Welcome to the Clariane 2026 half-year results presentation. For the first part of the conference call, participants will be in listen-only mode. However, during the questions and answer session, participants are able to ask questions. This can be done by dialing pound key five on their telephone keypad or by typing a question in the chat box. Now I will hand the conference over to the management team. Please go ahead.
Thank you very much. Ladies and gentlemen, dear investors and financial partners, good afternoon and welcome to the Clariane Group's 2026 half-year results presentation. I am Sophie Boissard, Chief Executive Officer of the Clariane Group, and together with Grégory Lovichi, the Group Chief Financial Officer, I will present our results for the first half of 2026, the refinancing transaction we completed during the period, and our outlook for 2026 and 2028. Let me start with the agenda. I will begin with the main highlights of the first half and the progress we made on our operational, financial, and non-financial priorities. Grégory will then take you through the income statement, cash flow, debt, and our own real estate portfolio. I will return for the final section on the drivers of our performance and of course, on the outlook. Let me now start with the key highlights.
The first half results reflect the sound execution of our roadmap and confirm the solidity of our fundamentals. The strong improvement in our operating performance, underpinned by the quality of our activities, the discipline in execution, and the relevance of our model, place us in a very favorable position with regard to our medium-term objectives. Three messages stand out. First message, the Group delivered a clear improvement in operating performance. As you see here on the slide, organic revenue growth reached 4.6%, supported by volume growth for 1.6% and a pricing gain of 3%, with all activities and all geographies contributing. Pre-IFRS 16 EBITDA rose by 14.9% on a pro forma basis excluding disposals, and the margin increased by 90 basis points to 10.4%. Opco EBITDA grew by 25.1% on a pro forma basis, driving a 100 basis point margin increase to 6.2%.
This reflects the first impacts of the various operational levers we are implementing, including higher volume on the existing network, a diligent case mix management, and several cost efficiency programs, which results in a positive price-over-cost effect. Second message, as you see here on the slide, we have further strengthened and simplified our balance sheet structure. Following the assignment of Moody's and S&P ratings, we will gain access to the debt capital markets and issued more than EUR 1 billion over the last six months. We have streamlined and strengthened our capital structure, and we have also extended our debt maturity profile. We are now benefiting from a very strong liquidity position of more than EUR 1.7 billion before the ODIRNANE repayment that would happen in September.
Holdco leverage as published stood at 4.9x on a reported basis, Grégory will explain later on how it translates in our balance sheet structure after repayment of the two hybrid bonds we had. Third message, we confirm both our 2023/2026 outlook and our 2025/2028 midterm plan outlook. The strong operating momentum achieved during the first half, together with the refinancing completed and the implementation of our corporate roadmap Succeed Together, gives us the means to execute our strategy with confidence. Let me now walk you through the key financials. I have already presented the main items of the P&L. I will therefore focus here only on the complementary cash flow, balance sheet, and portfolio indicators shown on the right hand of the slide. As you see, operating cash flow increased by 8.3% to EUR 144 million, reflecting the strong operating performance achieved during the period.
Net financial debt, excluding IFRS 16 and IAS 17, stood at more than EUR 3 billion at the end of June, down by EUR 539 million compared with June 2025. Net profit attributable to the Group stood at EUR -42 million, and the post-IFRS 16 at EUR -48 million. These figures include EUR 51 million in exceptional costs related to restructuring and disposal transactions we have executed over the last two years. Finally, the gross value of our real estate portfolio was EUR 2.4 billion, broadly stable excluding perimeter effects, while net asset value increased by EUR 90 million to EUR 515 million versus December 2025. Let me now say a few words about the ESG milestones achieved in H1 2026. The progress achieved on this dimension also reflect the central role of our mission commitment in Clariane's operating model, its value creation, and long-term resilience. I would like to highlight three dimensions.
The first one refers to social dialogue and human resources. We have renewed the agreement establishing our European company committee for a further four years with unanimous support from the members and the EPSU Trade Union Federation. We agreed with the workers' representatives that we would work on an agreement at European level to further promote common occupational health and to prevent absenteeism and workplace accident. We have also decided to work with the workers' representatives on artificial intelligence and how we can best roll it out in our operation. When it comes to HR and to training and talent development, we have also continued to invest in leadership and internal development. We have launched a new program called OLM, Operational Leadership Masterclass, dedicated to regional directors, and we have already 40 participants among the Group senior managers.
The same program will be rolled out in Germany during the second half and also in Belgium, with the aim to reach the target of 75% of facility directors and operational leaders promoted from within by the end of 2026. In France, we initiated an innovative value-sharing and incentive scheme. It's called the Prime Opérationnelle de Progrès, benefiting to all Korian and Inicea facilities. This scheme is calculated at facility level, on a half-yearly basis and based on financial value creation beyond budget. Payment is, of course, conditional on mandatory quality of care indicators. Close to 50% of the facility could benefit from the incentive scheme over the first half, We aim to replicate the scheme across all the network in 2027. Let me now say a few words about quality of care and what we do in terms of medical research.
