Terveystalo Oy Class A · OMXHEX:TTALO
Terveystalo Oy Class A — Q4 2022 Earnings Presentation
33 slides from Terveystalo Oy Class A's earnings presentation, February 2023
Slide 1: Terveystalo Group Q4 & Full Year 2022 Results
Terveystalo Group Q4 & Full Year 2022 Results VILLE IHO, PRESIDENT & CEO JUUSO PAJUNEN, CFO 1 FOOTER
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 • Market outlook 2 FOOTER
Slide 3: Solid revenue growth, profit improvement program well underway to address decreased profitability
Solid revenue growth, profit improvement program well underway to address decreased profitability • Q4 Revenue +2% y-o-y to EUR 334.8 mill. • Supply of appointments grew by 15% year-on-year in Q4 vs. 11% FY Profitability dampened by sales mix • Q4 Adjusted EBITA -29% y-o-y to EUR 29.7 mill, represen
Slide 4: Solid operational performance in 2022 - Supply strengthened; profitability addressed
Solid operational performance in 2022 - Supply strengthened; profitability addressed with the ongoing program Q4 2022 Revenue (EUR) FY 2022 Revenue (EUR) The preferred choice by customers and professionals 334.8 Mill. 1,259.1 Mill. +2% y-o-y +9% y-o-y CONTINUED HIGH CUSTOMER Q4 2022 Adj. EBITA (EUR)
Slide 5: Profit improvement program progressing as planned to reach financial targets and support long-term value creation
Profit improvement program progressing as planned to reach financial targets and support long-term value creation The program progressing as planned in our core business, aiming for industry-leading profitability in healthcare services Change in operating model to streamline the We made progress org
Slide 6: Profit improvement program progressing as planned; high confidence in reaching the targeted impact
Profit improvement program progressing as planned; high confidence in reaching the targeted impact IMPLEMENTED MEASURES ESTIMATED TO HAVE TARGETING EUR 50-MILL. ANNUALIZED AN ANNUAL RUN-RATE IMPACT OF EUR 11 MILL. RUN-RATE PROFIT IMPROVEMENT ON PROFITABILITY IN 2023 • Key achievements: • New operati
Slide 7: New operating model in full speed, 2023 financial reporting to follow the new structure
New operating model in full speed, 2023 financial reporting to follow the new structure Market leading Independent value Growth mid to profitability creation long-term Healthcare services Portfolio businesses Sweden Healthcare service Outsourcing Occupational health sales sales Staffing Dental Physi
Slide 8: Strong operational performance in 2022
Strong operational performance in 2022 +7% Y-O-Y +29% Y-O-Y HIGH CUSTOMER SATISFACTION INDUSTRY LEADING 0% Y-O-Y -33% Y-O-Y EMPLOYEE SATISFACTION THE FIGURES DO NOT INCLUDE SWEDEN 8
Slide 9: Our work to develop the effectiveness of treatment is strongly reflected in the results
Clinical Quality Highlight Our work to develop the effectiveness of Case Mental Health treatment is strongly reflected in the results SICKNESS ABSENCES RELATED TO MENTAL HEALTH DECREASED SIGNIFICANTLY AFTER BRIEF PSYCHOTHERAPY Terveystalo is a pioneer in building low- 11,7% threshold mental health s
Slide 10: We target stable dividends and an increase in total shareholder return
We target stable dividends and an increase in total shareholder return OUR POLICY IS TO DISTRIBUTE AT LEAST 40% OF 0,28 0,28 0,28 72% NET PROFIT IN DIVIDENDS 0,26 0,26 0,24 55% • A dividend of EUR 0.28 (0.28) per share is 0,22 0,20 proposed to the AGM, corresponding to 0,20 44% 147% (44%) of earning
Slide 11: Financial performance
Financial performance JUUSO PAJUNEN, CFO 11 FOOTER
Slide 12: Solid financials despite headwinds
