CEO review

President and CEO Ville Iho: We are on track to meet our targets   

Terveystalo's first quarter of 2024 was strong. Revenue increased by approximately 3 percent to EUR 350 million and our profitability strengthened for the fourth consecutive quarter. Adjusted EBITA increased by nearly 30 percent to EUR 47 million, representing 13.5 percent of revenue. Earnings per share increased by 112 percent to EUR 0.19.

The excellent performance of our core business, Healthcare Services drove this growth. The segment's revenue grew by more than 7 percent to EUR 268 million in the first quarter. The increase was driven by a more favourable customer and service mix and successful commercial measures. The segment's adjusted EBITA increased by 38 percent to EUR 43 million and 16 percent of revenue, driven by improved operational efficiency and revenue growth.

We started a profit improvement program in the fourth quarter of 2022 and reached the original target of 50 million euro run-rate impact ahead of schedule at the end of 2023. We now see a clear increase in our organization's performance in the first quarter results and we narrow the range of our guidance accordingly. In 2024, we will focus on further strengthening operational efficiency and continue our determined journey towards our EBITA target of 12 percent in 2025. By focusing on integrated care in line with our strategy, we strengthen not only the effectiveness of our healthcare services, but the professional and customer experience and our financial performance as well.

The independent profitability measures of the Portfolio businesses also paid off, and the segment's adjusted EBITA strengthened by almost 18 percent year-on-year to approximately EUR 3 million, representing 5 percent of revenue. The segment's revenue decreased by approximately 9% to EUR 65 million due to the proactive customer selection of staffing services and the continued subdued demand for dental care. The planned contraction of the outsourcing contract portfolio continued, but thanks to additional invoicing, the reported revenue of the business was close to flat year-on-year. The public sector market continues to be subdued due to funding challenges in the Wellbeing services counties and the sales pipeline is developing slowly. New tenders have been seen mainly in digital services.

The challenges in the Swedish market were clearly reflected in the results of the Sweden segment. Revenue declined by just under ten percent year-on-year due to weaker customer-specific demand, expired contracts, and the impact of working days, to EUR 23 million. Revenue is expected to decline further in the first half of the year. Adjusted EBITA decreased markedly and landed at a zero margin. The ongoing profit improvement program in Sweden, leveraging the best practices from the successful program executed in Finland, aims to generate a structural improvement in the business area's profitability. We expect the full impact to be realized in 2025.

When it comes to health, smooth access to high-quality effective care is critical. Satisfied customers who feel they receive the help and treatment they need are the foundation of everything we do. Our mental health services are an excellent example of effective, high-quality care. Although the number of mental health diagnoses has increased, we have successfully reduced the total number of related sickness absences in our customer organisations. The reduction in the length of mental health-related sickness absences seen in our occupational health population reflects our success in early intervention and the right treatment. For our customer organisations, this translates into lower costs and for the patients, into a healthier everyday life. The high quality of our work is also reflected in very high customer satisfaction and perceived effectiveness of our healthcare services. Our customer satisfaction index for appointments, NPS, exceeded 86 in the first quarter of the year and the PEI index, which measures the perceived effectiveness of care, showed excellent development. At Terveystalo, we focus on health so that our customers can concentrate on meaningful matters.

Meaningful Matters,
Ville Iho