Governance System and Structure

Basic Philosophy of Corporate Governance

Based on the founding spirit of "For People's Precious Life," the Group recognizes that it is essential to accurately identify challenges in healthcare, create and provide value that meaningfully addresses these challenges, and thereby maximize management quality and corporate value while maintaining and developing appropriate relationships with all stakeholders, including shareholders.

To this end, the Group considers it a critical management priority to enhance corporate governance through a management control system that aims to improve the transparency, soundness, and efficiency of management.

Outline of Corporate Governance System and Reasons for Its Adoption

At the Ordinary General Meeting of Shareholders held on June 27, 2023, a resolution was passed to amend the Company's Articles of Incorporation to transition to a Company with Audit and Supervisory Committee. This transition is intended to further strengthen and enhance corporate governance by reinforcing the management oversight function of the Board of Directors and accelerating efficient management and decision-making. An overview of the Company's corporate governance structure is as follows.

Board of Directors

The Board of Directors consists of ten members: President and Representative Director Ryuji Katsura (Chairperson), Vice President Yasuhiro Awane, Executive Director Shogo Yanagida, Director Toru Sakoda, Director Raita Uematsu, Outside Director Shozo Ishizaka, Outside Director Nobuhiko Watabe, Director and Audit and Supervisory Committee Member Yoshio Kondo, Outside Director and Audit and Supervisory Committee Member Akira Mito, and Outside Director and Audit and Supervisory Committee Member Yoshiharu Sagami.

In principle, the Board of Directors meets once a month to adopt resolutions on statutory matters as well as to formulate important management policies and strategies that will lead to continued growth and enhanced corporate value, and to supervise business execution.

The Company has introduced an executive officer system under which Executive Directors and Executive Officers manage the organization and make decisions based on the authority delegated to them by the Board of Directors. Executive Directors and Executive Officers commit to targets approved by the Board of Directors, and the Board supervises the process of achieving these targets.

In addition, the Executive Officers' Meeting, consisting of Directors (excluding Audit and Supervisory Committee Members) and Executive Officers, meets twice a month in principle to review issues related to business execution and deliberate on important matters.

Audit and Supervisory Committee

The Audit and Supervisory Committee consists of three members: Full-Time Audit and Supervisory Committee Member Yoshio Kondo, Outside Audit and Supervisory Committee Member Akira Mito, and Outside Audit and Supervisory Committee Member Yoshiharu Sagami. This structure ensures the Committee's independence and ability to conduct fair audits.

The Full-Time Audit and Supervisory Committee Member attends important meetings, including the Board of Directors and the Executive Officers' Meeting, to gather necessary information and develop a shared understanding of management issues. In addition, Directors and employees promptly report to the Audit and Supervisory Committee on matters that may have a significant impact on the Company and its Group, as well as on the status of internal audits.

Voluntary Committees

The Company has established the following voluntary committees as advisory bodies to the Board of Directors to enhance corporate governance:

Nominating and Review Committee
The Nominating and Review Committee ensures the objectivity and transparency of procedures for the appointment and dismissal of Directors with diverse backgrounds and expertise, thereby ensuring the Company's continued growth and enhancement of corporate value.

The Committee consists of five members: Representative Director and President Ryuji Katsura, Outside Director Shozo Ishizaka, Outside Director Nobuhiko Watabe, Outside Director and Audit and Supervisory Committee Member Akira Mito, and Outside Director and Audit and Supervisory Committee Member Yoshiharu Sagami. A majority of the Committee members are Independent Outside Directors.

Performance Evaluation Committee
The Performance Evaluation Committee ensures the objectivity and transparency of procedures for verifying the appropriateness of performance evaluation results for each Director based on business performance and the achievement status of the Medium-Term Management Plan, as well as the appropriateness of planned remuneration amounts.

The Committee consists of three members: Director and Audit and Supervisory Committee Member Yoshio Kondo, Outside Director Nobuhiko Watabe, and Outside Director and Audit and Supervisory Committee Member Akira Mito. A majority of the Committee members are Independent Outside Directors.

A schematic diagram of the Company's corporate governance structure is shown below.

Analysis and Evaluation of the Effectiveness of the Board of Directors as a Whole

An explanation of the analysis and evaluation of the effectiveness of the Board of Directors as a whole is provided below.

(1) Method of Evaluation

In order to analyze and evaluate the effectiveness of the Board of Directors as a whole in fiscal year 2025, the Company conducted a questionnaire survey of all members of the Board of Directors (including Audit and Supervisory Committee Members and Outside Directors), giving a five-point rating for each evaluation item and including an open-ended section to solicit opinions. The Board of Directors Secretariat compiled the results and reported them to the Board of Directors at its meeting held on April 15, 2026.

Summary of the evaluation:
・Composition of the Board of Directors
・Operation of the Board of Directors
・Deliberations of the Board of Directors
・Director Training
・Provision of information between the Board of Directors and the Advisory Committees
・Self-evaluation of role on the Board of Directors
・Other (free text)

(2) Summary of Evaluation Results

The Company's Board of Directors has determined that the effectiveness of the Board of Directors is generally appropriate. The Company confirmed that there was a certain degree of improvement in the submission of materials, which was an issue in the previous evaluation, and will continue to work on this matter going forward.

On the other hand, regarding the training of Directors, the Company confirmed that there were relatively fewer opportunities this term and that it would increase such opportunities. The Company also confirmed that it would continue to work on diversity, including the appointment of female executives.

(3) Future Actions

The Board of Directors will use the results of this evaluation to further optimize materials by making them more focused, with the aim of stimulating discussion at Board of Directors meetings.

Training Policy for Directors

The Company believes that Directors are appointed with sufficient experience and knowledge, but for the purpose of complementing this, the Company will provide opportunities for them to learn the knowledge necessary to fulfill their roles and responsibilities, as necessary. In addition, the Company will provide opportunities for Outside Directors to understand the Company's business and other aspects of its operations.