M3 : Presentation Material

July 29, 2020 at 03:05 am EDT

M3, Inc.

Presentation Material

July 2020

The following presentation contains forecasts, future plans, management targets and other forward-looking projections relating to M3, Inc. and/or its group. These statements are drawn from assumptions of future events based on data currently available to us, and there exist possibilities that such assumptions are objectively incorrect and/or may produce differing actual results from those mentioned in the statements.

Furthermore, information and data other than those concerning the Company and its subsidiaries/affiliates are quoted from public information, and the Company has not verified and will not warrant its accuracy or dependency.

M3, Inc.

FY2020 Consolidated Results Summary

FY2020 Q1 Consolidated Results

(mn yen)

FY2019 Q1

FY2020 Q1

YoY

Sales	30,766	35,478	+15%

Operating	8,901	11,253	+26%
Profit


Pre-tax	8,917	11,222	+26%
Profit


Net Profit	5,982	7,650	+28%

IFRS

+41%

growth

ex-impact

from

stock

sales and valuation

changes

Further acceleration in growth since April

FY2020 Q1 Consolidated Results by Segment

(mn yen)

	Medical
	Platform
	Evidence
Domestic	Solution
Career

	Solution
	Site
	Solution
	Emerging
	Market
	Businesses

	Overseas

	FY2019	FY2020	YoY
	Q1	Q1


Sales	10,333	13,612	+32%

Profit	3,643	6,200	+70%

Sales	5,254	4,725	-10%

Profit	977	803	-18%

Sales	5,545	5,369	-3%

Profit	2,647	2,364	-11%

Sales	2,730	3,668	+34%

Profit	159	140	-12%

Sales	695	656	-6%

Profit	18	37	+100%

Sales	6,940	8,242	+19%

Profit	1,282	1,960	+53%

+100% YoY profit growth excluding stock sales impact

Temporary demand decrease due to COVID-19

Fast growth in APAC

FY2020 Q1 Consolidated Operating Profit Contribution Breakdown

(mn yen)

Demand expansion from pharma companies

2,557

8,901

Large	Temporary demand
APAC
decrease due to
growth	COVID-19		Stock valuation

			changes
18	-19	-174	-282
678

-426

2,352

11,253

FY19	Adjustment	FY20

FY2020 Q1 Overview

Medical

Platform

Evidence Solution

Career

Solution

Site

Solution

Emerging

Businesses

Overseas

	COVID-19
		Impact
Accelerated digital transformation in pharma marketing
	+ +
Marketing service orders grew 2.5x yoy

Orders backlog remained healthy at 25 bn yen despite		_
partial halts in projects
Dampened demand from both physician and pharmacists		_
due to COVID-19

Increase in affiliate sites; profitability decreased slightly due	_
to COVID-19 but expected to rebound

New business seeds being planted at a healthy pace		0
Rapid APAC expansion brought sales to 8.2 bn yen (+19%		+
yoy) and operating profit to 2.0 bn yen (+53%)

COVID-19 Impact on M3

Structural changes in pharmaceutical marketing
Structural changes in clinical scene… telemedicine, AI diagnostics
Clinical Trials
Y's Rehabilitation Center
Hospital Management Support
Home Care Nursing
Career

COVID-19 Impact on M3

Structural changes in pharmaceutical marketing
Structural changes in clinical scene… telemedicine, AI diagnostics
Clinical Trials
Y's Rehabilitation Center
Hospital Management Support
Home Care Nursing
Career

m3.com Site Access Increase

COVID-19 Related Information Provision

Focused delivery of related news

Proactive information exchange across PtoP communities

Expert webinars regarding COVID- 19 examination

m3.com Access Increase (% yoy)

160%

150%

140%

130%

120%

110%

100%

90%

Q3	Q4	Q1	Q2	Q3	Q4	Q1
FY18		FY19		FY20

m3.com site access remains high after rapid rise since COVID-19; becoming an imperative infrastructure for the medical industry

