Pihlajalinna Financial Statements Release 1 January–31 December 2017 (12 months)

Pihlajalinna Plc           Financial Statements Release       13 February 2018 at 8:00

Pihlajalinna Financial Statements Release 1 January–31 December 2017 (12 months)

Revenue and profitability for the financial year improved as expected

Brief look at October–December:

  • Revenue amounted to EUR 107.9 (103.7) million – an increase of 4 per cent
  • EBITDA amounted to EUR 8.1 (7.1) million
  • Adjusted EBITDA amounted to EUR 8.5 (7.1) million – an increase of 20 per cent
  • Operating profit (EBIT) was EUR 4.6 (3.9) million
  • Adjusted operating profit (EBIT) was EUR 4.9 (3.9) million – an increase of 27 per cent
  • Earnings per share (EPS) was EUR 0.12 (0.12)

Brief look at January–December:

  • Revenue amounted to EUR 424.0 (399.1) million – an increase of 6 per cent
  • EBITDA amounted to EUR 33.3 (27.9) million
  • Adjusted EBITDA amounted to EUR 34.1 (28.9) million – an increase of 18 per cent
  • Operating profit (EBIT) was EUR 19.1 (15.1) million
  • Adjusted operating profit (EBIT) was EUR 20.0 (16.6) million – an increase of 20 per cent
  • Number of personnel at the end of the financial year was 4,753 (4,407)
  • Earnings per share (EPS) was EUR 0.46 (0.39)

Pihlajalinna’s outlook for 2018

Pihlajalinna’s consolidated revenue is expected to increase clearly from 2017 level especially due to M&A transactions. Adjusted EBIT is expected to improve compared to 2017.

In the financial year 2017, revenue was EUR 424.0 million and the adjusted EBIT was EUR 20.0 million.

3 months
3 months
12 months
12 months
Revenue, EUR million  107.9  103.7  424.0  399.1 
EBITDA, EUR million  8.1  7.1  33.3  27.9 
EBITDA, %  7.5  6.8  7.9  7.0 
Adjusted EBITDA, EUR million*  8.5  7.1  34.1  28.9 
Adjusted EBITDA, %*  7.9  6.8  8.0  7.2 
Operating profit (EBIT), EUR million  4.6  3.9  19.1  15.1 
Operating profit, %  4.2  3.7  4.5  3.8 
Adjusted operating profit (EBIT), EUR million*  4.9  3.9  20.0  16.6 
Adjusted operating profit, %*  4.6  3.7  4.7  4.2 
Profit before tax (EBT), EUR million  4.1  3.5  17.4  13.7 
Earnings per share (EPS), EUR  0.12  0.12  0.46  0.39 
Equity per share, EUR  4.87  4.74 
Dividend per share, EUR (the Board of Directors’ proposal)  0.16  0.15 
Return on capital employed (ROCE), %  11.8  10.8 
Return on equity (ROE), %  13.6  11.1 
Equity ratio, %  41.8  46.5 
Gearing, %  32.3  21.9 
Interest-bearing net debt, EUR million  34.2  22.1 
Net debt/adjusted EBITDA, 12 months*  1.0  0.8 
Gross investments, EUR million**  9.8  5.4  30.4  27.3 
Cash flow from operating activities, EUR million  16.5  13.2  34.9  32.3 
Cash flow after investments, EUR million  12.7  7.1  16.4  6.8 
Average number of personnel (FTE)***  3,879  3,526 
Personnel at the end of the period (NOE)  4,753  4,407 
Practitioners  992  942 

* 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 reporting periods. According to Pihlajalinna’s definition, such items include, for example, restructuring measures and Group refinancing, impairment of assets and the remeasurement to fair value of pre-existing interest in acquiree, 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. Adjustments to EBITDA totalled EUR 0.4 (0.0) million for the quarter and EUR 0.7 (1.0) million for the financial year. Adjustments to operating profit (EBIT) totalled EUR 0.4 (0.0) million for the quarter and EUR 0.9 (1.5) million for the financial year.
** Finance leases are not included in the gross investments.
*** Pihlajalinna has started to report the number of personnel on average as full-time equivalents (FTEs) instead of the previous Average number of personnel indicator. 

