Attendo AB (publ) ($ATT)

Welcome to Attendo Q1 report 2026. [Operator Instructions] Now I will hand the conference over to CEO, Martin Tiveus; and CFO, Mikael Malmgren. Please go ahead.

Thank you, and good morning, everyone. Today, we present Attendo's results for the first quarter. As usual, we will focus on the key drivers behind our performance, our operational progress, and how we continue to execute on our strategy. I will start by giving a general update on the development in the quarter. Then our CFO, Mikael Malmgren, will take you through the financials in more detail. Next slide, please. So let me start with the key highlights from the quarter. We continue to see positive development in both Finland and Scandinavia, driven by higher occupancy, stable quality indicators, and improved operational efficiency. While reported net sales decreased slightly, underlying growth in continuing operations remained strong at around 5%. The delta is fully explained by ended outsourcing and Home Care contract in Sweden as well as currency effects. Profitability improved significantly with lease adjusted EBITDA increasing by around 40% to SEK 326 million. The comparison quarter last year was affected by the transition to the 0.6 staffing requirements in Finland that came into effect January 1 last year. And this means that this quarter's result in our Finnish operations reflect a normalized run rate based on current staffing ratios. In Scandinavia, we continue to improve earnings according to plan. Adjusted earnings per share continued to increase, and we delivered a strong free cash flow of SEK 211 million, supporting continued investments in new capacity. During the quarter, we opened 2 new Disabled Care units in 12 new places. Overall, this is a quarter where we clearly see the effects of the actions taken during the past year, coming through both margins and cash flow. By continuing to develop quality of care and adding new care capacity to society, we're part of the solution to solve the care challenges of both today as well as tomorrow. Next slide, please. Turning to occupancy. Occupancy is a key driver for profitability, and we continue to see improving occupancy across both Finland and Scandinavia. At the end of the quarter, we reached 88%, up 2 percentage points year-on-year. The improvement is driven by stronger inflow of residents, active capacity management, and a continued focus on matching supply with demand in each local market. Next slide, please. So let's turn to the development of our rolling 12-month lease adjusted EBITA margin. We see a continued uplift in margins in both business areas, both sequentially and year-on-year, with lease adjusted group EBITDA margin reaching above 7% in the quarter. While we've seen a steadily improving margin trajectory in Finland for many consecutive quarters, I'm pleased to show that we continue to deliver on the expected margin uplift in Scandinavia in Q1. As we have previously stated, we expect Scandinavia to continue to improve during 2026. The improvement is driven by several factors: Higher occupancy, improved operational efficiency, a gradual exit of contracts with unsustainable terms, and better cost control across the organization. At the same time, underlying demand remains strong, and we continue to steer our business mix towards an increased focus on own operations, where we have a stronger control over both nonfinancial and financial results. With that, I hand over to our CFO, Mikael Malmgren. Please go ahead, Mikael Malmgren, and turn to the next slide, please.

