Today, and thank you for standing by. Welcome to the Ambea Interim Report, First Quarter 2025 Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone keypad. You will hear an automatic message advising your hand is raised. To withdraw a question, please press star one one again. Please be advised that this conference is being recorded. I would now like to hand the conference over to our speaker today, Mark Jensen, President and CEO. Please go ahead.
Thank you so much, and welcome, everyone. Today, we will review Ambea's performance for the first quarter of 2025. My name is Mark Jensen. I'm CEO of Ambea, and I'm joined by our CFO, Benno Eliasson. Together, we will walk you through our results and highlights and the key developments during this period. After that, I will summarize the quarter and compare Ambea's performance to our financial targets before we open for questions. I would like to begin with a brief overview of Ambea. Ambea remains the leading care provider in Sweden, Norway, and Denmark, and with the market entry in Finland, we offer high-quality care and support for over 16,000 care receivers across more than 1,000 units in the four largest Nordic countries. With that in mind, let's look at the acquisition of the Finnish business in Validia.
The acquisition of Validia was closed according to plan on April 1st. Validia will be reported as a new business area and be consolidated in Ambea's accounts with full effect in the second quarter. The reception to Ambea's acquisition has been positive for Validia's employees and customers alike, and we are impressed with the quality and engagement of the local team. The integration of Validia is proceeding according to plan. Validia is a platform acquisition in a new market for Ambea, and the integration is therefore, in some parts, lighter than what we are used to when acquiring in existing markets. A key part of the integration is to pave the way for leveraging Ambea's shared knowledge and best practices across all our markets, contributing to a stronger Nordic welfare model.
Most of the integration is expected to be completed in 2025, but the full integration will complete in 2026 with the establishment of Ambea's IT platform in Finland. The acquisition gave Ambea access to a sizable care services market with a healthy growth. Concurrently with the integration, the key focus of Validia is to deliver continued growth, which we are optimistic about, and maintain good quality of care to our Finnish customers. The market for M&A within care services in Finland is quite active. We are currently evaluating M&A opportunities and will continue to do so going forward. Let's go straight to some of the important achievements within care quality. As we continue to grow, it remains just as important that we deliver safe, high-quality care every single day. We follow a systematic approach to quality and sustainability with monthly follow-ups of all our care units.
During the quarter, we presented Ambea's Quality Award, an annual recognition given to one care unit within each business area. These units stand out through their exceptional quality work, closely aligned with Ambea's values and shared working methods. Notably, they are also among the top financial performers in their peer groups, reflecting the strong correlation that we have between high quality and healthy financial outcomes. With over 1,000 units spread across various regions where employees provide daily care and support, local leadership plays a critical role in ensuring consistent quality. This quarter, we conducted our first Leadership Index survey of the year, resulting in a score of 78 out of 100. This is a stable and encouraging result, underscoring our long-term commitment to present and supportive leadership. Leadership remains a cornerstone at Ambea, and we continue to support leaders at every level.
A key part of this effort is ensuring that all employee survey results are discussed in the local teams, and important improvement areas to each team are identified and agreed upon. This fosters a culture of continuous improvement and an improved work environment. Finally, attracting the right talent is vital to our continued success, but recruitment can be time-consuming. This quarter, we introduced a new AI-based recruitment tool in Vardaga. It's appreciated by candidates and managers and is already helping to streamline the hiring process, allowing our managers to spend more time focusing on care and on leadership. You can read more about our quality and sustainability work in the quarterly report, as well as in our 2024 annual report that we have recently published. Now, I would like to highlight some of Ambea's future growth opportunities.
We remain focused on expanding our services to meet the growing demand for care, fueled by an aging population and increasing care needs. In Q1, both Nutida and Stendi signed new contracts, adding 15 care places in total to the pipeline. Our pipeline is by far the strongest in the Nordic care sector. We have 1,285 beds and care places in our own management pipeline, most of them in Vardaga. The pipeline decreased slightly compared to the previous quarter due to newly opened units in the first quarter. We plan to open 280 beds in Vardaga, 81 care places in Nutida, and 49 beds in Stendi during the coming 12 months. We are not only opening new care units but also expanding existing units. We signed a contract to increase capacity by 30 beds at a planned nursing home in Täby, Stockholm.
