Terveystalo Oy Ord

Good morning, everybody, and welcome to Terveystal's first quarter 2026 results call and webcast. My name is Kati Kaksan. I'm responsible for investor relations and sustainability here at Terveystal. As usual, we'll go through the results with our CEO, Ville Iho, and our CFO, Juuso Pajunen, and after the presentation, you'll have time for your questions. Without further ado, over to you, Ville.

Thank you, Kati, and good morning. Let's... dive into it. So Tervestalo first quarter, during the first quarter, the market was even more negative than we expected going into the year. That was then clearly reflected into our revenue line, which came clearly down. And despite the adjustment measures that we did especially in our operations to adjust the ops to lower demand, there was a drop through to our adjusted EBIT, which was at 34 million euros. Quality across the operations and services, high as per standard, even improving, which is, of course, a positive sign of a very professional and robust organization delivering in any circumstances. If one then dives a little bit deeper in what's happening in healthcare services market, it is the market that is exceptionally negative this time around. We have not seen this type of a dip since the start of COVID, and basically all of the segments, regardless of what data you look at, all of the segments and services are roughly minus five to minus 10% down. The positive thing and silver lining with this one is that we are seeing a market bottoming out. So according to our judgment, And that's reflected also in our plans and actions. The bottom has been passed. And now the market shall start gradually, slowly but steadily, grow from a low level. In our own operations, we have been, as we have reported earlier, we have been suffering from a lower connected employees number. And that one as well, we see bottoming out. Going forward, now the number has been stable throughout the quarter, and now looking at the sales funnel activities, looking at the renewals, looking at new opportunities, looking at win rates, we can with confidence say that we start turning this one into positive, going into H2. Of course, the progress will not be rapid, because this is B2B business, and turning agreements around will take a while, but anyways, market and our own portfolio has bottomed out and now we can start developing from this new base. The negative market environment was present in all of our three P&Ls, healthcare services, portfolio business. and Sweden, a little bit different reasons and different levers into that one, but bottom line was that the market conditions were very, very tough during quarter one, 26. Despite that one, of course, the absolute result level and profitability we achieved was high and we can be pleased with our own ops but now the eyes need to be fixed on growth going forward. Market will not give, even though it starts gradually improving, it will not give anything for free. We still focus and concentrate on our own agenda. It is very much geared to boost growth in all of our segments. In healthcare services, we'll concentrate in occupational health care turnaround program and transforming that one to higher value for our customers and growth. We are renewing our offering for insurance customers and companies and intensifying cooperation with insurance companies. We are focusing in segments that are growing in our traditional integrated care. One prime example is seniors where we have captured big market chain in Kela65 and Kela65 continues developing positively for us. And of course, on top of this one, we are seeking drastic improvements in efficiency with our digital agenda. In traditional operations, in digital 10x and also in prevention. In portfolio business, of course, a positive move from our side is dental growth. Actually, dental has been a sort of a light or positive glimpse during quarter one. The market conditions have been fairly good and the team has done very good work in improving the business And with Hohde deal, the platform will be ever stronger, and an integration of that platform, Juuso will comment on the phasing and timing of that one later in the presentation. We are actively engaging with healthcare counties. It is evident that they are very low with their purchases still. But at one point that market will activate and we want to capture our fair share and even more from that one. In Sweden market conditions have been tough. Now the efficiency is there and we are operationally improving. Now the focus is in commercial actions and getting the revenue line in with the higher operating leverage and improving through that one profitability. Cycle is cycle, and it's clearly very, very negative at present, but we need to look beyond this cycle. As I said, market will start gradually improving, but every time a strong cycle goes through an industry, some things change permanently. And that one coupled with... Accelerating speed of technology development will mean that we need to be even speedier than the transformation of this industry, and we need to invest in all of the three modalities in healthcare technology. In integrated care, we are investing in Ella. We are making the life of our professionals easier, smoother, more efficient, and we are giving more time for professionals with the patients. In digital healthcare retail, we are improving the customer engagement, call centers, we are investing in digital Tenex and AI assisted appointments and efficiency potential in this modality is huge. We are also starting to invest in prevention at scale, so digital engagement through digital and based on data, proactive, active engagement with our customers being relevant when they need, actively guiding them through their lifelong health journey and looking for new growth in this emerging new market. We have the dry powder, we have the agenda, and we have the speed in executing in all of these three buckets. Two landmark milestones in this development during Q1. Tervestalo launched its new novel occupational healthcare digital platform for its first clients. This one is next level compared to current platforms in the marketplace. It's developed jointly with our joint venture MedHelp. And it's now live and it's used by the first paying customers. Early feedback from the market is very positive. We continue scaling this one rapidly throughout the year. And as I said, this is next level, this is future, and this will give way more value for our customers and better insights in their own personal than before. This is a big step in our main business. In digital 10X, we have introduced AI assisted appointments and we are scaling that one also during the year. The efficiency potential in this modality is huge. We are also scaling volumes so that we can, with our intelligent steering engines, can steer more volumes in the digital modalities. At the same time, we are improving traditional physician-led integrated care. And the prime tool is Stella, which we have launched. It's the user interface for our physicians. And already now, we have gained some 30% efficiency improvement with the new platform. And at the same time, we have been able to give more time to physicians and patients. As I said, we continue to scale this one up during the year. Within the next 12 months, this is going to bypass any present platforms in the marketplace and will be a clear and powerful asset for Tervästö. So, Market has been negative. It has bottomed out. We have agenda for growth. We continue investing. We continue accelerating our technology journey. And with that one, over to Juuso.

