Recovery International Co., Ltd

The Home-Visit Nursing Care Service Business is a labor-intensive industry, and the stable acquisition of nurses and rehabilitation staff is a prerequisite for business expansion. There are limits to identifying job seekers among applicants who wish to transition into home-visit nursing care, and if a significant gap arises between staffing plans and actual deployment, there is a risk that new user acquisition may not proceed as planned. As countermeasures, the Company utilizes staffing agencies, strengthens branding through social media, promotes retention through a tutor system, on-the-job training, and management training, and implements work-life balance initiatives targeting an average monthly overtime of around 10 hours.

Insurance-covered services account for 98.4% of the Company's sales (13th fiscal year), and revisions to the medical service fee schedule (once every two years) and the long-term care fee schedule (once every three years) directly affect business performance. If the fee unit prices or add-on payments related to the Company's services are revised downward in the medical service fee schedule revision scheduled for 2026, this may affect the financial position and operating results. Although the simultaneous revision in fiscal 2024 had no significant impact, it is necessary to continuously monitor future revision trends.

Operating a home-visit nursing care business requires long-term care insurance designation from prefectures and other authorities (renewed every six years) and medical insurance designation from regional bureaus of health and welfare, and compliance with personnel, facility, and operational requirements is mandatory. With insurance-covered services accounting for 98.4% of total sales, if designation requirements are no longer met due to some error, or if fraudulent billing is discovered, the designation may be revoked or suspended, which could have a material impact on the financial position and operating results. As a countermeasure, the Company has established a management system for change notifications and renewal procedures, and conducts focused checks during annual internal audits.

Due to the nature of home-visit nursing care services, the Company handles large volumes of sensitive personal information of users, including names, addresses, dates of birth, and medical history. If an information leak occurs, it could affect the financial position and operating results through a decline in social credibility. As countermeasures, the Company has established a personal information protection policy, management regulations, and information system management regulations, and conducts security monitoring and internal audits through its information systems department. In addition, the Company strives to ensure appropriate information security by adopting the billing system of an IT vendor specializing in the long-term care business.

If a serious problem, complaint, or medical accident due to negligence occurs during the provision of home-visit nursing care services, this could affect the financial position and operating results through payment of damages or a decline in social credibility. Even in cases where no causal relationship with the Company's services is recognized, there is a risk that litigation may be filed on the grounds of deterioration in a user's condition. As countermeasures, the Company conducts internal and external education and training, shares incident cases and recurrence prevention measures, and maintains manuals capable of responding to a variety of situations.

The home-visit nursing care industry has low barriers to entry in terms of personnel standards and initial investment amounts, and against the backdrop of an increasing need for home medical care due to the aging society and the decrease in the number of hospital beds, new entrants from other industries and the expansion of business scale by competitors are expected. If competition intensifies, this may affect the Company's financial position and operating results in terms of user acquisition and human resource acquisition. The Company strives to maintain and strengthen its competitiveness through business growth by executing key priority initiatives.

The Company is expanding its business locations based on opening/closing criteria that take into account profitability by location, but if the recruitment of nurses and other staff and the acquisition of new users does not proceed as planned, profitability may continue to deteriorate after opening, potentially leading to facility closures. In particular, in addition to dominant expansion centered on Shinjuku-ku, Tokyo, the Company is also promoting expansion into regional areas, and differences in the human resources and demand environment among regions heighten this risk. If deterioration in profitability or closures occur in succession, this may affect the financial position and operating results.

The Company utilizes systems for the management of accounts receivable and user billing, and positions IT promotion as a key element in achieving high profitability. If a system failure occurs for some reason, the Company may be unable to properly issue billing or collect accounts receivable, resulting in a deterioration of cash flow and delays in IT promotion initiatives, which may affect the financial position and operating results. As countermeasures, the Company has established a dedicated system management department and developed internal regulations and manuals.

The Comedical Staffing Placement Business operated by the subsidiary RePath Co., Ltd. is conducted under a paid employment placement business license (valid from March 1, 2025 to February 29, 2028) based on Article 30-1 of the Employment Security Act. If the license is revoked for any reason, or if a suspension of all or part of operations is ordered, or if a highly unfavorable legal amendment is implemented, this may affect the performance of the Company's group. At present, there are no facts related to the revocation or suspension of the license.

In connection with the business transfer of the paid employment placement business, etc. of the subsidiary RePath Co., Ltd., goodwill is recorded as an intangible fixed asset. If a gap arises between business performance and the business plan due to changes in the business environment, and the expected cash flow cannot be generated, it may become necessary to recognize an impairment loss. If an impairment loss occurs, this may affect the performance of the Company's group.