Interim Report 1 January – 30 September 2024: Market still challenging in the third quarter

Third quarter 2024

• Net sales SEK 460.9 million (524.5)

• EBITA SEK 11.2 million (40.6), adjusted for non-recurring items SEK 19.0 million (40.6)

• EBITA margin 2.4 percent (7.7), adjusted for non-recurring items 4.1 percent (7.7)

• EBIT SEK 9.0 million (36.7), adjusted for non-recurring items SEK 16.8 million (36.7)

• EBIT margin 2.0 percent (7.0), adjusted for non-recurring items 3.6 percent (7.0)

• Profit after financial items SEK 8.9 million (37.2)

• Profit for the period SEK 6.9 million (29.2)

• Basic earnings per share SEK 0.72 (3.05)

• Diluted earnings per share SEK 0.71 (3.02)

 

 

The period January - September 2024

• Net sales SEK 1,330.7 million (1,506.5)

• EBITA SEK 49.8 million (120.2), adjusted for non-recurring items SEK 60.5 million (120.2)

• EBITA margin 3.7 percent (8.0), adjusted for non-recurring items 4.5 percent (8.0)

• EBIT SEK 43.0 million (109.1 ), adjusted for non-recurring items SEK 53.7 million (109.1)

• EBIT margin 3.2 percent (7.2), adjusted for non-recurring items 4.0 percent (7.2)

• Profit after financial items SEK 42.0 million (98.4)

• Profit for the period SEK 32.7 million (76.7)

• Basic earnings per share SEK 3.42 (8.02)

• Diluted earnings per share SEK 3.39 (7.94)

 

 

Performance measures

 

 

Chief Executive Officer’s statement

 

“The market was still challenging in the third quarter”

 

The weaker market for contracted staff that we’ve encountered in recent quarters also persisted in the third quarter of the year. Net sales an EBITA fell sharply against a strong comparative quarter of the previous year, and our EBITA margin excluding non-recurring items was 4.1 percent. Our cost savings will have their full impact in the fourth quarter and work on improving our operational efficiency continues. In September, the group gained a new management, with me as CEO and Managing Director. It’s something of a challenge to take this on in a market in sharp decline. But Dedicare has long-term experience of healthcare staffing, and we know the sector is cyclical. We’re currently in a negative phase, and are used to adapting to the market’s changing needs. I’m looking forward to managing positive progress for the group over the coming years.

 

 

The Dedicare group’s net sales were SEK 460.9 million in the third quarter, a 12 percent decrease on the corresponding period of the previous year. EBITA fell sharply to SEK 19.0 million (40.6) excluding SEK 7.8 million of items affecting comparability; our EBITA margin excluding items affecting comparability was 4.1 percent (7.7). Mainly, the reduction is due to negative market progress in Sweden, and to some extent Norway, as well as a strong comparative quarter. The quarter’s items affecting comparability relate to our change of Managing Director and continued restructuring of our business.

 

To adapt to a weaker market, over the past year, Dedicare has taken a series of actions, mainly in Sweden, and in the quarter, we also completed the cost savings programme initiated in May. This will have its full impact in the fourth quarter and means we have created better potential for next year through a lower cost base. Our ongoing and long-term work on increasing our operational efficiency continues.

 

Like last year, we got two excellent endorsements as an employer in the quarter: firstly, Dedicare placed on Allbright’s Green List of Sweden’s most gender-equal listed companies. And secondly, Dedicare Norway ranked in Great Place to Work’s top 100 European workplaces again this year (7th place). I know that our great corporate culture, which unites hard work and having fun, lies behind these endorsements.

 

The third quarter presented differing challenges to our segments. In Norway, net sales were down by just over 7 percent to SEK 314.2 million, equivalent to a 2.1 percent reduction in local currency. EBITA fell sharply to SEK 19.2 million, equivalent to an EBITA margin of 6.1 percent (9.9). In the second quarter, NHO (the Confederation of Norwegian Enterprise) stated that Norway’s healthcare staffing market had contracted by 10 percent, while competition had increased, with price pressure resulting. Acapedia, our preschool operation, continued to generate stable revenue and EBITA margin in the quarter.

 

Since September, Dedicare Norway has been headed up by Lene Langås Ødegård, who was Interim COO of our Norwegian operation for a period. We’ve been working together for many years, and I’m fully confident about following her leadership of our Norwegian operation.

 

In Sweden, net sales fell by 30 percent-plus to SEK 75.9 million, while EBITA was negative for the second consecutive quarter at SEK -1.8 million (6.7) excluding SEK 0.9 million of items affecting comparability. The Swedish healthcare staffing market has been hit hard by contracting limits, and SKR (the Swedish Association of Local Authorities and Regions) stated that overall, the contracting market was down by 30 percent in the first half of this year. We note that the whole sector is being adversely affected by the current situation.

 

In Denmark, net sales were SEK 59.7 million, a drop of some 7 percent. Profitability was stable, with the EBITA margin at 5.2 percent (5.0). Doctor staffing performed well in the year. However, contracting limits on nurses did cause a sales decrease. Because we had already restructured our business in late-2023, we can now address the current demand level in doctor staffing positively.

In the UK, net sales for the quarter were SEK 15.5 million, an increase of some 11 percent in the quarter. EBITA fell by SEK 0.4 million (1.5) due to upscaled initiatives in its organisation in the period. Because of a slow UK market for contracting, our main focus in the UK is on international recruitment, which progressed well, and where our actions include providing healthcare in the Falkland Islands and other non-European territories with British doctors and nurses.

 

Finally, I’d like to say a few words looking ahead: I’ve become our CEO and MD at a time when there are challenges on all our markets. As yet, we see no clear signs of improvement on the Swedish healthcare staffing market, and we also expect the stiffer competition in Norway to persist. Meanwhile, we have now largely adapted our cost base and organisation to the current market conditions. Additionally, healthcare staffing remains a multi-billion kronor market where there’s room to grow, even if the market is declining overall. Despite Dedicare being hard hit by a deteriorated market, we do enjoy the benefit of having the major nationwide framework agreements in both Sweden and Norway. We also have a big advantage in our long-term experience of healthcare staffing, in our size, conferring us with financial strength, and in our diversified business, which makes us less vulnerable than most other players in the staffing sector.

 

Going forward, we’ll keep focusing on sales and improving operational efficiency. We’ll also invest in growth by winning market shares on what is currently a declining market. The underlying trend of an aging population and greater need for healthcare is sustaining.

 

Accordingly, we know that the need for healthcare staff will grow through the coming years, which is where healthcare staffing providers serve a vital function—we help healthcare to overcome the challenge of skills supply, helping enable more equivalent healthcare. I’m looking forward to continuing this vital work alongside all Dedicare’s staff and consultants.

 

Bård Kristiansen, CEO and Managing Director

 

 

 

This information is mandatory for Dedicare AB (publ) to publish pursuant to the EU Market Abuse Regulation (MAR) and the Swedish Securities Markets Act. This information was submitted for publication through the agency of the above contact at 8 a.m. CET on 24 October 2024