Good day, and welcome to today's Clariane Q3 2024 Revenue Conference Call. Throughout today's recorded presentation, hosted by Sophie Boissard, CEO, and Grégoire Lovichi, CFO, all lines will be in listen-only mode. Later, we will conduct a question-and-answer session. You may register for a question at any time by pressing star one, star one on your telephone keypad. You may also submit your question via the webcast platform. And now I'd like to hand the call over to Sophie Boissard, CEO. Please go ahead, ma'am.
Thank you very much. Ladies and gentlemen, dear investors, good afternoon. Welcome to the Clariane Group's third quarter, twenty twenty-four presentation. I am Sophie Boissard, Group CEO, and I'm today with Grégoire Lovichi. Grégoire joined Clariane a little over a month ago as Chief Financial Officer and member of the Group Management Board, and I'm delighted to welcome him to Clariane. Let us begin on slide five, with the four key highlights of this quarter's. Over the first nine months of twenty twenty-four, Clariane recorded dynamic revenue growth of 6.3% on an organic basis. All business segments and regions saw growth, and the average occupancy rate in care homes, which remains our main segment of activity, grew by close to two percentage points, confirming the back to normal momentum.
As the year comes to a close, the group is confirming its 2024 guidance of organic revenue growth over 5% and an EBITDA at least stable in value. This, excluding IFRS 16 and disposals, and despite the absence of contribution from real estate development activities in 2024, activities that generated close to EUR 50 million in 2023. Finally, and this is the fourth highlight, the quarter saw us move forward on the final component of the plan we announced one year ago to strengthen our balance sheet as we are progressing on the last part of the plan. I mean, the EUR 1 billion disposal program.
We have been securing, at end of September, 48% of the total target of EUR 1 billion of gross proceeds of disposals, to be compared to 40% at the 30th of June, which means an improvement of EUR 80 million during the summer. Let us now have a look at the main drivers of our revenue growth that stood at 6.3% in organic terms and 5.4% on reported basis. This increase was well-balanced, fueled by both volume and prices. Volume first, with a 2.3% increase in business volume, coming mainly from nursing homes, with a net positive impact of EUR 85 million revenue.
This was a result of a higher volume of occupancy by 2 points in mature networks and additional capacity coming onstream, especially in the Netherlands, which saw 10% of additional capacities recently opened, and in AGV network, our shared housing network in France. Price and case mix management are the second driver of the growth, with overall a 4% revenue increase, generating a positive impact of EUR 150 million , coming from all regions and particularly from France, Germany, Belgium, and the Netherlands. The slight negative impact from change in scope amounted to minus 0.9%, representing diminution of EUR 33 million in total on revenue. I will now hand over to Grégory to comment in more detail the period figures by sector and geography. Grégory, the floor is yours.
Thank you, Sophie, and hello to everyone. My name is Grégoire Lovichi. I joined the Clariane group after having been CFO of the food and catering company, Groupe Le Duff. I began my career as an auditor at Ernst & Young, then joined the Lafarge Group, where I was a 14-year tenant. I was successively in charge of corporate finance, cash optimization roles, M&A, and was a CFO in several countries. So let me begin by looking at the breakdown in growth of our various activities on slide 8. As you can see, the nine-month revenue increase was well spread throughout our balanced portfolio. Long-term care, which accounted for just over 62% of the group's business activity in the first nine months of 2024, grew 7% on an organic basis. The increase was powered by ongoing upticks in prices, particularly in Germany, and by increase in volume.
Specialty care accounted for around 25% of the group total, with organic growth of 3%. And revenue in community care with brands include Petits-Fils and AGV, amounted to EUR 491 million in the first nine months of 2024. This represented almost 13% of the group total, along with organic growth of 9.8%. This performance was driven by further development of the shared housing network and ongoing strong growth in the home care network. On slide 9, we mapped out the evolution of our occupancy rates. The continued improvement in our occupancy rates since mid-2022 has been the main driver in our revenue expansion in long-term care as the sector returned to normal, from a low of 85.6% in Q2 2022, we've now reached 90.7% in Q3 of this year.
That's a five hundred and ten basis point increase. On a year-on-year basis, the improvement stands at almost one hundred and ninety basis points, with a nine-month occupancy rate reaching 90.2%. Looking ahead, this trend is very positive. We have room for embed growth in our existing capacity. To note, since Q2 of this year, the price effect has overtaken volume to become the main driver of our revenue increases. On slide ten, let's dive into our revenue bridge for the first nine months. As Sophie pointed out, for the period, we saw reported growth of +5.4%, driven by both volume and price improvements, translated into organic growth of 6.3%. The most important aspect to bear in mind is, how important the prices component has become in the mix that drives the increase.
