Profarma - 2Q16

2Q16 EARNINGS RELEASE AUGUST 4, 2016

Highlights | Corporate

2

• The only Brazil’s mixed market player that features exposure and expansion

capacity in the segments of Retail, Hospital & Specialties and Distribution;

• Strategic partnership with AmerisourceBergen, the world’s largest player in the

pharmaceutical specialties, resulting in the creation of the company Profarma

Specialty since 2014;

• The Company carried out four acquisitions between 2012-2015, including its

entry into the Retail pharmaceutical segment, and the attainment of a market

position as 2nd largest player within this segment in the state of Rio de Janeiro;

• Proven capacity to integrate acquisitions, combining all group companies in the

SAP plataform, BI Cognos and Hyperion.

Highlights | 2Q16

3

CONSOLIDATED PRO-FORMA (considering 100% of all group companies)

• Gross revenue climbed by 15.2%;

• EBITDA rose by 59.8% to R$ 60.2 million,

with 5.1% EBITDA margin;

• Operating expenses shrank by 1.0 p.p.,

from 12.8% to 11.8% and;

• R$ 140.0 million capital increase ratification in late June.

RETAIL

• Sales increased by 10.5%;

• EBITDA climbed by 50.1% to R$ 9.8 million, with 4.8% EBITDA margin, the division’s highest since 2013;

• Operating expenses shrank by 0.5 p.p., from 26.5% to 26.0% and;

• Average monthly sales per mature store grew by 8.5%.

SPECIALTIES


• EBITDA shot up by 80.0% to R$ 5.1 million,

with 2.3% EBITDA margin;

• Operating expenses decreased by 1.5 p.p.,

from 10.5% to 9.0%, and;

• Sales to the private sector climbed by 54.2%.

PHARMACEUTICAL DISTRIBUTION


• EBITDA rose by 59.0% to R$ 45.1 million, with 5.3% EBITDA margin, the best performance in 7 years;

• Operating expenses shrank by 0.8 p.p.,

from 8.5% to 7.7% and;

• Health & beauty product sales rose by 19.5%.

Specialties(*)

2Q15 2Q16

Retail(**)

2Q15

2Q16

Consolidated (*)(**)

2Q15 2Q16

Pharmaceutical

Distribution

2Q15 2Q16

Highlights | Breakdown by Division – 2Q16

4

Gross Revenues

Gross Profit

SGA

Ebitda

(*) Pro-forma figures: 100% of revenues from Tamoio and Drogasmil / Farmalife in 2Q15.

(**) Pro-forma figures: 100% of revenues from Specialties (2Q15 and 2Q16).

173.7

20.3

16.7

2.8

246.5

30.8

20.3

5.1

185.3

58.5

49.2

6.6

204.8

63.4

53.2

9.8

1,178.5

178.7

132.3

37.7

1,357.3

208.4

139.9

60.2

900.8

99.9

66.4

28.4

1,003.2

114.2

66.5

45.1

CONSOLIDATED PERFORMANCE

Specialties

Consolidated Performance

6

Gross Revenues Evolution (R$ million)

Pharmaceutical Distribution

Sales increased by 11.4% year-over-

year

Sales increased by 41.9% in

comparison with 2Q16

Sales increased by 10.5% year-over-

year

Accounting Consolidated Gross Revenues

Pro-forma Consolidated Gross Revenues: 2Q15 – 100% from

Tamoio and Specialties / 1Q16 and 2Q16 – 100% from Specialties

Retail

964.1

214.5

1,178.5

1,126.0

212.2

1,338.2

1,149.6

207.7

1,357.3

2Q15 1Q16 2Q16

1.4%

15.2%

Performance by Division

Pharmaceutical Distribution Specialties(**) Retail

7

Gross Revenues Evolution (R$ million)

Accounting Gross Revenues

Pro-forma additional Gross

Revenues

(*) Pro-forma figures: 100% of revenues from Tamoio and Drogasmil / Farmalife

(**) Pro-forma figures: 100% of revenues from Specialties

2Q15 1Q16 2Q16

900.8

1,021.0

-1.7%

11.4%

2Q15 1Q16 2Q16

173.7

230.9

246.5

6.8%

41.9%

2Q15(*) 1Q16 2Q16

75.4

10.5%

109.9

185.3

204.8

4.5%

1,003.2 195.9


8

Pro-forma (*)

Gross Profit (R$ million and % Net Revenues)

2Q16 2Q15

14.7%

123.6

1Q16

13.6%

133.4

17.8%

177.6

13.5%

2Q16 2Q15

17.2%

178.7

1Q16

157.6

17.6%

208.4

(*) Pro-forma data: 2Q15 – 100% of revenues from Tamoio and Specialties / 1Q16 and 2Q16 – 100% of revenues from Specialties


9

Operating Expenses – SGA (R$ $ million and % Net Revenues)

Pro-forma (*)

12.8%

132.3

11.1%

130.4

11.8%

139.9

91.1 112.1

119.6

10.8% 11.5% 12.0%

2Q16 2Q15 1Q16 2Q16 2Q15 1Q16



10

Adjusted EBITDA and Adjusted EBITDA Margin (R$ million and % Net Revenues)

Pro-forma (*)

2Q16 2Q15 1Q16 2Q16 2Q15 1Q16

3.2%

27.2

2.1%

20.7

5.4%

54.1

161.7%

98.8%

3.6%

37.7

2.2%

25.8

5.1%

60.2

133.3%

59.8%



11

Net Profit (R$ million and % Net Revenues)

Net Profit

Adjusted Net Profit

Pro-Forma Net Profit

Pro-Forma Adjusted Net Profit

Pro-forma (*)

(9.3)

2Q15

2.7

0.3% -0.9%

0.6%

1Q16

(10.2)

