Medley : Presentation Material for FY2020 Q2 Financial Results

Presentation Material for

FY2020 Q2 Financial Results

Medley, Inc.

August 14, 2020

Disclaimer

In preparing these materials, Medley, Inc. ("the Company") relies upon and assumes the accuracy and completeness of all available information. However, the Company make no

representations or warranties of any kind, express or implied, about the completeness and accuracy. This presentation may contain future assumptions, prospects and forecasts

based on planning, but these forward-looking statements are based on the information that is currently available to us, and on certain assumptions that we assume to be

reasonable, but the Company does not promise to achieve these. Major differences may occur between the forecast and the actual performance, including changes in economic

conditions, consumer needs and user preferences; competition with other companies; changes in laws, regulations and others; and a number of other future factors. Therefore, the

actual performance announced may vary depending on these various factors. In addition, the Company has no obligation to revise or publish the future prospects posted on this site.

Copyright© Medley, Inc . ALL RIGHTS RESERVED .	2

1. Financial Highlights
2. FY2020 Q2 Results
3. FY2020 Forecast
4. Appendix

3

Financial Highlights

FY2020 Q2

Results

FY2020

Forecast

• Steady progress toward our earnings targets
• Maintained high sales growth rate and continued aggressive investment in growth
• • Sales：JPY 2,315 million (YoY：+42%)
  • EBITDA：JPY 699 million (YoY：+28%)
  • • Acquisition cost of EMR assets (JPY 130mm) was posted as one-time cost (see p9)
• Continue to make progress toward our medium- and long-term goals even
  as we face COVID-19
• Leave our FY2020 full-year forecast unchanged
• • Sales：JPY6,600~6,900million (YoY：+39~45%)
  • EBITDA：JPY500~800million (EBITDA margin：7~12%)
• Strengthen efforts to achieve our medium-term targets while responding to
  changes in the operating environment caused by the COVID-19
• • Respond to increasing demand in our telemedicine systems business
  • Launch online drug administration guidance support system business
  • Established a subsidiary to provide digitalization services to pharmaceutical
    companies and medical device manufacturers

Copyright© Medley, Inc . ALL RIGHTS RESERVED .	4

1. Financial Highlights
2. FY2020 Q2 Results
3. FY2020 Forecast
4. Appendix

5

Summary of Consolidated FY2020 Q2 Results

JPY mm	FY2019 Q2	FY2020 Q2	YoY growth
Sales	1,630	2,315	+42%
Gross Profit	1,213	1,804	+49%
EBITDA	547	699	+28%
Operating Profit	525	663	+26%
Ordinary Profit	525	665	+27%

Profit Attributable to

525

593

+13%

Owners of Parent

Copyright© Medley, Inc . ALL RIGHTS RESERVED .	6

Companywide Steady Progress Toward our Earnings Forecast

Steady progress toward our goals: H1 FY2020 sales represented 52% progress toward the high end of our FY2020 forecast range.

Aggregated Quarterly Sales

(JPY mm)

Q1 Q2 Q3 Q4

Upper bound of

H1

forecast range

3,564

6,900

(1)

(Progress: 52% )

FY20	1,249	2,315

2,502

(Progress: 53%)

4,765

FY19	871	1,630	1,173	1,089

			1,562	2,933
			(Progress: 53%)
FY18	523	1,039	693	676

(1) Progress toward JPY 6,900 million, which is the high end of our FY2020 forecast range of JPY 6,600 million to JPY 6,900 million

Copyright© Medley, Inc . ALL RIGHTS RESERVED .	7

Companywide Maintained High Sales Growth Rate

Q2 FY2020 sales increased by 42% YoY, trending in line with our forecast range. While the Recruitment Platform Business

was impacted by a bottleneck resulting from the COVID-19, our Medical Platform Business has seen an increase in the

number of medical institutions using our telemedicine systems, resulting in strong growth in overall sales.

(1)

Quarterly Sales

(JPY mm)

New Services

Medical Platform Recruitment Platform

YoY
+42%
	2,315	YoY
	- 21%
	21
	368	+238%
1,630
27
108
1,173	1,249
30
1,089

	530
	7
289	99
5
67	423
216
Q1'17	Q2'17

423	469
4
4
108
104
313	356
Q3'17	Q4'17

	1,039
	5
	98	693
523		5
	86
7	935
92
423		601
Q1'18	Q2'18	Q3'18

676

10

74

591

Q4'18

				29		33		134
871			186
			133				1,925	+29%
	26
108		1,494
			956		923			1,084
	736
Q1'19	Q2'19	Q3'19	Q4'19	Q1'20	Q2'20

(1) The Recruitment Platform Business posts sales based on the hire dates of new employees.

Copyright© Medley, Inc . ALL RIGHTS RESERVED .	8

Continued Aggressive Investment in Growth Funded by Profitable

Companywide

Businesses

In Q2 FY2020, we continued aggressive investment in growth funded by profitable businesses and earnings trended in line

with our forecast. Adjusted for one-time costs such as those associated with the acquisition of the EMR assets, EBITDA grew

by 51% YoY (see p10).

Quarterly EBITDA

(JPY mm)

(1)

Corporate Expenses

New Services

Medical Platform Recruitment Platform

547

699

	120
-39	214
50	-14
-22
-66	-79
-0.6	-0.3

7	-42	-62
7	0.2
107
96	95
-95	-23	-39
-115	-129
-0.8
	-1

301

543

-91

-9

-141

-77	-17
-209
219	270
154
-97	-80
-114
-26	-24
-34
-172	-182
	-214

903	-35
			-244
		398
				283
-117
	-169	One-time	-145
	Cost 100(2)
-25
						-15
-213		-22
	-242
					-366

			1,178
-177
323
-136			-115
	-16			-24
		-338
	-348
			一時費用(2)
			-100

One-time

(3)

Cost 130

Earnings trended in

line with our forecast

while continuing

investment in growth

(details on next page)

Q1'17

Q2'17

Q3'17

Q4'17

Q1'18

Q2'18

Q3'18

Q4'18

Q1'19

1. Total of companywide expenses not allocated to segments and intersegment eliminations
2. One-timecost (JPY 100 mm) for acquiring a source code to add a new function to the Medical Platform
3. One-timecost (JPY 130 mm) for acquiring EMR assets from another company

Q2'19

Q3'19

Q4'19

Q1'20

Q2'20

Copyright© Medley, Inc . ALL RIGHTS RESERVED .	9

Companywide Breakdown of Investments for Mid- to Long-term Growth

EBITDA margin for Medical Platform Business improved considerably as the EBITDA turned positive when adjusted for the

one-time expense (JPY 130 million) associated with the acquisition of the EMR assets of another company. Companywide

costs increased YoY on an increase in the number of corporate employees, but the ratio of companywide costs to sales

remained steady.

