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Pihlajalinna's profitability improved despite weaker demand compared to comparison period

This Interim Report is unaudited. The comparison figures in brackets refer to the corresponding period in the previous year.

July–September in brief:

• Revenue amounted to EUR 148.7 (164.0) million – a decrease of -9.3 per cent.
• Comparable organic revenue decrease¹⁾ was EUR -3.3 million, or -2.2 per cent.
• In Private Healthcare Services segment, revenue amounted to EUR 105.3 (103.7) million. Revenue increased 1.5 per cent.
• In Public Services segment, revenue amounted to EUR 46.3 (62.9) million. Changes in outsourcing agreements decreased revenue by EUR -9.2 million. Comparable organic¹⁾ revenue decrease was -9,2 per cent.
• Adjusted EBITA²⁾ was EUR 14.4 (13.5) million, an increase of 6.9 per cent.
• Net cash flow from operating activities amounted to EUR 7.3 (9.0) million.
• Earnings per share (EPS) was EUR 0.51 (0.26)³⁾.
• In late September, Pihlajalinna initiated a group-wide reform to renew its operational model and change negotiations related to it. According to estimate, the planned changes could lead to a reduction of up to 90 roles, primarily administrative roles, and substantial changes up to 120 positions.

January–September in brief:

• Revenue amounted to EUR 501.4 (522.0) million – a decrease of -3.9 per cent.
• Comparable organic revenue growth¹⁾ was EUR 4.2 million, or 0.8 per cent.
• In Private Healthcare Services segment, revenue amounted to EUR 346.0 (330.6) million. Revenue increased 4.7 per cent.
• In Public Services segment, revenue amounted to EUR 165.3 (201.7) million. Changes in outsourcing agreements decreased revenue by EUR -21.1 million. Comparable organic¹⁾ revenue decrease was -6.6 per cent.
• Adjusted EBITA²⁾ was EUR 47.1 (39.8) million – an increase of 18.2 per cent.
• Net cash flow from operating activities amounted to EUR 58.2 (67.7) million.
• Earnings per share (EPS) was EUR 1.35 (0.75)³⁾.

¹⁾ Changes in outsourcing agreements and divestments have been excluded from the comparison period revenue.
²⁾ Alternative performance measure. In addition to the IFRS figures, Pihlajalinna presents additional, alternative performance indicators which the company monitors internally, and which provide the company’s management, investors, stock market analysts and other stakeholders with important additional information concerning the company’s financial performance, financial position and cash flows. These performance indicators should not be reviewed separately from the IFRS figures, and they should not be considered as replacing the IFRS figures.
³⁾ Earnings per share was increased by the sales gain from the divestment of residential care units, changes in non-controlling interests and previously unrecognised deferred tax assets from tax losses within the Group.

Tuomas Hyyryläinen, CEO:

The third quarter of 2025 was an eventful period for Pihlajalinna. We launched a surgical collaboration pilot in Savonlinna and initiated the 65plus services in line with Kela’s freedom-of-choice pilot. We also began reforming our operating model, including related change negotiations. After the review period, the Wellbeing Services County of Pirkanmaa selected Pihlajalinna as the service provider for the outsourcing of services in Northern Pirkanmaa.

Our profitability continued to strengthen. Adjusted EBITA increased to EUR 14.4 (13.5) million, with an adjusted EBITA margin of 9.7 per cent (8.2). Our financial position continued to strengthen, and the net debt/adjusted EBITDA ratio was 2.6. Revenue decreased as expected to EUR 148.7 (164.0) million due to the controlled transfer of outsourcing agreements to the Wellbeing Services Counties. Additionally, the divestments of residential care units also contributed to the decrease in revenue but partly increased earnings per share to EUR 0.51 (0.26).

Revenue from Private Healthcare Services segment increased to EUR 105.2 (103.7) million, with the adjusted EBITA margin remaining at 7 per cent, the same level as the comparison period. While our service offering remained strong during the summer months, demand was weaker than in the previous year. Public sector cost-saving pressures kept service voucher purchases and direct procurement volumes low. A temporary change in customer guidance by an insurance partner in the second quarter also affected the number of care pathways in the third quarter. Fixed-price occupational healthcare contracts continued to weigh on profitability, but our actions in them are progressing as planned. We continued to implement measures aimed at business growth and profitability, with results gradually becoming visible in Private Healthcare Services.

