Humana AB
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STO:HUM
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Good morning, and welcome to the Humana Q3 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the conference over to Ewelina Pettersson. Please go ahead.
Thank you. Good morning, and welcome to the third quarter presentation from Humana. My name is Ewelina Pettersson, and I'm the Head of IR. With me today, I have Johanna Rastad, CEO. Today, Johanna will start by walking us through the highlights of the developments in the quarter. And then at the end, we will open up for questions.
Over to you, Johanna.
Thank you, Ewelina, and good morning, all. Let's move to the first page which summarizes the key aspects of this quarter. Overall, I am very pleased to see that we have improvements in several areas coming from tough beginning of the year. We grew at the highest speed in about 3 years, both on an overall level as well as organically. Operating profit is not excelling in the quarter, but sequentially improving. Supported by seasonality effects, the third quarter tends to be financially relatively stronger. That said, it is pleasing to see that we are closing in on our financial targets.
With the majority of our turnover residing in Sweden, outcome of the Swedish election was important to us. With the new government in place, we are cautiously optimistic when we see the topics such as freedom of choice, quality and price competition and social innovation, attract attention, as those are also important to us. By increase -- the [ increase ] certainly by authorities continues to be present, and here, we welcome audits that lead to higher quality, and we are confident that we have well-established procedures for systematic quality assurance, and are working effectively to continuously improve day by day.
We see some improvements in the staffing situation, although shortage clearly remains across several areas of our group. There is a significant impact on inflation, something we expect to continue. In the quarter, we revisited our strategy and made clear priorities on how to reach our targets. We believe in doing fewer things and do those well.
Finally, as a private care provider, we need to contribute to social sustainability. And at Humana, we do so by enabling freedom of choice, price and quality competition as well as social innovation.
To drive the industry forward, we're proud to present social outcome measurements where we focus on results of our care rather than activity, hence, taking one step in the direction of value-based care services.
Next page, please, and a quick overview of the current portfolio. In the quarter, the Swedish business areas continue to be dominating in terms of revenue, representing 3/4 of both total revenue and operating profit. Personal Assistance holds about 40% of revenues and 30% of operating profit. And although second by revenue, Individual & Family contributed about 40% of total profitability in the quarter, Norway and Finland together summing up to 1/4 revenues and operating profits.
Next page, please. Here we illustrate our mid-term financial targets which remain the same post revision of our strategy. Gladly, organic growth reaches 4%, high from a historical point of view and getting closer to the yearly target of 5%. This is primarily a result of high start-up pace over the recent quarters, improving underlying occupancy, and to some degree, our ability to lift prices in some segments.
Profitability continues to leave more to wish for, but is also here clearly better than in the nearest quarters. We reached an operating profit of SEK 171 million, corresponding to a margin of 7.2% above target levels. Adjusted for costs related to adaptation of central functions, operating profit reached SEK 175 million or 7.4%. That said, starting new units and acquiring at a high pace, while having low profitability in the last 3 quarters. That has led to leverage remaining higher than targets. This will be mitigated over time as we lay the low-performing quarters behind and focus more on developing our existing business.
Next page, please. A quick overview of the actual EBIT bridge quarter-on-quarter, a negative deviation of about SEK 20 million versus last year, driven by Personal Assistance and Norway, 2 business areas with strong performance last year. On a positive note, Individual & Family performed well, beating last year with SEK 8 million and reaching margins in line with last year. Also, Elderly Care contributes positively year-on-year.
Key drivers of our performance are, of course, the acquisitions made over the last period, improved ramp-up pace and an overall improving utilization in Elderly Care and Individual & Family. Higher costs due to the shortage of personnel and high sick leave, the few assistance hours, inflation and central costs way down.
Next page, please. Turning to the respective business areas. First off, Personal Assistance. In this business area, we reached sales of SEK 912 million, corresponding to historically high total growth of 19%, driven by the acquisition of Assistans for Dig made in June, where integration is going according to plan. Although totally, the acquisition pulls down margins somewhat.
