ＪＭＤＣ（4483） – FY2021 Financial Briefing Material

FY2021Financial Briefing MaterialMay 10, 2022JMDC Inc.INDEX1. Summary2. FY2021 Performance Report3. Healthcare-Big Data Business4. Tele-medicine Business 5. Dispensing Pharmacy Support Business6. FY2022 Performance Forecast7. Business Outlook2Section 1Summary3FY2021: Performance HighlightsAlthough Q4 was affected by seasonal leveling, the full-year results and major KPIs were firm and exceeded performance forecasts, which had been revised upward.Consolidated Revenue(Million JPY)21,814Y-o-Y+30％Consolidated EBITDA(Million JPY)6,411Y-o-Y+32％Healthcare-Big DataY-o-Y+38％Tele-medicine andDispensing Pharmacy SupportY-o-Y遠隔医療Tele-medicineDispensing 調剤薬局支援Pharmacy Support+10％ +33％Number of People in Contracted Health Insurance Unions 10.44million peopleNumber of Pep Up IDs3.43 million people* Estimation of the number of continually-contracted health insurance unions and the number of issued IDs at end of April 2022Revenue of Healthcare-Big DataRevenue of business for industry+36％Note: IFRS-basedEBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses* Comparison of FY2020 and FY20214FY2021: Business Segments of JMDC Group and SummariesHealthcare-Big Data accelerated not only data utilization, but also data accumulation. Tele-medicine and Dispensing Pharmacy Support delivered solid results although they continued to be affected by Covid-19.Business OutlineFY2021 SummaryHealthcare-Big DataFor IndustryData utilization service for pharmaceutical companies and insurance companiesFor Payers and IndividualsData analysis for health insurance unions and provision of ICT “Pep Up” products to health insurance union membersFor Medical Service ProvidersMedicine DB, data analysis/utilization for medical institutions, management consulting/finance, web-based medical inquiriesTele-medicineProvision of the remote diagnostic imaging servicesDispensing Pharmacy SupportDevelopment/provision of receipt computers and electronic medication histories for pharmaciesData applications expand through providing consulting/analysis/solutions. As a result, revenue growth, especially among Top 5 customers, increased significantly.The introduction of Pep Up was accelerated, and services were launched for local governments. Business scale expanded, and a new data platform was developed.As services for medical institutions expanded, data accumulation accelerated. Data utilization is gradually expanding in business for industry.Although Covid-19 continues to have an impact, business development is progressing well, including improved profitability through operational improvements and pharmaceutical approvals for the AI algorithm.Uncertainty in dispensing pharmacy management caused by Covid-19 will continue to affect the company’s business, but M&As have expanded the scale of the business, and the accumulation of pharmacy-derived data is on track.5FY2021: Shareholder ReturnWe will pay a dividend of 10 JPY per share in order to manage the Company while paying attention to maintaining an appropriat e balance between shareholder return and securing financial resources for investment for future growth.The dividend forecast for the fiscal year ending March 31, 2023, remains to be determined. The shareholder dividend level will be determined in consideration of the Company’s future management performance, such as operating results and financial condition.FY2021FY2022 (Forecast)Record dateMarch 31, 2022March 31, 2023Dividend per shareJPY10Total amount of dividendJPY565 millionTo be determinedEffective dateJune 7, 20226FY2022: Performance ForecastThe plan is based on the assumption of revenue growth as an extension of existing businesses, not including M&A or new busine sses.In terms of profit, we aim to manage the company with an awareness of healthy profit margins while continuing to invest aggre ssively in business opportunities with an eye to future growth.FY2022 Consolidated Performance Forecast(vs. FY2021 growth rate)27.5 bil JPY(+26％)6 bil JPY (22％) (+25％) 8 bil JPY (29％) (+25％) Preconditions of forecast• Healthcare-Big Data continues to grow steadily• Tele-medicine and Dispensing Pharmacy Support will grow moderately in anticipation of coexistence with Covid-19• Future M&A not factored in• Aggressive investment in human resources, including the hiring of more than 190 new employees, is incorporated with a view to continued future growth.• Factoring in costs such as increased office rents due to the strengthening of the organization and expansion of the scale of operations• Develop new business investment plans based on the assumption that a certain profit margin will be secured.RevenueOperating profit (Rate) EBITDA (Margin) Profit attributable to owners of parent (Rate) 4 bil JPY (15％) (+23％) • Assumption of no change in financial conditions and credit environment• Factoring in corporate taxes calculated logically• No concerns about impairment of subsidiary stocks, not factored in7Note: IFRS-basedEBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses, EBITDA margin: EBITDA/RevenueFY2021 and FY2022: Management ViewTo help shareholders, investors, and other stakeholders better understand the company, we provide management view on points o n which questions may be raised.FY2021 Q4 performanceFY2022 forecastImpact of Covid-19 on long-term trendsShareholder return levelsManagement Views••In data utilization for industry, revenue leveled off in Q3 and Q4 due to a shift from budget rush demand at the end of the fiscal year to demand stimulated by proposals of consulting, analysis, solutions, etc. Specifically, 200-300 million JPY of revenue was brought forward from Q4 to Q3.In Tele-medicine business, there was an impact of about negative 100 million JPY in revenue due to spread of Omicron variant.• Judging by the pipeline status in FY2022, demand continues to be on a steadily increasing trend.• This forecast is based on the premise that we will continue to invest aggressively in business opportunities aiming for future growth.