Careium reports fourth quarter results 2022

The quarter in summary

• Net sales amounted to SEK 196.2 million (162.3), an increase of 20.9 percent. Service sales amounted to 145.1 million (126.8) an increase of 14.4 percent. Product sales amounted to 51.1 million (35.5) an increase of 43.9 percent.
• Gross margin amounted to 39.4 percent (40.5).
• Adjusted operating profit (EBIT) amounted to SEK 16.5 million (1.0) excluding restructuring costs of SEK 3.3 million. Including restructuring costs EBIT amounted to SEK 13.2 million (-0.4) correspon-ding to an operating margin of 6.8 percent (-0.2). In addition, operating profit was positively affected by non-recurring items of SEK 7.2 million.
• Free cash flow amounted to SEK -53.4 million (15.5).
• Organic growth amounted to 20.9 percent.
• Earnings per share amounted to SEK 0.35 (-0.04).

 

January – December in summary

• Net sales amounted to SEK 725.1 million (587.5), an increase of 23.4 percent. Service sales amounted to 550.8 million (464.0) an increase of 18.7 percent. Product sales amounted to 174.3 million (123.5) an increase of 41.1 percent.
• Gross margin amounted to 37.8 percent (40.9).
• Adjusted operating profit (EBIT) amounted to SEK 9.0 million (11.5) excluding restructuring costs of SEK 24.8 million. Including restructuring costs EBIT amounted to SEK -15.8 million (8.6) corre-sponding to an operating margin of -2.2 percent (1.5). In addition, operating profit was positively affected by non-recurring items of SEK 19.1 million.
• Free cash flow amounted to SEK -87.1 million (-70.9).
• Organic growth amounted to 16.6 percent.
• Earnings per share amounted to SEK -0.47 (0.19).
• No dividend is proposed.

 

CEO’s commentary

Careium finished its first full year as an independent company by delivering its strongest quarterly sales and operating profit (excluding items affecting comparability) during Q4 driven by our action program for business transformation. Sales increased 21 percent for the quarter and 23 percent for the full year. The sales growth is in line with our strategy to provide customers with innovative and efficient technology-enabled care solutions.

On the service side, the Nordic markets grew 21 percent in the quarter, largely due to new and renewed contracts in Sweden. We also continue a positive momentum in Central Europe with a 25 percent increase in service sales mainly driven by new connections in the Netherlands. Product sales in the UK grew 131 percent, reflecting the ongoing transformation from analog to digital solutions.

Our operating profit (EBIT) increased significantly compared both to the last quarter of 2021 and the third quarter of 2022 amounting to SEK 13.2 million (-0.4). The profit was burdened by restructuring costs related to staff reductions of SEK 3.3 million. Operating profit was also increased by SEK 7.2 million from reversed provisions for earn-outs related to company acquisitions. Operating profit excluding transformation costs and other items affecting comparability amounted to SEK 9.3 million. Despite the positive result, free cash flow was negative by SEK 53.4 million. This is driven by a temporarily higher working capital balance as high sales toward the end of the quarter tied up capital in accounts receivable and also by accounts payable paid down during the quarter.

In the quarter, we began the rollout in Norway of digital keys for home care, a system that simplifies the process for caregivers and users alike. The offering, which is accompanied by proprietary software from Careium, has attracted considerable interest in Norway and the rest of the Nordic region. Another product novelty launched in Q4 was Ellis, Careium's new alarm trigger, which is designed as a piece of jewelry with the aim of minimising stigma as a way of increasing usage and thus safety.

The strengthened profitability is the result of actions taken during the fourth quarter and earlier in the year. A new organisational structure was implemented following a careful analysis of the business. Merging product and technology development together well as merging region Other markets

into Nordic region has created, a smaller and more unified Group management team and strengthened the conditions for moving quickly from decision to action. Efficiency gains from the organisational changes have contributed to Q4 profit improvement.

In the UK the rightsizing of the operations and the efficiencies from merging three alarm centres into one are being harnessed and a new management team has been appointed. Results from the UK service business improved towards the end of the quarter and key metrics for our alarm centre continues to improve in the first quarter of 2023.

Given the actions we have taken, our aim is to pursue this positive trajectory with continued profitable growth. The population is ageing and Careium is transforming the care of the elderly. Currently, significant growth opportunities exist in the digital shift, with the UK's decision to go fully digital by the end of 2024 as well as several countries' final phase-out of 2G networks.

Finally, I would like to express my sincere thanks to all employees in the Group who have worked hard to ensure that we completed our action program to get back to profit and are well equipped for the future.

Maria Khorsand,

President and CEO

 

Webcast

Careium will publish the report for the fourth quarter of 2022 on Thursday 16 February 2023 at 8am (CET). A webcast conference call will be held the same day at 11am (CET) when President and CEO Maria Khorsand will present the report. The webcast is accessed at https://ir.financialhearings.com/careium-q4-2022.

If you wish to participate via teleconference, please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference at https://conference.financialhearings.com/teleconference/?id=5009668

The presentation material is available on Careium’s financial website at https://www.careium.com/en-gb/investors/financial-information/presentations2/.