Looking at Ambea as a whole, more units are under construction, positioning us for future organic growth in our markets. Acquisitions are an important part of our growth agenda too, and we will now have a look at the acquired growth. As you can notice, we made acquisitions in almost all business areas between 2021 and 2025, except for Stendi. Nutida was most active in bolon acquisitions, expanding our footprint within social care in Sweden. This is a part of our strategy to strengthen our service offering through qualitative bolon acquisitions. On April 1, 2025, Ambea acquired Validia in Finland, making us the only care provider with a strong presence in the four largest Nordic countries. Validia runs operations in residential care and support for people with disabilities, thereby adding approximately SEK 1.4 billion in annual net sales.
After the quarter ended, we acquired Avasta, which operates care units in both Vardaga's and Nutida's operational areas, with annual sales of approximately SEK 145 million. Avasta operates a nursing home and four care units for adults with lifelong disabilities and psychosocial problems. Control of the company was transferred on May 5th. Further Bolon acquisitions are expected in the coming quarters in several business areas as we continue to identify strategic opportunities for growth in all Nordic markets. Therefore, we foresee a continued active year within M&A. Let's look at total revenue growth. The organic growth illustrated in the purple bars continues to show the strong trend observed since 2022. The total organic growth in this quarter was 4.2%. Acquired growth was 1.9%. We saw negative currency effects of - 1.5%, which affected overall growth. Summing up the highlights of the first quarter.
In conclusion, the first quarter of 2025 has been another successful quarter for Ambea, marked by strong financial performance, continued organic growth, and improved occupancy. Net sales increased by 5%, driven by 4% organic growth. Group EBITDA rose by 10%, reaching a margin of 8.4%. Altiden in Denmark continues to see profitability improvements from higher occupancy and strengthened operations and showed positive earnings again this quarter. Ambea entered into agreement to acquire Validia in Finland, making us the only care provider with a sizable platform in all four large Nordic countries and a strong position for growth. I will hand over to Benno, who will provide a financial overview of our performance this quarter.
Thank you, Mark. The good organic growth we have seen in the recent quarters continues. In Q1, we achieved 5% growth in net sales, driven by acquired and startup units in Nutida and increased occupancy in our care units in Vardaga and Altiden. Stendi had negative growth in SEK. In local currency, net sales growth was positive. Klara saw a decline in sales due to a weak external market. Turning to the EBITDA development, this slide shows how the different business areas have contributed to the adjusted EBITDA of the group. The first quarter last year was affected both positively by an extra invoicing day and negatively by the Easter holiday. This has, of course, affected the comparison for this quarter. This effect was negative for the Swedish business areas, Vardaga and Nutida, and positive for Stendi and Altiden.
Adjusted EBITDA increased by 10%, and our margin improved to 8.4%, driven by strong results in Vardaga and Stendi, and, of course, the positive earnings in Altiden. Nutida's EBITDA was lower than last year, down one and a half percentage points, mainly due to the occupancy challenges in individual and family care segment. Stendi's EBITDA increased by 1.3 percentage points, reflecting a favorable demand that has contributed to the stable occupancy. Altiden's EBITDA increased significantly by 5.3 percentage points compared to the same quarter last year, reflecting the good occupancy growth together with operational improvements, specifically in social care. Now to the cash flow development. Our operating cash flow amounted to SEK 425 million, with a stable cash conversion in the quarter. The decrease compared to the same quarter last year is mainly explained by an increase in working capital.
