Good afternoon, everybody. And welcome to terrestaur Q3 results call and webcast. I'm in charge of investor relations here at Pervastava. As usual, our CEO, Irene Narhinan, and our CFO, Ilklaurala, will give a short presentation and we'll follow that with the Q And A. And first, we'll take questions through the phone lines and then through the webcast as well.
But without further do I will give over to Uki.
We'll need to ask Kathy what's the time zones is on because for me, it's still morning and not afternoon. But, anyway, it's good morning, especially if there's anyone joining from the Nordic Countries or the UK. So without further ado, let's get into the results and we'll talk about Q3. I think the headline really is, is that, a stronger trend has continued and we have seen a very, very solid growth on both earnings and and revenue. So strong earnings trend, capacity growth has stalled.
We have seen several all indications from both Porvula as well as our competitor, Pilar, that they have stalled further investments into 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 to market dynamics. And at least for now, we have seen We have seen the end of that trend. We will, on the other hand, we will continue to have Hanine invested and we'll continue to invest in in the way we work and especially in digitalization. Running through the numbers then We have seen a revenue growth of 3.2 percent, up from 155.4to160.3. And then reflected into EBITDA adjusted EBITDA growth from 17.5 percent to 20 point 1, I.
E. Then giving an EBITR margin of 9.2, which is a solid 1.2 percentage growth. Net result, up from minus 6.9 to 16. Ayoka will talk more about the dynamics of that which then takes our net debt to adjusted EBITDA down from 4.5to2.0, which of course puts us in a very good position to then implement and close the Attendo Healthcare acquisition when that then in due time is approved from competitive authorities. Breaking down by payer group, we'll see revenue revenue growth approximately 3%.
And we'll see a very strong growth in, in our public customers, 31.8 somewhat, lesser decline, which is a sad way to say, in, in private, but basically we see underlying is that, is that the decline that we saw 23 or sorry, Q2, you know, we'll not, we'll not, as we see, it will not get get worse. And therefore, the consolidation or limits the stabilization of the market is likely to happen. No dramatic shifts in, in, in occupational health care, the number of customers remain broadly flat and, and we'll see some shifts in mix, which will, 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 we'll see growth both in, in well-being 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 to work that is proactive and preventative, which is something that is still a reflection of the activity we agree with the customer. Whereas then healthcare is always a function of, of sickness, of course. And so we're happy to see that development is something we've long term strive for.
Which is increasingly grow our prevention, our well-being services, and we see a good trend on those no significant change in number of occupational health care in customers year on year. And then a kind of a I think a very positive signal that we see this MyHealth plan, which is then the forward looking health plan, a number of those continue to grow. We have about 150 or over 150 plants already implemented. The good thing about it is that it it does not only give the patient a full annual view, but it actually gives us an ability to plan our production also. So 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, on our clinics. The, 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 then rather, I would say that the kind of investments, for a 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 meet 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 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 this 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 sort of going forward, how would we then provide the freedom of choice services? So overall, I think, very, very solid development there. And I think it is 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 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, 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 to market somewhat at least clarifies roles. It has intensified competition especially in the major cities. And I think we do see quite large variation from one city to another.
And, and that, 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, 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 step forward, now now basically all eyes are on the Constitution Committee. Form is postponed.
Of course, then the public sector demand will continue to be structurally more what it is today. A should that, proposal go forward, then of course, we will be talking about, we will be talking about, quite a large shift towards freedom of choice. That's why we are participating in these tests, as said. Confluence remains consumer confidence remains on a high eye 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 well-being services which we, 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 we'll 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, 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, we remain very, very close contact with different customer digitalization is what I think continues to keep us very competitive in the marketplace. Let the word
Thanks, Hakim. Then if we take a take a bit closer look on the on the finance source, starting from the, from the, revenue and adjusted EBITDA, as reported, the EBITDA or and the EBITDA, 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, and, so we have been able to continue the marginal improvement in all quarters during during, this year as well. And, to note that the actually, the the working days were actually same amount than than the, year before. Then regarding the cost structure, the same sort of, trend continues as earlier. If the top line has increased that 3.2% the adjusted EBITDA has increased at 15%, deriving from the cost structure in such a way that that the material expenses increased only 2% and actually the material expenses declined somewhat in there.
