OLYMPUS CORPORATION

Business Details

Consists of three areas: Gastrointestinal Endoscopy, Gastrointestinal Devices, and Medical Services. Its primary customers are medical institutions in Japan and overseas, with deployment centered on the EVIS X1 Gastrointestinal Endoscopy System across North America, Europe, Asia, and Oceania. Of the FY2026 (ending March 2026) consolidated net sales of ¥1,010,676 million, this segment accounted for ¥697,359 million (approximately 69.0%), serving as the Group's core revenue base. The segment was renamed from the former "Endoscopic Solutions Business" following the organizational restructuring in April 2025.

Recent Overview

Despite increased sales, one-time costs, tariffs, and the Swan investment combined to reduce operating profit by 20.5% year on year

Net sales for FY2026 (ending March 2026) increased 3.5% year on year to ¥697,359 million. Europe, Asia, and Oceania performed steadily, and North America also achieved double-digit growth in the fourth quarter, while China remained sluggish due to intensifying competition and domestic preference policies. Operating profit declined significantly by 20.5% year on year to ¥136,359 million. Main causes included cost ratio deterioration due to the impact of U.S. tariffs and worsening sales mix, approximately ¥44 million in expenses associated with the Swan EndoSurgical investment, approximately ¥141 million in expenses related to global workforce optimization measures, and an approximately ¥34 million increase in impairment losses on development assets. Excluding foreign exchange effects, net sales increased 2.1% year on year, while operating profit decreased 21.4% year on year.

Key Products

Growth Drivers

• Continued steady demand for gastrointestinal endoscopy in Europe, Asia, and Oceania (strong performance in multiple countries including the UK)
• Double-digit fourth-quarter growth in North America driven by sales promotion effects of EDOF technology-equipped scopes and EU-ME3
• Contribution from new products in the Gastrointestinal Devices field (such as GORE VIABIL Biliary Endoprosthesis)
• Steady performance of ERCP-related products across all regions
• Expansion of recurring revenue in the Medical Services field, led by Europe
• Room for margin improvement from the gradual decrease in one-time costs related to the Elevate quality assurance project (a decrease of approximately ¥58 million in the current period)
• Creation of future growth opportunities through strategic investment in endoluminal robotics via Swan EndoSurgical
• FY2027 (ending March 2027) forecast: expansion of net sales to ¥1,055,000 million to ¥1,076,000 million, driven by sustained growth in the Gastrointestinal Endoscopy Solutions Business

Risks

• Continued sales pressure in the Chinese market due to intensifying competition and domestic preference policies
• Deterioration of cost of sales ratio due to the impact of U.S. tariffs (current period cost of sales ratio of 35.3%, a 3.8 percentage point deterioration year on year)
• Burden of additional investment in Swan EndoSurgical (Endoluminal Robotics Joint Venture) (up to USD 206 million for the Company's portion)
• Remaining one-time costs related to the Elevate quality assurance and regulatory compliance project (¥10,781 million recorded in the current period)
• Continued response to the warning letter received from the FDA and costs of addressing findings from FDA inspections of eight sites in the second half of 2025
• Risk to product supply from the FDA import alert (announced June 24, 2025) concerning certain medical devices manufactured by Aizu Olympus
• Recording of expenses associated with global workforce optimization measures (approximately ¥141 million in the Gastrointestinal Endoscopy Solutions Business in the current period)
• Downward pressure on profit margins from increased impairment losses on development assets (¥5,179 million in the current period versus ¥1,704 million in the prior period)
• Loss of sales opportunities due to suspension of shipment of certain products
• Continued budget constraints among hospitals in the Japanese market

Business Details

Manufactures and sells Urology Products, Respiratory Products, Surgical Endoscopy, Energy Devices, ENT products, and Gynecology products. Its primary customers are medical institutions in Japan and overseas, with global deployment. Following the organizational restructuring effective April 1, 2025, the segment was renamed from the former "Therapeutic Solutions Business" to "Surgical Intervention Business." In FY2026 (ending March 2026), the segment experienced a decline in sales and fell into an operating loss.

