Ambea AB (publ)

Good day and thank you for standing by. Welcome to the AMBEA Interim Report Second Quarter 2025 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mark Jensen, President and CEO. Please go ahead.

Thank you and welcome everyone. Today we will review Ambea's performance for the second quarter of 2025. My name is Mark Jensen, CEO of Ambea, and I'm joined by our CFO, Benno Eliasson. Together we will walk you through our results and highlight 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 the four largest Nordic countries. We offer high quality care and support across more than 1,000 care units for over 16,000 care receivers. We deliver the services to 450 municipalities in Scandinavia and 20 well-being services counties in Finland. Due to the acquisition of the Finnish business, we present Validia as a new business area for the first time this quarter. The financial data for Validia pertain to one quarter only in the rolling 12 numbers. All business areas contributed well to the group EBITDA, which resulted in an adjusted EBITDA margin of 9.6% on group level in line with our financial target. More about that later in the presentation. So let's go straight to some of the important achievements within quality and sustainability. As we continue to grow, our commitment to delivering safe, high-quality care is unwavering. We take a structured, proactive approach to both quality and sustainability, with monthly follow-ups across all our care units to ensure consistency, to track progress, and identify new opportunities for improvement. In this Q3 report, we are spotlighting some of the initiatives and KPIs driving this progress. Earlier this year, Stendi completed a successful pilot with Able, a company offering health guidance via app and video. The goal was to help employees achieve a better work-life balance and reduce sick leave over time. The impact was clear. Participants reported high energy, better sleep, and improved well-being, reducing sick leave for the group. Building on this success, Stendi is now part of a national study led by CINTEF, one of Europe's largest independence research institutes, through which 300 more employees will receive digital health support. In a highly labor-intensive business like ours, our employees are truly at the heart of everything we do. Our latest employee net promoter score, which measures how likely colleagues are to recommend Ambea as a workplace, remains consistently high. This reflects the positive culture we are building together and strengthen the foundation of our employer brand. Finally, at Validian Finland, we partner with Global Hope to give new life to discarded textiles. These materials are being transformed into functional products such as acoustic panels and support cushions. which are now in use across our finish units. This is another step forward in reducing waste and advancing our sustainability goals. And you can read more about our quality and sustainability work in the quality report. Next, I'd like to highlight 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 all four Nordic countries. In Q2, our own management Our own management pipeline increased as Nytida, Vårdager, Stendia and also Validia signed new contracts, adding 119 care places in total. Our pipeline is still by far the strongest in the Nordic care sector compared to other care providers. We now have 1,360 beds and care places in our own management pipeline, most of them in Vårdager. We plan to open new care homes with over 500 care places during the coming 12 months, of which 336 beds in Vårdager, 107 care places in Nytida and 49 beds in Stendi. Roading 12, we have opened 107 new places if we exclude Validia, so the coming year will be a clear acceleration of new openings. More units are under construction, positioning us for future organic growth in our markets, and we continue to seek for more opportunities to help society manage the welfare challenge in the coming years. We will now have a look at acquired growth, which is an important part of Ambea's growth agenda. As you can notice, we made acquisitions in almost all business areas between 2021 and 2025, except for Stendi. Nutella was most active in Bolon acquisitions, expanding our footprint within Social Care in Sweden. This is part of our strategy to strengthen our service offering through qualitative Bolon acquisitions. So far, 2025 has been an active year with strong M&A momentum. On April 1st, Ambea completed the acquisition of Validian 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. Furthermore, we acquired Avasta in the second quarter, which operates care units in both Vardagas and Nytida's operational areas, with annual sales of approximately 104 million SEK. Avasta operates a nursing home and four care units for adults with lifelong disabilities and psychosocial problems. Further Bolon acquisitions are expected in the coming quarters in several business areas as we continue to identify strategic opportunities for growth in all Nordic markets. In Finland, we are increasing focus on pursuing additional acquisitions to Validia to strengthen and complement our existing operations in the market. We also allocate additional resources to our M&A team. Therefore, we foresee a continued active year within M&A. So let's have a look at the total revenue growth. This quarter acquired growth was significantly higher at 13.1% due to the acquisition of Validia. The organic growth illustrated in the purple bars continues to show the strong trend observed since 2022. And the total organic growth in this quarter was 4.9%. We saw negative currency effects of minus 1.8%, which affected overall growth. And overall growth landed at 16.2%. So summing up the highlights of the second quarter. In conclusion, the second quarter of 2025 has been another successful quarter for Ambea, marked by acquisitions, continued organic growth, improved occupancy and strengthened earnings performance. Net sales increased by 16%, driven by 30% acquired growth and 5% organic growth. Group EBITDA increased by 15%, reaching a margin of 7.6%, despite negative seasonality effects from the East holidays falling into the second quarter this year. Validia and Finland performed very well with high occupancy and a strong EBITDA margin. Altinn in Denmark continues to see profitability improvements with positive earnings this quarter, as well as growth in net sales resulting from higher occupancy. EMPS remained at a high level at plus 26, demonstrating that our employees are engaged, motivated and feel valued. And now I will hand over the presentation to Benno, who will provide a financial overview of our performance this quarter.

