Good evening. Welcome, and thank you for joining the Amplifon first quarter 2026 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Ms. Francesca Rambaudi, Investor Relations and Sustainability Senior Director of Amplifon. Please go ahead, madam.
Thank you. Good afternoon, welcome to Amplifon's conference call on first quarter 2026 results. Before we start, a few logistic comments. Earlier today, we issued a press release related to our results, and this presentation is posted on our website in the investor section. The call can be accessed also via webcast, and dial-in details are on the Amplifon's website as well as on the press release. I have to bring your attention to the disclaimer on slide two, as some of the statements made during this call may be considered forward-looking statements. With that, I am now pleased to turn the call over to Amplifon CEO, Enrico Vita.
Thank you, Francesca. Good afternoon, everyone, and thank you for joining us also today. I'm very pleased to share our first quarter results which show strong performance, and we believe a clear inflection point for the business. In fact, we have returned to solid organic growth and significantly improved the profitability across all our three regions. What is particularly rewarding for us is seeing our work, actions, and investments over the past year come together to deliver tangible results. Even more promising is the momentum that we observed throughout the quarter. Organic growth progressively strengthened and had a very positive start in April, reinforcing our confidence that the direction that we have taken is the right one and is now starting to deliver the outcomes that we expected.
Let me begin with a brief overview of the global market environment, where we are also seeing a positive and promising developments. In the U.S., the market grew by approximately 3%, a material improvement in comparison with the last quarters, especially because supported by a solid private pay segment at circa +6%, which more than offset the continued softness in the insurance channel at circa -6%. In Europe, we are seeing a positive and encouraging market development. Importantly, in our core markets like Italy and Spain, we are now seeing clear and strengthening signs of improvement. As we have consistently indicated, we expect the European market to gain momentum progressively, supported by solid underlying demand drivers and the normalization of market conditions.
As you know, we also believe that the relatively muted performance seen in recent years compared with historical levels has led to a degree of pent-up demand that is probably now beginning to materialize. In APAC, based on our estimates, all the markets in which we operate delivered overall a more positive dynamics, with also China showing gradually improving trends. Overall, we estimated that the global market grew in units by a solid and encouraging +3% in the first quarter, in line with our expectations. In this backdrop, we have outperformed in most of our key markets, including in particular, the U.S., Italy, Spain, and Australia. Turning to revenues, organic growth was at +2.2%, representing a solid performance with a clear acceleration throughout the quarter, particularly visible in the EMEA region.
The impact of our Fit for Growth program on revenues in the quarter was approximately -2.4%, mainly reflecting our portfolio optimization actions, including the clinic closures, the U.K. divestitures completed in early March, and the termination of a managed care agreement in the U.S. at the end of 2025. In addition, M&A contributed by +1%, primarily driven by the carryover effect from acquisitions completed last year. Turning to profitability, we achieved our highest ever first quarter adjusted EBITDA margin with an increase of 60 basis points compared to last year, supported by operating leverage and also by the early results of our Fit for Growth program. This increase is particularly noteworthy given that Q1 2025 had already set a very strong benchmark in terms of profitability. Overall, we are certainly satisfied with our results delivered in the quarter.
They confirm the strength and the validity of our initiatives and the investments made last year, and they give us confidence in our outlook for the remainder of the year. With that, I will now hand it over to Gabriele, who will walk through the financials more in detail.
Thanks, Enrico. Good evening to everybody. Turning to slide number four, we have a look at our financial performance in Q1 2026. Revenues were up 0.8% at constant FX versus Q1 2025, with a solid organic growth at 2.2%, improving 160 basis points over Q4 2025. I'm glad to say that all regions posted a positive organic performance in the quarter. The Bolt-on M&A, made primarily in 2025, contributed 1% to top line growth. Fit for Growth had an impact of around -2.4%, following the closure of around 190 non-performing clinics since the launch of the program, 30 of which during Q1.