• The high profit margins from existing strong business models remain unchanged, but we will aggressively invest resources in clinical trial Dx and other large growth markets as they appear likely to develop. In the event that costs are incurred ahead of schedule during the start-up phase of the business, there is a possibility that profits will be squeezed in some areas, but we will disclose and publicize such cases as appropriate.• There has been no significant short-term impact (neither positive nor negative) on Healthcare-Big Data. In the future, we believe that the new Dx trend that is emerging in response to Covid-19 will grow into a full-fledged trend particularly in the area of clinical trials and create new demand over the medium to long term.• Post-Covid-19 normalization is expected to cause reactionary growth in Tele-medicine and Dispensing Pharmacy Support.• We will make appropriate shareholder return a reality while striking a balance between the internal reserves required of issuers of Prime Market stock and shareholder return.• For FY2021, we decided to set the dividend payout ratio at 17%, taking into account our capacity to invest for growth.Initiatives on ESG and SDGs• We will work on such initiatives while being conscious of our required responsibilities as issuers of Prime Market stock. We will also actively disclose and announce the details of such initiatives to ensure our stakeholders’ clear understanding.8Section 2FY2021 Performance Report9FY2021: Summary of Consolidated PerformanceWith continued business scale expansion and healthy profit growth, we exceeded our initial and revised plans.(Unit: Million JPY)FY2020FY2021Y-o-Y16,77121,814RevenueOperating profit(rate)Profit before taxes(rate)Profit attributable to owners of parent (rate)EBITDA(margin)3,695(22%)3,636(22%)2,476(15%)4,867(29%)4,800(22%)4,785(22%)3,258(15%)6,411(29%)+30%+30%+32%+32%+32%10Note: IFRS-basedEBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses, EBITDA margin: EBITDA/RevenueFY2021: Consolidated Revenue/EBITDADemand leveled off in Q3 and Q4. This is due to the leveling off of demand from the previous rush demand for budgets at the e nd of the fiscal year to the early stimulation of demand through consulting proposals and other means.Quarterly Trends of Consolidated Revenue Quarterly Trends of Consolidated EBITDA/Margin(Unit: Million JPY)EBITDAMargin28+ 19%6,128 6,1355,1655,0204,6304,5303,068 3,0282,5583,5033,2123,763EBITDA1,619 1,5829349938351,050614480Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4FY2019FY2020FY2021FY2019FY2020FY2021(Unit: Million JPY and %)3130+ 16%2,1071,8311,3081,16411Note: IFRS-basedEBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses, EBITDA margin: EBITDA/Revenue[Reference] FY2021: Consolidated Revenue/EBITDA (LTM Basis)Even on LTM basis, which excludes seasonality, both revenue/EBITDA are growing steadily.LTM Trends of Consolidated RevenueLTM Trends of Consolidated EBITDA(Unit: Million JPY)(Unit: Million JPY)21,81420,84419,34618,08916,77115,11012,81313,5086,4116,1635,4165,6754,8674,2783,3793,593Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4FY2020FY2021FY2020FY2021Note: IFRS-basedEBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or lossesLTM: Last Twelve Months (the past 12 months from the latest quarter)12FY2021: Employee/SG&A Expenses (Consolidated)Our presence in the recruitment market is improving, and we are making steady progress in bolstering our organization to support the next wave of growth.Quarterly Trends in the Number of Employees (consolidated)Quarterly Trends of SG&A Expenses (consolidated)(Unit: persons)(Unit: Million JPY)960 9669198637417576486834614694745031,4991,3861,2931,047 1,039 1,0131,170+ 25%2,1782,1101,8861,7401,671Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4FY2019FY2020FY2021FY2019FY2020FY2021Note: IFRS-based13FY2021: Performance by SegmentAll segments achieved steady growth both in revenue and profit, although they were partially affected by Covid-19.(Unit: Million JPY)FY2020FY2021Y-o-YHealthcare-Big DataTele-medicineDispensing Pharmacy SupportAdjustmentRevenueEBITDA(Margin)RevenueEBITDA(Margin)RevenueEBITDA(Margin)RevenueEBITDA10,193 3,647 (36%)4,046 1,224 (30%)2,692 371 (14%)-160 -376 14,019 4,859 (35%)4,441 1,515 (34%)3,582 432 (12%)-228-395Note: IFRS-basedEBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses, EBITDA margin: EBITDA/Revenue+38%+33%+10%+24%+33%+16%–14[Reference] FY2021: Revenue/EBITDA by SegmentHealthcare-Big Data generates more than 60% of JMDC Group’s revenue and 70% of its EBITDA. Tele-medicine continued to maintain high profitability, while Dispensing Pharmacy Support’s profitability has recovered to previous levels.RevenueEBITDA/EBITDA MarginAdjustment−JPY228mAdjustment−JPY395mDispensing Pharmacy SupportJPY3,582mJPY21,814mTele-medicineJPY4,441m(including “Adjustment” -JPY228m)Healthcare-Big DataJPY14,019mDispensing Pharmacy SupportJPY432m12%Tele-medicineJPY1,515m34%JPY6,411m(including “Adjustment” -JPY395m)EBITDA margin29%Healthcare-Big DataJPY4,859m35%Note: IFRS-basedEBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses, EBITDA margin: EBITDA/Revenue15Section 3Healthcare-Big Data Business16Healthcare-Big Data Business: PerformanceThere was an increase of 140-150 million JPY in temporary costs and upfront investments. This was due to an increase in the comp osition of businesses with high cost of sales (Pep Up point business) in payer business (+30 million JPY), an increase in recruitment and M&A advis ory fees (+50 million JPY), and active investment in new businesses (+45 million JPY).Quarterly Revenue TrendsQuarterly EBITDA Trends(Unit: Million JPY)(Unit: Million JPY)+ 20%4,054 4,1353,4402,8552,7563,073+ 9%1,6771,4461,3301,2028588771,9631,7982,0981,338 1,4151,037802707616468406232Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4FY2019FY2020FY2021FY2019FY2020FY2021Note: IFRS-basedEBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses17Healthcare-Big Data Business: Performance (Seasonal Leveling)Revenues in H2 were +30% Y-o-Y, with Q3 and Q4 revenues roughly on the same level.Revenue as Compared to Last YearRevenue Composition as Compared to Last Year(Unit: Million