Ambea AB (publ) (AMBEA) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Ambea Interim Report Second Quarter 2026 Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mark Jensen, CEO. Please go ahead.

Thank you so much, and welcome to Ambea's presentation of the second quarter 2026. I'm Mark Jensen, CEO; and with me today is Benno Eliasson, CFO. We'll start with a brief group overview and our growth drivers, and then Benno will take you through the financials and business areas before we wrap up with concluding remarks and the Q&A. Ambea is the leading care provider in the Nordics with operations across Sweden, Norway, Denmark and Finland. We operate through strong local brands and business areas covering elderly care, social care and staffing and competence solutions. To clarify the breadth and scale of the group, we have redesigned this opening slide to provide a better context. On the left side of the slide, we see the care segment our business area serve and the respective segment share of the Ambea Group net sales. To the right, we see the actual rolling 12 net sales per business area, the corresponding share of group net sales and rolling 12 EBITA margins. In the last 12 months, we reached over SEK 16.9 billion in net sales and delivered an adjusted EBITDA margin of 10.0% on group level. We continue to grow through both organic expansion and acquisitions in a resilient and risk-balanced business model with continued strong growth potential. And from here, let's go straight to the highlights of the second quarter. Quarter 2 was characterized by solid organic growth, opening of new care places within social care and a new acquisition in Finland. Net sales increased by 7%, mainly driven by organic growth. At group level, adjusted EBITA amounted to SEK 397 million with an adjusted EBITA margin of 9%. The improved result is driven by higher occupancy and operational improvements. Adjusted EPS grew by 88% and amounted to SEK 2.13 in the quarter. The strong growth is primarily driven by higher earnings. At the end of the quarter, Ambea announced a recommended public offer to the shareholders of Humana and linked to that, we initiated a program to repurchase own shares. At the next slide, we will look at the development of our organic pipeline for new care places. Already during the first 6 months of 2026, we have signed agreements for new care places that exceed the entire year 2025. This is based on society's high need for more qualitative care places as the demand is rapidly increasing, not least within elderly care. Elderly care is also the area where we have the most new places in pipeline. New nursing homes are always minimum 60 apartments of size within social care and new care home is smaller, typically from 6 to 10 places. We will continue to expand the pipeline in line with the needs of society and where municipalities welcome private operators in the welfare mix. Over time, we foresee the need for our contribution will increase. Our pipeline ambition is to meet the 2025 full year numbers for Vardaga also in 2026. We expect further increase in Altiden's elderly care pipeline in the second half of the year and remaining business areas will also contribute positively year to go. Approaching the Swedish elections in September, we trust that the new ruling coalitions will face the supply challenges with new ideas and a focus on care receivers and their relatives. We will constructively engage in dialogues to provide sustainable and qualitative care solutions as we have always done. And turning the page, let's review the total organic pipeline. Organic growth is targeted to deliver approximately half of our growth target. The increase in signed rental contracts we saw on the previous slide positively impact the total pipeline, which is now above 2,200 new care places to open between 2026 and 2030, an increase of more than 60% compared to same quarter last year and clearly industry-leading. Fully ramped up and in 2026 prices, the expected total pipeline revenue will accumulate to approximately SEK 2.7 billion. A ramp-up normally takes 12 to 24 months from opening date depending on size and type of care home as well as local demand. Looking 12 months ahead, we will open 480 new care places in the Nordics, which supports continued growth and improved economies of scale. With mid-single-digit organic growth coming from pipeline expansion, it is important to maintain and develop our position as an employer of choice, while we will continue to invest in our workplaces, work environment, career opportunities, competence and leadership development. We will now have a look at acquired growth. Acquisitions are an important complement to organic growth, building to the overall 8% to 10% growth target, and we have maintained a high level of M&A activity in the quarter. During the quarter, Valida expanded and closed the third acquisition within Child Welfare Services, adding SEK 40 million in annual net sales. At the end of the quarter, we announced a recommended public offer to the shareholders in Humana, aiming to combine the companies. We continue to see an active pipeline across markets, and we remain selective, focusing on quality assets, strong operational fit and value creation through integration. Let's have a closer look at total revenue growth on the next slide. We have now cycled the acquisition of Validia in Finland and total revenue growth have slowed for that reason. Anyhow, the quarter showed good growth of 7.3%, driven primarily by a stable and industry-leading organic growth of 4.4%. This reflects the strength of our business model. We grow by improved occupancy, expanding capacity in our existing operations, signing rental contracts for new care units and by successfully integration acquisitions. Overall, this creates a balanced and sustainable growth profile. At the core of our model is quality and people. So let's turn to that. During the quarter -- during the last quarter, we introduced a new group-wide quality management system in Vardaga and Nytida named MiraQ. By bringing our quality process and data into one common platform across business areas and geographies, we can identify improvement areas more quickly, share knowledge across the organization and further strengthen our systematic quality management. And the rollout will continue in our remaining business areas during the remaining part of the year. In a highly labor-intensive business like ours, our employees are truly at the heart of everything we do. Our latest employee Net Promoter Score, which measures how likely colleagues are to recommend Ambea as an employer, remains consistently high. This reflects the positive culture we are building together and strengthen the foundation of our employer brand. Diversity and inclusion are an integral part of our culture and long-term people strategy. During the quarter, we participated in the European Diversity Month in May and continued our partnership with Stockholm Pride, reinforcing our commitment to creating an inclusive workplace where everyone is treated with respect and has equal opportunities. You can read more about our quality and sustainability work in the quarterly report. And now I would like to hand over the presentation to Benno for a financial summary.

