Thank you so much. Good morning, everyone, and welcome to Ambea's third quarter 2021 report presentation. Speaking is Mark Jensen, CEO of Ambea, and presenting with me today is Benno Eliasson, CFO. I will start today's presentation by introducing our Swedish social care segment Nytida, then I will give you an overview of the quarter and an update on our sustainability work. I will also cover the status of our growth drivers. Benno will then describe the development of the financials for the group and for the different segments in Ambea. After that, I will summarize the quarter and compare to our financial targets before we open up for questions. Starting off with a brief overview of Ambea. As you probably know already, Ambea is the leading Scandinavian care provider. We have about 26,000 employees across Sweden, Norway, and Denmark, and revenues of about SEK 11 billion.
We have a complete service offering within elderly care, disability care, psychosocial support, and staffing solutions. We have more than 350 municipalities as our clients and are an important partner in the solution of the welfare challenge. Nytida, Vardaga, and Klara all operate in Sweden, where Nytida offers social care, Vardaga offers elderly care, and finally, Klara offers staffing solutions. Stendi in Norway and Altiden in Denmark both have elderly care and social care. Now over to a short introduction of Nytida. As relatively new to Ambea, it has struck me that we often start our presentations, then almost only get questions and interest around our elderly care segments, when in fact, Nytida is the largest business area within Ambea. We realize this calls for a better and more thorough explanation of our social care segments, and in particular, Nytida being the largest.
As the support we provide within our social care segments is much more diversified than within elderly care, this part is also a little more complex to describe and understand. In fact, within Nytida, we have 18 main areas of support, all tailored to provide the best possible support that strengthens the individuals we provide care to. High-level, Nytida is divided into two main segments: disability care, which accounts for about 2/3 of the turnover, and individual and family accounting for 1/3 of the turnover. Nytida is mainly focused on all management units, especially within individual and family. As within elderly care, the municipalities are our customers also here. The various services and offerings that exist within Nytida's operation are based on different laws. For example, the Social Service Act or the Swedish Act concerning support and service for persons with certain functional impairments.
In Swedish, [Non-English content] . Due to Nytida's broad range of services, we can offer a complete spectrum of care with personalized support throughout all stages of life. One tool for personalizing support is Nytida's pedagogical framework. It is a unique approach and guidance that give employees adequate methods and tools to respond to the care receiver's needs. Nytida also supports and have cooperation with KIND, Center of Neurodevelopmental Disorders at Karolinska Institutet in Stockholm, this to be updated on the latest research findings to be able to further develop the support. Before we turn to the summary of the quarter, let's take a look at Nytida's pedagogical framework as it is paramount for the support and quality we provide to each individual care receiver.
The framework is based on Ambea's set of of values, evidence-based practice, the low arousal approach, and person-centered care. With the help of the framework, we support the individual to use their strengths, be independent, and experience quality of life. Overall, the framework consists of five areas. Accessibility means simplifying and removing obstacles, both physical and mental. Treatment means that we believe in the equal value of all people and in the daily work always adapting to the needs of the care receiver. Motivation means that we work together to find motivation, strength, and interests. Cooperation focuses on how we can create trustful relations and always with a comprehensive view over the entire life situation. All together, this gives us tools to develop personalized care, which is illustrated by the fingerprint in the center of the circle.
The framework is a benefit for Nytida because it means that we work similarly in all units while we, at the same time, deliver personal care. The framework is also central for developing quality and helping our clients with their assignments. I hope this gave you a better perspective on Nytida and what we offer within social care in Sweden. You can find more information in Swedish on nytida.se, and we are of course happy to take questions regarding Nytida when we come to the Q&A. Now, let's turn to the summary of the quarter. All segments, apart from Stendi, deliver net revenue growth in the quarter versus last year. In total, sales grew 7% compared to Q3 last year, primarily driven by our active M&A agenda, but also a return to organic growth in the quarter.
Adjusted EBITDA came in at SEK 344 million, an increase of 8% versus last year. The increase was mainly explained by Vardaga's positive occupancy trend, but counteracted by slightly weaker demand and increased costs in Stendi. As we will see later in the presentation, Vardaga showed positive occupancy development, and we are happy to report that once again, this has continued after the quarter ended. We continue to see positive development in Altiden in Denmark, and our strategic focus on social care and all managed elderly care homes delivered solid net revenue growth in the quarter. In Stendi, we will increase our focus within social care and divest the elderly care division. More about that later in the presentation. Now to sustainability. For Ambea, sustainability is a natural part of our value-driven care business.
