Clariane SE ($CLARI)

Welcome to the Clariane First Quarter 2026 Presentation. [Operator Instructions] Now I will hand the conference over to the management team. Please go ahead.

Good afternoon, ladies and gentlemen, and thank you for joining Stephane Bisseuil and I today. I'm Gregory Lovichi, Chief Financial Officer of the Clariane Group, and I will present our revenue for the first quarter of 2026 and reiterate our guidance for 2026 as well as the longer-term outlook to 2028. Before going into the details, let me highlight that this quarter is fully in line with the momentum observed in the second half of last year with solid growth across all our activities and geographies. I will start with the key highlights of the quarter and then walk you through the main drivers contributing to our revenue performance. Let me start with the key highlights for the quarter on Slide 5. First, we delivered solid organic revenue growth of plus 4.9%, fully in line with our trajectory with all activities contributing. This performance is supported by both volume and pricing effects. In long-term care, occupancy continues to improve with an average rate of 91.7%, up 130 basis points compared to last year. This is an important driver of growth. Alternative Living Solutions also showed strong momentum with organic growth of plus 6.9%. In Specialty Care, activity is supported by the continued development of outpatient care and management contracts, which are driving volume across all geographies. Second, we have confirmed our access to debt capital markets with a successful issuance of a EUR 500 million senior unsecured high-yield bond in a particularly challenging market environment. This transaction was very well received by investors as evidenced by a large oversubscription around 5x and allows us to secure the refinancing of our upcoming maturities while further strengthening the group's liquidity position. Finally, we are confirming all our medium-term objectives. For the 2023-2026 period, we maintain our target of around plus 5% organic revenue CAGR, an improvement in our pre-IFRS 16 EBITDA margin of 100 to 150 basis points on 2023. Therefore, with a 2026 EBITDA margin of 11.5% to 12% and a Wholeco leverage below 5x by the end of '26 per current definition and balance sheet structure. And looking beyond, our 2025-2028 outlook remains unchanged, with around plus 4% revenue CAGR, a pre-IFRS 16 EBITDA CAGR of plus 7% to plus 9% on a pro forma basis an EBITDA opco CAGR of plus 11% to plus 14% and a Wholeco financial leverage as defined in its bank financing agreement of around 4.5x at the end of 2028 per current definition and balance sheet structure. Overall, this quarter confirms both the strength of our operating momentum and the consistency of our financial trajectory. Let me now turn to the revenue performance in more detail. In the first quarter, revenue reached EUR 1.336 billion, representing reported growth of plus 1.4% and organic growth of plus 4.9%. This solid performance reflects a broad-based momentum with all activities and all geographies contributing to growth. Starting with activities. Long-term care, which represents around 75% of the group's revenue, organic growth stood at plus 5.5%. This performance is driven by both occupancy increases and pricing, particularly in medicalized nursing homes, which grew plus 5.2% organically. Alternative Living Solutions also showed strong organic growth of plus 6.9%, reflecting the continued development of the shared housing network. In Specialty Care, revenue grew by plus 3.3% on an organic basis. This reflects both an increase in activity, particularly in outpatient care and the positive impact of case mix improvement, notably in France. Looking now at geographies, Germany and Spain are the main contributor to growth with organic growth of plus 8.3% and plus 15.2%, respectively, supported by both pricing and occupancy dynamics. Belgium and the Netherlands also delivered solid growth at plus 5.9%. In France, organic growth stood at plus 1.8% with a positive contribution from occupancy in long-term care and continued progress in pricing and case mix in Specialty Care. Finally, Italy posted organic growth of plus 3.5%, driven by tariff increases with occupancy rates already at a high level. Overall, this performance illustrates once again the strength of our diversified model, both in terms of activities and geographies. Let's now take a closer look at the revenue bridge. We start from a Q1 2025 reported revenue at EUR 1.317 billion. The first element to highlight is the perimeter effect, which is negative at minus EUR 44 million or minus 3.5%, mainly reflecting disposals in France, Italy and Germany as part of the plan to reinforce the capital structure of the group. On a like-for-like basis, this brings us to a pro forma revenue base of EUR 1.274 billion. From this base, organic growth is plus 4.9%, driven by both volume and price effects. Volume contributed to plus EUR 20 million or plus 1.6%. This is mainly driven by long-term care of plus EUR 16 million with occupancy gains in medicalized nursing homes, particularly in Belgium and the Netherlands as well as growth in alternative living solutions. Specialty Care also contributed positively to around plus EUR 4 million, supported by increased activity, particularly in outpatient care in France and Spain. Second key driver is price and case mix which contributed plus EUR 42 million or plus 3.3%. In Long-term Care, this represents plus EUR 36 million, mainly driven by pricing in Germany, Belgium, the Netherlands and France. In Specialty Care, the contribution is plus EUR 7 million, reflecting