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0 February 2025 M3, Inc. Presentation Material
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1 The following presentation contains forecasts, future plans, management targets and other forward-looking projections relating to M3, Inc. and/or its group. These statements are drawn from assumptions of future events based on data currently available to us, and there exist possibilities that such assumptions are objectively incorrect and/or may produce differing actual results from those mentioned in the statements. Furthermore, information and data other than those concerning the Company and its subsidiaries/affiliates are quoted from public information, and the Company has not verified and will not warrant its accuracy or dependency. M3, Inc.
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2 FY2024 Q1-Q3 Consolidated Results Unit: JPY MM FY2023 Q1 - Q3 FY2024 Q1 - Q3 YoY Revenue 179,189 205,521 +15% Operating profit 54,963 50,101 -9% Profit before tax 57,325 52,513 -8% Profit 38,914 35,535 -9% * YoY growth for revenue and operating profit was +27% and +3% respectively in the quarter of October to December Q3YTD results were in line with the expectation. Both revenue and operating profit increased YoY in the quarter of October to December. ELAN consolidation also started as planned. YoY growth excluding COVID related revenues, sales +19%
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3 ～ 16,400 ～20,800 ～ 8,400 ～ 2,700 123,750 154,169 175,155 179,189 205,521 FY2020 Q1 - Q3 FY2021 Q1 - Q3 FY2022 Q1 - Q3 FY2023 Q1 - Q3 FY2024 Q1 - Q3 Consolidated Revenue Trend and COVID Impact Unit: JPY MM At the end of Q3, a negative impact of approx. JPY 6bn was materialized mainly in the Medical Platform and Evidence Solution segments Regular businesses COVID related (clinical trials, vaccination support, promotion of therapeutic drugs and vaccines, etc.) +19% * FY23 Actuals: Q1 ~3.0 Bn, Q2 ~2.7 Bn, Q3 ~2.7 Bn, Q4 ~2.0 Bn FY24 Actuals: Q1 ~1.1 Bn, Q2 ~0.9 Bn, Q3 ~0.8 Bn
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4 FY2024 Q1-Q3 Consolidated Results by Segment Unit: JPY MM FY2023 Q1 - Q3 FY2024 Q1 - Q3 YoY Domestic Medical Platform Revenue 71,480 68,397 -4% Profit 30,369 25,977 -14% Evidence Solution Revenue 20,321 18,119 -11% Profit 5,121 3,150 -38% Career Solution Revenue 12,530 16,058 +28% Profit 3,887 4,777 +23% Site Solution Revenue 23,368 34,562 +48% Profit 2,618 4,576 +75% Patient Solution Revenue - 8,462 - Profit - 145 - Emerging Businesses Revenue 1,934 1,836 -5% Profit 533 716 +34% Overseas Revenue 52,123 60,942 +17% Profit 12,894 12,593 -2% New segment through the acquisition of ELAN Profit was more than JPY 100MM even with the acquisition cost Both revenue and profit increased YoY in the quarter of Oct to Dec due to improved US clinical trial business Making proactive investments to drive growth Business for physicians and pharmacists both performed well Order backlog: JPY 35.5 Bn Contract renewals drove the backlog increase. With the reform of the sales function, the order backlog for the next fiscal year has been steadily accumulating Pharma marketing: The impact of a decline in COVID-related sales drove revenue decline, but the fundamental DX is still progressing Other businesses such as DX of the clinical scene showed steady growth
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5 FY2024 Q1-Q3 Forecasts vs. Actuals Revenue Operating profit Initial Forecasts* MPF ES CS SS PS Overseas Other / Adjustments FY2024 Q1-Q3 Act ~201.0 Bn 205.5 Bn ~49.0 Bn 50.1 Bn * The numbers of the initial forecasts for revenue and operating profit on the graphs are the median of the range of FY2024 financial forecasts disclosed on April 2024 Note: MPF: Medical Platform, ES: Evidence Solution, CS: Career Solution, SS: Site Solution, PS: Patient Solution While MPF and ES slightly fell short, solid performance in SS and newly established PS contributed to the overall revenue and operating profit being in line with the initial forecasts
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6 Growth Rate and COVID Relationship in FY2024 Currently, each segment and business is in a different phase, and the outlook for growth rate also varies Before COVID Repercussion Normalized During COVID 20km/h Organic Growth Rate COVID-19 Impact In Total… 20km/h 20km/h 20km/h 20km/h 20km/h 40km/h 0km/h 20km/h 20km/h Status per Segment * MPF: Medical Platform, ES: Evidence Solution, CS: Career Solution, SS: Site Solution MPF ES CS SS Overseas
