Emeis · EURONEXT:EMEIS
Emeis — Orpea — Investor Day (November 2022)
86 slides from Emeis's investor day presentation, Nov 15, 2022
Slide 1: Changing ORPEA
WITH YOU AND FOR YOU CHANGING ORPEA 15th november 2022
Slide 2: Guillaume Pepy
Guillaume Pepy Chairman of the Board of Directors
Slide 3: Laurent Guillot
Laurent Guillot Group CEO & Acting CEO, France
Slide 4: A refoundation process to restore our stakeholders' trust
A key milestone for ORPEA Our method: WITH YOU We’re involving you in our transformation and intensifying our regular, A refoundation process constructive dialogue to restore our stakeholders’ trust and involve them in rebuilding ORPEA Our ambition: FOR YOU We aim to become even more useful to all o
Slide 5: The findings of the new Executive Committee
The findings of the new Executive Committee Excessive, Dysfunctional Financial malpractices uncontrolled management by former directors international real practices has seen: estate development WITH YOU & FOR YOU ! CHANGING ORPEA 5
Slide 6: Dysfunctional management practices
Dysfunctional management practices STRONG EXPERTISE AND HIGH-QUALITY CLINICAL PROTOCOLS, BUT SERIOUS FLAWS IN: HUMAN RESOURCES Gaps within the organisation IT Lack of attention to employees Absence of social dialogue PURCHASING Opaque financial reporting FINANCE Embryonic financial controlling REAL
Slide 7: Poorly oriented growth, with excessive international and real estate investment
Poorly oriented growth, with excessive international and real estate investment, at the cost of too high level of debt Not offsetting a high investment Fast internationalisation EBITDA growth in real estate Heavily financed by debt International presence EBITDA excl. IFRS 16 Real estate assets value
Slide 8: Our priority: look to the future and rebuild
Our priority: look to the future and rebuild WITH A NEW EXECUTIVE COMMITTEE… Laurent Guillot Fanny Barbier Prof. Pierre Dr. Erik Hamann Anton Kellner Thibault Sartini Group CEO Group EVP, Krolak-Salmon CEO, Germany CEO, Central & CEO, & CEO, France Human Resources Group EVP, Eastern Europe New Count
Slide 9: Since July, we have worked to address three goals
Since July, we have worked to address three goals REMEDY ORGANISE RALLY WITH YOU & FOR YOU ! CHANGING ORPEA 9
Slide 10: REMEDY: putting the company back on track
1 REMEDY: putting the company back on track A sincere and transparent Review of the Group investigation Accelerated and France support procedure in case of Review recruitment to give staff functions: finance, Zero tolerance allegations against a of the whistleblowing the means to do their purchasing
Slide 11: ORGANISE our practices to the highest industry standards
2 ORGANISE our practices to bring them up to the highest industry standards Creation in France Definition of a true HR and of a Steering Committee Structuration & reorganisation Catering plan redesign social dialogue policy on Ethics & Quality Care of the support functions (France) Normal labour rel
Slide 12: RALLY towards new plans and new practices
3 RALLY towards new plans and new practices – to restart our innovation leadership Initiation of stakeholder Implementation of ORPEA’s engagement to turn them into refoundation Initiation of discussions on the Leverage of synergies partners of our refoundation with our employees care and services of
Slide 13: 1st July to 15th November
1st July 15th November New management Refoundation Plan: team vision & targets › New governance established › Break strategic objectives into operational targets (initiatives, managers in charge, targets) › Collaborative approach: visits of facilities, engagement of our staff, patients, residents an
Slide 14: ORPEA has powerful assets to succeed
ORPEA has powerful assets to succeed Our employees’ commitment Our care expertise Our extended local network A key private player, among the Expertise in clinical guidelines top 3 in all key markets ≈72,000 employees (end 2021), very combined with investment into committed to their social mission sp
Slide 15: Increasing demand, a major challenge in our societies
Increasing demand, a major challenge in our societies Nursing homes Rehabilitation clinics Mental health clinics European population over age 75 Prevalence among people aged 75+ Prevalence of depressive syndromes (millions, EU) (millions, EU) (%, 2014-2020, France) +15m (+23%) +20m people 161m +2.5p
