7062.T

Core Business Performance

• Both the massage direct management and massage franchise businesses grew year-over-year, supported by a tailwind from the June 2024 revision of massage therapy medical benefits that raised service prices. Increased staffing for sales expansion raised labor costs, and contract labor costs also increased alongside higher per-treatment prices.
• For the franchise business, royalty revenue from existing franchises grew with higher treatment prices, but overall franchise joining revenue fell as lower-cost joining plans grew more popular than higher-priced standard plans, pulling full-year results below the original target.

Medical Care Business Operations

• The medical care business remains in an investment phase, with 8 new medical care nursing facilities opened during the period, bringing the total number of hospice-type facilities to 11. The period's operating loss was driven by delayed nurse and care worker hiring that reduced home visit service volumes and hurt billing add-on acquisition, plus opening costs for the unplanned acquired Niigata Daigaku-mae facility. Temporary drops in occupancy occurred due to concentrated passings of high-need terminal cancer residents at several existing and new facilities, though occupancy recovered to a positive trend by Q4.
• For the nursing small-scale multi-functional home care (kanki) segment, overall occupancy stagnated through Q3 due to slower-than-planned new user acquisition, but focused sales and staffing improvements pushed occupancy up to 74.1% in March, and the segment achieved single-month profitability in March. Management considers the kanki segment to now be in a safe, stable phase with no new openings planned in the near term.

Corporate KPIs and Operational Updates

• Key massage business productivity KPIs remained stable: monthly visits per user stayed at 7.3, and daily treatments per therapist stayed at 10.3, with total user volume growing steadily to 103,955.
• As of period end, the company operates 423 at-home massage locations (79 direct, 344 franchise): 16 net new franchise locations were added, and 6 direct locations were closed for efficiency via consolidation, which is not considered a negative sign. The company operates 8 home-visit nursing locations (+1), 2 home-visit care locations (no change), 12 kanki locations (+4), and 11 medical response nursing facilities (+8), for a total of 456 locations across the company.
• The company's equity capital ratio fell to 17.5% due to required lease accounting for long-term care facilities, but 90% of the previously issued MS warrants had been exercised by late April, and the warrant exercise process is nearly complete.
• Compliance: The company has strengthened efforts to ensure appropriate insurance billing, tailoring visit frequency and staffing to each resident's individual condition rather than applying uniform rules. The company maintains a 100% external care manager ratio, which management says supports third-party oversight and appropriate compliant operations, and this policy will continue.
• Value proposition: The company's hospice facilities differentiate themselves by integrating the company's core acupuncture and massage therapy, offering robust recreational activities, providing high staffing levels, and focusing on physical pain management and emotional care to maximize residents' quality of life in their end stage of life, in partnership with the University of Tokyo Hospital.

• For the 2026 March full fiscal year, management forecasts 51.8% year-over-year total revenue growth to 11.513 billion yen, with a return to full-year operating profitability of 0.301 billion yen.
• By segment, revenue growth is forecast at 8.3% year-over-year for massage direct management, 24.5% year-over-year for massage franchise, and 165.8% year-over-year for the Medical Care business, which will be the main driver of overall company growth.
• Operating profit growth is forecast at 9% year-over-year for massage direct management, and 38.5% year-over-year for massage franchise. The Medical Care business is expected to remain in a net deficit overall, as the profitable kanki segment will be offset by ongoing losses from the still-investment-phase hospice segment.
• The company will continue pursuing its vision of supporting high-dependency patients from recovery through end-of-life care in home and facility settings, with a strategic focus on maximizing the time value of life for its users.

1. Massage Direct Management Business: Revenue of 3.965 billion yen, operating profit of 1.227 billion yen, accounting for 52.3% of total company revenue. It achieved 12.5% year-over-year revenue growth and 22.9% year-over-year operating profit growth.
2. Massage Franchise Business: Revenue of 1.025 billion yen, operating profit of 0.272 billion yen, accounting for 13.5% of total company revenue. It achieved 15.3% year-over-year revenue growth and 21.1% year-over-year operating profit growth.
3. Medical Care Business (new facility-based long-term care including hospice and kanki services): Revenue of 2.235 billion yen, operating loss of 0.62 billion yen, accounting for 29.5% of total company revenue. It achieved 154.4% year-over-year revenue growth. Half of the full-year operating loss came from performance delays against the medium-term management plan target, with hospice and kanki operations each missing the target by around 0.15 billion yen.
4. Other Business (including home-visit nursing): Revenue of 0.356 billion yen, operating profit of 0.025 billion yen, accounting for 4.7% of total company revenue.

Total company revenue for the 2025 March fiscal year was 7.582 billion yen, with an operating loss of 0.105 billion yen.

• Delays in hiring nurses and care workers for new medical care facilities can reduce service volumes, hurt revenue and billing, and increase operating losses beyond planned levels.
• New medical care facilities experience inherent temporary occupancy drops after opening, and uneven resident turnover (such as concentrated passings of high-need terminal patients) can create unexpected temporary dips in occupancy and revenue.
• New customer acquisition for the kanki segment has been slower than originally planned in the medium-term management plan, leading to missed profit targets.
• Facility-based long-term care operations require lease accounting that increases recorded assets and reduces the company's equity capital ratio, creating balance sheet pressure during the investment growth phase.
• Compliance risk related to insurance billing for home and facility care services, which requires ongoing investment in process oversight to maintain appropriate billing practices.

No substantive Q&A exchanges are included in the provided transcript.