COVID-19 Impact on M3

Structural changes in pharmaceutical marketing
Structural changes in clinical scene… telemedicine, AI diagnostics
Clinical Trials
Y's Rehabilitation Center
Hospital Management Support
Home Care Nursing
Career

Physician Preferences As of July, 2020	Marketing Support

75% of physicians prefer current conditions of higher digital information procurement

…this shift in behavior and sentiment is likely to remain

Q. How do you feel regarding the current increase in internet based information procurement compared to pre-COVID-19?

Very Inconvenient	0.2%
Inconvenient	0.9%
Somewhat Inconvenient	3.3%

Very Convenient

13.2%

Neither 20.9%

Convenient

31.4%

Somewhat

Convenient 30.1%

Ref: M3 Survey
Copyright © 2020 M3, Inc. All rights reserved.	12

Marketing Support Service Orders

Marketing Support

Marketing Support Service Orders

over 2.5x

FY2019 FY2020

Q1Q1

Rapid demand increase from pharmaceutical companies due to COVID-19
Sales team fortification (+47% yoy including external resource utilization) contributing to larger projects
Fortification of project execution staff yet to be procured

LINE Healthcare Expansion

Telemedicine & AI

Over 6.0 million "friends" (since launch in Dec 2019)
Adopted to support METI's remote health consultations hotline until the end of August
LHC reimbursable online consultation services scheduled for launch reimbursed

Early COVID-19 Detection with CT + AI	Telemedicine & AI

Medical image analysis software, "COVID-19 Pneumonia Image Analysis Program Ali-M3" manufacturing and distribution approval gained in 80 days! (1/9 of usual speed)

Diagnosis Accuracy Using CTs

n=51 (patients examined using both PCR & CT)

CT: NEG

PCR: POS

CT: POS

AI Based CT Analysis Accuracy

PCR: NEG

CT: POS

PCR: POS

Provides a confidence level and focal area highlights
AI based results have higher utility in early detection compared to PCRs which have high false negative rates.

CT exams show high effectiveness, while PCRs have high false negatives

Chest CT + AI analysis is effective in early detection

Launch of AI Platform Business	Telemedicine & AI

ＮＯＢＯＲＩ Cloud

Secure image upload

Medical Site

ＰＡＣＳ

Analysis results viewable via PACS of your choice

･･･

AI diagnosed image download

Edge Server

Business alliance with NOBORI providing medical cloud services
Connectivity with any PACS (medical image management system)
Multiple AI image diagnostic algorithms will be on-boarded and categorized by physical regions (head, lungs, heart, etc.)

Providing free COVID-19 CT remote image diagnostics support and system infrastructure to 100 medical sites across Japan, in collaboration with NOBORI

Rapid Increase in AI Projects (1/2) Telemedicine & AI

Lead

Support M3		Overseas

M3 Services

Company		Therapy Area

M3	Respiratory
M3	Diabetic Retinopathy
M3	Ostheoperosis
M3	Medical institution (overseas)
M3	COVID-19
M3	Lung Cancer
AI Venture	Thyroid Echo
AI Venture	Radiation Diagnosis
AI Venture	Coronary Artery
AI Venture	Coronary Artery
AI Venture	Chest X-Ray and CT,
Fundoscopy

AI Venture	Alzheimers
AI Venture	Mamography
AI Venture	Mamography
AI Venture	Fundoscopy
AI Venture	Chest X-Ray and CT
AI Venture	Chest X-Ray
AI Venture	Chest X-Ray and CT
AI Venture	Fundoscopy
AI Venture	Chest X-Ray and CT

Rapid Increase in AI Projects (2/2) Telemedicine & AI

Support M3		Domestic

	M3 Services
Company	Therapy Area
AI Venture	Influenza
AI Venture	Unruptured Cerebral Aneurysm
AI Venture	Insomnia
Academia	Respiratory
AI Venture	Gastrointestinal
Device Maker	Fundoscopy
Device Maker	Gastrointestinal Surgery
AI Venture	Alzheimers
AI Venture	Fluoroscopic moving image
AI Venture	Pathology
AI Venture	Cardiovascular
Device Maker	PACS Connectivity
Device Maker	Chest X-Ray &CT
Device Maker	Endoscopy
AI Venture	Endoscopy
AI Venture	Head MRI, Chest X-Ray & CT,
Mammography

