Ambea AB (publ) (AMBEA) Earnings Call Transcript

Welcome to the Ambea Q2 2022 Results. [Operator Instructions] Just to remind you, this session is being recorded. Today, I am pleased to present Mark Jensen, the CEO. Please begin your meeting.

Good morning, everyone, and welcome to Ambea's Second Quarter 2022 Report Presentation. Speaking is Mark Jensen, CEO of Ambea; and presenting with me today is Benno Eliasson, CFO. Last quarter, we provided an overview of Vardaga segments and the Swedish elderly care business. Today, I will give an overview of our updated strategy before we present an overview of the second quarter. Benno will then describe the development of the financials for the group and for the different segments in Ambea. After that, I will summarize the quarter and compare to our financial targets before we open up for questions. I would like to begin with a brief overview of Ambea. Ambea is the leading Scandinavian care provider. We have about 26,000 employees across Sweden, Norway and Denmark, and revenues of more than SEK 12 billion. We offer a full range of services within elderly care, disability care, psychosocial support and staffing solutions. We have more than 350 municipalities as our clients, and we are an important partner in solving challenges in the welfare system. Nytida, Vardaga and Klara all operate in Sweden, where Nytida offer social care, Vardaga provides elderly Care and Klara offers various staffing solutions. Stendi Norway and Altiden Denmark both primarily operate within social care. On the next slides, we will turn to a brief presentation of Ambea's updated strategy. Ambea was listed at the NASDAQ Stockholm Stock Exchange in March 2017, and a lot has happened since then. The company has almost doubled its turnover, and today we are present in 3 countries. We have invested in our business and employees and developed clear concepts and frameworks, which makes it possible to deliver an individual qualitative and cost-effective care. The need for care is expected to increase in the coming years due to an aging and growing population. Further, the care sector was significantly impacted by the pandemic, which gave us new learnings and areas to consider. All in all, this made it a very good time to evaluate and upgrade our strategy. The updated strategy is based on the clients' needs and was co-created in a solid process with 50 managers and specialists from our 3 markets. The work was conducted over 6 months and took base in our existing strategic framework, where we have evaluated the past, looked at the present and discussed new future opportunities both from the inside and from the outside and all driven by insights and data. Based on this, we have prioritized 4 strategic areas and want to strengthen our focus on sustainability. The strong internal commitment has been important to use all the knowledge that exists within the organization and to cater for a smooth implementation and effective strategy execution. The updated strategy is primarily a map for internal alignment and clarity as it sets out the direction and priorities, which is important for the organization. We launched the strategy internally in May after first being approved by Ambea's Board of Directors. The strategy will form the basis of our priorities and be an integrated part of our planning and execution across all of our operations. We call it strategy for future proof care. Let's have a look at how the parts fit together in what we call Our World. Our World provides a stable platform for all Ambea's employees. It consists of our vision, we make the world a better place one person at a time; our mission, together we create a safe, secure and sustainable care for everyone; and our values, respect, simplicity, responsibility and knowledge. Our World is an important foundation for the organization. It reminds us of why our company exists, the core of our mission, and how we should treat each other. Not least, Our World provides practical guidance in our everyday life, something that every employee can relate to, and together with clear routines, processes and concepts, secure we deliver upon our promises and make the right priorities also in challenging situations. With the updated strategy, we have renewed Our World and highlighted a number of important external factors that affect us and create opportunities. The cloud contains 3 challenges in the society that are creating the conditions for Ambea and the care sector over the coming 5 to 10 years. These are largely due to demographic changes that will put pressure on municipalities across Scandinavia. But these are also challenges that create opportunities for Ambea to offer assistance and ease the burden for society. We refer to those trends as the welfare challenge. We have also added our 4 updated strategic focus areas in the flag to clarify our priorities. And together we get a simple and clear map that will guide us forward and help us to reach our goals and realize our