Terveystalo Oy Class A · OMXHEX:TTALO
Terveystalo Oy Class A — Investor Day (September 2020)
95 slides from Terveystalo Oy Class A's investor day presentation, Sep 2, 2020
Slide 1: Disclaimer
Disclamer This document and the information contained herein is being provided solely for information purposes. This document includes forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,” “estimate,” “will,” “should,” “could,” “aim,” “target,” “might,” or
Slide 2: Terveystalo - Leading Nordic platform for health and wellbeing
Terveystalo - Leading Nordic platform for health and wellbeing Capital Markets Day 2 September 2020
Slide 3: Introducing today's speakers
Introducing today’s speakers Ville Iho Eeva Nyberg- Petri Bono Oksanen M.Sc. (engineering), President Ph.D., Applied mathematics. M.D., Ph.D., Chief Medical and CEO since December 2019. joined Terveystalo in 2016. Officer since 2019. Prior to Prior to joining the company, Prior to being appointed jo
Slide 4: Introducing today's speakers
Introducing today’s speakers Niki Kotilainen Nora Härme Ilkka Laurila M.Sc. (engineering), joined MSc (Econ), Director of Pricing MSc (Econ), MSc (Forestry), Terveystalo in 2015. Prior to at Terveystalo since 2020. joined Terveystalo in 2012. being appointed Director, 15 years of experience from Pri
Slide 5: Agenda
Agenda 12:00−12:40 Covid-19 is a transformation test for healthcare, Petri Bono, Chief Medical Officer & Ville Iho, President and CEO Get better 12:40−13:20 healthcare for all with a scalable platform for growth, Ville Iho, President and CEO 13:20−14:00 solutions with the smartest platform in the in
Slide 6: Covid-19 is a transformation test for healthcare
Covid-19 is a transformation test for healthcare Ville Iho, President and CEO & Petri Bono, Chief Medical Officer
Slide 7: Covid-19 reporting dashboard
https://avoinraportointi.terveystalo.com/korona/ 7
Slide 8: Covid-19 has accelerated the long-term trend of focus on health and wellbeing
Covid-19 has accelerated the long-term trend of ever-increasing focus on health and wellbeing • Google searches for health and related subjects increase exponentially • Wearables and apps gain traction • Mental Health a serious concern • Digital health surges Source: The Next New vol 3 Finns in chan
Slide 9: …and caused a massive acceleration in digital transformation
…and caused a massive acceleration in digital transformation Source: McKinsey & Company Telehealth: A quarter-trillion-dollar post-COVID-19 reality? 9 terveystalo.com
Slide 10: Despite our small home market, we are already a large player in digital health
Despite our small home market, we are already a large player in digital health Digital visits per capita, Digital visits, home market thousand 0.049 885 270 0.010 Visits Visits outside US Visits per capita, H1/ 2020 US visits per H1/2020 capita, H1/ 2020 H1/2020 Market value, €1.32Bn €16.94Bn €Bn So
Slide 11: Best value for the customer is often a hybrid of physical and digital services
Best value for the customer is often a hybrid of physical and digital services Digital care often happens episodically Seamless hybrid service model is required to integrate digital health to end-to- end care paths and holistic view of the patient 11 terveystalo.com
Slide 12: Our platform passed the Covid-19 transformation test
Petri Bono, Chief Medical Officer Our platform passed the Covid-19 transformation test terveystalo.com
Slide 13: Terveystalo has performed more than 70,000 Covid-19 tests
Terveystalo has performed more than 70,000 Covid-19 tests: Care path fully digitalized We publish daily data on the implementation of tests and diagnoses at https://avoinraportointi.terveystalo.com/korona/ Covid tests 2020 13 terveystalo.com
Slide 14: A true 2nd wave or a 2nd wave only in Covid-19 testing?