Our medical teams have brought a strong contribution on research on healthy aging and prevention over the last half. They have contributed to 60 research projects with very well-known universities and hospitals, including 24 indexed publications, and we are very proud about it. On digital solution in care, the benefits identified through the CAST experimentations, so a pilot project in Germany close to Munich, are now being rolled out more broadly. This includes and will actually be deployed everywhere, AI-supported full detection sensors to enhance patient safety and also, and that is actually the most efficient, voice-assisted care documentation that bring productivity gain for employees and also much more comfort in the daily routine. Last but not least, let me say a few words on the environmental side.
We have carried out in 2024 and 2025 a vulnerability analysis that had identified already extreme heat, heavy rainfall, and flooding as the main risk that potentially can affect our portfolio. We have started to translate this work, this analysis, into a climate adaptation plan for priority sites, with the related operating and capital expenditures integrated in our financial planning. I would like also to mention what we do in the dimension of energy saving. We have signed and/or are implementing nearly 100 energy performance contracts in France that took place end of 2025, and we are continuing this effort across the whole portfolio across Europe with a view to further reducing our carbon footprint, but globally, our energy consumption.
I would like now to say a few words about the very acute climate risk Europe is facing, and that is, of course, also a critical dimension for Clariane network. This slide illustrates how our climate adaptation work, the one I just mentioned, translates into concrete operational preparedness beyond regulatory standards, of course, and into support for local communities. The various weather events currently affecting many regions across Europe provide a very concrete illustration of what our responsibility and capacity to act are about. In France, all the 260 Korian nursing homes naturally comply with the requirements that were introduced following the 2004 heatwave regulation.
Each of our facilities has at least two air-conditioned areas supported by mobile cooling units. We have also installed a hotline with our key suppliers so that they are able to carry out urgent repair within a target time frame of two to four hours in terms of extreme heat condition. Beyond these measures, we have taken recently voluntary action by building and activating a dedicated internal heat wave response plan that we call Plan Bleu, Blue Plan, across the network. Our plan reinforces the monitoring of residents and patients and the coordination of health, technical, and human resources team. We have put in place a dedicated crisis unit at group level, which coordinates on a daily basis the response within each country. This dedicated crisis unit will remain in place all along the summer.
We are also making strong contribution to the communities around our facilities, as our teams have been doing in Bordeaux over the last days, by rescuing and hosting over 100 people that had to flee areas affected by the wildfires. The same happened also in the Madrid community. I would like to warmly thank all our employees for their daily commitment. Their responsiveness, their professionalism, their dedication remain the group's greatest strengths. Let me now comment how we regain access to debt capital markets. The ratings assigned in February, B+ by S&P and B2 by Moody's, have confirmed our access to debt capital markets and evidence the strength of the group's fundamentals. The swing in the roll refinancing transactions completed during the first half provide a solid foundation for the execution of our medium-term plan.
In total, more than EUR 1 billion was issued in demanding market condition and with solid subscription rates. The outcome is a simpler capital structure, a debt maturity profile largely extended beyond 2030, and greater visibility for the implementation of our business model, with a clear focus on three priorities that are reflected here. First priority, we will continue to fully leverage our existing capacities via an embedded growth representing roughly 7,000 beds in the nursing home segment. We are continuing developing patient activity in specialty care and enrich the service offering. The second priority is the pursuance of CapEx light development for disciplined capital allocation and with the maintain of strict selectivity for greenfield projects.
Last but not least, this is the third priority, we will continue actively managing the pricing and case mix to nurture positive price-over-cost effect, benefiting here from our balanced regulation profile between private pay resources and public funding, which represent each roughly 50% of our revenue. This combination of profitable and embedded organic growth, disciplined capital allocation, and active management of the pricing and case mix is the basis of our 2025, 2028 plan. Let me now say a few words about the operational roadmap we have designed to deliver on the plan. Here you see the operating priorities that form a clear operational roadmap supporting our Succeed Together plan and are directly linked to the public health needs identifying each region.
Here in the blue color, you see what we are focusing on for the long-term care activities, namely supporting the increase in care intensity and complexity within our facilities. We see that increasingly month after month. We are also working closely hand-in-hand with local hospitals, which are becoming our closest partners in care pathway for nursing homes. Last but not least, we are developing new support solution for relatives, for family helpers, including respite and short stay solution, which are offered in all our nursing homes across Europe. In the green line, you see what are our priorities for specialty care activities, namely promoting mixed rehabilitation pathways combining inpatient and outpatient care in all clinics. In addition, we are transforming our post-acute clinics into integrated geriatric platforms that can support aging population in the local communities. That is, of course, a critical need everywhere.