the positive impact of corrective measures implemented in France following the SMA reform as well as the contribution from Italy. Overall, price and mix remain the main driver of growth in the quarter. Putting all these elements together, we reached Q1 2026 revenue of EUR 1.336 billion, with a reported growth of plus 1.4% and organic growth of plus 4.9%. Let me briefly focus now on occupancy on Slide 9. In Q1 2026, the average occupancy rate reached 91.7%, up by 1.3 percentage points compared to Q1 2025. This confirms the continuous improvement trend we have seen since 2023. And importantly, we still have further growth potential embedded within our existing capacity. Let's now turn to energy costs on Slide 11. In the current context, we have implemented a proactive approach to manage both supply and price volatility. As of February around 93% of our 2026 energy needs are already hedged, providing good visibility in the short term. As of today, this hedging goes to close to 98%. We have also significant coverage for 2027 and 2028. This strategy was anticipated ahead of recent geopolitical tensions and is based on estimated needs at group level. At the same time, we closely monitor the situation through dedicated governance with regular reviews at both group and country levels. And finally, we continue to adapt our approach both through adjustments to our hedging strategy and through ongoing initiatives to improve energy efficiency. Overall, this allow us to limit exposure to volatility and secure our cost base. Moving to our financing on Slide 13. You are already familiar with the overall trajectory, so I will focus on most recent development. In April, we successfully issued EUR 500 million of high-yield bond and unsecured senior notes maturing in 2031. This transaction was very well received in the market with an oversubscription of around 5x from a broad base of Tier 1 French and international institutional investors. The bond carries a coupon of around 6.9%, which we consider very solid given the current market conditions. Proceeds will be used to refinance our 2026, 2027 and 2028 maturities and further strengthened the group's liquidity position. Importantly, this transaction confirms our restored access to the high-yield debt capital markets even in a more challenging context. More broadly, it is fully in line with our financial strategy, which is to anticipate financing well ahead 12 to 18 months before maturities and to continue optimizing our financial structure. Note that the company continues to actively monitor market conditions with a view to keep streamlining its financial structure on an opportunistic basis. Let's now move to Slide 15 and conclude on our outlook. Following the completion of the asset disposal plan and the successful refinancing, the group is now fully focused on its operations and on executing its road map. On this basis and in line with the operational efficiency measures already implemented, including the Better Support Program, cost reductions and digital transformation. We expect several drivers to support performance in 2026. First, continued volume growth across all geographies, both in the mature network and in ramp-up facilities; second, the full year effect of price increases implemented in 2025, particularly in Germany; and third, the benefit from active case mix management in Specialty Care in France. In this context, we confirm our objectives for 2026. This means organic revenue growth of around plus 5%, an improvement in EBITDA margin of 100 to 150 basis points compared to 2023 and a financial leverage below 5x by the end of 2026. Let me now briefly outline the key levers supporting our medium-term trajectory in Slide 16. First, we are focusing on our existing asset base to fully capture the growth and profitability potential embedded in our network. This is supported by the strength of our operating model, combining a robust quality management framework, strong medical expertise and continued investment in employee training. Second, growth is already embedded in our platform. We expect to progressively reach higher occupancy levels in Long-term Care while continuing to develop outpatient activity in Specialty Care. At the same time, we will further improve case mix management and continue to grow private pay and nonregulated activities. Third, we are maintaining strict discipline in capital allocation. This means prioritizing operational readiness being selective on investment and accelerating the digitalization of our operating model. Last but not least, regarding public financing, we are operating with a cautious approach with limited reliance on public funding increases and with proactive cost-saving measures already identified. Overall, these levers give us good visibility on our growth and profitability trajectory over the medium term. To conclude on Slide 17, let me briefly recap our medium-term outlook as well. First, as I pointed out previously, we confirm our 2023-2026 objectives. At the same time, our medium-term trajectory remain unchanged. Under our 2025-2028 plan, we are targeting around plus 4% revenue CAGR combined with EBITDA CAGR between plus 7% and plus 9% and an even faster improvement in profitability at the OpCo level with a CAGR expected at between plus 11% to plus 14%. This will be supported by the operational levers we have just outlined as well as strict financial discipline. Overall, we have a clear and consistent road map combining growth, margin improvement and continued deleveraging. On that note, thank you for your attention, and I'm available together with Stephane to take your questions.

