Good morning, everyone. Welcome to Grupo Fleury's first quarter 2023 earnings conference call. Joining us today are Ms. Jeane Tsutsui, CEO, Mr. José Filippo, CFO, and Mr. Renato Braun, IR Director. I would like to inform you that this event is being recorded and that we have simultaneous translation to English available. First, there will be a presentation on the company's results, and then we'll hold a question-and-answer session. At the end of the Q&A session, Ms. Jeane will make her final remarks. All of the numbers that we're going to mention here today are compared to the same quarter in 2022, except when specified, and they were rounded to the nearest thousandth. Before proceeding, let me mention that this presentation may contain forward-looking statements. Such statements are not only historical facts, but reflect the wishes and expectations of the company's management.
Terms like believe, expect, plan, forecast, estimate, project, aim, and other search terms are used to identify such statements which evidently involve risks and uncertainties known or unknown by the company. Known risks include uncertainties that are not limited to the impact of competitiveness on prices and services. Among the uncertainties are also market acceptance of services, the company and its competitors service transactions, regulatory approval, currency fluctuations, changes in the service mix offered, and other risks described in the company's reports. I'd like to turn the floor over to Ms. Jeane Tsutsui.
Good morning, everyone. Thank you for joining us in the first quarter 2023 earnings conference call. Today, we're first going to give you an overview and then the financial highlights of the quarter.
As you've seen in our previous releases, on slide five, we have once again the strategic positioning chosen by Grupo Fleury. We continue to strengthen our diagnostic medicine core business with brands that are recognized in their different regions of operation, serving the premium, intermediate, and more recently, also the entry-level segments. With the aging population and the increase in chronic diseases, we have a greater demand for diagnostic medicine. More than 70% of medical decision-making is based on complementary diagnostic test results. In addition to diagnostic medicine, we also offer services in the different stages of the continuum of care with primary healthcare in person or telemedicine appointments to secondary healthcare through different medical specialties such as orthopedics, ophthalmology, fertility, drug infusion, as well as tertiary care with low complexity surgeries.
More and more, we have been building a care journey solution that contribute more and more to the sustainability of the healthcare system. On slide six, you can see our growth avenues. The first one is the B2C diagnostic medicine, where we want to grow, keeping our high quality. The second one is our second growth avenue, B2B diagnostic medicine, which will be strengthened by the business combination with Grupo Pardini, which provides relevance, efficiency, and speed of innovation with complementary services in hospitals lab-to-lab, making our business even more competitive. We also have the New Links with a focus on establishing relevant operations on the value chain. The fourth growth avenue are healthcare platforms that aims to integrate businesses and increase patient engagement.
Our competitive advantages are medical excellence, science, technology, and innovation, national scale and operational efficiency, which are crucial for productivity and market gains, as well as our ESG practices with a highlight of our positioning of expanding access to healthcare to an increasing number of Brazilian people. Throughout the first quarter of 2023, we have given consistent steps towards building a healthcare ecosystem around our core business, diagnostic medicine. Establishing ourselves in new links of the healthcare value chain, we have an appropriate capital structure with low debt level, which puts us in a favorable position to strongly face the challenges of the coming quarters. Before we move on to the details of our financial results, I'd like to inform you about the successful completion of the incorporation of Instituto Hermes Pardini's shares by Fleury S.A. last Friday, April 28, 2023.
As a result, the business combination between Grupo Fleury and Pardini marks an important advancement in our growth strategy. The combined company becomes one of the most relevant ones in the diagnostic medicine market, with complementary businesses and expanded geographical coverage, as you can see on the map on slide 7. The total revenue of the combined company will be BRL 7.1 billion with an EBITDA of BRL 1.6 billion and processing of over 277 million tests a year with opportunities of gains of scale. We now have 520 care units in the main economic hubs of the country with recognized regional brands with great quality and great medical relationship. In addition, Pardini is a national reference in the lab-to-lab business, serving over 7,000 labs throughout the country.
We are joining two [inaudible] from virgin cultures, resulting in a combined company with over 20,000 employees and 4,000 doctors dedicated to offering high quality, efficient, and customer-focused services. In the last six months, there has been a joint effort of the leaderships and work teams which resulted in the identification and robust planning of the synergy opportunities. As you can see on slide eight, we estimated annual synergies of BRL 200 million-BRL 220 million in incremental EBITDA, a higher than expected estimate. About 90% of those synergies are related to cost and expense reduction, especially when it comes to negotiating with suppliers, unifying logistic routes, and optimizing assets and inputs. On the right-hand side, you can see the capture percentage throughout time. 95% of those synergies will be captured by the end of year three.
