Good morning, and welcome to Oncoclínicas Audio Conference earnings call. At this moment, all participants are connected as listeners, and later we will begin the questions and answer session when the instructions for you to participate will be supplied. If you need any assistance during this audio conference, please request the support of an operator by typing [asterisk] 0. This audio conference is being recorded. I would like to, at this moment, pass the floor to Dr. Bruno Ferrari, founder and CEO of the Oncoclínicas group. Please, Dr. Bruno Ferrari, you have the floor.
Good afternoon, everyone, and thank you so much for your presence in our teleconference of results. During the first quarter of 2023, we continued to deliver operational and financial results that are robust. I would like to start by highlighting our gross revenue. We grew 23% in the year-over-year, reaching BRL 1.5 billion in a sequential base. In other words, comparing it to the second quarter of 2023, the advance was 4%, a highlight to the fact that these growth rates are completely organic at the same unit base. Once again, this growth of revenue was well distributed between the increase of procedures, which was 14.4% in the yearly comparison and the expansion of the average ticket. This reinforces the sustainability of our growth and the resilience of oncological treatment. In the third quarter, we carried out 162,000 procedures.
This volume, that is so robust, reflects a series of initiatives that the company continues to put into practice, such as strong action in the medical relationship, retaining physicians in an organic way and attracting them, and more participation in the journey of our patients and are coming together closer to the health plans, offering solutions that can supply their needs, mainly for the integrated management of oncological care and cost effectiveness. So we reached BRL 269 million with around 19.2%. This expansion is of 2.6 percentage points higher than what we observed in the same quarter of 2022. This is the fruit not only of the growth of the company, which has been resulting in operational leveraging, but also of the successful execution of the acquisitions with gains and savings in costs in the second quarter of 2022.
It's important to remember that this EBITDA does not include adjustments or add-backs . And the expiration of around BRL 14 million from non-cash operations that are completely in from accounting from the incentive long-term plan of the company. When we annualize the EBITDA of the third quarter of this year, we've gone past the mark of BRL 1 billion. I would also like to mention very quickly our impressive advances in the reduction of expenses in the company for the last nine months, staying very close to the level of 14% of operational costs, cash over growth revenue, result of the efficiency of the company and the operational team and the financial team in capturing the synergies from various acquisitions that Oncoclínicas has concluded and integrated throughout the last year.
In other words, our gains and margins have been coming from the growth of volume, gains in scale, and more operational efficiency, which we've had in-house. In relation to net profit, we reported BRL 149 million in the third quarter of 2023, more than 2.5x The profit reported in the same period from last year. This is our fifth consecutive quarter with net profit. This profit was strongly impacted by relevant advances which we had in our agenda of reorganizations in our shareholder structure, leading us to recognition of a fiscal asset deferred that will allow us to operate with a better optimized income tax when we reached net profit in the third quarter of BRL 163 million in the last 12 months. The net profit with the same criteria was BRL 362 million.
Still about the financial indicators, another highlight was a quarter with very strong operational cash generation, reaching BRL 322 million. This is a record for the third quarter of the company, and it happens even in the context of a scenario that is still adverse to the health plan sector. This was only possible because of our operational performance and because of a very effective management of our working capital. Going on to the strategies for the quarter, I would like to highlight two relevant happenings. The first of them is the partnership that we signed with Unimed in September, through which Oncoclínicas will now coordinate the entire journey of oncological treatment for more than 200,000 beneficiaries. This transaction shows one more health operator or health plan that is joining forces with Oncoclínicas to have cost-effective and sustainable solutions for long-term oncological treatment.
It's important to remember that we are still under analysis for approval of CADE. In relation to the third quarter, before the disclosure of these earnings, I would like to mention two important realizations. First of all, the acquisition of 25% of additional participation in in social campus so far the joint ventures dedicated to oncological outpatient care existing in the company and Nacional Unimed in the cities of São Paulo, [Brasilia], and Salvador. These acquisitions, once again, once they are concluded, will allow the company to reduce even more the minority participation in its results, in line with our strategic goals. The closings of these acquisitions are also subject to the approval of CADE.
