Terveystalo Oy Class A · OMXHEX:TTALO
Terveystalo Oy Class A — Investor Day (December 2024)
82 slides from Terveystalo Oy Class A's investor day presentation, Dec 4, 2024
Slide 1: Terveystalo Capital Markets Day
Terveystalo Capital Markets Day 4 December 2024
Slide 2: Disclaimer
Disclaimer This document and the information contained herein are 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,”
Slide 3: Agenda
Agenda 10:00 Registration and breakfast 10:30 Opening of Terveystalo’s CMD 2024, Kati Kaksonen, VP, IR & Sustainability 10:35 Introduction & Strategic Overview, Ville Iho, President and CEO 10:55 Healthcare services, Sari Heinonen, EVP 11:25 Coffee break 11:40 Digital | Ilari Richardt, CDO SVP, Digi
Slide 4: Introduction & Strategic Overview | Focus on value creation
Introduction & Strategic Overview | Focus on value creation Ville Iho, President and CEO 4
Slide 5: We have delivered strong results and are well-positioned for continued value creation
We have delivered strong results and are well-positioned for continued value creation 1. We have fundamental strengths as a business 2. We have delivered on our promises: Record strong financials and customer satisfaction 3. We focus on creating value to our stakeholders through data-driven integrat
Slide 6: We fight for a healthier life
OUR PURPOSE We fight for a healthier life by focusing on the meaningful matters Human being at the centre We offer the best value for our customers by providing integrated care. We: Integrated • understand our customers and their needs care • prevent and manage health risks • guide patients to the r
Slide 7: We offer comprehensive, integrated care that delivers exceptional value
We offer comprehensive, integrated care that delivers exceptional value – with improvement potential through technology Process integration Prevention Primary care Specialist care Empowered and in control of Fast access to care, fluent Demonstrated superior their health patient journey medical outco
Slide 8: Long-term structural trends continue to support growth of the private healthcare market
Long-term structural trends continue to support the growth of the private healthcare market Finnish population aged 65+ expected to grow Growing demand for healthcare, Aging by 170K over next 10 years2); spend average especially specialties related to aging; population 3x on healthcare vs. under 653
Slide 9: Healthcare spending and the share of private provision are expected to increase
Healthcare spending and the share of private provision are expected to increase in the next decade Private provision market: €4,6B Public pay, Public pay, Dental, private Holistic out- 2024E public provided OHC Insurance OOP private sourcing provision provision €0,5B Total market size: €18,8B Dental
Slide 10: We have delivered record strong results in a challenging macro environment
We have delivered record strong results in a challenging macro environment Stable growth, driven by Group profitability target Record high customer Healthcare services reached ahead of schedule, satisfaction and medical Revenue, EURm strong financial position quality in Healthcare Services 3% 1,500
Slide 11: We have three business areas, each with a clear improvement agenda
We have three business areas, each with a clear improvement agenda Business Area Healthcare Services Portfolio Businesses Sweden LTM Revenue EUR 1,014 mill. EUR 249 mill. EUR 86 mill. LTM Adj. EBITA margin 15% 5% -1% Share of total revenue 76% 19% 7% Turnaround and selective, Profitable growth, prof
Slide 12: We have moved decisively from a turnaround to building an even greater company
We have moved decisively from a turnaround to building an even greater company: Our strategic agenda focuses on five areas accelerating our journey Engaged Superior customer Organic Profit Optimized team value through growth improvement business portfolio integrated care 12 Julkinen
Slide 13: Updated financial targets and dividend policy
Our focus on profitable growth and shareholder value is reflected in our updated financial targets and dividend policy Profitable Moderate Attractive growth leverage ratio dividends 10% <2.5 80%+ EPS to grow on Net debt to EBITA A dividend payout ratio average by 10% p.a.* not to exceed 2.5x of at l
Slide 14: We are well-positioned for continued value creation
