Orpea slides to annual loss of 4 billion euros on asset depreciation

Published : 1 year ago, on 12/05/2023

(Reuters) -French nursing care provider Orpea, hit by multiple scandals including allegations of malpractice at its care homes, on Friday reported an annual net loss, in line with the anticipated strong depreciation of its assets.

Orpea witnessed a tough 2022, following the publication of a book by journalist Victor Castanet, which sent shockwaves through France and much soul-searching over how the elderly are treated in nursing homes. It has rejected the allegations of widespread abuse.

The company, which has requested conciliation talks with creditors, said its net profit turned to a loss of 4.03 billion euros ($4.44 billion) in the fiscal year 2022 versus a gain of 65 million euros a year earlier.

The net loss is mainly due to asset disposals.

At 31 December 2022, Orpea’s real estate portfolio was valued at 6.5 billion euros, versus 8.4 billion euros at the end of 2021, the group said.

The group also said its net debt is now projected at 4.5 billion euros at the end of 2025, versus 4.9 billion euros previously announced.

This adjustment is due to the integration of real estate disposals in the restructuring plan, the group added.

Orpea announced in February a financial restructuring giving bondholders the lion’s share of control after a deal reached with state financial institution Caisse des Depots & Consignations (CDC) and other investors, but a shareholder group that opposes the safeguard plan called for a general meeting.

“There is only one plan, there is no alternative plan. There is only one plan that provides the company with the necessary capital to rebuild and continue to operate,” CEO Guillot said.

Three capital increases envisaged as part of the restructuring will lead to a theoretical unit value of less than 0.02 euros per share, versus 0.20 euros announced in February, Orpea added.

Orpea’s shares fell 4.2% to 2.48 euros at 0730 GMT.

($1 = 0.9084 euros)

(Reporting by Diana Mandiá and Federica Mileo; editing by Uttaresh Venkateshwaran and Sonali Paul)