Whereas the service, service expenses increased in line with the top line. That's 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 search areas have declined versus the increase in the preventive services and the well-being services are not that material heavy. On the employee benefit expenses, the increase is 3.1%, which is also less than and the top line increased, same sort of impact as in earlier quarters to sort of the operating impact as well as the sort of the synergy impact from the previous acquisition, meaning TDR Core mostly in 2017. That operating expenses obviously distorted by the, by the IPO, for the, for the 3rd quarter, In in 'seventeen, the major, the major amount of the decline is it is deriving from from that reason. Then on the balance sheets are further strengthening quarter by quarter.
And, and, we now see, what we have said already earlier that, 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, both the appendo acquisition as the cash flow has been strong and we've been able to to all the time to decline the gearing and the 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 of the summer holidays. Even though we've had been able to to decline the the, an net debt to adjusted EBITDA ratio, down to 2 times EBITDA And for the working capital, this was the positive development further continues, taking into account that the 2017 numbers are impacted by the IPO related items, and, therefore, the actually, the DSO and DPO, if you would sort of clean the IPO impact of those that 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 inventory assets, the CapEx related to intangible assets has increased again and trend wise, continue to increase as asset, which is sort of, obviously, deriving from the, the CapEx and the investments and the efforts that are around to the digitalization and the, and the service development the of the digital digital service service offering.
On the other hand, slight decline in the machinery and equipment and the network investment have remained quite stable. Then, totally sort of another kind of topic we would like to sort of open the impact of the of the, of the IFRS 16 which is still then effective, from the beginning of 2019, and implemented, in the first quarter of of the 'nineteen. 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's a renewal of the contract pays all the time. We have 100 of rental contracts, but the preliminary impact of the of the adoption of the IFRS 16 is such that there is gonna be 170,000,000 173,000,000 more, depth. And assets And the P and L impact results that the EBITDA will increase with that, 1,000,000 EBITA plus 2,000,000, and the net profit will decline €600,000.
That is to sort of the current estimate. At this stage that we have at the moment. Tend to calendar for the, for the 2019 reporting as well as the, for the financial year, 2018 is, is here and that there's some higher events and road source road source as well, following the Q3 result, but then I think we have time for the Q and
We have audience here as well, but let's take first questions from the phone lines, see if we have any in line.
Thank And our first question comes from the line of Alex Gibson from Morgan Stanley.
Hi, thanks for taking my questions. 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 development 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 preventative business becoming a bigger focus over the near term, how do you see that shift in mix play favorably or negatively to your margin going forward? And then I'll start with a couple after.
Thanks, 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 are out there And, and so that tends to vary from 1 quarter to another. Of course, the other one is, of course, that when the tendering is, then the question is when do the customers start? Of course, we do start from a relatively high base, and therefore, these situations vary from one situation to, sorry, from 1 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 much do we do preventative services, health care operations versus appointments? And I think right now on Q3, you know, the main impact for Q3 is rather mix related than the number of patient under care contracts. Looking forward though, I think, you know, we we do believe that our, our total offering are, as such that, that there is no reason to believe that we would not continue on our, 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, 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, on, corporate. Maybe one more thing to add is that I think there is 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 in developing our well-being services, our digital platforms because they do work hand in hand with our, if you wish to classical health care and occupational health care and kind of being very competitive on that, I think we'll continue your pathway to continue to grow in the future. But then, I think your second point was around around the margin.
I think if you could comment on the margin there.
