emeis Société anonyme (EMEIS) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the emeis conference call regarding its 2025 revenue and business update. It will be structured in 2 parts. First, a presentation by emeis management team represented by Mr. Laurent Guillot, Group CEO; and Mr. Jean-Marc Boursier, Group CFO. Afterwards, there will be a Q&A session during which you can ask oral or written questions. I will now hand over to the management team. Gentlemen, please go ahead.

Well, good morning to all of you, and thank you for attending this conference related to the presentation of our full year 2025 preliminary figures. I believe it will be clear to you through this presentation that we are particularly happy to deliver this set of figures. These figures provide evidence of the turnaround underway in our operating performance. And for the second year in a row, Emerys has beaten its guidance. As you will see this morning, this year has also been marked by continued improvement in our operational performance indicators for satisfaction and quality. And finally, 2025 has been an exceptional year in terms of structural progress relating to the divestment program, debt reduction and sustainability of our financial structure. Together with Jean-Marc, Jean-Marc Boursier, our CFO, we will present these major achievements of the year in detail and share our confidence in the years to come. So as you may remember, the resumption of our sales growth and the rise in occupancy rates started to support our operating margin recovery from the beginning of the second half of 2024. Since then, quarters after quarters, this improvement has continued and is continuing. We were today particularly happy to show you the evidence that this operational recovery is well confirmed again in 2025. Occupancy rates have improved further everywhere and quite significantly, now nearing 89% on mature perimeter with a price effect captured again in the year, the organic growth of our revenue posted a solid performance at 6. 1%. This positive momentum on top line is mechanically feeding our operating margins, thanks to the good grip we had once again on operating expenses, leading to a 19.2% growth in the EBITDA at constant perimeter, well above our guidance for 2025 and a 56.5% growth on EBITDA on a like-for-like basis. All cash flow components have largely improved this year. Free cash flow turned positive in H1 at 26%, as you remembered, and is now EUR 342 million on a full year basis. Fair to highlight the fact that operating cash flow at EUR 185 million was only EUR 15 million last year, so a tremendous improvement. And last, but not least, recurring free cash flow is now entering positive territory in H2 2025. The group's financial structure was also largely enhanced this year in 2025 and beginning of '26 with the disposal plan largely exceeded and the full refinancing of our net debt. In the meantime, the leverage ratio massively improved as well, down from almost 20x end of 2024 to 10x today in the beginning of '26. We do thus reiterate our midterm guidance, expecting an average growth of the group EBITDA of 12% to 16% CAGR at constant perimeter. And for 2026, we do believe that the EBITDA should grow at least by 10% on a like-for-like basis. I would like to start with this presentation after the introduction and summary by discussing the improvement of quality and satisfaction indicator, which, as you know, are the foundation of operational and financial performance. It's key to remember that we are improving all key indicators. I picked 2 just as reminder, and we will give you more details and especially CSR precise measures and KPIs when publishing our full year earnings along with the CSR report in April, but we picked 2 to show you the improvement that we are doing. The resident satisfaction rate measured in '25 in French facilities now stands at 93.5%, up 50 basis points compared to '24 and more than 3 points compared to 2022. Some message when considering the Net Promoter Score, which also measures the satisfaction and loyalty of our residents, patients and beloved ones. It has also risen sharply, now reaching a score of 41 in 2025, up 4 points from '24 and 23 points from '22. This significant improvement illustrates the successful measures taken in recent years to restore the confidence on the group. Another way to measure it is in France, our facilities are rated by the Haute Autorité de santé, French National Authority for Health in the same way than all other facilities in the sectors. You can see in this slide that these ratings are divided into 4 groups based on quality assessments comparing the results obtained in '25 and the years before. 99% of emeis facilities are in the 2 categories. This is significantly higher than the sector average, even higher than the private sectors as a whole. It marked a distinction that illustrates our leadership in this area despite the fact that probably some of these studies were made when we were still called Orpea and probably where we are suffering from that. So very good work from the teams overall showing our quality commitment and as a consequence of that, the attractivity of our facilities. Not only have the quality of the service and care provided in our facilities increased materially, but also our processes for new recruitment of residents improved again in 2025. Number of prospects increased by 13% in year 1 by 24% in 2 years. These prospects can increasing -- are increasingly coming from digital tools with none were coming from there in 2023, as you can see in the graph in the up and right. Most importantly, the transformation rate, the percentage of prospects visiting our facility that become residents were strongly growing these past 2 years. Interestingly, the rebranding of the group in H1 2024 seems to have occurred as a catalyst. As a result, the number of residents entering in nursing home in France grew by 21% since 2023 and 10% versus 2024. This is a second fundamental driver along with quality and satisfaction for occupancy rate increasing momentum therefore revenues thus operating performance. We show this concerning France as an example, but obviously, this is not the -- this is acting as an example in an illustration, and this is also the case in other countries. All of these matters support the positive momentum that we continue to see and that we are seeing on occupancy rates. on all our businesses and on every single