Terveystalo Oyj - Half Year financial report

Terveystalo Group Half-Year Report January-June 2024: Strong and rapid progress towards the financial targets

Terveystalo Plc, Half-Year Report 17 July, 2024 at 09:00 EEST

This release is a summary of Terveystalo's Half-Year Report 2024. The full
release is attached to this stock exchange release and is available on our
website at: https://www.terveystalo.com/en/company/investors/reports-and
-presentations/

April-June 2024 in brief

  · Revenue increased by 5.5 percent year-on-year to EUR 340.1 (322.4) million.
Q2 had one more working day vs. the comparison period.
The Healthcare Services segment revenue increased by 11.4 percent and was EUR
261.4 (234.7) million. Portfolio Businesses revenue decreased by 8.7 percent and
was EUR 62.7 (68.6) million. The revenue from Sweden decreased by 10.2 percent
and came to EUR 22.1 (24.6) million.
  · Adjusted[1)] earnings before interest, taxes, amortization, and impairment
losses (EBITA) increased by 49.1 percent year-on-year to EUR 42.5 (28.5)
million, representing 12.5 (8.8) percent of revenue.
The profitability strengthened in Healthcare Services and Portfolio Businesses.
The profit improvement program, including improved operational efficiency,
better sales mix, and successful commercial actions drove profit improvement.
In Sweden, the profitability clearly weakened from the comparison period mainly
due to decreased revenue caused by ended contracts and lower demand.
  · Items affecting comparability[1)] with a negative effect on EBITA were EUR
10.4 (5.5) million.
  · The result for the period was EUR 14.3 (7.5) million.
  · Earnings per share (EPS) was EUR 0.11 (0.06).
  · Cash flow from operating activities was EUR 44.4 (25.9) million.
  · NPS (Net Promoter Score) for appointments was 86.4 (85.8). NPS for hospitals
was 95.2 (95.9).

January-June 2024 in brief

  · Revenue increased by 4.1 percent year-on-year to EUR 690.4 (663.4) million.
The Healthcare Services segment revenue increased by 9.3 percent and was EUR
529.4 (484.5) million. Portfolio Businesses revenue decreased by 8.6 percent and
was EUR 127.3 (139.4) million. The revenue from Sweden decreased by 9.9 percent
and came to EUR 45.1 (50.1) million.
  · Adjusted[1)] earnings before interest, taxes, amortization, and impairment
losses (EBITA) increased by 38.1 percent year-on-year to EUR 89.7 (64.9)
million, representing 13.0 (9.8) percent of revenue.
The profitability strengthened in Healthcare Services and Portfolio Businesses.
The profit improvement program, including improved operational efficiency,
better sales mix, and successful commercial actions drove profit improvement.
In Sweden, the profitability clearly weakened from the comparison period, mainly
due to decreased revenue caused by ended contracts and lower demand. A profit
improvement program was launched in Sweden during the fourth quarter of 2023
targeting a structural improvement in profitability. The program progressed as
planned during the first half of the year.
  · Items affecting comparability[1)] with a negative effect on EBITA were EUR
14.6 (14.9) million.
  · The result for the period was EUR 37.9 (18.6) million.
  · Earnings per share (EPS) was EUR 0.3 (0.1).
  · Net debt/adjusted EBITDA was 2.5 (3.3).
  · Cash flow from operating activities was EUR 93.5 (61.8) million.

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


1) Adjustments are material items outside the ordinary course of business,
associated with acquisition-related expenses, restructuring-related expenses,
gains and losses on the sale of assets, impairment losses, strategic projects,
and other items affecting comparability. Adjustments related to the profit
improvement programs were approximately EUR 4.9 million during the second
quarter and EUR 9.4 million during January-June.

President and CEO Ville Iho: We are on track to reach our financial targets
faster than anticipated
Terveystalo's second quarter of 2024 was record strong in terms of revenue and
profitability, and the profit improvement program showed its strength especially
in May-June. Revenue increased by approximately 6 percent to EUR 340 million and
our profitability strengthened significantly year-on-year. Adjusted EBITA
increased by nearly 50 percent to EUR 43 million, representing 12.5 percent of
revenue. Earnings per share increased by 91 percent year-on-year to EUR 0.11.
Our profit improvement measures have had an even faster impact than expected and
clearly improved our profitability also during the seasonally lower demand in
the summer. We have raised our guidance for 2024 on 11 July 2024: We expect our
full-year 2024 adjusted EBITA to be 11.5-12.5 percent of revenue.
The Healthcare Services segment's excellent performance continued for the fifth
quarter in a row. The segment's revenue grew by more than 11 percent year-on
-year to EUR 261 million in the second quarter. In addition to a strong supply,
revenue was boosted by a more favourable customer and service mix and successful
commercial actions. Revenue growth and improved operational efficiency increased
the segment's adjusted EBITA by 67 percent to EUR 39 million, representing 15
percent of revenue. After running the profit improvement program for 20 months,
our core business is on a solid footing and continues to strengthen. We continue
to focus on profitable growth through operational excellence and by delivering
superior customer value.