Entering 2021, a major approach was taken within the area of sustainability with a strong focus on the social and ecological areas. Last quarter, we explained our efforts within ecological sustainability, and this quarter, we turn to social sustainability. Within social sustainability, very much at the heart of everything we do, during the last quarter, we have, among other things, launched a new training program for suicide prevention, a natural focus area for all our care activities that face these risks in everyday work, but also unfortunately, a growing problem in society. We also launched a pilot in Vardaga to support our employees with another mother tongue to develop their language and accessibility in the care work. An important statement for us as well for society's ability to integrate and secure the supply of skilled staff in the welfare sector.
This was also one of the improvement initiatives we identified in our internal post-pandemic analysis, an initiative that we are now executing. During the quarter, we also implemented a new digital tool to support our managers in detecting, preventing, and correcting ill health among our employees, an important and ongoing work to take care of our most important resources, our employees. I also want to take the opportunity to highlight this year's edition of Glada Midnattsloppet, which had a record number of participants, and where the business area Nytida are proud and recurring partners. Glada Midnattsloppet is an important event that enlighten our care receivers and encourages opportunities and joy of movement for people with cognitive impairments in general. Now let's look at the organic growth. We are glad to say that in the last two years, we have opened almost 1,000 new beds/placements.
As the municipalities in Sweden continue to fill the beds at their own nursing homes, we see an improving occupancy in most of our Vardaga units. In Q3, Vardaga signed one new nursing home with 60 beds that is planned to open in 2024. Nytida opened five new units with a total of 30 beds in Q3. As the demographic development calls for construction of more nursing homes and care facilities, we continue to actively explore opportunities for organic growth within elderly care in Sweden and Denmark, and within social care in all three markets. In Sweden alone, a recently updated report from the think tank Timbro highlights the need of more than 400 new nursing homes by 2030. This analysis is based on data originating from the Swedish Ministry of Finance.
As partners to the municipalities, we will work to support society in overcoming this challenge and aim to maintain and further develop a healthy pipeline of new care facilities. Let's turn to acquisitions. No new acquisitions were added in the quarter. This year, we have closed the acquisition of LSS Omsorgen in Sweden in Q1, adding about SEK 57 million in annual sales. In Q2, we closed the acquisition of EKKOfonden care operations in Denmark. This acquisition added about SEK 330 million in annual sales. I'm happy to report that both acquisitions are performing well and in line with our expectations. Strong cash generation gives us the opportunity to seek for bolt-on acquisitions, which we see as an essential part of our strategy.
We are active in all our markets, evaluating potential opportunities for future value creation and continue to see M&A as a key driver of growth. Summarizing the growth potential for Ambea, we look positively at the future in our existing markets. First, there is still an opportunity to further improve occupancy in our existing care facilities. In certain segments, we have faced a challenging time during the last quarters, but our view is we have passed the most critical phase. Over the last months, we have experienced an increase in market share within the Swedish elderly care, which indicates our communication and commercial activities are having a positive effect in a market which is again growing, but not fully back to pre-pandemic levels. Outside elderly care, it has been more difficult to see consistency in trends post the pandemic.
We know many care receivers are waiting to get the right placement, and we hope to see municipalities execute more of the already taken decisions faster when things are now normalizing. This in order to avoid society building up a care debt on the backside of the pandemic. As explained previously, there's also a strong underlying demographic trend showing the need for construction of more care facilities in all our markets that can contribute to solving the welfare challenge and that way also contribute to organic growth. Secondly, the market for social care continued to be fragmented and there are bolt-on acquisitions to be made in all markets. Ambea has a proven track record of acquiring small and mid-sized companies and integrate them swiftly. We will continue that journey in years to come.
Last but not least, we are currently in a very exciting process where the extended management team is co-creating a new strategy for Ambea. We're not aiming for a revolution, but we'll build on the strength we already have and identify strategic areas of improvements and new opportunities. This with support of detailed market analysis and also external perspective. The work is about to conclude in quarter one, and we look forward to present our strategy for the future Ambea during the first half of 2022. Now to the financial development in the quarter. Benno, over to you.
Thank you, Mark. This quarter, we see an increased growth numbers from second quarter's 3% year-on-year to this quarter's 7% year-on-year, and the growth from last quarter was 2%. If we look into how the different business areas have affected the group numbers, we can see that Vardaga is up 9% versus last year. We have opened five new nursing homes since the beginning of Q3 last year and have had an increasing occupancy throughout this quarter. Nytida is up 1% versus last year, helped by a small acquisition. Stendi has had a negative growth of 1%. We have seen weaker demand and have reduced our capacity in our own managed portfolio. In local currency, the decline was 3%.
