Humana AB (publ)

Good morning and welcome to Humana's Q3 presentation. My name is Evelina Pettersson. I'm the head of IR at Humana. With me today, I have our CEO, Nathalie Bolas-Nilsson, and our CFO, Kristoffer Herro. Please go ahead, Nathalie.

Thank you. So, having a look at... My name is Nathalie, and I started in... uh july so i've been here almost a quarter now so this is the first quarterly report from me and christopher together and looking at some of the highlights from q3 we improved and managed to have a record high adjusted operating profit of 203 million and the team olivia integration in norway is performing according to plans And we also have stable performance in Finland, and performing at a high level there, although we see some declining demand in open care services. And we have some positive developments for the personal assistance in Sweden for the first time in a long time as regards price adjustments, where we have now a 3% price adjustment from 1st of January next year. And in addition, there's been an announcement or looking into having a wage-related index as a yearly, connected to the yearly price adjustments, which will give us better foreseeability in the conditions and moving forward a more stable development. There's also been a reduction announced on the parent deduction in Sweden, which should amount to more parent, more hours for the children within personal assistance. So there are actually several signs of positive developments moving forward in this area now on the market. As I mentioned, I've been here for a few months and it's been an interesting and fun month. I've been able to visit units and get to know some of the Humana family and getting into the business. After a few months here, I must say it's quite evident that the Humana rests on a strong foundation. There's been substantial investments over the past few years in several areas and a lot of focus on ensuring that we have a value-based culture. There's a very strong focus on satisfied customers and employees. We are in the forefront of research. I'm very proud of that. And we do continuously work with method and service development to ensure that we have the best possible outcomes in our services for the individuals that are entrusted within our care. We measure the outcomes so we can see the changes and take action when needed, and also to continue to improve for the clients and customers we have. We also work hard on improving the conditions for our customers and society at large, and we'll get back to that a little bit. There's also a solid specialization strategy within Humana, which positions us in the forefront in many areas. To give a few examples of that work, we have improved our KPIs in three out of four areas. from Q3 last year. We have improved on satisfied customers, we've improved on safe service, we've improved on high quality training, and we have a continued high level of satisfaction for our employees, even if we haven't specifically improved that. We can also see the improvement in the social impact where we have increased the proportion of completed placements that actually lead to a lower level of care after they have been entrusted to us with 3%. This is a huge benefit from the individuals and for society at large. We've also increased the number of the care residential homes with 5% that reach their targets. Looking at Humana, we can also see that we have a strong growth through acquisitions. Just over the last six years, we have acquired 19 companies of various sizes. Looking at the strong foundation, we actually have coupled with the fairly large number of acquisitions that we've made. I don't think you will be very surprised by my short-term agenda. We will focus on consolidation within the Humana Group moving forward. There's some low hanging fruits here on many levels, both on a company structure level, but also on a system level and a shared service support level. So we will put a lot of effort into consolidating our group moving forward. We will also continue to work on efficiency and as we consolidate, that will become easier and focus on cost control on that. Humana is also a very decentralized company in general, and we will add a layer of internal governance and control to that, which will be another focus area. And the target of that is to increase the predictability of our business and making it somewhat more stable moving forward. And in addition, we will then also look into and do some deep dives in some of the areas within our specialization strategy. And for phase one, we will primarily focus on individual and family in Sweden. We will focus on open care services in Finland and also on mental health in Finland. Once that's completed, we will move over and do a phase two and focus on the elderly care. When we look at the growth development and the EBIT development during Q3, we can see that we've had a nice development of 11% year on year on the revenues. We actually, for the first time, reached 10 billion SEK revenue LTM, which we are quite proud of, of course. We also have a healthy underlying organic growth of 5.7%, excluding PA. If we look at the different countries, we can see all the countries are contributing positively to the adjusted EBIT margin. And the strong performance in Sweden within individual and family and the increased occupancy within elderly care are outweighing the somewhat lower margins in within personal assistance and looking at the adjusted a bit development we reached 499 million sec in q3 which is also a record we have an adjusted operating margin of five percent The main contributors to the EBIT increase is, of course, the acquisition of Team Olivia in Norway, coupled with the strong performance of individual and family in Sweden on both price increases and cost control, and also the elderly care increased occupancy in Sweden. As I mentioned in Sweden, we have a strong performance from individual and family. We have opened four new units during the quarter. We have also increased the occupancy within the elderly care, which is giving a good contribution and are making up for the continued net loss of customers within personal assistance. Comparing to Q2, Two, we are continuing to reduce the net loss of customers within personal assistance, and we are also continuing with reducing the costs related to personal assistance. So all in all, we have improved profitability in Sweden to 6.7%, which is almost a one percentage unit increase since last quarter, although we have not grown on the total. In Finland, we have a very strong performance of 10.7% adjusted EBIT. It is slightly lower than last year, but that's mainly because last year was an all-time record high quarter as regards profitability. We haven't grown significantly or at all actually in Finland, but we have grown in our target areas. So we are growing within child welfare services and disability, and we are also continuing to convert those units into more intensive care units, which is giving us a higher margin, all according to the strategy and plan. The open care services have seen a decline in demand from the SOTA regions, and this is primarily due to large saving requirements. And we are expecting this area to continue to decrease until the end of 2026. But it is, however, only 30% of our total business in Finland. So we are doing well in our areas of target. The elderly care is still thought to be divested by the end of the year. We're expecting that to go through. We can say also that if you look year on year on the elderly care, the proportion of elderly care in our business in Finland has decreased from 25 to 21 percent, all according to plan and due to the growth in our target areas. In Norway, it's been all about the integration of Team Olivia, of course. We're almost doubling our business year on year compared to the quarter last year, as you can see. And a large part of that is due to the Team Olivia integration. We have a healthy margin of 7.5% here. which is somewhat lower than last year, but still a healthy margin considering the large integration efforts during this period. The somewhat lower margin is primarily driven by the change regulations within scheduling, the medlever turnus, for those of you who understand Norwegian. It's important to notice that even if we are working very much with integration, we also have a very healthy organic underlying growth of around 12%, which I think is quite impressive considering the integration work. So, Kristoffer, over to you now for some financial highlights.

Thank you, Nathalie. Good morning. My name is Kristoffer Herreau and I started as CFO here at Humana two months ago. I have received a very warm welcome and I'm happy to be here this morning to report Humana's third quarter. During the quarter, Humana has taken further steps improving our financial position. Regarding our growth target of 5% organic growth and 2-3% additional growth from M&A activities, we reached an 11% nominal growth during the quarter. Our organic growth was 1.5%. If we allow ourselves to exclude the personal assistants, the organic growth was 5.7%, as Natalie previously mentioned. The adjusted EBIT of 203 million SEK is an improvement of 16% compared to last year, and the adjusted EBIT margin was 7.6%. Also, the capital structure is improving and our leverage ratio is again down to 3.4. It is satisfying to see this development already during the first full quarter after the Team Olivia Norway acquisition. When it comes to our operating cash flow, there are some seasonal trends and patterns depending on different details. For instance, Q3 last year was affected by the fact that the last day of September was on a Saturday and hence many customer payments were recorded on our bank accounts just after quarter end. Q3 this year was characterized by a strong EBITDA, neutral change in working capital, but at the same time quite some COPEX investments, with a further investment in our elderly care real estate project in Strängnäs as a major item. During the quarter, we had one adjustment in our adjusted operating profit, which was the capital loss linked to the divestment of our subsidiary in Denmark, as previously communicated in July. And with that, back to you again, Natalie.