Consolidated Financial Results for the Six Months Ended September 30, 2021 (Japanese GAAP)

Note: This document is a translation of the original Japanese version and provided for reference purposes only. In the

event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results

for the Six Months Ended September 30, 2021 (Japanese GAAP)

		November 5, 2021
Company name:	Medical System Network Co., Ltd.	Listing: Tokyo Stock Exchange
Stock code:	4350	URL: https://www.msnw.co.jp/eng/
Representative:	Inao Tajiri, President and Representative Director
Contact:	Eiji Hirashima, Executive Officer, Director of Finance and Director
Tel:	[phone]

Scheduled date for quarterly report submission:	November 9, 2021
Scheduled date for dividend payment:	December 13, 2021
Preparation of supplemental explanatory materials:	Yes
Results briefing to be held:	Yes (for institutional investors and analysts)

(Amounts of less than one million yen are rounded down)

1. Consolidated Financial Results for the Six Months Ended September 30, 2021 (April 1 to September 30, 2021)

(1) Consolidated operating results

(Percentages indicate YoY change)

	Net sales		EBITDA		Operating profit	Ordinary profit	Profit attributable to
			owners of parent
Six months ended	Million yen		%	Million yen		%	Million yen	%	Million yen	%	Million yen	%
52,169		2.2	3,253		16.7	1,862	37.4	2,235	60.0	1,431	147.2
September 30, 2021
Six months ended	51,045		(2.2)	2,787		22.5	1,355	70.1	1,397	78.1	578	165.1
September 30, 2020

Note: Comprehensive income for the six months ended September 30, 2021 was 1,451 million yen (+153.1% YoY), and comprehensive income for the six months ended September 30, 2020 was 573 million yen (+332.7% YoY).

Note: EBITDA = (operating profit + depreciation + goodwill amortization)

	Earnings per share	Diluted earnings
	per share
Six months ended	Yen	Yen
47.46	－
September 30, 2021
Six months ended	19.08	－
September 30, 2020

Note: Please refer to "Appropriate use of earnings forecast and other special notes 2" for details of earnings per share calculations.

(2) Consolidated financial position

	Total assets	Net assets	Equity ratio	Net assets per share
As of	Million yen	Million yen	%	Yen
62,433	12,504	20.0	413.81
September 30, 2021
As of	64,448	11,187	17.3	370.23
March 31, 2021

Reference: Shareholders' equity amounted to 12,488 million yen as of September 30, 2021 and 11,163 million as of March 31, 2021.

Note: Please refer to "Appropriate use of earnings forecast and other special notes 2" for details of shareholders' equity, equity ratio, and net assets per share calculations.

2. Dividends

		Dividends per share
	End of Q1	End of Q2	End of Q3	Year-end	Total
Fiscal year ended	Yen	Yen	Yen	Yen	Yen
－	5.00	－	5.00	10.00
March 31, 2021
Fiscal year ending	－	5.00
March 31, 2022
Fiscal year ending
March 31, 2022			－	5.00	10.00
(forecast)

Note: No revisions have been made to the Company's most recently announced dividend forecast.

3. Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2022 (April 1, 2021 to March 31, 2022)

(Percentages indicate YoY change)

									Profit attributable	Earnings
	Net sales		EBITDA		Operating profit	Ordinary profit	to owners of
				per share
									parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full-year	105,700	1.4	6,500	1.2	3,500	2.0	4,000	15.0	1,800 (18.1)	59.69

Note: No revisions have been made to the Company's most recently announced consolidated earnings forecast.

Note: EBITDA = (operating profit + depreciation + goodwill amortization)

*Notes

(1) Changes in significant subsidiaries during the period under review: None

(Transfers of specified subsidiaries associated with changes in the Company's scope of consolidation) Newly added: None

Excluded: None

1. Distinctive accounting methods applied when preparing quarterly consolidated financial statements: None
2. Changes in accounting policies, accounting estimates and retrospective restatements

1.	Accounting policy changes due to accounting standard revisions, etc.:	Yes
2.	Other accounting policy changes:	None
3.	Changes in accounting estimates:	None
4.	Retrospective restatements:	None

Note: Please refer to "(4) Notes to Quarterly Consolidated Financial Statements (Changes in accounting policies)" within "2. Quarterly Consolidated Financial Statements and Primary Notes" on page 10 of the attached materials for details.

(4) Number of shares outstanding (common stock)
1.	Shares outstanding	As of September 30, 2021	30,642,600	As of March 31, 2021	30,642,600
	(including treasury stock)
2.	Treasury shares outstanding As of September 30, 2021	464,055	As of March 31, 2021	489,055
3.	Period-average shares
Six months ended		Six months ended
	outstanding (cumulative	30,163,381	30,343,965
	September 30, 2021	September 30, 2020
	quarterly figures)

Note: Please refer to "Appropriate use of earnings forecast and other special notes 2" for details of calculation method regarding period-end treasury stock numbers and period-average shares outstanding (cumulative quarterly figures).

*The financial information in this quarterly report is not subject to review by certified public accountants or auditing firms.

