Too much is too much, says financial analyst Christophe-Raphael Gahne at private bank Oddo BHF. As of today, he no longer advises buying Korian on the stock market (his advice changes from “win” to “neutral”, target price reduced from 35 to 20 euros) and lowers the target price for Orpea again (advice has changed). to distress neutral in January) from 43.5 to 26.7 euros.
“The worst script is written every week”Exist “constant threats” about managers Ehpad Orpea and Korian since the investigative book gravediggers journalist Victor Castanet came out almost five months ago, exposing Orpei’s shortcomings and mistreatment of residents. The share price of the world leader in nursing homes has collapsed by 75% since the beginning of the year, while the price of its competitor Korian has fallen by just over 40%; their shares are down another 5% today. in “media flow” targets Orpea more than Korian, which at least we note in Oddo BHF, “continues to communicate to distinguish himself from Orpea. » However, despite the fact that almost every week brings new critical information about this sector, the breach of trust is only growing.
” This weeksummarizes the analyst we subsequently learned that a complaint had been filed against Corian by the families of the residents and that a summary of the report of her external auditors (Grant Thornton and Alvarez and Marshall) commissioned by him was published against Orpea to evaluate and clarify the allegations made against the group since February , and that [le groupe] was the subject of a search on issues raised by a joint mission of the General Inspectorate for Social Affairs and the General Inspectorate for Finance. »
“A few more blocks” under pressure
Many compromising allegations against Orpea are supported by the independent auditors’ report. “It seems that there is a surplus in the appropriations received from the authorities (underspending of appropriations received from the public authorities), the surpluses thus formed could contribute to the result of the group, [ainsi que] practice of year-end discounts where some suppliers are funded by government grants and are not reported to the authorities [et] that the compensation was paid with the approval of the former CEO or members of his team to outside business participants, [et enfin que] capital partnerships or economic transactions, in particular in the case of outward growth transactions abroad, have been entered into or may have had the effect or purpose of undue preference for third parties, in particular employees and/or former employees of employees or partner companies, without apparent justification. »
These shortcomings have prompted the state to decide to increase controls, which will have a financial impact on Ehpad’s managers, who will have to hire staff first.. “All facilities will be inspected by the end of 2025 (compared to 10% of nursing homes inspected each year, currently 5 to 50 inspections per region and per year, i.e. 850 per year for just over 7400 nursing homes)explains Christoph-Raphael Gahne. To do this, the regional health agencies will recruit one hundred agents. One can imagine the creation of an independent rating agency, close to the German MDK, largely funded by operators or a special tax, and responsible for the rating of nursing homes. »
Koryan is the target of “manslaughter” complaints filed with a dozen prosecutors in several regions. These complaints against X will be initiated by approximately twenty families of residents for acts of “endangering the life of others”, “failure to assist a person in danger” and “manslaughter”. They were served in Aix-en-Provence, Bobigny, Bourges, Le Mans, Marseille, Nantes, Niort, Paris, Pau and Versailles. This is the first major class action lawsuit against Korian. Analyst Oddo BHF believes that ” The practice and organization of Korian changed with the arrival of Sophie Boissart in 2016. [mais] the fact remains that shortages of nurses and, more broadly, medical personnel can sometimes lead to a deterioration in quality. »
According to the “hierarchy of values” Corian is higher than Orpei. Group “began a deep transformation (real estate policy, internationalization, restructuring of part of the portfolio, recruitment efforts, corporate social responsibility goals, CEO compensation based on ESG criteria, more balanced management than Orpea before the scandals). » The floating capital of Korian (62%), like that of Orpea (80%), makes the takeover possible, but the pressure of the media at the moment, its reputational influence, is likely to dissuade any potential buyer at the moment. At Oddo BHF we believe it is “It is likely that stock market prices will remain a few more quarters below fundamental levels, time to calm down in terms of funding and real estate valuation, that the market understands margin rebasing better, that the regulatory context is stabilizing, that the media environment and legal settlements. »