Q2 EBITDA

Main factors contributing to change in Q2 EBITDA margin

(JPY mm)

(1)

Corporate Expenses

New Services

Medical Platform

Recruitment Platform

547

903

-117

-25

-213

699

1,178

-115	One-time Cost(2)
-24	130
-338

Segment	Q2 FY19	Q2 FY20	Main factors
			• Decline in ratio of sales to advertising costs targeting
Recruitment	60.5%	61.2%	acquisition of medical industry professionals as members
- Q2 FY19: 16.6% → Q2 FY20: 15.3%
PF
		- FY20 advertising costs (digital ads + TV commercials)
			concentrated in Q1
Medical PF	-113.9%	-31.3%	• Strong telemedicine sales
• Acquisition cost of EMR assets (JPY 130 mm)

Main factors contributing to increase in Corporate Expenses

(JPY mm) *figures in parentheses show each cost to quarterly sales ratio

Cost item	Q2 FY19	Q2 FY20	Main factors
Personnel	85	155	• Expansion of corporate planning and hiring teams
- Number of corporate employees:
costs	(5.2%)	(6.7%)
27 in Q2 FY19 → 45 in Q2 FY20
Rents	43	61	• Office expansion ahead of increase in number of employees
(Q4 FY19)
(2.7%)	(2.7%)
	- 306 in Q2 FY19 → 451 in Q2 FY20
Hiring costs	25	42	• Progress made in companywide hiring (especially hiring to
(1.6%)	(1.8%)	meet demand in the Medical Platform Business)
Commission	38	36	• Decline in M&A-related costs and professional business
fees	(2.4%)	(1.6%)	outsourcing costs

Q2'19 Q2'20

20	42	• Size-based business tax associated with capital increase:
Other costs	(1.9%)	JPY 13mm
(1.2%)

1. Total of companywide expenses not allocated to segments and intersegment eliminations
2. One-timecost (JPY 130 mm) for acquiring EMR assets from another company

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 10

Companywide (Repost) Acquisition of EMR Assets

On May 1, we entered agreements(1) with Life Sciences Computing Corporation ("LSC") to acquire its EMR assets with

customer accounts and its license for PACS system. We are currently working with LSC to support the above mentioned

customers that we will take on and we plan to leverage these assets to increase the number of customers using our medical

platform and improve ARPU (minor near-term earnings impact).

Assets to be acquired: EMR assets and related customer accounts

Details regarding assets	• Mainly for medical clinics
to be acquired	• Including cloud-based and on-premise assets
Number of customer	Approx. 200
accounts to be acquired	(one of the largest pools of cloud- based EMR accounts in Japan)
Acquisition price	JPY110mm
(to be posted as a one-time sales promotion expenses)

Licensed asset: PACS technology

Purpose of acquisition

EMR Telemedicine

	Acquisition of roughly
	200 customers
Expansion	(We plan a phased transfer to
CLINICS EMR after expansion of
of our	CLINICS EMR functionality.)
customer
base

Overview of PACS

Licensed fee

• Data archiving system for images produced by
  imaging equipment (such as CT and MRI scanners)
• Used by large-scale internal medicine and orthopedic
  surgery departments, where compatibility with EMR
  is important.

JPY20mm

(to be posted as a one-time software expense)

Development and sale of
products featuring	Cross selling of CLINICS
integrated PACS and	Telemedicine to
EMR functions	acquired customers

Development of new customers

including orthopedic surgery

ARPU

departments

Compatibility between EMR and PACS

Imaging equipment

EMR

PACS

(such as CT and

MRI scanners)

Image display

Image archiving

Image capture

(1) Contract scheduled to become effective on June 1, 2020

improvem

ent

Sale of products featuring

integrated functions to existing

customers

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 11

Companywide Steady Growth in Number of Customers and ARPU

In Q2 FY2020, we have continued to aggressively invest in growth funded by profitable businesses. ARPU increases sharply in

every Q2 as a result of the concentration of sales during the time period.

(1) (2)	(3)
Number of Customer Offices	ARPU

(thousand)	199		(JPY)						11,695
	193		Medical Platform
	183		Recruitment Platform
								1,878
	176						9,912
	166
	157						673
	149
	142				7,994
	134	×
	125			759
	119					6,684		6,481
104
						5,889
100						1,091
		5,398		4,995	5,517	742	716
			1,025			706			9,817
					4,577
			4,1054,1734,235	626	514	9,239
				763
			1,026	7,235
			975
						4,811	5,593	5,146	5,764
			4,373		4,368
			3,472	4,064
			3,079
			3,198
Q2'17Q3'17Q4'17Q1'18Q2'18Q3'18Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20		Q2'17Q3'17Q4'17Q1'18Q2'18Q3'18Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20

(1)Total number of customers in the Recruitment Platform and Medical Platform businesses.

Please note, however, that since 4Q FY2019, customers using both platforms have been counted as a

single customer account.

(2)Starting in Q2 FY2020, the number of customer offices served includes customers acquired from Life

Sciences Computing Corporation.

(3)ARPU = Quarterly sales / Average number of business locations (total for Recruitment Platform and

Medical Platform businesses)

ARPU for each platform = Quarterly sales of each platform / Total number of customers in the

Recruitment Platform and Medical Platform businesses Please note, however, that since 4Q FY2019,

customers using both platforms have been counted as a single customer account.

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 12

Companywide Strong Financial Base for Further Business Expansion

While keeping a strong financial position, we increased lines of credit and borrowings to take advantage of operating funds

and investment opportunities. (capital ratio: 61%, D/E ratio: 0.34x).

B/S as of the end of March 2020

(JPY mm)

Cash raised from LOC		Untapped LOC 400

	Debt
	912
	Other debts
Cash and	972
deposits
3,997
	Net assets
	3,164
Other assets
1,051

B/S as of the end of June 2020

(JPY mm)

Cash raised from LOC		Untapped LOC 850

Debt
1,360
Other debts
1,236
Cash and
deposits
5,480
Net assets
4,054
Other assets
1,171

Make appropriate use of debt whilst monitoring cost of capital

Secure more LOC and increase borrowing to take advantage of business opportunities

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 13

Companywide Institutional Investor Ownership Ratio Rose to 45%

Since our listing, we have conducted proactive IR activities designed to attract long-term investors. As a result of these efforts, our ratio of institutional investor ownership (mainly foreign institutional investors) rose from 30% to 45% over a period of six months. We will continue to endeavor to provide robust disclosure that helps both institutional and individual long-term investors make investment decisions.

As of December 31, 2019

All institutional

investors

30%

Foreign

institutional

investors

Executives and

19%

employees

38% Japanese

institutional investors

10%

Individual

investors, Others

As of June 30, 2020

All institutional

investors

45%

Foreign

institutional

Executives and

investors

employees

35%

39%

6 months

Japanese

institutional

Individual

investors

investors, Others

33%

16%

11%

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 14

① Recruitment Platform

15

Recruitment

Platform

Hiring Process Bottleneck Eliminated as of June

While we saw slow growth owing to the impact of delays in hiring interviews and hiring postponements resulting from the

promulgation of the state of emergency in response to the spread of COVID-19, after the full lifting of the state of emergency

on May 25, we returned to a high-growth trend.

Impact of COVID-19

Transition of bottlenecks (YoY)

Job

Opening/

Application

Interview

No major change in hiring demand from customers or

job seeker sentiment regarding changing jobs

Some companies in the nursing care industry have

suspended hiring activities

Arranging interviews with

some customers has become

more challenging

Continued response

to remove bottlenecks

Declaration of	Full lifting of the
State of
Emergency	declaration
(4/7)	(5/25)
▼	▼
+60%
60%	Number of
	interviews

Number of

40%+40%

hires

20%+20%

Some customers have pushed

Employment

back hiring dates

0%0%

Jan Feb Mar Apr May Jun

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 16

Recruitment

Platform

Continued Growth in Number of Customers on Schedule

While we saw an impact from the COVID-19 in Q2 FY2020, the number of customer offices served trended in line with our

forecast and we currently have service contracts with 198k.

	YoY
Number of Customer Offices	+33k（+20%）	Current Customer Coverage Ratio
(thousand)
	198
	165
			All medical providers
			(1)
			1,106k
			(medical facilities, nursing cares,
			pharmacies, kindergarten, beauty/
			healthcare service providers, etc.)
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2	(1)	Ministry of Health, Labour and Welfare statistics

approx. 18%

(198k)

Medical：17k

Pharmacy：41k

Dental：15k

Nursing Care：83k

Others：41k

FY15

FY16

FY17

FY18

FY19

FY20

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 17

Recruitment

Platform

Accelerate Direct Recruiting with Expansion of the Pool of

Registered Workers

We think proactive recruitment methods are effective for hiring medical and healthcare professionals. In Q2 FY2020, we saw

a steady increase in medical industry professional members. While there was a temporary decline in the use of scouting

functions by customer offices, usage recovered starting in June.

