Financial Results Briefing of FYE March 2019, Second Quarter

Transcription

1 Financial Results Briefing of FYE March 2019, Second Quarter Presentation Material for Financial Results Nikkei Kayabacho Conference Room November 6, 2018 Japan Lifeline Co., Ltd.

2 Today's Agenda 1. Overview of Financials of 2Q FY3/19 2. Revision of FY3/19 Full-Year Forecast 3. Status & Future Outlook of Sales 2

3 1. Overview of Financials of 2Q FY3/19

4 Consolidated Financial Highlights for 2Q FY3/19 Sales were slightly below the target, and up nearly double-digit YoY Operating income rose 11.6% YoY in real terms* * Adjustment of unrealized gain on merger of subsidiaries recorded in the same period of the previous fiscal year (Gross profit +502 million yen) Net sales YoY +9.9% Initial plan Down 2.8% Operating Profit YoY +0.0% (Real base +11.6%) +5.3% compared to initial plan Profit attributable to owners of parent YoY + 7.4% +13.1% compared to initial plan 20,267 22,902 22,265 4,858 4,617 4,860 3,386 3,217 3,638 FY3/18 2Q Cumulative Result FY3/19 2Q Cumulative FY3/19 2Q Cumulative FY3/18 2Q Cumulative FY3/19 2Q Cumulative 4 FY3/19 2Q Cumulative FY3/18 2Q Cumulative FY3/19 2Q Cumulative FY3/19 2Q Cumulative Plan Result Result Plan Result Result Plan Result

5 Consolidated Financial Results for 2Q of FY3/19 Each margin improved in real terms, after adjustments for unrealized gain. FY3/18 2Q cumulative Result (Real term) FY3/19 2Q cumulative Initial plan (5/2/ 18 announced) FY3/19 2Q cumulative Result YoY (Real term) Vs. Plan Net Sales 20,267 22,902 22, % - 2.8% Gross Profit 12,529 13,719 13, % - 1.0% Gross Profit% 61.8% (59.3%) 59.9% 61.0% (+12.9%) Operating Profit 4,858 4,617 4, % +5.3% Operating Profit% 24.0% (21.5%) 20.2% 21.8% (+11.6%) Net profit attributable to owners of parent 3,386 3,217 3, % +13.1% % 16.7% 14.0% 16.3% 5

6 Operating Profit for 2Q FY3/19 YoY + 1 million yen FY3/18 2Q Result 4,858 Increase by adjustment of unrealized gain +502 Gross Profit +1,049 Increase in SG&A -1,048 Personnel expenses, advertising expenses, development expenses, expenses to upgrade distribution bases, etc. FY3/19 2Q Result 4,860 6

7 2Q FY3/19 Sales by Product Category, YoY 30,000 25,000 20,000 15,000 20,267 1,498 5,147 Total +9.9% 22,265 2,241 5,588 Cardiac Rhythm Management -14.2% Decreased due to insufficient supply of remote monitoring equipment. EP/ablation +13.6% Sales of AF-related products such as BeeAT grew. The number of AF cases is estimated to increase by 20%YoY. NHI price reductions on EP catheters. Surgery related +8.6% 10,000 5, ,894 11,239 3,727 3,196 FY3/18 2Q Cumulative FY3/19 2Q Cumulative Contribution of AFX2 (Abdominal stent graft) Sales of one-of-a-kind Open Stent Grafts also grew Intervention +49.6% Drug Eluting Stent launched in March 2018 NHI price reductions on most items 7

8 Cash Flow for 2Q of FY3/19 vs. Year End of FY3/18: Down 4,020 million yen Beginning Balance 12,732 Operating CF 1,598 [Increase] [Decrease] Income before Tax +5,082 Depreciation & Amortization +571 Increase in inventories -2,174 Income taxes paid -2,073 Investment CF -3,097 [Decrease] Purchase of property, plant & equipment -1,353 Purchase of investment securities -310 Payments for short-term loans -307 Payments for long-term loans -1,099 Financial CF -2,518 [Increase] Proceeds from long-term loans payable +1,800 Ending Balance 8,712 [Decrease] Decrease in short-term loans payable -1,000 Repayment of long-term loans payable -907 Cash dividends paid -2,311 8

