Terveystalo Oyj
OMXH:TTALO
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Good morning from Stockholm, and welcome to Terveystalo Q3 results webcast. My name is Kati Kaksonen, I'm responsible for Terveystalo Communications and Investor Relations. And as usual, we have our presentations held by our CEO, Ville Iho; and our CFO, Ilkka Laurila. And after that, we'll have time for your questions. And this time, we don't have the phone lines. So please type in your questions through the webcast, and then we'll have time for those afterwards. But without further ado, I'll give over to Ville.
Thank you, Kati, and good morning from Stockholm from my behalf. As Kati said, we are in Stockholm today to also properly kick off our joint journey with our Feelgood platform and Feelgood people. Straight to the key takeaways from our Q3 results. A strong quarter again from Terveystalo, revenue growth of 13.7%, and absolute adjusted EBITDA also up to a record Q3 level to EUR 31.5 million, a good progress across the board for Terveystalo.Couple of other key numbers, digital appointments, which is going to be a key driver for our business going forward, grew nicely, and now we have 0.25 million of visits in one quarter and it continues to grow. Testing activity, which has been a large factor for Terveystalo business during past quarters was slightly more active than we expected, continues to be active. Although the new regulation around testing has slightly decreased the run rate levels.We are, as expected, our Board this morning decided to distribute the second part of the dividends for our shareholders. And new decision also from this morning is that we are also starting a share buyback program to optimize our capital structure, both also indications of our financial strength.Growth, when looking a little bit deeper into the profile of Terveystalo business, basically grew in all of the customer groups and all of the segments. And now we have this new, very important slice in the pie, which is Swedish business first time introduced to -- and included into our results.Even though the slice is quite small at the first time, this is -- as we have indicated many times, this is a platform for growth. And also, now, with a much more larger addressable market, we are looking to grow the Swedish business together with our Feelgood people. Name of the game during Q3 and for the coming quarters, as we believe, is high demand, and best sort of illustration of the situation -- demand/supply situation right now is doctor booking rates. You can see from the graph here that Q3 '21, we are at a record level, 96% across the network booking rate for doctors is a level where we are slightly spilling revenue and we cannot quite fulfill the demand that we have from our customer groups. Of course, it's very nice to have high demand, but our short term focus for the business is to be -- to ramp up the supply.This is not a phenomena only in Finland, this is something that we can see also in the Swedish market. There's a backlog of services. There are queues building up for different surgeries in Finland, but also in Sweden, and we have indications of the same thing happening on this side of the seat. Just as an example, Swedish regions led by Norrbotten, they have started exploring opportunities to outsource part of their problem and the queue dismantling to private players, and we are bidding for a frame agreement as we speak. And Norrbotten will not be the only one, the rest of the regions, most of them, most probably, will follow.We have been talking about demand/supply management and managing the funnel from contracts and marketing. First, contacted Terveystalo through the care continuum, through care paths. And now with the booking rates on the level that we saw, just we are in a way back in the history in this sense. A lot of our focus is now in managing the demand/supply balance. Very positive for us -- for Terveystalo, obviously, is that we started investing into the intelligent platform already couple of years ago. These investments continue. We have been able to develop our marketing side, our digital channels, incoming channels, but also customer steering and steering of different services. When we have now been able to grow our digital offering, it also helps the funnel bottlenecks, and I will explain that one in a bit. This is one sort of key examples of how we are able in the current situation to -- in a slightly different way than in a traditional model to manage the demand/supply situation. We have introduced, a couple of years ago, chat visits. And now even though we are running at 96% of our booking rates, which means that not all of the physical appointments will be available for all of the needs from our customers. There's always digital channels available for the initial contact with the doctor, which is very, very positive for our customers. And with that one, we will not spill demand as much as we would. This helps also balancing the network-wide demand/supply imbalances as we have discussed many times before. In many cases, we do have professionals available in capital region, but we do not have specialist especially available in more remote parts of Finland. And hence, this is a key tool to level that one.Talking about digital platform. As I said, we have been investing a lot in this one and we get results also with optimizing our visibility in digital channels by optimizing our digital marketing and sales. We have been able to grow the traffic to our platform by 54% and even more importantly we have been able to grow the conversion rate from the contacts due to booking of the services with 64%.Equally