- Revenue: Consolidated gross revenue above BRL13 billion.
- EBITDA: Consolidated EBITDA of BRL2.1 billion, a growth of 28.5% year-on-year.
- Net Income: Net income for the quarter at BRL1 billion, more than double the second quarter of last year.
- Patient Dates: 750,000 patient dates, about 4.5% growth year-on-year.
- Occupancy Rate: Average bed occupancy rate of 84.4%, a growth of 1.5% year-on-year.
- Operational Beds: 1,891 operational beds, a growth of over 200%.
- Debt Reduction: EBITDA net debt reduced by 0.5 times year-on-year, now at 1.1 times.
- Cash Flow: Cash flow of technical provisions over BRL17 billion.
- Gross Revenue (Hospital Services): BRL7.895 billion in Q2 2024, a growth of 6.4% quarterly and 9.8% year-on-year.
- Gross Revenue (Oncology): BRL746 million in Q2 2024, a growth of 7.1% quarterly and 20% year-on-year.
- Cost (Hospital Services): BRL5.215 billion in Q2 2024, a growth of 3.9% quarterly and 6.8% year-on-year.
- EBITDA (Hospital Services): BRL1.837 billion in Q2 2024, a growth of almost 11% quarterly and 13.3% year-on-year.
- Net Income (Hospital Services): BRL1 billion in Q2 2024.
- Net Revenue (SulAmerica): BRL7.3 billion in Q2 2024, a growth of 11% year-on-year.
- Loss Ratio (SulAmerica): 83.6%, a drop of 2.7% year-on-year.
- Number of Beneficiaries (Health and Dental): 5.08 million.
- Adjusted EBITDA (SulAmerica): BRL486 million in Q2 2024.
- Cash Position: BRL35.489 billion as of June 30, 2024.
- Technical Reserves: BRL17.568 billion.
- Net Debt/EBITDA: 2.1 times.
- Average Debt Term: 5.4 years.
- Managerial Cash Flow: Positive variation of almost BRL680 million in the first six months of 2024.
Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved record historical performance in Q2 2024 with 750,000 patient dates, a 4.5% growth year-on-year.
- Average bed occupancy rate increased to 84.4%, a growth of 1.5% year-on-year.
- Consolidated gross revenue exceeded BRL 13 billion, with EBITDA growing 28.5% year-on-year to BRL 2.1 billion.
- Net income for the quarter reached BRL 1 billion, more than double the previous year's figure.
- Significant reduction in net debt to EBITDA ratio, dropping by 0.5 times year-on-year to 1.1 times.
Negative Points
- Operational challenges remain, requiring continuous efforts in efficiency gains and process improvements.
- High occupancy rates driven by seasonal factors like dengue fever and respiratory diseases may not be sustainable in future quarters.
- Complexity in managing newly acquired hospitals from 2021, which require significant investments and operational improvements.
- Pressure from tech incorporation and high-cost medications impacting the overall cost structure.
- Continued need for adjustments in commercial relationships and contracts to maintain financial stability.
Q & A Highlights
Q: We had a result that was very strong, substantially better than the trends that we've observed for the rest of the sector and above our expectations. Another point that I wanted to explore in this income which was beyond the operational result. The financial result imposed also contributed to this strong revenue. And I wanted to understand, there were a few lines. If we look at DTR, there is an impact of swaps and other financial revenues and the taxes. I would like to understand if there was something more pinpoint with the benefit being captured more efficiently by the company.
A: Vinicius, Otavio speaking. We don't have anything extraordinary in the company in terms of, well, it's difficult to look -- well, the expenses banking of the company that has other revenues and other financial expenses. There is over PG VG, there is financial expenses of IFRS 16 and 17. It's difficult to see the financial expense purely banking of the company. But there is nothing that is nonrecurring event and what we expect from the financial results. SulAmerica and tax had a judicial victory involving the incentive for the companies that offers the benefit for food stuff for the employees. This is a positive impact of BRL61 million. This is in the deferred. This is the number 17 you're going to see in deferred IR. And before you get to the reconciliation of the effective of the company.