On slide nine, we can see that in order to deliver the growth strategy and integration of the care journey, we have an executive team with vast experience in healthcare, deep knowledge of the market challenges, and a history of success. We now join the expertise of both companies. Let's go to slide 11 with our financial highlights. In Q1 2023, we showed once again consistency in delivery of results. As expected after a Q4 2022 marked by the effects of seasonality and the impacts of the World Cup, we have resumed our pace of growth. We had a quarterly revenue of BRL 1.33 billion, up 13.4% against the same quarter the previous year. If we exclude revenue from COVID testing, we have grown 20% compared to Q1 2022.
Our organic growth was 6.7%, even with a strong drop in COVID testing, which accounted for only 0.6% of revenue in Q1 2023 against 6.2% of revenue in Q1 2022. The results were boosted by the positive combination of our growth avenues, with a highlight to our diagnostic medicine care units. The Fleury brand grew by 10.9%, showing not only the strength of our core business, but also the robustness of the premium brand, which puts together tradition, quality, and innovation with a high degree of customer satisfaction and a great relationship with the medical community. We also grew by 17.2% in Rio de Janeiro, indicating a gain in market share.
Our home service continues to grow, up 31.1% against Q1 2022, now accounting for 9.3% of total revenue, confirming the differentiation of our service, which meets the needs of a change in behavior of our customers after the pandemic. A highlight of the quarter was the revenue from New Links, which grew 99.2% year-over-year, accounting for 10.2% of our total revenue. Part of that strong peak comes from the acquisitions, specifically Saha's acquisition, which happened in August 2022. The organic growth of New Links was 38.9%, also an expressive result. This year, we opened a total of four care units. Three of those are diagnostic medicine units, two of the Campana brand and one of the a+ brand in Teresina, with an organic entry of Grupo Fleury in the state of Piauí.
In Orthopedics, we opened another unit of the Vita brand in the District of Perdizes in the city of São Paulo. In Q1 2023, we achieved an EBITDA of BRL 345.8 million, up 5.9% against Q1 2022, with margin of 28%. Our discipline in executing the strategy and controlling costs and expenses, as well as the consistency of deliveries, were key for us to achieve this result with sound margins. Net profit totaled BRL 93.9 million with margin of 7.6%. I turn the floor over to José Filippo, CFO and IRO, who'll give you further details about our financial performance.
Thank you, Jeane. Good morning, everyone. I will now make a presentation with further details about the financial results of the first quarter of 2023. On slide 12, as Jeane already mentioned, we can see that our quarterly revenue was BRL 1.3 billion, up 13.4% year-over-year. If we exclude the COVID testing effects, that growth increases to 20%. Our organic growth was 6.7%. Our home service segment continues to grow, expanding 31.1% and now accounting for 9.3% of our gross revenue in the quarter. In New Links, we had growth of 99.2%. Organic growth being 38.9% of that.
On slide 13, we can see that once again, the contribution of COVID testing on our gross revenue dropped in Q1 2023 against the same quarter the previous year, accounting for 0.6% of the revenue and reaching the lowest level since the beginning of the pandemic, decreasing by 5.6 percentage points. As we said earlier, if we exclude the COVID testing this quarter, the growth of our gross revenue was of 20%.
If we exclude the acquisitions made in the quarter, in the period, 12.9%. On slide 13, we can see that the gross revenue of our care units achieved BRL 1.06 billion in Q1 2023, an increase of 15.2% against Q1 2022, with a highlight to the Rio de Janeiro performance, which grew by 17.2% in spite of the contraction in the number of members in healthcare plans, indicating a gain in market share. The Fleury brand also had significant growth of 10.9%, just like a+ São Paulo, which had growth of 18.3%. In other regions, the growth of 23% in the quarter reflects the integration of operations of Méthodos and Marcelo Magalhães.