Thank you, Mark. The majority of the net sales growth came from the acquisition of Validia that added 375 million to net sales. And the good growth we have seen in recent quarters continued driven by acquisition and startup units in Nytida and Vardaga, as well as increased occupancy in our care units in Vardaga and Altida. Stendi had a negative growth in SEC. However, in local currency, net sales growth was positive, which reflects a good demand for Stendi's care services still. Turning to the EBITDA development on the next slide. This slide shows how the different business areas have contributed to the adjusted EBITDA of the group. Earnings were negatively impacted by seasonality effects as the Easter holiday fell in the second quarter this year compared to the first quarter last year. This, of course, affected the comparison figures. As usual and expected, the seasonal effect had a particularly negative impact on Stendi and Altida. Adjusted EBITDA totally grew by 15% and our margin was 7.6% driven by the strong results in Vardaga, Validia and of course the positive earnings in Alltiden. Nytidas EBITDA was higher than last year thanks to the acquired businesses. Vardaga EBITDA improved slightly driven by high and stable occupancy and fewer new openings. Stendis EBITDA decreased by 32 million SEK or 3.8 percentage points compared to the same quarter last year, mainly due to the mentioned negative seasonal effects from the Easter holidays. Validia, our new business area, added 39 million to the group EBITDA, which underscores a strong EBITDA and EBITDA margin for our Finnish business. Altena's EBITDA continued to increase significantly, and margin increased by 4.5% of the point, despite the seasonal effects from the Easter holidays. a development that reflects the good occupancy growth together with operational improvements in the social care segment. Klara's EBITDA increased by 3.9 percentage points, enabled by a lower cost base in Klara. On the next slide, I will present Ambea's adjusted earnings per share, a KPI that we have not previously disclosed. The strong development in profitability together with the share buybacks we have conducted have produced a very strong growth in earnings per share every quarter the last years. After a bit slower pace in reported EBITDA growth the last quarters due to the Validia acquisition, we expect the growth pace to pick up again going forward. And if we look at the underlying APS adjusted for IFRS 16 and items related to acquisitions, we see an extremely strong development the last years. And now over to the cash flow. Operating cash flow slightly increased and amounted to 610 million. Cash conversion was a bit lower in the quarter. We had two non-recurring items negatively affecting the cash flow in the second quarter. The first one was the settlement of a legal dispute in Norway accrued already in 2021. And there was also payments related to acquisitions of Aledia. Together, these two non-recurring items amounted to 106 million in cash flow effect. This means that the underlying cash flow remains strong. This slide shows the way from the adjusted EBITDA down to the free cash flow post-tax of 642 million, excluding IFRS 16. This number is a bit lower than previous quarters, but as said, affected by one-offs in the quarter. We had rolling 12 and negative effects on working capital of 95 million SEK, but over time, we think that the net working capital effect to the cash flow will be neutral to slightly positive. next to the utilization of the free cash flow. This is how we used the generated 642 million. 185 was distributed to our shareholders as dividend. 1,358,000,000 was spent on the four acquisitions and 365,000,000 SEK was spent on the share buyback programs. Net debt then increased by 1,221,000,000 SEK compared to the same quarter last year. Of course, driven by the strategic acquisition of Alidia, which was mainly financed by a loan. And now, have a look at the different business areas. We can start with Nytida. Nytida, that showed a good growth in the second quarter, sales increased by 10%, which is driven both by acquired operations as well as startup units. As an offsetting effect, we saw continued lower occupancy in some parts of the individual and family care segment. EBITDA increased by 2% compared to the same quarter last year and landed at 127 million. The increase in earnings were thanks to the good earnings in the acquired businesses, but offset by this negative calendar effect due to the Easter holiday and by continued low demand within parts of the individual and family segment. NITIRA continues to work actively by adjusting its service portfolio and opening units in areas with strong demand. aiming to increase occupancy and to improve margins going forward. That adaptation of operations is aligned with a new Swedish Social Service Act, which came into force on July 1st this year. EBITDA margin in the quarter was 11.0%. At rolling 12, we were at 12.0. We had several quarters now in Etina with lower margin than previous year, but we expect to turn around that trend in the second half of this year. During the quarter, Nytida acquired Avasta, adding four care units with a total of 64 care places and approximately 62 million in annual sales. And then we turn to Vardaga Swedish