Terveystalo Oy Ord

Good morning, everybody, and welcome to Terveystalo's first quarter results call and webcast. My name is Kati Kaksonen. I'm responsible for Terveystalo investor relations, sustainability and communications. Today, as usual, we'll have the brief results presentation held by our CEO, Ville Iho, and our CFO, Juuso Pajunen. And after the presentation, we'll take questions through the phone lines as well as the webcast. So without further ado, over to you, Ville.

Thanks, Kati. And good morning from my behalf from Helsinki Sanomatalo. Q1, briefly, highlights from the quarter, very strong start for Terve Stala as a group. Strong performance, especially in healthcare services, the biggest business, which drove top line and margin growth. Also, even though the revenue decreased in portfolio businesses, the EBITDA margin improved, and it goes to show that the independent profitability measures taken in respective independent businesses are delivering. As we have discussed earlier, Swedish macro is not helping us, so we have headwind in our Swedish business, but we have launched, as discussed earlier, a profitability improvement program similar to Alfa, which has been a great success in Finland, and it's going to deliver results in 2025. We are not only improving our profitability and finances, we continue to deliver extremely high quality medical quality customer satisfaction, which is of course key to what we do. We fight for healthier lives. Q1, briefly in numbers, so revenue grew by some 3%, driven by healthcare services. Our EPS earnings per share more than doubled, which is, of course, a very strong development. EBITDA on absolute terms, 47.2, a strong number. EBITDA margin, 13.5, on track in our plan. to reach the targets in 2025. And as everybody remembers, the target is 12% on an annual basis. As said, quality continues to be on world-class level, NPS 86.4. And as per our business model, we are not only reporting profitability, we are delivering cash. Segment view from Q1 as discussed, healthcare services, extremely strong performance and rapid prompt development, both in revenue and EBITDA. Very, very good turnaround since the launch of the Alpha program. Portfolio businesses, as said, decreased in revenue, but despite that one and despite some headwinds in commercial or consumer-driven businesses and fairly muted demand in public services, EBITDA margin continued to improve. So good work done in independent respective businesses. Sweden, as said, decreased to basically a flat break-even result But as I said, we have a situation well in control in the heels of the Alpha program. We have launched a profitability improvement program, Gamma, for Sweden, and it starts to deliver later this year. We have a really good and strong roadmap, and it's executed by a new team in Sweden. We continue to deliver value to our customers. We fight for healthier lives. And of course, in this call, the focus is in finances, but we are fighting for healthier lives. We need to improve the value for our customers. We have earlier discussed the mental health care paths and what type of services we have been able to innovate to that space, which is an unfortunate trend in the society and working life. On individual diagnosis level, we have been able to prove great effectiveness of our care parts, our low-barrier services, early intervention and cooperation with customer companies. Now looking at the full population level data from last year, we have another proof point. So what we are seeing today is that number of diagnoses in the populations which we care they are increasing, but at the same time, the full or accumulated sickness days, they are actually decreasing. So more diagnosis, so lower barrier to enter into our services, more effective care paths and hence decreased number of sickness days for the organisations. So our model really works and delivers value for our customers. Our focus going forward, we have, of course, been very clear on the Alpha program and its targets. We reached the minimum targets already by the end of last year. Looking at the trends where we are going with the EBITDA, of course, we can be even more confident that we'll reach 12% next year. Thinking about the face of the company, we have made a strong turnaround We continue to deliver the tail of the turnaround during H1. We are shifting the company into continuous development mode, and that shift is key for this year. We'll reach 12% next year and continue from that base. as a renewed and more effective, more efficient company. With that one, over to you, Juuso.

