Investing in Humana is an investment in a sustainable provider in the growing Nordic care market. Humana has a strong market position and a clear strategy for achieving its goal of being the obvious provider of care services for customers, clients and contractors in the Nordic countries who demand high quality. Humana adds social and economic value to society.
Strong underlying trends in the world at large increase the need for care
Several underlying external factors are increasing the need for care and they are expected to continue to increase along with the need for high-quality, innovative, cost-effective care services. They include, among other things, an aging population, increasing mental illness, old property holdings and increased demand for quality, specialisation and individual adaptation. At the same time, this development is leading to increased economic pressure on states and municipalities, which in turn further reinforces the need for cost-effective care services.
The care market in the Nordics is huge and is growing
The care market in the Nordic countries is estimated to be worth approximately SEK 640 billion. That is the amount that national, regional and local governments spend on care in Sweden, Norway, Finland and Denmark. In this market, the private providers today provide care services worth approximately SEK 150 billion. The market has been marked by solid growth for many years. The private sector of the care market is fragmented with thousands of companies. However, the sector has been consolidating for several years and is likely to continue to do so.
Eight reasons to invest in Humana
Care services – a stable and growing marketThe market. The care market in the Nordics amounts to SEK 640 billion, of which the private segment represents about one-fourth. The need for care is enormous and the care market, which has grown by 3–4 percent annually in recent years, is expected to continue to grow. An aging population, increasing mental illness and old properties are important drivers.
Non-cyclic operations. The care market is less affected by business cycles.
Humana is a quality care provider in the NordicsVision and objective. Humana’s vision is that everyone, regardless of circumstances, is entitled to a good life. We want to be the obvious provider of care services in the Nordics for customers, clients and contractors with high quality standards – and we already are for 9,000 customers and clients. Quality that can be measured. Both our own studies and external studies show that Humana delivers high quality care in all of our active areas.
Humana makes sustainable welfare possibleA sustainable strategy. Humana’s vision and goal is about sustainability at the individual level in our society, as well as economic sustainability for society. It is more cost-effective for states and municipalities to purchase care services from Humana than it is to provide the care themselves. In 2019, they saved SEK 1.1 billion by engaging Humana. Sustainability is therefore fully central to our strategy and our strategic goals and values.
Market-leading position in important care segmentsMarket position. Humana has a strong market position and is a leader in crucial care segments such as personal assistance and individual and family care and is growing in elderly care.
Entry barriers. Complex care services with a high degree of specialisation, permit requirements and investment needs create high barriers to entry.
Consolidation. The ongoing consolidation of the care market creates opportunities for Humana.
Humana wants to grow and help more people have a good lifeGrowth-oriented. Humana is a growth-oriented company. We are proud of our business and the care we offer. Growing means that we help more people have a good life. In 2019 customers/clients increased by 1,047. Growing organically and through acquisitions. Humana is growing by building new elderly care homes, housing with special service and health and social care homes. We also grow through selective acquisitions.
Humana has shown stable growth and profitabilityStable results. Humana has a history of stable growth and stable margins over the years. For the past five years, Humana has had annual average revenue growth of 7.2 percent and an annual average operating margin of 5.2 percent.
Good cash conversion reduces riskCash flow. Humana’s revenues come primarily from national and local governments. They pay on time and are creditworthy. Increasing revenues and stable profitability contribute to good cash flow generation, which can be invested in growth initiatives. Over the last three years Humana’s cash flow generation, that is the operative cash flow divided by the EBITDA, has varied between 49 and 85 percent.
- Attractive financial targets
Financial targets. Humana will create good value for its shareholders. The financial targets were revised for 2020: Humana will be profitable (operating margin of 7 percent), continue to grow, primarily organically (5 percent) but to some extent also through acquisitions (can add another 2–3 percent) and have a good capital structure (net debt not exceeding a factor of 4.5 times EBITDA).
Dividend policy. Dividends may amount to 30 percent of net profit for the year. Over the last three years it has been 15, 16 and, 2019 (Board of Directors’ proposal), linked to the Covid-19 pandemic, 0 percent respectively