7.5

0.1

2Q16

0.0% -0.9%

0.8%

8.5

1Q16 3.2

16.0

(6.2)

0.4% -0.6%

1.6%

6.3

(6.9)

15.0

0.6% -0.6%

1.3%

2Q15 2Q16



Cash Flow (R$ million)

* Average

(1) Average of Gross Revenues in the Quarter

(2) Average of COGS in the Quarter

(3) Average of COGS in the Quarter

(4) The account was based on the average gross sale and CGS, excluding Specialties

division and Tamio’s chain

(5) The account was based on the average gross sale and CGS, excluding Specialties

division

Cash Cycle (Days)

Cash Flow Generated /

Used) in Operating Activities

Internal Cash Generation

Operating Assets Variation

Cash Flow (Used)

in Investing Activities

Cash Flow Generated /

(Used) by Financing Activities

Net Increase /

(Decrease) in Cash

12

Consolidated

Pro-forma

Cash Cycle *

Accounts Receivable¹

Inventories²

Accounts Payable³

Consolidated Pharma PFS. Retail

2Q16

(185.2)

33.6

(218.8)

(25.1)

138.2

(72.2)

2Q15

(104.2)

20.7

(124.9)

(5.9)

(6.6)

(116.7)

2Q165 1Q165 2Q154 2Q16 2Q16 2Q16

44.3

71.4

60.5

55.2 46.9

44.5

63.2

60.7

44.6

70.2

81.9

32.9

20.0

66.2

41.2

45.1 42.7

58.8

46.3

62.4

51.1

50.8

66.4

66.0


13

Capex (R$ million)

Indebtedness: Net Debt and Net Debt /

EBITDA (R$ million)

Capex

2Q16 Other IT

Machinery and

Equipment 2Q15 1Q16 2Q16

331.9

287.7

428.4

4.5x 3.3x 3.8x

9.2 5.2

1.3

2.7

PHARMACEUTICAL DISTRIBUTION

Pharmaceutical Distribution

Financial Data (R$ million and % Net Revenues)

5.3

2Q15 2Q16

3.6

7.7

2Q15 2Q16

8.5

13.3

2Q15 2Q16

12.8

1,003.2

2Q15 2Q16

900.8

Operating expenses shrank

by 0.8 p.p., from 8.5% to

7.7%.

EBITDA rose by 59.0% to R$

45.1 million, with 5.3%

EBITDA margin, the best

performance in 7 years;

Sales increased by 11.4%;

15

EBITDA Margin

(%)

Op. Exp. SG&A

(%)

Gross Margin

(%)

Gross Revenues

(R$ million)

SPECIALTIES

17

2.3 1.8

9.0

10.5

13.7

12.7

246.5

173.7

Specialties


EBITDA shot up by 80.0% to

R$ 5.1 million, with 2.3%

EBITDA margin;

Operating expenses

decreased by 1.5 p.p.,

from 10.5% to 9.0%.

Financial Data (*) (R$ million and % Net Revenues)

2Q15 2Q16 2Q15 2Q16 2Q15 2Q16 2Q15 2Q16

EBITDA Margin

(%)

Op. Exp. SG&A

(%)

Gross Margin

(%)

Gross Revenues

(R$ million)

(*) Basis 100%

RETAIL

19

4.8

3.5

26.0 26.5

31.0 31.6

204.8

185.3

Retail


Operating expenses shrank

by 0.5 p.p.,from 26.5% to

26.0%.

EBITDA climbed by 50.1% to

R$ 9.8 million, with 4.8%

EBITDA margin, the

division’s highest since

2013;

(*) 2Q15 Pro-forma figures: 100% of revenues from Tamoio

Financial Data (R$ million and % Net Revenues)

2Q15* 2Q16 2Q15* 2Q16 2Q15* 2Q16 2Q15* 2Q16

EBITDA Margin

(%)

Op. Exp. SG&A

(%)

Gross Margin

(%)

Gross Revenues

(R$ million)

Retail

20

Total Sales Growth (%)

SSS Mature Stores (%)

Same Store Sales (%)

Monthly Average

Store's Sales (mature) (R$ thousand)


2Q15 2Q16 1Q16 2Q15 2Q16 1Q16 2Q15 2Q16 1Q16 2Q15 2Q16 1Q16

13.3%

8.5% 9.6%

-4.8 p.p.

-1.1 p.p.

17.9%

11.1% 11.3%

-6.8 p.p.

-0.2 p.p.

589.7

548.3 543.5

8.5%

7.5%

10.5%

15.1%

12.4%

-4.6 p.p.

-1.9 p.p.

Retail

21

2 Opening

1 Close-downs

3 Reformulated

103 Mature

Average Ticket (R$)

# of Stores (units)


2Q15 2Q16 1Q16 2Q15 1Q16 2Q16

33.18

35.82

34.49

7.9%

3.8%

128 128 129

0.8%

0.8%

ANALYST COVERAGE

Analyst Coverage

23

Company Analyst Telephone E-mail

Brasil Plural Guilherme Assis +55 (11) 3206 8285 [email protected]

BTG Pactual Rodrigo Gastim +55 (11) 3383-2468 [email protected]

BofA Merrill Lynch Roberto Otero +55 (11) 2188-4119 [email protected]

Morgan Stanley Javier Martinez de Olcoz +55 (11) 3048 6088 [email protected]

Votorantim Andre Parize +55 (11) 5171 5870 [email protected]

J.P. Morgan Joseph Giordano +55 (11) 4950-3020 [email protected]

Max Fischer - CFO e IRO & Beatriz Diez - IRM

www.profarma.com.br/ir | Phone.: 55 (21) 4009-0276 | E-mail: [email protected]

Economy & Finance

Profarma - 2Q16