Organic contribution was negative with minus 1.4%, and the salary revision from 1st of July and a general salary drift following shortage of staff, continue to challenge the business area as well as increased cost for assistance, leading to a margin of 5.9%. Activities to [ meet ] challenges include staffing initiatives and continued focus on staying close to our clients, and, of course, further efficiency improvements.
Next page, please. This quarter, Individual & Family finally closed the performance gap growing at 12%, reaching revenues of SEK 616 million. Organic growth reached historical highs at 6% in the quarter, driven by high stable occupancy in adults, good occupancy in young, and initiatives on price increases given effect. We have, over a long period, built capacity to welcome complex clients into our care, and are now prudent to better adapt pricing, and to some degree, cost to it.
Operating profit reached SEK 78 million, which in actual terms is the highest operating profit ever in Individual & Family, up SEK 8 million from last year. Margins are in line with the previous year of close to 13%. Staff shortage remains a challenge, so also increased inflation pressure, but is well managed in the quarter. To sum up, Individual & Family grows profitably, reaching historically high organic growth and solid margins in the quarter.
Next page, please. Elderly Care continues to grow organically post the openings of the 5 new ambulatory care units last year. Utilization in the new units is clearly improving due to the tireless work by our colleagues. Although the third quarter tends to be seasonally strong, organic growth reached 20% and actual operating profit reached at the highest level in 3 years, which is very pleasing.
Margins still leave room for improvement, reaching 4.1% in the quarter. With some help on seasonality effects, the positive development is mainly due to increased occupancy following the dedicated change activity starting in the spring, but also an ability to manage shortage of staff.
Next page, please, and over to Finland. Staff challenges continue in Finland, and sick leave remains higher than historical average. Growth, however, continues following the acquisitions made previous years, reaching 19%. We reached 4% organic growth due to the shift towards more specialized care within Child and Youth. Margins are relatively strong due to seasonality, but also successful streamlining of admin costs. Our continued performance will definitely rely on our ability to get the right staff with the right competence into our daily operations.
Next page, please. In 2021, most went in our favor in Norway. This way, we have had some challenges in division, Child and Youth, and also built up admin capacity to cater to the high organic growth achieved recently. In the third quarter of this year, we continued to have stable and high demand with increased number of clients in all segments apart from Child and Youth, and a total growth of 15% and organic contribution of 6%.
In Norway, we have political headwinds, while at the same time, our colleagues are working hard to provide good care to vulnerable people and complex clients. We try to meet the headwinds by being better at describing the results of our care and the contribution we provide to society. Profitability in the quarter is lower than previous years, mainly due to less contribution from Child and Youth, while the other segments are performing well.
Next page, please. Cash flow for the quarter amounted to minus SEK 75 million, where cash flow from operating activities was SEK 65 million. The lower cash flow from operating activities is mainly due to lower profitability and working capital tied up in connection to recently made acquisitions. Cash flow from investing activities amounted to minus SEK 45 million in the quarter, and was due to investments in new units. Cash flow from financing activities amounted to minus SEK 95 million in the quarter, mainly due to repayment of lease liabilities.
Next page, please. Looking ahead, we have a new government in place in Sweden, parliamentary elections coming up in Finland during the spring, and an ongoing debate on private care providers' contribution, or noncontribution for that matter, in Norway.
In this environment, we need to be clear about what we bring to society. Humana's contribution to society rests on 4 elements: Freedom of choice. The Nordic citizens want to be able to choose care provider. And for that to be a reality, alternatives to public and nonpublic care need to be safeguarded. We need different providers to properly enable quality and price competition and drive standardization within care methodology.
Efficiency and price competition is absolutely key for society to be able to meet the challenges we see. Less resources, combined with increased need for care, presents an evident challenge and drive the need for innovative solutions so we don't need to run faster all the time, but rather smarter. Quality within care is not only about volume and activity, it's about results.
This industry needs to take large steps towards understanding which treatment or care models that work the best for a certain client profile, and roll that out to standardized care. This is important if we want the quality within care and improve access to the right care. At Humana, we contribute by -- to a larger degree working with results or output measurements. This is one way to drive the final element, which is social innovation.
Now we take a step forward in the area of quality competition by presenting 4 outcome measurements.
