Korian : Strong revenue growth of 16.5% in Q2 and 12.3% over the half year, driven by Korian’s evolving business model

PRESS RELEASE 29 July 2021

Strong revenue growth of 16.5% in Q2 and 12.3% over the half

year, driven by Korian's evolving business model

• Half year revenue € 2,107.5 million : +12.3% of which 6.4% organic, benefiting from healthcare developments
• EBITDA margin up by 110 basis points to 13.2% excl. IFRS 16 (22.6% incl. IFRS 16) reflecting activity normalization in all geographies with an excellent vaccination rate
• Net profit (Group share) doubling compared to last year at € 45.3 million versus €20.3 million in H1 2020 (excl. IFRS 16)
• ESG roadmap ahead of objectives with 20% of network certified ISO 9001 and more than 4,000 employees in qualifying training programmes
• Upgraded revenue guidance to reflect strong growth dynamics:

1. Full Year 2021 revenue growth guidance upgraded to >10% (vs >9% previously), with EBITDA margin (excl. IFRS 16) and free cash flow to be above 2020

1. Maintained growth momentum in 2022 with annual growth above 10%. Confirmation of EBITDA margin rate of 15.5% (excl. IFRS 16) and free cash flow1 of 300 million euros

Sophie Boissard, CEO of Korian, commented as follows:

"Korian's half year results show the acceleration of the development of the Group, accompanied by a rebound in our activity in the second quarter. This is, first of all, a reflection of the commitment and professionalism of our teams over the last 15 months, who have been fully mobilised to respond to the high level of needs for treatment and support in the context of Covid-19. It is important for me above all to warmly thank them.

Our results reflect the relevance of our targeted growth strategy that we have been rolling out over the last 5 years. The continued reinforcement of our expertise in rehabilitation and post- acute care and the care of patients, notably through outpatient care, together with the development of our Community Care activities, has created a sustained growth momentum of 10% with over half being organic.

Our aim through providing a wide range of services in the communities where we are present is to respond to growing needs for quality, local care.

Through our selective strategy that targets a limited number of geographies in Europe, we are building an integrated care platform based on our strong values, our Group culture and expertise, to respond to the needs of elderly and fragile people, alongside stakeholders in the communities in which we work."

1 Levered free cash flow post taxes, financial interests, operating capex and before growth capex

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The audited consolidated financial statements for the six months ended 30th June 2021 were approved by the Board of Directors at its meeting of 29th July 2021.

The consolidated financial statements have been prepared in accordance with the lease accounting standard, IFRS 16. For purposes of comparability, the financial information below is presented excluding the application of IFRS 16.

The financial statements for H1 2021, which are published in accordance with IFRS 16, are included in the half year financial report available on the Company's website, in the Finance section. The income statement and cash flow statement appended to this press release highlight the impacts of IFRS 16.

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Activity update

In an evolving environment, the Group has rolled out a successful vaccination programme that has reduced significantly the level of infections and allowed return to normal activity conditions across the network. The level of vaccination2 of our resident is is 100% completed , together with a campaign to both inform and organise staff3 vaccination4, the Group has a particularly high level of vaccination for the sector since the level of staff declared vaccinated rose from 53% end of April 2021 to 83% at the end of July. This level is significantly higher than the sector averages.

As of 23rd July, the Group has only 18 Covid-19 positive residents out of the entire European network, which is less than 0.2% of employees (health and medico-social sector).

However, given the circulation of the Delta variant in the Group's geographies, the facilities

continue to maintain strict hygiene rules and to closely monitor the situation in each region. The Group is already deploying the vaccine booster programmes in line with local health guidelines.

The Group has returned rapidly to pre-pandemic entry levels across the network. Based on the accelerating trend of entries and increased occupancy levels in June and July as well as the increased activity in healthcare, the Group expects to be back to pre-pandemic levels by the end of the year.

1. Full vaccination (two doses)
2. All staff in the Korian's Nursing Homes network in Europe
3. Full vaccination (two doses)

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2021 Q2 and half year revenue

Korian posted a Q1 revenue of € 1,018.2 million, with revenue growth of 8.1% compared to the same period last year, including 1.4% organic growth, despite the third wave of the pandemic that had a lesser impact on activities.

In Q2 2021 revenue was up 16.5% to €1,089.3 million, organic growth stood at 11.3% driven by the strong rebound in rehabilitation and post-acute and sustained high level of activity in mental health, as well as accelerating entry inflows into the long term care network.

In the first half of 2021, revenue totalled €2,107.5 million, up 12.3% on the same period the previous year. Strong organic growth of 6.4% reflecting the roll out of the Group's strategy to enlarge its services in long term care and home care, as well as the specialisation of its healthcare activities, including mental health, and moreover benefiting from the compensations received, mainly in Germany and France.

• Long-termcare grew by 4.1%, including 2.7% organic growth, given the recovery in new entries leading to increased occupancy rates, with maintained pricing in all geographies.
• Over the period the healthcare activity, benefitted from a strong rebound in activity and the increased outpatient capacity, growing by 43% on last year of which 20% was organic growth in the existing network.
• Community care, including solutions such as Ages&Vie in France and homecare, grew by 14.3% versus same period last year and 7.5% organically demonstrating the continued relevance of these solutions.

Growth & Development of the network

Korian has been delivering growth to respond to the evolving care needs of a growing elderly population and to provide adapted care solutions in a context of the rise of chronic diseases. Indeed there are 6 million chronic patients in the countries where Korian is present, a number that is set to double in the decade ahead.