Last but not least, we are also developing on top specialized pathway in coordination with payer and local public agencies to cover segments such as addiction, mood disorders, neurological disease, and oncology. Across both segments, digital and AI-enabled solutions support not only quality consistency, but also the efficiency of our services, and at the end of the day, contribute to margin improvement. This combination of levers is central to the better support efficiency program. I will now hand over to Grégory, who will take you through the income statement, cash flow debt, and real estate portfolio in greater detail. Grégory, the floor is yours.
Thank you, Sophie. Good afternoon, ladies and gentlemen. I will begin with the group's revenue performance in the first half. As Sophie indicated, consolidated revenues stood at EUR 2,699 million, up 1.6% on a reported basis and 4.6% on an organic basis. All activities and all geographical areas contributed to organic growth. By activity, long-term care, which accounts for 75% of group revenue, grew by 5% organically. Medicalized nursing homes increased by 4.9%, supported by higher occupancy and pricing, while alternative living solutions increased by 5.7% organically. Specialty care, which accounts for 25% of revenue, grew by 3.2% organically. Specialty care and post-acute care increased by 1.9%, driven by higher volumes, particularly in outpatient care, and an improvement in case mix. Mental health grew by 6.6%, supported by the development of the network, particularly in Spain.
Looking at the geographical breakdown, Germany delivered organic growth of 7.2%, Belgium and the Netherlands 5.9%, Italy 3%, and Spain 15.5%. France grew by 1.7% organically. In long-term care, growth was primarily volume driven, with average occupancy rate in medicalized nursing homes increasing by 1.1 percentage points, while price increases remain limited in the country. Specialty care continued to recover, supported by higher outpatient volumes and the favorable impact of case mix improvements implemented during 2025. Adjusting the comparison basis for the exceptional SMR-related effects recording in the first half of 2025, organic growth would have been at 4.3% on the segment of specialty care in France, out of which two sales are coming from price effects. The difference between reported and organic growth mainly reflects the disposal completed in 2025 as part of the plan to strengthen the group's financial position. Let us now look at the revenue bridge.
We start with reported revenue of EUR 2,656 million in the first half of 2025. Disposal plan and perimeter effects represent a EUR -90 million, or 3.5%. Organic growth was driven by volumes and by price and case mix. Volumes contributed EUR 41 million of 1.6%. Long-term care accounted for EUR 36 million of this increase, mainly through higher occupancy in medicalized nursing homes, particularly in Belgium and the Netherlands. Specialty care contributed EUR 5 million, reflecting higher activity, including outpatient care, mainly in France and Spain. Price and case mix contributed EUR 77 million, or 3%. In long-term care, the effect was EUR 61 million, led by Germany, with positive contributions from France, Belgium, Netherlands, Spain, and Italy. Specialty care contributed EUR 16 million with positive effect in France, Italy, and Spain.
As a reminder, other effects contributed a positive EUR 16 million, as H1 2025 was affected by the starting point for the tariff reform of SMR specialty care in France. In total, reported revenue increased by 1.6% and organic revenue by 4.6%. Taken together, volume, price, case mix, and other effects largely offset the planned reduction in perimeter. Turning to occupancy, the positive trajectory in medicalized nursing homes continues throughout the first half. The average occupancy rate reached 91.7%, compared with 90.5% in the first half of 2025, an increase of 1.2 percentage points. Based on beds actually available for occupancy, excluding around 400 beds temporarily unavailable due to renovation or maintenance work, the occupancy rate was 92.3%. The improvement was broad based across the group, confirming the additional growth potential embedded in the existing network. I will now turn to the EBITDA bridge, Trelli FI16.
Published EBITDA for the first half of 2025 was EUR 263 million. The scope effects related to the disposal plan and the closure of a small number of underperforming facilities was EUR -19 million. This gives a pro forma comparison base of EUR 243 million with a margin of 9.5%. Volumes contributed a positive EUR 10 million. Contribution was slightly positive across the geographies and reflects the increase in occupancy and activity. The net price effect was positive EUR 27 million. Price and tariff increases contributed EUR 77 million across all geographies, led by Germany. Cost inflation represented EUR 50 million, mainly in France and Germany. On this basis, Pre-IFRS 16 reached EUR 280 million, up 14.9% on a pro forma basis, excluding disposals, and 6.5% on a reported basis. The margin increased to 10.4%, compared with 9.5% on a pro forma basis in the first half of 2025.
This improvement reflects higher volumes, good control of operating costs, active case management, and the adaptation to the new pricing framework for SMR activities in France. Opco EBITDA reached EUR 168 million, up 25.1% on a pro forma basis and 13% on a reported basis. The Opco EBITDA margin increased to 6.2% from 5.2%. This performance illustrates the strength of our operating model. Organic revenue growth of 4.6% translated into a 15% increase in pre-IFRS 16 EBITDA and a 25% increase in Opco EBITDA, supported by the positive price over cost effect and the operational improvements, primarily in Germany and specialty care in France. This slide places the first half performance in the context of the trajectory since 2023. H1 EBITDA margin, excluding real estate development, reached 10.4% in the first half of 2026.
