Attendo

Comments from Martin Tivéus, Attendo president and CEO

“We continued to demonstrate strong growth and recovery of the financial result in Q2. The improvement strengthens our financial position and makes Attendo better equipped to continue investing in the care of the future.

Empowered employees are the key to good care. That makes it particularly gratifying to see the results of our employeeship initiatives, which are apparent in Attendo’s higher Employee Net Promoter Score. I am also pleased that our diversity, equity and inclusion work has gained attention from outside the company.

Group: High growth and stronger performance

We are reporting growth of 16 percent in local currency in the second quarter, driven primarily by price adjustments in Finland and higher occupancy. Occupancy was 86 percent, up by 2 percentage points since last year and in line with the first quarter. Lease-adjusted EBITA for the second quarter of 2023 increased by SEK 158 million compared to the preceding year to SEK 147 million, corresponding to an operating margin of 3.4 percent.

The improvement is attributable entirely to Finland. Reported profit for Scandinavia is slightly lower than in the preceding year and has been adjusted for non-recurring items in 2022. Higher profit in nursing homes in own operations has not fully compensated for lower profit in home care services in Sweden and losses in the Danish operations.

Free cash flow amounted to SEK 115 million (134). The slightly lower cash flow is mainly due to an increased capital tie-up. The increased capital tie-up is driven by growth in Finland, as well as the fact that accounts receivable is temporarily slightly elevated and that new payment routines do not yet work completely satisfactorily with the new welfare regions in Finland. We expect continued improvement and even some normalization going forward.

Finland

Sales in Attendo Finland increased by about 26 percent in local currency during the quarter, mainly due to improved terms and conditions and previous acquisitions. The effects of previously announced price adjustments based on the new staffing requirements combined with operational improvements were fully realised in the second quarter, as clearly apparent in operating profit of SEK 131 million for the quarter, as compared to SEK -75 million in the comparison quarter in 2022.

Staffing requirements and other regulatory requirements have successively increased in Finland since 2019. As of 1 April 2023, the staffing requirement in care for older people increased from 0.60 to 0.65 care workers per resident. Our Finnish organisation completed a comprehensive programme of preparations ahead of the change in April and has been able to attract qualified care staff in a difficult labour market and successfully maintain occupancy despite the higher staffing requirement.

We see that politicians, payors and authorities in Finland are now understanding the challenges that the staffing reform has entailed. The final stage of the reform will be postponed and authorities are reviewing how various staff categories and welfare technology can be used in order to increase flexibility for providers while safeguarding the quality of care.

A new collective agreement was negotiated during the second quarter. The agreement involves salary increases of about 5.7 percent from September 2023, which gradually will be reflected in the price levels in agreements with welfare regions.

Scandinavia

Sales in Attendo Scandinavia increased by about 4 percent compared to the corresponding quarter last year, primarily as a consequence of higher occupancy in nursing homes in own operations and price adjustments that took effect on 1 January.

However, statistics show that many local authorities have thus far in 2023 responded to higher inflation by reducing access to welfare services. Fewer people have been granted access for placement in nursing homes and waiting times for an apartment have increased in 2023. As a result, occupancy growth in the first half was slower than planned, although the quarter ended on a strong note with good sales in June.

Nursing homes in own operations are growing in terms of sales and profits in pace with higher occupancy, but the improvement in nursing homes operations has not fully compensated for worse financial performance in the Danish operations and in the home care operations in Sweden.

Lease-adjusted operating profit (EBITA) amounted to SEK 36m (84). Adjusted for positive one-off effects of SEK 30 million last year, profit was slightly lower than in the comparison period.

The challenges in Swedish home care operations are linked primarily to adjustments in local operations with new terms and conditions as well as discontinued units and several new areas in the start-up phase, which resulted in fewer hours delivered and lower efficiency. We have initiated both local action programs and an overall program around best practice. The Danish operations is experiencing difficulties with too high operating expenses. We have changed the management structure and strengthened the organisation in Denmark during the quarter to come to grips with the losses.

A new collective agreement in Sweden was negotiated in the second quarter, which resulted in salary increases of about 4.1 percent from June 2023, which will be gradually reflected in the price levels in agreements with local authorities.

Committed employees and managers

We are convinced that employee commitment is the single-most important factor in successfully delivering high quality care and empowering all of the persons who receive care from us.

At the same time, we see a long-term trend in which the availability of qualified staff is not increasing in pace with growing needs for care in society and due to increasing staffing density requirements. 

