Terveystalo Oyj - Interim report (Q1 and Q3)

Terveystalo Group Interim Report 1 January - 30 September 2021: Revenue growth driven by strong, broad-based demand

Terveystalo Plc, Interim Report, 28 October 2021 at 9:00 EEST

This release is a summary of Terveystalo's Interim Report 1 January – 30
September 2021. The full release is attached to this stock exchange release and
is available on our website at:
https://www.terveystalo.com/en/investors/Financial-information/.

July–September 2021 in brief

  · Revenue increased by 13.7 percent year-on-year to EUR 273.1 (240.2) million.
  · Adjusted[2)] earnings before interest, taxes, and amortization (EBITA)
increased by 1.9 percent to EUR 31.5 (30.9) million, representing 11.5 (12.9)
percent of revenue. The cost saving measures in comparison period had an impact
on the relative profitability.
  · Adjusted items affecting comparability were EUR 2.3 (0.6) million.
  · Profit for the period was EUR 14.5 (16.1) million.
  · Earnings per share (EPS) were EUR 0.11 (0.13).
  · Cash flow from operating activities was EUR 30.7 (8.6) million.
  · Feelgood Svenska AB was included in the Group’s consolidated result for the
first time. Revenue (Sweden and others segment) was EUR 13.5 million and EBITA
EUR -1.6 million.

January–September 2021 in brief

  · Revenue increased by 17.0 percent year-on-year[1)] to EUR 827.1 (706.7)
million.
  · Adjusted[2)] earnings before interest, taxes, and amortization (EBITA)
increased by 58.3 percent to EUR 99.1 (62.6) million, representing 12.0 (8.9)
percent of revenue.
  · Adjusted items affecting comparability were EUR 3.3 (3.7) million.
  · Profit for the period was EUR 54.6 (23.4) million.
  · Earnings per share (EPS) were EUR 0.43 (0.18).
  · Net debt/adjusted EBITDA was 2.6 (3.4).
  · Cash flow from operating activities was EUR 109.1 (77.4) million.

The figures in parentheses refer to the corresponding period one year ago.

1) The figures for the comparison period were affected by the COVID-19 pandemic
and the related restrictions. Cost saving measures were implemented in the
comparison period, which improved profitability. Compared to January-September
2019, revenue increased by 7.0% (1–9/2019: EUR 760.4 million) and adjusted
earnings before interest, taxes and amortization (EBITA) increased by 19.8%
(1–9/2019: EUR 82.7 million)
2) Adjustments are material items outside the ordinary course of business,
associated with acquisition-related expenses, restructuring-related expenses,
net gains and losses on the sale of assets, strategic projects and other items
affecting comparability.

CEO Ville Iho: Demand is strong, growth is restricted by supply

In the third quarter of 2021, we saw strong, broad based demand for healthcare
services and Terveystalo’s revenue grew by 13.7% to EUR 273.1 (240.2) million.
The number of appointments booked by private customers continued to grow in
particular.  The demand was solid in preventive occupational healthcare and
public sector customer group as well.  The number of digital appointments
continued to grow, which indicates that remote appointments will remain as a
part of our customers daily life going forward as well. Services related to
COVID-19 continued to increase revenue as testing volumes remained at a high
level. The past quarter marked the first time that Feelgood in Sweden was
included in the consolidated financial figures and had revenue of approximately
EUR 13.5 million.  Our profitability was solid: adjusted EBITA grew by 1.9% to
EUR 31.5 (30.9) million, representing 11.5% margin. The cost saving measures in
comparison period had an impact on the relative profitability, while seasonally
low operating volume weighed down on Sweden and others segment profitability.
Revenue and EBITA both also increased compared to the corresponding period in
2019; revenue by 16.7% and adjusted EBITA by 29.0%.

As the demand has strenghtened, the supply bottlenecks have returned. The
booking rates of appointments grew to a record level, 96% on average, in the
third quarter. Such a high network-wide utilization rate means we are unable to
meet all demand. For several years now, we have been investing in intelligent
supply and demand management to improve access to services. Active customer
steering and digital services that support local physical service provision
enable the entire network to operate at higher utilization rates. In addition,
we have managed to increase self-service rates and improve booking conversion.
We continue to invest in developing our processes and intelligent platform,
since there is still lot of untapped potential.

The integration of Feelgood has progressed according to plan and we have made
progress in building our shared growth strategy and business plans. With almost
double the customer base and our complementary capabilities, we can create added
value for our customers and professionals while also improving operational
efficiency. Our goal is to develop the Swedish occupational healthcare market
and achieve growth in that market both organically and through additional
acquisitions. As part of the growth strategy, Feelgood made an acquisition to
complement its business operations by acquiring Dalarnas Företagshälsan, the
fourth-largest provider of occupational healthcare services in Sweden. In the
future, we also see potential for scaling our digital solutions in the Feelgood
platform and expanding the range of services in the Swedish market towards more
integrated chains of care.

