Ambea AB (publ)

Welcome to Umbia third quarter 2025 presentation. 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 need to press star 11 on your telephone. You'll then hear an automatic message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to turn the call over to the first speaker today, Mr. Mark Jensen, CEO and President. Thank you. Please go ahead.

Thank you so much. Good morning and welcome to Ambea's presentation for the third quarter of 2025. I'm Mark Jensen, CEO of Ambea, and with me today is our CFO, Benno Eliasson. Together, we will take you through our performance this quarter, highlight key operational and financial developments, and discuss how we can continue to strengthen our position as the leading care provider in the Nordics. After that, I will summarize the quarter and compare Ambea's performance to our financial targets before we open for questions. Ambea is today the leading competency-based care provider in the Nordics. We operate across six brands, Nytida, Vårdaga, Stendi, Validia, Altiden and Klar, delivering high-quality care services for the elderly and for people with disabilities and psychosocial needs. In total, Ambea's 38,000 employees provide care services to more than 16,000 care receivers in over 1,000 physical facilities. The third quarter has been another strong one for Ambea, with solid growth, strong earnings, and continued momentum in both acquisitions and organic development. Our rolling 12-month net sales is close to 15.5 billion SEC and adjusted EBITDA just above 1.5 billion SEC, corresponding to an adjusted EBITDA margin of 9.9% on group level, which is somewhat above our financial target. Please note, in the rolling 12 numbers, the financial data for Validia pertains to two quarters only. The strong performance reflects our scalable Nordic platform and diversified care service offering, which allows us to grow both organically and through targeted acquisition. Let's go straight to some of the important achievements within quality and sustainability. As we continue to grow, it remains just as important that we deliver safe, high-quality care every single day. We follow a systemic approach to quality and sustainability with monthly follow-ups across all our care units. This quarter, I want to start by highlighting 25 of our Ukrainian colleagues who recently graduated as assistant nurses in Sweden, a milestone in our long-term partnership with Beretskapslyftet. We have now launched a new class of 30 participants from Ukraine, continuing to help people establish themselves in Sweden while strengthening our care teams. Vårdag has once again received strong feedback in the annual care receiver survey from Sweden's National Board of Health and Welfare. A large majority of residents expressed satisfaction with their care, confirming our focus on quality, engagement, and meaningful everyday life across our elderly care homes. Overall satisfaction landed at 79.6%, which is above the national average of private and public care providers. In transparency, and as the only operator, we published the unit-level results that can be found on Vodoga's website. And finally, our climate targets have now been validated by the Science-Based Targets Initiative, aligning Ambea's path with the 1.5-degree goal from the Paris Agreement. We have worked for many years on our climate transition and now have scientific confirmation of our new targets. The targets cover the entire group and all the markets where Ambea operates, Sweden, Norway, Denmark and Finland. The approval comes timely as our current greenhouse gas reduction target expires at the end of this year. You can read more about our quality and sustainability work in the quarterly report. And now I'd like to highlight Ampea's future growth opportunities. Looking ahead, we continue to expand our own management pipeline to meet society's increasing care needs. It is the largest pipeline increase ever in a single quarter, strengthening the growth plan going forward. In the quarter, Vårdokker signed four new contracts for nursing homes in the Stockholm area, adding a total of 320 new care places. New Theda added three new assisted living facilities and one unit expansion, providing 34 new care places, while Stendi signed two contracts, adding 11 new care places. Over the next 12 months, our plan includes opening up four new nursing homes and one expansion within Vardaga, six care units and three expansions within New Theda, and seven care units in Stendi, representing more than 420 new care places in total. This is by far the strongest organic growth path in the Nordic care sector. We will now have a look at acquired growth, which is an important part of Ambea's growth agenda. Alongside organic growth, we continue to strengthen Ambea through acquisitions. During and after the quarter, we maintained a strong M&A momentum, particularly in Finland. After the quarter ended, Valida expanded further through an acquisition within child and welfare and family care services. The transaction was completed on October 31st, 2025. So far, 2025 has been an active year with strong M&A momentum. Our total acquired annual net sales now amount to over 1.6 billion SEK in 2025. We continue to focus on high-quality bolt-on acquisitions that complement our existing operations, ensuring that growth is both strategic and sustainable. Let's have a closer look at our recent finished acquisition on the next slide. From the outset, our ambition has been to make Validia a platform for growth, both within its existing segments and by expanding into new ones. We follow the plan with the acquisition of Atendo's child and family care operations in Finland, which adds a new and important service segment to Validia. Child and family care services are already part of Ambea's core offering, well-established through Stendi in Norway, Nutin in Sweden, and Altin in Denmark. So this is a field we know well, and to enter the segment in Finland is a natural step for us and close to our vision of making the world a better place, one person at a time. The acquisition strengthens our position in the Finnish market by entering the child welfare segment estimated at a size around 13 billion SEK. It also further diversifies our operation and customer base, fully in line with Ambea's strategy to balance growth and risk across geographies. 2024 revenue for the acquired business was approximately 90 million SEK, and we expect the acquisition to have a positive impact on earnings from 2026. We continue to look for opportunities to grow in Finland, both organically and through further acquisitions, and expect to announce new organic expansion and acquisitions in the coming quarters. Let's look at total revenue growth. This quarter acquired growth was still significantly higher at 13.2% due to the acquisition of Validia. The organic growth illustrated in the purple bars continues to show good pace. The organic growth in this quarter was 3.5%. We saw negative currency effects of minus 1%, which affected overall growth. And the overall growth landed at 15.7%. So summing up the highlights of the third quarter. In conclusion, the third quarter of 2025 has been another successful quarter for Ambea, marked by a consistent high quality in care services, continued growth, improved occupancy and strengthened earnings performance. Net sales increased by 16%, driven by a 13% acquired growth and 4% organic growth. The future pipeline for Vodok and Nytida shows a significant growth. Groovy beta increased by 19%, reaching a margin of 13.9%. Validia and Finland performed very well with high occupancy and a strong EBITDA margin. Altiden Denmark continues to deliver growth in net sales, resulting from high occupancy and significantly higher earnings. Now I will hand over the presentation to Benno, who will provide a financial overview of our performance this quarter.

