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Good afternoon, everybody, and welcome to Terveystalo Q3 Results Call and Webcast. I'm Kati Kaksonen. I'm in charge of Investor Relations here at Terveystalo. As usual, our CEO, Yrjö Närhinen; and our CFO, Ilkka Laurila, will give a short presentation. And we'll follow that with the Q&A. And first, we'll take questions through the phone lines and then through the webcast as well. But without further ado, I will give over to you.
[ I'll need to ask ], Kati, what's the time zone [ season ], because for me, it's still morning and not afternoon. But anyways, good morning, especially if there's anyone joining from the Nordic countries or the U.K. So without further ado, let's get into the results and we'll talk about Q3. I think the headline really is that a strong earnings trend has continued and we have seen a very, very solid growth on both earnings and revenue. So strong earnings trend. Capacity growth has stalled. We have seen several indications from both Porvoo as well as our competitor Mehiläinen that they have stalled further investments into their network, which is something we had already alluded to earlier, that we think that a very rapid growth on physical facilities may change the market-to-market dynamics. And at least for now, we have seen the end of that trend. We will -- on the other hand, we will continue having invested and will continue to invest in the way we work and especially in digitalization. Running through the numbers then. We have seen a revenue growth of 3.2%, up from EUR 155.4 million to EUR 160.3 million. Then reflected into EBITDA, adjusted EBITDA growth from EUR 17.5 million to EUR 20.1 million, i.e., then giving an EBITA margin of 9.2%, which is a solid 1.2 percentage growth. Net result up from minus EUR 6.9 million to EUR 16 million. Ilkka will talk more about the dynamics of that, which then takes our net debt to adjusted EBITDA down from 4.5 to 2.0, which of course puts us in a very good position to then implement and close the Attendo health care acquisition when that then in due time is approved from competitive authorities. Breaking down by payor group, we'll see revenue growth approximately 3% and we'll see a very strong growth in our public customers, 31.8%. Somewhat lesser decline, which is a sad way to say in private. But basically what we see underlying is that the decline that we saw Q2, Q3 -- sorry, Q2, will not -- as we said, will not get worse. And therefore, the consolidation or level of stabilization of the market is likely to happen. No dramatic shifts in occupational health care. The number of customers remain broadly flat. And we'll see some shifts in mix, which we'll come back to talk about. Puts our corporate customers now at 53% of total mix. Public growing, you may recall, we had at some point in time 9%, now representing 12% of our total revenues mix. Diving into corporate customers, as said, 1.3%. There is really no significant impact on any acquisitions. But I think kind of diving deeper into the numbers, we'll see growth both in wellbeing, prevention. As you may recall, we do split our activity between health care and prevention. It has to do with our national reimbursement classification. But basically what we see is that we continue to increase relative the work that is proactive and preventative, which is something that is the reflection of the activity we agree with the customer, whereas then health care is always a function of sickness, of course. And so we're happy to see that development is something we've long term strived for, which is increasingly grow our prevention, our wellbeing services, and we see a good trend on those. No significant change in number of occupational health care end customers year-on-year. And then a kind of -- I think a very positive signal that we see this My Health plan, which is then the forward-looking health plan. Number of those continue to grow. We have about 150 (sic) [ 150,000 ] or over 150 (sic) [ 150,000 ] plans already implemented. The good thing about it is that it does not only give the patient a full annual view, but it actually gives us an ability to plan our production also. So that is a very positive trend. We see strong growth and demand for digital services, and we continue to invest on those. On private sales, we do continue to see high occupancy rates on our clinics. The demand remains solid. The increased capacity, which we saw Q2, of course, that situation remains broadly there. But looking forward, we don't see that trend strengthening. And rather I would say that the kind of investments for increased capacity, I think, we've seen the peak of that now and we're unlikely to see strong development on that front, which will stabilize the market in its own right. We have also worked very hard on activating to make sure that we can mix or match demand and supply, which basically means for us that we need to make sure that we do all possible activity to make sure that our private customers get in, that there is no long waiting times. And that, of course, then secures that we are able to provide the services that we have demand for. We have more physicians than a year ago, but we still continue to see the number of appointment times that we have opened is actually below last year. And that's the work we continue to do. Then from public customers, now mind you, though, in public customers, we also do calculate some public occupational health care deals, which is always worth recognizing here. But a very strong revenue growth, 31.3%, basically supported by new outsourcing contracts started as well as then participating in these freedom of choice