Supplementary Information on Financial Results For the Fiscal Year 2017 artra corporation Stock code: 6029 1
Results for 2017 2
Highlights of 2017 Higher sales and profits; Net sales, operating profit, ordinary profit and profit at all levels reached a record high Sales rose by 15.6% to 3,759 million and ordinary profit increased by 51.1% to 455 million Honetsugi chain sales were lower than expected because the difficulty of recruiting nationally certified care providers caused the number of newly opened clinics to fall below the initial plan. Backed by higher sales of equipment and supplies and growth in seminar sales, operating profit, ordinary profit and profit were all higher than the forecast. <Sales> 3,251,564 (Thousands of yen) 3,759,158 2,564,070 1,320,152 1,490,027 324,723 603,562 710,741 772,046 2009 2010 2011 2012 2013 2014 2015 2016 2017 3
Sales for Categories of Services (Thousands of yen) 2016 2017 YoY change Sales composition Equipment and supplies sales 1,485,525 2,031,874 136.8% 54.1% Honetsugi chain 1,017,447 704,872 69.3% 18.8% Artra Billing Service 330,696 372,858 112.7% 9.9% Honey-Style 275,959 501,629 181.8% 13.3% Management consulting for nationally certified acupuncture, moxibustion and Judo therapy clinics 90,020 68,652 76.3% 1.8% Nursing care support and other 51,915 79,271 152.7% 2.1% Total 3,251,564 3,759,158 115.6% 100.0% Sales benefited from an increase in sales of equipment used for procedures not covered by insurance. At the end of 2017, Honetsugi chain clinics increased by 12 to 98, members using the Artra Billing Service increased by 527 to 2,596 and clinics using the Honey-Style marketing and appointment service increased by 91 to 619. Honey-Style sales were up due to higher sales from the Honetsugi Academy seminars. 4
Statement of Income (Thousands of yen) 2017 Initial plan Results Vs. Initial plan YoY change 2016 Net sales 4,469,000 3,759,158 84.1% 115.6% 3,251,564 Gross profit - 1,369,109-110.1% 1,243,675 SG&A expenses - 933,535-98.3% 949,769 Operating profit 326,000 435,573 133.6% 148.2% 293,905 Ordinary profit 358,000 455,475 127.2% 151.1% 301,387 Profit 196,000 301,430 153.8% 202.7% 148,703 Net income per share 22.51 yen 34.59 yen - - 18.41 yen A focus on the increasing use of non-insured procedures resulted in increases in sales of equipment and supplies and seminar sales. At the Honetsugi chain clinics, the difficulty of recruiting nationally certified care providers caused the number of newly opened clinics to fall below the initial plan. 5
Balance Sheet (Thousands of yen) 2016 2017 Composition Composition Change Current assets 2,063,149 73.8% 2,387,656 67.4% 324,506 Non-current assets 732,850 26.2% 1,152,404 32.6% 419,554 Total assets 2,796,000 100.0% 3,540,061 100.0% 744,061 Current liabilities 1,098,896 39.3% 1,546,760 43.7% 447,864 Non-current liabilities 218,639 7.8% 238,098 6.7% 19,459 Total liabilities 1,317,535 47.1% 1,784,859 50.4% 467,324 Total net assets 1,478,464 52.9% 1,755,202 49.6% 276,737 Total liabilities and net assets 2,796,000 100.0% 3,540,061 100.0% 744,061 Net assets per share 169.81 yen - 200.95 yen - - Shareholders equity ratio 52.9% - 49.5% - - Assets increased mainly due to increases in operating loans, merchandise and investment securities. Liabilities increased mainly due to an increase in short-term loans payable. Net assets increased mainly due to recording of profit. 6
Sales of Equipment and Supplies (Thousands of yen) 2,031,874 1,485,525 776,598 189,298 265,653 2013 2014 2015 2016 2017 Sales benefited from strong sales of equipment used for procedures not covered by insurance due to increasing use of non-insured procedures at acupuncture, moxibustion and Judo therapy clinics. Sales of supplies were strong because of the enlargement of the lineup of products on Artra Store (an e- commerce site) and marketing campaigns. 7
Sales and Growth in Number of Honetsugi Chain Clinics Hokkaido: 1 Tohoku: 4 Kanto: 27 Chubu: 21 Kinki: 9 Chugoku: 14 Shikoku: 5 Kyushu: 16 Thailand: 1 Number of Honetsugi chain clinics 67 Sales (Thousands of yen) 86 98 Total: 98 46 29 512,975 509,413 1,051,241 1,017,447 704,872 2013 2014 2015 2016 2017 In 2017, the difficulty of recruiting nationally certified care providers caused the number of newly opened clinics to fall below the initial plan. In 2018, we will focus on recruiting nationally certified individuals. 8
