Sysmex : Summary of Consolidated Financial Results for the First Nine Months of the Fiscal Year Ending March 31, 2023

Summary of Consolidated Financial Results [ IFRS ]

for the First Nine Months of the Fiscal Year Ending March 31, 2023

February 9, 2023

Listed company name

Code

Listed stock exchanges

URL

Company representative

Contact

Phone

Scheduled date for filing of quarterly report Scheduled date for dividend payment Preparation of supplementary material for quarterly earnings

Holding of earnings announcement

• Sysmex Corporation
• 6869
• Tokyo Stock Exchange
• www.sysmex.co.jp/en
• Hisashi Ietsugu, Chairman and CEO
• Kensuke Iizuka, Senior Executive Officer and Executive Vice President of Corporate Business Administration
• 078(265)-0500
• February 13, 2023
• ―
• Yes
• Yes

(Unit: Millions of Yen)

1. Results for the First Nine Months of the Fiscal Year Ending March 31, 2023

(1) Operating results

(% changes as compared with the corresponding period of the previous fiscal year)

Nine months ended Dec. 31, 2022 Nine months ended Dec. 31, 2021

Net Sales		Operating profit	Profit before tax	Profit
298,743	15.4%	54,372	10.2%	51,058	7.4%		35,104	8.2%
258,901	22.2%	49,358	37.5%	47,554	42.9%		32,429	40.0%
	Profit		Total		Basic earnings	Diluted earnings
	attributable to
	comprehensive
	owners of the	per share (Yen)	per share (Yen)
	income
	parent

Nine months ended Dec. 31, 2022	35,185	8.1%	41,371	14.4%	168.17	168.10
Nine months ended Dec. 31, 2021	32,546	39.8%	36,158	34.1%	155.68	155.36

Note: Changes in accounting policy have been retroactively applied to the figures for the first nine months of the fiscal year ended March 31, 2022. Figures shown here are after this retroactive application.

(2) Financial condition

			Equity attributable	Equity attributable
Total assets		Total equity	to owners of the	to owners of the
			parent	parent to total assets
As of Dec. 31, 2022	501,435	374,078	373,409	74.5%
As of Mar. 31, 2022	483,707	349,053	348,303	72.0%

2. Dividend

Year ended Mar. 31, 2022 Year ending Mar. 31, 2023

Year ending Mar. 31, 2023 (Forecast)

Dividend per share
First quarter	Second quarter	Third quarter	Year-end	Annual
(Yen)	(Yen)	(Yen)	(Yen)	(Yen)
￣	37.00	￣	39.00	76.00
￣	40.00	￣
			40.00	80.00

Note: Revision of dividends forecast for this period: No

3. Financial Forecast for the Year Ending March 31, 2023

(% changes as compared with the previous fiscal year)

	Net Sales		Operating profit	Profit before tax	Profit attributable to	Basic earnings
		owners of the parent	per share (Yen)
Year ending	420,000	15.5%	77,000	14.2%	74,500	15.8%	51,000	15.7%	243.76
Mar. 31, 2023

Note: Revision of financial forecast for this period: No

4. Other Information

1. Changes in significant consolidated subsidiaries (which resulted in changes in scope of consolidation): Yes
   Excluded: One company (Sysmex International Reagents Co., Ltd.)
2. Changes in accounting policies and accounting estimates
3. 1. Changes in accounting policies required by IFRS: No
   2. Other changes in accounting policies: No
   3. Changes in accounting estimates: No
4. Number of outstanding stock (common stock)
5. 1. Number of outstanding stock at the end of each fiscal period (including treasury stock): 209,682,632 shares as of Dec. 31, 2022; 209,657,362 shares as of Mar. 31, 2022
   2. Number of treasury stock at the end of each fiscal period:

447,492 shares as of Dec. 31, 2022; 447,255 shares as of Mar. 31, 2022

1. Average number of outstanding stock for each period (cumulative): 209,222,682 shares for the nine months ended Dec. 31, 2022 209,056,923 shares for the nine months ended Dec. 31, 2021

Note: Quarterly summaries of financial results are excluded from quarterly reviews.

