CEO review

Ville Iho, CEO: Transition to normal operations is underway

The first quarter of 2022 was strong despite the shifting demand environment. Terveystalo's revenue increased by 18.3% year-on-year to EUR 329.7 (278.7) million. Growth was strong in all customer groups. The Sweden and others segment's external revenue was EUR 22.2 million, representing 8.0 percentage- points of revenue growth. The balance between supply and demand was not optimal during the quarter. Balancing between changing Covid-19 testing volumes and the aim to increase the supply of other services caused temporary over-resourcing in Covid-19 related services, while the appointments still saw supply challenges. For the first time during the pandemic, supply was also significantly reduced by staff’s sick leaves due to Covid-19. On the expenditure side, the imbalance between supply and demand led to a relative increase in costs, which weakened profitability. Profitability was also weakened by costs related to acquisitions and launching of new services. Adjusted EBITA increased by 2.0% year-on-year to EUR 38.9 million and was 11.8% of revenue.

The transition to normal operations will continue, and balancing supply and demand will be in the management’s focus throughout the year. We are confident that our position as the most sought-after employer and our pioneering role in digital solutions will give us a good position to strengthen our supply and improve access to care as the situation normalizes. The number of supply-enhancing digital appointments also continued to grow in the first quarter.

The Swedish business developed according to our plans. During the first quarter, we completed a supplementary acquisition in occupational health and announced that we would expand our operations beyond occupational health by acquiring Nämndemansgården, which specializes in addiction treatment. We see strong growth potential in Sweden going forward both organically and through acquisitions.

Our digital business took its first steps with the launch of a white label digital platform for public sector customers. Our goal is to continue to accelerate the growth of our digital business. More efficient use of health data, better care management and the use of digital appointments can improve productivity, access to care as well as job satisfaction. As a pioneer in digital health services, we continue to be an excellent partner for the public sector.

The Finnish health care system has been operating under exceptional circumstances for two years. In public provision of health care, the exceptional circumstances continue due to the nurses' strike. The congestion of the system, which began before the pandemic, has worsened, and there is no immediate solution in sight, with the new well-being services counties focusing on organization rather than service solutions. At some point the lengthy care queues and growing care debt need to be addressed. Part of the solution is to make greater use of private resources and expertise.

Russia's invasion of Ukraine and the ensuing economic turmoil, as well as the humanitarian crisis, are directly or indirectly affecting the operating environment in all sectors. The effects of the war on our business are small, but like all Finns, our desire to help is great. We are in a privileged position to act as a partner in providing health care services for those fleeing from war to Finland.

Our mission to fight for a healthier life is more urgent than ever, and as the leading private healthcare provider in our core markets, we play a key role in the lives of people and work communities. We are committed to our vision of creating a world with fewer sick days and more healthy, happy years.

Towards a better tomorrow,

Ville Iho