(Note) This translation is prepared and provided for readers' convenience only. In the event of any discrepancy between this translated document and the original Japanese document, the original document shall prevail.

April 28, 2022

CMIC HOLDINGS Co., Ltd. Consolidated Financial Results

For the 2nd Quarter Ended March 31, 2022

(The Fiscal Year Ending September 30, 2022, Japan Accounting Standards)

Highlights:

◆Net sales grew 34.0% year on year to ¥51,769 million on a consolidated basis ◆Operating income increased 166.1% to ¥5,743 million

◆Earnings per share: ¥194.07

◆Order received grew 47.7%, order backlog grew 17.9% year on year

Tokyo, April 28, 2022 - CMIC HOLDINGS Co., Ltd. (TSE Prime Code: 2309) today reported financial results for the 2nd quarter ended March 31, 2022.

CMIC Group aims at transitioning to PHVC (Personal Health Value Creator) business model that "maximizes the individual health value", while using our unique PVC (Pharmaceutical Value Creator) model that fully supports the value chain of pharmaceutical companies as the foundation for sustainable growth.

In the fiscal year ending September 2022, which marks the 30th anniversary of the company's founding, the Group will position the year as the first year of its third founding and strengthen its response to drug development and digitalization using new basic technologies for drug discovery. At the same time, we will expand our business domain into the healthcare field and promote support for efforts to provide total care for diseases, from prevention to diagnosis, treatment, and prognosis. With an eye on the post-COVID business environment, we intend to strengthen the Group's business foundation and make great strides toward sustainable growth.

CMIC Group is promoting "Pharmaceutical solutions" based on our PVC model and "Healthcare solutions" that contribute to the individual's health through medical institutions and municipal governments, in alignment with the focus activities in the mid-term business plan (FY2022-2025) 1) Evolution of healthcare business, 2) Comprehensive support for disease prevention, treatment R&D, and marketing, and 3) Contribution to sustainable society through services with high social benefits.

[Consolidated operating results for the second quarter]

During the second quarter of the current fiscal year, as part of our efforts to address the key issues in our mid-term plan, we focused on sales activities to propose business solutions for local governments that support local communities in terms of both digital and human resources, and to win new contracts for pharmaceutical development and manufacturing.

The invasion of Ukraine by Russia in February 2022 has caused social instability and there continues to be concern about the impact on our business, but the impact on our Group through the first half of the current consolidated fiscal year has been minimal.

In the second quarter of the current fiscal year, the results significant increased over the same period previous year, mainly due to significant growth in the Healthcare Solutions segment, including vaccine development and vaccination support services for new coronavirus infections. Sales were ¥51,769 million (up 34.0% from the same period of the previous year), operating income was ¥5,743 million (up 166.1% from the same period of the previous year), ordinary income was ¥6,169 million (up 160.5% from the same period of the previous year), and net income attributable to shareholders of the parent company was ¥3,503 million (up 186.6% from the same period of the previous year).

(Millions of yen)

Effective from the first quarter of the current fiscal year, the Company has adopted the new revenue recognition standard.

The business results by segment are listed as below:

Effective from the fiscal year ending September 30, 2022, the Group's reportable segments have been changed to two segments, "Pharmaceutical Solutions" and "Healthcare Solutions". Year-on-year comparisons of operating results by segment have been made based on the new segments.

We are developing a PVC (Pharmaceutical Value Creator) business model that provides solutions to the value chain of pharmaceutical companies through our CRO (drug development support), CDMO (drug formulation development and manufacturing support) and Market Solutions (pharmaceutical sales support, development, manufacturing, sales and distribution of orphan drugs, etc.) businesses.

Sales increased 9.7% year on year to ¥36,820 million due to growth in all businesses. Operating income, on the other hand, declined 13.4% year on year to ¥2,326 million due to a decline in profitability of some projects in the non-clinical operations of the CRO business and a delayed recovery in the CDMO business in the United States.

The application of the accounting standard for revenue recognition increased sales by ¥1,113 million and segment income by ¥40 million compared with the previous method.

CRO Business

-Sales increased from the same period of the previous year -Increased inquiries for development projects other than COVID-19

-Partnership with Science 37® to Promote Decentralized Clinical Trials (DCTs) and Accelerate Drug Development

-In the bioanalysis business, CMIC supports drug discovery in cutting-edge areas where modalities are diversifying, such as next-generation biopharmaceuticals and gene therapy drugs

CDMO Business

-Sales increased from the same period of the previous year -Energy costs on the rise

-Growing need to ensure stable supply in response to the spread of new coronavirus infections and generic quality issues

-Focus on acquiring new projects in the U.S.

