Medipal : Summary of Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017

January 31, 2017 These financial statements have been prepared for reference only in accordance with accounting principles and practices generally accepted in Japan.

Code number: 7459 http://www.medipal.co.jp

Representative: Shuichi Watanabe, President and CEO Phone: +81-3-3517-5171 Contact: Mamoru Tsuchishio, Manager of Corporate Communications Department

Filing of Quarterly Report (scheduled): February 10, 2017 Start of Distribution of Dividends (scheduled): -

Preparation of Supplementary Materials for the Quarterly Financial Results: Yes

Presentation Meeting for Quarterly Financial Results: Yes (For institutional investors and analysts)

(All amounts are rounded down to the nearest million yen.)

1. Consolidated Results for the Third Quarter of the Fiscal Year Ending March 31, 2017 (April 1, 2016 to December 31, 2016)

2. Sales and Income (Percentages represent change compared with the corresponding period of the previous fiscal year.)

   Net sales (¥ million)	Year-on-year change (%)	Operating income (¥ million)	Year-on-year change (%)	Ordinary income (¥ million)	Year-on-year change (%)
   Nine months ended December 31, 2016 Nine months ended December 31, 2015	2,329,654 2,292,008	1.6 5.6	32,898 31,920	3.1 33.9	43,147 41,384	4.3 27.7

   Note: Comprehensive income: Nine months ended December 31, 2016: ¥33,999 million (-5.9%);

   Nine months ended December 31, 2015: ¥36,134 million (+17.8%)

   Net income attributable to owners of the parent (¥ million)	Year-on-year change (%)	Earnings per share (¥)	Earnings per share (diluted) (¥)
   Nine months ended December 31, 2016 Nine months ended December 31, 2015	23,547 22,169	6.2 27.4	103.99 97.90	- -

3. Financial Position

4. Total assets (¥ million)	Net assets (¥ million)	Net worth ratio (%)
   As of December 31, 2016 As of March 31, 2016	1,572,095 1,497,310	515,192 488,328	27.8 27.7

   (Reference) Net worth: As of December 31, 2016: ¥437,136 million; As of March 31, 2016: ¥414,939 million

5. Cash Dividends

   Dividends per share (¥)
   1st Quarter	2nd Quarter	3rd Quarter	Year-end	Full year
   Year ended March 31, 2016	-	13.00	-	15.00	28.00
   Year ending March 31, 2017	-	15.00	-
   Year ending March 31, 2017 (est.)	15.00	30.00

   Note: Revisions to projected dividends during the third quarter: None

6. Forecast of Consolidated Results for the Fiscal Year Ending March 31, 2017 (April 1, 2016 - March 31, 2017)

   (Percentages represent change compared to the previous fiscal year)

   Net sales		Operating income		Ordinary income		Net income attributable to owners of the parent		Earnings per share
   (¥ million)	(%)	(¥ million)	(%)	(¥ million)	(%)	(¥ million)	(%)	(¥)
   Fiscal year	3,090,000	2.0	40,000	(5.4)	53,500	(3.0)	30,500	(0.9)	134.69

   Note: Revisions to forecast of consolidated results during the three months ended December 31, 2016: No

   *Notes

7. Changes in significant subsidiaries during the period (changes in specified subsidiaries during the period accompanied by change in scope of consolidation): None

   New: - companies ( - ) Excluded: - companies ( - )

8. Application of accounting methods specific to preparation of the quarterly consolidated financial statements:

   None

9. Changes in accounting policies and changes in/restatements of accounting estimates

10. Changes in accounting policies due to revisions of accounting standards: Yes

11. Changes in accounting policies other than (a) above: None

12. Changes in accounting estimates: None

13. Restatements: None

    Note: For details, please see "2. Summary Information (Notes) (3) Summary of Changes in Accounting Policies and Changes in/Restatements of Accounting Estimates" on page 4 of the attached materials.

14. Number of shares issued and outstanding (common stock)

    Nine months ended December 31, 2016	244,524,496	Year ended March 31, 2016	244,524,496
    Nine months ended December 31, 2016	18,085,535	Year ended March 31, 2016	18,085,160
    Nine months ended December 31, 2016	226,439,138	Nine months ended December 31, 2015	226,440,672

15. ) Number of shares at the end of the period (including treasury stock)

16. ) Number of treasury shares at the end of the period

17. ) Average number of shares outstanding (cumulative with earlier quarters)

18. *Items Regarding the Implementation of Quarterly Review Procedures

    This summary of quarterly consolidated results is exempt from the quarterly review procedures based on the Financial Instruments and Exchange Act. Review procedures for the quarterly financial statements based on the Financial Instruments and Exchange Act had not been completed at the time of disclosure of this summary of quarterly consolidated results.

    *Cautionary Remarks Regarding Proper Use of Projected Results and Other Items

    The projected results are based on information at the time of this announcement. Actual results may differ from figures in the projection owing to a wide range of factors. See page 4 of the attached materials for items regarding the projected results.