9 2. Revision of FY3/19 Full-Year Forecast Executive Vice President Corporate Administration Department Shogo Takahashi

10 Revision of Full-Year Forecast for FY3/19 Consolidated Full-Year forecast revised down due to reassess of sales plan on Nov. 2 Operating profit is expected to decline due to sales growth not being able to absorb the increase in SG&A expenses If impact of unrealized gain is eliminated from FY3/18 result, operating profit increased by +9.3% YoY (real term basis) Net sales YoY +10.6% Operating Profit YoY Down 2.7% (Real term basis +9.3%) Profit attributable to owners of parent Net profit Year-on-year +0.7% 42,298 49,411 46,762 10,671 11,202 10,383 7,478 7,825 7,530 FY3/18 Result FY3/19 Initial Plan FY3/19 Revised Plan FY3/18 Result FY3/19 Initial Plan 10 FY3/19 Revised Plan FY3/18 Result FY3/19 Initial Plan FY3/19 Revised Plan

11 Forecast of Full-Year Consolidated Financials for FY3/19 Expect high profits for the full year FY3/18 Full year Result (Real term) FY3/19 Full year Initial plan 5/2/ 18 announced FY3/19 Full year Revised plan YoY change (Real term) Vs. plan Net sales 42,298 49,411 46, % - 5.4% Gross Profit 26,576 29,455 28, % - 4.3% Gross profit % 62.8% (60.1%) 59.6% 60.3% (+11.0%) Operating Profit 10,671 11,202 10, % - 7.3% Operating Profit % 25.2% (22.5%) 22.7% 22.2% (+9.3%) Profit attributable to owners of parent 7,478 7,825 7, % - 3.8% % 17.7% 15.8% 16.1% 11

12 Operating Profit for Revised Full-Year Forecast vs. FY3/18, Down 288 million yen Increase by adjustment of unrealized gain +1,170 FY3/18 Result 10,671 Gross Profit +1,618 Sales increase (4,464) Reduction of insurance reimbursement price Lower ratio of in-house products Increase in SG&A -1,906 Personnel expenses, advertising expenses, R&D expenses. Expenses related to distribution bases, etc. FY3/19 Revised Plan 10,383 12

13 FY3/19 Revised Sales Forecast by Product 60,000 50,000 40,000 30,000 49,411 7,734 Total Down 5.4% 46,762 5,332 11,606 11,790 (vs. Initial Forecast) Cardiac Rhythm Management -8.2% Expect decrease in existing products due to announcement of supplier change EP/ablation +0.5% Sales of AF-related products such as BeeAT grew. Increase in HeartLight penetration in the market Surgery related +1.6% 20,000 10, ,345 23,469 6,725 6,170 FY3/19 Initial Plan FY3/19 Revised Plan Contribution of AFX2 (abdominal stent graft) Withdrawal of PERCEVAL Intervention -31.1% Lowered sales target of drug-eluting coronary stents 13

14 FY3/19 Revised Sales Forecast by Product (vs. Previous Year) 60,000 Total +10.6% Cardiac Rhythm Management % 50,000 40,000 42,298 3,221 46,762 5,332 Decreased due to insufficient supply of remote monitoring equipment. Expect decrease due to change of supplier EP/ablation +15.2% 30,000 11,464 11,790 Sales of AF-related products such as BeeAT are expected to grow Increase in HeartLight penetration in the market 20,000 10, ,364 23,469 7,247 6,170 FY3/18 Result FY3/19 Revised Plan Surgery-related +2.8% Contribution of AFX2 (abdominal stent graft) Sales of one-of-a-kind Open Stent Grafts are also expected to grow Intervention +65.5% Lowered sales target of drug-eluting coronary stents 14