Thank you, Mark. Net sales were driven primarily by the acquisition of Validia, but we also saw solid contributions from Nytida, Vardaga and Altiden. Validia added 388 million SEK to net sales. The good growth we have seen in recent quarters continued driven by acquisitions and startup units in Nytida and Vardaga, as well as increased occupancy in our care units in Vardaga and Alltiden. Stendi had a negative growth in SEK. However, in local currency, net sales growth was slightly positive. Then turning to the EBITDA. This slide shows how the different business areas have contributed to the adjusted EBITDA of the group. Adjusted EBITDA increases across most business areas and Altiden showed particularly strong margin improvement with its adjusted EBITDA margin up 3.6 percentage points. Valeria had another very strong quarter and we also saw strong EBITDA and margin improvement in Nytida and in Vardaga. Stendi delivered its second best quarter ever, but still 21 million lower than last year's exceptionally strong result. We are especially pleased with the fact that Nytida increased both EBITDA and EBITDA margin after a time of weak margin development, and that the strong pace of profitability improvements in Altium continued this quarter as well. Adjusted EBITDA in total increased by 19%, and the margin increased by 0.5 percentage points to 13.9%. Operating cash flow continued to increase during the quarter supported by the strong profitability and good working capital management. Our operating cash flow increased by 30% and amounted to 686 million in the quarter and cash conversion is now again over 91% rolling 12. Again, this quarter had a negative effect from the settlement of a legal dispute in Norway accrued since 2021. That means that the underlying cash flow is even stronger than reported. This slide shows the way from the EBITDA excluding IFRS 16 down to the free cash flow post-tax of 696 million SEK. On a rolling 12-month basis, free cash flow excluding IFRS 16 remains very high. The free cash flow is negatively affected by some one-offs in 2025. The settlement of the mentioned Norwegian dispute is already accrued in 2021, affected by 72 million, and one of connected to the Velydia acquisition with around 56 million. So the solid cash conversion gives us both flexibility and strength to continue investing in quality and growth. Now to the utilization. So here we can see how we have used the generated 696 million SEK in free cash flow. 185 was distributed to our shareholders as dividend. 1,338,000,000 SEK was spent on the three acquisitions and 219,000,000 was spent on the share buyback programs. Net debt had increased by 1,033,000,000 SEK compared to the same quarter last year, driven by the strategic acquisition of Alibia, which was mainly financed by a bridge loan. And now to the different business area. We start as usual with Nytida. Net sales increased by 9%, driven by acquisitions and startup units. EBITDA rose by 15% to 194 million SEK, compared to 168 million last year, thanks to the continued good performance in previous completed acquisitions, together with improved occupancy for startup units. Adjustments made to meet the new Swedish Social Service Act have started to yield results, improving both profitability and efficiency. We have continued adapting our service offering in favor of those services with expected high demand going forward, as well as adjusting capacity to meet the changing demand. During the quarter, a new facility with six care places was opened, and that will, of course, support continued growth. Nyttida is now well positioned for further margin improvement as occupancy stabilizes on expected somewhat higher levels than this. And then turning to Vardaga and Swedish Elderly Care. Vardaga continues to deliver good profitability and growth through operational excellence and efficient startup of new units. Net sales increased by 7%, driven by higher occupancy in both new and existing facilities, and by the Avasta acquisition. Sales in own management grew by 8%, reaching 952 million SEK due to the higher occupancy, and net sales in contract management also increased. EBITDA increased by 10% to 177 million SEK compared to 161 last year, driven by increased occupancy. During the quarter, we opened one new nursing home in Norrköping with 72 care places, further expanding our capacity in that region. On the next slide, we turn to Norway and look at Stendi. In Stendi, net sales decreased by 3%, but in local currency, sales were slightly higher than previous year. EBITDA amounted to 100 million SEK compared to 121 million SEK last year, and the margin declined to 12.2% from 14.4%. The decline in earnings were primarily driven by lower and more fluctuating occupancy than in the strong comparative year, which could not fully be offset by optimizing staffing costs in the short term. And on top of that, the FX effect was a minus 4 million SEC. Despite this, Stanley delivered its second best quarter ever in terms of earnings, although still below last year's exceptionally strong results. Two new facilities were opened during the quarter, adding five new care places. Stendi also adjusted local capacity to reflect the changing demand. So if we take a look at Validia, our newest business area. Validia is reported as a new business area from last quarter and has been consolidated in Abea's account from April 1st. And Validia delivered another very strong quarter. Net sales amounted to 288 million SEK and EBITDA reached 59 million, corresponding to a margin of 15.2%. Integration activities is progressing ahead of plan and the business continues to perform above expectations. After the quarter ended, Validia expanded further through acquisition of child welfare and family care services, a segment where we have extensive experience from other Nordic countries. Net sales for 2024 was 90 million SEK and acquisition expected to have a positive impact on earnings from 2026. The outlook for Validia remains positive with stable earnings and strong market potential. And we will continue to create growth in Finland through new establishments, both on acquisitions and further development of the existing operations. And then take a look at Altiden. Altiden continued its positive development this quarter. Net sales increased by 7% in SEC and by 10% in local currency, driven by higher occupancy in both elderly and social care. EBITDA increased significantly to 39 million SEC from 25 million last year and ultimately reached a record high EBITDA margin of 11.4% up from 7.8% last year. The strong earnings improvement was due to higher occupancy together with operational improvements. And thanks to the strong occupancy and improved earnings, we are now ready to take on next step and accelerate growth in Denmark. The new national elderly care legislation effective from July 1st this year enables expansion of all managed nursing homes. And we are evaluating several opportunities to sign contracts for new nursing homes. Finally, Clara. Net sales decreased by 9% to 86 million SEK, mainly due to lower demand in several of Clara's services. EBITDA amounted to 9 million SEK compared to 10 million last year, with a margin of 10.5%. The historically strong supply of nurses has led to some customers to employ their own staff instead of purchasing external services from companies like Clara. And Clara has adjusted its cost base to reflect the lower demand, helping to maintain stable profitability. But the business remains well positioned to benefit when market demands normalize again. And with that, back to you, Mark.

