ELAN Corporation

As awareness of the hospital admission set market has grown, the number of other operators offering similar services, as well as hospitals and nursing care-related businesses, has increased, intensifying market competition. If companies superior in capital strength, brand recognition, or customer base enter the market, this could lead to the loss of existing customers or a decline in profitability. The Group strives to improve the quality of CS Set services and maintain good relationships with linen supply operators and others.

In the rental of nightwear, towels, and other items, and the sale of paper diapers and similar products, if a significant problem occurs with the items provided, this could lead to claims for damages or loss of trust, potentially affecting the Group's financial position and business results. The Group pays attention to safety with respect to linen supply operators, including confirming whether they have obtained the Medical-related Service Mark and checking the hygiene of the laundering process, but it is difficult to eliminate all risks.

The CS Set service is fundamentally based on partnerships with linen supply operators and others, and the proportion of transactions tends to be high with specific operators that hold a large market share. In addition, part of the logistics operations for consumable goods is outsourced to specific operators. If the business policies of these partners change or the relationships change, this could disrupt service provision and affect the Group's financial position and business results. The Group strives to maintain mutually cooperative relationships, but securing alternative means remains a challenge.

The acquisition of new contracted facilities may not proceed as planned due to personnel or logistics issues, changes in relationships with partners, or the suspension of sales activities caused by prolonged epidemics or other events. The Group strives to acquire new facilities through its own sales activities and cooperation with linen supply operators and others, but delays in introduction plans could affect the foundation of its growth strategy and adversely affect the Group's financial position and business results.

CS Set usage fees are, in principle, paid after use, and since conducting credit checks on individual users or refusing applications is not realistic, a certain level of delinquency and bad debt occurs. There are cases where amounts become uncollectible due to deterioration in the user's financial situation or death, whether during use or after discharge or leaving a facility. If a large amount of bad debt occurs, this could affect the Group's financial position and business results. The Group prepares for such losses by strengthening its receivables collection system and recording allowances for doubtful accounts.

While the CS Set service itself does not directly require licenses or permits, the hospitals, health care facilities for the elderly, and other facilities to which the service is provided operate under the regulations of the Medical Care Act, the Health Insurance Act, the Long-Term Care Insurance Act, and other laws. If the Group is forced to respond to, or is unable to respond to, revisions to these laws or changes in the administration of regulatory guidance, this could affect the Group's financial position and business results. The Group conducts its business operations with particular attention to various regulations.

In the Nursing Care & Medical Related Business, the Group handles personal information of users. If a leakage or similar issue occurs, this could lead to claims for damages or loss of trust, potentially affecting the Group's financial position and business results. While the Group has established and thoroughly enforces internal rules and obtained Privacy Mark certification in March 2009 (renewed in March 2025) to develop its management system, it states that it is difficult to completely eliminate all risks.

The Group is actively pursuing expansion into related and peripheral businesses that leverage the know-how developed in the Nursing Care & Medical Related Business, but changes in the business environment and other factors may prevent it from achieving the results initially planned. While the Group's policy is to proceed with new businesses only after careful consideration, failure to achieve planned targets could affect the Group's financial position and business results.

Securing excellent personnel is an important challenge for business expansion and continued growth. If recruitment plans are not achieved or key personnel leave the company, this could lead to a decline in competitiveness or factors that constrain business expansion. Failure to secure and develop personnel as planned is recognized as a risk that could directly affect the Group's financial position and business results.

If a large-scale disaster such as a Tokyo Inland Earthquake or a Nankai Trough earthquake occurs, damage to facilities where the CS Set service is implemented or to linen supply operators and others, as well as disruption to social infrastructure, could cause service provision to be suspended over a long period and a wide area, potentially having a material effect on the Group's financial position and business results. The Group has established an early recovery system in normal times, including strengthening logistics functions, stockpiling inventory, enhancing information systems, regionally decentralizing back-office operations, and introducing a safety confirmation system.