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 a full-time employee. The reception to AMBEA's acquisition has been positive from Validia's employees and customers alike and we are impressed with the quality and engagement of the local team. The integration of Validia is proceeding according to plan. Validia 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 sizable 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 AMBEA's Quality Award, an annual recognition given to one care unit within each business area. These units stand out through their exceptional quality work closely aligned with AMBEA's values and shared working methods. Notably they're 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 a thousand 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 to present a 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 foster 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 WarDogger. 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 Newtis and Stanley 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 own management pipeline most of them in WarDogger. 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 WarDogger, 81 care places in Newtis and 49 beds in Stanley during the coming 12 months. We are not only opening new care units but also expanding existing units. We signed a contract to increase capacity by 30 beds at a planned nursing home in Tepuis, 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 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 Stanley. Newtis was most active in bold on acquisitions expanding our footprint within social care in Sweden. This is a part of our strategy to strengthen our service offering through qualitative bold 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 WarDoggers and Newtis 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 bold on 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 percent. Acquired growth was 1.9 percent. We saw negative currency effects of minus 1.5 percent 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 from AMBEA marked by strong financial performance, continued organic growth and improved occupancy. Net sales increased by 5 percent driven by 4 percent organic growth. Ruby beta rose by 10 percent reaching a margin of 8.4 percent. Altin in 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 Velidia in Finland making us the only care provider with a sizable platform in all four large Nordic countries and a strong position for growth. And now I will hand over to Benno who will provide financial overview of our performance this quarter.

Thank you Mark. The good organic growth we have seen in the recent quarters continues. In Q1 we achieved 5 percent growth in net sales driven by acquired and startup units in Nyte and increased occupancy in our care units in vardaga and alltiden. Stendi had negative growth in SEC. In local currency net sales growth 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 areas vardaga and Nyte and positive for Stendi and alltiden. Adjusted EBITDA increased by 10 percent and our margin improved to 8.4 percent driven by strong results in vardaga and Stendi and of course the positive earnings in alltiden. Nyte's 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. Stendi's EBITDA increased by 1.3 percentage points reflecting a favorable demand that has contributed to the stable occupancy. Alltiden's EBITDA increased significantly by 5.3 percentage points compared to the same quarter last year reflecting the good occupancy growth together with operational improvements 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 a trippy result to a normal fluctuations in payment flows related to the beginning and the end of the year. 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 SEC. 130 was distributed to our shareholders as dividend. 254 million was spent on the four acquisitions we made in 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 debt. Now a look at the different business area starting with Nythida. Sales increased by 8% which is driven both by acquired operations as well as newly opened business. Nythida 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 segments. Nythida is working actively and adjusting its portfolio and selected units aiming to increase occupancy and improve margins over time. This also follows the new social service act that Nythida 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 SEC. The decrease in earnings was partly due to occupancy challenges within the individual and family segment and that last year was positively impacted by calendar effects. EBITDA margin in the quarter was .5% and at 12.3 rolling 12. After the quarter ended Nythida acquired Vasta adding four care units with 64 care places and approximately 62 million in annual sales. Then turning to our Swedish Adelika Vardaga. In Vardaga net sales increased by 7% -on-year driven by higher occupancy in new and mature owned managed nursing homes as well as new contract management units. EBITDA amounted to 111 million SEC which was higher than last year thanks to the higher occupancy and last year was also positively impacted by calendar effects. Mature units showed an improved margin of .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 SEC but increased by 1% in local currency and sales in owned management rose 5% in local currency. Last year Stendi terminated all contract management operations which were exclusive within Adelika. EBITDA increased to 68 million SEC driven by favorable demand that has to contribute to stable occupancy and the improvement was also an effect of the last year was negatively impacted by calendar effects. EBITDA margin in the quarter increased by 1.3 percentage points to 8.3 and the rolling 12 margin increased to .3% thanks to the good earnings development over the last quarters. Stendi now performs at a consistent high level of growth. And then taking a closer look of Alteneden. Our Danish business area Alteneden continues to improve earnings this quarter with also so higher occupancy. Net sales in Alteneden increased by 6% in SEC. Increase in owned management sales increased by 12% in local currency thanks to the higher occupancy. And then the second quarter of 2020. The quarter ended with a good growth in 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. Alteneden 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 starting 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 regions limitations of the use of temporary nurses. Clara's EBITDA margin is still significantly above staffing competitors margins thanks to Clara's diversified portfolio consisting of different welfare services. For example, mobile nursing teams and student health services. This diversity in Clara services and 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% driven by both organic and acquired growth. Total growth rolling 12 for 6% 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 .5% in the medium term. We reached our profitability target again at .8% rolling 12. On leverage we target the net depth 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 and bearish leverage ratio is expected to be approximately 2.8 times. These financial targets underscore 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 quarter one 2025. In the beginning of April we closed the acquisition of Validia and Finland adding approximately 1.4 billion SEC in annual revenue. This marks a significant milestone for MBEA 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 bold acquisition within Vardaga and Nytida. The deal has around 145 million SEC in annual sales and further strengths of 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, Vardaga and Instendi supporting continued organic growth across the Nordics. We expect further profitability improvements in Altelen 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 outmost 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?

