Pihlajalinna Interim Report 1 January–30 September 2021 (9 months)
Pihlajalinna Plc Interim Report 4 November 2021 at 8:00 a.m.
Pihlajalinna Interim report 1 January–30 September 2021 (9 months)
Revenue continued to increase, profitability improved
The figures in this interim report are unaudited. The comparison figures in brackets refer to the corresponding period in the previous year.
A brief look at July-September:
- Revenue amounted to EUR 140.6 (123.9) million – an increase of EUR 16.8 million, or 13.5 per cent
- Adjusted EBITDA was EUR 18.8 (17.2) million – an increase of 9.2 per cent
- Adjusted EBIT was EUR 10.0 (8.7) million – an increase of 15.0 per cent
- IFRS 3 costs and amortisation related to M&A had a negative effect of EUR 1.3 (0.8) million on operating profit
- Earnings per share (EPS) was EUR 0.31 (0.20)
- COVID-19 services* revenue amounted to EUR 11.8 (3.4) million – an increase of EUR 8.4 million.
- The acquisition of Työterveys Virta Oy 1.4.2021 increased revenue by EUR 3.6 million, or 2.9 per cent.
- Appointments at Pihlajalinna’s private clinics grew by approximately 9 per cent year-on-year, with remote services representing 44 per cent of all appointments (excluding municipal outsourcings).
A brief look at January-September:
- Revenue amounted to EUR 423.1 (371.5) million – an increase of EUR 51.6 million, or 13.9 per cent
- Revenue amounted to EUR 423.1 (371.5) million – an increase of EUR 51.6 million, or 13.9 per cent
- Adjusted EBITDA was EUR 49.2 (38.9) million – an increase of 26.5 per cent
- Adjusted EBIT was EUR 23.1 (13.5) million – an increase of 71.3 per cent
- IFRS 3 costs and amortisation related to M&A had a negative effect of EUR 3.5 (2.5) million on operating profit
- Earnings per share (EPS) was EUR 0.71 (0.24)
- COVID-19 services* revenue amounted to EUR 28.8 (4.1) million – an increase of EUR 24.7 million
- The acquisition of Työterveys Virta Oy 1.4.2021 increased revenue by EUR 7.4 million, or 2.0 per cent
- Appointments at Pihlajalinna’s private clinics grew by over 8 per cent year-on-year, with remote services representing 42 per cent of all appointments (excluding municipal outsourcings).
- Pihlajalinna will acquire Pohjola Hospital Ltd. In connection with the acquisition, Pihlajalinna will also sign a new five-year service agreement with Pohjola Insurance. The first phase of the notification proceedings, in accordance with the Competition Act, concluded on 2 November 2021 and the Finnish Competition and Consumer Authority (FCCA) commenced the second phase of the proceedings. According to the Finnish Competition Act, the second phase of the proceedings may not take more than 69 business days unless the Finnish Market Court grants extension upon application. Without the potential extension, the second phase of the proceedings will be completed no later than 10 February 2022.
* COVID-19 services include COVID-19 testing, sample collection, vaccination and other potential services directly related to managing the COVID-19 pandemic.
|3 months||3 months||9 months||9 months||12 months|
|Revenue, EUR million||140.6||123.9||423.1||371.5||508.7|
|EBITDA, EUR million||18.2||16.7||48.6||37.3||52.4|
|Adjusted EBITDA, EUR million*||18.8||17.2||49.2||38.9||54.6|
|Adjusted EBITDA, %*||13.4||13.9||11.6||10.5||10.7|
|IFRS 3 costs*||-0.5||0.0||-1.2||-0.1||-0.1|
|Adjusted EBITDA excluding IFRS 3 costs, EUR million*||19.3||17.2||50.4||39.0||54.8|
|Adjusted EBITDA excluding IFRS 3 costs, %*||13.8||13.9||11.9||10.5||10.8|
|Operating profit (EBIT), EUR million||9.4||8.0||22.6||11.4||18.2|
|Operating profit, %||6.7||6.4||5.3||3.1||3.6|
|Adjusted operating profit (EBIT), EUR million*||10.0||8.7||23.1||13.5||20.8|
|Adjusted operating profit, %*||7.1||7.0||5.5||3.6||4.1|
|Adjusted operating profit (EBIT) excluding IFRS 3 costs and PPA amortisation, EUR million*||11.2||9.4||26.6||15.9||24.0|
|Adjusted operating profit (EBIT) excluding IFRS 3 costs and PPA amortisation, %*||8.0||7.6||6.3||4.3||4.7|
|Profit before tax (EBT), EUR million||8.5||7.0||19.9||8.0||13.8|
|Earnings per share (EPS), EUR||0.31||0.20||0.71||0.24||0.39|
|Equity per share, EUR||5.12||4.70||4.85|
|Dividend per share, EUR||0.20|
|OTHER KEY FIGURES|
|Return on capital employed (ROCE), %||9.0||4.7||5.7|
|Return on equity (ROE), %||16.1||7.4||8.1|
|Equity ratio, %||25.8||26.1||26.1|
|Interest-bearing net debt, EUR million||211.0||207.3||194.8|
|Net debt/adjusted EBITDA, 12 months*||3.2||3.9||3.6|
|Gross investments, EUR million**||9.3||3.5||37.8||20.1||25.7|
|Cash flow from operating activities, EUR million||8.8||-3.0||32.5||28.6||47.2|
|Cash flow after investments, EUR million||6.2||-4.6||5.8||26.1||42.8|
|Average number of personnel (FTE)||4,731||4,303||4,308|
|Personnel at the end of the period (NOE)||5,750||5,882||5,550|
* 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. Starting from H1/2021, Pihlajalinna reports key figures adjusted EBITDA and adjusted operating profit also without acquisition-related IFRS 3 costs and PPA amortisation.
