Specialist
Executive at Maisons de Famille
Agenda
- French care homes market update – occupancy rates, quality requirements and reimbursement dynamics following Orpea (PAR: ORP) scandal
- Orpea’s performance, noting possible rebranding and facility closures
- Competitive analysis vs players such as Korian (PAR: KORI) and DomusVi, plus market share trends following Orpea scandal
- Refoundation plan, discussing feasibility and 2-3-year cash flow and profitability outlook
Questions
1.
We saw the scandal coming out of Orpea in 2021. The company has now issued a refoundation plan. Do you think a recovery to pre-coronavirus occupancy rates is feasible despite the damage to the company’s image in the past year?
2.
How should we think about 2023 demand in the French cares home market?
3.
You said French care home capacity is fixed, but demand is growing due to more elderly people facing issues with autonomy. How should we reconcile those dynamics? How could market capacity translate into occupancy rates for providers? Could we see even higher occupancy rates than pre-coronavirus?
4.
Specialists in previous Interviews have said the authorities may threaten to close some Orpea facilities due to their low occupancy rates [see DomusVi – Company Performance & French Care Homes Update – 2 September 2022]. Could this be an issue for the company in 2023?
5.
In its refoundation plan, Orpea mentioned part of the EBITDA growth coming from restructuring human resources or planning to bring temporary staff in-house. This will make it possible to re-open beds that are currently closed due to lack of staff. How feasible is this given the structural lack of staff in the market?
6.
As we discussed, higher occupancy rates will need more staff. How do you assess Orpea’s ability to attract new staff considering the scandal? Have we seen a substantial portion of staff moving to competitors from Orpea due to the company’s reputation?
7.
What will Orpea do to offset its bad reputation in the market? Could it change names or rebrand?
8.
Orpea says it needs to spend roughly EUR 400m in IT CAPEX to implement the plan. Is this enough to catch up with competitors? Could it provide a competitive advantage for Orpea?
9.
Orpea says it will focus on key geographies and review its investment in others. What could this mean for the company? In what ways could it divest from some countries?
10.
Do you think the overall plan is executable for Orpea?
11.
You said Orpea will “probably” be able to execute the plan. What will happen in the French market if the company can’t execute it? How could the government react given the market is closed, the prevalence of Orpea’s facilities within it and the higher number of elderly people YoY?
12.
Do you think Orpea’s market share has changed due to the scandal given it still has roughly the same number of locations?
13.
How have players such as Korian and DomusVie been operating considering Orpea’s scandal and what happened in the market? How have they been impacted? What impacts could we still see in 2023?
14.
How should we think about Orpea’s future profitability, especially in 2023?
15.
How do you think Orpea will be able to offset the profitability pressures you discussed? From my understanding, all players in the market are subject to these headwinds.
16.
Can Orpea become more profitable, or profitable at all, in the foreseeable future? What could the headwinds we’ve been discussing mean for the company in the next 3-5 years?
17.
I assume Orpea will need a lot of cash pumped in to keep the business running and to surpass and restructure everything. How easily can the company achieve this? Could the French government step in to help the company?
18.
What major KPIs should we look at in the next 2-3 years considering Orpea’s very ambitious refoundation plan to 2025?