important is that, at the same time when we are introducing new services, new channels, we also improved efficiency of use of that channels and best indicator for that development is sales service rate, which also has developed nicely, up by 19%. So all-in-all, good numbers for our digital platform and investments are paying off quite nicely.We are, today, as said in Stockholm, we are kicking off the joint journey with Feelgood people today. We are now one team. We are -- we have a joint growth agenda. As I said today, the revenue of Feelgood is not yet a material part of our Terveystalo business, but as a growth area, Sweden will be a big, big one.And, obviously, coming to Sweden, starting this business and starting the investments into this business is a big leap for Terveystalo. But something that we have envisioned and discussed over the years. We are ready to make the move, and we have a great platform to build upon.When we entered Swedish market and new Nordic market, one of the key rationales for doing that one was that -- which we discussed also earlier, was the fact that we believe that we have in our unique Finnish system and with our unique capability and strength, we have been able to develop things, solutions, software and capabilities that are scalable across Finnish borders. And now we have -- with Feelgood, we have done a more detailed mapping of our digital tools, which ones are scalable across Finnish borders to Sweden. And here, you can see quite impressive map of that one.Of course, none of these ones will be plug and play. We will need to do some work to productize these different services, but it's a very positive indication that what we said earlier is actually happening, and we are able to leverage on the capabilities and additional investments done in Finland over the years. And, also, this is very important for the future when we are going forward in Sweden and potentially beyond even Sweden at some stage.I flagged earlier the high booking rates and demand/supply or supply restrictions, not only in Finland, but also in Sweden. This is the name of the game today, and our view of the world is that it's going to be high demand environment also coming -- going to next year. Very important for Terveystalo and a Feelgood, alike, in these circumstances is to be attractive employer. Universum, Finnish agency which studies this one -- the attractiveness of different employers annually is about to publish the results from this year. And I'm very pleased to say that for the second consecutive year, Terveystalo is #1 employer in this sector for experienced health care professionals. And that's, of course, giving us a pole position going into the next year and navigating in this high demand, restricted supply environment.Part of the reasoning behind going also across Finnish borders was that we want to be a Nordic leader in the fields that we are operating, into services that we are operating. And we feel, and we strongly believe that this is something that also is well received by professionals now when we are a Nordic company, I think that's inspirational for medical professionals, but also for other professionals and our attractiveness as an employer will continue to grow.Finally, the outlook going forward next 6 months, no major changes in our view. But I would say that the key takeaway from this slide is what I already said, we are going to operate in high-demand environment and managing the supply will be the key going forward. And with that one, I will give over to our CFO, Ilkka Laurila, who will go deeper into the numbers of Q3. Over to you, Ilkka.
Hi, good morning on my behalf as well. And without further ado, we will go take a look on -- a closer look on the financial performance during the Q3.Starting with the revenue. As Ville already told, nice 13.7% growth in top line, driven mainly by nice broad numbers, especially in the corporate segment with 9% and 6% in private customers -- within the private customers. But what is actually especially nice is the growth if we compare to 2019 numbers, because we can all remember that 2020 period was quite some distorted by the sort of the pandemic and pent-up demand that we faced at time, et cetera, et cetera. So 14% growth in corporate business area and customers and 16% growth compared to 2019 within the private customer.But -- then on the other hand, what is interesting to see is how actually the different services within the public customer group is developing, which we have already told you and communicated to you earlier. The outsourcing contracts have declined by 20% versus 2019. The staffing services has remained rather stable for the whole period. And, obviously, like communicated earlier, that's really sort of restricted by the supply that services. The demand has always been very high on that business.But then on the other hand, we have seen 65% growth in service sales and in occupational healthcare and other services for the public customers. And that is the sort of maybe a best proof point for the fact that we have said already earlier that there's a clear shift of paradigm when it comes to sort of public businesses. That before the pandemic and even before that, the public segment typically outsourced the sort of the cost related issues to private service providers. And sort of the type of the service and the type of the contract at that time was typically that either complete outsourcing or partial outsourcing.Nowadays, it's actually more and more that they are actually outsourcing their recruitment issues to the private sector, because we are now facing, obviously, restricted supply of health care