(News Bulletin 247) – The operator of retirement homes is slashing its objectives for the year 2023, due in particular to a greater than expected drop in attendance at its establishments in France.

The French retirement home giant Orpea announced on Thursday a downward revision for 2023 of its results forecasts, “of the order of 15 to 20%”, mainly due to an occupancy rate of its nursing homes in France weaker than expected.

The group, whose accelerated safeguard plan was approved at the end of June by the majority of categories of creditors and shareholders, now expects a result (Ebitdar) for 2023 of between 705 and 750 million euros, instead of 881 million announced last November.

A difficult “reputational” context

This “lag” is mainly due to “lower turnover” in France, where the occupancy rate of nursing homes only reached 83.4% in the first half, management explained in a press release.

This rate is “very much behind forecasts in a difficult reputational context”, added management, referring to the lingering consequences of the scandal that affected the company in early 2022: in his investigative book “Les Fossoyeurs”, the journalist Victor Castanet had reported mistreatment of residents and financial embezzlement by the former management.

The downward revision of the profit forecasts “is also explained by higher than expected personnel costs”, due to recent salary increases decided to try to “attract and retain employees”, and a policy of recruitment aimed at improving the resident supervision rate, according to the group.

A backup plan not questioned

Orpea, however, expects a level of cash almost unchanged for 2023 and early 2024, because the poor performance will be offset by “the freezing or cancellation” of certain investment projects, and by lower tax charges. These elements therefore do not call into question the execution of the accelerated backup plan, according to management.

This plan, which notably provides for the transformation of 3.8 billion euros of debts of unsecured creditors into shares, must still be approved by July 24 by the specialized commercial court of Nanterre.

At the end of the operations, the consortium led by Caisse des dépôts, the financial arm of the State, with Maif, CNP and MACSF should take 50.2% of the capital through a capital increase of 1. 55 billion euros.

The value of the Orpea share is down 1.3% to 1.848 euros around 2:30 p.m. on the Paris Stock Exchange, in a market up 0.84%.

(With AFP)