Growth in all customer groups, Attendo integration on track
Terveystalo Plc Interim report 9 May 2019 at 9:00 am EEST
This release is a summary of Terveystalo's Interim Report for 1 January – 31 March 2019. The full release is available as an attachment to this stock exchange release and is available on our website at https://www.terveystalo.com/en/investors/Financial-information/.
January–March 2019 in brief
- Revenue increased by 35.6 percent year-on-year to EUR 267.8 million (197.5)
- Revenue excluding Attendo's Finnish Health Services increased by 5.5 percent
to EUR 208.5 million - Adjusted1)2) earnings before interest, taxes, and amortization (EBITA) were
12.1 percent (13.0) of revenue - Earnings before interest, taxes and amortization (EBITA)2) were 11.8 (12.6) percent of revenue
- Profit for the period2)3) amounted to EUR 17.2 million (27.3)
- Net debt / adjusted EBITDA1)2)4) was 4.6
- Net debt/adjusted EBITDA1)4) before IFRS 16 impact (comparable) was 3.3 (2.5)
- Operating cash flow2) amounted to EUR 49.1 million (18.4)
- Earnings per share2)3) (EPS) were EUR 0.14 (0.24).
Unless otherwise stated, the figures in parentheses refer to the corresponding period a year earlier.
The reporting period includes the adoption of IFRS 16 starting on January 1, 2019.
The figures for the comparison period 2018 have not been restated. For more information on the adoption of IFRS 16 and other significant accounting policies, see Notes under section 1.
1) 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. Adjustments totaled EUR 0.7 (0.6) million in January–March.
2) Not comparable due to the impact of the adoption of IFRS 16
3) The result of the reference period was improved by the EUR 13.0 million recognized in deferred tax assets
4) LTM EBITDA includes only one quarter impact of the Attendo acquisition
Yrjö Närhinen, CEO: Strong and broad business performance continued, Attendo Integration on track
2019 started with a strong Q1, with broad scale growth and continuous improvement in performance of the core businesses, across regions and customer groups. Our long term efforts on improving operational performance continue to produce results on unit level. Our investments into prevention and wellbeing services enhance our offering as well as offer avenues for further growth.The on-going efforts on digitalizing patient journeys allow us to better match our offering with demand.This will further enhance our service delivery and operational efficiency across our network. We continue to develop new tools to further drive operational quality. For example, we are the first health care provider to enable both mobile registration and payment.
After the acquisition of Attendo’s Finnish health care operations, our revenue grew by 36 per cent to 268 million euros in the first quarter of 2019. Integration is well on track and we see great opportunities in offering new solutions to our customers and increasing public-private collaboration. The private sector can offer, for example, digital tools that improve access to health care and increase efficiency in producing these services.
The long awaited healthcare and social welfare reform was once again postponed. However, the need to reform our public services remains and the work already done will lay the groundwork for future preparations. Meanwhile, pressure on already strained public health care system in Finland continues to grow and strong demand for private health care services will continue. Terveystalo remains committed to long term partnerships in health care. Whether the customer is an individual, a company, or a public system, we believe that long term value in health care can only be delivered via higher quality, personalisation and cost efficiency. The tools to promote this change towards higher quality and cost efficiency remain at our disposal, with or without healthcare and social welfare reform. Ultimately, we need to strive for increased transparency and comparability of services. Only then do we fully empower citizens to make informed decisions. Terveystalo is committed to lead this work. Our latest Quality and responsibility publication hopefully acts as an inspiration to all of us to continue with this crucial task.
We in Terveystalo will continue to fight for healthier life for all Finns.
Yrjö Närhinen, Chief Executive Officer
Market outlook
Employment and consumer confidence remain at a high level in Finland, and the market environment is positive. With the health care and social welfare reform being delayed, demand in public outsourcings is expected to grow. 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 still 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.
