Shares in troubled nursing home group Orpea jump on update

Shares in scandal-hit French care homes group Orpea, which is Ireland’s largest provider of nursing home beds, surged on Monday after the company posted a nearly 8 per cent rise in fourth-quarter revenue and spelled out the details of a planned capital increase.

Orpea said revenue growth remained solid with an increase of 7.7 per cent of which 5.7 per cent was organic, adding that its cash position at the end of last year was estimated at €856 million, above the €350 million forecast the company had made in November.

It said the improved cash position was mainly due to extended credit lines and a suspension of loan repayments granted by creditors last year.

Its shares jumped 16 per cent on the Paris stock market on Monday, to trade at €4.23.

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Full-year revenue in 2022 rose 8.9 per cent to €4.681 billion, in line with financial data presented in November, the company added. The company also said the risk of a liquidity shortfall was now postponed until the end of the second quarter.

Earlier this month, Orpea announced it would cut its debt by about €3.8 billion and receive a cash equity injection of €1.55 billion under a deal reached with state financial institution Caisse des Depots & Consignations and other investors

The company on Monday said that a planned capital increase amid a wider restructuring process would reflect a theoretical share price value of less than €0.20, significantly lower than its current valuation.

A first capital increase would reflect a theoretical issue price at approximately €0.59 per share, followed by two additional tranches which would translate into individual share values of €0.18 and €0.13 respectively, Orpea said.

Orpea’s shares slumped by 93 per cent in 2022 after a book highlighted potential malpractice at its care homes.

French police carried out raids on Orpea care homes last November, while an independent audit found evidence of financial wrongdoing. Orpea has said it has taken steps to improve its business practices.

Orpea is a global player in the long-term care market, operating 104,234 beds in 1,014 care homes across 22 countries, of which 20,932 beds are under construction.

In Ireland, the company has acquired a number of nursing home groups. Its 2021 acquisition of the FirstCare portfolio of six nursing homes, with 552 beds, from businessman Mervyn Smith in a deal understood to be worth more than €100 million, made it the largest private player in the sector in the State.

All told, Orpea has 1,961 beds in a fast-consolidating sector in Ireland that has attracted a flood of European institutional investment in recent years. – Reuters