Yes of course. Just a reminder dear participants if you would like to ask a question please press star 1 1 on your telephone keypad and wait for a name to be announced. And now we're going to take our first question and it comes to the line of David Johansson from Nordea. Your line is open please ask your question.

Okay thank you. Good morning. Three questions from me please. First one if you could elaborate a bit more on the weaker margin I think in Nytida and some of the restructuring work you seem to be doing there to adapt your services. I think you comment on weak demand in some areas there and then then just on your margin I think you have some expectations for Nytida looking at the full year. I think it seems to be sliding a bit here so just wondering about some of the puts and takes here that we should consider for the coming quarters. Thank you.

Yes thank you so much. I can start with your first question on Nytida. I mean it's mainly driven by slower occupancy or slow occupancy individual and family segment and we have seen that for a few quarters now. There's a new social securities act coming into play in Sweden from 1st of July and it provides good opportunity for Nytida as it is basing the municipalities demand more on knowledge and on the methods that are used and that plays well to the quality segment of Nytida. So we expect that with the tweaks we are doing and supporting the municipalities in getting into this new legislation that we will see better occupancy going forward and also that Nytida's margin will strengthen somewhat. So it's absolutely our belief that Nytida is in good shape and it's a big business with almost 500 care units so of course over time there will be a need for changes and adaptations to demand and also to new legislation coming in but we remain comfortable on the both the short mid and long term outlook for Nytida and a positive about the opportunities also going forward this year.

Okay thank you that was helpful. Then my second question is on your pipeline so perhaps if you quantify the impact to organic growth I think first given the new openings and contracts that were signed during Q1 I think you believe is a total of 33 care places Nytida and Stendi and another 30 in Vardaga and also your planned openings for the 12 months if you could quantify the organic growth there. Thank you.

Yeah so I mean the contracts that we sign in a quarter is normally not for opening and within the next 12 months because there is construction time or time to refurbish if it is an existing facility so it's adding to the future pipeline so to speak and what we have done this quarter is that we have quantified the planned openings during the coming 12 months for both Vardaga and Nytida and Stendi that are the three units where we have plans to open own construction in the coming 12 months. It's five nursing homes in Vardaga and 280 beds there it's seven care units and 81 care places in Nytida and four units and 49 beds in Stendi and Norway and they are spread across the next four quarters and thereby of course decreasing the pipeline going forward but as we are constantly looking for new opportunities we will sign and add more volume to the pipeline also in the coming quarters. Was that an answer to your question?

I was hoping that maybe if you could quantify sort of the organic growth implication of that current pipeline?

You can say that in short term these openings don't affect the 2025 organic growth so much because most of the large one in Vardaga will be open in the fourth quarter but gradually it will of course help the organic growth going forward but if you are opening the ones for example in the Q4 normally a nursing home has taken 12 to 24 months to fill up so it will gradually affect the organic growth but not so much short term.

Okay thank you that's clear and then maybe just a last question and perhaps a general update on Stendi and where the demand situation is at it seems to me that demand for special care needs in Norway have remained at the high level so would you say it's starting to tail off now or should we expect it to remain at a stable level also for the coming quarters? Thank you

so with the visibility we have I mean the level is stable it has been again this quarter and with the outlook we have into the coming quarters it looks the same so to speak so with the visibility we have now the demand looks stable at a good level.

Okay thank you those are my questions.

Thank you now we're going to take our next question and it comes from Christopher Lilleberg from Carnegie Investment Bank your line is open please ask your question.

Thank you two questions the first one is coming back to the new to the margin is it possible to quantify how big of a seasonal effect was on the margin if you compare with Q1 last year and the second question relates to Denmark and if you could talk a little bit about your strategy for expansion there now with the new legislation thank you.