Q: The first one is about the ambition of -- well, of the consolidated loss ratio of SulAmerica. You had a normalization of 12, 15 months. Can you think that there is still a normalization of 9 to 12 months? And that would be close to the threshold of the pandemic, and this is the first question. And the second question, seizing the comment of Paulo in regards to the more financial flexibility of the company, the resources of D'Or Consulting and Atlantica D'Or, how do you see the temperature of M&A for any inorganic movements? They are a bit warmer, or do they continue with the same status?
A: Samuel, Paulo here. I'm going to talk about the second one, and then I'm going to go over Raquel. We had not stopped taking a look at M&A prospecting, negotiating in this period, and we didn't feel pressured for deleveraging and good opportunities. We are always seeking good acquisition with good returns. What happens is that in fact, as I commented many times, our pipeline today that is more restricted, not that you don't have hospitals for sale, but you have that profile of hospitals that sometimes are intermediary, the profiles of the ones that we acquired in 2021. Many of these are in tough conditions. Hospitals that, in the past, needed retrofit and investments, but now besides that, they stand from an operational situation that is difficult. And the commercial positioning that is more laborious for you to revert the attractivity when they're not in big debt. So it's lower attractivity not because of the lack of sales, but in most cases, we've seen the options of growth, organic growth with better returns or with a more advantageous strategic positioning. We are open. Of course, we're going to continue to be open, and we're going to evaluate maybe some interesting assets that might come up. We're going to be ready to do this.
Q: Two questions. I wanted to talk about oncology. There is a ticket, there is a volume. So I wanted you to tell me about the levers that you can see the growth after the hiccups that we went in 2023. And the second one, well, in the comment of Raquel, this was a better quarter, but what do you see in terms of competitiveness and the growth of life in SulAmerica?
A: Leandro, Paulo here. I'm going to take the first one. In Oncology, we have a strategy which differentiates ourselves, which is the integration of services. We have the capacity to have not only chemotherapy, radiotherapy, ambulatory, but also the hospital services, diagnose service, intervention. Well, our anatomy for pathology, very differentiated and surgery. So having this value proposition here for the clients where we can service the patient with all of their needs is what we understand that will bring a differential for the treatment, and it will benefit us in the organic growth. There has been the growth in oncology so I would like to say that this is the biggest lever that we have, and we still have an opportunity when we still look at a few specialities of strengthening. Of course, we have a big set of patients that already sees our services. And as we invest more and more the flow of these patients, we have the opportunity to organize this capturing and offer this differential, which is servicing the patient in all their needs for the oncology patients.
Q: So the first question in regards to ticket. When we look at complexity, lower complexity in the quarter, as it was commented, but still with a growth that is robust of the average ticket in the quarter. Does it make sense to think about the normalization of the complexity looking up ahead? If you can comment in a qualitative way, how do you see the evolution in the third quarter that would be interesting? And out of this, what it makes for the average ticket would be an acceleration that is higher for the second quarter doesn't make sense to look at this in this way for the division of hospitals in regards to ticket. And second question, in the division of hospitals in the funds. When you look at your portfolio and you look at the financial commercial relationships, do you still see any pinpoint need for adjustments that can be important in regards to the registering for Rede D'Or? We see the operators evolving in higher or less degree, but the recovery here of the consolidated loss ratio has been a consistent movement for the sector. But still we see a few pinpoint movement for adjustment. So when you look at the operation, the situation, is it completely normalized? Or do you still have any region or specific contract that might require a review or even an adjustment here? That's my question.
A: This is Paulo. I'm going to start with the second one. The answer is nothing material yet, but this is an analysis that we have to do on the day to day. So we don't intend on doing any adjustments that is material for the company, very pinpoint situations or a hospital or a local operator that might happen. But once again, this is an overview of today. And we are -- this is always going to be the follow-up here according to our negotiations, to the relationship with the different operators, the capacity for the readjustment, and keeping the payments in an adequate threshold.
Q: I wanted to explore two points. First, I wanted to hear about the operational beds opening, 162 beds. I wanted you to help us reconcile that with the opening of the installed beds, the entry of the operation of Vila Nova Star. And I wanted to understand if that delta of the installed is also for the operational ones or is there any opening in the legacy hospitals
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
