Good morning, everyone, and welcome to this conference call where we'll present Attendo's results for the Q1 . My name is Andreas Koch, I'm Communication and IR Director at Attendo. Today's presentation is hosted by our CEO, Martin Tivéus, and our CFO, Fredrik Lagercrantz. 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 Attendo and what measures we're taking to manage the situation. We'll of course, also walk through the operational and financial development during the Q1 and our key focus areas going forward. I will now turn to the presentation. Fredrik Lagercrantz, our CFO, will take us 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 belongs to the risk groups for COVID-19, 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 10th, 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 H2 of March, we started to realize that in spite of suspended visits and 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 to spread.
Since the start of the pandemic, we have been able to test customers with suspected COVID-19 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 had 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. Since last week, all our care staff in the most heavily affected regions use 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. 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.
Turning to some comments on the overall financial development in the Q1 . The corona impact was rather limited as the outbreak of the virus started in late Q1. We estimated its effect to be SEK 20 million, mainly related to protective gear and increased sick leaves on the back of our extensive health checks. For the full year 2020, we expect additional cost of SEK 100 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 on the demand of our services. Turning to the business areas. Our Scandinavian operations displayed underlying stable results.
We're seeing continued stable development in own care homes, and we have several new projects in pipeline for 2020 and 2021. Our outsourcing operations are stabilized past quarters and shows a slight improvement versus last year. Own care is continuing to develop in a positive way. In Finland, we report a significant drop in profit versus last year, mainly an effect of high opening pace on new units in combination with the cost increase from sharpened 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 start to see impact from cost compensation in Finland. On an annual basis, we increased prices corresponding to 3% of total revenue. Most of price effect came in Q1.
As we have previously stated, the profit recovery in Attendo Finland will take time and is primarily dependent on our ability in the coming years to reduce number of employees and continue to achieve compensation for sharpened staffing 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 high number of openings in the past 12 months. Growth was 12% in Finland and 4% in Scandinavia. Reported EBITDA amounted to SEK 182 million, corresponding to a margin of 5.8%. In old GAAP, without IFRS 16, this translates to an EBITDA of SEK 84 million. 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 648 beds, bringing us up to more than 17,000 beds in our own operations.
Occupancy remains at 30%. Next slide, please. As I just mentioned, we now have around 17,200 own beds in operation, an increase by 8% from the corresponding period last year. In Q1, we saw the 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 had around 1,400 beds under construction by the end of Q1. As you see in the chart, we're 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 contracts in areas with poor prospects. This chart shows a rolling 12-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 beds in total. In 2021, total number of openings should be lower as we are adding only a few new projects in Finland. Next slide, please. This chart explains group margins in mature and startup 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. The number of open beds will start to decline sharply after Q2. Next slide, please. Turning to the occupancy per vintage. As you 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're opening in the 2020 vintage. The opening pace will continue until mid this year. Then we will be in a better balance and position to start increased occupancy. With that, we move into the financial for the quarter. Please go ahead, Fredrik.
Thank you, Martin. Let's turn to page nine. Net sales continued to be strong and amounted to SEK 3.1 billion, 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 leap year supported organic growth with almost one percentage point. For this quarter, we see continuous 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 at somewhat lower sequentially. Reported EBITDA amounted to SEK 182 million in the quarter, and I will come back with details on the underlying EBITDA development.
