Pihlajalinna Oyj - Interim report (Q1 and Q3)

Pihlajalinna Interim Report 1 January-31 March  2024: Profitability continued to improve, operating cash flow was strong

Pihlajalinna Plc Interim Report 3 May 2024 at 8:00

Pihlajalinna Interim Report 1 January-31 March  2024

Profitability continued to improve, operating cash flow was strong

This interim report is unaudited. The comparison figures in brackets refer to
the corresponding period in the previous year.

A brief look at January-March:

  · Revenue was EUR 183.2 (187.8) million, a decrease of -2.5 per cent.
  · In the Private Healthcare Services segment, revenue amounted to EUR 114.6
(113.0) million, an increase of 1.4 per cent. The divestment of dental care
services decreased revenue by EUR 4.8 million.
  · In the Public Services segment, revenue amounted to EUR 72.7 (79.4) million,
a decrease of 8.5 per cent. The termination of cost liability for demanding
specialised care, along with the gradual transfer of the services agreement of
Jämsän Terveys decreased revenue by EUR 12.9 million.
  · Comparable organic revenue growth[1)] was EUR 13.4 million, 7.9 per cent.
  · Adjusted EBITDA was EUR 26.0 (21.4) million, an increase of 21.2 per cent.
  · Adjusted operating profit before the amortisation and impairment of
intangible assets (EBITA)[2]⁾ was EUR 14.9 (11.0) million, an increase of 35.0
per cent.
  · Adjusted EBITA was 8.1 (5.9) per cent of revenue.
  · Net cash flow from operating activities was EUR 31.1 (18.9) million.
  · Earnings per share (EPS) was EUR 0.30 (0.24).
  · Sickness-related absence rate decreased to 5.3 (6.2) per cent.
  · NPS for Private Healthcare Services was 81.2 (78.2) and NPS for Public
Services was 77.7 (70.1).

[1)] The following items have been excluded from the comparison period revenue:
the divestment of dental care services, the transfer of cost liability for
demanding specialised care, the gradual termination of Jämsän Terveys' service
agreement, and COVID-19 services.

[2)] Alternative performance measure. In addition to the IFRS figures,
Pihlajalinna presents additional, alternative performance indicators which the
company monitors internally, and which provide the company's management,
investors, stock market analysts and other stakeholders with important
additional information concerning the company's financial performance, financial
position and cash flows. These performance indicators should not be reviewed
separately from the IFRS figures, and they should not be considered to replace
the IFRS figures.

Key figures

                                           1-3/2024  1-3/2023  change %   2023
INCOME STATEMENT
Revenue, EUR million                          183.2     187.8      -2.5  720.0
EBITDA, EUR million                            25.7      23.0      11.5   72.5
EBITDA, %                                      14.0      12.3             10.1
Adjusted EBITDA, EUR million ¹⁾                26.0      21.4      21.2   80.6
Adjusted EBITDA, % ¹⁾                          14.2      11.4             11.2
Adjusted operating profit before the           14.9      11.0      35.0   37.8
amortisation andimpairment of intangible
assets (EBITA), EUR million ¹⁾
Adjusted operating profit before the            8.1       5.9              5.2
amortisation andimpairment of intangible
assets (EBITA), % ¹⁾
Operating profit (EBIT), EUR million           12.7      10.5      21.0   20.6
Operating profit (EBIT), %                      6.9       5.6              2.9
Adjusted operating profit (EBIT), EUR          13.0       8.9      45.1   29.1
million ¹⁾
Adjusted operating profit (EBIT), % ¹⁾          7.1       4.8              4.0
Profit before tax (EBT), EUR million           10.2       7.5      36.9    8.2

SHARE-RELATED INFORMATION
Earnings per share (EPS), EUR                  0.30      0.24      23.6   0.19
Equity per share, EUR                          6.78      6.58       3.0   6.56

