Interim Report 1 January – 30 June 2024: A still-challenging market burdened the second quarter

2024-07-12 Regulatory information

Second quarter 2024

• Net sales SEK 439.6 million (478.9)
• EBITA SEK 21.2 million (38.0), adjusted for non-recurring items SEK 24.1 million (38.0)
• EBITA margin 4.8 percent (7.9), adjusted for non-recurring items 5.5 percent (7.9)
• EBIT SEK 18.9 million (34.4), adjusted for non-recurring items SEK 21.8 million (34.4)
• EBIT margin 4.3 percent (7.2), adjusted for non-recurring items 5.0 percent (7.2)
• Profit after financial items SEK 19.6 million (29.8)
• Profit for the period SEK 15.3 million (22.9)
• Basic earnings per share SEK 1.60 (2.40)
• Diluted earnings per share SEK 1.59 (2.37)

The period January – June 2024

• Net sales SEK 869.8 million (982.1)
• EBITA SEK 38.6 million (79.6), adjusted for non-recurring items SEK 41.5 million (79.6)
• EBITA margin 4.4 percent (8.1), adjusted for non-recurring items 4.8 percent (8.1)
• EBIT SEK 34.0 million (72.4 ), adjusted for non-recurring items SEK 36.9 million (72.4)
• EBIT margin 3.9 percent (7.4), adjusted for non-recurring items 4.2 percent (7.4)
• Profit after financial items SEK 33.1 million (61.2)
• Profit for the period SEK 25.8 million (47.5)
• Basic earnings per share SEK 2.70 (4.97)
• Diluted earnings per share SEK 2.67 (4.92)

Performance measures 

Chief Executive Officer’s statement

”A still-challenging market burdened the second quarter”

As previously reported, the challenging start to the year continued in the second quarter. The Swedish healthcare market staffing market was slow and hard to navigate due to the implementation of its new nationwide deal, limits on contracting, a healthcare strike and overtime ban. Norway, our largest market, remains strong, but was negatively impacted by greater price pressure. Net sales and EBIT were down in the quarter on the previous year. However, the second quarter of the year was stronger than the first, both in terms of net sales and profitability. To adapt our business to prevailing market conditions, we initiated a cost savings programme in the quarter, while continuing to invest in markets with healthy demand.

The Dedicare group’s net sales were SEK 439.6 million in the second quarter, down 8.2 percent year on year. Our EBITA adjusted for non-recurring items decreased to SEK 24.1 million (38.0). Our EBITA margin adjusted for non-recurring items was 5.5 percent (7.9). The reduced sales year on year are mainly due to a weaker healthcare staffing market in Sweden. Our earnings downturn is due to both a poor Swedish market and price pressure on the Norwegian market. In May, we decided on a cost savings programme, which we plan to generate some SEK 15 million of savings yearly, with full effect from the fourth quarter of this year. Earnings in the quarter were charged with non-recurring costs of SEK 2.9 million from the programme. We also made a change to our management in the quarter, with Eva Brunnberg, Managing Director of Dedicare Sweden leaving the company, and Bård Kristiansen, MD of Dedicare Norway, taking over as Interim MD of Dedicare Sweden. The process of hiring a new MD for Dedicare Sweden is ongoing.

Market conditions remained positive in Norway in the quarter, and we were also delighted to be recognised as Norway’s Best Workplace by Great Place to Work for the second consecutive year. Meanwhile, more intense competition and increased price pressure is persisting in Norway, as we’ve witnessed in recent quarters. Primarily, this impacted us in the quarter through lower profitability. Net sales for Norway were SEK 282.3 million (280.5), while EBITA decreased to SEK 22.2 million (29.8), corresponding to an EBITA margin of 7.9 percent (10.6).

