Careium AB (Publ) (CARE) Earnings Call Transcript & Summary

Welcome to this live broadcasted report presentation regarding the second quarter of 2026, with a technology-enabled care company, Careium. Presenting today is newly appointed CEO, Tove Christiansson; and CFO, David Granath. After the presentation, there will be a Q&A where we are joined by equity analysts and viewers, investors can ask their questions in the live chat. Welcome, Tove and David.

Thank you.

Thank you.

Tove, before the presentation, since this is your first appearance as CEO at Careium, could you please give us a short presentation of yourself?

Of course. First of all, I'm really happy to be here, happy to meet with you. But of course, very happy and motivated to now have started as a CEO for Careium. I would like to introduce myself, but also a bit about my motivation about Careium. Looking back, what I've done. I've come from the security business. I've been working with sales around an alarm center, and I've been 10 years in the med tech sector. Last 10 years, I've been the CEO for Abilia, and Abilia is a company within Assistive Tech. And together with the team, we have done a good growth journey where we really found possibility to see how we can balance the passion for the user, but also add some professionalism and business acumen into the company. And that has been a very successful journey, which led to that we and I had the possibility to build Assistive Tech business area within MedCap. So I've been acquiring companies and growing companies. So yes, I think now, when I take a step into Careium, it's really nice to have that with me. And then the motivation for Careium then. Let's start with the market. I think this kind of market and industry is something that I really -- I really like to be in, and I really like it because you are there as an industry working very close with the society and working close with the society with the challenge that we have, people getting older, and we get more elderly in our society. That's not a challenge itself. That's something good. We live longer because we are living a healthier life. And that is -- especially, you can look at the woman here on the slide. This is how we want to live it. We want to be independent. We want to live free lives, and we want to be active in our lives. So that means that we would like to find some kind of support for that to make sure that we can live and stay at home and live free lives as long as possible. That's one side of it. The other side of it is the health care system and the care system. They have huge challenges to find people to really take care of all these people. And that means that we need to support and find new innovations and find a way to combine products and services to make sure to be the digital chain between the carer and the user. And that's where we want to operate. That's where we, and I think it's really nice to be part of the Careium and this journey. The other motivation is, of course, Careium itself, the company. I love the company with all this entrepreneurial spirit and the local presence. We have good operation in many of the main markets in Europe, and we can really see that with more than 500,000 users of our products and even more -- we have more than 300,000 connections into our own alarm receiving centers. That is something fantastic. That gives us a position that we can work close with the customers, and we can grow with innovations, and we can find the right way to find the balance and innovations around services and products, and that's what we're going to do. And as you wish or wish or I wish I am at least a very commercial and business-driven CEO, and I love to build companies. And with this kind of company where we have a good base to stand on and still a good growth potential and making sure that we can improve day by day. That's what I like. So yes, that's me.

Thank you very much, Tove. And please go ahead with your presentation and see you in the Q&A session.