In, and, and, sort of the sales mix change that we are describing. I would say it's a, it's a closer to new 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 if something, it will have somewhat diluting margin impact, obviously, but not that much as you might imagine, possibly.
I mean, overall, overall, one thing that, that, you know, I would kind of kind of look at our total business. And if you look at our ability to gear the business really about how do we how do we are a how are we able to attract total number of customers and how do we then continue to supply your largest 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 than even with, you know, 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 profit ability and gear the business in line with the top line growth remains there.
Yes. And on top of the utility rates of the facilities. It's also utilization rate of the of the personnel because some of the you should note that some of the preventive services are actually carried out with the employed nurses are actually quite a big proportion of that, and that's why it it will have a quite sort of good solid operating leverage and gearing on that sense.
Okay. Yes. Thank you. 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 position for doctors for private practitioners? And what do you factor in as percentage increased wages over 2019, for example?
Yes, the actually, I think what we missed to say is that for for at least people that are not here in Finland, probably not noticed that they actually took the OB Pohela publicly announced that they will stop the sort of, the increase or the investment in additional hospitals, as
well stop the existing ones.
Yes. And the and hospital units at least for 2019. So on that sense, what what the based on that information, that is that, the information that is existing in a market should be, should be quite well in there at the moment. Then
Salary costs and kind of competition. I mean, salary costs will continue to be a function of public salary agreements, which is basically then what's been budgeted, we have budgeted.
1.74 is the current agreement, of the of the union. And, and you should note also that, like I said, we have more private practitioners I would just stare at there in the, in the key figures than the year before. So so on that, on that sense, we don't see any sort of That kind of
I don't think it's the driver. I mean, for me, for me, the, 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. So that will attract private practitioners, which will then continue to churn 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 the game rather than saying that the competition increases cost of labor.
That's great. Thank you. And my last one is just on your guidance statement and the outlook for 2019. You think you'll 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
If you look at 2019, I think, 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 do have not gotten full access to attend those operations, it's going to be somewhat difficult for us at this stage to say what is the end, end number on synergies and what's going to be the organization formation when we go forward. So we will need to get access the company. And, we stick with our synergy calculation, but to be able to give guidance for 'nineteen, will be quite difficult.
Thank And our next question comes from the line of Panu Latinmaki from Danske Bank. Please go ahead. Your line is now open for your question.
Thank you. I wanted to ask you about corporate segment sales growth that you already part sirly 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? Thank you.
Like, I think, the short answer is, is, is no. And the reason for that is that, that basically like Yuki told the sort of the tendering processes and the stops and beginnings of new customers were 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 test that we are having. We are only having sort of the sort of the most strongest number at the end of the year. And it's also so that the at the Q4 typically there's a lot of tendering processes ongoing like this year as well. But so far, like like I said, it's close to flat, the, the, the, sort of, the development, versus year ago.
Okay. Thank you. I have another question about the outsourcing tendering pipeline. You had strong growth in the public segment in Q3, but can you give us 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 performance is obviously 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 kind of the public business, the way we classified. 1 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 at that varies through time.
So that's one. 2, is then the large public outsourcing tenderings. And 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, Cobalt, just a couple of weeks ago, we saw Kotakka a few weeks earlier, which were actually both something that we won.
North Korea.
North Korea will be coming up. So there is quite a lot of there. So when you look at our public portfolio, you'll actually see 3 quite distinct different types of activity baked into into one public segment. And therefore, it's not only the outsourcing and the outsourcing, we will probably need to come back to you to give you an exact list because it's a public list. So.
Okay. Thank you. I will 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, at the kind of deadline for tend to be incorporated is nearing. And what's your view on this plant, public provider organized by Teva?
Yes. I mean, there are several different that's a, that's a quite a complex picture. You're painting, but you're absolutely right. There is 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, Whatever.