15 CAPEX/ Depreciation/ R&D/ Number of Employees FY3/15 FY3/16 FY3/17 FY3/18 FY3/19 Revised plan CAPEX 331 1, ,630 1,436 Depreciation and amortization ,296 R&D expense ,051 1,121 1,472 Employees at year-end (people) Consoli dated Nonconsolid ated

16 Sales of in-house products Continuing growth in in-house products, but decreased in ratio due to growth in third party s products 53.6% 56.9% 54.7% 55.4% 54.2% 30, % 45.0% 23,402 25, % 20,000 16,638 19,659 10,000 8,184 10,274 13, % 0 FY3/13 FY3/14 FY3/15 FY3/16 FY3/17 FY3/18 FY3/19 (Revised Plan) 0.0% EP/ABL Wire/balloon Graft/OSG Blood purification and others Percentage of total The ratio of in-house products to non-consolidated sales is the ratio of in-house group products. Including blood purification from '18/3 16

17 (Reference) Cumulative 2Q Sales by Item FY3/18 FY3/19 FY3/19 Result Initial plan Result 2Q cumulative 2Q cumulative 2Q cumulative Change Rate (YoY) Change Rate (Vs. Initial Plan) Remarks Brady 3,355 2,872 2, % - 1.0% Pacemaker related Tachy % % ICD related Others % 3.3% Including AEDs Cardiac Rhythm Management 3,727 3,259 3, % - 1.9% EP catheter 7,446 8,447 8, % - 0.7% Including in-house products, Internal Atrial Cardioversion System ABL catheter % 9.2% In-house products Others 1,860 2,179 2, % 1.6% Including Including in-house products EP/ABL 9,894 11,211 11, % 0.2% Heart valve related % % Vascular graft related 3,781 3,836 4, % 12.2% Blood purification % - 1.7% In-house products including Open Stent Graft Others % 31.3% Including Cardiopulmonary related Cardiovascular Surgery 5,147 5,225 5, % 6.9% Balloon catheter % % Including in-house products Guide wire % - 0.2% In-house product Others 845 2,650 1, % % Transvascular Intervention 1,498 3,205 2, % % Total 20,267 22,902 22, % - 2.8% 17 Including penetrating catheters, atrial septal defect closures,drug eluting stents and products sold by subsidiaries

18 (Reference) Consolidated Sales by Product FY3/18 FY3/19 FY3/19 Result Initial plan Revised plan Full-Year Full-Year Full-Year 18 Change Rate (YoY) Change Rate (Vs. Initial Plan) Brady 6,463 5,739 5, % - 6.1% Pacemaker related Tachy % % ICD related Others % - 6.7% Including AEDs Cardiac Rhythm Management 7,247 6,725 6, % - 8.2% EP catheter 15,354 17,225 17, % - 0.1% Remarks Including in-house products, Internal Atrial Cardioversion System ABL catheter 1,161 1,611 1, % 8.5% In-house products Others 3,848 4,509 4, % 0.2% Including Including in-house products EP/ABL 20,364 23,345 23, % 0.5% Heart valve related 1,742 1,806 1, % % Vascular graft related 8,482 8,564 9, % 5.4% Blood purification 1,131 1,176 1, % - 1.5% In-house products including Open Stent Graft Others % 16.2% Including Cardiopulmonary related Cardiovascular Surgery 11,464 11,606 11, % 1.6% Balloon catheter % % Including in-house products Guide wire % 1.9% In-house product Others 1,899 6,553 4, % % Transvascular Intervention 3,221 7,734 5, % % Total 42,298 49,411 46, % - 5.4% Including penetrating catheters, atrial septal defect closures,drug eluting stents and products sold by subsidiaries