It drove two-thirds of the nine-month progression in revenue, and accounts for almost three-quarters of the increase in Q3. Let's break this down further for the nine-month period. The volume increase remains strong quarter after quarter and contributed EUR 85 million, or +2.3% to revenue growth. This was mainly supported by strong occupancy rate increases in our long-term care sector, particularly across our key regions. Furthermore, the specialty care activity, especially in France and Germany, added another EUR 13 million, and community care also provided a boost of EUR 8 million. As I pointed out, care, case mix, and price effect was more accretive, adding a significant EUR 150 million revenue, representing +4% growth. This includes a notable EUR 127 million uptick from price increases in long-term care services across key markets like Germany, France, and Belgium.
Finally, we saw a change in perimeter effect of - EUR 33 million , representing a minus 0.9% impact on revenue. On slide 11, you have the geographic breakdown in our revenue growth over the first nine months. You can see that here, too, our growth is well distributed, with all regions growing well on an organic basis, with Spain leading the way and Germany demonstrating the strength of its recovery. Let's now move to the analysis by country on slide 12 and begin with France. Revenue remained firm in France throughout the period, rising by 4.9% on an organic basis. Organic revenue growth in the long-term care segment was 4.6% in the first nine months of the year.
That increase reflects the positive impact of both active revenue management and higher volumes, with the average occupancy rate continuing to rise to 89.1%. The specialty care segment achieved organic revenue growth of 2.6% in the first nine months of 2024, and the community care segment achieved strong growth driven by robust demand for services, such as those offered by Hagevik and Petits-Fils. In Germany, revenue improved significantly in the first nine months of 2024, driven by a higher business volumes and the impact of price increases negotiated in 2023 with local authorities. Business growth and the strategy of increasing prices, combined with the recovery plan measures, have enabled the group to begin significantly improving its performance since the start of the year.
Over the period, long-term care posted organic revenue growth of 9%, supported by price rises and an occupancy rate that rose to 89.6%. Revenue in the community care segment grew by 5.1% on an organic basis. On slide 13, now with Belgium and the Netherlands. Growth remains strong in the BNL region, with revenue rising by 7.7% on an organic basis in the first nine months of 2024. In Belgium, revenue during the period totaled 483 million EUR, up 5.6% on an organic basis. The long-term care segment posted organic growth of 6.6%, supported by an occupancy rate that rose to 91.8% for the nine-month period and by regular prices rises.
In the Netherlands, revenue was EUR 114 million, up 17.9% in organic terms. All three of the group's business segments in this country achieved firm growth during the period. To note, long-term care revenue rose by 18.6%, with an average occupancy rate of 72.8% in the first nine months of the year, versus 75.9% in the same period of 2023. The decrease reflects new beds coming on stream, particularly in three new greenfield-like facilities in favorable market conditions. Moving now to Italy and Spain on slide 14. The Italian market remained dynamic in the first nine months of the year, with revenue up 3.4% in organic terms.
Long-term care revenue grew by 6.4% on an organic basis, supported by a high occupancy rate of 96.3% on average during the period. Revenue in the specialty care segment, which accounted for almost 44% of the total in Italy, was stable during the period. The community care segment, which accounts for almost 8% of the group's revenue in Italy, achieved organic revenue growth of 9.1%. Our last region posted solid revenue growth of 14.3% on an organic basis. It includes Spain and the whole of the UK business that was deconsolidated on ninth of April after the group sold all its assets and business activities in that country.
In Spain, the sum of revenue of EUR 184 million in the first nine months of 2024, up 13.4% on an organic basis. Revenue in the long-term care segment, which accounts for almost 21% of revenue in Spain, rose by 10.3% on an organic basis. This was supported by a slight increase in prices and an average occupancy rate of 89.8% over the period. Revenue in the specialty care segment, almost 75% of the total in Spain, rose by 11.1% in organic terms. That growth resulted from the group's strong momentum in this business segment, which is being boosted by the expansion of its network and service offering following the acquisition of Grupo Cinco. I will now hand back to Sophie to conclude on our refinancing plan and outlook.
Thank you, Grégoire. Let us now move to the update of the plan to strengthen the group's financial position on slide 16. As you know, with the successful completion of the capital increase with preferential subscription rights on the fifth of July, 2024, Clariane has completed the first three stages of this plan, announced exactly one year ago. The fourth and final part of the plan consists of a program to dispose of operational and real estate assets and to form asset partnerships. Program intended to refocus our business activities geographically and to raise around EUR 1 billion in gross disposal proceeds. On slide 17, you have reflected the principles that have guided and will continue to drive our asset disposal strategy. Since the start of the financial year, the group has already performed seven transactions of various size, representing almost EUR 500 million.