Thank you, Ville. So, good morning all. I'm Juuso Pajunen, CFO of Terve Stalant. Let's go to the topic numbers. So, first of all, if we look at Key numbers from first quarter, it is clear to say that the relative numbers are weak. We see negative on everything else, excluding the NPS of appointments, which is improving and is a stellar 88. But outside of that one, each and every number is negative, and the market has been weaker than anticipated. But let's go through then number by number what we are talking about. But before we go to that one, it is good to note that if we look at the absolute numbers, these are still quite robust figures. Our Q1 is materially above our average Q1 if we come to relative profitability. If we look in absolute EBITDA terms, this is the third best quarter ever in absolute EBITDA or EBIT. either way you want to look at. So in absolute terms, we are fairly strong, but the relative terms, we are absolutely disappointed and obviously we'll work on to get forward. If we then look the group, we know that our big ticket component is the headwinds in the revenue. We also know that the megatrends are there and in mid to long term, they will support the growth But as stated, the market sentiment at the moment is exceptionally weak. If we then look on different segments, we will go a bit further into details. But in the healthcare services, the big thing is occupational health. In the portfolios, it is the public sector. Sweden, we are now evening out. Then if we look on the group level and think about positives in here, our efficiency is strong. No matter how you view it, in an exceptionally weak market, we have been able to adjust our operations towards the lower demand, and we will continue to do that one. So all in all, with the efficiency, we will get forward. If we then look on the EPS impacting adjustment items, we have 7 million euros of these ones It is slightly more than I would like to see in there, but if we double-click those ones, we have a €1 million related to divestment of child welfare, which was a strategic move, and we have now closed that deal at the end of January. We have €1 million related to re-evaluation of the values in the real estate assets. We are doing investments in those ones, and this is something that, when you re-evaluate, this will take place. And then finally, €1 million related to restructuring. It's good to note that structures are restructurings, items that impact us in the future, not the demand-facing restructurings. And then finally, we have €4 million in the strategic projects, which we have been communicating earlier that we have, and we have guided how much annually is coming. This is slightly front-heavy now, facing a bit more into one than I was anticipating. So all in all, then we end up in the reported EBIT of 26.6 million euros. If we then go deeper into the healthcare services, margins are on a historically good level. So if we take any period of time and if we look at the Q1s of the history, the actual EBITDA and EBIT margins are solid, but obviously they are coming materially down. So we come into the discussion of relative weakness and absolute weakness. And then if we look further, Further, where this is coming, this is coming from demand. The visit growth is minus 9.6, and then everything else is basically flat. The visit growth, we will double-click that one on the next slide, but basically low morbidity impacts us through two different parts. We have the less appointments and weaker mix, as the diagnostics are lesser than in a higher upper respiratory area. disease situation. And then obviously the occupational health care has been contributing to that one. At the same time, as said, we are continuously adjusting for the lower demand and we have also during April announced statutory negotiations towards the demand situation. And However, of these ones, once again, in absolute terms, we are in a good place, and we will continue to invest, for example, digital transformation like we last played. Then looking at the patient visits, we have the same factors we have been now going through in a couple of different quarters. We have the seasonality. We do know that we have some 43,000 fewer upper respiratory diseases than previous year. This is part of normal variation and changes annually. This is the lowest prevalence since the COVID pandemic, if we take take it on the curves. Then if we look on the occupational health, it is very good to note, like Ville said, that we are now minus 5% in the connected employees, but it is now bottoming out, or has bottomed out. Then the underlying impacts in there are still the same. We have the macro component where there is less less employees, and then in the dire times, employers are spending less into employee well-being. And then we have the actual part where we have the ongoing strong program to address this one. But at the same time, the connected employees and the large account sales cycles are longer, so we are getting back on growth in the second half of this year. Public sector has been now bottoming out like we see that this is not, it's a miniscule bar in the chart and consumer is having positive momentum in the total supported by the Kela 65 and general tendencies are there. If we then take a segue with that one to the portfolios, we already now see that in the consumer part the dental business has been actually the best performing in relative terms of our businesses they are basically flat while other modalities have been clearly down this is a positive and then hopefully reflecting the future demand environment also We have then to note that in the portfolio numbers, we have the divestment of child welfare is visible in the bar other in here. Outsourcing is down 50%. This one we have known. The contracts are expiring and ending. Staffing is still having negative momentum in the welfare being county market, but also that one is now little by little stabilizing