Terveystalo Oyj : Q4 presentation

Terveystalo 2020 Results

Strong improvement in profitability in Q4

CEO Ville Iho

CFO Ilkka Laurila

Agile response to fluctuations in demand was rewarded by strong financial performance in Q4

Revenue	Adj. EBITA	EPS
EUR 0.18
EUR 279.7 Mill.	EUR 39.3 Mill.
(+39.0%)
(+3.5%)	(+21.5%)
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euismod tincidunt ut laoreet dolore magna	euismod tincidunt ut laoreet dolore magna	> 126,000
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Covid-19
tests

Strong sales in private and corporate customers as well as public occupational health & services

• • > 126,000 coronavirus tests conducted in total

• • Growth in insurance company sales, well-being services and vaccinations

• • Appointments associated with various infections as well as demand for specialist appointments decreased considerably y-o-y

• • Digital appointments more than quadrupled to ~242,000 visits

• • Oct-Dec 2020 had 64 business days, + 2 days y-o-y

300 250 200 150 100 50 0

Q4 2020

Q4 2019

CorporatePrivateOutsourcingStaffing services

Service sales, occupational health and others

2020: Strong performance in a challenging year

11.2.2021

We start the second corona year from a position of strength

6.9

Mill. customer visits

26% 1.2

Share of remote visits

Mill. Individual customers

309

Locations

Remote visits include digital and phone appointments

986

2020 Revenue,

Mill. Euros

10%

2020 Adj. EBITA margin

13,000

professionals

Already 26% of the appointments delivered remotely through our platform

Digital & remote services on care path

Physical services on care path

Physical services on care path

From a single discipline approach to customer centric

From local experts to network wide best practices

From physical to hybrid

• • The units focus expertise in selected areas and build multidisciplinary teams around the hybrid care path.

  • • The first Focus specialist units will provide services related to mental well-being, musculoskeletal and abdominal diseases.

Outlook

In the short term, the market environment is still uncertain because of the changes in consumer behavior resulting from the COVID-19 pandemic, and predicting demand is challenging in the short term. Demand for coronavirus testing is expected to remain high throughout the first half of 2021, and demand for healthcare services in general is expected to grow clearly year-on-year compared with the weak second-quarter reference period, providing that there will be no need to implement strict pandemic restriction measures as was the case in the first half of 2020.

Demand from corporate customers for preventive and statutory occupational health services is expected to remain stable. The recovery of demand for acute and non-urgent medical care is uncertain, owing to a reduction in general morbidity and the measures to restrict the pandemic. The proportion of remote services will increase considerably. Significant changes in the employment rate may be reflected in the underlying demand.

Overall demand from private customers is expected to remain normal, providing that, in particular, major restrictions to free movement can be avoided. However, there may be considerable differences between specialties in the short term because of variation in general morbidity and pandemic-related area-specific restrictive measures. Demand for remote services will increase considerably. Significant changes in consumer confidence may be reflected in the underlying demand.

Stable demand from the public sector is expected to continue in occupational health, service sales, and staffing services. Revenue from outsourcing business will fall, following the planned expiry of outsourcing contracts.

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.

Ilkka Laurila, CFO

Financial performance

Decent financial performance in a challenging year

Target: at least 5% revenue growth

2020

• 2018 2019

Revenue

Target: 12-13% Adj. EBITA margin

115,1

Target: Net debt / Adj. EBITDA not to exceed 3,5

3,8

2018

2019

2020

2018 2019 2020

Adj. EBITA, M€% of revenueNet debt/Adj. EBITDA

11

2018 does not include 12 months of Attendo EBITDA

Target: distribute a minimum of 40% of earnings in dividends

0,26

2019

2018

2020*Dividend, % of net profitDividend, euros

*Proposed dividend in total

Revenue back on a growth track, profitability improved

REVENUE. ADJUSTED EBITDA * **. %

300 250 200 150 100 50 0

Q4 2018

ADJUSTED EBITA* **. M€ AND %

30 25 20 15 10 5 0

40

39,3

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

35

30

25

20

15

10

5

0

Q4 2018

30 25 20 15 10 5 0

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

RevenueAdjusted EBITDA

Adjusted EBITA, M€Adjusted EBITA, %

* Alternative key figure ** The figures include the effect of IFRS 16 from 2019 onwards

