Institucional Presentation - JPM Healthcare

8/12/2019 Institucional Presentation - JPM Healthcare

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31st ANNUAL J.P. MORGANHEALTHCARE CONFERENCE

San Francisco

January 2013


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4 MARKETS PRIVATE CLINICS LAB-TO-LAB PRIVATE HOSPITALS

PUBLIC CLINICS AND HOSPITALS

19,000 EMPLOYEES

2,000 DOCTORS

Latin Americas Largest Diagnostics Company

DASA

ONLY HEALTH COMPANY

INCLUDED IN THE IBOVESPA


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BUSINESS RELEVANCE - REVENUE

66%

34%

CLINICALANALYSIS

IMAGE

SERVICE MIX

GROSS OPERATING REVENUE R$2.5 BN IN 2012** 2012 annualized / Bloomberg consensus - R$2.6 BN


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PUBLIC

LAB-TO-LAB

PRIVATE CLINICS

10% 9%

7%

74%

PRIV.HOSP.

BUSINESS RELEVANCE - REVENUE

Outsourcing oflab and imageservices for 73privatehospitals

Outsourcing oflab and imageservices in 93public hospitalsand 620 public

clinics

Serving private patientsin 8 of 10 majormetropolitan areas in447 Patient ServiceCenters (PSCs)

Outsourcing of basicand complex tests

4,853 labs nationwide


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DIVERSIFIED REVENUE BASE

Self-Insured Corporations

14.4%

Medical Cooperatives

Public Services

7.4%

Health Insurance Plans

19.7%

Others

1.5%

Hospitals

9.1%

Individuals

8.5%

Lab-to-lab

9.8%

%

12.1%


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12.03% 10.00% 64.02%2.39%

DISPERSED OWNERSHIP

Source: DASA (Reference Form)(1) Includes treasury shares representing 0.15% of total shares

STRATEGIC SHAREHOLDERS WITH LONG TERM FOCUS

11.56%

Others1Edson de

GodoyBueno

DulcePugliesede Godoy

BuenoPetros Others1

RomeuCrtes

Domingues


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, ,

HEALTH EXPENDITURE IN BRAZIL

GDPR$4.1 TRILLION

HEALTH EXPENDITURE: 9% GDP

R$370 BILLION

PUBLIC EXPENDITURE: 44%

R$160 BILLION75% OF THE POPULATION

PRIVATE EXPENDITURE: 56%

R$210 BILLION25% OF THE POPULATION


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%

HEALTH EXPENDITURE IN BRAZIL

, ,

DASA HAS 14%* SHARE IN A GROWTH MARKET

Outsourced Public Diagnostics MarketR$ 750 Million

DASA MARKET SHARE: 23% DASA MARKET SHARE: 14%

PUBLIC EXPENDITURE: 44%R$160 BILLION

PRIVATE EXPENDITURE: 56%R$210 BILLION

3% is spent in medical diagnostics 7% is spent in medical diagnostics

Public sectorR$ 5 Billion

Private marketR$ 14.7 Billion


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PRIVATE HEALTH INSURANCE ISESTIMATED TO GROW FROM 25% TO 30% OF POPULATION BY 2017

GROWING AWARENESS OF MEDICAL DIAGNOSTICS BENEFITSINCREASING NUMBER OF PER CAPITA ANNUAL TESTS

MORE OUTSOURCING BY PUBLIC STATE AND MUNICIPAL HOSPITALS

Increasing formal employmentGrowing competition for labor driving employee benefits

POPULATION IS AGING. POPULATION OVER

60 YEARS OLD EXPECTED TO DOUBLE BY 2032

OPPORTUNITIES FOR GROWTH


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Best brands in some local marketPrepared to grow in Middle Class Market187 PSCs with 8 brands in the standardsegment

DASA IS WELL POSITIONED IN THE MARKET

451

190

37

73

29

5,000 5,000

DASA FLEURY PARDINI DASA FLEURY DASA PARDINI

Most efficient because of scaleNationwide presence


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WORK IN PROGRESS

REFERENCEPHYSICIANS

TRAINING

REFERENCEPHYSICIANS

TRAINING

FRONT END SYSTEM

CLIENTS

CALL CENTER RENOVATIONS NEW EQUIPMENTS


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CALL CENTER

IMPROVING CUSTOMER CARE

17%8%

JAN-SEPT2012

OCT-NOV2012

26% 26%

JAN-SEPT2012

OCT-NOV2012

SO PAULO

RIO DE JANEIRO

Drop-out

rate

New Technology MORE STABILITY

PROCESSES revision

Centralization on 2 sites (used to be 4 in Rio) TEAM qualification


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INCREASE IN PRODUCTIVITY/VOLUME

