FY2015 The First Half-year Results (April 1, 2015 September 30, 2015)

Transcription

1 The First Half-year Results (April 1, 1 September 3, 1) November, 1 Please be aware of the following: * Figures and ratio in this material are rounded to the appropriate unit in principle. * The sums of the individual figures in each table do not always correspond to the total, because of rounding. * Abbreviations: : In Vitro Diagnostics (business) : Clinical Laboratory Testing (business) : Healthcare Related (business) : Operating income Ord. income: Ordinary income LP: LUMIPULSE MLS: Miraca Life Sciences, Inc. BMGL: Baylor Miraca Genetics Laboratories, LLC Summary of 1H/ Consolidated Results (1) reached record-high and decreased 1H/FY1 Results % (*) 1. 1.% (*) 13.% % 11.% 11.% 1H/ Results % 9.%.% Y/Y Variation +.7% +.9% -.1% -.1% % % % EBITDA (**) % 1..% (*) Segmentation adjustments :. in 1H/FY1;.9 in 1H/ (**) EBITDA = Operating income + Depreciation + Amortization of goodwill Exchange rate: 1H/FY1: 1USD=3.3JPY, 1EURO=13.9JPY 1H/: 1USD=11.1JPY, 1EURO=13.JPY % Increase in : Contribution of sales growth in global / businesses (incl. currency exchange gain) Decrease in : Profit increase in could not offset profit decline in 1

2 Each income (excl. income before income taxes) did not reach FY1 results and initial forecast Non-operating income/ expense Ord. income Extraordinary income/ loss Income before income taxes Iincome taxes Net income Summary of 1H/ Consolidated Results () FY1 Results % % % 1. 1.% % % +3.7% -.1% % % % % Results.3.% Y/Y Variation +9.% Forecast Variation from Forecast +.% -1.% -3.% % % % Factors of Y/Y variation Non-operating loss: Extraordinary income/loss and Income taxes: Shares of loss of entities accounted for using equity method (mainly BMGL) Provision of tax expenses related to a legal action against MLS (Actual effect: 1. billion, conservative estimation ) Business structure improvement expenses at FRE (. billion) and MLS (.1 billion) in 1H/FY1 Change in 1 st Half Results over years Miraca Group reached record-highs and reached record-highs (: billion) (Each income: billion ) (: billion) (Op income: billion) H/FY11 1H/FY1 1H/FY13 1H/FY1 1H/FY1 1 1H/FY11 1H/FY1 1H/FY13 1H/FY1 1H/FY1 Although reached record-high, turned downward due to price decline (: billion) (Op income: billion) EBITDA Net income 1H/FY11 1H/FY1 1H/FY13 1H/FY1 1H/FY1 3

3 1H/ Analysis of Changes (Y/Y) in and +3.7 bn yen(+3.7%), -.7 bn yen(-.1%) Consolidated Net Sales Japan 77% Global 3% Global sales ratio: +3 ppt Japan 7% Global % Consolidated Op. Income. 1H/FY Increase of Global +3. (Growth in USA/Europe and currency exchange gain (+3.1)) Decrease of Japan H/ 1. 1H/FY Increase of Global +.77 (Growth in USA/Europe and currency exchange gain (+.3)) Decrease of Japan H/ 1 年度上期 1 年度上期 1H/ Segment Performance Review 1. In Vitro Diagnostics: Increase in and (+.7%) Japan Global Japan Increase in : +.1 Sales growth of LUMIPULSE(LP) reagents Decline of low-profit product sales (Non-LP) Decrease in : -. Increase of R&D expenses for launch of LP sales in USA 1H/FY1. (.%) (Op. margin) 1H/FY1. (.%) Global (Non-Japan) Increase in : +1.9 Growth in raw material supply and LP business One-time royalty income (+1.9%) Currency exchange gain: 1.1 Increase in : +1.1 Increase in profit generated by sales increase:. 1 Currency exchange gain:. 1H/FY1 1H/FY1 Royalty income etc.

