Japan Lifeline : Consolidated Financial Results for the Three Months Ended June 30, 2023 (433KB)

Consolidated Financial Results for the Three Months Ended June 30, 2023 [Japan GAAP]

August 2, 2023

Company name	: Japan Lifeline Co., Ltd.
Code No.	: 7575
Stock Exchange Listing	: The Prime Market of the Tokyo Stock Exchange
URL	: https://www.japanlifeline.com/
Representative	: Keisuke Suzuki, President and CEO
Contact person	: Takeyoshi Egawa, Vice President, Business Administration Department
TEL	: [phone]

Scheduled date to file the Quarterly Securities Report	: August 10, 2023
Scheduled date to commence dividend payment	: -
Supplementary documents to the financial results for the period	: Available
Presentation on quarterly results	: Not available

(Amounts are rounded down to million yen)

1. Consolidated Financial Results for the Three Months Ended June 30, 2023 (April 1, 2023 to June 30, 2023)

(1) Consolidated operating results					(% indicates year-on-year changes)
			Net sales		Operating profit	Ordinary profit			Profit attributable to
						owners of parent
			Millions of yen	%	Millions of yen	%	Millions of yen		%		Millions of yen	%
Three	months	ended	12,954	(0.1)	3,176	17.3	3,244	21.3		2,330	19.7
June 30, 2023
Three	months	ended	12,969	2.8	2,707	16.7	2,674	10.6		1,946	14.3
June 30, 2022
(Note)	Comprehensive income: Three months ended June 30, 2023		: 2,437 million yen;	19.6 %
			Three months ended June 30, 2022		: 2,038 million yen;		6.6 %
			Earnings per share	Diluted earnings
			per share
				Yen		Yen
Three	months	ended		30.03		-
June 30, 2023
Three	months	ended		24.73		-
June 30, 2022

1. Consolidated financial position

			Total assets		Net assets	Equity ratio
			Millions of yen		Millions of yen			%
As of June 30, 2023		71,322		54,981			77.1
As of March 31, 2023		74,641		56,195			75.3
(Reference) Shareholders' equity:	As of June 30, 2023	: 54,981 million yen
			As of March 31, 2023	: 56,195 million yen
2.	Dividends
						Cash dividends per share
				1Q End	2Q End		3Q End		Year-End	Total
					Yen	Yen		Yen		Yen	Yen
Year ended March 31, 2023		-		0.00		-		38.00	38.00
Year ending March 31, 2024		-
Year ending March 31, 2024 (forecast)			0.00		-		38.00	38.00
(Note) Revisions to cash dividends forecast most recently announced : None

: None

: Yes

: Yes

: None

3. Forecast of Consolidated Financial Results for the Year Ending March 31, 2024 (April 1, 2023 to March 31, 2024)

(% represents change from the previous year)

	Net sales		Operating profit	Ordinary profit		Profit attributable to	Earnings
			owners of parent	per share
	Millions of	%	Millions of	%	Millions of	%		Millions of	%	Yen
	yen	yen	yen		yen
Six months ending	23,880	(6.3)	4,488	(12.3)	4,499	(12.0)		3,235	(12.6)	41.17
September 30,2023
Year ending March	48,807	(5.7)	9,763	(9.9)	9,531	(12.6)		6,854	(0.5)	89.13
31, 2024
(Note) Revisions to the forecast of consolidated financial results most recently announced	: None

* Notes

1. Changes in significant subsidiaries during the period (change in specified subsidiaries resulting in scope of consolidation): None
2. Application of specific accounting treatments for the preparation of the consolidated quarterly financial statement: None
3. Changes in accounting policies, changes in accounting estimates and restatements

(i) Changes in accounting policies due to the revision of accounting standards (ii) Changes in accounting policies other than (i)

(iii) Changes in accounting estimates (iv) Restatement

(Notes) For details, please refer to "2. Consolidated Financial Statements and Primary Notes (3) Notes to Consolidated Financial Statements Changes in Accounting Policies".

1. Number of issued shares outstanding (common stock)

1. Number of issued shares at the end of the period (including treasury stock):

Three months ended June 30, 2023	: 82,919,976	Shares
Year ended March 31, 2023	: 82,919,976	Shares

1. Number of shares held as treasury stock at the end of the period:

Three months ended June 30, 2023	: 5,653,073	shares
Year ended March 31, 2023	: 4,999,561	shares

1. Average number of issued shares outstanding during the period, after deducting shares held as treasury stock:

Three months ended June 30, 2023	: 77,603,344	shares
Three months ended June 30, 2022	: 78,704,802	shares

(Notes) The Company has adopted a BIP (Board Incentive Plan) trust, assuming the number of shares held by the trust are included in

the number of treasury stock of "(4) Number of issued shares outstanding (common stock)".

