Terveystalo Oy Class A · OMXHEX:TTALO
Terveystalo Oy Class A — Investor Day (May 2023)
83 slides from Terveystalo Oy Class A's investor day presentation, May 10, 2023
Slide 1: Terveystalo Capital Markets Day
Terveystalo Capital Markets Day HELSINKI 10 MAY 2023
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 and speakers for today
Agenda and speakers for today 10:05 Intro & strategic overview | Journey to value maximization, Ville Iho, President & CEO Commercial | Strengthening our position as a market leader, Marja-Leena Tuomola, CCO 11:15 Coffee break Integrated care | Delivering the best outcomes for patients, professional
Slide 4: Intro & strategic overview | Journey to value maximization
Intro & strategic overview | Journey to value maximization Ville Iho, President & CEO 4
Slide 5: We are well positioned for value creation
We are well positioned for value creation We have fundamental strengths as a business • Leader in an inflation-resilient, growing & profitable market, supported by megatrends • A pioneer in outcome-based integrated care and occupational health • Best-in-class digital capabilities and the preferred p
Slide 6: Terveystalo is an integrated healthcare platform
Terveystalo is an integrated healthcare platform Terveystalo – Key highlights We deliver integrated care 155 by incorporating preventive care and locations in 370 • #1 private healthcare service provider primary and secondary care consults Sweden clinics in in Finland in terms of revenue with labs,
Slide 7: We fight for a healthier life
OUR PURPOSE We fight for a healthier life by focusing on the meaningful matters. Human being Our strategy is to deliver at the centre integrated, data-driven outpatient and preventive care with best-in-class care outcomes Integrated People and people experience -centric Functional and humane We targ
Slide 8: Four key trends provide growth opportunities within our core markets
Four key trends provide growth opportunities within our core markets Growing demand for healthcare, Aging Finnish population aged 65+ expected to especially specialties related to grow by 170K over next 10 years1; spend population average 3x on healthcare vs. under 652 aging; build capacity to captu
Slide 9: We operate in resilient and growing markets, and have delivered strong, above-market growth
We operate in resilient and growing markets, and have delivered strong, above-market growth RESILIENT ADDRESSABLE MARKETS WITH ~5% TERVEYSTALO HAS OVERPERFORMED THE PROJECTED GROWTH* MARKET, NOW FOCUS ON MARGIN UPLIFT ~15B€ ~4.5B€ addressable market Revenue CAGR ~11B€ +12% 0.8B€ 1.8B€ 12% 12% 11% 10
Slide 10: 2023-2024 focus on margin uplift and at market growth across all the segments
2023-2024 focus on margin uplift and at market growth across all the segments Set targets for each business segment Healthcare services Portfolio businesses Sweden €909m 11% €288m 2% 4% LTM Revenue LTM LTM Revenue LTM €96m LTM Adj. EBITA Adj. EBITA LTM Revenue Adj. EBITA TARGET: TARGET: TARGET: AT M
Slide 11: Healthcare Services: At market growth and margin uplift
Healthcare Services: At market growth and margin uplift to return to industry-leading profitability 2023-2024 Objective: Commercial Improve pricing & commercial execution Improve margins Integrated Focus on integrated care to optimize outcomes and and grow within the care maximize value capture inte
Slide 12: Profit improvement program on track to deliver EUR 30 Mill.