This represents an improvement of around 100 basis points compared with the first half of 2023 on a pro forma basis. Looking at H2 versus H1, over the past three years, seasonality has consistently driven a sequential improvement in the pre-IFRS 16 EBITDA margin in the second half, ranging from 100 to 220 basis points compared with the first half. Let us now move to cash flow and debt. Operating cash flow increased to EUR 144 million in the first half of 2026, compared with EUR 133 million in the same period last year, primarily driven by EUR 70 million increase in EBITDA and EUR 11 million improvement in non-cash and other items, before taking into account the working capital and investment effects. Working capital requirements show a temporary and limited deterioration of EUR 9 million and maintenance and IT investments increased to EUR 57 million from EUR 50 million.
Financial expenses and taxes paid amount to EUR 124 million, compared with EUR 110 million in the first half of 2025. The increase mainly reflects the full first half impact of the EUR 500 million bond issued in June 2025 and, to a lesser extent, the high-yield bond issued in April 2026. This was partially offset by the repayment of the revolving credit facility. Operating free cash flow stood at EUR 20 million, compared with EUR 23 million last year. Development investment remained tightly controlled at EUR 46 million, compared with EUR 48 million. Further financial divestment contributed to a EUR +22 million, compared with a EUR -23 million in the first half of 2025. As a result, net free cash flow after CapEx improved significantly by EUR 44 million from a EUR -48 million to close to breakeven. This is consistent with our ambition to turn cash flow positive from 2026 on.
After coupon payments, real estate transactions, and the financing operations completed during the period, net debt decreased by EUR 49 million, including the IAS 17, and by EUR 35 million, excluding the IAS 17. The full-year cash benefit of around EUR 40 million from refinancing the sterling hybrid at a lower cost of funding is therefore only partially reflected in the first half cash flow. The first half was marked by three successful bond transactions totaling EUR 1 billion and EUR 63 million. Following the assignment of a B+ rating by S&P and a B2 rating by Moody's, Clariane gained access to a broader range of financing options, including the high-yield market. These repeated transactions enabled the group to extend its maturity profile, simplify its capital structure, and secure additional liquidity. First transaction was a EUR 500 million inaugural high-yield senior unsecured bond issued on 10th of April, maturing in 2031 and bearing a coupon of 6.875%.
The proceeds, together with available cash, are being used to refinance the full term maturing in 2026 and 2027 and the remaining EuroPP bond maturing in 2028. The EUR 40.8 million EuroPP, originally due in 2027, was repaid early on 25th October. Second transaction was the issue on 28th of April of EUR 230 million of additional high-yield senior unsecured notes, fungible with initial EUR 500 million issuance and forming a single series maturing in 2031. The proceeds enabled us to redeem the GBP 200 million pound sterling perpetual green hybrid bonds on 15th June. The transaction improved cash generation by around EUR 14 million a full-year basis. Third transaction was a EUR 333 million deeply subordinated and dated hybrid bond issued on 23rd of June with a fixed coupon of 7.875% for the first three years.
The proceeds will be used to redeem the ODIRNANE by 8th of September and avoid the application of the coupon separate clause. Once the corresponding repayments have been completed, the three transaction will extend the maturity profile, streamline the capital structure, and improve cash generation by approximately EUR 27 million on a full-year basis. Refinancing the sterling hybrid with senior debt mechanically increased group leverage by approximately 0.4x from 5.1x reported to 5.5x pro forma on the end 2025 reference base. The June hybrid issue retains equity treatment under IFRS and is neutral for leverage once its proceeds have been used to redeem the ODIRNANE. Following the assignment of our S&P and Moody's ratings, we are also beginning to benefit from our position as a repeat issuer in the debt capital markets with greater investor familiarity supporting broader access and more efficient execution.
This slide now shows the effect of the refinancing transactions on the group's maturity profile. On a reported basis, the proceeds are temporarily held in cash while the relevant instruments are repaid either on maturity or ahead of schedule. The 2031 senior notes will refinance the Schuldschein maturities in 2026 and 2027 and the remaining Euro PP maturing in 2028. The 2027 Euro PP has already been repaid early. After the planned use of proceeds, the corporate debt profile is significantly simpler, with fewer debt instruments and main maturities pushed to 2030 and 2031. It is also worth noting that our factoring arrangements are diversified across two separate revolving facilities provided by two different banking partners. Overall, the real estate debt profile remains well spread over time. This combination reduces short-term refinancing risks and supports the group's policy of anticipating refinancing 12-18 months before maturity.