professionals both in private and public sector in Finland, Sweden and in other countries, and that's the environment where we are living. And that's why -- that's one of the reasons why we have faced nice growth numbers within the services. Obviously, there's lots of other drivers as well, but to make a complex things simple.Then year-to-date development, nice 17% growth and the pie chart of the revenue breakdown, you can see on the left-hand side, maybe now further on that one. But then if you take a look at the -- a bit closer look on those 2, sort of already -- let's put it that way, traditional growth drivers that we have had in a near history that we have shown to you. Still quite nice growth numbers when it comes to the well-being sales, 10% versus last year and 22% versus 2 years back.The growth rates, bit sort of slower than earlier, but still nice growth numbers and faster than the rest of the business, and that is the good thing. And this growth is that this -- like said, is mainly comprising of different therapists as well as the lab services, et cetera, et cetera. And in those areas, we don't have that kind of restricted supply so much that we do have with the certain doctor, especially with the certain doctor specialties -- not all, but with a certain. And in this category, we don't have that kind of sort of that big supply issues.On the right-hand side, you can see the development of the digital visits, nice one with growth, 32% versus last year. And obviously, compared to 2019 numbers, the growth is astronomical, it's over 400%. But you can also say that actually, the sort of the bars there are actually balanced, sort of plateauing, and it's actually really exciting to see that how the digital visits will develop going forward. The growth rate, in the last few quarters has been quite nice. But now it's a bit plateauing, but it's really, really exciting to see that how it will develop in the future, because the trend has been so sort of clear and now we have quite tough sort of comparison period when we go towards fourth quarter.Then due to pandemic and COVID testing these kind of graphs are always really exciting. There's lots of details that you can sort of dig into and analyze, but maybe just highlighting couple of key takeaways on this graph. The key takeaway, number one is, that we faced the peak volumes in COVID testing during the August '21, as you can see from the graph. But then on the other hand, at the beginning of third quarter, we faced the lowest demand of the COVID testing services since Q3, 2020. So as you can see, during the summer, that the testing volumes went down quite rapidly and -- but then they shooted up during the August, and we faced the record high levels.Now, during the October, you can see that it has been sort of balancing that the volumes again. Even though that the sort of the COVID testing criteria has been somewhat adjusted and changed, we are still having quite nice volume compared to earlier period of pandemic, as you can see. If you take a sort of a trend line from Q3, 2020 up until end of Q2, '21, you can see it's roughly that 8,000 tests per week. And now we are during the October, so it's still quite close to that level, not quite, but quite close.Obviously, of course, without saying that I'm not clever enough to forecast that how that pandemic and COVID testing volumes will develop in the future. I have not been able to forecast before and I'm not trying to do it this time either, that's -- it's been a really sort of challenging thing to forecast.Then on the development of the profitability, the year-on-year comparisons on EBITDA and EBITA. On the right-hand side, you can see the EBITA development, somewhat below the relative profitability, 11.5%, somewhat below 12.9% versus last year. We will come back to that. That one is a key driver on that one. But still on a higher level compared to 2019, which sort of showcase also regarding the operating leverage, that it's still sort of works when it comes to the fee-for-services in fee-for-service type of business within the health care services.And then few words about the cost structure and few interesting takeaways and highlights. Like I said, the top line growth was close to 14%. But if you then take a look at the material expenses, it was actually down by 2%. And if we think about what happened during the pandemic 2020, we had lots of restricted supply issues when it came to personal protective gearings globally. And the prices were really, really high at that time, and that's why we had a quite high sort of material cost at that time.The other reason for that during 2020 was that we faced a pent-up demand when it came to the surgeries. And now, like I said, we are during the Q3 '21, we had a slightly lower level of surgeries then during the comparison period. Then on the other hand, if you take a look at the situation now, the global supply of different kind of protective gearings has increased enormously. The prices have came down. In some categories, actually the prices are now lower than before the pandemic, because the supply has increased quite a bit and that's an interesting sort of fact behind those numbers.The second takeaway is the employee benefit expenses, obviously increased quite a bit 1/3, maybe sort of more than 1/3 of that increase is related, obviously, to Feelgood acquisitions. The rest of the growth is mainly driven by, on the other hand, growth coming from organic growth for different business areas. But then on the other hand, as a reminder, during the Q3, 2020, we still had a temporary layoffs in place, especially during July and also partly in August 2020. And we also