We are well-positioned for continued value creation 1. A leader in an inflation-resilient, growing & profitable private healthcare market, supported by structural megatrends 2. A proven scalable business model, leading digital capabilities, high medical quality, and customer satisfaction 3. Profitab
Slide 15: Enhancing our position as a market leader
Enhancing our position as a market leader Sari Heinonen EVP, Healthcare Services 15
Slide 16: We target above-market revenue growth and incremental profitability improvement
We target above-market revenue growth and incremental profitability improvement during the strategy period Continuous +5% profitability >4 Engagement index >85 NPS >76% PEI Revenue growth p.a. improvement • Strengthen market share and share • Continued incremental improvement, • Industry-leading peo
Slide 17: We deliver exceptional value through comprehensive and integrated care
We deliver exceptional value to our customers by offering comprehensive and integrated care Fluent, caring and effective Prevention Primary care Specialist care Customer value Customer value Customer value Empowered and in control of Fast access to care, fluent Demonstrated superior medical their ow
Slide 18: Strong fundamentals drive growth of the private healthcare market
Strong fundamentals drive the growth of the private healthcare market in the coming years Demography drives Insurance is gaining Occupational health the need for care share continues to grow Number of working-age Immigration drives +0.4% Number of health +1-2% population increases +0.5% population g
Slide 19: We lead in all private pay segments of which insurance is the fastest growing
We lead in all private pay segments of which insurance is the fastest growing Occupational healthcare1 Out-of-pocket consumer2 Insurance3 1.3 Market size 1.1 1.0 0.7 0.8 0.7 (€B) 2024E 2029E 2024E 2029E 2024E 2029E Our position 1 1 1 Market +3-4% +1-2% +5-8% CAGR ’24E-29E 1. Kela reimbursement categ
Slide 20: After the successful profit improvement program, we are structurally stronger
After the successful profit improvement program, we are structurally stronger as a business Robust revenue growth Structurally stronger Record high customer profitability satisfaction Revenue, MEUR 1,250 13% MEUR 60% NPS, appointments 1,014 160 150 20 1,000 949 87 898 140 18 120 109 14,8% 16 750 100
Slide 21: We have outpaced market supply growth and balanced our margin contribution
We have outpaced market supply growth and balanced our margin contribution Supply growth in key areas Appointments are more profitable, which decreases the risk to our margins Physician supply Supply, Supply, growth (FTE) OH Doctors GP’s +5-p. 2x +3% +6% 4% 66% +9-p. 61% 50% 41% 2% Market Terveystal
Slide 22: We are the most respected, considered and preferred brand
Our brand is highly valued by our customers: We are the most respected, considered and preferred brand #1 The most #1 The most #1 The most #1 The most respected considered preferred preferred brand consumer brand consumer brand consumer brand among OH-customers 24 77 74 36 45 20 31 34 47 8 28 11 14
Slide 23: Further growth and customer value potential in four areas
Profitable We see further growth and growth customer value potential in four areas Scale prevention Strengthen insurance Invest in selected Scale centralized and care paths partnerships and geographies, hospitals digital channels customer experience and specialties Effective prevention Leading healt
Slide 24: Effective prevention has a huge potential impact on work ability and public health
Profitable Effective prevention has a huge potential growth impact on work ability and public health Early detection of Effective interventions Nationwide population health risks and care paths data on risk profiles Over 100,000 risk reports on individual Defined care paths in use for different risk
Slide 25: Strong organic growth and customer benefits within chosen specialties
Profitable We have delivered strong organic growth growth and customer benefits within our chosen specialties Orthopaedics Sleep Mental health Revenue Revenue Revenue +25% +32% +49% • Reduction in disability and sick • Insomnia severity index • Mental health-related absences leave, faster improvemen
Slide 26: Further growth opportunities in key specialties
