eWeLL Co.,Ltd. Q1 FY2025 earnings call

• Market Context and Business Positioning • Japanese national policy is shifting post-surgery patient care from hospitals to at-home chronic/end-of-life care, which reduces national healthcare costs by 35% and is rapidly expanding the home healthcare market. • eWeLL solves the core industry problems of chronic visiting nurse shortages and inefficient analog operations through digital transformation, with its core product iBow, a cloud-based electronic medical record system purpose-built for visiting nursing stations. • iBow is currently used by 54,000 medical professionals daily, supporting 740,000 total patients, and has accumulated 72 million chronic care data points since 2014.

• Product Development • The first new AI-series product, AI Home-Visit Nursing Plan & Report (launched October 2024), reached 945 contracted clients by end-1Q 2025, with a 29.7% upsell rate to existing iBow clients; over 70% of new iBow contracts now bundle this AI service. • The second new AI product, AI Visit Schedule & Route, is scheduled for launch in May 2025; it automates complex nurse scheduling, shift balancing, and route optimization, a task that currently requires 10+ hours monthly per team even at large stations, done manually by senior nurses. Pricing is planned at 30 yen per visit as an optional add-on to iBow.

• Customer Growth • eWeLL secured a large enterprise contract with Tsukui, a leading Japanese home care provider, rolling out iBow and the AI Plan & Report service to all 68 of Tsukui's national visiting nursing stations starting April 2025, with additional stations to be added as Tsukui expands. • New contracted visiting nursing stations reached a record high 196 in 1Q, bringing total contracted stations to 3,186, up 18.1% year-over-year; 1Q net new additions were 158 stations.

• Operational Updates • Average monthly customer per-station price increased 10.8% year-over-year to 83,700 yen, driven by upsells of AI services and BPaaS. • Revenue churn rate remained stable at 0.11% in 1Q, consistent with historical low levels. • eWeLL announced the relocation of its Tokyo office to Nihombashi, Chuo-ku, scheduled for August 2025, to accommodate growing headcount, expand development capacity, and improve cross-team collaboration.

1. Cloud Service: 650 million yen in revenue (86.2% of total revenue), up 27.1% year-over-year. This includes 18 million yen in revenue from the newly launched AI Home-Visit Nursing Plan & Report service, which started billing in 1Q. 2. BPaaS (formerly BPO) Service: 94 million yen in revenue (12.5% of total revenue), up 74.5% year-over-year. Gross margin for BPaaS reached 63.1% in 1Q, improving as productivity per employee increased. Total company revenue for 1Q was 754 million yen, up 31.2% year-over-year.

• Full-year 2025 financial guidance is maintained at the originally planned level, despite 1Q operating profit coming in above plan due to delayed timing of relocation and other expenses. Total operating profit for 1Q was 376 million yen, up 61% year-over-year.
• The company expects total 40 million yen in one-time relocation, exhibition, and hiring expenses to be recognized mostly from 2Q onward, with 20 million yen in one-time relocation expenses recognized in full-year 2025, and an ongoing 13 million yen annual increase in expenses (mostly depreciation and higher rent) starting from 2026.
• Management targets 15% adoption of AI Visit Schedule & Route among existing iBow clients by end-December 2025. Billing for the new service is now targeted to start in October 2025 or later, pushed back from the original target of July 2025 to allow for a free trial period, customer feedback integration, and improve adoption confidence, following the successful strategy used for the first AI product.
• Management expects BPaaS gross margin to stabilize around 60% as the business scales, and overall company gross margin to fall to planned full-year levels in the second half of 2025 as cloud service maintenance and development costs increase.

• The visiting nursing industry faces structural challenges including chronic nurse shortages that limit growth of client stations, and high rates of station closures that contribute to the small level of annual customer churn.
• Second quarter typically sees a seasonal increase in churn as more client contracts reach renewal dates, which management expects will occur this year as normal.
• Relocation and growth investment will increase near-term costs, though management frames this as a strategic investment that will drive long-term revenue growth exceeding added costs.

Q: Why was billing for AI Visit Schedule & Route delayed from the original July 2025 target, and what is the new timeline? / A: The delay follows the successful go-to-market strategy used for the first AI product, AI Home-Visit Nursing Plan & Report. Providing an extended free trial lets customers test the service, get familiar with it, and gives eWeLL time to incorporate user feedback to refine the product before billing. This approach drove high adoption for the first product, so management is repeating it to hit the 15% adoption target more reliably. Billing will now start in October 2025 or later, after the May 2025 launch. /

Q: What benefits will AI Visit Schedule & Route deliver to customers, and what is the expected impact on their profitability? / A: The service eliminates the heavy manual work of scheduling and route planning that currently takes significant time away from senior nurses that could be spent on direct patient care. It can increase monthly visit capacity by roughly 10 visits per station, which translates to over 1 million yen in additional annual revenue per station, based on the standard 8,500 yen per visit rate that stations receive from national insurance. This directly improves station profitability while addressing nurse workload shortages. /

Q: What drove the large 1Q profit gain, and is this growth sustainable after the planned relocation expenses? / A: 1Q operating profit was above plan purely because the 40 million yen in total relocation, exhibition, and hiring expenses are mostly being recognized starting in 2Q, not because of underlying business outperformance. The core business is performing in line with plan, with strong growth from new AI services and the large TsukUI contract driving top-line growth. Management maintains the original full-year profit guidance, and expects the investment in office expansion and development capacity to drive stronger long-term growth that offsets the added recurring cost. /

Q: What are eWeLL's plans for M&A and growth capital use, given its strong balance sheet? / A: eWeLL has an 83.6% equity ratio and a very strong cash position, which management intends to use to pursue strategic M&A and new business development to drive non-organic growth. The company remains disciplined and will only pursue opportunities that increase long-term shareholder value, leveraging its strong financial position to act on attractive opportunities when they arise.