Elderly Care. In Vardaga, net sales increased by 8% year-on-year, driven by acquisition, higher occupancy in home management, as well as new contract management units. EBITDA amounted to 115 million, which is 10 million higher than last year, thanks to the higher occupancy and less new openings. Vardaga had a more mature portfolio since no new openings have taken place since Q2 last year and therefore managed to compensate for a negative Easter effect versus last year. Mature units showed an improved margin of 9.9%, which is 1.4% higher than the average margin for Vardaga's total portfolio. During the quarter, Vardaga acquired Avasta, adding one nursing home in Gothenburg with 90 beds and approximately 82 million in annual sales. And Vardaga will open two new nursing homes and one large expansion of an existing home during the second half of this year. Next slide, we turn to a business area in Norway, Stendi. Stendi's care services experience somewhat lower occupancy with higher fluctuation this quarter. Net sales decreased by 2% in SEC, but increased by 4% in local currency. EBITDA decreased to 29 million, mainly due to the unfavorable seasonal effects from Easter holiday, which fell into the second quarter this year versus the first quarter last year. Public holidays have a stronger seasonal impact in Norway, as pay for inconvenient working hours is higher than in other Nordic countries. Lower staffing efficiency due to more fluctuating occupancy levels also had a negative, though smaller, impact on the earnings. Debit margin in the quarter decreased, as said, by 3.8 percentage points to 3.5. If you look at the first six months, the debit margin was 5.9, which is down from 7.2 last year, and rolling 12 margin ended now at 9.4%. During the quarter, Stendi adjusted its capacity by opening two new units and expanding one existing unit in high demand areas, while closing seven smaller units to optimize its operations. So let's take a closer look to our new business area in Finland, Validia. Validia is reported as a new business area and have been consolidated from the 1st of April. And as I said, net sales amounted to 375 million SEK. Validia delivered a strong performance with a good margin despite integration efforts and due to normally being a seasonally weak quarter, EBITDA amounted to 39 million SEK and EBITDA margin was 10.4%. The integration of Validia is proceeding according to plan. The work is structured around clearly defined work streams of which several have already been successfully completed. Early successes include integration of Validia into Ambea's operational financial follow-up processes, inclusion in Ambea's science-based target initiative application, and the creation of a new visual identity for Validia that will be implemented during the fall. Furthermore, our expansion and acquisition efforts have been structured in line with Ambea's growth model, and we have allocated additional resources to accelerate growth in Finland. During the quarter, Validia signed agreements to open two new care units with a total capacity of 78 beds. The units are planned to open in 2026 in regions with strong demand, comprising 60 and 18 beds respectively. We are pleased to have signed agreements already in the first quarter of the joint operation. We are also evaluating additional organic growth opportunities to increase capacity as well as M&A opportunities in Finland. The market for M&A within care services in Finland remains active. Now a look at Altiren. Our Danish business Altiren continues to improve earnings even in this quarter despite the negative seasonal effects from the Eastern holidays. Net sales in Altiren increased by 5% in sick and resulted as a result of higher occupancy in both elderly and social care. Increase in own management was 10% in local currency. And Altida once again delivered a strong profitability improvement. EBITDA was up 14 million compared to the same quarter last year, thanks to the good occupancy growth, together with operational improvements in social care segments. EBITDA margin in the quarter increased by 4.5 percentage points to 0.3%. Rolling 12, EBITDA margin increased to 3.4%. The new national elderly care legislation, effective from 1st of July, paves the way for the future opening of more managed nursing homes in Denmark. And now over to our smallest business area, Klara. In Klara, net sales was in line with the same quarter last year, as student health services could offset the continued weaker demand for traditional starving services. Clara adjusted its cost base to reflect the structurally lower demand in the market, which has contributed to the improved earnings, and EBITDA increased by 4 million to 9 million SEK. EBITDA margin increased to 8.7%, up 3.9 percentage points. This demonstrates a good earning development given the situation with the public healthcare region's limitations of the use of temporary nurses. Clara's EBITDA margin is significantly above all staffing competitors' margins, thanks to Clara's diversified portfolio consisting of different services, for example, mobile nursing teams and student health services. And this diversity in Clara services and adaptability to change market conditions is, of course, a core strength. And with that said, back to you, Mark.