pilots, which I think still continue to be a very important piece for us to learn how would we -- in the case of Sote going forward, how would we then provide these freedom of choice services. So overall, I think a very, very solid development there. And I think it's always worth to highlight that in our system, in a way, we do see that we continue to take efficiency out of the system almost despite which customer group the kind of the traffic, if you wish, increased patient flow comes from, because at the end of the day, there is a relatively strong cross-selling element in there. And therefore, it's important for us to grow year-on-year and it's important for us to drive efficiency, which of course is what we're seeing. Looking at market forward. We think that the demand continues to be solid. Capacity growth from a physical premises point of view has stalled, which kind of, I would say, stabilizes the market somewhat, at least clarifies roles. It has intensified competition, especially in the major cities. And I think we do see quite a large variation from one city to another, and that trend has not significantly changed from Q2. The social health care reform is now being further submitted to constitutional board or law committee, and then that is then -- they will take their due time. Whether we will then see a parliament vote still during this year or early part of next year remains a little bit unknown. But I think having moved now a step forward, now basically all eyes are on the constitution committee. If the proposed reform is postponed, of course, then the public sector demand will continue to be structurally more of what it is today. Should that proposal go forward, then of course we will be talking about quite large shift towards freedom of choice. That's why we are participating in these tests, as said. Confidence remains -- consumer confidence remains on a high level. And I think overall, our health care market remains positive. Basically from a corporate side, we don't see any major shifts for the trends that we've seen earlier. I think the only point to highlight is we do see increasing amount of demand for wellbeing services, which we grow steadily. We see increasing growth for digital services. And I think both of these, while still are relatively small in the absolute sphere, I think will become increasingly important as we continue to develop our total portfolio. From the private customer point of view, I would say that we don't see a big shift from a market point of view. I think the work that we continue to do is how do we optimize our internal operations. So overall, I think the outlook remains positive. We continue on the path that we have chosen, and I think from our point of view, really continuing to invest in development of our organization, make sure that we remain very, very close contact with different customer groups as well as continue to invest on digitalization. It's what, I think, continues to keep us very competitive in the marketplace. [ Let the word ] to Ilkka.
Thanks, Yrjö. Then if we take a bit closer look on the financials, starting from the revenue and adjusted EBITDA. As reported, the EBITA or -- and the EBITDA is both,, again, relative -- relatively speaking and in absolute terms, is up, mostly of course deriving from the both operating leverage as well as the synergy impact of the previous acquisitions. And so we have been able to continue the marginal improvement in all quarters during this year as well. And to note that the -- actually the working days were actually same amount than the year before. Then we got into cost structure. The same sort of trend continues as earlier if the top line has increased 3.2%. The adjusted EBITDA has increased 15%, deriving from the cost structure in such a way that the material expenses increased only 2%, and actually the material expenses declined somewhat in the -- whereas the service expenses increased in line with the top line. The sort of the key driver for the material expense decline is, of course, the sales mix impact. As we have said that the -- especially in private, the surgeries have declined versus the increase in the preventive services and the wellbeing services, it's not that material heavy. On the employee benefit expenses, the increase is 2.1%, which is also less than the top line increase, same sort of impact as in earlier quarters, sort of the operating leverage impact as well as the sort of synergy impact from the previous acquisition, meaning the Diacor mostly in 2017. Other operating expenses, obviously distorted by the IPO for the third quarter in '17, the major amount of the decline is deriving from that reason. Then on the balance sheet side, further strengthening quarter-by-quarter. And we now see what we have said already earlier, that we are -- because of the good cash flow that we have been able to generate, we are not that worried about the increased leverage post the Attendo acquisition, as the cash flow has been strong and we've been able to all the time decline the gearing and the leverage ratios. The leverage ratio development you can see here. Even though that the third quarter from the seasonality perspective is the lowest sales and profitability season because of the summer holidays, even though we have been able to decline the net debt to adjusted EBITDA ratio down to 2x EBITDA. And for the working capital, the sort of the positive development further continues, taking into account that the 2017 numbers are impacted by the IPO-related items. And therefore, the actual DSO and DPO, if you would sort of clean the IPO impact of those, they have actually developed positively and we have been able to