Earnings Call: Q2 2021

Jul 29, 2021

Good morning, everyone. Welcome to the Second Quarter 2021 Earnings Conference Call of Grupo Securities. In recent months, we have seen that we have entered a new cycle of growth, reflecting our strategic positioning of being integrated preventive and hybrid health ecosystem with physical vision strategies. And this is not only something we say. Grupo Feliz has reached an all time record of revenue for the period, achieving BRL 1,500,000,000, 104% up year over year. As you can see in the highlights on slides number 3 and number 4, The numbers are starting to reflect the expansion to other lengths in the chain, which in the Q2 of 2021 accounted for 4.1% of the group's revenue, including the revenues from the acquisition of Clinica de Hoyos Motor Coina and Centro de Infosys, Pacaibo. Although we face the 2nd wave of the pandemic in Brazil, the share of COVID tests in total revenue has achieved the lowest level since last year, 8.3%. At the same time, we see an increase in the volume of routine screening tests. The share of revenue from mobile services has gone up, achieving 8.1% of the total revenue of the group. Strengthening our platform strategy, the number of lives coming from Saudi ID is still growing. Since its opening in the beginning of the pandemic, Almost 600,000 medical talent visits have been made, positioning HealthTech Saudi ID as one of the leaders in this segment in the country. We have also started to offer surgeries in an addressable market of R1.45 for R1.9 billion dollars thus making its asset light platform model a reality. And even without our own so we can offer beds and partner institutions. On Slide 5, you can see that these movements make our company the best integrated health model available providing care throughout the whole patient journey with prevention, diagnostics, primary care, secondary and tertiary care offering all services available and increasing lifetime value. We offer checkup services, telemedicine visits or in person visits in our patient service unit and diagnostic tests and therapy of different specialties, ophthalmology, orthopedics, infusion of immunobiologics, for example and now surgeries. Thus the group has become a concrete and powerful as well as something that all healthcare industry needs, but that in practice patients couldn't yet find. So we had like little parts of a puzzle And now the starts are coming together and the value generated for clients, physicians, partner hospitals, HMOs and shareholders the and the whole health ecosystem is clear. Throughout the years, we have built a relationship of trust with our clients and physicians with brands that are strong and acknowledged. And now we have digital and physical platforms to offer healthcare in a hybrid way. Our purpose is to promote health in a preventive way and to be there for patients when they need specific care, meeting their needs in an integrated way. We've benefited from the marketplace. The total of 1,100,000 lives served this quarter, 14.5% of them came from total JID, 27.9% up quarter on quarter. Looking at the losses only, there was an increase of 21.9% compared to the first quarter 2021, totaling 228,000 visits. The B2B2C strategy was the embryo of a more ambitious strategy that will start to be implemented now with sales of services to consumers. Saudi AD has professionals that know the platform and focus on consumer experience, thus we can expand the portfolio's products and of potential partners. We created this to reinvent access to health care in Brazil. We have also started to offer subscription service involving telemedicine visits, in person visits and test packages straight to consumers. More recently, we have implemented an all inclusive surgery service accessible to people who don't have health care plans. The list of surgeries include procedures with low complexity, high predictability of cost and a care cycle of up to 30 days. Hello, today's conference call. In addition to marking the entry of Flori in that State, we reinforced our national footprint adding to our offer in the Southeast region of the country. But we have changes in the way health care for the bioclinical and Prat Laboratories. In addition to market Florid in that state, we reinforced our national footprint adding to our offer in the Southeast region of the country. III. But we have changes in the way health is consumed today and we don't want to focus only on organic inorganic extension in our service units. Today, extension is not only based on square footage, but also on remote services and Saluti ID is an example of that transformation. Another one is the growth of our mobile services in the Q2 of 2021 and accounted for 8.1% of the group's gross revenue, a 40.4% increase compared to the same period last year. Another impressive information is that today the revenue generated by mobile services is similar to that of 25 service units. In order to continue with that growth, we also focus on another differential we have, which is medical knowledge. Thus, we are a reference in innovation and healthcare. We have a 192 new products that were implemented this year with a highlight for genomic tests that had a 100% growth in the Q2 of 2021. And as a company that works in healthcare From Prevention to Therapy, we have been increasing our integrated offer in different specialties. On slide number 8, you can that the revenue coming from the different links in the chain going beyond diagnostic medicine has had an increase of 4 43% this quarter compared to the previous year, now accounting for 4.1 percent of the total revenue of the group. In ophthalmology, Clinic Adeolus Multicuna offers visits, diagnostic tests, therapy, surgery and other procedures. The addressable market for that specialty can get up to BRL2 1,000,000,000 per year as we can see on Slide number 9. We have also just acquired an interest of 66% of Clinica Vita, a premium asset that shows how present we are in the orthopedics market with an advanced diagnostic assessment