In Q1, we sold the full UK platform and some real estate assets in the Netherlands. In Q2, we secured the home care business disposal, the hospital at home care business disposal in France, after a successful competitive process. And during the third quarter of 2024, we continued to implement this program with four smaller size transactions, mainly real estate, one in France and three in Spain, for an additional amount of around EUR 80 million. We are currently progressing on a further set of various disposal process, around seven further processes ongoing. Some of large size, others of smaller size, in various geographies, which will allow us to tap different buckets of potential buyers. For obvious reasons, I will not be more specific today.
Just note that we are confident to achieve on time our target of EUR 1 billion in gross proceeds from disposal by the end of 2025. Let me now conclude on our outlook for 2024. We expect organic revenue growth to remain above 5% and EBITDA, excluding IFRS 16 and expected disposal, to remain at least stable. This despite the absence of contribution from real estate development activities in 2024, activities that generated EUR 48 million in 2023. Our 2023-2026 outlook, as presented at the Capital Markets Day in May, is also reaffirmed. As we move ahead, the group will continue to focus on improving its performance in a balanced way and on maintaining a high level of quality in all our activities.
On the strength of the momentum resulting from our At Your Side corporate project, along with our better support efficiency program, we are looking ahead to the coming months with determination and confidence. I thank you for your attention. Operator, can we move to questions?
Thank you. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad, and please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. And you may also submit your questions via the webcast. We will pause just a moment to allow you to signal. While waiting for the questions over the phone, we will now take questions from the webcast.
Yes, first question regarding the remaining maturities for the rest of twenty twenty-four, and what is your strategy to address your 2025 and 2026 maturities?
Yes, thanks for the question. You know, if you, regarding the maturities, I will invite you as well to have a look of what has been published, you know, last June, where we were mentioning the remaining maturities of twenty twenty-four. Meaning that, we have still a tranche of Schuldschein, mainly, and this was mentioned in June, of EUR 88 million and the remaining amortization of the real estate debt.
... The next question is regarding the EUR 80 million of disposal in Q3. What is the part of the real estate disposal, and what is the part of the OpCo that had been sold?
Most of the gross disposals come from real estate. It's 90% of real estate assets basis.
Thank you, Sophie. Next question: Are you satisfied by the 2025 PLFSS for your activities?
It's too early to tell, actually. I think that the type of companies with intensive labor and staff costs and salaries being mainly between minimum wage and three times minimum wage, so that's exactly our profile, will be to a certain extent protected by the change expected in the regulation on social charges and tax on wages. So that's what I can say based on the draft bill that has been presented to the parliament.
Thank you, Sophie. Next question, regarding the Q3 real estate disposal-
And sorry, just as a follow-up to the previous question, of course, PLFSS, so the is also covering the subsidies that will come to our nursing home and to our medical activities. So far, we have only been informed of the overall indexation that definitely is designed to protect or to secure funding for the nursing home and elderly care segment. That's what I can say, but I can, of course, not say yet how this overall indexation will be transformed into tangible pricing and subsidies for the private companies.
And when it comes to the medical activities, post-acute and mental health, again, we only have the overall indexation that has been communicated. There's a plus 4%. I doubt that we will get 4% as an indexation. But again, it's too early to tell, and we are actively exchanging with the healthcare ministry. That's what I can tell today.
Thank you, Sophie. Next question, regarding the Q3 real estate disposal, could you comment on the cap rate achieved, and what was the leverage on the assets sold, meaning real estate debt?
You know, on the capitalization rate, what we can say and what we saw, you know, it's different obviously from one country to the other, but on the cap rate has stabilized over the summer and are the same that we have observed in Q2. I think it's an important information that we have to bear in mind at that stage on that point there.
Thank you, Gregory. Next question, regarding the growth in occupancy rate in France, how much of this improvement will you attribute to a general tightening of the market versus gaining market share from one of your challenged competitors?
Since the various players do not provide granular information on the occupancy, difficult to tell. What I can tell you, because there has been recently a publication on the occupancy rate in France from 2020 down to end of 2023, and then we have been able to compare our own occupancy rates with this overall metrics for the industry. It's covering all type of operators, that we are to a certain extent overperforming the market, especially in the densely populated areas such as Paris region or Marseille, so the large metropolitan areas. So it probably means that we are performing better than some of our competitors at least in those regions, but I cannot tell you more.
What I can say is that we have really a very sound and regular progression, and a very strong commitment of all our networks and facility managers to fully use and fully occupy the existing capacities. And this is what it has to be, because the needs are there. Maybe one further comment, we also see some changes in the way patient residents use our facilities. The more we go, the more we see an increased activity coming from the acute hospitals. So we are definitely, as I already told you many times, traveling to a more medicalized activity, and directionally, I think that's what elderly care segments will be about.
Thank you, Sophie. Next question is regarding the next round of staff compensation negotiation in France and Germany. What level do you anticipate?
I'm sorry, I did not get the word?
The staff compensation in France and Germany, and what level of increase in compensation, if any, do you anticipate?
