Terveystalo Oy Ord

Good morning and welcome to Terveystalo's Q3 2026 results webcast. My name is Siri Markula and I'm responsible for investor relations and sustainability at Terveystalo. Today we will go through our third quarter results and highlights with our CEO Ville Iho and our CFO Juuso Pajunen. After that we will provide you with a short update of our ARC strategy execution and our strategic objectives. You will also meet our new SVP Oral Health Ville Pesonen. After the presentations, there will be time for your questions. But now let's start with the third quarter highlights. Over to you, Ville.

Thank you, Siri. And good morning. Let's dive straight into the highlights of the quarter. We have today plenty of things to cover, but briefly the highlights and lowlights of the quarter. Obviously, the lowlight of the quarter was muted demand environment, which can be seen in our volume development and hence decline in revenue, which is roughly 6%. and that dropped through to our EBIT also. Even though our service delivery and ops have been fighting hard to adjust to muted demand, we can see clearly now the operating leverage working to negative direction for us and EBIT coming down. We are positive, of course, also during the quarter. We have positive development in our dental services, which we will cover thoroughly today. We are progressing with our arc strategy. We are pushing new products into the market. And we are well positioned for the future as we take the next step in our execution and in our journey. Let's double click on this muted demand environment. We have shown this picture with different segments and underlying sort of factors impacting the demand for quite a couple of quarters. Consumer demand was actually showing positive indications earlier, but especially September took a dip down in our demand. And it can be also seen in the consumer confidence, which went down during September after some months of positive trend. Our biggest business suffered from a decline in occupational healthcare demand and visits, both in preventive and in health services, healthcare services. and demand and market is clearly down. We have made some adjustments to public statistics. There are some discrepancies in the data which are showing healthcare appointments in occupational healthcare dipping 10%. Our management adjustment says that it's actually 5%. But anyways, it is still negative and can be seen in the environment and in our numbers. Then finally the number of employed people in Finland is stable, no clear uptake just yet. And sort of the meltdown within the current agreements and current customers in occupational health care has been visible throughout now a couple of quarters. and that still continued to a certain extent. Of course, with the more positive trends now in the economy, we are expecting this one to start correcting itself and impacting also our numbers positively going forward. Negative demand environment is seen in all of our segments. In negative way, healthcare services took a clear dip down, also portfolio businesses. But within portfolio businesses, of course, we have a good news story with Denta, which we'll discuss today and present our future view on that very important new growth vector for Terveystalo. Sweden still a very muted demand environment even though we are winning in market share there. All in all sort of a disappointing quarter from terveystalo point of view but still underlying demand Going forward to coming years, next year and 28, underlying trends, demography will provide ample amount of demand for our services. We just need to adjust to the new expectations from our customers, be it public, be it corporate, or be it private or insurance customer. Actually, there's a lot of positives within our development inside Terveystalo. And there's one clearly negative that has been taking the numbers down during the last couple of quarters. And that's obviously our biggest demand driver, occupational health care. In that area, we have worked hard in renewing our services, in renewing our sales activities, account management activities, and we are making clear progress, especially when it comes to large accounts. So there we are growing again with large customers. There's still a lot of work that we need to do with the SMEs. to repackage our services to make them easier to buy, use and pay for. But we are making a turnaround here. We expect a number of connected employees to start growing again during first quarter 2027. Healthcare requires transformation from customer's point of view. Healthcare services companies are only sort of aggressively waiting for patients to pop in for a doctor visit is sort of past history. We need to reach to the customer to look at the actual customer needs and different ways we can help our patients and customers on the way. We have been planning with our Arc Strategy new packages, new type of services. We have now launched first pilot in continuous care modality, highly digitally driven continuous care service offering under WellBe brand. And that's the first service that we are providing through that platform is obesity management. It's a pilot phase, but we believe that this type of new services will be answering the developing and increasing customer demands. We will increase services, this type of services. We will launch the final platform for obesity management during Q4 in the piloting phase. We are testing, we are making trials for obesity. Acquiring customers, what type of service design changes we need to do. But this is part of the future. This is part of our strategy execution, which we will make a deep dive later during the presentation. With this one, I will, for the final round, actually give floor to CFO Juuso Pajunen.

