Japan Lifeline Co.,Ltd. Q2 FY2026 earnings call

Overall Financial Results

• Nihon Lifeline achieved revenue growth and profit growth in H1 FY2026/3, with all top- and bottom-line metrics hitting all-time record highs for the first half period:
  • Total revenue: 29.285 billion yen, +4.6% YoY
  • Operating profit: 6.62 billion yen, +5.7% YoY
  • Interim net profit: 4.774 billion yen, +7.7% YoY
• Compared to the initial full-year guidance, all three key metrics hit roughly 50% progress by H1, with operating profit and interim net profit seeing slightly better progress due to timing differences in R&D expense recognition.

Key Operational Updates

• A collaboration and joint development agreement with Heartseed for a regenerative medicine catheter delivery system was announced in September 2025. The system supports 3D mapping for visual confirmation of catheter position and includes a mechanism to confirm when the injection needle outlet reaches the myocardium. A clinical trial application was submitted in October 2025, and development is progressing on schedule.
• Global expansion is progressing steadily: overseas sales ratio increased 0.6pp to 2.6% YoY. The company now has sales agency agreements with 23 countries, with commercial launch completed in 10 countries. Further growth is expected from expansion into Middle Eastern markets.
• Corporate financial metrics: In-house product ratio decreased 2.5pp to 55.1% YoY, driven by faster growth of sourced cerebrovascular and hemostasis products and PFA-related declines in in-house esophageal monitoring catheters. Earnings per share saw a ~10% YoY increase, driven by higher net profit and a reduction in average outstanding shares from share repurchases in May 2024.

Operating Profit Change Breakdown

• Core product volume growth contributed +913 million yen to profit, new area volume growth contributed +295 million yen. Offsetting factors included PFA-related volume declines (which reduced profit by 563 million yen) and official price revision cutting profit by 90 million yen. Net profit contribution from cost of sales factors was +593 million yen.
• Selling, general and administrative (SG&A) expenses increased by 234 million yen net: higher payroll from wage increases, expanded R&D for PFA-related programs, and higher sales-related expenses from expanded field activities reduced total profit by 639 million yen, offset by a 400 million yen one-time profit from the reversal of bad debt allowance following partial recovery of previously written-off receivables.

• Rhythm Devices: Core product S-ICD delivered a 9.3% YoY revenue increase, supported by growing prophylactic implantation cases and stronger-than-expected replacement demand. Pacemaker-related products saw a 19% YoY revenue decrease, pressured by increased adoption of leadless pacemakers and 2 months of official price revision impact; newly added lead management products inherited from Philips contributed positively to revenue. This was the only segment with a YoY revenue decline.
• EP/Ablation: Overall grew on the back of a 10% YoY increase in atrial fibrillation (AF) cases. Core product BeeAT grew revenue 6.5% YoY, with the slight gap between its growth and AF case growth attributed to new competitor entry and targeted price adjustments in the period. Hemostasis devices continued strong penetration across many facilities. PFA adoption caused a sharp revenue decline for esophageal monitoring catheters and other related products. Management views further PFA adoption as a tailwind for its core growth products including defibrillation catheters and hemostasis devices.
• Cardiovascular: Core product Frozen Elephant Trunk (FET) led segment growth, with a slight Q2 case decline viewed as temporary. Artificial grafts delivered a 7% YoY revenue increase, pointing to broader market activation. Abdominal stent grafts saw a slight revenue decline amid a stagnant overall market. The segment also launched sales of sensor-equipped guidewires for TAVI as preparation for future Meril TAVI entry into the market.
• Cerebrovascular: This segment saw very strong growth led by thrombus aspiration catheters, which nearly doubled revenue YoY, driven by a newly launched peripheral vascular model released in Q1. The company's estimated market share reached 20%, ranking it 3rd in the industry. Embolization coils and stent retrievers also continued steady growth.
• Gastroenterology: Biliary tube stents, endoscopic guidewires, and gastrointestinal stents all achieved solid revenue growth. The transfer of liver cancer ablation needle rights to Terumo caused a 23% YoY revenue decline, pulling down overall segment growth, but management views the core portfolio as on a steady growth trajectory.
• Combined new areas (cerebrovascular + gastroenterology): Delivered 38.4% YoY revenue growth overall.

