Interim reports | Terveystalo’s profit fell clearly in the second quarter of the year, despite the increase in turnover

Economic|Interim reports

Healthcare group Terveystalo’s profit decreased considerably in the second quarter of the current year, despite the increase in turnover.

The group’s adjusted operating profit before amortization and impairment of intangible assets decreased by 18.2 percent from April to June last year. The group’s adjusted operating profit was EUR 24.1 million in the second quarter of the year, while it was EUR 29.5 million in April–June 2021.

CEO of Terveystalo Ville Iho the supply that fell short of the targets, the weakening of the sales distribution and, among other things, the personnel costs raised by the acquisitions weakened the group’s profitability.

“According to our assumptions, the number of corona tests decreased, while other diagnostics have not yet returned to the pre-corona level. The distribution of sales was also negatively affected by the supply falling short of the targets, as contract customer appointments took capacity away from higher-margin private customer care chains,” says Iho in the interim report published on Tuesday.

The group’s turnover in April–June grew by almost 16 percent from last year’s comparison period to 318 million euros. In the same period last year, the turnover was 275 million euros.

Sweden’s share of the turnover growth was around nine percent. About half of the turnover growth in Finland came from acquisitions.

Managing director Iho also says that the demand for health services has increased during the coronavirus pandemic, and despite the uncertainty of the economy, demand is very high.

However, Terveystalo estimates that even though the demand for health services is strong, its growth is limited by supply. The tight labor market and intensifying inflation create pressure on costs, such as salary expenses.

“We should also look at the pricing of our services so that it is in line with the general increase in cost,” says Iho in the review.

Coming regarding the outlook, Terveystalo predicts that the demand for corona-related services will continue to decrease.

The direct effects of the war in Ukraine are estimated to be very minor for Terveystalo, as Terveystalo does not operate in Ukraine or in or with countries under sanctions. However, the war may have indirect effects through disruptions in supply chains, acceleration of inflation or potential financial market disruptions.

The economic effects caused by the war can also, with a delay, weaken the purchasing power of consumers and the number of employed people, thereby weakening the demand for Terveystalo’s services if the situation is prolonged, the group estimates.

The increase in prices has already been seen in the procurement of some supplies. In addition, delivery times have been extended in some product and material groups, such as healthcare equipment.

The acceleration of inflation, on the other hand, brings pressure to raise wages, which are negotiated centrally in the industry, for example for nurses. Caregivers make up approximately 43 percent of Terveystalo’s employees.