Thank you, Ville. So thank you all. As Ville said, this will be my final quarterly result with Terveystalo number 16 in total after four years with the company. So thank you all stakeholders, investors, analysts for watching my face for these releases and obviously in other meetings. But let's go to the quarter three. So all in all if we look this page one can be only disappointed. In each and every KPI you see the negative sign in front of those ones and it's absolutely not something that we can be happy with. The market was challenging and during the quarter we saw decline throughout the market and within our services in public and private markets. Occupational health was especially challenged with the less connected employees and the lower visit per employee ratio. But at the same time, if we look a bit underneath the hood, we were able to reduce the variable costs at the pace of the decline of revenues and protect our profitability. It has been actually a good achievement, but in a seasonally low quarter, in any case, the fixed expenses also pushed through and the profitability is reduced. Then on a positive note, we closed the Hohto transaction and we have successfully started the integration and you will hear a bit more on that one later. Today. So looking at the whole group, the lower revenues were impacting the profitability despite the efficiency actions we have taken. Every segment declined. Healthcare services were pressured by the occupational health portfolio businesses due to outsourcing contracts, but the positive movement in dental supported the revenues. Sweden had a slow start after summer, which is visible on both the revenue and EBIT. As said, we were successful on protecting the profitability with defense in the variable costs. And finally, the adjustment items, they include mainly M&A-related topics on Hohde acquisition, with the biggest item being the transfer taxes within that 4.1 million. Then comes the advisory fees related to process, and everything else is small potatoes in that number. Looking to healthcare services, lower revenue and the changes in sale mix were impacting the profitability. All in all, the market was weak. Morbidity was below previous years on 15%. You will see a bit more details on the following slide on that one. and the start of the summer in occupational health was also quite slow. At the same time when the visits were on a low level it's good to note that our sales mix was weaker than usually which is seen especially in the diagnostics and especially within diagnostics in the laboratories and that one pushed the column services and sales mix and pricing to being negative during the quarter also. If we then go on the volume development, that continued to be challenging. The main contributors for the changes in visits remained pretty much the same as in previous quarters. Morbidity was low during the quarter, 15% down compared to previous year. At the moment, we are having our medical leadership forecast for the full year points out that in the Q4 morbidity starts to increase and the total levels during Q4 are above previous year Q4 levels. We are assuming the peak to happen late November, early December, but as you all understand, these forecasts are based on best information today and are subject for volatility. In occupational health the story was continued but the decline is stabilizing and like Ville has explained we are progressing especially with the large accounts and now turning our eyes more and more into small accounts. Out-of-pocket rent that was during summer and immediately after summer positive was broken in September even though it's supported by Kela 65. Those visits are now also in the comparable numbers from previous years. So all in all, combined consumer insurance demand was actually stable during the quarter, but the trend that we saw during summer was not continued during September. And at the moment, we are evaluating how it goes to Q4. Portfolio businesses, outsourcing contracts, revenue declined as expected. As you know already, these are nowadays margin contributing. So when we are reducing this or this revenue is reducing, it has an impact on EBIT also. On a positive note on public sector, we have now seen that especially in staffing services, the volume is growing. However, the price level is inherently lower than a couple of years ago. Dental is the bright spot. We have both organic growth within the terveystalo services and then we have added Hohde to revenues which has contributed some 5.5 million euros on total revenues. And as you see 6.2 million up, 5.5 of Hohde, you see that we have a healthy organic growth also underneath in the terveystalo operations. The column other includes divestment of child welfare services. that was announced earlier this year. In Sweden, revenues have been pressured by the slow macro and market. The start of the summer was slowish and in consulting world that one of course impacts quite quickly on the revenues. If we take comparable currencies, EBITDA was actually improving year on year, but on euro notes it was slightly down both in absolute and then relative terms. Going forward to balance sheet, our cash flow continues to track income statement steadily. So the decline that we see year on year basis or LTM basis is pretty much what we have lost on the profitability side and then from the Q1 tax outpayments from a strong 25 profits. Net debt to adjusted EBITDA at 2.9 reflecting now the Hohde acquisition and now we are pretty much within our financial target of 3.0. Going to see the market, the demand environment was challenging in Q3, weaker than we originally expected during the summer. The change in there is mainly on the consumer market. That, as explained, didn't behave post-summer as we were expecting and as all of the trends pointed out. If we then look for the next 12 months picture, it has not materially changed. We do see that there are positive development expected in the consumer and insurance market, especially in the dental, where we are continuing our solid performance. As said, this was the bright spot for the for the quarter in any case. And then Sweden, where we are net positive and capturing market share, we are expecting to little by little improve also from the market perspective. So all in all, we are expecting gradual improvement during the next 12 months. Then going to guidance, you heard our updates from yesterday or most likely have seen that one. So we have updated our guidance for 2026. We expect the full year 2026 adjusted operating profit to be between 110 and 120 million euros. January-September was clearly below the levels of and the demand development has been weak. Now within this guidance we have taken into the weak demand environment post-summer into account and we are not expecting material improvements in the market conditions for Q4 and we are expecting the challenging Thank you very much. anything from Silma-Asema or any other significant acquisitions. On the Silma-Asema we are progressing with the close dialogue with the competition authorities and we have communicated during summer closing to take place either this year or Q1 next year as the time close by this year closing gets more and more less probable or less and less probable if I put it that way. Then with these words I would like to invite our CEO Ville on stage to update you on the strategy.