vision; we make the world a better place, one person at a time. Now let's look briefly at our 4 strategic focus areas as shown on the flag on this slide. The updated strategy has evolved naturally from the needs of our clients. The strategy clarifies our position that we want to be the leading care company in the markets which we operate. That means that we will continue to invest in development and profitable growth in the segments where we are strong, while excluding areas with lower development potential such as elderly care in Norway or home care in Denmark. Ambea has identified 4 strategic focus areas. First, we offer care services with our customers in focus. Ambea's previous strategy was primarily focused on the development of residential care. The updated strategy will make us more adaptable by also enabling the inclusion of related service areas when they strengthen our business and cooperations. That will better enable Ambea to meet our customers where they are and thereby develop our business and create added value. Examples of this includes Klara's focus on student health services through the acquisition of SkolPool earlier this year and Altiden's acquisition of SK Reflekt, which provides an entry into the operational area of social services in Denmark. Second, we deliver quality through competence. The success of our company depends on our 26,000 employees. By investing in skills, development, language development and leadership, we are growing our levels of knowledge, which in turn will lead to higher quality and improved customer satisfaction and staff retention. In this area, our training organization, Lära, will play a key role in all markets for building and developing skills and competence within the organization. Thirdly, we make time for care. Our time is one of the most important things we can give to our care receivers. Processes and tools will support our employees so that everyone feels confident and spend time on the right things. Well-functioning systems and procedures are also a prerequisite for systematic quality control and continuous learning. That means that we'll be working to reduce administration and have systems that are modern, mobile and meet the needs of our employees. Fourth, we accelerate innovation and welfare technology. Technology is evolving fast and expectations from care receivers, loved ones and clients are increasing. Welfare technology can contribute to better care and a better work environment for employees. It can also improve efficiency. We will work with our own initiatives, seek collaborations, and be an innovative care provider in order to accelerate the development and use of welfare technology in the care sector. Innovation will also help society overcome the challenge of a growing shortage of care workers. And last but not least, we provide sustainable care for everyone. And the updated strategy in sustainability has been giving a clear role, and we will make efforts in all areas of sustainability. Briefly summarized, Ambea shall be a responsible provider of both care and care jobs, adapt our operations to climate change and become fossil free. This in a context with robust governance and a high level of trust, which generates clear value for our stakeholders and for society. With our updated strategy, we are ready for the next stage of Ambea's development. The need for care is expected to rise sharply in the coming years, and we are ready to help society overcome the challenge. You can read more about our strategy, focus areas, and sustainability work in the quarterly report. Now over to Vardaga and the latest national care receiver survey. The care receivers' experience of Ambea is an important measure of how well we have succeeded. Most of all, it is a strong foundation for our quality improvement processes. External care receiver surveys are also conducted in Norway and Denmark, but less frequently and not as comprehensively as in Sweden. So in addition to the external care receiver surveys such as the Swedish National Board of Health and Welfare's annual survey regarding elderly care or the Swedish Association of local authorities and regional survey within social care, at Ambea we also conduct our own care receiver surveys to achieve frequent and comparable results in all countries. Within elderly care in Vardaga, we do the most measurements with a total of 3 surveys per year. During the spring, the Swedish National Board of Health and Welfare carried out a survey, what do the elderly think about elderly care. In this year's survey, general satisfaction decreased somewhat in nursing homes on a national level. This also accounts for Vardaga. But Vardaga continues to be the largest private care provider with the most satisfied care receivers. At 7 of Vardaga's nursing homes, responses were 100% positive to the questions of overall satisfaction and respect and dignity, which means that all responders are fully satisfied with the facility and how they are met and