The organic reduction of 2.1% can be explained mainly by the smallest share of COVID testing. On the next slide, with the results of New Links and healthcare platform, we can see that together the growth revenue of New Links and healthcare platforms in Q1 2023 achieved BRL 146.9 million, up 85.3% and accounting for 11% of the growth revenue of the group. In Q1 2023, gross revenue of New Links totaled BRL 135.1 million against BRL 67.8 million in the same quarter of 2022, up 99.2% due to the combination of the acquisition of Saha and organic growth of 38.9%. The New Links revenue accounted for 10.2% of the gross revenue of Grupo Fleury in Q1 2023.
In healthcare, the volume of telemedicine appointments in Q1 2023 totaled 208.5 thousand, a 17.2% reduction against Q1 2022, a quarter that registered a higher than usual demand due to the impact of the Omicron wave. The revenue achieved BRL 11.8 million this quarter. On slide 16, we can see that in Q1 2023, gross profit was BRL 356.7 million, with margin of 28.8%, up 9.8% year-over-year. This result can be explained by the impact of mix with a higher volume of infusions, both in organic growth and inorganic growth.
On slide 17, you can see our operating expenses in Q1 2023, which had an increase of 34.6% year-over-year, achieving BRL 142.2 million, which accounts for 11.5% of our net revenue. This behavior is influenced mainly by salary increases. On slide 18, we can see that our EBITDA achieved BRL 345.8 million this quarter, with margin of 28%. That represents a 5.9% growth year-over-year, while our margin had a two percentage point contraction explained by the smallest share of COVID testing and also the change in mixes due to the acquisition of Saha, which uses high cost drugs. On slide 19, we can see that in Q1 2023, net profit achieved BRL 93.9 million, with net margin of 7.6%.
This quarter, when we compare to the previous year, we can see an increase in financial expenses due to the increased interest rates, reflecting a SELIC rate of 13.75% against 10.58% in Q1 2022. The effective tax rate was 24.9%. On slide 20, we can see that investments totaled BRL 70.7 million, up 6.4% against Q1 2022. This increase is a reflex mainly of the continuity of our program of offering services in units and technical areas compared to the same period last year, in addition to the investments in digital and IT. Moving on to slide 21. On Q1 2023, operational cash generation achieved BRL 212.1 million, up 235.9% year-over-year when we had negative impacts of one-off events.
The conversion rate was 61.3% of our EBITDA, which is typical for the first quarter of the year. On slide 22, we can see that the gross debt has remained relatively stable, with a slight reduction of 0.6% in Q1 2023 compared to Q4 2022. Net debt achieved BRL 1.5 billion in March, up 1% quarter-over-quarter, and a reduction of 6% year-over-year. The leverage was 1.2x at the end of the quarter, stable when compared to the previous quarter and below the same indicator at the end of the first quarter of 2022. Our leverage has remained way below the limit of 3x established by our debt instruments. This level of leverage enables the company to face an environment of high interest rates with more resilience.
On slide 23, we can see the schedule of debentures, financing, and acquisition amortization of Grupo Fleury, which shows our robust cash position, facing our obligations. We have a healthy debt profile with an average maturity of four years. Before we start the Q&A session, I'd like to turn the floor over to Jeane to wrap up the presentation.
Thank you, Filippo. As you saw in the first quarter of 23, we continued to show consistency in delivery of results and financial discipline, which shows the efficiency of our growth strategy and of the building of an integrated healthcare ecosystem. Our quarterly results prove that the plan that we defined almost 18 years ago has been successful and shows that we're on the right track. This is an accomplishment of all of Fleury's employees and doctors who dedicate to the health and well-being of our customers.
I would like to thank our teams and the confidence that our customers and partners bestow on us every day. I highlight once again that by completing the business combination between Grupo Fleury and Grupo Pardini, we have achieved a new level of revenue. We will strengthen the growth avenues that have already been defined and will open up new opportunities. Our ambition is to be one of the leaders in healthcare in Brazil, adding value through prevention, outpatient care, and integrating the patient healthcare journey. We have a unique positioning in the sector. We are a reference diagnostic medicine in Brazil, and we offer outpatient solutions that go from prevention to treatment and contribute to the sustainability of a healthcare system that suffers cost pressures. We have an experienced executive team with high level of corporate governance and a solid economic financial structure. Thank you very much.
We're now available for the Q&A session.
Thank you. Ladies and gentlemen, we'll now start the Q&A session. If you wish to pose a question, please dial star one. If you wish to remove yourself from the queue, please dial star two. Please wait while we poll for questions. Now I'd like to turn the floor over to Mr. Renato Braun, IR director, who will manage the question and answer session.