YoY	YoY
Number of Registered Workers	Number of Scouting Messages

(thousand)				+50%	(thousand)				+17%
					719
				478							429
										366	(YoY)
											June
											+30.7%
											May
											+8.0%
											April
											+12.6%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2	Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
FY15	FY16	FY17	FY18	FY19	FY20	FY15	FY16	FY17	FY18	FY19	FY20

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 18

Recruitment

Platform

Building a Stable Customer Base with Many Repeat Customers

We are building a stable customer base by encouraging customers to become repeat users of JobMedley. Recently acquired

customers are making extensive use of our scouting functions. This has boosted the ratio of applicants per job offering and

contributed to sales growth.

(1)

Sales by Customer Acquisition Year

2020 2019

2018 2017

2016

2015

2014

2013

2012 2011

2010 2009

2014/07

2014/12

2015/05

2015/10

2016/03

2016/08

2017/01

2017/06

2017/11

2018/04

2018/09

2019/02

2019/07

2019/12

2020/05

(1) Based on per-customer monthly orders/sales value data	Copyright© Medley, Inc . ALL RIGHTS RESERVED .	19

Hospitals/

Medical clinics

SaaS

Dental

Pharmacies

clinics

SaaS

SaaS

• Medical Platform

Patients

Nursing and

Life science

welfare

companies

facilities

20

Medical	Strong Results in Telemedicine, Number of New Customers Rising
Platform

In Q2 FY2020, the number of medical institutions using our services increased greatly owing to increased adoption of

telemedicine. We had expected a decline in EMR sales resulting from the declining number of new clinic openings due to the

COVID-19. However, the sales remained strong. The number of medical institutions does not include pharmacies with advance

applications (see p32).

YoY

Number of Customer Offices	(1)(2)		Quarterly Sales
+100%
(accounts)			(JPY mm)

368

2,173

NaCl Medical Sales

		Start of impact from
		COVID-19 (Feb. 2020)
Decision on revision of	1,271		Reductionoflowerbound	Consolidation
	fortelemedicinesystem
medical service fees	1,187		usagefees		ofNaCl
(Mar. 2018)	1,176			Medical 186
1,087		Decision on		Launchof
		1,032		revision of		salesofEMR
		972		medical
		882			products		134
798	803		service fees			133
667			104	108	98	108	108
581			99	92
443					86	74
Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20	Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20

1. Number of customer offices = number of medical intuitions that have begun using our systems and have not cancelled or discontinued their contracts; customers using multiple systems counted as a single customer account

(2) Starting in Q2 FY2020, the number of customer offices served includes customers acquired from Life	Copyright© Medley, Inc . ALL RIGHTS RESERVED .	21
Sciences Computing Corporation

Medical

Platform

Simultaneous Implementation of Measures to Expand Range of

Targeted Customers, Improve ARPU, and Streamline Operations

In Q2 FY2020, we implemented a number of measures to boost the medium- to long-term growth and profitability of our

Medical Platform Business. These include expanding our target customers, improving ARPU, and streamlining measures.

Main Measures Implemented in Q2 2020

Expansion of

targeted

Telemedicine

Strengthening of sales systems

EMROthers

Support worker's accident compensation		C
	Launch of online drug administration
and mandatory vehicle liability insurance		support system

customers

Improvement

in ARPU

Improved dissemination of information

on various types of public subsidies

A

Utilization promotion

B

Participated in

Acquisition of EMR assets of

another company

Sales of supporting systems

Improved dissemination of information on

various types of public subsidies

a Ministry of Health, Labour and Welfare study

investigating the feasibility of telemedicine

Streamlining

Improved device compatibility

Improvement of

implementation process

Optimized compatibility with

ORCA (reduced costs)

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 22

Medical

Platform

Continued Use of Telemedicine after the Lifting of the State

A：

of Emergency

Even after the lifting of the state of emergency, many patients are continuing to use telemedicine not only for their initial

examination, but for follow-up examinations. Telemedicine is steadily becoming part of people's daily lives. We will continue

to promote the appropriate use of telemedicine by medical institutions and patients.

Number of follow-up examinations using CLINICS telemedicine system

Full lifting of the declaration

(weekly)

(5/25)

Declaration of

State of Emergency

(4/7)

1/5

1/19

2/2

2/16

3/1

3/15

3/29

4/12

4/26

5/10

5/24

6/7

6/21

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 23

Medical

Platform

The CLINICS Telemedicine System has been Well

A：

Received by Patients

Although other companies have also launched telemedicine apps, our CLINICS app is consistently at the top of the rankings

and we believe it the first choice of patients.

App rankings in the medical category (telemedicine apps only)(1)

Store App

Play Google

1st

CLINICS

App A

50th

App B

100th

App C

150th

App D

4/1 4/5 4/9 4/13 4/17 4/21 4/25 4/29 5/3 5/7 5/11 5/15 5/19 5/23 5/27 5/31 6/4 6/8 6/12 6/16 6/20 6/24 6/28

1st

CLINICS

App A

50th

App B

100th

App C

App D

150th

4/1 4/5 4/9 4/13 4/17 4/21 4/25 4/29 5/3 5/7 5/11 5/15 5/19 5/23 5/27 5/31 6/4 6/8 6/12 6/16 6/20 6/24 6/28

(1) Comparison among telemedicine apps which cover insured medical treatment; Source: App Annie	Copyright© Medley, Inc . ALL RIGHTS RESERVED .	24

Medical

Platform

Participate in a Ministry of Health, Labour and Welfare Study

B：

Investigating the Feasibility of Telemedicine

We have been working with the Ministry of Health, Labour and Welfare (MHLW) on a research project that studies the

future of telemedicine medical fees. Medley, along with Juntendo University and medical institutions using CLINICS are

contributing to a study on telemedicine, of which there are very few.

(1)

Overview of the research

Summary of the research

Principal research organization	Research		• Investigation of the need for in-person examinations once
	results
Juntendo University			every three months for patients receiving telemedicine
			MHLW
Contributing research organization				Purpose	treatment for hypertension as required in medical fee
Medley and others					calculation guidelines

Subsidy

Blood pressure data

etc.

Contributing medical

institutions

(users of the CLINICS telemedicine

system)

In-person examinations

Telemedicine

• Production of data to be used when considering the future of
  medical fees
• Hypertension is a lifestyle disease that can cause death if it
  is prolonged or progresses
• The number of aged patients who have difficulty traveling to
  hospitals is on an uptrend

Background • One possible solution to this issue is the use of telemedicine

• However, under the current Japanese healthcare
  insurance system, patients are required to have an in-
  person medical examination once every three months

Patients with high blood

pressure

(1) Source: The research plan, partially modified

• • Studies on the efficacy of telemedicine are rare
• Improved treatment continuation rates may prevent disease
  progression

Significance

• Telemedicine can reduce the mental and physical burden on
  patients and their families

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 25

Medical

Platform

Launch of Online Drug Administration Guidance Support

C：

System Business

In April 2020, we decided to develop a service pharmacies called Pharms. Through integration with existing telemedicine

services, we can provide patients with a full end-to-end online experience from treatment to online drug administration

guidance.

Patients

Synergies

Prescription	1	Full end-to-end online	3	4	Shipment of
experience from	drugs
2
data sent	Telemedicine

Online Drug

treatment to online drug

Administration

administration guidance

Guidance

Hospitals/

2 Pharmacies

Medical Clinics

Prescription sent

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 26

1. Financial Highlights
2. FY2020 Q2 Results
3. FY2020 Forecast
4. Appendix

27

Continued Progress Toward our Medium- and Long-term Goals,

Even Amid COVID-19

Our management policy is to maximize long-term free cash flow, and aim to maintain high sales growth by increasing the value

provided to our customers. We continue to implement our plans, even amid COVID-19,while giving top priority to human life.