Thank you, Mark. Net sales grew with almost SEK 300 million or 7% in total and all 4 countries contributed well. Nytida and Vardaga grew respectively 4% and 6% from higher occupancy and Stendi 11% was this quarter helped by a stronger Norwegian currency, but also higher occupancy within Child Welfare. Valida grew with 19%, primarily driven by the new business segment, Child Welfare where we have made 3 acquisitions in the last 3 quarters. And turning to the EBITDA development. This slide shows how the different business areas have contributed to the adjusted EBITDA of the group. We can see that also when it comes to EBITDA growth, all 4 countries have contributed. Vardaga, Nytida and Vardaga showed solid improvement in EBITDA as well as EBITDA margin, driven by good occupancy and high level of operational efficiency. Stendi improved to a more stable occupancy situation and improved operational efficiency, helped by a one-off this quarter of SEK 8 million. Altiden showed a continued EBITDA improvement for the 10th consecutive quarter and contributed with SEK 12 million in the EBITDA improvement. Adjusted EBITDA in total increased by 28% to SEK 397 million, and the adjusted EBITDA margin in the group was 9.0%, up from 7.6% last year. Rolling 12 adjusted EBITDA margin now reached 10% for the first time. Cash flow. Operating cash flow in the Q2 was very strong. This is both an effect of the strong profitability as well as a normal pattern after a softer quarter like we had in Q1 and demonstrated the strong underlying cash generation that Ambea has. There are always some quarterly fluctuations in payments, but over time, we are delivering a solid cash conversion of around 95% year after year. This slide shows the way from EBITDA, excluding IFRS 16, down to the free cash flow post tax. The rolling 12 numbers are now at SEK 929 million, an increase as expected from last quarter by a bit more than SEK 200 million. The increase in EBITDA and more normalized net working capital are the driving factors behind the positive development. And our solid cash generation gives us both flexibility and strength to continue investing in quality and growth. And the next slide shows the utilization of the free cash flow. You can see how we have used generated SEK 929 million. SEK 212 million was distributed to our shareholders as dividend, SEK 187 million was spent on the 4 acquisitions and SEK 521 million was spent on the 2 share buyback programs and net debt has decreased by SEK 87 million. So even with this over SEK 700 million delivered in different ways to our shareholders, we have reduced our leverage from 2.7x EBITDA last year to 2.4x at the end of this quarter. This is well below our financial target of 3.25x and give us good flexibility for the future. And then to the earnings per share. The strong development in sales and profitability, together with the share buybacks we have conducted have delivered a strong growth in earnings per share over the last year. In this quarter, the reported EPS grew from SEK 1.13 to SEK 2.13 or by 88% compared to Q2 last year. The growth rate over the last year is very high. The compound annual growth rate in the last 2 years are 25% in reported EPS. And if we adjust the EPS for IFRS 16 and items related to acquisitions, the growth rate is at 23%. Then turning to the business areas, starting with Nytida. Net sales increased by 4% in Nytida, driven both acquisitions and ramp-up units. EBITDA rose by 17% to SEK 148 million compared to the SEK 127 million last year, thanks to continued good performance in previously completed acquisitions, together with improved occupancy for ramp-up units and adjustments made in the service offering. We have continued to adapt our service offerings in favor of services with more expected higher demand as well as successfully adjusted the capacity. This is the fourth consecutive quarter with higher margins compared to previous year and the rolling 12 margin now increased to 13.2% from 12.0% 1 year ago. And then we turn to Elderly Care and Vardaga in Sweden. Vardaga continues to deliver solid growth as net sales increased by 6%, but sales in own management continues to grow at a higher pace this quarter by 10%, reaching SEK 1.027 billion, driven by new openings and good occupancy in the new one as well as the existing nursing homes. The nursing homes we opened in Q4 last year and Q1 this year are showing better-than-expected occupancy development. Net sales in Contract Management decreased by 3% as we handed back 2 contracts that expired to the municipalities. We will exit the contract with an annual turnover of SEK 199 million gradually within the next 12 months. EBITDA increased by 24% to SEK 143 million. The profitability development in mature units continues to be strong as we are running the units with historically high occupancy and thereby improved operational efficiency. The negative effect on margins that normally come from newly established units was lower than expected. In total, EBITDA margin increased by 1.4 percentage points to 9.9% in the quarter and to 10.0% rolling 12. And then turn to Stendi and Norway. Stendi delivered a stronger quarter than last year. Net sales increased by 11% in SEK and 5% in local currency. Occupancy for care services for adults was still slightly lower than last year, but more stable than in the last quarters, while our services for children and youth had higher occupancy than last year in this quarter. The second quarter is the weakest quarter EBITDA quarter from a seasonality point of view since most of the banking holidays in Norway in the quarter, and this drives higher staffing costs. EBITDA amounted to SEK 54 million, and the EBITDA margin was 5.9%, which was SEK 25 million or 2.4 percentage points better than Q2 last year. A more stable occupancy, together with operational improvements following measures implemented to adjust operations improved the profitability. We were also helped by a positive one-off effect of SEK 8 million. We are strategically working towards units with higher capacity and better operational efficiency and are phasing out smaller units. We expect to see more effects of the various improvement measures in the second half of the year. We are now at a rolling 12 EBITA margin of 7.4%, which is up from 6.8% last quarter, and we expect the margin to improve further. Then turn to Finland and Validia. For the first time, we now have a quarter to compare with Finland. Validia showed continued solid performance together with the completion of the third acquisition in the new segment of Child Welfare. The latest acquisition was closed on 1st of June. Net sales in the quarter amounted to SEK 446 million, which is a 20% increase from last year. Of this growth, 15 percentage points was from the new segment within Child Welfare and 5 percentage points was from the other segments. EBITDA reached SEK 41 million, an increase from SEK 39 million last year, and margin in the quarter reached 9.2%, and we are now at 10.5% margin on a rolling 12 basis. The start-up of the new business segment and the integration of the acquired businesses have affected the margin negatively short term. We expect the margin in new segment to gradually increase as we improve occupancy and implement our system and processes. Over time, we expect the margin within Child Welfare to be in line with average margin in the other segments in Finland. Valida acquired -- was acquired as a growth platform in Finland, and we will continue to create growth through new establishments, bolt-on acquisition and continued development of the existing operations. So now turn to Denmark. Altiden in Denmark once again delivered an overall very strong quarter with continued strong revenue growth driven by higher occupancy across both elderly and social care. Net sales increased by 7% in local currency. In SEK, net sales were up 6%. Net sales in Own Management increased by 12% in local currency. Contract management decreased by 8% due to the termination of social care contract last year. The second quarter are from a seasonality point of view, the weakest for the same reasons as the same in Norway, but the profitability improvement versus last year continues at a high pace. EBITDA this quarter increased to SEK 13 million, corresponding to a margin of 3.7%, which is up from 0.3% last year. The positive earnings development was driven by the higher occupancy in own management and by operational improvements. We now have 10 consecutive quarters with margin improvement in Denmark and the rolling 12 margin has gone from negative 3.3% to positive 6.1% over this period. Our extensive work on the new project in Denmark resulted in signing rental agreements for another new nursing home with a total of 88 places scheduled to open for care receivers in 2030. We have now 3 rental agreements signed this year, which demonstrates the improved market condition in Denmark following the 2025 elderly care reform. Additional capacity expansion is expected within own management where our focus and future growth potential is in Denmark. And finally, Klara. Klara saw lower net sales due to the weaker demand across several of the services. Net sales decreased by 11% to SEK 93 million. Historically, a strong supply of nurses in the labor market has led some customers to employ our own staff instead of purchasing external services from companies like Klara. For Klara, we now, however, see signs that the negative revenue trend is starting to change, and we expect better revenue development going forward as we now also are improving the mix towards services with higher demand. EBITDA amounted to SEK 8 million with a margin of 8.6% in the quarter and 10.5% on a rolling 12 basis. The good margin level reflects the well-managed cost adjustment and continued focus on profitability even in a softer market environment. And with that, back to you, Mark.