The balance sheet trajectory continues to improve. Net financial debt stood at EUR 3.02 billion at the end of June, compared with EUR 3.559 billion one year earlier. This represents a reduction of EUR 539 million. Gross borrowings and financial debt were EUR 4.431 billion. Cash and cash equivalents stood at EUR 1.411 billion. Together with the undrawn revolving credit facility of EUR 325 million, reported liquidity reached a solid EUR 1.736 billion. This sound level of liquidity includes the EUR 733 million proceeds from the hybrid issue, which were still held in cash at June 13th and are expected to be allocated to the redemption of the outstanding amounts under the ODN. Reported group leverage stood at 4.9x , including the temporary EUR 733 million hybrid proceeds held in cash. Pro forma for the use of those proceeds to redeem the ODN group leverage stood at 5.4x . On a comparable pro forma basis, this compares with 5.6x at the end of June 2025.
Compared with December 2025, net debt was broadly stable, while EBITDA increased strongly, supporting the improvement in leverage. At constant financial structure, neutralizing the mechanical effect of refinancing the sterling hybrid with senior debt, group leverage stood at 5.1x . The trajectory since 2023 remains clear. Group leverage has decreased substantially, supported by the completion of the plan to reinforce the capital structure, improve the operating performance, discipline in capital allocation, as well as cash management and active debt management. I will conclude my section with the own real estate portfolio. Please note that as of June 2026, portfolio is appraised by CBRE Group, replacing Cushman & Wakefield as the group's external real estate valuer. The gross asset value of the group's real estate portfolio stood at EUR 2.428 billion at June 30th, 2026, compared with EUR 2.456 billion on a pro forma basis, excluding disposal last year.
The EUR 28 million decrease reflects three main effects. First, indexation contributed a positive EUR 23 million. Investments made during the period contributed EUR 9 million. These two positive effects were offset by a EUR 60 million impact from the limited increase in the average capitalization rate to 6.6%, compared with the 6.44% one year earlier. Real estate debt decreased to EUR 1.389 billion from EUR 1.494 billion at the end of June 2025, after restatement of IJV financial receivables. This decrease resulted from disposal of real estate assets over the past 12 months and the amortization of part of this debt. The loan-to-value ratio was stable at 57%. Net asset value increased to EUR 515 million, compared with an adjusted EUR 496 million at the end of December 2025, so an increase of EUR 19 million. Portfolio therefore remains broadly stable in value, excluding perimeter effects, while the reduction in real estate debt supports an increase in the net assets value.
Taken together, the deleveraging trajectory, the resilience of our real estate value, and the free cash flow now close to break even, these results confirm that Clariane's financial foundations are being rebuilt on a solid ground. I will now hand back to Sophie for the outlook.
Thank you very much, Grégory . Let me conclude by recalling the operating levers supporting our performance looking forward and confirming our objectives. The improvement in EBITDA will be supported, are supported, and will be supported by a diversified and well-identified set of levers I have already touched upon previously. The first lever is definitely the use and the full leverage of our existing capacities and the continued enrichment of the service offering. We are step-by-step increasing occupancy in medicalized nursing home, and we are expanding outpatient activity in specialty care clinics. We are also developing services that respond to more complex care needs and improve the relevance of our pathway for patient residents and family caregivers. The second lever contributing to EBITDA improvement is definitely active pricing and data-driven case mix management.
The progress we achieved in Germany and in specialty care at Inicea in France during the first half confirms the value of a detailed facility level approach to activity, tariffs, and care mix. The third lever contributing to EBITDA improvements is definitely the better support efficiency program. We are streamlining process by process, both the overheads and shared service centers. We are also redesigning selected operating workflows with the support of automation and artificial intelligence, applying a disciplined make or buy approach to selected services, and optimizing maintenance and energy costs. These actions are already contributing to our performance. Their impact will build progressively for the second half of 2026 and into 2027. They strongly support the combination of relative organic growth, margin improvement, and continued financial discipline set out in our medium-term plan.
To conclude, we confirm our objective across the two complementary horizons that are presented at the full-year result. For the 2023-2026 period, we continue to target an average annual organic revenue growth of around 5%. We expect an improvement of 100 to 150 basis points in the pre-IFRS 16 EBITDA margin, pro forma of disposal and excluding real estate development compared with 2023. We also target OpCo leverage below 5.5x at the end of 2026. For the 2025-2028 period, we target average annual pro forma revenue growth of around 4%. We target average annual growth in pro forma pre-IFRS 16 EBITDA of between 7% and 9%, and average annual growth in pro forma OpCo EBITDA of between 11% and 14%. OpCo leverage is expected to be around five times at the end of 2028.