Our first question comes from Estela Strano with JP Morgan.
Hi, everyone. Good morning. Thank you for taking my question. Can you give us an update of the integration of Pardini's management? Is there anything already in implementation, and what are the next steps that we can expect? Thank you very much.
Thank you, Estela, for your question. We are already implementing the plan that was designed 6 months before CADE's approval and the completion of the operation.
We announced on the day that we spoke about the synergies about the management between Grupo Fleury and Grupo Pardini. Our structure will preserve the expertise of both companies. We are now undergoing this process of integrating teams, always considering growth opportunities in those avenues that we now add to the B2B diagnostic medicine in addition to the B2C diagnostic medicine and New Links. We have defined that we will have heads of business units, lab-to-lab care units, and New Links, and the whole team who will be in charge of integrating both companies. About the next steps, we are executing the synergies capture plan. We have over 60 fronts that are being led by the executives according to the org chart that we presented to you.
We also have a composition in terms of corporate governance with the 10 members of the board who will take over and continue with the corporate governance with five committees to provide support to the board. We are completely aligned with our plan to be able to capture all synergies, which will be around BRL 200 million-BRL 220 million in incremental EBITDA, and we expect to achieve 95% of that by the end of year three. Thank you for your question, Estela.
Our next question is by Vinicius Figueiredo from Itaú BBA.
Good morning, everyone. Good morning, Jeane, Filippo, Renato. Thank you for taking my question. I would like to explore three different points with you. The first one is we have seen growth not only year-over-year, which was quite robust, but also quarter-on-quarter.
The Fleury brand grew by 16%. That drew my attention here. Of course, we have an effect here of working days, but can you tell us a bit more about Fleury, a+ São Paulo, Rio de Janeiro? Are you signing contracts with new payers? Did that help in this growth? What about the home service and the weaker organic performance in regional brands? My second question is a bit more straightforward. When we look at the spreadsheets here, we see that there is consistent margin gains throughout the quarters. Is this 100% related to the B2B, which is losing share? A third issue here, which is not related to results, but actually related to today's news. With Anvisa approving tests at drugstores and medical offices, what will be the expected impact of this on you?
Thank you for your question, Vinicius. As you said so well, we have had consistent growth in our business units. When we compare the first quarter of 2022 to this quarter, of course, we have the difference in COVID testing as we mentioned. Compared to Q4 2022, we saw significant growth. The explanation here was the effect that we had on Q4 of end-of-year seasonality and World Cup effects. At the time, we had mentioned that there was a slight drop in the diagnostic medicine tests in our care units because of the seasonal effect. What we saw was a recovery, as expected, of growth.
The Fleury brand grew 10.9% compared to the same quarter last year because this is a mature brand with a high market share, and we've been working on differentiation, renovating our units, expanding our portfolio, expanding revenue by square meter, strengthening our medical relationship and the relationship with payers. The a+ São Paulo brand has been growing strongly as well. They had significant growth last year, and this growth pace being kept. This is a brand that has a great growth potential because its market share is smaller than the Fleury brand market share. As a reminder, a+ São Paulo and Rio de Janeiro, which also has a great performance with growth of 17.2% this quarter in Rio de Janeiro with gain of market share, is also related to new commercial contracts, as you mentioned.
At the end of last year, we had mentioned that we were signing contracts, significant contracts, both for a+ and Rio de Janeiro as a whole, those contracts would bring around 1 million additional lives having access to our brands. We have been doing an excellent job with great customer satisfaction and gaining market share. Overall, we are strengthening our negotiation with HMOs, providing solutions, attracting more lives, and also working on expanding our portfolio to make the most of our square footage. The home service also helps because it's growing in all brands, especially a+ São Paulo and Rio de Janeiro, which helps with our growth. About what's growing the most. While we have to remember our mix of imaging tests and clinical tests, there are two factors that help us with the greater volume of tests.
First, we also brought to our portfolio some clinical test brands, Méthodos in the south of Minas, Marcelo Magalhães in Recife, and we had growth in the home service. Now, especially compared to Q4 2022, we see a strong recovery of imaging tests overall. Patients are going back to the medical offices. They have come back from traveling, and they are now taking care of their health once again. Our customers are now more attentive to their healthcare. As you said, there was a loss of volume and revenue with one contract in the B2B line being terminated, and that's specifically for lab medicine tests. Now with Anvisa's approval of tests in drugstores and offices, what we see is that this was already expected. They are now regulating screening tests being done at drugstores.