of the locomotor system and a dental clinic for ortho procedures. To help you understand what this can offer, the Although addressable market alone is estimated at BRL10 1,000,000,000 per year. We have also enhanced our Thiru's infusion of immunobiologic drugs with the acquisition of Cliniko de Fusen, Sakaibou. This market is of around RUB 7,000,000,000 per year. So this shows that the growth potential of these new links are is exponential and it will position us in a unique way in the healthcare market. We are creating an integrated approach that will recommend what patients need when they need it. And our goal is to take care of people's health so that they can have a better quality of life. And one of the greatest challenges of companies with an ESG GMV is to include environmental, social and governance actions into their business strategy. This has been a concern of ours for over 20 years. And although we still have a long way to go, we believe that we took some important step in July when we did our first issuance of ESG Linked Ventures. In addition to raising R1 million dollars of volume that will help us boost growth, We were pioneers in the issuance of this type of debt in the healthcare industry and the 1st company in Brazil to establish social indicators among the commitments made in the issuance of sustainability linked bonds. If the targets are not met, the company will pay a premium to investors. And the most innovative goal is related to democratization of health. We will impact 1,000,000 customers from Class of C, DME with the Saudi ID platform by 2026. This ambition is closely related to the goal of expanding our business itself and also to our purpose of offering quality health care to a higher number of Brazilians from all social classes. It's worth mentioning that today only 25% of the Brazilian population has access to health care. The second target is environmental in nature. We want to reduce biologic waste by 14% by 2023 and by 20.5% by 2025. We have also expanded the initiatives that aim to curb the impact of the COVID-nineteen pandemic. We are part of the vaccination campaign that aims to make it feasible for all Brazilians to get vaccinated by September this year. And we will contribute with technical and scientific knowledge and disseminating content and training. Also, we are part of the corona Nucaridao, Sao Mi Now campaign managed by NGO Gerardo Falcones, which aims to collect and distribute food baskets to families in the favelas of Brazil. As it comes to governance, Fernando Liao will end his cycle as CFO and Investor Relations Director after contributing to our company in a very relevant way. He was key to strengthening our finance area and he was also part of projects that leverage the growth of our company through organic growth and acquisitions. He helped us raise financial proceeds that made it possible for us to expand and grow. So I take this opportunity to thank Leon for his leadership and significant contribution since he joined Fluri. As part of a news cycle, Jose Antonio de Alveda Filippo will join Grupo Fluri as CFO and Investor Relations starting on August 1. He is experienced in Brazilian companies with international business. He was at Natura and Co since 2018. Before that, he held positions as CFO at Edrayer Pangasilcar, CPFL and other companies' great performance in their segments. He conducted relevant financial and capital market operations in all of those companies and he will help us in our growth strategy, strengthening our integrated preventive and hybrid health ecosystem. Finally, in the end of June, Grupo Flory has had a cyber incident that caused system instability. For a few days, we had to operate in a contingency team and we were able to overcome that thanks to the dedication and commitment of over 12,000 employees and 3,000 physicians. To this rest was the team who put our patients first at all times. I'd like to thank BAM. I would also like to thank our clients, hospitals and HMOs, who understand that companies and governments all around the world can be victims of attacks like this and the relationship of trust that we have built throughout decades with all of our stakeholders were tested during this episode. But this relationship is firm and it's the foundation for the group to continue pursuing its goal of offering high quality healthcare in different channels to an increasingly greater number of resilience. Now I turn the floor over to Fernando Leao, who will give you further details about our results. Thank you very much. Thank you, Gianni. Good morning. Now I'm going to talk about the Q2 2021 financial results. On Slide 10, you can see our consolidated gross revenue. We have achieved a new all time record and consolidated gross revenue totaling BRL1 1,000,000,000, a 104.2 percent growth visavishe2ndquarter2020 and an increase of 4.2% visavishe1stquarterof2021. On Slide 11, you can see the share of COVID-nineteen tests in our results. About 550,000 tests were performed in the quarter. Compared to the total revenue, the RT PCR and serology tests share in revenue decreased compared to the previous quarter, now accounting for 8.3% of total gross revenue compared to 9.7% in the Q1 of 2021 and 11.1% in the Q4 of 2020. This is the lowest level registered since the beginning of the pandemic. The test accounted for 7% of the revenue of patient Service Units and 15.9 percent of B2B revenue. This shows the strong growth of the group's consolidated revenue as the share of COVID test decreases gradually. Now on Slide 12, you can see further details about the performance of our brand portfolio. Gross revenue of patient service units grew by 114.4% compared to the Q2 of 2020 and by 1.5% compared to the Q1 of 2021, achieving RUB 793,700,000. Once again, all of the company's brands has had relevant growth, which reflects the continuous demand recovery. This reinforces the continuity of the expansion of our mobile services of 40.4% compared to the Q2 of 2020. This reflects how much we're focusing on making the most