A true 2nd wave or a 2nd wave only in Covid-19 testing? The future of Covid-19? Source: Moore K et al, University of Minnesota, Cidrap 2020 14 terveystalo.com
Slide 15: We are ready for evolving test modalities
We are ready for evolving test modalities 15 The Company makes no representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information contained herein. The Company has not entered in any agreement with Abbott in relation to the information contained herein
Slide 16: We successfully ramped up our digital appointments
We successfully ramped up our digital appointments to meet the new demand Digital appointments per week, thousands https://avoinraportointi.terveystalo.com 16 terveystalo.com
Slide 17: Efficient and effective care with Terveystalo platform
Efficient and effective care with Terveystalo platform terveystalo.com
Slide 18: Value based healthcare improves outcomes and reduces costs
Value based healthcare improves outcomes and reduces costs 18
Slide 19: Terveystalo follows international best practices to measure outcomes
Terveystalo follows international best practices to measure outcomes outcome CLINICAL OUTCOME MEASURES AND PROCESS MEASURES QUALITY MEASURES • Swift processes • ICHOM • Eg. access, lead-time, errors, use of • International standards resources • Comparable clinical outcome measures • Evidence based m
Slide 20: AI already in use for detecting individuals at risk
AI already in use for detecting individuals at risk In every appointment, data is collected into EMR Digital care plans (OmaSuunnitelma) are created to patients in risk of diabetes. OmaSuunnitelma is visible AI combines and analyzes to patient via Terveystalo’s the data with over 100 OmaTerveys app
Slide 21: Award-winning Oma Terveys mobile app
Award-winning Oma Terveys mobile app • Completely revamped user experience developed in collaboration with our customers • Digital appointment access in ~7 seconds: • Referral to the laboratory • Chat and video appointments • Symptoms testing • Communication with your own nurse and doctor • Health i
Slide 22: Cost savings and effective care with mental health care paths
Cost savings and effective care with Terveystalo mental health care paths BDI depression survey results Corporate customer Corporate customer at normal level post therapy No. 1 No. 2 25 20 Sick leave due to mental 15 disorders decreased by -31% -35% -12.6% 10 5 Mental health Total number of 0 relate
Slide 23: Improved outcomes with personal health plans
Improved outcomes with personal health plans (Oma Suunnitelma): A proof of concept % of patients who saw improvement in their risk factors 76% 69% 68% 64% Cholesterol LDL Cholesterol Blood pressure, dia Blood pressure, sys Individuals, who had a personal health plan (OmaSuunnitelma, OS) made Individ
Slide 24: Get better healthcare with scalable platform for growth
Get better healthcare with scalable platform for growth Health systems need to adapt and • Covid19 has resulted in a health care provider crisis that is likely to persist into respond to myriad of pressures new normal. • Covid-19 crisis will catalyze lasting shifts in care delivery, particularly tow
Slide 25: Q&A
Q&A Terveystalo Get better.
Slide 26: Get better healthcare for all with an integrated platform model
Get better healthcare for all with an integrated platform model Ville Iho, President and CEO
Slide 27: Terveystalo today is the leading healthcare platform in Finland
Terveystalo today is the leading healthcare platform in Finland with well balanced business Integrated care chains H1 2020 Revenue 1,031 by payor group, % EUR Mill. in Revenue 28,0 11.2% 42,5 Adjusted EBITA margin 29,5 300 Corporate Private Public Clinics across Finland 27 terveystalo.com
Slide 28: Platform business model matches customers with private practitioners
Terveystalo’s platform business model matches customers with private practitioners and integrates episodes into effective care chains Terveystalo platform with data driven care models Personnel Excel in customer Integrate experience & care chains, engagement optimize availability of right experts Pr
Slide 29: Our platform works: ~200 acquisition targets successfully integrated
Our platform works: ~200 acquisition targets successfully integrated Acquisition Acquisition of Pulssi Acquired by EQT Expansion into Acquisition of Attendo Dental Services of Diacor health care Launch of Oma Terveys Online Acquisition of ODL Platform Personalize Automate & • Significant investments
Slide 30: We have grown profitably
We have grown profitably with industry leading margins: 23% pa. Adj. EBITA growth between ‘14-’19 160 1 200 140 1 031 1 000 +17% 115 120 745 88 800 100 690 80 547 73 600 474 506 57 60 51 42 400 40 200 20 0 0 2014 2015 2016 2017 2018 2019 Revenue Adj. EBITA 30 terveystalo.com