They have a restricted portfolio, of course, that increases access to healthcare in general. They also approve the regulation for quality control that all clinical labs already do, and that is now expanded to drugstores. As a reminder, diagnostic medicine in general is advancing quickly. Last year alone, we had an implementation of 600 new tests and services at Grupo Fleury. It's only natural that part of these tests become screening tests and end up being done at drugstores. That will not prevent us from growing because we have quite a complex portfolio with integrated solutions. Of course, there's also a matter of accreditation at our units. That is another factor that matters when taking a test. We are also updated on all of the innovation trends at all times. We don't see that new regulation affecting our business in a significant way.
Thank you for your question, Vinicius.
Our next question is by Gustavo Miele from Goldman Sachs.
Good morning, Jeane, Filippo, Renato. Thank you for this conference call. I have two questions. The first one is about top line. There is something that drew my attention positively here, which was the growth of tests per patient, exams grew 35%. If we look at the number of tests per patient, the number is growing. I would like to understand why this effect is happening. If we look at the base of the first quarter of 2022, it was impacted by COVID, the number of tests by visit can be a bit lower because of that could be a factor. Is there any other organic factor that is leading to this increased share of wallet of the patients that go to your units?
Can you tell us a bit more about that? A second question, if you allow me. Can you tell us a bit more about your home service or mobile service? Jeane Tsutsui has been talking about the importance of new routes and the strong performance of the home service for some quarters now, I'd like to understand if there is any other mixed component affecting this part of your business. Are you offering some type of different service assortment with the home service now that the effects of the pandemic are behind us, is this only an effect of the new routes as you've been talking about? Thank you very much.
Thank you, Gustavo Miele, for your questions. About the number of tests per visit. We saw an increase in the number of tests per visit.
There has been a significant growth in the processing of tests this quarter, which were by 33.6%. Also, an increase in services by 15% approximately. Yes, there is an increased number of tests per visit. There are three factors related to that. The first one you already mentioned. In Q1 2022, we had a higher number of COVID tests. A COVID patient usually performs fewer tests per visit. That is, many of the customers come only to take the COVID test. That's the first change. The second change is related to our mix. We have made acquisitions throughout the year of 2022. That reflects on the volume of a higher number of tests per visit. When we perform more laboratory medicine, like Méthodos, Marcelo Magalhães, Bioclínico, you usually have a higher number of tests per visit.
The customer that comes to have an MRI done, sometimes they come only for the MRI or for fewer tests. Traditionally, a laboratory asset has more tests done per visit. We also see a slight drop of revenue per test because, of course, a blood test has a much lower revenue than an MRI. That's the combined effect that we're sharing with you, an effect of this change of mix. The third effect I wanted to mention is more structural. We are now seeing a higher number of patients because of this populational aging and also the severity of some chronic conditions with a higher number of chronic diseases. A patient with several chronic conditions have a number of tests per visit, which is higher than a healthy individual who goes to the lab only for a checkup.
This epidemiological trend also leads to a higher demand of laboratory tests and to the trend of a higher number of tests per visit. A cancer patient who's there for follow-up will reflect those changes. Now, about our home service. Through our time, we've been showing consistent growth. In 2022, we had growth of this home service, which reflected changes in customers' behavior after the pandemic. During the pandemic, we expanded the home service to all of our brands. That was a service that was already well known at the Fleury brand, and we expanded this to all regions, and we're also increasing the number of routes, and we're also working on the portfolio.
In addition to clinical lab tests, which is the greatest share, we also provide vaccines, and we can do Holter, polysomnography, depending on the brand, and we even do application of immunobiologicals with our home service. We're keeping up with the trends of being there at the patient's home or workplace because it's more comfortable for them, and we're also working hard with routing. Our professional will leave from the closest care unit, and that decreases commuting time, and we can use part of the structure for centrifuge or to take the sample to the technical areas that are already available in the care units. At the same time that I am also expanding the number of routes, I gain efficiency in our home service, which is also key. These are crucial aspects, and we continue believing in the growth of our home or mobile service.
Thank you for your question.
Thank you, Jeane. That was very clear.
Our next question is by Mauricio Cepeda from Credit Suisse.