INCREASE IN AVERAGE PRICE

(higher value added tests)

IMPROVING TECHNOLOGY ASSETS

KEY GAINS:

RENOVATIONS AND BUYING EQUIPMENT

WHEN TO REPLACE?

When there is an opportunity to INCREASE THE PRODUCTIVITY When there is demand for MORE COMPLEX TESTS

End of LIFE

WHEN TO BUY?

When opening NEW UNITS

FULL OPERATING capacity


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RENOVATIONS AND NEW EQUIPMENTS

2011 YTD 2012

NEW UNITS 9 19

Standard 7 18

Mega 2 1

RENOVATION/EXPANSION OF UNITS 45 26

CT Installation 10 7

MRI Installation 5 9

Other renovations 30 10


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MEDICAL RELATIONSHIP through events, lectures,

Contracting of REFERENCE PHYSICIANS

EDUCATION AND TRAINING for existing physicians

REFERENCE PHYSICIANS

MEDICAL PROJECT at the Unit

IMPROVING THE QUALITY OF WHAT WE DO

symposiums, and Inovar magazine


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EFFICIENCY, QUALITY, AND PROCESS STANDARDIZATION

INOVA: NEW FRONT END SYSTEM

TODAY

26 BRANDS20 FRONT ENDSYSTEMS


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1

INOVA: MATERIAL GAINS

2

3

4

5

6

Improve PRODUCTIVITY

Integration with CRM

SINGLE NATIONAL MEDICAL RECORD for physician and patient

MULTI-BRAND scheduling

Call Center: HOME OFFICE

UNIFIED database for management

INOVA web mobile collaborative

integrated to themedical world


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INOVA: SCHEDULE

4 brands implemented in 2012

%

%

%

%

% of Revenue


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CAPEX

CAPEX 9M12

R$178.1 MM in 9M12 71% of the amount estimated for 2012

Capex: LOWER THAN NET CASH GENERATION

Opening

andexpansion ofunits

44.8%Equipment

26.9%

IT19.4%

%

%


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PRIORITIES FOR 2013

MAXIMIZE RETURN ON EXISTING ASSETS1

LEVERAGE REVENUE2

REDUCE COSTS AND EXPENSES3

IMPROVE OPERATION QUALITY4

PEOPLE - MERITOCRACY5

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PRIORITIES FOR 2013MAXIMIZE RETURN IN EXISTING ASSETS

KPIs

Increase the PSCs OCCUPATIONLEVEL

Increase EquipmentOCCUPATION LEVEL

Ensure RETURN ON INVESTMENT

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PRIORITIES FOR 2013LEVERAGE REVENUE

Prospect NEW PAYERS (private, public,hospitals, support)

Increase the SHARE OF CURRENTCUSTOMERS

Increase the REVENUE FROMINDIVIDUALS

PRICE adjustment

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KPIs


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REDUCE COSTS AND EXPENSES

PRIORITIES FOR 2013

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KPIs

Increase the PSCs PRODUCTIVITY

Increase the PRODUCTIVITY of

NTOs (central labs)/NTHs(hospital labs)


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PRIORITIES FOR 2013OPERATION QUALITY

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KPIs

Improve the service level of the

CALL CENTER and PSCs

Ensure return from REFERENCEPHYSICIANS

Ensure the QUALITY OF TESTS andthe PERCEPTION FROM THEMEDICAL COMMUNITY in CLINICAL

ANALYSIS Ensure deadlines and quality of

implementation of INOVA Capturegains on PRODUCTIVITY


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PRIORITIES FOR 2013PEOPLE

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KPIs

MERITOCRACY Performance evaluation

Ensure organizational

TURNOVER


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Q&A

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Cynthia Hobbs CFOOctavio Fernandes VP of OperationsPaulo Bokel IR Officer