had that nationwide pension contribution, discount in Finland, which decreased the social expenses of personnel costs during 2020, and that is not in place anymore. So those are the drivers behind the increase in employee benefit expenses.Third takeaway on this cost structure is within the other operating expenses increased 62%. But, again, situation is not that dramatic as it looks like. If you still remember that in 2020, we communicated that just to make sure that we are sort of having a good financial situation. We freezed some of the expenses, some of the activities, some of the projects, and we took down the specialty marketing, IT, et cetera, et cetera, that kind of -- consulting expenses, et cetera, et cetera, and made some cost freezes. But we also said to you that we haven't done any sort of structural or cost structure changes.And now we are in a sort of more normal situation when it comes to other operating expenses. We are investing in digitalization, in marketing, et cetera. And that's why it's now on a higher level, but that's still sort of P&L type of investing for the growth that we are doing at the moment. And, obviously, it's also a showcase that if needed, we are able to take quick actions to balancing the cost structure, if so required.And there is a great sort of move to CapEx slide. So if you take a look at our investments, the LTM number is now EUR 41 million increased from EUR 35 million in Q1. And logical story on that is that we -- as we said during the pandemic that we are sort of postponed some of the investments, and now we are continuing to sort of the normal investments. And as you can see, the investments for the intangible assets is on the highest level. It's over EUR 20 million -- EUR 21 million, and those are the investments for our digital platform, which Ville told you about. So we are investing -- continue investing heavily on our digital tools, digital platform and our IT infrastructure overall.Quite stable development in machinery and equipment, a slight increase in there; as well as the improvement in premises, stable development in there as well. So no major surprises on that what we have communicated earlier. Balance sheet, maybe only thing to sort of highlight here is that unrestricted equity relating to that share buyback is that EUR 610 million and the relative proportion of EUR 13.5 million, you can do the math.Then a few words about the leverage ratio. Even though that we have done that Feelgood acquisition in Sweden and some other acquisitions also in Sweden, the Dalarnas Foretagshalsan, and other acquisitions as well. Our sort of net debt leverage ratio is developing still positively. So we are on the lowest level during this period that you can see 2.6x adjusted EBITDA LTM and quite -- 23.5% down from Q3, 2020 and still -- and developing positively.Finally, like Ville already said, we are sort of launching a share buyback program. Sort of the framework is such that the maximum amount is EUR 1 million shares, which corresponds 0.8% of the total number of shares, show that -- it's done so that the maximum amount spent to the acquisition is EUR 13.5 million. And it will start earliest tomorrow, and it will last April 6, '22.The second sort of -- thing worth mentioning here is, which Ville already touch upon is that we will pay, like planned earlier, the second half of the dividend, $0.13 per share, and the payment date is 9th of November '21. So that concludes my financial performance section. And now I think we have time for Q&A.
Thanks, Ilkka. As a reminder for everybody, we have only the webcast questionnaire possibility today so type in your questions into the webcast. The box below.So the first question comes from Jutta Rahikainen, SEB. Feelgood sales have been disclosed, but how much the other smaller acquisitions contribute to Q3 sales?
I don't have the exact number from the top of the head, but in any case, it's not material, it's in any case, that's the impact. So not material impact from the other acquisitions.
Then the second question comes from Jon Berggren from Kepler Cheuvreux. Could you please comment on the growth of physical appointments during the quarter and appointments related to infections release -- infection diseases that we have previously discussed in previous quarterly results.
Yes. So, yes, it's actually really interesting and sort of, again, lots of exciting data and facts behind the numbers. But to really make a complex thing simple, we are facing increasing demand and increasing number of the appointments in all other medical specialties with the exception of those that are related to infections. That's really sort of -- make a complex thing simple. So in that sense, if you want to take a positive flip of that, that if we are facing now sort of the -- because people are moving more and more and having social meetings more and more, et cetera, and we have not been infected for many -- for 2 years now. And so if the normal flu season will come during the winter, we still have sort of quite good capacity when it comes to, let's say, ear, nose, throat, doctors et cetera, et cetera. And so if we have a higher demand on -- during the flu season, we are able to also meet the demand on that category.
And maybe worth adding up that one. Actually, looking at the low season of the pandemic, of course, we are up from those days when it comes to infections and also within the quarter, we can already see a sort of a mini proof of what Ilkka said against the latter part of the quarter, the infections have been picking up. So there are reasons to believe that this is going to be more active season than we saw last winter.