*This Summary Report is out of scope for quarterly review by the external auditors.

*Explanation for the appropriate use of forecast of the consolidated financial results and other special notes.

Any forward-looking statements in the summary report, such as results forecasts, are based on the information currently available to the

Company and certain assumptions that the Company deems to be reasonable at the time this report was prepared. Actual results may

differ significantly from the forecasts due to various factors. For the suppositions that form the assumptions for earnings forecasts and

cautions concerning the use thereof, please refer to "1. Qualitative Information (3) Explanation of Consolidated Financial Guidance".

1. Qualitative Information

1. Explanation of Business Results

Forward-looking statements below are based on our judgment as of the end of the first quarter of the current consolidated fiscal year.

(Business Environment)

In the first quarter, our sales generally performed well due to an increase in the number of surgeries in hospitals. This was partly a result of the reclassification of COVID-19 as a "Class 5 Infectious Disease" in May 2023, requiring hospitals to take less severe measures. The number of cases of atrial fibrillation (AF) ablation treatment, which significantly impacts our performance, increased by about 9% compared to the same period last year in the first quarter. This exceeded our initial expectations of a 6% increase for the full year.

However, the "RF Needle," a main product of EP/Ablation, ended its exclusive distribution agreement at the end of the previous fiscal year. From this fiscal year, we changed our business flow by signing a contract with Boston Scientific Japan to provide sales support services. While this change resulted in a decrease in revenue, it contributed to an improvement in the gross profit margin because it did not involve product procurement.

As a result, the performance of the first quarter saw a slight decrease in sales compared to the same period last year, but each stage of profit significantly increased. The profit margin also improved.

The Japanese yen saw significant fluctuations against the U.S. dollar in the foreign exchange market. However, we saw no significant impact on our earnings in the first quarter. This is because we purchase over 70% of our products in yen and use the moving average method to calculate cost of sales, which smooths out any temporary increases in purchase costs over the long term.

(Business Performance)
The earnings for the first quarter are as follows.
					Unit: Millions of yen
	Three Months Ended	Three Months Ended
Summary of	June 30, 2022	June 30, 2023	Increase/	Increase/
Profit & Loss Statement	Amount	Vs Sales	Amount	Vs Sales	(Decrease)	(Decrease)%
	Ratio%	Ratio%
Net Sales	12,969	100.0	12,954	100.0	(14)	(0.1%)
Gross Profit	7,458	57.5	7,887	60.9	428	5.8%
Operating Profit	2,707	20.9	3,176	24.5	468	17.3%
Ordinary Profit	2,674	20.6	3,244	25.0	569	21.3%
Quarterly Net Profit
Attributable to Owners	1,946	15.0	2,330	18.0	384	19.7%
of Parent

• Net sales

Net sales decreased by 14 million yen year-to-year, to 12,954 million yen. Details are shown in the Sales by Product section below.

• Gross profit

Gross profit increased by 428 million yen year-to-year, to 7,887 million yen. The increase in in-house product sales due to the increase in AF case numbers, and the decrease in third-party products due to the change in the commercial flow of the RF Needle, resulted in our in-house sales ratio being 5.2 pts higher at 59.8% compared to the same period last year. Furthermore, the loss in disposal and write-down of inventories decreased by 118 million yen compared to the same period last year. As a result, the gross profit margin was 3.4 pts higher at 60.9% compared to the same period last year.

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• Operating Profit

Operating profit increased by 468 million yen year-to-year, to 3,176 million yen. Although sales and general administrative

expenses remained at the same level due to increased sales-related costs associated with increased business activity, there were

temporary miscellaneous income and a decrease in research and development expenses. As a result, the operating profit margin was

3.6 pts higher at 24.5% compared to the same period last year.

• Ordinary Profit

Ordinary profit increased by 569 million yen year-to-year, to 3,244 million yen. Non-operating income was 132 million yen,

mainly comprising of interest received. Non-operating expenses was 65 million yen, including provisions for doubtful accounts

related to receivables from business partners.

• Quarterly Net Profit Attributable to Owners of the Parent

Quarterly net profit attributable to the owners of the parent increased by 384 million yen year-to-year, to 2,330 million yen. Due

to the impact of tax deductions and other factors, our corporate tax burden rate was 28.1%.

