Ambea AB (publ)

Welcome everyone. Today we will review Ambea's performance for the first quarter of 2025. My name is Mark Jensen. I'm CEO of Ambea and I'm joined by our CFO Benno Eliasson. Together we will walk you through our results and highlights and the key developments during this period. After that I will summarize the quarter and compare Ambea's performance to our financial targets before we open for questions. I would like to begin with a brief overview of Ambea. Ambea remains the leading care provider in Sweden, Norway, and Denmark, and with the market entry in Finland, we offer high-quality care and support for over 16,000 care receivers across more than 1,000 units in the four largest Nordic countries. And with that in mind, let's look at the acquisition of the Finnish business in Validia. The acquisition of Validia was closed according to plan on April 1st. Validia will be reported as a new business area and be consolidated in Ambea's accounts with full effect in the second quarter. The reception to Ambea's acquisition has been positive from Valida's employees and customers alike, and we are impressed with the quality and engagement of the local team. The integration of Valida is proceeding according to plan. Valida is a platform acquisition in a new market for Ambea, and the integration is therefore, in some parts, lighter than what we are used to when acquiring in existing markets. A key part of the integration is to pave the way for leveraging Ambea's shared knowledge and best practices across all our markets, contributing to a stronger Nordic welfare model. Most of the integration is expected to be completed in 2025, but the full integration will complete in 2026 with the establishment of Ambea's IT platform in Finland. The acquisition gave Ambea access to a sizeable care services market with a healthy growth. Concurrently with the integration, the key focus of Validia is to deliver continued growth, which we are optimistic about, and maintain good quality of care to our Finnish customers. The market for M&A within care services in Finland is quite active. We are currently evaluating M&A opportunities and will continue to do so going forward. So let's go straight to some of the important achievements within care quality. As we continue to grow, it remains just as important that we deliver safe, high-quality care every single day. We follow a systematic approach to quality and sustainability with monthly follow-ups of all our care units. During the quarter, we presented a BAS Quality Award and annual recognition given to one care unit within East Business Area. These units stand out through their exceptional quality work, closely aligned with Ambea's values and shared working methods. Notably, they are also among the top financial performers in their peer groups, reflecting the strong correlation that we have between high quality and healthy financial outcomes. With over 1,000 units spread across various regions where employees provide daily care and support, local leadership plays a critical role in ensuring consistent quality. This quarter we conducted our first leadership index survey of the year, resulting in a score of 78 out of 100. This is a stable and encouraging result, underscoring our long-term commitment to present and supportive leadership. Leadership remains a cornerstone at Ambea, and we continue to support leaders at every level. A key part of this effort is ensuring that all employee survey results are discussed in the local teams, and important improvement areas to each team are identified and agreed upon. This fosters a culture of continuous improvement and improved work environment. Finally, attracting the right talent is vital to our continuous success, but recruitment can be time-consuming. This quarter, we introduced a new AI-based recruitment tool in Vodoga. It's appreciated by candidates and managers and is already helping to streamline the hiring process, allowing our managers to spend more time focusing on care and on leadership. You can read more about our quality and sustainability work in the quarterly report, as well as in our 2024 annual report that we have recently published. Now I would like to highlight some of Ambea's future growth opportunities. We remain focused on expanding our services to meet the growing demand for care, fueled by an aging population and increasing care needs. In Q1, both Nytil and Stendi signed new contracts, adding 15 care places in total to the pipeline. Our pipeline is by far the strongest in the Nordic Care sector. We have 1,285 beds and care places in our old management pipeline, most of them in Vårdager. The pipeline decreased slightly compared to the previous quarter due to newly opened units in the first quarter. We plan to open 280 beds in Vårdager, 81 care places in Nytida and 49 beds in Stendi during the coming 12 months. We are not only opening new care units but also expanding assisting units. We signed a contract to increase capacity by 30 beds at a planned nursing home in Teby, Stockholm. Looking at Ambea as a whole, more units are under construction, positioning us for future organic growth in our markets. Acquisitions are an important part of our growth agenda too, and we will now have a look at the acquired growth. As you can notice, we made acquisition in almost all business areas between 2021 and 2025, except for Stendi. Nytida was most active in bolt-on acquisitions, expanding our footprint within social care in Sweden. This is a part of our strategy to strengthen our service offering through qualitative bolt-on acquisitions. On April 1st, 2025, Ambea acquired Validia in Finland, making us the only care provider with a strong presence in the four largest Nordic countries. Validia runs operations in residential care and support for people with disabilities and thereby adding approximately 1.4 billion SEK in annual net sales. After the quarter ended, we acquired Avasta, which operates care units in both Vårdagas and Nyttiders operational areas with annual sales of approximately 145 million SEK. Avasta operates a nursing home and four care units for adults with lifelong disabilities and psychosocial problems. Control of the company was transferred on May 5th. Further Bolan acquisitions are expected in the coming quarters in several business areas as we continue to identify strategic opportunities for growth in all Nordic markets. Therefore, we foresee a continued active year within M&A. Let's look at total revenue growth. The organic growth illustrated in the purple bars continues to show the strong trend observed since 2022. The total organic growth in this quarter was 4.2%. Acquired growth was 1.9%. We saw negative currency effects of minus 1.5%, which affected overall growth. So, summing up the highlights of the first quarter. In conclusion, the first quarter of 2025 has been another successful quarter for Ambea, marked by strong financial performance, continued organic growth and improved occupancy. Net sales increased by 5%, driven by 4% organic growth. Group EBITDA rose by 10%, reaching a margin of 8.4%. Altina Denmark continues to see profitability improvements from high occupancy and strength operations and showed positive earnings again this quarter. Ambea entered into agreement to acquire Validian Finland, making us the only care provider with a sizeable platform in all four large Nordic countries and a strong position for growth. And now I will hand over to Benno, who will provide a financial overview of our performance this quarter.