Slide 31: We have grown organically ~3 times faster than the market
We have grown organically ~3 times faster than the market and 8 times faster overall Terveystalo CAGR 2014-2019 Terveystalo’s traditional addressable market 2010-2019E, €bn Total market +2.1% 17% 3.5 3.6 3.7 3.5 3.5 3.3 0.7 0.7 Public 0.5 0.6 0.7 0.5 Terveystalo CAGR w/o large M&A 2014-2019 1) 2.1 2
Slide 32: …while improving the performance of our platform
…while improving the performance of our platform 7 sec +9% NPS 83 24/7 Delivering on synergies High customer satisfaction Improving access to care Projected cost synergies Net Promoter Score at all time GP Chat 24/7 with an average exceeded by 9% on average in high waiting time of 7 seconds acquisit
Slide 33: Two key value drivers: operating leverage and ability to cross sell
Profitable growth has been based on two key value drivers of our platform: operating leverage and ability to cross sell Operating leverage is a key driver Ability to cross sell and grow in value of profitability improvement adding services across the care chain Terveystalo’s business has significant
Slide 34: Our platform is built for private business but can serve public market
Our platform is built for private business but we can leverage it also for the public market Terveystalo platform Public outsourcing & staffing • Market leader with ~EUR 800 Mill. sales • Market #1-3 with ~EUR 200 Mill. sales Operating • Terveystalo clinics and 24/7 digital platform, fee for service
Slide 35: There are further opportunities for growth
There are further opportunities for growth Three sources of future growth 1. 2. Market Growth in 3. and share share of Continued growth wallet M&A 35 terveystalo.com
Slide 36: Next phase
Next phase
Slide 37: Digital will continue to transform health care
Digital will continue to transform health care and enable new solutions but also increase Healthcare trends expectations The distrustful Holistic health and Depleting Changing employee Customer centric The empowered Longer lives and consumer wellbeing resources expectations digital services consumer
Slide 38: Platform business model matches customers with private practitioners
Terveystalo’s platform business model matches customers with private practitioners and integrates episodes into effective care chains Terveystalo platform with data driven care models Personnel Excel in customer Integrate experience & care chains, engagement optimize availability of right experts Pr
Slide 39: Growing platform for health and wellbeing
Growing platform for health and wellbeing Market and share growth Grow share of wallet Continued M&A The smartest platform The customer’s health Selective M&A in the industry partner Opportunity: increase Opportunity: Expand to new Opportunity: Further conversion, profit per visit, markets with new
Slide 40: Get better healthcare with scalable platform for growth
Get better healthcare with scalable platform for growth Strong track record of profitable growth consistently beating rest of the market Asset light platform model with operating leverage and massive amount of customer data supporting profitability Updated strategy to distill the full commercial and
Slide 41: Q&A
Q&A Terveystalo Get better.
Slide 42: Get better solutions with the smartest platform in the industry
Get better solutions with the smartest platform in the industry Niki Kotilainen, Director, Operations & Nora Härme, Director, Pricing
Slide 43: Key takeaways: smartest platform in the industry
Get better solutions with the smartest platform in the industry: Key takeaways Terveystalo has industry leading • 11% EBITA margin in 2019, target 12-13% efficiency and operative margins Several market trends are • Customers are requiring new types of services (and contract) that also requires new t
Slide 44: Market trends influencing our operative model
Market trends influencing our operative model Selected healthcare trends and implications for Terveystalo's daily operations 1. Corporates look for cost discipline creates demand for new types of services (target pricing, fixed pricing, service vouchers, value-based pricing, …) and hence, new oper
Slide 45: The objective: most relevant and convenient service for the customer
The objective: To offer the most relevant and convenient service for the customer … regardless of time, place and channel, from the beginning to the end of the integrated care chain ? Smart scheduling directs the The client is referred directly to The customer is directed to their The client feels t
Slide 46: Our solution: the smartest platform in the industry
Our solution: the smartest platform in the industry that meets customer expectations in a scalable way Physician appointments Other professionals Customer System layers optimize who, what Laboratory with a and when Imaging need What does the customer need and how channel channel Digital Digital acut
