Attendo - Stora Aktiedagarna Stockholm 11 mars 2025

Thank you for the invitation, and it's great to be here. I realized when I came here on the way that it was almost exactly ten years ago, actually, since I last spoke at Aktiespararna, so it's probably time to do it again. Clearly, Attendo is a company that started 40 years ago this year, and was one of the first private care companies in the Nordics. We started with a home care service and outsourcing business, but over the last 15-20 years we have transformed the company into one that primarily builds and operates care units in-house. It has been a quality journey and we have been first with many things that are now industry standards. Today we operate about 800 care units throughout the Nordics, mainly in Finland and Sweden, but also a smaller operation in Denmark. We employ over 30,000 people who work daily and serve approximately 30,000 care recipients.

I have been here for about seven years, this is my seventh year. I entered this sector largely because of the societal challenges we face as a sector. On the one hand, an aging population – the proportion of elderly is increasing, and in the next five to six years, the number of places needed in elderly care and home care will increase by over 30% in Sweden, Norway, Finland, and Denmark. So there is a huge demand surplus. These needs must be taken care of, and it is often people with multiple diagnoses who have quite complex care needs. These are needs that currently very few municipalities and regions in the Nordics have the capacity to handle. Perhaps only in our markets Stockholm and Helsinki, which have the size, resources, and expertise needed to develop future quality work and quality programs, to work with method development, to develop and build the care homes of the future, to make the investments required in digitalization to work smarter and better, so that the available competence can be focused on actual care with as little time as possible on administration. So we need large players who can make the investments needed to develop future care and meet the needs that exist. And we want to be that player – not just to run care units, but above all to make a difference and contribute something to the market.

Therefore, our most important internal metric is not just that we drive the right process quality, that is actual quality in routines and other things, but above all to create appreciated care. What we measure a lot is every quarter where we look at both employee satisfaction and engagement, but also what we call 'customer fate' – that is, the care recipients' own perception of whether they appreciate the care or not, and the relatives' perception. This is something we have measured quarterly in recent years, and there are also international or national studies to compare. Our reason or purpose is to be able to provide better and more appreciated care at a lower tax cost. That is why it is important for us to measure this and also to invest heavily in staff, leadership, education, and training to ensure we do this. Today we have higher process quality than the municipal sector or publicly operated care. We also have, on average, significantly higher employee satisfaction and higher customer satisfaction compared to the public sector, at a tax cost that is about 10% lower in Sweden and about 20% lower in Finland.

The growth matrix: the trends support strong growth going forward. There is a need for about 30% more capacity in the Nordics where we are present over the next five years. We also see that social care is becoming more complex, requiring more capacity and expertise even in social care, which currently makes up about a third of our business. We have also set a strategy for growth that is balanced growth, combining organic growth – that is, we build and open ourselves – and acquisitions, while also being able to work with active capital allocation to shareholders. If we go back a bit to where we came from: in 2023 we completed a turnaround that we started three years earlier. After the Finnish healthcare crisis in 2019, which led to a major re-regulation of the Finnish market, and the pandemic in 2020, we have done a lot: strengthened operational capabilities, worked on pricing and contract situations, improved occupancy, and worked on our geographic footprint. We completed that in 2023, where we made a substantial improvement in underlying earnings from about 70 oere profit per share to 3 SEK in one year. We also significantly reduced the company's debt ratio. In 2024 we set a new strategy: we said we should be able to deliver earnings per share of at least 5.50 SEK by 2026, with a mid-term target in 2024 of at least 4 SEK per share. We also said we would lower the debt target to make the company more solid, from 3.75 to between 1.5 and 2.5 times net debt to EBITA, and maintain the target of about 30% dividend to shareholders and continuous share buybacks.

Part of this has been about continuing to improve occupancy, continue working on operational efficiency, continue investing in staff and leadership to reduce sick leave and staff turnover, which we have succeeded in over the past three years, more than halving staff turnover. This has led to increased stability in care but also better cost efficiency. Looking at what we achieved in 2024, we had a very positive development in all our non-financial targets and also a very good development in our Finnish business. Moreover, we made a large acquisition in Sweden within what we call LSS and individual and family operations – Team Olivia, the third largest player in those segments in Sweden. It had 3,500 employees and 120 operations, which we acquired on April 1 last year and worked on integrating throughout the year. As part of that integration, we also created two new brands: Unika for LSS and Viljan for individual and family operations, which we completed by year-end. So now we are ready in 2025 to both build up those operations to create a leader in the Swedish market and drive better growth. We also achieved our short-term profit target of at least 4 SEK per share in 2024; we had a target of 4 SEK and ended at 4.08. But if we remove integration costs, it was higher. The next target is to reach earnings per share of at least 5.50 SEK by 2026. Looking at revenue and margin development, we currently have an EBIT margin of about 5%, but we came from a low point of 1.4% in 2022, so it has been a good development in recent years, driven by the turnaround in Finland and better operational efficiency, lower staff turnover and recruitment needs, and good stability in the underlying business. We have also managed to grow organically on the top line quite well, from 14.5 billion in revenue in 2022 to 19 billion at year-end 2024. Looking ahead, we expect continued good growth of about 10% annually at least after 2026, with higher growth until 2026. In 2025, especially with Team Olivia fully integrated, we can build up occupancy further. Normally, occupancy drives profitability – with high occupancy in our properties, operations improve. Historically, we have had occupancy around 92%. Today it is 86%, which is relatively low historically, so we think we have a lot left to work on with occupancy, even though efficiency is at a good level.

