Clariane SE (CLARI) Earnings Call Transcript

Welcome to the Clariane 2026 Half Year Results Presentation. [Operator Instructions]. 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'm Sophie Boissard, Chief Executive Officer of the Clariane Group; and together with Gregory 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 '26 and '28. 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. Gregory will then take you through the income statement, cash flow, debt and our owned 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 impact 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. The 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 regained access to the debt capital markets and issued more than EUR 1 billion over the last 6 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 will happen in September. Wholeco leverage as published stood at 4.9x on a reported basis, and Gregory will explain later on how it translates in our balance sheet structure after repayment of the 2 hybrid bonds we had. Third message, we confirm both our '23-'26 outlook and our '25-'28 medium-term 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 '25. Net profit attributable to the group stood at minus EUR 42 million and the post-IFRS 16 at minus EUR 48 million. These figures include EUR 51 million in exceptional costs related to restructuring and disposal transaction we have executed over the last 2 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 19 million to EUR 515 million versus December 2025. Let me now say a few words about the ESG milestones achieved in H1 '26. The progress achieved on this dimension also reflects the central role of our mission commitments in Clariane's operating model is value creation and long-term resilience. I would like to highlight 3 dimensions. The first one refers to social dialogue and human resources. We have renewed the agreement establishing our European Company Committee for a further 4 years with unanimous support from the members and the EPSU trade union federation. And 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 a0lready 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 called the Prime Operationnelle de Progres program, benefiting to all Korian and Inicea facilities. This scheme is calculated at facility level, each 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, and 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 index publications, and we are very proud about it. On digital solution in care, the benefits identified through the Karlsfeld experimentation, 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 for detection sensors to enhance patient safety and also -- and that is actually the most efficient voice-assisted care documentation that bring productivity gains 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 '24 and '25 a vulnerability analysis that had identified already extreme heat, heavy rainfall and flooding as the main risk that potentially can affect our portfolio. And 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 illustration 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 2 air conditioned areas supported by mobile cooling units. And we have also installed a hot line with our key suppliers, so that they are able to carry out urgent repair within a target timeframe of 2 to 4 hours in terms of extreme heat condition. Beyond these measures, we have taken recently voluntary action by building and activating a dedicated internal heatwave response plan that we call Plan Bleu 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 Benelux over the last days by rescuing and hosting over 100 people that had to flee areas affected by the wildfires and 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 strength. Let me now comment how we regained 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 evidenced the strength of the group's fundamentals. The 3 in a row 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 conditions 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 3 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. And 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 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 '25-'28 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 identified in each region. So here in the blue color, you see what we are focusing on for the long-term care activities, namely supporting the increasing 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. And last but not least, we are developing new support solution for relative, for family helpers, including respite and short-stay solutions, which are offered in all of 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. And 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 solution supports 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 are central to the better support efficiency program. I will now hand over to Gregory, which will take you through the income statement, cash flow debt and real estate portfolio in greater detail. Gregory, 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 revenue stood at EUR 2.699 billion, 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 SMA-related effects recorded in the first half of 2025, organic growth will have been at 4.3% on the segment of Specialty Care in France, out of which 2/3 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 billion in the first half of '25. Disposal plan and perimeter effects represent a negative EUR 90 million or 3.5%. Organic growth was driven by volumes and by price and case mix. Volumes contributed EUR 41 million or 1.6%. Long-term care accounting 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 effects in France, Italy and Spain. As a reminder, other effects contributed a positive EUR 16 million as H1 '25 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 continued 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 