• Adjusted EBITDA: Increased by 20%.
• EPS: Increased by 40%.
• Revenue: Slightly decreased due to softness in Sweden and discontinued outsourcing contracts.
• Healthcare Services Revenue Growth: Approximately 5% increase.
• EBITDA: Increased by 14%.
• Operating Cash Flow: EUR 202 million over the last 12 months.
• Net Debt to EBITDA Ratio: 2.2%.
• Investment Levels: EUR 42 million in the latest 12-month period.
• Guidance for 2025: Revenue growth expected; adjusted EBITDA margin between 10.7% to 11.8%.

• Warning! GuruFocus has detected 7 Warning Signs with FRA:4TS.

Release Date: April 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Terveystalo PLC (FRA:4TS) reported a 20% increase in adjusted EBITDA and a 40% rise in EPS, indicating strong profitability improvements.
• Customer satisfaction, as measured by the NPS, continues to trend upwards, reflecting positive client experiences.
• The healthcare services segment showed a healthy demand growth of nearly 5%, despite one less working day compared to the previous quarter.
• The company has been successful in improving operational efficiency and service mix, contributing to robust financial results.
• Terveystalo PLC (FRA:4TS) maintains a strong balance sheet with a net debt to EBITDA ratio of 2.2%, providing financial stability and capacity for future investments.

Negative Points

• Revenue was slightly down due to softness in the Swedish market and discontinued outsourcing contracts.
• The publicly funded market remains cautious, impacting the staffing segment and contributing to revenue decline.
• The Swedish economy's slow recovery and global economic turmoil present challenging market conditions.
• The company faces potential indirect impacts from global economic uncertainties, such as tariffs and employment level changes.
• Cash flow showed a slow start for the year, partly due to tax impacts and timing differences, creating volatility.

Q & A Highlights

Q: Why didn't Terveystalo narrow its guidance range despite a strong Q1 performance? Are there any concerns affecting the outlook? A: Juuso Pajunen, CFO, explained that while the guidance remains robust, the macroeconomic environment is unpredictable. Employment levels could impact operations, but it's more likely that results will be at the upper end of the guidance range.

Q: Regarding the outsourcing business, are there any further contract expirations expected after Q1? A: Juuso Pajunen confirmed that the expectation is a EUR25 million loss in volume for the year, with no further significant contract expirations anticipated.

Q: Is Terveystalo satisfied with the profitability of its staffing business, and will it be retained throughout the year? A: Juuso Pajunen stated that despite difficult market conditions, the staffing business remains profitable and resilient, with no plans to change its current operations.

Q: Has Terveystalo turned a corner in dental and martial services, and can positive growth be expected going forward? A: Juuso Pajunen indicated that there is a turnaround in consumer-driven demand for these services, and improvement is expected to continue.

Q: How does the global macro environment, including tariffs, impact Terveystalo's business? A: Juuso Pajunen noted that direct impacts are minimal as Terveystalo does not export or import significantly. However, indirect impacts could occur if economic conditions in Finland or Sweden worsen.

Q: Is Terveystalo's exposure to public sector contracts becoming a liability due to budget cuts? A: Ville Iho, CEO, stated that the current agreement portfolio is solid and profitable. The public sector is a small part of total revenues, and budget cuts may present opportunities for the private sector.

Q: What drives the 6.1% growth in healthcare services, and is it more price-driven or mix-driven? A: Juuso Pajunen explained that the growth is complex, involving channel, service, and customer mix. The mix impact is significant, with pricing slightly above inflation due to the value provided to customers.

Q: How confident is Terveystalo in achieving sales growth for the year despite a 1% decline in Q1? A: Juuso Pajunen reiterated the guidance for growth, emphasizing a focus on margin improvement and EPS enhancement.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.