CEO review
President and CEO Ville Iho: Despite the difficult demand environment, profitability remained at a good level
In the first quarter of 2026, the operating environment was exceptionally challenging, and demand for health services clearly weakened year over year across all customer groups. Despite market headwinds, our profitability remained at a good level, driven by strong operational efficiency and cost control. We adjusted our operations and costs to meet the demand, but above all, we continued to implement our strategy with determination, investing in our customer service, our occupational health development programme, and even better digital services.
Outlook and guidance
Our guidance for 2026 remains unchanged. We are responding to the negative cycle with cost adjustments and investing in future growth, supported by megatrends. The strong foundation built in recent years enables us to continue investing in the accessibility, medical effectiveness and fluency of our services for the benefit of our patients and customers.
Market and demand situation
The market and demand situation for Finnish health services was exceptionally weak in the first quarter. Demand was clearly lower than in the comparison period, which was affected by very low consumer confidence, the weak flu season, companies' cost-cutting measures and the Wellbeing Services Counties' caution in purchasing services. The decline in demand is historically exceptional and, in addition to the weak macroeconomic situation, partly structural. However, the long-term demand drivers and fundamentals have not changed, and the megatrends supporting the demand for health services remain very positive. We continue to expect the demand environment to gradually recover during 2026, although the first half of the year will be very challenging. Post-quarter, we have continued actions to address the cost base and adjust to weak demand.
Financial performance and profitability
The exceptionally weak demand environment and volume development had a broad impact on revenue, which decreased by approximately 11 percent year-on-year to EUR 308 million. The decline in volumes also impacted the margins. The adjusted EBIT margin was around 11 percent – still a historically good level, thanks to operational efficiency and despite the exceptionally strong comparables in the first quarter.
We adjust our cost structure according to demand to ensure profitability, even in low-volume environments. The work continues throughout the organisation, and we continue to emphasise measures that will strengthen our performance in the long term, including more accurate and flexible resource allocation, process simplification and automation, and solutions that improve the productivity of back-office operations.
Business area development
Occupational health remained at the heart of our development in Healthcare Services. In addition to negative volume drivers linked to temporary market headwinds in the operating environment and a decline in the total number of employed people, the number of Terveystalo's occupational health end users continued to decline year-on-year. We estimate that the bottom has now been reached and expect the number of connected employees to begin increasing over the next few quarters. The occupational health development programme has progressed as planned, and we will continue to invest in service and product renewal, the ease of doing business, and the usability of data as part of proactive work ability management. We launched a next-generation digital platform for our first client companies, which enables technology to be harnessed more efficiently to anticipate work ability risks, reduce sickness absence, and improve work ability.
Revenue from insurance customers decreased year-on-year as overall market segment volume declined. However, our relative position strengthened. We will continue to build solutions for insurance companies that improve cost-effectiveness, cost predictability, and the monitoring of care pathway effectiveness, and to support profitable volume growth in the future.
The freedom-of-choice experiment for consumers over the age of 65 has achieved its main goal: to bring completely new customers within the scope of smooth private health services. To serve customers even better, the range of services must be expanded, and the restrictions on the number of visits relaxed. Based on experience, we believe that the Kela system should generally be developed by allocating reimbursements to fewer services, but more effectively. In addition to expanding the experiment for people aged 65 and over, investments in oral health care and mental health for children and young people would be excellent next steps.
As expected, the revenue of the Portfolio Businesses declined due to the expiry of outsourcing agreements and lower purchases by the Wellbeing Services Counties. Demand for staffing services was weak, and revenue continued to fall. Digital services in the public sector were a clear positive exception to the overall trend in publicly funded services.
Demand for dental health services was stable, and revenue was close to stable year-on-year. The progress of the Hohde acquisition is awaiting approval from the competition authorities. If completed, the transaction will double the size of the dental services business and clearly strengthen our offering to different customer groups.
In Sweden, market weakness continued, but profitability improved slightly and operational efficiency improved year-on-year. The sales pipeline has developed favourably, which supports the outlook for a gradual recovery as demand normalises. In 2026, we will focus on strengthening our revenue, which we can also support through acquisitions.
Strategy implementation and digital development
Our goal is to be a pioneer in renewing healthcare service models and to harness technology's potential for the benefit of all our stakeholders. Although the operating environment has been challenging, we are not reducing our investment in the future. Structural shifts in demand are driving our investments to increase automation, improve customer service, and streamline our professionals' work by reducing and automating non-value-added phases.
The most significant and concrete developments of the year include the introduction of a digital occupational health platform developed with our joint venture partner MedHelp, the scaling of the previously launched Ella professional user interface and increased digital health productivity through new AI-assisted appointments, among other things.
The development cycle of our digital services has accelerated significantly over the past few quarters. The insourcing of development work we started earlier, combined with the extensive use of AI, has significantly enhanced both service design and application coding. At the same time, we have brought the entire development process closer to the end users, both our customers and healthcare professionals. The industry's transformation is accelerating, and we will continue to be at the forefront of development. Through long-term measures, we ensure we can create value for our customers, employees and owners in the changing healthcare environment, now and in the future.
Ville Iho