of opportunities, expanding our logistics routes and expanding the service to all other brands of our company. On Slide number 13, you can see the evolution of costs and operating expenses. It's important to mention that there is a reduced basis of comparison to the Q2 of 2020 when we had significant saving and cost avoidance measures implemented due to the beginning of the pandemic. On the chart on the left hand side, you can see a 49% increase in the costs in the quarter. This was boosted mainly by personal medical services and direct materials. Both reflect a significant increase in the volume of tasks in the period as the demand goes back to previous levels, including also the strong expansion of our mobile services infrastructure. It's worth mentioning that the lower cost with personnel personnel registered in the Q2 of 2020 were due to the company adhering to MT 936, reducing salaries and working hours of employees. In direct materials, there was an increase due to COVID tests and an addition of pharma products for infusion services in Medline. On the right hand side of the slide, we can see our operating expenses. This quarter, we had an 88.4% increase and excluding non recurring effects of R29 400,000 of expenses related to the cyber incident, acquisition of companies and organizational restructuring of the company, The increase in operating expenses was just 45.6%. The main impacts are due to the reduced basis of comparison to the Q2 of 2020 when salaries and working hours were reduced and the expansion of the org structure of our Saudi ID platform. Now on Slide 14, you can see that our EBITDA achieved BRL219.7 million in the quarter, an increase of over 11 times compared to the Q2 of 2020 with margins of 23.6%. Release. Excluding non recurring effects, EBITDA achieved $249,100,000 in the Q2 of 2021 with recurring margins of 26.7 percent. In the chart on the right hand side, you can see the accumulated comparison of EBITDA, which totaled BRL505.3 million, 834.4 percent increase year over year. Excluding non recurring effects, EBITDA totaled BRL 534,700,000, a 148% increase and recurring margins with 29.3%. On Slide number 15, you can see our net income, which achieved BRL65.5 million in the quarter compared to a loss of BRL73.3 million in the Q2 of 2020 and net margins of 7%. Excluding non recurring effects, net income totaled BRL86.6 million with recurring margins of 9.3%. On the chart on the right hand side, you can see an accumulated comparison of net income in 2021, which total BRL184.1 million and net margins of 10.1%. Excluding non recurring effects, net income totaled $2,200,000,000 in the first half of twenty twenty one with recurring margins of 11.2%. Now on Slide 16, you can see charts with our operating cash flow, which achieved $286,500,000 in the 2nd quarter, an increase of 316.1 percent boosted by the strong EBITDA growth in the period. On the right hand side, you can see our CapEx, which totaled R85.9 BRL900,000 in the 2nd quarter, up 113.7%. Now on Slide 17. ROIC, ROIC ex goodwill, achieved 50.7% in the Q2 of 2021. The right hand side, you can see the evolution of our NPS, which achieved 76.1% as a result of our continuous efforts efforts for continuous improvement of service at our units on Slide 18. So you can see that the Board of Directors approved yesterday, April 29, the distribution of interest on capital in the amount of BRL 42.4 million, $0.13 per share. This will be paid based on the shareholding position of August 3. Payment to shareholders is to be made on August 16. Finally, on Slide 19, you can see the events with the market already confirmed for the coming months. Now we would like to open for questions. Thank you very much. Florist. First question by Ricardo Boyette from Bank of You have the floor, sir. Good morning, everyone. Good morning, Gianni. Good morning, Leon. Okay. Talking about the Saudi ID platform and the healthcare platform as a whole with integrated business, I think it's amazing that you are now sharing important information more and more. So thank you for that. Now about the tertiary care vertical, can you tell me a bit more about that initiative? What is the current status of that vertical? And what is your target audience? Are you thinking about a B2C business or are you talking to HMO to try and offer that new service and include that in the contracts you have with HMO, who are your main partners there? Now, still talking about your verticals. There are many complementary businesses now. So which of the new verticals you think have the greatest growth potential. We have a great addressable market for infusions, for example, and you're already participating in that market with center the infozones Pakai and Bu. But is there something that you would highlight for growth in the short term considering the speed in which things are happening. And now finally, Since the vision of the company now focuses more on this platform, can you share is some analysis with us. Does it make sense to Accelerate investments in acquiring clients, acquiring users so that the platform can be expanded as quickly as possible. Do you think it's now time to accelerate investment and customer acquisition or not yet? That's all. Thank you very much. Good morning, Juliet. Thank you for your questions. I'm happy you asked them because, yes, we are focusing on building this integrated health ecosystem. That's our strategy and we see strong pathways for growth. Now the first thing I'd like to emphasize is that This building is based on the vision of a patient journey. And the patient journey is focused on Health Prevention. That's why we need to join physical and digital assets. That's key. But you're right, in addition to preventive medicine and diagnostic medicine, yes, we see opportunities for growth, especially in the different specialties. As we were saying, this quarter, we have seen Significant growth compared to last year when we were already starting to work on that. But this quarter, we included assets such as Floris, Clinica de