release cash out of those elements as well. On the CapEx side, same trend still continues as earlier. As you can see, the intangible assets -- the CapEx related to intangible assets has increased again and trend-wise continue to increase, as said, which is sort of obviously deriving from the CapEx and the investments and the efforts that are done to the digitalization and the service development of the digital service offering. On the other hand, a slight decline in the machinery and equipment and the net working investment have remained quite stable. Then, totally sort of another kind of topic we would like to sort of open, the impact of the IFRS 16, which is still then effective from the beginning of 2019 and implemented in the first quarter of the '19. As you can see, the estimated impact that -- these are not the final numbers, obviously, because we are not yet at the year-end, so there is a renewal of the contract, plus all the time, we have hundreds of rental contracts. But the preliminary impact of the adoption of the IFRS 16 is such that there is going to be 170 -- EUR 173 million more debt and assets. And the P&L impact results that the EBITDA will increase with that EUR 34 million. EBITA plus EUR 2 million and the net profit will decline EUR 0.6 million. That is the sort of the current estimate at this stage that we have at the moment. Then the calendar for the 2019 reporting as well as for the financial year 2018 is here. And there is some IR events and road shows as well following the Q3 result. But then I think we have the time for the Q&A.
Thanks, Ilkka and Yrjö. I think we have audience here as well, but let's take first questions from the phone lines, if we have any in line.
[Operator Instructions] And our first question comes from the line of Alex Gibson from Morgan Stanley.
I have a few, but I'll first with one on corporate customer group. Could you just give us a bit more color around how you're seeing the growth in this market develop for yourself? I see that you haven't really added any new customers. Is this a case of a higher competition in the marketplace? Or have you just felt that there hasn't been the opportunities to add any more contracts there? And then also on the corporate customer side, talking about the preventive business becoming a bigger focus over the near term, how do you see that shift in mix? Say, favorably or negatively to your margin going forward? And then I'll follow up with a couple after.
Alex, I mean, I would say if you look at the corporate customer overall, of course, the -- you have -- it's -- there's kind of 2 functions to -- or 3 functions really to it. But one is, of course, how much tendering processes there out there, and so that tends to vary from one quarter to another, of course. The other one is, of course, that when the tendering is, then the question is when do the costumers start. Of course, we do start from a relatively high base, and therefore, these situations vary from one situation -- sorry, from one quarter to another. Overall, I think the -- if you look at the number of customers, they are more or less flat year-on-year. And the current impact is actually much more around mix, and it's much more around how much do we do preventative services, health care operations versus appointments. And I think right now on Q3, the main impact for Q3 is rather mix related than the number of patients under care contracts. Looking forward, though, I think we do believe that our total offering, our competitiveness is such that there is no reason to believe that we would not continue on our kind of existing growth brand -- growth plan. And of course, my indication is that we need to grow and continue to grow in line or higher than the market. And I would say that we're probably closer to in line than higher currently. But that's kind of my point of view on the competitiveness on corporate. Maybe one more thing to add is that I think there's increasing amount of demand for what I would call a broader range of services. And that's why we have put quite a lot of effort in developing our wellbeing services, our digital platforms, because they do work hand-in-hand with our, if you wish, the classical health care and occupational health care and kind of being very competitive on that. I think we'll continue a pathway to continue to grow in the future. But then I think your second point was around the margin. I'll let Ilkka comment on the margin.
Yes. Regarding the margin and the sort of the sales mix change that we are describing, I would say it's closer to neutral than you might imagine, actually. So we don't see that drastic change in the margin deriving from the sales mix impact. It will have -- if something, it will have somewhat diluting margin impact obviously, but not that much as you might imagine possibly.
I mean, overall one thing that I would kind of look at our total business and if you look at our ability to gear the business, it's really about how do we -- how are we able to attract total number of customers and how do we then continue to supply a larger share of that demand to our customers and then how do we grow our mix across the board. And it is a very complex view, so you can't draw linear lines between one customer group to profitability, because it's always produced in kind of all units and it's all about utilization rates and efficiency of our existing units. And I think we still believe that, even with eventually Attendo coming in, I think we continue to find pockets of efficiency that we can address. And therefore, we remain optimistic that our ability to grow profitability and gear the business in line with the top line growth remains there.