Secondly, I would like to highlight the attention of all approvals that we need to move forward with the partnership previously announced with the Grupo Santa in the Federal District. From now on, both companies will operate together in a model of complete care for oncological patients in hospital settings and outpatient settings. Before passing the floor, I would like to congratulate the Oncoclínicas team once again, who has been delivering strong execution over the last quarters. I would like to thank our thousands of patients, which every day confirm and give us the privilege of taking care of their lives in the same way that we would take care of our lives. I pass the floor now to Rodrigo Medeiros, who will give us more details on the operations and the integrations of the units acquired in each state. Rodrigo, you have the floor.
Good afternoon, everyone. Thank you so much, Bruno, for that introduction. Now we're going on to the next slide on page four to the financial highlights of the quarter. In the third quarter of 2023, the company grew 23.4% in gross revenue compared to the same period of the previous year, reaching BRL 1.5 billion. I would like to highlight that this is a completely organic growth, given the fact that we are talking about the same units. It's also important to emphasize the strong expansion of 80 basis points in gross margin in the first nine months, reaching 35.6% compared to 34.2% in the previous year. This expansion has given us efficiency in our operations and also included greater participation of the cancer centers in the mix.
On the next slide, we report an EBITDA where we exclude the effect of the just amount of the long-term incentive plan, the amount of BRL 269 million in the quarter, an expansion of 39% in relation to the third quarter of 2022. In the first nine months, our EBITDA was BRL 814 million, 87% higher than the previous year. Finally, in the quarter, our net profit was BRL 149 million in the third quarter of 2023. Given the strong growth of our operations, the expansion of our profitability potentialized by the gains in efficiency and the initiatives to rationalize our tax plan, which the company continues to execute. On slide number five, we have an update on the integrations carried out by the company and the impact that they brought throughout the last quarters through the synergies that they captured.
Most of the acquisitions have already delivered the expected synergies, and Unity is in an advanced phase. It is the largest operation and the most recent, and it is composed of 35 units. The successful advance of the integrations is very clear through the graph on the right, which shows that the evolution of our operational expenses as a percentage of gross revenue. In the cumulative period of 2023, the level of cost over net gross revenue was 14.2% compared to 18.1% in the same period of 2022. However, we reduced this indicator 390 basis points. It's important to highlight two points here. First of all, that obviously this does not include the synergies of costs, which appear in the gross margin. Secondly, that this indicator, 14%, is the level in which the company would operate before all of the acquisitions carried out since 2021.
A level that we said we would only reach in the fourth quarter of 2023, which we have anticipated before that, ever since the first quarter. Therefore, we are very encouraged with the speed in which the integrations have been moving, result of the expertise that the company has developed all throughout these years in acquisitions and in our flexibility of mobilizing various internal teams working at the same time. Going on to the next slide, page six, I would like to highlight an increase of 14% in the total of procedures, reaching 161,800 procedures in the third quarter of 2023. Even in a quarter with less working days.
In the first nine months, there was an increase of 32% in the number of procedures and 8% in the average ticket, especially associated to the increase of complexity and the capacity of the company to increase prices due to inflation. It is important to notice that our growth is very balanced, coming predominantly from the increase of volume of the procedures. I pass the floor now to Cristiano Camargo, our CFO, Strategy Director, and our Investor Relations Director, who will give us more details on the results of the quarter. Thank you so much.
Thank you, Rodrigo. Good afternoon to all. Once again, we had a very positive quarter for Oncoclínicas, with a growth of revenue which was organic higher than 20%, expansion of the EBITDA margin, the net profit growing more than 2.5x When we compare it to the last year, and operational cash generation higher than BRL 300 million. On slide seven, we would like to highlight on the graph to the left, growth of 23.4% in net revenue in the third quarter of 2023 when compared to the same period of the previous year, reaching the record mark of BRL 1.5 billion. Following that, in other words, versus the second quarter of 2023, we had the expansion of more than 4%.
These growth rates are organic, since the last main acquisition made by the company was only accounted for in our numbers in the third quarter of 2022. Therefore, we are making a comparison on the basis of the same units on the graph to the right. In the comparison of the nine accumulated months over the years, we see the expansion of 42% in our gross revenue. This was impacted not only by the growth of the same unit growths, but also by the integrated operations between the respective periods. An important point to highlight is that the growth of the revenue that we report comes much more from the volume of procedures than from the average tickets, which we understand to be an indicator on the quality and sustainability of this growth.