EBITDA adjustments amounted to EUR 0.6 (0.6) million for the quarter and EUR 0.7 (1.6) million for the review period. Adjustments to operating profit amounted to EUR 0.6 (0.7) million for the quarter and EUR 0.5 (2.1) million for the review period.
** 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 unchanged
Pihlajalinna’s consolidated revenue is expected to increase and adjusted EBIT is expected to improve clearly compared to 2020.
The acquisition of Pohjola Hospital does not have an impact on Pihlajalinna’s outlook for the year 2021. The Finnish Competition and Consumer Authority (FCCA) has been notified of the transaction. The acquisition will be implemented after the FCCA’s approval. The first phase of the notification proceedings, in accordance with the Competition Act, concluded on 2 November 2021 and the Finnish Competition and Consumer Authority (FCCA) commenced the second phase of the proceedings. According to the Finnish Competition Act, the second phase of the proceedings may not take more than 69 business days unless the Finnish Market Court grants extension upon application. Without the potential extension, the second phase of the proceedings will be completed no later than 10 February 2022.
Joni Aaltonen, CEO of Pihlajalinna:
Pihlajalinna’s growth and the improvement of profitability have progressed according to plan. Revenue grew and profit performance improved substantially in the third quarter compared to the previous year. In September the Group’s monthly revenue exceeded EUR 50 million and adjusted quarterly operating income exceeded EUR 10 million for the first time in Pihlajalinna’s history.
COVID-19 testing nationally reached its peak in August, with over 25,000 daily tests. There has been a decline in testing volumes since August due to the revised testing recommendations and the increasing vaccination coverage. Pihlajalinna’s result for the third quarter was improved by the normal seasonal variation of the company’s operations as well as COVID-19 services and the customer volumes of Pihlajalinna’s private clinics recovering towards the pre-pandemic levels. Remote services through various channels represented 44 per cent of all appointments (excluding municipal outsourcing arrangements).
Pihlajalinna announced its intention to acquire the entire share capital of Pohjola Hospital Ltd at the beginning of July. The Finnish Competition and Consumer Authority (FCCA) confirmed that it had received Pihlajalinna’s acquisition control notification at the end of September. We expect the FCCA to approve the completion of the acquisition. We will elaborate the impact of the acquisition on Pihlajalinna’s business after the FCCA has made its decision.
The intended acquisition concerns nationwide insurance company services, but also local private sector offering of orthopedic and traumatology in addition to hand surgery services. The Competition and Consumer Authority finds it necessary to further investigate possible effects of the acquisition. The preliminary investigation indicates potential negative impact to private customers covering their costs themselves, specifically in the areas of orthopedic and traumatology as well as in the hand surgery specified services in hospital districts of Pirkanmaa and Northern Savonia.
Kuusiolinna Terveys Oy, a social and health care service provider jointly owned by Pihlajalinna and the participating municipalities, operates in Alavus, Ähtäri, Kuortane and Soini in South Ostrobothnia. In August KuusSote, a local service agreement customer of Kuusiolinna Terveys Oy, agreed to compensate any increased costs originated with authority directives in residental services and the investment funding share of the Southern Ostrobothnia Hospital District. Compensation for any cost increases resulting from authority directives and new legislation is essential to us to be able to ensure the preconditions for operations and capacity to further development of services.
The renewal of the sales strategy carried out in the early part of the year is reflected in growth in revenue. We shifted the focus of public sector sales from the outsourcing market to the service sales market, which will only be affected to a minor extent by the planned reform of health and social services. The most significant new service sales agreements signed in the third quarter included health center services in Matinkylä Espoo, COVID-19 testing services for the City of Jyväskylä and the new agreement for health advisory services for the Port of Helsinki.