Yes. And on top of the utilization rates of the facilities, it's also utilization rate of the personnel, because some of the -- you should know that some of the preventive services are actually carried out with the employed nurses or actually quite a big proportion of that, and that's why it will have acquired sort of good, solid operating leverage and gearing on that sense.
Okay, yes. That's helpful color. Could I ask one on the increasing capacity in the market and how you think that will impact your employee benefit expense in 2019? Are you seeing more competition for doctors, for private practitioners? And what do you factor in as a percentage increase of wages over 2019, for example?
Yes, the actually -- I think what we missed to say is that for at least people that are not here in Finland, probably not notice that the actually -- the old people publicly announced that they will stop the sort of the increased -- or the added investment in additional hospitals as well as...
And stop the existing ones.
Yes, and the Mehiläinen publicly reported also that they will stop investing in hospital units at least for 2019. So on that sense, what -- the -- based on that information, that is that information that is existing in market should be quite well in there at the moment. Then...
Salary cost and kind of competition -- I mean, salary cost will continue to be a function of public salary agreement, which is basically then what's been budgeted, we have budgeted.
1.74 is the current agreement of the union. And you should note also that like said, we have more private practitioners average stated there in the key figures than year before. So on that sense, we don't see any sort of -- that kind of...
I don't think it's a driver. I mean, for me, the -- I would not draw the conclusion that increased competition raises, if you wish, personnel expenses. I think it's much more of a function of who has a strong brand, who has the ability to attract customers. That will attract private practitioners, which will then continue to turn the machine. Then there is a completely different discussion on how do you create organizational structures that remain customer-centric and efficient. And I think that is much more of the game rather than saying that competition increases cost of labor.
That's great. And my last one is just on your guidance statement and the outlook for 2019. Do you think you have visibility -- enough visibility this year to give a precise growth and margin target? Or will you keep with the more broader mid- to long-term targets?
So far, we remain this kind of guidance that we are seeing. So there is no...
Plus if you look at 2019, I think then, again for us fortunately, we'll see strong growth. For transparency, unfortunately we'll see a lot of reorganization and activity, basically meaning that the like-for-like again is going to be quite, quite difficult to compare. So -- and as we have not gotten full access to Attendo's operations, it's going to be somewhat difficult for us at this stage to say what is the end number of synergies and what's going to be the organization formation when we go forward. So we would need to get access to the company. And we stick with our synergy calculation. But to be able to give guidance for '19 will be quite difficult.
Yes. At this stage, at least.
[Operator Instructions] And our next question comes from the line of Panu Laitinmäki from Danske Bank.
I wanted to ask about corporate segment sales growth that you already partially answered. But just to put it this way, can you be more specific about the number of customers? So was it down or up? And how did it develop in Q3? And what are your expectations for that kind of -- I mean, quarters if you have this visibility to the tenders?
Like, I think the short answer is no. And the reason for that is that basic, like Yrjö told, the sort of the tendering processes and the stops and beginnings of new customers vary case-by-case and system-wise, as we have that close to 700,000 occupational health care customers, that is not sort of real-time data that we're having. We're only having sort of the most strongest number at the end of the year. And it's also show that at the Q4 typically, there is a lot of tendering processes ongoing, like this year as well. But so far, like said, it's close to flat, the sort of the development versus a year ago.
Okay. I have another question about the outsourcing tendering pipeline. You had strong growth in public segment in Q3. But can you give us a kind of any color on the outsourcing pipeline at the moment? What are the public tenders, and what are you seeing in the market at the moment? Even though the Sote reform is probably still under preparation?
I mean, I don't have a specific list on me, but of course, many of these processes are public. So in terms of public tendering, I would say that there is basically 3 elements you might want to look at when you look at kind of the public business, the way we classify it. One is of course what we call service sales, i.e., there are a lot of activity where we discuss very kind of smallish activity together with hospital districts, with communities, and that pipeline is a function of very many small negotiations that varies through time. So that's one. Two is then the large public outsourcing tenderings. These are public processes, and -- I don't have the number on me. So overall, I see quite a lot of activity there, but to be very precise on how many start and when, we would need to probably return. The third point then is we see quite a lot of activity around publicly provided occupational health care, where we saw, for example, Kouvola just a couple of weeks ago. We saw Kotka a few weeks earlier, which were actually both something that we won.