I can start with the margin and seasonality of Nyte. There was two effects of the seasonality last year that was a little bit different from a normal year the first one was that there was an extra invoicing day last year and that the Easter was in the first quarter instead of normally in second quarter the total of these two were last year positive for for new to that it wasn't very much but there were some positive effects of that and that will be reversed this year of course especially when coming into the second quarter so it's the total decrease in in a bit it's not because of this effect so there was this effect as well as the lower occupancy within individual and

family care that contributed to the lower EBITDA. Yeah but I just follow up on on on

that before you turn to the next question but how quickly do you expect to turn margin surround again in Nyte? I guess we won't see it in the second quarter because of the Easter effects but

no yeah exactly in the in the second quarter we will have a negative calendar effect compared to last year but we hope that we the margin dilution we have seen for a couple of quarter we hope that we will can turn that around in the second half of the year that is absolutely our

our target to do that.

Thanks. Okay and then turn it to them Denmark and your question there so the new legislation which is coming into force in first of July in elderly care we have spoken about that also in the previous quarters it opens new opportunities for for establishment of of own managed nursing homes in Denmark and we are we are looking and in process with several developers and municipalities at a new project development in Denmark. So far no contracts assigned but it's happy absolutely our target to do that going forward and to leverage the opportunity that we have now in Denmark with the free right to establishment and also the new renumeration model in Denmark. So we believe that the reform is positive and give us a better opportunity to grow Danish elderly care going forward

which we will actually pursue. Great thank you.

Thank you. Dear participants as a reminder if you wish to ask a question please press star 1 1 on your telephone keypad and wait for your name to be announced. Now we're going to take our next question and the question comes line of Jacob Lempke from SED. Your line is open please ask your question.

Yes good morning my first question is on standing if you can sort of elaborate a bit more on on the previous question that or I guess my question is do you expect or should we interpret it as that you expect the current earnings level to persist for the remainder of the year and what we're seeing now.

There is in standing there are you can say there are larger seasonality effects going forward than in the other business areas. So the second quarter we have the full Easter effect which were in the first quarter last year. So now we have a rolling 12 that consists of no Easter holiday and that is a that is a extra cost in standing. Beside of that we think that the margin level at the second half of the year underlying will be still at a good level. So we said the last quarter that we are not foreseeing the level of 2024 to be the the long in the long run that we can keep that level probably and that is still that is still our best estimate but in the we think that it will be on a rather

high level during the year anyhow. Okay that's clear and

then I have a question on what Daga and now that you have relatively more openings ahead I'm wondering if you can you think that you can offset the sort of negative earnings impact from from new openings with higher earnings from the existing units.

We see that we think there is still a potential for the mature units to increase profitability slightly but of course in the later part of the third quarter and the fourth quarter with a lot of openings that will of course hurt our margins short term and that probably that won't be compensated for at the mature units that is

a best prediction as of now.

And then finally just if you can talk a bit about the development for Validia here in the start of

so far come into the details of the Validia number going forward we'll come back on that in the next quarter so we are not making any new estimates or forecasts on Validia beside what we what we said when we

made a deal in March. Okay that's all for me thank you very much.

Thank you. Now we're going to take our next question and the question comes to the line of Carl-Johan Bonnevier from DNB markets. Your line is open please ask the question.

Yes good morning Mark and Dana congrats to this solid start to the year and the solid development for the operation. I saw your comment Mark on that you managed now to get one of the units that has been say built ready but not opened yet in Northshereping now to be open adding to the pipeline in the second half. Any news on opportunities for the other remaining units that you have in that category?

We are working of course with all of them there are four left after Northshereping and we are working with them as we have been doing all along. There's no kind of concrete plans yet for any of them but it is you know things that can change relatively fast also so let's see how it looks going forward but for now only concrete plans for one of the five being Northshereping.

Good start good start and just on Validia as well how much of an organic pipeline do you see adding to your opportunities?

So we are not adding any numbers of course yet on Validia but there is organic opportunities also in Finland. Of course this has to be considered carefully also with the regions in Finland and also based on their needs for new capacity but we are evaluating a number of organic growth opportunities also in Finland and we expect that we can add some Finnish organic growth to the pipeline also in the second or in the third quarter this year.

And maybe also on the regions in Finland have you feel that or you feel that you are in a good discussion with them so to say given the the change of ownership of the operation and what that might imply from that perspective?

We have a very strong team in Finland that we are impressed with and the team has been in good dialogue with all the regions all the customers in Finland and the acquisition has been received well. I mean we have the existing team running full steam in Finland so it's the same counterparts and no changes to that and we are doing a soft integration of the Finnish business into Ambea. It's progressing well so we think it has been well received both internally and externally in

Finland. Sounds encouraging. All the best out there.

Thank you.

Thank you. Dear speakers, there are no further questions for today. I would now like to hand the conference over to your speaker Mark Jensen for any closing remarks.

So thank you all for calling in. The report for the second quarter will for the first time include the results of Alidi in Finland as we have discussed and will be published on 19th of August 2025. So thank you all. Have a nice day. Stay safe and healthy.