Infossois Pacaimbu, which can be expanded later on to the whole of Brazil, that same type of business and also ophthalmology. And in June, we closed the acquisition of Alintrazz in VITA. So we are also growing in Orthopaedics, although we already had assets with the Orthopaedic Hospital for integrated care, but now we are adding visits and physical therapy. So we believe that focusing on these new wins is very promising. That's why we shared with you the size of the addressable market. It's hard to say which of these pathways will give us more growth, But it's more important to work on all of that at the same time to offer what patients need at the time they need from prevention to therapy. Now for the tertiary care vertical, we started to define a few elements in order to complete the patient journey, either with an offer of our own services or by establishing partnerships with other companies to provide offers for the whole journey. We want to be there from end to end and integrate data for a better Health Management. However, we already have a few elements that can be mentioned already. 1st, We're working with Bay Hospital, Bay Hospital model for lower complexity surgeries. We have the hospitals for orthopedics, but also at Cinque de Olis moisirquia, we also perform low complexity surgery. So we have the state hospital there at this clinic and the fertility clinic that was opened in March this year also offers an OR for procedures. So we are offering lower complexity surgeries at different places within Flurrie Group. And at the Saudi ID platform, we have recently launched this model in which we do not have a hospital asset necessarily, but we established partnerships with hospitals. For example, we have a partnership with BR Surgery and we are discussing new opportunities for partnerships and we use idle periods in those hospitals to offer our surgery services. So that's a possibility of product that is now being offered in the B2C arena for now. We are still trying to define these businesses and products so that they can gain scale. But yes, we believe this has a great potential for growth. Now it's also important to mention that when we look at the different specialties, we want to offer The whole journey end to end from the first visit in primary healthcare to secondary healthcare to diagnostic, low complexity procedures, therapy and maybe at some point in time connect and offer higher complexity procedures and surgeries as well. Our Strategy is to focus on the whole journey and we see opportunity for growth there. Now about investing in the acquisition of customers, We have been sharing data about our own business. With diagnostic medicine, we know that our cost for customer acquisition is low. The strength of our brand is great and with Saudi ID, We are still reformulating the management of Saudi IB and including Professionals were very experienced with this platform model to see how we can increase this network effect. So we are still shaping our products. Once these products are fine tuned and consider The whole patient experience then will start to scale them up. And yes, we believe we'll need to make in order to acquire customers. But we're already considering potential partnerships that will help us connect with the customers. For example, the partnership with Smiles that we have just announced And maybe in a short period of time, we'll be able to triple the number of customers that are in contact with the services offered within Saudi ID. I hope I have answered all of your questions Floriani available for further questions you have. Thank you so much, Johnny. I think you answered all of my questions. Thank you, Goyat. Our next question is by Leandro Mastos with Citi. You have the floor, sir. Good morning, everyone. I would like to talk a little bit about costs and expenses. We saw an acceleration here in costs and expenses this quarter. So I'd like to for the details. You're talking about the platform and your mobile services. So how can you focus on the cost and expenses area from now on? Thank you, Leandra, for your question. I will start and then maybe Leon can add to my answer. I'd like to take this opportunity to clarify what happened this quarter and also to give you some ideas about the future. This quarter specifically, we had a major non recurring impact. We were reorganizing our structure and we also had costs involved with the cyber incident. So 1 third for the reorganization and about 2 thirds to deal with that cyber incident. Now when it comes to the cyber incident, Leandro, it's important to mention that we have an insurance policy. And we will probably recover part of the expenses incurred with the cyber incident from our insurance. Now when it comes to the recurring part, I'd like to highlight 2 points. First, yes, This quarter, we had a recomposition of our headcount. This is because routine screening tests have been resuming, going back to normal levels. And in previous quarters, We had an increase in productivity, but a reduction in NPS. So we made a decision to recompose our headcount and we see our NPS going up and our organization is now getting ready to meet the growing demand. We emphasize imaging tests are coming back and COVID test share is going down gradually. So we believe that once the vaccination picks up speed in the second half of the year, we have an opportunity continue growing in a sound manner in our business and we need to adjust our operating levels. And when we compare our costs with personnel compared to the pre pandemic period, we have approximately the same level in percentage numbers. Now in the second quarter, in the first half of April and the last days of June, Yes, we saw an impact on a slight reduction of the revenue Because in the beginning of the quarter, we went for a second wave of the pandemic and the lockdown was reestablished. But also the last part of the quarter, we had that cyber incident. And with all the contingency plans, we were able to continue serving our clients. But yes, that had certain