Hapvida Participações e Investimentos S.A.
Parent company and consolidated interim financial statements at June 30, 2021
Hapvida Participações e Investimentos S.A.
Parent company and consolidated
interim financial statements
at June 30, 2021
Contents
Management Report | 3 |
Audit Committee summary report | 24 |
Declaration of directors on the interim financial statements | 25 |
Directors' statement on the Independent Auditor's Report | 26 |
Independent auditor's report on the review of interim financial statements | 27 |
Statements of financial position | 29 |
Statements of profit or loss | 30 |
Statements of other comprehensive income | 31 |
Statements of changes in shareholders' equity | 32 |
Statements of cash flows | 33 |
Statements of added value | 34 |
Notes to the parent and consolidated interim financial statements | 35 |
2
2Q21 RESULTS
Quarterly Results - 2Q21
- Net Revenues of R$2.4 billion (+15.7%)
- Health and dental beneficiaries grow 14.8%
- Cash MCR of 66.6% (+14.2 p.p.)
- EBITDA Ex-LTIP of R$312.0 million (-48.7%)
Earnings Call
August 12th, 2021 (Thursday)
Portuguese(with simultaneous translation into English)
1pm (Brazil) | 12pm (US/DST) Webcast: ri.hapvida.com.br/en
Phone number: Brazil: +55 (11) 3181-8565 | USA +1 (412) 717-9627
Message from Management
The second quarter results reflect the consistency of our management model amid an unprecedented effort to save lives impacted by Covid-19. We are proud of our healthcare professionals who once again demonstrated dedication and selflessness in the most acute phase of the pandemic to date. Furthermore, we are equally proud of the performance of our business, which has proven to be resilient and efficient.
The quarter, marked by the continuation of the second wave of the pandemic in Brazil, was another atypical and challenging period, but also one of hope, with the reduction in hospitalizations and the progress in vaccination. Our hospitals and emergency units received practically the same volume of consultations and admissions related to Covid-19 compared to the first quarter of the year. On the other hand, as we approached the end of the quarter, we saw a strong reduction in the main indicators related to the pandemic. Daily volume of hospital admissions, which reached over 200 in a single day, dropped to just under 20 more recently. Our service numbers also continue a downward trend in all regions. In some cities, hospital admissions seem to have stabilized at a low level for a few months already. Average hospital stay also returned to pre-pandemic levels, with more recent data around 3.8-3.9 days/hospital stay. As a result, our demobilization efforts is an integral part of our operational normalization. The number of hospital beds dedicated to Covid- 19 cases has already been reduced by over 90% (just over 100 beds today versus 1,652 max). We currently have about 600 health professionals dedicated to combating the pandemic, a reduction of 80% when compared to the more than 3,000 we have had in the past. We expect that all additional hospital beds and medical personnel dedicated to Covid-19 will be demobilized by the end of August.
Net revenues were R$2.4 billion, growth of 15.7% compared to the same quarter of the previous year, even with the impact of the negative readjustment of individual/family plans applied to contracts with a base-date in the months of May and June 2021. A total of 768 thousand health and dental beneficiaries were added, of which 312 thousand came from organic growth and 456 thousand came mostly from the acquisition of Promed in Belo Horizonte (MG). Cash MCR was 66.6%, an increase of 14.2 p.p., impacted by: (i) the volume of hospital admissions caused by Covid-19; (ii) a high number of consultations related to the seasonal period of viruses; and (iii) the care costs arising from the newly acquired companies (Medical, Grupo São José and, in this quarter, Promed), which still operate at higher claims levels. Selling expenses reached 8.1% of net revenues and administrative expenses represented 9.9%. Ebitda Ex-LTIP decreased 48.7% and reached R$312.0 million in the quarter.
We remain committed to increasing our own healthcare network and our preventive medicine programs that allow us to achieve gains in healthcare quality and in the vertical integration of medical expenses. During the quarter, we opened 2 emergency units, 6 clinics (6 were closed) and 3 diagnostic units (5 were closed). Additionally, after the completion of the acquisition of Promed Group in May, 2 hospitals, 5 clinics and 1 diagnostic unit were added. We expanded our Nascer Bem program, which provides care to pregnant women, which is now offered in Goiânia (GO) in addition to five other capitals.