country where we do operate. Year-to-date, the upside captured is a bit stronger on nursing homes, whose occupancy rate grew 200 basis points in 12 months to 87.2% now. This was less than 80% in 2021. This is definitely significantly below what we believe should be a normalized level. We have plenty of room and plenty of opportunity moving forward in terms of improvement and occupancy rate thus top line, thus operating margins. And this upward movement will be supported by the demographic wave for elderly people can easily forecast ahead. So the positive momentum that we have experienced in '24 and in '25 is thus not fading out, and we do expect this momentum to continue ahead. Mechanically, almost mechanically, this requires work mechanically, this growth is in revenue is largely translates into operating margins. Thanks to the work that we've done on quality and capturing a favorable price effect on accommodation and on segmenting our offering, we have been able to boost our revenue growth that goes directly to the EBITDA. By controlling operating expenses, adapting methods and tools and focusing management efforts on turning around some underperforming facilities, we continue to optimize our operating performance and operating leverage. Thus our revenues has increased 6.1% on like-for-like. nearly 15%. And at the same time, our EBITDA margin increased far quicker by 56.5% like-for-like in 1 year and 90% in 2 years. As you can -- and you can trust our midterm guidance. It's not over yet. There is much more to come ahead. As a consequence of what I just told you and because our trajectory for enhancing processes and costs came ahead of expectations, we have beaten our guidance for 2025 this year. EBITDA like-for-like growth came at plus 19.2% thus ahead of the guided range between 15% and 18%. This is an outperformance of around EUR 10 million to EUR 30 million that we do enjoy at year-end. So we are happy to share with you the fact that these encouraging achievements leads our figures to grow comfortably in line with our ambition, confirming that we are now in the right path. It's now fair to say that this set of figures is a good milestone on the road to an embedded recovery that confirms our confidence for the year ahead. We can be confident this positive momentum will continue in 2026 with the EBITDA, as I said before, expected to grow at least by 10% at constant perimeter. With increasing confidence for the future, we are obviously able to reiterate comfortably our midterm outlook for 2028. The average annual growth rate of revenue on the like-for-like perimeter is expected to be between 4% and 5% between '24 and '28. And the group's average annual growth rate on EBITDA on a like-for-like basis is expected to be between 12% and 16% per year between 2024 and 2028. On the other front, this year has been exceptionally rich in the group's history as we have successfully overcome numerous challenging and hurdles. Our financial structure has been considerably strengthened, which in addition to the rapid recovery of our financial performance, gives us a peace of mind to further optimize our strategic positioning and operating performance for the years ahead. First achievement, as you know, is related to our disposal plan. As you may remember, our target was to sell EUR 1.5 billion of assets between '22 and 2025. And at the end of '25, we largely exceeded this target with EUR 2.45 billion of disposal achieved mostly through real estate disposal and to a lesser extent with operating disposals. At the end of '25, EUR 1.1 billion of this EUR 2.45 billion was still to be cashed in. But since the beginning of the year, the closing of Isemia, real estate vehicle brought more than EUR 700 million mid of January. And so a bit more than EUR 300 million is therefore still to be cashed in from now on. Fair to say that this disposal plan largely contributed to the restoration of our balance sheet strengthening. Second key achievement over the years is a massive improvement of our financial structure due to the both the disposal plan achievements and better-than-expected improvement of operating margin. Net debt is going down by EUR 1 billion in 1 year, and the leverage ratio is now back to 10x versus 19.5x end of '24, a massive improvement in only 12 months. You remember that mid-'24, we were even at 24x, so a massive improvement in 1.5 -- for sure, much more is still to come given the midterm outlook that we have shared with you already in terms of EBITDA and thus EBITDA on the leverage ratio, we have agreed for a covenant in '29 for 6.5x. And as you can imagine, we are comfortable with this covenant. Third key achievement of the year is a full refinancing of emeis bank debt with EUR 3.15 million of new debt raised this year with an average cash margin of EURIBOR plus 247 bps. As you can see from the chart shown here, it largely enhanced the debt maturity schedule versus the situation by the end of '24. The average maturity of our debt is now close to 5.1 years, and the average cost of debt at year-end was slightly below 5% in spot at the end of December '25. The average cost of debt was for reference, 5.37% in '24. I will conclude before ending -- before handing over to Jean-Marc, I will conclude my talk with this list of the major issues and challenges we have to address and that we have addressed in '25. It's clear that we have now made significant and positive progress and that the main achievements are now complete or on the way Disposal plan has been largely exceeded. Structure of our balance sheet has been considerably strengthened this year. Our debt ratio has already improved dramatically, but there is still more to come ahead. Occupancy rates have risen sharply already, but they should continue to grow significantly in the coming months and in the coming years. And as we are halfway there in terms of operating margin, which have grown over the last 12 months, and we continue to grow and to do so ahead. So on top of that, our company is also supported by favorable trends in real estate market valuation, but I will come back to this point later this morning. This year is, therefore, a stepping stone, a turnaround year, and the road ahead is full of promise. Our focus will be now on continuing this operational improvement trends further ahead, relying on attractivity, quality and financial results improvement. Thank you, Jean-Marc, for going into the details of these financial figures.