Occupational healthcare services sales continue to grow. The key drivers of growth include digital services, competitive pricing and successful acquisitions. The number of people within the scope of Pihlajalinna occupational healthcare services was approximately 240,000 at the end of the review period. In July, we signed a new multi-year agreement with the forest industry company UPM regarding the provision of occupational health services. In late summer, we signed a new multi-year occupational health services agreement with Stora Enso, also a major forest industry company.
Based on the analysis of Pihlajalinna occupational healthcare visits states that sickness-related absences starting from mental health reasons per 1,000 employees have increased by 28 per cent compared to last year. Sickness-related absences associated with musculoskeletal disorders have increased by seven per cent. This year, we have focused particularly on the development of cure paths for these types of ailments in our digital service development. In early 2021, we launched the Mielen huoli -service (Mental concern service) through remote channels to provide assistance and treatment for mental health issues at an early stage. When people who suffer or have any indications from mental health problems are referred to effective treatment at early phase, the outcome will be a decrease in prolonged sickness absences, permanent disability and human suffering as well as costs for the employer and society.
In the early summer, we launched the Liikuntalähete (Exercise referral) as part of our new service portfolio. The exercise referral is a comprehensive service offering that improves the customer’s quality of life and is produced in partnership with our fitness centres. The foundation for this service concept lies in the scientific evidence on the benefits of physical activity on wellbeing and health. Timely intervention in musculoskeletal disorders through physiotherapy and – where necessary – surgical treatment also reduces sickness-related absences and costs.
In September, we opened Pihlajalinna’s third Uniikki special needs residential service unit in Lohja. The first Uniikki unit was opened in Hämeenlinna in 2018 and the second in Riihimäki in 2020. Pihlajalinna’s Uniikki units are intended for people who have severe challenges controlling their behaviour or life management.
Pihlajalinna will strengthen its network of private clinics by opening new private clinics in Lahti, Espoo and Vantaa in early 2022. Expanding Pihlajalinna’s range of services in the network of operating locations is a constant component in Pihlajalinna’s business development.
We strengthened our position also in pediatric healthcare services by introducing a pediatrician’s online chat service on the Pihlajalinna health application in late August. A pediatric specialist is available on weekdays from 8:00 to 22:00 and on weekends from 8:00 to 18:00. The service gives customers direct access to a pediatric specialist without an appointment. Remote consultations can be used to treat various acute ailments of children under 12 years of age that do not require a physical examination. The pediatrician’s online chat service can provide assistance with infections, allergies, rashes and gastrointestinal symptoms, for example.
At the end of August 2021, a total of 140,032 people were waiting for access to care at hospitals operated by the hospital districts. Of these, 9,539 (6.8 per cent) had queued to non-urgent specialised care for more than six months. Compared to the end of April, this number had increased by 3,412. This is an exceptional situation. Our job at Pihlajalinna is to provide people with a channel through which they can access the service they need without unnecessary delay. I believe that by taking responsibility for the health of the individual as well as their quick and appropriate access to care – regardless of the actions taken by legislators and other parties – we will be able to continue to strengthen our position in the market.
In the coming years, Finnish healthcare will face significant reforms. The national reform of healthcare and social services proceeds. The first county elections will be held on Sunday, 23 January 2022, and the councils in charge of the wellbeing services counties will start their work on 1 March 2022. The private sector has developed new service models and care paths to ensure high-quality care and quick access to care in all circumstances. Our strong track record at Pihlajalinna proves that we are a pioneer in this transition. I expect the development of digital services to continue to significantly improve Pihlajalinna’s competitiveness. Where necessary, we have the agility and capacity to adapt to quick changes such as those brought by the national reform of health and social services.
Pihlajalinna's financial reporting in 2022
Financial statements bulletin 2021: Friday, 18 February 2022
Financial statements and Board of Directors’ report: no later than in week 12
Interim report January–March: Thursday, 5 May 2022
Half-year financial report January–June: Friday, 12 August 2022
Interim Report January–September: Friday, 4 November 2022
Pihlajalinna will hold a briefing for analysts and the media on Thursday, 4 November 2021 at 10:00 a.m. The event will be held remotely.
Helsinki 3 November 2021
The Board of Directors of Pihlajalinna Plc
Joni Aaltonen, CEO, +358 40 524 7270
Tarja Rantala, CFO, +358 40 774 9290
Pihlajalinna in brief
20 year-old Pihlajalinna is one 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, occupational healthcare and dental care services, residential services and wellbeing services, for example. 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.