Hello, Jeane, Filippo, Renato. Good morning. Thank you for this opportunity. I have two questions. First one about the infusions. This seems like a promising market, and it's been growing so much. It's already impacting Fleury's aggregate results. Registering new infusion services can be a barrier because we see smaller clinics also coming into market. What are the potential advances in that area in Brazil? I know that you have several diagnostic units that could be points of drug infusion as well. Can you comment on that? Another question is the economics of the home service. Now that it's quite relevant in your revenue and you have more experience in the segment, how are you measuring the marginal economics of this?
How much of the revenue is marginal? I mean, wouldn't these patients have gone to a care unit anyway? When you go to a unit, you already have your fixed cost established and higher productivity. With a home service, commuting time can impact your productivity. What are the conclusions you can share about the economics of this model? Do you think that this is also going to lead to better margins? Thank you very much.
Thank you for your question, Cepeda. First, about the infusion of immunobiologicals. This type of service grew a lot. When we look at New Links, we report growth of 99.2% this quarter, most of this comes from the infusion of immunobiologicals. As a reminder, we also acquired Saha, which is a reference in immunobiologicals, so we grew.
When we look at our materials line, we see a significant increment because these are drugs with a high cost and a very interesting type of business. The things you said, registering clinics. Today we have CIP, which is a strong brand for drug infusion here in São Paulo. Saha, with all of the licenses and opportunities to expand. As I said previously, throughout time, we've been also negotiating with pharmas because this additional volume also enable us to gain efficiency in drug acquisition. About the payers. Yes, we've had conversations with them because we see an opportunity of offering a solution to payers, because we're talking about chronic patients who will need the drug anyway.
If they take the drug, they can control their condition and avoid other costs, including costs of a higher complexity procedure because of a higher severity of those conditions. We have the opportunity to expand this business. We are already doing this in São Paulo, but we're studying the opportunity of expanding in other regions using the structure we already have in our diagnostic medicine units, because most of them have rooms for functional tests. We can make the most of those chairs, infusion pumps, and so on to offer immunobiological infusion. We see positive perspective in expanding and growing in this avenue. About our home service, it now accounts for 9.3% of our total revenue. It's keeping that pace of growth that we mentioned.
In overall, the margin of the home service is the same as the margin we have in the different brands. This margin helps us to achieve balance because you don't have to invest to build a new unit, and we monitor this possible shift of demand to a patient's home. Look how we do use our care units to serve patients who have clinical lab tests and imaging tests or only imaging tests. Much so that our revenue per square meter grew by 20.2% comparing the year of 2022 with the year of 2019 pre-pandemic in order to exclude the COVID effects. We are making the most of our existing square meter, we're using our investments better.
With the growth of the home service, we didn't have to build other units, which had all of the problems of licensing whenever you have a new unit. The home service has the same margin as the unit because it doesn't have fixed costs, but it has lower productivity on the other hand. The whole routing process that I mentioned earlier reduces commuting time, and it helped us throughout time to keep those margins at a sound level. In our perspective, it's very interesting to serve customers that will only have lab tests done at the home service and have our units available to offer imaging tests or customers that have both imaging tests and clinical lab tests, or to offer other services such as drug infusion and other services like ophthalmology, which is something we are already doing in our care units, especially here in São Paulo.
We think that the home service continues to be an important leverage, and we're going to capture all the possible demand because in terms of ROIC, that's a very interesting investment.
Thank you very much. That was very clear.
Thank you, Cepeda. Our next question is by Ricardo Boiati from Banco Safra.
Good morning, Jeane, Filippo, Renato. I have a question about margins. When we look at the projections, we see pressure throughout the years. This is aligned with what the company is saying, which the New Links have a lower margin, so we could have that pressure on margins. Incorporation of Saha, which happened this quarter, brought less pressure, especially in the materials line than expected at first. I'd like to understand if your view is changing somehow when it comes to the margin perspectives for the company. I'm talking about Fleury here, but not considering the synergies with Pardini. Is your view changing from now on as you start to manage the new assets, or do you see any improvement opportunities by gaining scale in those operations? Or it would be wise to consider that the New Links should pressure Fleury's consolidated margin?
I'm not considering the synergies. I believe that the synergies should improve the combined margin of the group in a relevant way. My second question is about genomics. This is a small division considering the whole, but it has been growing consistently and fast. It accounted for 2% of the revenue a year ago, and it's now at around 3%. Can you give us a bit more details about this? You're talking about internationalization, going into other markets in Latin America. Can you tell us a bit more about the genomic division and its perspectives?
