Care home group Orpea sees annual profit at lower end of guidance

(Reuters) -French care home group Orpea on Wednesday said it expects its annual core profit to come in at the lower end of a range announced in July, citing an increase in costs that has not been fully offset by price rises.

"We have an inflationary environment that continues to impact us, both in terms of staff costs and all other expenses," the company said in a call with journalists.

The group said it had limited capacity to lift tariffs to offset cost increases, saying a highly regulated environment both in France and internationally had left it little room for manoeuvre.

The company in July cut guidance for its earnings before interest, tax, depreciation, amortisation and rent costs (EBITDAR) to 705 million to 750 million euros ($747.6 million-$795.3 million).

Orpea posted EBITDAR of 336 million euros in the first half of 2023, down from 427 million euros a year earlier.

Its occupancy rate increased overall over the period, except at nursing homes in its main market France, where it is still impacted by reputational concerns, the company said.

The group has been in turmoil since the start of 2022, when allegations of mistreatment in its French care homes sent shockwaves through the nation. In July, it won court approval for an accelerated safeguard plan to restructure its debt.

Orpea said it expected a ruling in the first half of November on a shareholder appeal against French markets watchdog AMF's decision that a consortium led by Caisse des Depots (CDC) could take control of the group without having to file a takeover bid.

($1 = 0.9430 euros)

(Reporting by Diana Mandiá and Federica Mileo; Editing by Kirsten Donovan and Jan Harvey)