Humana AB (publ)

Good morning. Welcome to Humana's Q2 2024 presentation. My name is Evelina Pettersson. I'm the head of IR at Humana. With me today I have Johanna Rastad, our CEO, and Fredrik Larsson, our CFO. Over to you, Johanna.

Thank you, Evelina, and good morning to all listeners. We continue with a high pace of change also in the second quarter. and at the same time improving our existing business performance substantially. The adjusted operating profit increased by 40%, reaching 107 million up from 77 million last year. This is primarily due to the improvements seen in elderly care, where the reinforced change program we initiated about a year ago has continued to give positive effects, but also due to the activities in personal assistance targeting increased efficiency. In elderly care, the improvements in occupancy, as well as reduced staff turnover, and sick leave in the segment is both satisfying and also promising for the future. In Finland, we execute on a specialization strategy and sign an agreement to divest 21 elderly care units to an enterprise value of 25 million euros. The transaction is subject to approval by the Finnish competition authorities and is expected to be completed during the second half of the year. And in the quarter, we also close the transaction of Timo Lidia Norway and integrate the business and accounts from June onwards The integration is going according to plan. Team Olivia Norway contributes with sales of 88 million and an EBIT of 4 million in the second quarter. And we use existing cash and new share issue to finance the acquisition. And after almost six years in Denmark, we decided to exit the country through the sale of our small subsidiary. Denmark is not a focus area for Humana going forward, hence this strategic decision. I want to direct my warm thanks to Luna Hansen and her great team for all these years. Being on my seventh year in Omana, this will be my final quarterly report. And I have over the last weeks handed over to Nathalie Bolas-Nilsson, who takes over the role as president and CEO from this coming Monday. So it's pleasing to see that the performance curve heads upwards with net revenues improving with 5%. Organic growth reaches 1.3%, just above 5% excluding personal assistance, which still suffers from the wrongly revoked permit by the authorities in January last year. and the subsequent legal process. Adjusted operating profits, as I said, reach 107 million in the quarter, corresponding to a margin of 4.2%. That is 5.4% excluding personal assistance. Now over to Sweden, so the country out first, where we see continued clear performance improvements in elderly care following the reinforced change program initiated last summer, where occupancy reaches about 92%, which is up another percentage points from Q1 with organic growth of 6%, about 50-50 due to price volume. Both owned managed units and contracts improved profitability in the quarter. And after a few quarters with clear improvements in occupancy levels, reduced staff costs and staff turnover, as well as lower sick leave, we now conclude a more formal program. And that said, we're far from satisfied and we'll continue working on improving our operations. offering to clients and also payers as well as improve our efficiency in this coming phase. We've learned a lot in the process and it's comforting to know that the individual family and the Lilycare team are fully working together and they can continue striving towards further improvements to secure continued progress in the course to come. And although operating profitability improving personal assistance nets customers out from continuous in the quarter, we are working intensely on the so-called net journey which is to create a positive net client inflow through a number of activities. And simultaneously, the adaptation of overhead costs continues, and we do see effect from that in the quarter. However, as the net client outflow persists, the actual P&L effect is smaller than we would like it to be. A substantial improvement from Q1 is seen in individual and family, with occupancy levels, which occupancy levels increase about a percentage points as a total. And notably, the child and youth segments with family care leading the way, making the largest improvement from the first quarter, and is now on an operating profitability perspective in line with last year. And that said, we still have lower occupancy than in the second quarter of 23, but significantly higher than in Q1, and continue to increase also into July. Operating profits in INF moved sequentially closer to last year for INF as a whole. And now turning over to Finland, where we, as announced in the quarter, are taking another step in our specialization journey by signing an agreement to divest the leading care units. Growth continues, however, at a lower speed, with organic growth reaching 4% in the quarter. And in June, we pay a one-time salary payment according to our collective agreement, which totals 11 million SEK. Despite this one-off payment, adjusted profitability increases and reaches 28 million, or 5.6%. In Norway our like-for-like business continues to grow with 12% while actual operating profits remain stable. The main event in the quarter is of course the acquisition of Team Bolivia Norway which in June adds 88 million in turnover and 4 million operating profits. Full quarter consolidation will take place in the third quarter. Focus from the team has of course been to prepare for and take the first steps in the integration process and so far This has proceeded according to plan. It's very pleasing to have welcomed so many confident employees from Team Bolivia over the last month. And now over to you, Fredrik, for a summary of the financials.

Thank you, Johanna. Revenues are up 5% compared to last year. Personal assistance has lost 54 million in revenues that have been compensated by the good organic growth in all other businesses. In addition, the acquisition of Team Olivia contributed with $88 million from June 3rd. The adjusted operating profit increased by 40% from $77 million to $107 million compared to last year. This is our highest adjusted operating profit in actual terms ever in Q2. Both Q2 this year and last year were impacted by non-recurring items. I will elaborate more on those later. The profit increase by 30 million is primarily explained by the recovery in elderly care in Sweden that contributed 20 million and personal assistance that contributed with 8 million from that last year. In the second quarter net debt increased with roughly 150 million, where over 216 million is related to the payment for the purchase price for the acquisition of Team Olivia. Our leverage has increased 0.2 times during the second quarter to 3.8. This is primarily due to the acquisition of Team Olivia that increased our leverage with 0.4 times. Excluding requisition of Team Olivia, leverage would be 3.4. Operating cash flow of 172 million in the quarter was even stronger than in Q1. This is explained by our good profit generation. There were only minor effects in this quarter from changes in working capital. This is explained by the fact that both Q1 and Q2 ended on non-business days. During the quarter, we had negative items affecting comparability, reducing our operating profit with 27 million. This amount includes 9 million related to IVOS revocation of the permit in Humana Assistance and the subsequent claim. related to an acquisition of Team Olivia Norway. It was included with 9 million, and we had the 10 million for remesherment of contingent consideration to be paid for the acquisition of assistance a day. In 2022, personal assistance acquired assistance a day. A major part of the consideration was deferred and based on 2023 multiples. In Q2, the final contingent consideration amount has been established And the difference of 10 million between the previous estimate and the final consideration amount is recognized as an expense. This is consistent with previous adjustments of contingent consideration that have been recognized as positive items affecting comparability of in total 106 million in previous quarters. Q2 last year included 12 million positive items affecting comparability, including a positive adjustment on the continued consideration of 42 million. offset by costs linked to IWAS permit of 29 million. And finally this quarter is compared to last year partly impacted by Easter. We have estimated Easter had a positive impact on EBIT with some 20 million due to lower personnel costs. Easter effect is of course neutral on the half year period. Now some final words from you Johanna.