Thank you for your question. Talking about margins and looking at Fleury, ex-Pardini's perspective for now, I think that this is very aligned with what we expected and we have been sharing with you.
Diagnostic medicine, which is our core business, is growing. New Links is also growing. New Links has a lower relevance for now, as we saw, accounting for 10% of the revenue. This can have some type of influence, like on in a quarter with Saha coming in in 1 quarter. It's now going into the expected regime. When Saha came in at first, things were not that well organized. Now with the increased number of infusion, as we mentioned, we were able to get what we expected, which was gain of productivity in this segment. Summing up, New Links is within what we expected. It generates a different mix. It is consistent with our plans.
New Links has a lower margin than diagnostic medicine, but as it grows, it has the potential of gaining productivity and increasing in the mix. Diagnostic medicine continues to grow, and we're well-positioned, as we said earlier. Overall, this combination creates a more robust portfolio and a larger company in terms of revenue and management capacity. We don't lose our focus on cost management. We have recurring programs of cost reduction assessment and optimization. That's part of our management. We have weekly meetings on that. At the same time that we're growing, we're seeking cost reduction and efficiency gains. This is pretty much how we see this. Our margin reflects exactly this. In Q1 with all of these aspects of mix, but it's actually quite consistent with recent quarters.
Every time our revenue growth grows, we have also possibilities of gaining efficiency and diluting costs with New Links and therefore a greater margin contribution. That trend should not change. This is how we see the coming quarters playing out as well. About genomics, I'll turn the floor over to Jeane.
Thank you for your question, Boiati. Indeed, we've had strong growth in genomics, 48% growth this quarter. Through all time, we've also been gaining efficiency. Changes in methodology will lead to a higher efficiency, and we will be the first company in the private sector to acquire the new Illumina sequencer. We've also been growing internationally throughout time, receiving samples from other countries in Latin America and establishing partnerships with other players like pharma companies, which will lead to increased volume.
In terms of perspectives, we'll see a joint venture with Einstein, which will bring more volume. Also with the business combination with Pardini that performs genomic tests, we'll have a higher volume as well. This is one of the areas in which you can have the greatest gains by processing a greater volume, because technology enables you to reduce the cost by tests processed once you increase the volume. Another important aspect is that with increased volume, you also gain by reducing your turnaround time. Oftentimes these are complex clinical situations in which that makes a big difference. Through time, we've also been gaining productivity in genomics. Thank you for your question.
Thank you, everyone. Our next question is by Samuel Alves from BTG Pactual.
Good morning, Jeane, Filippo, Renato. Good morning, everyone. I have two questions here. Can you tell us a bit more about your renegotiation with payers? We had historic adjustments of 70% of IPCA. Does it continue the same considering the situation of payers? Are there any changes related to seasonality in implementing those readjustments? My second question is about CapEx. You had a reduction of CapEx this month, which is now around 5.5%-6% of revenue. Can you remind us of your CapEx budget for the year? Thank you very much.
Thank you, Samuel, for your question. I will start and then turn the floor over to Filippo to talk about CapEx. Negotiation with payers. We've been emphasizing, especially now where we see greater pressure on the healthcare system in general, we believe it's really important for us to become partners of HMOs.
Diagnostic medicine and the outpatient solutions that we offer, they focus very much on preventive medicine to keep chronic patients under control, preventing high cost events. This type of solution is very well aligned with the wish of payers of having a better healthcare management and to be able to control MLR. The negotiations are not easy, but through all time we've been able to keep historical levels, and we have been focusing on partnerships, either through new contracts and new solutions, or also by understanding the pain point of the moment in order to offer solutions. The more the population ages and the more chronic diseases we have, the stronger our outpatient positioning of reducing and having procedures or surgeries done in lower complexity environments, which is extremely important. About CapEx, Filippo, would you like to comment on that?
Sure. Hi, Samuel. About CapEx, yes, there will be a difference compared to last year where we had an important influence of the Polaris finalization. This is something that we commented last year. Now this has been completed. We have been making the most of Polaris, which is now operating, and it doesn't require the same level of investments we made last year. This is a major difference. Without giving you CapEx guidance, I don't think we'll see major annual variations in CapEx. This year's CapEx may focus a bit more on supporting our organic growth. This already happened at the end of last year. We believe we'll have stronger support to make up our CapEx, focusing on our organic growth because we have significant plan for the year.