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7 Before COVID Repercussion During COVID 20km/h Organic Growth Rate COVID-19 Impact In Total… 20km/h 20km/h 20km/h 20km/h 20km/h 40km/h 0km/h 20km/h Status per Segment * MPF: Medical Platform, ES: Evidence Solution, CS: Career Solution, SS: Site Solution Growth Rate and COVID Relationship in FY2025 The negative impact of COVID is to finish in FY2024. The business is expected to normalize after FY2025 and reflect the actual growth MPF ES CS SS Overseas Normalized 20km/h
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8 Ｍ Ｐ ＥＳ ＳＳ CS Others Regions (12 areas) Businesses (30 - 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Ｍ Ｐ ＥＳ ＳＳ CS Others Regions (12 areas) Businesses (30 - 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 M3’s Triple Growth Engine + CSV Continuous new business entries Cross-cell synergy maximization 1. Ecosystem Expansion (Sagrada Familia) 3. Ecosystem Synergy Creation 4. Social Impact Creation → CSV Ｍ Ｐ ＥＳ ＳＳ CS Others Regions (12 areas) Businesses (30 - 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Pharma marketing / Clinical Scene DX 2. Individual Business Development
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Copyright © 2024 M3, Inc. All rights reserved. 9 Ｍ ＰＥＳＳＳCSOthers Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Growth Engine 1 ： Ecosystem Expansion (Sagrada Familia) Ｍ ＰＥＳＳＳCSOthers Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 4. Social Impact Creation → CSV Ｍ Ｐ ＥＳ ＳＳ CS Others Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11
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10 Business Scope Expansion and Growth Potential FY ： 2010 2015 2020 2023 Country ： 3 → 8 （ 2.5 x ） → 11 （ 3.5 x ） → 17 （ 5.5 x ） Business Types ： 6 → 15 （ 2.5 x ） → 35 （ 6.0 x ） → 38 （ 6.0 x ） Business Units (Type x Country) ： 10 → 24 （ 2.5 x ） → 56 （ 5.5 x ） → 73 （ 7.0x ） Sales (bn) ： 14.6 → 64.7 （ 4.5 x ） → 169.2 （ 12.0 x ） → 238.9 （ 16.5 x ） Aggressive M&A to ensue in reaching growth potentials exceeding 10~20x current levels…
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11 Trend in M&A Volume: Programmatic M&A Strategy M&A is completed with approximately 10 companies annually. For FY2024, in addition to Infrastructure for On Call Cooperation, Medcare, and MinaCare, the tender offer for ELAN was carried out. We will continue to pursue M&A opportunities actively * 2 out of 9 domestic deals, and 2 out of 4 overseas deals were conducted by CUC Overseas Domestic 11 11 10 13* 6 6 7 4 5 5 3 9 FY2021 FY2022 FY2023 FY2024 As of Q3 Earnings Release
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12 Impact of ELAN Acquisition Consolidation started from Q3 – Newly established the Patient Solution segment – Contribution in operating profit was more than JPY 100MM even with the acquisition cost Progress of Synergy Creation – [Short Term] Started initiatives such as sales collaboration – [Mid-to-long Term] Initiated consideration to explore a broader range of synergy creation opportunities A good start overall. Accelerate efforts to accumulate quick wins from now on
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Copyright © 2024 M3, Inc. All rights reserved. 13 Ｍ ＰＥＳＳＳCSOthers Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Growth Engine 2 ： Individual Business Development Ｍ Ｐ ＥＳ ＳＳ CS Others Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 4. Social Impact Creation → CSV Regions (12 areas) Businesses(30–50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Ｍ ＰＥＳＳＳCSOthers Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11
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14 Pharmaceutical Sales & Marketing DX
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15 Pharma Marketing Cost and TAM for M3 Ref: M3 survey and estimate; numbers are approximate M3’s Role (2) MR Activity DX Support (1) Internet Marketing Support (3) Data-driven Marketing Support M3 involvement to go beyond the bounds of the internet to improve productivity across the entire industry 10 years ago Future MR Related Costs Internet Industry productivity improvement from DX TAM Present 20 ～ 30 % 70 ～ 80 % 700 ～ 800 bn yen 99 % 1.5 tn yen 95 % 1.15 tn yen 1 % 5 % 15 bn yen 70 bn yen 200～ 300 bn yen down by ~300 bn yen
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16 Trend of Domestic Pharmaceutical Sales Reps (MRs) In addition to a decrease in the number of MRs, an increasing number of contract reps and online reps who work exclusively online or by phone.... The trend toward sales efficiency is expected to continue 46,719 MRs in FY2023 (Second largest decline ever) Historical Peak 65,752 MRs * Source: MR Certification Center “2024 MR White Paper” -1,095 -522 -950 -752 -2,533 -2,742 -3,572 -1,738 -2,166 -2,963 4 5 6 7 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (10,000)
