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Terveystalo Plc: Terveystalo Group Financial Statements Bulletin 2018

Terveystalo Plc Stock Exchange Release 14 February 2019 at 9:00 EET

Record year, strong platform for growth

October-December 2018 in brief

  • Revenue increased by 4.2 percent year-on-year to EUR 197.9 million (189.9)
  • Adjusted* EBITDA increased by 11.9 percent year-on-year to EUR 32.5 million (29.1)
  • EBITDA increased by 7.2 percent year-on-year to EUR 26.6 million (24.8)
  • Adjusted* earnings before interest, taxes and amortization (EBITA) were 13.7 percent (12.6) of revenue
  • Earnings before interest, taxes and amortization (EBITA) were
    10.7 (10.3) percent of revenue
  • Profit for the period amounted to EUR 10.1 million (6.1)
  • Operating cash flow amounted to EUR 38.6 million (37.5)
  • Earnings per share** were EUR 0.08 (0.05).

2018 in brief

  • Revenue increased by 8.0 percent year-on-year to EUR 744.7 million (689.5)
  • Adjusted* EBITDA increased by 17.9 percent year-on-year to EUR 108.9 million (92.4)
  • EBITDA increased by 70.9 percent year-on-year to EUR 116.6 million (68.2)
  • Adjusted* earnings before interest, taxes and amortization (EBITA) were 11.8 percent (10.6) of revenue
  • Earnings before interest, taxes and amortization (EBITA) were 12.8 percent (7.1) of revenue
  • Profit for the period amounted to EUR 68.7 million (7.2)
  • Net debt increased by 61.2 percent to EUR 413.3 million (256.4)
  • Net debt / adjusted EBITDA*** increased from 2.8 to 3.8
  • Operating cash flow amounted to EUR 100.6 million (70.0)
  • Earnings per share (EPS)** were EUR 0.54 (0.06).


EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization
EBITA = Earnings Before Interest, Taxes, and Amortization
*Adjustments are material items outside the ordinary course of business associated with acquisition-related expenses, restructuring-related expenses, gain on sale of assets, strategic projects including the IPO, new business operations, and other items affecting comparability. Adjustments totaled EUR 5.9 million in October-December and EUR -7.7 million in January-December.
 ** The effects of share conversion and share split have been taken into account in the weighted average number of shares.
*** The indicator includes the effect of the acquisition of Attendo's Finnish health care operations on December 28, 2018 on net debt but not on EBITDA.
Attendos Finnish health care operations are included in the consolidated figures for the balance sheet and personnel as of 31 December 2018.

Yrjö Närhinen, CEO:
2018 was Terveystalo's fifth consecutive year of robust growth. It was another record year for us as Terveystalo grew in all key areas. Our revenue grew by 8 per cent to 745 million euros and our adjusted EBITA margin improved by 1.2 percentage points to 11.8 per cent. After many transformational projects, including the Diacor integration and our successful introduction to Helsinki Stock Exchange, our employees were again able to direct their focus on developing our core business, enhancing our service delivery, and gaining efficiencies of scale. We have build a strong platform for growth. We saw broad scale growth in all customer groups and improved our financial performance in every quarter, while at the same time delivering superior customer experience to a record number of customers.

Broad scale development accross operations was one of our major successes in 2018. We managed to tap into pockets of growth while further improving our operational efficiency and quality. We are proud of our network, which runs efficiently round the clock-across Finland. I am also particularly delighted by the improvement in our customer satisfaction: Our Net Promoter Score, or NPS, increased to 71 in appointments and to 91 in clinic hospitals and customer satisfaction in remote services was record strong. Correct and effective treatment is the foundation of all our activities. We continuously develop and measure our clinical quality and effectiveness and have further expanded its reporting. In the Quality and Responsibility Book, published at the end of February, we report on the results of this work and explain in more detail how we manage quality and corporate responsibility in Terveystalo and the strategic importance of quality in our business.

