French care home group Orpea posts first-half net loss, hit by asset impairments




  • In US
  • 2022-09-28 16:18:20Z
  • By Reuters
 

By Diana Mandia

(Reuters) -Care home group Orpea, at the centre of allegations of malpractice at its French retirement residences, on Wednesday reported a net loss for the first six months of the year, citing a fall in the value of its assets.

The company, which faces legal action in France over allegations of mistreatment of elderly residents and embezzlement of public funds, posted a net loss of 269 million euros ($260.37 million) in the first half of 2022, compared with a profit of 102 million euros in the same period last year.

"The company has been severely affected by the unethical behaviour of its former managers and by its rapid international and real estate development, which have weakened Orpea's financial situation", Chief Executive Laurent Guillot said in a statement.

Orpea said in June that an independent audit had found evidence of financial wrongdoing - including inflated labour expenses and suspicious large payments to third parties - but did not support all the allegations against the company made by "Les Fossoyeurs", a book by independent journalist Victor Castanet published earlier this year.

At least two thirds of Orpea's French nursing homes have been inspected in the first six months of the year, Guillot said in a call with journalists, after the government said in March that all 7,500 retirement homes in the country would be audited over the next two years as part of a plan to better supervise their activities.

Orpea, which operates across 22 countries and is one of Europe's biggest commercial care home operators, said depreciation, amortisation and provisions amounted to 333.2 million euros in the first half of the year, up from 268.7 in the same period of 2021.

The group, which in May disclosed an emergency deal with banks to handle major debt repayments, said its debt had increased by 433 million euros since the end of last year to 8.34 billion euros at the end of June.

The group also confirmed that its operating profit margin in second half of the year could be lower than in the first half due to volatile energy prices, which would require Orpea to approach its creditors to renegotiate its financial covenants.

($1 = 1.0332 euros)

(Reporting by Diana Mandiá ; Editing by Barbara Lewis, Kirsten Donovan)

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