Growth of the Virtual Slide Business in the Global Market

「During the second quarter of the current consolidated fiscal year, the Company sold part of its shares in Path Imaging and consequently excluded the company from the scope of application of the equity method. Accordingly, from the first quarter of the current consolidated fiscal year, the "digital pathology-related equipment business" previously operated by the company was excluded from the reportable segments.」

「During the first quarter of the current consolidated accounting period, the Company changed パスイメージング株式会社 (hereinafter, パスイメージング) to an equity-method affiliate. Accordingly, the digital pathology-related equipment business operated by that company was excluded from the reporting segments from the first quarter of the current consolidated accounting period.」

「The Company has positioned its medical equipment business as a next-generation core business and has actively pursued its development. However, having determined that it would be preferable for Path Imaging to advance the business in cooperation with With Partners in order to resolve the various issues in the medical field described above, the Company decided for the time being merely to monitor developments in the medical equipment business and not to take the lead in advancing it.」

「As stated in the notice regarding the release of a new product by a subsidiary disclosed on 25 December 2017, the Company has established a sales structure to strengthen order-taking activities centred on the new product and is building a structure for the future development of advanced medical equipment.」

「During the first six months of the current consolidated fiscal year, revenue from WSI (Whole Slide Imaging), which converts pathological specimens into digital images, fell below the initial plan because the Company was focusing on developing new products in anticipation of legislation enabling pathology testing using digital images and the policy for insurance coverage.」

「During the first quarter of the current consolidated cumulative period, revenue from WSI (Whole Slide Imaging), which converts pathological specimens into digital images, fell below the initial plan because the Company was focusing on developing new products in anticipation of legislation enabling pathology testing using digital images and the policy for insurance coverage. As a result, revenue from the business was ¥1 million and the segment loss was ¥37 million.」

「During the first half of the current fiscal year, we worked to expand sales channels for WSI (Whole Slide Imaging, formerly known as the virtual slide system) and focused on securing orders, but the expansion of the sales market has not progressed as expected, and sales remained at a low level.」

「At a meeting of the Board of Directors held on 30 June 2016, the Company resolved to enter into a business transfer agreement under which consolidated subsidiary テラ株式会社 would acquire the entire business of 株式会社クラーロ, from research and development and manufacturing and sales of medical imaging systems through to services, and executed the agreement on the same day. The formal date of acquisition is expected to be approximately 3 to 4 months from then, upon completion of the acquisition in accordance with the business transfer agreement.」

「We believe the best way to achieve high growth in this promising market by strengthening product development, marketing and service capabilities is for テラ to acquire the business from クラーロ and expand the business by making maximum use of the インスペック Group's networks in Asia, Europe and North America. Following discussions with クラーロ, テラ and クラーロ have reached an agreement on the acquisition of the business and will enter into this business transfer agreement.」