Terveystalo Oyj (TTALO) Earnings Call Transcript & Summary

Good morning, everybody. It is my absolute pleasure to welcome you to our Capital Markets Day today here in Helsinki. My name is Kati Kaksonen, and I'm going to talk you through our agenda today. We have an exciting agenda today for you. We will talk about the important progress we have already made since the last Capital Markets Day 18 months ago. And more importantly, how we are moving forward as a company. But first, a mandatory disclaimer regarding forward-looking statements. I'm sure you have memorized it by now. But so as I said, we have a great agenda for you today. Our CEO, Ville Iho, will start with an overview of our strategy, our progress that we have made since the last Capital Markets Day and our revised targets for our business areas and the group as a whole. After Ville, our Executive Vice President of Healthcare Services, Sari Heinonen will show you how the business is stronger today where she and the team are tapping into opportunities for profitable growth and how they are further strengthening our position as a leader in our core markets. After the first break, we'll dive into our digital agenda and our Chief Digital Officer, Ilari Richardt, will show you some really exciting opportunities we see in -- further improving our productivity, professional engagement and medical quality through our digital solutions. I'm also delighted to introduce you to our newly appointed Chief Medical Officer, Petteri Lankinen here today. And with Petteri, we'll have a discussion on the integrated care model and the value we see there from a medical perspective. After the lunch break, I will continue with our portfolio of businesses led by Henri Mäenalanen. He will share you with his turnaround and growth agenda regarding each of the business areas there. After Henri, we'll continue with Stefan Kullgren, our CEO of Feelgood Sweden. And he will talk you through the ongoing profit improvement program and how that will make the business stronger and structurally more profitable going forward. And finally, our CFO, Juuso Pajunen, will tie everything together in terms of financials. You have all seen our recent guidance upgrade for this year as well as the revised financial targets. So Juuso will elaborate our progress on the financial perspective and our thinking around the capital allocation going forward. Before each break, you will have a chance to ask questions. We will first take questions from the live audience and turn through the webcast. And as a reminder, you have a chance to send in your questions any time of the day. In this physical location, we have coffee available during the breaks and the lunch will be served just by the corner in the cafeteria area there. And the restrooms are behind there for important information as well. So with that, I'm really excited to welcome you all here today and continue with our agenda. So let's welcome Ville on the stage.

So good morning from my behalf. Delighted to be here today. As many of you remember, the last time around, we had CMD, it was May '23, after Q1 2023 release. And now looking back, actually, it's quite funny to think about the fact that Q1 '23 and after that, on the CMD, that was the period of all-time low performance for Terveystalo profitability during a stock-listed period. Back then, of course, with that, the agenda was all around turnaround credibility of our plan and how we bridge our journey and our agenda from that low point to our then set ambitious target of reaching 12% EBITDA in 2025. As you also well know, the progress that we have made since have been impressive. We have not only reached the target that we set, but we have overperformed ahead of schedule. We recently upgraded our full year guidance and set a minimum level for this year to 12.5%. Against the CMD story line in '23, one can truly say that team present here has delivered. Terveystalo today is stronger than ever. With that one, from my behalf, welcome to Terveystalo Capital Markets Day. As Kati already said, we have a really exciting agenda for this day. If '23 CMD was about credibility and storytelling around turnaround. This year's CMD is much more about confidence. Why we are confident in the next chapter of Terveystalo and how we position ourselves financially, medically, operationally, commercially into that journey. We have several reasons for that confidence. The track record that the team has is, of course, one key pillar for that one. The other one is the market, how we see the market. The market continues to support Terveystalo business model and Terveystalo profitable growth going forward. Third element is our model data-driven integrated care. And as Ilari, Sari and Petteri will elaborate in their presentations, there's ample opportunities to perfect the model and increase efficiency, productivity, medical quality and customer experience, especially through digital. Finally, as Kati already mentioned, we tie this all together into finances, Juuso will deep dive into that one, present in detail our updated financial targets and in numbers present our commitment to value creation. First, as a reminder, Terveystalo, we are, of course, a health care company and we have extremely simple, powerful and clear purpose. We fight for healthier life. Terveystalo, as a company, our operations, our team and everything we do is deeply rooted into our 3 core values: human being always in the center, reforming health care through technology, and in the core of the core, always being honest with medical science. Through those values and to achieve our purpose, we drive data-driven integrated care. We know our customers, we care about our customers throughout the care continuum, throughout the care journey. We steer them. We care about them. and we relentlessly always measure the outcomes that we get from our services. Our competitive advantage and edge will rely on this integrated care model and perfecting that one going forward. If the last stint since CMD has been a lot about fixing the basics and the profitability, upcoming stint and chapter will be more balanced. We'll invest in enhancing the value of our services to customers and the brand -- professional brand of Terveystalo. Our integrated model and our values, our targets are fully aligned with both achieving high profitability and positive societal impact, which as a health care company is utmost important for us. So integrated care -- data-driven integrated care, maximizing the value for all of the stakeholders will be mentioned many, many times during this day. And I will shortly explain why it's so important for us and for our business model and for our plan. Four key points to take home from this one: first is outcomes; second is integration; number three is shared targets and incentives with our customers and our payers; and our fourth one is data. I will start from outcomes. It sounds trivial, but really in this industry, it is not trivial. We are for outcomes and also our customers are for outcomes. So what that means is that we, with our integrated model by operating in prevention, primary care and specialist care are targeting -- throughout the full care journey for the end outcome of -- for every patient and for every customer. So we are not outsourcing partner typically for a health care organizer just taking care of one small tiny piece of the service. We are a holistic provider of the whole health care solution. So outcome is what we are keen at looking at, and that's what our -- especially private domain, our customers and payers are key looking at. Balanced shared incentives is the second thing. Typically, even if a health care company in a market is outcome-driven -- outcome is typically only defined as cost and medical outcome. For us, it is much more balanced. So on top of that one, of course, medical outcome is the core and our customers and payers are always interested in cost of our services, but they are very interested in fast access to care, throughput time, throughout the care journey and customer experience. So it is a balanced view. With that balanced view and our integrated model, where we are actually we are in charge of the whole journey. We are able to optimize. We are able to define the processes. We are in charge of care guidance, patient steering. We have ample opportunities to optimize the full care chain and our integrated processes and to use not only medical best practices, but also operational best practices and commercial best practices from other industries as well. So it's a different type of much more holistic model than you typically see in health care space. That then again, enables us to invest in the technology to truly integrate our processes, commercial, operational, medical process for the benefit of the end customer and the patient. With customer data, we can further enhance the service, create too intimacy with the customer. So what we like to say is that -- when in Finland, people are talking about a family doctor model. We are here to create family doctor model into your pocket through the technology, in scale throughout our whole network in physical and digital. So we truly believe in our model, and that's the core for our plan. Not only do we trust in our core model in the data-driven integrated care, but we have high trust in the markets that we are serving. Mega trends supporting the market growth. They have not changed. They have not changed since the last CMD or 5 years prior to that one. Some of the megatrends have even accelerated. Aging population will guarantee that volume-wise demand for health care services will grow. It is just a fact. Constrained labor market, on the other hand, that will mean for private provider like Terveystalo, first of all, a healthy pricing environment. There will not be an oversupply and benefit for a company like Terveystalo, who has the employer brand and attractiveness for the professionals to exceed the market growth in supply. So in simple terms, recruit professionals. Challenged public system is a thing to stay. Deficits in funding cannot be solved by just holding money into the problem. That will guarantee that private part of the funding, which is our main business will grow, and it will grow faster than the public side of the fund. Finally, if you look at this challenging equation from the society point of view, the only sustainable solution to really make progress is through technology. Truly increase efficiency and productivity into the system, and that can only be done by applying modern technology integration and for a company like Terveystalo, once again, that is a great opportunity because we have the robust technology platform already in place, and we have the cash flow to invest further into that one. And Ilari will share in his presentation, exciting examples what have we already done and most importantly, what we will do in the future. These megatrends, they translate into actual numbers. Health care spend based on demography and cost increases in especially specialty care will mean that the spend will increase roughly 4% annually during the course of 10 years. So it's big numbers accumulated. We are talking about big numbers. And again, funding gap that cannot be solved just by hosting money into the problem. That's why for the reasons I explained, private money into the system will grow slightly faster, 5% a year. And as a big picture, this will mean that there are -- this equation, this market view will support Terveystalo organic growth plans. And this view and 5% growth does not even include the potentially emerging private public partnerships between health care providers and new health care districts and Henri in his presentation will touch up on this opportunity. So we have the model. We believe in our model. We have huge potential in further perfecting that one. We have a market supporting our profitable growth agenda and value creation. Third pillar for our confidence, as I already mentioned, is our recent track record. This is a great day for the audience for you to hear from the team who actually delivered the turnaround details into that journey. And please take most of that opportunity. But looking at what we have achieved, we can say, as I already mentioned, that Terveystalo is stronger than ever. In tough macro environment, we have been able to grow the business, we have taken the profitability to all-time high in a normal operational times. Our leverage is decreasing and our cash flow is strong. So Terveystalo today financially is stronger than ever. As I said, this has been delivered in a tough macro environment. We have not gotten support from public market nor from the consumer market. At the same time, while delivering this turnaround, impressive turnaround, we have been able to raise the customer experience measured in NPS to all-time high level 87 in NPS. At the same time also improving the medical outcomes as Kati and Petteri will discuss in their presentation. So model, market, track record, 3 very clear and strong reasons to be confident in our future. When we started our turnaround journey in a fall of '22, we organized our business into 3 different P&Ls: Main Business, Healthcare Services, led by Sari, who will give a deep dive into this business later after myself. Portfolio businesses led by Henri and finally, Sweden, led by Stefan. All of these 3 businesses have a crystal clear agenda for coming years and mandate to deliver value creation. Our main business, Healthcare Services has been the focus for our turnaround actions and the development has been impressive. We have reached 15% EBITDA level LTM. And as a next step, we go beyond 16% and continue incremental development in that area. We have a lot of opportunities in health care services, especially through digital, increasing the value of the services for our customers, really investing into that one, focusing on the right growth areas, as Sari will explain and investing -- further investing into employer brand. Portfolio businesses has been living through difficult time when you think about the macro public side has been silent and consumer businesses, dental, massage; they have been suffering from all-time low consumer confidence. Despite that one, we have already seen positive development quarter-to-quarter in our portfolio businesses, profitability. So Henri and the team have started delivering that bottom line increase. The team and Henri as he will explain later, they are committed for doubling the profitability by '29, and we have planned for that. while also tapping as I said already, in the emerging potential of private public partnerships with health care districts. Sweden has also suffered from tough macro, as Stefan will explain in his presentation. Stefan has started the turnaround journey with a steady hand. And we see today already run rate improvement in that business and bottom line improvements will be shown during the course of next year. We will take the business to previous profitability and beyond and the target is to reach over 10% by '29 and we have a plan for that one. So all in all, this is a more balanced portfolio, a clear agenda for each and everyone, improvement potential, incremental improvement potential in health care services, step change potential in portfolio businesses and Sweden. One thing to add on that one is that this is also less risky portfolio than, for example, 2 years back. If you deep dive into that statement, looking into the Healthcare Services, Healthcare Services has been the profit driver for Terveystalo but it has been relying a lot on single high-margin diagnostic services. That is not so anymore. We have been able to -- and Sari's team has been able to balance that view so that margin contribution come now from more balanced -- more sources. So we are less risky in that core business. Portfolio businesses, on the other hand, they have been able to gradually exit from risk exposed contracts, legacy contracts with the communities and health care districts. We suffered from those low-margin risky agreements earlier but now even the portfolio businesses -- business portfolio is more balanced and less risky. Looking forward, of course, when we are able to reach the targets of portfolio businesses in Sweden, the full portfolio is more balanced and all of the 3 cylinders will produce profits. So less risky and a lot of potential in the group. So as you'll hear, business agenda for 3 P&Ls. They are crystal clear. From a group level, we have priorities as well, and they are equally clear. If last 2 years or so have been a lot about fixing the core, fixing the profitability, closing the profitability leakages, it's going to be much more balanced for you. We will invest into the team, into the employer brand of Terveystalo further enhancing that one. We have taken team through a fairly tough period. We will invest and accelerate the development of our services to enhance value of our services to the customers and that's going to be the key. It's going to be based on integrated model, and it's going to be accelerated through digital. Both of these employer brand value of our services to our customers are basis for our organic growth agenda. And especially, Sari will walk you through what it means in practice. We have been concentrating on profit improvement. And I said it's going to be more balanced. But of course, profit improvement will continue. As I said, from portfolio -- from the group view, we have incremental improvement potential in health care services and step change potential in our portfolio businesses and Sweden. And we have focused projects which are going through the full group, which will decrease the cost or increase the revenue. Finally, optimized business portfolio. We always in a lookout backed by our healthy strong cash flow for disciplined, value-creating acquisitions when there is a service synergistic service that either we are not as a market share high enough or if it's missing from our portfolio. So with agendas from the P&Ls from the group point of view agenda, we are prone to grow and create value. If one then ties this one into our financial targets. It's a slightly different kind of view than it has been. It's a more balanced view and it's very, very, very credible. We will drive for profitable growth, 10% EPS growth on average with the moderate leverage ratio, which we have reached during the turnaround program and reward our shareholders with attractive dividends. With a profitable growth agenda that we have created, this is doable while at the same time, leaving dry powder for value-creating acquisitions as Juuso will explain in his presentation later. So 24 months back, roughly, I set for this company, then very ambitious plan of reaching 12% in 2025. As you have read, as you have heard and as you will hear today, of course, the target for this team was not quite ambitious enough. So we have overperformed, we have overdelivered ahead of time. Terveystalo today is stronger than ever. We have the plan. We have confidence in our model. We have confidence in our market. We have a fresh team with energy, but the team, which has already been tested in this tough turnaround journey. With these elements, it's my absolute pleasure to close my presentation and invite Kati into the stage.