Next page, please. The first outcome measurements come from Individual & Family, which is a business area that has measured and followed up care results over several years. This really sets the foundation for clients across the Nordics to get the treatment that has the chance of providing the best results, beneficial for the individuals, the employees around the client, and society as a whole.
The 4 measurements picture on the right-hand side relate to the Child and Youth segment as well as family and open care, and we continue to measure and follow the Humana Quality Index with a dedicated focus on serious repeated deviations, only with good structures and processes in place. As represented by the Humana Quality Index, care results can be achieved over time.
Next page, please. Now looking ahead, our priority is much related to balancing the continued challenges we see in our market, secured that we have sufficient staff and the right competence to meet demand, profitability. Given inflation pressure, we will need to continue lifting our prices and manage costs well. You have seen the first outcome measurements, and we will continue to develop and present those with the absolute goals to make social impact [indiscernible].
And finally, I want to direct the special thanks to all our colleagues at Humana, making positive impact every day. And with that, we open up for questions.
[Operator Instructions] The first question comes from Kristofer Liljeberg from Carnegie.
4 questions. So first one is how sustainable do you think this improvement in the Swedish Individual & Family is? Then in Personal Assistance, was less positive. But could you explain a little bit more what's happening with margins there? You talked about the acquired business having a diluted effect. I don't know if that's possible to be more precise how big that was. And also, the wage drift you're talking about previously, I think you have been very good at handling that. So that would need some more clarification, I think.
Then on the Swedish Elderly Care business, if you could just comment on the occupancy levels now in the new managed nursing homes that was opened last year? And finally, if you could give some more explanation for the tied-up working capital in the quarter. If I heard you correctly, you commented that it was related to acquisition, but I don't know if that was correct.
So the sustainable -- I'll start with the first question, sustainability within Individual & Family. I mean, Individual & Family has an intrinsic volatility in it, of course. And in this quarter, we managed to keep a high and stable overall occupancy. So totally, occupancy levels are relatively high. At the same time, the occupancy in -- so the margin contributing area of the other division is very high in the quarter. So mainly in the beginning of the -- for the first 2 months. So sustainability on profitability will rely in our ability to keep the occupancy levels at these rates.
And have you seen continued stability in occupancy so far in the fourth quarter?
Yes, relatively stable occupancy so far. What is pleasing to see is that the Young division has managed to recover from the incidence of last year and the closures. So they are now back on track. And I would say they have a seasonality effect in the summer, and is now picking up again. So we are cautiously optimistic, even though, of course, Individual & Family in this quarter managed to balance the inflation effects, which is sort of significant in the area, which might be something that affects us going forward.
And I should also say, Individual and Family is not sheltered from the challenges in finding the right staff and sufficient staff. So finding the right stuff is crucial for us to be able to maintain the occupancy levels that we have had over this period.
Then your second question in terms of Personal Assistance and the margins, I mean, it is a fairly challenging situation for Personal Assistance. The recently made acquisition -- you asked about the margin there. It's not a major impact, but it's relatively more volume, of course, and they're not contributing at the levels -- they're not at the levels that we have in our underlying business. It is a challenging situation, of course, with Personal Assistance, not the least with the new -- the information that came yesterday about the yearly price increase. That will land at 1.5%. That's in line with previous years, but it will absolutely detrimental for us, the salary discussions that will take place towards the spring.
I should also comment on sort of -- on the wage levels. There are 2 components there. One is, of course, the salary increase from 1st of July in this quarter. That will continue, of course. And then it's an average salary drift that we can see as a consequence of us not having -- finding staff. So that sometimes means that we have to fill up with everything that we can -- all the resources we can find. And naturally in Personal Assistance, that's the people close to the client that step in and they are also generally -- have generally higher salary.
So as we move forward here, we believe tougher times is most likely to pull more people to our industry in total, which should have a positive effect on that side. So that also then covers the wage drift question.
And then the Elderly Care occupancy development. It is pleasing in the third quarter. We are in -- on the contract side, we are somewhere around 95%, 96%. On the own managed side, we are now on a total level, up to 87%, which is, of course, mainly due to the new ambulatory care units. So that, I must say, is very pleasing to see, and that trend also continues.
