Pihlajalinna Oyj: Pihlajalinna Interim Report 1 January-30 September 2024: Solid development in organic growth and profitability

Pihlajalinna Plc Interim Report 7 November 2024 at 8:00 a.m.

Pihlajalinna Interim Report 1 January-30 September 2024

Solid development in organic growth and profitability

This Interim Report is unaudited. The comparison figures in brackets refer to the corresponding period in the previous year.

July-September in brief:

• Revenue amounted to EUR 164.0 (165.6) million - a decrease of -1.0 per cent.
• Comparable organic revenue growth¹⁾ was EUR 13.3 million, or 8.9 per cent.
• In the Private Healthcare Services segment, revenue amounted to EUR 103.7 (93.8) million. Comparable organic revenue growth¹⁾ was 14.0 per cent.
• In the Public Services segment, revenue amounted to EUR 62.9 (75.8) million. Comparable organic revenue¹⁾ remained at previous year's level.
• Adjusted EBITA²? before the amortisation and impairment of intangible assets was EUR 13.5 (9.6) million, an increase of 41.1 per cent.
• Net cash flow from operating activities amounted to EUR 9.0 (6.6) million.
• Earnings per share (EPS) was EUR 0.26 (0.13).
• Profit guidance for 2024 was upgraded on 30 October. The full year adjusted EBITA is expected to increase to EUR 53-56 million (EUR 37.8 million in 2023).

January-September in brief:

• Revenue amounted to EUR 522.0 (537.0) million - a decrease of -2.8 per cent.
• Comparable organic revenue growth¹⁾ was EUR 37.5 million, or 7.7 per cent.
• In the Private Healthcare Services segment, revenue amounted to EUR 330.6 (312.3) million. Comparable organic revenue growth¹⁾ was 10.7 per cent.
• In the Public Services segment, revenue amounted to EUR 201.7 (237.5) million. The termination of cost liability for demanding specialised care, the gradual transfer of the services agreement of Jämsän Terveys Oy and other changes to outsourcing agreements decreased revenue by EUR 47.1 million. Comparable organic revenue growth¹⁾ was 1.5 per cent.
• Adjusted EBITA²? before the amortisation and impairment of intangible assets was EUR 39.8 (27.9) million - an increase of 42.7 per cent.
• Net cash flow from operating activities amounted to EUR 67.7 (52.9) million.
• Earnings per share (EPS) was EUR 0.75 (0.44).
• Sickness-related absence rate decreased to 5.4 (5.8) per cent.
• Customer satisfaction improved. NPS for Private Healthcare Services was 84 (79) and NPS for Public Services was 78 (73).

¹⁾The following items have been excluded from the comparison period revenue: the divestment of dental care services, the transfer of cost liability for demanding specialised care, the gradual transfer of Jämsän Terveys Oy's service agreement, other changes to outsourcing agreements, COVID-19 services and transfers between segments.

²⁾ Alternative performance measure. In addition to the IFRS figures, Pihlajalinna presents additional, alternative performance indicators which the company monitors internally and which provide the company's 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 separately from the IFRS figures and they should not be considered as replacing the IFRS figures.

Key figures
EUR million	7-9/2024	7-9/2023	change %	1-9/2024	1-9/2023	change %	2023
INCOME STATEMENT
Revenue	164.0	165.6	-1.0	522.0	537.0	-2.8	720.0
Adjusted EBITA ¹?	13.5	9.6	41.1	39.8	27.9	42.7	37.8
Adjusted EBITA, % ¹?	8.2	5.8		7.6	5.2		5.2
Operating profit (EBIT)	11.7	7.1	64.5	33.9	22.5	50.6	20.6
Operating profit (EBIT), %	7.1	4.3		6.5	4.2		2.9
Adjusted operating profit (EBIT) ¹?	11.7	7.4		34.2	21.4	59.9	29.1
Adjusted operating profit (EBIT), % ¹?	7.1	4.4		6.6	4.0		4.0
Profit before tax (EBT)	9.5	4.4	113.8	26.4	14.3	84.0	8.2
SHARE-RELATED INFORMATION
Earnings per share (EPS), EUR	0.26	0.13	93.1	0.75	0.44	69.9	0.19
Equity per share, EUR				7.20	6.84	5.3	6.56
OTHER KEY FIGURES
Return on capital employed (ROCE), %				6.4	4.3	48.7	4.0
Return on equity (ROE), %				9.3	7.2	29.6	3.4
Equity ratio, %				26.0	22.6	15.0	22.0
Interest-bearing net debt				324.4	372.2	-12.9	352.7
Net debt/adjusted EBITDA, 12 months ¹?				3.4	5.2	-34.4	4.4
Interest-bearing net debt excluding IFRS 16				124.6	155.3	-19.8	142.0
Net debt/adjusted EBITDA, excluding IFRS 16, 12 months ¹?				1.9	3.5	-45.6	2.7
Cash flow from operating activities	9.0	6.6	37.0	67.7	52.9	28.1	79.0
Average number of personnel (FTE)				4,449	4,852	-8.3	4,821
Personnel at the end of the period (NOE)				6,505	7,044	-7.7	6,880
Practitioners at the end of the period ²?				2,098	2,098	0.0	2,104
NPS, Private Healthcare Services	86.0	80.0		84.0	79.0	6.3	78.2
NPS, Public Services	76.0	77.0		78.0	73.0	6.8	75.5