Slide 16: Changing ORPEA to become a leader in the sector again
CHANGING ORPEA to become a leader in the sector again We therefore To this end, we need to need to CHANGE build the bases of to give our employees renewed trust We want to become the means and conditions needed to accomplish the our sector’s leading mission they are all committed with all our stakeh
Slide 17: Changing our method, organisation and approach
Changing our method Ethics, collaborative approach involving all stakeholders, symmetry of attention between staff and patients/residents, transparent & efficient operational model Changing our organisation Independence of the facilities, new role for support functions, an EVP Medical sitting on the
Slide 18: Changing ORPEA
A company fully devoted to the health, care, and life plan of the most vulnerable With our PEOPLE, to give them the means to do their jobs well and safely With our PATIENTS, our RESIDENTS and their FAMILIES, to care for them even better and support their life plan CHANGING ORPEA With society, to hav
Slide 19: Fanny Barbier
Fanny Barbier Group Executive Vice President, Human Resources
Slide 20: PEOPLE
PEOPLE A company fully devoted to the health, care, and life plan of the most vulnerable With our PEOPLE, to give them the means to do their jobs well and safely With our PATIENTS, our RESIDENTS and their FAMILIES, to care for them even better and support their life plan CHANGING ORPEA With society,
Slide 21: ORPEA's strategic asset are its 72,000 employees
PEOPLE ORPEA’s strategic asset are its 72,000 employees dedicated to care and health 77% of our employees are proud to work in their facilities1 82% are women 20.4% 60% care staff Germany 13.4% Northern Europe 70% of women among facility directors (France) 16.2% 38.6% Central Europe France 5 years o
Slide 22: ORPEA has not taken enough care of its employees
PEOPLE And yet ORPEA has not, until now, taken enough care of its employees Which are reflected in our operational kpis Low appeal affecting all professions across the sector 25% 10% Turnover rate Absenteeism rate 15 Internal dysfunctional 15,000 52 years organisation and management Positions occupi
Slide 23: Our ambition: a company culture that makes people its priority
PEOPLE Our ambition: a company culture that makes people its key concern and priority Focusing on health, safety and wellbeing COMMITMENT, PRIDE ETHICS and FAIRNESS and SENSE OF BELONGING A company culture focused on care for our employees, DIVERSITY, WORK/LIFE BALANCE & WORKING CONDITIONS so they c
Slide 24: Five levers to care for our employees
PEOPLE From intention to action: five levers to care for our employees guarantee employees’ effectively attract engage, develop health, safety motivated recruits and recognise and wellbeing A company rebuilt on its fundamentals, with group-wide policies to… build an agile organisation establish stro
Slide 25: Guaranteeing employees' health, safety and wellbeing
PEOPLE A company that guarantees employees’ health, safety and wellbeing A dynamic of continuous A global approach A dedicated organisation improvement Ambitious common standards Director of Health & Safety Managers’ training based on a CULTURE OF FAIRNESS appointed by end 2022 Monthly KPI monitorin
Slide 26: Effectively attracting motivated recruits
PEOPLE A company that effectively attracts motivated recruits ATTRACT RECRUIT Appeal of the profession Preference to ORPEA for its value proposition Employer National recruitment Appeal Inclusion Ethics and branding campaigns to the young & diversity policy Safety training Extensive use Attractive j
Slide 27: Engaging, developing and recognising
PEOPLE And that also engages, develops and recognises Recognition and rewards Ongoing training, development, promotion Trust Pride Attractive compensation policy Sense of Effective (pay, health insurance, benefits) belonging onboarding covered by formal collective negotiation procedures Aligned bonu
Slide 28: An agile organisation and new management culture
PEOPLE An agile organisation that fosters a new, collaborative management culture Clarified accountabilities that give Trained and exemplary management, back the initiative to facilities Inclusive and collaborative culture attentive to employees Staff in the field involved Right people at the right
Slide 29: Stronger HR teams closer to employees
