Amvis Holdings,Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥49.17B
• Operating Income: ¥6.16B
• Net Income: ¥2.14B
• EPS: ¥37.52

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Ambis Holdings (7071) delivered mixed FY2025 Q4 results: robust top-line growth but sharp profit compression due to higher costs and expansion-related burdens. Revenue rose 15.8% YoY to 491.74, while operating income fell 41.9% YoY to 61.62, and net income dropped 50.8% YoY to 36.60. Gross profit was 147.89 with a gross margin of 30.1%, and SG&A reached 86.26, resulting in an operating margin of roughly 12.5%. Based on the YoY change, we estimate operating margin contracted by about 1,250 bps from c.25.0% last year, and net margin by roughly 1,010 bps from c.17.5% to 7.4%. Ordinary income margin likewise appears to have compressed by around 1,200 bps to 12.9%. Earnings quality was solid with OCF of 60.25 exceeding net income (OCF/NI = 1.65x), indicating cash conversion remained strong despite profit headwinds. However, heavy investment (CapEx of 104.07) drove negative free cash flow of -44.02 and required net financing inflows of 63.65. Balance sheet liquidity is adequate but not robust (current ratio 111.8% vs a >150% comfort benchmark), and leverage is moderate (D/E 1.32x, Debt/EBITDA 3.03x). ROE stands at 10.1% via DuPont (7.4% net margin × 0.586 asset turnover × 2.32x leverage), while ROIC of 7.6% is near the common 7–8% target range. Interest coverage remains healthy at 10.94x, mitigating immediate solvency risk. The effective tax rate was elevated at 35.6%, weighing on net income. Non-operating income (7.61) provided a modest buffer, partially offset by non-operating expenses (5.80), for ordinary income of 63.43. Dividend data are largely unreported, but the calculated payout ratio of 10.7% implies a conservative policy; FCF coverage is negative due to expansion-phase CapEx. Forward-looking, the critical watchpoints are occupancy ramp, labor cost control, and the pace/return profile of new facility investments to restore margins. Overall, the quarter reflects a deliberate investment phase: cash conversion is intact, growth is strong, but profitability must stabilize for ROE/ROIC to improve sustainably.

Profitability Analysis

ROE (10.1%) = Net Profit Margin (7.4%) × Asset Turnover (0.586) × Financial Leverage (2.32x). The most significant change YoY is the net profit margin, inferred from revenue +15.8% YoY versus net income -50.8% YoY, implying a margin step-down of roughly 1,010 bps. Business drivers likely include expansion-related costs (pre-opening expenses, staffing ramp, rent and utilities on new facilities), wage inflation in healthcare staffing, and higher depreciation (27.53) pressuring operating margin. Non-operating items had a small positive net effect (7.61 income vs 5.80 expense) but did not offset operating compression; the effective tax rate of 35.6% further reduced net margin. Asset turnover at 0.586 is reasonable for a facility-based care operator; revenue growth outpaced likely asset growth, but the heavy CapEx suggests turnover could face temporary dilution until new capacity ramps. Leverage at 2.32x supports ROE but is not excessive (D/E 1.32x, Debt/EBITDA 3.03x). The margin compression appears partly transitory (ramp costs) but will require occupancy and operating efficiency improvements to normalize; sustained wage pressure is a structural headwind. A concerning trend is that SG&A and other operating costs grew faster than revenue (implied by margin compression) despite double-digit top-line growth, indicating negative operating leverage in the quarter.

Growth Assessment

Top-line growth was strong at +15.8% YoY to 491.74, suggesting continued expansion of the care/hospice network and services. Profit growth lagged substantially: operating income -41.9% YoY and net income -50.8% YoY, highlighting a growth-investment phase with cost intensification. EBITDA of 89.15 (18.1% margin) remains healthy but below the likely prior-year level, consistent with the OPM contraction to ~12.5%. Non-operating income contributed 7.61, partially cushioning operating declines, but is not a core growth driver. ROIC at 7.6% is at the management target zone but leaves limited buffer if margins remain compressed; improving returns will depend on utilization ramp of new facilities and tighter cost control. The growth outlook depends on occupancy, case-mix, and staffing efficiency; with negative FCF due to CapEx, growth is being debt-financed, which is acceptable near-term given leverage metrics but requires improved cash returns. Near-term, expect profitability to lag revenue if additional openings occur; medium-term recovery hinges on stabilization of labor costs and maturing cohorts.