As you have understood, and as Grégory explained, the leverage objective has been, of course, mechanically adjusted to reflect the new capital structure following the refinancing of the sterling-denominated hybrid bonds with senior debts. Our operational ambition and the discipline of our financial policy remain unchanged. The first half performance of Clariane confirms the relevance of our model and the sound execution of our roadmap. We will remain more than ever focused on the quality of care, on the development and safety of our employees, on a disciplined capital allocation, and on the progressive reduction of the leverage. More than ever, our work at Clariane is guided by our purpose, the purpose of taking care of each person's humanity in times of vulnerability. Thank you very much for your attention. Grégory and I are now available to answer your question.
Ladies and gentlemen, if you wish to ask a question by phone, please dial pound key five on your telephone keypad to enter the queue. If you are attending the conference on the web, you can also ask questions using the chat box at the bottom of the page.
Grégory, Sophie, thank you very much for the presentation. We already have a few questions. The first one probably for you, Sophie. What is your expected wage salary increase for 2027? Are the negotiation done?
Thank you. Thank you very much for the question. Average expectation is around 2%. This is of course, variable across the countries. Most of the negotiation or indexation are already known and set. This is the case for France. This is also the case since we are already negotiating the care rate for 2027 in Germany, and the indexation is also fully known both in Belgium and in the Netherlands.
Thank you, Sophie. Next question probably for Grégory regarding the guidance in EBITDA. The EBITDA growth projected is higher than the revenue growth. Can you explain the different levers and what part is cost saving?
Yeah. Thanks for the question. Maybe before starting with the guidance, this is what is already visible on the first half as a reminder, with 5% growth on the organic growth of revenue, this has been translated into a 25% improvement in the EBITDA OpCo. On the guidance and the way you need to look at it's 50% of the improvement that will come from top line, and the remaining 50% will come from performance measures. If you then go into detail on the top line and what we see in the guidance, half of the growth will come on the volumes. Remaining will come on pricing and case mix, and this is already visible in Germany and as well in France, clinic and SCA. The remaining 50%, so like I was mentioning, will come on the performance improvement plan.
One of them are the one already implemented in the reduction of the cost of structure. Last but not least, in our industry of fixed cost, obviously, the improvement of volume will benefit on the additional incremental EBITDA.
Thank you, Grégory. Next question is regarding the current events that we're experiencing in France, and in Europe overall with the heat waves and fires. Regarding heat waves, is there any impact on your cost structure? Are you planning to put AC in your care homes, and do you know how much it could cost? Regarding the fires in Spain and in France, is there any impact on all operations?
Thank you very much for the question. Starting with the last one, currently, we don't see any impact of the wildfire in Spain or France on our operation. I would say our facilities are doing, and the staff is really doing well, and we are welcoming on the top of our resident or patient, additional people coming from the local communities. I don't see a negative impact on our activity, pretty much the opposite. When it comes to the impact of extreme heatwave, and the additional cost related to further equipment into air conditioning, we have brought additional air conditioning with, in a lot of cases, some funding coming from the health care insurance to help us in it.
Directionally, for the next three years, we are going to prioritize and accelerate some further investments into air conditioning, especially the northern parts of our network, including south of Germany, Belgium, and the Netherlands to equip them with more powerful air conditioning equipment. All in all, it should represent a kind of EUR 10 million CapEx. As you see, it is totally absorbable in our maintenance CapEx.
Thank you, Sophie. An additional question regarding the heatwaves. As your facilities have AC, did you see any additional business coming because of the heatwaves?
It's always difficult to answer this in that sense because, of course, what's happening is very difficult for the communities that are impacted. Definitely, we see a kind of 15% increase in short stays in our facilities overall versus the previous years, very much related to this extreme heatwaves. A lot of families are asking to put their beloved ones in a safe place, and knocking at the door in that sense. Indeed, I would say the volume of activities has never been so acute and dense at this time of the year. This is actually over Europe. We really see families have realized that our beloved ones are much safer in one of our nursing homes or clinics than alone at home without any close support to go through these extreme temperatures.
Thank you, Sophie. We have one question, actually it is asked by several people regarding the seasonality in your business between H1 and H2. Would you please explain the seasonality and the reason of the seasonality, are you expecting the same kind of seasonality as last year?
Yeah. Thanks for this. As you've seen, we just went back the last three years on seasonality between H1 and H2. As you can see on the historical basis, you see a difference between 100 and 200 basis point EBITDA margin between H1 and H2. If you can see as well, as we have confirmed our guidance, if you do the maths, you will understand that the H2 of 2026 should be higher in term of margin than the H1. Several elements that we see, certainly on the H2 of this year, what will drive the continued improvement of margin, we see this good trend of volumes that we expect to continue on the remaining part of the year.
Good job on the case mix and pricing in France, especially clinics and as well in Germany, will continue and will be visible in second semester. We'll have as well the full effect of the performance improvement plan that has already been launched beginning of the year. That the key drivers that have already pushed the EBITDA margin up last year in H2, that will continue, this is what is confirming our guidance for the second half of this year.
Thank you, Grégory. We have a question regarding the occupancy rate. What trends do you anticipate in occupancy rates within the next few years?
