Terveystalo Oy Class A · OMXHEX:TTALO
Terveystalo Oy Class A — H1 2023 Earnings Presentation
24 slides from Terveystalo Oy Class A's earnings presentation, July 2023
Slide 1: Terveystalo Group H1 2023 Results
Terveystalo Group H1 2023 Results VILLE IHO, PRESIDENT & CEO JUUSO PAJUNEN, CFO
Slide 2: Welcome
Welcome AGENDA TODAY Ville Iho, President & CEO • Financial & operational highlights • Progress of the Alpha profit improvement program Juuso Pajunen, CFO • Financial performance analysis • Progress against financial targets • Outlook & guidance 2 FOOTER
Slide 3: Clearly strengthened profitability across segments
Clearly strengthened profitability across segments Margin uplift progressing according to plan in all segments Alpha on track: ~EUR 40 mill run-rate impact at the end of Q2 Supply in balance with the demand, the seasonal variation in demand is normalizing 3
Slide 4: Progress according to plan in Q2
Progress according to plan in Q2 Record-strong customer Q2 2023 Revenue (EUR) satisfaction* 322.4 Mill. NPS 86 +1.3% y-o-y 3 month rolling Q2 2023 Adj. EBITA (EUR) Engaged employees* 28.5 Mill. eNPS 23 +18.1% y-o-y H1 2023 Q2 2023 EPS (EUR) Physical appointments** 0.06 1.1 Mill. -32.3% y-o-y +2.3% y
Slide 5: Margin uplift progressing as planned in each segment
Margin uplift progressing as planned in each segment Set targets for each business segment Profit improvement program on track to deliver over EUR 30 Mill. P&L Healthcare Portfolio Sweden impact in 2023 services businesses €235 10% €69m 3% €25m 6% Q2 Revenue Q2 Adj. EBITA Q2 Revenue Q2 Adj. EBITA Q2
Slide 6: New Government program offers opportunities for private provision growth
New Government program offers opportunities for private provision growth KEY OPPORTUNITIES • Increase in Kela reimbursement Care Dismantling of • Less legal restrictions for private provision 1 guarantee outsourcing High restrictions • Broader scope of private provision funding Kela 2 3 Potential re
Slide 7: Our AI-supported self-assessment tool directs the patient to the right service, expert, and channel
Clinical Quality Highlight Our AI-supported self-assessment tool directs the patient to the right service, expert, and channel as the first fully integrated MD software in the market 7
Slide 8: Financial performance
Financial performance Juuso Pajunen, CFO 8 FOOTER
Slide 9: Underlying margin improvement continued in all segments
Underlying margin improvement continued in all segments Margins developing favourably across segments Successful entry into the bond market with our first Sustainability-linked Bond Guidance for 2023 unchanged 9
Slide 10: Revenue growth driven by price increases and strong demand in brick-and-mortar appointments
Revenue growth driven by price increases and strong demand in brick-and-mortar appointments 5,1 1,1 14,6 6,9 322,4 0,5 1,0 0,3 0,6 0,1 318,2 Healthcare services Portfolio businesses • Outsourcing declines due to • Loss of Covid-19 related the ending of contracts • Sweden growth revenue partly off-se
Slide 11: Adjusted EBITA impacted by a decrease in COVID-19 testing, all segments improving
Adjusted EBITA impacted by a decrease in COVID-19 testing, all segments improving 28,5 • In Healthcare services, EBITA was impacted by: 1,4 • Sales mix developing positively while loss of COVID-test revenues still impacting negatively 0,8 • Price increases compensated for the cost inflation impact 0
Slide 12: Performance continued to improve in all segments
Performance continued to improve in all segments Healthcare services Portfolio businesses Sweden Revenue (MEUR), Adj. EBITA % Revenue (MEUR), Adj. EBITA % Revenue (MEUR), Adj. EBITA % +5% -8% 250 235 12 80 74 10 30 -2%* 10 224 10,0% 70 69 25 25 9,7% 25 200 10 8 8 60 30 6,3% 23 129 137 20 150 8 50 6