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FINANCIAL RESULTS

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Gross revenue reached R$ 1,886 MILLION in the year, a 5.4% growth

GROSS REVENUE (R$ MILLION)

650 653

3Q11 3Q12

0.5%

1,789 1,886

9M11 9M12

5.4%

2


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Growth impacted by PSC REMODELING, EQUIPMENT UPGRADES, CALLCENTER changes and 1 payer DRAWBACK in RJ

Incoming calls GREW 12% compared with a 6% DECREASE in handled calls

MORE COMPREHENSIVE imaging mix increasing average value per requisition

GROSS REVENUES (R$ million) Average revenue per requisitionand volume (millions)

PATIENT SERVICE CENTERS

122.9 124.3 124.1128.6

124.0126.5

130.5

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

Requisitions Average Requisition Price

3.73.3 3.5 3.8 3.4 3.6 3.6

277.5 275.2

198.9 205.5

3Q11 3Q12

RID Clinical Analysis

58.2%

41.8%

476.5 480.7

42,7%

57.3%

-0.8%

3.3%

0.9%

3


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REVENUE DROP related to the loss of So Luiz hospitals contract andoptimization of existing contracts (R$ 14 MM per quarter impact)

Focus on INCREASING PROFITABILITY cancellation of 5 hospitals contracts

NEW CONTRACT in Rio de Janeiro for Clinical Analysis and Imaging, whichstarted in 4Q12

GROSS REVENUES (R$ million) AVERAGE REVENUE PER REQUISITIONAND VOLUME (millions)

HOSPITALS

47.2 46.3

22.313.4

3Q11 3Q12

RID Clinical Analysis

67.9%

32.1%

69.5

59.6

22.4%

77.6%-2.0%

-40.1%

-14.2%

63.948.1

57.2 56.2 50.9 49.8 52.2

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

Requisitions Average Requisition Price

1.11.30.9 1.2 1.1 1.1 1.2

4


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Increase in market share (111 NEW CLIENTS) and in the number ofrequisitions (+8.5%)

Focus on MAXIMIZING PROFITABILITY

Gross Revenues B2B (R$ million) Performance B2B

LAB-TO-LAB

61.2 64.3

5.1%

4,7864,897

12,77913,121

3Q11 3Q12# of Laboratories Average Revenue/Laboratory (in R$)

3Q11 3Q12

5


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STRONG GROWTH mainly due to NEW CONTRACT withthe Rio de Janeiro Municipality

GROSS REVENUES (R$ million) PERFORMANCE B2G

PUBLIC HOSPITALS AND CLINICS

42.5

48.1

3Q11 3Q12

13.2%

702 713

60,5 67,4

3Q11 3Q12

# collecting site Revenue per colleting sites

6


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PERSONNEL: enhanced customer service and pre operational costs

MATERIAL: increased number of tests produced in the Public and Lab-to-lab market

COSTS OF SERVICES and UTILITIES impacted by doctors fees, datalink and occupancy costs

COSTS

3Q12 3Q11 3Q12 3Q11 %

Personnel 114.8 103.6 19.5% 17.3% 10.8%

Materials 106.7 98.9 18.1% 16.5% 7.9%

Services and Utilities 152.4 144.2 25.9% 24.0% 5.7%

General 5.6 6.5 1.0% 1.1% -13.6%

Cost of Services Cash 379.6 353.3 64.5% 58.9% 7.5%Depreciation and

Amortization 25.2 20.1 4.3% 3.4% 25.1%

Cost of Services 404.8 373.4 68.8% 62.3% 8.4%

In R$ Million % of Net Revenues3Q12 vs

3Q11

7

C C COS S S


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CLINICAL COST ANALYSIS,PRODUCTIVITY AND GROWTH 3Q12

100%108%

151%

Growth

(tests)

100% 106%108%

Productivity(tests/employee)