Yes. Thank you. Me and David will do the report together, and I will start with the top line growth, and then David will take the cost side and the cash flow, and we will together answer on the Q&A. So let's get started. Looking at the highlights, you can really see that we are growing. We are growing in a good way. We are growing in all regions. We are growing with service sales, and we are growing with product sales. We're actually growing 24% versus last year. And as you see, we now have a number of connections to our alarm receiving centers above 340,000, and it's plus 6% versus last year. Still, you can also see that we are affected in the margins. We have done a lot of good service sales, but we also have some costs related to that, that is affecting our margin in a negative way. Still, we have an EBIT margin improved to 6%, and we have a free cash flow increase to SEK 4.7 million. So we have -- I think we have a good report and let us dig into the details into this one. I will start with the markets. Start with the Nordics. The Nordic markets, Sweden and Norway, we are growing with 13.6%. And I would say that the main driver of this growth is the new contracts of service with -- in Norway. And you can see that, that means that we are growing with 17% with services, and we have product sales of SEK 3.8 million. Here, you can see that we have the effect of -- in the gross margin. What you see when we go from 40.7% down to 39% is the investments that we have done to make sure to grow and take on this new contract in a good way. Another thing I would like to highlight when it comes to the Nordic is, of course, the Adda framework in Sweden. As you know, we signed the contract on the 12th of May. And looking at this contract, what it is, it's actually that all the municipalities has together now a possibility to use the Adda tender as their tender framework when doing their own tenders. What you can see in the Adda is that we have been working and operating within Adda for many, many years. We have been one of the main vendor in this tender. And you can now see that more vendors and partners or competitors into this tender. So what means in practical for us, that is something we will, of course, follow, and we will do our best to make sure that we continue to be the main vendor in the Swedish market. Looking then to United Kingdom, to U.K. In U.K., we are growing with 33.4%. We are growing both with services and products. We have a couple of new service contracts that we are growing with. And we also have product sales related to the Analogue to Digital Switch that we have in the market. Still, you can see with the sales of products to the Digital Switch also brings an installation service with very low margin. So that's what you can see is affecting us negatively in the U.K. market. So it actually takes us down to 36.9% in the gross margin. But we're growing on the top with service contracts in all these markets, which is really good. Netherlands. Netherlands, as you know, is a very service-driven market. And that's why also very interesting then to see in this quarter, we can see a nice growth in products. Product is actually growing, and we can see that, that takes us up in a new mix in the Netherlands. And this mix, of course, also then affects the gross margin a bit, but take and have in mind that it's a really nice margin we have in this market. Other markets, mainly Germany, with DACH and also the France, French market. That is something that is very product driven, and we are growing with products. We have a nice momentum in this market. We see that they like our products, and we are growing with our products. And this is very, very nice and good to see. So looking into that, we have a net sales increase of 30.4 percentage. We are up now then on SEK 28.1 million in these markets. So yes, it's a very nice growth and have in mind that since it's product sales, it can go up and down from quarter-to-quarter in this market. Still, summing up the top line growth. We see that we are growing in a very good way, growing with service contracts and product sales in a good mix and having the service sales with recurrent revenue that is giving us a good base to stand on going forward. And that's also why I want to highlight that we have the 6% growth in the connections into our alarm receiving centers. So top line is really good, and we are some kind of negatively affected in the gross margin due to the investments that we have done in the market. And that brings us to the cost side, and I hand over to you, David.

Thank you, Tove. And now an update on the profitability for the second quarter of 2026. EBITDA amounted to SEK 34 million compared to SEK 26 million for the same period last year with improved EBITDA margins. EBIT increased to SEK 15 million in the second quarter, giving an EBIT margin of 6% compared to 4.9% last year. We see improved profit levels driven by growth, while our margins reflected continued initiatives in product development and regional costs to support our growth. Profit for the period was SEK 10.7 million and SEK 6.5 million last year. With that, moving on to the cash flow. Cash flow from operating activities amounted to SEK 26 million in the second quarter compared to SEK 20 million for the same period in '25, mainly driven by improved earnings or profit. Cash flow from investing activities amounted to SEK 21 million compared to SEK 19 million last year. And as a result, our free cash flow increased to SEK 5 million in the quarter compared to SEK 1 million in the same period last year. Our cash totaled SEK 40 million and net debt was SEK 166 million. And I would like to end this with an update on the hybrid loan that we announced yesterday. So in connection with the listing in 2021, Careium obtained a hybrid loan of SEK 50 million from its former owner Doro. Yesterday, we entered into an agreement to fully settle this loan, by repaying SEK 35 million and writing off the remaining amount. This write-off will be recognized as retained earnings in the third quarter, and it will have no impact on the company's results. This provides Careium with a more efficient capital structure and enable us to pay dividends without the restrictions associated with this hybrid loan. And with that, I would like to hand over to Tove for a quarterly summary and some concluding remarks.

Yes. Yes. Thank you, David. Yes, I think it's fair to say that we are on a positive side when it comes to the report. It's always a good place to be at when you have a good top line growth. Still, of course, we also see that we have a kind of pressure on the margin. And that is something, of course, that also show the result bottom line. But we also see that these kind of investments to make sure that we continue to take service contracts and continue to be there taking contracts in the U.K. market for the Digital Switch, that is, of course, something we will continue to do. But of course, we will also see how we can work more smart or efficient in the organization. We also have an effect of the cost base with the initiatives we have done, and I think that's fair to say. But we also see the nice effect of those ones. So if it's negative or if it's something that's on the growth journey, that is -- you can see it from both sides, I would say. And that makes us then looking ahead, the prioritization. As you know, I'm quite new into the company still, and this will be something to continue to be close with customer, continue to be out in the market, continue to work close with the team in the organization and the Board to make sure that we take out the direction for the company, make sure that we have a good growth journey, both when it comes to the offering and the way of working. So yes, we have a high ambition for this company, and we will continue. We will take out the strategy and take the journey in that direction. And I think that's going to be a fantastic journey to do. It's not going to be an easy one. If it would have been, we would have been there already. But as a team, we have good experience and good competence, and we will do this together. So continuously, we will work with improvements, and we will go step by step into this direction. And that, I think, would summarize what we were aiming to say today.