Thank you, Laurent, and thank you all for attending this call this morning. We are very pleased to present the publication today that we believe is particularly strong for at least 5 reasons. First, a very positive growth momentum in our revenue, plus 6.1% organically that continued in line with the trend observed so far and is not fading out. Second, a significant improvement in operating margin with an EBITDA at EUR 872 million, up 19.2% organically versus last year. And as explained by Laurent, this drove us to beat our guidance for the year. And please note that emeis EBITDA has also significantly improved versus last year, plus 56% Third, our cash flow has improved sharply. Our group free cash flow turned positive in H1, but is now positive at EUR 342 million, an improvement of EUR 640 million in 1 year. Fourth, our net debt, excluding IFRS 16 and 5 is down by EUR 1 million in 1 year when considering the Isemia transaction that we closed mid-January. And fifth and final, considering both a reduction in net debt and an increase in operational performance, the leverage ratio considerably improved from 19.5x in December to 10x today. Please note that these numbers were reviewed by our Board of Directors yesterday, but remain largely unaudited at this stage. So let's start the performance review with our sales. I will be relatively quick on that slide since these elements are fully in line with the trend already observed in H1. Sales posted substantial organic growth of 6.1%, very similar to the publication in H1, driven by a combination of 3 positive factors: First, a price effect of 3.3%. As a reminder, it was 3.4% in H1 Second, an occupancy rate up by 1.8% versus 1.7% in H1. And finally, the effect of the ramp-up of facility opened in 2024 and 2025 for 1% versus 0.9% in H1. This favorable growth trend can be mostly observed on nursing homes, plus 8.1%, whilst clinic have been more muted, only up 2.5%, but I will show you later that there are encouraging signs in that segment as well. By geography, we can see that revenue is growing strongly internationally, particularly in Northern and Southern Europe, a little bit less so in France. In Northern Europe, momentum is particularly strong in Germany with both favorable price effect and occupancy rates that continue to grow very significantly. In Spain and in the Netherlands, recent openings, which are gaining momentum are accentuating an already favorable revenue trend. This year, revenue growth was driven by international market, plus 9.4% and by nursing homes, plus 8.1%, while France and clinics appear to be a little bit lagging behind. However, this apparent weakness in clinics in France is partly due to a perception yes and the underlying trend on a quarterly basis is much more encouraging. For clinics in France, the first quarter, as you can see on this graph, fell short of expectation, mainly due to weak sales of private rooms. Revenue were down 2.7% in Q1. But the graph shows you that quarter after quarter, a noticeable improvement can be seen, and we have been able to turn a 2.7% decline in Q1 into a 1% increase over the full year. This is a result of the work carried out by our teams, particularly on revising the segmentation of servicing offerings. And this trend overall is particularly encouraging for 2026 and beyond. For nursing homes in France, please note that the nonrecurring positive impact favorably played in Q4 last year. Restated from this one-off, the underlying like-for-like growth would be rather close to 4%, well ahead of the 2.6% that we are publishing today. The group average occupancy rate rose by 1.8 points to 87.6% versus 85.8% at the end of 2024, continuing the gradual recovery in this aggregate. The recovery was mainly driven by nursing homes with an average occupancy rate that rose by 2 points to 86.5% versus 85.3% at the end of 2024 and even 82.1% at the end of 2023. In Central and Southern Europe, the level achieved are now above 92% which means back to pre-COVID levels, especially if we remove from this computation, the ramp-up sites, which occupancy rates are obviously lower than those of mature facilities for the time being. Note that excluding ramp-up facility, occupancy rate for the whole group would have been today at 88.7%. So although still below our medium-term ambition, we are happy to see this supportive momentum continue. If I say a few words now about our 2 largest markets, Germany on one hand and the French nursing homes. In France, it is interesting to note that the improvement in occupancy rate for nursing homes is gradually confirmed quarter after quarter and is not at all fading out. confirming the trajectory of catching up the sector current standards at a relative steady and constant pace with an improvement along the year of 2 points. In Germany, the recovery is also following a steady and constant pace. Here again, the momentum doesn't seem to fade out, thus fueling confidence in this market as well. In Germany, the annual improvement trend is standing at plus 3 points for the second year in a row. If I move on to operating expenses now. As you can see on this slide, the performance of our revenue is flowing nicely to the operating margin as well. As a percentage of sales, staff costs have been reduced, reflecting the measures we progressively implemented during the past 12 months to optimize the allocation of our human resources. At the same time, we also benefited from the initial effect of our cost rationalization measures launched in H1, which led to a reduction in the intensity of other costs as well. I'm very confident that those 2 cost components, staff cost and OpEx can be further improved in the years to come. As a result, these measures are enabling us to maximize the conversion of revenue growth into operating profitability. Our EBITDA margin, although still below our medium-term ambition, increased consequently from 13.1% in 2024 to 13.8% in H1 and even 15.8% in H2 this year, showing a strong sequential improvement throughout the year. EBITDA margin also rose materially by more than 2.5 points to 6.8%. More of the same here, this chart illustrates that operating margin have started their way towards normalization. In euro terms, please note that the positive upside in sales, plus EUR 259 million versus last year was largely transferred into EBITDAR plus EUR 132 million and into EBIT plus EUR 131 million, another evidence