Thank you, Martin, and good morning, everyone. In the quarter, we saw underlying growth in both business areas, approximately 4% in Finland and 7% in Sweden. However, growth was offset by ending contracts in Sweden and FX headwind, which resulted in reported net sales decreasing 1.6% to SEK 4.7 billion. In Scandinavia, the growth was down 1% reported. However, underlying growth in continuing operations, which excludes ended and exiting contracts, was 7% with good development in owned homes. Ending and exiting contracts will continue to weigh on sales throughout 2026. In Finland, reported net sales was down 1.9%. Adjusting for currency, the business grew 3% and 4% when we exclude the divested child welfare business. Improvement largely driven by an increase in net new customers compared to same quarter last year with a good development in own nursing homes. Currency had, as expected, a larger negative net sales effect. And based on current Euro SEK trading, we expect, although slightly less, still a negative FX effect also in the coming quarter. Next slide, please. The reported result improved to SEK 470 million. Correspondingly, the lease adjusted EBITA increased from SEK 234 million to SEK 326 million, up 39% versus same period last year. Lease adjusted EBITA in Scandinavia was SEK 24 million higher. And in Finland, the lease adjusted EBITA improved SEK 77 million, excluding FX effects. Currency had a SEK 16 million reported and a SEK 12 million negative effect on lease adjusted EBITA. Next slide, please. Growth for Attendo Finland was 4%, excluding divestments and FX effects and 1.9% reported due to mainly a weaker euro. Lease adjusted EBITA was SEK 254 million, an improvement of SEK 65 million or SEK 77 million, excluding currency effects. The quarter improved by more sold beds in primarily owned nursing homes, continued improved manning driven by investments in staff development, working conditions, and support systems as well as reduced sick leave. In addition, last year, Q1 was as previously mentioned, impacted by the transition to 0.6 staffing density requirements. The transition is now estimated to have impacted 2025 results negatively by close to SEK 25 million. And please note that during '26, we plan to exit a few low or no occupancy units, which should lead to further improved productivity. At the same time, we are now scaling up our investments with confirmed plans to add about 400 additional beds during 2026. And in line with our sustainable growth strategy to add 2% to 3% EBITDA growth per year, we acquired one smaller bolt-on in Q1 and 2 more in April, including separately press released [indiscernible]. Next slide, please. In Scandinavia, underlying net sales growth was 7%, driven by growth in own homes and recent acquisition. However, reported net sales growth was slightly negative due to the ended and exiting contracts and which I will come back to on the following page. In line with our communicated financial plan and the building block of margin uplift, the lease adjusted EBITDA improved to SEK 93 million, up SEK 24 million versus last year, improvement primarily driven by own homes and improved central costs with ended outsourcing contracts having no material impact on the result. The result was slightly negative, affected by Home Care exits where the contracts generated about SEK 5 million in losses. Going forward, we still foresee some minor negative impact from ongoing Home Care contract exits as they roll out. During the quarter, we opened 2 new Disabled Care units with 12 places and also won 3 quality tenders in Disabled Care to a value of SEK 20 million on an annualized basis. Currently, we have 286 beds under construction, and we will open 1 new 60 beds nursing home end of the year. Next slide, please. So to better showcase underlying growth in Scandinavia, we introduced in Q4 a more detailed reporting of continuing operations versus ended and ending contracts. As you may recall, we showed the total reported net sales and EBITA at the bottom of the page from left to right. While at the top column of the page, we see the Attendo underlying business, which we call our continuing operations and where the ended and ending contracts have been excluded. Attendo margins continued to improve for the second consecutive quarter due to improved ways of working, faster responding to changes in manning and sales, while at the same time exiting nonstrategic outsourcing contracts and exiting non-sustainable Home Care contracts. As you can see, Attendo continuing operations showed a net sales growth of 7% and a margin of 5% in the quarter, up 1.5% compared to same quarter last year. At the same time, the contracts which have ended or will end had a significant impact on net sales, but limited impact on EBITDA. Next slide, please. In total, we now have a pipeline of 1,350 beds and up by 100 versus previous quarter, with total 930 new beds expected to open during 2026 and 2027. And worth reiterating is that our pipeline is built on our strategy to open in micro locations where we forecast a strong need for our services, a good payer relationship with a buying mechanism in place, a growing population as well as good commute options for both staff and relatives. Next slide, please. Our free cash flow to firm showed strong resilience and improved to SEK 211 million compared to SEK 50 million same period last year. As a result, the rolling 12-month free cash flow to firm increased to SEK 1,340 million. During the quarter, we repurchased SEK 201 million worth of shares. And today, we can report that we also reached our target mandate from last report to buy back SEK 200 million worth of shares between February and the time of this report. Since the initiation of our continued share buyback program back in February 2024, we have repurchased approximately 5% per annum of our outstanding shares. And in line with our EPS strategy, our ambition is to continue our share buyback program. And if the AGM later today approves a new mandate, we aim to disclose a new program shortly. Next slide, please. So let's have a look at some of our key financial metrics. If we start at the top left, the adjusted earnings per share improved by SEK 0.34, up 39% versus last year, improvement primarily due to higher lease adjusted EBITDA and further supported by continued share buybacks. If we turn to the top figure on the right and our lease adjusted margin percent, adjusted for nonrecurring items in '24, we continue to improve our lease adjusted EBITDA margin. In Q1, the rolling 12-month margin was 7.2%, up 1.5% compared to the quarter last year. And if we look at the figure at the bottom left, our lease adjusted net debt-to-EBITDA ratio remained at 1.1 and down 0.7x compared to same quarter last year. And finally, if we look at the figure on the bottom right, net interest expenses in the quarter was SEK 24 million. SEK 7 million better than same period last year and SEK 38 million lower on a rolling 12-month basis, further supporting our adjusted earnings per share growth. With that, I hand over to you, Martin.