Profit improvement program on track to deliver EUR 30 Mill. P&L impact in 2023 50+ 25 Q1-23 FY23 FY24 Total run- rate impact 12
Slide 13: Reversing the negative trends in omnichannel is underway
Reversing the negative trends in omnichannel is underway as a key part of the profit uplift The loss of brick-and-mortar volume offset Actions to tackle the early challenges & the positive impact of digital reach full potential underway Planned actions Completed profit improvement The decline driven
Slide 14: Impact already visible in the referral recovery
Impact already visible in the referral recovery Actions ongoing to tackle early First impact visible in digital and challenges & reach full potential physical lab referring practices Average number of like-for-like lab referrals Improve seamless care continuity via easier chat generated within a GP/
Slide 15: Portfolio businesses: Independent value creation
Portfolio businesses: Independent value creation LTM Revenue Public Offer new, value-adding services to Well-being Counties 2023-2024 partnerships Selective approach to long-term commitments €113m objective Commercial optimization Staffing Focus on more value-adding, integrated services €85m Optimiz
Slide 16: Good progress in Portfolio businesses’ value creation plans
Good progress in Portfolio businesses’ value creation plans – outsourcing revenue decreasing as expected Public partnerships Staffing Dental Other Revenue (€m) -21% 31 +3% 25 22 22 +16% 15 +9% 13 8 9 Q1 2022 Q1 2023 Q1 2022 Q1 2023 Q1 2022 Q1 2023 Q1 2022 Q1 2023 Outlook High inflation and inflexibl
Slide 17: We entered the Swedish market via Feelgood acquisition
We entered the Swedish market via Feelgood acquisition and accelerated growth as planned Feelgood revenue (EURm) and EBITA (%) Terveystalo acquisition (6/2021) Entry into Swedish occupational EBITA-margin health services in June 2021 Sales EURm +28% 96 93 Feelgood is one of Sweden’s leading +4% heal
Slide 18: Having achieved critical mass, we shift focus to margin uplift
Having achieved critical mass, we shift focus to margin uplift and expansion into healthcare Today, Feelgood is a strong platform During the next 2 years, we will increase focus on margin and for profitable growth in Sweden expand into healthcare services €96m LTM revenue Profitable Improve margin i
Slide 19: As an investment, we are well-positioned for outstanding value creation
As an investment, we are well-positioned for outstanding value creation 2023-2024 2025- A leader in an inflation-resilient, growing Focus on margin uplift Opportunity to accelerate 1. & profitable market, supported by structural megatrends at market growth profitable growth A pioneer in outcome-base
Slide 20: Terveystalo
Terveystalo MEANINGFUL MATTERS
Slide 21: Commercial | Strengthening our position as a market leader
Commercial | Strengthening our position as a market leader Marja-Leena Tuomola, CCO 21
Slide 22: Strong foundation for growth and margin uplift in Finnish private healthcare
We have a strong foundation for growth and margin uplift in the Finnish private healthcare market We operate in a growing and resilient market • Private-pay, private-provision healthcare market expected to grow by ~3% in ’23-’28 • Public-pay, private-provision healthcare market expected to grow by ~
Slide 23: We compete in €4.5B private healthcare market
We compete in €4.5B private healthcare market with +3-4% projected growth '19-’22 CAGR +2% +4% +5% +1% +4% +4% +0% '22-’28 CAGR +3% +3% +6% +1% < 0% +4% +0% Private healthcare market: €4,5B Healthcare Services Finland Portfolio (HC only) Total market size '22: €15,8B Total market CAGR '19-'22: +3-4%
Slide 24: The world’s oldest population is a strong basis for growth
The world’s oldest population is a strong basis for the growth of healthcare services Finland has significant proportion of old And the proportion is growing at a high rate adults in its population compared to the other EU countries Top 15 countries with the largest % of +65 years old population¹ To
Slide 25: Social and healthcare expenditure is growing with aging population
Due to the aging population, social and healthcare expenditure is growing – up to 3x higher with +65 Projected social and healthcare expenditure Implications of rapidly growing aged +65 increase due to growing aging population, M€ population in Finland Total social & healthcare spend in 65+ populati