100%94% 99%

Total Unit Cost

70%

90%

110%

130%

150%

170%

%

94%

Basis :100

YEAR 09 YEAR 10 YEAR 11 YEAR 12

%

8

SG&A


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GENERAL & ADMINISTRATIVE: receivables personnel increase and call

center R$3 MM per quarter reduction from 1Q13 in OCCUPANCY COSTS

SG&A

3Q12 3Q11 3Q12 3Q11 %

General and Administrative 101.6 93.6 17.3% 15.6% 8.5%

Profit Sharing Program 0.2 0.5 0.0% 0.1% -50.1%

Other Operating Revenues /Expenses

(1.4) 0.7 -0.2% 0.1% -299.8%

PDA* - 6.3 0.0% 1.0% -

Cash Oper. Expenses 100.4 101.1 17.1% 16.9% -0.7%

Depreciation andAmortization 17.4 10.8 3.0% 1.8% 61.3%

Operating Expenses 117.8 111.9 20.0% 18.7% 5.3%

In R$ Million % of Net Revenues3Q12 vs

3Q11

(*) As of 1Q12, the PDA is being recorded under "discounts at the income statement

9

ACCOUNTING EBITDA (R$ MILLION)


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ACCOUNTING EBITDA (R$ MILLION)

24.2%

18.4%

145

108

3Q11 3Q12

-25.4%

395

334

9M11 9M12

-15.5%

23.9%

19.4%

10

INCOME TAX


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OPTIMIZED FISCAL BENEFIT expected after the incorporation of MD1

* Withholding tax (current): Originally from financial income and withholding of gross revenue

INCOME TAX

34.0%

0.3%

33.7%

-11.2%-0.6%

21.9%

Income TaxRate

Permanentsadjustementsin tax books

Income Taxes(Financial

Statements)

TaxLoss/GoodwillCompensation

Other Withholding tax(current) /

Income taxescash *

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RECEIVABLES


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(1) Index coverage = BDP balance/ expired > 120 days

Coverage Index Average collection period

RECEIVABLES

R$ million 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

Accounts receivable 399.7 385.5 409.7 398.0 423.7 415.9 432.4

Past due 0-90 59.7 71.1 85.0 74.7 74.3 78.0 87.2

Past due 91120 8.2 12.2 11.3 10.1 10.7 10.8 8.3

Past due (more than) 120 84.9 83.3 92.4 111.2 111.2 113.8 117.6

Provisions (84.2) (71.7) (75.1) (103.9) (102.7) (106.1) (105.5)

Total Rec. 466.2 481.7 523.3 490.1 517.1 512.4 540.0

%

%

%

%

99.1%86.1% 81.3%

93.4% 92.4% 93.2% 89.7%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

107.8

112.9

101.2100 100.3

3Q11 4Q11 1Q12 2Q12 3Q12

12

BALANCE SHEET MANAGEMENT


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142.1

(246.6)

(924.1)

84.7

(943.9)

Debt Composition(R$ million)

Cash and Cash Equivalents

Debt Short Term

Dvida Long Term (*)

Net Debt

(+) (Escrow)

(*) Includes Escrow

Operating cash flow is

POSITIVE

Operational working capitalimpacted by INCREASEDREVENUES in 3Q12

Financial expenses impacted bythe LOWER INTERESTRATES

NET DEBT STABLE

compared to 2Q12

BALANCE SHEET MANAGEMENT

Management Cash Flow (R$ Million) 3Q12

ACCOUNTING EBITDA 108.5

Operational working capital (17.4)Other working capital accounts (2.7)

Financial expenses (25.5)Income tax (7.4)OPERATIONAL CASH FLOW (55.5)Capex (55.8)FREE CASH FLOW (0.3)

13

ROIC(*)


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ROIC is IMPACTEDin the short term bythe INCREASEDCAPEX

(*) Considering current EBITDANOPAT LTM/mean (working capital + intangible assets + fixed assets value for Exchange of shares of DASA and MD1)34% Income Tax effective rate

ROIC(*)

17.4% 16.3%14.2%

11.7%

2011 1Q12 LTM 2Q12 LTM 3Q12 LTM

14

CAPEX


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Capex Breakdown 3Q12

In 3Q12 we deployed 6 MRIs, 3 CTs, launched 8 NEW PCSc andREMODELED 4 OTHERS

4Q12: 5 new MRIs , 1 upgraded CT, 1 new mega-PSC and 1 remodeled PSC

R$55.8 MM in 3Q12 and R$178.1 MM YTD

CAPEX

Openingand

Expansionof PSCs49.9%

InformationTechnology

30.4%

Equipment19.2%

Others0.5%

15

CONTACTS


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CONTACTS

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Documents

Institucional Presentation - JPM Healthcare