Financial net was -SEK 146 million compared to -SEK 135 million in the Q1 of 2019. IFRS 16 related interest expenses increased by SEK 28 million, while interest expenses for our borrowing from banks decreased by SEK 2 million. 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 SEK 1 million, which corresponds to a tax rate of 24% for the period. Net profit amounted to SEK 3 million in the quarter, which equals an earnings per share after dilution of SEK 0.02. 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 SEK 0.37, down from SEK 0.64 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 own homes, price increases, and acquisitions, as well as the leap year effect. Organic growth was positive but reduced by ended operations in home care. EBITDA increased from SEK 161 million- SEK 165 million. Profit increased from home care, outsourcing, and owned care homes opened 2018 and earlier. That was offset by startups and corona effects. Increased profit in home care was based on increased customer concentration and improved planning and routing. We are actively acquiring smaller companies in exiting areas without the right prerequisites. The largest loss-making home care contract in Denmark ended in the Q4 of 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. Own care homes had a large negative impact on operating profit from startup losses in homes opened in late 2019 and 2020 as expected. This was to a large extent offset by increased profit in more mature homes. Please note that the profit in the Q1 2020 was negatively affected by SEK 50 million due to the COVID-19 situation. During the quarter, we have a tendering process won, but yet not started contract with an annualized estimated revenue of SEK 29 million. This means we have a positive balance between won and lost contracts for 2020 as well as for the last 12 months. Next slide, please. Growth continues to be high for Attendo Finland, 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. The EBITDA decreased from SEK 160 million- SEK 36 million. This decrease is mainly attributable to the year-on-year effects due to sharper staffing requirements implementing during the Q1 2019. Startup losses from units opened in 2019 and 2020 are also impacting negatively. Attendo is investing in strengthening its central and regional management and support functions, which has increased costs. Price increases and high occupancy in homes started 2017 and 2018 has contributed positively, but is not able to fully compensate for the cost increases. Before we turn slide, I also 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 Q1 and Q2 last year, which means we will have some year-on-year impact also the coming quarter. On the other hand, we will have the positive price effect of 3% for the upcoming quarters of 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 second part of 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.
In Scandinavia, we opened many beds year-end 2019 and in the Q1 of 2020, which will impact startup 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 attributable to positive development in working capital and high personnel-related liability. Adjusted net debt amounted to SEK 2.3 billion, which equals an adjusted net debt to adjusted EBITDA ratio of 3.9. The current high leverage is a consequence of pressured profits. 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 earliest 2022. Attendo 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 Attendo. This will impact cash flow positively with about SEK 200 million in the Q2 . With that, I hand back over to you, Martin.
Thank you, Fredrik. Next slide, please. I will end the session with our review of 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 million, whereof the vast majority will impact earnings in Q2. These costs relate mainly to purchase of protective equipment, compensation for sick leave for staff, and cost for isolation care. This includes the impact of known state support. The split between our two business areas is roughly 50/50. Please note that there are large uncertainties related to the assessment.
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's very hard to estimate the potential negative revenue effects going forward, as an indication, based on April data, we currently see a negative revenue run rate of approximately SEK 20 million per month. In the long term, we do not believe that the corona pandemic will have any significant impact on the underlying demand for our services.
The corona pandemic is an extraordinary situation. We have many challenges ahead of us. Some of our customers and employees have already been affected by the virus. Loss of life has occurred in all countries where we operate. We all feel with those who have lost a relative. We are doing our utmost to prevent the virus from spreading within our units. I am 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. We must all, within Attendo, society in general, and each of us as individuals, support the most vulnerable among us. Thank you for your attention. Over to you, Andreas. Thank you.
We'll now open up for questions. Please take one question at a time. Operator, please go ahead.
Thank you. If you would like to ask a question, please press zero one on your telephone keypad. If you wish to withdraw a question, you may do so by pressing zero two to cancel. That is zero one if you would like to ask a question. Our first question is from Kristofer Liljeberg from Carnegie. Please go ahead, your line is open.
Yes, good morning. Thank you. Regarding the COVID-19 situation, do you see any type of stabilization now in Stockholm at your nursing homes? As you have introduced gradually more and more protective gear, and you mentioned start doing more tests, et cetera, has that helped in any way? Could you see that in the number of infections? If you could talk a little bit how this differs versus regions versus Sweden and Finland, whether this is mostly a Stockholm problem or do you see that elsewhere also? Thank you.