19 (Reference) Consolidated P/L for 2Q FY3/19 2Q cumulative FY3/18 FY3/19 FY3/19 Result Initial plan Result Ratio 2Q cumulative 19 Ratio 2Q cumulative Ratio Change Rate (YoY) Change Rate (Vs. Initial Plan) Net sales 20, % 22, % 22, % 9.9% -2.8% Cost of Goods Sold 7, % 9, % 8, % 12.3% -5.4% Gross Profit 12, % 13, % 13, % 8.4% -1.0% SG&A expenses 7, % 9, % 8, % 13.7% -4.2% Operating Profit 4, % 4, % 4, % 0.0% 5.3% Non-operating income % % % 99.5% 176.8% Non-operating expenses % % % 373.6% 810.7% Ordinary Profit 5, % 4, % 5, % 1.2% 7.2% Extraordinary income % % 4 0.0% -76.2% -66.3% Extraordinary expenses % 0 0.0% % -89.2% Profit before tax 4, % 4, % 5, % 2.9% 6.8% Tax expenses 1, % 1, % 1, % -7.0% -6.4% Profit attributable to owners of parent 3, % 3, % 3, % 7.4% 13.1%

20 (Reference) Consolidated P/L for Full-Year FY3/19 FY3/19 FY3/19 FY3/19 Result Initial Plan Revised Plan Full-Year Ratio Full-Year Ratio Full-Year Ratio 20 Change Rate (YoY) Change Rate (Vs. Initial Plan) Net sales 42, % 49, % 46, % 10.6% -5.4% Cost of Goods Sold 15, % 19, % 18, % 18.1% -7.0% Gross Profit 26, % 29, % 28, % 6.1% -4.3% SG&A expenses 15, % 18, % 17, % 12.0% -2.4% Operating Profit 10, % 11, % 10, % -2.7% -7.3% Non-operating income % % % 125.8% 80.9% Non-operating expenses % % % 11.4% 415.6% Ordinary Profit 10, % 11, % 10, % 0.1% -6.4% Extraordinary income 1 0.0% % 4 0.0% 315.7% -66.2% Extraordinary expenses % 0 0.0% % -88.0% Profit before tax 10, % 11, % 10, % 1.1% -6.6% Tax expenses 3, % 3, % 3, % 2.2% -12.6% Profit attributable to owners of parent 7, % 7, % 7, % 0.7% -3.8%

21 3. Status & Future Outlook of Sales President and CEO Keisuke Suzuki

22 Cardiac Rhythm Management (CRM)

23 CRM FY3/19 2Q Cumulative Result 3,727 Tachy 281 Other 91 Down 14.2% 3,196 Decrease in brady* business Lower reimbursement prices Remaining issue of short supply of Remote Monitoring Devices Tachy 241 Other 110 *Brady: Pacemaker-related products Brady 3,355 Brady 2,844 Launch of new tachy products Launched PLATINIUM SonR in July Despite sales efforts, overall sales volume decreased *Tachy: ICD-related products FY3/18 2Q Cumulative Result FY3/19 2Q Cumulative Result 23

24 CRM - FY3/19 Full-Year Revised Forecast 7,247 Tachy 584 Other 200 Down 14.9% 6,170 Expect lower sales of existing products Change in sales partners Tachy 495 Other 285 Brady 6,463 Brady 5,390 Prepare for a smooth and quick transfer to a new sales system To build a unified sales system with Boston Scientific products FY3/18 Full Year Result FY3/19 Full Year Revised plan 24

25 CRM - New Exclusive Distribution Agreement Entered into exclusive distribution agreement with Boston Scientific Exclusive sales rights for CRM products in Japan 10 years from September 1, 2019 (automatic renewal every 2 years) Upfront payment of 3.0 billion (amortized over 10 years on a straightline basis) To conclude a sales support agreement with Boston Scientific Japan and plans to unify the sales system To continue to sell MicroPortCRM products until the end of August CRM products include Tachy products as well 25

26 CRM - New Exclusive Distribution Agreement Tachycardia accounts for more than 40% of the CRM market 10,000 CRM Devices Sales Trend CRM Domestic Market ,500 6,617 7,247 5,000 2,500 5,557 4,804 5,674 6,463 34,345 44% 44,215 56% FY3/16 FY3/17 FY3/18 Other Tachy (ICD-related) Brady (PM-related) Brady(PM 関連 ) Tachy(ICD 関連 ) (R & D CY2017) Include Brady/Tachy leads 26