So good morning, everybody. My name is Sari Heinonen, and I have been heading the Healthcare Services business segment from February early this year. And before joining Terveystalo, I worked for over 10 years for the largest financial group in Finland in different leadership positions, the latest being the CEO of a life insurance company. I have a PhD in marketing and the strong background in digitalization, different kind of commercial activities and customer experience in both B2B and B2C segments. And since joining Terveystalo, my focus has been, of course, on finishing the implementation of our profit improvement program but also on building our development agenda for our next phase of the strategy. So I'm really excited to be here today to talk about the progress that we have already made and our forward-looking development plan. So we have clear targets. We are aiming for above-market growth, continuous incremental improvement in our profitability and best-in-class customer experience and people experience. From a revenue perspective, we aim to both grow our market share and grow our share of wallet in order to reach the 5% annual growth in revenue. Then from operational excellent perspective, we will continue to incrementally increase our profitability by investing in digitalization and automation. And finally, we are committed to delivering industry-leading people experience together with high medical quality and high customer experience. So during my presentation, I will talk about our development agenda. In other words, how are we going to reach these targets. But before going into that, let's take a look at our strategy, how we see our relevant markets developing and what we have achieved with our strategy so far. So as Ville said, the core of our strategy is to offer exceptional value for our customers by providing comprehensive and integrated care. This includes prevention where we empower our customers to be more in control of their health. It includes primary care where we offer fast access to care and, of course, fluent care path. And finally, specialist care, where we demonstrate superior medical outcomes. And we will continue, of course, to develop each of these different parts to be more effective and more high quality. But the thing that distinguishes us in this model and the competition is the seamless commercial, operational and medical integration of these different steps. And believe -- we believe that, that will give us an edge when we look forward to changing market trends and customer needs. So Next, let's take a look how we believe that our relevant market is going to develop. So we see strong fundamentals driving the growth of private health care market in the begin -- next years. First, as Ville told, demographies driving the need for care, aging population, then we also see that insurance is gaining share. The volume of voluntary health insurance is growing and people are using their insurance coverage more frequently. And finally, we also see a gradual increase in the number of employees in Finland, which, of course, supports our growth agenda in occupational health. So the demand environment is positive, and it is expected to support our growth agenda. But next, let's take a look at how we see our position in this market. So we operate in 3 key private pay segments. Occupational health care, out-of-pocket consumer market and then insurance market. And we are the market leader in each of these segments. When you look at these 3 insurance is actually the fastest growing one as more and more Finns, especially adults are getting voluntary health insurances. When we look back 10 years, the volume of voluntary health insurance has actually grown in Finland by 30%. And also during the same time, the collaboration between insurance companies and health care providers has had many different phases. One could say that it started with insurance companies focusing on cost efficiency in care path. So quick access to care, no overtreatment, cost-efficient prices. After that, insurance companies started to take more steering power to themselves, and they started building different type of manual care assessment tools. After that phase came a phase of strong partnerships. One maybe remember that at that time, for example, OP Group built its own hospital chain and also LähiTapiola acquired part of Mehiläinen, one of our peers. But now we believe that we are moving towards a multi production model where digitalization is the key. So insurance companies are looking for private health care providers who can offer a digitalized customer journey who can steer their customers who have high-quality care paths and who have transparent reporting capabilities. And we believe that we are in a good place here as we have high-quality efficient care path and we have industry-leading digital capabilities. But next, let's take a look what we have achieved with our strategy so far and from where we are starting the next phase of our strategy. So as a starting point, we are structurally stronger as business after the successful profit improvement program. Here, you see that during the last 2 years, our revenue has grown by 13% and we have also reached our profitability target actually 1 year ahead. Our EBITDA margin now being 15%. And at the same time, we have record high customer satisfaction. Our NPS in appointments being 87 and in our hospitals, 95. We also start our next phase of the strategy from a place where we have actually outpaced market supply growth and we have balanced our profit margin, as Ville mentioned. So during the last year, we have been able to grow our physician supply by 4%, which is actually twice faster than the market, and this is due to our good and evaluated employer brand. We are especially pleased with the growth that we have had in occupational health doctors and GPs. And then at the same time, we have been able to increase the profitability of our appointments significantly. Here on the graph, you can see that during the last 2 years, the appointment share of our total revenue has grown by 5 percentage points and the appointment share of total salary margin contribution has grown by 9 percentage points. So to put this together, we have been able to grow in physicians, occupational health doctors and GPs who are the professions who actually perform most of the appointments. And at the same time, we have been able to significantly grow the profitability of our appointments. This is leading us to a place where our EBITDA is going and we are not so dependent on the margin of diagnostics anymore. So we are in a good position when we look at our financial figures. But next, let's take a look what our customers think about us. So as we all know, brand is a key factor in a private health care market where we operate. And our brand is highly evaluated by our customers. According to the recent research from Taloustutkimus, we are the most respected consumer brand in the category of private clinics in Finland. Also, according to our continuous brand tracking, we are the most considered consumer brand in the category of private clinics. We are the most preferred consumer brand and we are the most preferred brand among occupational health B2B decision makers. So to sum up, we have made a strong profitability improvement. We have been able to balance our margin structure in a way that we are not so dependent on the margin of diagnostics anymore. We have grown our supply. We have high customer satisfaction and a leading brand. And now when we look forward from here, our focus will be on profitable growth and creating more customer value. So next, let's move on to our development agenda. So what will be our key focus areas in the future. So we have prioritized 4 areas where we see further growth from -- for further growth and customer value potential. First, we will scale prevention and care paths. This is something where we are just in the beginning. I will come back to this in a minute. Second thing is that we will strengthen our insurance partnerships and customer experience. So our goal is to be the best partner for insurance companies and best service provider for insurance covered end customers. What this means in practice is that we will build a digital integration with insurance companies and also smoother digital customer journeys. Third thing is that we still see growth pockets in selected geographies, hospitals and specialties. What this means, for example, is that we will invest in growth centers with bigger entities and with a wider variety of specialties. And finally, we will grow in digital channels. During the last year, we have been able to improve significantly the profitability of our digital channels. And now we are ready to scale our digital channels in order to offer our customers even more convenient access to care in a cost-efficient manner. But next, let's take a look at a few of these focus areas in some more detail. Let's start with prevention. So we believe that effective prevention has a huge potential impact on workability and public health. We have recently deepened our cooperation with blood test company Nightingale and integrated their risk identification in our health checkup process. What -- and by this, we can actually identify the risk of developing 8 most common lifestyle diseases before they saw any symptoms. And so far, we have delivered over 100,000 risk reports to individual customers, and we also have population level data for over 10,000 corporate customers. We have also identified effective interventions and care paths for different type of risks. And our nationwide population data shows that there is a high need for these kind of integrations. As for example, a huge proportion of working age men in Finland have an increased or high risk of type 2 diabetes or cardiovascular disease. So we believe that when we succeed in effective prevention we can decrease morbidity, increase healthy working lives and extend working lives with a huge societal impact. And we are just in the beginning here. Next, let's jump into specialties. So we have earlier chosen 3 specialty areas: orthopedics, sleep and mental health. And now we can say that we have successfully delivered growth and customer benefit in all of these areas. If we start from Orthopedics during the last year, we have grown 25% and at the same time, delivered a reduction in disability and sick leaves. Then with sleep, the growth has been 32%. And for example, at the same time, the description of sleeping pills per visit has decreased by 27%. And with mental health, the growth has been even faster 49%. And with great results, mental health-related absences decreased by 45% despite the annual increase in the number of diagnoses. And we still see future growth potential in these 3. But in addition, we have selected new specialties where we want to grow in the future. So let's take a look at what they are starting from the right, ophthalmology. That is an area where demand increase as the population ages, and we are still a fairly small player. The same goes with a few conservative areas like dermatology, neurology and obesity care. In all of them, the demand is increasing, and we have still room to grow. With pediatrics, the market is not growing so fast, but we have room to grow our market share. And then there's gynecology where we see potential, especially in the treatment of menopause. I will come back to that in a minute. But overall, there are important specialties where we can still grow and create customer value. But let's come back to my example of gynecology. So menopause impact directly half of the working age population at some point. And it is still an area that is very commonly underdiagnosed and undertreated. Menopausal symptoms are not often recognized in health care services even though the treatment of more severe symptoms can have a crucial impact on the well-being and workability of women. And at Terveystalo, we have, of course, taken action to offer better treatment to our customers and this population of 1.5 million women in Finland. We have started to train our professionals. We have started to inform our customers, and we have also taken the role of a spokesperson over this subject area in Finland this autumn. And so far, the feedback from both professionals and customer has been overwhelmingly positive. So we think that here, we have a fantastic opportunity to improve the health and working capacity of people in their prime working years and also thereby support businesses and economy as whole. Okay. But then finally, I will move on in our development agenda into our focus areas in productivity and people engagement. So as you will soon hear from Ilari's presentation, digitalization plays a major role in further enhancing our productivity and people experience. Here, we have chosen 3 different focus areas, automizing and digitalizing routine work and in that way, enabling our people to focus on more value-adding tasks. Then modernizing our resource planning solutions. Here, we, of course, drive process efficiency, but also, we want to have the right people at the right place at the right time. And finally, we are committed to developing the best-in-class digital tools for our professionals in order to create more fluent workday experience and, of course, increase our productivity and care compliance. So we still see major potential in these areas to improve our profitability and people experience. And as I said, you will hear more about this after the break. So finally, I will sum up my presentation. So we have a clear plan to strengthen our position. We are targeting an annual revenue growth of 5% and incremental improvement in our profit margin, and we aim to increase our market share in all of our customer segments. And today, our business is structurally stronger. We have a balanced margin structure, robust supply, high customer satisfaction and a leading brand. And we aim to grow by scaling care paths and prevention, forming deeper partnership with insurance companies. targeting selected geographies, hospital, specialties and expanding our digital channels. And we will improve our profitability through automation and digitalization. And finally, we are dedicated to providing an industry-leading employee experience and maintaining high medical quality. And here again, digitalization plays a major role. Thank you.