Okay. Very markets are very different from Germany to France. In Germany, there will be an additional overall average wage increase of roughly 10% early January. This wage increase has been already anticipated in the pre-negotiated rates. So, I would say we are more and more in Germany operating in a regulated environment, where we are able to plan the wage increase and to take them in advance and to integrate them in advance in the rates. So that's really very good news compared to the time lag effects that we had to experience two years ago. That's for Germany. In France, this is definitely more about negotiation on tariff with our unions.
In 2024, summer 2024, we negotiated and we agreed with our two main unions at Clariane on an average increase of 2% and 3% for a selected nurse position. I do not anticipate a different trend next year, or probably even lower, because definitely inflation is now very low again and below 2% in France.
We have a live-
Yeah, we have a live question, so Sergei, please proceed.
Of course. We have a live question from Alex Simon, from Pekao Capital. Please go ahead.
Thanks for taking my question. Congrats for the results. I'm coming back on the question regarding upcoming maturities. So the remaining twenty-four maturities seem to be funded with a capital increase, where I understand that the proceeds from disposals are directed towards the term loans maturing in 2026. So what's the refinancing plan of the two hundred and seventy, of the 2025 maturity, so real estate debts Schuldschein on your PP. Do you expect a straight refinancing or on how confident in your, ability to refinance? Thank you.
Thanks, thanks for the question. I think, yeah, just to wrap up what we are saying, you know, last June and over the summer, you know, since the last capital increase and the work done on the disposal program that we have explained, we have worked this topic story of liquidity to face upcoming maturities of 2024 and 2025. I think this is a point that we need to state here. Obviously, we are always working on putting in place new debt, sorry. We were speaking, for example, of real estate debt.
But the main topic here is that since capital increase and disposal plan, we have enough liquidity to face maturity of 2024 and 2025.
Thanks for that. Very clear. I'll jump back to the queue.
Thank you, Sergei. We, I think we have another question from the live.
Yes, we have a question from Constantin Gumenita from Caius Capital. Please go ahead.
Hi, good afternoon. Three questions-
Good afternoon.
Three questions for me, please. So first, on French occupancy, very helpful color. Could you also expand a little bit on how you expect occupancy rates to evolve over 2025 versus this year? Second question, on community care, could you give a bit more color as to what's driving the growth, and how much cannibalization are you seeing from that on long-term care? And third question, could you please remind us the margin profile for each of long-term care, specialty care, and community care?
First question, what do we see looking forward in terms of further occupancy increase? We have been guiding on being back, at least for France, the largest network, somewhere around 92-93% directionally by 2026. And we are sticking to that approach. Of course, if we can be above, beyond 93%, it will be a good thing. But so we are seeing a kind of step-by-step increase with a higher churn related also to the more medicalized type of stay and care we are providing in those facilities. So that's directionally where we are.
What is driving the community care development, which is actually a clear momentum in France of course, but also in Germany and in Belgium and in the Netherlands. This is mainly additional capacities, because we are actually now developing full force the shared housing network of AGV, and same in the Netherlands. And this is not cannibalizing the nursing home network, because we are actually located in different areas. Shared housing is really a concept that is designed for rural areas, where actually there is no nursing home. And this is anyway a concept that is designed for agile aging people, mainly the one that are alone at home.
But still a valid one from a medical point of view. So this is definitely complementary business and very much driven with a significant new build pipeline that is now coming to the market. Margin profile, I think, I can only say that what we have communicated in our midterm plan, we aim to be back from the low 12% EBITDA margin pre-IFRS 16 we posted last year to something around 13%-13.5%. And with a kind of very consistent contribution from most segments from the three segments to this average margin.
Mm-hmm. And are you able to disclose roughly what of that 13%, let's say, how much is long-term care? How much is specialty care, and how much is community care? Just so that we get a sense for the margin differences.
I can only walk you to what we communicated on the half year, which actually where we were very specific, not on EBITDA, because it kind of could be misleading, but more on EBITDAR, meaning so before rent.
Mm-hmm.
So we are on the nursing home, so EBITDAR before rent is more. We are more kind of above 25% EBITDAR.
Mm-hmm.
And we expect to be back to that level at the end of the three-year plan. And on the specialty care since definitely the business case is a little bit different. We are more somewhere between 20 and 22%-23% of EBITDAR, so before rent. So that's basically the margin profile of those main segment of activities.
Great. Thank you so much.
Serge, I think there is no more question live and no more question on the website. So we probably will go through the final remarks. So Sophie, please.
Yes, thank you very much for your questions today and for your interest in Clariane. Our next call is set for February 24th, full year results, on the 24th, sorry. So our next call will take place on 24th February 2025, with our full year results publication, and until then, I wish you a great end of the year.
[Foreign language]
Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen, you may now disconnect.