Long-term

Policy

Medium-term

Policy

Maximize Long-term Free Cash Flow

Maintain High Sales Growth

(Expand Sources of Free Cash Flow)

Primary		×	Improve ARPU
Maximize Number of Customers	(Increase utilization ratio / Expand
KPIs
	product lineup)

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 28

No Changes to Medium-term Targets or FY2020 Earnings Forecast

Taking into consideration steady results as of end-H1 and our cautious assessment regarding the future impact of the

COVID-19,we leave our full-yearforecast and medium-termtargets (announced on February 14, 2020) unchanged. We will

also strengthen our efforts to reach our medium-term goals ahead of schedule.

						(billion yen)
Progress toward Our Mid-term Sales Target	FY2025	Year	CAGR30%	Sales	Actual
		JPY 23 billion			Forecast	Sales
Full-year FY2020 forecast: Unchanged	Reach our target earlier	2019	4.7	4.6	4.7
Sales	JPY 6.6～6.9 bn		2020	6.1	6.6~6.9
	(CAGR: +39~45%)

EBITDA	JPY 500～800mm
2021	8.0

CAGR

+30%

2022 10.4

2023 13.6

2024 17.6

2025 23.0

FY19

FY20E

FY21E

FY22E

FY23E

FY24E

FY25E

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 29

Assumptions as of February 14, 2020 and Updates

Recruitment

PF

Medical PF

New

Services

Corporate

Expenses

Others

Assumptions as of announcement on February 14 2020

• Number of customer offices: steady annual acquisition rate
• ARPU: Increase driven by improved functionality
• Continued improvement in ARPU, growth in range of
  targeted customers, and cost reduction
• • Targeting NaCl Medical to turn profitable in FY2020
  • Targeting narrower losses in the EMR business as it
    approaches profitability
• Continue investment in development targeting mid-term
  growth
• Forecast does not factor in any impact from revisions to
  official medical fees or deregulation
• Plan to continue expanding the range of services
• Continued aggressive hiring to achieve growth
• • Recruitment Platform: 60 new hires
  • Medical Platform: 40 new hires
  • New Services: 5 new hires
  • Corporate: 20 new hires
• Forecast does not factor in any impact from undetermined

new business sales or M&A

Updates

• The declaration of the state of emergency resulted in a bottleneck
  in April and May, but the situation has been improving since June.
  We expect to reach our original full-year target of FY2020 ［p16］

• Demand grew owing to the temporary relaxation of telemedicine
  regulations［p21, p23］
• Online drug administration guidance support system business off
  to a smooth start［p32］

• Decided to establish a new business to serve pharmaceutical and
  medical equipment manufacturers (no significant impact)
  ［p34-35］

• New nursing care business on a gradual recovery trend
• Adjust our hiring plans in line with progress on measures to
  strengthen our telemedicine systems and the launch of our online
  drug administration guidance support system business (adjusted
  based on sales outlook)

• Rise in hiring and human resource costs associated with start of
  new businesses serving pharmaceutical and medical equipment
  manufacturers (no significant impact)
• Includes impact from acquisition of EMR assets of another
  company in June

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 30

Medical

Platform

Promote the Use of Digital Technologies Leveraging

Our Customer Base

We aim to take advantage of the broad customer base of our Recruitment Platform Business and promote the use of digital

technologies in medical/healthcare industry by implementing new initiatives.

Customer base of Recruitment PF

Promotion of Medical Digital Transformation

Hospitals/

Medical clinics

17k

Pharmacies

Dental Clinics

41k15k

Nursing and

Welfare facilities

83k

To be released

in September

Pharmacies

SaaS

Utilization

of customer base

Life Science

Companies

MEDS, Inc.

Established on 8/3

Hospitals/

Medical clinics

Currently under

SaaS

trial operation

MEDLEY	Dental Clinics
Online Medical
Encyclopedia	SaaS

Patients

Nursing and

Welfare Currently

facilities formulating

business plan

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 31

Medical

Pharms: Securing Advance Applications Ahead of September Launch

Platform

A number of pharmacies are applying for Pharms ahead of its launch in September. The momentum is supported by external

factors including deregulation regarding ODAG and increasing demands due to COVID-19. Our track record of business and

end-to-end service integrating telemedicine aiming to improve patients' convenience also raise expectations.

September 2020

Changes in Japanese ODAG Regulations / Track Record of Medley

*ODAG: Online drug administration guidance

*PMD Act: Pharmaceuticals and Medical Devices Act

Scheduled implementation of

the Amended PMD Act:

Lifting of geographical

April 2020

limitations on ODAG

MHLW Guidance: Temporary,

Pharms

November 2019

provisional lifting of the ban

To be released

on telemedicine for first-time

Enactment of the Amended

patients and ODAG to prevent

PMD Act: Lifting of

the spread of COVID-19(3)

geographical limitations on

Number of customer offices

November 2017

signing advance applications

ODAG within a year from

MHLW Announcement: ODAG

the date of its publication

(4)

would be permitted when

(December 2019)(2)

Decided to launch ODAG

1,000+

providing telemedicine services

system business

in national strategic special

2020

zones(1)

Background to the positive momentum of Pharms

2019

February 2020

Deregulation regarding ODAG

Impact of COVID-19

Launched ODAG

business in national

Enactment of the Revised PMD Act

・High demands in telemedicine and

2018

December 2018

strategic special zone

(Scheduled to be implemented in

ODAG

2017

Entrusted by the MHLW

September 2020) allows drug

・MHLW announcement in April 2020

2016

with a project to promote

administration guidance online,

lifted the ban on ODAG with

full-scale use of

which currently requires in-person

telemedicine for first-time patients

April 2016

electronic prescriptions

Launch of the CLINICS

Strong track record in medical

Integration with telemedicine

telemedicine system

systems businesses (Telemedicine/ODAG)

(Patient convenience)

・Robust customer support

Full end-to-end online experience

・Trusted security measures

from treatment to ODAG

1. https://secure.nippon-pa.org/mail/img/833.pdf(Japanese language only)
2. Patients are required to have received in-person drug guidance before receiving ODAG.
3. https://www.city.shinjuku.lg.jp/content/000285629.pdf(Japanese language only)
4. Advance contract numbers do not include those mentioned on p12 and p21.

・ODAG business in national strategic

special zone (Feb)

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 32

Medical

Platform

Medical Media: Cooperating with Google to Provide Access to

Reliable Medical Information

Since 2015, through "MEDLEY", our online medical encyclopedia, we have cooperated with medical professionals under the

slogan, "Providing the strength to face medical care challenges", to develop a database of diseases, symptoms, and trials and

a service that helps patients get access to medical treatment. On July 7, Google announced that it has begun efforts to

support access to medical information. Medley will cooperate and participate in this project to the fullest extent possible.

Medley's key values when providing medical information

Cooperation with Google

Neutrality

Frequency

Comprehensiveness

MEDLEY, an online medical encyclopedia created by doctors

Online medical encyclopedia used by over three million users per month, including medical institutions. It also has a "symptom checker" function that allows users to narrow down the range of possible diseases based on a patient's symptoms.

Medley uses Question Hub, a tool provided by Google, to identify search

keywords for "pending" questions and publishes medical information content

based on keyword themes on its online medical encyclopedia MEDLEY.

Google's Question Hub tool

Question Hub is a tool that automatically gathers and displays search keywords for "pending"

questions ‒ those for which users have likely not yet found relevant information. For this project, the

beta version of Question Hub was used to provide keywords for pending questions regarding

COVID-19 to the project team. This project is expected to make it easier to understand what topics

users are interested in and which keywords will be useful to them.