Investments in digital services increased IT costs, PPE procurement increases costs of materials

M€

Revenue

Other operating income Purchase of materials Change in inventories External services

Employee benefit expensesRents. leases and premisesIT expenses

7.5

-9.6

-0.9

-112.4

-84.6

-8.9

-35.5

-113.3

-81.3

-0.5

1-12/2019

Change. %

1 030.7 -4.3

2.1 29.0

-32.0 11.0

-0.3 >200.0

-440.6 -6.2

-314.3 -1.3

-3.8

-4.0

-4.6

-16.3

-16.0 2.0

Other operating expenses

-6.8

-8.6

EBITDA

53.7

46.8

-5.8

-9.8

14.8

158.3

-21.1 19.7

-37.3 -15.5

171.2 -7.5

Adjustments* Adjusted EBITDA EBIT

0.8

54.5

1.0

4.5

5.1

47.8

14.1 29.4

162.8 67.2

176.3 -7.7

30.8

23.8

81.4 -17.5

Variable costs

Semi-fixed costs. scalable on a unit level

Fixed costs. scalable on a group level

*Adjustments are material items outside the ordinary course of business and these relate to acquisition related expenses. restructuring related expenses. gain /losses on sale of assets (net). strategic projects and other items affecting

comparability.

Group P&L

Liquidity at a good level

m€ ASSETS

31.12.2020

31.12.2019

Property. plant and equipment Right of use assets

67.6 69.5

172.4 193.2

Goodwill

781.8 779.2

Other intangible assets Other assets

152.2 161.9

110.0 114.9

Cash and cash equivalents TOTAL ASSETS

77.1 40.6

1,361.0 1,359.3

EQUITY AND LIABILITIES TOTAL EQUITY

571.4 541.2

Interest bearing liabilities Other liabilities

389.5 390.8

178.5 198.0

Lease liabilities TOTAL LIABILITIES

221.7 229.2

789.6 818.0

TOTAL EQUITY AND LIABILITIES

1,361.0

1,359.3

• • Cash and cash equivalents EUR 77.1 mill. (40.6).

• • Total assets EUR 1,361.0 mill. (1,359.3).

• • Equity attributable to owners of the parent company was EUR 571.4 (541.2) mill. The increase was due to an increase in retained earnings.

• • Net debt EUR 490.9 mill. (548.2) Including IFRS 16 liabilities and EUR 325.9 mill. excluding IFRS 16 impact

• • Net debt / adjusted EBITDA was 3.0 (3.1) and 2.8

  excluding IFRS 16 impact

2020 revenue

2020 revenue by payer group, %

CorporatePrivatePublic

1 000

800

600

400

200

0

CorporatePrivateOutsourcingStaffing services

Service sales, OH and others

2019

2020

Indebtedness below target

NET DEBT/ADJUSTED EBITDA

(LAST 12 MONTHS)*OPERATIONAL EFFICIENCY IS REFLECTED IN THE

NEGATIVE NET WORKING CAPITAL

4,6

3,0

150

100

50

0

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

-100

-150

-200

-50

Q1 2019

Q3 2020

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q4 2020

Inventories

Trade and other payables

*Figures include the effect of IFRS 16 from 2019 onwards.

Trade and other receivablesNet working capital

Further positive development in DSO and DPO

DSO, ROLLING 3 MONTHS

DPO, ROLLING 3 MONTHS

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2019

.