PEOPLE Stronger HR teams, repositioned closer to employees to provide better support HR teams close to the facilities Governance of Developer of the bodies and skills and the collective engagement negotiation process Guarantor of Local partner A new positioning fair treatment for ORPEA Works Adapted
Slide 30: Providing caregivers the means to do their jobs well
PEOPLE Providing our caregivers the means to do their jobs well Roll out an organisation Better plan tasks for a Create the conditions for Ensure that the teams are and tools that simplify balanced workload and a friendly, learning properly sized day-to-day work better care for patients environment
Slide 31: A major change at Group level that will soon bear fruit
PEOPLE A major change at Group level that will soon bear fruit Far-reaching change… …for quick operational improvements Group-level policies (including Health & Safety) Increased investment in and investments payroll and training Evolution of the HR organisation Stronger commitment Better care for a
Slide 32: Prof. Pierre Krolak-Salmon
Prof. Pierre Krolak-Salmon Group Executive Vice President, Medical
Slide 33: Patients, residents and their families
PATIENTS, RESIDENTS AND THEIR FAMILIES A company fully devoted to the health, care, and life plan of the most vulnerable With our PEOPLE, to give them the means to do their jobs well and safely With our PATIENTS, our RESIDENTS and their FAMILIES, to care for them even better and support their life p
Slide 34: Care and support is the heart of our work
PATIENTS, RESIDENTS AND THEIR FAMILIES Care and support for our patients and residents is the heart of our work, and our full company serves this mission Our people Our network of facilities & services Committed professional caregivers, offering An extensive network of outpatient & care at home comp
Slide 35: Three strong pillars for care and support policy
PATIENTS, RESIDENTS AND THEIR FAMILIES Our care and support policy for patients and residents is based on three strong pillars Ethics Steering Committee Facilities’ Medical Commissions Scientific Council Emmanuel Hirsch › Safety › Scientific literature › Drawing on questions from colleagues, › Quali
Slide 36: Caregivers need time and top-level skills
PATIENTS, RESIDENTS AND THEIR FAMILIES To keep our promise of quality, our caregivers need time and top-level skills/expertise They need to be confident about their They need TIME to provide care & support caregiving SKILLS and EXPERTISE We deliver through innovative We deliver through training prog
Slide 37: An organisation at the service of quality care
PATIENTS, RESIDENTS AND THEIR FAMILIES An organisation at the service of quality care for patients & residents Establish Quality Standards built Develop a benevolent, on medical/care, scientific Monitor & audit care non-stigmatising and learning and ethics criteria KPIs across the organisation quali
Slide 38: Playing our part fully in all aspects of care
PATIENTS, RESIDENTS AND THEIR FAMILIES Playing our part fully in all aspects of care Deliver excellence in accommodation and food, incl. CARE by ORPEA locally sourced & appetising meals Social link Offer activities related to each patient’s/resident’s history and personality Encourage patients/resid
Slide 39: Communicate more actively with patients, residents and families
PATIENTS, RESIDENTS AND THEIR FAMILIES Communicate even more actively between teams and with our patients/residents and their families Be transparent with Promote the facilities our clients to stay Guarantee information and Inform stakeholders of the in their respective aligned with their physical s
Slide 40: Personalise support to our patients and residents
PATIENTS, RESIDENTS AND THEIR FAMILIES Personalise support to our patients and residents Arrival Care journey Services For illustrative purposes A personalised welcome: By personalising the services we offer, Care Rehabilita- Care at Nursing › A plan defined with the patient, the at home tion clinic
Slide 41: A balanced medical-financial model
PATIENTS, RESIDENTS AND THEIR FAMILIES To provide the best possible care, we need a balanced medical-financial model Occupancy Ensure a high level of occupancy, aligned with pre-Covid levels and rate sustainable in the long run Offer Develop the most relevant and personalised offer to meet the needs
Slide 42: Laurent Guillot
Laurent Guillot Group CEO & France CEO
Slide 43: Positive economic & social impact
