Good morning, ladies and gentlemen, welcome to Hypera Pharma's first quarter of 2026 results conference call. Today with us we have Mr. Breno Oliveira, CEO, and Mr. Ramon Sanches, CFO and IRO. We'd like to inform you that today's event is being recorded, and you may watch this recording at the company's investor relations website, ri.hypera.com.br. We'd like to inform you that this event is being recorded, and all participants will be in listen-only mode during the company's presentation. After that, we will have a question and answer session when further instructions will be given. We would also like to inform that statements made during this conference call may contain forward-looking statements. These statements are subject to known and unknown risks and uncertainties that could cause the company's actual results to differ materially from those set forward in the forward-looking statements.
Now, I'll turn the floor over to Mr. Breno Oliveira, who will begin the company's presentation. Please go ahead, Mr. Breno.
Good morning, everyone, and welcome to our results conference call for the first quarter of 2026. This quarter, we once again delivered consistent sell-out growth with market share gains in our operating market. Our sell-out went up by 9.5%, 1.5 percentage points above the growth of our operating market. In the last 12 months, since the conclusion of the working-capital optimization process, the growth in our sell-out was 1.3 percentage points higher than the growth in our operating market. This performance confirms the company's ability to grow consistently with significantly less working capital investments than what we had before implementing this strategy. The recent growth in our sell-out is mainly as a result of new- product launches.
Launches in the last 12 months contributed 2.6 percentage points to the growth in sell-out in the first quarter. This performance also reflects the greater investments in marketing that have been made since the beginning of 2025, with an emphasis on digital media and point-of-sale marketing. Sell-out performance allowed Hypera to achieve a net revenue of BRL 2 million with an EBITDA margin of 29% in the first quarter, levels that were expected for a first quarter, which generally represents around 20% of the company's annual turnover, in line with what is observed in the entire market. In addition, our sales growth has benefited from the new practice implemented at the beginning of 2025 of monitoring the stocks of each of our customers in details at SKU level by distribution center.
This new approach is helping to optimize the product mix at points of sale and reduce out of stocks, even with lower inventory levels at the customers. We're seeing a significant improvement in the company's main logistics efficiency indicators, such as OTIF, which measures the percentage of products delivered on time and in the correct amount, which improved by 12 percentage points compared to the first quarter of 2025. In the last 12 months, we have also reduced OCT, or order cycle time, by 14%. These advances in order delivery, deliveries are very important for sustainable growth in sell-out. The evolution of these indicators also allows us to operate as of 2026 with lower level of internal inventories of raw materials and finished products, benefiting the conversion of our EBITDA into operating cash flow and accelerating net debt reduction.
In this sense, we took another important step in our strategy to strengthen our capital structure this quarter. We successfully concluded the capital increase announced in February for the full amount of the operation, BRL 1.5 billion, with significant participation from both controlling and minority shareholders. With this capital increase, we reduced our net debt by almost 20%, reaching a leverage of 2.2x LTM EBITDA, reducing exposure to post-fixed interest rates in a year when we will have presidential elections in Brazil. We reduced interest expenses benefiting our net income and cash generation in the short and medium terms. In addition, the capital increase strengthens our investment capacity to capture growth opportunities in the Brazilian pharma market. I will now hand it over to Ramon, who will talk about the quarter's results in detail.
Thank you, Breno. Good morning, everyone.
Our net revenue reached BRL 2 billion in the first quarter of 2026, an increase of 87% compared to the same period last year. This performance mainly reflects the impact on sales resulting from the working-capital optimization process carried out last year, in addition to the recent growth in sell-out, as Breno has already mentioned. It's worth noting that this level of revenue is consistent with the sector's seasonal pattern, since the first quarter normally represents less than 25% of annual sales in the pharmaceutical market. This is due to the lower number of working days, the vacation period at the beginning of the year, and Carnival, which reduces sell-out due to the lower number of doctor consultations, prescriptions, and purchases at points of sale.
In addition, the rate of deliveries to customers' distribution centers and their sales to smaller networks also tend to be lower in this period, which impacts sell-out for the entire pharmaceutical market. When we look at the history between 2020 and 2023 before working-capital optimization, the first quarter represented on average around 20% of our annual turnover, reinforcing the seasonal pattern. Our gross margin was 60%, impacted by the higher level of idleness in the plants due to the collective vacations that usually occur at the beginning of the year. It's important to note that the margin for the quarter does not yet reflect the price adjustment authorized by CMED, implemented at the beginning of the 2Q of 2026, which should add a positive contribution over the next few quarters.