Joni Aaltonen, CEO of Pihlajalinna:

“Pihlajalinna Group’s revenue and profitability for 2017 developed as expected. While investments in digital development and brand revamp had a negative effect on the result for the year, I am confident that these investments will be reflected in improved profitability in the near future.

In the Primary and Social Care (P&S) segment, positive development continued in the final quarter. The profitability of complete outsourcings, in particular, improved substantially compared to the previous year. All in all, the segment’s profitability has improved and reached our target level faster than we expected, which is something we can be very satisfied with.

In the Private Clinics and Specialised Care (C&S) segment, the fourth-quarter result was in line with expectations. Cost development in Public Specialised Care was expected. In accordance with the nature of Public Specialised Care, there is substantial variation between quarters. The segment’s revenue developed well during the financial year, but profitability was weighed down by investments in digital development and brand revamp. The revenue and profitability of the acquisitions made during the financial year have developed as expected.

The national expansion we announced a year ago has progressed according to plan. The first new full-service business locations opened at the turn of the year in Turku and Oulu, with Seinäjoki to follow. We plan to expand to five new regional capitals and substantially strengthen our network of business locations in the Helsinki Metropolitan Area. In addition to establishing new locations, we have made – and will continue to make – strategic acquisitions. These include the acquisitions of Salon Lääkintälaboratorio, Linnan Klinikka in Hämeenlinna and Kymijoen Työterveys Oy in Kymenlaakso, all of which were completed after the end of the financial year.

The postponement of the health and social services reform activated the municipal market in the final quarter. Due to the planned policies related to health and social services, municipalities are seeking solutions primarily on a property-driven basis. Pihlajalinna will assess projects on a case-by-case basis and pursue projects in which we can leverage regional synergies. This is influenced by having a sufficient population base, the extent of service voucher usage and the opportunities for care and health services in the region in question.

After the reporting period, the Finnish government presented the most recent draft on the legislative proposal concerning the Act on Freedom of Choice, related to the health and social services reform. The latest version eliminates the regional governments’ obligation to issue customer vouchers for specialised care except when the care guarantee is not realised. In our view, this will not have a major impact on the future market. As the population ages and the public sector cuts and centralises specialised care, there will be opportunities for the private sector to complement the public sector’s services, particularly in basic-level specialised care and non-urgent specialised care. This will present private operator with the opportunity to increase their share of specialised care service production.

The acquisition of the Forever fitness centre chain, published after the financial year, expands Pihlajalinna’s service offering to wellbeing services. The fitness centre operations will complete the preventive occupational healthcare services and rehabilitation services carried out after specialised care procedures. Furthermore, promoting wellbeing will increase its importance in the future as, due to the health and social services reform, an increasing proportion of the healthcare sector is moving from service-specific pricing towards a fixed-price business model. In this trend, Pihlajalinna is a forerunner since more than 60 per cent of our revenue comes from fixed-price business.”

Pihlajalinna’s financial reporting in 2018

Report by the Board of Directors and Financial Statements: no later than during week 11
Interim Report January–March: Friday, 4 May 2018
Half-Year Financial Report January–June: Thursday, 16 August 2018
Interim Report January–September: Thursday, 1 November 2018

Pihlajalinna Plc’s Annual General Meeting is scheduled for 5 April 2018 in Tampere, Finland.


Pihlajalinna Plc will hold a briefing for analysts and the media on Tuesday, 13 February 2018, at 10:00 a.m. in the Paavo Nurmi room at Hotel Kämp, Pohjoisesplanadi 29, 00100 Helsinki, Finland.

Turku, 12 February 2018
Pihlajalinna Plc’s Board of Directors

Further information:
Joni Aaltonen, CEO, +358 40 524 7270
Siri Markula, Head of Communications and IR, +358 40 743 2177, siri.markula@pihlajalinna.fi

Nasdaq Helsinki
Major media

Pihlajalinna in brief
Pihlajalinna is one of the leading private social and healthcare services providers in Finland. The company serves private individuals, businesses, insurance companies and public sector entities, such as municipalities and joint municipal authorities. In its private clinics and hospitals Pihlajalinna provides general practitioner services, specialised care, emergency and on-call services, a wide range of surgical services, occupational healthcare and dental care. In addition, the company offers innovative social and healthcare service provision models to public sector entities.