Thank you so much, Sari and Ville. Now we are ready for your questions. So first, if there are questions from the audience, we'll give the speech over there. I think Anssi was first and then some.

Yes. Anssi Raussi from SEB. So far, just one question regarding the big picture here. You increased the dividend payout ratio target. And you mentioned selective M&A possibilities. So just to confirm, you're not looking for any transformational M&A transactions or new countries, for example, at this point.

Yes. Actually, you answered the question yourself. So it's going to be very disciplined. It's going to be value-adding and we are not looking for any transformation. I laid out the agenda for each and every business. And of course, you might be alluding to, especially Sweden. Sweden is bang on focused in their turnaround journey end of story.

Sami Sarkamies at Danske Bank. I could continue actually on the same topic. If we look at the new targets, you have scrapped the top line target. I think previously, you had also EUR 1.8 billion sales target for '28, which included more material M&A. Should we read this so that you're not necessarily planning to do that larger M&A, the dividend policy would also suggest that.

Sorry, can you repeat the first part of the question.

Yes. So previously, you had this EUR 1.8 billion sales target of '28, which included more material M&A, I guess you're not now planning to do it because the high dividend payout ratio will not leave money for M&A.

Yes. actually, Juuso will go in detail through the modeling and what it allows and what it does not allow. So maybe you will hold that question until then. But you are roughly right.

Having said that, of course, we are still very much focused on growth but not material M&A, is not on the agenda.

It's profitable growth, especially through organic agenda as laid out by Sari.

All right. Marianne Palmu from Inderes. You expect the private provision market to grow around 5%, and this has increased somewhat from the last CMD. So could you briefly explain what has changed since then?

Well actually, I think I laid out the macro view, why this is growing, the mega trends push the full health care spend to grow, that's evident. Funding gap guarantees that the private part of that spend will not decrease. It's going to increase slightly and more detailed growth levers were laid out by Sari. I don't know if you want to elaborate. .

Yes, demographic. And then, of course, we see growth in insurance segment. And then, of course, when we look at the occupational health -- health care segment where we see increase in number of employees in Finland, which, of course, grows the market.

And then in terms of the health care services and appointments, have you seen any issues with the satisfaction of practitioners since now that you have increased the profitability of appointments and the share of wallet for Terveystalo?

Yes. Well, I would start with saying that in Alpha program, we had more than 200 different projects, which, of course, many of them affected the profitability of appointments, and we have done a lot of commercial and operational changes and activities there that have been levers for the improved profitability. But it is true that we have also developed the compensation models for private practitioners and our target and we are committed to that. Our compensation models will be competitive in the future as well. So we know that if our compensation models for practitioners are not competitive, we will not have supply.

Yes. And in a way, dialing back to bottom line. We have made urgently and well, needed changes to our model. And Sari explained how it has been one of the contributors to balance out the margin profile of Terveystalo. So it has been very important for our progress. Despite those changes, Sari explained and showed the supply has been growing, and that's the bottom line.

Yes. I think [indiscernible].

[indiscernible]

And we have -- as Sari said, we have been overperforming against market supply growth as a whole. So we are in a good place. We have been able to rectify the model, supplies there and we'll continue from this strong base.

Maybe one more question about the competitive landscape now that the profitabilities of key players in the market have improved significantly. Have you seen any increased pressure from competition or new concepts, perhaps entering the market?

Maybe I will start. So market has been fairly disciplined with the players focusing on profitability, as you pointed out. We have not seen any drastic changes in the stance to the market nor any new openings, totally new services or models as such. But it's -- this is a market and market goes somewhat in waves. And we are, of course, also prepared for different type of market conditions. But it's been disciplined and continues to be disciplined.

Sami Sarkamies, Danske Bank. I have 2 questions regarding the public pay, private provisioning market. You estimated 5% to 6% growth. But when do you actually estimate this growth to start? Because I think 2 years into SOTE reform, the market is shrinking at the moment. And then secondly, why didn't you include that into your core market, is the reason that you're not believing in this growth? Or you're not sure if you want to play that market?

Yes, that's a great question. Henri will actually talk in detail about that one and our view on how the market is going to evolve. Why we did not include that into the modeling is that it's fairly in a way, black or white. When it happens, it happens and it's very sort of -- it's anybody's guess when it will happen. But then Henri has a full story around that one.

Maybe just quickly referring that. It's an added -- it's an optionality for us. So we're not basing our model on that but it's an upside potential that we are very much interested in tapping into and Henri will explain in detail.

Yes.

Joni Sandvall, Nordea. Maybe 1 question on the labor market. We know that there is constraints in both nurses and doctors. So how you see this going forward? Is this a risk? Or can you maybe mitigate this with the data and, let's say, AI going forward?

Yes, very good question. Again, first, starting how the market dynamics have been evolving during last couple of years. So especially in late stages of COVID, we saw huge bottlenecks in nurse labor market, some bottlenecks in physician supply. But both of those for us have actually improved quite a bit. So we went through the physician supply development. It's been positive for us. We have been overperforming against the market. And actually, the nurses labor market is way better than it used to be 2 years back when there was a lot of discussion around that one, all of the health care districts complaining about the bottlenecks and salaries going up. So that's totally shifted. We don't see bottlenecks in that area anymore. Going forward, as you pointed out, productivity efficiency in the core medical process will be one of the key areas for our development. Of course, we want to further enhance the supply and also lower the unit cost by increasing productivity. And there will be stories around that one by Ilari later.

And maybe I can add that, what are the factors that affected the supply? What we have learned is, of course, that we have to offer the professionals of fluent workday experience. We have to have high demand and then we have to have competitive compensation models.

Sami Sarkamies, Danske Bank. This may be a bit of an unorthodox question. But are you sure integrated care that you talk about a lot is good for Terveystalo shareholders? What I mean is that preventive care sounds like high investments, perhaps little appetite to pay. And then, I guess, sicker patients mean more business for you.

Yes. Starting from the sicker patients, maybe looking at the demography, looking at the whole health care spend. If you consider a risk that we make the whole of Finland healthy and there will not be demand, I wouldn't be worried. Of course, that would be a dream scenario. And if we are then, then able to achieve that one as just one player, then all good. Maybe we'll -- and at Terveystalo, we will then find great new opportunities somewhere else. If that is the case, as Sari explained in her presentation, preventive has -- and scaling that one has started. Of course, we are doing that one in our corporate market already today. But for consumers, as you pointed out, funding the business model, willingness to pay has been a challenge for any player. But for us, it's not so much about scale and the revenue. It's about customer intimacy and customer loyalty. We want to strengthen our customer relationships with that one, taking care of a patient and a customer throughout the full continuum. We are not afraid of demand dying out.

Good. I think there are no further questions from the room. There are a couple online. I think we have already covered the first one regarding the reasons behind the margin structure improvement and why we are less dependent on diagnostics. So one part is the compensation and revenue sharing models and then 200 other projects that have contributed to that change.

Yes. One thing to mention on that front is that actually, when you look at the cost, that's been allocated to appointment, which is the bulk of what we are doing. That one is going down as well. So that's been a major contributor for the appointment profitability, not only the practitioner model.

Yes, [indiscernible] process improvements.

Yes. But then maybe a question around market shares in occupational health care, out-of-pocket and insurance? And how do you see the competition in these private pay segments?

Well, of course, the competition is there and challenging us all the time and keeping us awake. And as I told, our plan is to grow in each of these different segments. So we see growth potential and we see growth potential, especially in the industry segment -- insurance segment.

Yes. And it's a great thing that we have a healthy competition in this market in Finland.

Yes. And then the other question was around the segments where we want to increase the share of wallet where our market share is lower. And I think that you already presented some of the examples in mental, sleep and orthopedics where we have seen robust growth so far and believe that there are further areas of improvement. With that, I think that we'll close the first Q&A session. We'll have a small coffee break here. And after the break, we'll continue with our digital agenda with Ilari. [Break]

All right. Welcome back from the break. We are ready to continue with our digital agenda presented by our Chief Digital Officer, Ilari Richardt. Please, Ilari.