This is attributable to normal fluctuations in payment flows related to the beginning and the end of the different quarters, and the underlying cash flow remains strong. This slide shows the way from the adjusted EBITDA down to the free cash flow post-tax of SEK 713 million, excluding IFRS 16. We can see that we have invested SEK 129 million in fixed assets. We have paid SEK 141 million in interest and SEK 144 million in taxes rolling 12. We had a negative effect from working capital of SEK 43 million. Over time, we think that the net working capital contributions to the cash flow will be neutral to slightly positive. The utilization of the high free cash flow I will show on the next slide. This is how we have used the generated SEK 713 million. SEK 130 million was distributed to our shareholders as dividend.
254 million was spent on the four acquisitions we made in 2024, and SEK 534 million was spent on the two share buyback programs. As you can see here, our net debt has increased by SEK 169 million since the same quarter last year. This quarter, we can also look at the free cash flow development over a longer period of time, having a slide that shows the last three years of free cash flow. Comparing this, we can conclude a strong increase of almost 25% in terms of annual growth rate. This strong growth speaks for the good cash flow development across our businesses. High free cash flow allows us to maintain the financial flexibility, supporting both dividend payments and strategic investments, including acquisitions and share buybacks, as well as reducing debts. Now, a look at the different business areas, starting with Nutida.
Sales increased by 8%, which is driven both by acquired operations as well as newly opened business. Nutida opened three new assisted living facilities with a total of 29 care places. As an offsetting effect, we saw continued lower occupancy in some parts of the individual and family care segment. Nutida is working actively and adjusting its service portfolio and selected units, aiming to increase occupancy and improve margins over time. This also follows the new Social Service Act that Nutida welcomes and will come into force on July 1, 2025. EBITDA decreased by SEK 7 million compared to the same quarter last year and landed at SEK 118 million. The decrease in earnings was partly due to the occupancy challenges within the individual and family segment, and that last year was positively impacted by calendar effects. EBITDA margin in the quarter was 10.5% and at 12.3%, rolling 12.
After the quarter ended, Nutida acquired Avasta, adding four care units with 64 care places and approximately SEK 62 million in annual sales. Turning to our Swedish elderly care, Vardaga. In Vardaga, net sales increased by 7% year- on- year, driven by higher occupancy in new and mature-owned managed nursing homes, as well as new contract management units. EBITDA amounted to SEK 111 million, which was higher than last year thanks to the higher occupancy, and last year was also positively impacted by calendar effects. Mature units showed an improved margin of 9.9%, which is 1.4 percentage points higher than the average margin for Vardaga's total portfolio. During the quarter, Vardaga decided to open a previously completed nursing home in Norrköping in the third quarter of 2025.
After the quarter ended, Vardaga acquired Avasta, adding one nursing home in Gothenburg with 90 beds and approximately SEK 82 million in annual sales. Turning to Norway and Stendi, net sales in Stendi decreased by 2% in SEK, but increased by 1% in local currency, and sales in own management rose 5% in local currency. Last year, Stendi terminated all contract management operations, which were exclusively within elderly care. EBITDA increased to SEK 68 million, driven by favorable demand that has contributed to stable occupancy, and the improvement was also an effect of the last year being negatively impacted by calendar effects. The EBITDA margin in the quarter increased by 1.3 percentage points to 8.3%, and the rolling 12 margin increased to 10.3% thanks to the good earnings development over the last quarters.
Stendi now performs at a consistent high level, supporting the Norwegian society with high-quality social care. We see good opportunities to expand operations going forward through organic and acquired growth. Take a closer look at Altiden. Our Danish business area, Altiden, continues to improve earnings this quarter. We also saw higher occupancy. Net sales in Altiden increased by 6% in SEK. Increase in own management sales increased by 12% in local currency thanks to the higher occupancy in both elderly and social care. The decrease in contract management sales was mainly due to one large elderly care contract that expired in the first quarter of 2024. Altiden once again delivered a strong profitability improvement. EBITDA was up SEK 17 million compared to the same quarter last year thanks to the good occupancy growth with operational improvement in social care.
