Humana AB (publ)

Good morning and welcome to Humana's Q3 2025 presentation. Today, our CEO, Nathalie Boulas-Nilsson, and our CFO, Christoffer Heroux, will present the development in the quarter. Please go ahead, Nathalie.

Thank you. We will give you a short introduction, followed by financials and operational performance. We will then wrap it up with concluding remarks and open up for questions. Demana is a Nordic care provider with a high degree of specialized care. We are market leaders within children and young and personal assistance. We drive our development through digitalization, AI, sustainability, and by measuring the outcome of our services. We had an all-time high profit and the best margin in several years of 8.3%. The turnaround in Finland is completed successfully. we have a significant profit improvement in personal assistance, and we have continued improved profitability in Norway, now up to 9%. This, together with reduced financing costs, the earnings per share is up with 32% year over year. We have tripled our pipeline in targeted areas, which gives us confidence in our growth strategy moving forward. We will get back more on this topic in coming presentations. Humana has also taken the lead within the sustainability area, and all in all, we are in a strong position for continued positive development. During the quarter, Humana received validation by SPTI on our climate targets. We were the first amongst our peers to achieve this. We are also the first to test both short- and long-term net zero targets, something we are very proud of. Humana has during the year been ranked as the number one in sustainability, which is part of the Morningstar group. For us with a high degree of specialized care for customers and clients with complex needs and challenging behaviors, the work environment is an important part of the sustainability agenda. We have during the year paid extra attention to ensuring our employees have the right competence tools and support. It is crucial that we succeed in our work with risk assessments and prevention. And now over to you, Kristoffer, for the financials.

Thank you, Natalie, and good morning, everyone, on the call. In our LCM revenues, we see a slight growth over the last year. During the last year, we have divested the elderly care business in Finland, and as Natalie pointed out, we have a focus on organic growth. This work has resulted in an increased pipeline of new projects. Over time, we see a positive trend in the adjusted habits. The weak first half of this year for Finland burdens the group. But with a turnaround in Finland and the highest ever recorded EBIT for a single quarter, we have a positive outlook moving forward. In Q3, we had good operational improvements coming from both Sweden and Norway, while Finland was a little bit behind in absolute figures. In the comparison between the quarters, it is also worth to note the effects coming from the divested elderly care business in Finland.

Going over to the cash flow.

The LTM cash flow effects from our property construction in Strängnäs is decreasing compared to the previous periods as the property was finalized in Q1. The LCM net interest costs recognized in the income statement are now at 113 million SEK and are expected to, all as the same, decrease further the coming quarters. The paid net interest costs will follow the same path leading to improvements in the cash flow generation going forward. The free cash flow and the divestment of the elderly care business in Finland has enabled us to pay dividends to our shareholders, as well as completed share buybacks of a total amount of 159 million SEK. And at the same time, we have reduced the net debt. In July, our board took a decision to repurchase up to 1.5 million shares. So for 550,000 shares, out of this decision has been repurchased. It is also worth to mention that we have amortized 300 million SEK on our bank loans during the quarter and 400 million SEK in total during 2025. In our past quarterly reports we have communicated about different efficiency initiatives. We are glad to be able to update you on these initiatives where a vast majority of the actions are completed. The effects of this will be savings of approximately 100 million SEK in annual run rates by the end of 2026 and going forward. These savings are gradually included in our figures. And at the same time, we have recognized costs of some 20 million SEK in the TNL relating to digitalization investments to future-proof Humana. Back to you, Natalie, for a closer look at our segments.