impact on our revenue. So we were prepared to have an even higher revenue this quarter. Having said that, I would also like to take this opportunity to give you a medium term vision considering our strategic thinking. We are now thinking about investing and leveraging our Saudi IT platform, which will definitely grow. We are confident about the potential of Saudi ID to attract new lives and that will contribute to this health management model that we have to be there for patients throughout their whole journey. And we believe that healthcare is going to become hybrid, both physical and digital. So, I would say, I'd still have costs related to its initial phases of operation. Now another important aspect is that we feel completely comfortable with the investments we've been making in the platform. Another point is that in the medium and long term, The share of revenues coming from other lengths increase in addition to diagnostic medicine will have a mix. Some of these links will bring greater margins and others will bring lower margins. But Our goal is that the company grows. We want to be the main Players in this strategy looking at healthcare from an integrated perspective. So in our future vision, yes, we believe that we are going to bring other businesses that are also important to our company, but that might have lower margins. The most important thing is to continue firm with our growth strategy. Leon, would you like to add anything related to the cost and expenses of the quarter? Yes, Gianni. Thank you, Leandro, for your question. I think Gianni has given us a very broad in accurate view. There are indeed several factors, some of them related to the pandemic, but we also who had the cyber incident and we have a mix of revenues that It starts to change now as we incorporate the acquisitions that were made and other acquisitions will be made in the future as well. What I'd like to say is that We see all of these movements in the P and L of our company in a very natural way. The company has a clear strategy of diversification. We want to be a healthcare company and not only a diagnostic company and being a healthcare company, it presposes a broad combination of services. The level of productivity and efficiency that we have in diagnostic medicine will be kept. We can guarantee that. What will start to happen is that As we incorporate new services, we will experience greatest growth in the company. This growth presupposes a change in the mix of revenue. This change will impact the margins of our company, which will be taken to a new level. But that's part of the group's strategy. There is relevant growth in all of these fronts and as a consequence, the changes in the mix of revenue will have an impact on our margin. But as we continue to deliver productivity and efficiency in all different diagnostic front, we understand that we still deliver value to shareholders because we continue to grow and deliver results. Our next question is by Fred Mantis from Bank of America. You have the floor, sir. Good morning, everyone. Thank you for the call. I have two questions and that's in line with the previous questions that were asked, but I'd like to understand a bit more about the margins and also about medical relationship, the relationship you have with physicians. I believe you have a fee for life and you Based on that, you pay for physicians. You don't have enough lives included in the platform, but you already have these medical costs. Is that why the margin has been impacted? I just want to understand how this happens and how scaling that up will improve the margins. Now LG ID is a health pack for a startup. So I think it makes perfect sense to make investments that you have been making now to get the returns later on. It's natural to take some time for you to monetize and bear the fruit. So I just want to understand most of the costs have already been incurred? Or since this is a start up, the cost will remain high until you're able to monetize on that asset? Thank you, Fred, for your question. Actually SaudiID has different contracts or operating model. Telemedicine, more specifically, yes, today we have this based on live and we pay for physicians. And you need to strike a balance because if you have essential the demand, then you need to hire more physicians in order to serve that demand. Of course, Now during the pandemic we're going through, there is great fluctuation in demand when we see more patients with symptoms and that interferes in the economic rationale of the model. But generally speaking, we feel very that's how would the ID at the HealthTech is going through this growth phase and the lives that are added bring a lot of value because throughout time we'll be able to capture This whole life cycle and offer new services. One thing we didn't mention is that we already have estimates of revenue for diagnostic medicine Interactions happening within Saudi ID, so this was not mentioned specifically in the line of revenues or Saudi IG. That's important in our strategy. We have this connection between individuals Platform model in the retail segment, you can see several different platform models and that's a very successful model. You connect needs. You can acquire to seller and you have many ways to monetize either through tax rate or Throughout time, you may also update the network effect and check The total value of customers was enacted to the platform. To right now, we firmly believe that Although our IoT platform is already a significant platform in terms of its size and the number of lives served as well as in the number of the clients live to be added and it will continue growing from now on. But the valuing of the health plan is different from the value of the traditional model that we have in Grupo Ferri, which is a traditional diagnostic medicine company. In the HealthTech segment, you usually have valuing based on That's anyway, not necessarily on margin. And it has to go through that growth period. So we firmly believe in this model. We are very