That is associations. Some of them can, can basically think about whether they will continue as associations or whether they will actually sell out. Then you have communities like, for example, Kovalon Kotka who would then decide to outsource And so so that segment overall is, is in a quite a fluid state, at the moment. But if you take the big picture of it, is I would say there's more potential than risk in that segment for growth. And of course, we being our 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 Queva is then the situation on its own.
It's quite complex. What's the role of Kevva versus other pension insurance companies and how would that actually form. So I think that's a little bit early days. It's a topic on its own, But as long as there is competition that follows the same rules, we think we're going to be competitive. And I think, in that sense, if Kewa chooses to come, welcome, but of course, from an industry point of view, we do call for same rules for all players.
And that's a little bit the question from a kind of the whole industry point of view on how will the Keva form its operations.
Okay, that's all for me. Thanks a lot.
And as there are currently no more questions registered from the telephone lines, I hand to our speakers for any questions over the web and in the room.
We'll take questions from the audience here. Now
You can, Go ahead. Unless you, you don't want to practice our English, it's okay to finish question and we'll simultaneously translate the question and answer.
Alright. But I I I think I can do it in English very well. So it's, Yutra Hakan from SEB. Maybe a housekeeping question on the previous one, the public customer segment. So is it the first option now giving the tenderings you have won?
That we assume that it will be around 20,000,000 per quarter going forward as well, or is there something that would change it either way up or down in the coming coming quarters?
In the coming quarter, there's going to be a huge increase in sales because of the Atento.
So in Q4 then.
Yeah. No.
I'm pretty incredible. Alright.
But aside from that
it's quite steady. If you look at the business, it's relative to private. It's probably the most kind of steady business, from a, from a kind of a contract point of view. But it jumps in steps.
And there is no sort of discontinuing major agreements. So 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 have a high pension person to our growth rates because of the low starting point. Because those outsourced contracts typically are quite, quite significant.
But Q1 next year looks very good.
Yeah. In terms of growth rates in public.
Indeed. Alright. And then a different question on the insurance flows. And, now in particular that we have the OP or Pohila Health situation changing, what think or know that's this cooking in that market? And how do you play out in market shares?
Well, I mean, I mean, overall, overall, I mean, there's a couple of takeaways. One thing is that our insurance business aggregate has developed positively. There is shifting mix I. E. Basically, we see operations, the number of operations being basically impacted by Portula 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 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 Forehill plan pan out and that's really their, 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 a say, all right, well, as we are the producing kind of the providing partner for Paul Hill as well. That then calls out for them to come back and say, one their view on orthopedic surgeries versus other forms of activity. If I would need to speculate, I would say that, that, everybody tends to work with partnerships, but I think fundamental dynamics of that market has not really changed, which is, you know, as a as a insurance company, your primary role is to provide PD transparent services for your insured individuals. And so that, I think, remains very strong there. And therefore, we can to develop our operations.
We continue to develop our what we call care chains, reporting, and thanks to the network, we think we remain competitive which I think historical numbers will show. But then speculating on, you know, what will I hit up Hilla do and what will Boriela do. I think that's a little premature. Okay. Unless you have, we have some wisdom too.
No, I don't.
Okay. Thanks.
Thanks. Do we have other questions, Sami?
Okay, thanks. Sam Sarkemese, Northern Markets. I have four questions. Starting from, the corporate segment, you sounded quite optimistic regarding, the future growth prospects, can you verify that you're still expecting, market growth, sort of 3% to 4% going forward, even though in Q3, you had only 1% year on year?
Well, I mean, I do remain optimistic in in our relative, relative competitiveness. Of course, having new players, whether Porhela would have come in whether PLN would come in that, of course, changes to normal 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 in 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.
Okay. And then on the private segment, yeah, you did achieve some improvement from the to growth rates. Can you elaborate on the reasons? So 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 a little bit talk about the variations on kind of infectious diseases, but But overall, I think it is indeed the combination of the I mean, and they happen a little bit different timelines, but couple of kind of facts. 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 1, give enough times open, so match supply and demand at all times.