I will take this one. We expect actually to be up in the next three years, at least by 100 basis points to 150 basis points on a yearly basis in our nursing home networks. That's the steps upward that we are betting on expecting.
Thank you. The next question is regarding the organic growth that is seen as being slowing sequentially, particularly regarding pricing. What can you share on this point?
Just a reminder, the organic growth remains solid at 4.6%. When you compare versus Q1, where we had an organic growth of 4.9%, have in mind certainly that in the Q1 we benefited from a supported basis point of comparison with the severe flu that we have in the Q1 2025. As well, the German pricing effects remain very solid in the half year with 7%, but was at 8% on the first quarter.
Thank you, Grégory. Regarding Spain, what would you say is a normalized EBITDA level as a percentage of revenue?
EBITDA level in Spain could be expected as a normative between 18%-20% EBITDA margin.
Regarding Italy, how do you explain a decrease in EBITDA margin?
There is no decrease in EBITDA margin in Italy. Pro forma of the disposal plan, last year EBITDA margin was at 22.2%, while this year is at 22.1%. It's a stable margin there.
Sophie, we have a few questions regarding Germany and the nursing home reform. What do you expect regarding this reform?
It's still a little bit early to have a full picture. What we expect for sure is the recognition of what AI and digital can bring in terms of additional efficiency, and the tackling of the structural scarcity of skilled nursing staff in Germany. There is already a financing dedicated per facility or per resident to accelerate the digitalization of the main processes, including care and reporting processes, documentation processes. There might be some transfer of financing from the healthcare insurance or the federal state to local communities for people that have low revenue. This is actually the discussion ongoing. Last but not least, after a very strong catch-up on the wage level that are fully refinanced in the care rate, we expect to see a kind of slowing down of this catch-up of the wage level.
Any way, anyhow, the catch-up has been really done since the average wage of skilled nursing staff stand now above the average wage for the German working population. That's basically what we expect to see. We expect also the equipment in additional beds to be reopened in Germany because of the demographics for sure, the accelerating aging of the population, and it seems that they are going to allow additional beds to be reinstalled into existing facilities, which, of course, will be very beneficial to large networks like Korian network in Germany. That's basically the main actions or measures that could be in the package that is not yet final.
Thank you, Sophie. The next question is regarding Benelux. Someone apparently understood that there was a cost inflation for the reason of margin compression in Belgium or in Benelux. Do you have any comments to make?
That's certainly just to have in mind that on the Benelux, we have a stable margin on the period and an improvement margin in Belgium only. This is a comment we can do on this perimeter where we see visible improvement on the EBITDA margin.
The only thing I can say is that the refinancing of staff cost and cost basis in general in Belgium is pretty well done with actually an indexation of the rates according to wage evolution. This is definitely a geography where the price-over-cost effect is a positive one.
Thank you, Sophie. We have one question regarding the starting point of the 2023/2026 guidance in terms of the EBITDA margin. Would you please remind the starting point and the basis?
The guidance on the EBITDA margin is between 2023 and 2026, and the EBITDA margin to be retained as a starting point stands at 10.5%. That was the EBITDA margin we had on 2023. The improvement between 100 and 150 basis points that bring us to the guidance 2026 need to be done with this basis of 10.5% EBITDA margin.
Thank you, Grégory . I think we have a question live from Bernstein.
The next question comes from Aleksander Peterc from Bernstein. Please go ahead.
Yeah. Hi, I have a few questions. Maybe we can take them one by one. The first one is on Germany. You've already said quite a lot about it. I'm just wondering, given the EBITDA margin you achieved and very strong growth in the first half, are we there now in terms of as good as it gets for Germany, or can you still envisage going back to the historical levels of 26%-28%? That would be the first one. Maybe we can take them one by one.
Yeah. Yes. Hi, Aleksander. We expect a further EBITDA margin growth in Germany for sure, since we are not fully done with our repricing. We still have some room for further volume improvement there. Of course, the marginal occupancy in existing nursing homes, as Grégory explained, with a strong fixed cost base is a very contributive one. Last but not least, we are not fully mature yet in Germany with, I would say, additional services pricing. We are progressing. We see additional levers in terms of revenue and pricing in there.
That's great. Very helpful. Thank you. The second one is, I think you highlighted more than 7,000 remaining beds in nursing homes.
Yeah
that are in unused capacity. Can you tell us where these opportunities sit geographically? What are the main bottlenecks to fill them, and whether you expect, as a result of occupancy gains, to remain a meaningful contributor to growth beyond 2026?
The three large contributors to this volume growth are France, Germany and the Benelux, and especially the Netherlands, with a ramping up very recent network. We expect to fill them step by step with the right staffing. Staffing is for sure a point of attention in Germany, but we have now, I would say, the largest basis for apprentices in comparison with our other players, with 2,800 nurses apprentice there. They need two years to be certified, and then we keep them ongoing. That's definitely the critical dimension to fully occupy. We are really progressing on a very constant and steady way in Germany. The next pool is definitely coming from France, where we have actually a close around 90% occupancy rate in France, and we see actually a strong potential with this demographic dip that we are progressively stepping out.
