Ronin’s comments on Pihlajalinna’s new customers. 
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Negative regarding revenue, profitability unchanged: Pihlajalinna Oyj: Sisäpiiritieto, tulosvaroitus: Pihlajalinnan kannattavuusnäkymä ennallaan, mutta liikevaihto laskee vuonna 2025 | Kauppalehti
Pihlajalinna estimates its 2025 revenue to be approximately EUR 650 (704.4) million. Revenue is decreased by continued divestments of housing services and persistently weak demand due to lower morbidity and low procurement volumes from the public sector. However, Pihlajalinna estimates that profitability (adj. EBITA) will rise to the previously guided level of at least EUR 65 (55.2) million.
New outlook for 2025
In 2025, Pihlajalinna will focus on organic growth, especially in Private healthcare services, and continuous improvement of profitability.
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Pihlajalinna estimates revenue to be approximately EUR 650 million (EUR 704.4 million in 2024).
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The company estimates that adjusted operating profit before depreciation and impairment of intangible assets (adj. EBITA) will rise to at least EUR 65 million (EUR 55.2 million in 2024).
Previous outlook for 2025 (given on 30.5.2025, reiterated on 24.7.2025)
In 2025, Pihlajalinna will focus on organic growth, especially in Private healthcare services, and continuous improvement of profitability.
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The company estimates that revenue will remain slightly below the previous year’s level (EUR 704.4 million in 2024), particularly due to earlier-than-expected transfers of Kuusiolinna Terveys services to the South Ostrobothnia wellbeing services county and the divestment of special housing services.
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The company estimates that adjusted operating profit before depreciation and impairment of intangible assets (adj. EBITA) will rise to at least EUR 65 million (EUR 55.2 million in 2024).
The company estimates demand to remain stable. Slow economic growth may affect the demand for Pihlajalinna’s services and financial results more than anticipated.
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Revenue declines more than expected, but the profit level remains as good as expected. Why is the market taking this so hard? However, the outlook for next year, even in light of recent announcements, is still reasonable, and flu season is what it is every year. Any thoughts?
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Here are Roni’s comprehensive comments on Pihlajalinna’s Q3 results.
*Pihlajalinna’s Q3 figures fell short of our forecasts regarding operational figures, which was not a big surprise after yesterday’s [profit warning](https://www.inderes.fi/releases/pihlajalinna-oyj-sisapiiritieto-tulosvaroitus-pihl
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A lot has happened at Pihlajalinna this autumn! We went through the themes quite comprehensively in the CEO’s interview:
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Roni has prepared a new company report on Pihlajalinna.
Pihlajalinna’s Q3 figures fell short of our estimates, which, given the profit warning issued the day before the results, was not a big surprise. In our opinion, the softness is mainly due to external factors, and the company’s own operations are still on track. At the current valuation, we remain invested in the stock (26e adj. P/E below 10x) and see the risk-reward ratio as attractive. We cut our target price to EUR 17.0 (previously EUR 17.5) and reiterate our Add recommendation.
https://www.inderes.fi/research/pihlajalinna-q325-tuloskasvussa-pysyttiin-vastatuulista-huolimatta
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OP was slightly more bullish than Ron in its recent report and ended up with a Buy recommendation with a target price of €18:
“Pihlajalinna’s quarter was more challenging than expected due to lost occupational health customers, low purchases from wellbeing services counties, and significantly lower morbidity. On the other hand, the profitability of public services was at a record level, and the company’s sales pipeline looks promising for next year. We raised our forecasts for next year, which is why our target price is adjusted to 18.00 euros (prev. 17.70). Following the share price decline in recent days, we consider the return potential over a one-year horizon to be very good. We raise the recommendation to BUY (prev. ADD).”
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Nordea’s card data for October looks a bit weak in Pihlajalinna’s segment:
Admittedly, a strong comparison period as well.
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Here are Roni’s comments as Pohde has chosen Pihlajalinna as the provider of occupational health services. This is a continuation of the old contract, but slightly broader.
Pihlajalinna announced yesterday that the North Ostrobothnia (Pohde) wellbeing services county has chosen Pihlajalinna as the provider of occupational health services. The agreement covers 14,000 employees, making it a rather significant occupational health agreement for Pihlajalinna. It is mainly a continuation of the old agreement, but includes extensions regarding certain services.
