Terveystalo Oy Ord

Good morning everybody and welcome to Terveystalo's half-year results webcast and phone conference. My name is Kati Kaksonen and I'm responsible for Terveystalo Investor Relations, Sustainability and Communications. As usual, we'll have the presentations held first by our CEO Ville Iho and then the results analysis followed by our CFO Juuso Pajunen and after that we'll have time for your questions. We'll take questions from the phone lines as well as through the webcast after the presentations. Without further ado, over to you, Ville.

Thanks, Kati. And from my behalf as well, very good and hopefully sunny July morning from Helsinki. Tervestalo Q2 results. I have a great pleasure to present them today. we can say that this is the strongest second quarter ever in terrestrial history. And it's not only one number, it's across the board great results and strong, consistent development against our targets. Healthcare services, our biggest business, is driving the positive development and momentum, both a top line and margin growth. We are very glad to see that the portfolio businesses where we have started individual profitability improvement initiatives in respective businesses is also improving and contributing to the group result progress and with Sweden we don't see that the full results yet but we are very pleased to see how the agenda has been evolving and how committed and determined work the team in Sweden is putting in place, and we are confident that the same pattern will follow in Sweden, will turn around the business in 2025. This all and positive results when it comes to our finances is comes with the backdrop of continued high quality, our NPS is on a record high level, also medical quality is improving, which is very important for the future of our business and business model. Key numbers, as said, no matter where you look, this is an extremely strong quarter and continues on the path set for Tervestalo some 20 months ago with our profitability improvement program. Revenue is up by some 5% driven by healthcare services. EPS strong improvement there with 91%, EBIT A 42.5 million and 50% improvement also there year on year and EBIT A margin at 12.5. NPS has said 86.4% improvement from very high level there as well and we continue creating strong cash flow with our profitability. All in all, as I said, record quarter, but this is not where we want to end. This is second quarter in a row where we can see that we are on new high level and from this level we continue progressing. Our P&Ls, our segments presented in graphical format, as said, healthcare services is leading the race. The agenda for that one was set some 20 months ago with Alpha program. Great improvement still from Q2 last year to this second quarter. Portfolio businesses, as said, is starting to improve and that's of course very important for the company. It's not only one cylinder which is contributing, it's already two and it will be three as we turn around the Swedish business in the course of next 12 months. For Tervestalo future, it's important to see the progress that we are making and also the facing of the progress. In this slide, you can see the different P&Ls in order of magnitude, but this is not only order of magnitude, this is also the facing of our program and our progress. Healthcare services is now set on a new high level, but it continues to improve, and we see further potential there with our new agenda. Portfolio businesses, as I said, have started to improve, and there's a new ambitious target set for each and every business, and we are. determinedly progressing against those targets and Sweden we will turn around. And these three cylinders at the end contributing to tervestalo futures is very important for our story and supports also the new guidance that Juuso will walk you through in detail in a few minutes. This also, of course, begs the question, what's next for Terve Enstalo? We are now in a new level and we see further potential. And we invite you to listen to our new agenda and a new set of targets on 4th of December this year. With that one, over to you, Juuso.