Thank you, Mikael. So let me summarize. We continue to deliver appreciated care, creating value for both individuals and for society. Our latest surveys show high and stable satisfaction across all stakeholder groups, which confirms the resilience and sustainability of our operating model. The high and stable quality across our operations is paired with solid financial performance, driven by continued improvement in occupancy and strong operational efficiency. We also continue to strengthen our geographical footprint by gradually leaving less attractive areas and opening new units in locations with stronger long-term demand and better economics. With one new bolt-on acquisition made during Q1 and another 2 signed early Q2, we continue to deliver in line with our strategy for balanced growth, targeting at least 2% annual EBITDA growth through acquisitions. For the first quarter, rolling 12-month lease adjusted earnings per share increased to SEK 6.47, well in line with our financial plan and roll towards our new financial target for reaching at least SEK 9 per share in 2028. Our strong financial results and cash flow enable increased investments in new capacity to meet the growing demand for care in society. Currently, we have around 930 new care beds under construction. Overall, Attendo is well positioned to meet increasing care needs in society while delivering sustainable and profitable growth for shareholders. With that, I'd like to thank you for your attention and open up for Q&A. Operator, please go ahead.

[Operator Instructions] The next question comes from Julia Angeli Strand from Handelsbanken.

I have 3, and I take them one by one. And firstly, on the Scandinavia margin trajectory. I know you don't provide specific margin guidance, but it seems like Scandinavia is showing a nice turnaround with margins up 1.3 percentage points. So could you elaborate how much of your initiatives that have already materialized and whether you expect impact to come through gradually or be more back-end loaded, looking at the underlying operations?

As we said, we don't guide on margin. But as we have previously stated, we expect a gradual improvement of margins in Scandinavia throughout 2026. So I think this is just a first proof point on that. And just to add as well, you may be aware, last year, we also had some one-off effects impacting the reported results in Home Care in both Q2 and Q3.

And then secondly, a question on Finland. Demand appears to be quite strong. So could you give an indication of how much of the planned openings you expect to fill during 2026? And if you think that this strong level of demand is sustainable?

If you look at the underlying demand growth due to demographics, it's strong in all our markets, but it starts a bit earlier in Finland than in Sweden, supporting capacity growth already from now and onwards. We are -- we will start opening at a higher pace starting Q2, meaning the -- from next quarter on in Finland. And we expect to fill new capacity up to mature level within about 12 months' time period from opening.

And then there's a follow-up question there. Do you -- when do you expect the demand in Sweden to increase In line with what we see in Finland, I mean?

Yes. I mean in Finland, we've already seen it. I mean we expect Sweden demand growth to start picking up from now and onwards. In Finland, it actually started already a few years ago. So we expect demand growth to start picking up basically from now on in Sweden. And we are planning to start opening in -- from Q4, we opened the next one in Sweden and then opening at a higher pace from 2027 Q1 and onwards.