AI Venture	Cardiovascular
Device Maker	Chest CT
Academia	Interstitial Pneumonia
Device Maker	Head CT
AI Venture	Report
Device Maker	Endoscopy
42 cumulative AI projects to date. AI Platform launched.	18

COVID-19 Impact on M3 (Negative)

Clinical Trials (Evidence Solution)

- Temporary suspension in trial execution

- Potential for demand expansion from new R&D activity once conditions normalize

- COVID-19 vaccine related trials expected to increase demand in the US

Stroke Rehabilitation (Medical Platform)

- Rehab center reduction in customers

Job Placements (Career Solution)

- Refrain from Job fairs, etc.
Hospital Management Support (Site Solution)
- Reduction in patients, changes in operational environment
- Reduction in home care nursing (especially rehab) patients

COVID-19 negative impact still ongoing

Change in Growth Pace (current starting point)

Business Trend Image

Combined Business

Impact

Short term neutral overall, structural changes expected to be largely positive for the mid to long term

1 Billion Yen "M3: Stop COVID-19 Fund"

Appropriated 1 Billion Yen in funds to support COVID- 19 related initiatives
Utilize all M3 group resources to execute various initiatives serving medical professionals, medical institutions, and the general public

	Name	M3： Stop COVID-19 Fund

	Total	Maximum 1 Billion Yen
	Funds
	* Sponsorships may result in excess of this amount
	(cost)


	Fund	To support COVID-19 related initiatives that
	serve the public, medical scene (medical sites
	Purpose
	and professionals) , and public institutions

M3's COVID-19 Initiatives (examples)

Free LINE Healthcare	Webinars for Physicians	Free PPE Distribution

Masks: 2,000,000

Face Shields: 80,000

Free Remote Meeting	Free COVID-19 Image
Service for Patients	Diagnostics "Ali-M3"

Free Remote Meetings: 1 Button Video Chat Device Sets

COVID-19 Related Visitation Restrictions	Patient @	Patient's
Hospital	Family @

n=338 medical sites
	Home

No restrictions

Removed10% restrictions

Restricted

Relaxed43%

Restrictions

42%

1-患者

1-家族

I was ecstatic that I could clearly see the details of my husband's facial expressions as if he was sitting right in front of me. I cannot thank you enough for providing a service that allowed me to see how well he seems to be doing!

Today was the happiest day since his hospitalization!

We plan to enjoy these meetings daily during our agreed "relax times." I now have one more thing to look forward to every night, and will be able to have wonderful rest as well.

Free 6 month provision of 1,000 devices (500 sets) starting August. (partially funded by Sony)

Ref: M3 survey

M3 Growth Strategy

Business Scope Expansion and Growth Potential

Country

Business Types

Business Units

(Type x Country)

Sales (bn)

2010

201420182022

→		(1.5x)	→	10	(3x)	→
→	10	(1.5x)	→	26	(4x)	→	Similar pace
of growth

							expected
→	18	(2x)	→	41	(4x)	→ over the
							next 4 years
	370	(2.5x)	→	945	(7x)	→

Aggressive M&A to ensue in reaching growth potentials exceeding 10~20x current levels…

Annual Results

Sales

Operating Profit & Net Profit

130,973

(mn yen)

113,059

94,471

78,143

64,660

51,346

36,759

26,007

19,040

7,475

	2,276
107 480	1,563

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

(6m)

											34,337
(mn yen)							30,800
			Operating Profit						27,486

			Net Profit					25,050
								24,153
											21,346
									20,022	19,225

								16,061	16,938

							13,738*		13,493
							9,294		10,428
							8,878*
						7,648
					6,031	5,598
					4,803
						4,492
					3,5973,990	3,486
	62	136	279	493	991 1,6091,9652,3631,938

