Japan Hospice Holdings Inc. (7061) AI Stock Analysis

• Market Cap: ¥7.63B
• Dividend Yield: 1.41%
• Average Volume (3M): 47.89K
• Price to Earnings (P/E): 27.4
• Beta (1Y): 1.20
• Revenue Growth: 18.03%
• EPS Growth: -11.68%
• Country: JP
• Employees: 1,094
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Care Facilities
• EPS (TTM): -3.16
• Shares Outstanding: 8,428,100
• 10 Day Avg. Volume: 91,680
• 30 Day Avg. Volume: 47,890
• PEG Ratio: -0.59
• Price to Book (P/B): 2.56
• Price to Sales (P/S): 0.66
• P/FCF Ratio: -7.11
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 199.5
• Revenue Forecast (FY): ¥20.00B

• Rating: 45 Neutral
• Price Target: ¥869.00 ▼(-22.41% Downside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is held back primarily by weakening profitability, high leverage, and persistently negative free cash flow, which together increase financial risk. Technicals add further pressure as the stock remains in a pronounced downtrend with negative momentum, while valuation is only modestly supportive due to a relatively high P/E offset by a mid-single-digit dividend yield.

Positive Factors

Consistent Revenue Growth

Sustained top-line growth through 2025 demonstrates steady demand for the company's hospice and palliative services and indicates expanding utilization. Over a multi-month horizon, consistent revenue supports investment in care capacity and offers a foundation for potential margin recovery if cost trends are managed.

Operating Cash Flow Improvement

A return to positive operating cash flow signals underlying cash generation from core services despite weak free cash flow. Durable operating cash inflows provide working-capital support, reduce reliance on financing for day-to-day operations, and create a pathway to gradual deleveraging if sustained alongside margin stabilization.

Reimbursement-Backed Revenue Model

Earnings tied to Japan's healthcare and long-term care insurance create predictable, recurring revenue streams and reduce exposure to discretionary demand swings. This payer-backed model supports stable utilization and planning, aiding medium-term cash flow visibility and strategic capacity investments.

Negative Factors

High Leverage

Elevated leverage materially constrains financial flexibility and increases interest obligations, making the company more vulnerable to earnings or reimbursement shocks. Over 2–6 months, high debt limits capacity for discretionary investment, raises refinancing risk, and complicates any recovery plans until leverage is meaningfully reduced.

Persistent Negative Free Cash Flow

Chronic negative free cash flow implies the business is not self-financing growth or capital needs, forcing reliance on external funding. This pattern increases financing risk, may require asset sales or equity issuance, and undermines the company's ability to deleverage or invest in operations over the medium term.

Margin Compression / Weak Profitability

Sharp margin deterioration reduces earnings quality and return on equity (ROE fell to ~7.6% in 2025), weakening the firm's capacity to absorb fixed costs and service debt. Sustained margin pressure would limit cash generation and strategic flexibility, making operational improvement essential for longer-term stability.

Japan Hospice Holdings Inc. Business Overview & Revenue Model

Company Description

Japan Hospice Holdings Inc. engages in hospice housing and home care businesses in Japan. The company offers care services at hospice housing for patients with terminal cancer and intractable diseases; and home-visit nursing services. It also provides home care services, which supports medical care, including physical care and life support, as well as offers day and nursing multi-function home care services. The company was founded in 2017 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Japan Hospice Holdings generates revenue primarily through the provision of hospice and palliative care services, which are reimbursed by government health insurance programs in Japan. The company earns income from both inpatient services provided in their hospice facilities and outpatient services delivered at patients' homes. Key revenue streams include service fees for patient care, consultation fees, and additional support services such as counseling for families. The company may also engage in partnerships with healthcare providers and local governments to expand its service offerings and reach, thereby enhancing its earnings potential. Additionally, Japan Hospice Holdings may benefit from increasing demand for hospice care due to Japan's aging population, which is a significant factor contributing to its revenue growth.

