Attendo AB (publ)

Thank you and good morning everyone. Sorry if we keep you waiting a few minutes. We have some issues with the financial hearings line. Today we present the attendance Q3 results showing continued improvements both financially and operationally. Before diving into the development and the quarter let me just take a few moments to reflect on what company we are today and where we're going. Slide two please. Today, we serve almost 30,000 people with different care needs daily, with more than 34,000 employees across almost 800 care units. Thanks to a strong focus on both the financial and operational turnaround over the past few years, we have grown net sales to well over 18 billion SEK on a rolling 12-month basis and recovered our profitability significantly compared to where we were just a few years ago. We've also become more diversified, dedicated to serving an increasing amount of people in not only elderly care, but also in disabled care, individual and family and social psychiatry segments, which needs a stronger specialization for those with more complex care needs. And maybe most important, I'm happy to see strong progress in terms of customer satisfaction in our nursing home operations. This was confirmed during the quarter in the national user surveys from both THL in Finland and Socialstyrelsen in Sweden, where Tando scores higher than both industry average and public sector. At the same time, recent studies show that we are providing care at a clearly lower cost to society than public sector, hence creating value to both customers, society and shareholders. Next slide, please. Strategically, we believe that this makes us well positioned for further long-term value creation. Demographic trends will support long-term growth in elderly care segments for the foreseeable future, and in the disabled care and individual family care segments, we see a trend that public payers need increasing support with taking care of more complex care needs. Hence, our recent acquisition of Team Olivia not only adds valuable competence and footprint in these segments, It also provides the necessary volume to enable increased investments in competence, quality and methodology development. Investments that are needed to capture the future growth opportunities within more complex care needs in these segments. With a new financial and long-term plan for 2024 to 26, a clear path for value creation, I'm happy to present our Q3 results. I'll start by giving you an overview of the development during the quarter, followed by a more detailed financial analysis from our CFO Mikael Malmgren. Next slide, please. So let's look at the Q3 highlights. In the quarter, we showed a rolling 12-month growth in sales of 9%, mainly driven by the integration of Team Olivia in our Scandinavian business area. Underlying adjusted EBITDA improved by 21%, or 74 million to 420 million, an effect of the Team Olivia acquisition in combination with underlying operational improvements. In Finland, we had a positive impact from lower cost of care staff during the summer months and higher price effects in disabled care and social psychiatry. These improvements were partly offset by the timing of price and wage increases in the fall of 2023. Scandinavia continues to show a steady progress in earnings growth, mainly attributed to the integration of Team Olivia and continued improvements in our own nursing home operations. As in previous quarters in 2024, the result was hampered by one-off costs related mainly to integration, excess costs in Denmark and ended outsourcing contracts. Cash flow was slightly lower than the comparison quarter, mainly due to higher vacation salary payout. Still, we see a positive trend in working capital and we maintain a strong balance sheet after the acquisition of Timo Lidia, with net debt to EBITDA improving slightly to 2.1. Consequently, We still have ample headroom to continue with active capital allocation with share buybacks, investment in own operation, as well as selective Bolton acquisitions. All in all, this quarter shows that we're heading firmly towards our operation and financial targets. After Q3, I'm happy to announce that the effects of our long-term work to improve customer satisfaction is now also visible in external surveys. In the national survey from Socialstyrelsen in Sweden, our customer satisfaction score for nursing homes this year was 81%. Three points above publicly run nursing homes in the geographies where we operate. Six of our units were awarded 100%, one more unit than last year. The national THL survey for nursing homes in Finland shows a similar trend. This survey uses net promoter scores to find out to which degree customers would recommend the services provided. The MPS for 2024 came in at 49 points above last survey and a significant rise above the national average that remained unchanged. Moreover, recent study shows that private providers run nursing homes more cost effectively. According to a new study from industry organization Hali, private care costs 23 percent less than public care in Finland. A study from Vårdföretagarna in Sweden shows that privately financed new nursing homes in Sweden cost 8% less than the average cost for the public sector of nursing homes. This proves that there is a strong case for increased cooperation between the public sector and private providers to meet future demand for care. Next slide, please. Let's turn to the development of occupancy, a key factor for long-term profitability. Group occupancy at the end of the third quarter was 86% stable compared to last year. Scandinavia shows a slightly lower occupancy, which is mainly a temporary effect related to the openings of three new homes with 112 beds in the quarter. In Finland, underlying development is slightly stronger since we have added around 170 beds net since Q3 last year. As visible in the graph, occupancy in Finland has been flat the past years, while staffing density requirements has been steadily increasing. With the recent political shift and the return to lower staffing density requirements from 2025, we believe that the supply-demand balance on the labor market for qualified care staff will improve. We also believe that this will lead to better opportunities to increase occupancy going forward. Next slide, please. This graph shows rolling 12-month sales growth and least adjusted EBITDA margin. The most significant factor for sales development over the past 12 months has been the acquisition of Team Olivia in Sweden and improved terms in our Finnish operations. Group margin improvement in the past 18 months was mainly driven by the performance in the Finnish elderly care segment and now we start to see clear improvements in Scandinavia as well. Let's take a closer look at the financials for the quarter. Please go ahead Mikael. Thank you Martin and good morning everyone.

