Terveystalo Oyj — Interim / Quarterly Report 2021

Aug 12, 2021

Terveystalo Group Half-Year Report 1 January - 30 June 2021: Strong growth in revenue and profit compared to lockdown-influenced reference period

Terveystalo Group Half-Year Report 1 January - 30 June 2021: Strong growth in revenue and profit compared to lockdown-influenced reference period

Terveystalo Plc, Half-Year Report, 12 August 2021 at 9:00 EEST

This release is a summary of Terveystalo's Half-Year Report 1 January - 31March
2021. The full release is attached to this stock exchange release and is
available on our website at: https://www.terveystalo.com/en/investors/Financial
-information/.

April–June 2021 in brief

· Revenue increased by 31.6 percent year-on-year[1)] to EUR 275.3 (209.2)
million.
· Adjusted[2)] earnings before interest, taxes, and amortization (EBITA)
increased to EUR 29.5 (8.8) million, representing 10.7 (4.2) percent of revenue.
· Adjusted items affecting comparability were EUR 0.8 (0.8) million.
· Profit for the period was EUR 16.2 million (-1.5).
· Earnings per share (EPS) were EUR 0.13 (-0.01).
· Cash flow from operating activities was EUR 47.3 (35.9) million.
· Acquisition of Feelgood Svenska AB (publ) proceeded according to
expectations[3)]

January–June 2021 in brief

· Revenue increased by 18.7 percent year-on-year to EUR 554.0 (466.5) million.
· Adjusted[2)] earnings before interest, taxes, and amortization (EBITA)
increased to EUR 67.7 (31.7) million, representing 12.2 (6.8) percent of
revenue.
· Adjusted items affecting comparability were EUR 1.0 (3.1) million.
· Profit for the period was EUR 40.1 (7.3) million.
· Earnings per share (EPS) were EUR 0.32 (0.06).
· Net debt/adjusted EBITDA was 2.7 (3.4).
· Cash flow from operating activities was EUR 78.4 (68.8) million.

The figures in parentheses refer to the corresponding period one year ago.
1) The figures for the comparison period were significantly affected by the
first wave of the COVID-19 pandemic and the related restrictions introduced in
late March 2020. Compared to the second quarter of 2019, revenue increased by
6.5% (4–6/2019: EUR 258.6 million) and adjusted EBITA increased by 13.9%
(4–6/2019: EUR 25.9 million)
2) Adjustments are material items outside the ordinary course of business,
associated with acquisition-related expenses, restructuring-related expenses,
net gains and losses on the sale of assets, strategic projects, and other items
affecting comparability.
3) Feelgood has been consolidated in the balance sheet and personnel numbers for
the reporting period and in the consolidated financial statements from the end
of June 2021. There was no P&L impact for the reporting period, H1/21.

CEO Ville Iho

The demand for healthcare services continued to recover in the second quarter
and the demand for appointments showed growth from the pre-pandemic period. In
particular, visits from private customers increased. Booking rates for
appointments have risen month by month. Terveystalo’s revenue for the second
quarter grew by 32% compared to the weak reference period, to EUR 275.3 (209.2)
million, and our business developed favorably in all customer groups. Services
related to COVID-19 continued to increase revenue as COVID-19 testing volumes
remained at a higher-than-anticipated level and vaccination volumes grew. Our
profitability improved significantly from the previous year; adjusted EBITA
increased to EUR 29.5 (8.8) million. The comparison period in 2020 was very
challenging due to the first wave of COVID-19, which explains the exceptionally
high growth rates for the past quarter. Revenue and EBITA both also increased
compared to the comparison period in 2019; revenue by 6.5% and adjusted EBITA by
13.9%.

Trends driven by the corona pandemic were clearly reflected in the second
-quarter sales mix. The number of appointments conducted via digital channels
increased by 68% year-on-year to approximately 246,000 appointments. Revenue
from well-being services increased by 41%, especially due to strong demand for
mental well-being, nutrition therapy and physiotherapy services.  The share of
laboratory services in the sales mix remained strong, while the low number of
acute infections meant that the volume of general practitioners’ appointments
remained substantially below normal.

Terveystalo is the clear market leader in occupational health services in the
Nordics, and we have made long-term investments in occupational health
processes, services and digital tools. The acquisition of Feelgood, which is one
of the leading occupational healthcare companies in Sweden, represents a perfect
first step for us in scaling our occupational healthcare capabilities beyond
Finland’s borders. We completed the Feelgood acquisition process in early August
and will now start working together on integration and drawing up a detailed
business plan in Sweden. With an almost doubled customer base and our
complementary occupational healthcare capabilities, we can create added value
for our customers and professionals while also improving operational efficiency.
Our goal is to develop the Swedish occupational healthcare market and grow both
organically and through additional acquisitions. We also see potential for
expanding the range of services in the Swedish market towards more integrated
chains of care.

