7129.T

• Overall Consolidated Performance

  • Total consolidated third quarter revenue reached 18.407 billion yen, an increase of 707 million yen (4.0%) year-over-year; Operating profit reached 466 million yen, an increase of 53 million yen (12.9%) year-over-year; Quarterly net income resulted in a 38 million yen deficit due to a one-time impairment charge.
  • Revenue growth was driven by increased prescription volumes at new stores in the Pharmaceutical Business, and the official price increase for fiscal 2025 implemented by the Japanese Agency for Children and Families in the Childcare Support Business.
  • Overall profit growth was driven by gains in the Childcare Support and Nursing Care Businesses, offsetting a profit decline in the Pharmaceutical Business.

• Pharmaceutical Business Operational Highlights

  • Total prescription volumes increased 5.3% year-over-year (7,349 more prescriptions than the prior year quarter), with steady growth at new medical mall-style pharmacies, while volumes declined at large hospital-front pharmacies due to one clinic closure and reverse referrals from university hospitals.
  • Average prescription price decreased 2.3% year-over-year to 13,428 yen (84 yen lower than prior year), driven by the impact of April drug price revisions and a higher share of lower-price medical mall-style pharmacies compared to hospital-front locations. While technical fee per prescription increased due to efforts to earn additional adjustment fees, drug prices fell enough to offset this gain.
  • Cost of goods sold ratio increased 0.4 percentage points year-over-year due to rising pharmaceutical procurement costs; three new store openings generated upfront pre-operating costs that also pressured profits.

• Childcare Support Business Operational Highlights

  • Total number of children reached 9,274 in the third quarter, an increase of 104 year-over-year: 161 additional children at newly opened licensed nurseries, offset by a 57 child decrease at existing nurseries due to broader demographic declining birthrate trends.
  • Total number of nursery facilities stood at 56 at quarter end, a net increase of 1 facility year-over-year.
  • While labor costs increased due to improved compensation for nursery workers, proper staff sizing optimized operations and lifted overall segment profit margin.

• Nursing Care Business Operational Highlights

  • Third quarter home-visit care user volume reached 17,140, an increase of 949 users (5.9%) year-over-year; occupancy rate reached 78.7%, an increase of 4.3 percentage points year-over-year, with growth driven largely by co-located facilities attached to service-oriented senior housing.
  • Occupancy rate for service-oriented senior housing maintained a high 95.3%, an increase of 0.3 percentage points year-over-year, and the hospice-capable home opened in August 2023 has maintained stable occupancy.
  • The transfer of unprofitable facilities completed last year significantly improved segment profitability, lifting the segment profit margin by 2.1 percentage points year-over-year.

• Full year total revenue is upwardly revised from the original May 2025 forecast to 24.6 billion yen, an increase of 760 million yen from the prior forecast. The revision reflects stronger-than-expected prescription volume growth (including growth in high-value drug prescriptions) in the Pharmaceutical Business, and incorporates the full impact of the official price increase for the Childcare Support Business.
• Full year operating profit is upwardly revised to 640 million yen, an increase of 170 million yen from the original forecast. Full year ordinary income is upwardly revised to 630 million yen, an increase of 190 million yen from the original forecast. These upward revisions reflect improved profitability from proper staffing in the Childcare Support Business and stronger-than-expected profitability improvements centered on the hospice-capable home in the Nursing Care Business, offsetting ongoing profit headwinds in the Pharmaceutical Business.
• Full year net income guidance is maintained at the original 250 million yen forecast, despite the 370 million yen impairment charge recorded in the third quarter, as the upward revisions to revenue, operating profit, and ordinary income offset the impact of the impairment charge.
• The overall full year outlook of higher revenue and lower net profit compared to the prior fiscal year remains unchanged; after revisions, operating profit and ordinary income are now projected to be roughly on par with the prior fiscal year level.
• Management confirmed it will continue to build revenue and profit steadily through the final quarter, and will prioritize achieving the revised full year guidance.

Pharmaceutical Business: Revenue was 7.399 billion yen, an increase of 228 million yen (3.2%) year-over-year; Segment profit was 336 million yen, a decrease of 62 million yen (15.6%) year-over-year, contributing 40.1% of total consolidated revenue. Childcare Support Business: Revenue was 7.566 billion yen, an increase of 429 million yen (6.0%) year-over-year; Segment profit was 818 million yen, an increase of 93 million yen (12.8%) year-over-year, contributing 41.1% of total consolidated revenue. Nursing Care Business: Revenue was 2.667 billion yen, a decrease of 13 million yen (0.5%) year-over-year; Segment profit was 65 million yen, an increase of 55 million yen (547.4%) year-over-year, contributing 14.5% of total consolidated revenue. Total consolidated third quarter revenue was 18.407 billion yen, with an aggregate operating profit of 466 million yen.

• A 370 million yen impairment loss was recorded in the third quarter for some Pharmaceutical Business locations, driven by lower profitability resulting from delayed readiness for patient intake at a large partnering hospital that serves as the main prescription source for these locations. This impairment led to a 38 million yen net loss for the third quarter.
• Existing childcare facilities are experiencing declining enrollment due to broad demographic declining birthrate trends in Japan.
• Pharmaceutical Business profitability faces ongoing headwinds from April 2025 drug price revisions, rising pharmaceutical procurement costs, and upfront costs associated with new store openings.

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