Careium: Back on track - ABG

Fruitful restructuring - we revisit the Careium story
Double-digit organic growth to persist in '24e, margins stabilising
FVR of SEK 21-36 (17-40), with 20% '24e-'25e adj. EBITA CAGR


Diligence yields fruitful results

We have revisited the Careium story to get a fresh perspective following the successful turnaround from Q4'22 onwards. In mid-2022 Careium experienced a perfect storm; with gross margin pressure, skyrocketing admin costs, and significant working capital tie-up. Naturally, adj. EBITDA and cash flow were under significant pressure, weighing on leverage and resulting in a covenant breach. The turnaround was imminent, however, with the adj. EBITA margin improving 14pp sequentially from -7% in Q3'22 (i.e. the trough), to 7% in Q4'22. Since then, the margin has stabilised above 6%, and improved further recently to 12% in Q3'23 (albeit somewhat temporarily boosted by contract extensions). Furthermore, with positive FCF returning in '23 YTD, leverage has come back under control to a ratio of below 2x.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/careium/Equity-research/2024/2/careium---back-on-track/