Efficiency gains in our physical network have enabled us to invest heavily in digital services. Our cost-efficient solutions, such as remote appointments and other digital services, ensure that our customers have access to the service they want, regardless of time and place. Our capital expenditure in intangible assets will continue to grow as we further invest in our digital platform.

On top of strong performance in our core business, well-being and preventive services grew at a record pace. These services meet the changing needs of our customers and complement our comprehensive care chain. Oma Suunnitelma, our digital personal health management plan is a good example of a service that reflects our holistic approach. More than 170,000 individual health plans have been made since its launch in the end of 2017. In addition, we recruited a significant number of professionals and made multiple acquisitions in well-being services in order to support growing demand. We expanded our service range to massage therapy with Rela Group acquisition and introduced new types of partnerships. Our minority investment in Etsimo Healthcare, a company that develops a platform combining artificial intelligence, machine learning and health data, is an example of this.

Our public healthcare services grew in double digits. In addition to strong organic growth, the transformative acquisition of Attendo's Finnish health care operations which was completed in the end of the year was a major step in our evolution as Finland's leading private player in providing public healthcare services. We take our social role seriously and aim to be a long-term, reliable partner for society.

In 2018, we introduced a new mission: Fighting for a healthier life. This mission involves many important perspectives. The major health challenges facing our society, including lifestyle diseases such as diabetes and musculoskeletal disorders, as well as mental health issues, involve high costs for Finland. For our part, we aim to support holistic, preventive practices that help people stay as healthy as possible. Our objective is to harness our health care expertise to enable each individual to live a healthy life, while also serving as the highest quality health care partner in times of illness. This way, we continue to develop the Finnish health care system towards an individualized approach instead of one that is geared towards the system. We want to actively engage in social debate and continue to focus on quality in health care at the national and local levels.

At Terveystalo, we want to be a partner in health for all Finns and be present in individuals' everyday lives, independent of time and place. Our task is to repeatedly win our place in our customers' hearts and minds by working systematically and responsibly, with greater wisdom and transparency.

Naturally, our success is the end result of the dedicated work of our employees. Close to 10,000 health care professionals now work at Terveystalo, about half of whom are private practitioners. We were chosen as the most desired employer by both doctors and health care students for the sixth year in a row, and 93% of our employees were satisfied with Terveystalo as an employer. We are on the right track.

Yrjö Närhinen, CEO

Outlook
Employment and consumer confidence remain at a high level in Finland, and the market environment is positive. If the health care and social welfare reform is delayed, demand in public outsourcings is expected to grow. Should the reform move forward it would enable private service providers to offer publicly funded health center services basically similar to the current services. Corporate customers keep up a steady demand, and the relative share of preventive services is increasing. Private customer demand remains likewise at a steady level but new capacity on the market decreases Terveystalo's revenue growth. This capacity growth has reached its peak, however. These views are based on the expected market development within the next six months, compared to the last six months.

In 2018, according to management estimate, after the acquisition of Attendo's Finnish health care operations Terveystalo Group's revenue would have been EUR 976.4 million and the profit EUR 72.4 million if the acquisition of business operations during the financial year had been included in the consolidated financial statements starting from January 1, 2018.

Key figures

EUR million 10-12/
2018
10-12/
2017
Change,
%
2018 2017 Change,
%
Revenue 197.9 189.9 4.2 744.7 689.5 8.0
Adjusted EBITDA* 32.5 29.1 11.9 108.9 92.4 17.9
Adjusted EBITDA, % * 16.4 15.3 - 14.6 13.4 -
EBITDA * 26.6 24.8 7.2 116.6 68.2 70.9
EBITDA, % * 13.4 13.1 - 15.7 9.9 -
Adjusted EBITA * 27.1 23.9 13.6 87.7 73.0 20.3
Adjusted EBITA, % * 13.7 12.6 - 11.8 10.6 -
EBIT 16.1 14.0 14.7 75.4 28.2 167.6
Net profit 10.1 6.1 65.4 68.7 7.2 > 200.0
Net debt       413,3  256,4 61,2
Net debt/adjusted EBITDA
(last 12 months)* ***
- - - 3.8 2.8 -
Return on equity (ROE), %* - - - 14.2 2.1 -
Equity ratio, % * - - - 44.1 50.7 -
Gearing, %* - - - 80.8 56.1 -
Earnings per share** 0.08 0.05 - 0.54 0.06 -
Operating cash flow 38.6 37.5 2.7 100.6 70.0 43.7
Personnel (end of period) - - -  6,018 4,265  
Private practitioners (end of period) - - -  4,877 4,431  
Number of working days 62 62 - 251 251 -