treated by employees, a fantastic result. Another highlight from the survey is our home care service that received top marks. Positive responses on overall satisfaction reached 90% and landed well above the average in the municipalities where we offer home care. We are grateful and proud of the trust we received from our home care customers as a result of the dedicated work Vardaga's home care team carry out and we will continue to work for high customer satisfaction throughout our business. Now let's look at growth. At the start of the pandemic, overall group revenue was impacted negatively as occupancy dropped, especially within elderly care in Sweden. Since quarter 2, 2021, the trend has reversed and we see an increase in the number of care receivers, high occupancy rates, and increased revenue quarter-on-quarter. Over the last 5 quarters, the growth has been increasing substantially and amounted to 10% in the second quarter of 2022. The growth rate was slightly lower in quarter 2 compared to quarter 1, but on top of an also growing quarter 2 in 2021. We maintain a high commercial focus to fill vacancies in existing facilities and look positively at our overall growth potential in the coming quarters. On the next slide, we will have a look at organic growth. Since the beginning of 2020, we have added almost 1,200 new beds or placements, and as partners to the municipalities, we will continue to work to further develop good access to new care homes to meet the increasing demand. In quarter 2, the pipeline is again growing as we have signed new contracts, so we now have almost 1,500 new beds in pipeline, most of them in Sweden and some in Denmark. We still see an ongoing occupancy improvement within Vardaga. And Nytida opened a new unit with a total of 6 beds in Gothenburg. More openings are planned year to go. Both Vardaga and Nytida won several tenders, which is an acknowledgment of our good quality concept. Vardaga won 2 new management contracts with a net volume of SEK 110 million, and Nytida won 4 contracts worth SEK 25 million. As the demographic change requires construction of more nursing homes and care facilities, we continue to actively seek opportunities for organic growth within elderly care in Sweden and Denmark and within social care in all 3 markets. Let's look at acquisitions. In the second quarter 2022, we made 3 acquisitions, 2 acquisitions in May and 1 acquisition in June. Nytida acquired Alternatus Familia, which provides family care in Sweden. Revenue for the financial year 2020, 2021 was SEK 24 million. The second acquisition was made by Klara that acquired SkolPool. SkolPool is market leader in student health services with care provider responsibility. Through the acquisition, the 2 leading actors merged into one operation under Klara. The revenue of SkolPool during the financial year 2020, 2021 amounted to SEK 68 million. Both transactions were closed on May 2, 2022. In the latest and third acquisition, Altiden acquired 2 companies, SK Reflekt and Huset Reflekt. SK Reflekt provides consulting within social services for children, adults and families. The company also has training apartments. Huset Reflekt provides supported living facilities for children and youth with special needs. The 2021 revenue for SK Reflekt was DKK 60 million and DKK 10 million for Huset Reflekt. The acquisitions were closed on June 30, 2022. If we look into the future, Ambea has a strong cash generation that gives us the opportunity to seek for bolt-on acquisitions, which we see as an essential part of our strategy. We are active in all our markets, evaluating potential opportunities for value creation, and continue to see M&A as a key driver of growth. Now to the highlights of the second quarter. In local currency, all segments, apart from Stendi, delivered net revenue growth compared to last year. In total, sales grew by 10% compared to quarter 2 last year, primarily driven by organic growth, but also M&A activities. Adjusted EBITDA amounted to SEK 229 million, an increase of 57% versus last year. The increase was mainly driven by Vardaga's positive occupancy trend and one-off effects. Our free cash flow improved significantly and amounts to SEK 540 million. The improvement of cash flow was mainly due to the increased financial result and sale of real estate amounting to SEK 116 million in the second quarter. The positive occupancy development within Vardaga has continued month-on-month throughout the quarter. We will continue our increased commercial investments behind value and information and activities within Vardaga to reach future care receivers and their relatives. We will also continue to seek for M&A opportunities and aim to maintain the current pace of quality acquisitions during the second half of the year. The divestment of our elderly care business in Norway is ongoing and will improve focus and strengthen profitability in Norway going forward. And now over to you, Benno, for a presentation of the financial summary.

