[Foreign language]
This moment, all of our participants are connected only as listeners. Later, we will start the question-and-answer session when instructions for you to participate will be given. Please remember that this audio conference is being recorded. I would like to now pass the microphone to Carlos Gil, CEO of the Oncoclínicas Group. Carlos Gil, please go ahead.
[Foreign language]
Morning. Thank you for all of your presence. I would like to complement our investors, our analysts, and the other participants who are accompanying the release of the results of the first quarter of 2026. It was a quarter that was very challenging for the company, marked by strong operational pressure and financial pressure. We confronted a complex scenario which demands from the administration quick decision-making and principally responsibility in the conduction of our operations.
[Foreign language]
Since the beginning, the priority has been clear. Preserve the continuity and maintain the sustainability of the company for the long term. We have been through relevant impacts from the pressure from liquidity with temporary effects about certain operations, especially in the supply of medications. This theme was treated with the maximum priority and seriousness, and we operate in an active and coordinated way to establish operations and minimize the impacts on the assistance and accelerate the normalization of our services. In this context, we started important initiatives to recompose the gradual complying supply of medications and in partnership with Lumina and Oncoprod, which represent us in our restructuring plan, in our operational restructuring plan.
[Foreign language]
Our focus is on equalizing the treatments that have been held back and recovering the operational efficiency and the gradual reconstruction of the company. In spite of the challenges confronted in this quarter, I would like to emphasize that we are, remain have solid fundamentals and ethical fundamentals. Oncoclínicas maintains its position in the leadership position in oncology in Brazil with national presence and with a very important strategic role in the area of oncology and health in the country. I'd like to take advantage of this moment that we count on a clinical team which is committed, movements at the entrance and coming back of this doctors, which is natural in our sector, and up until the moment, we have not seen any relevant impact on our operations or capacity to attend our patients.
[Foreign language]
We have a great deal of co-consciousness that we have to have rationality in the allocation of capital. This is exactly what we're concentrated on right now. The measures implemented in recent months have started to rebuild a more sustainable basis for the recovery, the organic recovery of the growth with profitability and the strengthening of the reputation of the company. We affirm that in this process, this will not happen from night to day. It will be conducted with total transparency and responsibility, maintaining the market informed about all of the relevant advances. I'd like to pass it over to our CFO, our acting CFO, Isaac Quintino, who will detail the financial results from the first quarter of 2026.
[Foreign language]
Thank you, Gil. Good morning to everyone. It's a pleasure to be with you all once again. Beginning with slide number three, we can, on the graph on the left, we can observe that an evolution, a slight reduction in the number of procedures in the quarter here, which principally impacts due to the lack of certain medications in certain regions in Brazil, as Gil mentioned, just mentioned. This impact of lack of supply was principally in the middle of March going forward, and the impact which we calculated was for about BRL 40 million of revenue in this period, which we calculate about 4,000 procedures in this first quarter. Normalizing that, we will have basically the same number of procedures in the last quarter with a important growth in the average ticket of the company. Here, I would like to mention that two factors.
[Foreign language]
One, we had an advance in the passthrough of CMED in this period. We had several negotiations than we started to see in the first quarter, and we also had an impact of what we've been working on in recent years of the cleaning of some contracts and some payers who, beyond having pressure on their working, on our working capital, have average tickets that are lower than our average. We then start to see this effect in the first quarter and the tendency that we see on the stability of these numbers in coming quarters.
[Foreign language]
On the graph on the right shows exactly the effect of the last 12 months, which was a higher follow-up, which comprehends the effects, the complete effect of this cleansing, we've been mentioning of our basis, of our client base, which we've been talking about over the last 12 to 18 months. On the next slide, our gross revenue, we see the effect of this. Even though we've had a follow-up in the number of procedures, we had a good effect on the average ticket. We see a growth, a sequential growth of 1%, and year-on-year, we have the effect of this sanitation, of this cleansing of our base, as I just mentioned.
[Foreign language]
On slide five, we see the impact, principally of the PCLD in this quarter. We had an adjustment, a bigger adjustment in PCLD. Give you some clarity. As you know, we have a history of approximately 3% of PCLD, which is provisioned for in slide six, a long history of 3% of PCLD in this quarter, which is the first quarter of this year. We're getting close to 100% of our accounts to receive, almost 100%, which means that there is no. We're not applying any adjustment, any management adjustment to this PCLD number. The effect which we considered in the past and in certain payers, which at certain points in time during the negotiations have done several adjustments, management adjustments, which is no longer done in this first quarter.
[Foreign language]
The tendency, naturally, is that in the next quarters, we will go back to the normality of approximately 3%, understanding that this 14.3% of PCLD in this quarter is a one-time effect, which will happen only during this first quarter, fruit of this adhesion of 100% of the rule of the PCLD for the company. As a consequence of this higher level of PCLD in the first quarter, we had a net revenue falling significantly in relation to the last quarter. On slide number seven, I'm gonna mention about our gross margin, where we have two effects. The first is that what I mentioned right now, which is on the PCLD.