Thank you, Ville. So, let's talk about numbers, couple of words. So, I'm Juuso Pajonen, CFO of Terveystalo. Let's hit it. So what has happened in Q1? I think that the biggest message is that no matter how you look at the numbers, the efficiency improvement flows through. Our EBITDA is increasing 30 percent, our EPS is over doubling, our deleverage is coming via the operating cash flow that Ville mentioned also, we are at 2.7. So the efficiency improvement flows through. It comes through the income statement, it converts to cash and benefits then, of course, the whole company and stakeholders. We delivered 13.5% EBITDA during the quarter. It's especially supported by healthcare services, revenue growth and the efficiency improvements and the commercial actions. But at the same time, relative profitability grew also in portfolios. Sweden didn't perform within a satisfactory range, but we have the profit improvement program ongoing there and we will turn that one also back on track. So with these ones we have been able to narrow our guidance range and we are progressing swiftly towards our EBITDA margin target of 12 in 25. So all in all a solid quarter driven by efficiency. If we then look on the top line, healthcare services growing, it's continuously good to note that we had one working day less compared to previous year first quarter, and we were 1% down in the appointments, but despite this one, we are growing. We are growing throughout the appointments, diagnostics and other service sales. And this is coming from our commercial actions and we have been capable of really delivering on the top line. In portfolio businesses, our outsourcing contracts continue to decline. The top line decline is not as rapid. as we have communicated but this is normal volatility between q4 and q1 so there are certain items that depend on how the cost split for example in specialty care goes between different municipalities or welfare districts and so on so there's nothing abnormal as such on that one and it it's not a profit driver it's simply brings a bit of volatility on the top line staffing services declined but the biggest reason in there is that as in healthcare services where we have been careful on which value-add services we provide we have been doing the same in the portfolios and in the staffing so the underlying performance is solid but at the same time public sector behavior has been not so robust still when ramping up the welfare districts and seeking for the new operating models. In the consumer part, we continue to see lower demand, but at the same time, some flashes of better future going towards the end of the quarter. So it is on a lower level than previous year, but maybe sequentially, month by month, there could be some type of a flapping upwards. Sweden, difficult macro. At the same time, we have some public sector contracts that have ended and that have put pressure on the top line. But with all of these ones, 9 million euros more revenue, growth in the terrestrial revenues, and with one working day less. If we then look on the profitability, healthcare services, operational efficiency throughout the services and due to the profit improvement program especially, we have a solid sales mix improvement. We have also the commercial actions in place and then the cost control. So we have been able to take next steps as we have communicated throughout previous year in our profit improvement program. We have been able to deliver that one and now you see the results. They are coming through and we continue to improve like Ville also told. Portfolio businesses, we have positive development throughout. We have similar kind of medicines as in the healthcare services, but since the business mix and the provided services are different, of course, the medicines are tailor-made for that one. But we have the commercial actions, we have the operational efficiency, and then we have the natural ending of low-margin contracts. Sweden already discussed through but basically we have the profit improvement program in place we have kicked it off we have started to progress it the progress is in plan but at the same time it's good to note that we are not expecting to progress with leaps and bounds so year 24 will be difficult in Sweden but we will improve sequentially in that one not too much to go deeper into the details of this slide, but it's good to note that especially in healthcare services, if the service mix shows growth throughout, also the client mix shows growth throughout. public consumer corporate all growing and of course the margin improvement is positive 3.5 percentage points quarter to quarter or year on year improvement portfolio businesses outsourcing revenues declining staffing dental revenues declining other businesses muted but despite lower development in revenues, the relative profitability as well as the absolute profitability are going up. Sweden already discussed not meeting our targets, not on a satisfactory level but the plan is in place, we are progressing and I think that with Finland we have demonstrated that we have some experience and capabilities on turning businesses around. Other part, balance sheet, shareholder returns. We continue to be a strong cash motor. We delivered very solid operating cash flow. Our leverage goes down. And then if you look at that one, improving margins, solid EPS, doubling EPS, and strong cash flow. Those are all signals of a strong company. So no matter whether you look the income side, whether you look on the balance sheet side, we are demonstrating that what we are doing flows through the numbers. CapEx levels now stabilizing into the 40 million levels, having still the same buckets, intangible assets, mainly going to software, tangible assets, either leasehold improvements or machinery. So same investment pockets as earlier, nothing new in this one. So with these ones, we are narrowing the guidance range. Earlier it was 10.1 to 11.5. Now we have taken it to 10.5 between 11.5. Last year was 9.8. And basically normal disclaimers, we are basing the guidance on an information available at the closing of the quarter. So there are other inflation consumer demand components in there, normal sicknesses. Now of course we have Q1 in the pocket, so the next heavy season is in Q4. And basically outsourcing contacts will continue the contract. Sweden will not be great during this year. A new topic we are highlighting that the possible increase in the VAT rate in Finland is not expected to have a material impact on 24 results. We do not yet know when this one will take place, what is the final date, but presumably it will land on H2. And basically we are excluding, like always, material acquisitions and divestments from our guidance. So profit improvement will continue. With these words back to Katja.