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 33

Medical

Platform

MEDS: New Company Established to Support Life Science Companies

Amid the spread of COVID-19, Medley has received an increasing number of inquiries regarding digitization of operations

from pharmaceutical companies and medical device manufacturers. In response, we established a new company on August 3,

2020, earlier than we had originally planned. The Representative Director and CEO of the company is highly knowledgeable in

this field and is moving to aggressively expand the business.

New subsidiary profile

Company Name

MEDS, Inc.

Ownership ratio

MEDLEY, INC., 100%

Name of

Fumihiko Ugajin

Representative

Provision of support for the digital operations Main Business of pharmaceutical companies and medical

device manufacturers

Business development plan

	•	Business structure focused on recurring
Basic Policy		sales
•	Leverage assets of the Medical Platform
		Business
Direction	•	Supporting digitization to enhance
	patients' medical experiences and
		therapeutic effect

Introduction of Representative Director and CEO

Representative Director and CEO

MEDS, Inc.

Fumihiko Ugajin

In August 2020, Fumihiko was appointed Representative Director

and CEO of MEDS, Inc.

Before joining the company, he was Representative Director of

IQVIA Solutions Japan from 2015 to 2020.

He was graduated from the University of Tokyo majoring in

economics, and Graduate School of Public Health, the University

of North Carolina at Chapel Hill.

About IQVIA Solutions Japan

• Japanese branch of a global research and consulting firm specializing in the healthcare field
  with a broad range of medical information
• Provides information, technology, and services for customers in the pharmaceutical industry
  in Japan

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 34

Medical

Platform

MEDS：Direction of the business

MEDS will provide digitalization services to life science companies such as pharmaceutical companies and medical device

manufacturers by leveraging the assets of the Medical Platform Business, aiming to enhance patients' medical experiences

and therapeutic effect.The company will respond to the demands of life science businesses and create digital services

including, but not limited to, the following.

Examples of MEDS Business Domains
PHR(Personal Health Record) Apps	DTx (Digital Therapeutics)
App that manages medical information and health status	Software that supports or conducts disease prevention,
such as patients' diagnoses and dosage histories	diagnosis, and treatment using digital devices and IoT
		Used under the
	Medical	supervision of a physician
	Requires approval as a
	Treatment
	Leverage of	medical device

Medical Platform

Business assets

ePRO (Electric Patient-Reported Outcome)

Appropriate Delivery of Clinical Information

Digitization, storage, and analysis of patients' self-	Services that allow pharmaceutical companies to effectively
assessments and symptom reports (PRO) for clinical trials	offer medical workers and patients clinical information via
	the Internet (e.g. eDetailing(1), PSP(2))

Subjective patient		Early acquisition of highly
assessment		accurate data

・Level of satisfaction with treatment,

・Avoidance of typing errors by patients

severity of symptoms

・Improvement of patients' input rate

・HR-QOL(Health-Related Quality of Life)

(1) eDetailing: service that allows MRs to provide medical information online to physicians

(2) PSP: abbreviation of Patient Support Program; service to support patients' medical experiences including an access to appropriate medical care	Copyright© Medley, Inc . ALL RIGHTS RESERVED .	35

Medical

Platform

(Ref.) Increased Usage of Digital Technology in the

Life Sciences Industry

Digitalization is promoted in the life sciences industry in various ways as drug discovery becomes increasingly difficult and

digital technology is further developed.

Life sciences industry increasingly

working with IT companies and	eDetailing	PHR Apps
Volume of information provided to physicians	Apps that assist lung cancer patients in
using digital technology(1)	by pharmaceutical companies	managing their treatment
	(Third week of April 2020: YoY)

In-person Communication	63%	Recording of lung
cancer drug dosages
Remote Communication	34%	and symptoms, etc.

Survey by IQVIA Japan, from Yakuji Nippo

20192020

Otsuka Phamaceutical	Shionogi	Astellas Pharma	Pharmaceutical companies	Astellas Pharma	AstraZeneca	Amgen
✖	✖	✖	Remote support of MR	✖	✖	✖
Click Therapeutics	Akili Interactive Labs	Welldoc	activities through web-	M3	Welby	Integrity Healthcare
(App for patients with	(App for children with ADHD)	（DTx）	based conference systems,	(Remote Detailing)	(PHR App)	(ePRO)
depression)			etc.

DTx	ePRO
Co-development in Japan of BlueStar, a digital	Verification project for telemedicine in the
therapeutic product for diabetic patients	field of chronic skin diseases and ePRO

Support for disease self-management, sharing of

patient status with physicians

Telemedicine

ePRO

Sharing patients' subjective/QOL

information with physicians

(1) Materials from each company, graphics by Medley

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 36

1. Financial Highlights
2. FY2020 Q2 Results
3. FY2020 Forecast
4. Appendix

37

Creating the Future of Medical/Healthcare

Technology is not being fully leveraged in the medical/healthcare industry due to heavy regulations. Our ultimate goal is to solve

medical/healthcare issues by leveraging the internet and information technology.

Recruitment Platform Business

Medical Platform Business

We operate JobMedley, one of Japan's largest recruitment systems in

both medical and healthcare fields. Our objective is not only to provide

better matching for job seekers and medical providers, but also to

resolve the shortage of medical and healthcare personnel by facilitating

unemployed but skilled and qualified workers return to work and tackling

the issue of uneven service distribution between communities.

Focusing on CLINICS telemedicine, the largest telemedicine system in Japan,

allow us to create platforms that can enable both patients and medical

institutions to enjoy the benefits of technology. We also aim to provide

necessary information to consumers through MEDLEY, an online medical

encyclopedia dedicated to patients.

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 38

Company Overview

Corporate Name

Medley, Inc.

Headquarters

Sumitomo Fudosan Roppongi Grand Tower 22F 3-2-1 Roppongi, Minato-ku, Tokyo

Established

June 5, 2009

Business	Recruitment Platform Business
	Medical Platform Business

Management	Kohei Takiguchi (President and CEO)
	Goichiro Toyoda (Representative Director, Doctor)

No. of employees

451 (as of June 30, 2020)

Group Companies

NaCl Medical, Inc. (Shimane), MEDS, Inc. (Tokyo)

Awards	Nov. 2019：Forbes JAPAN - "Japan Entrepreneur Ranking" 3rd place
	Nov. 2019：ASPIC IoT/AI/Cloud Award 2019 "Best Social Contribution"
	Jan. 2019：Nikkei Superior Product/Service Award 2018
	Feb. 2018：Nikkei Digital Health - No.1 for "Venture Companies Chosen by Venture Companies"

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 39

Experienced Management Team

Representative Director, President and Chief Executive Officer

Kohei Takiguchi

He established Medley to heighten awareness of medical issues from personal medical

experiences.

As the CEO of Medley, he oversees the CEO's administrative office, the organizational strategy

office and the internal audit department. Prior to establishing Medley, at the age of 17, he

established Gemeinschaft, Inc., a U.S. corporation, and became involved in domestic and

overseas marketing and statistical research.

Representative Director (Medical Doctor)

Goichiro Toyoda

He was appointed co-representative of Medley in February 2015. He took the lead in launching

the Medical Encyclopedia MEDLEY and engaged in educational activities aimed at

disseminating correct telemedicine. Currently, he is in charge of the business collaboration

promotion department. Prior to joining Medley, he worked as a physician at Seirei Hamamatsu

General Hospital and NTT Medical Center Tokyo; conducted brain research at Children's

Hospital of Michigan; and worked at McKinsey & Company. He graduated from the University

of Tokyo Faculty of Medicine. He also published the book, "Working to Create Our Future."

Director and CTO

Sosuke Hirayama

He was appointed director of Medley in January 2016. He leads the medical platform system

and is currently in charge of the incubation development as CTO. Prior to joining Medley, he

worked for Hitachi Software Engineering, Co., Ltd. and Gree, Inc., as well as working as CTO

with Livesense, Inc. He has been selected to lead projects that are aimed at creating

completely new types of software.

