(BFM Bourse) – The number one European retirement home shows a historic drop in session on the Paris Stock Exchange following the publication of degraded accounts in 2022 and the announcement of forecasts below analysts’ expectations.
Since 2019, Korian has been transforming its business model. The French group, present in Germany, Benelux, Spain and Italy as well as in France, has made numerous investments to continue the modernization and diversification of its network and the development of local care pathways.
But this change has a cost. The charges induced by this transformation plan weighed on Korian’s 2022 profits, which saw its profits melt (excluding accounting standards) by 61.8% over one year to reach 52 million euros. .
Korian had to make “a high level of non-recurring expenses in 2022, linked to network transformation operations in France, Germany and Belgium”, said the financial director, Philippe Garin quoted by AFP.
An environment marked by inflation
The European number one retirement home Korian has, for example, invested in alternative housing projects carried out by its subsidiary Ages&Vie, or accelerated in psychiatry with the takeover in October 2020 of the French group Inicea then of Ita Salud Mental, in February 2021, third player in mental health in Spain.
In addition to the investments made to adapt Korian’s offer to new needs in the care of dependency and associated pathologies, the group had to deal with an “environment marked by the acceleration of inflation”.
The rise in energy costs alone reduced the gross operating surplus before rents (Ebitdar) by approximately 20 million euros. EBITDA, before the impact of IFRS 16 accounting standard, reached €607.1 million in 2022, or 13.4% of revenue, compared to €597.2 million. euros and 13.9% of turnover the previous year. Quoted by AFP, analysts at Oddo BHF point to a “declining margin”, even if “the situation does not appear worrying and totally different from that of Orpea”. For their part, Jefferies specialists, quoted by Archyde.com, argue that Korian’s Ebitdar in 2022 came out 5% below the consensus.
A “year of transition”
Korian describes 2023 as “a year of transition” at the end of which the company expects to achieve organic growth of more than 8% “driven by recent transformations and openings, the normalization of occupancy rates and of the activity, as well as revaluations and tariffs reflecting the increase in costs”. In 2022, the group has already seen the first effects of its transformation plan towards activities with greater potential. Last year, the group achieved organic growth of 6.2% of its activity to stand at 4.5 billion euros.
The gross operating surplus before rents (Ebitdar) is expected to be stable in amount in 2023 compared to 2022, “reflecting the effects of the passage without margin of the inflationary increase in costs and wages in the turnover “. A disappointing forecast for Jefferies as it is also below consensus.
“In 2024 and 2025, the evolution of Ebitdar, as well as that of operating income before taking into account the IFRS 16 standard, should follow the growth in turnover”, adds Korian.
Oddo analysts anticipate that Korian’s profits in 2023 will be “below the consensus” of analysts, especially since the company will find it difficult to “completely free itself from Orpea” and “from the context”, is it stated in their note.
On the Paris Stock Exchange, Korian posted the largest drop in its history during the session since its listing at the end of November 2006. The stock in fact dropped more than 20% to fall to a historic low of 7.51 euros, in reaction to this sharp fall in 2022 results and prospects below expectations. Carried away by the Orpea scandal, Korian has lost more than 70% of its value since the start of 2022.
Sabrina Sadgui – ©2023 BFM Bourse
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