that the operating leverage to the upside is strong and should continue to be supportive again ahead. Please note that in euro terms, the 2 largest contributor to EBITDAR and EBITDA growth are France and Germany, which were historically our most challenged markets. This is, again, a clear sign of recovery. Now let's move to the free cash flow analysis. Across all cash flow indicators, trend continue to be very favorable. This slide perfectly illustrates in my opinion, the continuous improvement of all our cash aggregates, which we hope to see continue in the coming years. The net operating cash flow on the left of this slide is up sharply. It is, as explained by Laurent, 12.5x higher than last year, and the second half of the year was particularly strong, not only because of operational improvement, but also thanks to a better working capital management and investment discipline. I would like also to focus on recurring free cash flow, which for the record is equal to the net operating cash flow minus financial expenses. For the first time, it is positive in the second half of the year, excluding one-off expenses related to the refinancing of the group. And this is, again, a very strong signal of a new balance that we are gradually achieving. And finally, as I mentioned earlier, the total free cash flow for the group is up EUR 640 million year-on-year at plus EUR 342 million versus a cash burn of EUR 298 million last year, partly -- this improvement is partly due to the disposal that we made this year. As Laurent mentioned in terms of disposals, the volume that we have been able to complete in 2025 is another major achievement for us. Since mid-2022, EUR 2.45 billion of disposal have been completed or are under agreement at the end of December. Among these EUR 1.1 billion were still to be collected at the end of December, but including the EUR 761 million related to the Isemia real estate transaction that you know was closed and cashed in on January 14. Therefore, only EUR 330 million are still to be cashed in, in the following months. As explained by Laurent, we have largely exceeded our divestment program, and this situation puts us in an opportunistic position when it comes to potential additional divestment that could be contemplated. A significant portion of this disposal corresponds to PropCo disposals. In 2025, EUR 1.5 billion of PropCo disposal were secured or finalized, including EUR 538 million related to mostly sale and leaseback transaction based on an average capitalization rate of 5.9%. This disposal mainly concerned French assets, particularly senior residents, but also assets in Switzerland and to a lesser extent, in the Netherlands. EUR 216 million related to transaction under promise, mainly sale and leaseback and EUR 761 million, thanks to the real estate partnership that you know about. A few words about this real estate vehicle. Emeis -- Isemia is emeis new real estate vehicle open to third-party investors. These vehicles brings together assets with an appraised gross asset value of EUR 1.22 billion for an average yield of around 6%. The investment received from Farallon Capital Europe and 22 real estate amount to EUR 761 million and therefore, represents 62% of this value. The 68 assets concerned are located in France, in Germany and Spain. Half of them is used for nursing homes and half are clinics. The innovative structure of the operation is particularly relevant and opportunistic for the group. First, because it strengthened immediately our financial closing structure at closing. Second, because it's a strategic move for the group. In the medium term, this vehicle could or should become the real estate operator that will meet emeis real estate needs. And third, because this is an opportunistic move considering health care real estate cycle likely to upturn. This deal is structured so it allows emeis to keep the benefit from the expected upside in the coming years on real estate valuation and value creation, contrary to a more classical sale and leaseback operation. Please note as well that the governance of this vehicle will allow the group to retain a full and exclusive control on emeis -- on Isemia ,sorry, which means that Isemia will therefore be fully consolidated in our books. In addition to PropCo disposals, we have also finalized the sales of several OpCos this year for a total consideration of EUR 165 million. This mainly concerns our activity in Czech Republic sold in March, but also our independent residential services business in France in the second part of the year and a few other OpCo disposals were also concluded in Belgium and in Italy. Overall, these activities represent only 1.8% of the group EBITDA and 2.5% of its EBITDA. As a result of everything we say today, emeis financial structure has continued to strengthen significantly this year. While net debt, excluding IFRS 16 and 5 has decreased by EUR 300 million in 1 year, the consideration of the Isemia transaction closed on January 14 brought pro forma net debt down by EUR 1 billion since December last year. So net debt pro forma is down to EUR 3.775 billion, a massive decrease, both thanks to the important volumes of disposal achieved in 2025, but also thanks to the operational margin improvement. As a result of both information, operational improvement in one hand and net debt reduction on the other one, the group's leverage ratio was significantly reduced, as said by Laurent, down from 23x in H1 2024 to 19.5x at the end of 2024. It now reaches 10x pro forma. As a reminder, this leverage ratio of 10x is already well below the covenant that we have agreed with banks for 2026 at 12x. And Laurent reminded you that we anticipate this ratio to fall below 6.5x before the end of 2029, this ratio being the covenant that we have agreed to the refinancing achieved in December. Last but not least, we secured the refinancing of the whole bank debt of EI SA with EUR 3.15 billion of new debt raised under favorable conditions, i.e., with a margin all in cash and peak of 363 bps over 3 months EURIBOR. This new debt, including a new EUR 400 million bond, have fully refinanced the former A B C D financing and have largely enhanced the debt maturity schedule of the group that can be seen on this slide. Thank you for your attention. And now I hand over to Laurent for an update on the development of our real estate portfolio and to conclude this presentation.

