Terveystalo Plc: Terveystalo Group Half-Year Repor

Terveystalo Plc Half-Year Report 17 August 2018 at 9:00 a.m. EEST

Strong bottom line growth continued. Strengthened balance sheet supports preparations for the Attendo acquisition.

Highlights of the second quarter, April-June 2018

• Revenue increased by 2.9 percent year-on-year to EUR 189.0 million (183.6)
• Adjusted* EBITDA increased by 15.8 percent year-on-year to EUR 25.5 million (22.0)
• EBITDA increased by 93.9 percent year-on-year to EUR 32.3 million (16.7)
• Adjusted* earnings before interest, taxes, and amortization (EBITA) were 10.7 percent (9.2) of revenue
• Earnings before interest, taxes, and amortization (EBITA) were 14.3 percent (6.3) of revenue
• Profit for the period amounted to EUR 15.4 million (2.2)
• Operating cash flow amounted to EUR 30.2 million (28.4)
• Earnings per share** were EUR 0.12 (0.02)

Highlights of the review period January-June 2018

• Revenue increased by 12.3 percent year-on-year to EUR 386.5 million (344.2)
• Adjusted* EBITDA increased by 22.7 percent year-on-year to EUR 56.3 million (45.8)
• EBITDA increased by 74.5 percent year-on-year to EUR 62.5 million (35.8)
• Adjusted* earnings before interest, taxes, and amortization (EBITA) were 11.9 percent (10.6) of revenue
• Earnings before interest, taxes, and amortization (EBITA) were 13.5 percent (7.7) of revenue
• Profit for the period*** amounted to EUR 42.6 million (8.0)
• Net debt decreased by 40.1 percent to EUR 218.0 million (364.1)
• Net debt/Adjusted EBITDA was 2.1, down from 4.5
• Operating cash flow amounted to EUR 48.6 million (34.9)
• Earnings per share**)***) were EUR 0.33 (0.07)

EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization EBITA= Earnings Before Interest, Taxes, and Amortization *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 including the IPO, new business operations, and other items affecting comparability. Adjustments totaled EUR -6.8 (5.3) million in April-June and EUR -6.2 (10.0) million in January-June.  ** The effects of share conversion and share split have been taken into account in the weighted average number of shares. *** Profit for the period includes a retrospective adjustment to Q1/2018 income taxes relating to usage of tax losses carried forward based on the estimated taxable income for the reporting period.

Yrjö Närhinen, CEO: "Further improved operational efficiency supports the implementation of our strategy in evolving markets"

In the second quarter, revenue increased by 2.9 percent, with no significant effect from acquisitions. We focus on healthcare in line with our strategy and provide complementary services to all customer segments. The market fundamentals supporting our growth have remained largely unchanged.Development is stable within corporate customers, while stronger demand in the public sector compensates for intensified competition of private customers. Total capacity of the market has increased faster than the demand as new medical centers and hospitals have been opened, especially in major cities in Finland. This is reflected in revenue growth this year. Growth and improved operating leverage will continue to generate value for our shareholders.

In June, Terveystalo's Board of Directors confirmed our medium and long-term financial targets, which remained unchanged. In the long run, our target is annual revenue growth of 6-8 percent through a combination of organic growth and bolt-on acquisitions. Our target for profitability is an adjusted EBITA margin of 12-13 percent in the medium to long term. With strong operating leverage of the company the growing public business and, when finalized, the Attendo acquisition will dilute relative profitability only in the short term.

Our profitability improved further. The net profit for the second quarter was EUR 15.4 (2.2) million, including a total of EUR 7.8 million in non-recurring capital gains. We are focusing on our core business and investing in customer experience, medical quality, and digitalization. Our solvency was substantially strengthened and a strong balance sheet supports the preparations for the Attendo acquisition.

We are seeing growing interest in our services among public customers and believe that, when finalized, the Attendo acquisition enables us to provide a unique service offering to public sector customers. In our view, regardless of the specifics of Finland's social and healthcare reforms, the share of publicly financed and privately produced services will increase in many ways: in outsourcing, specialized care, and primary healthcare. Transparent cooperation and effective dialogue are important aspects of this development. With this in mind, we are participating in freedom of choice experiments with a learning-oriented attitude and a long-term approach. Our view is that private operators can produce freedom of choice services when the appropriate determination of price is ensured. As a private operator, we supplement the services provided by the public sector. We fight for the wellbeing of individuals, work communities, and society at large.

Outlook for 2018 The positive development of the domestic economy supports the corporate and private customer businesses. Social and healthcare reform is important to Finland and would change the environment for all healthcare providers and create opportunities, especially for those investing in meeting new customer needs. Terveystalo expects its markets to continue to develop favorably. However, increased capacity is estimated to impact particularly the private customer business.

Key figures

(* Alternative performance measure. Additional information in note 14. (** The weighted average number of shares takes into account the effect of the consolidation of shares and the share split. (*** Profit for the period and the ROE profit for the period (LTM) include a retrospective adjustment to Q1/2018 income taxes relating to usage of tax losses carried forward based on the estimated taxable income for the reporting period. Diacor is included in the consolidated figures for the comparison period for the balance sheet and personnel as of March 31, 2017.

Terveystalo follows the disclosure procedure enabled by the Finnish Financial Supervisory Authority and hereby publishes its half-year report attached as a PDF file to this stock exchange release. The report is also available at: https://www.terveystalo.com/en/investors/Fina...formation/

Briefings Terveystalo will hold a Finnish-language result briefing and live webcast on August 17, 2018, starting at 11:00 a.m. EEST, at Terveystalo Piazza, Jaakonkatu 3B (3rd floor), 00100 Helsinki, Finland. The English audiocast and conference call will be held at 12:30 Finnish time. You can follow the Finnish webcast at: https://terveystalo.videosync.fi/2018-08-17-q2   

The English audiocast is available at: https://terveystalo.videosync.fi/2018-08-17-teleconference To ask questions, please join the telephone conference 5-10 minutes prior to the start time using your local number (Finland: +358 (0)9 7479 0360, Sweden: +46 (0)8 5033 6573, UK: +44 (0)330 336 9104, US: +1 323-794-2095). If you are calling from another location, please use any of the numbers above. The Participant Passcode is 320579.

Helsinki, August 17, 2018 Terveystalo Plc Board of Directors

For more information, please contact:

Ilkka Laurila, CFO Tel. +358 30 633 1757

Kati Kaksonen, Director, Investor Relations and Financial Communications Tel. +358 10 345 2034 Kati.kaksonen@terveystalo.com

Distribution: Nasdaq Helsinki Oy Main media www.terveystalo.com

Terveystalo in brief

Terveystalo is a listed company on the Helsinki Stock Exchange. Terveystalo is the largest healthcare service company in Finland with net sales and network. The company offers versatile primary and secondary health care services for corporate and private customers and the public sector. The nationwide network covers 180 locations across Finland, complemented by 24/7 digital services.

In 2017, Terveystalo had approximately 1.2 million individual customers and approximately 3.3 million doctor visits. Nearly 9,000 healthcare professionals work in Terveystalo, about half of whom are private practitioners. Terveystalo's services carry the Key Flag symbol and the company is a member of the Association for Finnish Work. www.terveystalo.com

Attachment

• Terveystalo Group Half-Year Report January-June 2018.pdf