Renascience (4889) FY2026 Q3 Earnings Report

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Executive Summary

The most important point this quarter is that revenue remains small for a research and development-focused company, while the operating loss widened from the same period last year. Revenue was ¥0.4B (down 39.2% YoY), the operating loss was ¥2.5B (versus a loss of ¥1.4B in the same period last year), and the ordinary loss was ¥2.2B (versus a loss of ¥1.4B). Net income was a loss of ¥2.2B, resulting in a shift into the red from net income of ¥1.5B in the same period last year. However, the same period last year included ¥3.2B in extraordinary income, and the absence of this item was the primary factor.

Factors Behind Earnings Changes

【Revenue】Revenue was ¥0.4B, down 39.2% YoY. Although segment information is not disclosed, progress against the full-year forecast of ¥1.3B was only 30.1%, significantly below the standard quarterly progress rate of 75%. Achieving the full-year forecast will require ¥0.9B of revenue to be recorded in Q4 alone, equivalent to 2.3 times the cumulative revenue through Q3.

【Profit and Loss】Gross profit was ¥0.4B, and the gross margin remained high at 89.1%, although it declined from 95.4% in the same period last year. The operating loss widened to ¥2.5B from ¥1.4B in the same period last year, and the operating margin deteriorated to negative 637.5% (negative 213.8% in the same period last year). Non-operating income of ¥0.4B partially mitigated the ordinary loss but did not contribute to improving the profitability of the core business. The substantial deterioration in net income was attributable to the reversal of the ¥3.2B extraordinary income recorded in the same period last year. Together with the widening operating loss, the results are classified as lower revenue and lower profit.

Key Financial Metrics

【Profitability】The operating margin was negative 637.5% (negative 213.8% in the same period last year), while the net profit margin was negative 545.0% (236.9% in the same period last year); both deteriorated substantially. Although the gross margin remained high at 89.1%, the small revenue base was insufficient to absorb fixed costs, resulting in a wider loss.【Cash Quality】Accounts receivable were ¥0.3B, equivalent to 82.5% of cumulative revenue, and annualized DSO was long at 226 days. Although fluctuations in the number of days may be significant because the absolute level of revenue is small, the concentration of collection timing warrants attention.【Investment Efficiency】Annualized ROE was negative 12.0%, and the total asset turnover ratio was low at 0.02x, indicating that the company continues to have limited revenue-generating capacity relative to its asset base.【Financial Soundness】The equity ratio was 94.4%, and the current ratio was approximately 1,775%, both extremely high. Cash and deposits were ¥24.2B, substantially exceeding current liabilities of ¥1.4B. The debt-to-equity ratio was also low at 0.06x, indicating strong short-term financial resilience. However, retained earnings expanded to negative ¥10.5B, and the elimination of accumulated losses depends on the monetization of the business.

Cash Flow Analysis

Because figures from the statement of cash flows have not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥24.2B, an increase of ¥6.2B (+34.3%) from ¥18.0B in the same period last year. Since the company recorded a net loss of ¥2.2B during the same period, the increase in cash is considered to have been primarily attributable not to cash generation from operating activities but to financing, as indicated by increases in capital stock and capital surplus. From a working capital perspective, accounts receivable were ¥0.3B, while current liabilities were only ¥1.4B, and no concerns were identified regarding short-term payment capacity. However, as operating losses continue, the pace of cash usage must be monitored continuously.

Earnings Quality

Non-operating income of ¥0.4B was nearly equivalent to revenue of ¥0.4B and consisted of items such as interest income and subsidy income. The ordinary loss of ¥2.2B reflects the partial offsetting of the ¥2.5B operating loss by this non-operating income, and therefore does not represent the earnings power of the core business. Net income of ¥1.5B in the same period last year included ¥3.2B in extraordinary income; excluding this item, losses at the operating and ordinary income levels had effectively continued. No extraordinary gains or losses were recorded in the current period, and the net loss of ¥2.2B therefore broadly corresponded to the ordinary loss, meaning that the impact of temporary factors was smaller than in the same period last year. Overall, the current-period results contained fewer temporary factors than the same period last year and can be interpreted as more directly reflecting the earnings structure of the core business.

Earnings Forecast and Guidance

Progress through Q3 against the full-year company forecast was 30.1% for revenue, 67.1% for the operating loss, and 63.2% for the net loss. While revenue progress was significantly below the standard quarterly progress rate of 75%, loss progress remained within the range of the company’s plan. Achieving the full-year forecast will require Q4 revenue to exceed the same period last year, and the plan assumes that revenue will be concentrated in the second half. The company forecasts full-year revenue to increase 0.9% from the previous fiscal year, but achievement of this forecast will depend on the timing of partnership income and the monetization of research and development results.

Shareholder Returns

Both the Q2 dividend and the full-year company forecast dividend are ¥0 per share, and the company continues to pay no dividends. As the company recorded a net loss of ¥2.2B for the current period, calculating the payout ratio has no meaningful significance. However, the no-dividend policy is consistent with a capital allocation policy focused on preserving research and development funding and liquidity. Cash and deposits of ¥24.2B and low debt levels support the continuation of the no-dividend policy for the time being, while the resumption of dividends will require improvement in operating earnings.

Risk Factors

1. Delayed revenue progress: Progress through Q3 against the full-year revenue forecast was only 30.1%, requiring Q4 revenue equivalent to 2.3 times cumulative actual revenue. The timing of monetization of partnership projects and research and development results will affect performance.

2. Lengthening accounts receivable collection period: Accounts receivable of ¥0.3B were equivalent to 82.5% of cumulative revenue, and annualized DSO was long at 226 days. Even taking into account fluctuations caused by the small revenue base, the concentration of collection timing is a working capital issue requiring close attention.

3. Continued losses and dependence on capital financing: The operating loss of ¥2.5B and annualized ROE of negative 12.0% continue. If monetization is delayed, cash consumption may accelerate and dependence on additional capital financing may increase.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (pharma)

Profitability and Returns

Profitability was substantially below the industry median, and the magnitude of the loss was also high within the industry.

Growth and Capital Efficiency

Revenue growth was also substantially below the industry median, and the pace of top-line contraction was notable within the industry.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. Although the high gross margin of 89.1% has been maintained, the operating margin deteriorated to negative 637.5% due to the insufficient revenue scale. The degree of progress toward commercialization will be key to improving the earnings structure.

2. Because net income in the same period last year included ¥3.2B in extraordinary income, greater importance should be placed on the fact that the operating loss widened by ¥1.1B rather than on a simple comparison of net income.

3. The robust financial base, comprising an equity ratio of 94.4%, a debt-to-equity ratio of 0.06x, and cash and deposits of ¥24.2B, supports the continuation of research and development. However, retained earnings expanded to negative ¥10.5B, and continued revenue generation will be required to eliminate accumulated losses.

Theoretical Share Price (For Reference)

Sensitivity: 80円–84円 at ±1% for the cost of equity, and 80円–84円 at ±0.1 for ω.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value will be below book value per share.
• Net assets as of the end of the quarter are used (there is a time lag relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

（Calculation model: Residual Income Model (Ohlson type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly available data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee the future share price）

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional as necessary.

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