Earnings Analysis: Kusurinomadoguchi (5592) Q1 FY2027 – Record Profits Driven by Medical DX and Recurring Revenue, Solidifying Market Dominance

In the first quarter of the fiscal year ending March 2027, Kusurinomadoguchi Co., Ltd. reported consolidated net sales of 3.64 billion yen (+25.0% YoY) , consolidated operating profit of 780 million yen (+24.6% YoY) , and recurring gross profit of 1.06 billion yen (+26.4% YoY) , achieving record-high performance across key metrics.

Below is a comprehensive analysis of the key takeaways from the earnings report, categorized into 10 points covering the business environment, operational structure, KPI trends, and governance/capital policy.

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1. Overview of Q1 FY2027 Consolidated Results

First, an overview of the consolidated performance for this quarter. The company recorded significant growth in both sales and profit, driven by the steady accumulation of recurring revenue in its core Healthcare Automation and Core System businesses, alongside the consolidation of new subsidiaries and temporary demand stemming from legal amendments.

This slide provides a summary of the company-wide and segment-specific performance for Q1 FY2027 and is the most critical slide for understanding the overall earnings results.

• Consolidated Net Sales : 3.64 billion yen (+25.0% YoY)
• Consolidated Operating Profit : 780 million yen (+24.6% YoY)
• Recurring Gross Profit : 1.06 billion yen (+26.4% YoY)

By segment, the Healthcare Automation business led growth with net sales of 1.62 billion yen (+37.3% YoY) and recurring gross profit of 620 million yen (+57.3% YoY) . Meanwhile, the Minna no Okusuribako business saw a slight decline in recurring gross profit ( 350 million yen, -8.0% YoY ) due to temporary operational delays caused by a warehouse relocation. However, net sales remained resilient at 940 million yen (+7.8% YoY) , indicating that the business maintains a growth trajectory when excluding these one-time factors. The Core System business also performed strongly with net sales of 1.03 billion yen (+25.9% YoY) .

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2. Rebranding and Strategic Focus on Medical DX

Starting this fiscal year, the company has renamed its business segments to more accurately reflect its current operations and growth strategy:

• Former "Media Business" → "Healthcare Automation Business"
• Former "Pre-symptomatic Prevention Business" → "Wellness Platform Business"

This change signifies more than just a name update; it reflects a commitment to solving the critical labor shortage in medical institutions and pharmacies through an AI-powered business automation platform (covering patient acquisition, reservations, reception, medical interviews, billing, and administrative tasks) . The company is clearly positioning itself to build a cross-functional infrastructure for hospitals, clinics, and pharmacies.

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3. Trends in Consolidated Sales Centered on Recurring Revenue

The primary strength of the company's business model lies in its recurring revenue structure , which generates continuous commission income once a system is implemented.

This slide illustrates the quarterly trend of consolidated net sales (recurring vs. non-recurring) from Q1 FY2020 to Q1 FY2027 . This graph is significant because it visually confirms that the company's growth is not driven by temporary spot demand, but is steadily supported by highly sustainable and cumulative recurring revenue.

In Q1 FY2027, recurring revenue reached 2.54 billion yen (+20.1% YoY) , accounting for approximately 70% of total sales. Combined with non-recurring revenue of 1.10 billion yen (+37.9% YoY) , the company achieved record-high consolidated net sales of 3.64 billion yen (+25.0% YoY) .

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4. Trends in Profitability Metrics (EBITDA and Operating Margin)

In line with the expansion of operating profit, EBITDA (Operating Profit + Depreciation + Amortization of Goodwill) , which indicates cash-generating capability, remains at an extremely high level.

This quarter's EBITDA was 1.194 billion yen (+22.0% YoY) , with an EBITDA margin of 32.8% and an operating margin of 21.5% . A key financial characteristic of the company is its ability to maintain such high profit margins while aggressively investing in software development and strategic M&A (e.g., Medi-Web, Techno Network).

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5. Viewpoint on MHLW Administrative Notice and Risk Management

Regarding the administrative notice from the Ministry of Health, Labour and Welfare (MHLW) concerning the "prohibition of inducement through the provision of economic benefits as stipulated in the Regulations for Insurance Pharmacies and Insurance Pharmacists," the company has provided transparent disclosure to address investor concerns.

