Attendo year-end and Q4 report 2021: Increased occupancy in challenging period
Attendo shows continued good organic growth during the fourth quarter as well as for the full year 2021. The quarter is negatively impacted by effects from the pandemic, where the combination of high sickness absence during the spread of omicron and lower public compensation affects the result. In the Finnish market, there is a strained personnel situation in the labour market, which is partly offset by price adjustments for renegotiated contracts. The demand for nursing home beds in Swedish has normalized and thanks to strong sales, we managed, despite many newly opened beds, to increase total occupancy by one percent to 80 percent during the quarter.
Comments from Martin Tivéus, Attendo president and CEO
“With vaccination programmes completed in all of our markets, residents in our nursing homes have been significantly better protected than during the second wave of the pandemic and we have seen very few cases of serious illness among our customers. Short term however, the quick transmission of Omicron has led to a sharp increase in sick leave, which creates challenges in operations and clearly pressured profits in the fourth quarter. At the same time, we are pleased to see continued strong inflow of new customers to our nursing homes in Sweden, and higher prices in Finland from 2022.
Scandinavia: Continued good customer inflow to nursing homes
During the quarter, we opened 100 new beds in own operations, and are consequently closing the year with a total of 600 new beds. During the autumn, we have seen a gradual normalisation of demand for nursing home placements and, despite openings, we managed to increase total occupancy with one percentage point to 80 percent in the quarter. There is still a long journey back to a satisfying occupancy level. Since the start of the pandemic, occupancy rate in our nursing homes has decreased significantly, driven by lower customer inflow as well as more openings. Regaining a total occupancy rate of around 90 percent is one of our key focus areas in 2022 and 2023. The way to achieve this is through customer focus, high quality of care, and a good cooperation with our payors.
Net sales in Attendo Scandinavia increased by around 7 percent to SEK 1,584 million due to a combination of more sold beds and acquisitions. Lease adjusted EBITA amounted to SEK 105 million, down about 6 percent compared to the preceding year. The decrease is explained by lower public support combined with higher costs to replace employees on sick leave.
Finland: Profits pressured by high personnel costs combined with lower public compensation
Demand for care beds in Finland remains strong. We managed to improve occupancy during 2021, although staff shortage affected our ability to accept new customers in certain geographies.
As a consequence of the rapid transmission and national quarantine regulations, sick leave reached record high levels during the end of the quarter. In an already strained labour market, this led to increased costs for overtime and external staffing. During the same period, we have had to increase staffing as new legal requirements came into force at the turn of the year. In total, these factors affected the result negatively.
Lease adjusted EBITA amounted to SEK -24 million in the fourth quarter, down by SEK 9 million compared to the preceding year. Attendo Finland’s net sales in local currency increased by roughly 12 percent to SEK 1,754 million, primarily due to more sold beds and higher prices.
Sick leave has continued to rise in early 2022 in line with the rapid spread of Omicron. With the current record high sick leave levels, we expect a negative effect on profits of SEK 15-20 million per month in Attendo Finland. We anticipate sick leave to remain on a high level during the first two months of 2022 before it gradually decreases and normalizes.
Our main focus for Attendo Finland in 2022 is to achieve sustainable business terms and to be able to secure staff to comply with increasing staff requirements. During the fourth quarter of 2021, we renegotiated parts of our framework contracts in Finland. We achieved an average price adjustment for these contracts of about 12 percent. Combined with other index-related price increases, this will result in positive price effects of about 5 percent of total net sales in 2022 for Attendo Finland. Underlying cost inflation as well as costs related to the new staffing law is expected to amount to just over 4 percent on a full-year basis. We still believe that the price level is structurally too low in Finland, where private operators are providing care at prices far below the municipalities’ costs to produce care under public management. We will therefore continue to pursue a comprehensive effort to secure compensation for upcoming staff increases in 2023 and to bring about sustainable conditions for the industry as a whole.
Group: Good organic growth
Organic growth amounted to 5 percent, driven mainly by higher customer inflow in Finland and Sweden. Lease adjusted EBITA was SEK 65 million in the fourth quarter, down by SEK 22 million compared to the preceding year. The decline in profit is primarily attributable to lower public compensation and unusually high personnel costs. As mentioned, Attendo is still experiencing negative financial impact from the Covid pandemic. For the fourth quarter isolated, profits were negatively affected by net of just above SEK 40 million. The effects of the pandemic are expected to subside during the second quarter 2022 as sick leave returns to more normal levels and occupancy increases.