Sales and Registered Users of the Artra Billing Service (A-COMS Basic) Number of users Sales (Thousands of yen) 2,596 2,069 1,695 1,049 1,309 287,161 330,696 372,858 232,286 185,993 2013 2014 2015 2016 2017 Sales increased along with the addition of more registered users, mainly newly opened acupuncture, moxibustion and Judo therapy clinics. The upgraded version of A-COMS will be the highest priority for 2018 activities in this service category. 9
Loans for Conversion of Insurance Receivables into Cash (Thousands of yen) 593,049 440,705 191,409 2015 2016 2017 Loans outstanding increased in association with the growth in the number of Artra Billing Service members. The January 2018 establishment of artra finance corporation will provide more flexibility; the goal is growth in loans outstanding. 10
Growth in Number of Clinics Using Honey-Style Service Clinics using Honey-Style Sales (Thousands of yen) 619 422 474 528 326 501,629 178,972 233,152 264,803 275,959 2013 2014 2015 2016 2017 The number of clinics using Honey-Style increased because of marketing campaigns and other steps. Seminar sales increased in association with the growing use of non-insured procedures at acupuncture, moxibustion and Judo therapy at clinics. Higher seminar sales contributed to the growth of equipment sales. 11
Plan for 2018 12
Establishment of Subsidiary A subsidiary has been established to provide a framework for the efficient operation and consistent growth of the insurance receivable cash conversion service. Outline of the subsidiary Trade name Location Main business Representative artra finance corporation 4-6-9, Itachibori, Nishi-ku, Osaka-shi, Osaka Insurance receivable cash conversion service Katsunori Tanaka, President & Representative Director Shareholder artra corporation 100% 13
2018 Plan (Consolidated) (Thousands of yen) 2018 Plan (Consolidated) 2018 Estimates Net sales 4,300,000 Equipment used for procedures not covered by insurance : Sales growth Operating profit 450,000 Honetsugi chain : More clinics Ordinary profit 460,000 Profit attributable to owners of parent 303,000 Artra Billing Service Insurance Receivable Cash Conversion Service Honey-Style : More registered users : More customers : More clinics using this service Net income per share 34.71 yen Honetsugi Daycare Service : More daycare service locations 14
Initiatives for Growth 15
Initiatives for Growth Our goal is to help extend the years of healthy life by starting the new business mainly of selling nursing care equipment while continuing the growth of current business activities. Business goals 1. Growth of equipment sales 2. Growth of the Honetsugi chain Actions Increase sales of equipment at seminars in association with the growing use of non-insured procedures. Increase sales of nursing care equipment to add a new category to the equipment sales business. Focus on recruiting nationally certified care providers to support growth. 3. Growth of the IT support business Upgrade A-COMS IT system. Increase productivity to support growth. 4. Growth of the Honetsugi Daycare Service Increase the number of franchised and directly operated locations that provide daycare services with functional training. 16
Number of New Nationally Certified Judo Therapists Number of New Nationally Certified Judo Therapists 5,570 5,227 5,349 5,069 4,763 4,592 4,416 4,438 4,582 4,503 4,274 3,755 2,902 2,215 2,108 963 1,059 1,005 1,137 1,128 1,063 1,091 1,041 1,071 1,024 Source: Foundation for Training and Licensure Examination in Judo Therapy 17
Number of New Nationally Certified Acupuncture and Moxibustion Therapists Number of New Nationally Certified Acupuncture Specialists 2,141 2,206 2,098 2,059 2,114 2,266 2,138 2,230 2,217 2,237 3,789 4,068 3,396 2,998 2,663 4,347 4,216 3,990 4,553 3,651 4,005 3,892 3,808 3,504 3,032 2,233 2,153 2,192 2,079 2,048 2,125 2,136 2,214 2,233 3,785 4,072 4,344 4,171 3,382 2,958 2,255 2,627 3,939 4,595 3,498 4,138 3,946 3,773 3,550 3,010 Number of New Nationally Certified Moxibustion Specialists Source: Public Interest Incorporated Foundation for Training and Licensure Examination in Anma Massage Acupressure, Acupuncture and Moxibustion 18
Health Insurance Payments to Nationally Certified Acupuncture, Moxibustion and Judo Therapy Clinics Health Insurance Payments to Nationally Certified Acupuncture, Moxibustion and Judo Therapy Clinics (Billions of yen) Judo Therapy Locations 600 柔道整復 Judo はり きゅう Acupuncture その他 Others therapy and moxibustion 34,893 37,997 42,431 45,572 48,024 500 400 37.4 26.7 45.9 51.6 56.0 61.0 29.3 31.5 35.2 35.8 63.7 67.0 36.5 38.0 300 200 393.3 402.3 406.8 408.5 398.5 385.5 382.5 2008 2010 2012 2014 2016 Number of Employed Judo Therapists 68,120 63,873 58,573 50,428 43,946 100 0 Fiscal 2008 Fiscal 2009 Fiscal 2010 Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Source: Medical Economics Division, Health Insurance Bureau, MHLW (Fiscal 2008-2009) Actuarial Research Division, Health Insurance Bureau, MHLW (Fiscal 2010-2014) 2008 2010 2012 2014 2016 Source: Report on Public Health Administration and Services Fiscal 2016, MHLW 19