First quarter last year was also negatively impacted by calendar effects. EBITDA margin in the quarter was 2.4%. Now turning to Klara. In Klara, net sales decreased by 5% due to a continued weak demand for staffing services. EBITDA decreased by SEK 1 million to SEK 8 million due to the lower net sales. Klara has adjusted its cost base to a structurally lower market demand, but remains well-positioned to respond if demand should increase again. EBITDA margin was 8%, which is a robust margin given the situation with the public healthcare region's limitations of the use of temporary nurses. Klara's EBITDA margin is still significantly above staffing competitors' margins thanks to Klara's diversified portfolio consisting of different welfare services, for example, mobile nursing teams and student health services. This diversity in Klara's services and adaptability to changed market conditions is our core strength, of course.
With that, back to you, Mark.
Thank you so much, Benno. To sum up our financial development versus our targets, we aim for an annual growth rate of 8-10%, driven by both organic and acquired growth. Total growth rolling 12 was 6%, driven by solid organic growth. Going forward, we will see more growth coming from acquisitions and, of course, through the acquisition of Validia, which will further boost our overall growth level. In terms of profitability, our target is to reach an adjusted EBITDA margin of 9.5% in the medium term. We reached our profitability target again at 9.8% rolling 12. On leverage, we target the net debt to EBITDA ratio to be below 3.25 times. As of quarter one, we remain well below this target at 1.8 times thanks to the strong EBITDA and cash flow development.
After completion of the acquisition of Validia, Ambea's leverage ratio is expected to be approximately 2.8 times. These financial targets underscore our commitment to delivering sustainable financial performance while investing in our long-term growth. We have reached two out of three financial targets and are close to the third, with more growth coming from acquisitions. We are committed to consistently deliver on all three financial targets. Before we open for questions, I would like to provide an outlook post quarter one 2025. In the beginning of April, we closed the acquisition of Validia in Finland, adding approximately SEK 1.4 billion in annual revenue. This marks a significant milestone for Ambea, as we now have a strong presence in all four major Nordic countries. Our entry into the Finnish market is not only a strategic expansion; it enables increased scale and fuels future Nordic growth.
I would like to welcome our new colleagues, our care receivers, and customers at Validia. After the end of the quarter, we also completed a bold acquisition within Vardaga and Nutida. The deal adds around SEK 145 million in annual sales and further strengthens our positions in elderly and social care in Sweden. Looking ahead, we have several planned openings across our business areas. In the coming quarters of 2025, we will open new units in Nutida, Vardaga, and in Stendi, supporting continued organic growth across the Nordics. We expect further profitability improvements in Altiden following ongoing operational enhancement and increased occupancy in Denmark, and a very strong performance by the local team. Finally, investing in our employees, our leadership, technology, and innovation to improve care quality going forward is paramount to our continued success and a core priority.
I would like to thank all of our employees for having done their utmost for our care receivers again this quarter. Their daily work is a constant inspiration to me and the entire group management team. This concludes our presentation, and we will now open for questions. Can we have the first question, please?
Yes, of course. Just a reminder, dear participants, if you would like to ask a question, please press star one one on your telephone keypad and wait for a name to be announced. We are going to take our first question. It comes to the line of David Johansson from Nordea. Your line is open. Please ask your question.
Okay, thank you. Good morning. Three questions from me, please. First one, if you could elaborate a bit more on the weaker margin, I think, in Nutida and some of the restructuring work you seem to be doing there to adapt your services. I think you comment on weak demand in some areas there. Just on your margin expectations for Nutida looking at the full year. I think it seems to be sliding a bit here, so just wondering about some of the puts and takes here that we should consider for the coming quarters. Thank you.
Yes, thank you so much. I can start with your first question on Nutida. I mean, it's mainly driven by slower occupancy or lower occupancy in the individual and family segment, and we have seen that for a few quarters now. There is a new Social Service Act coming into play in Sweden from 1st of July, and it provides good opportunity for Nutida as it is basing the municipality's demand more on knowledge and on the methods that are used, and that plays well to the quality segment of Nutida. We expect that with the tweaks we are doing and supporting the municipalities in getting into this new legislation, we will see better occupancy going forward and also that Nutida's margin will strengthen somewhat. It is absolutely our belief that Nutida is in good shape, and it's a big business with almost 500 care units.