North Karelia.
North Karelia will be coming up. So there's quite a lot of activity there. So when you look at our public portfolio, you'll actually see 3 quite distinct different types of activity baked into 1 public segment. And therefore, it's not only the outsourcing. And the outsourcing, we will probably need to come back to you just to give you an exact list, because it's a public list, so.
Okay. I would still have one final question. What about this public occupational health care service providers like the municipal ones, are you seeing kind of movement to the private as the kind of deadline for them to be incorporated is nearing? And what's your view on this planned public provider organized by Keva?
Yes, I mean, there are several different -- that's a quite a complex picture you're painting, but you are absolutely right. There's basically Keva thinking about forming their own. Some of them -- some of the municipalities are looking at that as one option. You have actually these [indiscernible], whatever that is...
Association.
Associations. Some of them can basically think about whether they will continue as associations or will -- they will actually sell out. Then you have communities like, for example, Kouvola and Kotka who would then decide to outsource. And so that segment overall is in a quite a fluid state at the moment. But if you take the big picture of it, as I would say, there's more potential than risk in that segment for growth. And of course, we being -- and ours private occupational health care provider, that of course means that we have the service provision that we think we continue to be very competitive there. Keva is then in the situation on its own. It's quite complex. What's the role of Keva versus other pension insurance companies and how will that actually form. So I think that's a little bit early days. It's a topic on its own. But look, as long as there's competition that follows the same rules, we think we're going to be competitive. And I think in that sense, if Keva chooses to come, welcome. But of course from a industry point of view, we do call for same rules for all players. And that's a little bit a question from the kind of whole industry point of view on how will Keva form its operations.
And as there are currently no more questions registered from the telephone lines, I hand back to our speakers for any questions over the web and in the room.
Thanks. We'll take questions from the audience here now.
Unless you don't want to practice your English, it's okay to do a Finnish question, and we'll simultaneously translate the question and the answer.
All right. I think I can do it in English equally well. So it's Jutta Rahikainen from SEB. Maybe a housekeeping question on the previous one, the public customer segment. So is it the first option now, given the tenderings you have won, that we assume that it will be around EUR 20 million per quarter going forward as well? Or is there something that would change it either way, up or down, in the coming quarters?
In the coming quarter, there's going to be a huge increase in sales because of the Attendo.
Right. So in Q4 then?
[indiscernible].
All right. But aside from that?
It's quite steady. If you look at the business, this is -- relative to private, it's probably the most kind of steady business from a kind of contract point of view. But it jumps in steps.
And there's no sort of discontinuing major agreements or if something -- if there is going to be a new sort of tendering processes, which we will attend, and should we win, of course, we will have a [ high pension ] person to our growth rates because of the low starting point, because those are also the contracts typically are quite significant.
But Q1 next year looks very good.
Yes, yes. In terms of growth rates in public.
Indeed. All right. Then a different question on the insurance flows. And now in particular that we have the OP or Pohjola health situation changing, what do you think or know that's cooking in that market? And how do you play out in market shares?
Well, I mean, overall, I mean, there's basically a couple of takeaways. One thing is that our insurance business aggregate has developed positively. There is shifts in mix, i.e., basically we see operations -- the number of operations being basically impacted by Pohjola opening their facilities in large cities, but then we've already started to see compensating activity coming. And so we'll see overall growth. And -- but the mix is shifting. So that's kind of one statement on it. The other one is of course that when you look towards the future, it's of course very, very difficult to say how will the Pohjola plan pan out, and that's really their game. But I think it is a significant announcement in a way that says, well, they do stop development. And that then puts kind of, say, all right, well, as we are the producing -- kind of the providing partner for Pohjola as well, that then calls out for them to come back and say what's their view on orthopedic surgeries versus other forms of activity. If I would need to speculate, I would say that everybody tends to work with partnerships. But I think the fundamental dynamics of that market has not really changed, which is as an insurance company, your primary role is to provide speedy, transparent services for your insured individuals. And so that I think remains very strong there. And therefore, we continue to develop our operations. We continue to develop on what we call [ care chains ] reporting. And thanks to their network, we think we remain competitive, which I think historical numbers will show. But then speculating on what will [indiscernible] do and what would Pohjola do. I think that's a little bit premature. Unless you have something to...
