Financial Results Briefing1Q of FYE March 2019

July 27, 2018

Japan Lifeline Co., Ltd.

Presentation Material for Conference Call

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Today’s Agenda

１．Overview of Financials for 1Q of FYE March 2019

Executive Vice President Corporate Administration Department

Shogo Takahashi

1,834 1,660

FY3/18 1Q FY3/19 1Q

Profit attributable to owners of parent

Performance Highlights:Consolidated Financials for 1Q of FYE March 2019

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• Strong sales for new products & in-house products absorbed the negative impact of NHI price revisons, resulting in overall revenue growth.

• Operating profit decreased on YoY basis but cleared the planned target due to unused SG&A expenses.

• Evaluation loss of investment securities was recorded as non-operating expense.

10,228 11,057

FY3/18 1Q FY3/19 1Q

Net Sales

2,620 2,415

FY3/18 1Q FY3/19 1Q

Operating profit

+8.1% △7.8% △9.5%

（¥ million）Results Results Results Results Results Results

Consolidated Results for 1Q of FYE March 2019

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（¥ million）FY3/18

1Q ResultsFY3/19

1Q Results YoY

Net Sales 10,228 11,057 +8.1％Gross Profit 6,341 6,745 +6.4％

Gross Profit Margin 62.0% 61.0% △1.0ptOperating Profit 2,620 2,415 △7.8％

Operating Profit Margin 25.6% 21.8% △3.8pt

Profit Attributable to Owners of Parent 1,834 1,660 △9.5%

Profit Attributable to Owners of Parent %

17.9% 15.0% △2.9pt

• Gross profit margin decreased by 1.0 pt due to absence of positive impact of adjustments of unrealized gain that resulted from the merger with subsidiary last year (GP margin has improved on non-consolidated basis)

• In-house ratio decreased from 55.8% to 54.3% due to the increase of third-party products

Sales Highlights:Consolidated Financials for 1Q of FYE March 2019

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Sales for in-house products went well• Sales for AF (Atrial Fibrillation) related products continued to

grow.

Impact of NHI price revisions differ from product to product

• Sales for pacemakers decreased due to NHI price revisions & supply shortage of remote monitoring devices.

• Sales for abdominal stent graft grew as the impact of NHI price revision was very small.

Will strive to expand sales of new products• Drug eluting stent contributed to revenue growth.

Sales by Product Category, YoY comparison1Q of FYE March 2019

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1,821 1,641

5,083 5,550

2,601 2,765 721 1,100 10,228

11,057

FY3/18 Results FY3/19 Results

TransvascularIntervention

CardiovascularSurgery

EP/ABL

Cardiac RhythmManagement

Total+8.1%

（¥ million）

Summary by Product Category 1Q of FYE March 2019

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Cardiac Rhythm Management △9.9% YoY

• Sales for pacemakers dropped due to supply shortage of remote monitoring devices in addition to NHI price revisions

• Started sales of "PLATINIUM 4LV SonR CRT-D" equipped with new features from July

EP/Ablation +9.2% YoY

• Sales for AF related products including BeeAT grew.• Assume Number of AF cases to have grown by 22% on YoY basis.• Started sales of endoscope ablation system HeartLight from July

Cardiovascular Surgery +6.3% YoY

Transvascular Intervention +52.5% YoY

• Abdominal stent graft AFX2 & Open Stent Graft contributed to revenue growth• Tissue valve related products are on the declining trend due to penetration of TAVI

(Transcatheter Aortic Valve Implantation)

• Drug eluting stent "Orsiro" (new product) contributed to revenue growth• Started clinical study to aim for more sales. Will strengthen size lineup in 2nd half.

Reference

Consolidated Sales by Product(FY3/18 1Q Results vs FY3/19 1Q Results）

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（¥ million)

FY3/18 FY3/19Notes1Q Results 1Q Results

Amount Composition Ratio Amount Composition

Ratio Difference Ratio

Pacemaker related 1,651 16.1% 1,460 13.2% △191 △11.6%ICD related 127 1.2% 121 1.1% △6 △4.7%Others 42 0.4% 59 0.5% 17 40.6%Including AEDCardiac Rhythm Management Total 1,821 17.8% 1,641 14.8% △180 △9.9%

EP Catheters 3,837 37.5% 4,169 37.7% 332 8.7%In-house productsIncluding Catheters for atrial cardioversion system

ABL Catheters 301 3.0% 258 2.3% △43 △14.2%In-house products

Others 944 9.2% 1,122 10.2% 178 18.8%Including Radio-Frequency Transseptal Needle. Including in-house products.

EP/ABL Total 5,083 49.7% 5,550 50.2% 467 9.2%Heart valve related 452 4.4% 424 3.8% △28 △6.2%

Vascular Graft related 1,929 18.9% 2,103 19.0% 174 9.0%Including in-house products. VascularGrafts & Stent Grafts.

Blood Purification 194 1.9% 217 2.0% 23 11.8%Others 25 0.2% 20 0.2% △5 △20.0%Surgery related 2,601 25.4% 2,765 25.0% 164 6.3%Balloon Catheters 232 2.3% 152 1.4% △80 △34.4%Including in-house productsGuide wires 102 1.0% 88 0.8% △14 △13.9%In-house products

Others 387 3.8% 860 7.8% 473 122.1%Including Penetration Catheters, ASD, DES and subsidiary sales products.

