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Introduction & Market Context
Terveystalo Oy (HEL:TTALO), Finland’s largest private healthcare provider, reported its first quarter 2025 results on April 25, showcasing significant profitability improvements despite a slight revenue decline. The company’s shares closed at €11.72 on April 24, up 0.86% ahead of the results announcement, reflecting positive market sentiment.
The healthcare provider navigated a mixed market environment during the quarter, with strong demand from occupational health and insurance customers offsetting cautious publicly funded markets. The company also benefited from a continued strong flu season, which supported overall service utilization.
Quarterly Performance Highlights
Terveystalo delivered robust profitability growth in Q1 2025 despite a marginal revenue decline. The company reported revenue of €347 million, down 0.9% year-over-year, while adjusted EBIT surged 19.2% to €47.8 million. This translated to a significant expansion in adjusted EBIT margin to 13.8%, up 2.3 percentage points from the previous year.
Earnings per share showed the most dramatic improvement, jumping 41.4% year-over-year to €0.26, reflecting the company’s enhanced operational efficiency and favorable service mix. Customer satisfaction remained strong, with the Net Promoter Score (NPS) for appointments increasing to 88, up 1.9% from the previous year.
As shown in the following chart of key quarterly metrics:
The only metric showing significant decline was operating cash flow, which fell 44.5% to €27.3 million. However, this appears to be a timing issue rather than a fundamental concern, as the company’s long-term cash flow generation remains strong.
Segment Analysis
Terveystalo’s performance varied significantly across its three business segments, with Healthcare Services (NASDAQ:HCSG) driving overall profitability while Portfolio Businesses and Sweden faced challenges.
Healthcare Services
The Healthcare Services segment, which accounts for 79% of the company’s revenue, delivered an impressive performance with 4.7% growth compared to Q1 2024. Revenue reached €280.6 million, while adjusted EBIT came in at €47.3 million, demonstrating strong operational execution.
According to the presentation, "The supply and booking rates were at a good level, and the flu season continued strong. Demand from occupational health and insurance customers remained strong."
The following chart illustrates the robust performance of the Healthcare Services segment:
Portfolio Businesses
The Portfolio Businesses segment, representing 17% of total revenue, experienced more challenging conditions. Revenue declined to €50.6 million, with adjusted EBIT of €2.8 million. The company noted that "the publicly funded market remained cautious," though consumer demand showed improvement during the quarter.
The segment’s performance is detailed in this chart:
Sweden
Terveystalo’s Swedish operations, accounting for 6% of revenue, continued to face difficult market conditions. Revenue fell to €20.6 million, with adjusted EBIT of -€0.2 million. The company attributed this performance to "weak macroeconomic situation" and "revenue decreased due to expired contracts."
The following chart details the Swedish segment’s performance:
Financial Position & Cash Flow
Terveystalo maintained a strong financial position in Q1 2025, continuing its deleveraging trend. Net debt decreased to €497.3 million from €564.9 million in the comparable period, with net debt to EBITDA ratio improving to 2.2x.
The company’s long-term operating cash flow (LTM) remained robust, supporting its strategic investments in both organic and inorganic growth. Capital expenditure has been strategically allocated to digital investments aimed at improving user experience and productivity for healthcare professionals, alongside selective investments in physical assets.
As illustrated in the following chart of the company’s financial position:
The company’s net debt excluding IFRS 16 lease liabilities amounted to €310.6 million, down from €353.9 million, further highlighting its improved financial flexibility.
Strategic Initiatives & Business Outlook
Terveystalo’s strategic agenda focuses on four key areas: engaged team, superior value through integrated care, organic growth, and efficiency. The company has shown progress across these dimensions, with employee engagement index improving from 3.96 in autumn 2020 to 4.19 in autumn 2024, and adjusted EBIT margin expanding from 8.1% to 11.1% between March 2024 and March 2025.
The company maintained its guidance for 2025, expecting revenue growth compared to 2024’s €1,340 million and adjusted EBIT to reach 10.7-11.8% of revenue, up from 10.5% in 2024. This outlook accounts for approximately €25 million revenue reduction in the Portfolio Businesses segment due to ending outsourcing contracts.
As shown in the following guidance slide:
Terveystalo expects profitability to strengthen across all business segments, based on assumptions of a stable demand environment, employment levels, and typical morbidity rates. The guidance does not account for significant acquisitions or divestments.
Conclusion
Terveystalo’s Q1 2025 results demonstrate the company’s ability to enhance profitability despite modest revenue challenges, primarily through operational efficiency improvements and favorable service mix. The Healthcare Services segment continues to be the primary growth driver, while management works to address challenges in the Portfolio Businesses and Swedish operations.
With a strong financial position, strategic focus on digital transformation, and clear guidance for continued margin expansion, Terveystalo appears well-positioned to navigate the evolving healthcare landscape. However, investors should monitor the company’s ability to reverse revenue declines in underperforming segments and maintain cash flow generation in the coming quarters.
Full presentation:
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