Insider information: Terveystalo launches a 50-million-euro annualized profit improvement program and confirms earlier financial targets

Terveystalo Plc Insider information 14 October 2022 at 09:01 EEST

Terveystalo strengthens the implementation of its growth strategy by launching a program to speed up the achievement of strategic and financial goals. The program consists of strategic and operational initiatives to increase revenue and improve profitability in accordance with the company's financial targets. Terveystalo’s financial targets are intact: The company is aiming for at least 5 percent revenue growth and an adjusted EBITA margin of 12-13 percent.

To strengthen long term value creation, focus on high medical quality and the execution of the program, Terveystalo is planning to change its operating model and organizational structure. The planned changes clarify roles and responsibilities, strengthen the independent and efficient management of separate businesses, and strengthen the implementation of intact care pathways and high-quality care.

The new organization would consist of three business areas: Healthcare Services, Portfolio Businesses which would include outsourcing, staffing, oral health, rehabilitation, child protection and massage services, and Feelgood in Sweden.  In Healthcare Services, Terveystalo targets high profitability and growth exceeding the market growth. In Portfolio Businesses, the company aims for independent value creation. In Sweden Terveystalo seeks strong growth in the medium term.

Program content and goals

The program aims for an inflation adjusted, annualized run-rate EBITA improvement of at least 50 million euros by the end of 2024. Most of the targeted benefits are estimated to be realized already in 2023. The costs related to the program are estimated to be 25-30 million euros. The costs are related to restructuring and advisory fees. Advisory fees are tied to the results achieved by the program. The costs of the program are treated as items affecting comparability.

Measures to strengthen profitability also improve access to effective care when moving to efficient and scalable operating models. The program applies to all Terveystalo's operations in Finland.

The program boosts growth by developing commercial operations, strengthening the recruitment and retention of professionals, and optimizing resource planning.

Efficiency is strengthened by developing customer journey and care pathways, optimizing the physical service network and procurement, improving the productivity of fixed assets, and simplifying the operating model and organization.

“Our long-term growth strategy remains intact. The new operating model enables a clearer focus on our core business and gives the Portfolio Businesses the opportunity for more independent value creation and portfolio optimization. We continue to aim for high profitability and faster-than-market growth in Healthcare Services - this is what the profit improvement program specifically aims for. In the coming years, we continue to seek strong growth outside our home market, in Sweden in particular. We believe we can transform the industry by providing better access to effective care with scalable solutions. With this program, we strengthen our position as a leading private healthcare service provider and our conditions to implement our growth strategy", Terveystalo President and CEO Ville Iho states.

The timing of the program also aims to mitigate the impact of weakening macro environment. Despite the changes in the market environment, the demand for health services continues to be strong.

Terveystalo communicates on the progress of the program in connection with its regular financial reporting.

The goals mentioned in this announcement are based on the preliminary plans of the company's management, and no goals or measures related to possible reorganizations have been decided.

Virtual investor meeting in connection with the results announcement on 27 October 2022

Terveystalo will publish its January-September 2022 results on Thursday, 27 October 2022. At that time, Terveystalo's CEO Ville Iho will present the content of the program, its financial impacts, and the new organizational structure in more detail in connection with the results webcast organized at 10:30 EEST the same day.

Terveystalo Plc

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