In Norway, we’re continuing to move forward from our market-leading position, and in the quarter, received the really positive news that we’d been reappointed to provide doctors, specialist physicians, psychologists and other healthcare staff to all hospitals across all Norway’s healthcare regions in the country’s nationwide healthcare tender. This is more far-reaching than the current deal. In nurse staffing, demand remained brisk after the new deal in 2023. Our preschool business Acapedia, with its new office in Kristiansand, also continued its positive progress in the quarter.

In Sweden, the challenges in healthcare staffing persisted, and the quarter was weak. Net sales were down by 28.2 percent to SEK 87.4 million (121.8), and EBITA adjusted for non-recurring items related to our cost savings programme was down to SEK 0.5 million (6.0), with an adjusted EBITA margin of 0.6 percent (4.9). Before adjusting for non-recurring items, our EBITA was a negative SEK -2.4 million (6.0). Apart from the regions’ limits on healthcare staff contracting, which are affecting the whole market, a healthcare strike and overtime ban complicated the situation. The implementation of the new nationwide deal also meant customers placing holiday staff orders late, just ahead of the summer, which ultimately made it difficult for us to fill all orders because of staff shortages. We anticipate the challenging position in Sweden’s healthcare staffing market persisting in the third quarter. As mentioned above, we’ve now taken action, both organisationally and through our cost savings programme. We also note that as a company, our diversity is a strength—in Sweden, apart from healthcare staffing, we’re also active in life science and social work staffing. Our life science consulting business grew in the quarter, in Sweden and Denmark. To consolidate our investment, we reorganised this business area at a pan-Nordic level, with Anna-Lena Mann appointed as MD in the quarter to head up our Nordic Life Science business.

I’d like to take this opportunity to refer to an interesting report by independent research firm Sirona, published in June. Misunderstandings surround the debate over the contracting limits imposed by Sweden’s healthcare regions-not least often huge exaggeration of the costs of contracting in doctors and nurses. While contracted staff do cost more than direct employees, the difference is actually far less than frequently cited in the debate. For example, the report, ordered by the Employers’ Organisation for the Swedish Service Sector (Kompetensföretagen), showed that in smaller towns, the cost of a contracted doctor was 11 percent higher than one employed by the regional authority, while the cost of a contracted nurse was 27 percent higher. The report states that the extra cost of contracting in doctors and nurses amounts is only just over 1 percent of the regions’ total staff spend of SEK182 billion, 1 percent that creates huge value in healthcare through more flexibility and shorter waiting lists! Healthcare staffing companies are here to solve problems, and we do so at a reasonable cost for Sweden’s healthcare sector.

In Denmark, doctor staffing is continuing its good progress, and we also had our long-term deal for midwives extended. However, the segment is still adversely impacted by limits on nurses on long-term contract, a contributor to the segment’s second-quarter net sales declining to SEK 58.6 million (67.5). Our EBITA margin expanded to SEK 7.5 percent (6.1).

Our initiatives in the UK segment, which consist of international recruitment and staffing, and of doctor staffing in the UK, are continuing. In the quarter, we achieved growth of 27 percent and net sales of SEK 13.5 million (10.6). We invested in new staff in sales, business development and recruitment in the quarter, which impacted our profitability, and our EBITA margin was down to 3.0 percent (7.5).

Our international recruitment and staffing projects performed well, and we secured a new deal. We’ve also decided on an initiative in Ireland, where we’re seeing higher demand. However, there was a general demand downturn in doctor staffing on the UK market in the quarter.

I can round up a quarter for the group with continued healthy demand and several significant new deals, but also more competition and price pressure in Norway, our largest market, while Sweden’s healthcare staffing market was weak and challenging. This is a market situation we’ve been reporting for several quarters now, but I have to accept, will unfortunately continue in the third quarter at least. Meanwhile, we’ve taken action, and I’m proud and pleased how professionally and quickly our staff have been able to navigate through the prevailing market conditions. This is a critical capability for our organisation so we can keep progressing and achieving our long-term goals.

Krister Widström, Managing Director and CEO

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 12 July 2024.