* Alternative performance measure. Additional information in note 14.
 ** The effects of share conversion and share split have been taken into account in the weighted average number of shares.
*** The indicator includes the effect of the acquisition of Attendo's Finnish health care operations on December 28, 2018 on net debt but not on EBITDA.
Diacor is included in the consolidated figures for the comparison period for the balance sheet and personnel as of March 31, 2017. Attendos Finnish health care operations are included in the consolidated figures for the balance sheet and personnel as of 31 December 2018.

Financial reporting and General Meeting of Shareholders 2019

In 2019, Terveystalo Plc will publish financial reports as follows:

  • Annual Report 2018 on week 9, 2019
  • Interim report for January-March 2019 on Thursday, May 9, 2019
  • Half-Year Report for January-June 2019 on Thursday, August 8, 2019
  • Interim report for January-September 2019 on Thursday, October 31, 2019

The financial reviews 2019 will be published at approximately 9:00 a.m. EET. Financial reports are published in Finnish and English.

Terveystalo Financial Statements and the Report of the Board of Directors are published as a part of the Annual Report 2018 on week 9. 

Annual General Meeting of Terveystalo Plc will be held on Thursday, April 4, 2019 starting at 3:00 pm EET, at Marina Congress Center, Katajanokanlaituri 6, 00160 Helsinki, Finland.

Terveystalo follows the disclosure procedure enabled by the Finnish Financial Supervisory Authority and hereby publishes its financial statements bulletin attached as a PDF file to this stock exchange release. The report is also available at: https://www.terveystalo.com/en/investors/Financial-information/

Briefing
Terveystalo will hold a result briefing and live webcast in English on February 14, 2019, starting at 11:00 a.m. EET, at Terveystalo Piazza, Jaakonkatu 3 B, (3rd floor), 00100 Helsinki, Finland. You can watch the webcast online at: https://terveystalo.videosync.fi/financial-statement-2018

To ask questions, please join the telephone conference 5-10 minutes prior to the start time using your local number (Finland: +358 (0)9 8171 0310, Sweden: +46 (0)8 5664 2651, UK: +44 (0)33 3300 0804, US: +1 63 1913 1422). If you are calling from another location, please use any of the numbers above. The Participant Passcode is 54831204#.

Helsinki, February 14, 2019
Terveystalo Plc
Board of Directors

For more information, please contact:
Ilkka Laurila, CFO
Tel. +358 30 633 1757
Kati Kaksonen, Director, Investor Relations and Financial Communications
Tel. +358 10 345 2034
Kati.kaksonen@terveystalo.com
Distribution:
Nasdaq Helsinki Oy
Main media
www.terveystalo.com

Terveystalo in brief

Terveystalo is a listed company on the Helsinki Stock Exchange. Terveystalo is the largest healthcare service company in Finland with net sales and network. The company offers versatile primary and secondary health care services for corporate and private customers and the public sector. The nationwide network covers 180 locations across Finland, complemented by 24/7 digital services.
In 2017, Terveystalo had approximately 1.2 million individual customers  and approximately 3.3 million doctor visits. Nearly 9,000 healthcare professionals work in Terveystalo, about half of whom are private practitioners. Terveystalo's services carry the Key Flag symbol and the company is a member of the Association for Finnish Work. www.terveystalo.com

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Thursday, February 14, 2019 - 02:01