Terveystalo PLC (FRA:4TS) Q2 2024 Earnings Call Highlights: Record Growth and Strategic Advancements
Revenue Growth: Up by 5% driven by healthcare services.
EPS Growth: Improved by 91% year-on-year.
EBITA: EUR 42.5 million, a 50% improvement year-on-year.
EBITA Margin: 12.5%.
Net Promoter Score (NPS): 86.4, an improvement from previous levels.
Leverage Ratio: 2.5, including IFRS 16 impacts.
Revenue Growth Rate: 5.5% for the quarter.
Adjusted EBITA Growth: Increased by 49% for the quarter.
Cash Flow: Strong cash flow generation with EBITA converting into cash.
CapEx: EUR 38 million LTM, slightly below expectations.
Guidance for Adjusted EBITA: Expected to be between 11.5% and 12.5% for the year.
Release Date: July 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Terveystalo PLC (FRA:4TS) reported its strongest second quarter ever, with significant improvements across all key financial metrics.
Healthcare services, the company's largest business segment, drove both top-line and margin growth, contributing to a 5% increase in revenue.
The company's Net Promoter Score (NPS) reached a record-high level, indicating strong customer satisfaction.
Adjusted EBITA increased by 50% year-on-year, reaching EUR 42.5 million, with a margin of 12.5%.
The company has successfully implemented a profitability improvement program, resulting in a 91% increase in EPS and strong cash flow generation.
Negative Points
The Swedish business has not yet shown full results, with improvements expected to materialize in 2025.
The portfolio business, including dental and massage services, continues to be impacted by lower consumer purchasing power.
Outsourcing services within the portfolio business are experiencing a decline, as anticipated.
The company faces challenges in the Swedish market due to weak demand and ended customer contracts.
Despite improvements, the company acknowledges that the consumer demand environment remains unstable, particularly in the dental segment.
Q & A Highlights
Q: What is driving the strong corporate sales growth in Q2? Is it due to pricing or successful commercial efforts? A: Juuso Pajunen, CFO: The growth is driven by an improved client mix, pricing, and commercial actions. Additionally, the number of connected employees has slightly improved, and there was one more working day in Q2, contributing to the growth.
Q: Has the new remuneration plan for appointments progressed faster than anticipated? A: Ville Iho, CEO: Yes, the plan has slightly exceeded our expectations. The mix has been better from our perspective, and while the progress is sequenced, it has been slightly overperforming. There is more to come during the year.
Q: How should we think about the seasonality of the business going forward? A: Juuso Pajunen, CFO: Q3 will be seasonally weak, but we have improved our ability to make margins from appointments, which should help. The underlying reasons for seasonality, like flu seasons, remain, but the volatility may not be as significant as in the past.
Q: What is the outlook for M&A activity given the improved profitability? A: Ville Iho, CEO: We are interested in acquisitions that fit our strategy and core offering. While our main focus is delivering solid returns to shareholders, we are open to M&A opportunities that are EPS-yielding and align with our strategic goals.
Q: Are there any identifiable risks for the business for the rest of the year, and what are the top-line growth expectations? A: Ville Iho, CEO: There are no new risks on the horizon. We expect steady progress and have been able to progress despite a challenging market environment. We anticipate continued growth in our top-line.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.