The divestiture of the U.K. business in early March, the termination of a managed care agreement in the U.S. from January 1st, and the rationalization of the wholesale business in China since Q1 last year. FX was a headwind of minus 2.2%. Adjusted EBITDA was EUR 142 million, with a record Q1 margin of 24.5%, an expansion of 60 basis points over the high comps of Q1 2025, which was 20 basis points above Q1 2024. This improvement was driven also by the early results of the Fit for Growth program and after ongoing investment in marketing to further strengthen the company's distinctive assets. Here again, all the region contributed to this very important performance. Moving to slide five, we have a look at EMEA performance.
In the quarter, revenues were flattish at constant FX, with a positive organic growth at +0.3%, which accelerated throughout the quarter with a strong momentum building in our core markets, Italy and Spain. The Bolt-on M&A made primarily in 2025, contributed for 0.7% to top line growth.
Hello, this is the operator. The line is now connected.
Okay, thank you. We shall start again from the beginning of slide number five, EMEA. Not sure when we were disconnected.
Yeah.
Please.
Okay, starting from slide five, we have a look at EMEA performance. In the quarter, revenues were flattish at constant FX, with a positive organic performance of +0.3%, which accelerated throughout the quarter with a strong momentum building in our core markets, Italy and Spain. The Bolt-on M&A primarily in 2025 contributed for 0.7% to top line growth. Fit for Growth had an impact of -1.1%, following the closure of 25 clinics in Q1 and the carryover from the clinics closed in 2025, and following the divestiture of the U.K. business in early March. Tax was a slight tailwind of +0.2%.
Adjusted EBITDA was EUR 116 million, with margin at 30.3%, 90 basis points above the record level of Q1 2025, which was 40 basis points higher compared to 2024. This was also thanks to Fit for Growth after the ongoing investment in our distinctive assets. Moving to chart six, we have a look at the performance of Americas. Revenue growth in the quarter was 1.1% at constant FX, while FX headwind was at -9.7%. Organic growth was a super positive well above market, 6.7%, thanks to the strong broad-based performance recorded in all the markets and businesses in the region, with significant market share gains. The Bolt-on M&A, made primarily in 2025, contributed for 1.9% top line growth.
Fit for Growth had an impact of -7.5% following the termination of managed care agreement in the U.S. from January 1, and the closure of three clinics in Q1, together with the carryover from the clinics closed in 2025. Adjusted EBITDA was EUR 25.2 million, with margin up 80 basis points to 23.3% versus 22.5% last year. Thanks to the early results of Fit for Growth and after the ongoing investment in our distinctive assets. Moving to chart seven, we have a look at the Asia-Pac performance. In the quarter, revenue performance was +4.6% at constant FX, driven by strong organic growth of 4.8%, improving 400 basis points over Q4 2025, thanks to the broad-based contribution of all markets across the region.
The Bolt-on M&A made primarily in 2025 contributed 0.8% to top line growth. Fit for Growth had an impact of -1% following the closure of two clinics in Q1, together with the carryover from the clinics closed in 2025, and the rationalization of the wholesale business in China since Q1 last year. Adjusted EBITDA reached EUR 24.2 million, with margin at 27.7%, 60 basis points higher than the 27.2% recorded in Q1 2025. Also, thanks to Fit for Growth and even after the fast growth in China. Moving to slide number eight, we appreciate the Q1 income statement. In Q1, total revenues came to EUR 580 million, an increase of open age percent at constant FX versus prior year.
Adjusted EBITDA was EUR 142 million, with a record margin of 24.5%, 60 basis points above last year. Also, thanks to the early contribution of Fit for Growth. G&A, excluding PPA, were at EUR 64 million, decreasing by over EUR 2 million versus EUR 66 million in Q1 2025. This led the adjusted EBIT to EUR 78 million versus EUR 74 million last year. Net financial expenses amounted to EUR 14.8 million, slightly below the EUR 15.1 million in Q1 2025. Tax rate was flat year-on-year at 29%, leading to an increase of around 7% in adjusted net profit from EUR 41.6 million last year to EUR 44.4 million in 2026. Moving to slide nine, we appreciate the cash flow evolution.