Thank you so much, Benno. So to conclude, Ambea continues to deliver on all our financial targets. The rolling 12-month growth rate is now at 11%, which is above our growth target. With a strong Q3 behind us, the adjusted EBITDA margin reaches 9.9%, somewhat above our profitability target of 9.5% adjusted EBITDA margin. Our leverage is down to a ratio of 2.4 times net debt to EBITDA, well below our target of 3.25 times. This brings Ambea into a position of strength from where we can continue to invest in our operations and our people and where we can support society with more new care places when care needs are increasing. This way we can continue to contribute to society and to deliver long-term growth and shareholder value. And we remain committed to consistently deliver on all three financial targets. We were flipping through a little fast before, so we missed the slide on the EPS growth, but I can say that there is in the pack a slide on EPS growth showing the strong development and profitability together with the share buybacks conducted have produced a strong growth in earnings per share every quarter the last years. So after two quarters with a low pace and reported EPS growth due to the Validia acquisition, we are now back to a higher pace again with 22% growth in the quarter. And if we look at the underlying EPS adjusted for IFR 16, leasing and items related to acquisitions, we see an extremely strong and steady development over the last years. So you can look at that in the pack later. So concluding and looking a bit at the outlook post the quarter three 2025, we see a positive growth outlook, both through continued acquisitions and expanding our organic pipeline, where we will have special attention to new nursing homes in Sweden and in Denmark. The organic pipeline continues to grow with quality projects in areas with good demand, and our aim is to continue to support society, overcome the welfare challenge, and to be a trusted partner to our customers. Validia's entry into child and family care further strengthens our Finnish presence and diversifies our operations. In a year of transition and integration, our Finnish team is doing an excellent job with high focus on care receivers and customers, and we are very impressed and proud of that. We have also launched another share buyback program, ensuring that our capital allocation remains balanced and value creating. The buyback program comprises 2 million shares before the next ordinary AGM. And with the aim to conclude the year in good shape, we have started looking into an exciting 2026 just around the corner. We know that the care quality we deliver is our license to operate. So we remain committed and focused to give our dedicated employees the best conditions for delivering just that, creating better and more independent lives for our care receivers. I would like to express my gratitude for the excellent work our employees in all parts of Bombay do every day. And this concludes our presentation, and we will now open for questions.