Slide 26: The €0,8B Public-pay Private-provision market will grow
The €0,8B Public-pay Private-provision market will grow (+6%), and Terveystalo will lead the market development In January 2023 established Wellbeing Services What is Terveystalo’s response? Counties¹ facing several challenges • Continue to offer staffing, diagnostics • Shortage of workforce and sec
Slide 27: Public-pay, Private-provision market to develop towards integrated care partnership
We expect the Public-pay, Private-provision market to develop towards integrated care partnership Integrated care partnerships Coordinated care, Care path outsourcing and new operating solutions, e.g. personal doctor, referral centres Healthcare service sales1 Outsourcing Diagnostics Holistic outsou
Slide 28: We are the market-leading provider of integrated, private healthcare in Finland
We are the market-leading provider of integrated, private healthcare in Finland Primary / Occupational Specialist care Surgeries Labs Imaging Health Occupational Health Integrated (€0,9B) private Private healthcare (€0,8B) delivery Public pay 1 (€0,9B) Occupational Health 2 Regional OH (€0,1B) 2 Dia
Slide 29: Our strong brand supports customer loyalty and pricing power
Our strong brand supports customer loyalty, pricing power, and premium – employee loyalty STRONG BRANDS CAN ACHIEVE ON AVERAGE 6-10% HIGHER PRICES FOR THEIR PRODUCTS WITHOUT SIGNIFICANT CUSTOMER IMPACT* The preferred Modern digital B2B solutions Data-driven OH solutions consumer brand 36 48 43 31 41
Slide 30: We serve a diverse, inflation-resilient, ~90% private-pay customer base
We serve a diverse, inflation-resilient, ~90% private-pay customer base Corporate customers Consumers Public sector customers 58% 31% 11% Of Healthcare Services Of Healthcare Services Of Healthcare Services Revenue 2022 Revenue 2022 Revenue 2022 • OH and employment-related • Private clinic sales • H
Slide 31: Our way forward in private healthcare: combining growth and margin uplift
Our way forward in private healthcare: combining growth and margin uplift Optimize margins Selectively gain market share (in private & public-pay, private-provision) Occupational health Top priority specialties1 General practice Other specialties2 (~50% of HC sales '22) (~25% of HC sales '22) (~15%
Slide 32: Strong foundation for growth and margin uplift in Finnish private healthcare
We have a strong foundation for growth and margin uplift in the Finnish private healthcare market We operate in a growing and resilient market Growing demand supported by aging population and healthcare system challenges Leveraging our strong brand and market position to maximize value capture Enabl
Slide 33: Q&A
33 Q&A Terveystalo
Slide 34: Terveystalo
Terveystalo MEANINGFUL MATTERS
Slide 35: Integrated care | Delivering the best outcomes
Integrated care | Delivering the best outcomes for patients, professionals, and shareholders Petri Bono, Chief Medical Officer 35
Slide 36: Our integrated, data-driven care delivers the best outcomes and customer experience
Our integrated, data-driven care delivers the best outcomes and customer experience Integrated care improves health outcomes • Enables adherence to care plans and shared accountability across care paths • Improves medical outcomes and patient experience, maximizes value capture We master integrated
Slide 37: What is integrated care? Why does it matter?
What is integrated care? Why does it matter? Integrate care encompasses a seamless transition To patients: between primary and secondary care, diagnostics, Improved medical outcomes and patient experience and surgery to address all patient’s needs To payers: Labs Strong cost control To professionals
Slide 38: Our standardized care paths improve care continuity
Our standardized care paths improve care continuity, medical, and business outcomes 1 Care path Digital GP/OH 3 4 5 Care need Symptoms 2 Specialist Diagnostics Surgery Therapy Outcomes assessment Physical GP/OH 1 25+ care paths within 2 Optimized 3 Ensures proper use 4 Maximizes the 5 Systematic & t
Slide 39: After the appointment, most patients feel they are coping better
After the appointment, most patients feel they are coping with their condition better than before PEI 23% 38% 28% 3% 8% 100 100% Much better Better The same Worse Cannot say 39 THE PEI INDEX (PATIENT ENABLEMENT INSTRUMENT) IS USED TO MEASURE WHETHER THE PATIENT FEELS THAT THEY ARE COPING WITH THEIR