No, I don't.
Do we have other questions? Sami?
Sami Sarkamies, Nordea Markets. I have 4 questions. Starting from the corporate segment. You sounded quite optimistic regarding the future growth prospects. So can you verify that you're still expecting a market growth sort of 3% to 4% going forward, even though in Q3, you had only 1% growth year-on-year?
Well, I mean, I do remain optimistic in our relative competitiveness. Of course, having new players, whether Pohjola would have come in, whether Mehiläinen would come in, that of course changes kind of market dynamics in every single town. But if I look at the total offering, I look at our ability to attract customers and our ability to provide services. Yes, I do remain positive. What's the market outlook? That -- I don't see any change in the way I look at the total market development. So in that sense, no change.
Yes.
Okay. And then on the private segment, you did achieve some improvement from the Q2 growth rates. Can you elaborate on the reasons? I mean, was this based on your own actions? Did the doctors behave differently? Was it the weather or demand? I mean, what explains the improvement?
Not the weather. I mean, of course, there is an impact on -- Ilkka can a little bit talk about the variations on kind of infectious diseases. But overall, I think it is indeed the combination of -- I mean -- and they happen in a little bit different timelines, but a couple of [ benefits ]. So basically, we have more doctors than a year ago. We still have less appointment times open than a year ago. And so the work that we do is to make sure that we're able to: one, give enough times open, so match supply and demand at all times. We also need to be very much -- I mean, we continue to be better at allocating individual -- the patient to the right caregiver, i.e., to make sure that the doctor uses their time to do the job that they are trained for. And so we utilize better also nurses there, digital services. We will now open prebooked specialist appointment in occupational health care, so you can actually prebook a digital visit. And so we continue to look for ways that we make our operations more efficient. We should then make sure that there are no -- there are minimal amount of time slots that we're not able to fill. So it's a combination of many things. But I would say, overall, if you look across the market, I remain confident that our ability to over time make sure that we optimize the supply and demand and because the demand remains strong, we just need to learn how we utilize it better. And I think that's one of the factors. How do you compare quarter-on-quarter becomes then more difficult. But I mean, overall, that's the job that we do. And I mean, look, we do small things, but now small big things. Our patients can now, for example, kind of come in to the appointment with their mobile and pay mobile, which means we take away steps from the chain, which frees up capacity. So in that way, we optimize the supply and demand.
Yes, and which also provides further opportunities when it comes to the efficiency development, of course, because you don't...
But there is not this kind of a magic [ bullet ], that you take one. And then your last question, whether doctors behave differently, no. No. And -- but I think the big trend remains. So if you think of this business, it's really a function of who has demand over time, has the physicians. And who has the contract base. But then monthly variations, quarterly variations are there. But the big trend is there.
Yes. And it's also something that probably is worth to mention that, of course, like said in the report, the wellbeing services developed well, and we see that it will continue to develop quite nicely. And on the other hand, like Yrjö said, the sort of the small variation, be it then 1%, it's 3% this year are sort of also impacted by the flu seasons, et cetera, how this kind of vaccination -- influenza vaccinations develop quarter-on-quarter, et cetera, et cetera.
But if I try to kind of -- from my point of view, why do I remain confident? Is really -- we have practiced for years on how do we drive efficiency in our operations. And that you should see in our profitability development over long term. Now what does that mean? That means that our ability over time and even a medium term is to react to changes in customer mix and in total growth rates, is I think what makes me confident that once we identify a topic -- it's a big organization, remember. There's still close to 10,000 people. So it takes a while. But once we get going, we identify it, I think we have demonstrated over and over again that we're able to change the way we provide in such a way that we optimally utilize the resources. And it's a high amount, these individuals -- I mean, people's work. And so it takes a while, but I think that we've been able to demonstrate. That's why I remain confident that we're able to withstand the changes in the market situations and continue to turn that into profitable development, which I think is key in this business.
