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Orpea shares jump on Q4 revenue and cash boost
Global Banking & Finance Review®
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PARIS (Reuters) – Shares in scandal-hit French care homes group Orpea surged on Monday after the company posted a nearly 8% rise in fourth-quarter revenue and spelled out the details of a planned capital increase.
PARIS (Reuters) – Shares in scandal-hit French care homes group Orpea surged on Monday after the company posted a nearly 8% 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% of which 5.7% was organic, adding that its cash position at the end of last year was estimated at 856 million euros ($914 million), above the 350 million euro 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% higher on the Paris stock market on Monday morning, to trade at 4.23 euros each.
Full-year revenue in 2022 rose 8.9% to 4.681 billion euros ($5.00 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 around 3.8 billion euros and receive a cash equity injection of 1.55 billion euros under a deal reached with state financial institution Caisse des Depots & Consignations (CDC) 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 euros, significantly lower than its current valuation.
A first capital increase would reflect a theoretical issue price at approximately 0.59 euros per share, followed by two additional tranches which would translate into individual share values of 0.18 euros and 0.13 euros respectively, Orpea said.
Orpea’s shares slumped by 93% 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.
($1 = 0.9369 euros)
(Reporting by Olivier Sorgho and Tassilo Hummel, editing by Emelia Sithole-Matarise)
Revenue growth refers to the increase in a company's sales over a specific period, often expressed as a percentage. It indicates how well a company is performing in generating sales.
Liquidity risk is the risk that an entity will not be able to meet its short-term financial obligations due to an inability to convert assets into cash quickly.
A capital increase is a process by which a company raises additional capital by issuing new shares or securities to investors. This can help improve the company's financial position.
Organic revenue growth refers to the increase in a company's revenue generated from its existing operations, excluding any revenue from acquisitions or mergers.
A cash position refers to the amount of cash a company has available at a given time, which is crucial for meeting short-term liabilities and operational expenses.
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