In terms of working capital, the explanation there, the Assistans for Dig acquisition, we are now trying to sort of -- we're working on adapting them into our way of managing working capital. So they are not -- they work slightly differently, and we are now adjusting them to our way of working which should balance that out over time.
And how quickly could you do that? We'll see some release of working capital again already in the fourth quarter or this take a bit into this year?
Yes. That's what we - yes, that's what we think.
Q4?
Yes, Q4.
The next question is from Jakob Lembke from SEB.
I have a few questions. My first one is on the revised strategy to prioritize value you talked about in the report. Can you give us some more information on what this means?
Yes, absolutely. I mean one thing being -- we have grown tremendously quickly over many years. And particularly now, I mean, we have all-time high both in total growth in -- and organic growth. And that's all good, but we need to shift to working more with profitability. We need to capitalize now on the initiatives that we have done and the capital we have dedicated to both building new units and acquiring new companies. So it is a slight shift towards working more with efficiency.
And that's also, of course, a response to what we see in the general sort of society developments with inflation and sort of the general financial worries. So it is a bit more focused on profitability, and also more dedicated to doing fewer things in our respective business areas and do them well. So that's really the essence of it.
And then my next question is sort of on general price increases. I know you have been successful here in Individual & Family. But what is your sort of assessment on your ability to work with price in the other segments when you look forward from here?
Yes, it's a really good question. I mean 40% of Humana is Personal Assistance in terms of revenue. And there we have 1.5%, which is, of course, challenging for us. We have managed that previously, and now it's going to be even more important for us to work with our internal processes and manage and sort of pull everything - all the strings we have to really work with efficiency in Personal Assistance.
We believe, over time, this has to change. We've got clear indications that it should be -- the annual price increase should be slightly higher. But I assume, given what we see in the general trends, the new government had to land in 1.5% versus previous years. But from Humana, as a total, of course, we have that as a reference, and that's what we will work with and try to manage and balance now going forward.
In terms of the other business areas, most of them are tied to various types of indices, just looking at the Swedish business areas -- the main Swedish business areas. I would say a bit more than half of the Elderly C are business has -- is tied to OPI. So that index will be set somewhere around -- somewhere in December. That will be important to us. And the same thing for Individual & Family. Here, we have a bit more flexibility. We still have price negotiations and price tags in relation to OPI, but it gives us more -- we have more [ wiggle ] room here.
But a lot -- it's important for us where the OPI discussions land. And in Finland and Norway, it's also, to a large degree, index related, which then partially takes sort of inflation and general salary increases into account.
And then -- so that's on the revenue side. On the cost side, you saw that we had -- it's an approximation, but double-digit inflation effect on other costs. So fuel, electricity and food in the quarter. We will come into '23, of course, also see increases in other parts as well, and we believe that increase. So it is -- it will be -- we will be squeezed, and that's why we have also taken a fairly significant actions in making sure we're focusing on the right things to manage a tougher time ahead.
And my final question is on Elderly Care. You mentioned here previously the occupancy levels, which I think looks or sounds pretty good, and there is a step in the right direction here in terms of the margin, but longer term, it seems like the distance is a bit small to sort of reach the sufficient scale you need to produce attractive profitability. So looking forward, how do you view this segment? And will you sort of continue to invest to grow here? What's your plan?
Well, I think our plan sort of remains in terms of focus that we have had since we opened up our 5 new care homes. That's our focus right now. We have to improve occupancy and improve profitability to get up to the levels where we think they should be. So that's really the near-term focus right now.
The next question is from Victor Forssell from Nordea.
Firstly, just if I understood it correctly that you had perhaps stronger occupancy development in the beginning of the quarter in I&F than you exited? Was that the correct assumption?
Yes, that's a correct assumption. Yes. That's true.
And that's sort of seasonal impact in this quarter? What was that driven from?
That's -- no, that's true. We generally see a stronger seasonality effect in the beginning of the quarter, sometimes even towards the end of the second quarter, but that came a bit later this year. So we saw the seasonality effect more towards the latter part of the quarter rather than in the beginning.