Okay. Then I have a question on competitive landscape. We did already discuss decisions at some of your rivals. Asking about OP specifically, is your understanding that they will stop offering occupational health and private health services at current 5 hospitals so that's what -- that would in a way improve the landscape from where we're at today?
If I understand correctly, what they have said is they have stopped expansion.
Yes.
And that even then meant that they took a step back from already announced expansions of [Lappeenranta and Pori ]. But that does not mean that they would not continue to provide the services they've already started to provide. That's my current understanding. So that means that there is potentially less capacity being built looking at the future, but it doesn't change status quo as per today.
And then finally, can you share experiences from the Sote pilots you've been involved?
Yes, well, that's a very good question. I think there are -- I mean there's a handful of pilots. And basically what our experience is that: one, you can make them profitable; but two, they're not all profitable. And so there is a large variation. We understand increasingly what the dynamics are, i.e., what's the critical threshold of number of people in contracts, how do you operate, organize your operations, how do we utilize local and central resources. And I think the combination of the 3, I would say, should we get into a large-scale freedom of choice services, I would say I grow in confidence that we're able to compete in there. And basically then the takeaway is I'm not shying away, saying if that comes, I think we're able to enter. But I would equally say it is not a free lunch. That means everybody needs to adjust the way they operate. And I think that's the net-net for me, at least.
Yes. And although those are -- like said, those are small trials at the moment. But one thing that is the sort of the one learning seems to be that it's a local brand that has a big impact on the ability to be able to get the listed people. It's really the matter of the sort of the local markets and the local brand units so that the people get listed.
We think of it this way, and that's why we tend to talk about on a national level and you automatically need to -- you need to simplify things, because there are so many stories in different, different facilities. Because as you say, every micro market has its own dynamic. But overall, it's about availability, it's about premises that drives the number of people who list, i.e., brand, you could say. And then the question is how are you able to receive that pool of individuals and provide that efficiently. And then that becomes a mix between nurse work, doctor work, central work, local work. And that -- and to learn that, I think, takes a while. And that's why we've entered the tests. But I think it's as tests are. It's a good learning ground.
Does anybody else from the audience here want to ask questions? It's very warm here in our meeting room. So if you hear sweating, it's because of that. We have a couple of questions from the message board. Let's start with [ Andrea Seretnip ]. I was wondering if you could elaborate on the potential for Terveystalo in other Nordic countries and also your view on growth of video services like KRY and -- which is expanding rapidly outside Sweden?
Well, yes. Well, a couple of reflections on that. One is of course this whole Ramsay, Capio thing, it of course kind of sheds the light on the Nordic businesses and it's equally, equally of course Ambea and Aleris, these transactions. And I think it's interesting to see what happens in the Nordic market. We continue to follow it. Of course, our strategy remains the same, which is we have still growth in domestically here as well as we want to see what happens with the reform. And then the second question regarding the digital services, there's a little bit of a difference between what I can see the Swedish market and the Finnish market operating when it comes to digital service. And the key driver of that is actually compensation. So in Sweden, it appears -- I'm not the expert on this, only the Swedish market. But it appears that some of these digital services actually get fee-for-service payment from the [ landsting ]. And they basically are able to provide a service, which lowers the cost for the [ landsting ], because they avoid a visit. In our case, it actually is somewhat different, because we do offer this possibility, for example, our occupational health care customers. But these customers tend to use digital services out of convenience, out of actually kind of, let's say, productivity loss. So take a very easy example. If you need to renew a prescription, instead of traveling to a doctor and traveling back to work, which would then mean that you're gone for, let's say, 3 hours, you can easily do that with the chat. So it is a convenience and productivity increase. And then in our case also, the digital services actually provide us increasingly a platform to bring a specialist into remote areas or towns where there is not availability of the physician. Coming back into how do we manage demand and supply and match these things. And so in Sweden, I think the growth in digital, while the technology remains broadly the same, comes in slightly different path that we see in Finland. But the net-net always, it's convenience, it's productivity increase, and it is increasingly the game of matching supply and demand, the professional and the patients. And I think digital platforms provide that very well. And of course, we look at that in several different formats.