Thank you. We have improved our margin in Sweden to 8%, and we see that our efficiency program delivers according to plan, as Christoffer mentioned previously. Within individual and family, we continue to see very high occupancy and good profitability within the elderly care segment. We are now toe-to-toe with the best from the market in this area. The somewhat weak demand within child and youth, and to some extent also within adults, is partly counteracted by clients with more complex needs and higher compensation. Within personal assistance, the quarter is positively impacted by the timing of annual salary increases. That occurred later this year compared to last year. But we also see an underlying profitability improvement. We continue to see that the loss of customers is declining, and out of the past seven months, we have seen three months with approximately net zero customer flow. Compared to Q3 last year, we have half our net outflow, so this is a good indicator for us moving forward. We can also see that our AI tools are starting to take off within the segment and thereby boosting our efficiency. In Norway, we have improved operating profits and increased margins to 9%. We see efficiency improvements in all of the divisions during Q3. In spite of what the diagram shows, we do actually have a positive growth in Norway if we look at the development in local currency. The negative percentage is the currency impact. In Finland, we have now completed the transition and are back up to a good profitability level of 10.3% after a negative Q2. This after the decline in demand in Finland due to the savings program in the SOTA regions and the divestment of the elderly care segment. This is a solid performance by our Finnish team. And we can see that three out of the four segments increase profitability year over year. The savings programs in the software regions will continue, but we are in a good position to meet the continued call for improved efficiency. We have a positive view on Finland and have, over the last six months, tripled our pipeline in our targeted areas. We have also set up for a more growth-oriented organization moving forward.

Going over to our financial targets, previously mentioned in the presentation we put a lot of focus on the organic growth, not yet visible in the figures. With regards to our profitability target, we are on a good track. Last quarter a bit downward due to the need resulting Finland and the divestment of elderly care. Now the transition is completed and the come quarter with the highest ever recorded operating profit gives us confidence in our work going forward to reach our profitability target. When it comes to our capital structure, we are at the same level as the previous quarter, which means that we are within our targeted level.

Summing up our achievements in Q3, the turnaround in Finland is completed, the efficiency and consolidation program delivers according to plan, we have tripled our growth pipeline in our targeted areas, and we have taken the lead within the sustainability area. Moving forward, we will focus on securing organic growth, both by signing more of the projects in our pipeline and by ensuring that we fill our unused capacity. We will also continue to drive efficiencies by the implementation of digitalization and AI.

And with that, we open up for questions.

So if you wish to ask a question, then please dial and pound key 5 on your telephone keypad and then to enter the queue. And if you wish to retry your question, please dial phone key 6 on your telephone keypad.

The next question comes from Jakob Lente from SED. Please go ahead. Yes, hi and good morning.

I did not really catch you on the progress you have made on the cost savings initiative, but could you maybe repeat what you said and also if You have started to see benefits from this already in this quarter or when you expect to see benefits from this?

Yes, we have started to see a little bit of defects already this quarter. And when we look at it, we can see that underlying we are spot on, which means that we can see that we have executed already the $40 million project. But since we are at the same time investing heavily in digitalization and AI, on the bottom line, some of that you cannot see.

So what is the sort of next benefit here in Q3 and what should we expect in the coming quarters?

So the total net benefit, and that is also a bit divided between EBIT and the actually bottom line, so to speak, in our P&L.

But the effect for this quarter is around 10 million on that net. Okay.

And that will increase some of maybe some time next year, I assume.

Yes, exactly. So what Natalie said now with the cost that we take now to digitalize the company and to invest going forward, that is one-time cost that we do now. And these savings will be annual savings going forward, so to speak.

Okay, and then I have a question on individual and family, and particularly the individual and family segment of elderly care. Just wondering a bit on the sort of, yeah, the demand and the sort of development you can see here, short term, and what expectations we should have for the coming quarters.

This is, like we've said in the past few quarters, there is a little bit of a weak development in the ACD segment, both for children and adults. It's a much larger part of the child segment than the adult segment, of course, so it makes a bigger impact there. But we do have more complex placements, which means higher compensation. So financially... It's a small impact, but we do see that we have still quite a bit of free capacity that we can use and fill up. And for us, we're very much working on making sure, because we do get a lot of requests from the municipalities, and you need to match the requests with the permit that you have. And it takes 10 to 12 months if you need to change a permit, since EHO is not that speedy in that process.

Okay, but I guess the underlying earnings development here is quite weak right now. And is it fair to assume that it will take some time before that sort of turns around?

The underlying earnings is not actually that bad. We do get more compensation for more complex clients. But what it really means for us is that we still have a bit of capacity left. that we can fill up and get a good development moving forward.

Okay, then my final question is on these new units you're adding to the pipeline. My question is, what sort of risks do you see in the demand profile?