Thank you, Mark. The strong growth numbers we saw last quarter continues, plus 10% year-on-year and 2% versus last quarter. Of the 10% in this quarter, 6% was organic growth, 3% came from acquisitions and 1% came from currency effects. If we look into how the different business areas have affected the group numbers, we can see that like in previous quarter, all business areas contributed to the growth in this quarter. Vardaga increased 16% versus last year. We again had increased occupancy throughout the quarter. Nytida is up 5%, driven by acquisitions and increased contract management portfolio. Stendi showed growth in SEK, but had a negative growth in local currency by 3% as we continue to adjust our capacity versus last year. Altiden is up 36% as an effect from the acquisition of EKKO, the good occupancy development in Altiden's own nursing home Fribo Holte which opened 1 year ago, as well as strong growth with new contracts within elderly care segment. And their last Klara increased 33% with growth in all subsegments and due to the acquisition of SkolPool. EBITDA. This slide shows how the different business areas have affected the EBITDA of the group. We can see in Vardaga that we have improved occupancy and the operational improvements have generated a higher profitability than previous year. Vardaga also received retroactive reimbursement of pension funds of SEK 23 million in the quarter. In Nytida, we have lower occupancy in some of our own managed facilities. The EBITDA in both Vardaga and Nytida were negatively affected by higher costs for sick leave, food and energy. Stendi was still affected by high cost, sick leave and energy, but we were able to match last year's numbers. In Altiden, we saw higher cost for close down of our home care business, high cost for integration for the EKKO acquisition, and higher start-up costs for contracts within elderly care. Outside the business area, we included some one-off effects in order not to affect the comparability of the segment numbers. These are, first, gains through the sale of real estate of SEK 44 million. Last year, we also reported a real estate in the second quarter, but only of SEK 9 million. The final purchase price set for acquisition in Altiden with a positive P&L effect of SEK 39 million. And third, partly divestment of the elderly care business in Norway with a negative effect of minus SEK 13 million. All in all, EBITDA grew by 57% versus Q2 last year. Operating cash flow, excluding IFRS 16, increased by 42%, in line with the strong earnings growth and the real estate sale of SEK 116 million. This puts the rolling 12 operating cash flow almost at 100% of EBITDA, and seen in a longer perspective, the cash flow is very strong, and this gives Ambea good opportunities for future growth. This slide shows the way from the rolling 12 reported EBITDA of SEK 837 million to the SEK 769 million in EBITDA, excluding IFRS 16, down to the free cash flow post tax. We can see that, for example, we have paid SEK 124 million in taxes, SEK 71 million in interest, and invested SEK 102 million in fixed assets. We can also see that we have gained SEK 116 million from the sale of real estate and had a negative effect from working capital by SEK 133 million. All in all, we have generated SEK 540 million in free cash flow post tax based on the own accounting standard. And in the next slide, we can see how we have used the generated SEK 540 million. SEK 109 million was distributed to our shareholders as dividend, SEK 205 million was spent on the 5 acquisitions we made in the last 4 quarters, and the rest reduced our interest-bearing debt. The increased EBITDA in combination with a strong quarterly cash flow has affected the leverage ratio positively. And we are now down from 3.3x last quarter to 2.8x, this is excluding IFRS 16. And then turning to the different business areas. We start with Nytida. Sales increased by 5%, mainly driven by acquisitions and growth in our own contract portfolio. Our own managed homes showed slightly lower occupancy than last year. We opened one new assisted living facility with 6 beds in the quarter and have the last 4 quarters opened 9 new units with a total of 54 beds. Nytida won 4 new contracts in the quarter, net of SEK 25 million in contract management. EBITDA decreased due to lower occupancy rates in some units and higher costs for sick leave, food, fuel and energy. This is the first quarter with no government reimbursement for sick leave cost, and that affects the comparison versus Q1 and last year. EBITDA in the quarter landed at 10.6%, and rolling 12, EBITDA is still at high 13.8%. Vardaga. In Vardaga, net sales increased by 16% year-on-year and by 4% versus last quarter. Occupancy in mature units, which now also include units started 2019 and 2020 were, in the second quarter, higher than last year and shows a month-on-month growing trend throughout the quarter. Own managed portfolio kept growing with high pace, now with 23% increase. In contract management, Vardaga won 2 new contracts, net of SEK 125 million during the second quarter, and this is for startup next year. EBITDA increased with 176% to SEK 69 million, mainly driven by higher occupancy. We had also startup of 3 large units in Q1, which led to higher costs in Q2, and EBITDA was positively affected by a one-off effect of SEK 23 million on retroactive repayment of pension payments, but negatively affected by higher sick leave costs as well as higher cost of food and energy. We have still around 10 nursing homes that we not yet have opened up for care receivers. We evaluate the local markets very carefully and are ready to open most of them within a short period of time. A few of these homes are now rented out on short-term contracts to municipalities to host refugees from Ukraine or as replacement accommodation for municipality care homes being renovated. To further improve occupancy, we continue to invest in commercial activities based on local needs and opportunities. This work already delivered good results in terms of increased occupancy rates. Stendi. Net sales increased by 1% in SEK, but decreased by 3% in local currency. We saw rather stable demand from last quarter, but compared to last year, we have reduced the capacity in our own management portfolio. One unit in elderly care was returned back to Oslo municipality during the second quarter, and we have closed an agreement regarding divestment of another elderly care home effective from September 1. EBITDA was stable compared to last year. EBITDA was negatively affected by lower occupancy, slightly higher sick leave rates, as well as higher costs for food and energy. Cost reductions from the ongoing program have to a limited extent affected EBITDA positively. We are working with different profit improvement measures, both to further adapt our capacity to the demand in the market, and other initiatives such as right manning on an entity level, renegotiation of contracts and relocation of units. This work has been ongoing since Q4 last year and the effects of the improvement measures will be shown gradually from the second half of this year. EBITDA rolling 12 was still at 3.6%. Altiden. Net sales grew by 36% and was affected positively by the acquisition of EKKO, startup of new contracts, as well as increased occupancy at our own managed nursing home, and on the negative side, our exit of home care contracts. Profitability wise, the second quarter is the weakest in Denmark. A majority of all bank holidays are in Q2 with much higher staffing costs than other quarters. This year, however, the second quarter was even weaker than normal. EBITDA was down SEK 14 million to minus SEK 80 million. We saw higher costs related to the closure of the home care business as well as higher costs for startup of new contracts and cost for integration of the EKKO organization with the old existing Altiden organization. EBITDA rolling 12 is now at low 1%. The final purchase price for EKKO acquisition was set in the quarter, and the positive P&L effect of SEK 39 million is not included in these Altiden numbers, but are reported only on group level to enhance comparability of Altiden's numbers over time. At the very last day of the quarter, Altiden acquired 2 legal entities within social care. With that acquisition, we are strengthening our position within social care. To conclude Altiden, it was a disappointing quarter in Denmark, but we expect stronger profitability in the second half of the year. And last, Klara. Net sales increased by 33%. We are growing our business towards external public and private operators as well as towards Vardaga and Nytida, and the strong growth that gives us the opportunity to gain scale in more geographies, which, in return, provides better staff efficiency and margin improvements. In the quarter, Klara acquired SkolPool, the market leader in student health services to private and public schools. This acquisition followed strategy and helped to position Klara as a solution service provider rather than an ordinary staffing service provider. EBITDA was in the quarter at 7.5% and at rolling 12 at 8%. And with that, back to you, Mark.