Profitable There are further growth opportunities growth in key specialties Market growth potential • Population development • Public healthcare queues • Health insurance growth Mental Ophthalmology • Medical and epidemiologic Conservative development other* Sleep Ortho- Gynaecology paedics Current
Slide 27: Case example menopause: commonly underdiagnosed and undertreated
CASE EXAMPLE MENOPAUSE: Commonly underdiagnosed and undertreated We have an opportunity to improve the health and working capacity of a large population and thereby support businesses and the economy as a whole 27
Slide 28: Digitalisation enhances productivity and people experience
Productivity, UI & CX Digitalisation plays a major role in enhancing our productivity and people experience Automatize and Modern resource Develop best in class digital digitalize routine work planning solutions tools for professionals Focus on more Process efficiency Fluent workday experience, valu
Slide 29: We will further strengthen our position and grow profitably
We will further strengthen our position and grow profitably 1. We are targeting an annual revenue growth of 5% and incremental improvement in our profit margins. We aim to expand across all customer segments. 2. Today, our business is structurally stronger, featuring a balanced margin structure, rob
Slide 30: Improving quality and productivity through digital solutions
Improving quality and productivity through digital solutions Ilari Richardt Chief Digital Officer & SVP, Digital Services
Slide 31: Unlocking exceptional quality and productivity through digital solutions
Unlocking exceptional quality and productivity through digital solutions High digitalization - Low digitalization - additional potential High potential from the use of AI Key enabler for superior CX & operational efficiency High potential in prevention and care compliance 31 Julkinen
Slide 32: We deliver world-class digital solutions that drive value
We deliver world-class digital solutions that drive value Appointment booking self-service rate 4.5M 3.3M >2.5M 80% Bookings in Bookings in Registered 75% centralized Digital users 70% channels channels 65% 60% >1.5M ~1M 55% 50% Monthly Successful 45% sessions self-triages 40% 2019 2024 Appointment
Slide 33: With AI, we can reduce transactional process costs by up to 40% by 2030
With AI, we can reduce transactional process costs by up to 40% by 2030 -15% -40% Function 1 Call-center Digital development Process 1 Contract management Function 2 Customer support Process 2 Finance Manual AI assisted AI assisted Agentic AI Full AI potential transactions potential 2024 2025 2029 J
Slide 34: Terveystalo Ella – the future EMR
Terveystalo Ella – the future EMR for efficient and pleasant appointments Old gen EMR replaces paper Ella guides the appointment process • Limited real-time automation • Automates real-time tasks • Hard to improve UX significantly • Enables rapid adoption of new tech (e.g., AI) • Lacks process guida
Slide 35: Julkinen
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Slide 36: Ella can increase appointment productivity fivefold in chat
Ella can increase appointment productivity fivefold in chat, and enhance medical quality Ella can increase productivity in chat by Further opportunity from channel mix up to 5x optimisation # # # A larger share Potential of remote regulatory 32% appointments restrictions Technology drives further 50
Slide 37: In physical appointments, Ella enhances professional UX and care compliance
In physical appointments, Ella enhances professional UX and care compliance Competitive edge from efficiency, Higher care compliance improves UX and care compliance medical quality and profitability ~1.3x higher EBITA potential # Efficiency: increase # appointments per day per professional # Complia
Slide 38: Superior experiences through data integration
We deliver superior patient, payor, and professional experiences through data integration Ella personalizes healthcare, creating an innovative, patient-centric experience. Our data analysis identifies over 500,000 risks annually to ensure proactive care pathways. Self-triage capabilities generate ov
Slide 39: Competitive advantage through digital solutions
Competitive advantage through digital solutions We have a track record of creating award-winning digital solutions that deliver value – achieving 1. over 50 million euros in annual efficiency gains Digital solutions can enhance productivity significantly, with a fivefold improvement potential in 2.