Our business has developed as planned in all customer groups. In the corporate
and consumer business, our goal is to solidify our position as the market leader
and accelerate growth in targeted areas. Terveystalo + Nightingale Well-being
Membership concept is an excellent example of a new growth product, a
subscription-based service that supports preventive healthcare and health
partnerships with customers.  We are excited to see how this new concept will be
received.

In the public sector customer group, market is active and there is appetite for
new types of services. As an example of new concept, Kannelmäki health center
opened its doors at the beginning of October. Terveystalo produces services for
the district’s 20,000 residents. Our goal is a health center with no queues, one
that maintains a high level of clinical quality while delivering a good customer
and employee experience.   We have also developed a new remote service platform,
specifically with the public sector’s needs in mind. Our aim is to grow in
remote and digital services also in the public sector.

Queues for treatment in the public healthcare systemare becoming longer in the
aftermath of the COVID-19 pandemic. There are plenty of queues for surgeries
that exceed the statutory six-month limit, with cataract surgery and hip
replacement surgery being the most congested by a clear margin. The Finnish
state has promised funding of EUR 450 million to address the treatment backlog,
but the decisions on the use of the funds have yet to be made. The Finnish
healthcare system is unique and, thanks to the multiple funding and production
models used, it has the ability to adapt to challenging fluctuations in the
demand for treatment. We have several existing solutions that make it possible
to clear the treatment queues faster, including the broader use of the service
voucher system for services such as surgeries, increasing the use of services
purchased from private sector service providers as well as targeted Kela
compensation. Access to care within a reasonable period of time can be
guaranteed for people in Finland provided there is the courage to make quick
decisions and take advantage of the existing system.

With our extensive network, digital platform and diverse expertise, we are
prepared to help the public sector in clearing the queues for treatment. Our
view is that in clearing the queues for treatment – and subsequently meeting the
growing demand for health services – the help of private sector service
providers will inevitably be needed. Instead of principles, the focus should be
on people in need of care. At Terveystalo, we work toward a future where more
and more people have fast and unhindered access to healthcare and well-being
services.

Our equity is growing every quarter and further strengthening our financial
position. In November, we will pay our shareholders the second dividend for 2020
(EUR 0.13 per share). In addition, we are launching a EUR 13.5 million share
repurchase program to ensure an optimal capital structure.

At Terveystalo, we work toward a future where more and more people have fast and
unhindered access to healthcare and well-being services.
Toward a better tomorrow,
Ville Iho

Outlook

  · The market environment has normalized and the demand for health services is
strong. Demand, however, varies between different services and could be
restricted by supply.
  · The demand for COVID-19 related services is expected to remain active,
despite a decline in volumes from previous peak levels. Predicting the volume
is, however, difficult. The overall demand for health services is expected to
grow substantially. The demand for digital services is expected to continue to
grow.
  · Demand from corporate customers for preventive and statutory occupational
health services is expected to develop favorably. The demand for medical care
varies between different services, but the overall demand is strong. Significant
changes in the employment rate may be reflected in the underlying demand.
  · In the private customer segment, overall demand is expected to develop
favorably and grow substantially. However, demand varies between different
specialties. Significant changes in consumer confidence may be reflected in the
underlying demand.
  · Demand from the public sector is expected to remain strong in occupational
health, service sales, and staffing services. Revenue from the outsourcing
business is expected to remain stable.
  · Demand in the Swedish occupational healthcare market is expected to develop
favorably.

These views are based on the expected development of demand for Terveystalo’s
services within the next six months, compared with the past six months.

The impacts of COVID-19 and the measures taken by Terveystalo

During the third quarter of 2021, Terveystalo’s service production was still
characterized by various COVID-19-related services as well as well-being and
digital services, which saw substantial year-on-year growth in demand.
The company’s liquidity and financing situation has remained strong. During the
review period, the company fulfilled the covenant requirement included in the
financing agreement that reflects relative indebtedness. Terveystalo continues
the increased reporting of explanatory financial information on the company’s
liquidity, assets, and liabilities as well as the maturity of loans in Note 13.