Thank you, Benno. Our financial targets remain as we drive profitable growth, strong margins and disciplined leverage. In line with our commitment, we continue to deliver on all 3 targets also in quarter 2. The rolling 12 months growth rate is now at 13%, which is well above our growth target, thanks to the high pace in acquisitions and good organic growth. Rolling 12 profitability landed at 10.0%, which is above the target of 9.5%. We will continue to invest in people, quality and growth. Our leverage is slightly down to a ratio of 2.4x net debt to EBITDA below our target of 3.25x. We maintain our financial capacity to engage in the right acquisitions. And before we open for questions, I would like to provide an outlook post quarter 2. Ambea is the only Nordic care provider with a new tailormade group-wide quality management system. We will continue the rollout of the new system to all business areas during the remaining part of the year. With MiraQ, we have further optimized and standardized our operational quality work, improved system performance and features as well as data quality and access to predictive analysis and cross-country quality improvements. For the remaining part of the year, we will see more bolt-on acquisitions in several business areas supporting growth and value-adding capital allocation. Care needs are increasing, and we remain committed to sign rental agreements for more care homes, adding to the future organic growth, supporting the Nordic society. And regarding the recommended public offer to the shareholders in Humana, the prospectus is scheduled to be published on August 24, with the acceptance period expected to commence on August 25. Over the next 5 years, we will employ 3,500 new care professionals to support the organic capacity expansion. Being an employer of choice is important and to maintain a strong employer brand, we will continue to invest in work environment, competence development and local leadership. Once again, our teams in 4 countries across more than 1,000 care units have delivered qualitative care to 18,000 care receivers, all with a need for a good and independent life. It is an important and rewarding contribution to people and society for which we are proud. Thanks to our employees, the high competence and attention to operational delivery, we also reached healthy financial results, which gives us the opportunity to do more of what we're here for, making the world a little better one person at a time. And this concludes our presentation, and we will now open for questions.

