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Emeis SA: Strategic Divestments and Operational Turnaround Fuel Growth

Isaac LaneMonday, May 12, 2025 2:00 am ET

2min read

Emeis SA, a leading European provider of elderly and disabled care services, has entered 2025 with renewed momentum, driven by strong sales growth, improved occupancy rates, and progress toward its ambitious divestment targets. The company’s Q1 2025 results underscore its strategic shift toward an asset-light model while capitalizing on rising demand for long-term care. Below, we dissect the key drivers of its performance and assess its investment potential.

Sales Growth and Operational Turnaround

Emeis reported total sales of €1.445 billion for Q1 2025, a 5.2% year-on-year increase, with organic sales rising 6.2% after adjusting for currency effects and divestitures. This growth reflects a recovery from pandemic-era challenges, with three key factors propelling results:

Price Increases: A +3.7% contribution from higher pricing in markets like Germany, Belgium, and Austria.
Occupancy Gains: A +2-point rise in average occupancy rates to 87%, contributing +1.8% to organic growth.
New Facilities: Recently opened sites added +0.8%, offsetting a -0.9% drag from calendar adjustments.

Regional Performance: Strength in Diversity

Emeis’ geographic diversification has been a key advantage, with strong growth across all major regions:

France (42% of sales): Nursing homes grew +3.6% organically, benefiting from price hikes and a +1.6-point occupancy rise to 83.5%. Clinics, however, declined -2.7% due to reduced hospitalization days.
Northern Europe (29% of sales): Led by Germany and the Netherlands, sales surged +11.4%, with occupancy up +3 points to 85.3%.
Central Europe (17% of sales): Achieved +9.5% organic growth, with occupancy near pre-pandemic levels at 91.6%.
Southern Europe & LatAm (8% of sales): Grew +10.3%, driven by mature facilities in Spain and Brazil, which hit 91.9% occupancy.

Divestments: Progress Toward Debt Reduction

Emeis is aggressively divesting non-core assets to reduce its net debt of €4.7 billion (as of December 2024). By April 2025, it had secured over €1 billion in disposals, including the €171 million Czech Republic sale, moving it closer to its €1.5 billion 2025 target. Over €2 billion in potential deals are in advanced discussions, signaling strong investor appetite for healthcare real estate.

The Road Ahead: EBITDAR Growth and Structural Demand

Emeis forecasts a 15–18% rise in EBITDAR (earnings before interest, taxes, depreciation, amortization, and rent) in 2025, underpinned by its occupancy rebound and pricing power. The company is also positioned to benefit from secular tailwinds:
- Europe’s over-75 population is projected to grow >30% by 2030, exacerbating a shortage of nursing home beds (estimated deficit of 550,000 by 2030).
- Chronic illness rates are rising, driving demand for mental health and rehabilitation services.

Risks and Challenges

French Clinics: Their -2.7% organic decline underscores reliance on hospital referrals, which remain volatile.
Regulatory Risks: Pending approvals for divestments, such as the €589 million in real estate deals, could delay cash realization.
Labor Costs: Staff shortages in elder care remain a global challenge, though Emeis’ 83,500-strong workforce offers some stability.

Conclusion: A Strong Position for Long-Term Investors

Emeis SA’s Q1 results demonstrate execution strength in both operations and strategy. With occupancy rates up 4 points since 2023 and divestments on track, the company is well-positioned to reduce debt while maintaining growth. Its diversified geographic footprint and focus on high-margin markets like Germany and the Netherlands further bolster its resilience.

Investors should note that while near-term risks exist (e.g., clinic performance in France), the long-term demand for elder care is undeniable. Emeis’ stock, trading at €12.35 (as of May 2025) with a market cap of €1.99 billion, appears attractively valued given its €3.04 billion trailing-12-month EBITDA and improving balance sheet.

For those willing to look past near-term volatility, Emeis offers a compelling play on a structural demographic trend—one that’s only set to grow.

Data sources: Emeis SA Q1 2025 results presentation, company financial filings, and analyst estimates.

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