The profitability of the Portfolio businesses also strengthened significantly.
The segment's adjusted EBITA increased by almost 52 percent year-on-year to
approximately EUR 3 million despite the decrease in revenue. EBITA margin was 5
percent. The segment's revenue decreased by approximately 9 percent to EUR 63
million. The planned contraction of the outsourcing agreement portfolio
continued. Revenue was also reduced by the proactive customer selection of
staffing services and the continued subdued demand for dental services. The
sales pipeline in the public market continues to develop slowly, and new tenders
have been seen mainly in digital services.
In Sweden, the revenue decreased by approximately 10 percent year-on-year due to
expired contracts and weakened demand and was EUR 22 million. The turnaround of
business operations is being built systematically. The cost structure has been
adjusted to meet demand, and in the next phase, the program will focus on
increasing operational efficiency and commercial activities. We expect the
impact of the program to be visible as a turnaround from the beginning of 2025
and the full runrate impact to take place during 2025.
Over the past twenty months, we have turned the company around and created a
very strong foundation for its development in the coming years. We are on track
to reach our financial targets faster than anticipated.

The profit improvement program has demanded a lot from Terveystalo's employees.
Achieving the turnaround has also required hard measures, which has inevitably
been reflected in our eNPS results. As the program reaches its final stretch,
our agenda will also change, and in the future, our actions to drive
profitability will be guided even more strongly by customer and personnel
experience.

I would like to thank everyone at Terveystalo for their excellent work. Our
results are created through your work.

Meaningful matters,

Ville Iho


Guidance for 2024

Terveystalo expects its full-year 2024 revenue to grow (2023: EUR 1,286 million)
and adjusted EBITA to be 11.5-12.5 percent of revenue (2023: 9.8 percent).

The estimates are based on the second quarter of 2024 projections for inflation,
consumer demand and employment, and normal morbidity. The performance
improvement program has significantly exceeded its initial target and the
measures are having an impact faster than previously estimated.  The estimates
include an annual decrease of approximately EUR 10 million in revenue in the
Portfolio Businesses segment's outsourcing business. The Sweden segment's
revenue is expected to decline due to macro weakness and the exchange rate is
expected to remain stable. The increase in the VAT rate in Finland does not
significantly impact the 2024 result. The estimates do not include material
acquisitions or divestments.

Guidance on 26 April 2024:

Terveystalo estimates its revenue for 2024 to grow (2023: EUR 1,286 million) and
its adjusted EBITA margin to be between 10.5 and 11.5 percent (9.8 percent in
2023).

The estimates are based on the first quarter 2024 projections for inflation,
consumer demand and employment, normal morbidity, and a predictable labour
market in Finland. The estimates include the impact of the successful completion
of the profit improvement program and an annual decrease of approximately EUR 10
million in revenue in the Portfolio Businesses segment's outsourcing business.
The Sweden segment's revenue is expected to decline due to macro weakness and
the exchange rate is expected to remain stable. The possible increase in the VAT
rate in Finland is not expected to have a significant impact on the 2024 result.
The estimates do not include material acquisitions or divestments.

Financial targets

Terveystalo's financial targets are:

  · annual revenue growth of at least 5 percent through organic growth and
acquisitions
  · an adjusted EBITA margin of at least 12 percent in 2025
  · net debt/adjusted EBITDA ratio of 3.5x or less
However, indebtedness may temporarily exceed the target level, such as in
conjunction with acquisitions.
  · to distribute a minimum of 40 percent of net profit as dividends annually
However, the dividend proposal must consider Terveystalo's long-term development
potential and financial position.

