(Medical) Washinkai and One Other Company | TSR Flash Report | Bankruptcies and Notable Companies – Tokyo Shoko Research

News Highlights

Medical Corporation Washinkai (Toyohashi City, Aichi Prefecture) and one other company commenced bankruptcy proceedings on February 13, 2025. The total debt amounts to approximately 360 million yen. The corporation’s medical profit margin turned negative in the fiscal year ending March 2019 and has remained in the red since. By the fiscal year ending March 2024, the current ratio had deteriorated to 24.3%. Concerns are also raised about the impact on regional healthcare.

M&A Medical Editorial Department’s Perspective

The case of Medical Corporation Washinkai, which has entered bankruptcy proceedings in Toyohashi City, Aichi Prefecture, suggests that consecutive losses in medical profit margin and a sharp deterioration in the current ratio were the direct triggers for its business failure. In particular, the fact that the current ratio had fallen to 24.3% in the fiscal year ending March 2024 indicates severe short-term cash flow problems. If they had consulted with M&A and business succession specialists early on, for example, when the medical profit margin turned negative in the fiscal year ending March 2019, there would likely have been options for succession that maintained the patient base and staff employment, rather than simply closing down. It is also a reality that negotiations to release personal guarantees from the clinic director are difficult to achieve unless the business is in a sound financial state. This case once again highlights the importance for providers of regional healthcare to detect signs of business deterioration early and explore paths for business succession in collaboration with specialists.

Points Raised by This News

• The decline into negative medical profit margin in the fiscal year ending March 2019 was likely an early sign of business deterioration leading to bankruptcy.
• The figure of a 24.3% current ratio suggests tight short-term cash flow, leading to the inference that continued business operations were difficult.
• Concerns are raised about the impact on the medical service provision system in the region of Toyohashi City, making consideration of business succession from the perspective of maintaining regional healthcare important.
• With early consultation with specialists, there would have been options to pass the business on to the next generation along with patients and staff, rather than bankruptcy.

Practical Questions Arising from This News

• At the point when the medical profit margin became negative, what specific types of specialists (lawyers, tax accountants, M&A intermediaries) should be consulted?
• Is M&A-based business succession possible even in situations where the current ratio falls below 25%?
• Before proceeding with bankruptcy proceedings, are there business succession schemes that can minimize the impact on regional healthcare?

If You Feel “Should I Consult Too?”

If your clinic’s medical profit margin has been on a downward trend for the past few years, or if your current ratio has significantly decreased, early consultation with specialists is essential to avoid the worst-case scenario of bankruptcy. In particular, by consulting with M&A intermediaries or business succession consultants at the point when the medical profit margin turns negative, the possibility of achieving a smooth business succession while protecting patients and staff employment increases. We recommend utilizing free consultations, etc., to understand your current business challenges and future options.

M&A Medical (CentralMedience Inc.) supports the business succession of medical corporations, hospitals, and clinics on a complete success fee basis as an M&A support institution certified by the Small and Medium Enterprise Agency. Consultations are kept strictly confidential. Free consultation here