[Operator Instructions]

Okay. Gregory, from the web, we have a few questions regarding the capital structures, more specifically regarding the hybrids. So how should we think about the capital strategy for the group, especially regarding your capital instrument, i.e., the GBP and the ODIRNANE? How are you going to deal with those bonds? Are you going to repay them in the next 12 to 18 months?

So thanks for the question. So as you know, hybrids are and especially as hybrids, including the GBP1 are considered as equity and IFRS and therefore, does not affect our total net leverage ratio, we call Wholeco leverage ratio. So we have a constraint, meaning that as the term of our SFA, redemption of hybrid instruments, with senior debt is possible as soon as the group total net leverage is below 5x, while our leverage or the latest leverage release was at 5.1x Wholeco. Like we already said, we will, therefore, evaluate all the options to refinance these instruments at any time. And obviously, the group will communicate on due time on the way to do it. And maybe as a reminder, alongside the operational strengthening that we have experienced the past years, we have worked a lot on reinforcing the capital structure of the group with 2 main objectives: simplification of the capital structure and improving the cash generation. And obviously, working on these hybrid treatments is one of the priority to achieve these 2 [ objectives ].

Thank you, Gregory. On the operational side, a few questions, the first one, at what level do you think occupancy could peak for the company versus the 91.7% of the moment? Is 95% achievable, and if so, how quickly?

Yes. Thanks for this. So the 91.7% show a strong improvement compared to the last quarter or the quarter of last year. And when you look, it's quite heterogenous between countries. We have countries like Italy that posted occupancy rate above 97%, meaning that we still have some potential in other countries. We'll not say that everybody will reach or will be above the 95%, but we can consider the range of 94%, up to 95% as a kind of a clear and a solid objective to target as a group when it came to occupancy rates in the nursing home.

Thank you, Gregory. We have a question regarding the energy cost due to the situation in Middle East. How do you expect your energy bill to be in 2026, 2027 compared to 2025?

Yes. So no in the -- like we are mentioning and especially in 2026, energy cost for us barely 2% of the total turnover of the group. Part of our hedging and risk policy, we have already hedged the main part of the energy last year, it was before what's happening currently in the Middle East, the energy on the market. Currently, we are close to 98% of the 2026 needs covered, meaning that we don't have impact when it came to the inflation of potential inflation on the energy for 2026. And we have as well a good level of coverage with next year because we are already hedged above 60%. So providing us good visibility in the short and medium term when it came to this specific sector.

Thank you. There is a question regarding the announcement that we made at the time of the full year publication regarding the cost reduction plan, especially in France and Germany. Can you provide an update?

Yes, for sure. So we -- part of the improvement and the profitability improvement at group level that we saw already in the P&L in H2 2025 and continuing in 2026, our cost reduction measures. These cost reduction measures come on top of the volume improvement that is visible in Q1, a strong price increase, and we saw it as well, 2/3 of the top line improvement in Q1 is coming from price. Big element as well on the profitability improvement is coming with the cost measures, especially central cost reduction. So it was mainly in France and in Germany. The plan in Germany and in France, especially also in Germany, plan has been announced and is already done and implemented. And in France, well on track and discussion with representative of the employees are still ongoing, and the plan is executing according to the schedule we have in our budget.