We see strong increase of demand coming forward starting 2027, 2028, 2029. Average, what we expect to see is that all networks will stabilize above 95%. That is actually what we see forward. Probably because I don't expect a lot of new buildings to come in the next seven years for various reasons. We will stabilize well above 95%. For the time being, that's the target or the assumption we have taken. We are also very focused on defending the pricing, because definitely we really don't want to be entangled in a vicious circle where we would go for volume without being able to deliver sound and profitable quality. This is why we are very attentive and cautious on defending the pricing everywhere.
Okay, that's very helpful. Coming back to France briefly. There was a dip, obviously, in French specialty care last year. H1 appears pretty encouraging it would seem. What are you seeing today in terms of case mix normalization, outpatient growth, profitability, and so on? In particular, how much of the planned increase in EBITDA in France is going to come from specialty care versus long-term care?
Yes, you are right. Situation is now normalizing. If we correct first half 2025 from the various failure in the calculation of the funding and the rate, the post-acute activity in France posted a +4.2% growth that is well-balanced between additional volume, mainly outpatient, because inpatient was already very high, and care case mix and various levels of pricing. I expect this type of momentum to be continued over the next two years because of further openings on outpatient units. Because of additional specialty to be granted, that will of course fuel the increase in the care case mix management and funding, and also opening of additional beds and specialty. That's this +4% of mainly or largely or only organic growth is the rhythm we expect for Inicea.
The growth of the margin in France is actually equally balanced between elderly care with, again, a continuous increase in overall capacity rate and the sound pricing approach on Korian side. This development at Inicea now that we have swallowed, digested the new financing scheme. There are some.
That's all my questions. Thank you so much
of course, the better support efficiency program that is contributing into in both segment.
Okay, great. Thank you very much for your very complete answers. That was all my questions. Thank you.
Grégory, Sophie, we have a question regarding the new climate mitigation initiatives that we're taking. Are those initiatives already incorporated in the CapEx assumption, or do we expect to increase CapEx typically for air conditioning in Roussillon?
No, they are fully encompassed in the trajectory of CapEx.
Thank you, Sophie. We have an interesting question regarding AI. You mentioned AI automation, which is included in your efficiency program earlier presented. Could you elaborate on how Clariane plans to leverage AI in the future?
Yes, actually, we have started to implement AI at scale on the back office and transactional services, so that's for the accounting, for the billing, for the staff planning. Everything that is done back office is now AI supported, and this was actually one of the trigger of the social plan we delivered in France and in Germany. It's a total of 250 FTE that has been actually impacted or encompassed in this efficiency program. Now we are starting to tackle, I would say, the front office function in the networks. All the service facility management in the facilities with cleaning robots and everything that can be automated on the non-care function. Based on the pilot facility pilot case that we have tested and validated in Germany, we also see that AI and automated reporting and tracking can save precious time for the nurses.
It's around 30 minutes a day. As I just said, in places where we are struggling to get the right number of nurses, it will help us to better cover and to better deploy the time of our skilled staff close to the residents. This is actually how you should think about how AI can help, replacing back office function that's in the going and giving to the caregivers, the nurse, the skilled staff, more time to be close to the resident and patient, and also more time, more comfort to better support.
Thank you, Sophie. We have a question regarding the plans that we've announced in France and Germany last year or early this year. What has been the impact of those plan in H1?
In H1, actually, there is limited impact.
Yeah
on the EBITDA because actually the departures, the cost reflected in EBITDA are not fully reflected yet. It will be much bigger in H2. When it comes to the non-current costs related to the plans, they are fully factored into the figures we published for H1.
Thank you, Sophie. There is a question regarding post-2029. With the expected growth of the demand in nursing home, what CapEx would be needed to match with the demand?
What you see there, [Inaudible], that we expect to keep those EUR 300 million CapEx we have at least for the next two years, the EUR 150 million CapEx on the maintenance and the EUR 150 million on the development of CapEx to develop. On top of this CapEx, having in mind and rebounding of what's mentioned by Sophie earlier, we have as well in between, sufficient as well capacity to continue to grow, especially in the nursing homes in the next two years. This is the way you need to look at it.
Thank you, Grégory . We don't have any.
Ladies and gentlemen, if you wish to ask a question by phone, please dial pound key five on your telephone keypad to enter the queue. If you are attending the conference on the web, you can also ask question using the chat box at the bottom of the page.
On our side, we don't have any more question. Sophie, if you want to conclude.
Yes. Thank you everyone for your interest in Clariane. Our next publication is set for the 28th of October. Until then, I wish you all restful holidays and bye.