confident and we'll make all investments needed so that Saudi ID can gain momentum and become a very successful healthcare platform in Brazil. As I said, healthcare will become both Physical and Digital from now on, more hybrid. Perfect. Thank you very much, Yani. Thank you, Fred. Is by Vinitius Ribeiro with UBS. You have the floor, sir. Good morning, everyone. Thank you for taking my question. I actually have two questions. First, can you give us further details about your organizational restructuring? Does that mean that the company will be structured in business units based on different advantages or specialties like platforms and so on. I think it makes perfect sense to go through that restructuring, but I just want to understand how this is going to work, not from the reporting perspective, but from the structure perspective itself. Now about the second quarter, You've had a few impacts. What about the composition of recurring volume of elective tests? And also the wrap up of the other initiatives that you've been implemented. Can you give us your take on that? Sure. Thank you, Vinicius. We're looking at this organizational restructuring with the rationale of more autonomous business units that are focused on growth. Of course, our Diagnostic Medicine business is doing really well. We continue to grow organically and inorganically. This quarter. We also announced the acquisition of Pratt Labs and Bioclinica's lab. But Thinking about new links, we are getting organized in order to have a more specific management of these new fronts, ophthalmology, orthopedics, infusion. And we have also strengthened our team with professionals who are experienced in those businesses and that are committed and focused for us to continue growing. Our M and A team has also been strengthened so that we can consider all the opportunities of inorganic growth. And with autonomy and agility of organization, we'll be able to gain speed for growth, which is what we want. Now about the second half of the year, We already see some recovery of the diagnostic medicine business, especially with routine screening test. Now for imaging test, we also saw significant growth compared to last year. But as we said, the basis of comparison is not that valid because we were hardly hit by the pandemic. But compared to the first quarters this year in imaging tests, we grew by 9.7%. Now we also see reports of medical societies saying that many patients with chronic diseases have not had their assessment tests, preventive and diagnostic tests as they should during the pandemic. So we see an opportunity there to provide these assessments. Now another aspect that we take into account is that patients who have had COVID-nineteen I mean, we have increasing evidence that these patients can have sequela in the cardiovascular neurologic System and Pulmonary Systems. So we are now considering new services in order to better serve patients who need post COVID care. And the number of users in the health care system is also important. Even though the unemployment levels went up, we keep track of the number of users in the healthcare system And we saw that the number is going up. So healthcare is being valued by the population and the number of users in the system is a good indication of the opportunity to grow. And As Grupo Flurie, we focus very much on these pathways. We want to continue growing in diagnostic medicine both organically and inorganically and focused on the new links in order to capture more revenue, more customers and Most of all, what makes perfect sense, which is to take care of people's health from end to end. Thank you very much, Johnny. Thank you, Vinicius. Our next question is by Mauricio Cepera from Credit Suisse. You have the floor, sir. Hello, Gianni and Royal. Thank you for your time. I have a few questions related to your future strategy. You talked about the consolidation and the inorganic growth. Now can you tell us a bit about your ambition? Are you planning to be more aggressive there? Or are you taking your time there for the expansion? Now you also issued debentures and raised some proceeds. So are you changing your profile of inorganic growth? And you're offering outpatient services now, right? Do you plan to become a consolidator in any of those verticals? Or you're just using this cross reference between users and services. Now another question, which is not related to strategy, but it seems to me based on the results that the average ticket has dropped. So can you tell me about the relationship with HMOs? What's your take on that? Thank you very much, Pepe. I will start and then Leon can add to my answer. Yes, We see the opportunity for growth in the new links, both inorganically and organically. So inorganically, we have the possibility of bringing capabilities to add to what we already have in house. We acquired 6% to 6% interest on VIDA and we capped all of the physicians who are references in the orthopedics field, and that brings additional knowledge so that we can grow on this pathway throughout time, both inorganically and organically. So maybe our strategy is a bit different from that of market players who are purely consolidators or more financial investors profile. Throughout time, we want to capture synergies from different businesses. For example, we already have diagnostic medicines, but once you add other businesses from other links, therapy or focusing on the whole patient cycle, You also leveraged the businesses of the Diagnostic Medicine Unit. So we capture the synergies from the business itself and we also capture synergies from our Diagnostic Medicine business. Another example is human reproduction, which was a greenfield project we had, no acquisitions, but that was part of the cycle. This women health journey that we focused mainly on diagnostics previously, but now we also focus on fertility and we can provide fetal care and children services so that we can complete that journey view. But answering your question, yes, we intend to grow inorganically as well so that