Hello and nice to see you again. My name is Ilari Richardt and I'm Chief Digital Officer and Senior Vice President for the Digital Services here in Terveystalo Group. I have almost 15 years of background in health care digitalization in various roles and today, I'm updating you on progress in our digital journey and journey going forward. 18 months ago at the last Capital Markets Day, I told you how our digital platform creates value and competitive advantage. Since then, we have taken significant steps forward. And today, I'm here to update on the progress, how the digitalization supports our productivity development, medical quality and professional engagement. As Ville already mentioned, we have a clear agenda and a strategy where the digital plays a significant role. Our digital platform is already creating true competitive advantage through superior user experience and data. And we have a great additional potential to improve the productivity through the digital solutions even further. Let me talk you through how. While talking about the process integration, we can think of 2 words: one, what happens outside of the appointments; and two, what happens within the appointments. This combined, we're addressing over 70% of our total cost base. Firstly, we have a industry-leading digital platform that already creates significant value in process outside of the appointments. But the AI technology advancements creates additional potential in this area. I'll briefly tell you more about the achievements which we have made in this area. Secondly, in Western countries, the digitalization level of the process within the appointments remain low. We also see that the appointments themselves have not been digitalized to full extent, where we see a high potential. Thirdly, the customer data creates significant opportunities in preventive care and care compliance. By utilizing data wisely, we can detect the person's hidden needs for health care and utilize preventive measures. Data acts as a enabler on integrating our processes, prevention, primary care and outpatient specialist care. Now we will dive more deeply on the first part of the presentation, the process outside of the appointments. First, let me give you a concrete example. This gives you a proof point that we know how to create digital solutions that deliver value. This is not something that we are planning to do. We are already doing this and it's already delivering significant business and customer value. Here, we have a case example that illustrates one of the key process outside of the appointment room, the appointment booking process. By systematic development of individual customers' channels, mobile app and the website, we have achieved our 75% self-service rate in appointment bookings and you can see the development in the graph. This means that 3 out of 4 of our visits start from the digital channels already without the need for interaction between the customer and the customer service. Our digital channels have over 2.5 million registered users, meaning that we have a direct connection to our customers through the digital channels. Now if you think that the cost of appointment booking in the call center cost EUR 13 and in digital channel, it costs EUR 1. You can easily see the efficiency chain by digitalizing the process outside of the appointment room. But it's also crucial to understand that while we have been able to create significant efficiency change in this area, we have also been able to improve the customer experience and the satisfaction at the same time. This proves that we can and know how to build digital solutions that the users love and deliver value. But it doesn't end there. As technology, especially the AI takes significant leaps forward, we can unlock the new ways of taking process and even further improve the productivity and the customer experience. We have around EUR 30 million payroll in supporting process outside of the appointments. In this transactional work and process, we have clear evidence that the AI-assisted process can increase the productivity by 15% within a year and it continues. When introducing Agentic AI to transactional process, there is up to 40% productivity potential. During '24, we have, for example, introduced AI to our call center and we can see already how the phone calls are getting shorter after introducing this technology. Now we will jump to the second part of the presentation. What potential does the digital platform have within the appointments. Let me introduce you to Terveystalo Ella, the future electric medical record, also called EMR, provides a support for the professionals, allowing professionals to focus on the most important, meeting the patient. Ella is our new EMR, which we already have introduced to chat appointments. But what does the Ella do in practice? Let's start by jumping to the deep end what traditional EMRs do. They replace paper. They have only little automation in real time and the UX for the professionals hasn't really developed further within the last 20 years. Ella on the other hand, is not just a journaling tool. It's a process tool for health care professionals. It guides the professionals' appointments and the workday process. It allows us to automate tasks in real time and rapidly exploit new technology. We have already, for example, integrated AI into Ella, which generates medical journals on behalf of the health care professionals and the results are really promising. We can see over 50% reduction in the time spent writing in medical journals. Now we will watch a short demo video on Ella, how it works in practice. This is an actual view on Ella from professionals point of view. Here on the center area, professional can see the data from self-triage, for example and the chat with the customer. On the right side of this view, the professional can see all the necessary data to complete the visit. It includes, for example, contract data, telling about the policies regarding sick leaves as well as customers' known history. Professionals get AI-suggested journaling based on the entry data and the discussion. It allows easy selection of the diagnosis as well as the necessary referrals for the visit. Ending the visit is just 1 click, which you will see here. This makes a huge difference, removing the necessary step from the appointment process, making the professionals work fluent and efficient. Now let's talk about the advantage that Ella can bring within the chat appointments. As Sari already mentioned, we have successfully derisked the margin on the remote channels and this allows us to develop the chat and the remote service further. Ella has been introduced to our professionals working in chat already. And we can see already over 20% productivity and throughput change compared to situation before Ella. This comes from the fact that the number of the clicks gets lower, up to 5 minutes savings per appointment can be achieved just by optimizing the workflow and reducing the clicks from nearly 100 all the way to the just a couple of. We see a huge potential in productivity in the future as well. Up to fivefold productivity gain can be achieved through the wise use of technology '29. Reaching the full potential requires also further optimization of our channel mix. We have introduced digital capabilities, for example, self-triage to the customer path, allowing us to steer the customer based on the data. By managing the channel mix right away, we can reach the full potential and the productivity gains and ensure the continuity of the care chains regardless of the channel. The next step is to expand Ella to the professionals working in physical appointments. And here, the value drivers differ a little bit. It's not only about the efficiency, even though we see a potential increase in the throughput within the physical appointments as well. The main value drivers are the professionals' experience that creates stickiness to Terveystalo from professionals' point of view and the care compliance. This essentially means that by guiding the process and suggesting the next best actions to professionals, we can make it easy for medical professionals to do the right thing according to national guidelines. These factors combined gives us opportunity to increase the EBITDA 30% within the primary care segment. Finally, let's talk about the customer data and how it connects to all this. First, the data is enabler for superior patient and professional experience. Secondly, the data is the way how to integrate -- how we integrate prevention, primary care and outpatient specialist care into a complete care chain. Thirdly, the data is the integrator with the process outside of the appointment room and within the appointment room. Let me give you a concrete example on each of these topics. As we wisely utilize and visualize the data, it allows every professional to feel like your personal doctor. And as Ville said, it creates the personal doctor to your pocket through the technology. Based on the data, we already identify over 500,000 individuals' health risks annually based on the data. This allows us to help our customers with different health needs and this is the prevention at its core. As an integrated care provider, we can use the same data to start the care path and lead the patient to the primary care and all the way to the outpatient specialist care. Last year, we introduced the self-triage to the process. This process part produces the data outside of the appointment room, which we can use to do channel steering, for example. But it doesn't end there. The same data can be utilized to familiarize the health care professional with the case before the appointment and in the future to suggest the next best actions to the professionals as well. This means process integration outside of the appointment room and within the appointment room. In summary, the data is enabled for the customer and the professional experience, care chains across the 3 domains and the process integration. So you can see how we are using the digital to power the profit potential of Terveystalo. We have a world-class digital platform that's a key strength to our core business and it boosts our competitive advantage. We have a strong and solid track record of creating solid -- creating digital solutions that deliver value. And we have already delivered over 50 million efficiency chains in process out of the appointment room. And here is more to come. Digital solutions can further boost the productivity significantly, both in appointments and in cost reduction in transactional process outside of the appointments. The use of the customer data enables exciting opportunities in preventive care and care compliance throughout the care path. With our comprehensive database, we are well positioned to lead the development in the industry. And the future is that we are very, very excited about. Thank you. Next up, we have Petteri.

Thank you, Ilari and welcome, Petteri. It's super nice to have you here after 1 week with Terveystalo. Tell us a little bit about your background and your experience.

Hello, everyone. I'm so delighted to be here today as a new Terveystalo's Chief Medical Officer. My clinical background is as an orthopedic surgeon. And my -- by academic background, I'm an Adjunct Professor in orthopedic surgery and traumatology. I've done an Executive MBA at Adler University. And my professional background is from both public and private hospitals and health care. In public health care, I mainly work at university hospital level at Turku University Hospital and at central hospital level in Satakunta Hospital District. At Satakunta, I worked as the Hospital District CEO and before that, as Chief Medical Officer and Director for the health care operations there. And just before joining Terveystalo, I worked as Chief Medical Officer and Senior Partner in Social and Healthcare Consulting Group, a company called Nordic Healthcare Group. So professionally, I'm really excited that now I'm able to use my past education and experience widely here at Terveystalo.

Yes, I believe that your extensive experience from both private and public sector are for sure, an asset for us going forward. Tell us a little bit about why did you decide to join Terveystalo team, what attracted you in the company?

As a medical professional, I've always respected what Terveystalo has done. You have managed to uphold the medical value as high as possible and also combine it with commercial goals. Well, Terveystalo has a clear and important purpose as a company, as you have already heard. So -- and anyway -- about the core, it's -- for me, it's quite important that the care is integrated and fluent and people are provided very fast and excellent access to care. And all this is supported, as Ilari already told us, how the IT solutions can provide the support for the professionals and also for the patients how they can cope better and professionals how to do their job easier and better. And the professionals that work here are the ones that I have always respected. So nice to join them now in the private side. Well and it seems that the people here are so committed to go ahead and develop and do their best. So...

Absolutely. Pleasure to have you. You mentioned integrated care. Would you like to share some of your thoughts on the model and what makes it special from a medical perspective?

The most important for me is that we understand the needs of the customer for both the payer and the patient and our collaborators in this. So this is the most important for me. And as everything starts from the prevention, as you already made a question about, that's something we can concentrate in and how we can aid patients to take control of their own health and also give service to them. And then -- in the end, what we are producing for our customers and for the patients is the outcome or the value. And the value is something that now we are able to measure and find out and refine our treatment processes and productivity based on that. And in bigger picture, this means that, let's say, the occupational health care patient is something that we can follow from the prevention and prevention has been there for occupational clients for well decades or at least many, many years. So that's not something that's totally new. But for the general public, the aspect of doing something good for the public health is a bit more new to private side. But in the occupational health care patient, we're able to do everything in-house. From the prevention up to the, well, surgeries and highly specialized treatments. And now as we have the data, this data is something that I've used actually in scientific work previously in my life. And I've studied what kind of factors, or the things that hold back the patient from returning to work and how long it might take. So segment patients and find out how to serve or treat the patient the best. And now this kind of data is readily in hand at Terveystalo and based on this serve each patient individually and on a larger scale, better. And this always causes or ends up in benefits for the patient, the payer and also for the society of public health. So that's what is actually the meaning for me, this integrated care path. And for the patient, it truly engages the patient and helps the patient to go through these different steps and know when they go where and follow how the treatment has actually progressed.

Yes. That's super important to know what happens next in your care as well. When we met last week, we also talked about some of the case examples that you found really exciting, namely prevention, mental and obesity care. Would you like to share some of the highlights with the audience here?

Okay. So a couple of examples here. Already before I joined, Terveystalo, I have been following what you have done and what's going on in the market and what new ideas have been coming up. And one of the examples was how you define risk. And on this map, you can see actually the results. Sari already initially said and Ilari continued. But on the map here, you can see risk factors from people in Finland between male -- people -- male Finnish inhabitants between the age of 45 and 54, how the risk factors for cardiovascular and metabolic diseases are divided. So you can see some differences. And what's the medical and also commercial aspect for this is that more than 10% of Finnish males after the age of 55 will end up with type 2 diabetes. And going back to, again, the occupational health care aspect, people with diabetes are 3x more likely to end up being unable to work due to their sickness. And even if they are able to work, they have much significantly more sickness absences than their counterparts -- healthy counterparts. So -- and you have to bear in mind the risk of elevated sickness absences increases up to the -- up to 3 years before the diagnosis is set. So this risk factor identification allows us to start treatment as early or allow the patient to get some kind of intervention before the diagnosis is set or the sickness is, well, arising. So there's much to do before that already. And beginning the treatment enhances the potential of getting good results but also makes the workability for the patient much better. And the third is actually that through the risk identification, we can start the patient steering and based on this, go through the integrated care path so that the primary care does what they do. And then go through the specialist care and maybe in some other cases also to surgical operations and other more aggressive treatment methods. So this is really like a really good example of what the integrated care path could mean.

Yes. And an important area for sure. I'd like -- Sari just mentioned, it's important from a societal point of view and an important topic for public health going forward. Another big topic is mental health that we discussed earlier. You were really excited about some of the recent findings and outcome data. Would you like to share those as well?

Yes. Of course, as we all know, mental health issues and conditions are widespread cause of human suffering and one of the top 3 reasons for early retirement. So what to do with this is something that all Western countries should do. Sari already showed a bit about this matter that how -- what are the benefits or outcomes for patients that have participated in these brief psychotherapy sessions. And commercial-wise, Sari already showed how good this has been for Terveystalo. But I'm so excited to show you that how satisfied the patients have been and what are the actual outcomes have been for the payer and also for the actual patient. So the NPS has been above 90, above 91. And the outcomes for the payer is that the return on invest is more than sixfold. And workability is -- workability wise, this means that these patients have had 45% of less sick days than their -- than the patients that haven't received brief psychotherapy sessions. And you have to bear in mind that this is a short period and the starting point of this mental illness. So this is really exciting and taking this even further, so there's a great potential in this.

