Amvis Holdings,Inc. FY2026 Q3 Earnings Report

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Executive Summary

Cumulative results for Q3 FY2026 reflected higher revenue but lower profit, with the rise in the cost ratio of the core business putting the greatest pressure on overall profitability. Revenue increased to ¥38.29B (+5.3% YoY), while Operating Income declined to ¥3.62B (-22.9%), Ordinary Income to ¥3.68B (-23.9%), and Net Income to ¥2.49B (-17.1%). The main drivers of revenue growth were the rapid expansion of the Comprehensive Medical Support Business and steady occupancy at Ishinkan. However, the primary cause of the decline in profit was the decrease in the gross profit margin as cost of sales increased at a faster pace than revenue.

Factors Affecting Performance

【Revenue】Revenue was ¥38.29B (+5.3% YoY). The core Ishinkan business generated ¥37.39B (+3.9%), accounting for 97.7% of total revenue and remaining the main contributor to performance. The Comprehensive Medical Support Business expanded rapidly to ¥0.90B (+131.2%), but its composition ratio remained only 2.3%, limiting its contribution to overall growth.

【Profit and Loss】Cost of sales increased to ¥28.14B (+12.8% YoY), significantly outpacing revenue growth, and the gross profit margin declined to 26.5% from 30.9% in the same period of the previous year, a decrease of 440bp. SG&A expenses were ¥6.53B, essentially flat (-0.1% YoY), indicating that the deterioration in profit margins was primarily attributable to costs rather than SG&A expenses. Ishinkan’s segment profit declined to ¥3.02B (-33.8%), with its profit margin falling to 8.1% from 12.7%, whereas the Comprehensive Medical Support Business generated ¥0.60B (+357.3%) with a profit margin of 66.8%, producing a contrasting result. Ordinary Income was ¥3.68B (-23.9% YoY), reflecting non-operating income and expenses, with subsidy income of ¥0.47B almost offsetting interest expenses of ¥0.50B. Extraordinary income and expenses consisted of a gain on transfer of business of ¥0.03B and a loss on disposal of fixed assets of ¥0.01B, resulting in a negligible net impact. Overall, the Company posted higher revenue but lower profit.

Segment Analysis

Ishinkan generated revenue of ¥37.39B (+3.9% YoY) and Operating Income of ¥3.02B (-33.8%), while its profit margin declined substantially to 8.1% from 12.7% despite higher revenue. Given its high contribution to total Company profit, this deterioration in margin was the primary cause of the decline in profit. The Comprehensive Medical Support Business generated revenue of ¥0.90B (+131.2%) and Operating Income of ¥0.60B (+357.3%), with a high profit margin of 66.8%. However, its revenue composition ratio remained only 2.3%, and its scale is currently insufficient to offset the decline in Ishinkan’s profit. Although business diversification is progressing, expanding its contribution as a source of earnings remains a key challenge.

Key Financial Indicators

【Profitability】The Operating Income margin was 9.5%, down 346bp from 12.9% in the same period of the previous year, while the Net Income margin was 6.5%, down 175bp from 8.2%. The gross profit margin declined to 26.5% from 30.9%, a decrease of 440bp, indicating that the primary cause of the deterioration in profitability was the higher cost ratio. 【Cash Quality】Accounts receivable of ¥9.07B substantially exceeded cash and deposits of ¥3.27B, and DSO was approximately 65 days, highlighting the lengthy collection cycle. 【Investment Efficiency】Annualized ROE was 8.6%, while total asset turnover remained low at 0.650x. Tangible fixed assets of ¥59.64B accounted for 75.9% of total assets, and this asset-intensive structure constrained asset efficiency. Basic EPS was ¥25.41 (¥30.73 in the previous year). 【Financial Soundness】The Equity Ratio improved to 49.1% from 43.0% in the previous year, while the current ratio was 124.6%, indicating that short-term liabilities were generally covered. Cash and deposits were ¥3.27B, a 69.8% decline from the same period of the previous year, making the trend in liquidity a key area to monitor.

Cash Flow Analysis

Although the individual disclosure of the cash flow statement is limited, movements in the balance sheet provide insight into funding trends. Cash and deposits declined by ¥7.57B, from ¥10.83B in the same period of the previous year to ¥3.27B, suggesting net cash outflows. Meanwhile, buildings and structures increased by ¥1.36B and land increased by ¥0.80B, indicating that facility investment was likely the primary use of funds. Construction in progress decreased by ¥1.01B, suggesting that projects under construction progressed toward completion and were transferred to operating assets. Long-term borrowings declined slightly year on year, while the current portion of long-term borrowings increased to ¥5.21B. This indicates that the Company continues to fund facility investment and debt repayments through a combination of internal funds and borrowings. Equity increased by ¥2.42B year on year, with retained earnings supporting the financial foundation.