Adjusted operating cash flow after lease liability was in the period equal to EUR 44.5 million versus EUR 52.1 million last year. Net CapEx decreased by around EUR 10 million- EUR 21 million in light of the Fit for Growth program, leading adjusted free cash flow to EUR 23.6 million versus EUR 20.6 million in Q1 2025. In Q1 2026, we had the net proceeds from divestiture, including the U.K. dilutive business, for around EUR 10 million versus a net cash out for acquisition for EUR 41 million last year. This, together with no share buybacks in the period, led the net cash flow for the period to positive EUR 27 million versus a negative EUR 31 million in Q1 2025. As a consequence, Net Financial Position improved to EUR 1.015 billion versus EUR 1.045 billion at the end of 2025.
Moving to slide 10, we have a look at the debt profile trend and key financial ratios. As mentioned, the net financial debt ended slightly above EUR 1 billion, with liquidity accounting for EUR 310 million, short-term debt accounting for around EUR 710 million, and medium long-term debt accounting for around EUR 650 million. Following the IFRS 16 application, lease liability were around EUR 485 million, leading the sum of net financial debt and lease liability to EUR 1.5 billion. Equity ended at around EUR 1.08 billion. Looking at financial ratios, net debt excluding lease liabilities over EBITDA improved to 1.84x versus 1.92x in December 2025, in line with our target to deleverage the company in light of the prospective acquisition of GN Hearing.
To this regard, please let me give you an update on the financing. We have now closed the syndication of the senior loan with 24 months tenure from signing of the facility expected in the next few weeks, allowing for high flexibility of execution of the takeout through a mix of debt and equity. We are not in rush to execute it. As far as the equity portion, please let me reiterate that the up to EUR 750 million equity raise indicated at the announcement was the maximum amount calculated backward in order to maintain a very conservative net leverage, including lease liability at three times at closing, so slightly higher than the current leverage. This ratio excludes any kind of run rate synergies. We can reduce the amount of the equity raise without affecting the financial flexibility of the group.
For example, even if we execute half of the maximum amount, our leverage ratio would move up only by circa 0.5x , with no substantial change in the rating agencies financial profile. Considering also run rate synergies, we would be just slightly higher than three times, including lease liability at closing. I will now hand over to Enrico for the outlook and final remarks.
Thank you, Gabriele. We have come to the end of today's presentation, and let me take a step back and connect what we are seeing today with the actions we have taken over the past year. As said, we believe we have reached an inflection point in our performance. Throughout 2025, we executed a series of meaningful initiatives and made targeted investments aimed at accelerating future revenue growth and structurally improving profitability. These actions were proactive and designed to strengthen the business and position us for sustainable long-term performance. In the first quarter of 2026, we are already beginning to see the early benefits of these efforts materialize, both in terms of organic growth and profitability. Importantly, we observed strong momentum building throughout the quarter, which continued to accelerate into April and also May in terms of trial activations.
This gives us increasing confidence that our plan is gaining traction. Looking ahead to the rest of 2026, we see a supportive and improving environment. We confirm a progressive recovery in the market demand with global growth in the region of 3%. Within this context, we are confident in our ability to continue outperforming in most of our key markets, driving further market share gains. This will translate into a strong improvement in organic growth, with levels exceeding +3%, hence restoring a solid growth trajectory. At the same time, we anticipate a meaningful step up in profitability, supported by operating leverage and also by the continued execution of our Fit for Growth program, with an expected improvement in adjusted EBITDA margin in the region of 100 basis points.
Additionally, as we advance through customary regulatory review, I am pleased to share a very brief update regarding the prospective GN Hearing acquisition. We have already initiated the full-scale internal integration planning, and our teams are fully mobilized to ensure day one readiness aligned with our regulatory obligations, and to position ourselves to capture the significant value creation opportunities we envisage. Finally, looking beyond 2026, we are highly confident and excited about our prospects. We see a clear path to sustained profitable growth, further strengthened by the transformational acquisition of GN Hearing. Francesca, over to you.