POSITIVE ECONOMIC & SOCIAL IMPACT A company fully devoted to the health, care, and life plan of the most vulnerable With our PEOPLE, to give them the means to do their jobs well and safely With our PATIENTS, our RESIDENTS and their FAMILIES, to care for them even better and support their life plan C
Slide 44: Building a sustainable company
POSITIVE ECONOMIC & SOCIAL IMPACT Building a sustainable company Continue to reduce our Rebuild an ethical Establish lasting roots energy consumption & organisation in local communities greenhouse gas emissions WITH YOU & FOR YOU ! CHANGING ORPEA 44
Slide 45: Rebuilding an ethical organisation
POSITIVE ECONOMIC & SOCIAL IMPACT We have already started to rebuild an ethical organisation, 1 involving all our employees Governance Prevention Whistleblowing ACCELERATION OF ANTI-CORRUPTION INCREASED VISIBILITY AND SIMPLIFIED DEEP RENEWAL OF THE BOARD OF TRAINING ACCESS TO THE INTERNAL REPORTING
Slide 46: GHG emission reduction and green building strategy
POSITIVE ECONOMIC & SOCIAL IMPACT A big first step in GHG emission reduction: 2 we are implementing now our long-term “green building” strategy Renewable energy produced locally at the facility level -16% -30% energy consumption Energy audits: 60% of facilities in France by by (kWh/m2 per year) alre
Slide 47: Establishing lasting roots in local communities
POSITIVE ECONOMIC & SOCIAL IMPACT We take our responsibility and establish lasting roots 3 in our facilities’ local communities Stronger ties with our local Integration communities in the care system Establishing ties with local healthcare Procuring fresh, local food from local practitioners supplie
Slide 48: Towards the mission-driven company status
POSITIVE ECONOMIC & SOCIAL IMPACT Our transformation, starting with the work on our Purpose and the Changing Orpea plan, will lead us towards the “mission-driven company” status Juillet Novembre 2022 2022 2023 2024 2025 CHANGING ORPEA PLAN FIRST ACTIONS: RENEWING CHANGING GOVERNANCE TO “REPAIR, ORGA
Slide 49: Transparent, high-performance model
TRANSPARENT, HIGH-PERFORMANCE MODEL A company fully devoted to the health, care, and life plan of the most vulnerable With our PEOPLE, to give them the means to do their jobs well and safely With our PATIENTS, our RESIDENTS and their FAMILIES, to care for them even better and support their life plan
Slide 50: Building a transparent, high-performance operational model
TRANSPARENT, HIGH-PERFORMANCE MODEL Building a transparent, high-performance operational model Put real estate back at the Share reliable, enhanced Reshape service of operations and Provide more effective and transparent external Group’s future review our asset support to our facilities reporting pe
Slide 51: Géry Robert-Ambroix
Géry Robert-Ambroix Group Executive Vice President, Real Estate
Slide 52: Put real estate back at the service of operations
TRANSPARENT, HIGH-PERFORMANCE MODEL Put real estate back at the service of operations and review the asset management 1 policy Real estate at its right place : Reviewing our asset ownership policy: an activity at the service of operations the “CAPEX RIGHT” strategy Target of 20% to 25% of owned real
Slide 53: A high-quality portfolio to implement Capex Right strategy
TRANSPARENT, HIGH-PERFORMANCE MODEL 1 A high-quality portfolio to implement the Capex Right strategy CURRENT PORTFOLIO 2022, # of facilities, top eight countries (excluding non-mature facilities) 41 Tier 1 123 15% 44% (catchment area demographics x local supply/demand x purchasing power) Priority fo
Slide 54: Demanding criteria for profitable and sustainable development
TRANSPARENT, HIGH-PERFORMANCE MODEL In the future, a demanding set of criteria to ensure profitable and sustainable 1 development Highly selective criteria for future developments Focus on activities and markets where we have a leading position Selective development with both: › Double-digit EBITDA
Slide 55: Laurent Lemaire
Laurent Lemaire Group Executive Vice President, Finance, Purchasing and IT
Slide 56: Provide more effective support to our facilities
TRANSPARENT, HIGH-PERFORMANCE MODEL Our priority: provide more effective support to our facilities better so that they can 2 focus on care Simplified finance High-performance IT Efficient purchasing & admin management Bring IT up to standard Top priority: ethical purchasing Simplify processes and re
Slide 57: Share reliable, enhanced and transparent external reporting
