Good morning, ladies and gentlemen. Welcome to Group of Panvel's Conference Call where we will discuss the earnings for the second quarter of 2025. This conference call is being recorded. You may watch a replay of this conference call on the company's investor relations website. The slideshow presentation is also available for download there. We'd like to inform you that all participants will be in listen-only mode during the company's presentation. After that, we will begin the questions and answer session when further instructions will be given. We have translations available in Portuguese and Brazilian sign language. If you would like to listen to the translation, click on the interpretation button. Before we continue, I'd just like to underscore that any statements about the future are simply the company's beliefs and assumptions based on the information that is currently available to them.
These statements may involve risks and uncertainties as they refer to future events, which depend on circumstances that may or may not occur. Investors, analysts, and journalists should take into account that events related to the macroeconomic scenario, the industry, and other factors may make these results materially differ from those expressed in these forward-looking statements. We have with us in this conference call Mr. Antonio Napp, CFO and Investor Relations Director, and Ismael Röhrig , Investor Relations Manager and Strategy Director. We will now pass it over to Mr. Antonio Napp, who will start this presentation. Go ahead, sir. Thank you. Good morning, everyone watching us. Here we are for one more conference call in the Panvel Group . As you will see, we are posting one more quarter of very good and strong results. This is due to our team.
I'd like to start this presentation by thanking the Panvel team. We have over 11,000 people who made a big effort to deliver all of the results that we're going to share with you throughout this presentation. Without further ado, let's start with our figures. The highlights for the second quarter of 2025 make it clear that we operated very well throughout all of our strategic pillars. We're going to go over them during this presentation, but the first message I'd like to leave here is that this was, again, a quarter in which our sales went up significantly, nearly 20%. This was accompanied by a strong growth in our results measured by our EBITDA and our net income. We also stood out in our strategic pillars such as digital, Panvel products, and all of this generated quite a bit of cash.
This is not different from what we have been seeing in the previous years. When we look at our historical series from 2011 until 2024, consistency has been the name of the game. We have been growing on average 16% - 17% year-on-year in sales, and our results are growing around 20%. This means that we have found in our territory and our strategy the right conditions to make the company grow in a very sustainable way. The elements behind this sustainability are always starting with sales. As I mentioned, in the second quarter, our sales went up 16.9%. A very strong growth based on the second quarter of 2024, which had already had a growth of 11.5%. In May 2024, we still had impacts from the floods.
Even when we normalized this, and based on estimates, our growth would have been at least 16%, which is still above the market. When we break down this growth, what we see is that most of it was due to a higher number of customers and services and less from ticket increases, which means we are at a very healthy level. Although we sold medication very well, we were able to attract more clients, increasing the traffic in our brick-and-mortar and virtual stores, which has ensured that we had good performance in our sales. The quality of our stores also improved significantly. How do we show this? On the graphs below, you can see the number of stores selling above BRL 700,000 and the number of stores selling up to BRL 300,000.
In the second quarter, since the second quarter of 2024, the percentage of stores that sell more than BRL 700,000 grew significantly, and they now represent 40%. We also have a lower number of stores that sell less than RBRL 300,000. This includes all stores, whether they are mature or developing. This took our average sales per store in the second quarter to BRL 724,000. In mature stores, we are BRL 785,000. Another important point to share with you is that when we compare this performance at Panvel with other competitors in the South, and here we're talking about other pharmacy chains and so on, we see that our average sales for the last year have been accelerating much faster than others.
Also, in 2020, when the company started accelerating its growth into bigger stores with more sales and returns, now in 2020, we see that these results are coming into the mature basis, and we see sales ramp up, which makes it very clear that what we proposed in 2020 is now becoming reality. Our average sales, which is the main driver for our growth, has been achieved, and we're having very healthy growth quarter on quarter. We also have great performance even in mature stores. The same stores that have a history of over 12 months have grown 14.4% versus the second quarter of 2024. Mature stores that are over three years old have grown 12.7%. These are robust figures above inflation rates, which show our productivity gains. Another element that helps explain this growth in sales is the success of our expansion.