Hold Seminars and Sell More Equipment Associated with the Growing Use of Non-insured Procedures Nationally certified acupuncture, moxibustion and Judo therapy clinics Publications distributed to about 48,000 clinics nationwide Internet members of the Honetsugi Academy (8,910 members as of Dec. 31, 2017) Provision of information Honey-Style Artra Billing Service Information is supplied in publication articles and at seminars Equipment and supplies 20
Started Trial Operation of a Service in the Nursing Care Sector Started the trial operation at 10 nursing care facilities of a multi-function high-frequency EMS Artra has obtained the exclusive right to sell the multi-function high-frequency EMS Excare Pro III in the nursing care sector as well. Special nursing care home Hyakunen-no-sato Social Welfare Corporation Seijinkai Community- based nursing care home Kura House Ofunato (A study group visiting the home) Special nursing care home Seijin Mori-no-sato Sendai Social Welfare Corporation Mori-no-sato Fukushikai 21
Use of the Multi-function High-frequency EMS to Improve Aspiration Pneumonia New report: Results of tests by Professor Kozo Yokoyama of Kagoshima University Improvement in dementia, improvement in aspiration pneumonia NATIONAL SANATORIUM KEIAIEN Department of Speech Language and Hearing, Kagoshima Daiichi Medical Treatment Rehabilitation College Professor Kozo Yokoyama Report on use of high-frequency electrical treatment The Functional Oral Intake Scale (FOIS) This treatment ended aspiration pneumonia and allowed patients to ingest food through the mouth. Individuals with dementia became able to communicate. Currently, three patients are using this treatment. Examinations and treatment at a clinic Kozo Yokoyama 6 5 4 3 2 1 Nothing by mouth Tube dependent with minimal attempts of food or liquid Tube dependent with consistent oral intake of food or liquid Total oral diet of a single consistency Total oral diet with multiple consistencies, but requiring special preparation or compensations Total oral diet with multiple consistencies without special preparation, but with specific food limitations Total oral diet with no restrictions 0 1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 22
More Clinics Offering the Honetsugi Daycare Service The Honetsugi Daycare Service includes personal functional training by a nationally certified Judo therapist in order to preserve and enhance the remaining functions of people using this service. This service is currently provided at 10 locations in Japan and more franchised clinics as well as a directly operated clinic will be added in 2018. A clinic that provides the Honetsugi Daycare Service Clinics are well equipped to provide this service A Judo therapist and nursing care professionals work together to lower each individual s care support level. We provide services that are based on an innovative functional training program developed by artra to increase the number of locations offering the Honetsugi Daycare Service. 23
Shareholder Returns 24
Shareholder Returns Distributing earnings to shareholders is one of our highest priorities. For 2017 in consideration of results of operations and other factors, we plan to pay a dividend of 3.50 yen per share, an increase of 0.5 yen from 2016. We also plan to pay an year-end dividend of 3.5 yen per share for 2018. Dividend per share Year-end Payout ratio 2016 (results) 3.00 yen 16.3% 2017 (forecast) 3.50 yen 10.1% 2018 (plan) 3.50 yen - 25
artra corporation Tokyo Stock Exchange, First Section (Stock code: 6029) http://www.artra-group.co.jp/ 4-6-9, Itachibori, Nishi-ku, Osaka IR contact: Ai Ikeda, Administration Dept. TEL: +81-6-6533-7622 (main switchboard) Disclaimer Plans and forecasts of future performance in this presentation are based on information available to artra corporation at the time the presentation was prepared and contain risks and uncertainties. Actual results may differ significantly from these forecasts due to changes in the business environment and other factors. Information in this presentation uses public information and other sources. artra corporation does not guarantee the accuracy of this information. 26