Recent Overview

FY2026 (ending March 2026) saw a reversal from the prior period's operating profit to an operating loss of ¥14,986 million

Net sales were ¥313,109 million (down 3.0% year on year). In addition to the sales decline, cost ratio deterioration due to the impact of U.S. tariffs and voluntary recall costs for surgical devices (approximately ¥24 million provisioned), approximately ¥67 million in global workforce optimization expenses, ¥1,595 million in impairment losses on technology-related intangible assets, and ¥3,376 million in impairment losses on development assets combined to result in an operating loss of ¥14,986 million. Excluding foreign exchange effects, net sales decreased 4.3% year on year, and operating profit/loss declined by ¥28,632 million year on year.

Key Products

Growth Drivers

• Continued steady sales in Europe (including the UK) in the Urology field and expanding demand for the BPH resection product group
• Strong performance of EBUS-TBNA-related products in North America and Europe in the Respiratory field
• Continued sales of the VISERA ELITE III Surgical Endoscopy System in key markets
• Strategic investment in endoluminal robotics product development through the joint venture with Swan EndoSurgical, Inc. (45% equity stake)
• Room for profit improvement from the gradual decrease in one-time costs related to the Elevate quality assurance and regulatory compliance project (a decrease of approximately ¥28 million in the current period)
• Expected profit growth in the next period driven by structural efficiency improvements and disciplined cost management under the new operating model

Risks

• Risk of continued deterioration of cost of sales ratio due to increased U.S. tariffs
• Risk of voluntary recalls of surgical devices and continued incurrence of quality-related expenses (¥10,781 million in the current period)
• Decline in sales in the surgical endoscopy field and other areas due to domestic preference policies and intensifying competition in the Chinese market
• Risk of additional impairment of development assets and technology-related intangible assets (¥4,971 million recorded in total in the current period)
• Risk of additional one-time costs from global workforce optimization measures (approximately ¥67 million recorded in the current period)
• Risk of lost sales opportunities in North America and other regions due to suspension of shipment of certain products
• Risk of prolonged corrective actions and additional regulatory measures related to the FDA warning letter (including the import alert on products manufactured by Aizu Olympus)
• Financial burden risk from the obligation for additional investment in Swan EndoSurgical, Inc. (up to USD 206 million)

Business Details

The "Others" segment includes research and development and exploratory activities related to new businesses that do not belong to either the Gastrointestinal Endoscopy Solutions Business or the Surgical Intervention Business reportable segments. Following the completion of the divestiture of the orthopedics business (July 2024), the financial significance of this segment has declined; in FY2026 (ending March 2026), net sales were ¥208 million and operating loss was ¥499 million, an extremely small scale, with negligible financial impact on the Group as a whole.

Recent Overview

Both net sales and assets contracted significantly, further diminishing the segment's presence

In FY2026 (ending March 2026), net sales were ¥208 million (down 60.8% year on year from ¥530 million in the prior period), and the operating loss widened to ¥499 million (from a loss of ¥474 million in the prior period). Segment assets also decreased significantly, from ¥4,599 million to ¥1,464 million, continuing the trend of contraction in the residual business following the divestiture of the orthopedics business. Capital expenditures were zero, with no new investments made.

Key Products

Growth Drivers

• Continuation of exploratory research and development activities in new business areas

Risks

• Low financial significance of the residual business following the divestiture of the orthopedics business, with unclear independent growth drivers
• Significant contraction in net sales, down 60.8% year on year, making it difficult to maintain the scale of business
• Widening operating loss, from ¥474 million in the prior period to ¥499 million, with an unclear path to profitability
• Sharp decline in segment assets from ¥4,599 million to ¥1,464 million, indicating a marked contraction of the business foundation