Solid financials despite headwinds Solid revenue growth, EBITA • The full-year 2022 revenue was EUR 1,259 million, + 9% y-o-y impacted by sales mix and • The full-year 2022 Adj. EBITA was EUR 105.2 million, -25.4% y-o-y and increased costs 8.4% of revenue Disciplined financial strategy • Net debt/ad
Slide 13: Revenue growth mainly driven by appointments in Q4 and FY 22
Revenue growth mainly driven by appointments in Q4 and FY 2022 Q4 revenue (m€) Q4 revenue was impacted by: 7.3 (+2%) • Reduction of Covid tests by appr. 18 13 335 90,000 pcs 328 0 4 4 0 2 • Supply growth especially in appointments • Growth of underlying diagnostics from a low base compared to pre- Q
Slide 14: Weaker sales mix, cost inflation and public business weighted on profitability in Q4 and FY 2022
Weaker sales mix, cost inflation and public business weighted on profitability in Q4 and FY 2022 Q4 adjusted EBITA (m€) -12.2 Q4 EBITA was impacted (-29%) 42 negatively by: 6 0 3 30 • Reduction of Covid tests by 5 1 1 1 appr. 90,000 pcs • Inflation, especially related to energy and facilities Q4 202
Slide 15: Covid-19 testing volumes peaked in Q1 2022
Covid-19 testing volumes peaked in Q1 2022 thousands, pcs 250 230 500 335 -69% 200 178 150 136 131 126 121 112 100 77 74 50 40 41 17 3 0 2020 2021 2022 Q1 Q2 Q3 Q4 15 FOOTER
Slide 16: Q4 profitability weakened due to decline in COVID-testing, changes in the sales mix and increased costs
Q4 profitability weakened due to decline in COVID- testing, changes in the sales mix and increased costs REVENUE, MEUR AND ADJUSTED EBITDA*-% ADJUSTED EBITA*, MEUR AND % +2.2% -29.1% 329.7 334.8 327.5 318.2 41.9 278.7 39.3 38.2 38.9 270.3 279.7 275.3 273.1 276.4 257.4 240.2 32.3 30.9 31.5 234.0 19.2
Slide 17: Capex to intangible assets decreasing, more investments to premises and equipment
Capex to intangible assets decreasing, more investments to premises and equipment GROSS CAPEX, MEUR AND %- OF REVENUE 59 58 58 4,7 4,6 4,6 4,5 54 4,5 4,3 4,1 4,1 3,9 3,9 48 45 46 3,7 3,5 3,4 26 40 41 32 30 38 38 37 29 19 35 18 25 18 17 21 20 19 19 22 19 19 18 19 21 14 13 14 16 13 12 14 7 7 7 7 5 6 6
Slide 18: We are the digital leader in our industry
We are the digital leader in our industry INDIVIDUAL CUSTOMER PROFESSIONAL BUSINESSES CUSTOMER Terveystalo.com – over 2 million monthly visits POINTS TOUCH Terveystalo Online 2.5 mill. Suunta work ability Registered management Terveystalo App users SERVICES SHARED SERVICES STAKEHOLDERS INTERNAL Inte
Slide 19: 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 250 6 5,2 195 189 200 5 175 176 157 153 4,2 145 144 150 150 142 141 3,8* 4 127 3,1 3,2 3,0 100 3 2,8 2,5 50 2 0 1 Q1/20 Q2/20 Q3/20 Q4/20 Q1/2
Slide 20: Balanced debt maturity profile and diversification between funding sources
Balanced debt maturity profile and diversification between funding sources 250 EURm 200 150 100 50 0 1 year 2 years 3 years 4 years 5 years 6 years 7 years Loans from financial institutions RCF (Unused) 20 FOOTER
Slide 21: Progress against financial targets
Progress against financial targets 2022 Revenue 8.4% Adj. EBITA EPS & Dividend Net debt/ +9% y-o-y margin payout % Adj.EBITDA 3.2 CAGR CAGR 1 259 141 0,6 145 3,8 +13% +8% 1 155 0,5 0,5 3,2 3,5 1 031 986 115 3,1 3,0 88 102 105 2,8 73 12 12 0,4 0,4 2,5 745 11 11 690 10 72 0,3 8 44 37 31 0,2 2017 2018
Slide 22: Sound fundamentals, medium-term financial targets are unchanged
Sound fundamentals, medium-term financial targets are unchanged FINANCIAL TARGETS MARKET OUTLOOK* • Demand for health services continues to be strong. Growth However, demand is focused on short care pathways At least 5% annual growth in revenue and services, the growth of which is limited by supply.
