Home Healthcare, Growth Driver for SOL

Vivisol, the home healthcare subsidiary of Italian gases group SOL SpA, is now a leading provider in Europe, and has been clocking in at around 70% of group EBIT. That makes the shares one of the purest European plays on the growing trend for health authorities to de-hospitalize parts of in-patient care.

Source: Johns Hopkins website

Recent studies in the US show that “Hospital at Home” not only saves costs, but can also improve outcomes. No wonder, then, that health authorities in a number of countries have plans to grow their home healthcare offering. A recent study from Data Bridge forecasts strong growth for this area.

A Mount Sinai Medical School paper concludes that costs for HaH in their sample of patients were 20% to 30% lower than those for hospital care, and the HaH page on the Johns Hopkins website talks about lower mortality, better functional outcomes, lower average length of stay, lower incidence of delirium and less caregiver stress.

Crossing the Atlantic, we find plenty of evidence that European health authorities are following suir. The UK’s NHS, whose HaH service is referred to as “Virtual Wards”, plans to have 40-50 virtual beds per 100,000 of population by 2023. In France, the health ministry has put out a plan with very clear intent to grow Hôpital à Domicile. Italy’s PNRR, the EU-funded COVID recovery and resilience plan, sets aside €4bn for home health care infrastructure.

It would therefore seem reasonably safe to assume that there will be a decent amount of growth to be had in this area, as a recent study from Data Bridge attests, forecasting 8.4% CAGR from 2022 to 2029 (NB the report is not freely available, so no due diligence could be conducted).


Vivisol is the no 2 provider of home healthcare in Europe. In recent “normal” years, this has accounted for over 70% of the SOL group’s EBIT, making the shares a much purer play on this growth area than European leader Air Liquide.

Vivisol is present in most of Western Europe (also Poland, Turkey, Brazil), and is leader in respiratory homecare in Italy, Belgium and the Netherlands, as well as no 2 in the UK. The legacy business is the provision of oxygen but, over the years, Vivisol has branched out into multiple areas such as sleep apnoea treatment, medical nutrition, wound-care, paramedical services etc. Patients under its care have grown from around around 140,000 in 2010 to close to 600,000, driving a steady sales CAGR of close to 10% pre-pandemic.

Growth has come both organically and through acquisitions, for which SOL has never tapped shareholders, funding its expansion with its own means. Acquisitions often bring new healthcare skills, and synergies from the exploitation of relationships with health authorities in geographies where Vivisol has a strong position.

The European leader in home healthcare is Air Liquide, but it is a much bigger company than SOL, which means that the incidence is much lower. Healthcare as a whole is 16% of  the French company’s sales, which includes the supply of gases and services to hospitals, so the home component will be in the low teens at best, compared to SOL’s ca. 50% of sales.

Given Vivisol’s higher margins compared to the industrial gases division, the incidence at the EBIT level has been closer to 70%, although this has been distorted downwards in the last few quarters by the passing on of abnormally high electricity prices to industrial customers.

For those who wish to invest for positive impact on society, SOL is a clear candidate. A predominant part of its profits come from an activity that not only improves the quality of life of home-treated patients, but also frees up hospital resource, increasing capacity and thereby creating the conditions for improving quality of care.

Source: Company Corporate Presentation

SOL’s multiples compare favourably with companies that have similar or related activities.

Because of a policy decision not to pay for research, SOL has, until recently, only been covered by Tradition in Paris. However, Berenberg has recently initiated coverage on the stock, providing a much-needed mainstream pan-euro champion for the story.

Tradition’s analysts forecast a ’22 EPS (according to Factset) of €1.35, which makes the current price of €20.5 look pretty undemanding compared to industrial gas giants Air Liquide and Linde. While a caveat needs to be made regarding the current positive impact of high electricity prices on industrial gases margins (and we can’t establish whether Tradition’s forecasts assume a return to more normal electricity prices), it should be safe to assume that other operators are also benefitting from this trend.

To find sizeable, listed home health care organizations, we have to look to the US. Six quoted companies with services comparable to Vivisol (to varying degrees) attended a recent Bank of America home care conference and their unweighted average ’22 PE multiple (as at 19/12/22) is 23.5x. If one looks back at early 2021, before long-duration lost its shine, the average of (then) current multiples was 32x!


Source: Twitter

Albeit a lower margin activity than Vivisol in normal times, the industrial gases business remains a focus for the SOL Group, with some interesting growth areas and the potential to benefit from re-shoring trends.

The SOL Group’s traditional activity of supplying industry and hospitals with gases generates margins somewhat lower than Vivisol’s. The passing on of exceptionally high electricity prices to industrial gases customers, and the pricing of power from its hydroelectric plants, are boosting margins this year. A return to normality would take the division back to its “second fiddle” profitability status, but there are a few points of interest in this business as well.

Firstly, there are some interesting potential growth areas in industrial gases, such as the use of liquid nitrogen in refrigerated lorries to reduce emissions, as well as biomethane upgrading and hydrogen infrastructure design/operation. Secondly, the North of Italy’s strong manufacturing base, a major chunk of SOL’s gases client base, should be a beneficiary of re-shoring, which appears to be the mot-du-jour in industry, as shown by the BofA chart recently posted on Twitter.

Also important to note that, as of this year, SOL has set itself the target of increasing its renewable energy purchasing agreements, in order to accelerate the mitigation of Scope 2 emissions associated with gas production. Sustainalytics already places SOL well within the top 2% of the hundreds of chemical companies it rates, and the use of more renewable energy can only improve that further.

In sum, a social impact play with a very strong position in what looks set to be a major growth area.

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Max Casini – 23 January 2023

SOL Corporate website

Research coverage by Berenberg and Tradition