| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥37.2B | ¥25.1B | +48.5% |
| Operating Income / Operating Profit | ¥20.5B | ¥10.0B | +105.2% |
| Ordinary Income | ¥35.4B | ¥49.4B | -28.3% |
| Net Income / Net Profit | ¥19.3B | ¥9.2B | +109.8% |
| ROE | 6.7% | 3.3% | - |
For the fiscal year ended March 2026, revenue was ¥37.2B (YoY +¥12.2B, +48.5%) and operating income was ¥20.5B (YoY +¥10.5B, +105.2%), indicating strong growth, while ordinary income was ¥35.4B (YoY -¥13.9B, -28.3%) and net income was ¥19.3B (YoY +¥10.1B, +109.8%), showing more complex movement at higher P&L stages. The large improvement at the operating level and doubling of net income reflect improved underwriting profitability, but the decline in ordinary income is attributable to increased non-operating expenses (interest expense ¥0.9B, etc.) and a decline in special gains (prior-year ¥0.8B gain on securities disposals disappeared). Despite booking special losses of ¥3.3B (of which impairment ¥2.3B), net income doubled, clarifying an improved earnings base. Operating Cash Flow (OCF) of ¥48.2B is 2.5x net income and provides solid cash backing, but cash and deposits declined by -75.3% YoY to ¥14.9B due to Investing CF of -¥166.7B (including short-term investment securities acquisitions ¥218.2B and capital expenditures ¥49.2B). Free Cash Flow (FCF) was -¥118.5B, a large outflow, placing liquidity management at a critical juncture.
Revenue ¥37.2B (YoY +48.5%) breakdown: P&C Insurance Business ¥658.2B (+8.8%) as the core accounting for 89.1% of the total; Pet Internet Services ¥22.7B (+1.3%); Veterinary Hospital Operations ¥24.0B (+10.7%); Health Innovation ¥5.7B (+65.6%); Others ¥27.8B (+13.7%). Robust expansion in the P&C segment and rapid growth in Health Innovation drove the overall result, while growth in Veterinary Hospital Operations slowed slightly. Underwriting KPIs: Net Written Premiums ¥641.0B (+8.9%), Loss Ratio 58.1% (including loss adjustment expenses), Expense Ratio 32.3% (commission ratio 8.9%, SG&A ratio 31.5%), maintaining a combined ratio of 90.4% at a healthy level. Investment income was ¥16.4B (of which interest & dividends ¥9.0B, securities gains ¥7.4B), a modest increase of +3.5% YoY. Steady asset management returns supported the bottom line.
Profitability: Operating income ¥20.5B (YoY +105.2%) achieved an operating margin of 55.0% due to SG&A efficiency (SG&A ¥16.8B; SG&A ratio 45.0%) and appropriate goodwill amortization expense of ¥2.6B. Ordinary income ¥35.4B (-28.3%) reflected operating non-recurring items: non-operating income ¥0.2B (interest income ¥0.1B, etc.) versus non-operating expenses ¥1.1B (interest expense ¥0.9B, equity-method losses ¥0.5B, etc.), producing net non-operating expense outflow of ¥0.9B. While non-operating expenses were broadly flat versus prior-year ¥0.96B, the prior-year special gain of ¥0.1B (gain on disposal of tangible fixed assets) did not recur this period, and special losses of ¥3.3B (impairment ¥2.3B, losses on disposal of fixed assets ¥0.5B, etc.) pressured higher-level profit. Pre-tax income was ¥32.2B; after corporate taxes ¥10.1B (effective tax rate 31.2%), and adjustment for net loss attributable to non-controlling interests ¥0.5B, net income attributable to owners of the parent was ¥19.3B (YoY +109.8%). Comprehensive income was ¥25.1B, aided by ¥3.1B in unrealized gains on securities. Excluding temporary factors (impairment, disposal losses), underlying earnings power is strong, leading to revenue and profit growth.
P&C Insurance Business: revenue ¥658.2B (YoY +8.8%), segment profit ¥47.97B (-14.4%), accounting for 89.1% of revenue and the dominant driver. The decline in margin is not due to structural increases in loss or expense ratios but reflects the absence of prior-year special gains and the impact of ¥2.3B impairment. Pet Internet Services: revenue ¥22.7B (+1.3%), segment profit ¥1.03B (-56.7%), a decline in profit. Veterinary Hospital Operations: revenue ¥24.0B (+10.7%), segment loss -¥7.17B (widened from -¥0.28B prior year), with higher depreciation from increased capex (¥4.1B vs ¥0.9B prior year) pressuring profits. Health Innovation: revenue ¥5.7B (+65.6%), segment loss -¥3.08B (widened from -¥1.32B), reflecting upfront costs in a growth investment phase. Others: revenue ¥27.8B (+13.7%), segment loss -¥3.03B (improved from -¥7.30B prior year), with efficiency gains in genetic testing business, etc. Overall, while P&C delivers overwhelming profit contribution, losses in Veterinary Hospital and Health Innovation amount to -¥10.2B and dilute consolidated profitability.