Let's turn to page 8 please. Net sales in the quarter increased to 4.8 billion, up 9% compared to quarter last year. The organic growth for the quarter was 2%. Organic growth was slightly negative in Attendo, Scandinavia, where we saw continued organic growth in our own nursing homes. However, growth was as previous impacted by outsourcing contracts that ended end of last year. Including acquisitions, Scandinavia grew 18%. In Attendo, Finland, the organic growth was 6% and primarily driven by improved terms. Currency had a negative effect in the quarter. Slide nine, please. Excluding one-offs of 18 million, the reported result improved to 554 million, and correspondingly, the lease adjusted EBITDA increased from 346 to 420 million. As is visible in the graph, occupancy in Finland has been lease adjusted EBITDA in Scandinavia, excluding one-offs improved by 48 million year over year. while Finland lease adjusted EBITDA improved 32 million euro every year. Currency had a 4 million negative effect on lease adjusted EBITDA. Next slide, please. Growth to attended Finland amounts to 3% reported and 6% in local currency. Lease adjusted EBITDA including currency effect improved by 28 million versus last year to 277 million. The quarter was impacted by higher personnel costs due to the annual salary increase effective as of August versus September last year. However, the negative impact was more than offset by continued improved terms in social psychiatry and disabled care year over year, as well as better operational efficiency during the important vacation period. Occupancy rate was also slightly positive. As mentioned earlier, the Finnish government announced in April that staffing requirements will be reduced from 0.65 to 0.6 for care staff per resident from January 2025. The negotiations with welfare regions are ongoing or about to start, and it's still early days as the law has only been presented, but not yet passed in the parliament. However, we are well prepared for the expected change, and we believe that the reform will ease the balance on the finished labor market going forward. Slide 11, please. Organic growth in Scandinavia was slightly negative. We saw continued underlying growth in own nursing homes and welcomed more net new customers to home care. However, growth was upset by lower revenue due to the outsourcing contracts that ended at the end of last year. Acquisitions had a considerable effect on sales, and in total, Scandinavia grew 18%. Lease adjusted a bit, excluding one of costs relating to the Danish exit, and integration costs increased 48 million to 164 million. The improvement was primarily driven by Team Olivia acquisition and improved results from our own nursing homes. Improved result was partially offset by ended outsourcing contracts, which had a $20 million impact versus Q3 last year. Ended outsourcing contracts will continue to impact the result while gradually less in Q4 as the majority of contracts ended in December last year. Please note that we expect Q4 to be impacted by a minor non-recurring Team Olivia integration cost of up to $5 million. Finally, I would like to highlight that we recently, and as part of the integration team Olivia, introduced two new brands to bring together our businesses in disabled care and IOF in Sweden, Unica and Vilja. With two distinct brands, we believe we will have a better opportunity to build a leading player in these two important segments. When we look at the cash flow, the rolling 12 months, as previously communicated, has been affected by two one-off items in Q1 and Q2. But still, our free cash flow remains healthy at 714 million. In the quarter, working capital, due to better vacation planning, and which now also includes Team Olivia, was impacted by higher vacation payoffs. CapEx was also slightly higher, and we will, as previously communicated, continue to normalize this at more historical levels compared to last year's low. During the quarter, we repurchased 86 million worth of share, and in October, we have repurchased almost 30 million more worth of shares. And today we can announce that we will continue our repurchases in Q4 under a new program. The new program aims to repurchase up to 150 million up until next report and will be executed under safe harbor regulation. Next slide, please. Over the course of the last 12 months, we have utilized our free cash flow to do a dividend according to policy. And in February, we also initiated continued share buybacks. These two elements make up more than 50% of our free cash flow utilization to date. In addition, we've made a transformative acquisition with Team Olivia and which was financed by own cash and additional debt. Next slide, please. Let's look at the top left chart. The adjusted earnings per share improved by 0.41 sec per share or 0.46 sec per share when excluding integration costs, which is equal to more than 30% uplift versus last year. Improvement primarily due to higher lease adjusted EBITDA and continued share buybacks, and what is expected slightly offset by increased income tax. Now let's turn to the top right figure. Adjusted for non-recurring items, we continue to improve the lease adjusted EBITDA margin. In Q3, the 12-month margin amounted to 4.9%, which is up from 4.6% last quarter and up from 4.3% end of last year. The figure at the bottom left shows the least adjusted net debt to EBITDA ratio, which decreased, a trend we continue and expect to gradually continue. As indicated in the figure to the bottom right, the net interest expense in the quarter was 42 million. The increase in Q2 and Q3 is explained by higher financing costs due to the recent acquisitions. Going forward, we expect our interest rates to gradually come down as our loans gradually roll over to the new and now lower stable Euribor market interest rates. Next slide, please. I would like to briefly recap on our adjusted EPS development. In 2022, our adjusted EPS was 0.68 sec per share. In 2023, we made a significant turnaround based on the plan we set out in 2021, and we achieved an EPS of 3.02 sec per share. Since then, our reported adjusted EPS has continued to improve and now amounts to 3.65 SEC on a rolling 12-month basis when we include integration costs. And when we exclude the integration costs of Team Olivia of 20 million year to date, our EPS is actually at 3.76 SEC per share. And if we also adjust the EPS with our continued share buybacks to date, I divide with the outstanding shares at the end of the Q3 in the run rate, we are actually now at 3.84 SEC per share. With that, I hand over to you, Martin.

Thank you, Mikael. Before we move on to the questions and answers, let me just briefly summarize the quarterly development. We continue to see an overall stable growth in both sales and profits quarter on quarter. Improvement was driven by the acquisition of Team Olivia in combination with underlying positive development in Scandinavia. In Finland, we managed to increase profits year over year, despite continued headwind from strained public finances. We have many opportunities in the years ahead, and we're both well equipped and committed to solving society's complex care needs while empowering even more individuals. So now let's turn to the Q&A session. Operator, please go ahead.