To summarize for 2025: we will continue to focus on our non-financial figures – that is our purpose in the market, to create the best possible care for our care recipients. This requires investment in leadership, education, culture and values, specialist training, and method development, because that is what will generate results. We also want to continue driving operational improvements, not least now that we are done with integrations. We want to leverage the two new brands and the new organization in Sweden within LSS and individual and family and social psychiatry to truly create a strong player in those fields that many municipalities and care recipients need. We also want to continue improving occupancy in elderly care in Sweden, Finland, and Denmark, which currently stands at about 86% in all markets. We aim to increase that. For our long-term target of 5.50 SEK per share, we have assumed about 1% annual occupancy growth, which we consider conservative and that we should at least achieve. We will also continue our acquisition strategy alongside organic openings, where we open new capacity at about 2% of profitability each year, and also make selective acquisitions where appropriate. Just last month we actually acquired two companies in Finland, so we do that continuously. I think I'll stop there and open for questions.

A little over 25%, a little over a quarter of Attendo today. I think it will be about that size because over the next five years, due to the satisfaction of needs...

I think everyone can calculate that it will be needed. No, I think it will be quite low partly because there are very few players who have both the money and the balance sheet to actually take on the large leasing commitments required to build this type of care facility. We have actually built more than anyone else in Europe. We have built 250 nursing homes ourselves. No one else has done that. But it is quite a large leasing commitment that one must take. So it is essentially only us and Amba in Sweden and Esperi and Mehiläinen in Finland, only four of us who do it. So that can be ruled out.

I think they are much less going forward than they have been in the past. The biggest political risk we had was in Finland and it has actually materialized. That market in Europe has regulated elderly care the most in recent years. We have had constantly changing regulations and requirements in 2020, 2021, 2022, 2023, and 2024 until April was the last regulatory change, and then a new one came on January 1. They say they are done now. With that regulatory framework, I think the Finnish market will be stable. We operate 21% of all care in Finland, so it is important for us.

Well, it's more this type of add-on acquisitions rather than such structural large deals. There are no more Team Olivia left on the market to acquire. So it's add-on acquisitions. Our long-term growth plan is to grow by about 2% organically and 2% through acquisitions, which are add-ons. In Sweden, within elderly care in nursing homes, there is nothing to acquire because it's only us and Vardaga that build. The acquisition opportunities are mainly in LSS, individual and family operations, and to some extent home care, which is a fragmented market. In Finland, it looks different – there it is within elderly care that one can acquire because that market is quite fragmented after the three big players.

No, they don't sell public operations. But on the other hand, looking at Finland from a European perspective, most of Europe has privatization around 70%. Sweden, Norway, and Denmark are outliers – we have the lowest privatization rates, somewhere around just over 50%. But in Sweden, only half the market is open because about half of the population lives in municipalities that have privatized. In those areas, privatization has been done for about 40%. So there is clearly a need, and it is a municipal need – they buy services from private providers just as they buy other services.

Yes, I definitely think so. There is such a huge need. We see care queues growing in many municipalities in all our markets. Looking at municipal plans, very few municipalities have concrete construction plans and the capacity to build the capacity that will be required. So I think it's up to private players like us to provide that capacity and expertise. An average municipality might build a new nursing home every 20 years, while we, over the last five years, have built on average 20 per year. So we clearly have the competence and know-how, and we can build cheaper and better.

It is mostly headquarters. Local organizations are needed for method and quality development, HR, etc. The regulations are so local that the biggest synergies are local. Between countries, there are relatively few synergies, except to some extent in purchasing.

There isn't much larger structural to do. Those are smaller add-ons. But Team Olivia was still quite large, but that doesn't prevent us from doing dividends and buybacks at the same time. Much is about reinvesting in the company, either through acquisitions or by increasing opening rates and opening more capacity. Looking at our debt ratio, we have brought it down. With our balanced growth strategy, we can do both – so yes, you can expect dividends and share buybacks.