Director and Head of Corporate Division

Yuta Tamaru

In May 2016, he joined Medley and worked on the development of the telemedicine

business as Chief Legal Officer. After that, he was appointed director in January 2018, in

charge of overseeing the corporate headquarters. Prior to joining Medley, he worked on

M&A, business alliances, and other cross-border company legislations at Paul Hastings

LLP and White & Case LLP. He holds attorney qualifications.

External Director

Noboru Kotani

He was appointed outside director of Medley in March 2018. He has an extensive career as a

senior vice president at the Boston Consulting Group, as well as a founder and representative

director at Dream Incubator Inc. He currently serves as the external director for Combi

Corporation, Jins Holdings, Inc., SanBio Co., Ltd., Bilcom Inc, and Innophys Co., Ltd. He holds a

Master's degree in Industrial Engineering from Stanford University and graduated from the

University of Tokyo Graduate School of Engineering・Faculty of Engineering.

Director

Yosuke Ishizaki

He was appointed director of Medley in April 2015. He is driving the growth of

businesses. Prior to joining Medley, he worked at Hatena Co., Ltd. and worked as director

of the media department, as well as president of a subsidiary at GREE, Inc.

Director and CFO

Ryo Kawahara

He was appointed director of Medley in July 2016. As CFO, he is engaged in financial

activities across Medley, including financial affairs, analysis, and investor relations. Prior

to joining Medley, he worked on domestic and overseas finance and M&A advisory

business at JPMorgan Securities Japan Co., Ltd.

External Director

Hidetoshi Takano

He was appointed outside director of Medley since the establishment in June 2009. Prior

to joining Medley, he was involved in the start up of the talent referral business at

Intelligence, Inc. He is also the founder and representative director of KeyPlayers, Inc.

He graduated from the Tohoku University Faculty of Economics.

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 40

Steadily Securing Human Resources to Fuel Growth

Companywide

of Business Operations

Not only the number of employees working in both platform businesses, but we have also increased the number of corporate

employees working in our planning and hiring teams.

Number of employees(1)

Breakdown of employees by segment(1)

	Corporate
451	(Expansion of corporate planning and hiring teams)
	65
379	New Services
49
	19
	17
246	Inner Circle : Dec. 2019
	Outer Circle : Jun. 2020	207
	106
147	123
92
58
16	Medical Platform
FY14 Q4 FY15 Q4 FY16 Q4 FY17 Q4 FY18 Q4 FY19 Q4 FY20 Q2

Recruitment

Platform

244

(1) Includes part-time employees etc.

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 41

Defensive Growth Industry: Social Welfare Spending and Number

of Employees not Impacted by Economic Trends

Spending on social welfare is expected to rise continuously in Japan owing to the aging of the population. The number of medical

care workers taking care of elderly patients is also expected to rise.

Social welfare spending forecast (1)

Employment trend forecast (2)

(JPY Trillion)

Employees in all industries

Nursing care cost

Medical cost

Medical care/welfare employees

									63.1
			49.0	51.9	53.0				15.3
		46.6		9.9
	43.2		9.5
		8.9
40.6	8.0
7.2
6.5
										65.80 million
									47.8	People
			40.1	42.4	43.1
	36.0	38.6
34.1
										8.23
										Million people
										12.5%
2007	2009	2011	2013	2015	2017	2019	2021	2023	2025	2018

56.54 million

People

10.65 million

people

18.8%

2040

In 2040, one in five

workers in Japan is

expected to be

employed in the medical

care/welfare industry.

(1) Report from Ministry of Health, Labor and Welfare

(2) Report from Cabinet Secretariat, Cabinet Office, Ministry of Finance, Ministry of Health, Labor and Welfare

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 42

Recruitment

Platform

Stable, High Demand in the Medical/Healthcare Industry

The Japanese medical industry suffers from a chronic shortage of workers, with a jobs-to-applicant ratio remains much

higher than the average for all industries regardless of economic conditions. We estimate the current market size to be

approximately JPY300 billion, and expect expansion to up to JPY370 billion in 2025 driven by increasing demand.

Ratios of Job Openings to Job Applicants	(1)	Market Scale of the Medical/Healthcare Recruitment Industry
		(2)
		(based on our unit price)

Financial crisis (Q3'08)

Declaration of State of Emergency(Q2'20)

9x

8x

7x

6x

5x

4x

3x

2x

Doctor/Pharmacist(3.5x)

Nursing services(3.4x)

Medical technicians(2.4x)

Nurse(2.1x)

approx.

JPY 370 billion

approx.

JPY 300 billion

1x	All-industry(1.0x)

0x

Q2'08

Q2'10

Q2'12

Q2'14

Q2'16

Q2'18

Q2'20

(1) Ministry of Health, Labor and Welfare statistics, 3-months average

20182025

(2) Estimates by Medley, Inc.

FY2018A: Calculated based on the number of employees in the medical industry in Japan (roughly 7 million), the

average annual hiring rate for occupations that fall under the category of "medical care / welfare" in FY2016

employment trend survey results (approximately 15% of roughly 7 million = approximately 1 million people), and

the average unit price of JobMedley placements for all occupation categories.

FY2025E: Based on the abovementioned FY2018A multiplied by the medical cost growth rate in Future Outlook

for Social Security in Anticipation of 2040 published by the Cabinet Secretariat, the Cabinet Office, the Ministry of

Finance, and the Ministry of Health, Labor and Welfare.

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 43

Recruitment

Platform

Success-fee-based Hiring Support System for the Medical/

Healthcare Industry

JobMedley is a recruitment system used by businesses (mainly medical institutions) in the nursing, childcare, and healthcare

fields. Recruitment information for over 50 types of qualified professionals can be entered into the system and placement fee

is charged when a placement is successfully made. The placement fee varies depending on the occupation type and hiring

classification.

Service

Providers

Post job offers/

Send scouting

messages Candidates

Apply/Inquire

Hospitals, Nursing facilities,				Employ	Database of qualified person
Pharmacies etc.					in the medical/healthcare field
						with more than
		Join!	50 occupations

Success fee

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 44

Recruitment

Platform

Industry has a Long-tail Structure:

Our Strengths are in the Middle and Tail Segments

Out of the 7 million workers in the medical/healthcare industry, 30% are doctors, nurses, and pharmacists, who are highly competitive in

terms of job placement. On the other hand, there are few competitors in the remaining 70% - the middle and tail segments - where we have

captured a leading market share. We currently have over 600,000 users in more than 50 occupations registered in our system.

(1)

Our Target Area

Head

Large market with

many competitors

and high unit

prices

Doctor

327k

Nurse

1,523k

Pharmacist

311k

Middle

Some competitors, but most are

small-scale and focused on urban areas

Clinical	Physical therapist	Dentist	Certified care
technologist	worker
151k	38k
67k	871k

MRI technician	Occupational	Dental hygienist	Care manager
therapist
54k	133k	152k
78k

Midwife	Speech language	Nursery school	etc..
hearing therapist	teacher
37k	24k	518k

Tail

Very few competitors. Government employment centers

and local magazines have a strong presence.

Public health nurse	Acupuncturist	Dental technician	Orthoptist
53k	242k	34k	89k

Nursing assistant	Licensed masseur	Welfare equipment	Certified clinical
consultant	psychologist
194k	119k
27k	36k

Judo-orthopaedists	Welfare counselor	Clinical engineer	etc..
73k	172k	28k

(1) Ministry of Health, Labor and Welfare statistics,

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 45

Recruitment

Platform

Low-cost Structure Gives Advantages in Terms of Pricing

JobMedley covers more than 50 different types of medical/healthcare occupations, and recruitment success fee is

approximately 50 - 80% lower than the industry average. While many recruitment agencies conduct most of their business in

person, JobMedley uses online support staff, thereby increasing efficiency and enabling lower fees.

