Amvis Holdings, Inc.

The Home-visit Nursing / Preventive Home-visit Nursing business, which accounts for approximately 90% of the Ishinkan Business's net sales, operates under designations (valid for six years) granted based on the Long-Term Care Insurance Act and related laws. Fraudulent billing, violations of staffing standards, violations of operational standards, and false reporting are grounds for revocation. If even a single business site has its permit revoked, the entire corporate entity would be barred from receiving new designations or renewals for five years, which could force most existing sites to be unable to renew their designations, potentially compelling withdrawal from the Ishinkan Business. While no revocation or business suspension has occurred to date, the Group addresses this risk through a compliance framework covering the period both before and after facility openings.

The proportion of the Group's net sales derived from medical insurance and long-term care insurance revenue reaches approximately 90%, resulting in a revenue structure heavily dependent on insurance income. Fee schedules under the health insurance system are revised every two years, and under the long-term care insurance system every three years, with the concurrent revision occurring every six years providing a particularly significant indication of the direction of social security policy. If a fee revision or system change unfavorable to management is implemented, it may directly impact the Group's business performance and financial condition.

The Ishinkan Business is founded on strength in nursing staff deployment (staffing structure), and securing and developing appropriately qualified personnel forms the core of the business. The medical and long-term care industry continues to face chronic labor shortages and intensifying competition for recruitment. If personnel of the necessary quality and quantity cannot be secured, this may result in a reduction in the scale of service provision at existing sites or postponement of opening dates for new sites. The Group strives to reduce this risk through active recruitment activities while continuously verifying the effectiveness of job-listing sites and media.

In selecting locations for new Ishinkan facilities, the Group conducts multifaceted market research; however, unpredictable factors such as failure to secure favorable locations due to competition with other companies in the same industry, inability to open due to municipal regulations, force majeure events such as typhoons or heavy snowfall, and fluctuations in economic sentiment and various markets constitute uncertain elements in opening plans. If these factors cause delays in opening timing or significant deviation from business plans, it may result in lost profit opportunities and affect business performance and financial condition. The Group has established a project management framework based on the principle of multi-person handling of matters.

Keiichi Shibahara, the founder and Representative Director, has played an important role in formulating and executing management strategy since the Company's establishment, and is also a major shareholder holding 61.71% of issued shares (excluding treasury shares), including shares held via IDEA Capital Co., Ltd. Should his ability to execute business duties become impaired for any reason, this may affect the Group's business performance and financial condition. While the Group is working to establish a management structure that is not excessively dependent on him, the current situation continues to reflect a high degree of dependence.

In the Ishinkan Business, business sites and buildings are procured through leases, and due to municipal guidance related to the opening of fee-based nursing homes, it is common to enter into long-term lease agreements of 20 to 30 years. Early termination may result in payment of penalty fees, and there is a risk that continued use or recovery of security deposits may become difficult in the event of bankruptcy of the landowner or building owner. The Group strives to reduce this risk by establishing appropriate contract terms and maintaining close communication with owners.

Affected by inflation in timber, energy resources, facility supplies, and other items, the Group revised occupancy fees in fiscal 2023. If inflation progresses further, procurement costs for new facilities, such as land rent and construction costs, may increase, potentially affecting business performance and financial condition. Given the revenue structure's dependence on insurance income, there is an inherent risk that cost increases cannot be fully passed on through price adjustments.

Given the nature of medical and long-term care services, immediate withdrawal is difficult even if profitability declines, due to the need to secure placements for users and maintain relationships with medical institutions and administrative authorities, which may force continued operation at low profitability. If unprofitable sites increase or closures become concentrated, substantial impairment losses may arise, potentially affecting business performance and financial condition. As of the end of the current consolidated fiscal year, no indications of impairment have been identified; however, the Group thoroughly manages profitability at each business site and takes proactive measures against unprofitable sites.

The Ishinkan Business handles sensitive personal information requiring special care, such as the medical histories and treatment status of numerous users. Should an information leak occur, it may result in a loss of social trust and incur costs for damages compensation and system remediation, potentially affecting business performance and financial condition. The Group implements measures including employee training, submission of confidentiality pledges, segregation of areas handling information, and restrictions on access to servers and disks.

The Group positions M&A activities (such as making companies subsidiaries or acquiring businesses) within the same industry as a means of complementing and strengthening its business; however, if matters that could not have been anticipated beforehand come to light after execution, or if the business development of the acquired company or business does not proceed as planned, this may affect business performance and financial condition. While the Group strives to reduce this risk by conducting thorough financial, tax, legal, and operational due diligence with adequate time in its decision-making, the uncertainties inherent to M&A cannot be entirely eliminated.