• Explanation regarding the appropriate use of financial forecast and other information
• 1. The forecasts and future projections contained herein have been prepared on the basis of rational decisions given the information available as of the date of announcement of this document. These forecasts do not represent a commitment by the Company, and actual performance may differ substantially from forecasts for a variety of reasons. Please refer to "3) Consolidated financial forecast" within "1. Qualitative information on quarterly financial results" on page 4 of the attachment to this document for cautionary statements concerning the conditions and performance forecasts that serve as the basis for these forecasts.
  2. Supplementary financial materials (in Japanese and English) will be posted on the Sysmex website on Thursday, February 9, 2023.

Content of Supplementary Materials
1. Qualitative information on quarterly financial results	2
1)	Operating performance analysis	2
2)	Financial conditions analysis	4
3)	Consolidated financial forecast	4
2. Condensed quarterly consolidated financial statements and notes	5
1)	Condensed quarterly consolidated statement of financial position	5
2)	Condensed quarterly consolidated statement of income	7
3)	Condensed quarterly consolidated statement of other comprehensive income	8
4)	Condensed quarterly consolidated statement of changes in equity	9
5)	Condensed quarterly consolidated statement of cash flows	11
6)	Notes to the condensed quarterly consolidated financial statements	12
	1. Notes related to the going concern assumption	12
	2. Segment information	12

－ 1 －

1. Qualitative information on quarterly financial results

1. Operating performance analysis

Future-related information contained in the text below is based on the judgement as of the end of the fiscal period under review.

In the past, the Group booked configuration and customization costs in cloud computing contracts as other non-current assets. However, in the fiscal year ended March 31, 2022 we began recognizing these costs as expenses when the services are received, in accordance with a decision announced in April 2021 by the IFRS Interpretation Guidelines Committee. These changes in accounting policy have been applied retroactively, and we are comparing and analyzing the figures for the first nine months of the previous fiscal year to reflect this retroactive treatment.

During the first nine months of the fiscal year ending March 31, 2023, the Japanese economy was characterized by a gradual recovery in personal consumption, and economic activity is beginning to normalize. However, the outlook remains uncertain due to continued high resource and energy prices, rapid exchange rate fluctuations, and other factors. Overseas, concerns are mounting about a potential slowdown in socioeconomic activity, which had been on an overall recovery trend, due to the prolonged situation surrounding Ukraine, persistent inflation, and the economic slowdown in China.

On the healthcare front, developed countries are demanding more efficient healthcare. Demand for healthcare is growing in emerging markets, along with rising needs to improve the quality of healthcare and services. At the same time, we are seeing rapid advances in the application of artificial intelligence, information and communications technology, and other leading-edge technologies to the healthcare sector. The COVID-19 pandemic has also prompted considerations about global healthcare systems and the potential for major changes in the healthcare environment itself. Accordingly, we anticipate further opportunities for growth in the healthcare field.

Against this backdrop, Sysmex received manufacturing and marketing approval in Japan for an assay kit to identify amyloid beta (Aβ) accumulation in the brain, a cause of Alzheimer's disease, using a small amount of blood. This assay kit makes it possible to assist in identifying Aβ accumulation in the brain, which is a characteristic of Alzheimer's disease. Unlike conventional testing methods, the product allows testing with blood, thus reducing the physical, emotional, and financial burden on patients. Furthermore, the product is expected to contribute to early diagnosis and early determination of optimal treatment plans for patients. Sysmex will move forward with preparations for the early introduction of the product to the market, while working toward its coverage by Japanese national health insurance.

We also received approval of an application for a partial change to the manufacturing and marketing approval in Japan of our gene amplification reagent, LYNOAMPTM CK19, marketed as a lymph node metastasis test reagent for breast cancer, colorectal cancer, gastric cancer, and non-small cell lung cancer, expanding its amplification to cervical cancer and endometrial cancer. This approval expands the application of our proprietary OSNA™ method*1 to lymph node metastasis testing for cervical cancer and endometrial cancer, thereby providing swift and accurate testing results. As a result, the system is expected to contribute to the formulation of appropriate medical treatment plans.

Meanwhile, to realize the social implementation of regenerative medicine and cell therapy, Sysmex and JCR Pharmaceuticals Co., Ltd. have established a joint venture for carrying out research and development, manufacture and sales in of cell-based regenerative medicine products, using diverse cells such as stem cells. In recent years, the significant potential of regenerative medicine and cell therapy have been established in particular in areas that have traditionally been difficult to address with conventional chemically synthesized low molecular weight drugs*2 or biopharmaceuticals*3. Through regenerative medicine products, we aim to provide appropriate treatment options to patients and improve their prognosis, and we initiatives toward commercialization accordingly.

As the global general distributor, Sysmex continued to market hinotori™ to medical institutions in Japan. (The hinotori Surgical Robot System is the first made-in-Japanrobotic-assisted surgery system.) The system had been approved for application in urology. The Ministry of Health, Labour and Welfare has also approved the system for use in gastroenterological surgery and gynecology, enabling support for patient-friendly minimally invasive surgery in new fields. We are continuing with efforts to put together regulatory affairs and sales systems in preparation to enter overseas markets.

*1 One-Step Nucleic Acid Amplification (OSNA) method:

A technique developed by Sysmex that does not require extraction or purification of nucleic acid in the pre-treatment process, enabling one-step amplification.

*2 Chemical synthesized low molecular weight drugs:

Organic compounds produced through a chemical synthesis process. The molecules are small,

－ 2 －

and the drugs have a relatively simple structure, containing very few functional molecular groups.

*3 Biopharmaceuticals:

Pharmaceuticals produced by biotechnology (technologies such as genetic engineering and generation of recombinant cell lines for biomanufacturing). Active ingredients are proteins (growth hormones, insulin, antibodies, etc.), produced by biological sources (cells, bacteria, etc.). Compared to chemical synthesized low molecular drugs, the molecules are large, and the drugs have a complex structure.

Net sales by destination
	Nine months ended	Nine months ended	YoY
	December 31, 2021	December 31, 2022
	(Previous
	Amount	Percentage of	Amount	Percentage of
	period = 100)
	(Millions of yen)	total (%)	(Millions of yen)	total (%)
Japan	39,283	15.1	43,765	14.6	111.4
Americas	59,275	22.9	77,236	25.9	130.3
EMEA	76,184	29.4	84,636	28.3	111.1
China	62,792	24.3	66,038	22.1	105.2
Asia Pacific	21,366	8.3	27,066	9.1	126.7
Overseas subtotal	219,618	84.9	254,978	85.4	116.1
Total	258,901	100.0	298,743	100.0	115.4

In Japan, sales rose for immunochemistry reagents, mainly in relation to COVID-19 testing. Sales of hematology and medical robotics instruments also increased. As a result, sales in Japan rose 11.4% year on year, to ¥43,765 million.

Overseas, testing demand recovered compared with the first nine months of the previous fiscal year, when demand was affected by COVID-19. In the hematology field, sales of reagents increased, as did sales of reagents in the urinalysis and hemostasis fields. These factors, plus ongoing yen depreciation, caused overseas Group sales to rise 16.1% year on year, to ¥254,978 million. The overseas sales ratio rose 0.5 percentage point, to 85.4%.

Selling, general and administrative (SG&A) expenses expanded 20.3%, to ¥81,551 million, owing mainly to the resumption of sales and service activities that had been constrained across all regions in the previous period due to the pandemic. In addition, R&D expenses increased 20.5% year on year, to ¥22,064 million, owing to active investment in development.

As a result, during the first nine months of the fiscal year ending March 31, 2023, the Group recorded consolidated net sales of ¥298,743 million, up 15.4% year on year. Operating profit up 10.2%, to ¥54,372 million; profit before tax increased 7.4%, to ¥51,058 million, and profit attributable to owners of the parent rose by 8.1%, to ¥35,185 million.

Performance by segment

1. Japan
   In addition to higher sales of immunochemistry reagents, mainly related to COVID-19 testing,

sales of reagents and maintenance services increased in the life science field and for medical robotics instruments. As a result, sales in Japan rose 10.4% year on year, to ¥46,575 million.

On the profit front, performance was affected by higher SG&A and R&D expenses, but higher sales and an improved cost of sales ratio lifted segment profit (operating profit) 42.2%, to ¥38,570 million.

(2) Americas

In North America, sales of instruments, reagents and maintenance services increased in the hematology field and sales of urinalysis reagents also rose due to a resurgence in testing demand and higher sales of instruments. In Central and South America, sales of instruments and reagents increased in the hematology and urinalysis fields due to increased instrument sales. As a result, overall sales in the Americas grew 31.2% year on year, to ¥73,269 million.

Segment profit (operating profit) fell 16.8%, to ¥2,459 million, as the cost of sales ratio deteriorated and SG&A expenses increased.

(3) EMEA

Sales of instruments and reagents increased in the fields of hematology, urinalysis and life

－ 3 －