2689.T

• Corporate Purpose and Background:

  • The corporate mission is "Contribute to the development of medicine, medical care, and nursing care through business, and contribute to the healthy longevity of the Japanese people", with the shared employee mission of "Contribute as a regional medical infrastructure, do not stop medical and nursing care".
  • The company changed its name from Kawanishi Holdings to Olba Healthcare Holdings in 2021 on its 100th anniversary; the name "Olba" is a portmanteau representing the goal of connecting people and technology in regional healthcare and building a shared future.

• Market Environment and Corporate Response:

  • The domestic medical device market is growing stably at 2-3% annually, with a projected 2025 market size of 3.895 trillion yen, driven by post-COVID recovery in surgery volumes and adoption of new products such as surgical robots.
  • Global inflation and yen depreciation have pushed up prices of imported medical devices; the company is expanding sales, improving procurement, offering alternative products aligned with customer needs, and negotiating cost pass-through to selling prices.
  • Many medical institutions have delayed capital investment amid reduced COVID-related subsidies, rising labor costs, and worsening operating conditions; the company is responding by proposing efficiency improvements through new businesses and expanding sales to non-medical customers.
  • Recent policy tailwinds include a 1.4 trillion yen support package for medical and nursing care in the Japanese government's FY2025 supplementary budget, and a 2.22% positive revision to medical fees (up from a 0.12% negative revision in the prior cycle). The company will leverage these improvements to expand support for medical institutions.

• Core Operational Initiatives:

  • OLBA-DX Reform: The DX Promotion Office (established 2021) is expanding use of generative AI and no-code tools, building CRM/SFA systems currently in pilot testing, refreshing groupware and sales management systems, and upskilling employees through expanded e-Learning and IT certification incentives.
  • Logistics Innovation: The integrated logistics system Li-Flo has been rolling out since 2022 and will complete group-wide deployment this fiscal year, delivering improved inventory/expiration date management and reduced picking, invoicing, and inventory counting time. Construction of the new Okayama Logistics Center is targeted for launch in July 2027, to create a hub for medical device supply in the Chugoku-Shikoku region, improve operational efficiency, and strengthen BCP.
  • Joint Distribution Pilot: A pilot test of joint medical device distribution was completed November 2025 to January 2026 in Kurashiki with industry partner Nishinihon Medical Link, targeting solutions to driver shortages, low load factors, and inefficiency. The pilot is expected to reduce logistics costs, labor dependency, and CO2 emissions, with plans to expand regionally to build a sustainable logistics model for the industry.

• New Business Progress:

  • TemaSaku (automatic checkout machines for clinics): 147 units installed between July and December 2025, reaching a cumulative 901 units as of December 2025. Around 40% of sales are in the Kanto region, with sales coverage across 46 of 47 Japanese prefectures (excluding Yamagata). The product integrates with medical claim systems and supports cashless payment, and is in high demand for accounting labor saving.
  • ORSEED (100% subsidiary established January 2025): Sells the low-temperature decomposition upcycling unit OLSTECH, which decomposes waste without burning using chemical reaction heat, drastically reducing CO2 emissions and operating on standard household power. Developed in partnership with Osaka University to process waste such as nylon gloves and diapers from medical/nursing sites, the product has already received inquiries from the apparel and food industries, with initial sales completed and plans to accelerate growth.
  • Babyeets (newborn live streaming and memorial video service for obstetrics and gynecology departments): The service allows families to view real-time video of newborns via smartphone/PC during hospitalization, and provides a memorial video after discharge. It has been operating at Ehime University Hospital since December 2024, is patent-protected, and is live at 5 facilities as of December 2025.

• Overseas Business (Thai Olba Healthcare, operating since January 2023):

  • Has an official distribution agreement with Japan's Takazono, and has secured contracts to deliver pharmaceutical distribution management systems including fully automatic tablet packaging machines to a leading university hospital and the Royal Thai Hospital; these high-profile reference cases are expected to support expansion to other facilities.
  • Has started sales and surgical case acquisition for locally-made DiOS orthopedic implants, launched a rental business for Morito's weight-bearing walking lifts for rehabilitation, and obtained Thai FDA medical device approval for mediVR's VR rehabilitation device and Mie Chemical's insulated cooling packs. The company will continue to expand operations close to medical device manufacturers.

• ESG and Human Resources Initiatives:

  • Environment: Promotes environmental improvement through sales of OLSTECH low-waste processing units.
  • Social: Invests in human capital, promotes health management (re-certified as a Health and Productivity Management Outstanding Enterprise in 2025), promotes male paternity leave and women's advancement (introduced an external mentor program for women, set a 19% target for female managers by 2030, and introduced GLTD income compensation for employees unable to work long-term due to injury/illness).
  • Governance: Maintains transparency, efficiency, and sound management, and promotes ethical awareness among all employees.
  • Human Resources Development: Operates the OLBA Academy internal education program to provide role-aligned continuous learning, expanded e-Learning to build deep medical/nursing and product knowledge, and views human capital investment as a source of competitive advantage.

