CEO review
CEO Ville Iho: Clearly strengthened profitability across segments
Terveystalo's revenue increased by 1.3% to 322.4 million euros in the second quarter of 2023, driven by the Healthcare Services segment. As expected, the revenue of the Portfolio businesses decreased year-on-year due to the expired outsourcing contracts. Sweden's revenue continued to increase in local currency but decreased for the first time in euro terms due to the weakening of the exchange rate.
Revenue from appointments continued to grow thanks to an improved supply of physical appointments, price increases, and an improvement in the customer mix. The recovery of underlying diagnostics excluding Covid-19 testing continued until the beginning of the summer, when the demand fell due to a clearly reduced number of infections in addition to the normal holiday season impact. We have successfully strengthened our brick-and-mortar offering for three consecutive quarters to meet record demand. The supply is now more balanced compared to the aftermath of the pandemic, which is also reflected in the variation of booking rates according to the holiday and infection seasons.
We have managed to strengthen our profitability despite continued high inflation and the end of Covid-19 testing. Adjusted EBITA increased by 18.1% from the comparison period to 28.5 million euros. The profitability of the Healthcare services segment was strengthened by a more favourable sales mix, successful pricing measures, and the profit improvement program progressing as planned. Portfolio businesses and Sweden also strengthened their profitability significantly from the comparison period.
The profit improvement program measures implemented by the end of the second quarter are estimated to have an approximately EUR 40 million annual run-rate impact on profitability, and the P&L effect of the program for the entire year 2023 is estimated to exceed EUR 30 million. The rise in the general interest rate and continued high inflation underlines the importance of the profit improvement program during the next quarters.
During the second quarter, we issued our first 100-million-euro sustainability-linked bond, and we are very proud of the successful issuance. As a leading operator in private healthcare, we want to set an example and reform healthcare in a more sustainable direction.
Our most important sustainability goal is to fight for a healthier life, and we are constantly working towards more integrated and data-driven care with best-in-class care outcomes and people experience. The key means to achieve the goal are successful investments in automation and digital customer paths. At the end of the second quarter, we took a significant step towards smoother treatment paths, when our care need assessment tool using artificial intelligence was introduced to the first occupational health client. This is software as a medical device that directs the patient to the right treatment path and professional at the right time, thus improving care outcomes and resource management. We will continue to invest in the utilization of innovative technology, and we see the technological transformation in healthcare accelerating further.
The direction in which our operating environment is developing is about to change significantly through the healthcare-related entries and goals in the new government program, published at the end of the second quarter. The new government program contains many entries aimed at increasing cooperation between private and public healthcare to improve the effectiveness and cost-efficiency of the healthcare system. We estimate that the measures will support the growth of demand for private provision. When it comes to health, smooth access to treatment, effective patient-centric treatment paths, and high-quality care are everything. We welcome the government’s strong intent to utilize private operators as a part of the solution by using our full capacity, know-how, and investment ability.
Meaningful Matters,
Ville Iho