Marketing expenses dropped by almost 9% year-over-year, mainly due to a reduction in advertising and consumer promotions. This dynamic reflects the strategic readjustment of the consumer- health campaign calendar, seeking greater alignment with product launch schedules and relevant events for the year, such as the 2026 FIFA World Cup. Sales expenses grew 3% in the year, benefiting from the recognition of BRL 12 million related to the Lei do Bem. Excluding this effect, growth would have been 7%, still below sell-out growth. General and administrative expenses rose 14%, mainly reflecting greater investments in technology. As a result, EBITDA reached BRL 587 million with a margin of 29%. This result is also affected by the seasonality of this period, with a lower level of revenue in the quarter and consequently lower dilution of operating expenses.
Continuing with slide five on cash flow and indebtedness. We generated BRL 521 million in operating cash, which is equivalent to almost 90% of our EBITDA, with no changes to the collection periods established after optimizing our working capital. As already mentioned, the first quarter has a lower sales volume, especially in January, due to the vacations of our main customers. This concentrates sales in February and March and increases the accounts receivable balance for the following quarter. For this reason, the reduction in accounts receivable compared to the fourth quarter of 2025 is naturally smaller than the variation in revenue in the period. We generated BRL 368 million in free cash flow after investments, and we also had an inflow of BRL 1.5 billion from the capital increase completed at the end of the quarter.
We also paid BRL 1.5. Excuse me, BRL 1.1 billion in interest and debt amortization, including the early redemption of the 14th issue of debentures. As a result, we ended the quarter with an increase in cash of almost BRL 670 million and a reduction of BRL 725 million in gross debt. As a consequence, net debt was reduced to BRL 6.3 billion, down from BRL 7.7 billion at the end of 2025. We ended the quarter with a leverage of 2.2x the EBITDA of the last 12 months. With that, I give the floor back to Breno for his closing remarks.
Thank you, Ramon. To conclude, I'd like to say that I'm very excited about our performance this first quarter and the perspectives we have for 2026.
We started the year on the right track with the acceleration of our sell-out growth and market share gains in our market of operation. With a significant strengthening of our balance sheet with the successful conclusion of the capital increase, which reinforces our investment capacity and reduces our indebtedness. One year after completing the working-capital optimization process, our operation is even more robust and efficient. We made significant progress in our logistics indicators, which have allowed us to work in a lighter way with less inventory at our clients and greater agility in delivering orders. The evolution of these indicators give us the security we need to move forward with our strategy of reducing internal inventories of finished products and raw materials over the course of this year and the next, as I said in the last earnings call.
At the same time, we're seeking to expand our market presence with important launches in relevant markets such as diabetes and obesity, which have recently lost some patents. Thank you. We now will continue with the Q&A.
We will now begin the questions and answers session for investors and analysts. If you'd like to ask a question, please click on the Raise Hand button. If your question has been answered, you may leave the queue by clicking on the Lower Hand button. Our first question will be asked by Mr. Vinicius Figueiredo from Itaú BBA. Go ahead, sir.
Good morning, everyone. Thank you for taking my question. Breno mentioned a little bit about this in his closing remarks, but I'd just like to understand your sales perspective for some categories separately.
Generics faced a very competitive scenario in 2025. I don't think we should consider it to be very different in the next quarters. I'd like to talk a little bit about what you've been doing in that regard. If the company believes that prices will stabilize, if there are any categories that are still drawing your attention when it comes to profitability. If you could tell us a little bit more about your sell-out perspectives and what you expect to gain in market share in the categories you are.
Thank you, Vinicius. Thank you for that question. It's true, the generics market is the most competitive of all. I think we're doing well in this market. I think we can grow about above the market average with the performance of our current portfolio, but also with our new launches.
We had some recent launches in diabetes, CNS, intestinal. These are some interesting launches that have contributed to our market share gains. We're looking at our competitors. We have a good scale. We have good raw material costs, so we're very competitive in this market. As a reminder, this only represents 15% of our revenue. The company is focused on branded products, over-the-counter and prescription. We believe that we can grow above the market average in these categories as well, sustaining our leadership in OTC across our main leading categories like flu medication, analgesics, and trying to grow through the categories around these line extensions that we have.