(Sales by Product)

			Unit: Millions of yen
Product Category	Three Months Ended	Three Months Ended	Increase/	Increase/
June 30, 2022	June 30, 2023	(Decrease)	(Decrease)%
Cardiac Rhythm Management	3,094	3,446	352	11.4%
EP/Ablation	6,662	6,272	(390)	(5.9%)
Cardiovascular	2,611	2,853	241	9.2%
Gastrointestinal	599	381	(218)	(36.4%)
Total	12,969	12,954	(14)	(0.1%)

(Note) The main products classified in each product category are as follows.

Effective from the first quarter of the current fiscal year, the Company has changed the names of product categories, so that "Cardiovascular" corresponds to the former "Cardiovascular Surgery", and "Gastrointestinal" corresponds to the former "Gastrointestinal/PI". In addition, the product category of Atrial septum defect closure has been changed from the former "Gastrointestinal/PI" to "Cardiovascular". Consequently, for the year-on-year comparisons, the figures for the same period of the previous fiscal year are reorganized into the changed product categories for comparative analysis.

Cardiac Rhythm	Pacemaker, T-ICD (Transvascular Implantable Cardioverter Defibrillator), S-ICD
Management	(Subcutaneous Implantable Cardioverter Defibrillator), CRT-P (Cardiac Resynchronization
	Therapy Pacemaker), CRT-D (Cardiac Resynchronization Therapy Defibrillator), AED
	(Automated External Defibrillator)
EP/Ablation	Electrophysiology catheter, Ablation catheter, Endoscopic laser ablation catheter, Internal
	cardioversion catheter, Esophageal temperature monitoring catheter, Radiofrequency
	transseptal needle, Steerable sheath
Cardiovascular	Vascular graft, Open stent graft, Stent graft, Embolic coil, Aspiration catheter, Atrial septum
	defect closing device
Gastrointestinal	Bile duct tube stent, Bile duct dilation balloon, Cholangioscope system, Colonic stent, Gastro-
	duodenal stent, Radiofrequency ablation needle for liver cancer treatment

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• Cardiac Rhythm Management

Sales related to pacemakers increased by 5.2% compared to the same period last year. While competitors' new products penetration and low pricing strategies subsided at the moment, we increased face-to-face sales using catheters and other tools that support the proper implantation of leads during surgery. As a result, we secured a slightly higher share than the same period last year.

Sales related to ICDs increased by 15.1% compared to the same period last year. We have positioned the S-ICD, which is a unique product in the industry, as a strategic product and have focused on nationwide sales expansion measures. In the first quarter, sales outpaced market expansion due to an increase in new adoption hospitals and an improvement in the repeat rate. Also, for T-ICDs, we initially planned sales to be on par with the same period last year, but sales were strong because we were able to acquire more replacement cases than expected.

Overall, Cardiac Rhythm Management net sales were 3,446 million yen, up 11.4% YoY.

• EP/Ablation

EP catheter sales increased by 12.3% compared to the same period last year. Against the backdrop of an increase in AF case numbers exceeding expectations, sales of our in-house products such as the internal atrial cardioversion catheter BeeAT, the electrophysiology catheter EP Star, and the esophageal temperature monitoring catheter Esophastar were strong. In particular, for EP Star, the sales growth was beyond that of the case numbers, due to a shortage of other companies' products.

Ablation catheter sales decreased by 29.0% compared to the same period last year. Our supplier for the endoscopic laser ablation catheter HeartLight X3 experienced a shortage of raw materials. This led to a continued lack of sufficient product supply, and we had to limit our expansion to new accounts, putting a damper on our sales.

Other sales significantly decreased by 66.1% compared to the same period last year due to the change in the commercial flow of RF Needle.

Overall, EP/Ablation net sales were 6,272 million yen, down 5.9% YoY.

• Cardiovascular

Vascular graft-related sales increased by 5.6% compared to the same period last year. This was due to the steady increase in market share of our in-house vascular graft, J Graft, and the third-party abdominal stent graft. With regards to our open stent graft Frozenix, the sales were steady in the first quarter but slightly decreased because of the particularly strong sales in the same period last year.

Neurovascular-related sales increased dramatically, about 5.7 times compared to the same period last year. We have identified the expansion of the neurovascular area as one of our medium-term priority measures, and we plan to launch about 10 products in the next few years. In the first quarter, in addition to the embolic coil Avenir, which we started selling from the previous fiscal year, we launched a new thrombus aspiration catheter Esperance. Both products have received good reviews in the medical field, and sales have progressed above plan.

Other sales decreased by 12.5% compared to the same period last year. The number of catheter treatments for pediatric atrial septal defect was low, resulting in a decrease in sales for atrial septal defect closure devices.

Overall, Cardiovascular net sales were 2,853 million yen, up 9.2% YoY.

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