Slide number eight shows growth in net revenue, which was slightly lower than what we verified for gross revenue because of the impact we had in the third quarter in the line of PCLD, our provision for credits with liquidation that are a bit. We will get into these details in the next slide. We still see more than 20% of growth in our net revenue year-over-year. Remembering that this is organic growth, and higher than 40% in the nine months of 2023 against 2022, as we show in the graph to the right. Going on to slide nine, we provisioned 3.6% of gross revenue through PCLD in this quarter, comparing that to 1.2% in the third quarter of 2022.
Both of these indicators, be it 3.6% from this year or 1.6% from last year, go beyond our average historical levels, which is 1.2%, and this affects the comparison of the net revenue between periods or between years. This quarterly change is normal, as you can observe on the graph, because of the rule that the company applies that is more sensitive, therefore more punitive at the same time. That is why it is better to look at the average of a longer period of time. If we follow that logic, if we look at the nine accumulated months of 2023, we are at 2.5% of PCLD over gross revenue, in line with the 2.2% observed ever since the IPO.
Another important factor is that from the increase observed in the PCLD, there is a concentration in receivables from our agencies, which usually accelerate payments in the fourth quarter, which leads us to believe that this is something specific and not necessarily does it indicate a trend. On slide number 10, we highlight 40 basis points from the gross margin, reaching 35.4% in the third quarter graph to the left and 80 basis points of expansion in the accumulated period of the year, reaching 35.6% in margin. Graph to the right. On slide number 11, the EBITDA with no adjustments or add-backs, limiting us only to eliminate the accounting effect and not cash effect of the calculation of the long-term incentive plan amount.
We reached BRL 269 million in the third quarter of 2023, with a margin of 19.2% or 260 basis points higher than the same period of the previous year. In order to make the historical comparison, and for those who have been accompanying the adjusted EBITDA number, it was BRL 285 million in the quarter, with a margin of 20.4%. In the accumulated comparison of the year, the company expanded 500 basis points EBITDA margin reaching BRL 814 million, 87% higher than the same period in the previous year. On the next slide, number 12, we report our net profit [Ex-LTIP] of BRL 163 million. Compared to a profit of BRL 70 million in the same quarter of the previous year.
Mainly the fruit of the growth of the operations, increase of the profitability of the company, and of the incentives to face the historical fiscal inefficiencies through the incorporations of operational subsidiaries. In the comparison between the nine months of 2023 and 2022, on the graph to the right, the growth of net profit is more than 6x , going from BRL 40 million to more than BRL 260 million. On slide 13, we demonstrate the expansion of the company's gross profit from the first quarter of 2022 based on the last 12 months. The performance has been very consistent quarter-after-quarter, reflecting the execution of the company. On the next slide, we detail the behavior of the company's working capital cycle.
The third quarter of 2023 was marked by one more sequential improvement in the average deadline of receivables, which went down from 103 days in the second quarter to 101 days in the third quarter as a result of the active management from the company, along with the payers, even though the scenario is still adverse with the pressures for more dilated payments from them. At the same time, we continue working together with our suppliers, seeking more favorable commercial conditions, which has been translated into an average payment from our suppliers of 80 days. This is an important evolution, both in the comparison of the year-over-year as well as in the sequential comparison.
The combination of these results gave us a very important optimization of the net days for working capital, which reached 35 days in the third quarter against 43 days in the second quarter, reinforcing the focus of administration and efficiency gains in all indicators, including the generation of operational cash, which is directly impacted by the dynamic of our working capital. On slide 15, the cash flow. We generated BRL 322 million of operational cash, a record for the third quarter of the company, especially through the combination between an operational performance that was strong and the efficiency in the management of working capital. The cash generation in the quarter was BRL 224 million after the service of the debt and BRL 87 million even after the service of the debt and all of the executed CapEx. We continue to be very focused on operational cash generation.