Of course, there are other relevant items in our CapEx: IT and digital, user experience, customer interaction, which will continue as part of our CapEx investments.
Thank you, Jeane and Filippo, and have a great afternoon, everyone.
Our next question is by Fred Mendes from Bank of America.
Good afternoon, everyone. I have only one question. About that strategy of swapping price with volume, is that part of your average history? Are you being more aggressive to gain market share? Other players will start talking more about this type of strategy. Are there other players that are trying to replace price with volume? Do you think that that could lead to pressure on your margins?
Thank you for your question, Fred. Well, we've been studying, and throughout time we've gained great expertise about using our care units at all different time points.
Typically speaking, we have more movement in the morning because of the clinical tests and greater availability in the afternoon. All of our negotiations take into account the expertise we have in our business by distributing the volume in the afternoon time, where you can dilute your fixed costs and have interesting margins, which enables us to negotiate better. Technological advances throughout time enabled us to distribute the volume better throughout the day. Of course, we try to respect our customers' wishes, but our advancement with home service also helps because tests that require fasting can be performed by our home service. At all times, we are doing the math to see how much we can advance by bringing additional volume. You know our structure. In addition to fixed costs, we have the technical area to process the volume.
All the math is done carefully in order to preserve a healthy negotiation that will lead to advantages for all players. Also for suppliers, we can bring more volume and have better negotiations with suppliers. Throughout time, we can reach a good balance. Our view is that we do a thorough analysis, but once we start offering the solution to HMOs, when you have the sustainability challenges in this sector, these solutions are very appropriate. In order to do that, you need great footprint. In Rio de Janeiro, we have over 80 units and different brands, and we have this network available. Here in São Paulo, we're also expanding our network, especially now with our business combination with Grupo Pardini. We're adding new units, which will give us greater competitiveness to continue establishing partnerships with the HMOs.
We're very attentive to capture the market share gain that we aim to have throughout time with good brands, great customer satisfaction, sound profitability, and a better use of our time in morning and afternoon at our care units.
Thank you very much, Jan. That was very clear.
Thank you, Fred.
Our next question is by Leandro Bastos from Citi.
Hi, everyone. Good morning. I have two quick questions. The first is, can you tell us about the volume throughout April and revenue trends for Q2? The second question, we think we're going to have another year of high price increases in healthcare plans. Do you think there will be downgrading of healthcare plans, or what are you expecting in terms of this dynamic for the year?
Thank you, Leandro, for your questions. We don't give guidance. In general, what we see is that everything is within the expected, but we cannot give you any specific numbers. What we can tell you is that we work continuously to offer high quality services, better use of our care units, achieving good NPS, so on and so forth.
About the price increase or readjustment, you mentioned something important which causes concern, which is whether we'll have growth in the number of lives in the private healthcare plan market considering this price increase situation. If you look back at the last five years, the number of lives in private healthcare remains more or less stable, around 50 million people. This variation, I mean, we had a drop during the pandemic, it went up again. In the last five years, the number of members of healthcare plans was stable. We had a CAGR of 13% because we implemented several actions for organic and inorganic growth and gain of market share. That's what we'll continue to do. Another important aspect is that more and more, the Grupo Fleury is diversifying. Today we have a good balance.
We act in the premium, intermediate, and entry-level segments with a business combination now. We have even more diversification in terms of payers and geographical distribution as well as segmentation. In our view, we'll continue to work to increase the service and expand access to customers. Healthcare is extremely needed, and people have realized that during the pandemic, and we'll continue with our strategy.
Great, Jeane Tsutsui. Thank you very much. Have a great day.
If there are no further questions, I'd like to turn the floor over to Ms. Jeane Tsutsui for her final remarks.
Thank you all very much for joining us for our 1st quarter 2023 earnings conference call. We're very confident on our clear strategy and on the execution of such strategy with discipline. Our combination of business now with Grupo Pardini will improve our national positioning as one of the healthcare leaders in Brazil. We'll continue to execute with discipline, and we would like to see you again in our earnings release conference call of Q2 2023. Thank you very much. Have a great afternoon and a great weekend. This completes Fleury earnings conference call. Thank you very much for joining, and have a great day.