Thank you, Mark. The good organic growth we have seen in recent quarters continues. In Q1, we achieved 5% growth in net sales, driven by Acquired and startup units in Nytida and increased occupancy in a care unit in Bardaga and Altiden. Stendi had negative growth in SEC. In local currency, net sales growth was positive. Clara saw a decline in sales due to weak external markets. Turning to the EBITDA development, this slide shows how the different business areas have contributed to the adjusted EBITDA of the group. The first quarter last year was affected both positively by an extra invoicing day and negatively by the Easter holiday. This has, of course, affected the comparison for this quarter. This effect was negative for the Swedish business area, Vardaga and Nytida, and positive for Stendi and Alltiden. Adjusted EBITDA increased by 10% and our margin improved to 8.4%, driven by strong results in Vardaga and Stendi and, of course, the positive earnings in Alltiden. Nytidas EBITDA was lower than last year, down one and a half percentage points, mainly due to the occupancy challenges in individual and family care segments. Stendis EBITDA increased by 1.3 percentage points, reflecting a favorable demand that has contributed to the stable occupancy. Altiras EBITDA increased significantly by 5.3 percentage points compared to the same quarter last year, reflecting the good occupancy growth together with operational improvements This is specifically in social care. And now to the cash flow development. Our operating cash flow amounted to 425 million with a stable cash conversion in the quarter. The decrease compared to the same quarter last year is mainly explained by an increase in working capital. This is attributable to normal fluctuations in payment flows related to the beginning and the end of the different quarters, and the underlying cash flow remains strong. This slide shows the way from the adjusted EBITDA down to the free cash flow post-tax of 713 million, excluding IFRS 16. We can see that we have invested 129 million in fixed assets. We have paid 141 million SEC in interest and 144 million in taxes rolling 12. We had a negative effect from working capital of 43 million SEC. Over time, we think that the network and capital contribution to the cash flow will be neutral to slightly positive. Utilization of the high free cash flow I will show on the next slide. So this is how we have used the generated 713 million SEK. 130 was distributed to our shareholders as dividend. 254 million was spent on the four acquisitions we made 2024. And 534 million was spent on the two share buyback programs. As you can see here, our net debt has increased by 169 million since the same quarter last year. This quarter, we can also look at the free cash flow development over a longer period of time, having a slide that shows the last three years of free cash flow. Comparing this, we can conclude a strong increase of almost 25% in terms of annual growth rate. This strong growth speaks for the good cash flow development across our businesses. High free cash flow allows us to maintain the financial flexibility, supporting both dividend payments and strategic investments, including acquisitions and share buybacks, as well as reducing debts. Now, a look at a different business area, starting with Nytida. Sales increased by 8%, which is driven both by acquired operations as well as newly opened businesses. Nytida opened three new assisted living facilities with a total of 29 care places. As an offsetting effect, we saw continued lower occupancy in some parts of the individual and family care segment. Nytida is working actively and adjusting its service portfolio and selected units, aiming to increase occupancy and improve margins over time. This also follows the new Social Service Act, That's needed a welcomes and will come into force on July 1st, 2025. EBITDA decreased by 7 million compared to the same quarter last year and landed at 118 million SEK. The decrease in earnings was partly due to the occupancy challenges within the individual and family segment and that last year was positively impacted by calendar effects. EBITDA margin in the quarter was 10.5% and at 12.3% rolling 12%. After the quarter ended, Nytida acquired Vasta, adding four care units with 64 care places and approximately 62 million in annual sales. Then turning to Swedish elderly care, Vardaga. In Vardaga, net sales increased by 7% year-on-year, driven by higher occupancy in new and mature-owned nursing homes, as well as new contract management units. EBITDA amounted to 111 million SEK, which was higher than last year thanks to the high rocket fancy, and last year was also positively impacted by calendar effects. Material units showed an improved margin of 9.9%, which is 1.4 percentage points higher than the average margin for Vardaga's total portfolio. During the quarter, Vardaga decided to open a previously completed nursing home in Norrköping in the third quarter of 2025. And after the quarter ended, Vardaga acquired Avasta, adding one nursing home in Gothenburg with 90 beds and approximately 82 million in annual sales. And then turning to Norway and Stendi. Net sales in Stendi decreased by 2% in SIC, but increased by 1% in local currency. And