In line with our expansion strategy, we entered into a binding proposal for the acquisition of HB Saúde Group, comprised of a vertical healthcare operator with a portfolio of approximately 128 thousand beneficiaries located mainly in the municipalities of São José do Rio Preto and Mirassol, in São Paulo. Additionally, we acquired a day-hospital called Cetro, located in Alagoinhas (Bahia). We remain with a robust balance sheet and a high level of liquidity, allowing us to remain participating in the process of consolidating the private healthcare market in Brazil, which continues to be quite fragmented.
In June, we took another step towards the business combination of Hapvida and Grupo Notre Dame Intermédica (GNDI) as we received the official approval from the National Supplementary Health Agency (ANS), authorizing our request to assume indirect corporate control of the healthcare operators that make up GNDI. Both Hapvida and GNDI share the dream of offering high quality healthcare services at affordable prices to the greatest number of people. The conclusion of this operation is still subject to the appreciation and approval by the Brazilian antitrust authority (Cade).
The trust we have in our 37,000 employees and the welcoming and continuous dedication of 30,000 medical and dental professionals reinforce our confidence in strongly fulfilling our strategy for those we serve. Looking to the future, we remain highly confident in our ability to continue to grow and remain focused on delivering quality medicine to those we serve.
Jorge Pinheiro
CEO
EARNINGS RELEASE | 2Q21 | 4 |
Summary
1. INTEGRATION AND REPORTING CRITERIA
On June 1, 2021, we concluded the acquisition of Promed Assistência Médica Ltda., Promed Brasil Assistência Médica Ltda., Saúde - Sistema Assistencial Unificado de Empresas Ltda. Consequently, the assets, liabilities and results of Promed are fully reflected on our balance sheet, income statement and cash flow. The consolidated financial statements for Hapvida's 2nd quarter of 2021 include one month of operation of Promed Group.
Ebitda Ex-LTIP reflects the exclusion of the company performance award (LTIP) approved by shareholders on 04/30/2021 and the Adjusted Net Income also excludes the amortization of the fair value arising from business combinations (described as "amortization of the fair value arising from business combinations (value-added)" in this document), net of taxes.
When we refer to the América company, we are referring to the entities that made up the former América Group, which has already been incorporated into the Company.
2. HIGHLIGHTS
FINANCIAL HIGHLIGHTS (R$ million) | 2Q21 | 2Q20 | Var. % | 1Q21 | Var. % | 1H21 | 1H20 | Var. % | ||||
Net Revenues | 2,402.4 | 2,076.3 | 15.7% | 2,323.2 | 3.4% | 4,725.6 | 4,155.1 | 13.7% | ||||
Medical Costs - Cash | 1,599.5 | 1,088.5 | 46.9% | 1,420.1 | 12.6% | 3,019.5 | 2,249.2 | 34.2% | ||||
Medical Costs - Ex-SUS | 1,652.7 | 1,115.6 | 48.1% | 1,451.1 | 13.9% | 3,103.9 | 2,319.5 | 33.8% | ||||