Slide 16 shows the huge advance which we made in the conversion of FCO, operational cash flow in relation to EBITDA, which was from -46% in the nine months of 2022 to +37% i n the accumulated numbers of this year. On slide 17, we comment on our net debt and leverage, which increased in the quarter exclusively because we included the amount of the acquisition to be paid through the participations of the stakes that we bought in Unimed Rio, CEON, and HMM. If these acquisitions had not happened, which bring us several benefits, we would have had a reduction of our net debt, and we would maintain our leverage levels by 2.9x as the slide 18 demonstrates.
It's important to highlight as well that from our BRL 990 million that include the acquisitions that still need to be paid, BRL 374 million are payments for future earn-outs, which may or may not be materialized, and if they do materialize, they will be associated to a future higher EBITDA, which is not captured in our current indicator. The adjusted leverage, excluding future payments through earn-out, would be at 2.8x . On the next slide, finally, we will show you our debt amortization plan. With this, we close the earnings call of the third quarter, and I would like to now open for the questions and answer session. Thank you so much.
Thank you, ladies and gentlemen. We will begin our questions and answer session. In order to ask a question, please type [asterisk]. To remove a question from the list, click asterisk too. Our first question comes from Vinicius Figueiredo from Itaú BBA. Please go ahead.
Good afternoon, everyone. I wanted to, first of all, in relation to the cash structure, something that drew my attention more was the CapEx. So you detailed this more in your release. There was an acceleration from the second to the third quarter. I want to understand what were the main drivers behind this. Is there any operation specifically that is maturing still that is taking up more CapEx? If this will go back down in the next quarter. Then another topic would be to understand, I think we were seeing a very strong dimension on the line. In the fourth quarter, there was a strong growth. Could this be implicating the nursing costs? Are these numbers incorporated? Should we be concerned about this in the future?
Then very quickly, one more question about what Cris just mentioned in his introduction. These provisions in relation to the PCLD in general, has more to do with autarquias specifically. Just to understand the payment flow, should we expect a normalization in the fourth quarter or in the short term? Thank you.
Thank you so much. This is Cris. I'm going to start by addressing your cash flow question, and then I'm also going to talk about PCLD, and then I pass the floor to Rodrigo for him to comment on the operational expenses. Starting with cash flow. We saw, in this quarter, a generation of operational cash that was very strong as we highlighted. There were BRL 322 million , and specifically that is what allowed us to carry out our expansion CapEx in a more accelerated manner.
If we look at the CapEx of BRL 136 million , most of the number is associated to expansion CapEx. Remembering that it's a discretionary number. We can open or close that tap depending on the cash flow, the company's operational cash flow. So putting operational cash flow that is very robust with all of the initiatives that we've had in the operational actions, such as efficiency and working capital management. This allowed us to advance more quickly with the expansion CapEx. Remembering also that in the expansion CapEx, we are also talking predominantly about brownfields, which will bring, we expect, revenues relatively quickly. Since they are brownfields, they happen in an accreted way. So we have been talking about this systematically.
Last year, at this level, after nine months of the year, we had 46% less EBITDA conversion in FCO, and we've been saying that we would address that the focus was operational cash generation bringing to this year. In the nine months of 2023, we're already at 37%. So we made it - 46% to + 35% of operational cash, which allowed us to accelerate our expansion CapEx. Then another point that's important to mention, and then I'll pass the floor to Bruno for him to complement, is the following. Because of the follow-on at the end of June, we made it very clear that the BRL 200 million that we had in the primary, so we would not need to deaccelerate our CapEx, our expansion CapEx. So we wouldn't need to do it in a more cadenced way. That's why we did it in this rhythm.
In other words, the expansion CapEx that we are working with is already self-funded by the BRL 200 million, which we raised in the follow-on of the primary. Making a very qualitative analysis on the CapEx, it is connected to the coverage of the full journey. It is exactly what we said. More and more, we will be able to take advantage of the patients that already are inside of Oncoclínicas because it is a moment we are going through.
And another thing that is also important that Cris mentioned. The company is more and more becoming a cash-generating company, and this cash generation is going to be one of the main drivers of the company's growth. This is what is going to allow us to grow organically and inorganically, and that will allow us to make more acquisitions. That is the future of Oncoclínicas. Most of our growth will be in this cash generation. We will optimize so we can continue growing. We will use this cash generation for that reason.