Yes, it's picking up, but still, it's a tens of percentage below 2019 level, so it's still significantly below 2019 levels.
The next question comes from [ Grace Lee ]. This is a 3-parted questions, so I'll start with the first part. On an underlying business recovery, excluding COVID related services, we highlighted the strong demand, but supply bottleneck return. Can you give more color on where are the key bottlenecks and how do we plan to increase the funnel beyond the initial 24/7 chat service?
Well, there are many things that we are doing to improve the supply, obviously, maybe going a little bit back into the high season of the pandemic. Within our system, we are running a platform and our doctors are mainly sort of 90% private practitioners who join our platform and give their services through our platform. And during the pandemic, when the demand was down, obviously, they started restricting their supply, because there's no incentive to give available times and their time for the platform, so to speak. And it's a natural thing that supply decreases during that low season.Now, of course, the supply has been starting to pick up, but it's going to take time until we are sort of in -- full operational model, back to normal, so to speak. We are attracting professionals, that's the main thing, of course, which we always need to do. We are a health care company, and we run -- we run our services based on the skills and the capacity of the professionals. We are #1 employer in Finland, and we continue to improve the sort of platform also from a professional's point of view, so that the working environment is efficient, it's smooth, it's sort of rewarding to a professional and -- so that there's not only a sort of monetary incentive to join our platform, they can do a meaningful work and sort of the customers that they get from our platform in a way, they are the right customers for different specialties. That's the core. When we talk about the digital platform and customer steering and demand supply management, there are many things that we can do. We can -- from a supply side, when we do sort of targeted marketing, for example, we can target -- and we are doing that as we speak. We target the efforts to a specialties and disciplines where we do not have bottlenecks.Of course, there's no reason to boost the demand in the areas where we don't have the capacity to supply. We can steer, we have the capability of steering customers and guiding them in a better way than we -- and basically, everybody else adding the history to right channel and to the right professional network wide. And chat as a mode of a visit is just sort of one example. But more important for demand/supply management is the fact that now we are able to distribute the capacity network wide.We are not restricted to one location, one specialty, one professional and sort of a local share of the customers. And that's maybe the other example that we are now capitalizing when optimizing that supply.
Then on the second part of the question, how do you expect the organic activity recovery to develop on the back of this discussion in the next -- in the Q4 and the following year.
Well, as we have discussed throughout the session, we see uptick in demand in multiple disciplines, multiple services and across the board, basically. And it goes in different bases. Obviously, we have disciplines and services, which are trending faster, then we have disciplines and services that are still lagging slightly behind. But, for example, when we discussed the infections, everybody can observe the environment how the environment is with that one. When the society is normalizing, when we are back to normal, when we are back to normal working conditions and working life, when children are in the kindergarten, it's going to be a normal season for infections as well.Maybe the interesting, most interesting thing for Terveystalo -- from Terveystalo's point of view and looking at the big volumes is the, sort of, observing how the sickness care for our occupational health care customers in Finland, how that one is going to develop. And that is -- that has been slightly lagging still from 2019 figures. But there's really the upside for our business big time, if that -- if and when that comes back, when people are going back to their workplaces and when sickness care services demand will come back.
Then the third part, maybe over to you, Ilkka, the wage inflation, what was it in Q3? And what's the outlook for wage inflation going forward?
We are still having a sort of similar rates -- levels that we have had before, so I think it -- we have communicated at 1.7%. But going forward, what we have said is that the wage inflation is slightly increasing. So we are saying that it's roughly a bit more maybe than 3%. That is something that we are expecting for the wage inflation.
Then a new question from Jutta Rahikainen, what is your ambition level for profitability in Feelgood, both near-term and then longer term?
Well, we have not given exact targets externally. But, obviously, we do have internal targets, and they were the basis for our business case when going in. And now looking at next year, we have gone through the plans and budgets now with the Feelgood and the thing -- I would say that we are in our -- within a frame of our business case, with Feelgood, more important than sort of organic development of Feelgood's profitability is, as stated earlier, the Feelgood's position as a growth platform to the Swedish market. We are building the joint strategy and plans as we speak, and we do have possibilities in this growing market. I don't know, Ilkka, anything to add?