Thank you. As a reminder, to ask questions, please press star 11 and wait for a name to be announced. Please stand by while we compile the Q&A roster. Our first question comes from Jacob Lemke from SEB. Please go ahead.

Yes, hi, and good morning. My first question is on Validia. When you announced the acquisition, I think you said that the EBITDA margin was around 11.5% on a full year basis. Now, here in Q3, the margin looks quite strong, even if you sort of account for decisionality. So would you say that you're now sort of tracking at a more higher level, perhaps more like around 12% or above that even?

Thank you, Jacob. We are only two quarters into Validia and we have not really the full seasonality effect yet. We know that the Q4 is normally a weaker quarter in Finland due to banking holidays. So we're not setting another expectation than we did previously. And 11.5 was what we expected from last year. And so we still are a little bit cautious that this is not the run rate level going forward.

Okay, that's fair enough.

And sort of more in general on the Lydia, how should we think about the growth and potential to increase profitability for next year?

So if we look at the growth opportunity for Validia, it comes from two sources. One is organic growth with new care units. As we have high occupancy today, it's predominantly in that field we will see organic growth. We have two new signed contracts for openings in quarter four next year. So that's one source of growth. And then another source of growth is, of course, bull run acquisitions, where we closed one acquisition after the quarter ended, adding 90 million SEC to the top line. and positive earnings in 2026 and entering a new segment within childcare. And we are actively looking at more acquisitions in Finland. And as we said, we expect to both sign more contracts for new care units, but also close more acquisitions in the coming quarters.

Okay, but then it sounds like the organic growth will be perhaps more for 2027, where you can have a party.

Yeah, back end of 2026 and into 2027. And in the short term, I mean, the growth will come from maintained high occupancy and then some price adjustments and acquisitions.