OTHER KEY FIGURES
Return on capital employed (ROCE), %            4.5       4.1      11.4    4.0
Return on equity (ROE), %                       4.5       8.1     -44.2    3.4
Equity ratio, %                                23.1      22.2       4.1   22.0
Gearing, %                                    220.1     247.2     -11.0  243.9
Interest-bearing net debt, EUR million        331.0     364.7      -9.2  352.7
Net debt/adjusted EBITDA, 12 months ¹⁾          3.9       5.3     -26.3    4.4
Gearing, excluding IFRS 16, %                  81.3     100.5     -19.1  93.56
Interest-bearing net debt excluding IFRS      128.5     153.8     -16.4  142.0
16, EUR million
Net debt/adjusted EBITDA, excluding IFRS        2.3       3.5     -35.2    2.7
16, 12 months ¹⁾
Gross investments, EUR million ²⁾               6.9      21.7     -68.1   66.5
Cash flow from operating activities, EUR       31.1      18.9      64.5   79.0
million
Cash flow after investments, EUR million       28.5      13.1     117.1   60.5
Average number of personnel (FTE)             4,813     4,882      -1.4  4,923
Personnel at the end of the period (NOE)      6,722     7,094      -5.2  6,880
Practitioners at the end of the period        2,110     2,072       1.8  2,208
NPS, Private Healthcare Services (private      81.2      78.2      3.84   79.1
clinics)
NPS, Public Services (municipal                77.7      70.1     10.84   77.8
outsourcing activities)

[1)] Significant transactions that are not part of the normal course of
business, are related to business acquisition costs (IFRS 3), are infrequently
occurring events or valuation items that do not affect cash flow are treated as
adjustment items affecting comparability between review periods. According to
Pihlajalinna's definition, such items include, for example, restructuring
measures, impairment of assets and the remeasurement of previous assets held by
subsidiaries, the costs of closing businesses and business locations, gains and
losses on the sale of businesses, costs arising from operational restructuring
and the integration of acquired businesses, costs related to the termination of
employment relationships as well as fines and corresponding compensation
payments. Pihlajalinna has also presented costs according to the IFRS
Interpretations Committee's Agenda Decision concerning cloud computing
arrangements, and reversals of amortisation, as adjustment items. Cloud
computing arrangements costs and reversals of amortisation according to the IFRS
Interpretations Committee's Agenda Decision has not been presented as adjustment
items since 1 Jan 2024.

EBITDA adjustments amounted to EUR 0.3 (-1.6) million for the review period.
Adjustments to operating profit (EBIT) amounted to EUR 0.3 (-1.6) million for
the review period.

[2) ]Assets acquired via leases are regarded as equal to assets acquired by the
Group itself, meaning that right-of-use assets pursuant to IFRS 16 are included
in gross investments.

Pihlajalinna's outlook for 2024, specified

In 2024, Pihlajalinna will focus on organic growth and improving its
profitability and financial position.

  · The Group expects the consolidated revenue to decrease from the previous
year's level (EUR 720.0 million in 2023) due to the cost liability for demanding
specialised care being transferred to the well-being services county of South
Ostrobothnia on 1 January 2024.
  · The Group expects the adjusted operating profit before the amortization and
impairment of intangible assets (EBITA) to improve from the previous year's
level (EUR 37.8 million in 2023).
  · The Group continues measures to strengthen its financial position.
Efficiency measures are expected to improve Pihlajalinna's profitability.

Slowed economic growth and weakened consumer confidence may affect
Pihlajalinna's service demand and financial result more than expected. Price
increases are expected to compensate the effects of cost inflation.

Previous guidance, issued on 14 February 2024

In 2024, Pihlajalinna will focus on organic growth and improving its
profitability and financial position.

  · The Group expects the consolidated revenue to increase from the previous
year's level (EUR 720.0 million in 2023).
  · The Group expects the adjusted operating profit before the amortization and
impairment of intangible assets (EBITA) to improve from the previous year's
level (EUR 37.8 million in 2023).
  · The Group continues measures to strengthen its financial position.
Efficiency measures are expected to improve Pihlajalinna's profitability.

Slowed economic growth, weakened consumer confidence and changes in market
interest rates may affect Pihlajalinna's service demand and financial result
more than expected. Price increases are expected to compensate the effects of
cost inflation.

Tuomas Hyyryläinen, CEO:

The year 2024 has begun according to plan for Pihlajalinna. Comparable organic
revenue growth for the first quarter reached 7.9 per cent, and the Group's
profitability and financial position improved.