Absolutely. And this is one of the areas that we've been really focused on finding solutions with our corporate customers and developing like best low threshold services to tackle this issue together with the corporates, as Sari mentioned and we've seen the growth rates in these services. Then a third topic that we also talked about was obesity treatment and the newest developments there.

Yes. As an orthopedic surgeon, I'm pretty familiar with that, obesity is rising. People are not anymore overweight but they are obese. So it's drastic change in the nation and all around Western countries. And you have to bear in mind that people that are really obese, there are at significant risks in surgical operations and it really causes complications quite -- actually frequently. So for everyone, this is something that can be done and should be done. But talking about the integrated care path for obesity is that we are starting with digital coaching, or the low threshold mentality. So the patient is empowered and doing something themselves and we give tools for them. Going, the next step is the aided support and actual treatment by psychological support or nutritionist consultation. And next step is treatment, it's pharmacological terms, so drugs and the last step that can also be done in-house is obesity surgery. So this is all in hand at Terveystalo and combined it with IT solutions, is that the metrics and the outcome metrics have been chosen for this so that they are internationally accepted and standardized. And this allows us both to boost our productivity and find out what is actually the most significant meaning in different parts of world at the moment, which patients want -- what's the most important thing for the patient? Is it ability to move, ability to work or just to get the weight down. So we are able to do international benchmarking with the standardized set of metrics.

Yes. And definitely, big topic that's globally an issue and increasing, as you said, in the working-age population here in Finland as well. Then maybe going into summary, how would you then summarize the key strengths of Terveystalo from a medical perspective and a couple of words then on your priorities going forward?

Yes. I tried to sum up in these 5 points what I aim and what I feel is important. So we develop world-class health promotion and prevention strategies and prove how their effectiveness is and what's the population level impact. Integrated care and medical excellence enhance well-being and health on individual and also population level and supported by this sustainable growth and also social impact. We offer transparent and straightforward patient journeys that enhance patient engagement and improve also medical outcomes and medical excellence, as I'd like to say. Digitalization plays a major role in developing medical excellence and also the professional engagement and professional experience. And lastly, the integrated care, medical excellence and customer value are key components in sustainability and societal impact creating general wellbeing and health for the population.

Yes. So important in our fight for healthier life. Thank you so much, Petteri and warmly welcome once again. Last question, what are your priorities now as you have officially started as Chief Medical Officer?

Okay. During the first week, I've started to meet people. And also later this year. I'm -- my absolute priority is to meet as many as Terveystalo's health care professionals, as I can. To visit our units over on Finland and familiarize myself with what Terveystalo is actually doing and in-depth understanding of it. And then -- well, taken together, as you can see from the previous examples and what you have heard today and what I've told, there's a really important mission. And yes, just to work.

Yes. Just to work. Great. With that, I think that we are ready for our next Q&A session and I welcome Ilari back here with us. I think we have the first question then from the audience. I think Anssi was first here again.

Yes, Anssi Raussi from SEB. About your digital services and applications and so forth, like how is the monetization with the public side? I know that you offer digital solutions to public side as well but are you in discussions with another counties? Or do you see that you could expand this side?

Yes. During the year, we have been expanding quite rapidly. 2 weeks ago, we had, for example, the one in the Lapland area of the Finland. And I think Henri will be touching on this topic on the commercial side a little bit further in his presentation. But we can clearly see that there is a huge demand for the digital platforms and the private payers are producing Terveystalo's digital solutions.

Yes. So currently, our software-as-a-service production and commercial models are focused for serving the wellbeing services counties here in Finland. Any further questions?

Roni Peuranheimo from Inderes. Just about the competitiveness of your digital tools maybe since the competitors are obviously working on this as well. So could you just briefly tell the key factors that differentiate you from competitors.

We have a really functioning in-house development capabilities. where we have been based on many benchmarks see that we are ahead in the many areas, for example, individual customer areas, which I showed you already. Then I think one of the key enablers is also that we have a capability on building software for medical devices, which means essentially that we can produce the software that can take actions based on the data in medical field as well. And that's a crucially important topic, especially when moving to the process inside the appointments. And we have, for example, a certified ISO 13845 quality system, which other players at the moment don't have.

Here in the front.

Yes. Joni Sandvall from Nordea. Maybe 1 question. I think you didn't mention this but the funneling of the remote appointments. I think we heard quite much of this in '23. So can you -- although I know it's more balanced now with the profits -- profit contribution but how this funneling has evolved since the last CMD, let's say?

Really well. And I think one of the key enablers compared to previous CMD, is that previously, we got data only when person came to appointment. Now we have introduced self-triage, meaning that we know before the appointment, what is the actual cause for the need for appointment. And based on that data, we can steer the patient to the right channel and that way also affect significantly on the completeness of the care chain. And that's a key asset, which we have introduced during the last year.

Yes. And additionally, in chat, as Ilari demoed, the Ella is supporting the professional to do the right thing and also steer the patient care journey during the chat appointment as well. Next, Sami?

Okay. Sami Sarkamies, Danske Bank. I have 2 questions, starting with Ilari. You showed Ella, the EMR tool, is that developed by Terveystalo, or is that like a third-party product you're buying?

It's purely produced by Terveystalo. Of course, there are certain components in architecture, which we, of course, buy. But what you saw in there, it's totally Terveystalo's IPR.

Okay. And then for Petteri, you spoke a lot about integrated care. Are there any benchmarks or peers internationally or in Finland that you can look into when you're developing your integrated care offering?

Well, that's a quite good question because that's like a trend in the health care business to be able to have in-house all the services that is needed for the patient. So even the things public sector and all the competitors are probably doing it some way or another but the way that Ilari has managed to prove the -- or provide the tools, it means that now we have the -- well, elements that we have the capability of combining the data and the patient need to develop them by ourselves now. But bits and pieces you can gather from different, well, units in and around the world and probably also in Finland but it's a trend in the market at the moment.

But can you maybe name some companies who would be leaders in this area in addition to Terveystalo?

I would have to go the U.S. and go through the idea of generating value for the patient and how to prove it. But I would have to go to U.S. or the Central Europe.

Thanks. It looks like we don't have any further questions from the audience, so there's 1 question there. It's an important one to Ilari, from the webcast. Two years ago, we did a write-down related to digital development. How can we now ensure that the digital investments we are making are made correctly and there is no risk of future write-downs?

Really good question. One of the key elements is that we are doing iterative development based on the customer needs. We are not doing this big bang ERP project to some extent. And One proof point is that Ella is already in production. What you saw here is already true today. Our doctors in the chats are using that. We add increments all the time and we push those to productions continuously. So we are not doing this huge 3-year project where at the end, something big happens. We're doing incremental development based on the customer needs, constantly evaluating on the value generation that it creates and that way, make sure that we make right investments throughout every period of every year and from now to future.

Good. With that, I think we are ready to finish our second Q&A session. We'll have a lunch break here. Lunch will be served down the corridor and on your left. And to the webcast audience we will return with our portfolio of businesses after the lunch break and see you then. Thank you. [Break]

All right. Welcome back from the break. We are ready to continue with our program and the 2 other business areas, namely Portfolio Businesses followed by Sweden. Without further ado, over to Henri Mäenalanen.

Hello. My name is Henri Mäenalanen, and I have a responsibility for leading our portfolio businesses. I have been in this role for a year now, and I have spent 8 years in Terveystalo, working in different position and businesses, including Chief Operational Officer, and Executive Vice President in Healthcare Services. My background before Terveystalo is in the retail sector from Kesko, one of the leading trading company in the Finland. So today, I will explain you how we will plan to maximize our value in our portfolio businesses. My presentation, there has 3 parts: First, I will give you an overview of our portfolio businesses, where we can see clear improvements. In the second part, I will dive into both consumer pay and public pay businesses and explain where we see growth areas and upsides. And finally, I will summarize our value maximizing strategies. So we have clear priorities for maximizing value of our portfolio. Our portfolio of businesses were a carve out from the core businesses in 2022. They initially includes 8 different businesses, but integration was divested successfully in the spring. So at the moment, the portfolio business is a platform consisting of 7 different businesses, which complement healthcare services office offering. In public pay business, we have 5 different businesses to adjust our offering to new market environment and changing customer needs. There, we have 3 focus areas. In staffing, we focus on new market growth areas such as mental health. Then in our digital SaaS platform, offering supports wellbeing counties with the high growth rate. And the network capacity sales utilize the existing health care capacity and provide that capacity due to wellbeing counties. As we know at the present wellbeing counties primarily focused on cost savings and integrations. But we see that new markets will emerge by 2026 earliest. We have begun preparing this market ramp up by strengthening our core capabilities to offer better solutions to wellbeing counties with the deep cooperations with the wellbeing counties. Then in the private pay businesses, we are focused on expanding dental and massage services by increasing scale and profit improvements through both organic and inorganic growth. So overall, we aim to grow revenue 5% annually and doubled EBITA margins by aggressively expanding high-margin consumer pay businesses, by investing key areas in public pay system and by preparing for market growth in public sector. Over the past 2 years, we have successfully implemented our turnaround actions within the portfolio businesses. Our profit margin has increased more than 4% during this period. In staffing, we have been selective with the new contract and partnerships, ending many public partnerships, contracts that had mainly low margins. Outsourcing and staffing are the 2 largest businesses in the portfolio. So naturally, profit improvement actions have had a significant impact on the top line. Additionally, the low level of purchasing power in the recent year has negatively impacted on the massage and dental demand. So what we can see today, currently, the portfolio business has a healthy and strong foundation. We have reduced the risk of our legacy outsourcing businesses. And this allows us to move on to the next chapter with sustainable growth and profit improvement. So next take a look at how things going forward. Now I will go in the second part of my presentation and in the public pay health care market. And yes, as you see here, we are a strong and solid player. We have outlined our focus areas for next 5 years, staffing, digital solutions and existing capacity of healthcare services. This positions us well with the growing and high-margin segments. In staffing, we are the market leader. Despite focus is on reducing cost on wellbeing counties, we offer high-value proposition in the long-term partnerships. In Digital Solutions, we cooperate with 4 wellbeing counties at the moment and anticipate securing 4 more contracts for next year through new tenders. And in healthcare service, we have a potential to leverage our capacity through Finland's largest health care network. So while the underlying market will grow gradually, shift in the service mix will provide favorable condition for our property improvements. The public market expansion is significantly influenced by political decisions. Although major changes could open new profitable opportunities, they are not accepted until the later half of next government season due to the current situation. As you see currently, private healthcare public market stands at EUR 1.6 billion, with predictive growth of EUR 500 million by the end of 2029. The legacy outsourcing market is expected to decline for following years. However, new partnership models will arise in the markets. And the big point is that we are well positioned to capitalize on the potential upside of 3 elements. Now let's take a look for the ongoing market trends. And we are well positioned to benefit from key market trends with a minimum risk in legacy businesses. We have identified 4 different market trends and all of them we cover very well. So for example, in the digital services, we are one of the top player in the market and through Finland's largest healthcare network, we can too address public healthcare backlogs. This autumn, we launched new service concept and brand for our public partnerships, Terveys Kumppani. We offer high-quality cost-effective products and services. Our goal is to become the most sold after partner with the wellbeing counties. We already cooperated all wellbeing counties. But with the better segmentations and customer-oriented business model, we can prove more value for the customers in the future. We are a healthcare sector player with clearly defined focus areas. We will not venture in the elderly care or social services. So by concentrating on high market margin segment, with growing market opportunities, we aim to achieve revenue growth of EUR 100 million with EBITA level of 10% by the end of 2029. So to summarize, we aim to achieve this target for 3 key areas. To strengthen our customer relationships, we have renewed our relations model to understand our customer needs better. See growth through new partnership models, digital solutions, staffing and healthcare service capacity sales and develop new partnership focus on our strength, we are avoiding expansion in the elderly care or social services, and we are concentrating on our strength on healthcare services. We believe that there are opportunities for profitable growth in the public market, but change will be gradual. No major shifts will happen before 2026. So as I summarize, we see growth for our key areas, staffing services, digital services and healthcare capacity sales. In outsourcing legacy business, we continue our profit improvement access. And we see that new markets will arise earlier than 2026 and we have started to prepare ourselves for that. Now we move on to next section and private pay businesses, dental services partially. So dental care complements our healthcare service offering. And we have synergies here. We consider Dental Care as an essential part of integrated care. Because infections in the mouth can have a significant impact on the overall health. For example, some oral infections can increase risk of stroke or heart attack and in some cases, they can barrier larger surgeries. So including Dental as a key part of integrated care, we can add value for our customers. Dental helped place an important role of the overall health, and there are synergies with the healthcare system, especially with the occupational health care system. And that's why we have decided to set dental health as a growth area and aim to double our revenue and reach industry-leading profitability by the end of 2029. We believe that we are well positioned to grow in this area. Thanks to our leading brand, digital capabilities and the capacity to invest in this area to the growth. At the moment, our dental business offers comprehensive range of services in 31 units across the Finland. We are the fourth largest player in the market, but we aim to become #1 within next 5 years. Over 90% of customers are private individuals, but we have started to develop our business models and care paths provide more value to our occupational health care customers. Now let's examine how the market dynamics are in the dental market. So the dental market is predicted to grow at a low single digit rate in the coming years, both Kela reimbursed and private individuals is growing as they have over the past 5 years. The growth is driven by several megatrends. Many wellbeing counties faced a long waiting lines because of the lack of resources. Aging population is also increased the healthcare service demand, including dental services. And additionally, occupational healthcare and insurance package services is increasing in the future. And we, as a leader in occupational healthcare, we can provide added value to our customers. Looking at the market structure. We see that there is room to grow our dental business. The sixth largest player accounts of 70% of total market. And that is expected to consolidate even more in the future. There are many local players, which generate about EUR 1 million in revenue. And as said, currently, we are the fourth largest player in the market. So in the short term, we will focus on implementing our operational excellence activities across all units and are prepared for more acquisitions in this area. So to summarize our dental, our goal is to become a leading dental care provider in Finland. Recognizing that Dental is a key part of integrated care. We offer comprehensive care paths from regular checkups, through hygiene care and specialist treatment. There is a huge potential to increase referrals from the occupational health to dental services, currently only 1%. So improving this process alone, yield significant growth in the future. So you can see, we believe that there is untapped potential in the dental, and we aim to double our revenue and reach an industry-leading profitability by the end of 2029. So to summarize, for portfolio businesses. We have a strong foundation for revenue growth and doubling our margins from 2023 levels. In public market, we are well positioned to capture market upside potential with limited downside risk. We expect to see new market will ramp up in 2026. And our focus is in public pay, high-margin segments and value-accretive healthcare services. We are not expanding the social care or elderly care services. In Dental Services, we are focusing building scale, doubling our revenue level and reach industry-leading profitability by the end of 2029. So with this, we believe that we can materially improve our more profit contributions and create value for society, for our customers and our shareholders. Thank you.

So good afternoon, everyone. My name is Stefan Kullgren, and I'm the CEO of Feelgood Sweden. I'm delighted to be here today to talk about our focus on improving profitability of our Swedish operations. The progress we made so far and what to expect in the short and midterm. As a background, I joined as CEO for Feelgood 1 year ago. I have an industry background of some 15 years from the care and healthcare industries. And I also have an M&A advisory background. I've been now with the company for 12 months. And my focus has been to initiate the profit improvement program and building a strong management team that will be able to deliver on that plan. Let me start with some key points. Feelgood has a very strong position on the Swedish occupational health market. There is a short-term negative impact on our margins due to contract losses in late 2023 and the weakness of the Swedish macro environment. However, we have a clear understanding of the situation, and we have a solid plan to turn the business around. The plan is already delivering. And with these measures, we will soon be at the breakeven level. We will be profitable next year, and we will not only reach historical profitability levels, but we will exceed those in the following years. We are now 100% focused on delivering on this turnaround. And after that, we see further opportunities for profitable growth. Now let me go into more detail and look and present Feelgood and the markets we operate in. Feelgood is a leading occupational health provider for modern working life, and our vision is to have the healthiest customer in the Nordics. We have 4 specialist areas, of which occupational health is, of course, the largest one. In addition, we have organization and leadership and harmful use services that are well integrated into our occupational health offering. We have some 800 health specialists serving approximately 8,000 customers with over 1 million customer employees. We operate in 140 units across Sweden. And our annual revenue is approximately EUR 86 million and a little bit more than half of that comes from private organizations and the rest comes from the public sector. So through our services, we connect with a big fortune of the working age population in Sweden. Now then a couple of words about the Swedish occupational health market. The occupational health market in Sweden is concentrated among 3 larger players, and we have a strong position as the second largest player in this market. As you know, the occupational health system in Sweden is entirely funded by the customers, and there are minimal mandatory services. It is, therefore, more sensitive towards economic cycles and the average spend is much lower than in the Finnish system. We, together with the rest of the industry have recently been impacted by the macro environment. However, the economy is expected to bounce back and recover. The Swedish economy is robust and the forecast for GDP growth in Sweden actually exceeds expected growth across the EU. So we are coming from a challenging underlying market, but we now see early signs of turnaround. Now then, let's see where we started with our profit improvement program. So to remind you of the recent background. In addition to short-term headwinds due to the macro environment and change in customer behavior thereof, contract losses in late 2023 had an impact on our margin development. The volume impact of these losses and change in customer behavior, focusing more on mandatory services, made a dent in our margin that had until then steadily been improving since 2020. We quickly assessed the situation, took action and launched a profit improvement program to turn this around. So -- and I think this is very important. We fully understand the dynamics behind this. We have the right people to make the necessary changes and we have a solid plan to turn this around. So as I said, we have a solid plan to turn this around and is already happening as we speak. We are targeting at least SEK 120 million in annual run rate EBITA improvement during 2025. We are looking at each and every process in the whole company, and this is a perfect opportunity to reset the business. So we are looking at every aspect of our operations, and we are already seeing results. As a first cost measure, we have cut operating and admin staff by some 15%. In addition, we're already seeing over 10% productivity increase and a 5% run rate savings in facility costs. Our contract rate has also improved during the last 6 months, which is also, of course, very important. So we are seeing progress and are very confident that the plan will deliver. So then looking forward, where will this put us. Well, we expect that these measures will allow for a rapid recovery, followed by a gradual strengthening of profitability. As you can see, we started out 2024 from a negative territory. Then in 2025, the business will recover to historical profitability. And from thereon, further gradual improvement till approximately 7% to 10% in around 2027. The profit improvement program that started earlier this year, will run through all through 2025 and we are using the same methodology as in the alpha program in Finland, and we can also draw from those conclusions. So we are very confident that we will deliver on this. So to summarize, we are 100% focused on turning the business around and improving the structural profitability of the business. Our plan is already yielding results, and the impact will be seen in the 2025 numbers. We are improving productivity, optimizing staff in SG&A and operations. We continue to improve win rates of new customers through tender excellence and we also expand growth with current and new customers, predominantly within the midsized profitable segment. After a successful turnaround, we see further opportunities for profitable growth. Thank you.

Thank you, Stefan, and thank you, Henri. We are now ready for our third Q&A session, and we'll start from the audience and Sami Sarkamies.

Sami Sarkamies, Danske Bank. Starting from Henri, I have 3 questions. If we think about the margin progression you've been able to improve margin by 4% over the last couple of years. How much of that has come simply from ending outsourcing contracts with low profitability? And then looking ahead, how much tailwind do you have from the remaining low-margin contracts if we think about the 10% margin target?

Yes. If first, we take the approach in this space, we have done many different actions to get that profitability point. So it's -- we have a limited risk for our current portfolio businesses and also in staffing, we have been selective with the contracts. So there are so many different actions to this point that there are not only -- reason is not only the reducing our outsourcing cost. And about the future, we are reaching 10% EBIT margin in this area. And at the moment, we have a limited downside risk with this portfolio business.

Yes. So there's limited tail of those outsourcing contracts in the portfolio now and the uplift will come from growing the higher-margin businesses in the public pay.

Okay. Then maybe second question on growth. You were targeting a 5% growth. But if I look at consensus, it's like negative 5% growth that is expecting from -- expected from you in the coming 2 years that's probably mainly coming from ending outsourcing contracts. So where will this growth come from? Will you be buying, for example, dental care?

Yes. First, in the public sector where the growth comes from, there are those 3 key focus areas: staffing, digital solutions. There are the -- we are waiting for new tenders for next year and then digital capacity sales. And we can really utilize our existing healthcare services to provide more services for the health wellbeing counties. So those are the growth areas in public sector to reach 5% uplift by the end of 2029. And then in the dental sector, there is 2 main drivers. At the moment, we are focusing on operational excellence activities in this market and are prepared for more acquisitions in this area. So those 2 things driven in our private pay businesses.

And then thirdly, you were kind of promising public pay market growth in '26 where do you get the visibility?

At the moment, we have strength cooperation with all wellbeing counties and we have renewed our customer realizing model with them. So that's the one indicator. And then the second very important indicator are the key market trends. What I really showed. So those are really driving the new market growth in 2026, and we have very good position over these key market trends.

And then finally, one question regarding Sweden, if I may. If we look at the operation at the time of acquisition, it was a profitable business with a revenue base that is much lower than today. So what has actually happened? Why is the operation loss-making with much higher revenue than at time of acquisition?

What happened was that we had a lot of tenders that we had to retender in late 2023. And unfortunately, we had to submit all of those within a very short time frame. So we had to make one decision on the pricing point for all the tenders at once. And unfortunately, we misjudged that where the pricing was, where the market was resulting in that we lost all of those tenders. And I would say it's so unusual that all of them had to be re-tendered at once. So that was basically it. And if you also see that at the same time, the market, especially the public market were really hit by inflation, so they were very much focusing on price. So those are the 2 major reasons.

Marianne Palmu from Inderes. Thinking about the growth ambition of 5%. Would you say it's backloaded towards the end of the strategy period since you are expecting the welfare county (sic) [ wellbeing counties ] activity to start in '26?

Okay. I didn't hear, could you repeat, please?

Is the growth ambition of 5% in the portfolio businesses, is it backloaded towards the end of the strategy period reflecting stable growth?

Yes. As I mentioned, we expect that the new market will open early as the 2026 in the public pay market. And at the moment, if you think about the growth in the private pay segment, we are focusing on operational excellence activities. But of course, we are prepared for -- have more acquisitions in the recent years. So after 2026, we can expect more uplift in this area.

Then about dental, you mentioned that there are a lot of synergies between healthcare services and dental, could you go through in history, how have these synergies played out? And have you been happy with them? And if not, then why?

Yes. Of course, in the long term, we have been a leader in occupational health care. But in dental, right now, we have set our ambition target to be a top player in the market, and we can gain competitive advantage through the occupational healthcare system. So we are focusing on that and give more value for our occupational healthcare customers for the future. So that -- those are those 2 points in this sector.

Yes. Maybe if I just elaborate a bit. So historically, we actually gained the dental business as a part of the Attendo acquisition back in the day and it was integrated into the healthcare services. And we didn't have any history of actually driving dental business. And it was sort of sucked into the core and was not optimized as a dental business. Now it has been developed as an independent business led by Henri within the portfolio businesses, we are much better in leading that business as a stand-alone business as well. And now we are actually in a position where we can start to gain those synergies between the businesses. It didn't really happen in the first setup when we acquired the business.

Okay. Then about the profitability target of portfolio businesses that would imply that the new partnership models with the public sector would be significantly more profitable for Terveystalo than the outsourcing legacy businesses. So could you just briefly go through why is this?

Yes. Basically, the legacy outsourcing business was focused on long-term partnerships. And right now, the new partnership model is coming from different sections, not only kind of legacy outsourcing businesses. There are several models, for example, with the staffing, sale digital solutions and using healthcare capacity sales. So there are much more leverage with the new kind of products and services than the before.

So the legacy outsourcing contracts were, of course, quite difficult in an inflationary environment with the caps on price increases and so forth. So we are now more aware of the risks and more flexible with the structures of those contracts.

Then about dental, still one more. Is the growth target of doubling revenues? Can you elaborate how much organic or inorganic growth?

Yes, there are both activities. At the moment, we are focusing more on operational excellence and profit improvements. But in the long term, it's coming more from the acquisitions that we are preparing.

Okay. Then one question about Sweden. So just overall, is there kind of any way to make the Swedish business more defensive and stable? And are the profitability ambitions that you have kind of dependent on the macro environment?

I think that what we're doing is focusing, as I said also in the presentation, on the midsized segment and typically that are private, nonpublic sector and they are not retendered as often as in the public side. So that is one thing that we're actually doing to mitigate that. And I think also what we see is that the market is picking up, and we see GDP growth now coming strong in Sweden. So we're quite positive also that the market now is turning.

Joni Sandvall, Nordea. Maybe one question still on Sweden. You mentioned that tenders were focusing on price last year. So has the environment changed and how competition is behaving on this environment?

I mean what happened was, and I can explain that a little bit more, was that we had -- the economy went down. On top of that, we also had high inflation, and that actually stressed the public side very much, because they can't really adjust their prices. They just have to deliver services. Now the inflation is going down quite rapidly, and we also see that the market is picking up in general. So I think that -- and we don't see the same price pressure as we saw previously. So I think it was quite unfortunate for us that we have such a large portion of our tenders being retendered at just that point of time. So it was very unfortunate, but we now see the market picking up.

Good. I think that there are no further questions from the audience. We have a couple from the webcast. So I think I could have Ville at least for the first one. What's the long-term strategy for Sweden? And how do we plan to achieve that? If you can take the mic.

Okay. So I think Stefan said it all in a way, and I said it earlier, we are bang on fully focused, 100% focused on turnaround. We are not buying scale at this stage. Once the turnaround has been delivered, and it will be delivered, we have several different opportunities for value creation in the Swedish market.

Good. Then another question. Given that we are not likely to do larger M&A in the short term, which would indicate that we are not planning to expand aggressively in Sweden to a higher-margin private customer segment, how would we now assess the performance of our acquisition in Sweden? And was it the right decision to do that?

Well, this is a group of different healthcare services. And as a group, as you can see, since the last CMD, we have brought the full group to all-time high performance, be it any metric. And as a group, this will be led also going forward. There will be a portfolio of different businesses, and there will be different cycles for different businesses. But the important thing is the group.

Good. With that, we are ready to finish this Q&A session. Once again, we'll have a short break, and we'll continue with the financials and the closing words and one more Q&A. Thanks. [Break]

Welcome back from the break. We are now ready to tie everything together in terms of financials and talk about our capital allocation priorities going forward. Without further ado, over to our CFO, Juuso Pajunen.

So good afternoon, all. My name is Juuso Pajunen. I'm the CFO of Terveystalo. I've had the pleasure to be on a very exciting journey for 2 years within the company. We've been turning the business around. We have gone through a massive profit improvement. And we have already started our journey in organic growth when it comes to Healthcare Services. You have now heard from Ville on the solid underlying market, what is the dynamics in the world and where the market is going. Sari explained especially our market position, what comes to private sector. So we have a strong solid position in a growing market. We have also from Petteri, Medical Quality. That's in the core of our DNA, and happy clients, NPS, our patients. Then if we go forward, Ilari explained on our digital journey, how we can reap efficiency, how we can improve care guidelines, care compliance and the excellent medical outcomes. Then Henri told you about the public sector opportunities. We do know that there is optionality for growth what comes to that segment. And then finally, Sweden explained by Stefan, not where we want to be, but we have a very clear pathway back to solid numbers. So I will bring this all together from the financial point of view. We are focused on profitable growth. We are dedicated on results, and we will deliver value for our stakeholders. So let's go a bit deeper into the fun stuff. Before that one, just a quick look backwards. From my perspective, Terveystalo has gone through 3 phases to develop what we are today. We have the first priority as the market consolidation. Focus has been on growth and market share, creating the foundation of Terveystalo. Then came COVID. COVID global pandemic was a big crisis throughout the societies. At the same time, it brought to Terveystalo a very rapid digitalization period. We were concentrating on, from physical to digital, making sure that our operations can protect the society, bring the COVID tests, ensure that we deliver health to our patients, but digital was the thing, massive quick investments to digitalize the offering, to start working in a different manner. Then COVID started little by little fade out in late '22, and we were in a position that we needed to fix the base, concentrate on the efficiency, go back to basics that were a bit overshadowed by the COVID period and the pandemic. And now after those 3 phases, we are in a new crossroads. We are starting a next phase in the history of Terveystalo. And before going to that phase, let's still take one step to evaluate where we are, what is the foundation on which we are building our next steps. We have decreased our risk profile. We are structurally stronger foundation with lower risk profile. We have converted our appointments to be profitable. It means that we are less dependent on the diagnostics parts on the full integrated care part. This is not anymore coming and then we will make our money later. We are more balanced in this perspective. And on top of that one, our digital channels are also making money. So if you recall the previous CMD, there was still some difficulties on that. And now the digital channels are on par or even exceeding the physical channels. So we have definitely derisked this one. At the same time, you heard from Henri, the public sector outsourcing. We have less and less exposure to legacy outsourcing businesses. We publish every quarter our kind of the tail, how it looks like, EUR 70 million this year, EUR 50 million next year and so on. So we are step-by-step getting rid of those contracts. And as Henri explained, there are opportunities to have better, more balanced contracts with the public sector, however, they will form. And then finally, during the 2 years, both through profit improvement and cash generation, we have deleveraged. We have less leverage in the system than during the history of this group. So we are operationally derisked. We are profitability-wise derisked. We have a solid foundation and a strong balance sheet. That's the starting point. Then if you take the view on the financial development, we bottomed out at the 8.1% and that one still included some positives from the COVID test period. So the real baseline is actually even lower than that one. Now 12.5% to 13.1%. You heard last week our upgrade on the guidance. So we have effectively improved almost 5 percentage points of our underlying profitability. So when we are looking our next phase about our growth journey, about our efficiency levers, we have delivered and we are starting that journey from a position of power. We have a strong momentum entering that phase. So then let's go further forward. We have the market fundamentals. They support our growth. You have heard all of this one from Sari, Henri, Stefan and Ville. But everything in here is based on the bottom of this slide. We have megatrends. You know them. You have heard them. They have not changed at all. It's the aging population. It's the advancements in the medical treatment. It is the interest in the personal well-being. Those are trends that carry forward. Those are not going anywhere. And we have seen that those have already impacted us. If we then look at the occupational health market, we see that on top of the aging population, we have a potential to grow our value add to our clients. Sari explained how the number of employees are growing due to immigration. So we have a positive market momentum supported by the megatrends, and we are the player in this market to capture that momentum. Then if we go to look at the consumer market, no matter whether it's paid by insurance or you are paying it out of your pocket, I bet quite many of you are doing either of those ones. We have the both. The aging population, more need. We have the high insurance penetration. That means that there's a shift of the payer. You have a lower threshold to enter the services. And then finally, we have the distressed public sector that potentially creates further volume growth by a spill to private sector. So solid sound market dynamics supporting volume growth. Public pay market is a bit more difficult to evaluate. Market will grow. There's no question on that one because of the megatrends. Then you have the other components that play into that market is that the budget constraints will mean that public sector needs to choose. How they choose may impact positively the consumer market. It may impact different directions, most likely on the positive way from our perspective. We are part of that solution in any case. And then for us, the other part is that when we are talking about the market growth, the other part will be that what is the use of private provision services within that market. So there may be a shift within that market that is an optionality for us. We want to be part of the solution, but we don't want to be, at any price, part of the solution. But once private pay comes or private provision comes more and more, obviously, we are there. Then we have Sweden. I've been working a couple of years in Sweden, like some of you may know. I have been always super-impressed on the dynamics of Swedish market. They are always up on their feet already before you have even noticed that someone has fallen. And that one, I believe, will contribute positively in Stefan's business and the macro environment. Stefan has been suffering from weak macro. So in the forthcoming years, I believe that we will get support from the macroeconomic on top of the megatrends that continue to support Stefan's business in any case. So then if we go from market and look ourselves a bit, we have focused on efficiency, we have focused on productivity. We will continue to do so. We have basically -- if we start from operating leverage, we have talked about that one. We have a derisked foundation. But now if you think about all of the communication we have given from the guidance narrowing to profit warning or guidance upgrade, the main reason has been strong operating leverage. That operating leverage coined with now, for example, the flu season this fall, when you add volume to this type of a machine, it drops through the income statement to bottom line. So that one is a big component on our machine today. Ilari explained on the digitalization, automate to decrease costs, increase productivity. And that one is not only an efficiency game, medical outcomes are in the core of our DNA. This one also improves our care compliance. It improves the access to care, which is an enabler for volume growth. And then on top of that one, the channel mix optimization will allow us to further reap the productivity benefits. We have the medical quality. You heard from Petteri on that one. We will focus on the meaningful matters. We will increase the patient-facing time. We will improve the productivity. That one will continue throughout, and that one means increased value add. When we increase the value add, when we have the efficacy and the care compliance. Our customers get what they need. We need to remember that we have the value prop that drives our pricing points. The better we deliver value, the more powerful we will be. And then we have the people part. We have continued the FTE and supply growth during the past 2 years. We have a competitive, I would say, the best remuneration model for private practitioners of the market that supports and we have a strong employer brand. So a system where we have a solid foundation fed with demand and volume, positive supply environment, that means that we can improve the productivity throughout. So we have delivered efficiency. We have delivered productivity, and we will continue doing so. Just to highlight that one, a couple of concrete examples. Cost efficiency productivity during the past 2 years. We have saved roughly EUR 10 million on the admin work, less admin in absolute terms, less admin compared to revenue. It comes through FTE savings, but it also comes through other types of savings. This is a journey that we can continue still further. We have the appointment profitability. You have heard now so many times today on this topic, plus 5 percentage points, improving cost efficiency. We have the new revenue share models, and we have the continued transition in the digital. We have the capability to support private practitioners digital day and so on. Customer services, we have basically roughly 15% reduction already now what comes to customer service staffing. And this has come through optimized digital channels, through process optimization and so on. So we have not touched the AI base that Ilari was explaining. We have not gone there yet. We have further potential in there, like everyone in industries facing large customer service operations. So we have taken solid steps. We will continue to do solid steps. And the outcome will be more productive, more cost-efficient system with superior medical quality and value add to our patients and clients. Then if we look about the invest. You have heard the market opportunities, you have heard the efficiency levers. But I have to say that grasping the organic growth, making the efficiencies happen will not happen without investments. We will invest in the organic growth, and we will do disciplined M&A. We have been in the past 2 years, we have been a bit on the low side. You see that it's now in the 3 percentage levels. It has been closer to 4 percentage points from revenues levels earlier. I would foresee that the next 2 years will probably require a bit higher investment levels and then it will stabilize somewhere around the 4 percentage ballpark when we go forward. What do we invest in? We have the digital investments. You heard the journey from Ilari, user experience, productivity. Those are the things that we want to have the full control. We want to be the best. Then we have the physical assets. You know we have told we invest in a new hospital in Turku. We have just last week announced that we invest in Lahti, these type of investments, including then the medical equipment, MRIs and so on that we will put on top of that one. So we will continue investing in physical assets. Then I have to say that part of these investments are defense moves. For example, in Turku, we are already present in Turku. So this is not a greenfield investment as such. This is an investment where we get modern, more efficient, better premises that allow us to drive for the productivity and then capture organic growth in a new manner. So it comes with a defense angle and it comes with an offense angle. We will continue this type of thinking further on. Our footprint is fairly strong, especially when it comes to Finland. Then we have the disciplined M&A agenda. That one will complement the organic investments, but focused on organic growth. So let's take a view on our business profiles and inorganic investments. First of all, it is crystal clear that when we go to M&A, it will be disciplined, it will be EPS enhancing, and it needs to fit very well to our value propositions. It needs to bring us something positive new. So when looking on the Healthcare Services, we are now at the 15% LTM levels. We think that our potential is above 16% -- clearly above 16%, I would state. And this is a stable cash-generating fee-for-service business. It's good to note that the capital intensity is at the high end in our portfolio, medium, I would say, if you compare to many other businesses. So in here, our M&A logic will be enhancing the value proposition. There's not that much volume to be bought in any case, especially in the Finnish market. There could be some small white spots, but in the big picture, it will not be volume. But what we could do is that we have a value prop that is technology-driven capabilities. This is a place where we could accelerate our growth journey by improving our services, our value proposition to clients. Then if we go to portfolios, 5%. Henri promised to double it by end of '29 to 10%. Here, the capital intensity in the private part is on the medium level. Dental is not that different from the Healthcare Services. On the public sector, it's actually low. It's a negative net working capital business. We get money first and then we pay it forward and so on. So that also justifies lower margin ambition, because return on capital employed will be better. Here, depending on the niche, we can do dental, which would be basically consolidation move, adding volumes and then reaping benefits, or then we have the value proposition moves. Depending how, for example, the public sector segment opens up, we may see that we lack some type of a service and we go in there or we enhance our digital capabilities and so on. Then we have Sweden. Profits not good. Stefan explained how we bring it to solid levels, 10%, definitely there, but we fix the base first. We will not go into acquisitions at the moment. Then going to balance sheet, going to cash flow. You have heard the positive market efficiencies. You know our cash profile. It ticks like a Swiss clock. We are less leveraged than ever. But it's good to note that our leverage ratio and this type of a cash delivery will definitely enable still continued M&A. We can do disciplined M&A. So if we look at that one, we have market momentum, we have efficiency levers, we have balance sheet. So what does that count for focused on growth, dedicated on results. We have updated our financial targets. Basically, EPS to grow in average by 10% per annum, noting that '25 will be clearly better due to having less items affecting comparability. And what I would like to note is you don't see that adjusted in here. We think that the shareholder returns comes from real profits. We drive for real profits without adjustments. Then if we look on the leverage, we come from 3.5 to 2.5. We have derisked. We have solid cash flow. We concentrate on organic growth. So the higher leverage is not justified on that one. But if we would have a positive target fulfilling all of our criteria, we are happy to momentarily surpass this level. And then finally, we have the attractive dividends, at least 80% of the net results to be distributed, taking into account long-term potential and financial status. So basically, we can grow profitably, we can keep moderate leverage, we can distribute solid dividends, and we can invest into our future at the same time. That's what our financial targets are about. So then let's summarize. We will drive profit. We will drive profitable growth. We will enhance the shareholder value. You have heard it. We have a structurally growing market with a solid market position, outstanding medical outcomes. So basically, we will grow faster than GDP. There's no way for any other. We have transformed our base to a structurally more profitable and less volatile company. We have the efficiency levers to drive incremental profitability growth. Hence, EPS 10%. I don't think GDP will grow 10%. So just a guess. And we have the strong business, so we can invest both in organic growth and disciplined growth and still distribute the dividends. So that's our formula for the next coming 5 years. Ville, you want to say something?