Great. Then we have a question for Ilkka from Kimmo Stenvall. OP CapEx is down year-on-year in Q1 and -- to Q3, excluding M&A. Where should the CapEx land on a full year basis for this year? And will Attendo integration require some additional CapEx?
I think the historical sort of numbers are good proxy also going forward, so mean we don't see any major sort of fast movement in the CapEx at the moment. But on the other hand, like I think we already announced while doing the Attendo acquisition, it requires some CapEx at the integration of the units and integration of the ICT infrastructure, et cetera, et cetera. But it's only sort of handful of million of euros sort of as a nonrecurring item as such. On the other hand, like we have said, we will continue to increase investments in digitalization. It will inevitably have an impact on the total CapEx level, at least on some level going forward also for the following years.
Of course it does. And I think it's only natural when we look at most industries, you'll see this development between, I would say, analog world and digital world. And you need to -- in order to be competitive there, I think we need to keep on driving efficiency of our existing network to be able to invest into creating digital platforms. And I think only the players who can do both will, I think, over time, be successful. And that's our strategy, and we will continue to invest in material CapEx, if you wish.
Yes. And when it comes to the Attendo's piece of the business going forward, the only material impact for the CapEx from -- on their business is actually related to the rental business. So the outsourcing and the staffing business that they have don't really require any significant CapEx.
Then a follow-up on the corporate customer group that we discussed earlier. Could you elaborate a bit if we have lost or gained any big customers this year and if there are shifts within the customer base as such?
There always is. I mean, public information, was it that Mehiläinen who said that they gained the -- was it...
Stora Enso.
Stora Enso. And then on the other hand, we just won Valmet in Uusikaupunki. And so you do see shifts in there, and I don't see there is then an abnormal amount of shift. The shift is there. It varies from one quarter to another. And therefore, I see that situation rather stable rather than being very shaken, I think. But it does vary from one quarter to another.
And related to that Valmet, there is actually one that Yrjö also have, I think, discussed several times that, that is a typical way when we established a unit. So we won that Valmet contract. I think it was 4,500 employees or something. And with that sort of customer, when we will establish a new unit in Uusikaupunki, which is sort of a white spot for us at the moment. And that is the way we see that we would like to sort of [ accrue ] and open new units if -- should that happen.
But basically what it would mean, of course, we didn't have a customer base that supports establishing an operation. And that means that we can widen the services there over time.
And related to that, I would also replace -- this is a good place to say that the oral or the only -- the small dental clinic in Porvoo that we also acquired a couple of weeks ago, I think it was, is a typical -- another kind of sort of organic growth element for us. It was a new -- brand new clinic, which was opened at the beginning of 2018. So instead of sort of building a greenfield in Porvoo, we acquired a brand new unit. It actually over-priced, and that was invested in the unit, and we actually got doctors and some of the customers obviously with it. So those are the sort of the growth -- the network growth and the organic growth elements that we are continuously seeking for and looking for. We see -- both of those we see inside of the company, we see those in organic growth elements, although from the financial perspective, other one is organic and other one is inorganic. But we see both of those actually being organic growth. Instead of building, we've made an asset deal without increasing the capacity in the local town.
Great. Then we discussed quite a lot around the capacity development within the market. But then there is a follow-up on how does the capacity growth stall in -- within the market impact, there was the [ last strategy now ], but in terms of investments or business as an engine...
Without being overly sarcastic, I think basically what it just highlights is that our strategy is and we firmly believe that the last thing one would need to do from a macro point of view is to build units. And so we think we look at tactically and we look at white spots in the market, but it really is around network of physical units. Next to that network, we will continue to develop 2 sorts of activity. One is national, 24/7 digital network. And the other one is outsourcing network that works hand-in-hand with our physical network. And through that combination, we believe that we can continue to drive scale benefits that then takes increased efficiency [ out of ] our entire system. But -- so I would say from our point of view, no change. Rather I would say underlines that we believe we are on the right path.
Great. Do we have any other questions within the audience at the moment or from the phone lines?
We currently don't have any more questions registered over the telephone.
Great. And neither we have any follow-ups from the audience here.So if there are no questions, I would like to thank you very much for taking time to join us today, and have a good day.
Thank you.
Thank you.