we can speed up our growth and at the same time seek synergy opportunities with our businesses. Now I'd like to turn the floor over to Leon so that he can talk about ESP. But now about the average ticket that you mentioned, there is not a specific price issue, but we have a mixed composition. So if you have a smaller share of diagnostics or imaging path in this composition, then You increased the clinical analysis, thus you reduced the average ticket. We can tell you that we have not reduced prices, mainly a matter of ticket combination. This is Leon speaking. Thank you for your questions, Feda. Well, Johnny said that you mentioned that also the that we did with the raise of 1,000,000 BRL reflect our ambition and the speed that we want to achieve when it comes to the company's organic growth. This year, we have made a few moves for that. Our pipeline continues to be very robust. We have companies at different forms and at different of maturity and there will be new announcements by the end of the year. And so This rating of speed shows that we are financially prepared for that organic growth. The results of the company continue very robust, cash operations and the energy growth strategy that we consider very important within our platform strategy to grow quickly and to provide all the diversification and all of the new revenue flows for the company. Perfect. Thank you very much. Thank you, Cepeda. Our next question is by Ian Firsin from BTG Pactual. You have the floor, sir. Good morning, everyone. Now most of my questions have already been answered by my colleagues. But I'd like to take this opportunity to ask 2 very straightforward questions. First about Saudi ID. Have you defined any target for growth? I know that you have achieved over 150,000 lives or 14% of the total number of lives served by the group. But do you have medium term growth targets for Saudi IT. Now about M and A, I would like to So what your views are on leverage targets considering that you have now a stronger appetite for M and A. Thank you very much. Thank you for your questions, Jan. About Saudi IP, yes, we have a great ambition, especially because we have an amazing potential with that business model. And of course, we have internal targets, but we are now going through this organizational phase of the products offered by Saudi ID. And after that, we'll start the scalability phase, which is really important for this business model. So today, If we look at the number of customers we were planning to have in Saudi ID, I'd say, we are very Domestic. We launched Saudi ID in September with 7,000,000 lives. In the second quarter, we will triple the number of eligible lines in the platform. We have also established another target, which is $1,000,000 This is related to our ESG linked debentures. So we want to have 1,000,000 customers served in the Saudi ID platform in classes social classes CD and E by 2026. And that's only part of the population that we aim to serve. But that's just so you have an idea of the size and the ambition we have for Saudi ID. Our mission is great, the perspectives are great, And we're looking at Saudi A. D. With Hans as CEO and a very qualified team that has all the autonomy they need in order to leverage Saudi ID. Now about M and A, I'll turn the floor over to Liao. Okay, and good morning. Now about the leverage, as I said previously, our P and L and our balance sheet When it comes to growth through acquisitions, so we'll close the quarter with a leverage of one time our EBITDA, and we feel very comfortable to increase that leverage to around 2 or 2.5 times our EBITDA in order to achieve the growth we want. So we think there is a lot of space there to bring new companies to our brand portfolio. Flores is already being executed here very carefully at our M and A area. And our M and A team has grown and we have 2 focus. Actually, we have one team to focus on diagnostics. So there is a lot of opportunity to Consolidating the diagnostics market and now considering the number of assets and the diversification In terms of the number of service verticals, we also have a team to focus on new lengths. So we have already started working on ophthalmology, orthopedics, infusion, and we have Thoracic Infusion and we have others that are being analyzed. The potential market for all of those verticals is great. So we have a huge ambition of growth and we think that the share in revenue of these new links at the company can also be great. So yes, the company will focus on growth through M and A and we think there is a lot of space for that. Okay. Thank you. Thank you, again. Our next question is by Mr. Emerson Vieda with Itau. You have the floor, sir. Good morning, Gianni and Leao. I have two questions. First, I'd like to understand what share you think you might achieve in that area. Considering the medical relationship, What is the potential you see there in this segment? Now you were talking about integrated patient care. Can we think about products and compensation models. Are you going to accelerate the offer packages and to build that strengthen your relationship with current payers. Now a follow-up question about the genomic test revenues. There has been a regulatory change And I would like to understand your market timeline when it comes to genomics. Thank you very much. Thank you for your question, Emerson. We don't give guidance. So what we did was to establish the addressable market. And what we can say is that our ambition is great, but we don't know exactly what chair will have on those new links. What we always say is that our ambition is great, but we don't give any special guidance on market share. Now when it comes to integrated care, you're right. As we offer new services, we increasingly see the challenge of HMO to find balance, sustainability and adequate use of resources. So it makes sense to start thinking about new models that considers a package of care throughout patient's journey. And we've been working with HMOs because we know there is a challenge related