Profitability: Operating margin 55.0% (improved +15.2pt from 39.8% prior year) driven by lower SG&A ratio and optimized goodwill amortization. Net margin 51.7% (improved +15.1pt from 36.6%) remains high despite special losses, supported by sound underwriting. ROE 6.7% (down from 11.2% prior year) fell due to denominator effect from expanded equity (¥289.4B vs ¥280.7B prior year) despite higher net income. ROIC 4.3% (= EBIT ¥20.5B ÷ Invested Capital ¥475.5B) indicates room to improve capital efficiency. Cash Quality: OCF ¥48.2B is 2.5x net income ¥19.3B, and OCF/EBITDA 1.47x (EBITDA = Operating income ¥20.5B + Depreciation ¥12.3B = ¥32.8B), indicating soundness. Accrual ratio -3.4% (=(Net income ¥19.3B - OCF ¥48.2B) ÷ Total assets ¥766.9B) is negative, showing cash generation advantage. Investment Efficiency: Capex ¥49.2B is 4.0x depreciation ¥12.3B, indicating aggressive growth investment. Goodwill ¥21.6B equals 0.66x EBITDA ¥32.8B; goodwill amortization ¥2.6B is 7.9% of EBITDA and in a reasonable range. Financial Soundness: Equity Ratio 37.7% (down -1.0pt from 38.7% prior year) due to asset expansion. Current Ratio 100.3%, Quick Ratio 100.3%, with cash & deposits ¥14.9B versus short-term liabilities ¥50.0B (bonds maturing within 1 year) giving cash/short-term liabilities 0.30x and a thin liquidity buffer. Debt/EBITDA 1.53x (interest-bearing debt ¥50.0B ÷ EBITDA ¥32.8B) and Interest Coverage 22.99x (EBITDA ¥32.8B ÷ interest expense ¥0.9B) indicate adequate serviceability, but concentration of short-term maturities warrants attention.
OCF ¥48.2B (YoY -24.7%) equals operating cash subtotal ¥58.0B less corporate tax payments ¥17.6B, with adjustments including interest & dividend receipts ¥8.8B and interest paid ¥1.0B. Operating cash subtotal ¥58.0B relative to net income ¥19.3B reflects non-cash adjustments such as depreciation ¥12.3B, goodwill amortization ¥2.6B, impairment ¥2.3B, and working capital movements including increase in loss reserves +¥23.1B and increase in unpaid losses +¥5.8B. The main cause of Investing CF -¥166.7B was acquisition of short-term investment securities ¥218.2B (vs ¥75.2B prior year, +¥143.0B), expanding allocation to managed assets. Capex ¥49.2B (vs ¥5.9B prior year) surged 8.4x due to investments in veterinary hospitals and Health Innovation facilities. M&A ¥2.2B and investments in affiliates ¥0.5B were also outflows. Financing CF -¥16.7B comprised bond redemptions ¥50.0B and bond issuance ¥49.7B for rollover, share buybacks ¥10.2B, dividends ¥6.4B, and lease repayments ¥0.1B. FCF -¥118.5B (= OCF ¥48.2B + Investing CF -¥166.7B) was a large outflow, reducing cash & deposits from opening ¥60.2B to closing ¥14.9B (-¥45.3B). The concentrated acquisition of investment securities was the primary driver, and liquidity recovery is expected to depend on future investment pacing.
Ordinary income ¥35.4B versus operating income ¥20.5B shows an uplift of ¥14.9B from non-operating items; this is not explained by the simple difference between non-operating income ¥0.2B (interest income ¥0.1B, etc.) and non-operating expenses ¥1.1B (interest expense ¥0.9B, equity-method losses ¥0.5B, etc.), but rather by the insurance-company-specific accounting structure where investment income ¥16.4B is reflected at the ordinary income stage. Net investment income ¥16.1B (investment income ¥16.4B less investment expenses ¥0.3B) explains the gap between ordinary and operating income. Special losses ¥3.3B (impairment ¥2.3B, losses on disposal of fixed assets ¥0.5B, etc.) are one-off items; normalized profit levels would be higher. Comprehensive income ¥25.1B equals net income ¥19.3B plus ¥3.1B unrealized gains on securities, which boosted comprehensive income. With OCF ¥48.2B being 2.5x net income ¥19.3B and accrual ratio -3.4%, cash backing is strong. Excluding temporary factors, underlying earnings power is high, supported by investment income and robust cash generation; overall quality of earnings is high.
Full-year ordinary income forecast ¥50.0B (YoY +41.1%) versus first-half actual ¥35.4B, representing a progress rate of 70.9% and on track. Assumptions include maintaining underwriting profitability (assumes combined ratio in the low-90s) and stabilization of investment income. Special losses booked in H1 such as the ¥2.3B impairment are assumed not to recur in H2, expecting further profit accumulation in the second half. EPS forecast ¥44.43 (vs actual ¥29.77, +49.3%) implies large second-half earnings increase; key to achievement will be continued expansion of the P&C segment and reduction of losses in deficit segments (Veterinary Hospital, Health Innovation). Dividend forecast ¥0 (prior-year actual ¥9, now non-disclosed) reflects a cautious stance given liquidity constraints and continued investment cash outflows. Achievement depends on maintaining underwriting margins, a stable investment environment, and smoothing the investment pace.
