With revenue growth accompanied by lower earnings, price pass-through and cost absorption will be the focus in FY2027-Q1

Consolidated revenue in FY2026 increased 3.2% year on year to ¥126,595 million, while operating profit fell 15.2% to ¥1,679 million. Ordinary profit was also ¥1,664 million, and profit attributable to owners of the parent was ¥1,112 million, both below the previous fiscal year. Compared with revenue of ¥122,702 million and operating profit of ¥1,979 million in the previous fiscal year, the operating margin declined from approximately 1.6% to 1.3%, indicating that the expansion in revenue scale has not translated into earnings growth.

The company cited higher procurement, inventory-management and delivery costs associated with inflation and insufficient pass-through of these increases to selling prices as factors behind the decline in earnings. It also listed base-pay increases, additional staffing, system investment in OLBA-DX and management-integration fees, but did not disclose a bridge quantifying the reduction in operating profit attributable to each factor. Impairment losses were ¥0 in FY2026 and extraordinary losses were limited to approximately ¥22 million, so at least on a full-year basis the decline in operating profit should be viewed primarily in terms of ordinary costs and gross-margin deterioration rather than large-scale impairment.

In the most recent quarter, results reports indicated that ordinary profit in the fourth quarter of FY2026 was approximately ¥0.42 billion, down approximately 37% year on year, while the operating margin deteriorated from 2.3% to 1.4%. Since the full-year decline may have extended beyond temporary integration costs into quarterly profitability, FY2027-Q1 should be assessed based not only on revenue growth but also on the operating margin, gross margin and growth in SG&A expenses.

At the next results announcement, the focus will be whether revenue increased year on year, whether the operating margin returned above 1.3%, and whether improvement from price pass-through was reflected in earnings from the medical equipment business. In particular, the ability to disclose integration-related costs and human-resources and DX investments separately as one-time and recurring costs will be important in assessing the recovery in FY2027 earnings.