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By the way, Ron made quite a big geographical error in the title.
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Here are Roni’s comments regarding how upper respiratory tract infection diagnoses are at a lower level than in the comparison period – it also affects Pihlajalinna’s financial figures.
According to Terveystalo’s open reporting data, the upper respiratory tract infection diagnoses made by the company have been at a clearly lower level at the end of the year than in the corresponding period last year, although the decrease is also partly explained, in our assessment, by the company’s contracted occupational healthcare customer base. For both Terveystalo and Pihlajalinna, the “flu season” is one profit driver in Q4 and Q1, but in our opinion, its importance for the long-term development of the investment stories should not be overemphasized. In our assessment, achieving this year’s guidance requires a strong end to the year from both, and the development of the flu season could become one decisive factor in reaching the guidance.
Here are Roni’s preview comments as Pihlajalinna publishes its Q4 report on Thursday, Feb 12.
We saw a risk of a profit warning for the company, but since none has been heard, we have raised our Q4 earnings forecast, which previously anticipated a slight profit warning. Revenue has been under heavy pressure at the end of the year as a result of terminated outsourcing contracts and divestments. Profitability has been at a very strong level for the company, supported, in our estimation, by the release of provisions following the end of outsourcing contracts. The current year is particularly interesting in Pihlajalinna’s investment story, as the termination of significant outsourcing contracts creates significant headwinds for revenue and now also for earnings, and we expect a clear decline in the operating result this year. Therefore, the full-year guidance and the outlook for the private network business are particularly interesting.
Here are Roni’s quick comments on the morning’s result.
Pihlajalinna’s Q4 operational figures developed in line with our expectations, but one-off items resulting from the autumn’s change negotiations weighed on the reported result. The balance sheet position continues to improve, and the company announced it will redeem its hybrid bond on the interest reset date, as we expected. There was some suspense surrounding the guidance for the pivotal year 2026, but it ultimately also landed very close to our expectations. Preliminarily, the report does not cause significant pressure for changes to forecasts. The company’s webcast starting at 10:00 can be followed here.
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Pihlajalinna’s CEO Tuomas Hyyryläinen was interviewed by Roni regarding Q4.
Topics:
00:00 Introduction
00:15 Pihlajalinna’s year 2025
02:58 Q4 results
05:00 Private sector profitability
06:05 New organizational model
08:54 Cash flow was weaker
10:04 Kela 65
11:26 Portfolio review
12:35 Demand outlook
16:51 Insurance company market
17:42 Guidance
If you take the midpoint of that guidance, the adjusted EPS for this year could still be around €1.5 or slightly above, meaning the P/E ratio at the current share price is closer to nine than ten. Now, revenue is dropping as expected as the outsourcing ends, but the goal is to grow again in the coming years, so in that light, the valuation seems quite moderate? The guidance should, however, remove the biggest uncertainty regarding this year.
How do others see the report?
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Here is Roni’s company report on Pihlajalinna regarding Q4
Pihlajalinna’s Q4 figures were operationally in line with our estimates, although one-off costs caused some blemishes in the reported results. The guidance was practically in line with our expectations, and we made only minor negative estimate revisions. The earnings drop seen this year is one-off, and reflecting on this, we believe the stock valuation is very low (adj. P/E 9x). We reiterate our target price of EUR 17.0, and following the share price decline, we upgrade our recommendation to Buy (prev. Accumulate).
Quoted from the report:
Small cuts to estimates
We have made only minor negative adjustments to our estimates. We now expect Pihlajalinna’s revenue to contract by 10% to EUR 584 million this year and adjusted EBITA to decline to EUR 55.0 million (9.4% of revenue). In our estimates, the Public Services segment’s adj. EBITA will drop significantly to less than half from 2025 (estimate EUR 10.3 million), and we expect Private Health Services to remain in clear earnings growth (estimate EUR 44.7 million). Earnings growth in Private Services is supported by moderate volume growth, savings from change negotiations, and measures regarding fixed-price occupational health agreements. Our estimates are still based on the old segment reporting, but we will update them when the company updates its reporting in the spring.
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