Slide 40: Mental health: major cause for suffering, absence days & early retirements
Major cause for human suffering, Terveystalo taking actions to tackle absence days & early retirements especially depression and anxiety >11,000,000,000 € Developed fast access to appropriate care and efficient Total annual cost of mental health issues for Finland¹ care protocols 77% of early retire
Slide 41: Integrated care generates the best outcomes in mental health
Clinical Quality Highlight Integrated care generates the best Case Mental Health outcomes in mental health Illustrative care path: Mental health Digital GP/OH Mental chat Symptoms Therapy Outcomes & sparring Physical GP/OH INNOVATION VALUE CAPTURE CUSTOMER EXPERIENCE OUTCOMES Investing in the Patien
Slide 42: Care path decreased depressive symptoms with annual ROI of 480%
Clinical Quality Highlight Our care path decreased depressive symptoms Case Mental Health materially and resulted in an annual ROI of 480% for employees SICKNESS ABSENCES RELATED TO MENTAL HEALTH WITH THE CORRECT CLINICAL PRACTICE, THE RISK DECREASED BY 40% AFTER BRIEF PSYCHOTHERAPY OF PERMANENT WOR
Slide 43: Integrated care generates the best outcomes in orthopaedics
Clinical Quality Highlight Integrated care generates the best Case Surgical Care outcomes in orthopaedics Illustrative care path: Orthopaedics Digital GP/OH Care need Symptoms Specialist Surgery Phys. therapy Outcomes assessment Physical GP/OH INNOVATION VALUE CAPTURE CUSTOMER EXPERIENCE OUTCOMES Te
Slide 44: Optimized surgical care delivery maximizes employee workability
Clinical Quality Highlight Optimized surgical care delivery maximizes Case Surgical Care employee workability and results EUR 10,500 savings for the employer per episode Care protocol implemented -34% 91 90 93 89 75 61 2017 2018 2019 2020 2021 2022 Post surgery sick leave days after shoulder operati
Slide 45: Our integrated care model results in superior care outcomes
Our integrated care model results in superior care outcomes and great business results 2023-2024 focus Integrated care improves health Improve care continuity and outcomes outcomes Competitive Optimize omnichannel care delivery edge with We master integrated care Terveystalo Integrated care Develop
Slide 46: Terveystalo
Terveystalo MEANINGFUL MATTERS
Slide 47: Digital | Driving efficiency, care continuity, and the best care outcomes
Digital | Driving efficiency, care continuity, and the best care outcomes Ilari Richardt, SVP, Digital Services 47
Slide 48: Digital enables the best medical and business outcomes
Digital enables the best medical and business outcomes Our digital strategy is tightly aligned with integrated care • Optimize access to care and supply-demand balance • Increase the efficiency and productivity of professionals • Improve continuity, quality and outcomes of care Our digital solutions
Slide 49: Our digital strategy is tightly aligned with integrated care
Our digital strategy is tightly aligned with integrated care 1 2 3 4 Optimize access to care and Strive for professional Improve care continuity supply-demand balance excellence and quality Digital GP/OH Care need Symptoms Specialist Diagnostics Surgery Therapy Outcomes assessment Physical GP/OH 5 C
Slide 50: Our digital solutions create value for all stakeholders
Our digital solutions create value for all stakeholders through integrated care Patients Professionals Terveystalo Society • Fast access to right • Early detection of health • Supports growth in • Meet the growing demand treatment risks of the patient supply constrained for care • Functional and smo
Slide 51: ’23-’24 focus on productivity and care continuity
’23-’24 focus on productivity and care continuity supports top-line and EBITA growth Key focus areas Capitalize data accumulated Prioritize and steer patients Increase productivity/hour Improve care outcomes by population-level preventive based on medical needs by 3x Capture full business value in c
Slide 52: Digital enables easy access to care, higher margin per appointment
Digital enables easy access to care, higher margin per appointment, and significantly higher volumes when managed in the right way BETTER VALUE & LOWER COST SCALABLE & FLEXIBLE ~10-30% lower unit ~3-5x higher Sales € throughput # price1 Sales € ~40% lower unit # EBITA, € EBITA, € cost Live Chat Live