We also need to be very, very much I mean, we continue to be better and allocating individual the patient to a right caregiver, I. E. To make sure that you know the doc to use their time to do the job that they're trained for. And so we utilize better, also nurses, their 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.
Which should then make sure that, that there are no, there are minimum amount 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 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, I mean, look, we do small things, you know, but now small, big things, you know, our our patients can now, for example, kind of come into the appointment with their mobile and pay mobile. Which means we take away steps from the chain, which frees up capacity.
I think that's why
we we optimize the supply and demand.
Also provides further opportunities when it comes to the efficiency development, of course, because we don't
but there's not this kind of a magic bullet, then you take 1. And then your last question, will the doctors behave differently? No, no. And but I think the big trend remains. So if you think of this business, it's really really a function of who has, who has demand over time has the physicians.
And who has the contract base, you know, but then monthly variations, quarterly variations, are there. But the big trend is very clear.
Yeah. And it's also something that probably is worth to mention that, of course, like set in the report of well-being services developed well, and we see that it will continue develop quite nicely. And on the other hand, like Yuki said, the sort of small variation beat, then, 1 percentage, 3 percentage here are sort of also impacted by the flu seasons, etcetera, how the how this kind of vaccinease the influence of vaccinations develop quarter on quarter, etcetera, etcetera.
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 even medium term is to react to changes in customer mix and in total growth rates is I think what makes me confident once we identify a topic, it's a big organization, remember.
They're still close to 10,000 people. So it takes a while. But once we get going within we identified, 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 as the resources. And it's a high amount is individual, something people's worked. And so it takes a while, but I think that we've been able to demonstrate why I remain confident that we're able to withstand the changes in market situations and continue to turn that into profitable development, which I think is key
Okay. Then I have a question on competitive landscape. We did already discuss decisions 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 would in a way improve the landscape from where we are today.
If I understand correctly what they have said is they have stopped expansion. Yeah. And that even then meant that they took a step back from overly announced expansions of Lappeenranta 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 for today.
And then finally, can you share experiences from the sort of pilots you've been involved?
Yeah. Well, that's that's a very good question. I think there are, I mean, there's there's a handful of pilots and and basically what what our experience is that, 1, you can make them profitable, but 2, they're not all profitable. And so there's a large variation. We understand increasingly what the dynamics are, I.
E, what's the 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 takeaways, I'm not shying away saying, if, if that comes, I think we're able to enter, But, 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 that's the net net for me, at least.
Yeah. And although those are, like I said, those are small trials at the moment, But one thing that I, what is the sort of the one learning, seems to be that it's a local brand that has a big impact on on on the ability to pay to be able to get the listed people. Yeah. It's the it's the really matter of the, of the sort of the local market share rental and the local brand image so that the people can list it.
If you think of it this way, And that's why we tend to talk about on a national level and you automatically need to I don't know, 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, but overall, it's about availability, it's about premises, that, that drives the number of people who list IE brand, you could say. And, 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, that, and to learn that, I think, takes a while.
And that's why we've entered the, the tests. But I think it's, as tests are, it's a good learning growth.
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 Andreas Cerykne.
I was wondering if you could elaborate on the potential for Theravastal and other Nordic Countries and also your view on growth of video services, like KRR, KRY, and, which is expanding rapidly outside Sweden?
Well, yeah. Well, couple of couple of reflections on that. One is, of course, This whole Ramsey copy of thing is it's of course, kind of sheds the light on the Nordic businesses and it's equally, equally, of course, Ambea and Alaris, these, these transactions. And I think it's interesting to see what happens in the Nordic we continue to follow it. Of course, our strategy remains the same, which is we have still growth domestically here, as well as we want to see what happens with the reform.