[Operator Instructions] And the question comes from the line of Bjorn Olsson from SEB.

First, a question on the pipeline. One of your first slides, you illustrated the pipeline and clearly, Altiden is the main driver of the increase. What type of pace of additional contracts are you expecting to sign for H2? How should we view the sort of the trajectory of growth here?

Yes. Thank you so much. I mean we expect to sign contracts also in the second half of the year. And as I mentioned when we went through that slide, I mean, we are aiming for Vardaga to deliver in line with the full year numbers for 2025. You can see we are not completely there yet. So that would mean a number of new contracts for Vardaga year to go. We also expect to sign further contracts in Altiden in Denmark in the second half of the year. And then we will see contributions also in Norway and Finland. But as the care homes there are, in general, smaller than the nursing homes we are signing in Vardaga and predominantly in Altiden, those additions from Norway and Finland will be more limited.

Okay. And you also started by mentioning the election coming up in Sweden in a few weeks. Have you any -- I mean, you are in touch with several local politicians and municipalities. Have you any sense of any risks in conjunction with the election? Because I mean, the national debate is probably more noise than actual impact for you? Or how should we view this?

Yes. I mean election year is always exciting as the various parties are launching their plans and ideas for the next 4-year period. And in Sweden, you have all the elections on the same day, both for municipalities, regions and the national parliament on the same day, which is a little different from the other Nordic countries. And that means that we will see changes in the coalition, the ruling coalitions for the next 4 years. Our customers are the municipalities, and we work with municipalities that are led both by left side of politics, right side of politics and by coalitions in the middle. And we have done that for many years over many elections, and we will continue to do that also after this election. In general, we think it's good that the public debate on the future of the welfare society is taking place and especially within the care sector as the needs are increasing significantly over the next 2 or 3 mandate periods for the politicians. And it is very important that the society as such will accelerate the capacity expansion, especially within elderly care. And we believe we have an increasingly important role to play in this field also in Sweden.

Makes sense. And just finally on the Humana acquisition. Do you have any update on the progress of the acquisition? Or have anything sort of changed in your view of the deal?

We are following a plan exactly as we communicated when we announced the public offer to the shareholders of Humana on the 29th of June. And we plan to launch the prospectus on August 24, as I said, next week. And everything is following plan as we have communicated earlier. So there's nothing else to communicate on that particular matter.

Now we go to next question. And the question comes from the line of Kristofer Liljeberg from DNB Carnegie.

First one relates to the margin target and the fact that you're now trending above that. So what's your view on that? Second question, if you maybe could give a little bit more explanation for what appeared to be a very fast ramp-up in new elderly care units in Sweden. And then my third and final question relates to Norway. And you mentioned the higher compensation. Was that just a pure mix effect or more of a general trend?