- -93

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

(6m)

Forecasts were not given, however, growth is expected continue on a fundamental basis, just as it had through events such as the Lehman shock and 311 earthquake in Japan

* FY17 results retroactively restated according to IFRS9 (Financial Instruments)

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Disclaimer

M3 Inc. published this content on 29 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 July 2020 07:05:10 UTC

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Market Closed - Japan Exchange Other stock markets 02:00:00 2024-04-25 am EDT			5-day change	1st Jan Change
1,883 ^JPY	-1.18%		-0.63%	-19.29%

Apr. 17	Dai-ichi Life CEO expects unsolicited takeovers to become common practice in Japan	RE
Feb. 29	M3, Inc. Provides Dividend Guidance for the Fiscal Year Ended March 31, 2024	CI

Dai-ichi Life CEO expects unsolicited takeovers to become common practice in Japan	Apr. 17	RE
M3, Inc. Provides Dividend Guidance for the Fiscal Year Ended March 31, 2024	Feb. 29	CI
M3, Inc. cancelled the offer to acquire a 55% stake in Benefit One Inc. from Pasona Group Inc. and others	Feb. 28	CI
Benefit One Board Backs Dai-ichi Life Tender Offer	Feb. 13	MT
Dai-ichi Life reaches deal with Pasona on Benefit One acquisition - Nikkei	Feb. 08	RE
Jefferies Adjusts M3's Price Target to 2,200 Yen From 2,770 Yen, Keeps at Hold	Feb. 01	MT
Japanese Shares Snap Winning Streak as US Fed Signals More Rate Cut Delay	Feb. 01	MT
M3 Books Lower Nine-Month Income Despite Improved Net Sales	Feb. 01	MT
Japanese Shares End in Red But Hit Fresh 52-Week Peak on Weak Yen	Jan. 17	MT
M3 Extends Tender Offer Period for Benefit One Amid Talks Over Potential Change in Offer Price	Jan. 16	MT
Chefaa announced that it has received $5.25 million in funding from Newtown Partners Ltd, Global Brain Co., Ltd., GMS Capital Partners LLC, Verod-Kepple Africa Ventures, M3, Inc.	Dec. 18	CI
Dai-ichi Life to Submit Higher Rival Bid of 1,800 Yen per Share for Benefit One Buyout	Dec. 13	MT
M3 Extends Tender Offer Period for Benefit One Shares Amid Competing Offer from Dai-ichi Life	Dec. 12	MT
M3, Inc. acquired Dr. Bhatia Medical Coaching Institute.	Dec. 04	CI
Horus HD Co., Ltd. completed the acquisition of 82.05% stake in Visionaryholdings Co., Ltd. from M3, Inc and others.	Nov. 20	CI
M3, Inc. entered into a share tender agreement to acquire a 55% stake in Benefit One Inc. from Pasona Group Inc. and others for approximately ¥140 billion.	Nov. 13	CI
Jefferies Adjusts M3's Price Target to 2,770 Yen From 3,400 Yen, Keeps at Hold	Nov. 13	MT
M3’s Attributable Profit Down 3.2% in Fiscal H1 on Lower Profits by Emerging Business, Site and Evidence Solution Segments	23-10-29	MT
M3, Inc. Reports Earnings Results for the Half Year Ended September 30, 2023	23-10-27	CI
M3, Inc. Provides Consolidated Earnings Guidance for the Full Fiscal Year Ending March 31, 2024	23-10-27	CI
Horus HD Co., Ltd. made a bid to acquire to acquire Visionaryholdings Co., Ltd. for ¥200 per share.	23-10-05	CI
M3, Inc. acquired Messly Limited.	23-08-20	CI
M3, Inc. acquired frogwell corporation.	23-08-06	CI
M3's Attributable Net Profit Up 2.4% in Fiscal Q1	23-07-31	MT
M3, Inc. Reports Earnings Results for the First Quarter Ended June 30, 2023	23-07-28	CI

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