And the exit rate here into Q4 are still good in your view on a year-on-year basis?
Yes. It's as expected, I would say.
And then just finally on pricing in that division. Could you perhaps state a little bit about how much of that was of the 6% growth that you have, and also the expectations you have for, let's say, the coming 12 months on pricing I&F?
Yes. I'll -- on an average level, it's -- about 2/3 of that organic growth comes from volume and about 1/3 price increases. The price increases generally resides in the Young division where we have a higher turnover of clients, because the price negotiations generally do relate to the new clients coming in.
And coming back to Personal Assistance. We've heard about all these audits going on for a while now, but 2 questions related to that. Firstly, on the potential magnitude that currently has, or potentially weighs on your operational performance in efficiency or any other metric, how would you describe that?
Yes. Personal Assistance, I mean, it carries 40% of our revenues and by 30% of the contribution as of the third quarter. And I think moving forward, we will have a slight shift because Personal Assistance will be more strained and we have less wiggle room, so to say, in Personal Assistance. And then I think Individual & Family will sort of weigh over in - Personal Assistance over time.
So I think margins definitely will be -- it [ will ] be tougher for us and -- but also bearing in mind that we have managed tough circumstances over quite some time and also managed to keep our margins 2%, 3% higher than the market as a whole, historically. So with too much squeeze, there would be a tough situation for the smaller actors in Personal Assistance. And over time, it should be adjusted. So that's one comment on the margins. Is that -- does that clarify it?
A little bit. But -- and also, I mean you alluded to it, but given that get all these audits, all the uncertainty that it has created in the market, do you see already now signs of a consolidation that you will engage in, that you will be more, let's say, aggressive on the M&A side in Personal Assistance to defend absolute figures at least on an EBIT line? Is that something we could expect already next year?
Yes, absolutely. And I think we have -- I mean we can definitely say for sure that, that's something that we already see, and that's -- it's been ongoing for a few months already, that the market is highly pressured from so many angles. So definitely, that's it.
Another -- we are open to acquisitions still where we have to make sure that we can take care of the acquisitions in a proper way. We did the large acquisition in June, and so we have to make sure that, that gets integrated properly. Then there is an element too which is that -- we are such a large provider in Personal Assistance in Sweden, which means that when companies stop operating, it's a natural tendency to look at other alternatives, and then we are there. So acquiring is a good idea for certain -- in certain companies, but sometimes it's also good for us to just wait and see that clients turn to us anyway.
Just final one on Personal Assistance before I head back. The absolute sort of number of market participants next year -- or sorry, people that are eligible for Personal Assistance is expected to grow next year for the first time in a very long time. Perhaps that will come more closer to the second half of the year, but how do you see the balance in you attracting new customers organically next year on the same notice as you have the staffing challenges? And what should we expect in terms of that net balance, please?
I think we are well positioned to attract more clients and also to -- following the challenges in the market as a whole, I think it will go fairly quickly for the pressure to be evident in the market as a whole. So I think there are good opportunities for us to at least have a flat organic growth development. But it really -- it is a lot of factors now outstanding that are -- it makes it -- it's really hard to predict.
But would you say that you would have a flat volume development next year despite the market growing in terms of number of people that will be eligible for Personal Assistance?
Yes. I think it's -- definitely, the initiatives that -- as a stance, we will attract parts of that initiative. It would be very strange if we didn't. At the same time, so I think it's less of a challenge on the growth side, but there will be a margin pressure continuously if we don't see the staffing situation improving. At the same time, staffing, in tough times, this is a sector that generally attracts resources during those times.
The next question is from Albert Broock from ABG.
So I have 2 questions. The first one is regarding the election outcome in Sweden. So the government granted a bit less money to the municipalities than they asked for. Have you had any time to review that? And have you had any discussions or seen any effects from that?
And the second question was regarding you mentioning some M&A possibilities within Personal Assistance possibly next year. And I was wondering, would you say that you are -- and at the old word about the best levels going forward? And would you say that with your new strategy that M&A within the Personal Assistance segment is a priority when you are going for more profitable growth segments?