TransvascularIntervention Total 721 7.1% 1,100 10.0% 379 52.5%

Total 10,228 100.0% 11,057 100.0% 829 8.1%Note: Cardiopulmonary related has been included in “Others” in “Surgery related” since FY3/19

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Consolidated Profit & Loss StatementsFY3/18 1Q Results vs FY3/19 1Q Results)

（¥ million）

FY3/18 FY3/191Q Results 1Q Results

Amount CompositionRatio Amount Composition

Ratio Difference Ratio

Net sales 10,228 100.0% 11,057 100.0% 829 8.1%

Cost of sales 3,887 38.0% 4,311 39.0% 424 10.9%

Gross profit 6,341 62.0% 6,745 61.0% 404 6.4%

SG&A expenses 3,721 36.4% 4,330 39.2% 608 16.4%

Operating profit 2,620 25.6% 2,415 21.8% △ 204 △7.8%

Non-operating profit 55 0.5% 145 1.3% 89 160.5%

Non-operating expenses 48 0.5% 334 3.0% 285 583.0%

Ordinary profit 2,626 25.7% 2,226 20.1% △ 400 △15.2%

Extraordinary profit 0 0.0% 4 0.0% 3 742.3%

Extraordinary expenses 4 0.0% 2 0.0% △ 1 △38.6%

Profit before taxes 2,622 25.6% 2,227 20.1% △ 395 △15.1%

Tax expenses 788 7.7% 567 5.1% △ 221 △28.0%Profit attributable to owners of parent 1,834 17.9% 1,660 15.0% △ 174 △9.5%

Consolidated Sales by ProductFY3/19 1Q Results vs 1st Half & Full Year Plan）

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（¥ million）

FY3/19 FY3/19

Notes1Q Results 1st half Plan Full Year Plan

AmountComposition

Ratio AmountComposition

Ratio AmountComposition

RatioPacemaker related 1,460 13.2% 2,872 12.5% 5,739 11.6%ICD related 121 1.1% 280 1.2% 680 1.4%Others 59 0.5% 106 0.5% 305 0.6%Including AEDCardiac Rhythm Management Total 1,641 14.8% 3,259 14.2% 6,725 13.6%

EP Catheters 4,169 37.7% 8,447 36.9% 17,225 34.9%In-house productsIncluding Catheters for atrial cardioversion system

ABL Catheters 258 2.3% 584 2.6% 1,611 3.3%In-house products

Others 1,122 10.2% 2,179 9.5% 4,509 9.1%Including Radio-Frequency TransseptalNeedle. Including in-house products.

EP/ABL Total 5,550 50.2% 11,211 49.0% 23,345 47.2%Heart valve related 424 3.8% 872 3.8% 1,806 3.7%

Vascular Graft related 2,103 19.0% 3,836 16.7% 8,564 17.3%Including in-house products. VascularGrafts & Stent Grafts.

Blood Purification 217 2.0% 486 2.1% 1,176 2.4%Others 20 0.2% 30 0.1% 58 0.1%Surgery related 2,765 25.0% 5,225 22.8% 11,606 23.5%Balloon Catheters 152 1.4% 375 1.6% 781 1.6%Including in-house productsGuide wires 88 0.8% 179 0.8% 399 0.8%In-house products

Others 860 7.8% 2,650 11.6% 6,553 13.3%Including Penetration Catheters, ASD, DES and subsidiary sales products.

TransvascularIntervention Total 1,100 10.0% 3,205 14.0% 7,734 15.7%

Total 11,057 100.0% 22,902 100.0% 49,411 100.0%Note: Cardiopulmonary related has been included in “Others” in “Surgery related” since FY3/19

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Consolidated Profit & Loss Statements (FY3/19 1Q Results vs 1st Half & Full Year Plan)

（¥ million）

FY3/19 FY3/191Q Results 1st Half Plan Full Year Plan

Amount Composition Ratio Amount Composition

Ratio Amount CompositionRatio

Net sales 11,057 100.0% 22,902 100.0% 49,411 100.0%

Cost of sales 4,311 39.0% 9,182 40.1% 19,955 40.4%

Gross profit 6,745 61.0% 13,719 59.9% 29,455 59.6%

SG&A expenses 4,330 39.2% 9,108 39.8% 18,252 36.9%

Operating profit 2,415 21.8% 4,611 20.1% 11,202 22.7%

Non-operating profit 145 1.3% 149 0.7% 323 0.7%

Non-operating expenses 334 3.0% 20 0.1% 43 0.1%

Ordinary profit 2,226 20.1% 4,740 20.7% 11,482 23.2%

Extraordinary profit 4 0.0% 12 0.1% 12 0.0%

Extraordinary expenses 2 0.0% 0 0.0% 0 0.0%

Profit before taxes 2,227 20.1% 4,753 20.8% 11,495 23.3%

Tax expenses 567 5.1% 1,542 6.7% 3,670 7.4%Profit attributable to owners of parent 1,660 15.0% 3,211 14.0% 7,825 15.8%

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Among the descriptions in this document, the matters that are not historic fact are the forecast concerning the future of our company and the future prospects based on forecasts. Particularly, the matters concerning clinical trials, regulatory approval and launch timing, which are involved in introduction of products, are our company’s prediction obtained from past experiences and available information. Since the actual result may be different from the forecast described in this document, due to the influences of various risks and uncertain factors, please do not depend on these forecasts excessively.

Precautions

Contact:

Japan Lifeline Co., Ltd.Corporate Planning Section

TEL:03‐6711‐5214E‐Mail:ir@jll.co.jp

URL:http://www.jll.co.jp