Overall, we can say that the spread of the virus in nursing homes follows the spread of the virus in society at large in terms of regions being affected, where Stockholm region is, of course, the most affected region in Sweden. We have seen a flattening trend the past weeks. I think a part has to do with the spread of the virus 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 all nursing homes outside Attendo. If you look at some data points that we got earlier this week, it looks like we have lower number of infections than our market share in Stockholm region, which points out that some of our actions do have an effect 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 spread of the infections outside Sweden. It's extremely limited in the other Scandinavian countries or Nordic countries. In Sweden, Stockholm region is, of course, where we have the largest impact, and then we see some singular cases in other, 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 singular care home. That can be seen even at units where we have no infections, that we can still see that our payers are hesitant to move more clients into nursing home in general. We can also see cancellation of home care hours as people are concerned and worried about the potential risk.
That is the trend that is more based on worries and concerns, I think, than actual facts and figures around the spread of the virus.
Is it possible to, maybe it's sensitive, but possible to say how much mortality has gone up in Stockholm, for example, versus normal?
We're not going to give any exact numbers on that. We won't release that here either. Of course, we're supplying all the data to the authorities so they will collect that picture. Of course, mortality has gone up somewhat on the back of the coronavirus.
Okay. If that's okay, could I just ask you about the cost impact you're talking about? I guess that's the net effect of the various type of government support.
Yes, correct.
Yeah. Thank you.
Our next question is from Carolina Jervin from DNB. Please go ahead. Your line is open.
Hi. You previously commented on the regional differences in the spread of the virus, but of the estimated SEK 100 million extra costs, how will that be distributed between Scandinavia and Finland?
Around 50/50 between Scandinavia and Finland. Pardon me, between Sweden and Finland. Yeah.
Yeah. Okay. I heard that private providers are getting requests from hospitals to taking more patients as they want to free up space for 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 to say?
It's way too early to say. There are initial discussions and have been for a few weeks, nothing material yet.
Okay, thank you.
Our next question is from Peter Testa, from One Investments. Please go ahead, your line is open.
Hi. Thanks for taking the question. Just on this point on patient flow, have you seen any particular change in new patient flow trends between Sweden and Finland, or is this issue essentially a Swedish issue?
We can see a difference in patient flows in both markets. 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 around 400 units. We only had two units where we've seen the infection spread, so it means that 99.5% of units in Finland don't have any infections. Still, we see an effect on demand. That sort of emphasizes that point. It's mainly driven by worries and concerns.
Okay. Has that change in demand pattern moderated as you go into May, given the facts of Finland, or is it too early to see any change?
It's too early to say. That's why this is very, very hard to estimate the revenue effect. We can see the revenue impact it had on April. I think your guess is as good as ours 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're doing business today, we're supporting around 350 different local authorities across the Nordics with care services. Of course, we stay in close contact with them. 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. They're also well aware. This worry is not only what we've seen in so far from the local authorities and payers. It's also from actually potential residents and relatives.
Yeah. Okay. This for a different topic. If you look at the Finnish staffing ratio discussion, which has been put on hold, and I guess there's also some cost factors, there's the pushback 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 is put on hold. The government of Finland has still not taken a decision regarding the 0.7. It's in the cards that it will be further delayed. They have not stated anything officially regarding timing. I would not be surprised if that legislation is postponed until the end of the year or early next year. There's no official information out there yet.
Has there been any change in sense of how that should be compensated, if indeed it's going to go forward at all?
They have presented a summary of costs related to that new law proposal. They've also presented a partly financing all those costs. That is something that they yet have to find funds for.
Yeah. Okay. No, thank you, Tivéus.
Our next question is from Claus Teeg from Nordea. Please go ahead, your line is open.
Good morning, and thank you for taking my questions. First, just a follow-up on previous questions asked. You say that increased personnel cost has been some less equally split between Scandinavia and Finland. If I understand correctly, the support has been more generous in Sweden compared to Finland with compensating sick leave. Maybe I'm being wrong. 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 support for sick leave has been in Sweden now for April and May so far. In Finland, we have not received that support yet, but they are released in the H2 of the year for 2020 in Finland instead. Those are not related to sick leave as such, but to social taxes and so forth. The measures have been a bit different, both in terms of construction and in timing effects in Sweden and Finland.