Key figures

[][][][][][][][][][][][][][][][][][][]
Terveystalo Group,   7-9/   7-9/  Change,     1-9/     1-9/  Change,     2020
MEUR                 2021   2020        %     2021     2020        %
Revenue             273.1  240.2     13.7    827.1    706.7     17.0    986.4
Adjusted EBITDA *    48.6   46.1      5.4    146.9    108.3     35.7    162.8
[1) ]
Adjusted EBITDA, %   17.8   19.2        -     17.8     15.3        -     16.5
* [1) ]
EBITDA [1) ]         46.2   45.5      1.5    143.6    104.6     37.3    158.3
EBITDA, % [1) ]      16.9   19.0        -     17.4     14.8        -     16.1
Adjusted earnings    31.5   30.9      1.9     99.1     62.6     58.3    101.9
before interest.
taxes and
amortization
(EBITA) * [1)
]
Adjusted EBITA, %    11.5   12.9        -     12.0      8.9        -     10.3
*[1) ]
EBITA [1) ]          29.1   30.3     -4.0     95.8     58.9     62.6     97.4
EBITA, % [1) ]       10.7   12.6        -     11.6      8.3        -      9.9
Adjusted EBIT[ *     23.6   23.4      0.7     79.6     40.1     98.6     71.6
1) ]
Adjusted EBIT, % *    8.6    9.7        -      9.6      5.7        -      7.3
[1) ]
EBIT[ ]              21.2   22.9     -7.2     76.3     36.4    109.5     67.2
EBIT, %               7.8    9.5        -      9.2      5.1        -      6.8
Return on equity        -      -        -     13.0      7.2        -      8.2
(ROE), % [1) ]
Equity ratio, %         -      -        -     43.1     40.7        -     42.1
[1) ]
Earnings per share   0.11   0.13     -9.7     0.43     0.18    133.9     0.36
(EUR)
Net debt[1)]            -      -        -    529.8    528.0      0.3    490.9
Gearing, % [1)]         -      -        -     86.5     96.2        -     85.9
Net debt/adjusted       -      -        -      2.6      3.4        -      3.0
EBITDA (last 12
months) *[1)]
Total assets            -      -        -  1,424.4  1,351.0      5.4  1,361.0
Adjusted EBITDA         -      -        -    155.7    111.1     40.1    118.0
(last 12 months),
excluding IFRS
16*[1)  ]
Net debt,               -      -        -    355.1    349.9      1.5    312.4
excluding IFRS
16[1)]
Adjusted net            -      -        -      2.3      3.1        -      2.6
debt/adjusted
EBITDA
(last 12 months),
excluding IFRS
16*[1)  ]
Average personnel       -      -        -    5,645    5,023     12.4    4,900
in person-years
Personnel (end of       -      -        -    9,622    8,226     17.0    8,253
period)
Private                 -      -        -    5,191    5,210     -0.4    5,057
practitioners (end
of
period)

*) Adjustments are material items outside the ordinary course of business,
associated with acquisition-related expenses, restructuring-related expenses,
gain on sale of assets, strategic projects and other items affecting
comparability.
1) Alternative performance measure. In addition to the IFRS figures, Terveystalo
presents additional, alternative performance indicators which the company
monitors internally and which provide the company 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 separate from the
IFRS figures and they should not be considered to replace the IFRS figures.


Briefing

Terveystalo will arrange a webcast in English on its result on 28 October, 2021
at 11:30 EEST. You can watch the webcast online at:
https://terveystalo.videosync.fi/2021-10-28-terveystalo
-q3 (https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fterveystal
o.videosync.fi%2F2021-10-28-terveystalo-q3&data=04%7C01%7CLiisa
-Maija.Seppanen%40terveystalo.com%7C874fc4b322734ce9c39e08d98c926a32%7C4077cecbac
d7488080229ed9f30e6f8f%7C1%7C0%7C637695382740040684%7CUnknown%7CTWFpbGZsb3d8eyJWI
joiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=QXFl0C
pze6TuQ5O3E%2FIWO98ietH0yzL3bpHV4GwckuA%3D&reserved=0)
This time, we do not exceptionally hold a telephone conference, but questions
can be asked via the webcast in writing.

Helsinki, 27 October, 2021
Terveystalo Plc
Board of Directors

For further information, please contact:
Ilkka Laurila, CFO
Tel. +358 30 633 1757

Kati Kaksonen, Vice President, Communications
Tel. +358 10 345 2034
Kati.kaksonen@terveystalo.com

Distribution:
Nasdaq Helsinki Oy
Main media
www.terveystalo.com

Terveystalo in brief

Terveystalo is Finland's largest health service company in terms of revenue and
network, with the aim of empowering lifelong health and well-being and building
a healthier society. The company provides comprehensive well-being, primary care
and specialist care services to corporate and private customers, as well as the
public sector. Terveystalo's digital appointment serves are available 24/7,
regardless of time and place. In addition, the company offers health and well
-being services in more than 300 locations throughout Finland.

In 2020, Terveystalo had 1.2 million individual customers. Some 6.9 million
customer visits were made, of which more than a quarter took place in remote
channels. Terveystalo employs more than 13,000 health and well-being
professionals.

Attachments:

10276509.pdf