Attendo AB (publ) (ATT) Earnings Call Transcript & Summary

Welcome to Attendo Press Conference Call. [Operator Instructions] Now I will hand the conference over to CEO, Martin Tiveus; and CFO, Mikael Malmgren. Please go ahead.

Thank you. This is Martin here. I'd like to start with saying that this is an acquisition that I'm very happy to announce. We have seen over the past years that society is facing more complex care needs and that public payers demand for such services are increasing. This acquisition gives us access to several specialized care units within disabled care and individual and family care to handle complex care needs. Team Olivia has several strong care concepts with local brands that can be further leveraged within Attendo. It also gives us improved economies of scale within disabled care and I&F, which allows us to invest more in competence development, method development and digitalization, which will make Attendo an even better partner to public payers in the future. On top of disabled care and individual and family care, this acquisition also contains a sizable home care business, which will further strengthen our existing Home Care operation, higher customer numbers that will drive both quality and margin density in our existing footprint, and we will, on top of this, get access to new geographies that we can further develop. All in all, it also gives us a better balance between segments in our Scandinavian operation and a stronger platform to continue to grow from, both organically and through further acquisitions. Next slide, please. As I said on the announcement earlier this morning, the Team Olivia Care business that we are acquiring has a total sales of SEK 1.35 billion with an EBITA of around SEK 130 million in pass-on run rate. The acquisition will improve the earnings per share at Attendo with at least SEK 0.50 fully integrated, meaning for the fiscal year 2025. We expect some integration costs in 2024 of around SEK 25 million. On top of this, we were going to have some transaction costs occurring in Q4 of around SEK 10 million. Over the past year, the financial position of Attendo has improved significantly with the turnaround of Finland. And today, we have a strong financial position with a quite low leverage in terms of net debt-to-EBITDA. This acquisition is fully financed with cash and loans from a new financing agreement that we announced recently as well. The acquisition will now be looked into by competitive authorities, and we expect closing to be late Q1 or early Q2. If we look at our Scandinavian business. Post this acquisition, we will have a better balance between segments. Our Scandinavian operations has been very dominated by Elderly Care segment. Now we are, with this acquisition, forming a stronger Disabled Care and I&F business, but also an even stronger position within Home Care, which will make the Scandinavian business better balance going forward. Total of above SEK 8 billion in our Scandinavian operations alone and Attendo Group, if you look at the current run rate would be above -- around SEK 18 billion in turnover. I hand over to Mikael just to walk through the financial situation.

Yes. Thank you, Martin. So as mentioned, the enterprise value on a cash and debt-free basis is SEK 950 million. We see that we will be fully financing this with cash, about SEK 300 million, and loans of about SEK 650 million. And we said that the post-transaction net debt-to-EBITDA will be around 2x, which is also well below our current leverage target of 3.75x. As I mentioned, we have a new financing agreement now in place with our banks, which will be split between some Swedish loans of SEK 2.75 billion and a euro loan of EUR 125 million. The duration is 3 plus 2 years of potential to increase for 2 years. And we have also successfully been able to link that to sustainability relating to employee and customer satisfaction. When we then look at the timetable, as mentioned by Martin also, so we have the announcement today. We are now waiting for the approval from which starts the process as of now for the commission authorities, both local and European and we expect to be able to close late Q1 or early Q2. With the potential approval of the acquisition, we will also then be reverting to new financial targets post closing. So to summarize, if you look at the rationale behind this acquisition, apart from volume, it's -- we believe this will strengthen Attendo's position within disabled care and individual and family care. We have seen a trend in society that we are facing more complex care needs and also a trend among public payers to demand more complex service offerings in -- within these segments. This acquisition gives us both access to specialized care units within Disabled Care and I&F, but also a larger volume, which will enable Attendo to invest more also in method development and competence development that will make us a stronger partner going forward to public payers. It also adds even more volume and strength to our already existing very strong home care operations in Sweden and also accessing some new geographies to grow from. So overall, a stronger platform to continue to grow from both organically and for further acquisitions. With that, we open up for Q&A. So operator, please go ahead.

[Operator Instructions] The next question comes from Jakob Lembke from SEB.

I have a few questions. If we start on the synergies, you are seeing in the [ EPS accretion ] here. Can you just talk a bit about what the drivers are if there's -- through central [ costs ] or more in the business units?

Yes. I mean, we see several synergies, I mean part of the synergies are within procurement, systems and IT and digitalization, but also, of course, [ cumulated ] accounts also with the head office, we already have one, and there will be some double functions going forward. So we expect synergies of around SEK 20 million when fully integrated in 2025.

Okay. And then on the home care business you get now, you have talked about in your own Home Care business that there have been some, let's call it, headwinds here in 2023. Has it been the same for Team Olivia?

We're in the same market. So we've had similar headwinds, but I think that we're seeing our own Home Care operations gradually improving. Within Home Care, customer density is a very important driver for both operational efficiency, quality and margins. And of course, this acquisition gives us a -- it's a sizable home care operation. It will give us further customer density in our own areas where we currently operate. It's about SEK 350 million in Home Care volume. So this will -- we expect this to drive further margin improvement in our existing Home Care operations, but also give us access to some new geographies we can further expand.

And then more in general, I mean, the margin for Team Olivia, it looks quite solid. It's looking at your same -- or your own comparable business unit. Is the margin for Team Olivia comparable or is it higher or lower? What do you [ posit ]?

What was the question?