GENOVA,Inc. Q1 FY2026 earnings call

• Corporate Mission & Business Structure

• GENOVA operates under the mission "Connect people and healthcare to build a healthy society", with two core existing businesses, plus the newly added dental distribution business via subsidiary ASANO.
• Medical Platform Business is centered on Medical DOC, a consumer-focused medical information media that connects patients to appropriate medical facilities, and addresses information gaps between patients and healthcare providers.
• Smart Clinic Business develops clinic automation digital transformation (DX) solutions to address staff shortages, eliminate unnecessary administrative work, reduce patient wait times, and improve overall operational efficiency, offering both hardware and software products that work synergistically with the Medical Platform business to provide end-to-end solutions for clinic clients from patient acquisition to operations.

• New Business Expansion & ASANO Integration

• GENOVA established subsidiary ASANO in April 2025 to acquire the core business of ADI.G, with operations launching July 1, 2025. ASANO provides logistics, store opening support, management support, and digital solutions for dental clinics, based on dental equipment, materials, and pharmaceutical distribution and SPD services.
• ASANO adds a new dental distribution business segment to the GENOVA group. GENOVA plans to leverage its strength in information and marketing paired with ASANO's logistics expertise to build an integrated, one-stop platform for dental clinic management that connects fragmented information and distribution channels across the dental industry.
• Three key synergies are expected from ASANO integration: 1) Cross-selling to maximize customer lifetime value by offering combined hardware, logistics, and IT solutions; 2) Strengthened healthcare DX through end-to-end support for clinic operations from both hardware and software sides; 3) Optimized sales structure by combining local and national coverage strengths to build a nationwide sales network. The company's long-term goal is to become the No.1 platform provider for the dental industry.
• The company has also newly entered the veterinary clinic segment this fiscal year, with plans to expand into the nursing care and pharmacy sectors in the near future.

• Product Development Updates

• In May 2025, the company launched a new art-designed waiting room monitor product in collaboration with teamLab, expanding its existing monitor product line for medical facilities.
• The medical appointment system SMARTOne was recently fully renovated: electronic medical record and receipt/claim system integrations expanded from 1 partner to 60 partners, covering over 90% of medical clinics, adding new map-based appointment flow and improved patient acquisition functionality, and enabling per-service customization. The company expects this renovation to drive sales growth starting from the third quarter.
• NOMOCa AI call continues to see delivery rate improvements, with the company targeting further product upgrades and the establishment of a stable revenue model for this product.
• The company is actively working to improve stagnant PV growth for Medical DOC through feature upgrades to increase media value and drive traffic growth.

• Organizational Updates

• At the June 2025 shareholder meeting, three new directors were appointed: one executive director and two outside directors. Two new departments, the Business Promotion Office and AI Solution Division, have been newly established.

• Shareholder Return Policy

• The company paid its first dividend this year, a total of 30 yen per share (10 yen regular dividend + 20 yen 20th anniversary special dividend). Moving forward, the 20 yen anniversary dividend will be converted to a regular dividend, setting a base regular dividend of 30 yen per share to avoid future dividend cuts. The company will proactively consider additional shareholder return measures including share buybacks based on stock price performance and investor input.

For the 2026 March fiscal year first quarter, total consolidated sales amounted to 1.86 billion yen, a 26.5% decrease year-over-year, with an operating loss of 0.17 billion yen, a 28.8% decrease year-over-year. Total new contract volume reached 1,048 units, a 34.6% decrease year-over-year.

1. Medical Platform Business: Sales of 1.06 billion yen, representing 57% of total first quarter revenue, a 35% decrease year-over-year. Contract volume and average contract price declined due to competitive pressure and stagnant page view (PV) growth, which forced the company to introduce discounted pricing plans.
2. Smart Clinic Business: Total sales of 0.68 billion yen, representing 36.6% of total first quarter revenue, an 11% decrease year-over-year. Within this segment:

• Hardware Services: New contracts totaled 91 units, with average selling prices declining slightly after the addition of new optional product sets. Sales growth was held back by post-campaign pullback and delayed workforce ramp-up of newly hired sales staff. NOMOCa-Desk remains the top-selling product in this category.
• Software Services: NOMOCa AI call, an AI phone automation solution launched in the prior period, has seen steady adoption growth, with delivery rates improving to 48%, though further improvements are targeted. Upgrades to NOMOCa AI chat are still in development and have not yet contributed to new orders.

• Full year 2026 March fiscal year consolidated guidance after including ASANO (9 months of ASANO results will be consolidated) targets total sales of 14.01 billion yen and operating profit of 1.36 billion yen, with the explicit goal of achieving consolidated full year net profitability this fiscal year. Over 90% of ASANO's sales come from its low-margin logistics business, with the remainder from DX solutions, so the combined group's gross margin will appear lower than GENOVA's standalone margin, but this is expected to improve as ASANO's DX business scales.
• The full year guidance uses conservative provisional estimates for goodwill and intangible asset valuations, which are still undetermined at the time of the call. Cross-selling synergies between GENOVA and ASANO are not included in the current guidance.
• ASANO is targeting a return to profitability in its first full year as a consolidated subsidiary, with near-term priority placed on stabilizing and turning around the business which saw a temporary decline after exiting civil rehabilitation. ASANO's DX business operates a recurring revenue model that is expected to bring stable sales and profit growth once it recovers.
• The company expects the upgraded SMARTOne to drive sales growth starting in the third quarter of the current fiscal year, and targets the launch of its new elderly healthcare initiative within the current fiscal year.

• Stagnant PV growth for the Medical DOC platform has persisted since the fourth quarter of the prior fiscal year, leading to slower contract growth, lower average contract pricing, and significant profit decline for the Medical Platform segment.
• The Smart Clinic segment has seen stagnant hardware sales and continued slow new contract growth for software products, limiting profit contribution from the segment.
• GENOVA added 50 new graduates and expanded mid-career hiring in prior quarters, and the new workforce has not yet reached full productivity, leading to higher temporary labor costs that contributed to the first quarter operating loss, the first deficit since the company listed.
• ASANO's business is still recovering from a post-civil rehabilitation temporary decline, and the turnaround may take longer than expected to deliver the projected profitability.
• Goodwill and intangible asset valuations for the ASANO acquisition are still undetermined, which could lead to future adjustments to the projected financial results.

No question and answer section was included in the provided transcript.