For example, a major contributor in the last 12 months has been analgesics, expectorants, which were some important launches that we had in the last 12 months that really help us in growing across these other categories. Growth in generics is higher than average, we've been gaining share in brands as well.
Great. If I can ask a follow-up question. In the painkiller category specifically, you mentioned a migration of brands towards generics, I think that was very true in 2025. Would it make sense to think that this has already stopped, this migration, now that we're on a more comparable basis?
Yes, that is true. Generics had an increase in penetration.
We're now seeing more stability, and what we're also seeing are new branded launches, ours and our competitors, which are making the category bounce back and grow more in branded products. Yes, that is true.
Great. Thank you, Breno.
Thank you, Vinicius. The next question will be asked by Mr. Caio Moscardini from Santander. Go ahead. Hi, everyone. Thank you for taking my question. Still discussing sell-out, we believed that we would be at around 7% or 8%, and it was much higher than that. I'd just like to understand a little bit more about that, if you believe that your sell-out will change this year after such a strong result in the first quarter. I'd also like to ask about your seasonal pattern in revenue. We imagined that this seasonal pattern would not be as significant as we see in historical patterns.
What do you imagine will happen here from now on? I think that would be very helpful. Thank you.
Good morning, Caio. Thank you for that question. I'll answer your first question and let Ramon answer the second one. Sellout was a bit higher than we had imagined, and that applies to ours and the entire market. We cannot give a guidance on what we expect for sell-out for the rest of the year, but we believe it will probably be at the upper threshold of what you mentioned, upper band. I think that makes sense considering this quarter and what we're seeing from April as well. As a reminder, there are many variations across the months, especially and across the quarters.
As I mentioned in my presentation, we're very excited about the results we're seeing in the first quarter and, you know, the perspectives for the rest of the year.
Hi, Caio. This is Ramon. To answer your second question, the seasonal pattern impacting the first quarter is due to the sell-out itself. With lower inventories, it carries this variation from sell-out to sell-in, which is a bit different from when you have higher inventories. When you look at our historical figures, our net revenue has always been close to 20% and 21% of the year's revenue in the first quarter. Looking towards the future, the quarters will be similar. The fourth quarter might be higher also due to sell-out. We have gastric and intestinal categories, which do better earlier in the year, but not by much.
This is very similar to the net revenue we will see in the next three quarters.
Great. Thank you.
The next question will be asked by Mr. Robert Ford from Bank of America. Go ahead, sir.
Good morning, Breno and Ramon, and congratulations for these results. Breno, how are you seeing the pricing going in branded and generics products considering the new changes in Eurofarma, Novo Nordisk? What is the most exciting for you, and what will facilitate Hypera's work during this patent cliff? Thank you.
Hi, Robert. Thank you for that question. To give you an update on this process, we are already involved in this with Anvisa. No registry has been approved for Novo Nordisk products by Anvisa. I think we are among the 1st in being assessed by Anvisa.
The timing is a bit slower than we expected initially, but we're well-positioned right now. I think we will be one of the first few to launch after the patent is dropped. Considering the price, we're seeing some changes, but I don't think this is too different from what we had expected. We have some space to launch our product at a competitive price with good margins for the company. These prices are within what we had imagined. This is not a surprise for us given our pricing strategy. To answer your second question, on new molecules, we have several things in our pipeline in our core- prescription categories, which are diabetes, central nervous system, and cardio.
There are a few patents that have recently been dropped that we still haven't launched and some that are about to drop, and these are still the biggest categories in the market. We're also moving towards diversifying our portfolio even further, more in the direction of a single-use medication.
Thank you, Breno. That was very clear and, again, congratulations.
Thank you, Rob. The next question will be asked by Mr. Joseph Giordano from JPMorgan. Go ahead, sir.
Hi, good morning, everyone. Good morning, Breno, Ramon. Thank you for taking my question. I'd like to go into three quick points. First, we see that launches have been contributing towards your sales, and I'd like to explore this across two fronts. How do you believe this has been evolving in retail and out of retail?
