| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥115.7B | ¥100.1B | +15.6% |
| Operating Income / Operating Profit | ¥4.0B | ¥20.3B | -80.2% |
| Ordinary Income | ¥4.3B | ¥20.2B | -78.6% |
| Net Income / Net Profit | ¥3.1B | ¥14.3B | -78.0% |
| ROE | 4.6% | 20.4% | - |
For the fiscal year ended March 2026, Revenue was ¥115.7B (YoY +¥15.6B, +15.6%) achieving top-line growth, but Operating Income was ¥4.0B (YoY -¥16.3B, -80.2%), Ordinary Income ¥4.3B (YoY -¥15.9B, -78.6%), and Net Income attributable to owners of the parent was ¥2.8B (YoY -¥11.1B, -78.5%), representing a substantial decline in profitability. Revenue expanded due to M&A effects such as the consolidation of ASANO Co., Ltd. (now Dental Distribution), but start-up losses in that business of ¥1.4B, goodwill amortization of ¥0.6B, and an increase in corporate-wide expenses of ¥18.1B (YoY +¥1.7B) pressured Operating Income, driving Operating Margin down sharply from 20.3% to 3.5% (a 16.8pt decline). The core Medical Platform business contracted to Revenue ¥50.3B (‑19.7%) and Operating Income ¥17.8B (‑43.2%), and modest growth in the Smart Clinic business (Revenue +5.7%) was insufficient to offset the decline. The financial position remains solid with cash of ¥53.2B and an Equity Ratio of 67.3%, but Operating Cash Flow (OCF) fell to ¥2.0B (YoY ‑83.6%), Free Cash Flow deteriorated to ¥‑7.6B, and shareholder returns (dividends ¥5.2B and share buybacks ¥6.4B) significantly exceeded internal cash generation.
【Revenue】 Revenue of ¥115.7B increased +15.6% YoY. By segment, Medical Platform recorded ¥50.3B (‑19.7%, 43.5% of total), declining significantly from ¥62.7B the prior year, highlighting contraction in the core business. Smart Clinic was steady at ¥33.5B (+5.7%, 29.0% share), while newly consolidated Dental Distribution contributed ¥23.9B (20.7% share) and DX Distribution ¥3.1B (2.7% share), supplementing volume. Other businesses were ¥4.8B (‑14.9%, 4.2% share). Overall, revenue growth was secured by contributions from new segments via M&A, but the slowdown in existing core businesses is a structural concern.
【Profit & Loss】 Gross profit was ¥64.7B (gross margin 55.9%), down from ¥73.8B (73.7%) the prior year, though gross margin remained at a high level relative to Revenue. SG&A was ¥60.7B (SG&A ratio 52.5%), up ¥7.2B from ¥53.5B, with newly recorded goodwill amortization of ¥0.6B and an increase in corporate shared costs to ¥19.8B (prior year ¥18.1B) compressing profits. As a result, Operating Income fell to ¥4.0B (Operating Margin 3.5%) from ¥20.3B (20.3%), a decline of 80.2%. Non-operating items were roughly neutral at +¥0.3B (interest and dividend income ¥0.1B, interest expense ¥0.1B). Extraordinary gains of ¥0.8B (e.g., gain on sale of fixed assets) were recorded, but Profit Before Tax was ¥5.1B versus ¥20.2B prior year, down 74.9%. After corporate taxes of ¥2.3B (effective tax rate 45.8%), Net Income attributable to owners of the parent was ¥2.8B (Net Margin 2.4%) down 78.5% from ¥14.1B (14.3%). In conclusion, despite higher Revenue, contraction in the core business, start-up losses from new operations, and higher corporate expenses led to a substantial revenue-increase but profit-decrease outcome.
The Medical Platform business contributed the most to segment profit with Operating Income ¥17.8B (margin 35.4%), but it showed pronounced contraction (Revenue ‑19.7%, profit ‑43.2%). Smart Clinic posted Operating Income ¥5.5B (margin 16.5%) and remained stable; however, despite Revenue +5.7%, profit declined ‑4.4% indicating cost front-loading. Dental Distribution recorded an Operating loss of ¥1.4B (margin ‑5.9%) reflecting start-up losses, reducing consolidated profit by ¥1.4B. DX Distribution achieved high profitability with Operating Income ¥0.9B (margin 27.3%). Other businesses generated Operating Income ¥1.0B (margin 20.6%), down 12.6% YoY. Total segment profit of ¥23.8B less corporate shared costs of ¥19.8B (including goodwill amortization ¥0.6B) resulted in consolidated Operating Income of ¥4.0B. The slowdown in core business and start-up losses in new segments have materially reduced company-wide profitability.
【Profitability】Operating Margin of 3.5% worsened by 16.8pt from 20.3% last year; Net Margin of 2.4% declined 11.9pt from 14.3%. ROE at 4.6% (prior year 22.9%) was mainly driven down by the steep fall in Net Margin. Total Asset Turnover was 1.13x and Financial Leverage 1.49x, reasonable levels though overall profitability deterioration is significant. Gross Margin of 55.9% fell from 73.7%, but remains high considering cost-structure differences in newly consolidated businesses. 【Cash Quality】Operating CF of ¥2.0B is below Net Income of ¥2.8B (OCF/NI ratio 0.71x), indicating weak conversion of earnings to cash. EBITDA was ¥4.9B (Operating Income ¥4.0B + D&A ¥0.9B) with OCF/EBITDA ratio 0.40x, subdued due to tax payments ¥6.7B and accounts receivable increase ¥2.4B. Accrual ratio at 0.8% is low, suggesting accounting profits broadly reflect economic reality. 【Investment Efficiency】Total Asset Turnover 1.13x slightly declined from 1.17x, reflecting asset increases from M&A. Goodwill of ¥10.3B raises the intangible asset ratio, but Goodwill/EBITDA at 2.1x remains within a healthy range. 【Financial Soundness】Equity Ratio 67.3% (prior year 76.9%), Current Ratio 373%, Quick Ratio 370% — all very strong, with cash ¥53.2B exceeding total liabilities ¥33.6B. Interest-bearing debt ¥7.4B (short-term ¥1.2B, long-term ¥6.2B) and interest coverage 76.2x, Debt/EBITDA 1.5x indicate a conservative capital structure.
Operating CF was ¥2.0B (prior year ¥11.9B, YoY ‑83.6%). Profit before tax ¥5.1B before tax adjustments plus non-cash items — depreciation ¥0.9B, goodwill amortization ¥0.6B, stock-based compensation ¥1.4B — yielded an operating CF subtotal of ¥7.8B, but increases in trade receivables ¥2.4B and corporate tax payments ¥6.7B caused cash outflows. Inflows were supported by increases in trade payables ¥3.3B and contract liabilities ¥1.3B. Investing CF was ¥‑9.5B (prior year ¥‑2.8B), mainly due to payments for business acquisitions ¥6.8B, capital expenditures ¥1.0B, intangible asset acquisitions ¥0.2B, and purchase of investment securities ¥0.5B. Free Cash Flow was ¥‑7.6B (prior year +¥9.2B), a substantial deterioration. Financing CF was ¥2.0B (prior year ¥‑10.1B), reflecting borrowings raised ¥8.2B, offset by debt repayments ¥1.1B, dividend payments ¥5.2B, and share buybacks ¥6.4B. Consequently, cash decreased from ¥5.9B to ¥5.3B, a decline of ¥5.6B.
Operating Income ¥4.0B plus non-operating income ¥0.4B (interest and dividend income ¥0.1B, fee income ¥0.1B, etc.) less non-operating expense ¥0.1B (interest expense ¥0.1B, etc.) resulted in Ordinary Income ¥4.3B, with the bulk of recurring income derived from core operations. Extraordinary gains ¥0.8B (gain on sale of fixed assets ¥0.04B, etc.) were one-off, leaving a limited gap to Profit Before Tax ¥5.1B. Corporate tax ¥2.3B (effective tax rate 45.8%) compressed Net Income to ¥2.8B. Operating CF ¥2.0B is below Net Income ¥2.8B (OCF/NI 0.71x), indicating earnings are not fully converted to cash; main causes are tax payments ¥6.7B and accounts receivable increase ¥2.4B. Despite a low accrual ratio of 0.8%, cash-based earnings quality is weak. Goodwill amortization ¥0.6B is a JGAAP-specific earnings compression factor; EBITDA before goodwill amortization is ¥5.4B (Operating Income ¥4.0B + D&A ¥0.9B + goodwill amortization ¥0.6B). Recurring income quality is generally adequate, but high effective tax rate and weak cash conversion reduce earnings quality.