On PCLD, Vini, we have this indicator of 3.6% from gross revenue, which as I mentioned during the presentation, both 3.6% of this year as well as 1.4% from last year, they are outside of our goal. Our historical goal is closer to 2.2%. What happened? How did this uptick happen in PCLD during this quarter? It is concentrated in aging. So it is not specifically close. It is aging of accounts receivable f rom autarquias, it is where most of the increase of PCLD is concentrated. Why does that not worry us? Of course, we are paying attention to it, but it does not worry us because we can see consistently year- over- year, the autarquias accelerating their payments in the fourth quarter of every year.
They have this characteristic of receiving extra budgetary payments so that their accounts payable are all put up to date in the fourth quarter. We have already started seeing this dynamic during the fourth quarter. Historically, we see this level of receivables increasing, and this is why we have the increase in PCLD as a point and not a trend. Another thing that is important to highlight, we have a provisionary rule that is very restrictive. So we start provisioning 25% of the receivables over 60 days, and we do this for the ambulatory operation as well as for the operation. And it is a naturally longer cycle, but we punish the hospital accounts in the same way. This ends up contributing to the indicator of 3.4% in the quarter, where once again, we see it as a percentage point. I will let Rodrigo answer the question about the operational expenses.
Thank you so much, Cristiano. Hello, Vinicius. In fact, the increase of the percentage in the third quarter is related to the salaries. The trend is that this will dilute in the same rhythm that we have seen in the integrations where the synergies have already predominantly been captured in relation to gains in scale and efficiency. But operational leveraging that is natural, where we see the business will continue having this dynamic to be able to support the structure. So gradually, we have to look at this in a gradual manner. It is the trend that we will continue capturing these gains, including the ceilings, the nursing ceiling, which we already commented on, which we believe affects our business less than other hospital structures, because we work more with outpatients and not hospital structures, so the impact will be lower.
Thank you so much for those complete answers.
Our next question comes from Yan Cesquim from BTG Pactual. Please go ahead.
Good morning, Bruno, Cris, and everyone else who is here. I would like to ask two questions. The first question is about the top-line growth. I wanted to understand, how do you understand that the volume should grow looking at the fourth quarter. I am not sure if you could share how these first months and a half have affected you in terms of volumetry, and maybe you could give us more detail on how you make reports and how you gain market share in this quarter. How do you see the market growing for the fourth quarter? How do you think things will play out?
How the volumetry will play out in the future? That is the first question. The second question is about leverage. I would like to understand what you are thinking about in terms of leverage versus the cash generation perspective. That is it. Thank you so much.
Hello, Yan. Thank you. Starting with your question on the top-line growth. We reference our history in the last quarters in which we have seen the top-line growth on the base of the same units, organically speaking, between high- 10s and low- 20s. This kind of growth has been brought through the growth of the market on oncological care in general, which has been between 15% year-over-year. And then connecting to the question on market share. We have seen gains in market share in the company because at the same time in which the market grows with these percentages, we have been growing 20%, while the market grows 15%.
So we have been growing [20%, 25%] in an organic way, not only because of the performance of the clinics, but also because of the ramp-up of the cancer centers and because of our expansion in our integral line of care through the journey of our patients, our program of attraction and medical retention, which has been done over the last few years, is also a way to contribute to this growth on the basis of the same clinics. This has given us this magnitude and has allowed us to gain market share. On our net debt, at the rate in which the company advances more and more expressively in operational cash generation. Of course, we may be sounding a little repetitive, but we have 37% conversion for FCO in the nine first months of this year.
Last year, in the last months of last year, we had operational cash generation that was negative because of the working capital that the company was experiencing losses. And quarter-after-quarter, we have had these efficiency improvements in the net days of our working capital. We have a completely different situation in terms of our cash flow operation, and the focus is free cash flow to equity. So at the rate in which the expansion CapEx is growing over the next quarters being addressed and these brownfields expanding and entering into operation, we should have this dynamic contributing to the reduction of the net debt through the company's cash generation, which improves at every quarter.
Thank you so much.
Our next question comes from Caio Moscardini from Santander. Please go ahead.
