M3, Inc.

The Group handles personal information of registered m3.com members and users of employee benefit services, as well as confidential information received from multiple competing healthcare-related companies. In the event of an information leak, there is a risk of violation of the Personal Information Protection Act, claims for damages, and loss of credibility, which could materially affect the Group's business and results of operations. As countermeasures, the Group has established an information security oversight organization and implemented internal regulations, regular internal audits, manualization of work processes, and a multi-employee check system.

In the Medical Platform business, Evidence Solution business, medical device-related business, and others, the Group is subject to regulations specific to the pharmaceutical industry, such as the Pharmaceuticals and Medical Devices Act, the Clinical Trials Act, and premium regulations. If such regulations are abolished, revised, or newly established, business performance and business development may be affected. Overseas, there are also country-specific regulations regarding information provision to doctors and the provision of gifts, creating a risk that the Group may be forced to respond to unforeseen regulatory requirements. While the Group addresses this through prior consultation with local attorneys, this does not guarantee complete compliance with regulatory changes.

Given the nature of the business, which is based on computer systems utilizing the internet, system damage or disruption caused by hardware or software defects, cyberattacks, natural disasters, and the like could have a material impact on business performance. In addition, if the technological environment changes rapidly due to unexpected proliferation of new technologies, the Group's technologies could become obsolete, affecting business development. To mitigate this risk, the Group continuously introduces new system and security technologies and carries out capital investment and maintenance management.

Goodwill and other non-current assets held by the Group are exposed to impairment risk, and if the value of such assets declines, the Group may need to recognize impairment losses, which could adversely affect business performance. Because the Group pursues a growth strategy that actively promotes M&A and capital alliances, the goodwill balance tends to continue accumulating structurally. The occurrence of impairment could lead to a temporary recognition of a substantial loss, making it an important risk factor for investors.

Pharmaceutical companies, the Group's major customers, continue to face competition and restructuring at the global level, and if existing customers revise contracts following such restructuring, business performance may be affected. In addition, the impact of U.S. tariff policy and changes in laws and regulations related to the medical and healthcare industry on the global economy is difficult to predict at present, and the outlook remains uncertain. Since a large portion of revenue depends on the medical and healthcare market, stagnation or contraction of the market, or a delayed response to new market trends, poses a risk that could directly affect business performance.

The Group conducts overseas business in the United States, the United Kingdom, France, India, South Korea, and other countries, and if such business development does not proceed as planned, additional investment or unexpected losses may be required. Local currency-denominated items of overseas operations and foreign currency-denominated items of Group companies are exposed to foreign exchange fluctuation risk, and a yen appreciation phase would exert downward pressure on business performance. Combined with country-specific legal and regulatory risks, overseas business entails multiple compounded risks.

In the Evidence Solution business, if health damage occurs to subjects in clinical trials or large-scale clinical research projects that the Group is commissioned to support, the Group may be held liable for damages in cases attributable to it. In addition, if the reliability of collected case data is lost due to various regulatory violations, this could cause significant harm to client pharmaceutical companies and others, and could affect business performance through loss of credibility and claims for damages. Health damage or regulatory violations caused by the negligence of dispatched employees present similar risks.

In marketing support services, revenue may come under pressure due to the proliferation of other marketing tools, new market entrants, and customers' in-house development. In addition, if the medical system undergoes fundamental change—such as patients directly obtaining prescriptions or the expansion of drug-independent treatments such as genetic manipulation—there is a risk that the Group's services could become obsolete. In the Patient Solution business as well, there is a possibility of losing existing customers and declining profitability due to new market entrants with superior capital strength, brand recognition, and customer base.

Securing and developing entrepreneurial talent is essential to the Group's business expansion, but if recruitment does not proceed as planned, or if existing personnel leave the Group, difficulties in carrying out operations may arise, adversely affecting business performance. In addition, because many employees are concentrated in nearby offices, a large-scale accident such as a natural disaster or fire could concentrate damage and affect business continuity. The Group seeks to mitigate this risk by formulating a business continuity plan (BCP).

Sony Group Corporation, the Company's largest shareholder, holds 34.5% of the Company's voting rights, and changes in Sony's management strategy could affect the Group's business performance. In addition, if Sony Group's reputation is significantly damaged for any reason, this could affect the Group's business performance even in cases not attributable to the Group itself. Furthermore, the possibility that Sony Group may in the future offer services that compete with the Group cannot be ruled out.