Earnings Quality

The difference between Ordinary Income and Net Income was primarily attributable to income taxes of ¥1.22B, while the impact of extraordinary income and expenses was limited. Extraordinary income of ¥0.03B consisted of a gain on transfer of business, and extraordinary loss of ¥0.01B consisted of a loss on disposal of fixed assets; both were small and strongly one-off in nature. Non-operating income of ¥0.61B included subsidy income of ¥0.47B, which should be noted as a temporary component differing in nature from recurring earnings. Most of the ¥0.55B in non-operating expenses consisted of interest expenses of ¥0.50B, which increased 21.4% year on year. Comprehensive income was ¥2.49B, almost equal to Net Income attributable to owners of the parent of ¥2.49B, indicating that the impact of other comprehensive income items was small and that there was no significant divergence between Net Income and Comprehensive Income. Overall, earnings quality can be assessed as generally reflecting operating performance, with limited dependence on extraordinary items or subsidy income.

Earnings Forecast and Guidance

Against the full-year Company forecasts of revenue of ¥51.70B, Operating Income of ¥3.80B, and Ordinary Income of ¥3.30B, cumulative Q3 progress rates were 74.1% for revenue, 95.3% for Operating Income, 111.5% for Ordinary Income, and 118.3% for Net Income (¥2.49B against the Company forecast of ¥2.10B). While revenue was broadly in line with standard progress of approximately 75%, Operating Income, Ordinary Income, and Net Income were significantly ahead of standard progress. This suggests that the full-year Company forecasts are based on conservative assumptions incorporating a substantial decline in profit in Q4, with planned Q4 Operating Income of approximately ¥0.18B. No revisions have been made to the earnings forecast or dividend forecast.

Shareholder Returns

The dividend at the end of Q2 was ¥0 per share, while the full-year Company dividend forecast is ¥4.0 per share. The Payout Ratio based on forecast full-year EPS of ¥21.53 is approximately 18.6%, significantly below the general sustainability benchmark of 60%. Cumulative Q3 EPS was already ¥25.41, exceeding forecast full-year EPS, and the current dividend plan therefore represents a relatively low level of shareholder returns compared with earnings. Although retained earnings were substantial at ¥27.28B, cash and deposits had declined to ¥3.27B, so the trend in funding liquidity must also be considered when assessing dividend capacity. No disclosure regarding share repurchases was identified.

Risk Factors

1. Declining profitability in the core business: Ishinkan is the core business, accounting for 97.7% of revenue, but segment profit declined 33.8% year on year and its profit margin fell from 12.7% to 8.1%. Future Company-wide profitability will depend on whether the increase in the cost ratio is structural or temporary.

2. Collection of trade receivables and funding liquidity: Cash and deposits were only ¥3.27B against accounts receivable of ¥9.07B, and DSO was approximately 65 days, exceeding 60 days. Cash and deposits declined 69.8% year on year, making cash management important, including arrangements to fund the ¥5.21B in the current portion of long-term borrowings.

3. Higher interest burden and asset-intensive structure: Interest expenses increased 21.4% year on year to ¥0.50B, while tangible fixed assets of ¥59.64B accounted for 75.9% of total assets. Although the interest coverage ratio remains approximately in the 7x range, attention should be paid to potential deterioration in coverage if higher interest rates coincide with lower profitability.

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Income margin and Net Income margin exceeded the industry median, indicating relatively favorable profitability.

Growth and Capital Efficiency

The revenue growth rate was below the industry median, placing the Company at a relative disadvantage within the industry in terms of growth.

Source: Compiled by the Company

Key Takeaways from the Results

1. While revenue increased 5.3%, Operating Income declined 22.9% due to the higher cost ratio. The coexistence of higher revenue and lower profit is the central issue in these results. Recovery in Ishinkan’s profit margin will be the focus going forward.

2. The Comprehensive Medical Support Business is highly profitable, with a profit margin of 66.8%, but its revenue composition ratio remains only 2.3%. It is at a stage where expansion in scale is necessary to offset the decline in Ishinkan’s profit margin.

3. Progress toward the full-year forecast has already exceeded 100% for Ordinary Income and Net Income. The fact that neither the earnings forecast nor the dividend forecast has been revised provides a basis for reviewing the assumptions underlying the Q4 plan and monitoring potential future revisions. In addition, the substantial decline in cash and deposits and the lengthy accounts receivable collection cycle require monitoring from a liquidity management perspective.

Theoretical Share Price (Reference Value)

Sensitivity: ¥342–¥362 at ±1% for the cost of equity, and ¥351–¥353 at ±0.1 for ω.

Notes:

• Because progress in Net Income toward the full-year forecast (118%) exceeds the standard level (75%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies ahead of schedule tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest Rate Reference Month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data. It is not a forecast of the market share price, a recommendation of any specific investment action, or a prediction or guarantee of future share prices.)

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This report is an automatically generated earnings analysis document produced 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 responsibility, after consulting a professional as necessary.

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