Financial Health

Liquidity is adequate but below a comfortable cushion: current ratio 111.8% and quick ratio 111.6% (benchmark >150% for comfort, warning <100%); no explicit warning threshold breach. Working capital is positive at 22.94; cash and deposits of 108.33 provide coverage for short-term loans of 76.99, limiting near-term refinancing stress. Total liabilities are 478.14 vs total assets of 839.47; D/E is 1.32x, within a conservative range (<1.5x). Debt/EBITDA is 3.03x, and interest coverage is strong at 10.94x, indicating manageable solvency risk. Maturity profile risk appears contained: current liabilities 194.44 are covered by current assets 217.38; however, the cushion is modest, and continued negative FCF could tighten liquidity. No off-balance sheet obligations are reported in the data provided. Equity stands at 361.32, with retained earnings of 251.87 supporting capital flexibility.

Cash Flow Quality

OCF of 60.25 exceeds net income of 36.60 (OCF/NI = 1.65x), indicating sound earnings quality and limited accrual risk this period. Free cash flow is negative at -44.02 due to substantial CapEx of 104.07, consistent with capacity expansion. Financing inflow of 63.65 indicates growth is debt-supported; this is reasonable provided returns on invested capital exceed funding costs and ramp schedules are met. Working capital dynamics look normal for the sector: accounts receivable of 91.91 imply roughly 68 days sales outstanding, reasonable given reimbursement cycles; inventories are immaterial. No clear signs of working capital manipulation are evident from the available data. Sustained negative FCF would limit flexibility for dividends or buybacks without incremental borrowing.

Dividend Sustainability

Dividend disclosures are limited; annual DPS and total dividends paid are unreported. The calculated payout ratio of 10.7% suggests a conservative stance if accurate, while the reported DOE is 0.0%. However, FCF coverage is -11.22x, indicating that any dividends are not covered by free cash flow during this investment phase and effectively financed by the balance sheet. With leverage moderate and interest coverage strong, a small dividend appears serviceable near term, but continued expansion CapEx may constrain distributions. Policy outlook likely favors reinvestment until profitability and FCF normalize as new facilities mature.

Risk Assessment

Business Risks:

• Margin pressure from labor cost inflation and staffing shortages in healthcare services
• Execution risk on new facility openings and occupancy ramp to planned levels
• Potential reimbursement/pricing pressure impacting revenue per bed or case mix
• Operational compliance risk in regulated care settings

Financial Risks:

• Negative free cash flow due to elevated CapEx requiring continued external financing
• Liquidity cushion only modest (current ratio 1.12x), potentially tightening if FCF remains negative
• Rising interest rate environment could increase borrowing costs despite current strong coverage
• Tax burden elevated (effective tax rate 35.6%) weighing on net income

Key Concerns:

• Significant YoY margin compression (~1,250 bps OPM and ~1,010 bps NPM) despite strong revenue growth
• Dependence on timely ramp of new investments to improve ROIC above the 7–8% threshold
• Sustained SG&A and depreciation intensity potentially limiting near-term earnings recovery

Investment Implications

Key Takeaways:

• Strong top-line growth (+15.8% YoY) but profit compression with OPM ~12.5% and NPM 7.4%
• OCF robust vs earnings (OCF/NI 1.65x), yet FCF negative on heavy CapEx (-44.02)
• Leverage moderate (D/E 1.32x; Debt/EBITDA 3.03x) and interest coverage strong (10.94x)
• ROE 10.1% supported by leverage; ROIC 7.6% near target but needs margin recovery
• Liquidity adequate but thin vs best-practice benchmarks (current ratio 1.12x)

Metrics to Watch:

• Operating margin trajectory and SG&A as a percentage of sales
• Occupancy/utilization and revenue per bed metrics (proxy via revenue growth vs facility count, if disclosed)
• CapEx pipeline, project returns, and timing to positive FCF
• OCF/NI ratio sustainability and working capital turns (DSO trend)
• Debt/EBITDA and interest coverage as rates evolve
• Effective tax rate normalization

Relative Positioning: Within Japan’s healthcare services peers, Ambis exhibits above-peer revenue growth but weaker near-term margin performance due to expansion costs; balance sheet leverage is moderate and liquidity adequate, positioning the company to execute growth provided occupancy ramps as planned.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis