ANNUAL GENERAL MEETING Tampere April 4Th, 2019 Joni Aaltonen CEO PIHLAJALINNA in BRIEF
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ANNUAL GENERAL MEETING Tampere April 4th, 2019 Joni Aaltonen CEO PIHLAJALINNA IN BRIEF • One of the leading private social and healthcare service providers in Finland Services for public sector • Headquarter in Tampere (municipalities, hospital districts) and private sector (consumers, companies) • Market leader in social and healthcare outsourcings • Listed on the Nasdaq Helsinki main list since June 2015 Private clinics and hospitals Social and healthcare • Over 13,000 shareholders, of which 90% domestic outsourcings • 5,850 employees at the end of 2018 Residential services Fitness centres Responsible doctor and remote services THE YEAR OF GROWTH PROFITABILITY IMPROVED TOWARDS THE END OF THE YEAR 140 12,0 120 10,0 100 8,0 80 6,0 60 4,0 40 2,0 20 0,0 0 -2,0 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Oikaistu käyttökate (EBITDA) Oikaistu liikevoitto (EBIT) Liikevaihto, M€ REVENUE INCREASED BY +15 % IN 2018 - GREENFIELD PROJECTS HAD NEGATIVE IMPACT ON OPERATING PROFIT MEUR 1–12/18 1–12/17 change H2 2018 H2 2017 change Revenue 487,8 424,0 63,8 243,3 207,3 35,9 EBITDA 31,2 33,3 -2,1 21,3 17,3 4,0 EBITDA % 6,4 % 7,9 % 8,8 % 8,3 % Operating profit (EBIT) 12,8 19,1 -6,3 11,9 10,0 1,9 EBIT % 2,6 % 4,5 % 4,9 % 4,8 % Profit 7,1 14,1 -6,9 7,9 7,5 0,4 Earnings Per Share 0,17 0,46 -0,29 0,23 0,21 0,02 (EPS) 37,6 41,8 Equity ratio % Personnel at the end of the financial year 5 850 4 753 NEW ORGANIZATIONAL STRUCTURE PIHLAJALINNA’S YEAR OF GROWTH - 2018 PIHLAJALINNA IS NOW A GENUINELY NATIONAL OPERATOR 8 new locations 26 new Oulu locations: Parainen Kotka Salo Varkaus Turku Kouvola Raahe Hamina Hämeenlinna Kerava Leppävirta Suonenjoki Järvenpää Somero Lahti Raisio Iisalmi Karhula Lammi Pielavesi Tuulos Rautalampi Paimio Rautavaara Joroinen Sonkajärvi Juankoski Tervo Kaavi Vesanto Keitele Vieremä Kiuruvesi Occupational health care: Customer base from 60,000 in 2017 to over 150,000 in 01/19. OUTLOOK 2019 2019 STRATEGIC TARGETS: GROWTH IN ALL CUSTOMER SEGMENTS – PROFITABILITY THROUGH GROWTH • Extension of service network to county centres by acquisitions and smooth and fast integration • Effective cross selling of services • Organic growth with a strong focus on sales and marketing • Expansion and establishment of the municipal service portfolio OUTLOOK 2019 • Pihlajalinna’s consolidated revenue is expected to increase from the 2018 level. • Adjusted EBIT is expected to improve clearly compared to 2018. AGING POPULATION IS THE MAIN DRIVER FOR THE INCREASING HEALTHCARE AND CARE EXPENDITURE, WHICH WILL ADD PRESSURE ON MUNICIPALITIES ECONOMY Healthcare and care expenditure and GDP development 2000-2020E HC&C expenditure1) and GDP development, Index year 2000 = 100 260 HC&C- expenditure 240 220 200 BKT 180 160 140 120 100 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020E 1) Includes HC&C services expenditure and related costs. Doesn’t include service fees paid by customers Sources: National institute for health and welfare, Finnish centre for pensions, Statistics Finland, VALOR-analysis THE STRONG AGING OF THE FINNISH POPULATION IS ONLY AHEAD - THE STRONGEST EFFECT WILL BE REALIZED IN 2020-2025… Nationwide demographic development in years 2015-2030E Number of people over 75 years of age and percentage share in total population % Of the population over 75 years of age Number of people over 75 years +2.8% 804 447 785 524 765 452 745 116 +4.8% 721 593 699 393 673 773 645 204 +2.8% 614 369 582 847 552 074 527 750 501 067 503 516 514 795 480 839 13,6% 13,9% 13,0% 13,3% 12,3% 12,6% 11,4% 11,9% 10,9% 10,4% 9,9% 9,3% 9,5% 8,8% 9,1% 9,1% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Sources: Statistics Finland, VALOR-analysis … MUNICIPALITIES AND MUNICIPAL FEDERATIONS ARE ALREADY FACING CHALLENGES WITH HC&C SPENDING, EVEN THOUGH THE STRONGEST IMPACT OF AGING DEMOGRAPHICS IS STILL AHEAD HC&C-expenditures reversed Tampere social and healthcare The city council of Pori was forced to municipality of Iitti to one million euros expenses are expanding this year give more money again expansive to minus - “The Päijät-Häme rigorously, up to 50 million - Financial HC&C-expenditure – “In Finland it is not Hyinvointiyhtymä has failed to reach director’s crude estimate: tax rise appropriate to leave people discarded” the set goals” probable 26.3.2019 28.5.2018 28.5.2018 Spend outflow of Eksote will lead to a Lahti got substantial extra (HC&C) bill – Special medical care swallowed a negative result for Lappeenranta – The uninvited and unexpected million euros more than expected, also municipalities struggle, even though excesses in foster care Ekoste’s HC&C-expenditure are lowest in the country 15.8.2018 5.2.2019 21.3.2019 Sources: Kouvolan sanomat, Aamulehti, Satakunnan Kansa, Etelä-Saimaa, Kuntalehti and Valkeakosken Sanomat WITH THE AGING OF THE POPULATION, THE PROPORTION OF PEOPLE OVER 75 WILL INCREASE OVER 50 % IN EACH BUSINESS AREAS Proportion of population over 75 years of age 2015-2030E Development of population over 75 years of age 2020E-2030E %-share and %-change Number of people over 75 and the average annual growth rate +64% Northern +2% +5% +3% 11,9% 14,1% Finland 8,6% 9,5% 57 395 64 212 80 927 96 030 2015 2020E 2025E 2030E 2015 2020E 2025E 2030E +50% 14,9% +2% +4% +3% Ostrobothnia 9,9% 10,8% 13,2% 44 113 48 293 59 577 67 679 2015 2020E 2025E 2030E 2015 2020E 2025E 2030E +56% +3% +2% +5% 240 181 274 506 Middle Finland 15,5% 172 809 192 685 9,9% 11,0% 13,6% 2015 2020E 2025E 2030E 2015 2020E 2025E 2030E +3% +64% +4% +5% 314 858 361 694 Southern 243 835 12,8% 203 991 Finland 7,8% 9,1% 11,4% 2015 2020E 2025E 2030E 2015 2020E 2025E 2030E Sources: Statistics Finland, VALOR-analysis THE AGING OF THE BABY BOOMERS WILL CHALLENGE THE MUNICIPAL ECONOMY BY VIGOROUSLY INCREASING HEALTHCARE AND CARE SPENDING Distribution of social and health care costs by age group per capita nationally (2011), € per capita in age group and %-difference compared to population average 21 236 75-84-year olds HC&C-expenditure is on average 2.9x higher compared to population average Respectively over 85-year olds HC&C-expenditure is on average 6.3x higher compared to population average +533.5% 9 705 +189.5% 4 867 3 352 2 878 2 212 1 944 1 196 1 442 0-2 3-6 7-17 18-40 41-64 65-74 75-84 85- Keskiarvo Sources: THL - Miesten ja naisten terveysmenot ikäryhmittäin 2011, VALOR-analysis THE ANNUAL MARGINS OF PIHLAJALINNA'S PARTNER MUNICIPALITIES HAVE DEVELOPED VERY STRONGLY DURING THE COOPERATION PERIOD Development of Pihlajalinna’s partner municipalities annual margins during the cooperation period Average per capita annual margin two years before Pihlajalinna cooperation and two years after, € per capita Mänttä-Vilppula Juupajoki Kihniö Parkano Alavus Kuortane Soini Ähtäri 2013- 2014- 2016- 2016- 2016- 2016- 2016- 2016- +126.7% +49.1% +66.0% +109.0% +21.5% +499.5% n/a n/a 102 575 270 468 429 595 540 597 444 314 259 285 45 100 -2 -171 1) The annual margin shows the income financing that remains after paying current expenses, margin is available for investments and loan repayments Sources: Sotkanet, Statistics Finland, VALOR-analyis THE NUMBER OF LEGALIZED DOCTORS HAS GROWN FASTER THAN NUMBER OF DOCTOR POSITIONS IN PUBLICLY FINANCED HEALTH CENTERS – SHORTAGE OF DOCTORS VARIES REGIONALLY Number of legalized doctors and doctor positions in health centers 2006-2016 Shortage of doctors in health centres by hospital region 2018 Number of doctors and %-change Unfulfilled doctor positions share of all health centre positions, % Legalized doctors of working age Kainuu 19,6% Health centre doctor positions in total Etelä-Savo 15,2% Keski-Suomi 15,2% +7.5% Etelä-Karjala 14,9% Etelä-Pohjanmaa 14,2% +19.1% Satakunta 9,2% 20 970 Vaasa 6,7% 19 643 20 110 Kymenlaakso 5,8% 18 933 18 260 Päijät-Häme 5,6% 17 607 HUS 5,3% Varsinais-Suomi 4,0% Pohjois-Savo 3,0% Lappi 2,9% Itä-Savo 2,7% Pirkanmaa 2,7% Pohjois-Pohjanmaa 2,2% Pohjois-Karjala 1,7% Kanta-Häme 1,5% 3 670 3 716 3 729 3 786 3 876 3 944 Ahvenanmaa 0.0% Keski-Pohjanmaa 0.0% Länsi-Pohja 0.0% 2006 2008 2010 2012 2014 2016 Sources: Lääkäriliitto – Statistics on physicians and the health care system 2016, Terveyskeskusten lääkäritilanne 2012, 2014 ja 2018, Sotkanet, VALOR-analysis A NEW HEALTH CENTER RENEWS THE WAY OF WORKING* * Headline from a piece of news/ Hämeen Sanomat 2.4.2019 MID-TERM TARGETS THANK YOU!.