Terveystalo Oy Ord

Good morning, everybody, and welcome to Terveystalo's first quarter results webcast and conference call. My name is Kati Kaksanen. I'm responsible for Terveystalo Investor Relations and Sustainability. As usual, our CEO Ville Iho and our CFO Juuso Pajuelen will present the results and we'll follow that with a Q&A. We'll take questions from the phone lines as well as through the webcast and from the audience, if there's any. But without further ado, over to you, Ville.

Thank you, Kati. So diving into Q1 very shortly through the key numbers. All in all, a solid start of the year and continuing on the improvement path that we have laid out during the last two years. Margin is up. Our adjusted EBIT is up by 20 percent. EPS up by 40 percent. against slightly dropping revenue line, which is then again due to softness in Sweden, softness in portfolios and some discontinued outsourcing contracts in portfolios. Healthcare services still growing with healthy 5%, but all in all a flattest quarter in revenue. Very glad to still see our NPS customer satisfaction trending upwards as it has done throughout the improvement journey that we have conducted. So strong, solid start for this year 2025. Looking at different businesses, if there's one headline for the agenda, it's improvement. As we have communicated previously, we are looking for still incremental improvement in health care services, which is already on a very strong place. Q1 was one step in that journey. In portfolio businesses in Sweden, we are looking for more drastic performance improvement. Against tough market conditions in portfolios and in Sweden, I'm very glad to say that both of these businesses have been able to improve their relative profitability. first step in Sweden to see the real benefits of turnaround agenda and turnaround program in our bottom line numbers. Portfolios continue to do good work against fairly tough market conditions and incrementally improving their performance. The agenda is solid. Improvement will be there across the board. Taking a slightly longer view on our strategic agenda and strategic KPIs, it's been again a solid improvement in efficiency, organic growth, but also in underlying forward-looking KPIs like NPS customer satisfaction and people engagement index where we also see all-time high figures and a positive trend going forward. Also medical quality measured with the pay index trending nicely to positive territory and at all-time high. So all in all, we have not only been able to improve the financial performance step by step, but also underlying forward-looking KPIs in our strategic agenda. With that one, I will hand over to Juuso.