Year-end dividend ¥9 (payout ratio 20.2% on a net-income basis), maintained at the same level as the prior year. Meanwhile, with OCF ¥48.2B, dividends ¥6.4B and buybacks ¥10.2B give total shareholder returns ¥16.6B (34.4% of OCF), leaving some cash-based room for returns. Considering FCF -¥118.5B, total returns represent an outflow relative to FCF (FCF coverage -17.56x), driven mainly by the concentrated Investing CF -¥166.7B (short-term investment securities acquisition ¥218.2B). Normalization of asset allocation should improve this. Share repurchases of 1,301 thousand shares (-¥10.2B, acquisition ratio 1.7%) contributed to capital efficiency, but continuation under liquidity constraints depends on future investment pace. Next fiscal year dividend forecast ¥0 (non-disclosed) signals prioritization of liquidity and continued allocation to capex and investment securities, with dividend policy to be reconsidered once investment allocations stabilize. Sustainability requires continuation of OCF around ¥48B and smoothing of investing outflows (rolling over short-term securities, spreading capex across fiscal years).
Short-term liquidity strain risk: Cash & deposits ¥14.9B vs short-term liabilities ¥50.0B (bonds maturing within 1 year) yields cash/short-term liabilities 0.30x and current ratio 100.3%, indicating a very tight buffer. Although bond rollovers have been executed, concentrated maturities and thin cash buffers limit refinancing capacity if investing outflows continue. Short-term investment securities ¥426.3B (BS carrying amount) can be liquidated to respond, but sale-loss risk depends on market conditions.
Expansion of loss-making segments risk: Veterinary Hospital Operations -¥7.17B and Health Innovation -¥3.08B total -¥10.2B diluting profits. Increased capex for veterinary hospitals (depreciation ¥4.1B vs ¥0.9B prior year) raises fixed-cost burdens. Turnaround uncertainty depends on demand ramp-up; continued losses would pressure consolidated margins. Goodwill balance ¥5.6B (Veterinary Hospital ¥4.0B, Others ¥1.6B) carries impairment risk.
Underwriting profitability deterioration risk: Loss ratio 58.1% and combined ratio 90.4% are healthy, but major natural catastrophes or pet disease pandemics could sharply raise the loss ratio. Increases in loss reserves (loss reserves ¥290.8B on the BS) could pressure capital and liquidity. Changes in interest rate environment that reduce investment income ¥16.4B would directly hit ordinary income and affect the stability of the revenue structure.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 55.0% | 8.8% (4.0%–20.0%) | +46.1pt |
| Net Margin | 51.7% | 4.3% (0.6%–11.3%) | +47.4pt |
Both operating and net margins significantly exceed industry medians, highlighting strong underwriting profitability and fixed-cost efficiency.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 48.5% | 2.1% (-4.5%–6.9%) | +46.4pt |
Revenue growth rate outpaces the industry median by 46.4pt, reflecting contract expansion and growth in new businesses. Top-tier growth pace in the industry.
※ Source: Company compilation
Sound underwriting profitability: With loss ratio 58.1%, expense ratio 32.3%, and combined ratio 90.4%, the company maintains underwriting advantage versus peers. Operating margin 55.0% exceeds industry median 8.8% by 46.1pt, confirming a strong earnings base. Revenue growth +48.5% substantially outperformed the industry median 2.1%, showing continued momentum in contract expansion. The coexistence of structural profitability and growth is evident.
Liquidity management at a critical stage: Cash & deposits ¥14.9B and short-term liabilities ¥50.0B give cash/short-term liabilities 0.30x and an extremely thin liquidity buffer, relying on the ability to liquidate short-term investment securities ¥426.3B. Concentrated Investing CF -¥166.7B (including short-term securities acquisition ¥218.2B) caused cash to fall -75.3%, so smoothing future investment pacing and appropriate rollover of investment securities are conditions for liquidity recovery. While OCF ¥48.2B is solid, continued capex ¥49.2B and cash outflows from loss-making segments mean improving FCF -¥118.5B is a near-term priority.
Turnaround scenarios for loss-making segments: Veterinary Hospital Operations -¥7.17B and Health Innovation -¥3.08B total -¥10.2B, a primary reason for low ROE 6.7% and ROIC 4.3%. Depreciation ¥4.1B in Veterinary Operations reflects the deployment of capex ¥49.2B and is part of the path to monetization, but timing of medium-term commercialization remains uncertain. P&C profitability ¥47.97B continues to drive the company, but the pace of loss-making business remediation will be key to improving capital efficiency and expanding shareholder returns.
This report was auto-generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; consult professionals as necessary before making investment decisions.