27 CRM - New Exclusive Distribution Agreement Bradycardia treatment market continues to decline. CRMDomestic market forecast 50,000 40,000 30,000 20,000 10, Brady(PM) Tachy(ICD/CRTD) Based on the 2017 Yano Research Institute's medium-term forecast for the medical bionics (artificial organ) market and thorough analysis of participating companies Excluding Brady Lead (approx. JPY 6.3bn in 2017) and Tachy Lead/LV Lead (approx. JPY 5.0bn in 2017) 27

28 CRM - New Exclusive Distribution Agreement Japan Lifeline Japan s #1 Distributor Globally competitive products Strong Sales force with high expertise in Tachy Boston Scientific Boston Scientific Japan By creating a new business model, Aim to become the top CRM company 28

29 EP/Ablation

30 EP/Ablation - FY3/19 2Q Cumulative Result 9,894 Other 1,860 ABL Catheter 586 EP Catheter 7,446 FY3/18 2Q Cumulative Result +13.6% 11,23 9 Other 2,215 ABL Catheter 638 EP Catheter 8,385 FY3/19 2Q Cumulative Result AF cases continue to increase Up 20% 2Q YoY One-of-a-kind products Growth in BeeAT and RF needles Impact of NHI price reductions seen in some products Lower prices of EP catheters (generic products excluding BeeAT) by 7% to 10% Launch of new products in the treatment area Launched HeartLight, an endoscopic laser ablation system, in July Contributing to an increase in ABL catheters 30

31 EP/Ablation - FY3/19 Full-Year Revised Forecast 20,36 4 Other, 3,848 ABL catheter, 1, % 23,46 9 Other, 4,520 ABL catheter, 1,748 Expected increase in AF cases Expect a 19% YoY increase for the full year (up 18% in the initial plan) Expect growth in BeeAT and RF needles EP catheter, 15,354 '18/3 Full year Result EP catheter, 17,201 '19/3 Full year Revised plan Promote early penetration of new products Endoscopic laser ablation system "HeartLight" ABL Catheter took a turn for the better PMS completed, prospect of fullscale penetration phase from January 31

32 EP/Ablation - Prediction of AF ablation Cases The number of cases in FY3/19 slightly exceeded the forecast Forecast for AF cases in FY3/23 is unchanged from 120,000 at present Steady growth is expected in the future, mainly driven by one-of-akind products. Number (Sales; Millions of yen) 125,000 30, ,000 75,000 50,000 25,000 5,122 6,181 9,019 11,448 14,371 17,528 20,364 23,469 25,000 20,000 15,000 10,000 5,000 0 '12/3 '13/3 '14/3 '15/3 '16/3 '17/3 '18/3 '19/3 '20/3 '21/3 '22/3 '23/3 Revised plan 0 EP/ABL sales AF Number of patients *Numbers of AF cases are estimates by JLL 32

33 EP/Ablation New product HeartLight Launched an endoscopic laser ablation system HeartLight : Was launched in July this year Is Manufactured by Cardiofocus Incorporates Endoscope that allows direct viewing of pulmonary veins Is capable of adjusting output of cauterizing laser Endoscopic laser ablation system HeartLight Left: Catheter Right: Console New treating device to replace conventional RF catheters for treatment of AF 33

34 EP/Ablation New product HeartLight Steady progress toward full-fledged penetration Post-Marketing Surveillance (PMS) progress exceeds the plan (Completed on Nov. 6) Working toward full release next January Currently, PMS done at 21 facilities, the number of facilities expected to exceed 30 by Jan. next year Full-scale contribution from FY3/