Thanks, Enrico. I kindly ask the operator to open for the Q&A session. I also kindly ask everyone to limit their participation to a maximum of two questions to ensure that all participants have the opportunity to engage. In the interest of time, please keep to a single question format so that all analysts have a fair chance to ask their questions.
Thank you for your cooperation. Now I turn to the operator.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who have a question may press star and one at this time. We will pause for a moment as participants are joining the queue. First question is from Hassan Al-Wakeel, Barclays.
Thank you. Good evening.
Good evening.
Hey. Firstly, can you please comment on the dynamics you're seeing in EMEA, which was a bit of a softer region in today's results, and particularly France, which you don't call out. What are your assumptions here for growth for the full year, as comps get tougher in the second half? You very helpfully mentioned where you think you're gaining share. Where do you think you're losing share in EMEA, and more broadly? Secondly, on the margin. If you can just talk to the building blocks and confidence you have in now increasing your margin by 100 basis points, whether it's a function of Fit for Growth or better Q1 or both. Just curious on timing, given some of the macro uncertainties.
I guess to that end, if you could talk to the impact you're seeing from inflation or the impact you expect to see, later this year or next. Thank you.
Thank you for your very articulated question. I will try to answer to all the different points that you have raised. In terms of dynamic in the EMEA, we are very encouraged by the kind of trend that we have seen in terms of market, but also in terms of our performance. What we have seen was a slower start in January, but progressively throughout the quarter, we have seen also clear signs of improvement with strong momentum building in particular in some of key markets for us, like Italy and Spain. I think that this is a very good news for us.
I think, you know very well that the market growth last year of these two markets, which are fundamental for our performance in the EMEA region, last year was not great. To see this kind of trend, both in terms of market but also in terms of our performance, is very positive for us. With regards to France, we have, according to the official data, the French market was very positive in terms of units in the first quarter.
It is also true that you have, when we compare our sales with the growth of the market in units, we have also to take into account the fact that given the mix change between Class I and the rest of the market, of course, the growth in terms of value is much less. In terms of forecast for the year, at this stage, it's difficult to say, but clearly from the second quarter of this year, we will be anniversary the strong growth of last year. We envisage a positive growth for the full year. You also made reference to share gain or loss.
I would say that in most of the markets in which we operate, we think, as I mentioned during the call, U.S., Spain, Italy, Australia, not sure about Germany, but also. Apart that, we feel very good about our share performance. With regards to France, please bear in mind that last year, most probably we anticipated the market. Now we are comparing ourselves with an anticipation in sales that we had last year. Overall, let me say that we feel very good about our ability to overperform in most of the key markets in which we operate.
With regards to the last part of the question, and in particular to the profitability improvement, you know, this quarter was, let's say the most challenging one in terms of comparison base, because we are beating record on records. What I mean is that last year already our profitability was the record one for quarter one, and this year we have again increased our profitability, reaching, I would say, a remarkable profitability level of 24.5% EBITDA margin, which is very, very strong. We envisage also to continue to deliver a stronger profitability increase going forward. Our confidence is coming from the fact that, as you can see from our outlook for in terms of organic growth, which is above 3%, we envisage a good strong organic growth for the remainder part of the year.
As I mentioned during my speech, we have already quite a good visibility about quarter two, and we are very positive also by the momentum that we see in terms of organic growth. We envisage the increase in terms of profitability coming partly from operating leverage, but also from the execution of our Fit for Growth programs, which will deliver increasing results going forward.
Perfect. Thank you.
Next, please.
Next question is from Andjela Bozinovic, BNP Paribas.
Hi, good evening. Thank you for taking my question. I have two.
The first one is on guidance and the second one just on the GN deal. On the guidance, I understand that the above market growth of above 3%, that's guidance for the organic part.
Yeah.
Can you give us an indication on what should we expect for the Fit for Growth parameter and the scoping impact for the group for the full year? The second question is on the GN deal. Assuming that the deal closes by the end of the year, could you discuss what theoretical rate you expect to secure financing at, just given the rates are very uncertain at the moment. Is this already set? Thank you.
