Medical System Network Co Ltd

Medical System Network Co Ltd maintains a capital structure with a debt-to-equity ratio of 1.92, indicating a significant reliance on debt financing. The company's liquidity position is characterized by a current ratio of 0.89, suggesting potential challenges in meeting short-term obligations. Additionally, the company's cash and equivalents amount to 8,273,000,000 JPY, which is insufficient to cover its long-term debt of 29,179,000,000 JPY, resulting in a negative net cash position.

In terms of profitability, the company's return on equity is 1.11%, and its return on assets is 0.25%, both of which are below the industry median for drug retailers. This indicates that the company is not generating returns that are in line with its peers. The operating income of 380,000,000 JPY and net income of 169,000,000 JPY further highlight the company's modest profitability.

The company's revenue is concentrated in a single business segment, with no disclosed geographic diversification. This lack of diversification may expose the company to higher risks associated with market fluctuations in its primary operating region. The company's revenue of 29,186,000,000 JPY is derived from its drug retailing operations, with no significant contributions from other segments.

The company's growth trajectory is modest, with a revenue of 29,186,000,000 JPY in the latest reporting period. Analyst estimates suggest a revenue of 122,387,000,000 JPY, which is significantly higher than the reported revenue, indicating potential discrepancies or unmet expectations. The company's capital expenditure of -2,110,000,000 JPY suggests a reduction in investment in physical assets, which may impact long-term growth.

The company faces a medium liquidity risk, as indicated by its current ratio of 0.89 and negative net cash position. The risk assessment also highlights the potential for dilution, although it is currently rated as low. The company's financial structure, with a high debt-to-equity ratio, may limit its ability to raise additional capital without diluting existing shareholders.

Recent events, including the latest financial report and analyst estimates, indicate that the company's performance has not met expectations. The discrepancy between the reported revenue and analyst estimates suggests potential challenges in the company's operations or market conditions. The company's operating cash flow of 7,724,000,000 JPY is a positive indicator, but it must be managed carefully to address the company's liquidity needs.

Revenue grew 6.1% year-over-year to 122.4 billion JPY in FY2025, demonstrating consistent top-line expansion.

Cash conversion of 45.7% ranks best-in-class among 31 drug retailers, indicating superior operational efficiency.

Gross profit increased to 50.7 billion JPY in FY2025, reflecting a steady upward trend in core profitability.

Long-term debt decreased slightly to 29.8 billion JPY in FY2025, showing modest leverage management.

Dilution risk is assessed as low, providing stability for existing shareholders regarding equity structure.

Debt-to-equity ratio of 1.92 is in the bottom quartile, indicating excessive leverage compared to peers.

Credit risk is flagged as high, suggesting potential difficulties in meeting financial obligations or securing financing.

Revenue ¥34.82B, +8,4% YoY; Operating income −32,3% YoY.

• ▍Revenue ¥34.82B, +8,4% YoY
• ▍Operating income −32,3% YoY
• ▍Net income −55,0% YoY
• ▍Net margin 1.6%

Revenue ¥32.76B, +8,0% YoY; Operating income +101,7% YoY.

• ▍Revenue ¥32.76B, +8,0% YoY
• ▍Operating income +101,7% YoY
• ▍Net income +913,5% YoY
• ▍Net margin 1.1%

Revenue ¥31.10B, +5,7% YoY; Operating income −11,4% YoY.

• ▍Revenue ¥31.10B, +5,7% YoY
• ▍Operating income −11,4% YoY
• ▍Net income −53,8% YoY
• ▍Net margin 0.3%

Revenue ¥30.50B, +4,5% YoY; Operating income −97,1% YoY.

• ▍Revenue ¥30.50B, +4,5% YoY
• ▍Operating income −97,1% YoY
• ▍Net income −208,3% YoY
• ▍Net margin -0.6%

Revenue ¥32.13B; Operating income ¥1.54B.

• ▍Revenue ¥32.13B
• ▍Operating income ¥1.54B
• ▍Net margin 3.9%

Revenue ¥30.34B; Operating income ¥345.0M.

• ▍Revenue ¥30.34B
• ▍Operating income ¥345.0M
• ▍Net margin 0.1%

Revenue ¥29.42B; Operating income ¥489.0M.

• ▍Revenue ¥29.42B
• ▍Operating income ¥489.0M
• ▍Net margin 0.6%

Revenue ¥29.19B; Operating income ¥380.0M.

• ▍Revenue ¥29.19B
• ▍Operating income ¥380.0M
• ▍Net margin 0.6%

Revenue ¥122.39B, +6,1% YoY; Operating income −30,8% YoY.

• ▍Revenue ¥122.39B, +6,1% YoY
• ▍Operating income −30,8% YoY
• ▍Net income −32,2% YoY
• ▍Free cash flow −50,2% YoY
• ▍Net margin 1.0%

Revenue ¥115.36B, +5,3% YoY; Operating income +22,2% YoY.

• ▍Revenue ¥115.36B, +5,3% YoY
• ▍Operating income +22,2% YoY
• ▍Net income +15,6% YoY
• ▍Free cash flow −1,0% YoY
• ▍Net margin 1.6%

Revenue ¥109.55B, +2,7% YoY; Operating income −18,2% YoY.

• ▍Revenue ¥109.55B, +2,7% YoY
• ▍Operating income −18,2% YoY
• ▍Net income −32,7% YoY
• ▍Free cash flow −8,0% YoY
• ▍Net margin 1.5%

Revenue ¥106.69B, +2,3% YoY; Operating income +13,9% YoY.

• ▍Revenue ¥106.69B, +2,3% YoY
• ▍Operating income +13,9% YoY
• ▍Net income +8,9% YoY
• ▍Free cash flow −16,3% YoY
• ▍Net margin 2.2%