Thank you, Gregory. Next question regarding France and more specifically in the health care following the reform that we -- that has been implemented last year. Where are we in terms of compensating for the consequences that we've seen in 2025 of this reform?

Yes. So thanks for the question. The reform, we already started to work some months and years ago on adapting to the reforms. Main element to adapt on the reforms were already visible in the second half of 2025. The team in Specialty Care in France is actively working on the case mix after the reforms to be able with price increase to offset part of overall funding that were not received the post the reforms. And we will say that this element is progressing very well with case mix translated into price increases in France, Specialty Care continuing on the good trend in Q1 2026.

Thank you, Gregory. There is one question regarding that. I'm not sure this is the right call to answer this question, as we answered in Q1. But the question is, do you expect in amount, the net debt of the group to decrease compared to last year?

What I can say is that the guidance of the group is to be below 5x Wholeco EBITDA with the same capital structure by the end of December 2026, and that we've just confirmed the guidance.

Thank you. Regarding the disposal plan that we finished last year, are we expecting more disposals?

No, the disposal plan has been completed last year. And as a reminder, 6 months ahead of schedule. We didn't announce any new disposal program or plan Nevertheless, obviously, with a group of our size, we may be in a situation to make some portfolio review, but doesn't mean a disposal plan or program. It's more usual portfolio optimization for a group of our size.

Thank you. All in all, how much are we expecting in terms of inflation, especially regarding wage this year in the different geographies?

Two elements, when it came to wage inflation for our sector. This year, and especially in the main geographies, wage inflation have already been negotiated and implemented for 2026 early this year because they have been worked already in last year, and they are already negotiated in line with what we have budgeted. And I think we could have in mind as well in some main geographies like Germany, where we have as well and not only in Germany, but especially in Germany, and it was visible as well in the price improvement we saw in the last 2 years. We have this ability as well to pass through to the -- the price as the wage increase.

Thank you, Gregory. The next question will be live. So please, Maria, can you give the mic to [indiscernible] please.

The next question comes from Constantin Gumenita from Caius Capital.

A quick question for me. If you could -- looking at the countries, fantastic performance across the board, especially in international. But looking at France specifically, maybe if you could comment a little bit on the speed of getting to that 94% to 95% target occupancy rate that you mentioned versus the sort of 88%, 89% that you have right now. Any color would be helpful.

Yes. It's -- what we see in France, we still have a solid level of net entries compared to last year. And this is what we have seen as well in the nursing homes with occupancy rate at 88.5% compared to 87.4%. And what we see is that we have a good dynamic in France. And certainly, we see good dynamics. What we see is that we are able to regain in average 100 basis point a year when it came to occupancy. So this is certainly -- sometimes it's -- we can regain it faster depending on some situation and some years it's a bit less, but this 100 basis point catch-up is certainly a good proxy in France. And when I say this as well in France occupation rate, we see a good development and certainly a better development than the market [indiscernible].

Thank you, Constantin. We'll take the last question. regarding the regulatory change in France and the pricing environment decided in the social security scheme. Could you tell us a little bit or give us a little bit of color regarding those changes?

So on the -- certainly, what we see on the -- and this is a question, and I will answer a little bit as well with the plan 2025, 2028. When we see the last evolution and especially in France in terms of social security budget is slightly positive, first. It's slightly positive and in line with what we have budgeted. So it's good news. And when we say slightly positive and in line, it's because when we set up the plan, we build a plan up to us with indiscernible] action plan, rather a plan built on the financing or public financing improvement. So it's a plus 0% to 1% public financing inflation over the plan and the profitability regain comes from the action we just mentioned during the call around the top line, around as well the cost reduction measures. But all of this is gathered for one common purpose is quality of care, quality of service and the synergy we have with the medical expertise to serve our community.

Thank you, Gregory. So this was the last question. I leave you to the final remarks.

So thanks to all for attending this call, and we obviously remain with Stephane available after this meeting if needed. And I wish you a good end of afternoon.