35 EP/ABL Forecast of Balloon Ablation Market 45% of AF cases expected to use balloon ablation in FY3/23 HeartLight aims to capture 40% share of the balloon ablation market (# of cases) 150, ,000 Forecast of AF cases and balloon ablation in Japan 45% 40% 36% 32% 28% 25% 50.0% 25.0% 50,000 0 FY3/18 FY3/19 FY3/20 FY3/21 FY3/22 FY3/23 Balloon ablation cases AF cases Use rate of balloon 0.0% *Numbers are estimates by JLL 35

36 EP/Ablation - Sales Breakdown by Product Use Products for treatment accounted for 5.7% of total EP/Ablation sales (FY3/18 results) Expand treatment area and increase the growth rate of EP/Ablation 25,000 JLL EP/ABL Sales by Product Use 20,000 15,000 10,000 5,000 Enjoying inflating AF market growth in treatment product area too 0 FY3/11 FY3/12 FY3/13 FY3/14 FY3/15 FY3/16 FY3/17 FY3/18 FY3/19 For Diagnosis Use(EP catheters etc.) For Treatment Use (Ablation catheter) * Diagnosis use includes internal atrial cardioversion catheters, esophageal temperature monitoring catheters, high frequency atrial transseptal needles, etc. 36

37 CardioVascular Surgery (CVS)

38 CVS FY3/19 2Q Cumulative Result 5,147 Blood Purification 474 Tissue Valverelated 840 Other % 5,588 Blood Purification 478 Tissue Valverelated 764 Other 40 Artificial graft related grew AFX2 (abdominal stent graft) VELA (abdominal extension) contributed to increase in "AFX2" Open Stent Graft "FROZENIX" Vascular Graftrelated 3,781 Vascular Graftrelated 4,305 Tissue valve related declined Tissue valves are on declining trend due to the spread of TAVI FY3/18 2Q Cumulative Result FY3/19 2Q Cumulative Result 38

39 CVS - FY3/19 Full-Year Revised Forecast 11,464 Blood Purification 1,131 Tissue Valverelated 1,742 Vascular Graftrelated 8,482 FY3/18 Full Year Result Other % 11,790 Blood Purification 1,157 Tissue Valverelated 1,535 Vascular Graftrelated 9,028 FY3/19 Full Year Revised plan Other 68 Mainly driven by artificial graft AFX2 stent graft for the abdomen Extension "VELA" Open Stent Graft "FROZENIX" Delay in overseas expansion OSG CE Mark acquisition and launch schedule in Europe lagging behind the plan Decreased for tissue valves To terminate sales in May next year No sales of PERCEVAL, sutureless valve to be done by JLL 39

40 CVS - End of Exclusive Distribution Agreement Sales of LivaNova's tissue valve-related products will end in May next year Continue sales until May 31, 2019 No sales of PERCEVAL, sutureless tissue valve by JLL Artificial valves business which has lasted since 1990 is to end Seeking to re-enter the market in the medium term, We will concentrate resources on Vascular Graft-related products. 40

41 CVS - New Exclusive Distribution Agreement Exclusive Distribution Agreement with Endospan for thoracic stent graft Endospan Ltd. (Israel) NEXUS, branched stent graft Contracts to be signed in Nov Submitted an application for CE mark (Very First for an aortic arch device) in Feb High expectations for reducing complications by its unique design Preparing for launch in 2023 Branched Thoracic Stent Graft NEXUS 41

42 CVS - End of Joint Development Agreement Termination of joint R&D agreement with Endologix for thoracic stent graft Shifted policy to handle Endospan products in the thoracic area Strengthened cooperative relationship with Endologix toward launch of new products in the abdominal area 42

43 CVS - New Products for Abdominal Stent Graft Strengthened alliance with Endologix for sales of abdominal products To be launched in 1H of FY3/20 Ovation To be launch in 2H FY3/22 Nellix Capable to cover diverse cases with the finest delivery system in the market 43 Stent graft of new concept & new generation Covering diverse cases with the richest lineup unparalleled with other companies

