Miahelsa Holdings Corporation

Pharmacy revenue is based on the drug price standards and dispensing fee points stipulated under the Health Insurance Act, and since 2014 every drug price revision has resulted in a decrease (in the range of -4% to -7%). If the magnitude of the drug price reduction diverges from the reduction in procurement prices, the margin from the drug price differential will decline, directly affecting business performance. Reductions in dispensing technical fees similarly act as a factor reducing revenue.

In the Pharmaceutical Business, Childcare Support Business, and Nursing Care Business, the provision of services by qualified personnel such as pharmacists, childcare workers, certified care workers, and nurses is legally mandated, and satisfying staffing standards is a prerequisite for business operations. If it becomes difficult to secure qualified personnel, delays in opening new facilities or revisions to operating plans for existing facilities may occur. The Group is actively engaged in recruiting activities, but there is a risk that securing personnel may become difficult due to intensifying competition in the labor market.

The Nursing Care Business is subject to the Long-Term Care Insurance Act and the Health Insurance Act, and changes in business content or reductions in revenue may occur due to nursing care fee revisions and system reforms conducted every three years. Home Nursing and Home Care operations receive designations renewed every six years by prefectural governors and other authorities, and there is a risk of designation revocation or suspension if designation requirements are not met or fraudulent billing is discovered. In the Pharmaceutical Business as well, violations of or revisions to related laws such as the Act on Pharmaceuticals and Medical Devices and the Pharmacists Act may affect business performance.

The majority of funds for opening new facilities and capital investment is procured through borrowings from financial institutions, and if interest rates rise sharply or fundraising cannot be conducted as planned, opening new facilities becomes difficult, hindering the growth strategy. Syndicated loan agreements and commitment line agreements entered into by wholly owned subsidiaries include financial covenants, and breach of these covenants would result in loss of the benefit of time and require immediate debt repayment. The Group is working to reduce interest-bearing debt, but changes in the interest rate environment may adversely affect its financial position.

The majority of fixed assets held are used in facility operations, and if there is a significant decline in profitability due to changes in the business environment or economic factors, impairment losses will occur, affecting business performance. Goodwill has been recorded in connection with M&A through share acquisitions, and if business operations do not proceed as planned, impairment of goodwill and other assets may be necessary. Penalty payments for early termination may also arise upon closure of facilities under long-term lease agreements.

The Group handles large volumes of personal information of users, including medical history and medication records, and if a leak occurs, business performance may be affected due to damages compensation, administrative sanctions, and loss of public trust. If unforeseen events such as cyberattacks, unauthorized access, or system failures occur, business operations may be disrupted and trust from customers and business partners may be undermined. The Group has implemented measures such as establishing personal information protection regulations, company-wide employee training, and obtaining Privacy Mark certification, but these risks cannot be completely eliminated.

The opening of nurseries in the Childcare Support Business depends on public solicitations from local governments, and if such solicitations decrease due to the declining birthrate or a reduction in the number of children on waiting lists, significant deviations from facility opening plans may occur. If the number of enrolled children falls short of initial expectations, business performance will also be directly affected. The opening of nurseries is also subject to competitive selection through screening by local governments against competitors, and progress according to plan is not guaranteed.

Isamu Aoki, who served as Chairman of the Board of Directors of the subsidiary Miahelsa Co., Ltd., passed away on May 28, 2026, and the number of shares held including related holding companies and family members reaches 54.4% of the total number of issued shares. Discussions regarding the division of the estate among the heirs are currently underway, and depending on the outcome, this may affect the Company's management. A change in controlling shareholder could bring about significant changes to management policy and the decision-making process.

The pharmacies in the Pharmaceutical Business are primarily gate-front pharmacies located in front of large general hospitals, and the closure or discontinuation of medical institutions with high prescription fulfillment rates, or a decline in the number of outpatients, directly leads to a decrease in sales. If a competitor opens a pharmacy on the premises of the same hospital, there is a risk that the number of visitors will decrease. Since dispensing sales in the Pharmaceutical Business account for more than 40% of total sales, this dependent structure is a major factor in business performance fluctuations.

In each of the Pharmaceutical, Childcare Support, Nursing Care, and Food Businesses, a certain scale of real estate is leased through operating lease transactions, and application of the new lease accounting standard may significantly increase right-of-use assets and lease liabilities. An increase in liabilities could lead to deterioration of financial indicators and increase the risk of breaching financial covenants with financial institutions. Since numerous lease contracts exist in proportion to the scale of operations, the impact on the financial statements may not be minor.