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Profit warning: Weakened profitability and non-recurring items have a significant negative impact on Terveystalo's third quarter result

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Terveystalo Plc Insider information 14 October 2022 at 09:00 EEST

Terveystalo publishes preliminary financial information on third quarter 2022 and updates its outlook

The demand for healthcare services is at a record high, but it is more strongly focused on low-margin services than in the comparison period. Terveystalo updates its market outlook due to changes in customer behavior, accelerating inflation, rising costs, and weakened consumer confidence.

Terveystalo’s profitability has weakened during the third quarter. Preliminary revenue is expected to be approximately EUR 276 million (EUR 273 million in Q3 2021) and adjusted EBITA approximately EUR 13 million (EUR 31 million).

The result of the third quarter is further weakened by a one-off write-down of approximately EUR 29 million to other intangible assets.

Today, 14 October 2022 Terveystalo has announced a profit improvement program targeting an inflation adjusted, annualized run-rate EBITA improvement of at least EUR 50 million by the end of 2024.

New outlook:

  • Demand for health services continues to be strong. However, demand is focused on short care pathways and services growth of which is limited by supply. Tight labor market and rising inflation create growing pressure on operating costs, including wages.
  • The demand for Covid-19 related services is expected to decrease and the demand for digital services to continue to grow.
  • Significant changes in employment and consumer confidence may be reflected in underlying demand.

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.

Previous outlook, 19 July 2022:

  • Demand for health services is very strong and broad based. However, growth is restricted by supply. Tight labour market and rising inflation create growing pressure on operating costs, including wages.
  • The demand for services related to COVID-19 is expected to decrease. However, predicting the volume is difficult. The overall demand for health services is expected to remain at a high level. The demand for digital services is expected to continue to grow.
  • Demand from corporate customers for preventive and statutory occupational health services is expected to develop favourably. Demand for medical care is expected to continue strong. Significant changes in the employment rate may be reflected in the underlying demand.
  • Overall demand is expected to remain strong in the private customer segment. Significant decline in general consumer confidence may, however, be reflected in the 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. Tight labour market creates pressure especially on the salary costs of new and replacement recruitments in staffing and outsourcing services.
  • Demand in the Swedish occupational health market is expected to develop favourably due to pent-up demand in the wake of the pandemic.

Terveystalo records a 29 million euro write down of other intangible assets in the third quarter result

Terveystalo is modernizing its basic IT systems in stages. The basic IT system development project portfolio contains several sub-projects in different stages of readiness, some of which, in the revised plan, have been decided to be suspended. These projects are not expected to go into production as earlier planned and related impairment is considered necessary.

The development model of basic IT systems has been revised. Projects will be broken down into even smaller sub-assemblies, and the development of strategically important systems is insourced going forward.

The revised plan has no effect on the functionality of Terveystalo's current services or the reliability of their delivery. The continuation of the basic system reform does not prevent or limit the development or sale of new digital services as SaaS services.

Impairment is recorded in the third quarter's result and has no effect on Terveystalo's cash flow or adjusted operating profit (adj. EBIT).

Terveystalo will publish its January-September 2022 interim report on 27 October 2022 at 9:00 a.m.

Terveystalo Plc

Nasdaq Helsinki Oy
Principal media


Terveystalo in brief

Terveystalo is the largest private health care service provider in Finland in terms of revenue and network. Terveystalo is also a leading occupational health provider in the Nordic region. We offer a wide variety of primary health care, specialized care, and well-being services for corporate and private customers and the public sector. Terveystalo’ s digital services are available 24/7, regardless of time and place. Health and well-being services are also provided by Terveystalo’ s over 360 clinics across Finland. In Sweden, we offer occupational health services at 120 clinics. Terveystalo is listed on the Helsinki Stock Exchange and has a predominantly Finnish ownership.

In 2021, Terveystalo had approximately 1.3 million individual customers in Finland and the number of customer appointments was approximately 8 million, with more than a quarter of these taking place via remote channels. Terveystalo employs over 15,500 healthcare and well-being professionals. Terveystalo is a Key Flag company and member of Association for Finnish Work. www.terveystalo.com