Now then the second question regarding the digital services, There is 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, not the expert that is on the Swedish market, but it appears that some of these digital services actually get fee for service payment from, from the lunch thing. And basically are able to provide a service which lowers the cost for the lunch thing 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, very easy example. If you need to renew a prescription instead of traveling to a doctor, traveling back to work, which would then mean that you're going for, let's say, 3 hours, you can easily do that with the chat. So it is a convenient 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, or a 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 So in Sweden, I think that the growth in digital, while the technology remains broadly the same, comes in slightly different paths that we see in Finland. But the net net though is, 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 Kimo Sten while OPIM, CapEx is down year on year, in Q1 and, to Q3. Excluding M and A, where should the CapEx land on a full year basis for this year? And we'll attend integration require some additional CapEx?
I think the historical sort of numbers are good proxy also going forward. So we we don't see any major sort of fast movements in into CapEx at the moment, but on the other hand, like I think we already announced while doing the attender acquisition, it It requires some, some CapEx at the integration of the of the units and the integration of the of the ICT infrastructure, etcetera, etcetera. But it's only sort of handful of of of €1,000,000 of euros, sort of as a as a nonrecurring item as such. On the other hand, like like we have said, we will continue to to increase investments in digitalization. Which will inevitably have an impact on the total CapEx level at at at least on some level going forward also.
For the following years. Of course,
of course, it does. And I think it's only natural. When we look at the cross 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?
That's our strategy. And we will continue to invest in immaterial CapEx, if you wish.
Yeah. And when it comes to the attendees piece of the business going forward, the only material impact for the CapEx from from on their business is actually related to the rental, rental business. So So the outsourcing and the staffing business that they have don't really require any any significant CapEx.
Then a follow-up on the cost 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?
They're they're they're always is. I mean, I mean, you know, public information, was it a Pilarina who said that they gained the, was it it's a And, and then on the other hand, we just won Valumet in Ozikov, again. So you do see a shift in there. And I don't see there is an abnormal amount of shift to shift is there. It it varies from 1 quarter to another.
And, and, and, and, therefore, I see that situation rather stable rather than, than being very shaken. I think, but it does vary from 1 quarter to another.
And related to that volume, that is actually on the Twitter, she also have, I think, discussed several times that there is a typical way when we establish a unit So so we want that, walnut contract. I think it was 4500 employees or something. And with that sort of customer when we will establish a new unit in Use Kaulpunki, which is sort of white white spot for us at the moment. And that is the way we see that we are we we would like to sort of, and open new units if should that happen?
It's basically what it means. Of course, we didn't have a customer base that supports establishing an operation. Yeah. And Mr. We can widen the services there over time.
And related to that, I would draw some properties. This is a good place to say that the aura or the the only the small dental clinic in Porvoo that we also acquired a couple of weeks ago, I think it was it's a typical another kind of sort of organic road, element for us. It was a new brand new clinic, which was all at the beginning of 2018. So instead of sort of building a greenfield in Porvoo, We acquired a brand new unit, we actually lower priced and that that was invested in the unit, and we actually cut cut a dock and and some of the customers, obviously, we did. So those are the sort of the pros.
The network call and the organic growth elements that that we are continuously seeking for and and looking for, uh-uh, we we see both of those VC, you know, inside of the company VC, those in in, organic growth elements, although into from the financial perspective other one is organic, and other one is inorganic, but we see both of those actually being organic quote instead of building Building, we made a made an asset deal without, increasing the capacity in the in the local town.
Great. Then we discussed quite a lot around the capacity development within the market, but then there's a follow-up on, on, how does the capacity growth stalling within the market impact their WESTala strategy, but in terms of investments or business as in general?
Without being overly sarcastic. I think basically what it just highlights is that our strategy is, and we firmly believe that the land thing one would need to do from a macro point of view is to build units. And so we think we look at tactically 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. 1 is national 20 fourseven 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 of our entire system. But, but, so I would say from our point of view, no change. Rather, I would say, underlines that we believe we're in the right path.
Great.
Do we have any other questions within the audience at the moment
just over the telephone.
Great. Another word, do 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.