TRANSPARENT, HIGH-PERFORMANCE MODEL 3 Share reliable, enhanced and transparent external reporting 1 Support data production with reliable and robust internal processes and information systems 2 Gradually enrich reporting with non-financial KPIs (e.g. occupancy rates, safety, quality, patient/residen
Slide 58: Review ORPEA's future footprint by country
TRANSPARENT, HIGH-PERFORMANCE MODEL 4 Review ORPEA’s future footprint according to each country’s strategic value › A leadership position (in the private-sector segment) Refocus our › The ability to manage the safety and quality of operations (e.g. distance, geographical scope management quality, as
Slide 59: Focus on Germany
Dr. Erik Hamann CEO, Germany Focus on Germany
Slide 60: ORPEA operates in all segments in Germany as a premium player
ORPEA operates in all segments in Germany and is positioned as a premium player in a large market ORPEA Germany covers all lines ORPEA Germany of business In a large and deep market is a premium player Demand for nursing homes and clinics Selected nursing home figures # of ORPEA facilities (2022) (#
Slide 61: Clear objectives defined for each pillar of our plan
Clear objectives have been defined for each pillar of our plan, following stakeholder consultation and benchmarking against the market’s best practices Patients, residents Positive social Transparent, People and their families & economic impact high-performance model Improve recruitment and Offer pe
Slide 62: Taking care of our employees in Germany
PEOPLE Taking care of our employees: some of our proposed actions to make ORPEA attractive, ensure employee wellbeing and increase retention Our HR vision Our HR structure › 10,900 full-time employees Improve recruitment & retention › incl. 6,200 care staff › ≅620 care staff vacancies in 2022 Attrac
Slide 63: Going beyond traditional assisted living
PATIENTS, RESIDENTS AND THEIR FAMILIES Going beyond traditional assisted living with a range of quality, autonomous and flexible residences to meet residents’ appetite for flexibility Assisted living +: our residents’ needs Assisted living +: what we offer › Average age ≅80 years, vs. 85-90 in conve
Slide 64: Leading outpatient rehabilitation services
PATIENTS, RESIDENTS AND THEIR FAMILIES We are committed to meeting our patients’ need for leading outpatient rehabilitation services Outpatient clinics: salvea outpatient clinics: our patients’ needs what we offer › Decreasing need for hospitalization thanks to less invasive Our ambition: strengthen
Slide 65: Personalised solutions to residents
PATIENTS, RESIDENTS AND THEIR FAMILIES We offer personalised solutions to our residents, meeting their needs for comfort & quality of life while remaining accessible to all Standards Services Mix of standards in Germany COMFORT › High-end furniture and bathroom PREMIUM 100% Standard › Small built-in
Slide 66: Focus France
Laurent Guillot Group CEO & France CEO Focus France
Slide 67: France's transformation with you and for you
France’s transformation with you and for you French revenue breakdown by line of business (2021) Key country for ORPEA, with a great wealth of activities, expertise and committed employees Care at home Nursing homes Mental Health 2% (including clinics assisted living) Extensive local presence thanks
Slide 68: Employees' safety & wellbeing: a priority for France
Employees’ safety & wellbeing: a priority for France Pay attention to our employees’ Foster a culture of employee Use our know-how in Invest in equipment (ceiling rails, physical & psychological health safety (supervised by a Health & rehabilitation, prevention and electric beds) and training to and
Slide 69: Give autonomy to local teams
Give autonomy to local teams to fulfil their care mission A co-developed facility- Autonomy to carry out this KPIs to enable them to More autonomy for the level plan to unite the staff plan (recruitment, training, manage their work facility manager to lead and stakeholders (2023/ communication tools
Slide 70: Foster a close relationship with residents, patients and families
Foster a close relationship between our residents, patients, their families and our organisation at all levels Launch an annual approach, in the spirit Offer residents, patients and their families of the “États Généraux”, for all our activities a role as partners More than 2,000 participants (employ