You mean interest rates?
Yes, exactly.
Okay. I will answer to the first one, and I will let Gabriele to answer the second one. With regards to the first one, as you can see, in the first quarter, the impact of Fit for Growth was - 2.4, 2.5, and this is more or less slightly above will be the impact for the year. You can assume between 2.5% and 3%. With regards to M&A, you can consider a positive impact of about between 0.5% and 1%. I would say more towards the 1%. Mainly driven by the carryover, which, yes, will be around 1%.
You can also assume, an organic growth that at the moment we have identified in above 3%, and then we'll see throughout the year. With regards instead to the.
The debt rate, of course, is difficult to say how much is gonna be the IRS seven-year. As you know, it was much lower a couple of months ago, then today it stands at around 2.9, 3.0. Let's say, let's see how the interest rate is gonna move, I mean, the IRS. For what concern our spread, I mean, the deal is gonna be a double B plus bond for sure, because, I mean, regardless of the amount of capital raised, we made the example before, either 750 or something much, much lower, we're gonna end up below four times leverage, including lease liability. Since Standard & Poor's improved our business risk profile, potentially, we're gonna stay regardless of the NFP increase in the double B plus area.
Last time with the double plus we got a record over 140 BPS spread, which is gonna be difficult to be achieved, but in any case, it is gonna be, in any case, a good spread of at least something, 160 or 170 like this. Depending on the IRS, this is basically the interest rate at which we are aiming to finance the bond, assuming seven-year, of course.
Perfect.
Sorry. Probably, since we will put together the debt financing of the operation plus our bond, probably it's gonna be a couple of tranches with different maturity. We also have the opportunity to sign a loan facility with, I mean, the pool of the banks, which were very willing to syndicate the current, let's say the former bridge financing to a senior loan. Let's say that also on the debt part, we are not very much scared.
Okay. That's very clear. Thank you. Just to confirm, that is not already signed, like the interest rate is not already signed?
No, I mean, the interest rate today is the interest rate which will lead us to the senior loan up to the takeout, which will be done through equity and debt. Basically, this is the amount of money we have available in order to close the deal, in order to pay the EUR 1.7 billion cash to GN. Of course, our aim is to take it out through equity and debt. The debt is gonna be partially or large majority DCM and the portion maybe through bank. I wanna say that it was flexible. Of course, this is the financing for the closing, then we will have to refinance within the next 24 months.
Okay, perfect. Thank you very much.
Thank you.
Next question is from Veronika Dubajova, Citi.
Good afternoon, guys, and thank you for taking my questions.
Afternoon.
I have three, if that's okay. I hope I won't get in trouble with Francesca, but one is very sort of technical, so hopefully it won't really count. My two big questions are, one, just on the organic growth rate at EMEA. I just want to understand, I think, you know, the data that we've seen from Demant, and I know it's for a different parameter, but, you know, they're sort of suggesting the European market grew 2%, your organic growth rate still tracking meaningfully below that. I know you've made some changes in leadership in a couple of the large markets.
I guess if you could maybe just comment on your performance in Spain, Italy, and Germany in particular, and I guess France as well, and how you feel like you're tracking against the market in those major markets, and is there anything else that you can do to improve that organic performance relative to market? That would be my first question. My second question is around the financing structure for the GN deal. Gabriele, you alluded to that a little bit, but I'm just curious what your thoughts are around that EUR 700 million equity component, given where the share price stands at the moment. What's your flexibility to get that leverage pretty close to four times and maybe reduce that equity component? What your thoughts are on it at this point in time, just given the market environment?
Maybe I ask my third technical one at the end because it's very boring and I don't want you to lose the train of thought on the other two.
I will answer the first one, and then I will let Gabriele to answer the second one. With regards to the organic growth of the EMEA, what in my opinion is very important to underline is the fact that, as I mentioned before, first of all, we have seen a progressive strengthening of our performance throughout the quarter. Also, we have seen a very strong start of Q2, which makes us very positive, of course, also for the remainder part of the year. In particular, I think that what is positive for us is that we see very good signs of recovery, in particular in our key markets like Italy and Spain.