Yes.

Okay. Thank you so much, Tove and David, for this presentation. And the quarter looks just as bright as the sunny weather outside.

And by that, let me welcome Fredrik Reuterhall, who is equity analyst with the bank SEB. Please welcome Fredrik with your questions.

I have a few questions. I'm going to start off with the gross margin there. It's a bit lower as you talked about. But do you expect the gross margin to be under pressure for the rest of the year?

David, what do you say? No?

Yes. I mean we see it as kind of stable levels. We see we have one big installation deal that we also mentioned in the report this quarter. Excluding that one, we are on par with last year. And I mean, we don't give any guidance into the future, but we don't see any big effects, and that's why we want to highlight this kind of big installation project. And there could be more of those also since the A2D to -- or Analogue to Digital Switch is ongoing and will continue for the rest of the year. So -- but we are not very concerned. I mean, we are on par with last year with increased growth. So yes.

Good. I have a follow-up question regarding that. But first, I mean, I know we talked about it before, regarding transport costs and material costs coming into H2. I mean everything that happens in the Middle East region and so on. Do you see that you're going to have higher transport costs going forward?

Yes. I mean, I think everyone is suffering from increased cost, mainly in the COGS, I would say. We don't see it affecting us so much during the fall. I mean what we see is more kind of towards end of '26, early '27. But again, it doesn't impact our gross margins so much. So that is something I worry too much about. But yes, of course, we are impacted as everyone else.

Yes. Okay. So I mean the product sales in the U.K. and Ireland continue to be very strong, in 2025 was up 12%, and now 33% in the quarter. And this switch that you're seeing now from analog to digital, is it broad-based, would you say? And is it like a sense of urgency there? Or is it more or less -- more like a one-off?

It's a sense of urgency. We are closing down the analog network end of the year. And that's what the whole country is aiming for. So it's actually a tough game out there. We have many companies into this and everybody does what they can to make it happen. So yes, it is a sense of urgency and it is something that will happen and is happening.

So you would say that this will probably continue to push growth in the U.K. and Ireland for H2?

Yes.

Yes. So I want to talk about -- a bit more about Germany and France. I mean, can you give us an update on how you work on -- to take on competition there, market position? And then, of course, the strong product sales for H2 as well? Is it any particular customers driving the sales? Or is it more broad-based?

I would say that we have a good momentum and a good position in those markets. The customer likes us. They like our product, and that's why we see we're growing. So that's a quick answer on that question.

Okay. And how will you continue to take market shares there?

Continue to do the work we do. I mean we have a lot of good meetings with our customers, good dialogues and the products are really appreciated. So we will continue what we do with good activities and good meetings and make sure that the products have and give the effect that we want them to have.

And I can add to that as well. I mean we are growing in Germany organically. So yes, initially, we started with fewer customers. But yes, we are gaining more customers, and they are growing over time. So -- but it's more -- it's the same kind of buying pattern, but -- and it takes some time to ramp up customers. So yes, I mean, I think we are having good traction and good development.

Okay. Good. And then a short question on Holland. I mean, of course, the service sales continue to be stable there, but the product sales, as you mentioned in the presentation, jumped up to SEK 6 million. I mean still small, but a large delta there. Is this the new run rate that we should model on? Or is it more or less a good quarter?

I mean, again, I mean, we don't really comment on the future, but we have worked on getting into the product sales in the Netherlands for some time. Now we are seeing some traction. And I mean, we have spent some time on it, and we are getting through, and we have no kind of visual on that it will stop, so to say.

Good. And then regarding the Adda framework, maybe this is a tough question, too, but my question is, how long does it take from -- you got a lead up until signing a new order within the frame agreement. Is it weeks or months? Or how does it work?

Do you mean Adda or which one are you referring to?

Yes. Adda framework in Sweden, yes.