And just my last question then. Can you elaborate a little bit on the rationale behind the latest acquisition, which is a bit outside your core elderly care business? Is this a segment you want to grow within? And also wondering just considering you divested Disability Care unit last year to a competitor. So just maybe a few words there.

Sure. I think this is very much in line with our strategy for Finland. We -- about 75% of our business in Finland is elderly care. That's correct. The remaining part is divided between Disabled Care and service psychiatry, including substance abuse, which is a fairly big segment in Finland. So this is complementary to our already existing substance abuse operations in Finland. A-klinikka is a very well-known brand in Finland. I think it will strengthen our total offering within that segment. So we're really happy about that acquisition. With regards to the small divestment that we did earlier in Finland, which was child welfare, that is a very small segment for us. That was a bit subscale. So that's also part of us reducing complexity and streamlining our offering.

The next question comes from Philip Ekengren from ABG SC.

So Finnish margins improved considerably. Just trying to understand a bit moving forward here, but how much of the easier staffing comp? Or you went into the year with sort of a different cost base before the change of staffing requirements. So how much of the improvement in margins is the easier staffing comp washing through versus structural improvements that should persist into Q3 and onwards?

So thank you for the question. We estimated now that the impact from the staffing transition impacted negatively Q1 last year by approximately SEK 25 million. So that would correspond to slightly north of 1 percentage point.

And then just on occupancy in Finland perhaps, it's at 87%, if I'm not mistaken. And what's the practical feeling here? And what's the -- and I guess this is sort of hard to quantify and you don't want to give guidance on it, but what's the margin sensitivity for each percentage point of occupancy from here if we were to see 1 percentage point more occupancy, what would that imply on margins?

Thank you for that. That's a great question. I believe as we state in our EBITDA growth -- sustainable growth model, 1 percentage point in occupancy development generally translates into an additional 2 percentage EBITDA growth on productivity.

And then just on the leverage, it's at 1.1. How do you see sort of the trade-off between potential new M&A, any sort of any plans on the pipeline? Could you give us any color on that versus accelerated capacity additions or buybacks and sort of the mix and how you think about that moving forward throughout the coming year?

As we have stated in our growth model, we plan to grow with a combination of organic openings and bolt-on acquisitions. If you look at our cash flow, it's strong enough to support a combination of both dividend, continued share buybacks, organic growth, and M&A. And I mean, I think as you noted, leverage is quite low at 1.1%, in our target range of 1.5 to 2.5. But on the other hand, I mean, it gives us also maneuverability now when we are increasing growth base, we're increasing organic growth. So I think we're in a good position to continue to grow the company forward.

The next question comes from Bjorn Olsson from SEB.

First, just a follow-up then on the occupancy in Finland. The trend seems to be slightly decreasing. And as you're guiding for a higher pipeline of new openings, do you think that will sort of slightly compress the occupancy improvement for the quarters to come, maybe Q2, Q3?

Yes. I think that's a good question. And of course, when we're opening at a higher pace, yes, that will very likely hold back overall occupancy development somewhat if you look at the average overall occupancy, it's only natural. When we look at our growth model for balanced growth, we separate EBITDA growth from new openings and adding capacity from occupancy development in existing portfolio. So we still estimate that -- we still target occupancy improvement in existing portfolio towards our target of reaching 92% on average, while, of course, new openings, it will take -- we expect it to take at least 12 months from opening to fill up new capacity forward.

And do you think -- is it credible to think that the new openings have a steeper path towards 92%? Because I guess you opened where the demand is.

What we can say is that the ones that we have opened over the past 18 months have filled up within a year.

Filled up, you mean 92%-ish?

Yes.

And on Scandinavia, I maybe speaking only for myself, but somewhat extrapolated perhaps to the entire audience of analysts. We still missed your margin improvement by roughly 50 bps on average. And I mean that's -- you're guiding quite transparently on the continuing operations versus existing. So the miss from our side seem to be driven by efficiency initiatives from your side. Could you give -- I mean, just to follow-up on Julia's questions maybe, but could you give any guidance as if we are to expect additional impact from cost initiatives? Or was this it, so to speak?