Yes. Thank you, Jean-Marc, for the detailed presentation. One final key point for me concerning our momentum is that the health care real estate market appears to be beginning rebound after hitting the trough at the end of '24. This is obviously important for our group since one of the characteristic and singular characteristic of the sector is the rate of real estate ownership of the assets that we operate, something that makes emeis quite unique in the sector. The group's real estate portfolio is currently valued at EUR 5.6 billion, representing 44% of the beds operated by the group at the end of '25. and is valued on an average yield of 6.4%, excluding duties. Nearly half of this portfolio is located in France with the remainder spread across Northern, Central and Southern Europe. Obviously, the total value of the assets declined this year due to the significant real estate disposals that we have completed. But the interesting point about this slide is that it highlights that the value of assets on a like-for-like basis has now started to recover slightly after several years of decline, indicating that the trough of the cycle has reached -- was reached at the end of '24 and that we could now enter a new phase. The capitalization rates used by experts have stabilized and improved outlook for our markets is beginning to translate into an upturn in values on a like-for-like basis. While in detail, valuation changes on like-for-like basis were positive everywhere, especially where the valuations were already flattening 1 year ago. I'm talking about Central and Southern Europe. In France, the rebound is far more limited, plus 0.4%, as you can see, but this needs to be compared with a sharp decline last year, minus 8%. This clearly brings confidence for the market valuation changes that we can expect ahead everywhere. It also reinforces our view that the strong shortfall of bed we do forecast in the coming years will bring even more appetite for these health care real estate assets ahead, thus feeding momentum for the upward phase of the cycle, both on operations and on real estate market values. So before answering to your question -- to your questions and the questions you may have, I would like to conclude this presentation with reminding key elements I want to summarize. First, the positive trend of our top line continues with a strong organic growth of 6.1% and 8.1% on nursing homes, supported by a positive momentum on occupancy rates and positive price effect and especially positive occupancy rates in France. Improvements on quality and satisfaction metrics largely contribute to this performance. Second, the strong momentum on operating margins, up 19.2% for EBITDA and 50 points for the EBITDA, mostly driven in million euros by France and Northern Europe. Our guidance '25 is therefore exceeded by EUR 10 million to EUR 30 million. And as a consequence of this and along with other components, our free cash flow have turned positive this year for the very first time for a very long time with more than EUR 600 million better off versus last year. Third, our EUR 1.5 billion disposal target before end of '25 is largely exceeded with EUR 2.45 billion now achieved or secured. This was reached partly thanks to a major real estate partnership recently signed, bringing EUR 761 million to emeis. Since the beginning of '25, EUR 1.4 billion have been cashed in already. This will accelerate further the strengthening of our financial structure, as Jean-Marc detailed with a pro forma net debt around EUR 3.8 billion, decreasing EUR 1 billion compared to last year and a leverage ratio that is now at 10x versus 19.5x at the end of '24. Real estate valuations are bottoming out after several years of severe adjustments, raising confidence that valuation cycle should now be supportive ahead along with improvements on operations. And finally, the positive trend seen in '25 will be continuing ahead after EBITDA like-for-like growth of 19.2% in 2025. We do expect it to continue to grow and to grow at least by 10% in '26 at constant perimeter. And our confidence brought also up in a situation to confirm our midterm outlook. We are now expecting revenues to continue growing ahead between 4% and 5% CAGR at constant perimeter and EBITDA dynamics are also set to continue in the same path with a CAGR between 12% and 16% at constant perimeter over the same period. So thank you for your attention concerning this introduction. And now obviously, we are available with Jean-Marc Boursier to answer the questions you may have.