Consequently, our ability to attract, introduce, develop and engage our employees is becoming ever more important. We are also focusing intensely on further developing leadership at all levels of the company. It is gratifying to see that our long-term efforts to create a stronger culture and greater empowerment are apparent in our employee survey scores. The Employee Net Promoter Score increased in the second quarter to +11 from +6 in the first quarter on a scale of -100 to +100. Our ambition is higher than this level, but the score indicates that we are moving in the right direction.

Diversity, equity and inclusion (DEI) are central tenets of our culture. An overwhelming majority of our operational managers have been women ever since Attendo was founded. In a survey conducted by AllBright, a non-profit foundation, Attendo received an honourable seventh place out of 361 ranked listed companies based on DEI in executive management, boards of directors and operative managers. Being an equal opportunity employer is a key piece of the puzzle in attracting the right skills and thus creating optimal care to the benefit of customers and contracting authorities.

Focus going forward

The improved result creates opportunities to increase focus on new priorities going forward such as growth and further development of our offering and operational model. We also have a number of immediate focus areas to further improve conditions for 2024.

In Finland, we continue to focus on attracting qualified personnel, which is a prerequisite for higher occupancy. We have also started negotiations on changed new terms for social psychiatry and disabled care, areas that have so far not been compensated for higher costs.

In Scandinavia, our highest priority is to attract customers to nursing homes and influence municipalities so that those in need will get access to care. We will also work to get compensation for wage inflation in 2024. Finally, we will implement measures required to stop the losses in Denmark and to improve our home care operations in Sweden.

Overall, we will continue the work to improve the quality of life for our residents and show that we are a reliable partner for local authorities and welfare regions.”

Summary of the second quarter 2023

• Net sales amounted to SEK 4,333m (3,546). Total growth amounted to 22.2 percent of which organic growth was 13.9 percent.
• Lease adjusted EBITA was SEK 147 (-11), corresponding to a lease adjusted operating margin of 3.4 percent (-0.3).
• Operating profit (EBITA) amounted to SEK 283m (106), corresponding to an operating margin of 6.5 percent (6.0).
• The profit for the period amounted to SEK 60m (-63). Diluted earnings per share were SEK 0.37 (-0.39). Adjusted earnings per share after dilution were SEK 0.60 (-0.14).
• Free cash flow amounted to SEK 115m (134).
• There were 20,870 (21,062) beds in Attendo’s homes at the end of the period. Occupancy in the homes was 86 percent (84).

Summary of the period January-June 2023

• Net sales amounted to SEK 8,377m (7,028). Total growth amounted to 19.2 percent, of which organic growth was 11.4 percent.
• Lease adjusted EBITA was SEK 263m (20), corresponding to a lease adjusted operating margin of 3.1 percent (0.3).
• Operating profit (EBITA) amounted to SEK 524m (248), corresponding to an operating margin of 6.3 percent (3.5).
• The profit for the period amounted to SEK 88m (-95). Diluted earnings per share were SEK 0.55 (-0.59). Adjusted earnings per share after dilution were SEK 1.03 (-0.06).
• Free cash flow amounted to SEK 123m (191).

Invitation to presentation

In connection with the release of the report, a webcast presentation will be held at 10.00 am (CET), hosted by Attendo CEO Martin Tivéus and CFO Mikael Malmgren.

You can follow the presentation on the following page:
https://ir.financialhearings.com/attendo-q2-2023  

Analysts and investors will have the opportunity to ask questions during the presentation by calling in. To obtain call-in details, please send your request to: kommunikation@attendo.se.

The quarterly report and other information material will be made public on:
https://www.attendo.com/

Attendo AB (publ)

For further information, please contact:

Andreas Koch, Communications and IR-Director Attendo
Phone: +46 705 09 77 61   I   email: andreas.koch@attendo.com

Stefan Svanström, Head of Community Communications Attendo
Phone: +46 708 67 38 07   I   email: stefan.svanstrom@attendo.com

This is information that Attendo AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact persons set out above at 08.00 CET on 20 July 2023.

attendo.com

Attendo - the leading care company in the Nordics   |   For over 35 years, seeing, supporting and strengthening people with care needs has been the starting point of everything Attendo does. In addition to care for older people, Attendo provides care for people with disabilities and social care for individuals and families. Attendo has more than 30,000 employees and is locally anchored with over 700 facilities in close to 300 municipalities in Sweden, Finland and Denmark. Every day Attendo has tens of thousands of encounters with its customers. In all these encounters, our employees manifest Attendo’s shared values of care, commitment and competence.