JPY)H2+30%10,193Q43,440Q32,855H1+50%H13,89714,0194,1354,0545,829100%Q434%Q328%H138%100%29%29%42%FY2020FY2021FY2020FY202118JMDC Healthcare-Big Datahealthcare industry to use the data.JMDC will support the evolution of medicine by accumulating diverse healthcare data in Japan and building an environment enabling any player in the Use dataUse dataPayersInsurersCompute disease contraction rateAnalyze patient behaviorStudy epidemiology dataMedical institutions DoctorsProvide dataPharmaceutical companiesJMDC’s Healthcare-Big DatabaseAnalyze regional medicinenetworkEstimateand analyze patient countProvide dataBusiness ownersDispensing pharmacies Individuals19Healthcare-Big Data Business: OutlineWe operate our business by offering data utilization-based services to a range of players in the healthcare industry, such as “For Industry” (mainly for pharmaceutical companies and insurance companies), “For Payers/Individuals,” and “For Medical Service Providers.”(Unit: Million JPY)Data UtilizationFor IndustryFor Payers/IndividualsFor Medical Service ProvidersMainly for pharmaceutical companies and insurance companies• Pharmaceutical companies utilize data for analysis to increase the value of medicine, while insurance companies do so for product development.• Consulting-accelerated expansion of data utilization and improvement in added value.• The use of DBs other than the payer DB has also expanded.Develop services for health insurance unions and Pep Up• Accumulate information such as receipts and dispensing histories before devising measures to rein in medical expenses.• Specific health guidance business, in addition to health checkup recommendations and severe disease prevention, expanded steadily.• Progress was made in the accumulation of new data due to the expansion of services provided to local governments and PHR.Rapid expansion of business for medical institutions• Analyze in-hospital data for use in consultation and finance services.• Provide medical institutions with original applications such as package insert DB of medicine and web inquiry.• Accelerate the accumulation of DPC data and electronic chart data through the expansion of service provisions.Note: Each business size value represents a simple sum for business management purposes. No adjustment was made to IFRS adjustment values and inter-segment transaction adjustment values.Healthcare-Big DataBusiness Size(FY2021, actual)6,6042,8484,55120For Industry: Business Status of Data UtilizationWith the continued expansion of applications by leading clients, revenue across all client segments grew.Data Utilization for the Industry: RevenueAnnual Per-company Revenue by Customer Segment(Unit: Million JPY)(Unit: Million JPY)+ 36%6,6044,862400380360340320300280260240220200180160140120100806040200FY20161,9732,3562,8973,422Note: Revenue figures for the top 5, top 6–10, top 11–20, and 21 or below were computed according to the revenue value for each fiscal year.FY2016FY2017FY2018FY2019FY2020FY2021FY2017FY2018FY2019FY2020FY2021Top 56 to 1011 to 20 21 or below 21For Industry: Business Policy on Data UtilizationWe will grow the potential of data utilization hand in hand with industry frontrunners, highly eager to use data, and aim to create a world in which data utilization becomes a standard.(Unit: Million JPY)Annual revenue per customer in pharmaceutical companies and insurance companiesStep 1: Extend data utilization with front-runner customers of the industry••Average revenue of top 5 customers went up 28% (March 2021 LTM vs March 2022 LTM)Average revenue of top 10 customers went up 25% (March 2021 LTM vs March 2022 LTM)Step 2: Adopt data utilization as an industrial standard•Raise average revenue on the whole by horizontally developing the usage expanded through transactions with top customers.3002001000A B C D E F G H I J ・・・・(Pharmaceutical companies, insurance companies)22Note: The graph above is image-based.For Industry: Maximize Revenue of Effective Data UsageTo expand data utilization, we will take measures in the form of raising value-added (Up-Sell) and widening data categories (Cross-Sell).Value Enhancement (Up-Sell)SolutionAnalysisDataConsultingDBPayer claimsCheckupDPCLaboratory dataElectronic chartInquiryMedical imagingMedical facilities・・・Doctors Amount of activity MedicinePROGenomeData Expansion (Cross-Sell)23For Industry: Up-Sell EffortsHigh value-added services such as consulting and solutions, which have been strengthened as part of the up-sell strategy, have steadily led growth.Up-Sell Status (Revenue by Service)SolutionConsultingAnalysisDBData4,8635322282,6721,429FY20206,6041,0559382,9941,616FY2021(Unit: Million JPY) • Significant expansion of application development, development of systems to improve business operations through data utilization, etc.Steady expansion of consulting services that utilize data and database analysis.• The spread of the use of databases on a subscription basis gained momentum.• The provision of data on an ad hoc basis also expanded at a stable pace.24For Industry: Cross-Sell Performance of DBs Other Than Payer DBRevenue of data other than the payer DB, which have been strengthened as part of the cross-sell strategy, are steadily growing.Cross-Sell Performance (Sales by Data Category) Medical institution DBMedical facility DBAcademic conference information DB・・・・・Payer DB4,8638314,031(Unit: Million JPY) As databases expand, various uses are being developed.Effective use of databases originating from payers is steadily expanding.6,6041,5165,088FY2020 FY2021 25For Industry: Dx Support for Pharmaceutical CompaniesDemand for Dx support focusing on data and ICT has started to increase in various departments of pharmaceutical companies.Strategic clinical trial support focusing on DB and PHRSales and marketing Dx using payer claim data with extra dataDB-based sales and marketing toolsData-driven facility selectionOptimization of sales and marketingDoctors’ academic activity analysis service, “Doctorna”Using RWD with extra data, we optimize clinical trial protocols and support the selection of optimal facilities for clinical trials to avoid delays.Based on RWD and pharmaceutical company internal data combined with machine learning, we examine effective activities and marketing mix.Find opinion leaders using keywords, such as a disease name or symptom, by aggregating DBs of academic societies and papers in sync with market research. DCT/Virtual trialsSafety forecast supportBy making full use of EDC systems, such as DB+PHR and EDC, we will enable clinical trials to be held at home and through satellite visits to reduce trial cost.Using various data including RWD, we closely examine the accuracy in the existing forecasting model to develop new and corrective logics.