Improved efficiency by leveraging online support

Price Advantages

Success Fee (of annual income; back calculation)

registemploy

Online matching support

ration	ment		2～13%
	(1)

mostly completed online

			accomp				Success Fee (of annual income)
		match			Major Recruitment
Competitors	regist	any to	docume	employ	(2)
		ws
	ration	ing	ntation	ment	Agencies	20～35%
	intervie

support via face-to-face / telephone

(1)Ratio of our recruitment success fee to annual salary (full-time) is calculated based on the 2018

Basic Survey on Wage Structure (range of nurses, childcare professionals, physiotherapists, dentists,

and caregivers).

(2) This refers to typical fees for recruitment services for occupations such as doctors, nurses, childcare

professionals, physical therapists, dentists, and care workers among the 50 occupations we handle.

(Some recruitment services employ different methods for setting success fee amounts that are

different from that described above.)

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 46

Medical

Vast Opportunities in Cloud-based Medical IT System Market

Platform

Estimated current medical IT system market size is approximately JPY470 billion. Today, the bulk of the systems used in medical industry

are on-premises based (on-site servers), but more platforms are adopting cloud-based systems since the deregulation in 2010, owing to

advantages in terms of costs and convenience. Due to the low operating efficiency and customary use of long-term contracts, 7-year

(FY2018-2025) CAGR in target operating area of the cloud medical IT system market is expected to be 17.3%.

(1)	(1)
Scale of the Medical IT System Market	Cloud Medical IT System Market in Our Operating Area

(JPY billion)

Cloud Medical IT system

(Telemedicine, Cloud-based EMR, Reservation system

for treatment and examination)

JPY 8.3 billion

Others

JPY 156.1 billion

25.3

6.0

Reservation system for treatment and examination

Medical ITShift to Cloud- based system

System Market

(2018 actual)

JPY467.4 billion

On-premises EMR

JPY 303.0 billion

8.3

3.4

4.2

0.7

2018

(actual)

12.0

4.1

6.5

1.4

2020

(forecast)

14.0

5.3

2025

(forecast)

Cloud-based EMR

Telemedicine

Currently, most systems are on-premises based (on-site servers)	Cloud-based systems are expected to become more prevalent in
	light of deregulation, cost advantages, and greater convenience.

(1) Future Outlook for Medical Big Data Business and Seamless IT / Cloud Computing of Medical IT in 2020 by Fuji Keizai	Copyright© Medley, Inc . ALL RIGHTS RESERVED .	47

Medical	Launched as a Telemedicine System in 2016,
Platform	(1)
	CLINICS has No.1 Market Share

Telemedicine is one of the keys to next-generation medical care. We aim to create a world where medical institutions, in cooperation with

pharmacies and care providers, can realize benefits to patients by appropriately combining traditional face-to-face medical care and

telemedicine. CLINICS charges system usage fees from medical institutions and provide additional functions to the system platform.

Patients

Reservation /

Pre-fill Question

Form

Provide Systems

Home / Workspace

Doctor-visit

Pay Service Fees

(Online or Face-to-

(Initial / Monthly Fee)

face)Telemedicine

Reservation

EMR

Receipt Computer

Medical

Institutions

+

Partnership with	Partnership with
Receipt Check	Inspection Facilities

1. According to Fuji Keizai's report on"Future Outlook for Medical Big Data Business and Seamless IT / Cloud Computing of Medical IT in 2020: No.1 Medical IT and Medical Information Platforms",
   as of 2018, the CLINICS telemedicine system had the largest installed base in the telemedicine systems and services category.

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 48

Medical

Platform

CLINICS is Evolving into a Comprehensive Cloud-based

Medical Support System

In addition to the telemedicine system (launched in 2016), in 2019, a cloud-based EMR system (CLINICS EMR) was launched.

As this system is connected with apps used by patients, CLINICS is evolving into a cloud-based medical support system that

smoothly connects institutions and patients, handling functions including reservations, reception, treatment, and accounting.

Cloud-based EMR (paid service)

(1)

Telemedicine can be conducted using EMR.

(1)

Examination data can be sent to patients' apps.

Cloud-based treatment

support system

connecting patients to

medical professionals

Cloud-based EMR (paid service)	Telemedicine system (paid service)
Patients can make appointments for face-	Telemedicine system that can complete reservations, handle
to-face medical treatment and	prior consultations, video chat consultations, payments, and
(1)	delivery of medicines and prescriptions in one stop.
telemedicine at any time.
	(2)
	Consultation data of telemedicine can be linked with EMR

(1)	When used concurrently with CLINICS Telemedicine		49
(2)	When used concurrently with CLINICS EMR	Copyright© Medley, Inc . ALL RIGHTS RESERVED .

Medical

Platform

(Ref.) Changes in Japanese Telemedicine Regulations

Official medical fees were established for telemedicine treatment in April 2018, but strict regulations regarding the practice of

telemedicine were also established. After that, deliberations regarding telemedicine continued and regulations were relaxed to

some degree with the revision to official medical fees conducted in April 2020. Significant deregulation was then implemented

as a temporary measurein response to COVID-19.

Apr 10

Medical fees for telemedicine, online medical

management, and online home healthcare

were newly established as part of the 2018

revision of medical service fees. "Guidelines

for the proper implementation of

telemedicine" was also announced and the

government imposed strict restrictions on

telemedicine.

Apr 2018

Temporary lifting

of ban on initial

Temporary

medical

Lifting of ban on Impact

examinations via

telemedicine

telemedicine

treatment for patients

systems

with mild COVID-19

Lifting of ban on

symptoms

telemedicine treatment

Mar 19

for patients with chronic

diseases receiving

regular medical

At the 2nd Council

onInvestments for the

Future(1), the "promotion

of telemedicine" was Apr 2017

announced

Nov 2016

	Aug 2015
Dec 1997	Ministry of Health, Labour and
Welfare practically lifted ban on
Ministry of Health and Welfare	telemedicine
(then) conditionally life ban on
telemedicine	2015	2017
1997

examinations

Feb 28

Partial revision of "Guidelines for

the proper implementation of

telemedicine""

Jul 2019

Sep 2019

Jun 2019

Ministry of Health, Labour

The Cabinet decided on "Follow-

and Welfare launches

up Growth Strategy", and

"Review meeting on

"Consider adding diseases that

Smooth Operation of

have been confirmed safe and

Electronic Prescriptions"

effective for the next medical

service fee revision, to be included

in telemedicine" 2019

(Initial Forecast)

Apr 1

Revision to official

medical fees in FY2020

2020

1. A meeting to be held by the Prime Minister to promote bold investments in fields that contribute to future growth through public-private partnerships and to accelerate growth strategies and structural reforms aimed at expanding
   "investment in the future". Held from September 2016. http://www.kantei.go.jp/jp/97_abe/actions/201611/10mirai_toshi.html

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 50

Medical

Platform

(Ref.) Changes in Japanese Telemedicine Regulations

On April 1, 2020, the regular biannual revision of revision to official medical fees was conducted and regulations regarding

telemedicine were relaxed to some extent. Then, on April 10, in response to COVID-19, national health insurance coverage was

extended to include initial medical examinations conducted via telemedicine systems and restrictions regarding which conditions

may be treated via telemedicine were also lifted. This has resulted in significant temporary changes in our telemedicine business.