In Public Services segment, revenue decreased as expected to EUR 46.3 (62.9) million. The segment’s adjusted EBITA margin rose to 16.4 per cent (9.9 per cent). We continued the controlled transfer of outsourcing agreements’ services to the Wellbeing Services Counties. At the end of August operations of Jämsän Terveys and Jokilaakso hospital were transferred to the Wellbeing Services County of Central Finland. Similarly, the social services of Kuusiolinna Terveys were transferred to the Wellbeing Services County of South Ostrobothnia. The quarter also included the sale of two residential care units. Customer experience in Public Services improved to 80 (76). We have been able to deliver high-quality customer-oriented services in a changing operating environment.

In September, a new model of public-private partnership was launched at Savonlinna hospital, leveraging our unique expertise developed at Jokilaakso Hospital. In collaboration with the Wellbeing Services County of South Savo, we primarily provide joint replacement surgeries. As part of the pilot, we also offer outpatient and surgical services to private and insurance customers. Together with our partner, we are reforming healthcare in a cost-effective and impactful way.

The Kela freedom-of-choice pilot for people aged 65 and over began, and Pihlajalinna’s 65plus services were successfully launched. The number of customers aligns with our market share, and customer satisfaction is excellent (NPS 98). We have welcomed new customers to our services and are expanding our offering based on demand to support access to care for the elderly and ease the burden on wellbeing services counties.

After the review period, we received confirmation that the Wellbeing Services County of Pirkanmaa had selected Pihlajalinna as the service provider for the outsourcing of services in Northern Pirkanmaa, starting next spring. Together with the Wellbeing Services County, we get to develop even more impactful cost-effective value-based social and healthcare services for the region’s residents. The estimated total value of the procurement over the five-year contract period is at least EUR 222 million.

In spring 2025, we renewed our strategy and are transitioning to a new operating model. We are clarifying responsibilities, accelerating decision-making, and harmonising service production. These improvements will benefit both our professionals in their daily work and our partners through even higher-quality services and collaboration.

1) Pihlajalinna has changed the definition of adjustment items affecting comparability effective from 1 January 2025. The change simplifies the previous definition. The comparison figures have not been adjusted, as the change does not materially affect the adjusted key figures reported for the year 2024.

Pihlajalinna's definition of adjustment items affecting comparability effective from 1 January 2025:

Items affecting comparability are non-recurring and material events that are not part of normal day-to-day operations. Items affecting comparability include, among other items, costs related to business acquisitions, costs related to restructuring measures, impairment of assets, and gains and losses arising from the sale or discontinuation of business operations. Items affecting comparability only include events with an impact on profit or loss of more than EUR 0.1 million.

Pihlajalinna’s definition of adjustment items affecting comparability that was used until 31 December 2024:

Significant transactions that are not part of the normal course of business, are related to business acquisition costs (IFRS 3), are infrequently occurring events or valuation items that do not affect cash flow are treated as adjustment items affecting comparability between review periods. According to Pihlajalinna’s definition, such items include, for example, restructuring measures, impairment of assets and the remeasurement of previous assets held by subsidiaries, the costs of closing businesses and business locations, gains and losses on the sale of businesses, costs arising from operational restructuring and the integration of acquired busi-nesses, costs related to the termination of employment relationships as well as fines and corresponding compensation payments. Pihlajalinna has also presented costs according to the IFRS Interpretations Committee’s Agenda Decision concerning cloud computing arrangements, and reversals of amortisation, as adjustment items. Cloud computing arrangements costs and reversals of amortisation according to the IFRS Interpretations Committee’s Agenda Decision has not been presented as adjustment items since 1 Jan 2024.

According to the updated definition, adjusted operating profit before amortisation of intangible assets (EBITA) for the comparison period 1 January–30 September 2024 would have been EUR 39.5 million, and adjusted EBITA for the financial year 1 January–31 December 2024 would have been EUR 54.4 million.

EBITDA adjustments during the review period amounted to EUR -6.0 (0.3) million and EUR -2,6 (0,0) million in the quarter. Adjustments to operating profit during the review period amounted to EUR -2.0 (0.3) million and EUR -2,0 (0,0) million in the quarter.

Pihlajalinna’s outlook for 2025, updated 30 October 2025

In 2025, Pihlajalinna will focus on organic growth, especially in Private Healthcare Services, and continued improvement in profitability.

• The Group estimates the revenue to be approximately EUR 650 million (EUR 704.4 million in 2024)
• The Group estimates the adjusted operating profit before the amortisation and impairment of intangible assets (EBITA) increase to at least EUR 65 million (EUR 55.2 million in 2024).

Q3 Interim Report 2025