Careium reports third quarter results 2022

The quarter in summary

• Careium’s net sales amounted to SEK 175.9 million (140,2), an increase of 25.5 percent. Service sales amounted to 134.3 million (111.5) an increase of 20.4 percent. Product sales amounted to 41.7 million (28.7) an increase of 45.2 percent.
• Gross margin amounted to 34.8 percent (39.6).
• Operating profit (EBIT) amounted to SEK -18.2 million (-2.1) corresponding to an operating margin of -10.3 percent (-1.5). Operating profit was negatively affected by non-recurring items of SEK -2.2 million.
• Free cash flow of SEK -34.2 million (-35.7).
• Organic growth amounted to 18.6 percent.
• Earnings per share amounted to SEK -0.67 (-0.09).

 

The first three quarters in summary

• Careium’s net sales amounted to SEK 528.9 million (425.1), an increase of 24.4 percent. Service sales amounted to 405.7 million (337.9) an increase of 20.1 percent. Product sales amounted to 123.2 million (87.3) an increase of 41.2 percent.
• Gross margin amounted to 37.1 percent (41.2).
• Adjusted operating profit (EBIT) amounted to SEK -7.6 million (10.6) excluding restructuring costs of SEK 21.5 million. Including restructuring costs EBIT amounted to SEK -29.1 million (9.1) corresponding to an operating margin of -5.5 percent (2.1). In addition, operating profit was positively affected by non-recurring items of SEK 11.9 million.
• Free cash flow of SEK -33.7 million (-85.9).
• Organic growth amounted to 14.9 percent.
• Earnings per share amounted to SEK -0.82 (0.24).

 

CEO’s comment

Careium strives to become the market leader in technology-enabled care in Europe. During the third quarter, sales increased significantly by 25.5 percent compared to the previous year, and our organic growth was 18.6 percent.

In Sweden, we continued to win and implement new contracts profitably and achieved revenue growth of 36.4 percent in the Nordics with a new high in the number of connections in our alarm receiving centers. The United Kingdom & Ireland region continued to generate strong product sales driven by an increased demand for our digital security alarms. The region's product sales increased by 58.8 percent compared to the previous year, while the service sales declined by 17.5 percent in the UK.

We are strengthening and further developing our offering in technology-enabled care. Applications that involve family or friends in the care chain will become a priority for both customers and end-users for a stronger, safer, and more inclusive care. During the quarter, we were proud to launch the i-care® plus app (available on the App Store and Google Play) which connects users, care providers and relatives. We are excited as the app provides peace of mind with improved communications within the care chain, new functionality, as well as important time and cost savings.

The gross margin in the third quarter amounted to 34.8 percent, which was lower than in the previous quarter and the same period last year. Above all, high costs in the UK operations, to ensure quality in service delivery, continued to impact the gross margin negatively. High shipping and component costs as well as weakened Swedish krona continue to have a negative impact on the margin.

Regarding the inflationary environment, Careium is a non-cyclical business thanks to a large share of recurring revenue contracts. Contractual price increases in the majority of the contracts are starting to become effective at the beginning of the next year.

Operating profit excluding transformation costs and other items affecting comparability amounted to SEK -16.0 million. The challenges in the UK continued to impact the group's profitability negatively. Despite the efforts during the year, the transformation is taking more time than anticipated. Many actions are now done in order to drive operational efficiency in service delivery and administrative functions. During the year, we moved our operations to a single location in Blackburn, implemented a unified platform for alarm handling, started to terminate unprofitable customer contracts, and strengthened the leadership team. During the end of the quarter, the operating cost of the UK business started to decrease.

Overall focus will continue to be in the transformation of the UK operations and ensuring performance improvements in the rest of the group. The communicated transformation costs notwithstanding, our ambition remains to increase operating profit by approximately SEK 60-80 million on an annual basis by the turn of the year 2022/2023.

As I now hand over the baton as outgoing CEO, I would like to express my thanks to our competent and motivated employees throughout the group developing Careium as the market leader in technology-enabled care in Europe.

Carl-Johan Zetterberg Boudrie,

President and CEO

 

Webcast

Careium will publish the report for the third quarter of 2022 on Friday October 21, 2022 at 8am (CET). An online audiocast and conference call will be held at 10am (CET) on the same day where CEO Carl-Johan Zetterberg Boudrie will present the report and answer questions.

The webcast can be found here www.careium.com/sv-se/investerare or via https://ir.financialhearings.com/careium-q3-2022. The presentation will be held in English.

To participate in the conference call please dial one of the following numbers.

Sweden: +46 8 505 58 369

UK: +44 333 300 9270

USA: +1 646 722 4904

The presentation will be available on www.careium.com/sv-se/investerare as soon as the report has been made public. The recording of the webcast will be available on the same link after the presentation.