Yesterday, LIMES delivered a strong set of preliminary FY25 figures, beating both our top- and bottom-line estimates, with the latter already ahead of the company's guidance. In detail:
FY25p sales increased 40% yoy to € 53.1m (eNuW: € 49.5m; H2 +60% yoy), driven by strong growth across all clinics, most notably at the Paracelsus Recovery Clinic (PRC) in Zurich. This resulted in a significant increase in average revenue per patient day to € 1,014 (+30% yoy), underlining continued pricing power and an increasingly favorable case mix. On the other hand, total patient days grew 9.1% to 52k, reflecting the effect of the new clinics Abtsee and Bergisches Land, which opened in July.
Profitability improved disproportionately, as FY25p EBITDA was up 78% yoy to € 12.8m (eNuW: € 11.3m; H2 € 6.6m at 22% margin), corresponding to a 5pp margin expansion to 24%. This was driven by the strong performance of the established clinics leading to operating leverage as well as a faster-than-anticipated ramp-up of the new sites, which were materially below plan. EBIT more than doubled to € 9.2m (17% margin, +112% yoy), highlighting the scalability of the operating model as fixed costs were absorbed over a higher revenue base.
With this, management's FY25 outlook has been significantly exceeded, as initially sales of € 50.8m and EBITDA of € 8.7m was targeted.
Notably, CPS almost doubled to € 43 (FY24: € 24), highlighting the cash generating nature of the business model, that is characterized by limited capital intensity. On this basis, the company should be able to achieve cash conversion ratios of >75% (EBITDA basis) in a steady-state scenario.
New clinics up and running. As aforementioned, the new clinics exceeded expectations thus far. In fact, management reports that the Abtsee clinic for adolescents is experiencing strong demand and is already showing profitability since January. At the same time, break-even for the Bergisches Land clinic is set for Q2.
On that basis, management guides for a solid development at the established sites and an increase in sales and earnings at the new clinics. While growth at existing clinics should be to a large extent connected to pricing effects, the new clinics are seen to close in on the group average occupancy level over the next 24 months (eNuW), allowing for continued strong top-line and earnings expansion (eNuW: +52% sales and 12pp EBIT margin FY25p-27e).
Overall, the preliminary results strongly reinforce our confidence in the case, which still offers a highly attractive entry point at 5.8x FY26e EV/EBITDA despite the +37% YTD performance.
Confirm BUY with a new PT of € 710 (old: € 600) based on DCF.
ISIN: DE000A0JDBC7
