Assessing earnings growth in continuing operations assuming a decline in revenue after the business transfers

Consolidated revenue in FY2026 was ¥7,637 million and operating income was ¥293 million. In contrast, the company's FY2027 plan calls for revenue of ¥6,586 million, down 13.8% year on year, and operating income of ¥520 million, up 77.5%. The plan indicates a smaller revenue base alongside higher operating income. It should therefore be read not as simple top-line growth, but as a plan to improve the profitability of the remaining businesses following the transfer in September 2025 of, among other businesses, all of the medical-care-oriented residential facilities.

In the first quarter of the fiscal year ending March 2027, revenue was ¥1,609 million and operating income was ¥53 million. Mechanical progress against the full-year revenue forecast was approximately 24.4%, close to the 25% represented by one quarter of the fiscal year, while operating income progress was only approximately 10.3%. The first-quarter return to profitability was partly supported by the elimination of losses from the transferred businesses and lower company-wide costs, so operating income may not build linearly in the first half. For the six months ended September, it will be necessary to distinguish how much of the earnings reflects higher revenue from continuing operations and how much reflects the improved cost structure after the transfers.

At the next earnings release, the focus will be not only on whether the full-year forecast is met, but also on how much of the ¥6,586 million revenue is generated by directly operated businesses, franchises and the remaining medical-care business, respectively. The first-quarter results explain the overall revenue decline and earnings improvement resulting from the business transfers, but do not disclose a monetary breakdown of the prior-year revenue of the transferred businesses, the losses eliminated, or the reduction in head office and other costs. If this bridge is presented for FY2027-H1, it will be easier to assess whether the ¥520 million operating income plan depends on temporary cost elimination or on improvements in continuing operations.