After the scandal, the financial consequences: the group nursing home private Orpeain turmoil since the release in January of an investigative book, has signed an agreement with its banks to ensure its financing in an uncertain context, following a plunge of nearly 60% in its annual net profit.
This agreement is part of “an amicable conciliation procedure”, to prevent difficulties, opened before the Nanterre commercial court, the group said in a press release published on Friday.
Credit of 1.73 billion
It “responds to the current context of uncertainty weighing on Orpea, as well as closed access to the financial markets and the slowdown in the asset disposal program initially envisaged”, explained the group present in 23 countries and which manages more of 350 establishments for the elderly dependent in France.
It provides for the granting of a loan of 1.73 billion euros, the implementation of an asset disposal plan for more than 3 billion euros by the end of 2025 and an optional loan of a maximum amount of 1.5 billion euros.
“Learning lessons from this crisis”
“I pledge that we will learn all the lessons from this crisis to restore the trust that our stakeholders have always placed in us, wherever the group operates”, commented Philippe Charlier, CEO of Orpea, quoted in the press release.
For the current year, Orpea expects “to face exceptional charges related to the management of the crisis and its consequences”. It also expects its profitability to be affected by the increase in l’inflation which impacts “energy costs and wages in some countries”.
Turnover increased
The group says it is “confident regarding the growth dynamic” of its 2022 turnover but has not published any numerical forecasts. It will not pay a dividend for the 2021 financial year. In the first quarter, turnover increased by 9% to 1.12 billion euros.
Last year, its net profit fell by 59.3% compared to 2020 to 65.2 million euros, due in particular to a provision of 83 million euros “for risks and charges relating to estimated risks for the years 2017-2021 following the administrative investigations” to which the group was subject.
Accusations of abuse
And in 2020, its net profit had already shrunk by almost a third because the health crisis reduced its activity and increased its operating expenses. In 2021, the group’s gross operating surplus (Ebitda) however increased by 11% to 1.07 billion euros for a turnover of 4.3 billion euros, up 9.6 %.
The group has been under fire from critics since the publication at the end of January of the investigative book by Victor Castanet “The Gravediggers”. The independent journalist denounced in particular the mistreatment of residents and the misuse of public funds. A report commissioned by the government in the process pointed to serious dysfunctions in early April. The State filed a complaint and demanded the restitution of public grants allegedly diverted from their purpose.
Dysfunctions within the group
Since the end of April, the group has been the subject of a judicial inquiry, opened at Nanterre, on suspicion of institutional mistreatment or financial violations. An interim report by the independent firms Grant Thornton and Alvarez & Marsal, commissioned by Orpea, also noted dysfunctions within the group.
“Many corrective measures have already been taken”, assured Philippe Charrier. Orpea, which announced last week the appointment of a new general manager, intends to carry out “a major transformation plan, primarily deployed in France” intended to improve in particular “the quality of support and the well-being of the resident”. as well as its human resources policy. Early in the morning, at Bourse Paris, the title Orpea fell 4.70% to 32.23 euros in a rising market. It has lost more than 60% of its value since the start of the year, posting the worst fall of the SBF 120 index.