Slide 40: Superior value with integrated care
Superior value with integrated care Petteri Lankinen, Chief Medical Officer 40
Slide 41: Fluent, caring and effective integrated care
Medical Fluent, caring and effective integrated care We understand We prevent We guide patients We take care throughout We cooperate as We measure and our customers and manage to the right service the care path from teams of experts improve our and their needs health risks and treatment booking to r
Slide 42: Effective prevention has a huge potential impact on work ability and public health
Medical Effective prevention has a huge potential impact on work ability and public health More than one in ten men over 55 will develop type 2 diabetes within ten years. People with diabetes are 3x more likely to be unable to work and have significantly higher rates of sickness absence. The risk of
Slide 43: Integrated care generates the best outcomes in mental health
Medical Integrated care generates the best outcomes in mental health Mental chat & Digital or physical Therapy/ PROM/PREM to ensure sparring GP/OH Specialist recovery is achieved 2 Prevention Steering 1 Care paths Follow-up 4 3 1 INNOVATION 2 VALUE CAPTURE 3 CUSTOMER EXPERIENCE 4 OUTCOMES Investing
Slide 44: Addressing obesity - from digital solutions to surgical interventions
Medical Specialist Care Case Study: Addressing obesity - From scalable digital solutions to surgical interventions Obesity among Finns is increasing, reducing work ability – Terveystalo model is scalable with proven results for patients and payors: Nutritionist consultation/ Digital coaching Psychol
Slide 45: We deliver superior value with integrated care
Medical We deliver superior value with integrated care 1. We develop world-class health promotion and prevention strategies with proven effectiveness and population-level impact. 2. Integrated care and medical excellence enhance wellbeing and health on an individual and population level, supporting
Slide 46: Maximising value in Portfolio businesses
Maximising value in Portfolio businesses Henri Mäenalanen, EVP 46
Slide 47: Clear priorities for maximising the value of our portfolio
We have clear priorities for maximising the value of our portfolio Our targets Public Partnerships Staffing 5% revenue Capacity sales growth Public pay Focus on network capacity sales, businesses staffing & digital services p.a. Public Digital Services Prepare for market ramp-up in new Child welfare
Slide 48: We have already made significant progress
We have already made significant progress Planned decline in revenue due to ending of While successfully strengthening profitability legacy outsourcings +231% -14% 291 11,6 267 249 5,0 119 8,7 91 87 3,1 84 85 77 3,5 52 55 51 0,7 36 37 34 2022 2023 LTM Q3/24 2022 2023 LTM Q3/24 Outsourcing Staffing D
Slide 49: Solid position in growing, high-margin public pay segments
Public pay We have a solid position in growing, high- margin public pay segments Healthcare market Expected market segments 2024E 2024E market Market growth (excl. social care) Market shares size (€m) EBITA level p.a. (’24-'29) TT Pihlajalinna Mehiläinen Others Outsourcing 15% 45% 25% 15% 500 0-5% -
Slide 50: Underlying market will grow but the service mix will change
Public pay Underlying market will grow but the service mix will change Overall market grows – largest Outsourcing to decline, growth from new services converting into new services Expected market growth Market Expected market growth Market size bn€ bn€ / CAGR ('24-'29) Market size bn€ EBITA level bn
Slide 51: Well positioned to capture upside from key public market trends
Public pay We are well positioned to capture upside potential of the key public market trends Growing demand Growing aging Public healthcare Adoption of new for child and population backlog digital services youth services Potential to Capture with Digital solution Low threshold expand staffing curre
Slide 52: Most sought-after partner for Wellbeing Services Counties
Public pay Our goal is to become the most sought-after partner for Wellbeing Services Counties Public Our targets for the renewed digital services partnership model Capacity Staffing sales €100m 10% >85 >4 100% Terveys- kumppani Growth ’24-’29* Engagement Of counties EBITA ’29 NPS index as customers
Slide 53: Strengthen customer relationships, accelerate growth
Public pay #1 #2 #3 Strengthen customer Accelerate growth We are ready for relationships in focus areas market opening New organisational model Growth from new partnership Active development of new and roles to enable deeper models, staffing services, new solutions. cooperation with Wellbeing digita