Yes. So the margin target, we are holding on to the 9.5% margin target. And we think it's also a wise thing to do in the light of the potential acquisition of Humana and the offer to the shareholders of Humana as we communicated when we launched that in June. So changing that now is not relevant. And it's also important for us to make sure that we have sufficient funds to invest in people, capacity expansion, competence development, local leadership and quality overall. So we are holding on to that as we're holding on to our other 2 financial targets. In terms of the ramp-up pace for Swedish elderly care, Werner, will you comment on that?

Yes. That's correct, as you said, that we have... Has very good ramp-up or very rapid occupancy improvement in all -- more or less all of the new establishments. And we have been a little bit -- you can say, a little bit coincidence that a municipality closed one of their own nursing homes in one of the municipalities. In another municipality, they have actually just before we opened also closed one of their own. And then we have a third municipality that was built up for a queue before we open. So it's different from every new establishment. It is different. But this time, we have a really good pace in at least 3 of these 5 that are more or less already full.

And then the final question on Norway. I mean, we have not seen any changes in compensation as such, but -- in terms of occupancy in social care for adults, it has been more stable as Benno commented, which has been the issue in the previous quarters that we have had a quite high frequency of move-outs and move-ins in different parts of the country, which makes it difficult for staffing efficiency. That has been more stable this quarter. That has helped us. We have had also a high occupancy level in childcare in Norway, which is performing very strong again this quarter, which has helped us. And then we have implemented various operational improvements in the Norwegian business over the last quarters, which has proven to show results already now. And as we also said, we expect that we will continue to improve performance in Norway over the coming quarters.

Next question comes from the line of Julia Angeli Strand from Handelsbanken.

I'll take them one by one. I'll start with Stendi. So given the strong performance here and given that you have communicated that H2 will be even better in terms of margins year-over-year. So could you give some color on how much this quarterly performance had improved your H2 outlook? Is it unchanged? Or has it improved?

It is basically unchanged the outlook for the second half of the year. We have said that a margin level of 8% to 9% in Norway with the size of the business we have now is a good level. We are not yet there. We are approaching, of course, the 8% and the likelihood of getting into that range is higher now than it was last quarter from the strong quarter 2 performance. But let's see where the year will take us. But the outlook for the second half is unchanged, but still positive.

Okay. Got it. And then on Validia, you mentioned some margin pressure and that H2 will be a year with high opening pace. So how should we think about the margin pressure when you have a lot of openings there during H2 as well?

There is margin pressure, you can say now a little bit from the new established business area in Child Welfare. We said that 15 percentage point on the growth from last year is the new area where the profitability now is lower. And also there are some transaction integration costs related to these 3 acquisitions. That will improve going forward gradually, we hope. And then in the second half, we are also opening 2 new units in the beginning of fourth quarter that will short term probably hurt the margins a little bit. But as it always does when you open large units with the full rental cost and gradually coming in occupancy. That will probably affect Validia a little bit in the later part of the year.

Okay. So if we adjust for normal seasonality effects, will margin pressure increase from this quarter or still the same?

A little bit hard to say. I think in the third quarter, the margin pressure from lower margins in Chile Welfare will ease a little bit gradually as we say. But then, of course, depending on the -- how fast we can ramp up the new unit in the fourth quarter, that could also, of course, as I said, hurt the margin. But how much it's still to be seen because we don't know the occupancy development after the start of that unit.

Okay. And then my last question on Humana. They have some units facing some challenges or has varying performance and Norway being one of them. So given that you have experience from managing a somewhat challenged Norwegian business following a large acquisition, could you share some thoughts on how you plan to address it in terms of profitability and occupancy levels?

In general, we can say that what we said when we announced the offer to the shareholders of Humana still stands. And on the presentation there on the 29th of June, we were talking about the strength of the combining the 2 companies. We think that it's unchanged, and we have no other opinion than what we communicated on June 29. in a process like this, which is quite complex and when there are certain steps to be taken in a specific order, we need to take it step by step, which we are doing and in that order. And we will come at a point in time, hopefully, to a place where we can get more insights on the business, and we can start the integration planning and all that, but that's too early for now. So we basically have no other view than the view we communicated on June 29.

And the next question comes from the line of Jacob Andersson from Danske Bank.

I just have a few couple of questions. Starting off with Nytida. So you continue to deliver strong margins once again. But was the improvement in occupancy broad-based across both disability as well as Individual family or mainly driven by specific segment or...