In fact, as I said, and as I mentioned, we believe that in this market, we performed very well and we performed even above the market. I'm super happy about the kind of performance that we are seeing in Italy and also about the turnaround that the team has made in Spain. We have seen a softer performance in France. As I said before, most probably because last year, as we also discussed during our quarterly results, most probably we anticipated the growth of the market with a number of initiatives which started much earlier than the rest of the market. Most probably there is a, let's say, a timing effect on this regard.
Let me say to really summarize the fact that I'm becoming more and more positive about our prospects of organic growth in the EMEA. As I said, most probably we are now, both because of a more supportive market, in the markets which in the past were slower and important for us, like Italy and Spain. We see traction there. This is very important to us. Most probably, you know, overall, we see a supportive market in Europe. Probably also because of what we have been saying for long about the fact that something type of demand anyway was building in the EMEA region, which in a way was below the historical levels in terms of growth, maybe starting to release.
To really summarize, I'm pretty confident and positive about our prospects of organic growth in the EMEA region. With regards to the second part of the question, I leave to Gabriele.
Yeah, absolutely. Veronika, when we decided to, I mean, finance with an equity issue-
Of up to EUR 750, we really took a very conservative stance, you know. Just to give you an idea, today, if I include the lease liability, our current rate is at 2.7, and when we back solve the equation without including the synergy in order to lend, we wanted to lend at three times, so just at 4.3 times additional leverage compared to where we stand today. Super conservative after a very strong, a very large acquisition with a lot of synergies. Without considering synergies, what we did was, let's say, if you wanna say super conservative, we raised this amount of capital, we lend at three times.
With a combined EBITDA of EUR 750 million, including Amplifon, GN, and the synergies, you can assume that each EUR 750 million of additional debt represent one time EBITDA. One time the additional leverage. Basically, if you assume for a second zero equity raise, just debt, we could end up at four times. Four times following our calculation. I mean, Standard & Poor's, for example, include some additional item. For them, it could be 4.2x . Probably with 0 equity raise, we would end up at BB flat, which can be also something sustainable. As you know, we are always very conservative.
Frankly speaking, my belief is that something in the middle between zero and EUR 750 is probably the best choice today if market is positive. If you ask me the same question, maybe at the share price of some months ago or a couple month, one month ago, EUR 8 or EUR 9 for sure, I would have excluded any kind of equity issue. For the future, let's see at how the share price is gonna evolve. When the market will be positive, I think, my personal belief, something in the middle between zero and EUR 750 is the right amount. Again, we have a lot of flexibility in terms of timing. I mean, the senior loan is basically in life for the next 24 months, so we are not at all in a rush.
I'm sure that we will see good market conditions in order to raise this amount of money.
That's super helpful. Thank you.
Next question is from Oliver Metzger, Oddo BHF.
Yes. good afternoon. Thanks a lot for taking my questions. The first one is about the indicated recovery in Italy and Spain. You appear very optimistic, but it's my understanding that last year, in Q2, it was very, very weak in both countries, potentially somewhere at the minus 10% level. Would you describe the recovery already as fundamental or which role plays the low base in this Q2 for you? The second question is about you named the potential pent-up demand of the market because of some slower growth over last years. Do you have any indications for this?
When I look for the overall hearing industry, everybody has something more muted expectations after some years of some slower growth, and that would be great to hear some more insights about that. Thank you.
Thank you. Thank you for the question. With regards to key markets for us like Italy and Spain, I would say that I'm confident because we see a more supportive market. It is true that last year, they performed in slower. We see strengthening signs of recovery. Definitely, last year was not minus 10%, as the performance was much less than that. They were negative, but not that much. We see a more supportive market.
