A look back on the third quarter confirms that occupancy and demand in elderly care in Sweden is continuing to rise. We can also see how social challenges such as demographic shifts, a lack of care placements and mental illness are once again becoming evident.

In September, most of the general restrictions were eased across Scandinavian countries, bringing delight and relief. But in our operations, we are obviously continuing to follow the health guidance issued by the authorities in relation to, for example, PPE and hygiene procedures. I recently visited units in all three countries and would particularly like to commend our employees for the care and commitment they are showing our care receivers and their contribution to the creation of security and well-being.

Social challenges once again evident

How society will be affected in the long term by this difficult period we have experienced is anybody’s guess, but we are now seeing some consequences with impact on Ambea’s operational areas. Mental health problems have increased in the community, while the expansion of new nursing homes has not kept pace with the demographic shift. These challenges have existed for some time, but are once again becoming evident.

In a study from the University of Queensland in Australia, researchers have followed the psychological effects of the pandemic across the world. According to estimates from the study, the pandemic led to 53 million more cases of depression during 2020. According to the same report, the depression rate rose 24 per cent in Sweden and 17 per cent in Norway and Denmark. Women and children were reportedly the most affected. The 2020 annual report for the Swedish Children’s Rights in Society organisation (BRIS) also reported a significant increase in calls from children and young people related to anxiety, depression, family conflicts, and physical and psychological violence. A similar situation was confirmed by the National Council for Children (Børns Vilkår) in Denmark. Society must take action to stop this trend. Ambea has a high level of expertise and experience in working with children, young people and adults when it comes to mental illness, substance abuse problems or other types of residential and treatment alternatives, and we are ready to help with this important task.

Continued unmet need for new nursing homes

In 2019, the Swedish Ministry of Finance estimated that 560 new nursing homes would be needed in Sweden by 2026 due to the demographic shift of an increasingly ageing population. In September this year, Timbro released an updated report based on new population projections, which also accounts for the current rate of nursing home construction. According to the report, private actors are needed. Timbro predicts a shortage of 289 nursing homes in Sweden by 2026 and 418 residential facilities by 2030. Unless private actors like Ambea help society by building their own residential facilities, the situation could be even worse. The unmet need for nursing homes could already reach 400 within five years.

In the years to come, Ambea will undoubtedly play a very important role in
ensuring that society can provide enough care for everyone.

The fact that placements are currently available in elderly care has no effect on the major social challenge ahead. But there are solutions, and I am optimistic about the opportunities that exist for us to help our clients. While the political debate can sometimes be polarised, the fact remains that too few new nursing homes are being built. One concrete solution that would help to increase the number of new nursing homes in Sweden is a national introduction of the Act on System of Choice in the Public Sector (LOV). That would make it easier for both non-profit and private actors to help the community offer more care placements, provide more freedom of choice and help to meet the challenge. But the task is urgent and needs political priority.

Increased occupancy

In the third quarter, Ambea’s net sales rose 7 per cent to SEK 2,912 million. This trend was attributable to increased occupancy in Vardaga, acquisitions and contracts won in Altiden. EBITA rose 18 per cent to SEK 344 million. Nytida, our disability care operations, posted earnings in line with the preceding year. During the quarter, Nytida took over three contract management units in Västerås and opened five new residential LSS facilities under own management. We will continue to focus on sharing information and knowledge with our clients, loved ones and care receivers via events such as our popular webinars.

In Vardaga, the positive trend for demand and occupancy will continue – a situation that we expect to continue as society gets back to normal. During the quarter, we took over our first contract management unit in Gotland and occupancy in our new nursing homes under own management – Villa Näs in Åkersberg and Villa Stallgången in Eskilstuna – is running according to plan. Our intensified marketing campaigns will also continue to meet the higher demand.

In Altiden in Denmark, the integration of EKKOfonden is ongoing, and creating a leading position for Altiden in social care. In the third quarter, sales rose 57 per cent due to the acquisition and contracts won. In line with our strategy, we will continue to terminate contracts in home care, which will help to strengthen profitability. We have confidence in our growth potential in Denmark. Primarily through organic and acquired growth in social care, and through more residential facilities under own management in elderly care.

In Stendi, our Norwegian operations, we have introduced capacity adjustments and efforts to strengthen profitability and increase occupancy are continuing as planned. Achieving long-term and sustained profitability requires a new approach now that society has reopened. As part of this process, we have decided to focus on social care where we are the market leader, have a high level of expertise and strong potential for growth as we move forward. Due to this decision, we are divesting elderly care in Norway. Elderly care accounts for 8 per cent of Stendi’s sales and generates low profits. The divestment of elderly care will begin in the final quarter of the year and is expected to conclude in 2022.

Our contribution

In the years to come, Ambea will undoubtedly play a very important role in ensuring that society can provide enough care for everyone. Together with our clients, we will continue our efforts to ensure that all people have access to effective, personalised and high-quality care. As well as creating new care placements and developing the skills of employees, this also means improving the quality of care and encouraging innovation. We are optimistic about the future and want to contribute.

Mark Jensen

Interim report January – September 2021

Strong quarter with growing demand

Third quarter July – September

  • Net sales rose 7 per cent to SEK 2,912 million (2,732). Acquired growth was 4 per cent and organic growth 3 per cent.
  • Operating profit (EBIT) totalled SEK 316 million (264).
  • EBITA rose 18 per cent to SEK 344 million (291), corresponding to a margin of 11.8 per cent (10.7).
  • Adjusted EBITA, which excludes items affecting comparability, rose 8 per cent to SEK 344 million (319). The adjusted EBITA margin was 11.8 per cent (11.7).
  • Profit for the period totalled SEK 190 million (152).
  • Earnings per share were SEK 2.01 (1.61) before and after dilution.
  • Cash conversion was 52.1 per cent (70.8).
  • Free cash flow totalled SEK 186 million (274).

First nine months, January – September

  •  Net sales amounted to SEK 8,490 million (8,319). Acquired growth was 2 per cent and organic growth 0 per cent.
  • Operating profit (EBIT) totalled SEK 560 million (543).
  • EBITA increased 2 per cent to SEK 642 million (628), corresponding to a margin of 7.6 per cent (7.6)
  • Adjusted EBITA, which excludes items affecting comparability, decreased 6 per cent to SEK 642 million (679). The adjusted EBITA margin was 7.6 per cent (8.2).
  • Profit for the period totalled SEK 273 million (266).
  • Earnings per share were SEK 2.90 (2.82) before and after dilution.
  • Cash conversion was 81.7 per cent (91.1).
  • Free cash flow totalled SEK 730 million (804).

 

Read the Interim Report here