Thank you so much, Benno. And to sum up our financial development versus our targets. Our growth target is 8% to 10% through a combination of acquired and organic growth. We are on track with 9% growth rolling 12. In 2022, we have done 5 acquisitions already, and that together with strong organic growth, have improved our opportunities to fulfill our financial revenue growth target in 2022. Looking at profitability target, we have a mid-term adjusted EBITA target of 9.5%. Since quarter 2, 2021, we have seen improving occupancy, which in turn will support an increased margin going forward. Also, the efforts to improve profitability in Norway is expected to positively contribute to the margin development during second half of 2022. And finally, leverage has improved a lot in the quarter, and this will give us more potential to grow. We expect that our solid cash conversion will continue to reduce leverage over time. So summarizing the second quarter of 2022. Ambea is showing good organic growth in the quarter and see an ongoing positive occupancy trend in our elderly care segment in Sweden. EBITDA was strong, but also driven by one-off effects. Free cash flow was at SEK 540 million, which will give us opportunities for further quality acquisitions. We have completed 3 acquisitions during the second quarter and 5 acquisitions year-to-date. Stendi in Norway continued to adjust capacity and focus on social care, where we have scale, high competence and growth opportunities. We have a strong pipeline for new beds and placements, which will contribute to future growth. Both Vardaga and Nytida won several new contracts in contract management as an outcome of public tenders. The successful tender win rate is a result of the quality focus we have and which we are proud of. A consistent high quality is our license to operate and what we aim to deliver every day. Our updated strategy was launched internally and is now incorporated into the annual short and midterm planning processes. The strategy builds on our strengths and will guide us to capture new opportunities in areas where we want to grow and can contribute to society. In a constantly changing environment, adaptability and agility is important. At Ambea, we continue to look optimistic at the opportunities to support our clients, 350 municipalities across 3 countries. Together, we will follow our vision to make the world a better place one person at a time. This is only possible with a committed team of professional care workers. Therefore, I want to send a special thank you to all our employees again this quarter. And with that, I conclude our presentation and open up for questions. Operator, can we have the first question, please?