Total Medical Costs | 1,698.8 | 1,132.6 | 50.0% | 1,522.1 | 11.6% | 3,220.9 | 2,412.2 | 33.5% | ||||
Sales Expenses | 193.5 | 179.8 | 7.6% | 144.3 | 34.1% | 337.8 | 334.4 | 1.0% | ||||
Administrative Expenses¹ | 236.9 | 200.3 | 18.3% | 233.1 | 1.6% | 470.0 | 410.3 | 14.5% | ||||
EBITDA | 291.7 | 607.8 | -52.0% | 466.8 | -37.5% | 758.5 | 1,075.6 | -29.5% | ||||
EBITDA Ex-LTIP² | 312.0 | 607.8 | -48.7% | 466.8 | -33.2% | 778.8 | 1,075.6 | -27.6% | ||||
Net Income | 104.6 | 278.6 | -62.5% | 151.8 | -31.1% | 256.4 | 443.2 | -42.1% | ||||
Adjusted Net Income³ | 269.8 | 382.5 | -29.5% | 299.6 | -9.9% | 569.4 | 645.4 | -11.8% | ||||
CONSOLIDATED RATIOS (% NOR) | 2Q21 | 2Q20 | Var. % | 1Q21 | Var. % | 1H21 | 1H20 | Var. % | ||||
Cash MCR (ex-IBNR;ex-SUS;ex-D&A) | 66.6% | 52.4% | 14.2 p.p. | 61.1% | 5.5 p.p. | 63.9% | 54.1% | 9.8 p.p. | ||||
Ex-SUS MCR | 68.8% | 53.7% | 15.1 p.p. | 62.5% | 6.3 p.p. | 65.7% | 55.8% | 9.9 p.p. | ||||
Total MCR | 70.7% | 54.5% | 16.2 p.p. | 65.5% | 5.2 p.p. | 68.2% | 58.1% | 10.1 p.p. | ||||
Sales Expenses | 8.1% | 8.7% | -0.6 p.p. | 6.2% | 1.9 p.p. | 7.1% | 8.0% | -0.9 p.p. | ||||
Administrative Expenses¹ | 9.9% | 9.6% | 0.3 p.p. | 10.0% | -0.1 p.p. | 9.9% | 9.9% | 0.0 p.p. | ||||
Ebitda Margin | 12.1% | 29.3% | -17.2 p.p. | 20.1% | -8.0 p.p. | 16.1% | 25.9% | -9.8 p.p. | ||||
Ebitda Margin Ex-LTIP² | 13.0% | 29.3% | -16.3 p.p. | 20.1% | -7.1 p.p. | 16.5% | 25.9% | -9.4 p.p. | ||||
Net Income Margin | 4.4% | 13.4% | -9.0 p.p. | 6.5% | -2.1 p.p. | 5.4% | 10.7% | -5.3 p.p. | ||||
Adjusted Net Income Margin³ | 11.2% | 18.4% | -7.2 p.p. | 12.9% | -1.7 p.p. | 12.0% | 15.5% | -3.5 p.p. | ||||
OPERATING HIGHLIGHTS | 2Q21 | 2Q20 | Var. % | 1Q21 | Var. % | |||||||
Members Health and Dental (thousands) | 7,197 | 6,266 | 14.8% | 6,851 | 5.0% | |||||||
Members Health | 4,084 | 3,500 | 16.7% | 3,761 | 8.6% | |||||||
Members Dental | 3,113 | 2,766 | 12.5% | 3,090 | 0.7% | |||||||
Average beneficiares (thousands) | 6,928 | 6,376 | 8.6% | 6,716 | 3.1% | |||||||
Members Health | 3,850 | 3,529 | 9.1% | 3,747 | 2.8% | |||||||
Members Dental | 3,078 | 2,847 | 8.1% | 2,969 | 3.7% | |||||||
Proprietary care network | 465 | 438 | 6.2% | 457 | 1.8% | |||||||
Hospitals | 47 | 39 | 20.5% | 45 | 4.4% | |||||||
Emergency Units | 47 | 41 | 14.6% | 45 | 4.4% | |||||||
Clinics | 199 | 184 | 8.2% | 194 | 2.6% | |||||||
Diagnostics | 172 | 174 | -1.1% | 173 | -0.6% | |||||||
- Administrative Expenses without depreciation, amortization and long term incentive plan expenses.
- Ebitda Ex-LTIP without long term incentive plan expenses.
- Adjusted Net Income excluding the effects of the long term incentive plan and the amortization of the fair value arising from the business combination (value-added), net of taxes.
EARNINGS RELEASE | 2Q21 | 5 |
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Hapvida Participações e Investimentos SA published this content on 11 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 August 2021 22:10:05 UTC.