[Operator Instructions]

First question from Christophe Ganet. In clinics in France, how do you see the rates of occupancy evolve in 2026? What level do you have to improve it? Two points concerning that this question. First, we can see an improvement at the beginning of '26 compared to last year. So we see further improvement in the rate of occupancy in clinics. Obviously, the question is not the needs in clinics. You know that we have clinics in France, psychiatric clinic and rehab clinic and the demand for psychiatric and clinic is definitely much over the capacity that is installed. So we have -- from that front, we have no issue with occupancy rate and occupancy rate improvement. And so we will see what will happen during the year, but we are quite confident in terms of occupancy. The second point, which I wanted to elaborate on is to continue to work on private revenues from our clinic and not only public and coming from state support for our clinics. So this is a key element. And from that respect, we've put in place more dynamic marketing and commercial approach in '25 compared to '24. This has evolved very positively for us in terms of revenue in the second half of the year, and it continues to gain traction in the first weeks of '26. And so we should continue to see an improvement from that respect. Second question from Christophe Ganet. EBITDA '25, '26 and guidance, can you help us to draw what will be our starting points given the disposals when you guide a plus 10% at least for '26. Jean-Marc, perhaps you want to answer that question in terms of what's constant perimeter and constant perimeter given the disposals.

For 2025, Christophe, you can find in the appendix of the booklet that we have disclosed an explanation about how we compute the what we call the like-for-like growth of the organic growth. Obviously, we are considered in those numbers only the disposal of OpCo that were closed during the year and they mostly concerned, as you have understood, Czech Republic and senior residences in France. As you know as well, we have also other disposal of OpCo in our radar screen, notably in China and South America because we made clear to all of you that we would refocus on Europe and sell any non-European activity. So it's difficult for us to be much more precise at this stage. But obviously, there will be some impact on our portfolio of activity, and that has been taken into consideration when we guide you on 10% organic growth. Obviously, that will lead probably to some restatement of our 2025 numbers so that the comparison in 2026 would be totally obvious and transparent to all of you. Your next question is an update on our OpEx saving plan. So yes, as you know, we have announced a full review of our OpEx base in France. So OpEx base in France amounts to a total consideration of EUR 500 million, a little bit less than EUR 500 million. And we believe that through a thorough analysis of our organization for [indiscernible] for residence management, for energy, for laundry, for anything like that. So anything that is related to human resource but to OpEx, we believe that we can generate significant savings. The savings were already noticeable in H2 this year, but we anticipate further savings that were obviously included in the guidance that we gave you.

Last question from Christophe Ganet. What price levels do you anticipate for '26? Well, for sure, compared to '23, '24 and even '25 with the much lower inflation rate we anticipate lower price increases. What is important for us and has always been important in our message in the last 3, 4 years is that we intend to continue to have a positive spread between price and inflation, price and cost through dynamic pricing or detailed pricing house by house, sometimes apartment by apartment. And this is critical for us. So lower price level increase than '25 definitely. But once again, trying to increase the spread between price and cost through pricing. This is our critical strategy from the beginning. We are more in value-added part of the segments, both in clinics and nursing homes. The quality of our facilities and the quality of the service that we are providing is key to continue to develop this pricing power that we already have experienced in the last years. Two questions from [indiscernible]. How come occupancy rates are so low given the demand for placement of elderly people? That's a good question. Well, clearly, [indiscernible] we were suffering both from the COVID situation in 2021 and from what happened in '22 with the scandal of the company and which is a previous company, I would say. And we are recovering. If you look at what happened on the market and especially the communication of our competitors, I would say that the occupancy rate is across the board a little bit more stable, and we are gaining traction and we are recovering. And last year, we've increased our occupancy rate in France by 2 points. We will continue moving forward. The big increase of the demand will happen more in '27, '28, '29. Why? Because the people that are entering our facilities today are around 85 years old, which means they were born during the war. So you have a little bit of lack of people during this period for obvious reasons. And these are the people that are now due to enter in our facilities. So for a period, there will be a little bit less. Second question for [indiscernible]. Second question for [indiscernible] is concerned by the focus on lowering OpEx, especially the question of staff cost given what happens in 2022. I want to reassure you definitely [indiscernible] on that topic, and that's why we are communicating that much about quality and satisfaction rates. We are never lowering OpEx at the expense of quality of service to our customers. This is critical promise that we've made to our customers, and this is critical for the improved financial situation of the company. At the same time, we have costs, both operating cost in terms of purchasing that we can reduce, not at the expense of quality, but because we are not -- we were not completely efficient in the last years in terms of purchasing, and we are making it much more efficient, both in terms of prices and in terms of volume. But once again, being very concerned about quality. Same question concerning staff. When we look at some of our facilities, not all, but some of our facilities, we have staff levels that are way above the market standards. We will -- the target that we have given it continues to be one of the best in terms of standards on the market by far. But at the same time, when it's not good, we need to continue to reduce our cost to be sure that we have the right level of profitability facility by facility. So this is a good exercise, but this is a very question. We are very much taking care of exactly the point. We are reducing our OpEx, but not at the expense of the product quality. This part of our brand that we are trying to rebuild. A question of Lloyd, please can you explain what the outlook is on the regulatory environment in France? Well, it's fair to say that in our guidance and in the guidance concerning the short term, I would say, the '26 or in the midterm guidance, we have taken into account a very modest improvement of the financing coming from the government. When I say modest, it's between 0% and 1% in '26 and the same moving forward because we are very conscious that the financial situation of the French government does not much more than that. If we have more than that, we will be very happy and we will enjoy it. But we are working with an assumption which is very conservative because we want to have more self-help measures that allow us to improve our EBITDA and situation. Clearly, if I go into the detail for 2026, there is a very limited increase of the tariffs for clinics. We will see what will detail in the coming weeks, but we've taken into account something like 0 or 0.5 depending on the activity. And in the nursing homes, we've taken as an assumption, which is not wrong, 1% improvement of the public financing. So you see very modest and the improvement of the situation in France that will come in 2026, a further improvement is more due to self-help measures. That's why we are quite confident. A question, Jean. Can you remind us what is now the percentage of real estate owned? And what is your medium-term target, please? Jean-Marc, do you want to take this one?