Thank you so much. I have two questions, actually. I would like to go back to the CapEx subject. It is something that we observed. I want to understand a little bit more where the investments were made. If you opened a clinic, you opened 35 clinics against another number from last year. So maybe more color would help. And more color on the financial results, where there is the exchange rate also involved. If you could explain that a little bit more, it would help us.
Thank you so much, Caio, for those questions. The expansion CapEx is associated to the expansion projects, the brownfields and clinics and cancer centers, which we have been commenting that are very accretive because they bring revenue in a faster way than greenfield projects.
So going back to the point that we discussed at the time, where the BRL 200 million in the primary, which we decided we did not need to even raise, they came to give us this cushion so that we could conclude more quickly the expansion CapEx and these brownfields of clinics and cancer centers, which the company expects can bring revenue in a more accelerated way and cover, in a broader way, our patients' journey. Having said that, it is a tap which we may open or close in a discretionary way, which is already self-funded by the BRL 200 million that were raised in the primary and in the follow-on. The second point is related to the financial costs.
We, in fact, did see an increase between the second quarter of this year and the third quarter of this year, in other words, in a sequential base, because of financial costs that are non-cash. So we had approximately BRL 20 million of mark-to-market swap in our debts, which ended up impacting BRL 15 million as well in mark-to-markets of instruments connected to the exchange rates variation. So, our financial costs were closer to BRL 100 million. Then we also had the impact of BRL 30 million in the financial accounting costs that are non-cash, that are mainly market.
Thank you so much.
Our next question comes from Fred Mendes from Bank of America. Please go ahead.
Good afternoon, everyone. Thank you for this call. I think the first issue on strategy, just to understand how the company's brain works. I think it would be important to understand better your modifications and expansions. So now you are including M&As and partnerships, short-term M&As and partnerships, then you are also talking about using the cash generation to expand even more with the CapEx. We understand that the larger you are, the better deals you are able to get from your suppliers, but would there be any other points that could give you long-term competitive advantages so that in 10 years you would be very concentrated?
Is there a long-term competitive advantage that you see as a very strong point that could explain this very fast acceleration? I am not sure if my question was clear, but that would be the first question. And then in relation to the ticket. We know that the third quarter was very difficult from several payers, and we believe that the fourth quarter will improve margin. How do you see this, and how do you see the next few months playing out? Thank you so much.
Hello, Fred. Thank you so much for that question. I will try to address your question. The first is the following. It is a very good moment for us. At this moment, because there is a strong difficulty today for the system to provide cost-effective oncological care. We have been announcing a lot of partnerships because we have been sought out to provide cost-effective oncological care for the health plans. Of course, some of them will want more investment, some will want less investment, and we have been trying to do this in a way that is strategic to the group, not only opportunistic. So what am I trying to say? We will always have partnerships as long as they do not divert us from our main discipline of investment.
We are not going to sacrifice our cash generation to make investments unless our discipline is very controlled. We will not raise more debt to make partnerships. If we can generate cash at the right moment, we would raise more equity. We can accelerate this even more. We are not trying to do everything all at once. We are trying to do things strategically, and that is how the group has performed always. At each of these movements, more and more has been done in a way that we have a partnership that generates cash continuously. This has also been a very strong concern that we have had in the group to make an investment that could bring with it cash generation. That is the discipline that we will always maintain. Do not expect any kind of abrupt movement from the group.
That is not what we are trying to do. We do not have that mindset. If you want to understand the head of the company, the head of the company is to continue growing strategically with and investment discipline, with a lot of discipline on investment. The Unimed investment, it was highly strategic, and it addresses structural issues for the company, so taxes, minority. It was important to do that. We will be reaping the fruits of that in the short term already, in the next quarter already. It was opportunistic, and it had to be done. It was strategic. It was opportunistic. It was an opportunity, strategic, and it had to be done. That is how the company's mind works.
And of course, we will continue doing this, keeping the mentality that if it is strategic, it needs to bring also benefits in the short, medium, and long term, and we are always evaluating that, keeping the discipline in our investments.
Fred, just addressing your second question, which was about the health of the health plans in relation to the dynamic with the payers. The progress that we have done in our working capital line connected strictly to the payers, which is our main line of receivables. We had one more quarter of reductions in the average deadline of receivables. This is because of the work we have done in-house with a lot of focus on efficiency in our line of revenue, from the pre-billing to the collection, and less because of an actual improvement in the situation in general from the health plans and the payers.