I think these are fruits from long-term work, partly work on -- I mean, in a company like this, we have more than 30,000 employees working shifts, so day and night. What is really important is a combination of leadership training, which lowers staff attrition, which lowers sick leave numbers, improve stability in operation. It's also a question of leadership density and get that stability in operations. And then digitalization, which is something that we continuously work with. And we have several AI pilots going on, and we roll them out continuously to save time for administration and improve efficiency. All that combined makes operation more efficient and also that's dependent on, for example, rental staff, which is now at close to 0 level. And that is what we're seeing the fruit of. So it's rather a long-term gradual improvement rather than step changes.

So we could expect some additional cost initiatives to run through to the P&L, I guess, then?

Yes.

Yes. We continuously work on improving our ways of working.

The next question comes from Kristofer Liljeberg from DNB Carnegie.

Three questions. First, on the Easter effect, which I guess should impact margins negatively now in the second quarter versus the first quarter. But I guess, last year in Finland, margins were pretty flat sequentially because you had that staffing transition effect in Q1. So would you be able to -- or would it be possible maybe to quantify the Easter effect for Finland and Scandinavia now?

Very detailed question, Kristofer. I would be happy to come back to all of the analysts on that question specifically.

But I guess it's fair to assume lower margins in both markets in the second quarter versus the first quarter? Or will this be offset by continued underlying improvements, similar to what we saw last year?

I mean, generally, Q2 is a bit, I would say, on the margin compressed for the Easter effect versus Q1. That is correct. And last year, the Easter was in the same quarter. But I don't think you can make the same comparison Finland and Sweden also because of the still ongoing improvement in underlying business in Scandinavia.

So lower margin in Finland, but sequentially, but maybe not in Scandinavia.

Yes, that's the direction we're looking at.

Yes. And then this difference between underlying sales and reported sales, of course, FX is what it is. But for how long do you expect to have this type of large impact from closed units and ended outsourcing contracts?

Yes. So I think we were pretty much at the peak in Q1. It will now gradually become lower over the next 3 to 4 quarters, and then it will be very little after that is our expectation at the moment.

And when we move into 2027, would you say that you have closed most units that you want and have reached low enough level for outsourcing contracts so that we will see growth picking up from new openings?

Yes, that's the overall plan. But we continue to, of course, evaluate our contracts. But that is the overall...

And just the final question, if I look at the financial net adjusted for leases, it seems to be some other factors here impacting then the net interest. Is that FX or something else?

Well, that's a great question, and that's correct. FX has a -- it's called an accounting effect on our euro-based loan. So when the euro versus SEK goes either up or down, that has a one-time effect on the total financial net.

[Operator Instructions] The next question comes from Filip Wetterqvist from SB1 Markets.

I have 2 questions. First on Finland. You mentioned in the report that you plan to take over a number of homes currently operated in the public sector during 2026. Are those homes already on full occupancy? Or do you have to fill beds yourself and taking over? And what is the margin profile of those homes compared to homes in own operations?

That's a great question. We plan to at least take over one home in Q2 or we have taken over one home in Q2, and we plan to take over another one in Q4 at least. They are generally operating at our target occupancy or better, and we believe we can run them in the same way we run our current operations.

And then my second question, if I'm not mistaken, the contract with Linkoping Municipality rolled off here in April. How much did that impact sales in Q1? And what impact will have in Q2? And did it have any effect on earnings as well here Q1, Q2?

Yes, that's correct. The Linkoping contract rolled off now. We have previously stated it's approximately SEK 100 million revenue. So it has about SEK 25 million impact in net sales. We don't discuss or disclose on a contract level EBITDA.

There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Well, thank you all for listening in for very good questions and comments. And that's all for us then. If there's anything else, then just please contact us directly. Thank you for listening in.

Thank you very much.

Thank you.