• The overall H1 performance is in line with or slightly above initial guidance, with full-year progress tracking on schedule.
• Hemostasis devices and cerebrovascular products are tracking well above the initial full-year guidance, with faster-than-expected adoption and product launches driving the upside.
• Gastroenterology has a mixed performance: some products are above guidance while others miss initial targets, with no full upward revision expected for the segment at this point.
• S-ICD is expected to continue steady growth, supported by ongoing market expansion of prophylactic implantation.
• BeeAT is expected to grow in line with overall AF case volume growth; management does not expect its market penetration rate to increase further from current levels, and will focus on maintaining market share via product differentiation (including its unique femoral vein approach offering).
• Further PFA adoption is expected to drive overall AF case growth, particularly among mid-sized facilities which account for ~70% of total case volume, and this will benefit the company's core EP products. Management is monitoring this trend closely.
• For abdominal stent grafts, management expects the stagnant market trend to continue into the second half, and will focus on expanding market share to offset the market headwind.

• PFA adoption in the EP/ablation space is reducing sales of the company's esophageal monitoring catheters and other traditional EP products, creating a drag on overall revenue and in-house product ratio.
• The June 2024 official medical price revision created a 90 million yen negative impact on gross profit in H1, with full-year effects expected to pressure margins.
• Rising wages have increased personnel costs, and expanded R&D activities for PFA and new products have increased R&D expenditures, creating upward pressure on SG&A expenses and margin compression.
• The abdominal aortic stent graft market is facing stagnant overall demand, which is expected to continue into the second half of the fiscal year.
• Approximately 100 million yen in previously written-off bad debt remains outstanding, with recovery not yet included in guidance and remaining uncertain.

Q: Are hemostasis devices, cerebrovascular, and gastroenterology on track to outperform original guidance in H2, and what is driving the upside for hemostasis and cerebrovascular? Is there any risk of supply shortage? / A: Hemostasis devices and cerebrovascular are indeed outperforming original guidance, while gastroenterology has a mixed outcome with some products beating targets and others missing. For cerebrovascular, a very thin 3 French thrombus aspiration catheter launched earlier than planned, which is almost a one-of-a-kind product driving rapid segment expansion; additionally, a marked stent retriever (a previously cited product weakness) received approval earlier than expected and will launch in H2. For hemostasis devices, penetration is progressing much faster than expected because clinicians recognize the product's high value for both patients and providers after first use. The company confirmed it has sufficient inventory and no supply shortage is expected.

Q: If PFA penetration continues to increase, how will it affect BeeAT and hemostasis devices long-term, and are PFA-driven case volume increases already visible? / A: Hemostasis devices have already outperformed initial growth expectations, and are now at a solid penetration level with limited room for further sharp growth from adoption gains. For BeeAT, management expects penetration rate to stay stable at current levels, so it will grow in line with overall PFA-driven AF case volume rather than gaining additional share. PFA's procedure time reduction effect is already starting to drive case volume growth, particularly at mid-sized facilities (which account for 70% of total AF cases) that have unused operating room capacity; large facilities are already at capacity so have less room to grow. Management will continue monitoring this trend closely.

Q: Was the 200 million yen bad debt recovery in H1 expected at the start of the period, and what about the remaining balance? / A: The 200 million yen recovery was included in the initial guidance forecast at the start of the fiscal year. Approximately 100 million yen in bad debt remains uncollected, which is not included in current guidance, but the company will continue pursuing recovery efforts going forward.

Q: What is the outlook for BeeAT growth amid rising PFA adoption, and how will the company maintain share against competitors? / A: The slight growth difference between BeeAT and overall PFA case growth in H1 was due to competitor entry that did not exist in the prior year. BeeAT's utilization rate has remained stable since PFA adoption started, so it will continue growing in line with overall case volume. The company is actively pushing adoption of its differentiated femoral vein approach BeeAT product, which has strong product performance to help maintain and defend market share against competitors.