Very low risk, I would say. They are exactly in our targeted areas where we want to be. We see within the LSS segment in Sweden and within the disability in Finland. So exactly where we want to be, where we have high profitability and strong demand. So we feel very confident about the growth pipeline moving forward.

Okay, that's all for me. Thank you very much. The next question comes from Christopher Lilyberg from Carnegie. Please go ahead.

Thank you. Good morning. Four questions. The first one on the cost savings is that all of it's on the overhead cost line or do you also see this spreading out in the business area? My second question relates to personal assistance in Sweden. As you said, earnings were a bit inflated, maybe this quarter, but how do you think about Q4 and then going into 2026, given the allowance fee was only increased by 1.5%, which I guess is not going to fully compensate for wage increases. My third question, on the Lovido model, if you could explain... bit more in detail what has been driving this impressive improvement and what do you think a sustainable Norwegian margin on an annual level going forward and also the same for Finland what do you think the run rate margin in Finland is now of course you have the seasonality in the third quarter it's always a bit difficult to extrapolate that and the improvements you have done there thank you yeah

Well, maybe I can start with the personal assistance question. And I would say for Q4, the expectations is always Q4 in personal assistance is traditionally always a negative quarter. So there will be challenges in Q4 financially. That's the way it's always been, unless there's a one-time impact of some sort. So that will be weak. But looking into next year, We do, of course, the 1.5% increase, price increase is a big disappointment for us all. We are slightly helped, though, by the reduced social fees next year and also the year after that. So there's a positive impact on that. We were counting on improving our profits quite a bit here next year with impersonal assistance. We have a lot of positive signs that we mentioned before. The market has begun to grow slowly, but still in a steady pace. And we are more or less flattening out now in the bottom of the net customer flow. So we have a lot of positive signs there. I would say that we will not reach the increased profitability next year. It will be postponed with one year. The index clause is still in investigation, so we hope that this will go in for 2027 instead. That's our best guess, which means that we will probably be around the same profitability level as we will end up with this year or next year. That's the assumptions we're making right now. Then a little bit on the Norwegian margin. I would say that run rate is a bit more than 6%. And we continue to see this improvement. We have improved over the past two quarters. So we feel pretty confident. It's efficiency measures in all of the divisions. So moving forward, we will continue to improve. expect an improvement in Norway. And in Finland, we have a run rate of around 6.5%, and we do believe that it will continue to increase. We feel also there the remainder, the divisions that we have left after the divestment of the elderly care, Three out of four have improved year over year in spite of us doing this large transition program. And we do have a continued conversion from too demanding intensive within child welfare services, which we see is giving us a positive boost. And we are opening up new units within disability where we have a very high margin. So we have a couple of openings coming up in the end of this year now, and we have an additional couple of openings over next year. So we feel pretty confident that we will continue to improve in Finland.

So you don't think the openings will be diluted initially?

Initially, they will be a little bit, but based on the strong base that we have there, we do expect a continued improvement.

Do you think you can do 6.5% more than in Finland next year? Yeah. Okay.

Yeah.

Right.

We have also, as I mentioned, we are shifting our organization towards a more faith-oriented organization, and we are strengthening that team to fill up the units more. with the first move here from 1st of November joining us.

So we feel pretty confident about that, yeah.

And then your first question, which was about the efficiency program. So I said on the previous question that some of it is included in the operating costs and some are also in the financing costs. But most of it will be visible or is visible in the Sweden segment and some of it also in the other segments.

that was the answer to yeah okay yeah that's very good thank you good the next question comes from jacob lemke from seb please go ahead yeah just a follow-up with a small sort of technical question um looking at the cash flow on the uh investments in non-current assets you have a It's positive and you say that you have received some investment subsidies of 80 million.

Yes, exactly. So that is related to our property construction in Stagnas, where there was investment payback. I don't know the exact English word for that, but when the construction is finalized, you get a subsidy back from the authorities. So that is what is a positive cash flow effect in this quarter.

But it's a one-off. Yes. Okay, thank you.

We have no more questions at this time, so I want to remind you, if you would like to ask a question, dial the sound key five on your telephone keypad, but it seems we have no more questions at this time, so I will hand back the conference to the speaker for any written questions or closing comments.

We would like to thank you all for listening in today and wish you a good day. Thank you.