Okay, thank you. On the occupancy in Finland, 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 rate might continue to decline. At the same time, it's a sequential uptick in occupancy in Finland during the quarter. Can you say anything about what you expect in terms of occupancy rates in Finland going forward? Thank you.
We will have a continuous high opening phase in Q2 in Finland, and then it will decline sharply in the H2 . We're still selling new beds in Finland, albeit at a slightly lower level now due to the worries around the Corona crisis. I think that given the Corona situation, and given the uncertainty 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 factor is that we will open additional beds in Q2 and shortly decline in the H2 , and of course, we know we expect occupancy to start lifting in the H2 . The big uncertainty, of course, is the short-term demand situation.
Okay, fair enough. Thank you. One last question, if I may. The cost impact, has this been largely on elderly care, or can you say anything about your disabled care operations in Finland as well, in terms of Corona?
Largely in elderly care. That's also the main part of the business in Finland and in Sweden.
Yeah, sure. Okay. Thank you. That's all from me.
Just as a reminder, if you do wish to ask a question, please press 01 on your telephone keypad. Our next question is from Thomas Hoff from Handelsbanken. Please go ahead. Your line is open.
Hi, everyone. Thanks for taking my call. Most of my questions have been answered, if you could just give some flavor in general of the Corona situation. Has it been worse or better off than you initially thought when it came, or how has it been for you? Also, how has the reaction been for you?
I think no one knew what to expect, and we didn't either. We quite early established our own network of contacts within the healthcare system, within professors of virology and so forth, to give us early second opinion on how this potentially could develop apart from authorities. Based on sort of worst case data points we got from them, that's also the reason why we, earlier than anyone else, decided to close down for visitors and to establish gatekeeping functions for health checks in all operations. I think we've decided quite early on better to take harder measures earlier on than be sorry afterwards. Of course, we learn more day by day on how to manage the virus situation and what actions are actually working and have an effect, and what doesn't seem to work.
It's a constant learning experience for the organization, where we every day sort of question what we're doing and see if there's anything else or anything more that we could actually do. I think that we will not be able to get the full picture on how this has been developed until afterwards. For now, we can see that what we're doing at least it seems to have an effect, and we see it have a lower number of infected than general elderly care, but it's still early days.
Okay. Thank you for that. Also, you mentioned 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 expected in Finland?
This is Fredrik. In Finland, what has happened is that the parameters on how you pay money to the collective pension system has been changed. We will pay a lower percentage of the employees' salaries, and that is from May onwards. There's no direct link to sick leave or social charges as we have in Sweden. If that is lower pension system payments to the collective systems, and that is from May until December. It's more biased to the H2 of the year. You should, 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. There are other side costs, for example, pensions and vacations and so forth, that the employers still have to be responsible for.
Yeah. What is the percentage? How much is cut down in Finland? Do you know that?
2.55%.
Okay, great. Thanks for that.
Thank you.
Our next question is from Kristofer Liljeberg from Carnegie. Please go ahead. Your line is open.
Yeah, 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 salary increases. Will they happen after April? I thought they were maybe postponed until the autumn. What's the latest there?
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. If salary increases is delayed, then we don't know exactly how that will fall out. The delayed salary increase, of course, means that we don't have the cost increases. The tradition in Finland is that if it is delayed, you pay some sort of one-time catch-up reimbursement, but that is still to be negotiated.
Okay. As it looks now, in the accounting, will you have that cost in your P&L for the Q2 ?
No, not as it looks now.
Okay. We still don't know what the salary increases will be. That's a discussion to be held.
The industry benchmark right now is 3.3% over two years.
Okay.
It's not specific care industry, it's the general industry benchmark.
Okay. Regarding this general concern to take on care services and the impact on revenues. I struggle a little bit to I think I understand why this is happening, but I struggle to understand what are the alternatives, because I guess you don't want to have home care either, which I may think maybe is even more risky. When you move into a nursing home, you are in pretty bad condition. What is the alternative? Are those people staying in hospitals or rely on relatives? Do you know?
