January 31, 2022

Summary of Consolidated Financial Results for the Third Quarter

of the Fiscal Year Ending March 31, 2022

(Nine Months Ended December 31, 2021)

Company name:

[Japanese GAAP]

NIHON CHOUZAI Co., Ltd.

Listing: Tokyo Stock Exchange, First Section

Stock code:

3341

URL: https://www.nicho.co.jp

Representative:

Yosuke Mitsuhara, President & CEO

Contact:

Masahiro Tojo, General Manager of Corporate Planning Department Tel: +81-(0)3-6810-0800

Scheduled date of filing of Quarterly Report:

February 14, 2022

Scheduled date of payment of dividend:

-

Preparation of supplementary materials for quarterly financial results: Yes

Holding of quarterly financial results meeting:

None

Note: The original disclosure in Japanese was released on January 31, 2022 at 15:00 (GMT +9).

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

1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2022 (April 1, 2021 - December 31, 2021)

(1) Consolidated results of operations

(Percentages represent year-on-year changes)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Nine months ended Dec. 31, 2021

223,439

7.2

5,827

1.0

6,058

4.9

1,096

(67.8)

Nine months ended Dec. 31, 2020

208,337

4.7

5,767

2.4

5,773

5.9

3,410

11.5

Note: Comprehensive income (million yen)

Nine months ended Dec. 31, 2021: 1,112 (down 67.5％)

Nine months ended Dec. 31, 2020: 3,427 (up 11.2％)

Net income per share

Diluted net income per share

Yen

Yen

Nine months ended Dec. 31, 2021

36.57

－

Nine months ended Dec. 31, 2020

113.74

－

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Million yen

Million yen

%

As of Dec. 31, 2021

181,904

50,231

27.6

As of Mar. 31, 2021

186,262

49,868

26.8

Reference: Shareholders' equity (million yen) As of Dec. 31, 2021: 50,231 As of Mar. 31, 2021: 49,868

2. Dividends

Dividend per share

1Q-end

2Q-end

3Q-end

Year-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended Mar. 31, 2021

－

12.50

－

12.50

25.00

Fiscal year ending Mar. 31, 2022

－

12.50

－

Fiscal year ending Mar. 31, 2022 (forecasts)

12.50

25.00

Note: Revisions to the most recently announced dividend forecast: None

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

(Percentages represent year-on-year changes)

Profit attributable

Net income per

Net sales

Operating profit

Ordinary profit

to owners of

share

parent

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

Full year

294,600

5.6

7,000

(13.6)

7,000

(16.8)

4,000

13.0

133.39

Note: Revisions to the most recently announced consolidated forecast: None

  • Notes
  1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): None
  2. Application of special accounting methods for presenting quarterly consolidated financial statements: None
  3. Changes in accounting policies and accounting-based estimates, and restatements
  1. Changes in accounting policies due to revisions in accounting standards, others: Yes
  2. Changes in accounting policies other than 1) above: None
  3. Changes in accounting-based estimates: None
  4. Restatements: None
  1. Number of outstanding shares (common stock shares)
  1. Number of shares outstanding at the end of period (including treasury shares)

As of Dec. 31, 2021:

32,048,000 shares

As of Mar. 31, 2021:

32,048,000 shares

2) Number of treasury shares at the end of period

As of Dec. 31, 2021:

2,061,175 shares

As of Mar. 31, 2021:

2,061,074 shares

3) Average number of shares outstanding during the period

Nine months ended Dec. 31, 2021:

29,986,867 shares

Nine months ended Dec. 30, 2020:

29,987,066 shares

Note 1: The quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.

Note 2: Cautionary statement with respect to forward-looking statements and other special items

  1. Note concerning forward-looking statements
    Forecasts and other forward-looking statements in this document incorporate risks and uncertainties because these statements are based on Nihon Chouzai's judgments and assumptions using information that is currently available. These materials are not promises by Nihon Chouzai regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons.
  2. How to view supplementary materials for financial results
    Supplementary materials for quarterly financial results will be disclosed at the Timely Disclosure network (TDnet) as appropriate, and also will be available on the Nihon Chouzai website.

Nihon Chouzai Co., Ltd. (3341) Third Quarter of FY3/22 Financial Results

Contents of Attachments

1. Qualitative Information on Quarterly Consolidated Financial Performance

2

(1)

Explanation of Results of Operations

2

(2)

Explanation of Financial Position

4

(3)

Explanation of Consolidated Forecast and Other Forward-looking Statements

4

2. Quarterly Consolidated Financial Statements and Notes

5

(1)

Quarterly Consolidated Balance Sheet

5

(2)

Quarterly Consolidated Statements of Income and Comprehensive Income

7

Quarterly Consolidated Statement of Income

For the Nine-month Period

7

Quarterly Consolidated Statement of Comprehensive Income

For the Nine-month Period

8

(3)

Notes to Quarterly Consolidated Financial Statements

9

Going-concern Assumption

9

Significant Changes in Shareholders' Equity

9

Change in Accounting Policy

9

Segment and Other Information

10

1

Nihon Chouzai Co., Ltd. (3341) Third Quarter of FY3/22 Financial Results

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

In the third quarter of the current consolidated fiscal year (April 2021-December 2021), Japan's economy showed signs of recovery as the effects of COVID-19 gradually receded. However, the discovery of new variants among other factors continued to render the situation unpredictable, and the economic situation remains uncertain.