Slide 23: Focus going forward
Focus going forward In our core business, we continue implementing the profit improvement program and aim for industry-leading profitability Portfolio businesses aim at independent value creation In Sweden, we aim for significant and profitable growth in the medium term 23
Slide 24: Save the Date: Capital Markets Day
Save the Date: Capital Markets Day IN HELSINKI, 10 MAY 2023 24 FOOTER
Slide 25: Appendix
Appendix Terveystalo
Slide 26: Q4 revenue growth driven by Sweden, corporate customers growing in share
Q4 revenue growth driven by Sweden, corporate customers growing in share Q4/2022 revenue breakdown, % Q4/2022 revenue breakdown, M€ 2% 8% 328 335 23 28 25 29 24 22 33 30 24% 41% 89 89 133 137 27% Q4/2021 Q4/2022 Corporate Public Corporate Outsourcing Service sales, OH and others Private Sweden and o
Slide 27: Well-being and digital continued to grow
Well-being and digital continued to grow WELL-BEING SALES, MEUR DIGITAL VISITS, THOUSANDS +22% +44% 35 11% 400 18% 30 350 25 300 250 20 200 15 150 10 100 5 50 0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022
Slide 28: 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 28 FOOTER
Slide 29: Cuts to discretionary spending and profit improvement program launched to combat cost increases
Cuts to discretionary spending and profit improvement program launched to combat cost increases M€ 10-12/2022 10-12/2021 Change % 2022 2021 Change % Revenue 334.8 327.5 2.2 1 259.1 1 154.6 9.0 Other operating income 1.0 1.2 -22.2 2.7 3.4 -20.8 Purchase of materials -11.7 -10.4 12.6 -44.1 -34.8 26.5
Slide 30: Recap: Identified sources of Alpha profit improvement to meet €50M annualized run-rate
Recap: Identified sources of Alpha profit improvement to meet €50M annualized run-rate net impact H2 2022 - 2024 PROGRAM NET IMPACT, AFTER INFLATION Mix, supply & growth €10-20M Margin improvement Total €15-20M > €50M Cost reductions €15-20M 1 Direct cost reductions 2 Margin improvement 3 Mix improv
Slide 31: Disciplined financial strategy
Disciplined financial strategy NET DEBT, MEUR AND NET DEBT / ADJ. EBITDA (LTM) EQUITY RATIO, % AND GEARING, % 700 4 120% Gearing 600 581 3,5 3,4 3,4 557 567 548 537 100% 101% 531 3,2 528 529 530 3,2 99% 3,1 510 519 3,1 96% 96% 96% 96% 491 3 3 92% 500 477 87% 87% 86% 85% 85% 2,7 2,7 2,7 82% 2,6 2,6 8
Slide 32: Key figures
Key figures Terveystalo Group, EUR mill. 2022 2021 2020 Revenue 1,259.1 1,154.6 986.4 Adjusted EBITDA, * 1) 178.0 206.1 162.8 Adjusted EBITDA, % * 1) 14.1 17.8 16.5 EBITDA 1) 168.8 201.8 158.3 EBITDA, % 1) 13.4 17.5 16.1 Adjusted EBITA * 1) 105.2 141 101.9 Adjusted EBITA, % * 1) 8.4 12.2 10.3 EBITA
Slide 33: Feelgood AB key figures before the acquisition by the Terveystalo Group
Feelgood AB key figures before the acquisition by the Terveystalo Group SEK, thousand Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Revenue 204,393 213,110 138,429 220,230 208,448 185,825 125,102 204,733 193,469 206,243 EBITDA 24,371 28,626 -1,612 34,157 24,155 18,486 -464 38,926 20,77