Pihlajalinna Oyj — Earnings Release 2020

Feb 19, 2021

Pihlajalinna Financial Statements Release 1 Jan–31 Dec 2020 (12 months)

Pihlajalinna Financial Statements Release 1 Jan–31 Dec 2020 (12 months)

Pihlajalinna Plc                  Financial Statements Release           19
February 2021 at 8:00

Pihlajalinna Financial Statements Release 1 Jan–31 Dec 2020 (12 months)

Profitability and revenue developed favourably

The figures in this financial statements release are unaudited. The comparison
figures in brackets refer to the corresponding period in the previous year.

A brief look at October–December:

· Revenue amounted to EUR 137.2 (133.8) million – an increase of 2.6%
· Adjusted EBITDA was EUR 15.7 (14.4) million – an increase of 9.0%
· Adjusted EBIT was EUR 7.3 (5.6) million – an increase of 31.2%
· IFRS 3 costs and amortisation related to M&A had a negative effect of EUR
0.8 (1.4) million on operating profit
· Earnings per share (EPS) was EUR 0.15 (0.16)
· Although the demand for healthcare services is returning to normal, the
customer volumes of Pihlajalinna’s private clinic locations were approximately
10 per cent lower than in the comparison period.
· COVID-19 testing volumes increased by 67 per cent compared to the previous
quarter as the second wave of COVID-19 continued.

A brief look at January–December:

· Revenue amounted to EUR 508.7 (518.6) million – a decrease of 1.9%
· Adjusted EBITDA was EUR 54.6 (55.1) million – a decrease of 0.9%
· Adjusted EBIT was EUR 20.8 (20.8) million – a decrease of 0.2%
· IFRS 3 costs and amortisation related to M&A had a negative effect of EUR
3.2 (5.2) million on operating profit
· Earnings per share (EPS) was EUR 0.39 (0.15)
· Pihlajalinna won a public bidding competition for the sale of Työterveys
Virta Oy’s entire share capital and occupational healthcare services.
Pihlajalinna’s position in North Ostrobothnia will be significantly strengthened
by the acquisition. The municipalities in the region will make decisions on
selling the shares in January–February 2021.
· In early 2021, the company won a significant proportion of a competitive
bidding process for the outpatient clinic, surgery and inpatient services of the
Northern Ostrobothnia Hospital District.
· Pihlajalinna is the public sector’s largest partner in the early stages of
COVID-19 vaccinations.

                           10–12/2020  10–12/2019       2020       2019
                             3 months    3 months  12 months  12 months

INCOME STATEMENT
Revenue, EUR million 137.2 133.8 508.7 518.6
EBITDA, EUR million 15.1 12.3 52.4 47.8
EBITDA, % 11.0 9.2 10.3 9.2
Adjusted EBITDA, EUR million* 15.7 14.4 54.6 55.1
Adjusted EBITDA, %* 11.5 10.8 10.7 10.6
Operating profit (EBIT), EUR 6.8 3.7 18.2 10.2
million
Operating profit, % 4.9 2.7 3.6 2.0
Adjusted operating profit 7.3 5.6 20.8 20.8
(EBIT), EUR million*
Adjusted operating profit, %* 5.3 4.2 4.1 4.0
Profit before tax (EBT), EUR 5.7 2.7 13.8 6.3
million

SHARE-RELATED INFORMATION
Earnings per share (EPS), EUR 0.15 0.16 0.39 0.15
Equity per share, EUR 4.85 4.47
Dividend per share, EUR (the 0.20
Board of Directors’ proposal)

OTHER KEY FIGURES
Return on capital employed 5.7 3.1
(ROCE), %
Return on equity (ROE), % 8.1 3.8
Equity ratio, % 26.1 24.3
Gearing, % 169.4 181.7
Interest-bearing net debt, 194.8 192.7
EUR million
Net debt/adjusted EBITDA, 12 3.6 3.5
months*
Gross investments, EUR 5.6 13.1 25.7 44.1
million**
Cash flow from operating 18.6 19.8 47.2 36.8
activities, EUR million
Cash flow after investments, 16.7 15.4 42.8 17.4
EUR million
Average number of personnel 4,308 4,515
(FTE)
Personnel at the end of the 5,995 5,815
period (NOE)

* Significant transactions that are not part of the normal course of business,
infrequently occurring events or valuation items that do not affect cash flow
are treated as adjustment items affecting comparability between review periods.
According to Pihlajalinna’s definition, such items include, for example,
restructuring measures, impairment of assets and the remeasurement of previous
assets held by subsidiaries, the costs of closing down businesses and business
locations, gains and losses on the sale of businesses, costs arising from
operational restructuring and the integration of acquired businesses, costs
related to the termination of employment relationships as well as fines and
corresponding compensation payments. Pihlajalinna does not recognise adjustments
affecting comparability for acquisition-related transfer taxes and expert fees
(IFRS 3 costs) or purchase price allocation (PPA) amortisation.

EBITDA adjustments amounted to EUR 0.6 (2.1) million for the quarter and EUR 2.2
(7.3) million for the financial year. Adjustments to operating profit amounted
to EUR 0.5 (1.9) million for the quarter and EUR 2.6 (10.6) million for the
financial year.