I'll start with the view on elections. In general, I mean, the budget that was presented, it's a pressured budget in our area of business. It's a low allowance to the municipalities, which I discuss on IVO. We think it will likely affect price competition. So the municipalities will be pressured on that side. It could be good for us, but it's also -- could also be challenging, of course.
In general, the conservative -- the new conservative central leadership is positive towards business activity, and that supports us. It also mentions in the budget, and also [indiscernible] is not really focusing on our sector, which we think gives us an opportunity to also steer a bit because it's not just -- there are other things that can affect our industry too from a legit point of view that we think is important.
In terms of the -- that -- from the central side, we have the steering of Personal Assistance. So -- but it's the local municipalities that, as you point out, will be of utmost importance to us, and it's somewhere around 180 municipalities that, about a week ago, had formed their leadership. And it's -- I think what stands out is that it's very sort of speckled color combinations in the municipalities. And some of them, of course, are more important to us than others. But the larger municipality is Stockholm, Malmo, Uppsala, Linkoping, Orebro and Vasteras. That might be some of the more important to us.
It's a mixed leadership, and that poses challenges to us, but it's also good for us when we have individuals in place in these municipalities that we can have a good dialogue with. So that's the -- your question on the politics side.
In terms of M&A and some of the leverage levels, I think we have been fairly aggressive on the M&A side, and we need to, in more challenging times, focus on our existing business. That said, we will still be open for acquisitions, but we need to make sure that we don't -- we need to be a bit careful when it's challenging times. So that's definitely going to be something that comes into '23.
The next question is from Karl Bonnevier from DNB Markets.
Just coming back to a couple of the subjects you already alluded to quite deeply and well, I must say. Looking at Personal Assistance and the utilization rate of fewer assistance hours, is that something you feel is more down to use in the perspective of maybe having staffing challenges, not being able to do everything you should be able to do? Or how does it play out? Is it still the market phenomena that second [ customer ] is not willing to pay for everything, so to say, that you used to be able to charge them?
It's a good question. We see, in this quarter, we have a decrease in our so-called occupancy in Personal Assistance, which means that we have been granted the hours. The hours are there, but we can't find enough staff to perform the hours that are out there. So a 2% lower level from that perspective, of course, makes an impact on our revenues and our ability to work efficiently. So it has an impact that is more related to -- definitely mostly related to the challenges we see in the staffing situation.
And how much of that would you say would be a seasonal phenomenon? I guess Q3 is always an extra challenge with temporary staff and these kinds of things anyway. So coming into Q4, do you think you will be more able to do it just out of a seasonality perspective?
We think partly. Like over time, what we see now, it's a lot of things moving in the market. And with the challenges in the financial market, we actually see a tendency of more people wanting to work for us. They need to work in order to honor their commitments that you have on a home base situation. So we believe in challenging times, we should be able to better -- to have -- to get a better situation. There are small positive indications.
And -- for instance, we follow very closely how many people that respond to our job as -- and that's slightly increasing sort of after the post-COVID dry out of personnel. So there are a few indications that it's easening up right now. And we think that in a turbulent time, people will tend to maybe work a little bit more and maybe take another job. And that's -- Personal Assistance is to a large degree, part-time workers.
And coming back also the revision of the strategy. Has that made you feel that you are going to exit any areas or is managing within the portfolio that we are looking at?
Yes. That's a good question. I think we are definitely open to looking deeper into the portfolio, and we are continuously looking into our portfolio. As an example, we have a clear strategy in Finland to dedicate our efforts on child welfare services where we have opened new units over a few quarters now. And that is a general trend that we have been communicating around dedicating efforts to complex clients. So that's really clearly on the specialized -- on the path of increased specialization. So we are open to working with our portfolios in an active way, of course, also going forward.
A few years ago, we exited our home care business in Sweden also as a response of working more actively with our portfolio, but it was a while ago.
But if you look at the majority of the operations, you don't see that this would be, say, smaller areas, smaller operations rather than something on the grand scale?