Slide 54: Dental health is a key part of integrated care
Private pay Dental health is a key part of integrated care Can lead to additional diagnosis Increases the risk of cardiac arrest, stroke, dementia, diabetes and its adjacent diseases Common gum infection can have serious Complicates treatment of existing implications on multiple conditions disciplin
Slide 55: National network and comprehensive range of dental services
Private pay Terveystalo has a national network and a comprehensive range of dental services East & North 650 90% West Capital area Rovaniemi Sodankylä Healthcare Private professionals customers Oulu >300 55M€ Pietarsaari Iisalmi Kuopio Dentists Sales in 2023 Seinäjoki Jämsä Jyväskylä Savonlinna Tamp
Slide 56: EUR 500+ million dental market to grow at +2% CAGR
Private pay EUR 500+ million dental market to grow at +2% CAGR in 2024-2029 Market size (€m) • Public sector dental care resources are limited, +2% leading to long waiting times and driving demand +2% ~630 ~570 Outsourcing to the private sector ~500 • The aging population increases demand for all No
Slide 57: There is room to grow our dental business
Private pay There is room to grow our dental business Finnish Dental care market (Revenue 2023, M€) 500+ 1,000+ 100+ 500+ The Finnish Dental care market has several nationwide and 23% regional companies as well as 25 45 a large number of local players: 55 4% 2% 8% 4% ~70 10% 5% 95 12% 7% • 6 large d
Slide 58: We aim to become one of the largest and most profitable dental care companies
Private pay We aim to become one of the largest and most profitable dental care companies in Finland Double revenue We see dental health as a key part of overall health and well-being and reach an industry-leading Value proposition We deliver a full spectrum of health services under one profitabilit
Slide 59: Strong foundation for growth and doubling our margin
We have a strong foundation for growth and doubling our margin 1. We are well positioned to capture public market upside potential with limited downside risk 2. Our focus in public pay is on high margin, value add services, and capacity sales to optimise margin In Dental, we focus on building scale
Slide 60: From Turnaround to Market Leader
From Turnaround to Market Leader Stefan Kullgren, CEO of Feelgood Sweden 60
Slide 61: 100% focused on delivering the turnaround
We are 100% focused on delivering the turnaround, after which, we see opportunities for profitable growth We have a strong position in the Swedish Occupational health market, 1. recently hindered by macro headwinds 2. Recent contract losses impacted our margin development short-term 3. Our profit im
Slide 62: Feelgood is a leading occupational health provider
Feelgood is a leading occupational health provider for modern working life Revenue breakdown ltm q3/2024 4x 86M€ By specialist area By customer type Specialist areas Sales in LTM Q3/2024 Private Health Org & Leadership Public Harmful Use +800 8,000 Private Health Specialists Customers Occupational H
Slide 63: Strong position in Swedish occupational health market
We have a strong position in the Swedish Occupational health market, recently hindered by macro headwinds We have a strong position as a top 3 player in a Market challenged short-term, will recover mid- niche market term propelled e.G., By recent interest rate cuts Real GDP annual growth. % 2021-202
Slide 64: Recent contract losses impacted our margin development short-term
Recent contract losses impacted our margin development short-term Contract losses in late 2023 due to intense price …Leading to temporary offset of margin competition and reduced demand… improvement trend since 2020 Terveystalo acquisition (6/2021) Contracts 93 93 gradually fading 86 ~-20% out durin
Slide 65: Our profit improvement program is showing initial signs of success
Our profit improvement program is showing initial signs of success Objective Priorities on track Examples of targets delivered At least SEK 120 Operations mill. Annual run- Optimization of operative and -15% administrative staff rate EBITA SG&A improvement >10% Productivity uplift during 2025 Commer
Slide 66: Rapid recovery followed by gradual strengthening of profitability
Going forward, these measures will allow a rapid recovery followed by a gradual strengthening of profitability Baseline 2023 2023 contract Run-rate 2024 2024 L12M 2025 2026 2027+ losses starting point EBITA margin 4% (5%) (1%) 3-5% 5-7% 7-10% potential Julkinen
Slide 67: Near-term focus on margin uplift, followed by profitable growth