“SCUEL News” –Aggregating and delivering local medical and nursing informationNews information provided by medical institutions, physician associations, pharmacist associations, and governments is distributed widely to sales representatives. Information on areas, facilities, and doctors-in-charge are quickly collected.26For Payers/Individuals: Widening the Data PlatformWhile building an overwhelming position in health insurance unions, we will promote the provision of services to local governments, the Japan Health Insurance Association, and others.JMDC Population Count TrendPenetration in Health Insurance UnionsThe population has been steadily increasing evenduring the Covid-19 pandemic(Unit: 10,000 people)Traceable targets: 1 in 2.8Number of health insurance unions 2991,044TotalApprox. 29 million people1,0008005000Aim early for a dominant position with 20 million in health insurance unionsFirst mover advantageWinner take all…Apr. 2015Apr.2016Apr.2017Apr.2018Apr.2019Apr.2020Apr.2021Apr.202227Note: Members represent the total number of members of health insurance unions that have continuous contracts with us as of the end of April of each year (excluding one-time transactions, rounded off), provided that the numbers for April 2015 through 2022 are the total member numbers as of the date of this presentation of health insurance unions. 1,044 million people(1 in 2.8 persons)For Payers/Individuals: State of BusinessThe business of providing solutions through Pep Up for local governments and the national health insurance system is growing. In addition, the cycle in which the enhancement of services leads to the expansion of new users is continuing.Quarterly Trends in Business Revenue of Payers/individualsPep Up: Number of User IDs(Unit: Million JPY)(Unit: 10,000 people)+ 18%984831654641568481460381339326182202Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4FY2019FY2020FY2021343+ 57%218FY2020FY2021 28For Payers/Individuals: Business Engagement PolicyExpanding the business to provide solutions for health enhancement, prevention of extremely serious diseases, etc. by develop ing health insurance population (healthcare data platform) into a user platform.10.44million peoplePopulationHealthcare data platformFive-year target for the business with health insurance unions (by FY2025) Expansion with a view to 20 million people3.43million people●万人Approx. 190 thousand people164万人Pep Up userUser platformExpansion to 50% of the populationService user(Annually 5,000 yen or more per person)A user rate of 10%Note: Estimation of the number of continually-contracted health insurance unions and the number of issued IDs at end of March 2022.29For Medical Service Providers: State of BusinessWith the steady growth of various services for medical institutions, the enhancement of data platforms originating from medical institutions is making rapid progress.Quarterly Revenue Trends of Businesses Providing Medical Services(Unit: Million JPY)Number of medical institutions (hospitals) capable of utilizing DPC/receipt data+ 30%1,3531,0409688811,0871,142705711368320360239Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4FY2019FY2020FY20215004003002001000528+ 54%FY2020FY202130For Medical Service Providers: Initiatives to Promote Healthy Medical Practice (Melp Web Inquiry, Melp PHR)Both Melp Web Inquiry, which streamlines inquiries with digital technology, and Melp PHR, which enables the digitalization of in-clinic patient behavior, are being introduced at an accelerated pace.Number of Medical Institutions that Have Introduced Melp Web InquiryMelp Web InquiryNumber of Melp PHR UsersMelp+ 46%1,2001,1001,000900800Ave.+ 900/day200,000100,0000Apr.2021May2021Jun.2021Jul.2021Aug.2021Sep.2021Oct.2021Nov.2021Dec.2021Jan.2021Feb.2022Mar.2022May2021Jun.2021Jul.2021Aug.2021Sep.2021Oct.2021Nov.2021Dec.2021Jan.2021Feb.2022Mar.202231[Reference] For Medical Service Providers: Functions of Melp (PHR to Inquiry)We will renew the entire patient experience with AI-assisted consultations for hospital visits, searches for nearby medical institutions, digital patient registration cards, and web inquiries, while reducing the workload of clinics, such as by eliminating the need to post medical questionnaire sheets.MelpAI-assisted consultations for hospital visitsSearches for medical institutionsFamily doctor registration,digital patient registration cardsWeb inquiriesOne-tap electronic chart coordination 32For Medical Service Providers: Expansion of Medical Service Provider Platforms (Antaa, Ishiyaku)Medical service provider platforms are rapidly expanding as the number of “Antaa” and “Ishiyaku” users increases at an accelerated pace. We will continue to increase engagement with doctors to promote the optimization of medical services.Number of “Antaa” Doctor Member AccountsNumber of “Ishiyaku” User IDs(Unit: persons)+ 23%40,00030,000Ave.