Yes. I mean, yes, I don't have -- in the longer run, I think we want to be a Nordic group. I mean that is important. And when we -- speaking of making positive impact and the social outcome measurements, I think there is a value of understanding the systems and how they work and how we work with output measurements and that requires us to have clients across the Nordic region. So that's important. But then I think we can be also more clear of which are the strategic business units and how -- in the different countries and how do they relate to each other, because there are similar types of clients across our countries, and we can work better in using the knowledge we have across the borders.
And on that outcome management, do you feel that you're getting this across the municipalities that they are, say, also making use of it in their procurement of these favors or these services from you or in general in the market? So it's creating a new kind of market, so to say, in maybe the next 5 to 10 years or something like that?
I'm so pleased you asked that question. That's -- this is really close to our hearts. I think the Nordic region have not been active enough in this area. This is a phenomenon that is well known in an international setting, and we are very proud of our social welfare systems in the Nordic regions. But here, we are lagging behind. And I would say it is an interest from the municipalities, definitely. And we see really -- we have a position here to drive this industry towards -- in a way where we really create something that is valuable for society as a whole in this sector.
And to be honest, I think that's also something that we -- that's a responsibility that we as a large provider can do. So I'm super confident that the models that we have developed, the care models that -- methodologies that we have developed ourselves and also brought into this country -- to our countries, that they are valid and that they -- the results that they produce are valid not only for the individual but also for society as a whole when you look at the financing aspects of it. So I must say when we got into this, I was surprised when I understood that we were not further ahead in this area. So you will see more of it.
[Technical Difficulty] is that still work in progress? Because I think at the end of the day, shouldn't be the -- that kind of organization that would be most interested in [Technical Difficulty] based kind of outcome [Technical Difficulty]?
You break up a bit. Can you take it again?
Yes. Just looking at the support from maybe IVO to do this on the grander scale. Is there anything going on that suggests that those kinds of things might come?
Yes, absolutely. I mean this is definitely of interest from, I would say, some different parts of the actors here. We have spoken to -- we're out in several forums talking about this, both from the payer side but also from Vardforetagarna and similar actors around in the Nordic region. So definitely, this is happening.
And also from the financing point of view, I mean, most investors look for opportunities in investing in social sustainability, and this sits at the very core of what we do. We take care of clients in need and people in need at the mandate from the Nordic citizens really. So I am surprised that we don't attract more capital from investors that are interested in social sustainability.
Sounds like a promising opportunity. Just coming back to also the free cash flow question, looking at Q4, is there any reason we shouldn't expect the seasonally normally strong Q4? I guess the last couple of years has been a lot of specific things happening in Q4. But if you look at this year and the starting point?
Well, I think when we come from a few quarters where we have not performed in line with what we should, and at the same time, been fairly aggressive on expanding. And that's definitely something that we change, not the least, to balance the challenging times ahead. But I must also say, I mean, with the acquisitions and so on, it's a lot of things happening in our company. And when we acquire companies, we also get new ways of working in -- that we need to adjust to. But I think there's definitely room for us to work better with -- on working capital and those elements going forward.
And if I understand your reasoning on earlier question, looking at your capital allocation priorities for the moment, is getting net debt down first of all, and then organic initiatives and then maybe look at acquisitions if there is room for it?
Yes. That's a fair summary.
The next question is a follow-up question from Jakob Lembke from SEB.
Yes, just a follow-up on Personal Assistance. Just wondering how much more efficiency improvements you can do? I mean, there has been a long period now where you have been able to protect your margins despite what I understand costs increasing more than the compensation. So what's your view on this?
Yes. I mean we have a really well-functioning Personal Assistance business area. They are very good at managing both revenue and costs, and use all the possibilities they have to be careful on the cost side and manage margins. There is still -- there are always things to do, I should say. It's always -- there are always more things to do, and we are in a good position.
At the same time, 1.5% revenue increase in these sorts of turbulent times is -- and with the salary reviews coming up towards the spring, of course, the pressure will be even higher than we have seen over the last years. So we're really trying everything we can and use all the tools we have to meet it. But of course, it will be a challenging time. I think that's definitely so.
That was the last question. I would like to turn the conference back over to you for any closing remarks, madam.
Thank you very much, everyone, and have a continuing good day.