Yeah. That's why we also believe that demand will come back because the people that we're accepting into the nursing homes is normally sort of the last two years in their lives, and they are sick, and they have dementia, quite many of them. It's quite difficult to stay at home for a very long time. I think now it is very affected by all the worries and concerns around the coronavirus, but we expect demand to come back. It's very difficult to keep people in the line for too long. I think there won't be enough room for them in the hospitals. It's most likely not a better place to be, probably worse.
Right now, is it mainly that municipalities try to keep them longer at the hospital, sometimes that municipalities pay that penalty rather than that those people are in their own homes with support from relatives?
No. They're in their own homes.
Okay. They are in their own home. Okay.
Yeah. Actually, for risk of coronavirus, the hospital is probably the last place you want to be in.
Yeah. Maybe fundamentally, but I think if you read at least Swedish media, I think it seems the worst place you could be, at least that's the perception, is the nursing home.
Yeah.
Okay. Yeah.
That's the unknown, right? How those concerns will develop.
Okay. Yeah, thanks.
Just as a reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. Our next question is from Viktor Fichele 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 just your increasing in opening new homes, if we should have something else in mind in that figure that you released today? Thank you.
No. It's driven by openings of new homes. We had quite a significant amount of openings in Q1.
Okay. Given this demand discussion that we had today, it's fair to say that 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. 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 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. It was largely offset by better performance or better occupancy in the other nursing homes. What I said is for the start of 2019 and 2020, that will continue to have negative impact here for the reminder of 2020. I did not guide on how big the offsetting effect will be compared to those startup losses.
Right. It was not the net effect, rather the single effect from openings. Okay. That's fair. Just lastly, in terms of your net sales split in Finland, this 7% other revenue, could you just remind us of what that is?
It's a combination of different things. We have some home care. We have some care services that is similar to what we call individual and families in Sweden. It's the childcare services. We actually sell some food externally from some of our production kitchen. We have some real estate that we rent out that has come as parts of other transactions. It's a combination of different things.
Obviously this must have been growing quite a lot faster than the rest of the business in Finland.
What has happened is that we did a reclassification. Before part of these things that I mentioned, for example, selling food for production kitchen. In 2019, if it was production kitchen that was co-located within a nursing home, we reported it as part of the nursing home revenue. Now we have it as being reported as out there. The same comes with some of this real estate that we sell externally. This is part of transactions where the essence of what we wanted was the nursing homes. Also the rental income we had on those extra real estate was in 2019 reported as part of the nursing home revenue. It's not the sequential trend shift. It's a reclassification of the reported revenues.
Okay, thanks for the clarification. That was all for me. Thank you.
Just as a final reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. Our next question is from Hans Boström. He's a private investor. Please go ahead, your line is open.
Good morning. 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? Also in terms of the cost, are you carrying any of these costs yourself? Thank you.
In Finland, the fair part of testing being done by private players like Terveystalo. The good side is that we can get access to testing quicker and broader in Finland for staff than in Sweden. Of course, we're also paying for it. In Sweden, the laboratories and the testing capacity is run by the public sector and the healthcare system. We don't have the possibilities to buy testing capacity on a broad scale for staff in Sweden. We are dependent on the healthcare system, and up to now, we've only been able to test sick clients, not staff. We're still waiting on test capacity for staff to screen the staff in Sweden. If you look at Norway and Denmark, public test capacity has been much wider, where we're able to test broadly both staff and clients, and the public sector is taking the bill for that.
Are there any plans for Sweden to increase this capacity, and what's the time horizon for that?
The authorities in Sweden have said that they are in the process of expanding test capacity, which we're gladly looking forward to because 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. We hope it will come during May.
Thank you.
Thank you.
As there are no further audio questions, I will hand you right back to the speakers.
Okay. Thank you for listening in, and we will now conclude this conference call. Please contact us directly if you have any further questions afterwards. Thank you for your participation.