+ 200/day40,00030,00020,00010,0000Oct.2021Nov.2021Dec.2021Jan.2022Feb.2022Mar.2022Oct.2021Nov.2021Dec.2021Jan.2022Feb.2022Mar.202233[Reference] For Medical Service Providers: Expansion of Medical Service Provider Platforms “Antaa”By providing an environment for mutual learning and teaching, Antaa is attracting hospital doctors in their 20’s and 30’s who are highly motivated to learn. It aims to become the de facto learning standard for energetic young doctors, while planning for various initiatives in coordination with doctors who are well-aware of medical issues.SeeConsultKnowLarge- to medium-sized medical institutionsMain participants are young doctors in their 20’s and 30’sLong self-learning hours and high motivation to learnParticipants include many doctors working in large to medium-sized medical institutions rather than doctors working in clinics.Doctors in their 20’s and 30’s account for 80% of the total.Participants include many doctors who participate in external training at their own expense and spend long hours doing self-learning.34Potential of Healthcare-Big Data Business: Expansion of Data AssetsWe are collecting a variety of Healthcare-Big Data to support the evolution of healthcare as a whole.We are steadily expanding our data assets, and will keep our eyes on the prize.52%（+5%pt）37%（+19%pt）Health insurance union dataNational Health Insurance/Japan Health Insurance Association dataDiagnosis procedure combination and payer claim dataElectronic charts and case dataPrescription dispensing payer claimsClinicPHRPlatform for doctors18%（+7%pt）4%（+3%pt）16%（+16%pt）6%（+2%pt）19%（+8%pt）25%（+25%pt）Targets20 million people30 million people3,000 hospitals3,000 hospitals25,000 pharmacies20,000 clinics20 million people200,000 people35Potential of Healthcare-Big Data Business: Examples of Data Utilization Enabled by Data AssetsAs data assets are accumulated, the scope of data utilization within the industry is expanding.Example for pharmaceutical companiesDCTMedium termDigitalization of clinical trialsControl group based on RWDKOL supportKOL researchShort termRepositioningSubject recruitmentDB researchFacility selectionMR activity supportIdentification of potential patientsTreatment flowLocal government coordinationKPI monitoringPromotion to doctorsDoctors’ panelsPMSCompliance with reguationslPep UpMelpFacility DBDoctor DB Medicine DB Health insurance unions National Health Insurance/Japan Health Insurance AssociationDPC/Payer claimsElectronic chart casesClinicPrescription dispensing payer claimsIshiyakuAntaaPHROpen data PayerMedical institutions Dispensing pharmacies Platforms for doctors 36Potential of Healthcare-Big Data Business: Business Opportunities for the Industry (1)At this point, we feel that there are considerable business opportunities based on our discussions with clients.Example for pharmaceutical companiesPharmaceutical company departmentThemeOutlineHypothetical: Potential Market Size (JMDC’s current penetration)MarketingIdentification of potential patientsIncrease the number of new patients by identifying and addressing bottlenecks that prevent patients from receiving diagnoses and appropriate medical treatment based on observing patient journeys using RWD.KPI monitoringTreatment flowRefine KPIs, such as share of in-house drugs and ratio of new patient acquisition, down to clinical department-level KPIs by utilizing RWD.Test against data hypotheses developed based on interviews with doctors on when and to what extent the switching or dropping of a particular drug is occurring.MR activity supportSupport the targeting of key doctors and the planning of lectures based on information about medical institutions and doctors.Promotion to doctorsSupport online promotion using platforms for doctors.DevelopmentFacility selection and subject recruitmentUse RWD to select facilities and regions in which there are many patients who can be subject candidates and use such information in facility selection and subject recruitment.Control group based on RWDFor clinical trials for which it is difficult to recruit relevant patients, use RWD as the control group.Promotion of digitalization of clinical trialsDigitalize clinical trial processes that are currently performed manually by using, for example, EDC and electronic worksheets to improve efficiency.Secondary use of trial dataAfter anonymization, use patient data that are accumulated through EDC and the like in other trials and further drug development.At-home DCT and clinical trialsIn order to enable patients to participate in clinical trials without visiting medical institutions, create a mechanism for home visits by healthcare professionals and at-home measurement and data reporting.JPY5 to 10 billionJPY3 to 5 billionJPY5 to 10 billionJPY10 to 20 billion>JPY100 billionJPY3 to 5 billionJPY3 to 5 billionJPY10 to 20 billionJPY3 to 5 billionJPY10 to 20 billionLess than 10%Less than 10%10 to 20%Less than 10%Less than 1%Less than 1%Less than 1%Less than 10%0%0%37Potential of Healthcare-Big Data Business: Business Opportunities for the Industry (2)At this point, we feel that there are considerable business opportunities based on our discussions with clients.Example for pharmaceutical companiesPharmaceutical company departmentThemeOutlineHypothetical: Potential Market Size (JMDC’s current penetration)Drug developmentRepositioningExplore the direction of repositioning by using data to uncover other diseases and specific patient profiles to which existing drugs are effective.Less than 10%AI drug developmentImprove accuracy and shorten the period of development for new drugs that are likely to be effective by utilizing chemical compound libraries and machine learning.MedicalDB researchPerform clinical trials using RWD rather than actual patients.KOL supportBased on information from doctor conference presentations and papers, support appropriate KOL targeting and management driven by objective data.PMSConduct post-marketing surveillance on efficacy and safety using RWD.Patient outcome surveySupport patient outcome surveys and analysis utilizing patient panels.Analysis of genome informationIdentify genomes that are related to the efficacy and safety of drugs by collecting patient genome information and use that information in drug development as well.Business developmentEvaluation of business potential of pipelinesTo analyze the number of patients and the current methods of treatment for each disease, evaluate future feasibility by introducing a pipeline and prioritizing development projects.CorporateRWD organizational supportSupport pharmaceutical companies’ efforts to establish and operate dedicated departments or organizations inside their companies to utilize RWD.Collaboration with local governmentsSupport pharmaceutical companies’ efforts to coordinate with local governments for early detection and acuteness prevention of diseases.JPY3 to 5 billionJPY5 to 10 billionJPY10 to 20 billionJPY3 to 5 billionJPY10 to 20 billionJPY3 to 5 billionJPY10 to 20 billionJPY10 to 20 billionJPY3 to 5 billionJPY10 to 20 billion0%0%0%Less than 10%Less than 1%Less than 10%Less than 10%Less than 10%Less than 1%38Direction of Healthcare-Big Data BusinessIn order to capture expanding business opportunities, we will continually evolve in all of our data, business models, value o fferings, and Fee for serviceBusiness ModelFee for successbusiness areas.Whole healthcareOperation + Digital technologiesGoals aerAssensuBiPastMedicalPresentValue ProvidedDataHealth insurance union data No. 1Data AssetsIntegration of the group of No. 1 data assets39Section 4Tele-medicine Business40Tele-medicine Business (Tele-RAD services): Summary The number of radiologists is approx. 