Altiden is affected by the acquisition of EKKOfonden on the positive side by SEK 96 million, and on the negative side by exiting home care contracts by SEK 11 million. Klara is continuing to expand geographically and has won several new contracts in this first half of the year and is up SEK 7 million versus last year. EBITDA. This shows how the different business areas have affected the EBITDA of the group. In Vardaga, we see that the improved occupancy has generated a substantially higher profitability than previous quarters and last year. We can also see that the weaker demand in combination with higher staff costs related to the Norwegian quarantine rules still hurts the profitability in Norway. In Altiden, the acquired EKKOfonden contributed well, but the EBITDA was negatively affected by the newly opened own-managed nursing home in Holte.
All in all, the adjusted EBITDA grew by 8%. Cash flow. Even if Q3 is the strongest quarter from a profitability point of view, it is often the weakest from a cash flow point of view. This is because the net working capital reaches its highest point of the year in late Q3. Last year, the Q3 and Q4 numbers were positively affected by the different government measures related to the pandemic, and this quarter's number is a bit lower than last year's. This puts the rolling 12 operating cash flow slightly below 100% of EBITDA, but seen in a longer perspective, still very strong. Cash flow statements including the new leasing standard IFRS 16 are sometimes a bit tricky to follow.
This slide shows the way from the rolling 12 reported EBITDA of SEK 843 million to the 799 million SEK in EBITDA excluding IFRS 16 and down to the free cash flow post-tax. We can see that we have paid SEK 136 million in taxes, SEK 61 million in interest, and have invested SEK 74 million in fixed assets. With a minor change in working capital, we have generated SEK 510 million in free cash flow post-tax based on the old accounting standard. On this slide, we can see how we have used the generated SEK 510 million in free cash flow. SEK 109 million was distributed to our shareholders as dividend. SEK 189 million was spent on the two acquisitions we made in this first half of this year, and the rest was used to reduce our debts. Financing.
The seasonal weaker cash flow in Q3 is of course also affecting the leverage ratio in the quarter. We managed to reduce the leverage from 3.7x to 3.6x in the quarter, and we are now at the same level as previous year. As you can see in the graph, we are financing around 2/3 of our debt by our own commercial paper program, where credit spreads now are back to the levels they were pre-pandemic in 2019. Turning to the different business areas, starting with the Nytida. Sales was up 1% versus last year, but down 1% versus last quarter. Own management shows slightly lower occupancy than last year. In the later part of the quarter, we opened five new assisted living facilities that will help the growth going forward.
Last year, we saw a positive EBITDA effect in Nytida from the government program, especially in Q2 and Q4. In Q3 this year, we saw an EBITDA just slightly below last year's numbers, SEK 174 million versus SEK 177 million last year. The rolling 12 EBITDA is slightly down from last quarter, but still at a high level of 15%. Vardaga. Net sales increased by 9%. We have opened up five new nursing homes since the beginning of Q3 last year, and occupancy in mature units were in the quarter higher than last year and shows a month-on-month good trend throughout this quarter, with high numbers entering Q4. Our own managed units on the ramp-up, as well as our units under contract management, shows the same positive trend.
We can also see in the national statistics for August that there is an increase in the total market since January this year, but still on a lower level than the pre-pandemic levels. EBITDA increased with 78% to SEK 89 million. Compared to Q3 last year, we have, as said, an overall higher occupancy and have now adjusted our cost base in units where decreased occupancy in a better way than we were able to do in Q3 last year. We have, during the last 1.5 years, been very cautious in opening up new units due to the weaker local demand. We have now around 10 nursing homes that we not yet have opened up for care receivers, and we evaluate the local markets very carefully and currently plan to open two of these in the first half of 2022.
To further improve occupancy, we continue to boost our communication and marketing activities based on local needs and opportunities. Stendi. Net sales decreased by 1% in SEK or 3% in the local currency. We saw a slightly weaker demand and have also reduced the capacity in our own managed portfolio. EBITDA was down 19% to SEK 64 million. We were still, to some extent, affected by the strict Norwegian quarantine rules, where our employees have not been able to go to work, but still are on our payroll. For our operational staff, working from home is of course not an option. In the quarter, this impact was lower than previous quarters as the vaccination program has been rolled out.
We are now working on different measures, both to adapt our capacity to the demand in the market, but also to improve the profitability, and effects of this will be shown in the P&L in 2022. We have, after the closure of the quarter, decided to divest our operation within elderly care in Norway. This business represents about 8% of Stendi's turnover and have had low profitability. We have started a process now in Q4, and we'll finalize the divestment during 2022. Altiden. The repositioning of Altiden is progressing according to the plan in the quarter. Net sales was affected positively by the acquisition of EKKOfonden by SEK 96 million, and then on the negative side of exiting the home care contracts by SEK 11 million. We also saw underlying growth in both elderly care and disabled care segment.
EBITDA increased by SEK 4 million, driven by the acquisition of EKKOfonden, but were reduced by losses in our first own managed nursing home that opened in late Q2. Normally, it takes 8- 12 months until a newly opened nursing home reach breakeven. Last, Klara. Net sales increased by 9%. We are growing our business towards the external and public and private operators, as well as towards internal Ambea units. Compared to last year, we expanded our nursing patrols geographically to three new cities in Sweden, and expanded our business in several existing geographies as well. The business model of Klara, delivering nursing services on-site in evenings and weekends only when needed, has proven to be very attractive for smaller care units. EBITDA margin was rather stable at 9%, and rolling 12% now at 7.4%. With that, back to you, Mark.
Thank you, Benno. To sum up our financial development versus our targets. Our growth target is 8%-10% through a combination of acquired and organic growth. 2021 shows the negative effects from the pandemic, but we have announced two acquisitions in the first half of the year: LSS Omsorgen in Sweden and EKKOfonden's Care Homes in Denmark. Profitability-wise, we have a midterm adjusted EBITDA target of 9.5%. In Q3 2021, we saw clear signs of improving occupancy, which in turn will support an increased margin going forward. Also, the improvement program in Norway is expected to positively contribute to the margin development during 2022. Finally, our leverage dropped slightly quarter on quarter, and is still at the same level as Q3 last year. That said, our solid cash conversion will reduce leverage over time. Summarizing the third quarter of 2021.
Ambea is back to organic growth in the quarter, and see a continued positive occupancy trend in our elderly care segment in Sweden. We will focus Stendi in Norway on social care, where we have scale, high competence, and growth opportunities. The strategic repositioning of Altiden in Denmark follows plan. Our new own managed nursing home, Fribo Holte, fills up faster than anticipated. We have a new strategy being co-created by the extended management team to build on our strengths and capture new opportunities. The new strategy will be communicated during first half next year. We are still very focused on keeping our good routines and updated contingency plans, but to also see an increased need for care that we do our utmost to help society solve. It requires long-term investments and focus on what each party can contribute, being public, not-for-profit, or private.
We all have an important role to play avoiding a short-term care debt and delivering viable solutions to solve the mid and long-term welfare challenge. 2030 is not far away, and planning processes take time, while politicians must remove hindrances to deliver the care we owe to our elderly and to people with social care needs. It is still possible, but focus on the task and speed is of the essence. Lastly, I want to express my respect and gratitude to our staff in all three markets for lifting the business into a better position by a constant focus on our day job, serving our clients and providing quality care to each individual care receiver. The last six quarters have indeed been challenging times, but with joint efforts, we can now look more optimistic at the future and what it will bring.
From the outside, it can be difficult to understand what our teams have gone through. From my field visits, I have seen and discussed firsthand with colleagues in all three markets. I will take this opportunity to share with you what an amazing job they have done. Their job makes me proud. With that, I conclude our presentation and open up for questions. Operator, can we have the first question, please?
Thank you. We will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star and one on your telephone keypad. Your first question comes from the line of Karl Norén from Danske Bank. Your line is now open.
Yes, good morning. A couple of questions from my side. If we start with Vardaga, would it be possible if you could elaborate a bit on the margin there? I think now the margin is above Q3 2019's levels, and how should one see these margins going forward? Is there any reason that we should not see the same trend continuing into the next coming quarters and years? That's my first question, please.
Yes, we have a good margin, as you said, in Q3. If you compare to Q3 2019, we were not fully exploring our potential because that was just after the acquisition of Aleris. I think the potential is, it should be higher that way than what was then. We see that Q3, of course, is the seasonal best quarter in Vardaga as in all the other segments. We hope that we will still have the occupancy growth going forward into Q4, and that will continue. That will of course help the margin. You also know that we're in Q4 and Q1 this year as comparables have some extra money for the pandemic costs that we don't have going forward now.