Main requirements to be

covered by insurance

Requirement for

a patient to

begin treatment

via telemedicine

Requirements for

medical care

system

Target patients

April 1 2018: Medical Fee Revision

The doctor conducting telemedicine

treatment must also provide face-to-

face medical treatment every month

for at least six months

In the event of an emergency, face-

to-face medical treatment must be

possible within roughly 30 minutes

Certain patients with lifestyle-

related diseases such as

hypertension and diabetes

Continuing impact until March 31, 2022		Temporary impact from COVID-19

April 1 2020: Medical Fee Revision	April 10 2020: Guidance Statement

The doctor conducting telemedicine

Initial medical examinations via

treatment must also provide face-to-

telemedicine systems allowed

face medical treatment every month

for at least three months

No restrictions

No restrictions

Chronic headaches and nicotine
addictionadded to list of conditions	No restrictions
eligible for telemedicine treatment

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 51

(Ref.) Markets Targeted by the Online Drug Administration

Medical

Platform

Guidance Support System Business

The online drug administration guidance support system business targets approximately 59,000 pharmacies across Japan.

Unlike medical and dental clinics, roughly 30% of pharmacies in Japan are members of top-tier or second-tier pharmacy chains.

Pharmacies are now our target customers	Market share (number of locations) in pharmacy market
			(breakdown of 59k pharmacies nationwide)(2)

Pharmacies

approx. 59k

Top-tier chains

(more than 100 locations)

Dental clinics			Service for dental clinics
approx. 68k
		Second-tier
		(currently conducting test marketing)
			chains
			Small-scale pharmacy
			(30-99 locations)
			companies with less than
			10 pharmacies
			(35% have less than two pharmacies)
			Mid-tier chains
Medical clinics and hospitals			(10-29 locations)
approx. 110k

Number of medical institutions (1)

(2)Classified based on establishing entity as entered in the "list of medical institutions receiving notification" of

(1) Calculated using statistics from "Survey of Medical Institutions" and "Hospital Report"

each regional Bureau of Health and Welfare. Therefore, pharmacy operators that have different corporate

(2018) published by Ministry of Health, Labor and Welfare

names, but are members of the same corporate group are counted separately (as of October 2019)

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 52

Use of Operating Cash Flows from Profitable Businesses and Debt for

Aggressive Investment

We focus on companywide sales growth rather than on growth of individual businesses. We have set target years for bringing lossmaking businesses into the black and will increase operating cash flow in line with our plans.

Priority

(in principle)

Use of funds		Procurement of funds

Prioritization based on investment efficiency

Business Investment

Operating Cash Flows

from Profitable Businesses

M&ADebt

	Share Buyback				Equity

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 53

Increase Operating Cash Flow by Making Lossmaking Businesses Profitable

in Line with Our Plans

We have set target years for bringing lossmaking businesses into the black and will increase operating cash flow in line with

our plans.

Cash generation phase: Positive operating cash flow

Profitability phase: Operating cash flow negative, but unit economics sound (return on investment expected)

Commercialization phase: Creation of business model targeting generation of operating cash flow, unit economics carefully monitored

Profitable in FY2019

In the red in FY2019

Cash generation phase	Profitability phase	Commercialization phase
Recruitment
Platform
(Telemedicine)		• Preparation for next phase
Profitable in FY2019
	• No expansion of losses
Expected to turn profitable		Service for Dental Clinics
in FY2022	(Cloud-based EMR)	• Began development in FY2019
Medical
Platform		• Plan to begin business development in FY2020
Expected to turn profitable		New Service
in FY2020		• Began development in FY2019
		• Plan to begin business development in FY2021
New
Services		• Consideration of optimal earnings structure

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 54

Investment in Growth Targeting Maximization of Customer Numbers

and ARPU Improvement

Aggressively invest capital secured via operating cash flow and interest-bearing debt while keeping the company in the

EBITDA positive on a companywide basis.

Investment in Growth

Aggressive investment while maintaining profitability

on a companywide basis

• We will focus on achieving cost merits on a pretax
  investment basis while also focusing on after-tax
  capital base strengthening merits.

Focus on sound unit economics

• Confirm investment return periods and LTV/CAC for
  all businesses
• Determine profitability timing and invest aggressively
  in businesses with sound unit economics

Maximization of Customer Numbers

Strengthen customer base by leveraging JobMedley's cost

leadership

• Maintain current customer acquisition pace
• Aggressively pursue cross selling by leveraging
  companywide customer management system

ARPU Improvement

• Increase customer usage rate
• Continuous improvement

• Strengthen product lineup
• New services under development
• Plan to increase number of services
• Proactively pursue operational and capital alliances with
  other companies

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 55

Continue to Expand Customer Base by Leveraging JobMedley's Cost Leadership

All businesses face human resources constraints. Providing low-cost human resource systems in the field of healthcare

enabled increase in number of customers and users. We will further strengthen our customer base by continuing to pursue

our cost leadership strategy. Our basic strategy is to develop and deliver valuable services to our customers.

Customer Base Expansion

Ratio of target businesses using our services

approx.18%

(198k offices)

41k

：83k

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 56

Leveraging Our Customer Base to Promote the Use of

Digital Technologies in Medical/Healthcare Industry

Shifting medical institutions' on-site systems to the cloud is an essential step for society in terms of increasing the efficiency

of the medical healthcare industry as a whole. The outsourcing of services required by all medical institutions would benefit

patients, cut costs, and boost sales. We will leverage JobMedley's strong customer base to aggressively develop and widely

distribute such services.

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

Deregulation Commercialization

Telemedicine

Started development

Started development

Launch

EMR

Started pilot testing

Service for Dental	Started development
Clinics

Started pilot testing

Started development

Launch

Online Drug Administration

Guidance System

Started development

New Service

Development completion

New Service C		Consideration of development	Completion of development
(Undisclosed)		or collaboration	or start of collaboration
				Completion of development
New Service D		Consideration of development
		or start of collaboration
(Development plan)	or collaboration
(Undisclosed)
		Consideration of development	Completion of development

New ServiceEContinuously developing and providing services for hospitals, clinics, dental clinics, and pharmacies, etc.

or collaboration

or start of collaboration

(Undisclosed)

New Service F	Consideration of development	Completion of development
(Undisclosed)	or collaboration	or start of collaboration

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 57

Proactive Pursuit of M&A

In addition to continued investment in development, M&A is a core component of our growth strategy and we are

strengthening our M&A team.

M&A Plan		M&A team

Conduct strategic M&A	Ability to handle sourcing, due diligence, negotiations,
• Proactively acquire functions necessary for each	and post-merger integration with in-house team
business segment	• Team members with experience:
Focus on synergy	- working at investment banks

- working in companies undergoing M&A

• Sales support to leverage our strong customer base

- working as legal and financial specialists

• To leverage our Internet product development knowhow

- serving as general manager

• To leverage our digital marketing knowhow

- working as DX engineer

Conduct M&A necessary for the future without delay

• Because it is not always possible to make the necessary acquisitions
  at the time they are needed.

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 58

Promotion of companion diagnosis(1) and individualized medicine

By sharing data between corporate systems and patient services, we aim to lighten patient burden and enable full utilization

of medical services by patients to achieve excellent medical care. To achieve this, we will continue developing applications

and products for consumers and patients.

Promotion of proactive

Promotion of drug

Disease risk assessment

Reduction of

Overseas support

development through

clinical trial efficiency

Promotion of companion

diagnosis(1) and

(2)

Efficient triage

individualized medicine

Support for

complicated

cases

Priority allocation

preventative medicine

misdiagnosis

and healthcare

Treatment policy

decision support

Shortening waiting times	Elimination of
	regional disparities

Patients

for emergency care

Enhancement of night and

Support for active

Early detection /

Improvement of severity prevention Family sharing

treatment

holiday medical treatment by

concentration of resources

treatment by doctors

continuation rates

1. Companion diagnosis involves clinical testing to predict the efficacy and side effects of a drug before administering medication.
2. Triage is the process of deciding treatment priorities based on the urgency and severity of injuries when a large number of victims must be treated due to a disaster.

Copyright© Medley, Inc . ALL RIGHTS RESERVED . 59

Creating the Future of Medical / Healthcare