Changes in reporting
Terveystalo adopted IFRS 16 accounting standard on January 1, 2019. In the profit and loss statement, the current operating lease expenses are replaced by the depreciation of the right-of-use asset and interest cost associated with lease liability. As a result, it is estimated that the impact on EBIT is small and on net profit it is immaterial in 2019. In 2019, the adoption of IFRS 16 is expected to have an positive impact of approximately EUR 40 million on EBITDA and to increase net debt and assets by approximately EUR 200 million . The figures for 2018 have not been restated. The adoption of IFRS 16 has affected the key figures of the income statement, balance sheet and cash flow. For more information on the accounting principles, see pages 16-17 under Notes.
Key figures
| EUR million | 1–3/ 2019 | 1–3/ 2018 | Change, % | 2018 |
| Revenue | 267.8 | 197.5 | 35.6 | 744.7 |
| Adjusted EBITDA1) 2) | 47.8 | 30.8 | 55.4 | 108.9 |
| Adjusted EBITDA, %1) 2) | 17.9 | 15.6 | - | 14.6 |
| EBITDA1) 2) | 47.1 | 30.1 | 56.3 | 116.6 |
| EBITDA, %1) 2) | 17.6 | 15.3 | - | 15.7 |
| Adjusted EBITA 1) 2) | 32.4 | 25.6 | 26.7 | 87.7 |
| Adjusted EBITA margin, % 1) 2) | 12.1 | 13.0 | - | 11.8 |
| EBIT 2) | 24.9 | 20.0 | 24.8 | 75.4 |
| Net profit 2) 3) | 17.2 | 27.3 | -36.7 | 68.7 |
| Net debt 2) | 575.7 | 246.4 | 133.7 | 413.3 |
| Net debt/adjusted EBITDA (last 12 months) 1) 2) 4) | 4.6 | 2.5 | - | 3.8 |
| Return on equity (ROE), %1) 2) | 10.5 | 6.9 | - | 14.2 |
| Equity ratio, %1) 2) | 38.1 | 52.2 | - | 44.1 |
| Gearing, % 1) 2) | 108.8 | 50.8 | - | 80.8 |
| Earnings per share 2) 3) | 0.14 | 0.21 | 0.54 | |
| Operating cash flow2) | 49.1 | 18.4 | 100.6 | |
| Personnel (end of period) | 6,893 | 4,396 | 56.8 | 6,018 |
| Private practitioners (end of period) | 4,885 | 4,553 | 7.3 | 4,877 |
| Number of working days | 63 | 63 | - | 251 |
| Before IFRS 16 impact (comparable), EUR million | 1–3/ 2019 | 1–3/ 2018 | Change, % | 2018 |
| Adjusted EBITDA 1) | 38.0 | 30.8 | 23.5 | 108.9 |
| Adjusted EBITDA, % 1) | 14.2 | 15.6 | - | 14.6 |
| Adjusted EBITA 1) | 32.1 | 25.6 | 25.4 | 87.7 |
| Adjusted EBITA, % 1) | 12.0 | 13.0 | - | 11.8 |
| Adjusted net debt | 383.8 | 246.4 | 55.8 | 413.3 |
| Adjusted net debt/adjusted EBITDA) (last) 12 months 1) 4) | 3.3 | 2.5 | - | 3.8 |
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. Additional information in note 14.
2) Not comparable because of the adoption of IFRS 16.
Adoption of IFRS 16 had a material impact on adjusted EBITDA which increased by EUR 9.8 million and lease-related interest-bearing debt which increased by EUR 191.9 million.
3) The result of the reference period was improved by the EUR 13.0 million recognized in deferred tax assets
4) LTM EBITDA includes only one quarter impact of the Attendo acquisition.
Briefing
Terveystalo will hold a result briefing and live webcast in English on May 9, 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/2019-q1
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 90882048#.
Helsinki, 9 May 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 health care 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 260 locations across Finland. The clinic network is complemented by 24/7 digital services.
In 2018, Terveystalo had approximately 1.2 million individual customers and approximately 3.5 million visits to a physician. Around half of Terveystalo’s 10,000 health care professionals are employees of Terveystalo, while the other half are independent practitioners. www.terveystalo.com
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