For FY March 2027, management projects Revenue ¥216.0B (YoY +86.8%), Operating Income ¥15.7B (YoY +293.0%), Ordinary Income ¥15.6B (YoY +260.1%), Net Income attributable to owners of the parent ¥11.9B (YoY +332.7%), and EPS ¥68.74, foreseeing substantial top- and bottom-line expansion. Operating Margin is planned to recover to 7.3%, an improvement of 3.8pt from this year’s 3.5%. The large Revenue increase assumes full-year contribution from Akasaka Co., Ltd. (now Dental Distribution business) and M&A effects; the sharp Operating Income recovery assumes new segments turning profitable, Medical Platform regaining growth, and corporate expense efficiencies. Monitoring progress at the half-year point is important; recovery of the core business, speed of profitability improvement in Dental Distribution, and control of corporate expenses are key to achieving the plan. Dividend forecast is stated as ¥0 per share, but reconciliation with the prior-year dividend payout of ¥30 per share requires confirmation.
Year-end dividend was ¥30 per share (total ¥5.2B, ordinary dividend ¥30). Dividend payout ratio relative to Net Income attributable to owners of the parent ¥2.8B is 189%, extremely high, meaning current profits do not cover dividends. Additionally, ¥6.4B of share buybacks were executed, making total returns ¥11.6B — over four times Net Income. Free Cash Flow of ¥‑7.6B also falls short of dividends and buybacks, so shareholder returns significantly exceeded internal cash generation. The sustainability of the dividend is supported by ample cash ¥53.2B, but going forward requires profit recovery and improved cash generation. The disclosed dividend forecast of ¥0 for FY2027 is markedly different from the prior year and calls for clarification of future dividend policy.
Risk of continued contraction in the core business: Medical Platform Revenue declined ‑19.7% YoY and Operating Income ‑43.2%. As the largest contributor to company profit at Operating Income ¥17.8B, a structural slowdown would make sustainable recovery in company-wide profitability difficult. Market environment shifts, intensified competition, or changes in customer needs could affect achievement of FY2027 forecasts.
Risk of delayed new-business ramp-up: Dental Distribution recorded an Operating loss of ¥1.4B, and continued delays in achieving profitability would downside the recovery scenario to Operating Margin 7.3% in FY2027. There is also an inherent impairment risk on goodwill ¥10.3B, and delays in PMI (post-merger integration) pose financial and valuation risks.
Risk of weakened cash generation: Operating CF ¥2.0B lags Net Income ¥2.8B (OCF/NI 0.71x, OCF/EBITDA 0.40x). Increased receivables and heavy tax payments (effective tax rate 45.8%) constrain cash generation; if persistent, investment capacity and sustainability of shareholder returns could be constrained. Payout ratio 189% and share buybacks ¥6.4B mean total returns greatly exceed internal cash generation, implying risk of revising return policy in future periods.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.5% | 8.1% (3.6%–16.0%) | -4.6pt |
| Net Margin | 2.7% | 5.8% (1.2%–11.6%) | -3.1pt |
Profitability is below the industry median, placing the company in the lower ranks for both Operating Margin and Net Margin.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 15.6% | 10.1% (1.7%–20.2%) | +5.5pt |
Revenue growth outperforms the industry median by 5.5pt, placing the company in the upper tier on growth.
※ Source: Company compilation
Trade-off between aggressive M&A strategy and short-term profitability: Revenue grew YoY +15.6% exceeding the industry median thanks to new consolidation and business acquisitions, but start-up losses in Dental Distribution ¥1.4B, goodwill amortization ¥0.6B, and an increase in corporate-wide costs ¥1.7B compressed Operating Income by 80.2%, driving Operating Margin down from 20.3% to 3.5%. Realization of M&A benefits will take time; in the short term, priority is restoring margins and cash generation. Achieving the FY2027 Operating Margin target of 7.3% requires Medical Platform to re-grow, new segments to turn profitable, and corporate expense efficiencies.
Balance between ample financial resources and excessive shareholder returns: With cash ¥53.2B, Equity Ratio 67.3%, and Debt/EBITDA 1.5x, financial soundness is excellent and reinvestment capacity is secured. Conversely, payout ratio 189% and share buybacks ¥6.4B (total returns ¥11.6B) substantially exceed Net Income ¥2.8B and Free Cash Flow ¥‑7.6B. Sustainability of the ¥30 dividend this period depends on profit recovery and improved cash conversion, and reconciliation with the FY2027 dividend forecast of ¥0 is necessary. The company is at a juncture to rebalance growth investments and shareholder returns given its strong financial base.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the firm based on publicly disclosed financial statements. Investment decisions are your own responsibility; consult professionals as needed.