Slide 71: Continuously improve quality of care and ethics
Spare no effort to continuously improve the quality of our care and bring our ethical principles to life Medical & Ethics Quality and safety control Promote gateways between activities locally and exchanges of know-how (e.g. depression of the elderly) Separate and weight transparent KPIs, balancing
Slide 72: Optimise catering quality
Optimise catering quality, a major element of the offering in our plan A promise to our patients, residents and their guests Resources for our catering teams › A multidisciplinary nutrition and catering › Nutritional values reviewed by committee, also sharing good practices specialised teams › Train
Slide 73: Financial performance
Laurent Lemaire Group Executive Vice President Finance, Purchasing and IT Financial performance
Slide 74: 2022-2025: +9% annual revenue growth and EBITDAR margin
2022-2025: +9% annual revenue growth / +340bps of EBITDAR margin CAGR 2022 20251 22-25 REVENUES €4,688m €6,102m +9% 2022-2025 DYNAMICS (€m) EBITDAR €797m €1,246m +16% › c.75% of the increase in the Group's EBITDAR margin (% revenues) (17.0%) (20.4%) rate comes from improvements in France Pre-IFRS 16
Slide 75: EBITDAR margin target of 20% in 2025
EBITDAR margin target of 20% in 2025 (up c.€450m from 2022 to 2025), driven mainly by the initiatives of the Changing ORPEA plan A Post-Covid: › Impact of Covid subsidies +449m€ termination +[170-180] 1,246 m€ +[250-280] B Net inflation effect between pricing policy and cost inflation 797 m€ +[60-70
Slide 76: Value creation from Changing ORPEA initiatives
C Value creation from Changing ORPEA initiatives: +€280 to +€310m from 2022 EBITDAR Levers BP impact on EBITDAR 22-25 Key initiatives › Reopening of beds thanks to the hiring of additional caregivers People €60 – 65m › Permanent contracts offered to temporary staff Recovery of occupancy rates to pre
Slide 77: A very sharp drop in Capex
A very sharp drop in Capex driven by the end of the Greenfield programmes Group investment plan (€m, 2022-2025, excluding M&A Capex) 2,530m€ Renovation 532 & extensions €928m 121 Development €776m CAPEX 1› Important drop in Greenfields 167 €1.6bn (building of new facilities) Capex 1 1,065 Greenfield
Slide 78: Strong improvement in cash-flow generation
Strong improvement in cash-flow generation Gap €m 2022 2023 2024 2025 2025-2022 Operating cash 59 132 295 471 +412 flow1 Development -705 -544 -216 -132 +573 Capex Net total -646 -412 79 339 +985 Note: 1) Pre-IFRS 16 EBITDA - change in WCR - maintenance & IT CAPEX - tax WITH YOU & FOR YOU ! CHANGING
Slide 79: Why the June 2022 plan cannot be implemented as planned
Why the June 2022 plan cannot be implemented as planned 1 › A binding commitment on real estate disposals of at least €2bn over 2022-2025 (including €1bn in 2023) The plan relied heavily on massive › In its internal business plan, ORPEA planned real estate disposals reaching €3bn over the period 202
Slide 80: ORPEA needs to take immediate action
ORPEA needs to take immediate action New financial resources › In the absence of significant property disposals, the company's liquidity level could be (“new money”) are New money is needed under severe pressure by February 2023 mandatory The levels of the debt › Uncertainty regarding debt covenant
Slide 81: Proposed solution
Proposed solution Issue Suggested solutions Mechanism Benefits for ORPEA 1 Excessive financial leverage Reduced financial leverage › Equity conversion of ORPEA SA unsecured debt › Capital increase in cash › A sustainable financial structure › A strengthening of the equity capital › €800m of new secu
Slide 82: Conclusion
Laurent Guillot Group CEO & France CEO Conclusion
Slide 83: Changing our method, organisation and approach
Changing our method Ethics, collaborative approach involving all stakeholders, symmetry of attention between staff and patients/residents, transparent & efficient operational model Changing our organisation Independence of the facilities, new role for support functions, an EVP Medical sitting on the
Slide 84: Next steps
Next steps Live our values Continue the immediate and claim our purpose actions already initiated Build our Restore our financial refoundation plan strength WITH YOU & FOR YOU ! CHANGING ORPEA 84
Slide 85: Q&A session
Q&A session WITH YOU & FOR YOU ! CHANGING ORPEA
Slide 86: Thank you
Thank you WITH YOU & FOR YOU ! CHANGING ORPEA