It was explained that surveys and point-granting related to prescription reservations, which were previously discussed, were already terminated by May 2026 . The currently active check-in points do not provide incentives for specific pharmacies and thus pose no legal issues. The company has confirmed this with the MHLW and clarified that there have been no significant impacts on prescription online reception volume, pharmacy contract counts, or churn rates, nor any material disruption to business performance.

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6. Agile Capital Policy and Share Buybacks

Prioritizing capital efficiency and shareholder returns, the company is actively pursuing share buybacks:

• Resolution on June 5, 2026: 115,000 shares / 300 million yen
• Resolution to increase limit on June 29, 2026: Up to 400,000 shares (3.51% of total shares outstanding) / Total 800 million yen
• Acquisition status as of July 31, 2026: 216,400 shares / 525 million yen

While maintaining financial health, the company has set and executed a buyback program equivalent to approximately 3.5% of its outstanding shares, demonstrating concrete actions toward enhancing shareholder value.

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7. Scale and Key KPIs of the Healthcare Automation Business

The "Healthcare Automation Business," the company's growth driver, possesses one of the largest market shares in Japan.

This slide summarizes the key KPIs indicating the customer and user base of the Healthcare Automation business . It is the most important slide for providing objective data on the platform's entry barriers and the strength of its network effects.

• Number of Pharmacies (Facilities) : 24,694 facilities (approx. 39.3% share of the roughly 63,000 pharmacies nationwide)
• Cumulative Downloads of Medication Notebook App : 7.667 million (steady increase of 1,605 facilities/users YoY)
• Prescription Share : Approx. 2.0% (out of approx. 900 million prescriptions nationwide, the company's target SAM for online reception is 450 million)

With an overwhelming network covering about 40% of pharmacies nationwide, the company is successfully capturing users through its medication notebook app. As the market share for online prescription reception is still around 2.0%, there is significant room for growth as digitalization progresses.

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8. Trends in the Minna no Okusuribako Business and Background of Temporary Factors

The Minna no Okusuribako business provides pharmaceutical procurement support and matching services for stagnant inventory.

• Net Sales : 940 million yen (+7.8% YoY)
• Recurring Gross Profit : 351 million yen (-8.0% YoY)

The temporary decline in recurring gross profit was due to operational delays caused by a warehouse relocation in the stagnant inventory service, which caused some sales originally planned for Q4 FY2026 to shift into Q1 FY2027, creating a reactionary impact. Excluding this one-time factor, the business is on a growth trend. Profitability is expected to improve in the medium to long term through the re-release of inter-store sharing functions and the DX of in-house warehouse management using AI.

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9. Performance of the Core System Business and Special Demand Factors

The Core System business (receipt computers, electronic medical records, systems for nursing care facilities, etc.) performed exceptionally well, bolstered by the consolidation of subsidiary Techno Network and temporary demand related to legal amendments.

• Net Sales : 1.03 billion yen (+25.9% YoY)
• Recurring Gross Profit : 180 million yen (+31.2% YoY)

Once implemented, core systems for medical institutions and pharmacies have high switching costs, contributing significantly to the expansion of recurring revenue.

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10. Progress Against Full-Year Forecasts and Future Outlook

The progress rates against the full-year consolidated earnings forecast for FY2027 as of Q1 are as follows:

• Net Sales Forecast : Against 14.4 billion yen, actual 3.643 billion yen (25.3% progress)
• Operating Profit Forecast : Against 3.1 billion yen, actual 784 million yen (25.3% progress)
• Ordinary Profit Forecast : Against 3.1 billion yen, actual 778 million yen (25.1% progress)

All major profit items have exceeded the 25% progress rate against initial forecasts , indicating a very strong start to the year.

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Summary

Kusurinomadoguchi's Q1 FY2027 earnings were of high quality, with both sales and profits reaching record highs due to the successful capture of medical DX demand and the accumulation of recurring revenue . The company has responded to concerns regarding the MHLW administrative notice with prompt, fact-based disclosure while simultaneously advancing shareholder return measures such as share buybacks. With a solid platform covering approximately 39.3% of pharmacies, the company's future initiatives in further AI utilization and automation solutions for medical institutions remain a key focus.