Yes, without elaborating any exact numbers. Obviously, the growth is a key driver for profitability also in Feelgood's business. So now when we are sort of targeting faster growth in Feelgood business that it has historically grown inorganically and also organically with working together, I think we are able to sort of increase margins quite considerably. It's really, sort of, same -- similar game there in Finland. It's a scale game. And, obviously, when you compare smaller companies to the bigger companies, the overheads in smaller companies are always on a higher level than in a bigger companies. And that is the most obvious scale effect that you can find when you grow. And as we have plans to grow fast, the obvious answer is that it will increase considerably, but we don't have any exact target numbers communicated externally.
And maybe just to continue on that one, out of the identified growth opportunities in Feelgood, what -- where are the low-hanging fruits, so to speak.
Well, the first low-hanging fruit, I guess, was the Dalarnas acquisition that we did already. So there are bolt-ons that can be done in Swedish market. Swedish market is not as consolidated as the Finnish market, as we all know. Then we showed earlier the map of different digital solutions that we are able in a mid and long run to deploy to Sweden. But there are some fast tracks in that process as well. So we are looking at one or 2 particular tools that we would like to introduce to Swedish market quite fast.
Yes. And maybe sort of further commenting on that, I think we said already during the acquisition that there's, let's say, 3 legs on the growth agenda. It's consolidated and growth within the occupational health care market, then expanding the services for -- especially, for the corporate segments, but also for the private customers. And the third one is to sort of expand the services also to the specialty care and that applies to those Nordic markets.Maybe adding still on that one, you -- we should not underestimate the opportunities even though that those are not yet sort of in the P&L. The Norrbotten example that Ville already mentioned, there's lots of opportunities on that kind of -- that we are able to do, also sort of cross-border in that sense in certain sort of service categories.
Then another question from Jutta. How would you describe your cost base currently, is it elevated by digital and other growth efforts at the moment?
Yes, it is. It's elevated by the growth and the growth investment. So, we are investing in -- if you take a look at the -- if you take a sort of look at 2 parts of the cost increases. One is within the network. If the network grows organically, obviously, we need more personnel within the network. Even though that the operational efficiency will develop, we need to sort of customer service people, et cetera, et cetera, especially now during the pandemic.But still, then on the other hand, the central overheads and the group services, we have invested quite a bit to resources in group services, to further drive organic growth also in the future. So even though that these are not sort of booked as a CapEx from the CFO perspective, I would consider this as a sort of growth investments.
Maybe elaborating a little bit more on other topic, which is very relevant for us. One is to bear in mind that we are doing a major transformation in this industry. This is not fully integrated, digitized, far developed industry compared to many others. And we are touching upon multiple different processes, multiple different roles, multiple different touchpoints for professionals and customers alike.So it is a big -- actually a huge undertaking that we are doing. And it's going to take time. It's going to take effort. It's going to touch almost everybody within Terveystalo. And hence, as Ilkka a pointed out, it's impacting a basically all the things that we are doing. But that's the future, and that's the commitment that we have made, and we are going to transform the industry when it comes to outpatient health care.
And then the next question comes from Panu Laitinmaki, Danske Bank. First, there's quite a few parts in this question. So I'll start with the COVID-19 contribution. Did the revenue from testing grow year-on-year in Q3? And what is the best guess for the volume and revenue contribution in 2020? And then continuing on that, do we expect to be able to compensate for the loss of revenue in COVID testing with the growth in other business areas in 2022?
Well, starting from the revenue contribution, yes, it's a somewhat higher level. It's good to note that, as I said earlier, we are facing a sort of a declining prices, so the profit contribution is then a different game, but still that's a positive development there as well. But it's -- we are sort of continuously having a decline in prices.Then when it comes to sort of COVID testing and the development, I think, like I said, at least I don't have a capability. That's one of my few weaknesses that I will have a capability to forecast the pandemic. I don't have many of those, but that's one of those few. And I stick to that one. And -- but then when it comes to sort of replacing the volumes, it's good to understand that, it's a partly replacing those acute care visits that we had before the pandemic. So it's not that simple that you would take COVID-19 sales and then you have underlying sales. It has replaced some of the earlier volumes for that acute care. Like I said, we are seeing sort of a significantly lower volumes when it comes to different kind of infections, and that's the -- how it is.And then, you should take a sort of -- not our view, but take a sort of an expert's view that I think it's a quite consensus opinion that the testing is not going to go away in a few years' time. It will be -- it will continue as a part of the service area that we provide and other health care service providers will provide also in the future. Volume is obviously then a question, but the service itself will not disappear in the near future that -- even I can forecast that one.