Trying to break down what is retail growth, and I see that the market is a bit more difficult in this context. I'd like to ask about your factory idleness. You mentioned this again. I'd like to understand the main points affecting this idleness and when we should expect it to normalize. Third, Breno mentioned that there has been delivery improvements. I'd like to understand how that affects your inventories. Thank you.
Hi, Joe. Thank you for your questions. I'll answer your first one and let Ramon answer the other ones. Launches. As you know, now 95% of our business is in the retail market. Many of our R&D efforts are there as well, and these are our older efforts as well.
We created a smaller innovation center for retail in 2018 or 2017, and the institutional market initiative started in 2021 with greater investments in 2022 and 2023. The R&D, the new launches for the institutional market or the entire market, but specifically the institutional market, are taking a bit longer than we had foreseen, especially due to the Anvisa deadlines. We know that there are improvements that the new directors have been promoting to reduce queues, and we believe that in the next few years this will normalize. We're seeing some impact to our schedule from that. We believe that the main launches will happen or a greater institutional growth lever will happen starting in 2027 or 2028. There are a few products. We've started to position ourselves across a few categories.
There are markets that we went into recently. Our market share is above 20% in some of them. In some of them, we are either the leader or the second biggest. Building up the portfolio still takes some time, and we're very excited throughout the next years, believing that these will be the main or one of the main growth drivers in the company, the institutional market. In retail, we've been reaping the results of the last investments in the last five or six years. The company has invested a lot in R&D, and gradually we've been getting the results from that.
Hi, Joe. About idleness, first, this level of idleness that we saw in the first quarter is standard for this time of the year.
We always have collective downtime in the first part of the first quarter and the last part of the fourth quarter, and that varies depending on Christmas and New Year's. This is natural. We need to have some maintenance downtime for the lines, the air conditioning systems, the water systems, and so on. This is not unexpected, and we've seen this in previous years. In the second quarter, this will stop affecting our results. When it comes to inventories, you're right. With all of the improvements that Breno mentioned, with higher sell-in and with a stable system, we can start reducing our internal inventory, as we mentioned. We've been making a very similar effort to what we did to reduce our inventories at the end.
This involves several internal departments to make sure that we're not having any stock-out issues in the future. We're starting to see that happen. Internally, it happens in procurement or purchases. This will start affecting our inventories because, of course, it depends on turnover and in smaller purchases for that to impact our working capital. Starting in the second quarter, we expect to see a reduction along that line.
Great. Thank you.
Thank you, Joe. The next question will be asked by Mr. Artur Alves from Morgan Stanley. Go ahead, sir.
Good morning, Breno and Ramon. Thank you for taking my question. We have just one talking about the institutional channel and the long-term growth for this segment. When we look at retail, most of the potential patent operations in the next few years will happen in the monoclonal antibodies line.
I know that this is still something that you are beginning to do in the company, but I'd just like to understand if you're thinking of going into this more complex line and if you expect to ride this wave and how you would be competitive in this segment if you do decide to go in.
Thank you. Hi, Artur. That's a great question. To clarify to everyone, the monoclonal antibody market is. We're in it through Bionovis, a joint venture with other Brazilian pharmaceutical companies. We've partnered with them since 2012, and it focuses on monoclonal antibodies, and we have several molecules, especially PDPs, and more recently, we are trying to go into the private market as well.
Bionovis, just to give you an idea, its results are in our asset equivalence line with a revenue of about BRL 1.5 billion with an EBITDA margin slightly above 10%. We expect it to grow as these patents drop. There's a lot of potential here, which we've been taking through Bionovis. Margins. PDPs have slightly smaller margins, but as contracts age, the margins increase. The EBITDA margins have a specific price rule for PDPs. They're very present in Bionovis, and as the years go by, we will have a greater margin as they take over the production. They start by selling to the government, and it's starting to internalize a part of this production in Brazil, so transferring technologies from our partners to Brazil, and then these margins will go up.
Thank you.
The next question will be asked by Mr. Samuel Alves from BTG Pactual. Go ahead, sir.
Good morning, Breno, Ramon. We have two questions, they're not directly connected to your results. First, I'd just like to ask about semaglutide. How long after Anvisa approves it can we expect sales to happen, if you can give us a rough timeline? The second question is about the six days a week working scale that is about to be regulated in Brazil. I'd just like to understand how much of your workforce uses that work scale and how much impact that would have on you.