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17 Current Status of Pharmaceutical Marketing The impact of the decline of COVID-19 revenue (for vaccines and treatment drugs) expanded from the initial forecast with the possibility to have a negative impact of approx. JPY 6bn for the full year Demand and Its Trend After COVID Future ＣＯＶＩＤ - 19 Structural changes Short-term demand Now Sales During COVID • Temporary decline in demand during the COVID period • Cost reduction at some global pharma companies • Advancement of structural digital transformation (DX) • Further penetration of data- driven marketing • Projects on a larger scale
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18 As a Strategic Partner to Pharma Companies Rejuvenate and strengthen leadership Our Products Continual development of services that dramatically improve the productivity of pharmaceutical company sales and marketing (currently at level 50%) Our Professional Staff Continuously expanding the team by several tens of people each year (currently at level 50%) Productivity Per Staff Standardization of service proposals, skills enhancement, improvement in per-person productivity through DX (currently at level 75%) Overall Trend Further accelerating essential DX initiatives as a strategic partner to pharmaceutical companies Efforts for Renewed Growth Future ＣＯＶＩＤ - 19 Now Sales After COVID During COVID
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19 DX of the Clinical Scene
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20 M3 DigiKar EHR Growth Cumulative number of installations is approx. 7,300. Steady progress Co-selling with DigiKarSmart further increases the added value of DigiKar Incontestable #1 market share within cloud-based digital health records, approx. 310 million charts 7,300 FY15 16 17 18 19 20 21 22 23 24 Number of Medical Institutions Using M3 DigiKar
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21 DX of Clinics： DigiKar Smart Medical Institutions： Managing System Patients： Mobile App Appointment Auto- Reception Consultation Next Appointment Payment Linking to EHR 44,000 reviews with a rating of 4.6 from users, a new patient experience created, and a high rating in the category M3 DigiKar Smart Physical Online * Taken from the following URL, as of January 16, 2025 https://apps.apple.com/jp/app/m3%E3%83%87%E3%82%B8%E3%82%AB%E3%83%AB%E3%82%B9%E3%83%9E%E3%83%BC%E3%83%88%E8 %A8%BA%E5%AF%9F%E5%88%B8/id1563102530
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22 1 44 173 479 1,0701,368 2,067 2,973 4,3204,741 5,673 7,089 9,437 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 * Quarterly sum of monthly UUs No. of DigiKar Smart Users Rapid market penetration of DigiKar Smart as the clinics' infrastructure # of Users: 2.2x YoY Txn Amount: 3.2x YoY Video call has been added and is expanding as an infrastructure for telemedicine FY21 FY22 FY23 FY24 Unit: Index with FY2021Q3 as 1
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23 Overseas
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24 Number of Doctor Members and Panelists (Global) *The no. of doctors in Japan is based on data from the Ministry of Health, Labour and Welfare (2022). The no. of doctors in other countries is based on the latest data from WHO and other sources. Including regions not mentioned above, more than 6.5 million doctor members and panelists, covering over 50% of doctors worldwide Ratio of doctor members (As of June 2024)
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25 10,323 11,927 21,476 25,653 20,309 23,333 52,108 60,914 FY2023 Q1-Q3 FY2024 Q1-Q3 Overseas Segment: Sales by Region North America Europe Growth RateUnit: JPY MM Continued strong performance Clinical trial business: Strengthening management base and muscularization in progress for recovery in growth. Confirmed improvement in Q3 as expected, while monitoring the trends in Q4 Continued solid momentum, along with DBMCI contributions Steady progress in France and the UK North America Europe ＡＰＡＣ +17% * ~10% excl. currency tailwinds +15% +19% +16% Overall performance remains solid. Accelerating new initiatives for the future such as M&A and structural reforms APAC and others
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Copyright © 2024 M3, Inc. All rights reserved. 26 Growth Engine 3 ： Ecosystem Synergy Creation Ｍ Ｐ ＥＳ ＳＳ CS Others Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 4. Social Impact Creation → CSV Regions (12 areas) Businesses( 30– 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Ｍ ＰＥＳＳＳCSOthers Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Regions (12 areas) Businesses(30–50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Ｍ ＰＥＳＳＳCSOthers Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11
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27 Business Scope Expansion and Growth Potential FY ： 2010 2015 2020 2023 Country ： 3 → 8 （ 2.5 x ） → 11 （ 3.5 x ） → 17 （ 5.5 x ） Business Types ： 6 → 15 （ 2.5 x ） → 35 （ 6.0 x ） → 38 （ 6.0 x ） Business Units (Type x Country) ： 10 → 24 （ 2.5 x ） → 56 （ 5.5 x ） → 73 （ 7.0x ） Sales (bn) ： 14.6 → 64.7 （ 4.5 x ） → 169.2 （ 12.0 x ） → 238.9 （ 16.5 x ）