And maybe to continue on Panu's question. As has stated many times today in -- with different slides and different examples, it's going to be a supply game. We are not, in a way, worried about the lack of demand moving going forward for the replacing services, but we need to work hard on the supply. The supply is roughly at the level where we were at 2019 during the last sort of normal season. The only exception is that now we have the digital channels, boosting the services, but we need to continue working hard on the supply.
Yes. Then quite a few questions still left from Panu. Are we to expect to see historical seasonality returning this year with Q4 margin being higher than Q3 as is the normal trend line had been in Terveystalo's business?
Well, that we will see after Q4. But -- then on the other hand, there's maybe no reason -- if the sort of the business continues, as expected, there's no reason why the overall trend would be different from the earlier years.
Then on the share buyback program, what was the rationale behind starting the program now and wouldn't there be a need for the money or better spend in acquisitions?
Well, starting from the acquisitions, we -- of course, we analyze regularly with the different institutions the capacity for Terveystalo to do acquisitions and leverage the balance sheet, and we do have capability in place, all without this share buyback program, so that's really not a relevant thing for our ability to do even major acquisitions. And then as stated, the sort of underlying rationale for share buyback is to optimize the capital structure.
Then finally, on Capex, what level do we expect to see in '22-'23 relative to sales?
I think the overall historical development is a good proxy also in the future. So there's a -- obviously, always some fluctuation but then on the other hand, we don't see any sort of dramatic need with this existing business -- sort of, we don't see any dramatic change that why it should be dramatically different versus the historical numbers.
The next question comes from Iiris Theman, Carnegie. When do you expect to see the public outsourcing contracts to become visible? I assume, this refers to the pipeline that we have commented earlier.
So I think, Ilkka shared some examples of the profile shift of public demand, the profile is going to be different in the future as we have discussed many times earlier. The contracts and also bids, they are smaller sized, and they are more diversified than they were earlier. So huge bulk of, overall, outsourcing contracts, a little bit of a thing of the past and the sort of a plate is more diversified with smaller, but of course, in accumulated terms, highly, highly interesting base of our business.And what we have stated earlier still holds that the public market is active. It stems, for example, from the queue situation from the quite bad capacity situation in public organizations and the demand is there, but I don't know, Ilkka, if you want to comment on the specific forecast.
Well, I don't know. I think you sort of already said all the relevant.
Then finally, a couple of questions on the M&A. Which markets do we consider to be most interesting outside Finland and Sweden and why? And how big is the role of acquisitions in our strategy in the coming next 3 years?
Of course, a very relevant question. It's a little bit sort of forward leaning, obviously, when we start discussing M&A beyond Sweden. We have just entered Sweden. This is the first session that we are having in Stockholm to release our quarterly report. So the focus, obviously, is to develop this first ex-Finland market and the win here and we see a lot of growth opportunities in Sweden.In that growth, obviously, M&A is a big part. As I stated earlier, Sweden is less consolidated health care market. And as you know, already, Feelgood's portfolio is highly concentrated on occupational health services and hence there's room to expand the portfolio with our experience, capabilities and financial strength.Then if you want to discuss the future steps, we said when we embarked into this journey, that Nordic region is sort of a sweet spot for Terveystalo from the system point of view, but also from the culture point of view. And in my books, even though it's not sort of academically correct, I also consider Baltics to be part of that definition. We have had some hardiness around this one.
There, we have a different score books, but that's been a different story. Yes, I can only agree with what Ville said. We have a sort of well-polished M&A machine up and running and that we see lots of opportunities especially in Sweden, but also in the other sort of the Nordic countries.
Any final words before we wrap up?
Strong result from Terveystalo across the board development in revenue, EBITDA and also in the key areas of our strategy, a big leap for Terveystalo to become a Nordic company and exciting opportunities ahead with that journey.
Great. Thank you, everybody, for joining us here today, and have a good rest of the week.
Thank you.
Thank you.