We have continued to take determined measures to improve profitability, and the
adjusted EBITA increased to EUR 14.9 (11.0) million. In the review period net
cash flow from operating activities was EUR 31.1 (18.9) million. Alongside the
improved result, cash flow was supported by the development of working capital
management. Consolidated revenue decreased to EUR 183.2 (187.8) million. This
was due to the termination of cost liability for demanding specialised care in
the wellbeing services counties of South Ostrobothnia and Central Finland, and
the gradual transfer of Jämsän Terveys' services to the wellbeing services
county of Central Finland. These contract changes have strengthening effect on
the profitability of operations, as well as the forecasted EBITA level for the
financial year, and predictability of outsourcing agreements.

During the review period, we transitioned from Group-level segment reporting to
reporting, that better reflects our business operations and organisational
structure. The new segment reporting consists of two segments: Private
Healthcare Services and Public Services.

Revenue from Private Healthcare Services segment amounted to EUR 114.6 (113.0)
million. Comparable organic revenue growth in the segment was 8.8 per cent.
Revenue was increased by successful commercial measures and stable demand. In
addition, our cooperation with insurance companies strengthened further, and the
number of end customers in occupational healthcare services rose to 290,000.
During the quarter, we focused particularly on service processes and on
streamlining internal operating models. The segment's adjusted EBITA increased
to EUR 10.7 (8.2) million.

Revenue from the Public Services decreased to EUR 72.7 (79.4) million due to the
termination of cost liability for demanding specialised care in the wellbeing
services counties of South Ostrobothnia and Central Finland. During the quarter,
we aligned our operations according to the needs of the wellbeing services
counties and focused on impactful and efficient service delivery. The segment's
adjusted EBITA was EUR 4.2 (2.8) million.

The long-term work towards employee well-being continues. The sickness-related
absence rate decreased further and was 5.3 (6.2) per cent. We also achieved
strong development in customer satisfaction. The NPS for Private Healthcare
Services was 81.2 (78.2) and NPS for Public Services was 77.7 (70.1). The well
-being and engagement of professionals and customers are reflected in the
company's profitability.

Our measures aimed at organic growth, strengthening profitability and our
financial position, and developing the company's leadership are progressing.
Together with our highly competent professionals and business partners, we will
develop Pihlajalinna even more impactful. Thank you all for your great
collaboration and valuable work.

Webcast for analysts and media
Pihlajalinna will organise a live webcast meeting for analysts and media, on
Friday, 3 May, 2024 at 10:00 a.m. at https://pihlajalinna.videosync.fi/q1
-2024 (https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fpihlajal
inna.videosync.fi%2Fq1
-2024&data=05%7C02%7CHanna.Viskari%40pihlajalinna.fi%7Cf7f0b189cf26400b5d3408dc58
0506ce%7Cbf8efe09ca4c48bc9743d25df78218f9%7C0%7C0%7C638482025807790908%7CUnknown%
7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%
7C0%7C%7C%7C&sdata=eJnI%2F%2Bwf1sUBB9F81SGfa0zqIatpUCDfP798XxH1PfI%3D&reserved=0)
. The event will be conducted in Finnish. The recording of the event will be
available later on the same website as the live webcast.

Pihlajalinna Plc's full Interim Report for 1 January-31 March 2024 is attached
to this release and available at company's
website (https://investors.pihlajalinna.fi/?sc_lang=en).

Pihlajalinna Plc

Further information:

Tarja Rantala, CFO, +358 40 774 9290 or tarja.rantala@pihlajalinna.fi
Tuula Lehto, Chief Communications and Sustainability Officer, +358 40 588 5343
or tuula.lehto@pihlajalinna.fi

Distribution:

Nasdaq Helsinki
Major media
investors.pihlajalinna.fi

Pihlajalinna in brief
Pihlajalinna is one of the leading providers of private healthcare and social
services in Finland. The Group provides comprehensive and quality private clinic
and hospital services as well as occupational healthcare and insurance
cooperation services. To the wellbeing services counties Pihlajalinna offers
social and healthcare service production models, in which the
cooperation between the public and private sectors guarantees effective services
for citizens. Appoximately 7,000 employees and 2,200 practitioners work at
Pihlajalinna. In 2023, Pihlajalinna's revenue was 720 million euros.
Pihlajalinna's shares are listed on Nasdaq Helsinki Oy. Read more
www.pihlajalinna.fi.

Attachments:

05022666.pdf