44 Transvascular Intervention

45 Intervention - FY3/19 2Q Cumulative Result 1,498 Other 845 Guidewire 191 2,241 Other 1,768 Guidewire 179 Balloons 462 Balloons 294 FY3/18 Cumulative Result +49.6% FY3/19 Cumulative Result Drug-eluting coronary stent Launched Orsiro in Mar, Significant contribution to sales growth, but lower than initially planned Penetrating catheter Sales of GuideLiner decreased due to impact of competing products Decrease in balloon catheters NHI price reduction down 23% No new products, sales volume down Slight decrease in guide wires NHI price reduction down 5-13% 45

46 Intervention - FY3/19 Full-Year Revised Forecast 3,221 Other 1,899 Guidewire 371 5,332 Other 4,299 Guidewire 406 Balloons 950 Balloons 625 FY3/18 Full Year Result +65.5% FY3/19 Full Year Revised plan Drug-eluting coronary stent Revised down initial forecasts with target market share from 15% to 8% Strive to expand sales by strengthening the size lineup Penetration catheters still expected to decrease Slight increase in guide wires and decrease in balloon catheters Launch new products FFR OptoWire 46

47 Intervention - Drug-Eluting coronary Stent Osiro, a drug-eluting coronary stent, lowered its forecast Revised target market share from 15% to 8% first-mover companies exceeded in sales experience and sales structure BIOFLOW V 2-year FU demonstrated excellent performance of Orsiro again Appropriate Use Criteria (AUC) s negative impact on number of cases from April to August is estimated to be around 3%. Aiming to increase sales through further efforts Started to handle long sizes (35 mm, 40 mm long) Conducting CASTLE study Further strengthen initiatives to capture market share 47

48 Intervention - Newly Introduced Products FFR system Sales Agency Agreement (Non-Exclusive) Zeon Medical Inc. (developer: Opsens, Canada) Device for measuring Fractional Flow Reserve (FFR) OptoWire OptoMonitor, a guidewire with sensor for measuring intravascular pressure Installed with an optical fiber, the system is capable of measuring FFR with high-precision In PCI procedures for stable angina pectoris, evaluation of functional ischemia became mandatory for reimbursement after the revision of NHI prices in April this year. Satisfying the growing need for appropriate interventions 48 Left: OptoMonitor Right: OptoWire

49 Intervention Newly Introducing Product Submitted Application of IVUS-OCT hybrid system for Regulatory Approval Manufactured by Conavi Medical Inc. (Canada) Novasight Hybrid IVUS and OCT are integrated in a single imaging system Still in the regulatory application stage and the launch date has not been decided. With the introduction of imaging devices following DES and FFR, Aim to strengthen the intervention area 49

50 Regarding Mid-term Plan

51 Mid-term outlook The effect of each project on the mid-term outlook is under scrutiny. The mid-term plan is scheduled to be updated in May next year as there exist a number of factors that are fluid in terms of sales/expenses. 51

52 Status of Each Business Field Business field Changes from the mid-term plan set forth as of May Cardiac Rhythm Management EP/ablation Adding tachycardia area to our strength, CRM will become a growing segment in the medium term. Arrhythmia treatment will be our core business. Increasing trend in AF cases is stable and sales of AF-related products will steadily increase Hold high expectations for treatment area (HeartLight) Cardiovascular Surgery End of tissue valve business Continue to strengthen the vascular graft-related product lineup. To tackle remaining challenges in overseas expansion Intervention Downward revision of DES has limited medium-term impact Continue to introduce products lineup mainly in diagnostic devices 52

53 Precautions Among the descriptions in this document, the matters that are not historic fact are the forecast concerning the future of our company and the future prospects based on forecasts. Particularly, the matters concerning clinical trials, regulatory approval and launch timing, which are involved in introduction of products, are our company s prediction obtained from past experiences and available information. Since the actual result may be different from the forecast described in this document, due to the influences of various risks and uncertain factors, please do not depend on these forecasts excessively. Contact: Japan Lifeline Co., Ltd. Corporate Planning Section TEL: ir@jll.co.jp URL: 53