Okay. And then I have a question on STEM-D, where you mentioned in the report that you cannot fully offset the fluctuations in demand with capacity adjustments. My question is then, should we really think that the margin was hurt a bit more than what could have been in this quarter and that we should expect a lesser impact in the coming quarters?

We had a very strong quarter four last year, as you probably recall from a one-off item that we also announced in the quarter last year. So that effect we will of course not see this year in quarter four. And when it comes to the fluctuations in demand and the way that we work on both the capacity and also staff efficiency in Norway, we will continue to optimize, of course, our portfolio of care services to the demand in society and also to work on operational efficiency going forward. But as there is quite high demands on staffing requirements in Norway from education level and so on, we need to be a little cautious in how fast we change things and we need to follow the customers very closely in terms of what demand that they have. So when demand is fluctuating, as it has been doing now for a couple of quarters and as it probably will continue to do for the next quarters, we will follow pace, of course, but with some delay. We have said previously that we believe that good market level profitability in Norway would be around 8-9% EBITDA margin. And we still think that that's the area we should be able to meet.

Okay, and just a short follow-up question.

Is your base case for demand in childhood and youth in Norway that it will continue to decline here over the coming 12 months or do you think it will be more stable?

It's very difficult to say because there is fluctuations in these things. We have been through a period of time in 2024 where we've had the unusual high demand which we have also communicated. Now that's come down a bit but it has also fluctuated more than usual, which makes it a little more difficult to compensate in the short term. So the outlook now is that there are still some fluctuations in the near term. So I would say in the fourth quarter, we will also see that. How we look coming into next year is difficult to say, but we will, of course, follow it closely as we have done. And we don't think there are any big changes in demand in Norway, but some adjustments over time. And that's natural. And that's something which

belongs to our business and what we should be able to adapt to also. But as I said, with some lag.

Okay, that's very clear and that's all from me today. Thank you.

Thank you.

Thank you for the questions. One moment for the next question. Our next question comes from Raymond Kerr from Nordea. Please go ahead.

Hi, good morning. A couple of questions from me also. Starting maybe on your M&A pace ahead. And if we should read the board's decision to buy back shares yesterday as an indicator of maybe lower M&A appetite in the near term?

I can start with that. No, we should not read the... the share buyback program that we are not planning on doing any M&As. The share buyback program on 2 million shares will affect the leverage of 0.2 times and we are still on our way with good cash flow. So we think that we can still make all the acquisitions that we plan to do, so to speak.

Okay, that's very clear. And if we stay with M&A, could you maybe provide some color into your M&A pipeline outside of Finland and how you see opportunities there?

So the strongest pipeline, as usual, we have for the new TIDA segment in Sweden, where there are quite a few smaller and mid-sized opportunities in the pipeline for good qualitative bolt-on acquisitions. So that's where we have the strongest pipeline. We are looking in all markets and for all segments, basically, for good qualitative bolt-on opportunities. And that's a path we will continue to follow. But for now, the most attractive pipeline is within the Nutida and Validia segments.

Got it. And then on Finland, with your latest acquisition there, you had the child welfare and family care. How should we think about its sort of margin hampering effects on Validia in the near term? How long they might carry on? And where do you sort of expect it to end up once it normalizes? How does it compare to Validia, say?

Yeah, we are entering a new sub-segment of child care. in Finland, and we are, of course, some startup cost for these sub-segments and some integration costs as well. So in the coming couple of quarters, we shall not expect any positive margin or EBITDA from the acquisitions, but over time, this will for sure add the EBITDA to the Validia organization as well. And we think that this could long-term provide the same margins as the rest of the Validia business.

Okay. That's very clear. Thank you. I'll get back in line.

Thank you for the questions. One moment for the next question. Our next question comes from the line of Christopher Liebet from Carnegie Investment Bank. Please go ahead.