Thank you Ville. So let's talk about the red hot part of our quarterly release, so that's the numbers. Obviously a week ago we took a bit of the wind out from this presentation, but I'm really proud and happy to show what we are doing at the moment. So if we take the highlights, we have continued the margin recovery in Q2. Actually we had the best ever Q2 during the company's listed history what comes to relative margin we are our adjusted EBITDA is increasing 49% EPS 91 or if you take the half year EPS it has more than doubled our leverage is at 2.5 all included what comes to IFRS 16, so no matter how you look at this performance, it's solid. You can pick a line in income statement, you can pick a line in balance sheet, or you can combine those ones, and we are on track. And then, as Ville mentioned, it's not only the financial performance, but we have the NPS, client satisfaction, we have the medical quality, pays, all of those ones are strong and solid. So we are truly delivering now. Our performance is coming from the Finnish segments and especially from the healthcare services, which you will see a bit further when we go forward on the slides. Sweden is not visible in the figures, but we have a very clear agenda. We have taken solid steps forward and we are very confident on the profit improvement program progress. So it will be coming in 2025. And all of this one merits the guidance update. We will be between 11.5 and 12.5 at the end of this year. So if we then look a bit on the revenue, basically you could read the headline, profit improvement program working, commercial actions delivering. We are growing 5.5%. One needs to remember that we had one working day more in second quarter compared to previous quarter. That helps a bit also on that growth. So the volume adjusted appointment growth. or workday adjusted appointment growth is not heavily growing it's stable even though it is 1.4 percent during the quarter in absolute terms but that helps us on the growth part then we have both the customer and service mix are working in our favor we need to remember also that this is a low demand month Low demand quarter as is the third quarter what comes to diagnostics and other service sales. So the appointment delivery is more important and the appointment performance may be then in Q1 and Q4. And then it's worth to note that revenue is increasing in all customer groups and in all services, so we are consistently improving our healthcare services. What comes to portfolio businesses, we have the outsourcing decline, we have all known, we have communicated, you have all known. And it continues on the pace as anticipated. Staffing continues the track from Q1. We have been doing some proactive customer selection. We don't want to offer whatever. We want to offer those services where we have the solid value add, which also converts into profit. And then what comes to dental and massage, we are continuously impacted by the lower consumer purchasing power. The decline has stabilized, but the trend is still very wobbly. It would be difficult to say that it is clearly demonstrating improvement, but it has clearly stabilized during the year and most likely bottom out during Q1. Then if we look Sweden, also the story continued. We have the ended customer contracts, customer selection, but also a weak demand environment, which is in our business model hitting more than in our Finnish business. So all in all 5.5% growth, very solid growth in our healthcare services which is the big motor and basically margin improving customer selection and revenue selection especially in portfolios and Sweden. Then if we look at the EBITDA development, adjusted EBITDA from 28.5 to 42.5, almost 50% improvement. We have the healthcare services truly delivering. clearly seeing the operational efficiency and here I want to highlight continuously that it's the low demand season and during that season the sales mix capability to yield margin in through all of the services is very important and this is what we have demonstrated now with our profit improvement program that has progressed quicker than anticipated but also delivers very solidly. So this one combined with the successful commercial actions and the continued scrutiny on cost delivers the profit improvement. If we then see the portfolio businesses, we have positive development in staffing and outsourcing. In here also we have the commercial actions, we have the operational efficiency improvement, but then it's good to know that we have been fairly solid and good in adjusting in our consumer driven businesses. to the lower demand so once the demand starts to pick up we are lean and mean to go forward also in that end and finally in Sweden the reduction in revenues converts into bottom line but as said the profit improvement program is progressing Then finally good to note it's not an adjusted EBITDA topic but we have in the adjustment items as written in our profit warning last week we have a roughly 6 million euros additional item related to renovation liabilities coming from a rental contract older than a decade so that is truly not for this period and we don't have similar type of items in our portfolio so That's good to note when you look at our total numbers. Going into the sales mix, that is improved in Finland. We continue to have the headwinds in Sweden. Here's nothing particularly new that I wouldn't have said earlier, but as said, good to note in healthcare services, all client segments growing, all services growing in revenue perspective, and the margin creation is really solid. Portfolio business is a bit of mixed bag, but the revenue is declining in the public sector by choice and in the consumer segments from the market environment. If we look then H1 as a total, this is story continued. Revenues are growing 4%, so now we don't have work data adjustments needed. We don't have this type of, so it's fully comparable year on year. 4% up appointments, a bit less than 1% it's down, and despite that one, we are improving our adjusted EBITDA by 38%. The big contribution coming from healthcare services, portfolio businesses, still in a phase of going into the better and better yielding momentum and Sweden in early steps of profit improvement program. So very natural, very understandable facing. And the H1 tells the same story as Q1 and Q2. So very consistent, very understandable in my opinion. Then if we look cash flow, When we make profit, we make cash. As simple as that. This clock is ticking. We have a really strong EBITDA, really strong cash flow. We have been fairly stingy on the CapEx side, minus 38 million LTM. We continue to be slightly below of our own expectations maybe, but at the same time we are... we are doing what is the right thing. We are investing in digital, we are a bit investing in the walls, and that's pretty much that. Then if we look at our leverage, 2.5, continued improvement on the leverage ratio, interest-bearing liabilities going slightly down, and good to know that in Q2 we paid our dividends out, and we have already funded that with operating cash flow, so a solid place to be. EBITDA converts into cash which is how it always should be so then we go to the guidance so we expect revenues to grow no change in there adjusted EBIT A to be between 11.5 and 12.5 so as you know the midpoint is at 12 percent so 20 months ago, Ville told that we will make 12% in 2025. Now there's a clear likelihood that we could do it already in 2024. Our estimates are based on everything we know at the end of second quarter. So inflation, consumer demand, employment and normal mobility. So still on the Q4, we would expect that we have normal flu season. That's important for our profit generation. We are confident that our performance improvement program continues to deliver and is sustainable, and then we have the same disclaimers as earlier. So all in all, we are very confident on our visibility. We are confident on our past delivery, and we are confident on our future delivery, and with these ones, it's easy to say that 11.5 to 12.5, a clear improvement compared to Q1 release, a clear improvement compared to start of the year, And that's where we are. With these words, any final words, Ville?