• Full-year 2026 (June period) consolidated forecast:

  • Projected revenue of 127.978 billion yen (all-time high, 6th consecutive year of revenue growth), operating profit of 2 billion yen (a 21 million yen increase year-over-year, recovering to the 2 billion yen level after a 5-year decline in 2025), ordinary profit of 1.928 billion yen, and net income attributable to parent shareholders of 1.321 billion yen. The year-over-year decrease in projected net income is a one-time reversal effect from the prior year's non-recurring gain from subsidiary head office relocation integration.
  • Projected profit drivers: Medical equipment consumables are expected to grow steadily from further market expansion in the Kansai region; SPD and nursing care products businesses are expected to deliver profit growth from increased revenue. Capital equipment sales are projected to hold steady despite softer-than-expected performance in the first half. Offsetting these gains, SG&A expenses are expected to increase significantly from continued investment in human capital and DX-related systems.
  • Dividend policy: The company targets dividend increases or maintenance, while retaining internal reserves for growth investment. Full-year dividend per share is maintained at 80 yen, unchanged from 2025. The company's dividend on equity (DOE) is 4%, which is well above the 2% average for all listed industries, with a 4% dividend yield, both at relatively high levels.

• Long-term Guidance:

  • VISION2030 goals: Become the top medical device trading company in Japan, generate 20% of operating profit from overseas business, and launch more than 30 new products and services.
  • Mid-term management plan (fiscal 2026 to 2028 June period): Targets consolidated revenue of 142 billion yen and consolidated operating profit of 2.7 billion yen for the 2028 June period, focused on three core priorities: OLBA-DX for efficiency and skill improvement, productivity improvement including logistics innovation and new logistics center construction, and investment in the future including new business development and sustainability initiatives.
  • PBR improvement target: Current PBR is 1x as of December 2025, compared to a 1.5x weighted average for the wholesale industry on the Tokyo Standard Market. The company targets exceeding the market average, and will improve net profit margin through DX-driven efficiency and high value-added new business development, and improve expected growth through higher overseas business ratio, new business development, and IR activities to boost recognition.
  • Current ROE remains above 12%, consistently exceeding the estimated 6% cost of equity, with an equity spread of 6-7%, so the company will continue to invest for growth while improving profitability.

1. Medical Equipment Business: Revenue contribution of 92.9%, with total revenue of 58.922 billion yen, a 2.8% increase year-over-year. Operating profit was 555 million yen, a 22.4% decrease year-over-year. Within this segment, consumables total revenue was 53.4 billion yen, a 2.7% increase year-over-year: surgery-related consumables grew 0.7% YoY, orthopedic consumables grew 5.8% YoY driven by robotic surgery-related products, and circulatory organ consumables grew 3.4% YoY driven by new arrhythmia treatment products. Capital equipment revenue was 6.4 billion yen, a 1.6% decrease year-over-year, due to delayed capital investment from healthcare institutions amid worsening operating environments. 2. SPD Business: Revenue contribution of 4.8%, with total revenue of 3.027 billion yen, a 6.5% increase year-over-year. Operating profit was 64 million yen, a 16.9% increase year-over-year, driven by service price revisions at existing contracted facilities and strong sales of the in-house developed inventory management system Medilia for small and medium-sized medical institutions. 3. Nursing Care Products Business: Revenue contribution of 2.3%, with total revenue of 1.46 billion yen, a 6.6% increase year-over-year. Operating profit was 122 million yen, a 16.2% increase year-over-year. The core rental business grew 6.7% YoY, driven by expanded business in the Shikoku region developed in the prior fiscal year, and product sales grew 11.5% YoY.

• Pressured profit growth in core medical equipment business: Difficulty passing through rising procurement costs to selling prices due to tough price negotiations with medical institutions, and increased SG&A expenses from system and security investments have led to sluggish operating profit growth despite steady revenue growth.
• Soft capital equipment demand: Worsening operating environments for medical institutions, driven by reduced COVID-19 related subsidies, rising labor costs, and rising resource prices, have led to delayed equipment renewal and weaker-than-expected capital equipment sales.
• Industry structural weaknesses: The wholesale medical device industry has structurally low profit margins, and the company has low market share in large metropolitan areas, which creates pressure on overall profitability.
• Logistics industry challenges: Persistent driver shortages and industry inefficiencies (low load factors for medical device deliveries) create pressure on logistics costs and long-term operational sustainability.
• Market concentration trend: Ongoing government-driven consolidation of advanced medical functions into large-scale hospitals requires the company to continuously strengthen cooperation with medical device manufacturers to maintain its position supporting regional core hospitals (its main customer base).

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