*Appropriate use of earnings forecast and other special notes

1. The earnings forecasts and other forward-looking statements contained in this document are based on information currently available to the Company, and certain assumptions it considers reasonable, but are not intended to be a promise that the Company will achieve. Actual results may vary materially from forecasts due to a variety of factors. For matters concerning earnings forecasts, please refer to page 3 of the attached materials "1. Qualitative Information on Quarterly Financial Performance (3) Explanation of Consolidated Earnings Forecasts and Other Projections."
2. In the quarterly consolidated balance sheets, the Company's shares held as trust assets of the Board Benefit Trust (BBT) are recorded as treasury stock. They are included in treasury stock in calculations of earnings per share, equity ratio, net assets per share, shareholders' equity, period-end treasury stock numbers, and period-average shares outstanding (cumulative quarterly figures).

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Six Months Ended September 30, 2021

Accompanying Materials - Contents
1. Qualitative Information on Quarterly Financial Performance..........................................................................................	2
(1)	Explanation of Operating Results .................................................................................................................................	2
(2)	Explanation of Financial Position..................................................................................................................................	3
(3)	Explanation of Consolidated Earnings Forecasts and Other Projections .....................................................................	3
2. Quarterly Consolidated Financial Statements and Primary Notes .................................................................................	4
(1)	Consolidated Balance Sheet ........................................................................................................................................	4
(2)	Consolidated Statement of Income and Consolidated Statement of Comprehensive Income......................................	6
(3)	Consolidated Statement of Cash Flows .......................................................................................................................	8
(4)	Notes to Quarterly Consolidated Financial Statements ..............................................................................................	10
(Notes to going concern assumptions).........................................................................................................................	10
(Notes in the event of significant changes in shareholders' equity)..............................................................................	10
(Changes in accounting policies) .................................................................................................................................	10
(Segment information)..................................................................................................................................................	12

1

Medical System Network Co., Ltd.(4350) Consolidated Financial Results for the Six Months Ended September 30, 2021

1. Qualitative Information on Quarterly Financial Performance

(1) Explanation of Operating Results

During the six months ended September 30, 2021, the Company recorded consolidated net sales of 52,169 million yen (+2.2% YoY), operating profit of 1,862 million yen (+37.4%YoY), and ordinary profit of 2,235 million yen (+60.0% YoY). There was solid growth in the number of new network affiliates in the Pharmaceutical Network Business, and while prescription unit price fell in the Dispensing Pharmacy Business, the number of prescriptions recovered to a certain extent. Profit attributable to owners of parent was 1,431 million yen (+147.2% YoY), due to gains on the sale of investment securities and the impact of tax effects from the absorption-type merger with the Company's consolidated subsidiary, Home-Visit Nursing Care Station Himawari Co., Ltd., in July 2021.

Results by segment were as follows. Net sales for individual segments include intersegment sales.

1) Community Pharmacy Network Segment

In the Community Pharmacy Network Segment, we aim to provide value throughout the entire pharmaceutical supply chain. Our businesses include a pharmaceutical network to support pharmacy management, dispensing pharmacy operations, pharmaceutical manufacture and marketing, and a digital shift business using the communication app LINE.

In the Pharmaceutical Network Business, the environment surrounding the pharmacy industry has become increasingly severe as the NHI drug price list, which was previously revised every other year, is subject to the annual revision from April 2021. The number of new network affiliates continued to post solid growth amid mounting needs for operational stability in these circumstances. As of September 30, 2021, network affiliates totaled 6,700, comprising 419 Group dispensing pharmacies and 6,281 general network affiliates (an increase of 584 from March 31, 2021).

In the Dispensing Pharmacy Business, while the prescription unit price fell, the number of prescriptions recovered to a certain extent. As of September 30, 2021, the Company had 419 dispensing pharmacies, one care plan center, and eight drug/cosmetic stores.

In the Manufacture and Market Pharmaceuticals Business, we launched nine products (five ingredients) in the six months ended September 30, 2021, and had 77 products (39 ingredients) available as of September 30, 2021.

In the Digital Shift Business, as of the end of September 2021, the number of registered LINE users exceeded 170,000, the largest among dispensing pharmacies in Japan, with 552 pharmacies using the service.

As a result, segment sales for the six months ended September 30, 2021 were 49,663 million yen (+2.3% YoY) and operating profit was 2,885 million yen (+21.8% YoY).

2) Leasing and Facility-related Segment

In the Leasing and Facility-related Segment, while real estate lease revenue was generally solid, and orders for construction projects increased, occupancy rates at serviced residences for the elderly slumped as sales activities were restricted due to the COVID-19 pandemic. As a result, segment sales were 1,536 million yen (+6.8% YoY) and operating profit was 32 million yen (+97.5% YoY).

As of September 30, 2021, occupancy rates were stable at three of our five serviced residences for the elderly. At the remaining two, Wisteria Senri-Chuo had an occupancy rate of 78.1% (64 out of 82 units occupied), and Wisteria Minami-Ichijo had an occupancy rate of 70.7% (82 out of 116 units occupied). We plan to carry out marketing activities to reach our fiscal year-end target occupancy rate of 90%, while taking care to prevent COVID-19 infections.

3) Meal Catering Segment

In the Meal Catering Segment, the number of meals supplied fell during the COVID-19 pandemic, but gross profit improved as we changed suppliers. Segment sales were 1,166 million yen (-6.5% YoY) and operating profit was 1 million yen (operating loss of 13 million yen in the same period of the previous fiscal year).

4) Other Segment

The Other Segment provides home-visit nursing care. Segment sales were 152 million yen (+38.7% YoY) and the

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