I would say that we're still stable. We have not seen any deterioration, but we also did not see any improvement in the general situation. We think that we will still take several quarters to normalize this. But the company has been doing the work that needs to be done to manage the working capital in the best way possible, and that has been happening, and it is reflected in our operational cash flow.
Perfect. That was very clear. Just one last follow-up question. I would like to understand the strategy. Would you say that maybe you would first get the contract? Because if you sign a contract, you cannot lose it after, so it is much harder to change it. So maybe it would be an advantage in the next few years. Is there something along those lines, as Bruno said, when there is an opportunity, you do business as usual?
Well Fred, we're not even competing for the contracts. They come to us. This is the strategy that we have as partnerships with the health plans. That is what has worked. We're not competing, and we have strategic actions. We have a long pipeline in this strategic framework. There is no hurry. Some of them we discuss over the months, actually, which needs to be done in-house.
Excellent. Thank you so much, Bruno.
Our next question comes from Emerson Vieira from Goldman Sachs. Please go ahead.
Good morning, Bruno, Rodrigo, Cris, and other directors. I have two questions. The first of them is a follow-up on the ticket point. You talked about the impact of the autarquias on PCLD. That was very clear. But I wanted to understand if there is any negative effect on the third quarter numbers. Because of the adjustment, d o you expect any acceleration or effect when you look at the fourth quarter?
That is the first question, and the second is in relation to cost. We've seen a dynamic that has been changing in the industry, especially if we look at generics and biosimilars. We understand that Oncoclínicas is focusing on brand medications. But do you think that the biosimilars and generics expansion can impact the company? The cost of procedures in the company is growing along with so much inflation and pressures on revenue. However, is the dynamic of cost more effect of deflation, or do you actually think you're able to get better purchasing conditions with the pharmaceutical companies? Those would be the two questions. Thank you.
Hello, Emerson. Thank you. I'm going to start with your question on the average ticket. We have seen the ticket very well distributed, the recomposition of the ticket over the quarters. There has been nothing specific in the third quarter, and we do not expect anything different in relation to this historical dynamic, which is a recomposition of the very unified or standardized average ticket in the next quarters. I'll pass it forward to Bruno to talk about deflation cost and medication and the impact on the margins.
In relation to the medication, we have a relative scale, our negotiation with the industry's references. That has absolutely no relevance here in our dynamic of negotiation. No, I wouldn't say that is an effect. This is the time of the year where we are making our plans for next year based on our volume for next year. That's kind of how the dynamic works.
Perfect. I have one more question, which is a subject that was not explored until now. Could you comment on the dynamic of taxes? How do you take advantage of the taxes? Looking at 2024 and 2025, if you could give me an estimate. Thank you.
We do not have an estimate for that, Emerson, specifically because we would not be able to have any guidance in relation to that subject. However, we have seen this rationalization of our effective amount advancing. If we look at the [net] of the last nine months, from 2022, we had around 70% of the effective level of income tax, and it's rather different than what we are seeing in this year, the last three months of 2023, because of the advance of all of these initiatives o f incorporations and the rationalization of our shareholder structure with the operational subsidiaries in our holding as well.
So that what we can say, our agenda continues advancing, and this is reflected in our profitability. We have been delivering quarter-after-quarter, the net profit growing consistently. This has been the ways that we've been able to create value. Of course, besides the organic growth and operational growth, it has been the optimization of the effective value. This has been from the operational focus on cash generation. Once again, being repetitive, but we went from -47% in nine months to 37% this year. In nine months, and t his is of course, the reduction of the minorities line. We showed this in the reduction of the minorities in the total profit, which is the agenda that we are following with.
Thank you so much. Good. Have a great day.
Our next question comes from Leandro Bastos from Citi. Please go ahead.
Good afternoon. Could you just update us from Grupo Santa and Porto Seguro, what are your first impressions? Do you have any numbers on the amount of clients that they will bring in? Could you give us an estimate? Thank you so much.