I think you actually well summarized the contents of today. But maybe just to reiterate the core story, which is very, very simple. Looking back at the CMD '23, we have truly delivered. And we had a discussion during the lunch break with a couple of participants that the CMDs are about promises and aspirations. But looking at the CMD '23 of Terveystalo, every single promise that we made has been delivered, and there's a variety of those. Turnaround, of course, is the biggest thing. We have brought the company highest performance, be it any metric. Margin profile is less risky, as we discussed back then. Technology platform has taken big leaps ahead. We discussed the care steering, for example, last time around. It is a mainstream today for us. We have a live, not aspirational target of launching something. So that's been done. We discussed about strong supply fundamentals that we have of our business against growing market. Market has grown, and we have been able to increase the supply all the time. So a lot of ticks in the boxes, and that's that strong foundation. Terveystalo today is stronger than ever. We have the model that we truly believe in. We have the market fundamentals in place, which will drive our profitable growth agenda forward, and we do have a track record. And as Juuso summarized, that translates then into very balanced financial targets of EPS growth, moderate leverage and dividend policy. With that one, over to Q&A.

Thanks. One more Q&A before we finish and we'll start with Anssi.

Anssi Raussi from SEB again. A couple of questions. And the first one is about your margins in Healthcare Services. We have heard that there's not that much of a difference between different services, appointments or diagnostics. But what would be the biggest risk for your margins in this business area? Is there still something in your mix which has lower margins or something like that?

Well, one of the big discussion points back in the days in '22 and then '23 was digital channels and their profitability. And that was sort of a realized risk back then, and we elaborated on a lower profitability and contribution to high-margin diagnostics back then. What we said that we'll fix that one, we'll fix the conversion to diagnostics, but at the same time, the appointment profitability, and that's what we have done. So that really was the big risk that we encountered post-COVID. Now looking at the margin contribution of Terveystalo service mix in Healthcare Services segment. It is balanced. Of course, you still have a variation, but each and every cylinder is producing margins for our business. So it's more down to volumes now and operating leverage, as you Juuso pointed out.

Yes. And then it's important that we maintain our position from client value perspective. So as long as we deliver client value, we are entitled for high margins. So we need to be very clear with the medical outcomes and the client happiness. So as long as you redeem that value proposition, we are in a good place.

And then about your adjustment items next year. You, of course, mentioned that those will be lower than in 2024, but can you quantify in more detail?

Well, probably we come back to these topics in our quarterly releases. But as I said, we expect them to be clearly fewer. And I think that our dedication is shown that we want to report the real not adjusted EPS when we go there.

Maybe just to elaborate that the adjustment items recently have been related to the profit improvement programs. So the profit improvement program is still running in portfolio businesses and Sweden. So those are anticipated to then wind down going forward.

Sami Sarkamies, Danske Bank. I have a question related to mix going forward. You are suggesting roughly 5% growth in Healthcare Services. How does that split between volume and price next year and in the long term?

Yes. A very topical question. So during the turnaround process, the revenue growth has been driven mainly by price, as we have discussed in the quarterly release events. Now when we are talking about growth and what Sari is striving for is volume growth and volume growth will take over from price-driven growth gradually.

But I'm sure there will be a pricing component still, but...

Yes, as I explained in the market view, this is a business where we are with the pricing also in the future, able to beat inflation, and that will not change. But still volume growth is really the challenge that Sari is putting to her team, and that's the target.

So if you grow 5% next year in Healthcare Services, the contribution is sort of equal from volume and price.

Well, we don't guide in that level, but you are not entirely wrong, if I put it like that.

In the ballpark.

Joni Sandvall, Nordea. Only one question. I think this maybe goes to Juuso. After new EPS target, no capital return targets and weak property market currently. So have you considered maybe owning more key properties than leasing?

Well, we evaluate the market continuously. So just concrete examples, Turku Hospital has been announced. That one we didn't want to do on our balance sheet. It goes actually to a large institutional investor's balance sheet, but we were contemplating the idea that should we do it in our balance sheet. Now the Lahti will go through our own balance sheet. So we are actually flexible from the return on investment perspective to evaluate different options. We will never be a real estate company as such. But when we see an opportunity and when we exceed certain type of a target in a certain type of a market, then we don't have difficulties to utilize our balance sheet also. So I would guess that materially, we will work with the investors' balance sheet. But as said, we have our criteria, we will follow those ones. And depending on the situation, we will do the decision. We are also a fairly wanted tenant, basically. We increase the value of certain type of assets clearly. So obviously, we want to take that one into account in our negotiations. And if someone doesn't appreciate it, then we have our own means to walk away.

Good. I think there are no further questions from the audience. We have at least one question from the webcast over to Juuso. Does the investments in organic growth mean higher OpEx in Healthcare Services? And if so, does the above 16% margin target take this into account?

First of all, we wouldn't say that we think that we drive above 16% and then would come back to you saying, "Just kidding. It didn't include ABC". So it's all included. That one I will guarantee. Then the second part is that, yes, investments in organic growth. Remembering that we are in people business, it will always require an OpEx component and a CapEx component. So just an example, let's use the Turku. We are getting better, more efficient premises that allow volume growth. To capture that volume growth, we need solid supply. Getting that supply in will most likely require also some kind of OpEx investment. And then you need to make sure that the demand comes in. So all of these ones are cornered together. So there is no investment that is pure balance sheet. There is no investment that is pure OpEx. You always have a combination and depending on what you do. But that said, our margin ambitions are all included.

Great. With that, we thank you for attending our Capital Markets Day. It's been a pleasure telling the story and having a good dialogue with you guys, and we'll continue that going forward as well. For the audience here, before you leave, for quick feedback on how valuable the day was, please drop your badge to 1 of the 3 buckets over there, so we get a pulse of the contribution of the day. And as a final video of the day, we are also a proud partner of -- official partner of the Santa Claus here in Finland. And with this video, we wish you all a nice holiday season going forward.