pre-IFRS 16. Published EBITDA for the first half of '25 was EUR 263 million. The scope effects related to the disposal plan and the closure of a small number of underperforming facilities was negative 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 mix 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 '26. This represents an improvement of around 100 basis points compared with the first half of 2023 on a pro forma basis. Now looking at H2 versus H1 over the past 3 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 '26 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 noncash and other items before taking into account the working capital and investment effects. Working capital requirements showed 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 '25. The increase mainly reflects the full first half impact of the EUR 500 million bond issued in June '25 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 positive EUR 22 million compared with a negative EUR 23 million in the first half of '25. As a result, net free cash flow after CapEx improved significantly by EUR 44 million from a negative EUR 48 million to close to breakeven. This is consistent with our ambition to turn cash flow positive on 2026. After coupon payments, real estate transactions and the financing operations completed during the period, net debt decreased by EUR 49 million, including IAS 17 and by EUR 35 million, excluding IAS 17. The full year cash benefit of around EUR 40 million from refinancing the sting hybrid at a lower cost of funding is therefore only partially a in the first half cash flow. The first half was marked by 3 successful bond transactions totaling EUR 1.63 billion. Following the assignment of a B+ rating by S&P and a B2 rating by Moody's, Clariane gained access to a broader round 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. The 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 Schuldschein maturing in '26 and '27 and the remaining Euro PP bond maturing in '28. The EUR 40.8 million Euro PP originated due in 2027 was repaid early on '25 of June. Second transaction was issued on 28th of April of EUR 230 million of additional high-yield senior unsecured notes, tangible with the initial EUR 500 million issuance and forming a single series maturing in 2031. The proceeds enabled us to redeem the EUR 200 million bond sterling perpetual green hybrid bonds on 15th June. The transaction improved cash generation by around EUR 14 million on a full year basis. Sub transaction was EUR 333 million deeply subordinated and dated hybrid bond issued on 23rd of June with a fixed coupon of 7.875% for the first 3 years. The proceeds will be used to redeem the ODIRNANE by 8th of September and avoid the application of the coupon setup clause. Once the corresponding repayments have been completed, the 3 transactions will extend the maturity profile, streamline the capital structure and improve cash generation by approximately EUR 27 million on a full year basis. Financing the sterling hybrid with senior debt mechanically increased Wholeco leverage by approx 0.4x from 5.1x reported to 5.5x pro forma at 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 at maturity or ahead of schedule. The 2031 senior notes will refinance the Schuldschein maturities in '26 and '27 and the remaining Euro PP bond maturing in '28. 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 2 separate revolving facilities provided by 2 different banking partners. Overall, the real estate debt profile remains well spread over time. This combination reduces short-term refinancing risks and support the group's policy of anticipating refinancing 12 to 18 months before maturity. The balance sheet trajectory continues to improve. Net financial debt stood at EUR 3.020 billion at the end of June compared with EUR 3.559 billion 1 year ago. 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 30th of June and are expected to be allocated to the redemption of the outstanding amounts under the ODIRNANE. Reported Wholeco 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 ODIRNANE Wholeco leverage stood at 5.4x. On a comparable pro forma basis, this compares with a 5.6x at the end of June '25. Compared with December '25, 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 Schuldschein with senior debt, Wholeco leverage stood at 5.1x. The trajectory since 2023 remains clear. Wholeco leverage has decreased substantially supported by the completion of the plan to reinforce the capital structure, improved operating performance, discipline in capital allocation as well as cash management and active debt management. I will conclude my section with the owned real estate portfolio. Please note that as of June 2026, the portfolio is appraised by CBRE 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 30th of June '26 compared with EUR 2.456 billion on a pro forma basis, excluding disposal last year. The EUR 28 million decrease reflects 3 main effects. First, indexation contributed a positive EUR 23 million. Then investments made during the period contributed EUR 9 million. And then these 2 positive effects were offset by a EUR 60 million impact from the limited increase in the average capitalization rate to 6.6% compared with 6.4% 1 year earlier. Real estate debt decreased to EUR 1.389 billion from EUR 1.494 billion at the end of June '25 after restatement of Ages & Vie 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 550 million compared with an adjusted EUR 496 million at the end of December '25, 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 asset value. Taken together, the deleveraging trajectory, the resilience of our related value and the free cash flow close to breakeven, these results confirm that clients' financial foundations are being rebooked on a solid ground. I will now hand back to Sophie for the outlook.