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28 Cross-Business Synergy Creation Potential ・・・ nC20 1 3 6 Number of businesses ｎ４３２１ Synergy Links Synergy potential between businesses: 73Ｃ2 = 2,628 possible linkages
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29 “The White Jack Project” Future expanding priority areas Traditional main business domain General Public (consumer) HCP (e.g. wholesaler) After O nset / Patient Pre - O nset / Healthy Person Steady progress is also being made on the White Jack project, which realizes M3's mission from a more upstream perspective Happiness-i Phase 1 Rinkai Medical Phase 2 Cancer Prevention Phase 3 ＥＢＨＳ Phase 4 Phase 5 Medcare Phase 6 MinaCare Phase 7
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30 1 18 19 78 203 280 Expand Coverage of Enterprise Services Approx. 215x Covers approximately 2.8 million employees in FY24Q3, with the following services EBHS Life Cancer prevention, PSP Ask Doctors Booking & conducting medical check-ups Employee health data management Dispatch of industrial physicians and stress checks Services for health insurance associations Number of Employees Covered by Enterprise Services Steadily expanding the business base to create ecosystem synergies as well… With the consolidation of Medcare and MinaCare, coverage has spread to health insurance associations, achieving 2.8 million employee coverage Unit: 10,000 persons FY19 20 21 22 23 24Q3
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31 100 179 End of FY22 FY24Q3 100 200 End of FY22 FY24Q3 KPI Trend of Main Services # of Accounts for Employee Health Data Management Service(1) # of Client Worksites for the Occupational Physician Dispatch Service (2) (1) “Happiness Partners” provided by M3 Health Design (2) Provided by M3 Career Unit: Index with the end of FY22 as 100 Unit: Index with the end of FY22 as 100 Approx. 2.0 x Approx. 1.8 x The development of individual services in “The White Jack Project” is progressing smoothly
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Copyright © 2024 M3, Inc. All rights reserved. 32 Social Impact Creation 4. Social Impact Creation → CSV Regions (12 areas) Businesses( 30– 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Ｍ ＰＥＳＳＳCSOthers Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Regions (12 areas) Businesses(30–50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Ｍ ＰＥＳＳＳCSOthers Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Regions (12 areas) Businesses(30–50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11 Ｍ ＰＥＳＳＳCSOthers Regions (12 areas) Businesses (30 – 50) １ ２ ３ ４ ５ ６ ７ ８ ９ 10 11
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33 ＳＤＧｓ Detail ＣＳＶ Under M3’s mission of “Making use of the Internet to increase, as much as possible, the number of people who can live longer and healthier lives, and to reduce, as much as possible, the amount of unnecessary medical costs,” we are also committed to SDGs through its CSV activities Sustainable Development Goals (Development goals which are possible to sustain) Creating Shared Value (Creation of shared values) International objectives that governments, businesses and individuals in all countries aim to achieve with regard to human rights, the environment and development SDGs and CSV: M3's CSV positioning Positioning for companies Relevance to corporate mission Each company fulfills its responsibilities towards international targets Not necessarily linked to the company's mission Initiatives by companies to solve social problems through their core business Balancing corporate growth and solving social issues Fully consistent with corporate mission/purpose
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34 FY2024 Outlook
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35 Annual Results and Forecasts Revenue Operating Profit (6m) (6m) Unit: JPY MM Unit: JPY MM Medlive IPO Impact Operating profit* *FY2021 excludes gains related to Medlive IPO In line with tradition, aim to expand our business foundation and achieve growth from a medium to long-term perspective 107 480 891 1,563 2,276 3,854 5,729 7,475 8,534 11,811 14,646 19,040 26,007 36,759 51,346 64,660 78,143 94,471 113,059 130,973 169,198 208,159 230,818 238,883 95,141 - 93 46 255 509 895 1,683 2,677 3,597 3,990 4,803 6,031 7,648 9,294 13,738 16,061 20,022 25,050 27,486 30,800 34,337 57,972 64,210 71,983 64,381 273,000 ~268,000 70 ,000 ~67,000 FY 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 E 24 FY 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 E 24
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