[Operator Instructions] Our first question comes from the line of Kristofer Liljeberg of Carnegie.

Three questions for me. First on Norway. It's now 3 years since you acquired Aleris Norwegian business. Nothing has improved. Of course, the pandemic has had a large negative impact and delayed everything. But what's needed, and what could you do here in the short term to have this business starting to generate any meaningful earnings? And you comment about the savings should start to impact in the second half. How confident are you in that comment given that we have seen constant delays previously? Second question related to the weakness in Denmark. Surprisingly, a big loss for me here in the quarter. It seems that we have had some different costs here as well for integrating, closing the last part of the home care business, et cetera. Is it possible to try to quantify how these different factors are impacting? And final question on the divestments you're doing in Norway, if you could quantify how much of sales has been divesting and whether you're planning here and think you will continue to divest units in the near term?

Thank you, Kristofer. I will start with answering your first question in terms of the development in Norway. You're right. We have had quite some time to turn around the business in Norway. We have also had the well-known challenges along the road such as the pandemic, which impacted Norway quite significantly, and our business, in particular, and other bumps as well. Turnarounds are never kind of a straight line, and there will be ups and downs. But the measures that we have put in place since quarter 4, we can see are starting to buy. And what we have done is that we have adjusted capacity. You can see that we have reduced number of beds with around 8% since quarter 2 last year. That means, of course, also reductions in staff. We have looked at merging some of the care facilities. We have renegotiated certain contracts and some of these things just take time before they actually get into the P&L. We have been saying for some time that we will start to see the results of this gradually from the second half of this year and we hold on to that. And we feel confident that, that will happen. So that's my comment to the development in Norway. Also on...

Sorry. When you say that you feel confident about starting to see this effect, is this a very gradual effect? Or is it more of a step change in margins?

It's a gradual effect -- it will be a gradual effect.

And then your third question in terms of divestments of the elderly care segment in Norway, which we have announced previously and which is ongoing, we have divested and handed back around half of our elderly care business in Norway, and we will continue to seek opportunities to also divest or hand back the remaining half of the elderly care segment in Norway. So we feel we are progressing well in terms of exiting that segment. And we will continue to update you on that when we have news. Then the question on Denmark, maybe you can take that, Benno?