4 (11.%) 1H/FY1. Clinical Laboratory Testing: Increase in, Decrease in (+.9%) H/FY1 ($ million) 1 (Op. margin) (-17.7%) 1H/FY1.3 (9.%) 1H/FY1 Global (in US dollar) H/FY1 1H/ Segment Performance Review 1H/FY1 Japan Slight decrease in : -.1 was almost flat, excluding impact of less working days Growth in high-priced test segment Impact of test price decline (Y/Y basis): -3% Decrease in : -.99 Decrease in marginal profit caused by test price decline Initial investment for launch of new testing Global (USA) : +.1, : -.3 Currency exchange gain: +. MLS (before goodwill amortization) ($ million) : -$.M Mainly average price decline in GI segment due to GI test mix change and unit price decline :-$7.M Test volume increase(growth in Derm) :+$.M : -$.M Decrease in marginal profit caused by test menu/segment mix change and price decline 1H/ Segment Performance Review 3. Healthcare Related: Decrease in and (-.1%).3 PM CT Sterilizing (ST) : : +.9 bn yen, Op income: +. bn yen Sales growth achieved through development of new accounts H/FY1 1. (11.%).3 (11.%).3 (1.%) (Op. margin) 1H/FY1.33 (.9%).1 (.%) (.%) (11.%) 1H/FY (-.3%) 1. (.%) 1H/FY1 ST PM CT ST Clinical Trials (CT) : : -.1 bn yen, Op income: -. bn yen Decrease in profitability caused by decline of project price Smaller project size ( target disease area change ) Started to improve cost structure corresponding to sales size Preventive Medicine Related (PM): : -.9 bn yen, Op income: -. bn yen Stable growth in Nursing-care related business Decrease in sales due to absence of sales of Health checkup business 7

5 H/ Consolidated R&D Expenses, CAPEX, and D&A R&D expenses Capital expenditure (CAPEX) Depreciation and Amortization (D&A) FY1 FY13 FY1 FY1 FY1 FY13 FY1 FY1 FY1 FY13 FY1 FY1 1 st half result Full-year result Full-year forecast Key points in Increase in R&D expenses for global sales of LP series in business Increase in CAPEX and carry-forward of partial D&A due to delay in development/ cutover of Navi-Lab (nextgeneration IT system) in business Full-year forecast has been revised. 1H/ Consolidated Balance Sheet Current assets 9.1 Current liabilities.9 Non-current Liabilities 7. Current assets 9.7 Current liabilities 3. Non-current Liabilities 9. Main factors for change Non-current assets Amortization of goodwill Amortization of customer-related intangible assets Other intangible assets Other Investments and other assets Non-current assets 17.1 Total net assets Non-current assets 17. Total net assets 17. Non-current liabilities Decrease of long-term loans payable Other non-current liabilities (incl. Provision for loss on litigation) Treasury stock -1. Equity ratio.% Treasury stock -1. Equity ratio.% Total net assets Net income Dividends from surplus End of FY1 (Mar. 31, 1) Total assets:. bn yen End of 1H/ (Sep. 3, 1) Total assets:.7 bn yen (+. bn yen) Interest-bearing liabilities decreased by.9 billion Net cash improved to.1 bn yen 9

6 Consolidated Cash Flows 1H/FY1 1H/ Consolidated Cash Flows 1H/ Income before income taxes Depreciation and amortization.3.3 Income taxes payable Other. -1. Net cash provided by operating activities Purchase of property, plant and equipment Other. -. Net cash used in investment activities Free cash flows. 9. Net cash used in financing activities Effect of exchange rate change on cash and cash equivalents.1.1 Net increase/decrease in cash and cash equivalents 3..1 Cash and cash equivalents at the beginning of financial period Cash and cash equivalents at the end of financial period Main Factors of Change Net cash provided by operating activities and Net cash used in investment activities: similar level with 1H/FY1 Net cash used in financing activities similar level with1h/fy1 (repayment of loans payable, cash dividends paid, etc.) Cash and cash equivalents increased by.1 bn yen from the beginning of financial period Forecast and Progress of Business Plans 11

7 Ord. income Net income Revised Forecast (Consolidated) Full-year Revised Forecast % % % % % % %.7 1.% % % % %.9 3.%.7 3.% %..% +. +.% 1..% 13..% % 13.9.% %..% % %.93.3% %. 11.7%.9 1.% %.7 13.% % % Full-year Full-year Initial Forecast 1.9.% Rev. Forecast vs. Initial Forecast FY1 Actual % 1. 7.% Rev. Forecast vs. FY1 Actual % Major Reasons of the Revision Japan: Sales will become nearly equal to the initial forecast Marginal profit deceases due to price decline and test menu mix change Delay of new IT system operation i. Lower expenses related to the system launch ii. Effect of rationalization will be in/after FY1 iii. Operation costs of existing IT system will continue Global : Increase in test volume Decrease in sales and profit rate in high profitable segment (GI) Clinical Trials: Significant sales decrease due to price drop etc. 1 Progress of Business Plan 1 st Half nd Half ~ LP Global Geographic Expansion LP Japan Increase Market Share Europe Asia USA Reagents Platform (Analyzer) Strategic markers : Evaluation by KOL and improve awareness Approach to niche market with GII (small size analyzer) China: Expansion of PIVKA II and KL- Korea:Collaboration with multi distributors G and CA1 obtained FDA approval Launch new sales organization Strategic markers: Focus on hepatitis market (high-sensitive HBsAg, HBsAb, HBcAb reagents) Launch L-FABP Instrument installation Reagent sales expansion Register for national health insurance system s coverage Additional reagent registration process in series Start sales activities Continuous launch of new items Launch L (high-throughput analyzer) Lumipulse installation in global markets is on track ( >3 installations cumulatively by the end of Q/1) 13

