Sodexo sees wins, and delays, in healthcare sector in H1 FY25
Entrance to the headquarters of France-based food services and facilities management company Sodexo in Issy-les-Moulineaux, France on Aug. 24, 2024. Sodexo’s North America healthcare and seniors segment grew 2.5% year over year in the first half, driven by good performance in the first quarter due to price increases, volume growth and cross sales, according to its first half earnings report. ·Facilities Dive·HJBC via Getty Images
Despite challenges in the healthcare segment, Sodexo secured key wins in the sector during the first half of its 2025 fiscal year, the France-based food services and facilities management company said in its FY 2025 first half earnings presentation.
Notable agreements include an extension with a life sciences company and new contracts with University of Cincinnati Health, which is expected to mobilize in Q4, and AtlantiCare, the largest healthcare system in southeastern New Jersey, Sodexo CEO and Chairwoman Sophie Bellon said on the earnings call.
Sodexo’s overall organic growth fell from 4.6% in the first quarter of 2025 to 2.4% in the second quarter due to “an expected weak February,” particularly in the North American region, which saw 3.5% overall growth in the first half, according to its H1 fiscal year 2025 earnings.
The company’s Sodexo Live! segment grew 15% year over year in the first half of 2025, driven by strong activity in Q1 across conference centers, stadiums, arenas and airline lounges, it said in its H1 2025 earnings presentation. Growth softened in the second quarter due to event timing and a strong prior comparative base, it said.
Strong performance in the Sodexo Live! and Corporate Services segments were partially offset by contract demobilizations in the education and healthcare and seniors verticals during the first half, the company said. A number of setbacks related to service agreements at U.S. healthcare facilities and a large number of contracts up for renewal in its federal portfolio corporate services also reduced Sodexo’s growth guidance from 5.5% to 6.5% for fiscal year 2025 to between 3% and 4%, Sodexo CFO Sebastien De Tramasure said on an earnings call.
Sodexo’s North America healthcare and seniors segment grew 2.5% year over year in the first half, driven by good performance in the first quarter due to price increases, volume growth and cross sales, according to its first half earnings report.
Sodexo’s agreement with AtlantiCare, effective June 21, will span a range of on-site operational services aimed at elevating overall patient and employee satisfaction through environmental services and facilities management, as well as nutrition and healthcare technology management, the company said in an April 8 release. The health system of over 6,500 employees serves more than 110 locations in southern New Jersey, per the release.
In addition to patient and staff dining, Sodexo will use its Site Management System IT platform to streamline service and business operations, it said. As part of the contract, a centralized response center will support “on-demand, hotel-style patient meal ordering and serve as the hub for receiving and dispatching requests for environmental services and facilities requests,” the company said.
The agreement will also include one of Sodexo’s “new eat” retailing dining destinations with two micromarkets for those visiting the facility and “use of Sodexo’s proprietary infection prevention program, Protecta.”
Healthcare represented a 90-basis-point drag on growth guidance, “mainly due to delays in the ramp-up of new contracts,” including an exclusive, 10-year contract with Captis that Sodexo expected to contribute in the second half but was delayed until FY 2026, he said. Captis, a collaborative healthcare organization that provides savings and value for nationwide members through aggregation and committed spending, serves more than 100 health systems, including 1,400 hospitals in 29 states.
The company this week also announced expanding a partnership with Greener by Default, extending a plant-based patient meals program to all U.S. hospitals under Sodexo’s management. The program, which provides sustainable plant-based meals as a default option for one meal per day, builds on previous work between the two companies at NYC Health + Hospitals that launched in 2022 and “resulted in half of all eligible patients opting for plant-based menu items—cutting the health system’s carbon emissions by over one-third in just its first year.”
Further caution in education, federal services
Sodexo also rolled back its growth estimates in education due to predictions of increased student enrollment and retail initiatives falling short of expectations, which accounted for 40 of the 60 basis point impact from education, De Tramasure said.
Sodexo’s business and administration segment grew 6.5% year over year during the first quarter as the result of growth in food services driven by return-to-office trends, cross-sales and price increases. Second quarter growth was slowed by contract demobilization, last year’s global contract loss and fewer working days, per the presentation.
Of the six major global contracts Sodexo has expiring this year, it has successfully retained all of them, and the company is targeting a retention rate of around 94.5%, factoring in one nonrenewal, De Tramasure said. The company’s shortfall in expected growth guidance was “essentially concentrated in North America,” which accounted for 80% of the revision, De Tramasure said.
This includes 80% of GSA portfolio contracts being up for renewal in fiscal years 2024 and 2025. “We’re trying to be ambitious and it’s true that we know that that GSA contract will have a full year impact,” Bellon said. Responding to a question on how she views the current political environment as a France-based company, Bellon added that while Sodexo employs 120,000 people in the U.S., buys local and pays taxes locally, the U.S. federal government only accounts for 4% of its revenue, of which half is from the U.S. Marine Corps.