Key figures

[][][][][][][][][][][][][][]
EUR mill.       4-6/2024  4-6/2023  Change,  1-6/2024  1-6/2023  Change,
2023
unless stated                             %                            %
otherwise

Revenue            340.1     322.4      5.5     690.4     663.4      4.1
1,286.4
Adjusted EBITA      42.5      28.5     49.1      89.7      64.9     38.1
125.6
* [1)]
Adjusted            12.5       8.8  -            13.0       9.8  -
9.8
EBITA, % *
[1)]
EBITA [1)]          32.1      25.0     28.5      75.1      52.0     44.4
104.4
EBITA, % [1)]        9.4       7.7  -            10.9       7.8  -
8.1
Operating           24.6      15.0     64.2      60.3      34.0     77.1
-14.7
profit (EBIT)
Operating            7.2       4.6  -             8.7       5.1  -
-1.1
profit (EBIT),
%
Return on       -         -         -            -4.5       1.1  -
-7.6
equity (ROE)
(LTM),
% [1)]
Equity ratio,   -         -         -            36.9      39.0  -
36.5
% [1) ]
Earnings per        0.11      0.06     90.8      0.30      0.15    103.4
-0.3
share, EUR
Weighted         126,605   126,556  -         126,605   126,554  -
126,555
average number
of
shares
outstanding,
in
thousands
Net debt [1)]   -         -         -           569.8     601.7     -5.3
598.1
Gearing, %      -         -         -           110.8     105.3  -
116.0
[1)]
Net             -         -         -             2.5       3.3  -
3.0
debt/Adjusted
EBITDA
(LTM) * [1)]
Adjusted        -         -         -           169.3     124.5     36.0
142.8
EBITDA (LTM),
excluding IFRS
16 * [1)]
Net debt,       -         -         -           365.2     399.9     -8.7
379.0
excluding IFRS
16
[1) ]
Net             -         -         -             2.2       3.2  -
2.7
debt/Adjusted
EBITDA
(LTM),
excluding IFRS
16 *
[1)]
Average         -         -         -           5,956     6,563     -9.2
6,426
personnel
(FTEs)
Private         -         -         -           6,020     6,145     -2.0
6,092
practitioners
(end of
period)
Sustainability
PEI-index[2)]                                     3.0       2.9      3.4
2.9
Net Promoter                                     86.4      85.8      0.7
84.8
Score (NPS),
appointments
Net Promoter                                     95.2      95.9     -0.7
94.5
Score (NPS),
hospitals
Employee Net                                       10        23    -56.5
18
Promoter Score
(eNPS)[3)]

*) Adjustments are material items outside the ordinary course of business,
associated with acquisition-related expenses, restructuring-related expenses,
gain on sale of assets, impairment losses, strategic projects, and other items
affecting comparability.
1) Alternative performance measure. In addition to the IFRS figures, Terveystalo
presents additional, alternative performance indicators that 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 separately from the
IFRS figures, and they should not be considered to replace the IFRS figures.
2) PEI index (Patient Enablement Instrument) is used to measure whether the
patient feels that he is coping with his symptoms or illness much better,
better, as before, or worse after the reception. The scale is 1-4
3) Includes only Finland, as in Sweden eNPS is measured only once a year.
Result briefing
Terveystalo will arrange a webcast and a conference call in English on its
result on Wednesday 17 July 2024 starting at 10:30 EEST. You can watch the
webcast online at: https://terveystalo.videosync.fi/q2-2024

You can access the teleconference by registering at the link below.
https://palvelu.flik.fi/teleconference/?id=50048571
After the registration, you will be provided phone numbers and a conference ID
to access the conference.

Helsinki, 16 July 2024
Terveystalo Plc
Board of Directors

For further information, please contact:
CFO Juuso Pajunen
Tel. +358 40 584 9722

Kati Kaksonen, Vice President, Investor Relations, Sustainability &
Communications
Tel. +358 10 345 2034
kati.kaksonen@terveystalo.com

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

Terveystalo in brief

Terveystalo is the largest private healthcare service provider in Finland in
terms of revenue and network. Terveystalo is also a leading occupational health
provider in the Nordic region. We offer a wide variety of primary health care,
specialized care, and well-being services for corporate and private customers
and the public sector. Terveystalo's s digital services are available 24/7,
regardless of time and place. Health and well-being services are also provided
by over 377 clinics across Finland. In Sweden, we offer occupational health
services at 152 clinics. Terveystalo is listed on the Helsinki Stock Exchange.

In 2023, Terveystalo had approximately 1.2 million individual customers in
Finland and the number of customer appointments was approximately 7.6 million.
Terveystalo employs over 15,500 healthcare and well-being professionals.
www.terveystalo.com

Attachments:

07166350.pdf