sales in own management rose 5% in local currency. Last year, Stendi terminated all contract management operations which were exclusively within elderly care. EBITDA increased to 68 million SEK, driven by favorable demand that has contributed to stable occupancy, and the improvement was also an effect of the last year was negatively impacted by calendar effects. The EBITDA margin in the quarter increased by 1.3 percentage points to 8.3, and the rolling 12 margin increased to 10.3% thanks to the good earnings development over the last quarters. Stendi now performs at a consistent high level supporting the Norwegian society with high quality social care. We see good opportunities to expand operations going forward through organic and acquired growth. And then taking a closer look of Alptiden. Our Danish business area Alptiden continues to improve earnings this quarter. We also saw higher occupancy. Net sales in Alptiden increased by 6% in SEK. increase in own management sales increased by 12% in local currency, thanks to the higher occupancy in both elderly and social care. The decrease in contract management sales was mainly due to one large elderly care contract that expired in the first quarter of 2024. Altiren once again delivered a strong profitability improvement. EBITDA was up 17 million compared to the same quarter last year, thanks to the good occupancy growth with operational improvement in social care. First quarter last year was also negatively impacted by calendar effects. EBITDA margin in the quarter was 2.4%. And now turning to Clara. In Clara, net sales decreased by 5% due to continued weak demand for staffing services. EBITDA decreased by 1 million to 8 million due to the lower net sales. Clara has adjusted its cost base to a structurally lower market demand but remains well positioned to respond if demand should increase again. EBITDA margin was 8%, which is a robust margin given the situation with the public healthcare region's limitations of the use of temporary nurses. Klara's EBITDA margin is still significantly above staffing competitors' margins thanks to Klara's diversified portfolio consisting of different welfare services For example, mobile nursing teams and student health services. This diversity in Clara services and the adaptability to change market conditions is our core strength, of course. And with that, back to you, Mark.

Thank you so much, Benno. So to sum up our financial development versus our targets, we aim for an annual growth rate of 8 to 10 percent driven by both organic and acquired growth. Total growth rolling 12 for 6 percent driven by solid organic growth. Going forward, we will see more growth coming from acquisitions and, of course, through the acquisition of Validia, which will further boost our overall growth level. In terms of profitability, our target is to reach an adjusted EBITDA margin of 9.5% in the medium term. We reached our profitability target again at 9.8%, rolling 12. On leverage, we target the net debt to EBITDA ratio to be below 3.25 times. As of quarter one, we remain well below this target at 1.8 times, thanks to the strong EBITDA and cash flow development. After completion of the acquisition of Validia, MBS leverage ratio is expected to be approximately 2.8 times. These financial targets underscore our commitment to delivering sustainable financial performance while investing in our long-term growth. We have reached two out of three financial targets and are close to the third, with more growth coming from acquisitions. We are committed to consistently deliver on all three financial targets. Before we open for questions, I would like to provide an outlook post Q1 2025. In the beginning of April, we closed the acquisition of Validia in Finland, adding approximately 1.4 billion SEK in annual revenue. This marks a significant milestone for Ambea, as we now have a strong presence in all four major Nordic countries. Our entry into the Finnish market is not only a strategic expansion, it enables increased scale and fuels future Nordic growth. I would like to welcome our new colleagues, our care receivers and customers at Validia. After the end of the quarter, we also completed a bolt-on acquisition within Vardaga and Nytida. The deal adds around 145 million SEK in annual sales and further strengthens our positions in elderly and social care in Sweden. And looking ahead, we have several planned openings across our business areas in the coming quarters of 2025. We will open new units in Nytida, Vårdaga and Estendi, supporting continued organic growth across the Nordics. We expect further profitability improvements in Altiden following ongoing operational enhancement and increased occupancy in Denmark and a very strong performance by the local team. Finally, investing in our employees, our leadership, technology and innovation to improve care quality going forward is paramount to our continued success and a core priority. I would like to thank all of our employees having done their utmost for our care receivers again this quarter. Their daily work is a constant inspiration to me and the entire group management team. And this concludes our presentation and we will now open for questions. So can we have the first question, please?