[Foreign language]
Now beyond that, because of this lack of supply in medications, we had certain moments we had to do purchases of medications from local distributors. Naturally, we don't have the same margins, same commercial and discounts that we have in nationwide agreements due to that. We have pressure on our gross margin occurring in the quarter. As we see here, the gross margin, excluding the effects of the PCLD, both in the fourth quarter as well in the first quarter, normalizing the PCLD at 3%, we go from 32.3% to 27.7%. We understand that this fall is the fruit, specifically for the fruit of this question of the lack of supplies of certain medications and local purchasers from local suppliers of these medications. Slide eight is the good eight.
[Foreign language]
As the beginning of the process of reduction of operating expenses, as we've been mentioning, the company since the beginning of the year has been working on a zero budget for certain renegotiations of contracts with suppliers of expenses, of IT contracts with suppliers, corporate suppliers, and has brought to the company in this first quarter a reduction, an important reduction, which should continue to appear in the coming quarters. Here, we're gonna leave here and make it more evident in the next weeks and months what are the principal initiatives in the zero-based budget on which we've been working to maintain the company, to bring it to the right size for the current moment of the company.
[Foreign language]
That's what the financial plan here that we've been working on and making more adequate for the company. It's also important to mention that in this quarter, we had a provision due to the risk of Unimed Leste Fluminense, where They have a debt with us, and there were several failures in receipts of payments of that on that debt, we made a provision for the total amount of that balance. We continue trying to collect it, we will continue our efforts to negotiate.
[Foreign language]
However, due to a higher level of being conservative on the part of our administration, due to the accounting and financial point of view, we opted to provision 100% of that balance, this balance will then be counted as an expense in this quarter. We adjusted this effect in this slide so that the expenses that the comparative expenses would be comparable on a recurring basis. Having said that, we had a reduction in the percentage of expenses on revenue, which is important, which is that which we continue to see in coming quarters. On slide number nine, our EBITDA, the same thing happened, as I mentioned, for the gross margin, appears also in the EBITDA margin as well. The effect of the PCLD, higher losses in this, reflect in our EBITDA margin.
[Foreign language]
We put here the effect excluding or normalizing the PCLD both in the fourth quarter as well as in this quarter. We go from 11.2% a margin in the quarter to 8.7% in this quarter, and with the effect basically due that which I mentioned about the purchase of medications from local suppliers. Slide 10, the effect of the loss, accumulated losses of this quarter. The effect, which is not just of the non-payments, as well as the high level of leverage of the company. The company has no growth year-over-year. We have had an operational deleveraging in this quarter. Beyond that, the sum of the interest in the period to get added to that with the effect, accounting effect of the PCLD. On slide number 11, working capital of the company.
[Foreign language]
We continue, and we continue to observe a stability in the accounts receivable since the first quarter of last year. In the second quarter of last year was already a little bit better, and since then, there has been a stability in this line of accounts receivable. Here I would like to mention once again the strong work the company's doing on the cleaning of our client base so that this line will not vary as it has in the past. Beyond that, you will note the stabilization in the level of inventories. This line of inventories here, as you can see, as you know very well in the past, was close to 10 days, and last year it got to a maximum of 20 days of inventory, which is now down to 13 days.
[Foreign language]
The tendency is with the exit of the hospitals that we go back to our historic levels. Here are the accounts payable. As you know, we have renegotiated several balances that we had. They were owned by our principal suppliers of medication, and this will continue to impact the days of accounts payable for some time. We will be communicating this to the market as we advance in our formal negotiations, definitive with negotiations with our principal suppliers. Slide 12, the reconciliation of the cash on hand. We started the year with BRL 518 million cash on hand. Our operation had negative operational cash flow. We did the anticipation of receivables of approximately BRL 330 million in the fourth quarter of last year.
[Foreign language]
Naturally, these receivables were allocated for the first quarter , we had an important effect here on the operational cash flow due to this anticipation of receivables from the fourth quarter. The payment of interest in January and February before the standstill period of BRL 65 million, a payment on the principal on the debt of approximately BRL 87 million, prior to the standstill period, the CapEx of approximately BRL 28 million in this quarter, a value which is much lower than the amount that we had been practicing in the past and is also a line which should reach to even lower levels in the future, and the payments of BRL 66 million for acquisitions and partnerships prior to the standstill period.
[Foreign language]
We also finalized the cash flow in this period with BRL 124 million, which naturally, this fact, together with a lower EBITDA in this quarter on slide 13, increases our leveraging from 3.5x net debt to EBITDA to 5.2x net debt to EBITDA. To give you an update, we have continued in our negotiation with our creditors, and shortly we'll be able to release the advances in these negotiations. We continue optimistic in negotiations on which we're working, and we will continue, as Gil mentioned, open, for any clarifications and to give any details that we can to the market and for the financial markets. With that, I will wrap up my presentation. I'm open for any questions and answers. Please raise your hand if you have any questions.
[Foreign language]
Ladies and gentlemen, we now begin the question-and-answer session. To make a question, please raise your hand through the button which is available in the video conference on the Q&A button or the Raise Hand button. Remembering, ladies and gentlemen, that we will begin the question- and- answer session. To make a question, please raise your hand through the available button in the video conference. Thank you. Since there are no questions, I will now return the microphone to Carlos Gil for his final comments. Sir Carlos, please go ahead.
[Foreign language]
I'd like to thank you all for joining us today, and thank you very much in the name of Oncoclínicas Group. Thank you very much.
[Foreign language]
Thank you. The conference of Oncoclínicas is now closed. We thank you for the participation of everyone, and please have a good day.