Earnings Call: Q3 2025

Oct 23, 2025

Welcome to Attendo Q3 Report 2025. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing 5 on their telephone keypad. Now, I will hand the conference over to CEO Martin Tivéus and CFO Mikael Malmgren. Please go ahead. Thank you, and good morning, everyone. Today, we present Attendo's results for the third quarter, Attendo's strongest quarter to date. I'll 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. Let's start with the highlights from the quarter. This is our strongest quarter to date. The development continues to be positive, mainly driven by strong momentum in our Finnish operations and by increased occupancy in nursing homes in both Finland and Scandinavia. Our strong results enable continued investment in quality, technology, and method development to further improve our ability to solve complex care needs in a society where more and more people are living longer. Attendo plays an important part of the solution to both current and future care challenges, and we are a close partner to municipalities and welfare regions in the Nordics. Net sales in the quarter were SEK 4.8 billion, a decrease of 2%, while underlying growth, excluding currency effects in entered and exited contracts, was positive with 3.5%. During the quarter, we increased our occupancy by more than one percentage point in both business areas, mainly due to more sold beds in the nursing home segment. Furthermore, we increased our lease adjusted EBITDA by 20% to SEK 482 million, mainly driven by Finland. As earlier communicated, we expect margins to gradually pick up in Scandinavia, supported by ongoing actions to improve performance. Free cash flow in the quarter was very strong, SEK 981 million on a rolling 12-month basis, up SEK 267 million compared to last year. With a 12-month rolling earnings per share of SEK 5.34 after Q3, we are well on track to beat our current 2026 EPS target of at least SEK 5.50 already this year. We will present new financial targets in conjunction with our year-end report in February. Next slide, please. If we move to occupancy, we see an upward trend in both business areas, and after Q3, we're at 87%, which is the highest average occupancy level in eight years. The increase is mainly due to more sold beds in nursing homes in both Finland and Scandinavia, key drivers being rising demand in elderly care and a good cooperation with municipalities and welfare regions. During the quarter, we opened one new nursing home and two new units in disabled care. Next slide, please. During the quarter, we managed to accelerate margin improvement led by strong development in Finland. Total average lease adjusted EBITDA margin came in at 6.2% for the quarter. Finland has a very strong momentum, and we expect margins to gradually pick up in Scandinavia from Q4, supported by ongoing actions to improve performance. With that, I hand over to Mikael Malmgren, CFO. Please go ahead, Mikael. Thank you, Martin, and good morning, everyone. In the quarter, we saw underlying growth in both business areas of around 3% to 4%. However, growth was offset by ended outsourcing contracts, home care exits, and FX headwind, which resulted in reported net sales decreasing 2% to SEK 4.8 billion. In Scandinavia, the growth was down 4.9% reported, while underlying growth, excluding exiting home care contracts and ending contracts in outsourcing, was plus 3.1%. We see continued growth in owned nursing homes with more sold beds at the end of the quarter. However, growth was offset by ending outsourcing and exiting home care contracts. Ending and exiting contracts will continue to weigh on sales with a similar impact as this quarter for the subsequent quarters, and then gradually weigh less and less throughout the remainder of 2026. In Finland, excluding the divested rehab business December last year and currency, underlying growth was plus 3.7%. Improvement largely driven by an increase in net new customers, with an especially strong development in our owned nursing homes during the quarter. Currency had, as expected, a negative net sales effect of close to 2%. Based on current trading, we should expect a similar to slightly higher effect in the coming quarter. Next slide, please. The reported result improved to SEK 648 million. Correspondingly, the lease adjusted EBITDA increased from SEK 402 million to SEK 482 million, up 20% versus the same period last year, and our strongest Q3 result to date. Lease adjusted EBITDA in Scandinavia was slightly higher than last year. The result was negatively impacted by home care exits, which had a SEK 15 million year-over-year effect, equaling to approximately SEK 10 million in non-recurring losses. Finland lease adjusted EBITDA improved SEK 85 million year-over-year. Currency had a SEK 13 million reported and a SEK 10 million negative effect on lease adjusted EBITDA. Next slide, please. Growth for Attendo Finland was plus 3% in local currency, and adjusting for the exited rehab business in December last year, the underlying growth was close to 4%. Lease adjusted EBITDA was SEK 351 million, an improvement of SEK 74 million, or SEK 85 million excluding currency effect compared to last year. The quarter improved by more sold beds in primarily owned nursing homes due to strong collaboration with welfare regions, as well as continued improved manning with investments in staff development, working conditions, and support systems. In the quarter, we opened two new units and exited two no or low occupancy units. In Q4, we expect to exit a few more no or low occupancy units, which will lead to further improved occupancy and productivity. Finally, we see a strong possibility to continue our growth with more than 400 new beds under construction. Next slide, please. In Scandinavia, underlying net sales growth was +3.1%, driven by growth in owned nursing homes. However, growth was offset by ended outsourcing and exiting home care contracts. Lease adjusted EBITDA was SEK 150 million, a slight improvement versus last year's, with both periods impacted by non-recurring one-off effects. Ending outsourcing contracts had no material impact on results. However, as mentioned, the result was negatively affected by home care exits, which had a SEK 15 million year-over-year negative effect, equal to approximately SEK 10 million of non-recurring losses. Going forward, we still foresee less, but still some negative effect in Q4 and Q1 next year from the home care exits. We also expect the Q4 result to be slightly impacted by one-time integration costs linked to the recent Fremia acquisition. While we delivered a result in line with last year when adjusting for one-offs, we are not fully satisfied with the result. Scandinavia has more to give, and ongoing actions, which include central function adjustments, are expected to improve performance gradually going forward. Finally, Scandinavia, which has had a higher rate of openings in the last 12 months, has a further 130 beds under construction. It is worth noting that our total pipeline of both units under construction and signed lease agreements for both business areas combined amounts to close to 1,050 beds, which are expected to open during 2026 and 2027. Next slide, please. Our free cash flow was strong and improved to SEK 981 million on a rolling 12-month basis, equal to a 37% increase versus last year. Our free cash flow to firm, i.e., free cash flow excluding interest paid on bank debt of SEK 144 million, was SEK 1,125 million on a rolling 12-month basis, supported by a strong Q3 free cash flow versus the same period last year. During the quarter, we finalized the Fremia acquisition and repurchased SEK 101 million worth of shares. Today, we can report that we reached our target mandate of buying back SEK 150 million worth of shares by the time of this report. Finally, we're happy to announce our next repurchase program, which aims to repurchase an additional SEK 200 million worth of shares until the next quarterly report in February. Next slide, please. Over the last 12 months, we continue to deliver on our '24 to '26 financial plan and a more active capital allocation. As a result, we have utilized about 60% of our free cash flow for dividend and continued share buybacks. In addition, we have continued to add high-quality value-accreted bolt-ons, firstly in Finland in Q1 this year and in Sweden during Q3. We aim to continue adding further value-accreted bolt-ons going forward, in line with our financial plan of at least 2 to 3% of additional EBITDA growth per year from M&A. Also worth mentioning is that with our agreed and increased revolving credit facility of additional SEK 600 million and our strong free cash flow generation, we have the financial flexibility to continue to deliver on both strategic initiatives and share buybacks. Next slide, please. Let's have a look at our key financial metrics, which continue to move in the right direction. If we start at the top left, the adjusted EPS improved by SEK 0.51, up 28% versus last year. Improvement primarily due to higher lease adjusted EBITDA and further supported by both reduced financing costs and continued share buybacks. If we turn to the top right figure and our lease adjusted margin in %, adjusted for non-recurring items in 2024, we continue to improve our lease adjusted EBITDA margin. In Q3, the rolling 12-month margin was 6.2%, up 1.3 percentage points compared to Q3 last year. If we instead look at the figure at the bottom left, our lease adjusted net debt to EBITDA ratio was 1.5 times and down 0.6 times compared to the same quarter last year. Finally, if we look at the figure on the bottom right, net increased expenses in the quarter was SEK 30 million, an improvement of SEK 12 million versus the same period last year and in line with last quarters, where we see the effects of improved market interest rates. With that, I hand over to you, Martin. Thank you, Mikael. Next slide, please. Since the end of 2022, we have improved our adjusted earnings per share significantly. After our first phase of our turnaround plan, which was 2021 to 2023, we announced a new financial plan at the beginning of 2024, with an ambitious target to deliver more than 80% of earnings per share growth by 2026. As you can see in the graph, we're currently at SEK 5.34 per share. If we divide adjusted earnings last 12 months with the number of shares outstanding end of Q3, we are at SEK 5.43, well on track towards beating our 2026 adjusted EPS target of at least SEK 5.50. Next slide, please. To summarize, we deliver our strongest quarter to date, mainly driven by our operations in Finland, supported by increased occupancy in all markets. Our strong results enable continued investments in quality, technology, and method development to further improve our ability to solve complex care needs in a society where more and more people are living longer. In Finland, we continue the positive development over the past couple of quarters with strong operational efficiency, improved occupancy, and a well-planned summer period. In Scandinavia, a strong development in owned operated nursing homes was offset by exited home care and outsourcing contracts and margin pressure in the home care segment. With the current initiatives, we expect to gradually improve performance and margins in Scandinavia from Q4 and onwards. Looking ahead, we have a strong pipeline on new projects to support our organic growth targets for the upcoming next three years. Cash flow was very strong during the quarter, and we will continue with share buybacks entering Q4. All in all, we're well on track to beat our 2026 adjusted EPS target already this year. Hence, we're looking forward to presenting updated financial targets in conjunction with our year-end report in February. With that, we open up for Q&A. Operator, please go ahead. If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 6 on your telephone keypad. The next question comes from Jakob Lemke from SEB. Please go ahead. Yes, hi and good morning. My first question is on Scandinavia, where I believe you in Q2 said you expected to improve profitability in the second half of the year. Do you still think that is possible? Yes. Okay, on Finland, you seem to have quite good customer inflow here in Q3. I'm wondering a bit what drove the shift here from Q2 and also if it's mainly in existing units or newly opened units. Mainly in existing units. We've seen a strong inflow in new customers during Q3, actually mainly even better in the end of Q3. That is something that we've seen both in Finland and Scandinavia. The underlying reason is we are in a period with a growing demographic demand. Do you know why or do you have any sense of why there was a sudden uptick later in the quarter? What changed? Normally, the inflow is fairly slow during the summer months, mainly based on that the welfare regions are on vacation. What we've seen is a stronger inflow after summer. We've seen waiting lists for residential elderly care increasing in many welfare regions gradually over the past year. This is also a sign that public sector capacity is getting fuller in several regions, and then they buy more seats at private operators. Okay, another question on occupancy and sort of customer inflow. I'm wondering if you can give a sort of a general update on the occupancy environment or sort of demand environment you see for 2026 across the two business areas. Jakob, can you please repeat the last part of that question? The sort of demand situation you see or potential for customer inflow across the two business areas for 2026. We foresee a continued demand growth. If we look at the demographic situation in both Finland and Sweden, it's been coming a bit earlier in Sweden. I mean, the demand, if you look at the number of people above 80 years old in Sweden, has been growing quite a lot over the past five years and will continue over the next five years. If you look at Finland, we are just in a period of rising demographic needs. We foresee that the demographic push will continue into 2026, actually over the next five years. The sort of willingness to place clients will also be high. Yes, we still have an advantage that we can deliver a stronger quality of care with higher customer satisfaction in general than the public sector at a lower cost than public sector capacity. Of course, we think that we have a strong value proposition towards municipalities and welfare regions. Okay, just a final more technical question. The lease effects on reported figures seem to be higher in this quarter in both segments. I'm wondering if these are sort of one-offs or if it's a new sort of normal level. Yeah, we had a positive lease effect in Scandinavia, not impacting lease adjusted EBITDA but reported due to we were able to exit one empty house. Okay, that will go back to a lower level. I think it was around $6 million or so in impact. It seems to also be a bigger impact than normal in Finland. I think it's just an accounting effect. There's no big reserves or anything like that that has been. Okay, that's fine. It's all for me today. Thank you very much. The next question comes from Christopher Lilleberg from Carnegie. Please go ahead. Thank you and good morning. First, I just wanted to have a clarification on what you said about the impact on earnings from home care. Is it correct that you said ending home care contracts had a negative SEK 15 million effect year-over-year in the third quarter? That's correct and equal to $10 million. That is equal to $10 million. Because we had plus $5 million last year, and now it was minus $10 million. Okay, thanks. Given this favorable occupancy rate you show in Swedish or Scandinavian elderly care, I guess there must be other segments than home care that also underperform. Could you comment how the social and disabled care are doing, and are you still making losses in Denmark or has that become a profitable segment for you? Yeah, I think disabled care is delivering the same as we've discussed previously. In the region family, we had a slightly lower occupancy during the summer, partly due to also schools being closed. Denmark, we are slightly negative due to the opening of a new house that we did in June this year, which has start-up cost as it's filling up to its occupancy. Is the margin improvement you expect in Scandinavia going to be driven by a continued stronger margin in elderly care residential living and lower losses than for home care, or do you also expect to see better earnings in individual and family in Denmark? It's three parts. One is that our residential elderly care part is, we expect that to continue to operate very strongly. Secondly, we are right-sizing central functions, considering the number of home care and outsourcing contracts that we have been exiting. Thirdly, we expect gradual improvements both in home care and individual and family care. Okay, thanks. In Finland, is it possible to come up with a run rate margin right now on an annual level? We don't comment on margins, as you know, Christopher. Okay. Another question about Finland is, have you judged the opportunity to gain new contracts when the healthcare or welfare regions will be allowed to move volumes from the smaller municipalities, say public contracts, to private providers here from next year? I think that is something that would overall be positive. If you look at Finland, I mean, we've been in a changing regulatory environment for quite some time, for the past four years, both in terms of changing staffing density requirements, which we believe now is stable from this point and on going forward. Secondly, also the softer reform, which has led to us doing business with 300 municipalities, and now that has changed into 22 regions. We believe that the fact that the new larger regional buyers, they are more professional than previous. They were, as you're mentioning, Christopher, they had to continue to buy the old municipalities' capacity for a grace period of a number of years, which goes out starting 2026, meaning that they are more free to, if should they want to, shift more capacity to private operators. We don't expect a massive shift, but we expect this to improve the environment in Finland in terms of driving occupancy gradually from 2026 and onwards. Mainly due to that, our capacity is more modern. They have a higher quality and customer satisfaction. Foremost, we run them on average at about 20% lower cost versus public operations. We hope that this will continue to enable us to drive occupancy growth in Finland. What would be the rationale for the healthcare regions to continue to buy from municipalities? I guess that's more expensive for them. Is there political things we have to consider here and different views about whether to use private versus municipality? Yeah, I mean, it's a bit different also region by region. It's very easy to think that Finland is one country, but in fact, it's a lot of micro-locations depending also where people are actually living. People living in residential care homes, you're unlikely to want to move them. It's rather placing new customers in new places. It's a gradual process. Great, thank you so much. Thank you. The next question comes from Johan Anders from SB One Markets. Please go ahead. Thanks for taking our questions and congratulations to a strong quarter. Some follow-up and some useful questions as well, perhaps. Finland started off with, as I understand it, there is some pressure on price, but also more flexibility on staffing relating to new regulations, partly. The end result seems to be positively judged by Q2 and Q3. What to expect going forward? Can we see more support from this? Thank you. As I just stated, I think we're now in a more stable regulatory environment in Finland after 40 years of changing staffing density requirements. We expect the 0.6 staffing density regulation to continue. After a year of adoption, we're now at a very strong operational efficiency level, and I think we've adapted very well to the 0.6 level, which is deemed to continue. From this point onwards, I think we will see the continued development in Finland based on our long-term strategy for sustainable growth, which is based on a combination of gradual occupancy improvement from this point onwards, paired with gradual productivity improvements that come also with higher occupancy. Secondly, opening pace. As Martin Tivéus stated earlier, we have a strong pipeline of openings in Finland, and we expect to open at least 2% new capacity per year, paired with at least 2% continued bolt-on acquisitions in Finland on an annual basis. We will also continue to optimize footprint and exit some of the geographical locations where we think they are less positive for occupancy development. There are still a lot of things to do in Finland, but the big turnaround that was done over the past couple of years in Finland, that is done. Now it's about continuing to develop in the Finnish market according to our long-term plan. Thank you. That's useful. There is some more leverage in terms of occupancy improvement and also presumably staff intensity. Is there any risk in stretching the staff? Both these drivers put some more pressure on the staffing and care satisfaction? We don't see that. I mean, given also the strong demographic growth and the availability long-term of qualified care staff, we have, of course, identified that being the star employer in the industry is one of our core strategic pillars to make sure that we can secure an ample supply of qualified care staff. Hence, we have worked a lot over the past couple of years in working long-term with increasing leadership density, working with leadership development, working with culture and value program, career path for staff, but also digitalization. We have a number of initiatives going on both in Finland and Sweden on reducing administrative time for the staff to be able to focus on what they do best. What we see, the long-term trend is that we are continuously improving staff satisfaction and also decreasing staff turnover and staff sick leave. That is also actually part of our strong margin development in Finland over the past couple of years is a better operational efficiency, but also relatively lower staff costs as we don't have to hire as many staff. They tend to stay longer on board and lower sick leave. This is important. Great. The year-on-year change in terms of elderly home care in Scandinavian operation is quite a marked shift. You said during the call that you should expect more of that Q4 Q1. Can we look more into sort of midterm forward? Should we expect a sort of fading dynamics there? It's a rather big change. Yeah, I think we're all in a transition period in terms of Swedish home care services. I think, as I mentioned, if you look at the demographic boom, it started earlier in Sweden than in Finland. Over the past five years, we've seen a 20% increase of demand needs in elderly care in Sweden. That has not been reflected so far in public sector municipality budgets. What we've seen is the effect has been strained budgets in municipalities. As they're not meeting increasing demographic demands with increasing budgeting, they're forced to look at the terms. As we can see, this has come to home care first, because that's where the demographic boom is hitting the elderly care services first, it's in home care, and then later on in residential nursing homes, we've seen that they haven't been adapted terms accordingly. A consequence of that is that I think we are in a transition where we have been also stating examples by actually exiting a number of home care contracts in Sweden where we don't think that the terms are sustainable any longer. We believe that we can do a lot of good difference in the home care segment as a large player, and with the large home care players still in Sweden. We think that, I mean, we can see that we can deliver a better home care at a clearly lower cost than public sector. We think that we need to work with the municipalities over the next few years to understand how home care should be delivered and procured over the next couple of years. Even though we're in a pressure situation now, we also believe that we are in a transition with lower margins, we're figuring it out, but we think it has a good future long-term. Thank you. Finally, there are some regulatory changes, the LOV, and also increased DB in terms of ownership and so forth for some of these operations. Will that create some opportunities for you, and could it also create some risks? We see it's seldom, but it happens that public buyers may change from framework contracts to freedom of choice or from freedom of choice to framework contracts. We haven't seen that it has had any material impact. We see basically a similar number of municipalities that tend to use private operators to solve their care challenges. Currently, it's about half of the market in Sweden that is using private operators, where the market share for private operators is close to 40%. How they choose to, under what contract they choose to do, that might differ a bit or change a bit from time to time, but we can work under any contract type. Okay, thank you. That's all from us. Thank you. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more phone questions at this time. I hand the conference back to the speakers for any written questions and closing comments. Thank you for your participation in this call. If there's anything else that you want to ask about, just please reach out to me, Mikael, or Josephine. We will answer your questions accordingly. Thank you for listening in. Thank you very much.