In the last quarter, we opened 14 stores, and in the last 12 months, we opened 58 stores. This is providing great results, and at the end of the presentation, as per usual, we'll discuss the results for this season. Since our IPO in 2020, we have opened nearly 300 stores. Most of our base is still maturing. Looking ahead, we still have this potential of stores that will provide even better results. This is another sign that our strategy is healthy and sustainable. This growth in sales adds to the good performance in pre-existing and new stores. This is reflected in our market share. This is the 21st quarter in a row where we have gained market share in the South. The South is where we have worked in for the last 50 years, and our market share is above 20% there.
We have grown 0.8% on a yearly comparison. We also grew in Santa Catarina and in Paraná. In São Paulo, and we are in the city of São Paulo now, we have already surpassed the 1% share, which is very significant in the city. This growth in market share has been represented across product categories. We grew our share in medication. We're growing in our brand and generics, and also hygiene and beauty. We're not being led by a single category. We are very balanced, and we're doing a good job on our mix across all product categories. Now that we've talked about sales, this is something that we always want to highlight. What are the pillars? What are the competitive advantages that really make our performance above average? We always start with digital. Panvel continues to be the most digital pharmacy in Brazil, especially in the South of Brazil.
Our market share in e-commerce is nearly 28%. From a share of 12.5%, that's nearly 30% in e-commerce. This is due to many factors, but especially the greatest concern we have, which is having the best experience possible in digital, whether it is in our app or on our site. We have 24.4% of our sales going through a digital channel. This is the biggest level in pharmaceutical retail. This is due to our high number of monthly active users. Nearly half of our base use our app every day because it is good, because it works well, and we also deliver fast. This is another concern that we have. Not only do we want to give customers a good purchasing experience, we are the player that delivers the fastest. 59% of all of our deliveries are concluded within 60 minutes.
This does not include click and collect data, which is the opportunity of buying on the website and picking up at the store. If we did that, that would amount to over 80% of deliveries within 60 minutes. This helps boost loyalty. You can see the number of downloads we had, which has grown about 30%, 35% year- on- year. This also helps the client's journey because they can choose, and they do not treat digital just as a payment method. A very important pillar when we look at the future are services. Although the share of sales is still low, they are at 1.4% in services. I always say that services in pharmacies are how we do our mission, which is providing health and well-being. Vaccination, we are leaders in the market.
We have 43% of the market share of vaccinations in the southern region, and in services, we are at 23%. This also helps to create loyalty for our customers, and this is one of the pillars we are working on. For a company focusing on health and beauty, it is essential to continue to operate well. Another one of our key pillars that was also a highlight in the second quarter were Panvel brand products. We reached 7.2% in sales in retail from Panvel products, a growth of over 35% versus last year. This leadership has helped us in making us stand out in such a competitive market. We have 35% of all of the private label products in the southern region. They belong to Panvel products. This is another area in which we have absolute leadership.
We have to share that our launch strategy, we have over 63 SKUs launched now, and we have 110 additional SKUs to be launched this year. Many of these launches connect very well to new generations. The effort we've been making in social media has been providing very good results. Through TikTok and Instagram, we have reached over 10 million accounts across Brazil, with a lot of organic content being created by influencers. This creates a virtuous cycle, and you can only find our products in our stores, so that increases traffic to our stores. We hope to continue growing in this category. Also, we'd like to share these images with you. These are the latest launches that we had this quarter. There's still a lot on the way. We are very proud of our products.
To conclude this part on categories, here we have an overview of our growth when we look at medication and non-medication products. This slide underscores how balanced our growth has been. We grew very well in medication, but not only branded products. Here, we also have GLP-1 molecules, but we also grew well in generics, OTC, and hygiene and beauty. We had a growth of 14%. This is high above the market average, which shows our strategy and what we've always had in our core, which is working with hygiene and beauty. This gives Panvel a competitive advantage. As I said, we also have our own branded products. When we look at the compound growth from 2021 until now, you can see how consistent it has been. Hygiene and beauty has been growing at around 16%, and the other categories have been growing at around 18%.