6,000 while there are 110,000 medical institutions and 150 million diagnostic images ta ken each year in Japan. JMDC aims to fill this gap through effective use of resources of radiologists.レコードLargest market share of 28% in JapanMatching of diagnostic imaging request and contracted radiologistsConducting Tele-medicine by DtoDContracted medical institutions1,183Image DBRadiologist DBNote: Market share is calculated by Doctor Net based on the “Outlook and Strategy for the Medical Imaging System (PACS) and Related Equipment Market in 2020” published by Yano Research Institute.The number of contracted medical institutions and radiologists are calculated based on the total number of institutions and radiologists with which Doctor Net has service contracts.Source: Ministry of Health, Labour and Welfare “Survey on Medical Facility Dynamics in 2020,” List of Radiologists on the website of the Japan Radiological Radiological Society.Radiologists93841Tele-medicine Business: PerformanceThe trend of reduced consultations due to the spread of Omicron variant infection impacted the growth of revenue and EBITDA i n Q4.Quarterly Revenue Trends of Tele-medicine BusinessQuarterly Trends of EBITDA(Unit: Million JPY)(Unit: Million JPY)+ 2%1,1001,0381,046 1,0271,2211,1221,0701,014 1,004934932861+ 3%470400373313330306314294288234231162Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4FY2019FY2020FY2021FY2019FY2020FY2021Note: EBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses42Tele-medicine Business: Changes in Profit MarginEBITDA margin has improved by over 10% in the last five years through our efforts to streamline business operations.Changes in Gross Profit MarginChanges in EBITDA Margin(Unit: %)(Unit: %)373942423946+9% from FY201622242525Mar.2017Mar.2018Mar.2019Mar.2020Mar.2021Mar.2022Mar.2017Mar.2018Mar.2019Mar.2020Mar.2021Note: Gross profit margin is shown for Doctor-Net on a non-consolidated basis; EBITDA margin for FY2016 and FY2017 is the EBITDA margin for Doctor-Net on a non-consolidated basis; thereafter it is the EBITDA margin for the Tele-medicine Business segment.Doctor-NET has been consolidated since April 2018, but the above figures include Doctor-NET’s revenue for the prior periods.Doctor Net on a non-consolidated basis is based on Japanese GAAP, while Tele-medicine Business segment is based on IFRS. EBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses, EBITDA margin: EBITDA/Revenue (or Sales)3430+12% from FY2016Mar.202243Tele-medicine Business: Expansion of the Remote Image Interpretation PlatformIts position as the largest remote image interpretation platform in Japan is strong, and its appeal to institutions and radio logists is growing.Trend in the Number of Contracted FacilitiesChanges in the Number of Radiologic Interpreters(Unit: facilities)(Unit: persons) 1,1831,073+ 12%982880759663938+ 14%844746657584492Mar.2017Mar.2018Mar.2019Mar.2020Mar.2021Mar.2022Mar.2017Mar.2018Mar.2019Mar.2020Mar.2021Mar.202244Note: The figures presented as the numbers of contracted facilities and the numbers of radiologic interpreters represent the total numbers of facilities and radiologic interpreters contracted for the services of Doctor-NET. Doctor-NET has been consolidated since April 2018, but the above figures include Doctor-NET’s revenue for the prior periods.Tele-medicine Business: Changes in Market Size and ShareIn the growing remote image interpretation market, Doctor Net’s market share is steadily expanding.Changes in the Size of the Remote Image Interpretation MarketChanges in Market Share(Unit Billion JPY)14.913412811715141312111013914155%54%51%50%50%48%100%80%60%40%20%0%5%7%6%6%19%Mar.20173%3%5%6%5%6%4%4%4%5%5%5%6%5%5%5%5%5%6%5%6%3%5%5%5%6%21%22%25%26%28%Doctor-NET70 to 80 companies including university-affiliated NPO corporations and owner-operated companies45Mar.2017Mar.2018Mar.2019Mar.2020Mar.2021Mar.2022Mar.2018Mar.2019Mar.2020Mar.2021Mar.2022Note: Prepared by Doctor-NET based on “2021 Edition of Outlook and Strategies for Picture Archiving and Communication System (PACS) Market and Markets for Related Devices” published by Yano Research Institute.Tele-medicine Business (Tele-RAD service): Business StructureAs the number of inspections at each facility declined under the Covid-19 pandemic, the number of inspections requested by JMDC was also affected. On the other hand, as it is difficult for contracted medical institutions to replace our services with substitute services, we expect that our performance will expand at a moderate pace as the number of inspections recovers.Revenue of Remote Image Interpretation Matching Services (Unit: Million JPY)4,0003,5003,0002,5002,0001,5001,0005000Contracted in FY2021Contracted in FY2020Contracted in FY2019Contracted in FY2018Contracted in FY2017Contracted in FY2016Contracted in FY2015Contracted in FY2014Contracted in FY2013 or before46Mar. 2015Mar. 2016Mar. 2017Mar. 2018Mar. 2019Mar. 2020Mar. 2021Mar. 2022Note: Revenues in this slide are for JMDC’s management. Doctor-NET has been consolidated since April 2018, but the above figures include Doctor-NET’s revenue for the prior periods.Tele-medicine Business: AI Regulatory ApprovalIn December 2021, we obtained regulatory approval for a