Yes. As you said, Denmark is the business area where we are disappointed this quarter. We had SEK 14 million loss more than last year. We know that Q2 is challenging. But this year we had these 3 items, that is closing down of home care, and we have more startup costs than estimated for new contracts, and we also have now integrated EKKOfonden organization with our Altiden. It's a little bit hard to say how much these parts are totally. But I can say that maybe half of the total loss versus last year is a bit of a one-off effect and half is that we have some kind of worse operation, you can say, or extra challenges in the quarter with extra sickness rate and these kind of things that are more ongoing, you can say. So we see for the second half of the year that this negative deviation versus last year is not going to be at this point at all. So we see that we have higher profitability coming from the third quarter and going forward.

So on Denmark, do you expect earnings to be up year-over-year in the second half or more flattish?

I won't give an estimate of that, but it would be much better than this quarter, I can say.

Our next question comes from the line of Karl-Johan Bonnevier of DNB Markets.

Just to continue on Kristofer's question on Denmark and your answer to that. When you look at also the quite a big change to the payment that you now got from the EKKOfonden kind of acquisition, has that same sort of view on the opportunity in Denmark or anything as you see going forward? And how that can become a big profit generating unit for you?

No, I wouldn't say. This extra purchase price agreement we had with EKKOfonden's owner was that it could get SEK 49 million. Now the debt was SEK 10 million, so the SEK 39 million positively affected the P&L. We are rather pleased with that operations that we bought. And there is good profitability, and there is good structure for the future in both organizations. So we are looking positive to the future even if we had a bad quarter this quarter.

So more a teething problem at the early part of the integration and then getting things sorted than something that changed your view for the future.

Yes, I would say so.

Good. Looking at Vardaga, and the continued, say, growth in occupancy sounds very promising. Could you give us some feel for where you now stand in the mature units compared to prepandemic and looking at occupancy levels?

Yes, we can. I mean if we look at the mature units, we are not back exactly at the level we were before the pandemic, but we are closing in. We are not far away from that level. And we hope we can see the trend to continue, both in mature and also in new opened homes. So yes, not exactly there, but close.

And when you look at, say, the demand pattern you see out of the municipalities that you have most of these units in, are we now looking at also say, new kind of client flows being, say, back to more normal. So you should expect that basically occupancy difference to close during the second half of this year? Is that too early?

I think that's too early to say. I mean, to increase occupancy, we need a flow which is higher than normal, and we have had that since the second quarter last year. So it has been going on for quite some time. It might slow down at a certain period in time, but also we know that demographic trends underlying will, of course, support the occupancy going forward. But it could be, from a quarter to another quarter, there will not be a lot of movement. Now we have kind of come so close to the level we had before the pandemic. But underlying, I mean, midterm, long term, we still see good growth opportunities. So that's also why we are again signing new contracts for future care homes.

Yes. And looking at that pipeline of the units that you now have, say, taken control of, but still not opened under your own brands, or say, on managed pipe, those 10 units. When you're looking at those kind of short-term measures, using them as, say, refugee kind of hosting places and helping local municipalities in their own, say, pipeline with temporary measures. Is that basically taking out the cost for you? And where are you getting a contribution from those units when you look at those kind of arrangements rather than having them as it was before?

You can say that we are covering our costs in these units that we are subleasing to municipalities, but long term, we, of course, want to open our own operations in these real estate, of course.

Of course. And do you see that occupancy now is coming up to a level in these municipalities that you would be looking for getting them into your time line for opening in maybe '23?

We're looking very carefully, and it's a little bit shifting from municipality to municipality. We have decided to open up 1 of them in Q4 in the municipality of Laholm in the southern part of Sweden. And that's 1 of them that we have decided now to open. But we are looking very carefully in each municipality. And we are, of course, ready to open most of them, but not any more decisions than one.