Japan Hospice Holdings Inc. Financial Statement Overview

Summary

Despite steady revenue growth through 2025, profitability weakened materially (gross margin ~13% and net margin ~2% vs. much higher levels in 2022–2023). Leverage remains high (debt-to-equity ~3.6x) and free cash flow has been negative in most years, including deeply negative in 2024–2025, indicating constrained financial flexibility and weaker earnings quality.

Income Statement

Revenue has grown consistently from 2020 to 2025, with 2025 revenue up ~8.0% year over year. However, profitability has weakened materially: 2025 gross margin (~13.0%) and net margin (~2.0%) are down sharply versus 2022–2023 levels (~20% gross margin and ~5.8–6.9% net margin). EBIT and EBITDA margins also compressed meaningfully in 2025 (EBIT ~6.0%, EBITDA ~10.1%), pointing to rising costs and reduced operating leverage. Net income fell substantially in 2025 versus 2024 despite higher revenue, which is a key near-term concern.

Balance Sheet

The balance sheet is highly leveraged, with debt-to-equity consistently elevated and still ~3.6x in 2025 (after being ~4.0x+ in 2021–2023). Debt has climbed over time (from ~¥4.4B in 2020 to ~¥13.2B in 2025), while equity has grown but remains modest relative to the debt load. Returns on equity have deteriorated to ~7.6% in 2025 from stronger levels in 2022–2024, reflecting weaker earnings power. Overall, the company appears asset-growing, but financial flexibility is constrained by leverage.

Cash Flow

Operating cash flow is positive and improved in 2025 (~¥1.05B), but cash conversion is not strong, with operating cash flow running at only ~0.31x of net income in 2025 (and also low in prior years). Free cash flow is the major weakness: it was negative in most years (2020, 2021, 2023–2025) and deeply negative in 2024–2025 (about -¥2.27B and -¥1.32B). Free cash flow being negative relative to net income in 2023–2025 suggests ongoing investment or working-capital pressure that is not being funded organically.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	13.13B	14.17B	12.12B	9.87B	7.89B	6.02B
Gross Profit	1.97B	1.84B	2.11B	1.92B	1.58B	1.12B
EBITDA	1.76B	1.43B	1.82B	1.79B	1.40B	852.01M
Net Income	529.62M	278.01M	639.58M	681.88M	454.73M	240.80M
Balance Sheet
Total Assets	17.98B	18.92B	18.31B	15.16B	11.45B	9.15B
Cash, Cash Equivalents and Short-Term Investments	1.40B	2.01B	1.53B	1.88B	1.51B	1.04B
Total Debt	12.91B	13.18B	13.19B	10.89B	8.09B	6.67B
Total Liabilities	14.47B	15.25B	14.86B	12.47B	9.41B	7.61B
Stockholders Equity	3.52B	3.68B	3.45B	2.69B	2.01B	1.54B
Cash Flow
Free Cash Flow	0.00	-1.32B	-2.27B	-865.26M	340.76M	-1.45B
Operating Cash Flow	0.00	1.05B	835.74M	1.13B	873.83M	467.10M
Investing Cash Flow	0.00	-511.73M	-2.79B	-1.01B	48.27M	-1.98B
Financing Cash Flow	0.00	-47.03M	1.60B	256.45M	-448.16M	1.59B

Japan Hospice Holdings Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1120.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7061, the sentiment is Negative. The current price of 1120 is above the 20-day moving average (MA) of 986.95, above the 50-day MA of 1047.36, and below the 200-day MA of 1162.16, indicating a bearish trend. The MACD of -49.76 indicates Positive momentum. The RSI at 34.91 is Neutral, neither overbought nor oversold. The STOCH value of 11.21 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:7061.

Japan Hospice Holdings Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2374	75 Outperform	¥30.28B	17.64	―	2.48%	3.88%	0.31%
2425	75 Outperform	¥3.03B	13.13	―	2.56%	-3.06%	-38.56%
2435	72 Outperform	¥2.40B	4.64	―	4.76%	1.84%	92.34%
7129	68 Neutral	¥3.31B	63.45	―	2.64%	4.69%	103.59%
7133	64 Neutral	¥7.82B	13.42	―	1.80%	18.58%	-6.30%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
7061	45 Neutral	¥7.63B	27.36	―	1.41%	18.03%	-11.68%