What I would like also to underline is the fact that we believe that the results that we are delivering and the kind of outlook that we are today sharing with you is not driven only by a recovery of the market, but it's also driven by all the work that we have done last year in order to improve our performance. What I can tell you is that we have done a huge, huge amount of work, starting from advertising and communication to the protocols and the operations in the stores. I'm very positive because from one side, we see a more supportive market. On the other side, I can see the results of all the work that we did last year.
With regards to the contribution of the pent-up demand that I mentioned, I mean, probably we are seeing now some pent-up demand because, you know, at the end of the day, our services, product and services are not discretionary ones. As I've been constantly saying, we expect that some pent-up demand has been built in the market, sooner rather than later, this will be released. I expect this, most probably a part of it is starting to release now.
Next please.
Okay. Very helpful. Thank you.
Next question is from Martin Ruler, Jefferies.
Hi. Thank you, thank you very much for taking my questions. I would have two very quick ones, if that's okay for you, please. The first one would be on the transaction with GN Hearing. I would be curious to hear your thoughts on whether you've started to see some retaliatory measures from your comps in light of the transactions. I would also be curious to hear your thoughts on the sort of discussion you currently have with your commercial partners and especially in the U.S., whether it be on the insurance segments or with your franchisees. The second question would be-
Martin, I'm sorry.
Yeah.
We didn't take the question. Can you please repeat?
Yes. The question would be on, the transaction with GN Hearing.
Yeah
More specifically, whether you started to see some retaliatory measures from your comps. I would be also keen to hear your thoughts on the some sort of discussions you have with your commercial partners, especially in the U.S. at the moment, whether it be on the insurance side or with your franchisees. That's the first question.
No. Well, first of all, let me underline once again that of course we are going through all the regulatory approvals, in particular antitrust, et cetera, et cetera. Therefore, there is, I mean, Amplifon and GN Hearing are going to act as two very separate companies until closing. This kind of questions are not relevant, to be honest, at the moment. We can't really comment on possible discussions with third parties, et cetera, et cetera, because we are not having these discussions, because we are very respectful of our obligations while a process is in place.
Okay. That's very clear. Thank you. The second one would be very quick and would be focused on managed care. At the full year 2025 results, you've announced the termination of a contract in that channel. Given your comments on the insurance segment in the U.S. still being depressed at Q1, I would be keen on hearing your thoughts on whether you are further considering measures to streamline, sorry, your exposure there or not.
No. The, the answer to your question is no, because now we have a more, I would say, healthy and balanced portfolio of customers, which we are happy with. No, but it is a matter of fact that the managed care insurance channel continued to underperform in the first quarter. What is positive, I would say for us, is that instead, the private pay channel, which is the one in which we are more exposed, actually was very positive. That, in for us, is a good, a good trend.
Next, please.
Next question is from Niels Granholm-Leth, DNB Carnegie.
Thank you for taking my questions. First question would be about the ongoing shift towards ITE hearing aids, and it seems like the manufacturers are making a push towards this category, which many years ago made up a much bigger part of the market. How would that such a trend affect your profitability in your stores? My second question would be on your plans to convert Miracle-Ear stores from franchise stores to company-owned stores. How is the acquisition of GN Hearing affecting your plans to convert all Miracle-Ear stores? Thank you.
Thank you. Thank you for your question. Very, very clear. With regards to the first part, and therefore the mix of ITE in our sales in retail, we are not seeing any significant shift year-over-year. The mix has been more or less the same, I would say now for a while. With regards to the second question and the conversion of some of our franchisees into direct retail, of course, we have been very active in the past, acquiring many of our major franchisees. Of course, now in terms of M&A, the plan is to invest less in the coming months, because of course, the priority will be to the leverage given the GN prospective acquisition.
Of course, if there will be some opportunity, clear opportunities, we will get them, but more, let's say, on an opportunistic fashion.
If the trend towards ITE would get to your stores as well, how would you say that the profitability in retailing is between hitting ITE products and BTE products?
No, I don't expect any significant impact coming from that. Not at all.
Okay. Thank you.
Next question is from Domenico Ghilotti, Equita.