to system sustainability. And that's the differential we might have to help HMOs to fight waste. We always say that all of us who work in the healthcare industry need to think that the resources should be used appropriately and that we should fight waste. So once you focus on the whole journey, You can share information and use the resources appropriately. Another point I'd like to emphasize is that Early diagnosis and the right referral of the case in different clinical conditions make you reduce the total cost of care for that specific condition. So there are opportunities there. That's why our view of integrated care is important and that focusing on preventive care is also something that can contribute to the sustainability of the system and to control HMO's medical loss ratio. And we're going to work closely with HMOs to do that. Now about genomics, yes, there has been a significant increase year over year, Maybe not quarter on quarter that much, but year over year, yes. And in genomics, we still have a challenge of managing new tests. And yes, the approval of some product to be included in ANL's list is important, like the exolam test. But after it's been approved to be added to A and S, we go through a phase of negotiating with HMO. That takes some time, but we've been working with all of them in order to make that happen, and we have a commercial team that is very much focused on that. Thank you, Emerson. Thank you. That was very clear. Our next question is by Eugenio Cavaliero from JPMorgan. You have the floor, sir. Hello, Jenny and Leon. Good morning. Thank you for the call. I have a question about the opening of new units. We see that the mobile service has been growing for the 5th quarter in a row. So What do you expect in terms of the opening of new units? Is that a focus of the company? Or are you focusing more on M and A. Now about the new initiatives, can you give me a bit more detail about the margins compared to the level we currently have and what we can expect for the future. Thank you. Floriani. Thank you, Jean Ann, for your questions. Now about opening of new units, it's important to emphasize that in 2016, when we talked about opening team. When we talked about opening for the Q4 to 9 PUMs, we We're able to open 55 of them. During the course of our mobile services, the revenue that we have there was strong to about 25 units from Grupo Flory. So if we look at the average in terms of the number of brick and mortar units that were open and the mobile service that was actually larger. This is indeed the 5th year in a row that our mobile services revenue has grown and there is still a potential for growth. Customer behavior is changing, especially customers who Try this type of service for the first time during the pandemic and they come back because the NPS of the mobile services is very high, 84% compared 76% of our general NPS. So we're focusing on expanding our mobile service throughout the whole country in the regions where we see opportunities for growth. And also we are looking at new tests that can be added to that type of service. So going back to the opening of units, when we look at the brick and mortar units that were opened and the mobile services, would say that we have achieved 80 openings, but we also added 72 serviced units in recent years through inorganic growth. So yes, there has been a significant growth and we consider looking at the opportunities. Of course, they need to make sense to tell you our strategy of balancing organic and inorganic growth. And of course, we want to make the most of this fresh footage we already have. So once part of the customers are served with our mobile services. That means that I can use our units better, our square footage better to add other potential services such as infusion. We started organically within our units and now We have acquired a clinic for that. But yes, we're always looking at new opportunities to open units and also the possibility of extending our existing units since some of them are at the top of their service capacity. Now about your second question, some initiatives may have lower margins than our current business. So we've been emphasizing that As part of our growth vision, the composition of new revenue flows or new businesses that have Lower margins and percentage terms may happen. So margin reductions are expected as time goes by, but we're very confident about that. It's part of our strategy. But I'd also like to emphasize that new businesses also attract revenue and margins to our Diagnostic Medicine business. So we need to emphasize that What we want is to have an integrated offer, anything that patients need to take care of their lives. And as time goes by, we'll gain synergies, inter and intra businesses, and The margin composition will result from that mix, but our main goal is to grow and to establish this integrated system that looks at the patient journey as a whole from end to end. That was very clear. Thank you very much. Thank you, Eugenia. Thank you. If there are no further questions, I'd like to turn the floor over to Ms. Gianni Tutsui for her final remarks. I would like to close this conference by saying that we're very optimistic about the new cycle of growth for our company. As you heard today, the execution of our strategic positioning is happening quite fast and it's enabling us to create an integrated preventive and hybrid health ecosystem combining physical and digital offers, The organic growth, the development of our Saudi ID platform and the acquisition of services and solutions to make up that ecosystem combined to the significant increase in the number of potential customers, have been bringing results that clearly show that we are on the right track. Once again, I would like to thank Fernando Leao for his great contribution throughout his journey with us. And at the same time, I would like to welcome Josefilippo, who will join Grupo Flori starting next Monday. Thank you all for your participation in our conference call and have a great weekend.