8 Progress of Business Plan : Lumipulse L Launch Next generation of high-throughput fully automated immuno-assay system ( test/hr) Capable to be integrated with clinical chemistry analyzer BioMajesty ZERO JCA-ZS (JEOL) Designed to satisfy global market requirements Utilize existing Lumipulse Presto-II reagents(nearly items) Advantage of space saving Improved usability Market launch on nd/november in Japan 1 Next Generation IT System 1Q Q(~3Q) 3Q Q Validation Operation One-time costs to start operation Progress of Business Plan Depreciation Increase Japan Operation Cost structure improvement Small Start Depreciation increase One-time costs to start operation Stepwise Operation FY1 Full Operation Cost structure improvement Initial Plan:Operation from Q Revised Plan:Stepwise Operation from 3Q The Cause of Delay The system itself is almost completed, however, additional adjustment between each customer is required for the smooth migration Due to the delay of full operation, cost structure improvement will start from FY1 Price Higher price decline due to market environment Establish price policy per customer/product Price control to improve profitability Ensure price management Profit ability Higher CAPEX to launch new genetic testing menu (e.g. NIPT) Profitability improvement coming from high value-added tests expansion 1

9 Progress of Business Plan Global Business (1) Miraca Life Sciences (Anatomic Pathology Business in US) Full-year Initial Plan 1H Actual Progress to Full-year Plan Net Sales $3.M $13.M 9.% Op. Income $7.M $.9M.% Both Sales and Op. Income are behind the initial plan Reasons of Profitability Decrease GI (>% of ): Lower profitability Decline in average income per client - Shift to in-house pathology lab - Less reimbursement by some private payers Client loss - Loss to Physician Office Laboratory - Loss to hospital lab (acquisition of clients by hospital) GU: Lower volume (collaboration delay with IT vendor) Heme: Influenced by price decline Improvement Actions GI: Promote customer retention and obtain new accounts GU: Start collaboration with IT vendor Profitability structure improvement through lab operation efficiency (FY1) Consolidate lab facilities Introduce new LIS Promote lab automation Performance is forecasted to recover in the H 1 Progress of Business Plan Global Business () BMGL (Genetic Testing Business in US) Full-year Initial Plan 1H Initial Plan 1H Actual Progress to 1H Initial Plan Sales $.M $3.M $.M $-.M.% EBITDA $13.M $3.M $-.3M $-3.9M -.3% Share of loss of entities accounted for using equity method ( *) $-.M $-.M $-.M $-.3M - Reasons of Progress Delay Pediatrics genetic disorder area Decline of reimbursement rate Client lost due to increasing competition Carrier screening (obstetrics/ gynecology) Delay of cooperation w/ distribution channel partner sales lost Develop new test platform one-time costs increase Result of BMGL is recognized in Ordinary Income line on consolidated P/L Improvement Actions Carrier screening Start cooperation w/ channel partner in Oct. Enhance revenue and profit generation in H Profitability improvement Higher efficiency of lab-operation Strengthen in-house sales force Enhanced sales capability with more reps Accelerate new test development and market launch Leverage Baylor s technology Both sales and profit are forecasted to improve in H (The annual result will not reach the initial plan) 17

10 Forecast of Cash Dividends Interim dividend per share increased by 9 yen, to yen. Annual dividend per share is planed to increase to 1 yen. Cash dividends (yen per share) (yen) Annual dividend Year-end Interim FY FY7 FY FY9 FY FY11 FY1 FY13 FY1 FY1 (Forecast) Payout Ratio (%) %.1% % 3.% 3.% 3.1% 3.3% 33.1% 31.% 3.9% 33.% 3%.% % % % FY 年度 FY7 年度 FY 年度 FY9 年度 FY 年度 FY11 年度 FY1 年度 FY13 年度 FY1 年度 FY1 年度 (Forecast) ( 予 ) 1 Contact information: IR Public Relations Group ir@miraca-holdings.co.jp Website: Disclaimer regarding forward-looking statement: The performance forecast provided in this document is prepared by the management based on currently available information and various hypotheses and ideas including significant risks or uncertainties. Please be aware that the actual performance may turn out to be different from the forecast as a result of various contributing factors. Factors affecting the performance include, among others, aggravation of the economic situation, fluctuation of the exchange rate, change of regulatory, statutory, and administrative requirements, delayed launch of new products, pressures from the product strategies of competitive companies, and decline of the sales potential of existing products. 19