Hello, this is Bruno again. No, we don't have numbers, but these will be the weeks where we will close the operations. What day is it today? We finalized the operation yesterday, but there's a full integration in the medical area, and we are sure that in 30 days we will be reaping these. This is an operation that's already completely aligned. In the medical point of view, there are synergies that are happening.
You're talking about the Grupo Santa and Oncoclínicas?
Yes, e verything is already designed by the medical area, the margins, radiotherapy from surgeons, everything is already set up. It's an operation that is completely aligned, both on one end and the other. The expectation is that things will work really well.
What about Porto?
Porto is an operation that is growing very quickly. In relation to CapEx, we need to accelerate several clinics. It's very important clinics, because of their service capacity. The flow was higher than expected. So, discussing expansion CapEx, these are two ones that we did very quickly. We delivered [Zona Leste] this month, and we will be delivering BC in the beginning of December, t wo large clinics that will be completely occupied. And we have the expectation to grow with Unimed as well. That's one of the ways that we can use the expansion CapEx to attend to a repressed demand. So t he expectation from Porto is that it is above our expectations, not only in terms of volume, but also in the quality of assistance.
Once again, Leandro, just to complement Bruno, we did know that the expansion CapEx would come, and that it could happen faster, and that is why the BRL 200 million from the primary and the follow-on came. But we created a cushion back then to have the option of accelerating the CapEx of expansion in case it was necessary, and if it was funded by these resources. This was already being operationalized. We expanded our presence to two large regions in the city of São Paulo, which we did not have presence in yet. We will be growing with Porto. We will be growing in the Unimed system. We will be growing with all of the health plans.
With the investments, i t is not green fields, but it is expansion. It is not even greenfield or brownfield. This is parts of the CapEx is explained there.
Thank you so much, everyone.
I received a question from Rafael from XP, how much of the increase of PCLD came from cancer centers? Is there a largest difference between PCLD from the cancer centers compared to the clinics? The answer here is, it is very well distributed between our operations of clinics and cancer centers, where there is a concentration in the source, the kind of payer source. Once again, a lot of concentration on the government sectors, autarquias, which does not concern us because most of the payments from them come in the fourth quarter, and also remembering that for the cancer centers operations, even if we have a more stable account, therefore a longer cycle with the auditing and longer process of retention.
We do not have two rules for provisionings for clinics and cancer centers. We use the same rule, which is quite punitive, so it starts already in the first 90 days, and this ends up also impacting the number of 3.6%, which we had in the quarter. But still very well distributed between cancer centers and clinics, following the average proportion of the representation of each operation in the company's average.
Our next question comes from Stella. Stella from JPMorgan, please go ahead.
Hello, everyone. This is more on a strategic question on the company. Maybe you could tell us how the environment is for future expansions that may be organic in other geographies in terms of M&As as well, and assets as well, if it makes sense. That would be a little bit outside of what [Cordon] said. Thank you.
Hello, Stella. The first question I will answer with Bruno. Expansion to other geographies. I think historically we have seen that happen. Today, we have the presence in 36 cities. These are cities in all of the geographic regions of Brazil. The trend is that this will continue happening over time, since we still cover a relatively limited area from the point of view of municipalities, and this is also reflected in the market share. If we look at Oncoclínicas, even though they are the largest player focused on oncological care in Brazil, according to our estimations, we have a market share of only 6.5%. So we are still talking about a very fragmented market with hundreds and hundreds of oncological clinics that are operated by different generic groups inside of Brazil and outside of Brazil. It makes sense that we have more larger geographic expansion.
Well, it is not simple, but yes, that is exactly it. It still makes more sense to grow with more partnerships, perhaps. So more and more, that is what we have been called to. Growing into other geographies because we have been gone after. So it would not make sense to grow into other areas of action unless they are connected to oncology. If we do not have the focus related to oncology, I do not see how the group would go into that area.
Thank you. Thank you so much, Bruno. Thank you. Good afternoon.
We are now closing our questions and answer session. I would like to pass the floor now to Dr. Bruno Ferrari for his final considerations.
Once again, I would like to thank everyone for their participation in our earnings call and for all of the questions that were made. With that, we close our presentation on earnings, and we are available. Thank you and good afternoon
Our Oncoclínicas earnings call is now closed. We would like to thank everyone for their participation, and have a great day.