out. Dental assets. positive in relative terms in the performance, and we have announced the Hohde acquisition. That one is progressing well in a very good and positive dialogue with the authorities, and we are expecting the closing in the second half, and now based on the current visibility, it looks like it will be rather third quarter than fourth quarter, but obviously in these processes, there are variables that are beyond our control, but as said, solid... positive dialogue with the authorities, and if I would need to guess, it would be rather in Q3 closing than in Q4 closing. Going to Sweden, we are having a weak market. It is a continued weak market, and Sweden as an export-oriented nation is also having their share of the market environment. At the same time, it's good to know that our efficiency is in place. We have the EBITDA margin is now improving, absolute numbers 50% up, give or take. almost 60. Obviously, within our scale, that is peanuts in the total absolute numbers, but it's signaling that we are going to the right direction. If we then look beyond the efficiency, our next battle in here is the growth, and we already now see that our connected employees are increasing significantly. But at the same time, the behavior is similar by the employers as in Finland, so their behavior is dampened by the weak macro. But we have the means and the tools for growth in here, and we are confident that this will improve as we have iterated many times earlier. When talking about investments, we continue our investment cycle. We are now at 56 million on the LTM. I think that it's good to highlight from here that what we are doing is facing the real world. It is in production. It is in use. brightest investments ella it's the user interface for professionals it's already live we have been rolling it out to wider user groups in with improved functionalities and we are seeing continuous growth on the usage rate so this is live this is not something that happens at at the back office, and then one day comes somewhere. We are doing this one. The same applies to our joint venture MedHealth. We have in March rolled out this to customers. We have paying customers on this one, and we are continuing this one. So what we are doing is already now impacting us positively. If we then look on the balance sheet, We continue to have a positive balance sheet position. Our net debt to EBITDA is at 2.4. It has been increasing due to weak cash flow in Q1 and reduced profitability in Q1. But if we double-click that one, we are in a good component. And on the cash flow perspective, it is good to note that how our cash operates, first of all, we are a negative net working capital company. which is obviously positive from balance sheet perspective, but when the revenues decline, our cash flow also weakens because we don't actually release networking capital, we increase it. So that one is impacting us negatively. Then the second component on the cash flow is that if you look on the taxes paid now in Q1, we paid taxes from the record profits of 25, and that is having a negative impact on the cash flow. So all in all, our balance sheet is strong. We can continue to invest. We are not limited by the balance sheet. But at the same time, we are working on the cash flow, and the key component in there is going back on cross. Then before going to guidance, let's take a quick view on the market environment. First of all, if we look at the red arrows, they are all pointing down. This is weaker than we originally expected in February. We have had negative momentum through all periods. payer groups, and then we have had incidents in the world that are also impacting, for example, the consumer confidence that Ville was showing, now referring especially to the Iranian war. So the market environment in Q1 has been exceptionally big. However, then if we look on the next 12 months and we look further the outlook, actually the arrows are the same we had in February, and based on the data we have, we believe that the bottom has been seen. We do know that public sector, both in portfolio businesses and healthcare services, is on a lower level. They are still having stickiness in the system, but little by little, it will improve over time. If we then look at the consumer market, we have the dental is already performing well. As stated in relative terms, it was the best performing payer group and discipline and then looking forward we have the Kela 65 we have recently heard the news on the widening of the scope of Kela 65 and widening the scope of the services within Kela 65 which are positive insurance market continues to be in a positive momentum and then we have Sweden which still is having positive macro macro forecasts slightly coming down compared to the February post-Iranian war, but they are still positive. So if we look at the market momentum, we believe that the market will improve. Then at the same time, we do know that this is tilting toward second half and the latter part of that one. So if we think about the developments, Q2 will definitely be difficult. Q3 is always seasonal low, and then Q4 is the place where we would see the impacts. And with these ones, we reiterate our guidance. We expect full year 26 adjusted debit to be 135 to 165 million euros. The estimates are based on the gradually improving demand environment, as explained earlier, and normalization of the upper respiratory infections in the second half, and as stated, profitability in the first half is expected to be below the first half of 2025. Then, further to that one, it is good to note that our scenarios at the moment are pointing rather below midpoint than above midpoint of our guidance. So all in all, We have a difficult first half, but we have a strong, robust and efficient motor, and we are investing in the future, so we are confident that we are also delivering with those investments. With these words, thank you, and let's go to Q&A.