Slide 53: Digital tools enable more efficient time usage for professionals
For professionals, our digital tools enable more efficient time usage and supply management Saved professionals work due Time spent in digital TT Pro monthly and daily users to COVID-19 chatbot appointment after symptom (2019-2022) (2021-2022) assesment 3 000 13,0 4 000 2 000 12,0 2 000 1 000 11,0 0
Slide 54: We make our customers’ lives better with digital solutions
We make our customers’ lives better with digital solutions CAPITALIZE DATA PROFESSIONAL EXCELLENCE Doctors and nurses can see my medical My medical history can be used to history at a glance, make more recognize early signs, giving me peace informed diagnosis and determine the of mind. best treatmen
Slide 55: Our digital services are loved by our B2B and B2C customers
Our digital services are loved by our B2B and B2C customers Monthly sessions in TT Cumulative onboardings to the digital services (2019-2022) mobile application (2019-2022) 1 200 000 3 000 000 900 000 2 000 000 1 000 000 600 000 0 300 000 2:2019 2:2020 2:2021 2:2022 0 Monthly sessions, TT.com (all w
Slide 56: We automate medical expertise to achieve higher efficiency and scale
We are automate medical expertise to achieve higher efficiency and scale Regulation requires software to be Terveystalo is well-positioned to classified as Medical Device when it succeed in the Software as a Medical automates medical expertise Device market • Data-driven OHC World-class clinical kno
Slide 57: Unique competitive advantage: medical expertise, software and data
Terveystalo’s unique competitive advantage is based on combining medical expertise, software and data MDs Absence mgmt. Appointment Financial systems Work-ability risk Care steering engine booking management Professional supply Health survey management. Chat & video HR systems Digital self triage ap
Slide 58: 2023-2024 focus on building a solid foundation with leading digital capabilities
2023-2024 focus on building a solid foundation with leading digital capabilities 2023-2024 focus Digital strategy tightly aligned with Improve care continuity and outcomes integrated care Competitive Optimize EBITA edge with Value creating digital solutions Terveystalo Digital Leverage digital asset
Slide 59: Q&A
59 Q&A Terveystalo
Slide 60: Terveystalo
Terveystalo MEANINGFUL MATTERS
Slide 61: People-centric | The best workplace for professionals
People-centric | The best workplace for professionals Minttu Sinisalo, SVP HR 61
Slide 62: Our people strategy supports our growth
Our people strategy supports our growth Best workplace for healthcare professionals • A humane workplace where professionals can focus on the most meaningful matters • … validated with results, e.g. #1 preferred private HC employer among professionals Our strategy works: Strong track record in attra
Slide 63: We offer the best workplace for professionals
We offer the best workplace for professionals Our formula for winning workplace… …validated by professionals Focus on meaningful matters #1 preferred private healthcare with tools & processes that increase quality of care employer among professionals¹ Commitment to clinical excellence recognized wit
Slide 64: Grown our professional base without major increases in entry compensation
And have grown our professional base without major increases in entry compensation levels Our healthcare professional FTE has grown …while we have maintained stable entry faster than market during 2021-2023… compensation levels Terveystalo annual FTE growth¹ vs healthcare professional market Annual
Slide 65: Strong position to further grow our professionals FTE
We are in a strong position to further grow our professionals FTE and support growth Psychotherapists and Specialist physicians GP and OH physicians Nurses psychologists Our share of HCP market Market 97% 91% 97% 93% Terveystalo 9% 7% 3% 3% Our HCP FTE growth +5% +5% +6% +18% track record1 Our HCP F
Slide 66: Our people strategy ensures attraction, engagement, and productivity
Our people strategy ensures attraction, engagement, and productivity and is a key enabler for growth Improve attraction Improve engagement & productivity EMPLOYER BRANDING| Reinforce Terveystalo's employer value proposition to all professionals CULTURE & LEADERSHIP | Nurture humane, yet efficient cu
Slide 67: Terveystalo
Terveystalo MEANINGFUL MATTERS
Slide 68: Financial performance & targets | On track with improved value creation