Thank you, Ville. So good morning all. Happy to be here and proud to present our numbers for first quarter. So I'm Juuso Pajunen, the CFO of Terve Östalo Group. If we start on the group level, Hede says solid performance at group level. Some might say even strong performance. We have been doing quite well. If we look on the totals and we start from bottom up. Our EPS went up 41% like Ville told. Our adjusted EBIT is almost 20% up and our EBIT A is 14% up. So we have a throughout solid performance from the income statement KPIs. And what is more important if we look on the picture is that all of our business segments improved in their relative profitability. We are getting the demand in, we have the improved operational efficiency, and we have a favourable service mix, especially in the healthcare services that yields now into our results. Then if we look on the top line, we have healthcare services having a healthy almost 5% demand against one working day less compared to previous quarter. We have the portfolio businesses where especially outsourcing contracts contributed to negative revenue development and then we have Sweden where we are working on our turnaround program and progressing as planned. But if we go a bit deeper into each segment and start with the healthcare services. So healthcare services continues to be the revenue driver and the profit driver in our group. If we look into the supply and the booking rates, they are on a good level. What is good to understand on the demand is that the flu season continues to be strong. We had some 25,000 to 30,000 visits more contributing on the stronger flu season now compared to previous year. That helped our both the service mix and also having an impact on the customer mix, which on a big scale are fairly normal, but we see that in the in the total demand if we then think about further our profitability and our revenues were supported by our service sales and channel mix and then the pricing and to improve our transparency towards markets we have now updated how we show this one to you in the future so if we take a view on the growth and the revenue bridge, as said, almost 5% up. Our visits are moderately growing with somewhat 0.4 percentage points if we adjust for the working days. And then the rest of the growth is coming from the service, sales and channel mix in total. So all in all, a robust result in healthcare services supported by organic growth and an efficient operation model. If we then go to see the portfolio businesses, we have seen that the publicly funded market remains cautious. We see this one, especially in the staffing, where part of the decline in the revenues is still coming from our selection of customer contracts. And then we have the outsourcing where we are 10 million down. We have earlier told that we will this year lose revenues in the ballpark of 25 million euros, it will be first half heavy and that estimate of 25 million euros has not changed despite this 10 million euro at the moment. Then if we look on the consumer driven markets, we see dental is going up despite the headwind from the one working day less. We are almost 5% up and also massage services, we see that the demand is picking up. However, it's good to note that these are coming against quite weak comparables what comes to demand. So all in all, what is important is that we are improving our adjusted EBIT percentage. We are now going back on the improvement mode, both on EBIT A level and EBIT level in total in the portfolios. Our agenda is working, but we have some stickiness in the public sector market at the moment that creates headwinds in the revenue. Then if we go to Sweden, We have difficult market conditions. The Swedish economy has not been recovering and has been impacted by the global turmoil. to a certain extent that has made our market environment difficult. But at the same time, we have been able to improve our efficiency. Our Gamma program is having a clear impact and it will continue to have the impact. So we are within our plan. We would obviously benefit from support from the markets, but our improvement plan doesn't require that one. So we are getting forward in here. We are improving our relative profitability and we will continue to do so. Then if we look into our investments, our balance sheet and our investment levels are fairly normal. We have a slight pickup. to 42 million in the latest 12 months period and as we have since CMD and already earlier communicated we will prioritize organic growth investments and disciplined inorganic expansion. So disciplined M&A is part of our plan and then very focused organic growth driving investments are what we will continue to do and this 42 million will modestly ramp up in the coming quarters or so towards the vicinity of 4% on the revenues or slightly above that one in the longer term. If we then look on the cash flow, we have a 202 million euros of operating cash flow on the last 12 months. It is a solid good performance, but it needs to be put into context that in 24 we made more profits that comes with taxes that were paid out now. So we have a tax impact in here and then if we look the Q4 numbers or then Q124 numbers, it's good to note that the Q4 LTM has two strong quarters within that one. So this is normal volatility within the cash flow that we are seeing. The profits that we are making convert in a very high ratio into cash. And then if we look on the balance sheet, we are net debt to EBITDA at 2.2. And if we would take against adjusted EBITDA, we would be at 2. So our balance sheet is strong and we have all the powder needed to invest in our growth in the future. Then finally, let's talk about guidance for 2025. First, it is unchanged. So we are saying that the full year revenues are going to grow and our adjusted EBIT will be between 10.7% to 11.8% of the revenue, while previous year was 10.5%. The estimates are based on stable demand environment, employment levels and typical morbidity rates. And we have the 25 million reduction what comes to the outsourcing contracts. So we reiterate what we have said. At the same time, having said that one, we all know that there is some global uncertainty and turmoil in the world. There are the tariffs from Trump and there are different type of forces in play at the moment. We are not immune to those ones. And there are scenarios where they could have indirect impact to us. So we don't export to US. The tariffs don't mean anything to us in that sense. And what we buy will not be impacted by that one either. But the indirect impact, if Finnish employment levels would be starting to go down, if the employment levels in Sweden would start to go down, those could have an impact. on our operations, but we deem it fairly unlikely based on the megatrends on our services and based on the need and the value that we provide to clients that it would have a material impact and we are very comfortable to reiterate our guidance for this year. Then also if you look now our performance in Q1, the solid improvement what comes to previous year performance. It is fair to say that if you take all the scenarios that are at the moment meaningful to us, it is The scenarios that are above the midpoint of the guidance are probably more likely to occur than those ones that are below the guidance. Obviously, it is up to you to put your own scenarios into place, but that is how it looks like to us. We are within the range, but potentially the upper part of the range is more likely at the moment. So with these ones, I'm happy to reiterate our guidance for 2025. We are going to grow and our adjusted EBIT margin will be between 10.7 and 11.8 percentage points. With these ones, let's invite Kati on board and start the Q&A.