Slide 47: System layers optimize the customer flows
1 System layers optimize the customer flows System layers optimize who, Key actions for Terveystalo what and when What does the customer need and how Build care need (self)assessment capabilities (incl. call center, chat bot, AI-based) acute is their need? Acquire / partner with relevant provide
Slide 48: Smart use of capabilities ensure resources for growth
2 Smart use of capabilities ensure resources for growth 1. Utilize technology in order to minimize the need of human work Smart use of 2. Allocate scarce resources in an optimal way capabilities 3. Build smart resourcing systems and models 4. Defend position as the 1. place for professionals to work
Slide 49: Care guidelines and Centers of Excellence drive care chains and visits
3 Care guidelines and Centers of Excellence drive care chains and visits Care Guidelines Centers of Excellence • National Current Care Guidelines are independent, CoEs consist of physical centers and virtual components evidence-based clinical practice guidelines. that manage care paths and provide t
Slide 50: Smartest platform -> Better customer experience and operational efficiency
Smartest platform -> Better customer experience and operational efficiency ? 25-40M€ potential in >20M€ potential in bypassing 10-15M€ potential in improving 30-100M€ potential in more higher booking bottlenecks and prioritizing output per healthcare systematically managing care conversion% “premium
Slide 51: Improving profitability and driving growth with pricing
1 Nora Härme Improving profitability and driving growth with pricing terveystalo.com
Slide 52: Revenue management & pricing as a core competence
Revenue management & pricing as a core competence Revenue management & pricing is considered a core competence in industries with: • perishable inventory • restricted capacity • fluctuating demand from various customer segments • customer segments with differing needs & willingness to pay • intense
Slide 53: Smart application in healthcare has upside potential
Smart application in healthcare has upside potential for both the customer and the company Pricing is fundamentally about perceived value • Foundation of all pricing decisions is a solid grip of cost drivers & competition Value • Advancing towards value-based pricing requires a deep understanding of
Slide 54: Best practices from branded air fares can be applied to OHC offerings
1 Best practices from branded air fares can be applied to OHC offerings Potential to enhance Terveystalo’s OHC offering by • Clear descriptions focusing on benefits (vs features) Airlines offer a range of fare types to • Range of price points choose from, with different benefits, • Introduction of p
Slide 55: New pricing models advance the development of health partnerships
2 New pricing models advance the development of health partnerships Auto-renewing subscriptions Potential to leverage our wide health & reduce hassle wellbeing offering and existing large OHC and increase customer base to create a ridership in commuter traffic new loyalty-enhancing health partnershi
Slide 56: Making pricing into a true core competence
Making pricing into a true core competence for Terveystalo Ensure operative efficiency • Increase transparency into pricing data • Manage price lists, discount structures, transactional pricing • Clear roles and responsibilities Strategic approach to pricing development • Incorporate pricing into se
Slide 57: Key takeaways: smartest platform in the industry
Get better solutions with the smartest platform in the industry: Key takeaways Terveystalo has industry leading • 11% EBITA margin in 2019, target 12-13% efficiency and operative margins Several market trends are • We are developing a smarter platform that meets the customer demand in influencing ou
Slide 58: Q&A
Q&A Terveystalo Get better.
Slide 59: Get better for life with Terveystalo as your health partner
Get better for life with Terveystalo as your health partner Eeva Nyberg-Oksanen, Director, Strategy & PMO
Slide 60: The opportunity: Trend of health and wellbeing
The opportunity: Trend of Health and wellbeing terveystalo.com
Slide 61: Wellbeing market is polarized but demand for services grows
Wellbeing market is polarized but the demand for services grows 50% Finnish working-age people have some Some are becoming more and more interested lifestyle disease or are at risk of developing and aware of their overall health and wellbeing one • Healthy nutrition trends (e.g. Ketogenic diet, plan
Slide 62: Our offering consists of preventive care and wellbeing