Yes. At the moment, we are slightly above 42%, 42%, 43%. And do we have a medium-term target, a very precise medium-term target? The answer is no. But we can well anticipate a slight reduction in our ownership. But keep that in mind, 40% is owned, 42% is owned, and the rest is under long-term agreement.

Which, as I said before in my presentation, is a very different situation compared to our peers. We are quite significantly owners of our real estate. You may remember that 3, 4 years ago, we were saying that we probably reduce this percentage significantly. That was in a goal to strengthen the balance sheet. Now that the balance sheet is strengthened, there is less need to reduce this ownership. And on the opposite, being owner of our real estate is probably becoming a competitive advantage now that the real estate market concerning health care market is turning around and is progressively improving.

And you have noticed also that our real estate valuation as of today is much above our current level of debt, which gives us a lot of confidence going forward. I believe that we are now moving to oral question. [indiscernible] shall we do that?

[Operator Instructions]

Can you hear me?

Yes.

This is Constantin from Caius. Thank you for good set of numbers. And 3 quick questions from me, please. One, could you please provide a little bit of color on the overall organic revenue growth for the group you expect in 2026? Two, given the disposals achieved in the slightly lower -- smaller perimeter, is there a scope for reduction in central costs that you anticipate? And then three, does the EUR 868 million pro forma EBITDA reflect all the disposals, including the EUR 328 million yet to be received?

Concerning the first question, yes, we are not giving any guidance on short term 2026. We have given a guidance of 4% to 5% for the medium-term guidance. If you -- give you a little bit more color, Constantin, for sure, the trend that we have experienced in '25 concerning the volumes, we expect it to be relatively similar because the trend at the beginning of the year and what we expect is not very different. On the prices on the opposite, for sure, given the overall reduction of inflation across Europe, the trend is to a reduction of prices. What is important for us is to continue to maintain the gap between price and inflation, so price and cost so that we can continue to improve our profitability. For sure, there is a reduction in terms of sulfur cost. It has been already the case in 2025, and it will continue to be the case in '26. We continue to work on a regular basis on our sulfur cost. As you remember, we've discussed that before we've increased our central cost significantly in '22 and '23 and even a little bit in '24 to strengthen the control of the company, the quality measures, the measurements of all what we were doing. It was -- and to put the things in order. Now we are more progressively, but steadily and constantly on the other way. And we do it in a way that is not costly for the company. And I think I prefer to do it steadily during 2 to 3 years by optimization and having people going progressively as we are in France than doing a big plan. And this is what we have already done with a significant cost reduction in '25 and we will continue in '26. Last question, Jean-Marc.

Constantin, your last question was on the free cash flow computation. Are the EUR 328 million that remain to be cashed in part of the free cash flow of the year? The answer is obviously not. It will be computed in the 2026 free cash flow when the cash will be collected and when the operation will be effectively closed.

It's actually on the EBITDA. So you have this slide with the pro forma 2025 EBITDA of EUR 868 million. And my question is, does that EUR 868 million reflect all the disposals, including the EUR 328 million? So is that the right starting basis? Or is there going to be more adjustments from the disposals yet to be received?