In the consumer business, we aim to accelerate our growth and further strengthen
our leadership position. To accomplish these goals, we are developing a
personalized and engaging customer experience and convenient use of services.
Furthermore, we invest in the broad availability of leading expertise in our
chosen specialties, and developing new service products that suit the various
life stages of our customers. In May, we launched a strongly digital Children’s
Terveystalo to serve families with children better, more comprehensively, and in
an increasingly child-friendly manner. Remote appointments are a key element of
the Children’s Terveystalo service package. The concept has been received very
well by both families with children and pediatricians. Revenue of our services
for children increased significantly during the second quarter. We will expand
the Children’s Terveystalo concept to 13 new units in the autumn in addition to
the 6 units launched earlier. On the consumer side, we have also invested
heavily in the development and marketing of a personalized, digital service
experience. The results of these efforts are reflected, among other things, in
the growth of number of visits to terveystalo.com, the higher self-service rates
in the booking phase, and in the improved conversion rate of services.

The Government’s proposal on the reform of social and healthcare services was
approved by the Parliament at the end of June. Under the proposal, the
responsibility for the organization of social and healthcare services will be
transferred to the 21 well-being services counties to be established and the
City of Helsinki. As a result of these reforms, some of Terveystalo’s
outsourcing agreements for public services will need to be renegotiated so that
the new contractual terms will enter into force at the beginning of 2026 at the
latest. Furthermore, there will be restrictions on the subcontracting practices
for public services produced as outsourced services, but these will not have a
significant impact on Terveystalo. It is clear that there is demand in the
publicly funded markets under the new SOTE model, services will adapt to the new
legislation and high-quality supply will continue to find demand.

Indeed, we see a number of promising growth opportunities in public customer
relationships that will enable us to leverage our expertise, customer insight,
and extensive network. Terveystalo’s overall service sales have seen strong
growth throughout the pandemic and cooperation with the public sector has become
increasingly effective. The number of open tenders for outsourcing agreements is
also currently at a good level.  We have been successful in several tenders, the
latest of which is the launch of a partnership in the service production of
Kannelmäki health center in Helsinki. This is the City of Helsinki’s first
service purchase decision concerning a health center. Operations in Kannelmäki
will start this fall. This represents a very important partnership for
Terveystalo, which also enables us to pursue the development of our Health
Center of the Future concept.

Our most important task is still to provide measured quality care at a
reasonable cost - whether it is promoting well-being, preventing diseases or
treating them. We can invest in new solutions and quickly upgrade our operations
to meet changing customer needs. One important enabler for this is the ISO 13485
certificate we recently received for our software development as the first
Finnish health service company. With our investments, we improve the
productivity of operations and the value of our services to the customer. Our
actions encourage the renewal of all healthcare to improve people's quality of
life and well-being. As a forerunner in the industry, we are also the best
possible partner for the public sector.

We at Terveystalo work towards a future where more and more people have fast and
unhindered access to healthcare and well-being services.

Toward a better tomorrow,
Ville Iho

Outlook

·
The market environment is normalizing, but predicting demand continues to be
challenging in the short term.

· Demand for COVID-19 related services is expected to remain active during the
second half of the year, and the demand for healthcare services in general is
expected to grow clearly year-on-year.
· Demand from corporate customers for preventive and statutory occupational
health services is expected to develop favorably. The recovery of demand for
acute and non-urgent medical care is uncertain due to the reduction in general
morbidity and the restrictions introduced in response to the pandemic.
Significant changes in the employment rate may be reflected in the underlying
demand.
· In the private customer segment, overall demand is expected to develop
favorably and grow substantially year-on-year. However, there may be
considerable differences between specialties and regions in the short term due
to variation in general morbidity and regional restrictions related to the
pandemic. Demand for remote services is expected to increase further.
Significant changes in consumer confidence may be reflected in the underlying
demand.
· Demand from the public sector is expected to remain strong in occupational
health, service sales, and staffing services. Revenue from the outsourcing
business is expected to remain stable.

These views are based on the expected development of demand for Terveystalo’s
services within the next six months, compared with the past six months.

The impacts of COVID-19 and the measures taken by Terveystalo

During the second quarter of 2021, Terveystalo’s service production was again
characterized by various COVID-19-related services as well as well-being and
digital services, which saw significant year-on-year growth in demand.
The company’s liquidity and financing situation has remained strong. During the
review period, the company fulfilled the covenant requirement included in the
financing agreement that reflects relative indebtedness. Due to the prevailing
uncertainty, Terveystalo continues the increased reporting of explanatory
financial information on the company’s liquidity, assets, and liabilities as
well as the maturity of loans in Note 13.
The company estimates that, in addition to the direct impacts of the crisis,
changes in the employment rate and consumer confidence may be reflected in the
underlying demand even after the acute phase has passed. Nevertheless, the
company estimates that its diverse customer base and service selection will
mitigate the impacts on its business from any changes in demand for individual
services or in individual customer relationships.