Our offering consists of preventive care and wellbeing Large pool of wellbeing professionals Digital mental wellbeing services Mielen Chat • 24/7 chat with a nurse in Oma Terveys Physiotherapy Work ability coaching • Quick access and forwards to Mielen Sparri Psychologists, Massage psychotherapists
Slide 63: Monetizing proactive and holistic care requires comprehensive wellbeing offering
Monetizing proactive and holistic care requires comprehensive wellbeing offering • Preventive care is already at the core of Terveystalo’s occupational health business • Existing tools to collect data, identify individuals at risk, and a large selection of professionals to help people to proactively
Slide 64: Issues to be solved to engage private wellbeing customers
Issues to be solved in order to engage private wellbeing customers Low awareness of Factorylike High price image wellbeing services & remote High barriers for Internal Perception of purchasing communication & medical care change of mindset Source: Consumer interviews, spring 2019. 64
Slide 65: Digital engagement as a foundation for a continuous health journey
With digital engagement we provide a foundation for a continuous health journey Expanding digital Personalizing services Solving the bottlenecks platform to reach new based on of supply customers comprehensive data We will increase our presence We will actively gather data By proactively reacting to
Slide 66: App users spend >100% more on their health
App users spend >100% more on their health already today 1. Digital health is linked to higher customer engagement and overall use of services and better health outcomes 2. Active Oma Terveys app users spend >100% more than an average customer on their health Terveystalo currently has ~210,000 activ
Slide 67: Excellent results in proactive care with OHC customers
We have already delivered excellent results in proactive care with OHC customers 67
Slide 68: Significant, unrealized potential within core wellbeing services
There is still significant, unrealized potential within our core wellbeing services People categorized as “greens”, “yellows” and “reds” based on identified risk factors Evalua health survey analysis 2019 (N = 22 000)* 5% 11% 14% 17% 18% 30% 4% 53% 53% of the working 31% 28% age population has 46% 8
Slide 69: Current model and future model
Current model Data is the engine of personalization Appointments and Diagnostics, EMR data Questionnaires My Health, My Plan visits, EMR data Future model Questionnaires 3rd party partners, Diagnostics, My Health, Appointments and diagnostics My Plan visits, EMR data 69
Slide 70: Data is the engine of personalization
Data is the engine of personalization Questionnaires, My health & My Plan, My wearable data (all services for free) Health, My Plan Health Data from new services questionnaire including 3rd parties Doctor-centric data and wearable Consumer-centric data collection data collection Marketing data Marke
Slide 71: Activating our customer base to increase share of wallet
We can activate our customer base to increase the share of wallet Existing customers New customers Customers never visited Churned customers Visited within Visited within Terveystalo (ID in our system) 2-3 years 1 year 1.9 million 1.6 million 0.8 million 1.2 million Example: Terveystalo network reve
Slide 72: Lowering the entry barrier with new business models backed by digital
Lowering the entry barrier with new business models backed by digital Existing customers New customers Free services Low-entry services Fee-for-service Free content & advice, light surveys… self-diagnostics, referral-free laboratory, Interventions taking place mainly in validated surveys… digital ch
Slide 73: Taking a proactive role in promoting customer health
We change the industry standards by taking a proactive role in promoting customer health 01 02 03 We assist people in staying We make our services We ensure continuity of care healthy accessible to everyone The customer typically uses our services when We will foster continuous dialogue between We w
Slide 74: A platform is a winning one when the customer has an active part
A platform is a winning one, when the customer has an active part in it TERVEYSTALO 2025: TERVEYSTALO 2020 Empowering lifelong health and wellbeing Focus on traditional market, treating Customers have an active role in defining their people with health issues. Low market health goals and preferences
Slide 75: Get better for life with Terveystalo as your health partner
Get better for life with Terveystalo as your health partner There is still significant, unrealized • We already have a wide offering of preventive and wellbeing services to OH potential within our wellbeing customers that can be commercialized and packaged for private consumers in business addition
Slide 76: Q&A
Q&A Terveystalo Get better.
Slide 77: Get better EBITA - profitability leader in Nordic private health services
Get better EBITA - The profitability leader in the Nordic region in private health services Ilkka Laurila, CFO
Slide 78: Our updated financial targets
Our updated financial targets Since IPO 2020 onwards Growth Growth revenue growth of 6-8% revenue growth at least 5% annually Profitability Profitability Adjusted EBITA 12-13% of revenue Adjusted EBITA 12-13% of revenue Indebtedness Indebtedness Leverage ratio not to exceed 3.0 Leverage ratio not to
Slide 79: We have delivered on our financial targets
We have delivered on our financial targets Target: 6-8% revenue Target: 12-13% Target: Net debt/ Adj. Target: at least 30% growth Adj. EBITA margin EBITDA not to exceed 3,0 of net profit distributed +9% 827 115,1 3,8 +26% 0,30 106,9 745 690 0,25 87,7 2,8 2,7 0,20 73,0 11,8 0,20 10,6 11,2 0,15 0,13 3
Slide 80: …And kept our industry leading margins
…And kept our industry leading margins despite lower margin Attendo health care business 2019 Adjusted EBITA margin 11,2 Terveystalo Mehiläinen Ambea Medicover Attendo Humana Pihlajalinna Source: Company Annual reports 2019 80 terveystalo.com
Slide 81: Our strategic target: the profitability leader in the Nordic region
Our strategic target: The profitability leader in the Nordic region in private health services AT LEAST 5% REVENUE GROWTH AND 12-13% ADJUSTED EBITA The smartest The customer’s platform in the Selective M&A Operating leverage health partner industry • Grow share: • Grow market and share of • Scale an
Slide 82: Operating leverage continues to drive profitability
Operating leverage continues to drive profitability Existing infrastructure with significant capacity Significant Share of Fixed Costs % of Revenue Capacity Digital health services Key driver of Appointment Variable profitability Rooms costs Materials and services 46% improvement Imaging and
Slide 83: Continued selective M&A in three categories
Continued selective M&A in three categories Strengthening Growing market Growth in specialties scalable capabilities share in adjacencies Internationally scalable Cost synergies & scale Growth in new services capabilities that support our Segments where we have a Niche players in specialized strateg
Slide 84: Strong track record in creating value through M&A
Strong track record in accelerating growth and creating value through M&A in our platform Projected cost synergies exceeded by 9% in healthcare acquisitions,(1 significantly reducing pre-synergy acquisition multiples(2 from ~13x EBITDA to post ~6x EBITDA 1) Comparing budgeted expected cost synergies
Slide 85: Strategic growth drivers for our platform
Strategic growth drivers for our platform THE SMARTEST PLATFORM THE CUSTOMER’S IN THE INDUSTRY HEALTH PARTNER Bypassing New bottlenecks & services prioritization ~€ 50 Mill. >€ 20 Mill. New Higher customers conversion More visits ~€ 40 % ~€ 30-100 Mill. Mill. ~€ 25-40 Mill. Higher Higher Increase re
Slide 86: Strong cash flow funds growth, investments and increasing dividend
Strong cash flow funds our growth, further investments and supports increasing dividend 174 Dividend 40 distribution at Operating cash flow least 40% of IFRS 16 impact earnings 101 Free cash flow Investments to 70 generation growth 60 65 134 58 M&A to support strategy execution 2014 2015 2016 2017 2
Slide 87: The share of intangible investments continues to grow
The share of intangible investments continues to grow investment level stable at ~4% of revenue Gross capex, M€ and %- of revenue 45 45 4,2 4,3 4,5 4,0 4,1 40 40 4,0 35 18 3,5 29 30 18 30 3,0 25 5 2,5 10 20 2,0 16 19 15 14 1,5 15 10 1,0 5 6 7 7 0,5 3 0 2 2 1 1 0,0 2017 2018 2019 Q2.2020 LTM Intangib
Slide 88: Strong financial position and capacity for growth investments
Strong financial position and capacity for continued growth investments Leverage ratio below target Operational efficiency is reflected in the Net debt/adjusted EBITDA (last 12 months)* continuous decline of net working capital 3,8 3,4 6 3,1 6 8 2,8 5 90 102 83 70 -42 -51 -58 -117 -86 -147 -165 -177
Slide 89: The profitability leader in the Nordic region in private health services
The profitability leader in the Nordic region in private health services • Profitable growth with ~3x faster organic growth vs. market We have delivered on our promises • Industry leading profitability despite lower margin Attendo acquisition • More visits and higher share of wallet through increase
Slide 90: Q&A
Q&A Terveystalo Get better.
Slide 91: Conclusions and Closing words
Conclusions and Closing words Ville Iho, President and CEO
Slide 92: Our strategy
Our strategy Our Vision is to empower lifelong health and well-being. And therefore we fight for a healthier life, every day. Values Human being in the center We take responsibility for the health and well-being of our fellow human beings, for the opportunity to live a good life. We work together to
Slide 93: Terveystalo as an investment – platform for growth
Terveystalo as an investment – platform for growth in health and wellbeing Strong market Industry leader Preferred Strong platform Further profit growth drivers in private with growth improvement healthcare place to work opportunities potential An aging population and a high incidence of Operating
Slide 94: Thank you.
Thank you.
Slide 95: Get better.
Terveystalo Get better.