    Table of Contents of Attached Materials

19. Qualitative Information on Quarterly Financial Results

20. Description of Results of Operations

21. Description of Financial Position

22. Description of Future Outlook including Projected Consolidated Results

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1. Summary Information (Notes)

2. Summary of Changes in Significant Subsidiaries during the Period

3. Summary of Accounting Methods Specific to Preparation of the Quarterly Consolidated Financial Statements

4. Summary of Changes in Accounting Policies and Changes in/Restatements of Accounting Estimates

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1. Quarterly Consolidated Financial Statements

2. Quarterly Consolidated Balance Sheets

3. Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income

4. Notes to the Quarterly Consolidated Financial Statements (Notes Regarding Assumptions of Going Concern)

5. Quarterly Consolidated Statements of Income

   Quarterly Consolidated Statements of Comprehensive Income

   (Notes in the Event of Significant Changes in Shareholders' Equity) (Segment Information)

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1

1. Qualitative Information on Quarterly Financial Results
1. Description of Results of Operations

   During the third quarter of the fiscal year ending March 31, 2017, the nine months ended December 31, 2016, Japan's economy recovered gradually due to factors including the effects of the government's economic policies and improvement in employment and income, despite concerns about a downturn in overseas economies.

   In these economic conditions, the MEDIPAL Group formulated the "2019 MEDIPAL Medium-Term Vision: Change the Oroshi next - Innovate and Create," which covers the three years starting April 1, 2016 and is aimed at a new oroshi business model that benefits society with distribution in the fields of medical care, health and beauty. The MEDIPAL Group will expand its earnings foundation and achieve the sustainable growth of the Group by further increasing the efficiency and enhancing the functions of existing businesses, continuing to expand new businesses using its nationwide infrastructure and human resources, and developing business in growth fields by making full use of the functions and resources of Group companies.

   In line with this vision, MEDIPAL FOODS CORPORATION (Chuo-ku, Sapporo-shi), which conducts the food processing raw materials wholesale business, was established in April 2016 through a business reorganization in the Group, and SPLine Corporation (Chuo-ku, Tokyo), which develops plans and solutions for the distribution of specialty pharmaceuticals (such as orphan drugs), was established in May 2016. In June 2016, MEDIPAL HOLDINGS concluded a capital and business tie-up with MTI Ltd. (Shinjuku-ku, Tokyo), a mobile app development firm with strengths in the field of digital healthcare. In July, PRESUSCUBE Corporation (Minato-ku, Tokyo), which conducts businesses including management support services for health insurance pharmacies, was established as a joint venture.

   For the nine months ended December 31, 2016, consolidated net sales were ¥2,329,654 million (a 1.6 percent increase compared with the same period of the previous fiscal year), operating income was ¥32,898 million (a

   3.1 percent increase), ordinary income was ¥43,147 million (a 4.3 percent increase) and net income attributable to owners of the parent was ¥23,547 million (a 6.2 percent increase).

   A summary of results by principal business segments follows below.

   Prescription Pharmaceutical Wholesale Business

   Although the MEDIPAL Group made aggressive efforts to promote sales of generic drugs, for which demand is increasing, and new drugs, conditions for sales of prescription pharmaceuticals were challenging due to negative market growth resulting from National Health Insurance (NHI) drug price reductions implemented in April 2016, the peak in demand for new hepatitis C treatments, and other factors.

   In this business, the MEDIPAL Group has been taking various measures to fully utilize its wholesale functions, with the idea of optimizing and raising the efficiency of the overall supply chain from pharmaceutical manufacturers to patients as social infrastructure that supports safe, secure medical treatment.

   In strengthening the MEDIPAL Group's distribution infrastructure, operating companies that are wholly owned subsidiaries of MEDIPAL HOLDINGS CORPORATION are carrying out the nationwide expansion of ALCs, 1 and the Fukuoka ALC (Higashi-ku, Fukuoka-shi) of ATOL CO., LTD. began operation in July 2016. Construction of the Saitama ALC (Misato-shi, Saitama Prefecture) of MEDICEO CORPORATION and the

   Okayama ALC (Tsukubo-gun, Okayama Prefecture) of EVERLTH CO., LTD. is scheduled to start in February 2017. The MEDIPAL Group is also establishing FLCs2 in areas where ALCs are already operating. Furthermore, the MEDIPAL Group is promoting PRESUS®,3 a new operations support system it developed for dispensing pharmacies.

   In its new approach to promotion activities to strengthen sales, the MEDIPAL Group has expanded the number of highly skilled and knowledgeable Assist Representatives (ARs)4 with medical representative (MR) certification to approximately 2,000. In addition, the MEDIPAL Group is operating a new business in which it

   provides certain Post-Marketing Surveillance (PMS) services under contract with pharmaceutical companies using its nationwide operating bases and its ARs and other human resources.

   As a result, sales of the Prescription Pharmaceutical Wholesale Business were ¥1,578,097 million (a 1.8 percent decrease compared with the same period of the previous fiscal year), and operating income was ¥15,481 million (a 12.6 percent decrease).

   Definition of Terms:

2. Area Logistics Center (ALC): A state-of-the-art logistics center that supplies prescription pharmaceuticals, medical supplies and other items primarily to dispensing pharmacies, hospitals and clinics.

3. Front Logistics Center (FLC): A combined sales and logistics base that is located near customers and supports stable supplies of products in coordination with ALCs.

4. PRESUS® (Pharmacy Real-time Support System): An all-in-one system for conducting automated ordering, inventory management, etc., using demand forecasting through linkage with ALCs to support the operations of dispensing pharmacies.

5. Assist Representative (AR): An internal designation given to Marketing Specialists (salespeople for the Prescription Pharmaceutical Wholesale Business), pharmacists and others who have passed the Medical Representative (MR) qualification exam.

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