There will be more adjustment going forward once we will have closed the further OpCo operation that I was disclosing. So we will need to adjust the 2025 pro forma once those operations will be closed and announced, yes. The pro forma that we are showing is only based on the operation that we have closed already in 2024 and 2025.

Well, one question of Aleksander Peterc. Our '24 comments simply read in France, the main contributor of the growth was nursing homes, which delivered plus 6% organic growth. This segment benefited from strong momentum in admissions from the middle of the year, which continued throughout the second half and into the early part of '25. Why wasn't the tailwind flagged in '24, but you do now disclose the headwind in a year-to-year comparison? Well, I think I don't get this question. I think we communicate with the results every on the -- especially on the occupancy rate every quarter. So this momentum in '24, sorry, in the second half of '24 was clearly indicated and we reiterate this communication on a regular basis in '24 and in '25. So I'm not sure that I understand the comment.

We had, Laurent, slide income by the French state last year at the end of 2024, which corresponds to reimbursement of social charges that were accounted into revenue. And we just highlighted today to make it clear that this one-off by the French state has not reiterated in 2025.

But we are not talking about admissions and occupancy rate [indiscernible].

Occupancy rate whatsoever. And regarding the momentum for admission, Alex, I can, but we already communicated on admission for 2024, especially the change in dynamics, which was seen in Q2 2024 already. So that's already revenue effectively, but absolutely no impact whatsoever on occupancy rate.

On the -- just to flag that to Aleksander, on Page 23 of our presentation that you may have received and you can find online. And this is a graph that we have communicated on in all the quarters in the previous communications. We have a clear -- we show a clear evolution of our occupancy rate in France because we know it is a key indicator for our guidance and for your analysis of the company. Given your near-term context comment, should we assume that 10% EBITDA is really the safest possible bare minimum for '26 and you may well hit the lower end of the midterm target, 12% to 16% EBITDA CAGR. I think clearly, we -- as you remember, 10% is -- well, at least I repeated in my presentation, I said that our guidance for '26 is at least 10% growth in EBITDA. We are confident that we will achieve that. This guidance is also taking into account some of the headwinds that we are experiencing in some of the countries. And if I name one in France, the change in regulation and the change in especially in support to companies due to the taxes and I don't know how you say that, Aleksander. So social charges reduction by the government in government budget for 2026 is taken into account in this guidance. So we've taken somehow the bad news, and we'll see how the company will deliver on the EBITDA ratio. This is clearly why we are confident to deliver that. And we will see how the company and the results evolve throughout the year, and we will communicate in due time if we see different targets and perspective. Well, 10% EBITDA, as you may see, with the performance that we have done by almost 20% EBITDA ratio last year is also the reason why we are confident with the midterm target of 12% to 16% EBITDA. If you do 20% 1 year and 10% the other year, it's average 15% ratio, and we are confident that this gives us for the midterm range that will lead us in this frame of 12% to 16%. I hope I answered your question the way I could answer. Any other question? Yes. Looking at your real estate pro forma value of 5.6%, are there any assets slated or disposal that will no longer be in your real estate perimeter by year-end?

There are a few, yes. There are a few -- if you look at Page 29, I've explained to you that out of the disposal program that we have secured, EUR 216 million yet remain to be cashed in, in 2026. So yes, there are a few of those assets that are part of existing disposal program. Your second question, Aleksander, is with regards to minority interest in this EUR 5.6 billion value. technically speaking, none whatsoever. Having said that, if I phrase it slightly differently, the EUR 1.22 billion of real estate valuation in Isemia is part of this EUR 5.6 billion. So at some point in time, investors will have to be replaced because as you have understood, the partnership with Farallon Capital and 22 Real Estate is only a temporary one. This partnership is supposed to last for 5 years with a potential elongation program for 2 years more, but EI has the capacity to replace those investors if and when needed. So technically speaking, no minority interest in this 5.6, but the 1.22 is obviously a part of it.

No other question? Is there any other question asking it last time. So if it's not the case, Jean-Marc, we thank you a lot for your participation to this call. A quick summary. rapidly, clearly, if we -- we are very pleased with the results as we have beaten our guidance for '25 with a strong momentum on operating margin and cash flow that will continue -- that is continuing in the beginning of '26 and will continue in 2026. The balance sheet has been clearly strengthened, thanks to significant disposals and the renegotiation of our debt. And if we look at the midterm to long-term outlook, we are -- the company is supported by very tremendous and significant demand growth in the years to come, which gives us a lot of confidence to support our midterm outlook of 12% to 16% EBITDA growth between '24 and '28 and short-term EBITDA growth of at least 10% in '26. Thank you for your participation, and see you soon. Bye-bye.

This concludes today's call. Thank you for your participation. You may now disconnect.