chest X-ray pneumonia detection engine for the first time in Japan. This long-expected chest X-ray engine, rather than CT or MRI, is becoming the major method for diagnosis used by clinics that generally lack the support of radiologists. This engine will enable the detection of pneumonia to be assisted by AI based on radiologist data.Program outline• Brand name:• Date of approval:• Medical device approval number: 30300BZX00339000• General name:• Class classification:• Performance:Chest X-Ray Pneumonia Detection Engine DoctorNet JLK-CRPDecember 9, 2021Program for X-ray diagnostic imaging workstationsClass IISensitivity 98.1% and specificity 36.6% (* assuming that the test is positive at a confidence level of 30% or more)Display on reporting system screenPresentation of image analysis reportPresentation of confidence level• The confidence level and label are indicated with such messages as “As a result of image analysis by the AI program, the confidence level of infectious pneumonia is determined to be 65.1% (high).”• The AI analysis result report also indicates the confidence level clearly to the right of the image.Presentation of heat map• For cases with a confidence level of 50% or more, a heat map is shown on the lesion.47Section 5Dispensing Pharmacy Support Business48Dispensing Pharmacy Support Business (P-CUBE n): SummaryWe offer “P-CUBE n,” an integrated electronic medication history and receipt computer system, to realize ICT optimization for ph armacies as a whole. Refining medication instructions optimized for each patient, we provide ICT services to support next -generation pharmacies.To support increasingly diverse pharmacist operationsWide-ranging services that can be networked togetherTo support pharmacists who are shifting to the next generationPrepare a medication history with a next-generation electronic medication history systemCoordination between header information and medication history data entries⚫Realize coordination between header information and medication history data entries, which have been entered separately.⚫Drastically improve productivity of medication history data entry.Clear screen layout ⚫The series of operations, from instructions to the completion of medication history data entry, were thoroughly reviewed during the upgrade from the previous version⚫In combination with a significant change in screen layout, the operating efficiency of the system has been increased.Improved user friendliness of functions for medicine-specific instruction guidance ⚫Customizable pharmacy-specific guidance functions that summarize the key points of ⚫Labor-saving in medication history data entry with a filter function based on patient instructions for each medicine.attributes FollowNavi Patent medication follow-up serviceOngoing medication follow-up service using social networking* Patent pending (Application number: 2019-140708)* “LINE” is a trademark or registered trademark of LINE CorporationGraphical illustration of operation that realizes integration between LINE and electronic medication historyCommunications on LINE are coordinated with electronic medication historyConduct follow-up using instruction detailsElectronic medication historyPharmacistPatient’s smartphone (LINE)Provide answers via LINE at a timing suitable for the patient’s lifestyle1. Communication with patients using LINEReduce the burden on pharmacists and patients using the widely used LINE chat app. Improve the continuity of medication follow-up.2. Equipped with question content for the conduct of follow-up instructionsEquipped with content on key instruction points that are specific to various prescription drugs and symptoms. Automation of communication for medication follow-up. 49Dispensing Pharmacy Support Business: PerformanceAlthough this business continues to be impacted by reductions in investment by dispensing pharmacies to a certain extent, the most recent performance indicates that it has recovered to its previous levels of profitability.Quarterly Revenue Trends of Dispensing Pharmacy Support BusinessQuarterly Trends of EBITDA(Unit: Million JPY)(Unit: Million JPY)+ 37%1,01487790776864563965565858870374178211855808139129113991024946+ 71%22250Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4FY2019FY2020FY2021FY2019FY2020FY2021Note: EBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or lossesSection 6FY2022 Performance Forecast51FY2022: Performance ForecastAs in the previous fiscal year, the plan is based on the assumption of revenue growth as an extension of existing businesses, not including M&A or new businesses. In terms of profit, we will continue to invest aggressively in business opportunities with an eye to future growt h, while maintaining a balance between healthy profit margins(Unit: Million JPY) FY2021 ActualFY2022 PlanY-o-Y21,81427,500RevenueOperating profit(Rate) Profit before taxes(Rate) Profit attributable to owners of parent (Rate) EBITDA(Margin) 4,800(22%) 4,785(22%) 3,258(15%) 6,411(29%) 6,000(22%) 6,000(22%) 4,000(15%) 8,000(29%) Note: IFRS-basedEBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses, EBITDA margin: EBITDA/Revenue+26%+25%+25%+23%+25%52FY2022: Plans by Segmentsteadily in the current fiscal year.Healthcare-Big Data continues to drive the Group’s growth. Trends in each business segment have been maintained and are expected to grow (Unit: Million JPY) FY2021 ActualFY2022 PlanY-o-YHealthcare-Big DataTele-medicineDispensing Pharmacy SupportAdjustmentRevenueEBITDA(Margin) RevenueEBITDA(Margin) RevenueEBITDA(Margin) RevenueEBITDA 14,019 4,859 (35%) 4,441 1,515 (34%)3,582 432(12%) – 228- 39518,900 6,400 (34%) 4,900 1,700 (35%) 3,900 400 (10%) -200- 500Note: IFRS-basedEBITDA: Operating profit + Depreciation and amortization costs ± Other profits and/or losses, EBITDA margin: EBITDA/Revenue+35%+32%+10%+12%+9%-8%–53Section 7Business Outlook54JMDC’s Mission”Providing a Healthy and Rich Life for All Individuals”Leveraging data and ICT solutionsto create a sustainable healthcare system55What Should We Do to Realize Our Mission?In order to realize the optimization of the health care system, we need to