Good afternoon. Two question. The first is on the Fit for Growth program. If you can give us a sense of how much what is the contribution that you are expecting in the 100 BPS profitability, and if you see upside looking at 2027, compared to your 150 to 100 BPS guidance. Second, just on the current trading, is it fair to say that in Italy and Spain, particular in Q2 you had a very quick June, so the comparison will be will become even easier entering to the last part of second quarter?
Yeah. Well, I will answer first to this second question. Yes, yes, of course, in Q2, we will have some benefits coming from the comparison base of last year and most probably in June. Also for this is also one of the reasons why, of course, we are very confident about our performance in Italy/Spain. Let me say, let me underline once again one thing that is for me very important, which is, I believe that in many markets, and including Italy and Spain, we are now seeing the result of all the work that we have done in last year.
We have done a huge amount of work in many different parts of the business, starting from, for example, advertising. We see very strong results from our latest campaign. We are also modifying our stores in order to be more proactive and pro-productive and to increase conversion rates. Spain has shown a very strong trend in terms of performance. I think that this year, these two markets will contribute very positively to the results of the company and the two of the AMA region.
Fit for Growth.
Fit for Growth. Yes, of course. We are very happy about Fit for Growth, as you know. I mean, we are going full steam in all the different parts, in all the different streams. Clearly, the 100 basis point is a combination of the Fit for Growth program, which had a limited impact in Q1 and the impact will increase in the next quarters. And a combination of operating leverage. We feel also very, very good about this target for the year, which will lead to a material improvement in terms of profitability coming back to more than 23.5, 23.6 profitability in percentage.
Nothing particular to add about 2027, apart the fact that everything is going according to the latest plan that we shared with you.
Okay. Thanks.
Last question, please.
Last question is from David Adlington, JP Morgan.
Thanks for the question. Most of them have been asked, but maybe just on the cadence of the growth through the first quarter, obviously it sound like it got better as the quarter went on. I think you started in negative territory in January, and then it got pretty better. As you've gone into April, are you already tracking at more than 3% in April as you think about the second quarter?
Well, as I said, I mean, yes, you're right. I mean, what we have seen is was a slow start, slower start in January, and then we have seen a progressive strengthening of our sales and also of the market. We have seen this momentum continuing, I would say, very strongly into April and also in terms of activation of trials, which are a good proxy of our sales also in May. This give us the confidence that we can definitely achieve very, very strong organic growth also in the coming quarter. That's why also we have set as an outlook an organic growth for the year above 3%.
Sorry, I've noticed there was still, Susannah waiting on the line, so maybe we can have, the last two questions from, Susannah Ludwig, please.
Last question is from Susannah Ludwig, Bernstein.
Great. Good evening, and thanks for squeezing me in. I have one question and then just a quick follow-up to Veronika's on equity issue. I guess the first question would be on pent-up demand in the market that you think is starting to be released. What do you think can be a catalyst to release this? For example, all the major manufacturers are expected to release a product in H2. Could that play a role? Or on the flip side, you know, are inflation concerns, could that potentially have a negative impact on this release? So for example, are you seeing anything in the U.S. HIA April data that might make you concerned there? Then I guess the second is just a follow-up.
You know, you noted that if your share price was trading where it was one to two months ago, you would use much less equity. Can I ask on the flip side, if your shares are trading a lot higher, say in the range of 12 to 13, then is it more likely that you use closer to the maximum EUR 750 million in equity?
Yeah, I would, I would ask Gabriele.
Of course. I mean, in terms of pricing of the debt, price of the share, we cannot comment at the moment. I mean, we want to see a market supportive for an equity issue, and we believe that, I mean, if the market for Engage is improving as it did during Q1, for sure we will see much better situation than the current one, frankly speaking.
Thank you. This concludes today's call. Thank you all for interest and attendance, and we kindly ask operator to disconnect. Thanks. Bye-bye.
Thank you. Thank you, everyone. Thank you. Bye.
Ladies and gentlemen, the conference is now over. You may disconnect your telephones.