President and CEO Ville Iho: We are making determined progress towards our financial targets
Terveystalo's fourth quarter of 2023 was a strong end to a solid year, in line with our expectations. Revenue increased by 2.8% year-on-year to EUR 342.8 million. COVID-19 testing in the comparison period, expired outsourcing contracts and the weakening of the Swedish Krona decreased revenue year-on-year. Underlying organic growth was approximately 4% excluding these changes. Our profitability strengthened further and adjusted EBITA increased by 33% year-on-year to EUR 39.5 million, representing 11.5% of revenue.
Our core business, Healthcare Services, had a great quarter and the segment’s revenue increased by 6.4% year-on-year. Revenue was boosted by a more favourable customer and service mix and the successful implementation of successful pricing actions. Profitability strengthened thanks to the outstanding progress of the profit improvement program, improved operational efficiency, and a stronger top line.
The profit improvement program focused on our core business and a clear organizational structure have brought excellent results and create a solid foundation for the future. The program exceeded the target set ahead of schedule and achieved a run-rate profit improvement of EUR 60 million in 2023. The adjusted EBITA impact for 2023 was EUR 37 million. With the target exceeded, the estimated one-off costs of the program will also increase slightly from the original estimate. Our strengthened line organisation will continue to execute profit improvement initiatives in 2024.The conditions for growth in Healthcare Services remain favourable and demand is strong despite the uncertain economic environment. Poor access to treatment in public healthcare increases the demand for privately produced services, notably through increasing health insurance.
Independent profitability improvement measures in the portfolio businesses paid off, and the profitability of the entire segment strengthened markedly year-on-year. The segment’s revenue decreased by 8.8% in the fourth quarter, due to the planned contraction of the outsourcing agreement portfolio. The situation in the public pay market is still pending due to the funding challenges of the wellbeing services counties, and there are few new tenders. It is not easy to see a substantial recovery in the market before the second half of 2024.
Macroeconomic and exchange rate weakness impacted the Sweden segment’s revenue, which decreased by 3.6% year-on-year in the fourth quarter. Lower revenue and prolonged inflation also weakened profitability. We reacted to the change in the operating environment with the launch of a profit improvement program at the end of 2023 to strengthen the business area's structural profitability by the end of 2025.
I am proud of the committed work of Terveystalo employees. During 2023, we strengthened our profitability significantly in all segments despite headwinds and without compromising the high quality of our operations. In 2023, the Group’s adjusted EBITA margin strengthened by 1.4 percentage points to 9.8% of revenue in line with our guidance. Our financial position is strong, and we are advancing with a clear agenda towards our financial target of an EBITA margin of 12% in 2025. Our earnings per share excluding non-recurring items for 2023 were EUR 0.47. The Board of Directors proposes to the Annual General Meeting that the dividend be increased from the previous year and a dividend of EUR 0.30 per share be distributed.
As a company, we have a clear purpose; We fight for a healthier life. Investments in data-driven integrated healthcare in line with our strategy are paying off. We are at the forefront of our industry in adopting technology that streamlines healthcare processes and improves customer value. Our customer satisfaction is record high. We have maintained our position as the preferred employer of professionals in the field, and the medical quality of our services and the effectiveness of treatment are excellent. We will continue to be at the forefront of the industry and build efficient, caring, and effective care for our customers.