Of course, over time, there will be a need for changes and adaptations to demand and also to new legislation coming in. We remain comfortable on both the short, mid, and long-term outlook for Nutida and are positive about the opportunities also going forward this year.
Okay, thank you. That was helpful. My second question is on your pipeline. Perhaps if you could quantify the impact to organic growth, I think first, given the new openings and contracts that were signed during Q1, I believe it was a total of 33 care places in Nutida and Stendi and another 30 in Vardaga. Also, your planned openings for the next 12 months, if you could quantify the organic growth there. Thank you.
Yeah, so I mean, the contract that we sign in a quarter is normally not for opening within the next 12 months because there is construction time or time to refurbish if it is an existing facility. It is adding to the future pipeline, so to speak. What we have done this quarter is that we have quantified the planned openings during the coming 12 months for both Vardaga and Nutida and Stendi. Those are the three units where we have plans to open own construction in the coming 12 months. It is five nursing homes in Vardaga and 280 beds there. It is seven care units and 81 care places in Nutida, and it is four units and 49 beds in Stendi in Norway. They are spread across the next four quarters and thereby, of course, decreasing the pipeline going forward.
As we are constantly looking for new opportunities, we will sign and add more volume to the pipeline also in the coming quarters. Was that an answer to your question?
I was hoping that maybe if you could quantify sort of the organic growth implication of that current pipeline.
You can say that in short term, these openings don't affect the 2025 organic growth so much because most of the large one in Vardaga will be open in the fourth quarter. Gradually, it will, of course, help the organic growth going forward. If you are opening the ones, for example, in Q4, normally a nursing home has taken 12-24 months to fill up. It will gradually affect the organic growth, but not so much short term.
Okay, thank you. That's clear. Maybe just a last question and perhaps a general update on Stendi and where the demand situation is at. It seems to me that demand for special care needs in Norway have remained at a high level. Would you say it's starting to tail off now or should we expect it to remain at a stable level also for the coming quarters? Thank you.
With the visibility we have, I mean, the level is stable. It has been again this quarter, and with the outlook we have into the coming quarters, it looks the same, so to speak. With the visibility we have now, the demand looks stable at a good level.
Okay, thank you. Those are my questions.
Thank you. Now we're going to take our next question. It comes from the line of Kristofer Liljeberg from Carnegie Investment Bank. Your line is open. Please ask your question.
Thank you. Two questions. The first one, just coming back to the Nutida margin, is it possible to quantify how big of a seasonal effect was on the margin if we compare with Q1 last year? The second question relates to Denmark. If you could talk a little bit about your strategy for expansion there now with the new legislation. Thank you.
I can start with the margin and seasonality of Nutida. There were two effects of the seasonality last year that were a little bit different from a normal year. The first one was that there was an extra invoicing day last year and that the Easter was in the first quarter instead of normally in the second quarter. The total of these two were last year positive for Nutida. It was not very much, but there were some positive effects of that. That will be reversed this year, of course, especially when coming into the second quarter. The total decrease in EBITDA is not because of these effects. There was this effect as well as the lower occupancy within individual and family care that contributed to the lower EBITDA.
Yeah. Could I just follow up on that before you turn to the next question? How quickly do you expect to turn margins around again in Nutida? I guess we won't see it in the second quarter because of the Easter effects.
No, exactly. In the second quarter, we will have a negative calendar effect compared to last year. We hope that the margin dilution we have seen for a couple of quarters, we hope that we can turn that around in the second half of the year. That is absolutely our target to do that.
Thanks.
Okay. Turning to Denmark and your question there. The new legislation which is coming into force on 1st of July in elderly care, we have spoken about that also in the previous quarters. It opens new opportunities for establishment of own-managed nursing homes in Denmark. We are looking and in process with several developers and municipalities at new project development in Denmark. So far, no contracts are signed, but it is absolutely our target to do that going forward and to leverage the opportunity that we have now in Denmark with the free ride to establishment and also the new remuneration model in Denmark. We believe that the reform is positive and will give us a better opportunity to grow Danish elderly care going forward,
which we will actively pursue.