** Assets acquired via leases are regarded as equal to assets acquired by the
Group itself, meaning that right-of-use assets pursuant to IFRS 16 are included
in gross investments.

Pihlajalinna’s outlook for 2021

It is still hard to assess and predict the financial impacts of the duration of
the COVID-19 situation. National or regional restrictions aimed at preventing a
third wave of COVID-19 and potential delays in COVID-19 vaccinations may have a
negative impact on consumer demand. At the same time, extensive COVID-19
testing, the start of vaccinations, working through the queues in the public
sector and the release of other pent-up demand help compensate for the decline
in consumer demand.

Pihlajalinna’s consolidated revenue is expected to increase clearly and adjusted
EBIT is expected to improve clearly compared to 2020.

Pihlajalinna is updating its strategy and will publish the new strategy during
the beginning of the year 2021.

Joni Aaltonen, CEO of Pihlajalinna:

I am satisfied with our customer service and the flexibility that our
organisation demonstrated in shifting the focus of our services – including
public services as well as services offered directly to consumers – during the
COVID-19 epidemic.

I am also pleased with our strong profit performance, which shows that our
efficiency improvement programme has had a long-term impact on our
profitability. Our revenue in the final quarter of 2020 exceeded the previous
year’s level. Partnerships and occupational healthcare have increased the use of
our services and elevated the capacity utilisation rates of our operating
locations. Nevertheless, we have not yet returned to the normal level of
operations seen before the COVID-19 epidemic. While the direction is good, there
is still room for improvement. The final quarter of the year puts us in an
excellent position to enter the new year.

Earnings per share improved substantially year-on-year thanks to the measures we
have taken over the past couple of years. The substantial leap in profitability
taken in our private clinic, occupational healthcare and hospital operations
also supported the improvement in earnings per share.

Pihlajalinna’s acquisition of Työterveys Virta Oy further strengthens our
position as we start the new year. Our position in the Oulu region will be
significantly strengthened by the transaction. Our market share in occupational
healthcare services in the region will increase to approximately 30 per cent,
which improves our position in all services offered to consumers and partners in
North Ostrobothnia. Early this year, we also won a significant proportion of a
competitive bidding process for the outpatient clinic, surgery and inpatient
services of the Northern Ostrobothnia Hospital District.

In Kristiinankaupunki, the operations of Selkämeren Terveys Oy have got off to a
good start. The Huhtasuo health centre outsourcing in Jyväskylä, which began in
December, has received good customer feedback. Huhtasuo is an important proving
ground for us, as we see broader opportunities for our service models in public
services.

Preventive services are the primary purpose of occupational healthcare and
remote work situation has further increased the need for these services. Already
for a long time the most common causes of disability have been mental health
disorders and musculoskeletal disorders. This year, the focus of Pihlajalinna’s
development of digital occupational health services will especially be on care
paths for musculoskeletal disorders and services to support mental health. We
are also developing products in collaboration with our Forever fitness centre
chain. We believe we have an excellent opportunity to grow the number of
Pihlajalinna’s occupational healthcare customers and the impact of occupational
health services.

Customers’ service consumption habits changed quickly due to the COVID-19
epidemic. Pihlajalinna’s preparedness to deliver extensive remote services
proved to be good. Our remote services were used nearly 500,000 times during the
year, representing 44 per cent of all consultations. The use of video and chat
consultations grew threefold. The work of healthcare professionals who provide
remote consultations is flexible, and the opportunity to work remotely improves
employee satisfaction and the productivity of work. Ideally, however, in-person
appointments and remote consultations complement each other. Nearly all ailments
can be treated in remote consultations, but the best outcomes are achieved by
combining both consultation models. Certain routine healthcare tasks can also be
automated.

Pihlajalinna will publish minor revisions to its strategy during the beginning
of the year 2021. We continue to focus on good cooperation with our partners.
Ensuring that our services are smooth and easy to use is key to winning our
customers’ trust regardless of who pays for the service. We will focus on
digital sales and service channels and emphasise the customer’s comprehensive
health and wellbeing in our services.

Pihlajalinna’s financial reporting in 2021

Financial statements and Board of Directors’ report: no later than in week 13

Interim report January–March: Friday, 7 May 2021

Half-year financial report January–June: Friday, 13 August 2021

Interim report January–September: Thursday 4 November 2021

Briefing

Pihlajalinna will hold a briefing for analysts and the media on Friday, 19
February 2021 at 10:00 a.m. The event will be held remotely.

Helsinki, 18 February 2021
The Board of Directors of Pihlajalinna Plc

Further information

Joni Aaltonen, CEO, +358 40 524 7270
Tarja Rantala, CFO, +358 40 774 9290

Distribution

Nasdaq Helsinki
Major media
investors.pihlajalinna.fi

Pihlajalinna is one of Finland’s leading private providers of social, healthcare
and wellbeing services. The Group provides services to private individuals,
companies, insurance companies and public sector entities, such as
municipalities and joint municipal authorities, across Finland. The Group
provides general practitioner and specialised care services, including emergency
and on-call services, a wide range of surgical services, occupational healthcare
and dental care services, in private clinics and hospitals. The Group, in
cooperation with the public sector, offers social and healthcare service
provision models to public sector entities with the aim of providing high
-quality services for public pay healthcare customers.

Attachments: