Earnings Call: Q1 2020

May 6, 2020

Good morning, everyone, and welcome to this conference call where we'll present Atendo's results for the first quarter. My name is Anders Kotchland, Communications and IR Director at Atendo. Today's presentation is hosted by our CEO, Martin Thewis and our CFO, Fredrik Larkbrands. And as usual, after the presentation, we will open up for questions. With that, over to you, Martin. Thank you, Andreas, and good morning. The ongoing corona pandemic is greatly affecting our operations. In this call, we will spend some time to describe the impact it has on Atendo and what measures we're taking to manage the situation. We will, of course, also walk through the operational and financial development during the first quarter and our key focus areas going forward. I will now turn to the presentation, then Fierde Krajekrant, our CFO, will take you through the numbers in more detail. Next slide, please. I will start with giving an update on our work to prevent the virus to spread within our operations, how we treat infected clients, access to testing and protective equipment, as well as how we manage the staffing situation. As most of our customers belong to the risk groups for COVID-nineteen, our organization has been focused since early March on preventing the effects of the pandemic among customers and employees. As part of the preventive efforts, already March 10, first of all care providers in the Nordic countries, we suspended all visits at all care homes and introduced health screening, including taking the temperatures of all staff before each shift. In the March, we started to realize that in spite of suspended visits from staff health checks that the virus could enter our nursing homes through asymptomatic but infected personnel. Hence, we believe that access to frequent testing and screening of employees, in combination with use of protective gear, is key to prevent the virus' spread. Since the start of the pandemic, we have been able to test customers with suspected COVID-nineteen infection through the healthcare systems. Opportunities to test and screen employees, however, have been more limited. In Sweden, this possibility is still very limited. In Norway and Finland, we have better possibilities to identify infected among both staff and customers, put asymptomatic employees in quarantine and perform contact tracing at local units. Access to protective equipment has been constrained during this period in all countries, but most acutely in Sweden. Despite this, we have since the start of the pandemic managed to secure sufficient volumes of equipment for the care of customers with suspected or documented infection, in accordance with the recommendations of the authorities. We are now taking additional measures to improve the safety for our customers, and since last week, all our care staff in the most heavily affected regions used protective masks in all close physical contact with customers. We also started to screen returning staff for possible immunity to the virus. This ambition exceeds the recommendations of relevant government authorities in Scandinavia. And while these measures imply extra costs, we are convinced it is a necessary step to increase the level of protection for our customers. At times, the staff situation has been strained. As more staff are beginning to return to work, the situation is now under control. During the crisis, we have received a large number of spontaneous applications, and we're also starting to see tendencies towards an increased interest in the care profession as such, something that could have long term positive consequences. Next slide, please. Now turning to some comments on the overall financial development in the first quarter. The corona impact was rather limited as the outbreak of the virus started in late Q1. We estimated its effect to be SEK20 million, mainly related to protective gear and increased sick leaves on the back of our extensive health checks. The impact is expected to increase going forward. And for the full year 2020, we expect additional cost of SEK100 million, where the majority will impact Q2. We also foresee some revenue impact on the back of the pandemic, something I will come back to. In the long term, post the pandemic, we do not see that the corona situation should have any significant impact demand on of our services. Turning to the business areas. Our Scandinavian operations displayed underlying stable results. We are seeing continued stable development in own care homes and we have several new projects in pipeline for 2020 and 2021. Our outsourcing operations have stabilized past quarters and shows a slight improvement versus last year. Home care is continuing to develop in a positive way. In Finland, we reported a significant drop in profit versus last year, mainly on effect of high opening pace on new units in combination with the cost increase from Sharpen staffing requirements early last year. Q1 last year was only partially impacted by the cost increase. We will continue to have a high opening pace in Finland until mid this year. More satisfactory is that we started to see impact from cost compensation in Finland. On an annual basis, we increased prices corresponding to 3% of total revenue. Most of price effects came in Q1. As we have previously stated, the profit recovery in Santander Finland will take time and is primarily dependent on our ability in the coming years to reduce unpreventive beds and continue to achieve compensation for sharpened requirements in price negotiations. Next slide please. We reported a top line growth in the quarter of 8% year on year, excluding currency, mainly a result of the highest number of openings in the past twelve months. Growth was 12% in Finland and 4% in Scandinavia. Reported EBITDA amounted to SEK182 million corresponding to a margin of 5.8%. In all GAAP, without IFRS 16, this translates to an EBITDA of €84,000,000 Profit in Scandinavia was slightly higher versus previous year, while Finland reported a significant drop versus last year for reasons explained earlier. During Q1, we opened additional six forty eight beds, bringing us up to more than 17,000 beds in our operations. Occupancy remains at 30%. Next slide, please. As I just mentioned, we now have around 17,200 owned beds in operation, an increase by 8% from the corresponding period last year. In Q1, we started construction of just one new unit that will add roughly 100 new beds. This is a result of the more selective approach that we have been striving to achieve. In total, we have around 1,400 beds under construction by the end of Q1. As you see in the chart, we are still in the process of decreasing our pipeline in Finland, which is now only about a third of the size a year ago. At the same time, we continue to identify selective attractive opportunities in Scandinavia. Next slide, please. We are taking several actions to improve the occupancy situation. We have sharply reduced the number of new openings in Finland and we are working to exit some contracting areas with poor prospects. This chart shows a rolling twelve month opening pace and openings per quarter. We still had a very high number of openings in Q1, but after Q2, we will sharply reduce the opening pace and towards the end of the year, we will return to an opening pace similar to what we had in 2016. In 2020, we expect to open around 1,600 new vessels in total. In 2021, total number of openings will be lower as we're adding only a few new projects in Finland. Next slide please. This chart explains group margins in mature and start up units and sales. The downward trend since 2019 relates primarily to the higher cost level and more empty beds in Finland. In order to turn this trend, we need higher prices and higher occupancy. Prices started to increase from Q1, and the number of open beds will start to decline sharply after Q2. Next slide, please. Turning to the occupancy per vintage. As we can see on the top green line, the occupancy is clearly above 90% level for units started in 2016 and earlier. On a positive note, we are increasing occupancy in all vintages quarter by quarter. The reason for total occupancy not lifting is all the new beds we are opening in the twenty twenty vintage. The opening phase will continue until mid this year and then we will be in a better balance and position to start increased occupancy. With that, we move into the financials for the quarter and please go ahead, Jytik. Thank you, Martin. So let's turn to page nine. Net sales continued to be strong and amounted to SEK 3,100,000,000.0, up by 9% compared to the corresponding quarter last year. Adjusted for currency, net sales increased by 7.6. Acquisitions contributed with 1.7% and strong organic growth amounted to 5.9% in the quarter, up sequentially from previous quarters. The lead supported organic growth with almost one percentage point. For this quarter, see continued strong organic growth in our own nursing homes and increasing growth for outsourcing in Scandinavia. In Finland, we see growth across all service offerings. We still have a negative effect from exited home care contracts, but somewhat lower sequentially. Reported EBITDA amounted to SEK182 million in the quarter. I will come back with details on the underlying EBITDA development. Financial net was negative SEK 146,000,000 compared to negative SEK 135,000,000 in the first quarter twenty nineteen. IFRS 16 related interest expenses increased SEK 28,000,000, while interest expenses for our borrowing from bank decreased by 2,000,000. The lower bank related interest expenses are explained by somewhat lower debt. In addition, we had positive currency effects from financing of our Norwegian operations. Income tax for the quarter was 1,000,000, which corresponds to a tax rate of 24% for the period. Net profit amounted to SEK 3,000,000 in the quarter, which equals an earnings per share after dilution of SEK 0.02 kronor. From this quarter, we also report adjusted earnings per share. This is earnings per share adjusted for effects from IFRS 16 and acquisition related amortization and the corresponding tax effects. The adjusted EPS for the quarter was SEK0.37, down from SEK0.64 last year. Next slide please. Overall, our Scandinavian business area is stable, with profit improvements in home care and outsourcing. Net sales for the business area increased somewhat due to more sold beds in owned homes, price increases and acquisitions as well as the leap year effect. Organic growth was positive, but reduced by ended operations in Home Care. EBIT decreased from SEK 161,000,000 to SEK 165,000,000. Profit increased from home care, outsourcing and owned care homes opened in 2018 and earlier, but was offset by start ups and corona things. Increased profit in home care was based on increased customer concentration and improved planning and routing. We are actively acquiring smaller companies and exiting areas without the right prerequisites. The largest loss making homecare contract in Denmark ended in the 2019, meaning full positive effect in this quarter. It is also satisfying that they have succeeded in growing profits in outsourcing this quarter after challenging 2019. Homecare homes had a large negative impact on operating profit from start up losses in homes opened in late twenty nineteen and 2020 as expected, but this was to a large extent offset by increased profits in more mature homes. Please note that the profit in the first quarter twenty twenty was negatively affected by SEK50 million due to the corona situation. During the quarter, we have in tendering process won, but yet not started contracts with an annualized estimated revenue of SEK29 million. This means we have a positive balance between won and lost contracts for 2020 as well as for the last twelve months. Next slide, please. Growth continues to be high for Atendo Finland and amounts to 14% reported and 12% in local currency. The growth primarily comes from more occupied beds in units opened in 2019 and 2020. Price increases and acquisitions. Price increases amounted to around 3% and the LEAP Day also contributed to the strong growth. EBITDA decreased from 160,000,000 to SEK 36,000,000. The decrease is mainly attributable to the year on year effects due to sharper staffing requirements implemented during the first quarter twenty nineteen, Start up losses from units opened in 2019 and 2020 are also impacting negatively. Further, Atenda is investing in strengthening its central and regional management and support functions, which has increased costs. Price increases and higher occupancy in homes started 2017 and 2018 has contributed positively, but is not able to fully compensate for the cost increases. Before we turn to slide, I just want to give a few comments on the coming quarters for both Finland and Scandinavia. The corona pandemic will impact the coming quarters, which Martin will come back to. Besides that, I want to mention the following: Higher staffing requirements was gradually implemented during the first and second quarter last year, which means we will have some year on year impact also in the coming quarter. On the other hand, we will have the positive price effect of 3% for the upcoming 2020. Profit impact is lower due to salaries and cost increases. The salary negotiations for 2020 is expected to be delayed due to the coronavirus. Further, the number of openings in Finland decreased in the 2020, and this will impact the development for number of empty beds. In addition, as we have built a stronger organization, we will continue to report higher overhead costs on a year on year basis. Scandinavia opened many beds year end 2019 and in the 2020, which will impact start up costs initially but should contribute to increased profits by the end of the year. Next slide, please. On this slide, you can see the complete cash flow statement. Free cash flow is strong this quarter despite operating profit being down. This is mainly attributed to positive development in working capital and high personnel related liability. Adjusted net debt amounted to billion, which equals an adjusted net debt to adjusted EBITDA ratio of 3.9. The current high leverage is a consequence of pressured profit. With the new finance agreement that was renegotiated in 2019, we can tolerate the higher than normal leverage for a transition period. The new agreement also means that there are no maturities until early twenty twenty two. Atendo also has a strong liquidity and unutilized credit lines. During April, we have also signed an agreement to sell a nursing home facility in Sweden built by Atendo. This will impact cash flow positively with about SEK200 million in the second quarter. With that, I hand back over to you, Mark. Thank you, Fredrik. Next slide, please. I will end this session with how we view the financial impact of Corona in the next few quarters. I want to emphasize that no one currently knows how the pandemic will develop, and our estimates are based on the assumption that we gradually return to a more normal state towards the latter part of the year. Our current best estimate is that we will have additional costs in 2020 of approximately SEK 100,000,000, where the vast majority will impact earnings in Q2. These costs relate mainly to purchase of protective equipment, compensation from sick leave from staff and cost for isolation care. This includes the impact of non state support. The split between our two business areas is roughly fifty-fifty. Please note that there are large uncertainties related to these estimates. For example, we don't know how sick leave numbers will develop, how long time we will need extensive use of protective equipment or to what extent we will be able to get compensation for extra costs related to the pandemic. In addition to higher costs, we expect a short term risk of lower demand for new beds in nursing homes and home care services as a result of concerns about the corona situation among clients. We also lately noted increased mortality in some regions, which could soften occupancy levels. It is very hard to estimate the potential negative revenue effects going forward, but as an indication, based on April data, we currently see a negative revenue run rate of approximately million per month. In the long term, we do not believe that the corona pandemic will have a impact on the underlying demand for our services. The corona pandemic is an extraordinary situation and we have many challenges ahead of us. Some of our customers and employees have already been affected by the virus and loss of life has secured in all countries where we operate. We all feel we are lost to relative and we are doing our utmost to prevent the virus from spreading within our units. I'm very proud of the work carried out by our competent and engaged employees. Their efforts to prevent infections, to handle infected customers, and to keep relatives involved in the everyday lives of our customers is extraordinary. Compassionate care has perhaps never been more important than now, and we must all within Atendo, society in general, and each of us as individuals support the most vulnerable among us. Thank you for your attention, and over to you, Andreas. Thank you. We'll now open up for questions. And please take one question at a time. Operator, please go ahead. Thank Our first question is from Christopher Lilleberg from Condi. Please go ahead. Your line is open. Yes. Good morning. Thank you. Regarding the the COVID nineteen situation, do you see any type of stabilization now in in in Stockholm at your nursing homes? And also, as you have introduced gradually more and more protective gear and you mentioned start doing more tests, etcetera, how that helped in any way? Could you see that in the number of infections? And also if you could talk a little bit how this differs versus regions and and the the versus Sweden and and Finland, whether this is mostly a Stockholm problem or or do you see it up? That's very awesome. Thank you. Overall, we can say that the the spread of the virus in nursing homes follows the the spread of the virus in society at large in terms of regional regions being affected, where Stockholm region is, of course, you know, is is the most affected region in in Sweden. We we have seen a flattening trend the past weeks. I mean, the part has to do with with the the spread of the virus in in this in society at large, but also due to the different actions that we're taking to prevent the virus. It's hard to get exact data from from all nursing homes outside Atendo, But if you look at the the some data points that we got earlier this week, it looks like we have lower number of infections than our market share in in Stockholm region, which points out that that some of our actions do have an effect on on the spread of the virus, which is, of course, a comforting thought. When it comes to the spread of the virus at large, we don't really have any any spread of infections outside Sweden. It's it's extremely limited in the under in the other Scandinavian countries or Nordic countries. And in Sweden, we we Stockholm region is, of course, where we have the largest impact, and then we see some singular cases in other more more heavily affected regions. The effect on demand is, as we've seen, more driven by concerns and worries about the corona situation rather than the actual impact of a single carol. So that can be seen even at, you know, units where we have no infections, that we can still still see that our payers are hesitant to move more clients into nursing home in general. And we can also see cancellation of home care hours as people are concerned and worried about the potential risk. So that is a trend that is that is more based on worry worries and concerns, I think, than than actual fact and figures around the spread of the virus. Is it possible to maybe it's sensitive, but possible to to say how much mortality has has gone up in Stockholm, for example, for versus normal? We're not gonna offer any exact numbers on that, so we won't release that here either. Of course, you know, we're supplying all the data to the authorities so they will collect that picture. But, of course, mortality has gone up somewhat on the back of the on the back of the coronavirus. Okay. And if that's okay, could I just ask you about cost impact you're talking about? I guess that's the net effect of the various type of governance support. Yes, correct. Yes. Thank you. And our next question is from Carolina Jelvin from Danske Bank. Please go ahead. Your line is open. Hi. So you previously commented on the regional differences in the spread of the virus, but of the estimated 100,000,000 extra cost, how will that be distributed between Scandinavia and Finland? Around fifty fifty between Scandinavia and Finland, and then predominant this region in Finland. Yeah. Yeah. Okay. And then I heard that the private providers are getting requests from hospitals to taking more patients as they want to fill up space from to our coronavirus patients. Is that anything that you've experienced so far? On a very limited scale so far, yes. Okay. Do you think that's, going to help occupancy going forward, or is it too early or too small? It's too early to say. There are initial discussions and have been for for for a few weeks, but nothing material. Yeah. Okay. Thank you. And our next question is from Peter Testa from One Investments. Please go ahead. Your line is open. Hi. Thanks for taking the question. So just to to on this this point on patient flow, have you seen any particular change in new patient flow trends between Sweden and Finland, or is it or is this issue essentially a Swedish issue? We can see a difference in pension flows in in in both markets. And I think that adds to the point I made about this being more driven by concerns and worries than actual fact. In Finland, we have we have around 400 units. We only had had two units where we've seen the infection spread. So means that ninety nine point five percent of of units in Finland don't have any infections. Still, we see an effect on of demand, which so that's sort of emphasized at that point. It's it's mainly driven by by worries and concerns. K. And is that change in demand pattern moderated in as you go into into May given, you know, the the the facts of Finland, or is it too early to see any change? It's too early to say. That's why, you know, this is very, very hard to estimate the revenue effect. We can see the revenue impact it had on on April, but then I think your guess is as good as ours on on how this develops going forward. Okay. What do you think you can do in terms of information package or I don't really want to call it marketing, but sort of management of information flow to be able to try and get the point across and sort of address the concerns of the local authorities who are guiding patients. We're in close contact with all the local authorities in all our markets. We are making we're doing business today. We're supporting around 350 different local authorities across The Nordics with care services. And, of course, you know, we stay in close contact with them. And we're also sharing what we are doing, the strength and guidelines that we're having to prevent infections, provide isolation cares, additional use of protective equipment, and so forth. So they're also well aware. But this worry is not only what we've seen in so far from from the local authorities and payers. It's also from actually, you know, potential residents and relatives. Yeah. Okay. And then it's a different topic. If we if you look at the the Finnish staffing ratio discussion, which has been put on hold, and I guess there's also some you know, there's there's cost factors. There's a the the fight back from the local authorities on the cost impact, and I presume also some learnings that will be taken out of this COVID exercise and staffing model. When you think about how that whole process of staff ratios plus payer coverage of that. Can you give any thoughts on how you think that's going to work itself out through 2020 or whether it will not even happen in 2020? As I said for now, that that is put in hold. There's still not the government of Finland are still not taking a decision regarding the 0.7, and it's it's it's in the court that it will be further delayed. They have not stated anything officially regarding timing. I would not be surprised if if that legislation is postponed until the end of the year or early next year, but there there's no official information out there yet. And has there been any change in sense of how that should be compensated if if indeed it's gonna go go forward at all? They have presented a a summary of costs related to to that new law proposal, and they've also presented a part partly financing all that all those costs. But that is something that the Yakt has defined funds for. Yes. Okay. Thank you for the interest. And our next question is from Klaus Tieck from Nordea. Please go ahead. Your line is open. Good morning and thank you for taking my questions. So first, just a follow-up on previous questions asked. So you say that increased personnel costs is somewhat equally split between Scandinavia and Finland. And if I understand correctly, the support has been more generous in Sweden compared to Finland with compensating sick leave. But maybe I've been wrong, but could you please elaborate a bit on the differences in support you received from the different governments? That's my first question. Thank you. The report for sick leave has been in Sweden now for for April and May so far. In Finland, we have not received that support yet, but they they have they they are released in the second half of the year for 2020 in Finland. And so So and those are not related to city as such, but to to social taxes and so forth. So the measures have been been a bit different both in in terms of construction and in timing effect in in Sweden and Finland. Okay. Thank you. And then on on the occupancy in in Finland, you you previously talked about the majority of new homes in Finland will open in the first half of the year and planned for that occupancy rates might continue to decline. At the same time, we see a sequential uptick in occupancy in Finland during the quarter. Can you say anything about what you expect in terms of occupancy rates in in Finland going forward? Thank you. We will so we will have a continuous high opening phase in q two in Finland, and then it will decline sharply in the second half. We are you know, we're still we're still selling new beds in Finland. I'll bet at a slightly lower level now because due to the the words around the corona crisis. I think that that is given the corona situation and given the uncertainty on regarding the concerns around putting more clients into care homes, it's difficult to say the exact timing of the development of occupancy in Finland. The known fact is that we will open additional beds in q two and shorten the decline in the second half. And of course, we know we expect occupancy to start lifting in the second half. The big uncertainty, of course, is the short term demand situation. Okay, fair enough. Thank you. And one last question, if I may. Can you say any so the cost impact, has this been largely on elderly care? Or have you seen any or can you say anything about your disabled care operations in Finland as well in in terms of corona? Laughtering under liquor. And that's also the main part of the business in in in Finland and in Sweden. Yeah. Sure. Okay. Thank you. That's all for me. Our next question is from Thomas Goff from Handelsbanken. Please go ahead. Your line is open. Hi, everyone. Thanks for taking my call. Most of my questions have been answered. But if you could just give some flavor of the, in general, of the corona situation? Has the is has it been worse or better off than you initially thought when it came? Or how has it been for you? And, also, yeah. If you could how has the reaction been for you? Do you I think no one knows what to expect, and we didn't either. We quite early established our own network of of contacts within within the health care system, within, you know, professors and virology and so forth to get a, you know, early second opinion on on how this potentially could develop apart from authorities. And based on sort of, you know, worst case data points we have from them, we get we get we got them. That's also the reason why we, earlier than anyone else, decided to to close down for visitors and and to establish gatekeeping functions for health checks in in all operations. And I think we've we've decided quite early on to take better to take harder measures earlier on than be sorry afterwards. Then, of course, I'm not we we learn more day day by day on on how to manage the virus situation and and what actions are actually working and have have any effect and what what doesn't seem to work. So it's it's a constant learning experience for the for the organization where we, you know, like, we everyday sort of question what we're doing and and see if there's anything else or or anything more that we could actually do. So I I think that we will not be able to to get the full picture on how this has been developed until afterwards. From now, you know, we can see that what we're doing seems to have at least it seems to have an effect, and we see it have a lower number of infected than than than general elderly care, but it's still early days. Okay. Okay. Thank you for that. And also, just you mentioned the cost. Can you the cost, how you will be compensated in Finland? Can you just repeat that? What was the difference between you will get paid afterwards? Or could you just repeat what's This expected in is Fredrik. So in Finland, what has happened is that the the parameters on how you pay pay money to the collective pension system has been changed. So we we will pay a lower percentage of the employees' salaries, and that is from May onwards. So there's no direct link to sick leave or social charges as we have in Sweden. So if that is a lower pension system payments to the collective systems, and that is from May until December. So it's more biased to the second half of the year. Then you should you know, in this equation also when we talk about subsidies and so forth, the sick leave reimbursement that we have in Sweden does not cover all costs because there are all there are other side costs, for example, pensions and vacations and so forth, that the employers still have to be responsible for. Yeah. And what is the is the percentage how much is capped in Finland? Do you know that? 2.520.5%. Okay. Great. Thanks for that. Thank you. And our next question is from Christopher Lilleberg from Convey. Please go ahead. Your line is open. Yes. Thank you. Two follow ups from me. You mentioned that the positive price increase affecting Finland will be less now in the coming quarters from SADA increases. So will that happen after April? I thought they were maybe possible until the autumn. So what's the latest there? So what we said is that the profit impact is less than the price impact because we also have a cost inflation that has to be compared with. Then if salary increases is delayed, then there's no we don't know exactly how that will fall out. But the delayed salary increase, of course, means that we don't have the cost increases. But the tradition in Finland is that if it is delayed, you pay some sort of onetime catch up reimbursement. But that is still to be negotiated. Okay. But are you as it looks now, would you in the accounting, would you have that cost in your P and L for the second quarter? No. Not as it looks now. Okay. And and you still don't know we still don't know what the salary increases will be. That's an open discussion to The be the the industry Danish market right now is 3.3% over two years. That's not, you know, that's the kind of it's not specific car industry, it's the general industry. Okay. And then regarding this the end of concern to take on care services and and the impact on on revenues. So I struggle a little bit to I I too can understand why this is happening, but I struggle to understand what are the alternatives because, I guess, you don't wanna have home care either, which I may think maybe is even more risky. So so it's and and when you move into a nursing home, you know, you are in pretty bad condition. So what is the point of view? Are are those people staying in hospitals or rely on relatives? Do you know? Yeah. Well, that's why we also believe that that demand, you know, will come back because the people that we're we're accepting into the nursing homes is normally sort of the last two years in in in their lives. And they are sick, and they have dementia, quite many of them. And it's it's quite difficult to stay at home for a very long time. So think now it's very affected by all the worries and concerns around the coronavirus, but but we expect demand to to come back. That's it's very difficult to keep people in the line for for too long. And I think that there won't be enough room for them in the in the in the hospitals. It's most likely not a better place to be, probably worse. But right now, it's mainly that they that municipalities try to keep them longer at at the hospital. Sometimes that municipalities pay that penalty rather than that those people are in their own homes with support from No. They're in their own homes. They're okay. They are in their own homes. Okay. Yeah. Actually, for risk of spreading virus, the hospital is probably the the last place you want to be in. Yeah. Yeah. Maybe fundamentally, but I think if you read, please, Swedish media, I think it seems the worst place it could be at least that's the perception with the nursing one. Yeah. And and that's the Yeah. That's the that's the unknown. Right? How that concerns how those concerns will develop. Okay. Yep. Thanks. Our next question is from Victor Fischel from ABG. Please go ahead. Your line is open. Hi, guys. Thanks for taking my question. Just two shorter ones. The sequential occupancy drop in Q1 in Scandinavia, could you perhaps elaborate a bit on that, if there are any other moving parts than than just just your increasing in opening new homes, if we should have something else in in mind in that figure that you released today? Thank you. No. It's it's driven by openings in new homes. We had quite a significant amount of openings in q one. Okay. So given this demand discussion that we have today, so it's it's fair to say that that's good or should continue down in at least the, let's say, two quarters ahead. Yes. In Q1, we didn't really see a demand effect. It was too early. Right. Thank you. And I think, Fredrik, I'm not sure if you said this in your presentation here, but looking at Scandinavia in terms of profits, obviously, you will have the pressure from the new openings. But was that correct to how I understood it that in Q1, that was mitigated by your older openings, but that will not be the case in Q2 and Q3 as well before perhaps being mitigated in Q4? What I said is that it was largely offset, not fully offset. We had a negative effect. But it was largely offset by by better performance or better occupancy in now the nursing homes. And then then what I said is for the for the start ups '19 and and '20 that will continue to have negative impact here for the remainder of 2020. We do not I did not guide on how big the offsetting effect will be compared to those start up losses. Right. So it was not the net effect, so rather the single effect from openings. Okay. That's fair. Just lastly, in terms of your net sales split in Finland, the 7% other revenue, could you just remind us of what that is? It's a it's a combination of of different things. We have some home care. We have some, you know, care services that is similar to what we call individual families. In in in Sweden. It's a child care services. They actually sell some food externally from some of our production chick kitchen. And then we have some some real estate that we rent out has come as parts of other transactions. So it's a combination of different things. And obviously, this must have been growing quite a lot faster than the rest of the business What in has happened is that we did the reclassification. So before, part of these things, as I mentioned, for example, selling food for production kitchen. In 2019, if it was production kitchen that was co located within nursing home, we reported it as part of the nursing home revenue. But now we have it as a then reported as out there. And the same comes with some of this real estate that we sell externally. It is a part of transactions where we we know the essence of what we wanted was the nursing homes. Also, the rental income we had on those extra little bit was in 2019 reported as part of the nursing home revenue. So it's not a, you know, a sequential trend shift. It's a reclassification of the report revenues. Okay. Thanks for the clarification. That was all for me. Thank you. Our next question is from Hans Bostrom, he is a private investor. Please go ahead. Your line is open. Good morning. I just had a question regarding the testing policies in Finland and Sweden regarding healthcare staff. How do they differ in terms of scope, timing and goals? And also in terms of the costs, I mean, are you carrying any of these costs yourself? Thank you. In Finland, there is a, you know, a fair part of testing being done by private players like ServiceDOLLO. The good side is that we can get access to testing quicker and and broader in Finland for for staff and in Sweden. Then, of course, we're also paying paying for it. In Sweden, the laboratories and the testing capacity is run by by public sector and the health care system. So we don't have the possibilities to buy testing capacity on a broad scale for staff in Sweden. We have to we we are dependent on health care system. And up to now, we've only been able to test sick clients, not staff. So we're still waiting on on test capacity for for staff to screen the staff in Sweden. If you look at Norway and Denmark, public test capacity has been much wider where we were able to test broadly both staff and and clients, and the public sector is is taking the bill for that. And are there any objectives in Sweden to increase this capacity, and what's the time horizon for that? The authorities in in Sweden have said that they are in the process of expanding test capacity, which we're gonna be, you know, looking forward to because that's that's one of the key actions to stop the virus from spreading, mainly screening staff for asymptomatic virus. We haven't seen it yet, but we hope we will come during May. Thank you. Thank you. And as there are no further audio questions, I will hand you back to the speakers. Okay. Thank you for listening in, and we will now conclude this conference call. And please contact us directly if you have any further questions afterwards. Thank you for your participation.