¹⁾ Significant transactions that are not part of the normal course of business, are related to business acquisition or divestment costs (IFRS 3), are infrequently occurring events or valuation items that do not affect cash flow are treated as adjustment items affecting comparability between financial years. According to Pihlajalinna's definition, such items include, for example, restructuring measures, impairment of assets and the remeasurement of previous assets held by subsidiaries, the costs of closing businesses and business locations, gains and losses on the sale of businesses, cost arising from operational restructuring and the integration of acquired businesses, costs related to the termination of employment relationships as well as fines and corresponding compensation payments. Pihlajalinna has also presented costs according to the IFRS Interpretations Committee's Agenda Decision concerning cloud computing arrangements, and reversals of amortisation, as adjustment items. Cloud computing arrangements costs and reversals of amortisation according to the IFRS Interpretations Committee's Agenda Decision has not been presented as adjustment items since 1 January 2024.

EBITDA adjustments in the quarter amounted to EUR 0.0 (0.4) million and EUR 0.3 (-1.0) million in the financial year. Adjustments to operating profit during the quarter amounted to EUR 0.0 (0.3) million and EUR 0.3 (-1.1) million in the financial year.

²⁾ Dental care services divestment has been excluded from the comparison period.

Pihlajalinna's outlook for 2024, upgraded 30 October 2024

In 2024, Pihlajalinna will focus on organic growth and improving its profitability and financial position.

• The Group expects consolidated revenue to decrease from the previous year's level (EUR 720.0 million in 2023) due to the cost liability for demanding specialised care being transferred to the well-being services county of South Ostrobothnia on 1 January 2024
• The Group expects the adjusted operating profit before the amortisation and impairment of intangible assets (EBITA) to increase to EUR 53-56 million (EUR 37.8 million in 2023)

The Group expects the demand to remain steady.

Slow economic growth and weakened consumer confidence may affect Pihlajalinna's service demand and financial result.

Tuomas Hyyryläinen, CEO:

We have continued our determined measures towards developing Pihlajalinna, and the work is progressing as planned. Organic growth and profitability were strengthened further during the third quarter. At the same time, employee and customer satisfaction have developed favourably.

During the third quarter, the Group's comparable revenue growth grew organically by 8.9 per cent.
Profitability improved in both segments, and adjusted EBITA increased to EUR 13.5 million (9.6) and adjusted EBITA margin to 8.2 (5.8) per cent. The strong quarter was supported by the successful expansion of our offering, enhanced service processes in occupational healthcare services and changes in Public Services.

In Private Healthcare Services, business development has advanced well, and in July-September, the segment's comparable revenue grew organically by 14 per cent. The profitability of occupational healthcare continued to develop positively, and collaboration with insurance companies remained strong. Adjusted EBITA increased to EUR 7.3 (5.7) million. We will continue our uncompromising work towards improving segment's profitability.

In Public Services, contract changes in outsourcing operations and adapting operations to the needs of wellbeing services counties, have continued. We uphold a good service level with as much cost-efficiency as possible. During the third quarter, the segment's adjusted EBITA increased to EUR 6.2 (3.9) million.

While we have consistently developed Pihlajalinna, we have also continued our long-term work to ensure leadership and employee satisfaction. Results are visible, as the Group-level Employer Net Promoter Score (eNPS) improved despite changes in Public Services, reaching a total of 9. Particularly in Private Healthcare Services we witnessed good progress with an eNPS of 20 (4). Customer satisfaction has also improved strongly. In Private Healthcare Services, the NPS was 84 (79) and in Public Services it was 78 (73).

We are advancing with determination towards our long-term profitability goal of 9 per cent adjusted EBITA margin. The goal of our operations is to offer even more impactful healthcare services to our customers in order to provide added value to all our stakeholders. This is possible with committed and well-being personnel who thrive at work and through strong partnerships. A warm thank you to all Pihlajalinna employees for their excellent work and to our partners for their collaboration.

Webcast for analysts, investors and media

Pihlajalinna will organise a live webcast meeting for analysts, investors and media, on Thursday, 7 November, 2024 at 10:00 a.m. at https://pihlajalinna.videosync.fi/q3-2024/register. The event will be conducted in Finnish. The recording of the event will be available later on the same website as the live webcast.

Pihlajalinna Plc's full Interim Report 1 January-30 September 2024 is attached to this release and available at company's website.

Pihlajalinna Plc

Further information:

Tarja Rantala, CFO, [phone], [e-mail]
Tuula Lehto, Chief Communications and Sustainability Officer, [phone], [e-mail]

Distribution:

Nasdaq Helsinki
Major media
investors.pihlajalinna.fi

Pihlajalinna in brief

Pihlajalinna is one of the leading providers of private healthcare and social services in Finland. The Group provides comprehensive and quality private clinic and hospital services as well as occupational healthcare and insurance cooperation services. To the wellbeing services counties Pihlajalinna offers social and healthcare service production models, in which the cooperation between the public and private sectors guarantees effective services for citizens. Appoximately 7,000 employees and 2,200 practitioners work at Pihlajalinna. In 2023, Pihlajalinna's revenue was 720 million euros. Pihlajalinna's shares are listed on Nasdaq Helsinki Oy. Read more www.pihlajalinna.fi.