Okay, thank you. Then if we turn page to Norway and Stendi, would it be possible to say anything about how much this elderly care business generated in profits or loss during the last 12 months? Do you expect what kind of payment or how much should we expect you to receive for selling this business?
We have had very low margin in the elderly care business going forward. We don't know, of course, but because we have already started the process right now, and we are not foreseeing any one-offs connected to the divestment. Of course, we don't have any deal done yet.
Okay. Just the last question on Norway again. After the divestments now in Stendi or when it's finished, how should one see your margin development in Norway going forward? What is your kind of own assessment of when you can do a margin more in line with peers, and how should a trajectory look like in terms of the margin expansion in the Norwegian business?
We are working on a program with our team in Norway to focus on social care, where we have already a very good market position and where we have high competence. We believe with our improvement programs and also the increased focus on social care, we can definitely lift margins over the coming years. The program that we have already described in the quarter two announcement is aimed to give the first results next year in 2022. We can of course also expect improvements beyond that. Still that is early days. We believe the increased focus and also the improvement program will show results in the P&L and also in the margin development next year.
Okay, thank you.
Thank you. Your next question comes from the line of Kristofer Liljeberg. Your line is now open.
Hi. Sorry, Kristofer Liljeberg from Carnegie. Two questions. The first one also rely on or relates to Norway. Is it possible to describe a little bit more in detail what the next steps are now and timing for that, considering the underperformance we have seen in Norway? And whether you expect improved margins already at the beginning of 2022, or if this will be towards the end of the year. Thank you.
If we look at the program that we have initiated in Norway, it is of course a program to adapt to the market situation now post the pandemic, which means that we are looking at our capacity in our various segments, especially within social care, if we put elderly care aside for this question to simply adjust our capacity to the demand in the market. That is one of the initiatives in the plan. There are other initiatives as well, such as looking at of course our operating costs when we're adjusting the demand.
We're also looking of course at initiatives that, in terms of communication and also commercial initiatives, can you know make us a more visible, I would say, care provider in the Norwegian market. Those initiatives will give effect from next year. It will be you know spread across the year, so we'll not see everything in one chunk. It will be a gradual improvement. We should see some results from the beginning of the year.
Is it so that besides elderly care, also in the social care segment, that you have contracts that are unprofitable so that we won't see the full margin potential until you are out of those contracts?
I wouldn't say that we have contracts that are unprofitable, but we have contracts with different margins, and we have in the children's side contract frame agreements with low margins that will still be there in 2022. So that's that makes that segment margin maybe it's easier to adjust from 2023.
Okay. The fact that you haven't been adjusting your capacity during the past 12 months, is that due to the pandemic and that you have to have higher staffing than normal, et cetera?
Yeah, that is due to the pandemic. We have been fully focused simply on managing the pandemic in the best possible way, which we have done. As we have also explained, I mean, there have been very strict quarantine rules in Norway for staff, which means that we have had a lot of staff in quarantine, and we have had the need simply to use staff from other facilities to cover for staff in quarantine. That effect is not completely gone, but almost gone, and with that, we also have then the opportunity to adjust capacity to the new market reality.
Okay. No, thank you. My second and last question relates to Denmark. It's a bit difficult to follow the underlying trend here with, you know, integration of acquisitions, et cetera. Could you say something about the run rate now for margins? I guess there's a positive seasonal effect in the third quarter. Given what you did in the third quarter and expect for the fourth quarter, what type of run rate for margin do you see maybe when you enter 2022?
It's very difficult to say because there are different aspects to that. We have the disability care segment where we have the newly bought EKKOfonden that runs rather stable with a high margin. Of course we have higher margin in Q3 than we have in the other quarters. Then we have the elderly care market where we just opened one new own managed unit, and that is causing losses in Q3, and we'll have little bit lower losses in Q4, but still losses in that unit. The underlying contract management and the other business is rather stable, but there is a rather big seasonality effect in both Norway and Denmark. It's maybe bigger than it is in Sweden.
The Q3 margins is not representative for the full year, of course. There is a lot of extra costs related to bank holidays and these kinds of things in Q4 and Q2 in both Denmark and Norway.
Okay. Thank you.
Thank you once again. If you wish to ask a question over the phone, please press star and one on your telephone keypad. There are no further question at this time. Please continue.
With that, I will thank you all for listening in to this interim report of our third quarter 2021. Have a nice day and a good weekend when you come to it.