At the end of the day, we want to service our customers well. I've been talking about competitive advantages, and this is one of the main points for Panvel . We finished the quarter at 79 points in NPS following the Bain & Company methodology, and this can only be done through people. We have to thank our team of 11,000 employees. We have to think about them and support them because it's through them that we will create the best customer experience. This is what creates loyalty for them. That's why we are investing in training, onboarding, and we always have a constant concern about having the best team with the best service possible. Now we will continue with our income, starting with gross margins. For this second quarter of 2025, gross margin was one of the main highlights.
Looking at retail, we had a growth year-on-year from 30.1% - 30.4%. It was very significant because we had major challenges in the second quarter. This was a quarter in which we had a lower price readjustment in medication prices, and we also had a higher penetration of medication, especially GLP-1 molecules. We were able to do a good job through the product mix with a higher penetration of OTC and private label products. This was also driven by a sort of product pricing strategy with AI and with our commercial team. We found opportunities at the store level, at the regional level, and we had good negotiations with the industry, which supported us and really helped us with our growth. When we look at all of this, we were able to overcome these margin pressures and deliver a growing margin. Looking at the group, this margin is even greater.
In the second quarter of 2024, as a reminder, we still had the Takato operation. This slightly higher margin for the group is partly a growth in retail margins, and a part of it is the mix effect from the business since this quarter we no longer have wholesale sales. Looking at expenses, there was another highlight here. Sales and administrative expenses grew below our sales growth. Total administrative expenses grew 16%, retail sales grew about 19%, and selling expenses grew about 15%. Percentages are not diluted here because we also have a mix effect, as I mentioned in the previous slide. Since last year, we still had wholesale, and this no longer happens. This affects our comparison, but starting in the second quarter, this dilution will become much clearer. This impacts our EBITDA positively.
In the second quarter of 2025, it grew nearly 43%, reaching 5% of gross revenues with a growth of one percentage point. This is on the adjusted basis. On that table, we can see that in the second quarter of 2024, we already have all the impacts we had from the floods, all of our problems, and if we were to disregard that, our EBITDA growth would have been above 5%. Even from this perspective, we've had significant growth, and I believe that we are on the right track. It's also important to share that this is how our results have behaved over time. If we look at the first half of 2021 and compare it to 2025, the average growth is about 15%, and we're accelerating this to levels of around 40% now, as you've seen. We also have to highlight retail EBITDA.
As a reminder, this is the performance of our stores. This is the contribution margin from stores minus depreciation. Here we can see very clearly what has been done, an EBITDA of 11.1%, up 0.4%. Significant growth. This was due to the growing gross margins and the dilution in expenses, as I've mentioned before. The performance of our stores continues to be an important lever for the group's performance, and in the same period from 2021 - 2025, our retail EBITDA has been growing significantly at about 16.5%. Net income also performed very well, growing nearly 40% versus the second quarter of 2024. Here it is also growing on an adjusted basis. If we were not adjusting the base, this growth would have been over 500%. This all represents operational gains.
We had a slight increase in financial expenses due to interest rates, and obviously, we also had higher income tax. Since last year, the base was lower, but even with our successful operation, we were able to grow 40% comparing to the previous year's quarter. Another important highlight here that we're very happy to share is our cash management. All of our cash indicators continue to improve from any parameter. Looking at the first table, you can see that our cash cycle improved by eight days. This has been led by our efforts in inventories. Thanks to this cash cycle and our strong results, we are able to reduce our leverage continuously in our debt versus EBITDA. We are at 1.1 x net debt to adjusted EBITDA, and this is one of our best positions, and it continues to improve.
Just as we do that, we are reducing our leverage, and we are able to extend terms and reduce the cost of our debt. Our current debt cost is below CDI. We've been able to reduce it quarter after quarter, and it is now at a cost of CDI - 1.35%. This really makes us very proud because we are growing in sales. We know that naturally this will boost our working capital. We are investing more versus 2024, and we're truly generating cash. This all points to the health of our business. Again, I'd like to thank all of our employees who have helped us thus far and who will continue helping us in the next quarters.
