Dedicare AB (DEDI:STO), a staffing firm focused on healthcare, life sciences and social work, reported yesterday for the first quarter of SEK 430.2 million (€36.8 million), down 14.5% over the previous year.

Dedicare CEO Krister Widström said it was a challenging start on all Nordic markets in 2024, and the first quarter of the year was weak in revenue and profitability terms, exacerbated by an exceptionally strong comparative quarter.

“This challenging start to the year has several causes and is fundamentally about limits on contracted staff and an altered competitive situation with more market participants, the related margin pressure, and us no longer having pandemic-related demand,” Widström said.

On the Norwegian market, profitability was limited by price pressure and increased salaries due to intensified competition. Denmark also experienced a tough quarter, impacted by contracting limits. On the other hand, the UK progressed well, Widström noted. “We’re taking a number of actions to address current challenges,” he said.

The group also announced that it has adjusted its segment reporting. From the first quarter 2024, the segments are Sweden, Norway, Denmark, UK (previously called New Markets) and Group-wide.

The reason for this alteration of segment reporting is that Dedicare has amended its business model from the parent company previously being operational to now provide support functions for other group companies and deal with shareholder-related matters. This is part of the group’s growth strategy, and thus centralised in group-wide functions to streamline the group’s administration. The group recalculated the comparative period in Q1 2023.

Revenue by segment

In Sweden, continued limits on contracting staff resulted in net sales for the quarter decreasing by 32.2% on a very robust comparative quarter to SEK 94.1 million (€8.0 million). The transition to the new nationwide agreement for Sweden’s regions caused extra hesitancy on the market at the beginning of the year. This deal came into effect in January 2024, and the regions are joining it progressively. Most of the regions will have joined during the second quarter.

In Norway, competition from new Nordic players became tangible in the first quarter, mainly in doctor staffing. Last fall’s new deal for nurse staffing for all Norway’s hospitals triggered record-high demand for nurses in this operation. The corresponding tender for hospital doctor staffing is ongoing and scheduled for completion in the second quarter of this year. The preschool operation, Acapedia, continued its high growth in the quarter.

In Denmark, net sales for the quarter fell by 17.3%. The downturn relates to the limits on nurses on long-term contract introduced spring 2023.

In the UK, net sales for the quarter were SEK 12.4 million (€1.0 million), a 25.2% increase. The group said this was another eventful quarter for the UK operation, when demand for doctor staffing and recruitment services progressed positively.

Earlier this month, Dedicare announced it appointed Anna-Lena Mann as CEO of Dedicare Life Sciences in Norway.

Dedicare also announced an update to its 2024 financial target. The group has had a financial profitability target of its EBIT margin exceeding 7.0%. Its Board of Directors has decided to change its profitability target to an EBITA margin of 7.0% over time.

Dedicare’s strategy is acquisition-led growth. The reason for this change is to enable the monitoring of profitability performance without the effect of acquisition-related assets, it stated. The transfer to an EBITA-based metric is also consistent with how other major staffing and consulting firms monitor their profitability targets, so it increases comparability with other companies on the European market.

“Although we’re currently experiencing increased demand ahead of the summer half-year, it’s clear the market is more hesitant than previously, and the challenges we saw at the beginning of the year are also following us into the second. We’re streamlining our organisation, while also putting energy into improving customer loyalty and our attractions as an employer, while our work on expanding and internationalising our business continues,” Widström said.

Over time, Dedicare’s objective is to grow by at least 10% yearly. Its growth goal includes further acquisitions.

Dedicare shares set a new 52-week low during today's trading session when it reached SEK 60.50 (€5.19). Over this period, the share price is down 57.79%. the company shares last traded at SEK 61.20 (€5.25), down 2.86% on the day. The company has a market cap of SEK 524.78 million (€44.97 million).