Yeah, thank you. Good morning. see both the swedish business continues to gradually improve audience here so how much further you think you could take that higher i believe you have said before that it's difficult to increase it further but yeah at least it continues to surprise me somewhat thanks

It's a little bit different situation between vardaga and nytida. Vardaga is now from this quarter, next quarter, entering a higher pace of new openings. We have a couple of openings in Q4 and a couple of openings in Q1 next year. So that will, of course, temporarily hurt the margins a bit. So we cannot foresee that the margin will still increase in vardaga short term. In Nytida, we communicated last quarter that we see a more stabilized margin situation in the second half of the year than we have seen for a couple of quarters. And we think that we will see a little bit higher margins than the rolling 12 we have now going forward, as we are adapting to the new Social Service Act in Sweden.

And we see a little bit better occupancy going forward because of that. Thank you.

Thank you for the questions.

As a reminder, to ask questions, please press star 11. Our next question comes from Julia Angelis Tran from Handelsbanken. Please go ahead.

Hi. Good morning, and thank you for taking my question. I have a question on Validia. I know it was a small acquisition, I'm wondering if you're able to realize synergies in this acquisition. It seems like attended divested it because it was somewhat diluted to the group and they have a lower group margin than you have. So could you maybe expand on the strategic rationale behind the deal?

Yeah, absolutely. I mean, we said from the outset that Validia was a platform for growth in Finland. And one lever is, of course, entering segments where Validia was not present when we acquired, but where Ambea has a good experience from other markets and where there's a sizable opportunity in the Finnish market and society has an increasing care need. And childcare is one such area. So that's the strategic rationale behind entering that new segment. It opens a completely new growth opportunity to Validia with more coefficients and more organic growth in that segment, and that's of course important to us. So to the questions on synergies, I mean, as it is a new sub-segment, there'll be no direct synergies with the existing business as we're building up a new leg, you could say, to the Validia business. But the business that we have acquired, the part of the business we have acquired will add to Validia's profitability in 2026. And over time, we expect it to deliver in line with the average profitability of Validia. So that's very clear from our side that that's the expectation to that new subsegment.

Okay, I understand. And then on Altud, and I saw in the report, you mentioned that you wanted to take the next step and accelerate growth. Does that mean growing within existing capacity mainly or is this other than that?

It's mainly new capacity as we have high occupancy in the existing capacity and where we see the biggest source of growth in Altiden is through signing contracts on new nursing homes in line with the new Danish elderly care act from July this year. And we are evaluating several opportunities to sign such new contracts in the coming quarters. Those contracts will be for facilities opening in the back end of 2027 or most likely in the first half of 2028. So it's a bit out in the future, of course, before that will add to the top line. But it's, of course, important that we start to build a stronger pipeline of new capacity in Denmark. Also, in the social care area, there will be opportunities to sign new contracts for new care units. They will be smaller, of course, than nursing homes, but that will also be something that we are interested in and actively looking at. And then, as Altin is now in a much better shape and much better place, and we have a very strong team in place delivering very well in terms of quality and profitability. We could also take on bolt-on acquisitions in Denmark. Would there be such qualitative ones in the market for us to look at? So we're actively looking at all these areas to expand our business in Denmark and to boost growth going forward.

Okay, I understand. And just the last one for me. Maybe you already mentioned this, but Did you say you were done with the efficiency measures in Nytida or will you continue to make changes to your offering in order to improve the margin?

There will be some small adjustments going forward. We continue to optimize all the time. You should recall that Nytida consists of almost 500 physical care facilities in a wide variety of social care segments. And there's always something being in higher demand and something being a little lower demand. So being very close to the customers, our municipalities, and understanding their needs for support and how we can fulfill that is the core competence of the new TIDA team. And I think they're doing that very well. There will be some small adjustments going forward. And as Benno said, we expect the margin to stabilize on a somewhat higher level than the current rolling 12 level. And that is also coming from a slightly higher occupancy. So that's our view on Nutida in the short term.

Okay. That was all from me. Thank you.

Thank you. Thank you for the questions. We have no more questions on the line. I'd like to hand the call back to management for closing.

So thank you all for joining us today and for your continued interest in Ambea. As the Nordic leader in competency-based care, we remain committed to create value both for society and for shareholders through quality, sustainability, and growth. And the report for the fourth quarter will be published on February 12, 2026. So have a nice day all. Stay safe and healthy. Thank you.

Thank you. That does conclude today's presentation. Thank you for your participation. You may now disconnect your lines.