optimize the journey of each patient from the healthy stage through the disease HealthyExcellent conditionWorsening of health checkup resultsPoor conditionTreatmentRecuperationstage.Unhealthy1Health management2Hospital visits and early recovery3Long-term treatmentAdvanced treatmentOptimization of patient journey56① Health Management OptimizationUsing devices to manage daily health is where the patient journey begins. We can further increase an individual’s understanding through our partnership with Omron.SphygmomanometerPedometerThermometerPulse oximeterWeight scaleMedicalinformationRecord past health and checkup informationMedical examination recordsRecord medical examinations, drug dosages, and laboratory dataRisk measurementMeasure future risk of diseasePreventive solutionsSolutions regarding blood pressure control, weight loss, and preventing conditions that require treatmentPanelCheck subsequent conditions, such as painMedical consultationHealthcare consultations online57② Renewing the Medical Experience of Hospital Visits—Digital Front DoorThis is a service to streamline patient contacts by using digital technologies, thereby encouraging low-cost participation in medical services.InitiationMelp PHR01Searching for medical institutionsMelp Web InquiryCoordination with pharmacies through MelpMelp ePROFollow-upServiceTele-medicineElectronic chartReservation02030405Pre-servicePost-service58② Optimization through Definitive DiagnosisFor diseases with low diagnosis rates, we will develop a mechanism to prevent patients from getting lost through data-based observational studies and data coordination among medical institutions and doctors.Visit a hospital with the initial symptomsAre test items andresults appropriate?Examination/testPrescriptionFollow-up visitFollow-up visitExamination/testPrescriptionExamination/testPrescriptionFollow-up with symptomatic treatmentAwareness of onsetDoes the patient have sufficient motivation and opportunity to see a doctor?Clinic A (GP)Visit a hospital with other symptomsHospital B (GP)Examination/testPrescriptionFollow-up visitExamination/testPrescriptionIs the referraldecision appropriate?Deterioration in the course of follow-upsReferral based on suspicion of a specific disease,transfer to another hospital following the deterioration of symptomsSpecialist Hospital C (HP)Examination/testPrescriptionDefinitive diagnosisHealthcare-Big Data, Digital Front Door, and the platform for doctors can shorten the period from onset to definitive diagnosis.59③ Fostering Understanding throughout the Long-term Treatment ProcessBy providing information through PHR, recruitment announcements, patient communities, and big data to address unmet medical needs (UMNs), we can increase the motivation of patients in long-term treatment and help them realize that life is rewarding until the end.Average eGFR value of the group of people who geta regular health checkupCheckup 3 years ago: XXXCheckup 2 years ago: XXXCheckup 1 year ago: XXX(Various other indicators, such as bloodpressure and exercise habits can be used)Distribution of eGFR valuesCKD patients (most recent data at the time of examination)Overall average“I’m worried that I will have to do dialysis for the rest of my life.”“I’ve started taking supplement A.”Start of drug A prescription“I like salty food and meat.”“Work comes first”Get first-time CKD diagnosis following tests A and B performed by the nephrology department with 100 bedsDistribution of clinical departmentsNephrologyGeneral internal medicine“I participated in the patient community, but it merely boosted my anxiety about the future.”“I want to eat tasty food like before. I want to drink. I’m miserable.”“I can’t get used to dialysis at all. It gets in the way of my work. I can’t have that.”Start ofdialysisDiagnosis ofcomorbidity A“I’m starting to understand how to live with kidney failure.”Diagnosis ofcomorbidity BStart of drugB prescription“I feel a little more positive after talking with other patients.”60Toward Realizing Whole Patient CareTo realize a “Whole Patient Care” that optimizes the patient’s journey, we will continue to acquire various capabilities.Mental healthClinical trialsCommunity healthcare networkPHRWhole Patient CarePatient communityUMNsMedical institution DxProvision of securityPharmaceutical Dx61This document is intended to provide corporate and other information concerning JMDC Inc. (“JMDC”) and its group. It is not intended to solicit people for acquisition of shares and securities issued by JMDC. Forward-looking statements in this document, including the JMDC Group’s goals, plans, estimates, and forecasts, merely reflect decisions or ideas of the JMDC Group as of the time of writing. The actual results of the Group, including operating results and financial position, may vary greatly from the content of this document and assumptions based on the content depending on the economic situation at home and abroad, industrial trends, business competition, securing of human resources, technical innovation, and other factors of the business environment. The information described in this document concerning the industry, market trends, economic situation, etc. was prepared based on the information available as of the time of writing and the JMDC Group provides no warranty as to the authenticity, accuracy, reasonableness, and completeness of such information. In addition, this document may describe information based on the JMDC Group’s judgment, forecast, or estimation about the industry, market trends, economic situations, etc. Such information, however, merely reflects decisions or ideas as of the time of writing and the actual values may greatly differ from the information. Financial data and other indicators of other companies cannot be directly compared with the corresponding indicators of JMDC due to differences in accounting standards, calculation methods, etc. Future changes in circumstances may affect the content of this document, however, JMDC takes no responsibility for updating or correcting this document. The content of this document is subject to change without prior notice.62