Thank you very much, Gregory. 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've 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 CapEx. The third level contributing to EBITDA improvement is definitely the better support efficiency program. We are streamlining process by process, both 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 '26 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 2 complementary horizons that are presented at the full year results. For the '23-'26 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 Wholeco leverage below 5.5x at the end of 2026. For the '25-'28 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%. Wholeco leverage is expected to be around 5x at the end of 2028. As you have understood and as Gregory explained, the leverage objectives have been, of course, mechanically adjusted to reflect the new capital structure following the refinancing of the sterling-denominated hybrid bonds with senior debt. 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. Gregory and I are now available to answer your questions.

[Operator Instructions]

Gregory, 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 very much for the question. So average expectation is around 2% most. And this is, of course, variable between 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 rates, the care rate for '27 in Germany and the indexation is also fully known both in Belgium and in the Netherlands.

Thank you, Sophie. Next question probably for Gregory 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?

Yes. Thanks for the question. So -- and maybe before starting with the guidance, and this is what is already visible on the first half, as a remember, 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, 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 in Inicea. And the remaining 50%, that 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. And last but not least, in our industry of fixed cost, obviously, the improvement of volume will benefit on the additional incremental EBITDA.

Thank you, Gregory. Next question is regarding the current events that we're experiencing in France and in Europe overall with the heatwaves and fires. Regarding heatwaves, 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? And then 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 are really doing well. And we are welcoming on the top of our resident or patients additional people coming from the local communities. So 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 cost -- the additional costs related to further equipment into air conditioning, we have brought additional air conditioner with, in a lot of cases, some funding coming from the health care insurance to help us in it. Directionally, for the next 3 years, we are going to prioritize and accelerate some further investments into air conditioning, especially in the northern part 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. So 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 heatwave?

It's always difficult to answer this in that sense because, of course, what's happening is it's very difficult for the communities that are impacted. But definitely, we see kind of a 15% increase in short term -- in short stays in our facilities overall versus the previous years, very much related to the 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. So indeed, I would say the volume of activities has never been so acute and dense at this time of the year. And this is not only -- this is actually over Europe. We see families have realized that our beloved one are much safer in one of our nursing homes or clinics than alone at home without any close support to go for the extreme temperatures.

Thank you, Sophie. We have one question actually asked by several people regarding the seasonality in your business between H1 and H2. Could you please explain the seasonality and the reason of the seasonality? And are you expecting the same kind of seasonality as last year?

Yes. So thanks, Bisseuil. So as you've seen on the -- we just went back to the last 3 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. And if you can see as well as we have confirmed our guidance, and if you do the math, you will understand that the H2 of '26 should be higher in terms of margin than the H1. Several elements that we see, but certainly on the H2 of this year, what will drive the continued improvement of margin. And 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 the second semester. And we'll have as well the full effect of the performance improvement plan that has already launched beginning of the year. That's the key driver that have already pushed the EBITDA margin up last year in H2 that will continue, and this is what is confirming our guidance for the second half of this year.

Thank you, Gregory. We have a question regarding the occupancy rate. What trends do you anticipate in occupancy rate within the next few years?

Maybe I will take this one. We expect actually to be up in the next 3 years, at least by 100 basis points to 150 basis points on a yearly basis in our nursing home networks. That's the step upward that we are betting on expecting.

Thank you. The next question is regarding the organic growth that you've seen us be slowing sequentially, particularly regarding pricing. What can you share on this point?

Yes. 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%, bear in mind certainly that in the Q1, we benefited from a supported basis point of comparison with the sever flu that we have in the Q1 '25. And as well, the German pricing effect remained very solid in the half year with 7%, but was at 8% on the first quarter.

Thank you, Gregory. Regarding the 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% to 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%. So it's a stable margin, yes.

Sophie, we have a few questions regarding Germany and the nursing home reform. Would you -- 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. And there is already a financing dedicated current facility or resident to accelerate the digitalization of the main processes, including care and reporting processes, documentation processes. And there might be some transfer of financing from the health care insurance or the federal state to local communities for people that are benefiting that have low revenue. So this is actually the discussion ongoing. And last but not least, after a very strong catch-up on the wage levels that are fully refinanced in the care rate, we expect to see kind of slowing down of this catch-up of the level. Anyway, 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. So 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 could be -- 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. So that's basically the main actions or measures that could be in the package that is not yet final.