[][][][][][][][][][][][][][][][][][][]
Terveystalo 4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 2020
Group, MEUR 2021 2020 % 2021 2020 %
Revenue 275.3 209.2 31.6 554.0 466.5 18.7 986.4
Adjusted 45.0 24.0 87.8 98.3 62.2 58.2 162.8
EBITDA, * [1)
]
Adjusted 16.4 11.5 - 17.8 13.3 - 16.5
EBITDA, % *
[1)
]
EBITDA [1) ] 44.2 23.2 90.6 97.4 59.1 64.9 158.3
EBITDA, % [1) 16.0 11.1 - 17.6 12.7 - 16.1
]
Adjusted EBITA 29.5 8.8 >200.0 67.7 31.7 113.3 101.9
* [1) ]
Adjusted 10.7 4.2 - 12.2 6.8 - 10.3
EBITA, % * [1)
]
EBITA [1) ] 28.7 8.0 >200.0 66.7 28.6 133.1 97.4
EBITA, % [1) ] 10.4 3.8 - 12.0 6.1 - 9.9
Adjusted EBIT 23.6 1.3 >200.0 56.0 16.6 >200.0 71.6
* [1) ]
Adjusted EBIT, 8.6 0.6 - 10.1 3.6 - 7.3
% * [1) ]
EBIT[ ] 22.8 0.5 >200.0 55.0 13.5 >200.0 67.2
EBIT, % 8.3 0.2 - 9.9 2.9 - 6.8
Return on - - - 13.3 6.3 - 8.2
equity (ROE),
%
[1) ]
Equity ratio, - - - 42.9 38.8 - 42.1
% [1) ]
Earnings per 0.13 -0.01 >200.0 0.32 0.06 >200.0 0.36
share (EUR)
Net debt - - - 529.4 509.5 3.9 490.9
Gearing, % - - - 87.0 95.7 - 85.9
[1)]
Net - - - 2.7 3.4 - 3.0
debt/adjusted
EBITDA
(last 12
months) [1) ]
Total assets - - - 1,419.0 1,373.6 3.3 1,361.0
Adjusted - - - 153.8 104.9 46.6 118.0
EBITDA (last
12
months),
excluding IFRS
16*[1)  ]
Net debt, - - - 347.2 323.8 7.2 312.4
excluding IFRS
16
Adjusted net - - - 2.3 3.1 - 2.6
debt/adjusted
EBITDA
(last 12
months),
excluding IFRS
16*[1)  ]
Average - - - 5,365 5,000 7.3 4,900
personnel in
person-years
Personnel (end - - - 9,306 8,079 15.2 8,253
of period)
Private - - - 5,159 5,203 -0.8 5,057
practitioners
(end of
period)
Responsibility
Quality 94.8 94.5 0.3 94.2
index[2)]
Net Promoter 83.4 82.8 0.7 82.8
Score (NPS),
appointments
Employee Net 18 19 -5.3 18
Promoter
Score (eNPS)
Mixed waste 6.21 5.06 22.6 6.00
intensity[3)]

*) 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, and other items affecting
comparability.
1) Alternative performance measure. In addition to the IFRS figures, Terveystalo
presents additional, alternative performance indicators which the company
monitors internally and which provide the company management, investors, stock
market analysts, and other stakeholders with important additional information
concerning the company’s financial performance, financial position, and cash
flows. These performance indicators should not be reviewed separate from the
IFRS figures and they should not be considered to replace the IFRS figures.
2) The quality index consists of seven effectiveness indicators that describe
the clinical and experienced quality, access to care, and the proportion of
preventive care.
3) Amount of mixed waste (metric tons) relative to total revenue (100 million)

.

Briefing
Terveystalo will arrange a webcast in English on its result on August 12, 2021
at 10:30 EEST.

You can watch the webcast online at: https://terveystalo.videosync.fi/2021-08-12
-terveystalo-q2

To ask questions, please join the telephone conference 5–10 minutes prior to the
start time using your local number (Finland: +358 981 710 310, Sweden: +46 856
642 651, UK: +44 33 3300 0804, US:
+1 631 913 1422. If you are calling from another location, please use any of the
numbers above.

The Participant Passcode: 32751256#

Helsinki, August 11, 2021
Terveystalo Plc
Board of Directors

For further information, please contact:

Ilkka Laurila, CFO
Tel. +358 30 633 1757

Kati Kaksonen, Vice President, Communications
Tel. +358 10 345 2034
Kati.kaksonen@terveystalo.com

Distribution:
Nasdaq Helsinki Oy
Main media
www.terveystalo.com

Terveystalo in brief

Terveystalo is Finland's largest health service company in terms of revenue and
network, with the aim of empowering lifelong health and well-being and building
a healthier society. The company provides comprehensive well-being, primary care
and specialist care services to corporate and private customers, as well as the
public sector. Terveystalo's digital appointment serves are available 24/7,
regardless of time and place. In addition, the company offers health and well
-being services in more than 300 locations throughout Finland.

In 2020, Terveystalo had 1.2 million individual customers. Some 6.9 million
customer visits were made, of which more than a quarter took place in remote
channels. Terveystalo employs more than 13,000 health and well-being
professionals.

Attachments: