Business Results for the Nine Months ended December 31, 2015 (1-3Q/FY2015)

Transcription

1 Business for the Nine Months ended December 31, 1 (13Q/FY1) (February 9th, 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: IVD: In Vitro Diagnostics (business) CLT: Clinical Laboratory Testing (business) HR: Healthcare Related (business) : Operating income Ord. income: Ordinary income MLS: Miraca Life Sciences, Inc. BMGL: Baylor Miraca Genetics Laboratories, LLC Net Sales Op. Income Nonoperating Income/Expense Ord. Income Extraordinary Income/Loss Income before Income Taxes Income Taxes Net Income/ Net Loss Consolidated Financial for 13Q/FY1 Net Loss due to the effect of MLS s Impairment Loss %. 7.9% %. 1.9% % % % % %.3.%.1 1.%.% 11.7% 79.% % 13.1.% 13Q/FY1 9.9 Y/Y Variation.% 3.7 FY1 Forecast (Rev. Jan. 1)..% Achievement to Forecast Net Income excl. impairment loss on MLS's goodwill 1. 7.% % 7.7% Factors of Y/Y variation Nonoperating loss Extraordinary income/ loss and Income taxes Shares of loss of entities accounted for using equity method (mainly BMGL) MLS goodwill impairment (approx.. billion) Provision of tax expenses related to a legal action against MLS (actual effect: approx.. billion, which decreased from Q estimation) Gain on sales of noncurrent assets (approx. 1. billion yen) Business structure improvement expenses (approx..7 billion) 1

2 Net Sales Consolidated Financial for 13Q/FY1 reached recordhigh and decreased 13Q/FY1 Y/Y Variation FY1 Forecast (Rev. Jan. 1) Achievement to Forecast %. 7.9% IVD CLT HR Op. Income IVD CLT HR EBITDA (**) %.3 7.1% % % %.1 7.% (*) (*) %. 1.9% %.7 1.%.%.1.9%.73.% %.9 3.%.1%.97.9% % % 1..% 79.7%.3 11.%.1.1%.1 7.9%..% 77.3% % %.3.% (*) Segmentation adjustments :.7 in 13Q//FY1;.1 in 13Q/ FY1 (**) EBITDA = Operating income + Depreciation + Amortization of goodwill Exchange rate: : 1USD=.JPY, 1EURO=1.3JPY 13Q/FY1: 1USD=11.71JPY, 1EURO=13.3JPY Increase in : Contribution of sales growth in global IVD and currency exchange gain Decrease in : Profit increase in IVD could not offset profit decline in CLT 13Q/FY1 Segment Performance Review 1. In Vitro Diagnostics Japan 1. ( +.9% ) Global 13Q/FY1 Japan : flat LUMIPULSE (LP) reagent sales: flat NonLP products: flat overall (Decrease in flu test reagent sales) Decrease in :.77 Increase of R&D expenses for LP launch in USA Decrease of marginal profit due to product mix change.1 (.9% ) +.7 ( + 9.% ).73 (.% ) 13Q/FY1 Global (NonJapan) Increase in : +.1 Growth in raw material supply and LP business Onetime royalty income (Q) Currency exchange gain: 1. Increase in : +1.9 Increase in profit generated by sales increase:. Currency exchange gain:. Royalty income etc. 3

3 ( +.% ) Q/FY (.9% ) 1.1 ( 1.% ) ( 9.% ) 13Q/FY1 Japan Global Global CLT (in US dollar) 13Q/FY1 Segment Performance Review. Clinical Laboratory Testing 13Q/FY1 Japan Slight increase in : +.3 New test menu and volume increase by existing customers Impact of test price decline (Y/Y basis): 3% Decrease in : 1. Decrease in marginal profit caused by test price decline Increase in initial expense related to NaviLab operation Initial investment for launch of new testing Global (USA) : +.7, :.33 Currency exchange gain in sales: +.9 MLS (before goodwill amortization) : $3.M Decline in average unit price: $9M Test volume increase: +$M : $3.9M Decrease in marginal profit caused by test menu/ segment mix change and price decline ($ million) 13Q/FY1 Segment Performance Review 3. Healthcare Related ( + 1.% ) Q/FY1 (11.%) (.1%). (.%).1. (9.3%). ( 7.9% ). (13.%) (.7%) (.%).1 (11.3%) 13Q/FY1 PM CT ST PM CT ST Sterilizing (ST) : : +.3, : +.1 Sales growth achieved mainly through growth in onsite business and expansion of market area (new entry into Okinawa) Clinical Trials (CT) : :.9, :. Decrease in net sales caused by decline in project price and number of potential project Effect of fixed cost reduction was still small Preventive Medicine Related (PM): : +.1, :. Nursingcare related business: Stable growth in sales Decrease in due to investment for purchase of rental assets

4 Original goodwill $3M Accounting for Impairment of MLS s Goodwill As of Oct. 31, 1 (Date of the transaction) $M $M 1 (USGAAP) $M (JGAAP) $3M Remaining goodwill $1M (1 ) Impairment loss (USGAAP) 3 $M Impairment loss (JGAAP) Goodwill after impairment $M $1M *Under USGAAP, nonlisted companies are allowed to choose to amortize goodwill since Jan. 1(FASBASC Topic3). According to this accounting rule, MLS started amortization of goodwill in Apr. 1. Accumulated amortization 1$M (JGAAP) (amortized since the acquisition by straight line method over years) $M (USGAAP) (amortized since April 1 by straight line method over years ) Impairment loss on MLS s goodwill 3$M (USGAAP) $1M (JGAAP) (After the deduction of $1M, the difference of JGAAP1 and USGAAP) Impact to Miraca Consolidation (JGAAP) Impairment loss of approx. $1M (approx..b) is posted as extraordinary loss Goodwill amortization will decrease after impairment by approx. $11M/ year (decrease of $M in FY1) Background of MLS Impairment Sales Acquisition~FY1 Sales showed stable growth, however, profitability went down due to increased price pressure influenced by Medicare reimbursement revision Q 3Q Actions to improve profitability structure were taken and profitability improved in FY FY1 FY13 FY1 FY1 Operating Income FY1 FY13 FY1 FY1 Q 1Q Q 3Q Q 1Q FY1 Business environment got worse since 1 st Half Customer loss to POL *1 Customer loss to hospital lab for 13Q was down approx. % (y/y) One of MACs * started to limit number of test per sample from Oct. Trigger event has been recognized and impairment test was conducted Goodwill impairment *1: Physician Owned Laboratory *: MAC: Medicare Administrative Contractors 7

5 MLS Forecast Market Environment Forecast Test price: Positive reimbursement revision in 1 Test volume: Negative impact from limited pathology tests per sample, which has been influenced by MAC s new policy Sample volume: 3% per year growth Full Year Forecast Current trend (Q & 3Q) is forecasted to continue during Q (Sales: similar with previous year, OP: approximately % of previous year) Future Direction 1) Implement Business Improvement Plans GI : Customer retention and manage profit level by operation improvement Derm : Sample volume in 13Q/FY1 increased by.% (y/y) Success collaboration with IT vendor shows continuous growth Others :Stable growth ) Focus on Profit Structure Improvement Introduce new LIS, consolidate lab facilities, promote lab automation, etc. Contact information: IR Public Relations Group ir@miracaholdings.co.jp Website: Disclaimer regarding forwardlooking 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. 9