Profits of a group of private nursing homes in free fall

Post-scandal financial fallout: Orpea, a private nursing home group in turmoil after the release of an investigative book in January, signed an agreement with its banks to secure its funding in uncertain circumstances after falling nearly 60%. its annual net income.

The agreement is part of an “amicable conciliation” to avert hardships open before the Nanterre Commercial Court, the group said in a press release on Friday.

Loan 1.73 billion

This “is in line with the current context of uncertainty weighing on Orpea, as well as the shutdown of financial markets and the slowdown of the originally envisaged asset divestment program,” explained the group, which is present in 23 countries and operates more than 350 institutions for dependent older people. man in France.

It provides for a loan of 1.73 billion euros, the implementation of an asset disposal plan for more than 3 billion euros by the end of 2025 and an additional loan for a maximum amount of 1.5 billion euros.

“We are learning from this crisis”

“I am determined to ensure that we learn all the lessons from this crisis in order to restore the trust that our stakeholders have always placed in us, wherever the group has been established,” commented Philippe Charrier, CEO of Orpea, quoted in the post.

This year, Orpea expects “exceptional spending related to managing the crisis and its aftermath.” He also expects its profitability to be affected by rising inflation, which is affecting “energy costs and wages in some countries.”

Turnover increased

The group says it is “confident in the growth dynamics” of its turnover in 2022, but has not released any numerical projections. It will not pay dividends for the financial year 2021. In the first quarter, turnover increased by 9% to 1.12 billion euros.

Last year, its net income fell by 59.3% compared to 2020 to 65.2 million euros, in particular due to a reserve of 83 million euros “for risks and fees associated with assumed risks for 2017-2021 years after administrative investigations. the group was on point.

Abuse allegations

And in 2020, its net income has already fallen by almost a third, because the health crisis has reduced its activity and increased operating expenses. However, in 2021, the group’s gross operating profit (Ebitda) increased by 11% to €1.07 billion on a turnover of €4.3 billion, up 9.6%.

The band came under heavy criticism from critics following the publication of Victor Castanet’s investigative book Les Fossoyeurs in late January. The independent journalist condemned, in particular, the mistreatment of residents and the misuse of public funds. A government-commissioned report in early April pointed to serious violations. The state filed a complaint and demanded the restitution of state subsidies allegedly misused.

Dysfunction within the group

Since the end of April, the group has been the subject of a judicial investigation opened in Nanterre on suspicion of institutional mistreatment or financial crimes. Commissioned by Orpea, an interim report by independent firms Grant Thornton and Alvarez & Marsal also noted dysfunction within the group.

“Many corrective measures have already been taken,” said Philippe Charrier. Orpea, which announced last week the appointment of a new CEO, intends to implement “a plan of major transformation, primarily launched in France”, aimed, in part, to improve “the quality of support and the well-being of residents.” as well as its personnel policy. In the early hours of the morning on the Paris Stock Exchange, Orpea’s title fell 4.70% to 32.23 euros in a rising market. It has lost more than 60% of its value since the beginning of the year, posting the worst drop in the SBF 120 index.