Great. Thank you.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad and wait for a name to be announced. Now we are going to take our next question. The question comes from the line of Jakob Lembke from SEB. Your line is open. Please ask your question.
Yes, good morning. My first question is on Stendi. If you can sort of elaborate a bit more on the previous question, or I guess my question is, do you expect or should we interpret it as that you expect the current earnings level to persist for the remainder of the year based on what we're seeing now?
There is in Stendi, you can say there are larger seasonality effects going forward than in the other business areas. The second quarter, we have the full Easter effect, which were in the first quarter last year. Now we have a rolling 12 that consists of no Easter holiday, and that is an extra cost in Stendi. Beside of that, we think that the margin level at the second half of the year underlying will be still at a good level. We said the last quarter that we are not foreseeing the level of 2024 to be in the long run that we can keep that level probably, and that is still our best estimate. We think that it will be on a rather high level during the year anyhow.
Okay, that's clear. I have a question on Vardaga. Now that you have relatively more openings ahead, I'm wondering if you think that you can offset the sort of negative earnings impact from new openings with higher earnings from the existing units?
We see that we think there is still a potential for the mature units to increase profitability slightly. Of course, in the later part of the third quarter and the fourth quarter, with a lot of openings, that will, of course, hurt our margins short term. Probably that will not be compensated for at the mature units. That is our best prediction as of now.
If you can talk a bit about the development for Validia here in the start of 2025 and how they're tracking versus the margin they did in full year 2024.
We have not so far gone into the details of Validia's number going forward. We'll come back on that in the next quarter. We are not making any new estimates or forecasts on Validia beside what we said when we made the deal in March.
Okay, that's all from me. Thank you very much.
Thank you. Now we're going to take our next question. The question comes from the line of Karl-Johan Bonnevier from DNB Markets. Your line is open. Please ask your question.
Yes, good morning, Mark and Benno. Congrats to a solid start to the year and a solid development for the operation. I saw your comment, Mark, on that you managed now to get one of the units that has been built ready but not opened yet in Norrköping now to be open and adding to the pipeline in the second half. Any news on opportunities for the other remaining units that you have in that category?
We are working, of course, with all of them. There are four left after Norrköping , and we are working with them as we have been doing all along. There are no kind of concrete plans yet for any of them, but it is things that can change relatively fast also. Let's see how it looks going forward. For now, only concrete plans for one of the five being Norrköping .
Good start. Good start. And just on Validia as well, how much of an organic pipeline do you see Validia adding to your opportunities?
We are not adding any numbers, of course, yet on Validia, but there are organic opportunities also in Finland. Of course, this has to be considered carefully also with the regions in Finland and also based on their needs for new capacity. We are evaluating a number of organic growth opportunities also in Finland, and we expect that we can add some Finnish organic growth to the pipeline also in the second or in the third quarter this year.
Maybe also on the regions in Finland, have you felt that you are in a good discussion with them, so to say, given the change of ownership of the operation and what that might imply from that perspective?
We have a very strong team in Finland that we are impressed with, and the team has been in good dialogue with all the regions, all the customers in Finland. The acquisition has been received well. I mean, we have the existing team running full steam in Finland, so it's the same counterparts and no changes to that. We are doing a soft integration of the Finnish business into Ambea. It's progressing well. We think it has been well received both internally and externally in Finland.
Sounds encouraging. All the best out there.
Thank you.
Thank you. The speakers are running for the questions for today. I would now like to hand the conference over to your speaker, Mark Jensen, for any closing remarks.
Thank you all for calling in. The report for the second quarter will, for the first time, include the results of Validia and Finland, as we have discussed, and will be published on 19th of August, 2025. Thank you all. Have a nice day. Stay safe and healthy.
This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.