EUCALIA Inc.

Business Details

Provides management consulting as its core service, along with fundraising support, working capital lending, real estate sale-and-leaseback, DX support, HR and labor support, construction consulting, business succession M&A support, BPO services, and HRM solutions. Centered on "Hospital Management Support," a comprehensive, hands-on support service for partner medical corporations, the segment also offers External Consulting to non-partner medical corporations. The Home Healthcare Business (Medistep Inc.) has been integrated into this segment, reorganizing the business operation structure with the aim of strengthening collaboration between home healthcare and medical institutions.

Recent Overview

Revenue grew significantly by 83.8% year on year, but segment profit declined 55.8% due to increased upfront investment and goodwill amortization

Segment revenue for Q1 FY2026 (ending December 2026) grew substantially to ¥2,360 million (up 83.8% year on year). Segment profit, however, was only ¥177 million (down 55.8% year on year). This was due to increased upfront investment such as hiring to expand the BPO business and External Consulting, an operating loss recorded during the ongoing business integration of Zero Medical Co., Ltd., and increased goodwill amortization expense (up approximately ¥30 million year on year) resulting from M&A activity in FY2025 (ended December 2025). No new hospital partnerships were formed in the first quarter, but the five hospitals partnered in the prior fiscal year are gradually beginning to contribute to results. In addition, the business segment for Medistep Inc. was changed from the Senior-Related Business to this segment, establishing a framework to strengthen collaboration between home healthcare and medical institutions. In March 2026, a new base was opened in Fukuoka Prefecture with the aim of strengthening the business foundation in the Kyushu region.

Key Products

Growth Drivers

• Strengthening the revenue base through continued expansion in the number of partner hospitals and the accumulation of recurring revenue from the five hospitals partnered in the prior fiscal year
• Full-scale rollout of BPO services for medical institutions: inquiries are increasing on the back of a track record of achieving a 30% reduction in medical affairs department workload, with active expansion planned as a focus business going forward
• Deepening of home healthcare and medical institution collaboration and revenue expansion through the integration of the Home Healthcare Business (Medistep) into this segment
• Acceleration of new partner medical corporation acquisition triggered by improvement in the hospital management environment following the June 2026 revision of medical service fees
• Revenue diversification through expanded orders for External Consulting (including large-scale and public hospital projects such as Toranomon Hospital)
• Stable sourcing and increased management support inquiries from financial institutions via a network of regional banks covering 65 of 96 banks nationwide
• Deepening of collaboration with regional medical institutions and government bodies and expansion of the business foundation through the opening of a new base (Fukuoka) in the Kyushu region

Risks

• Prolonged PMI for Zero Medical Co., Ltd.: an operating loss has been recorded amid the ongoing business integration, creating a risk of additional costs until integration is complete
• Increasing goodwill amortization burden from M&A subsidiaries: goodwill balance of ¥2,374 million and Q1 amortization of ¥73 million (up approximately 68% year on year) continue to weigh on segment profit
• Short-term profit pressure from upfront investment: hiring investment to expand BPO and consulting operations has pushed up SG&A expenses, causing a significant decline in profit margin (from 31.2% to 7.5%)
• Stagnation in acquiring new partner hospitals: no new hospital partnerships were formed in the first quarter. There is a risk that changes in the external environment, such as the expansion of WAM loan facilities, could delay partner medical corporations' consideration of management improvement measures
• The impact of trends in medical and long-term care fee revisions on the management environment of partner medical corporations
• Credit risk and real estate price fluctuation risk associated with loans to medical institutions and real estate holdings