Market Solutions Business

-Sales increased from the same period of the previous year

-Acquired new projects and made steady progress in existing projects in MR dispatch services

The Site Support Solutions business provides comprehensive support for healthcare-related facilities and healthcare professionals, and the Healthcare Revolution business provides solutions using a new ecosystem for healthcare to individuals and local governments.

Sales increased to ¥15,262 million (up 185.4% year on year) and operating income to ¥4,182 million (up 2,650.4% year on year) due to significant growth in vaccine development and vaccination support services for new coronavirus infections and other services.

The application of the accounting standard for revenue recognition increased sales by ¥150 million and segment income by 29 million yen compared with the previous method.

Site Support Solutions Business

-Sales significantly exceeded the same period of the previous year

-Increase in development projects for vaccines and therapeutic drugs for new coronavirus infections and needs for call center projects

-Needs for clinical trials (researches) and other support for medical institutions are expanding -Promote collaboration with academia

Healthcare Revolution Business

-Sales significantly exceeded the same period of the previous year

-Significant increase in vaccination support services for new coronavirus infections, etc. -Expansion of businesses that integrate disease prevention, health information, and IT technologies -Promote cooperation with local governments

-Promote the use of harmo® as a Healthcare Communication Channel in PHRs, etc.

Ordinary Income

Ordinary income in the consolidated cumulative second quarter was ¥6,169 million (up 160.5% year- on-year).

Foreign exchange gains and other of ¥530 million were recorded as non-operating income, and interest expenses and other of ¥104 million were recorded as non-operating expenses.

Profit attributable to owners of parent

Profit attributable to owners of parent in the consolidated cumulative second quarter was ¥3,503 million (up 186.6% year-on-year).

CMIC recorded an extraordinary loss of ¥51 million for loss on retirement of fixed assets and loss on valuation of investment securities, income taxes of ¥2,631 million, and net loss for the quarter attributable to non-controlling interests of ¥17 million for the period.

Overview of the financial condition

Assets, liabilities, and net assets

Total assets at the end of the consolidated cumulative second quarter increased by ¥6,035 million compared with the end of the previous consolidated fiscal year to ¥97,228 million. This was mainly due to increases in notes and accounts receivable, trade and contract assets, property, plant and equipment, and cash and deposits.

Total liabilities increased by ¥3,512 million compared with the end of the previous consolidated fiscal year to ¥60,218 million. This was mainly due to increases in "Other" in fixed liabilities, long-term debts and provision for bonuses.

Total net assets increased by ¥2,523 million compared with the end of the previous consolidated fiscal year to ¥37,009 million. This is due mainly to an increase in retained earnings.

Future Outlook

The outlook for the fiscal year ending September 30, 2022, incorporates the outlook for future work related to COVID-19 and the impact of the situation in Ukraine on our business, based on information available at this time.

With regard to operations related to new coronavirus infection, while therapeutic drug and vaccine development projects are expected to continue, large-scale vaccination projects, which had driven our performance in the first half of the current fiscal year, are expected to decline.

As for the impact of the situation in Ukraine, although the Group does not have any business sites in Russia or Ukraine, there is a possibility that clinical trials in both countries will be cancelled or postponed, or that procurement of raw materials, medical equipment, and other materials will be delayed due to logistical disruptions, which may cause changes in our plans for contract projects. In addition, higher energy and logistics costs are expected to have an impact on profits.

Based on the above, we have revised upward our full-year forecasts for the fiscal year ending September 30, 2022, to net sales of ¥97,000 million, operating income of ¥7,600 million, ordinary income of ¥7,800 million, and net income attributable to owners of the parent of the company of ¥3,900 million, respectively, in light of continued strong performance in vaccine development and vaccination support services for new coronavirus infection during the first half of the current fiscal year.

Cautionary statement:

This material includes forward-looking statements based on assumptions and beliefs in light of the information currently available to management, and is subject to significant risks and uncertainties. Actual financial results may vary materially from the content of this material depending on a number of factors. While this material contains information on pharmaceuticals (including compounds under development), this information is not intended to make any representations or advertisements regarding the efficacy or effectiveness of their preparations, promote any kind of unapproved uses, nor provide medical advice of any kind.

This is an excerpt of the original content. To continue reading it, access the original document here.