In this economic environment, keenly aware of our role as a medical institution tasked with supporting medical care in our communities, our Group undertook thorough infection prevention measures in our pharmacies while continuing to offer quality medical care. We are also taking ongoing steps to rein in costs across the Group to improve profitability.

In December 2021, the Group formulated a Basic Sustainability Policy to further reinforce and put into place sustainability initiatives, and established a Sustainability Committee, chaired by the President and CEO. At the same time, we identified material issues (key issues) requiring a priority response.

In August 2021, the Group announced a Digital Transformation (DX) Strategy to step up our efforts in this area. Our initiatives to move forward with digital transformation, as well as to enhance appropriate disclosure to stakeholders, have met with highly positive feedback. On December, 2021, Nihon Chouzai was the first company in Japan's pharmacy industry to be certified as a DX Business Operator under the certification system established by the Ministry of Economy, Trade and Industry (METI).

In the Dispensing Pharmacy Business, the Group began rolling out an online insurance eligibility verification system using patients' Individual Number Cards to pharmacies nationwide during a trial launch initiated in March 2021. Full- fledged operations began in October 2021, with 663 Group pharmacies nationwide operating the system as of October 20, 2021.

In the Pharmaceutical Manufacturing and Sales Business, there was a fire at a contract logistics center in western Japan to which Nihon Generic Co., Ltd. outsources warehousing operations for its products, causing damage to products stored there. Although distribution functions have already nearly returned to normal, mainly through a logistics center in eastern Japan, the Group recorded the amount of damage to inventory as an extraordinary loss. However, all of the products damaged by the fire are covered by insurance.

Choseido Pharmaceutical Co., Ltd. has formulated a business improvement plan in response to an administrative directive issued in October 2021. The Nihon Chouzai Group has been working together to prevent recurrence of the issue identified and improve quality control. The period of suspension of business operations specified by the administrative disciplinary action has elapsed, and Choseido Pharmaceutical resumed all pharmaceutical manufacturing and sales operations on November 12.

The Medical Professional Staffing and Placement Business continued to be impacted by COVID-19, which put downward pressure on demand for temporary pharmacist staffing and pharmacist placements. However, the Group expanded its placements of doctors, including to sites involved in the rollout of Japan's COVID-19 vaccination program.

Net sales for the first nine months of the current consolidated fiscal year were 223,439 million yen (+7.2％ YoY),

operating profit was 5,827 million yen (+1.0％ YoY), ordinary profit was 6,058 million yen (+4.9％ YoY), and

profit attributable to owners of the parent was 1,096 million yen (-67.8％ YoY).

The Group will continue to make every effort to prevent the spread of COVID-19 and provide high-quality medical care to ensure that patients and customers can use our services with peace of mind.

Segment-specific earnings are as indicated below.

2

Nihon Chouzai Co., Ltd. (3341) Third Quarter of FY3/22 Financial Results

1) Dispensing Pharmacy Business

In the first nine months of the current consolidated fiscal year, the Dispensing Pharmacy Business reported net sales of 197,389 million yen (+9.0％ YoY) and operating profit of 9,108 million yen (+30.3％ YoY).

The total number of pharmacies at the end of December came to 690 stores (including one merchandise store) as a result of 30 new store openings and 10 store closures during the period.

Although COVID-19 continued to impact performance, sales and operating profit both increased on the back of new pharmacy openings in the previous fiscal year and a greater volume of prescriptions.

Generic pharmaceuticals represented 89.0% of the Group's total pharmaceutical usage in volume terms as of the end of December. Pharmacies performing at-home medical care (12 or more home visits per year) has steadily increased, now standing at 92.4%.

2) Pharmaceutical Manufacturing and Sales Business

In the first nine months of the current consolidated fiscal year, the Pharmaceutical Manufacturing and Sales Business reported net sales of 35,274 million yen (+0.1％ YoY) and operating profit of 1,294 million yen (-41.3％

YoY).

Higher sales were owing to brisk performance of drugs newly NHI listed in 2019, 2020 and 2021, which offset the steep decline in selling prices for existing drugs under the April 2021 drug price revision. The sharp decline in operating profit reflects a combination of factors. In addition to efforts to reduce costs, the Group continues to pursue a sales policy focused on profitability and to expand sales of newly listed drugs manufactured in-house. Nevertheless, these efforts were offset mainly by the impact of product recalls following quality issues at Choseido Pharmaceutical and of the temporary suspension of business operations under administrative disciplinary action. On the other hand, the company has been making steady business improvements based on its announced business improvement plan. At the end of the third quarter of the current consolidated fiscal year, the Group had 669 drugs on the market (including two over-the-counter drugs).

3) Medical Professional Staffing and Placement Business

In the first nine months of the current consolidated fiscal year, the Medical Professional Staffing and Placement Business reported net sales of 5,207 million yen (-21.6％YoY) and operating profit of 423 million yen (-35.1％

YoY).

Sales were down as the pandemic constrained demand for temporary pharmacist staffing. The decline in operating profit reflects a contraction in temporary staffing and placements in the pharmacist business, which offset expansion in placements of doctors, including to sites involved in the rollout of Japan's COVID-19 vaccination program.

3

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NIHON CHOUZAI Co. Ltd. published this content on 31 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 January 2022 06:20:17 UTC.