Near-term focus on margin uplift, followed by profitable growth in mid-, to long-term Short-term: Mid-term: Long-term: Focus on margin uplift Accelerate profitable growth Expand into adjacencies Operations & SG&A Improve productivity and optimize staff Increase presence in high growth insurance pay
Slide 68: Financial performance, and targets
Financial performance, and targets | Focus on continuous improvement Juuso Pajunen, CFO 68
Slide 69: We have momentum entering a new phase as a listed company
We have momentum entering a new phase as a listed company LTM revenue LTM adj. EBITA margin, % +10% 1 400 1 329 15 1 155 1 259 1 286 1 031 12,2 12,3 1 200 11,8 986 10,6 11,0 10,3 1 000 9,8 10 8,4 800 745 690 600 5 400 200 0 0 2017Q4 2018Q4 2019Q4 2020Q4 2021Q4 2022Q4 2023Q4 2024Q3 Market consolidati
Slide 70: Structurally stronger foundation with a lower risk profile
We have a structurally stronger foundation with a lower risk profile WE HAVE SUCCESSFULLY UPGRADED 2024 ADJUSTED EBITA DECREASED OUR RISK PROFILE GUIDANCE 12.5-13.1% 12.5-13.1 LTM adjusted EBITA-% 12.3 ✓ Appointments are more profitable, 11.4 decreasing the risk to our margins 10.5 ✓ Less exposure t
Slide 71: Market fundamentals continue to support our growth
Market fundamentals continue to support our growth The healthcare market is growing faster than the overall economy due to its fundamentals Occupational Consumer market Public pay market Sweden healthcare Market size EUR 1.1 billion Market size EUR 1.1 billion Market size EUR 1.6 billion Market size
Slide 72: We continue to focus on efficiency and productivity
We continue to focus on efficiency and productivity We have four levers to drive efficiency Operating leverage: Digitalisation: Medical quality: People: • Strong, de-risked • Automate to decrease • Focus on meaningful • Continued FTE and supply foundation costs and increase matters – increase of gro
Slide 73: Significant leap in productivity and cost-efficiency
We have made a significant leap in productivity and cost-efficiency General Appointment Customer administration profitability services 14% +5-p. 15% The decrease of admin New revenue share The increase of self-service FTE has resulted in appr. model, continued rate in customer service and €10 millio
Slide 74: We invest in organic and disciplined inorganic growth
We invest in organic and disciplined inorganic growth 59 • Our investment strategy prioritizes organic growth and disciplined inorganic expansion. 43 30 41 • We will focus on digital investments to improve 37 user experience and productivity for healthcare 34 33 professionals. 21 4,7 • We selectivel
Slide 75: Businesses have different financial profiles and M&A focus
Our businesses have different financial profiles and M&A focus BUSINESS AREA HEALTHCARE SERVICES PORTFOLIO BUSINESSES SWEDEN LTM Revenue EUR 1,014 mill. EUR 249 mill. EUR 86 mill. LTM Adj. EBITA margin 15% 5% -1% Share of total revenue 76% 19% 7% Cyclicality Low Low-medium High Pricing model Mainly
Slide 76: A strong financial position supports our strategy execution
A strong financial position supports our strategy execution Strong profit growth has led to significant cash flow conversion and deleveraging Operating cash flow 196 3,8 Net debt to EBITDA 190 174 171 158 3,1 3,2 150 152 3,0 3,0 141 143 2,5 2,3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2018 2019 2020 2021 2022 202
Slide 77: Focused on growth, dedicated on returns
Focused on growth, dedicated on returns New financial targets and dividend policy set for medium term Attractive Profitable growth Moderate leverage dividends • EPS to grow on • Net debt to EBITDA not • At least 80% of the net average by 10% p.a. to exceed 2.5x result to be distributed as dividends
Slide 78: Driving profit growth and enhancing shareholder value
Driving profit growth and enhancing shareholder value A structurally growing market combined with a solid market position and outstanding medical 1. outcomes enables Terveystalo to grow organically faster than GDP 2. We have transformed to a structurally more profitable and less volatile company 3.
Slide 79: Closing words
Closing words Ville Iho, President and CEO 79
Slide 80: Well-positioned for continued value creation
As a business, we continue to improve and are well-positioned for continued value creation 1. A leader in an inflation-resilient, growing & profitable private healthcare market, supported by structural megatrends 2. A proven scalable business model and leading digital capabilities 3. Profitable grow
Slide 81: terveystalo.com
Terveystalo MEANINGFUL MATTERS
Slide 82: Appendix
Appendix Terveystalo