17

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

The share of intangible investments continue to grow

(excluding M&A)

GROSS CAPEX. M€ AND %- OF REVENUE

NET CAPEX. M€ AND %- OF REVENUE

50

45

40

35

30

25

20

15

10

5

0

Q2.2019 Q3.2019 Q4.2019 Q1.2020 Q2.2020 Q3.2020 Q4.2020

LTM LTM LTM LTM LTM LTM LTM

• 4,5 45

• 4,0 40

• 3,5 35

• 3,0 30

• 2,5 25

• 2,0 20

• 1,5 15

• 1,0 10

• 0,5 5

• 0,0 0

Q2.2019 Q3.2019 Q4.2019 Q1.2020 Q2.2020 Q3.2020 Q4.2020

LTM LTM LTM LTM LTM LTM LTM

4,5

4,0

3,5

3,0

2,5

2,0

1,5

1,0

0,5

0,0

Intangible assets

OtherMachinery and equipment% of revenueImprovement to premises

Non Cash Capex% of revenueNet Cash Capex

We met all three sustainability criteria targets linked with financing agreement

Mixed waste intensity = Amount of mixed waste (metric tons) relative to total revenue (EUR 100 million) Target to decrease y-o-y, increase due to multiplied use of PPE

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Financial calendar and AGM in 2021

• • Annual Report 2020 on week 7, 2021

• • Interim report for January-March 2021 on

  Thursday, 29 April 2021

• • Half-Year Report for January-June 2021 on

  Friday, 16 July 2021

• • Interim report for January-September 2021

  on Thursday, 28 October 2021

Annual General Meeting of Terveystalo Plc will be held on Thursday, 25 March 2021 in Helsinki.

20

11.2.2021

Q & A

22

Key Figures
Terveystalo Group, EUR million	2019	Change. %
Revenue	279.7	270.3	3.5	986.4	1,030.7	-4.3
Adjusted EBITDA * 1)	54.5	47.8	14.1	162.8	176.3	-7.7
Adjusted EBITDA, % * 1)	19.5	17.7	-	16.5	17.1	-
EBITDA 1)	53.7	46.8	14.8	158.3	171.2	-7.5
EBITDA, % 1)	19.2	17.3	-	16.1	16.6	-
Adjusted earnings before interest. taxes and amortization (EBITA) * 1)	39.3	32.3	21.5	101.9	115.1	-11.5
Adjusted EBITA, % *1)	14.0	12.0	-	10.3	11.2	-
EBITA 1)	38.5	31.4	22.7	97.4	110.0	-11.4
EBITA, % 1)	13.8	11.6	-	9.9	10.7	-
Adjusted EBIT * 1)	31.6	24.8
27.5	71.6	86.5	-17.2
Adjusted EBIT, % * 1)	11.3	9.2	-
7.3	8.4	-
EBIT
30.8	23.8	29.4	67.2	81.4	-17.5
EBIT, %
11.0	8.8	-	6.8	7.9	-
Return on equity (ROE), % 1)
-	-	-	8.2	10.3	-
Equity ratio, % 1)
-	-	-	42.1	39.9	-
Earnings per share (EUR)
0.18	0.13	39.0	0.36	0.43	-15.5
Gearing, % 1)
-	-	-	85.9	101.3	-
Net debt/adjusted EBITDA (last 12 months) 1)
-	-	-	3.0	3.1	-

10-12/ 2020

10-12/ 2019

Change, %

2020

*) 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.

Key Figures

Terveystalo Group, EUR million

Average personnel in person-years Personnel (end of period)

Private practitioners (end of period) Adjusted EBITDA, excluding IFRS 16 *1) Net debt, excluding IFRS 16

Adjusted net debt/ adjusted EBITDA, excluding IFRS 16 (last 12 months) *1) Quality index2)

Net Promoter Score (NPS), appointments Employee Net Promoter Score (eNPS)2) Mixed waste intensity2)

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

4,900

4,943 -0.9

8,253

8,685 -5.0

5,057

5,068 -0.2

118.0

131.4 -10.2

325.9

366.4 -11.1

2.8

2.8

-

94.2

96.4 -2.3

82.8

72.5 14.2

18.0

9.0 100.0

6.0

4.98 23.7

*) 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. eNPS is measured every six months; the reported figure is the result of the latest measurement.

Mixed waste intensity = Amount of mixed waste (metric tons) relative to total revenue (EUR 100 million)

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