Hi, Samuel. Let me answer your question about semaglutide, Ramon will talk about the possible impact of that change in work scale. Semaglutide.
Well, after getting approval, there's a procedure which is setting the price with CMED. That's the government agency that approves prices. Usually these prices will be published in up to 60 days after approval. It would take about 60 to 90 days for us to launch something after we get approval.
Hi, Samuel. To answer your second question about the working scale, we're still assessing the impact of that. Depending on the details of the regulation that gets passed, we know that there are a few bills, we would probably only be impacted in our plant operators, some of which work six days a week. That's a very small part of our workforce. We don't have figures, but it shouldn't be significant.
Thank you, Breno and Ramon. Have a good day.
The next question will be asked by Mr. Vinícius Strano from UBS. Go ahead.
Good morning, Breno and Ramon. I have a couple of questions. The first one is a follow-up question to the patents cliff, excluding semaglutide. If you can tell us a little bit about the potential new molecules for diabetes, prescription medication, vitamins, cardio. Do we expect anything that is a bit more favorable in the second half of the year or on the short term, before 2027 or 2028 on the retail side? I'd also like to ask about sell-out throughout the quarter. Looking at Sindusfarma, we see that in March there was a spike. Have you seen a stronger trend at the end of the quarter? What should we expect for it in April, considering that we're starting the flu season? Thank you.
Hi, Vinicius. Good morning. Considering other launches beyond semaglutide, our forecast for the year, it's not a guidance, but we expect new launches to contribute 1 percentage point of our sell-out growth. We expect this to come from new markets where the patent will be dropped and markets in which it has already been dropped and are new for us. For example, we expect to go into the dapagliflozin market, which is worth BRL 1.5 billion. Testosterone is also a major market. We will start playing in these markets. We just recently launched testosterone. Dapagliflozin is expected until the end of the year. There are several products that we expect. There's no major specific product that we expect to contribute to our sell-out, but there are several bets in the company for the next months.
I'm sorry, can you repeat your second question?
Of course. The second question was about sell-out trends. We saw an accelerated month of March, according to Sindusfarma. Do you expect that for April as well?
Yes, March had a strong sell-out. We mentioned this in the previous earnings call. We said that there was some displacement there due to Carnival, so March had more working days than the previous year. Looking at February and March together, it wasn't such a huge variation. It was better than expected. When you add both of them together, and if you discount the working days effect, that didn't impact us that much. April, it's still early, but under the same comparison, our growth has also been positive, around 8%. I think we're on the right track here.
For the first four months, we're slightly above what we imagined.
That's great. Thank you, Breno.
The next question will be asked by Mr. Renan Prata from Citi. Go ahead.
Good morning, everyone. Thank you. I have a couple of quick questions. First, we saw a slowdown in your marketing expenses. You mentioned in the release that you might accelerate this for the World Cup. I'd like to understand your perspective on this line for the quarter and for the year. Also, I'd like to ask about discounts. We can see that they were under control this quarter. I'd like to understand what you expect for this line throughout the year. That's it. Thank you.
Hi, Breno. This is Ramon. Let me take your questions. First, on marketing expenses. We mentioned in our release that they are slightly below the first quarter.
We see a better match of expenses to launches, especially, medical visits, events, and media expenses. We have some media investments that will be related to events like the World Cup. This will be left for the second quarter, we will see some increase in the second quarter, and the third and fourth will still be above the first, but still lower than the second quarter. For the year, as we mentioned, expenses grow in line with our sell-out. It should grow in that range. For the remaining quarters, it will be similar to that. Your second point was on commercial discounts. We reached a level that we believe should be maintained for the next quarters. We had a higher level of growth due to the mix of generics, but this has already stabilized.
Breno mentioned our performance in generics. It's been growing well with the same commercial policy that we've been using. It should go down if it's still in line with our revenue. It will be at the same level as the first quarter, but in comparison to the rest of our revenue, it will be lower.
Okay, still on marketing. For the second quarter, do you have any estimated budget for marketing in the second quarter? Is it in your projection, or are you front-loading it versus the approval by Anvisa?
Well, that's not so different. I mean, what I mentioned is related to semaglutide, these expenses are not as relevant. We need to get the approval first to start investing in medical communications and everything else for semaglutide specifically.
Okay. Thank you, everyone.
This concludes the questions and answer session. Thank you for your participation, and have a nice day.