Value creation and financial targets
In early 2021, Attendo introduced new financial targets for 2023, including a profit target for adjusted earnings per share of at least SEK 4 by 2023. The target was based primarily on the following factors: an expected recovery after the pandemic, higher occupancy in all markets, higher price levels in Finland and operational improvements.
The target of SEK 4 per share can be compared to SEK 1.5 per share in 2021 (1.4). The profit improvement in 2021 in relation to 2020 was constrained by significant negative pandemic effects and high personnel costs in Finland. Our plan to achieve at least SEK 4 per share in 2023 still applies. In order to obtain this target, we need to continue to increase occupancy in our two main markets and reach satisfactory price levels in Finland also 2023.
We still have significant potential to improve our methods in all segments, and possibilities for value creating acquisitions. We expect the pandemic to affect profit in 2022 but to a lesser extent than in 2021 and anticipate very limited impact in 2023. The primary risks related to the target are the price negotiations in Finland during the autumn 2022 and staff provision in Finland, which will affect the development of personnel costs and occupancy.”
Summary of the fourth quarter 2021
- Net sales amounted to SEK 3,338m (3,065). Organic growth was 5.4 percent.
- Lease adjusted operating profit (EBITA), i.e. EBITA according to the previous accounting standard, amounted to SEK 65m (87), corresponding to a lease adjusted operating margin of 2.0 percent (2.8). The effects of the pandemic are estimated to have affected profits by a net of just above SEK -40m (0).
- Operating profit (EBITA) amounted to SEK 172m (193), corresponding to an operating margin of 5.2 percent (6.3).
- The loss for the period amounted to SEK -8m (4). Diluted earnings per share were SEK -0.06 (0.02). Adjusted diluted earnings per share were SEK 0.21 (0.31).
- Free cash flow amounted to SEK 153m (132).
- There were 21,093 (20,349) beds in Attendo’s homes at the end of the period. Occupancy in homes was 84 percent (81).
- High sick leave due to Omicron, and shortage of staff are expected to affect first quarter profits, primarily in Attendo Finland.
Summary of the January-December period 2021
- Net sales amounted to SEK 12,867m (12,288). Organic growth was 4.4 percent.
- Lease adjusted operating profit (EBITA), i.e. EBITA according to the previous accounting standard, amounted to SEK 400m (375), corresponding to a lease adjusted operating margin of 3.1 percent (3.1). The effects of the pandemic are estimated to have affected profits by a net of about SEK -80m (-120). In comparison with 2020, profit in 2021 is negatively affected by SEK 96 million regarding non-recurring effects (excluding pandemic effects).
- Operating profit (EBITA) amounted to SEK 836m (797), corresponding to an operating margin of 6.5 per-cent (6.5).
- Profit for the period amounted to SEK 59m (-904). Diluted earnings per share were SEK 0.35 (-5.63). Adjusted diluted earnings per share were SEK 1.48 (1.43).
- Free cash flow amounted to SEK 249m (428).
- The Board of directors is proposing no dividend for the 2021 financial year.
Invitation to teleconference
In connection with the release of the report, a teleconference will be held at 10.00 am (CET) hosted by Attendo CEO Martin Tivéus and CFO Fredrik Lagercrantz. To participate in the conference, please dial in on any number below at least ten minutes before the start of the call:
SE: +46 8 505 583 74
FI: +358 981 710 520
UK: +44 333 300 92 67
You can follow the presentation and the conference on the following page:
https://tv.streamfabriken.com/attendo-q4-2021
The quarterly report and other information material will be made public on:
https://www.attendo.com/
Attendo AB (publ)
For further information, please contact:
Andreas Koch, Communications and IR-Director Attendo
Phone: +46 705 09 77 61 I email: andreas.koch@attendo.com
Stefan Svanström, Head of Community Communications Attendo
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This is information that Attendo AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above on 10 February 2022 at 08.00 CET.
Attendo - the leading care company in the Nordics I For over 35 years, supporting and strengthening people with care needs has been the starting point of everything Attendo does. In addition to care for older people, Attendo provides care for people with disabilities and social care for individuals and families. Attendo has approximately 27,000 employees and is locally anchored with more than 700 facilities in around 300 municipalities in Sweden, Finland and Denmark. Every day Attendo has tens of thousands of encounters with its customers. These encounters manifest Attendo’s shared values of care, commitment and competence.