Financial performance & targets | On track with improved value creation Juuso Pajunen, CFO 68
Slide 69: Potential for outstanding shareholder returns
Potential for outstanding shareholder returns Profit uplift on track • Cumulative €25m+ run-rate EBITA impact achieved ahead of plan in Q1-23 • P&L impact in 2023 estimated to be at least 30 MEUR • Target margin of 12% adjusted EBITA estimated to be achieved in 2025 Attractive market growth combined
Slide 70: We have a strong financial track record
We have a strong financial track record SOLID REVENUE INDUSTRY-LEADING STRONG BALANCE STRONG PAYOUT GROWTH MARGIN2 SHEET TO SHAREHOLDERS 14% 8.4-12.2% <3.5 85 M€ (69%) growth CAGR1 adjusted EBITA over Interest-bearing net paid out as dividends (organic & M&A) the past 5 years debt/EBITDA in the past
Slide 71: 2023-2024 focus is on margin uplift to reach >12% EBITA
2023-2024 focus is on margin uplift to reach our financial target of >12% EBITA Margin development with drivers of change EBITA Well on track >12% 11.2% 9.1 to drivers 10.1% Volume 8.4% Price & Mix Costs COVID Sweden/Portfolio 2019 2022 2023 2025 • Volume1: Volumes up ~10% • COVID: Drop in testing v
Slide 72: Profit improvement program has delivered +25 M€ run-rate impact
Profit improvement program has delivered +25 M€ run- rate impact and tracking well to generate the full impact Examples of Objective Priorities on track targets delivered Commercial • New operating model in place EUR 50 Mill. annual run-rate EBITA • First wave of price increases improvement by Opera
Slide 73: We continue to focus on efficiency and productivity
We continue to focus on efficiency and productivity – capability to work with inflation embedded in cost structure Share of different costs as % of revenue • Build-up of digital capabilities allowing omnichannel 2019 2022 Q1/2023 IT Expenses • Build-up phase ready, capability to optimize Materials 3
Slide 74: We are well positioned to drive continued real growth
We are well positioned to drive continued real growth In 2023-2024 we expect to grow in line with the market, with an opportunity to accelerate from 2025 onwards Medium-term In market with ~5% growth and continued momentum, public capacity growth constraints & budget restrictions support private pro
Slide 75: Strong cash generation, with potential for attractive shareholder returns
Strong cash generation, with potential for attractive shareholder returns and investments to growth Strong and growing cash Potential for attractive payouts and to invest in growth generation Net Cash from Operating Activities Lower spend vs. 2022. Focus on omnichannel Digital investments (M€) optim
Slide 76: A strong financial position supports our strategy execution
A strong financial position supports our strategy execution MATURITY PROFILE OF DEBT* NET DEBT TO EBITDA ON A SOLID LEVEL 3,8 250 3,2 3,3 3,1 3,0 200 2,5 150 100 50 0 1y 2y 3y 4y >5y 2018 2019 2020 2021 2022 Q1 2023 LTM • Average cost of interest-bearing debt in Q1/2023 was 2.8% • Revolving credit f
Slide 77: Sound fundamentals and profitable growth, financial targets intact
Sound fundamentals and profitable growth, financial targets intact 2023-2024 Financial targets priorities At least 5% annual revenue growth through • Complete the EUR 50 Mill. organic growth and acquisitions profit improvement program to reach >12% adj. An adjusted EBITA margin of at least 12% EBITA
Slide 78: Potential for outstanding shareholder returns
Potential for outstanding shareholder returns • Delivering on 50M€ profit growth in short-term Profit and Revenue • Potential to grow >5% with strong margins in medium-term growth • Backed by strong market position • Highly cash-generative business especially post profit-program with room to Cash fl
Slide 79: Terveystalo
Terveystalo MEANINGFUL MATTERS
Slide 80: Summary & closing words
Summary & closing words Ville Iho, President & CEO 80
Slide 81: As an investment, we are well-positioned for outstanding value creation
As an investment, we are well-positioned for outstanding value creation 2023-2024 2025- A leader in an inflation-resilient, growing Focus on margin uplift Opportunity to accelerate 1. & profitable market, supported by structural megatrends at market growth profitable growth A pioneer in outcome-base
Slide 82: Q&A
82 Q&A Terveystalo
Slide 83: Terveystalo
Terveystalo MEANINGFUL MATTERS