In this context Korian's growth is focused on increasing its capacity to care for a larger number of people alongside increasing the level of medical expertise across the network. Overall the network grew by 1,737 beds over the half year, of which 743 beds from greenfields and extensions.

The healthcare activities continue to represent a growing part of the activities of the Group reaching 23% of revenue and the Group expects this to reach 30% by 2024.

Seven new acquisitions were finalised in the first half year of 2021, for a total expected revenue of c. €150 million particularly focused on healthcare. Notably, Korian acquired ITA Salud Mental in Spain, following the acquisition of Inicea in December 2020, becoming the third largest private mental health player in both France and Spain. The group also acquired IPDL home

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services in Germany, an operator focused on care for patients with chronic respiratory or neurological conditions. Finally in Italy the Group acquired two outpatient clinics, bringing its European network to 117 outpatient centres and increasing its capacities to more than 60,000 sessions per month (an additional capacity of c.14,000 sessions over the half year).

In France, Petits-fils reached 190 agencies and over 9,000 clients, with overall business volume up by more than 60%.

The Group also entered the UK market, one of the largest private long term care markets in Europe, with the acquisition of Berkley Care, a high end care network.

2021 Half Year results

The Group's EBITDAR for the first half of 2021 was € 520.5 million with an EBITDAR margin of 24.7%, reflecting lower occupancy, rebounding only in the second quarter, and a maintained staff structure to ensure a high level of care, with limited use of temporary staff, reducing personnel costs. In the first half of 2020, the Group's EBITDAR amounted to €442.9 million with a 23.6% EBITDAR margin5.

Results by country6:

• In France, Spain and the UK, revenue reached € 1,071.9 million, showing strong growth of 16.9% (versus 6.1% in 2020) and strong organic growth of 8.5% driven by the strong performance of the healthcare activities in France. Inorganic growth is driven by the acquisitions in mental health in France and in Spain. Community care continues to grow at a sustained pace. The EBITDAR margin is 25.1%, progressing slightly from 25.0% last year.
• In Germany, revenue grew by 5.8%, (versus 5% in H1 2020), to €525.7 million, with a strong organic growth of 4%. Revenue has been supported by strong rebound in occupancy levels in nursing homes throughout the second quarter. Home care activity rose by over 50% over the period following acquisitions in this area and increased demand for services. The EBITDAR margin is significantly up at 27.8% (versus 24.1% in H1 2020), reflecting the increased care mix and favourable tariff impacts.
• In the Benelux region,7 revenue reached € 288.2 million with reported growth at 1.6% (versus 14.2% in H1 2020) and organic growth slightly positive at 0.5%.. The EBITDAR margin was nearly stable at 22.1% (versus 22.2% in H1 2020).
• In Italy, revenue reached € 221.7 million growing by 23.8% with 11.1% organic growth driven by the rebound in healthcare activities and an increase in occupancy in nursing homes

from the start of second quarter in favourable sanitary conditions. The revenue growth also reflects the bolt on strategy in Italy where the group has made regular successful

1. Data including one-offCovid-19 related costs
2. EBITDAR by country for the first half of 2021 as well as for the first half of 2020 includes one-offCovid-19 related costs
3. Including Belgium with € 250.1 million and the Netherlands €38.1 million

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acquisitions notably to reinforce its healthcare activities. The EBITDAR margin increased to 18.5% (versus 16.9% in H1 2020), as a result of the rebound in activity.

Korian's EBITDA impacted by Covid-19 totalled €278.1 million, compared to €227.4 in H1 2020. The EBITDA margin is up 110 basis points to 13.2% from the same period last year, reflecting the increased activity and less Covid-19 related costs.

Korian has continued its dynamic investment policy during this period and invested €561 million in the continued modernisation and diversification of its network and the development of ambulatory care capacity, reflected notably in the increase in development capex.

The Group's free cash flow fell over the period to €16.2 million, reflecting the temporary delay in the payment of public funding in Germany. This effect is expected wear off in the second half year. Earnings before interest and taxes (EBIT) amounted to €147.8 million versus €121.2 million last year, i.e. 7% of revenue (versus 6.5% in 2020), while net profit (Group share) totalled €45.3 million versus €20.3 million in H1 2020 excl. IFRS 16, following improved results and a reduced tax impact.

Strong financial structure

The Group's balance sheet is strong with an adjusted leverage ratio of 3.4x, compared to 3.7x in H1 2020, with operating debt representing € 1,564 million, slightly above the end of last year.

The Group continues to deploy its real estate strategy and now owns 25% of its operated network, representing over €2.9 billion in value and a net value of over €1.3 billion after taking into account the real estate debt. This is a direct result of selective investment into sites where the Group can create value.

Net financial liabilities increased to €3,173.6 million from €2,839.8 million at end-December 2020.

Korian had over € 1.5 billion of liquidity at the end of June 2021 with significant cash of € 1 billion on the balance sheet and an undrawn €500 million syndicated facility.

The Group remains well protected against inflation and rising interest rates and has 100% of its net debt hedged. 52% of the Group's gross debt is at fixed rate benefitting from exceptionally low rates and after the implementation of a considered hedging policy 80% of the Group's gross debt is at fixed rate. The average interest rate of gross debt is 2.1%.

ESG commitments and Human Resources

Korian remains focused on the roll out of its ESG strategy with two axes around quality: care excellence and quality at work.

The Group's ISO 9001 certification programme has accelerated with 64 facilities in Germany newly certified, with equivalent to 20% of the network now certified, ahead of our plan for the year. This ISO 9001 approach is a guarantee of the excellence of care and a harmonisation of the procedures across the Group.

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