(News Bulletin 247) – The retirement home operator published an increase in turnover between July and the end of September. Orpea took advantage of this publication to update its financial outlook on Monday and thus postponed its medium-term objectives by one year, to 2026.

A very volatile start to the week on the Orpea file on the Paris Stock Exchange. Up sharply at the opening (+6.9% at 9:05 a.m.), the stock of the retirement home operator fell again and now lost 3% on Monday morning after the announcement of its latest quarterly publication.

The group certainly indicated that it had achieved a turnover increase of more than 10% for its third quarter but it also warned that it was postponing its medium-term objectives by one year. Enough to instill doubt on a file with a tarnished reputation since the publication of the investigative book The Gravediggers in January 2022.

Between July and the end of September, Orpea therefore achieved a turnover up 11.1% to 1.31 billion euros. In organic data, the increase amounts to 10.2%.

The retirement home operator explains that it has benefited from a positive dynamic in its activity “internationally and within the scope of clinics in France”. “Turnover also benefited from the effects of price increases, particularly in Germany, and from the contribution of establishments opened during the last 12 months,” continues Orpea.

As for the occupancy rate, this is increasing with an average occupancy rate of 83.8% in the third quarter of 2023, up 1.8 points compared to the same period of the year. previous.

In France, Orpea indicates that its retirement homes posted an occupancy rate of 84.4% between July and the end of September. This indicator has certainly increased by 100 basis points (i.e. 1 percentage point) compared to what was observed in the first half of 2023 (83.4%) but it still remains “very far from its historical levels”, deplores the group .

An operational recovery delayed by one year

Regarding the rest of the financial year, Orpea indicates that it has adjusted its profitability forecast which it had already lowered on October 12, alongside the publication of half-year accounts still weighed down by an increase in its operating costs.

The group therefore expects its Ebitdar, its main indicator of profitability, to be around 710 million euros. In its previous forecast, Orpea announced that its Ebitdar would be at the bottom of a range between 705 million euros – 750 million euros that it had communicated on July 13.

In October, the company also indicated that it was going to communicate its prospects which it will have updated for 2024 and 2025. This is done, with “a delay of almost 12 months in the recovery of the group’s operational performance”, given an inflationary context.

The company has therefore postponed its financial objectives, from 2025 to 2026. It is now counting on a turnover of 6.4 billion euros, for an occupancy rate for all of the group’s activities of 90, 8% in 2026. Operating income before rental charges, depreciation, provisions, interest and taxes (Ebitar) is expected at 1.2 billion euros when the balance sheet should be based on financial leverage reduced from 7.6x in 2025 to 5.5x in 2026.

“The group would therefore benefit by this 2025-2026 horizon from a restored financing capacity, which should enable it in particular to cope with the refinancing of the residual part of the loans put in place in June 2022 with its main banking partners, and thus ensuring its viability and sustainability,” explains Orpea.

A theoretical value of less than 2 cents

The announcement of this roadmap therefore comes before the launch of the two capital increases (before a third at the start of 2024), planned to restructure its colossal debt. At the end of June, it still peaked at more than 9 billion euros.

To relieve itself of this significant financial burden, Orpea must embark on a vast operation to restructure its liabilities, with nearly 4 billion euros of debt erased, in addition to three capital increases and the takeover by a group of shareholders led by the Caisse des Dépôts et Consignations (CDC).

Orpea gave more information on the timetable for these capital increases. The launch of the first fundraising is expected “in the coming days”, but the company will however have to wait, before implementing its project, until the Paris Court of Appeal has validated, “no later than November 13” , a final point of the procedure, namely the authorization given by the Financial Markets Authority (AMF) to proceed with the restructuring without going through a public purchase offer (OPA).

The second capital increase will enshrine the entry into the capital of the group of shareholders led by Caisse des Dépôts. It is scheduled for mid-December 2023, before a third “scheduled for early 2024, according to the indicative timetable announced by Orpea.

But this financial restructuring will nevertheless involve significant dilution for the existing shareholder. The group had indicated on numerous occasions that these capital increase operations would cause massive dilution for existing shareholders and lead to a significant drop in the value of the share after these fundraising.

The company then specified on October 12, the extent of the loss in value that awaits them, “with a theoretical unit value of the shares after operations which could be less than 0.02 euros”, warns the company. Compared to the current Orpea price of this Monday at 11:30 a.m., of 1.017 euros, the implicit theoretical discount would thus be… more than 98%.