Slide 13: The normalisation of the sales mix, price increases, and progress of the profit improvement program
The normalisation of the sales mix, price increases, and progress of the profit improvement program improved profitability y-on-y REVENUE, MEUR AND ADJUSTED EBITDA*-% ADJUSTED EBITA*, MEUR AND % +1.3% 327.5 329.7 334.8 341.1 318.2 322.4 41.9 +18.1% 39.3 38.9 38.2 279.7 278.7 275.3 273.1 276.4 36.5 2
Slide 14: Overall capex decreasing, more investments to premises and equipment
Overall capex decreasing, more investments to premises and equipment LTM GROSS CAPEX, MEUR AND %- OF REVENUE 59 58 58 4,7 4,6 4,6 4,5 54 4,5 53 4,1 4,1 4,2 48 3,9 3,9 48 3,8 46 3,7 3,5 3,4 26 40 41 32 30 38 38 23 37 29 19 19 35 25 18 17 21 20 19 19 22 20 18 19 18 19 21 14 13 14 16 13 12 14 7 7 7 6 7
Slide 15: We maintained strong cash flow, solid balance sheet and credit profile
We maintained strong cash flow, solid balance sheet and credit profile OPERATING CASH FLOW (LTM), MEUR NET DEBT/ADJUSTED EBITDA (LTM) GROSS CAPEX (LTM), MEUR 195 189 3,8 175 176 3,3 3,1 3,2 153 150 152 3,0 142 141 143 2,5 2018 2019 2020 2021 2022 Q2 2023 -35 -37 -41 -48 -54 -53 -48 -59 -58 -58 Q1 Q2
Slide 16: Sustainability-Linked Bond
Sustainability-Linked Bond • Terveystalo has established a Sustainability-Linked Financing Framework under which Terveystalo issued a senior Loan type: Senior unsecured sustainability- unsecured sustainability-linked bond of 100 MEUR linked notes • Broadened source of funds Principal amount: EUR 100
Slide 17: Strong fundamentals, guidance remains intact
Strong fundamentals, guidance remains intact FINANCIAL TARGETS GUIDANCE FOR 2023 • Terveystalo estimates its revenue for the full year 2023 to Growth grow (2022: EUR 1,259 million) and its adjusted EBITA at least 5% annual growth in revenue margin to be between 9.1% and 10.1% (8.4% in 2022). • Estim
Slide 18: terveystalo.com
Terveystalo MEANINGFUL MATTERS terveystalo.com
Slide 19: Appendix
Appendix Terveystalo
Slide 20: The outsourcing contract portfolio will shrink in the coming years as old contracts expire
The outsourcing contract portfolio will shrink in the coming years as old contracts expire CONTRACT VALUE INCLUDING OPTIONS, OLD OUTSOURCING CONTRACTS 122 Contracts Options 81 78 1 1 60 61 122 1 19 43 80 77 59 20 20 42 4 23 16 2022 2023 2024 2025 2026 2027 2028 20 FOOTER
Slide 21: Cuts to discretionary spending and profit improvement program combat cost increases
Cuts to discretionary spending and profit improvement program combat cost increases M€ 4-6/2023 4-6/2022 Change % 2022 Revenue 322.4 318.2 1.3 1,259.1 Other operating income 1.0 0.7 48.4 2.7 Purchase of materials -10.7 -10.9 -1.9 -44.1 Change in inventories 0.2 0.7 -73.6 0.2 External services -124.4
Slide 22: Key figures
Key figures Terveystalo Group, MEUR 4–6/ 4–6/ Change, % 1–6/ 1–6/ Change, % 2022 2023 2022 2023 2022 Revenue 322.4 318.2 1.3 663.4 647.9 2.4 1 259.1 Adjusted EBITA * 1) 28.5 24.1 18.1 64.9 63.1 3.0 105.2 Adjusted EBITA, % * 1) 8.8 7.6 - 9.8 9.7 - 8.4 EBITA 1) 25.0 22.5 11.2 52.0 60.7 -14.4 95.9 EBIT
Slide 23: Sustainability-linked Financing Framework – KPI 1
Sustainability-linked Financing Framework – KPI 1 KPI 1: Proportion of relevant occupational healthcare patients referred to short-term • Terveystalo is a forerunner in building low-threshold mental health psychotherapy treatment1) services for companies - these services have radically reduced sickn
Slide 24: Sustainability-linked Financing Framework – KPI 2
Sustainability-linked Financing Framework – KPI 2 KPI 2: Average Net Promoter Score (NPS)1) Rationale: The NPS is Terveystalo's most important measure of the quality of the customer experience. Terveystalo aims to stand out by providing an excellent experience in all customer encounters. The company