After discussing all these figures, we're going to continue with the final part of the presentation where we want to talk about our strategic pillars, what we're doing in each one of them, and what we're expecting for the future. We always talk about expansion. The main pillar for drug stores are brick-and-mortar stores. If we make a mistake there, we are basically making a mistake for our entire business. This is not what is happening. I have no doubt, and I've said this in many calls, that pharmaceutical retail is the best retail market in Brazil and maybe in the world. I'm saying this because there's a very clear trend that the population is aging. In Brazil, we have a lot of space to consolidate the market. This hasn't changed.
The South of Brazil is the fastest growing in Brazil, and we have the population with the best conditions of aging with health. If you look at all of these factors and the new market launches, I have no doubt that we are in a very good market with contracted growth, so to say. We're operating well. We're focusing on the South of Brazil, going into smaller towns, and this shows in our figures. 60% of our expansion has been done in interior towns. We're also growing in larger cities, and we are already in 152 cities in the South of Brazil, plus São Paulo. When we look at our figures, we can see how we continue to stand out truly. Everything we've shared so far was internal data. It's always good to look at outside data to confirm what we have been seeing in home.
When we look at the second quarter, what is the biggest highlight for Panvel versus the rest of the market? This includes AbraFarma, independent stores, and so on. Panvel is the only one that has really expanded its sales volume. All the others have been growing based on price and mix, which we've always done good work in. 8.7% of it has been due to volume growth versus zero in many of our players. We're also very happy about our performance in other states. In all states, with no exception, Panvel has performed very much better than the market. In Santa Catarina, we had a growth of nearly 22%, in Paraná nearly 16%, and in Rio Grande do Sul, 17%. The two words are consistency and healthy growth. In Santa Catarina, we are in areas that can still mature.
30% - 40% of the stores are still maturing, and we are accelerating versus our competitors, AbraPharma, and versus the market. There's still a lot that we can do. Some figures here. Again, we have to maintain this disclaimer on the left. We're always looking at the vintages on ROIC, which continues to grow. Our stores are providing returns of, on average, above 40%, and this has improved with each vintage. On the right-hand side, when you look at the performance of our stores by state, it has improved significantly quarter on quarter. Our mature base in Rio Grande do Sul posted an EBITDA of 12.3% in the second quarter. Santa Catarina is at 10.4%, and last year it was at 9.3%. Paraná is at 9.7%, and last year it was at 8.7%, and São Paulo is at 8.1%. These accelerated results are showing that our expansion plan is working.
It's not only mature stores, and we have a large base of stores to mature. Our medium and long-term objective is that the expanding states will get closer to the margins we have in Rio Grande do Sul, and this is what we're making an effort on through average sales and costs. We're focused on this, and with that, we hope to drive the company's results up. To help with all of that, we also have the digital world. There are two important topics here. Digital, as I said, is a competitive advantage for Panvel. We're the first pharmacy chain in Brazil that really brought digital to its core, and we're doing increasingly more. This is very new. This has been launched in the last two months. One of the fronts that we've been working on is improving our conversational services through WhatsApp with the use of AI.
I'd like to invite you all to test this platform. It's already available, and it can do all of this: product recommendation, consultations, and so on. We are very close to concluding sales through WhatsApp, and with the use of AI, Panvel is once again creating a competitive advantage. We believe that not only do we have a good experience in our app and website, but the future will be conversational in platforms. Let's be honest. It's much easier for us to operate by writing or saying what we want until the end of our sales, and we're on the way there. This, once again, will bring Panvel to a new level. Behind all of this, we continue to make a strong effort in AI, and we have to be pragmatic here.
For us, AI is not just a fad, but it's something that we're really looking at, especially on two fronts: how we can improve our customers' lives and what we can make more productive in home. These are some of the solutions that we have been using with generative AI: pricing, product mix, productivity, and so on. In these first efforts, looking at productivity only, and this is just the beginning, we've measured that we are saving over 25,000 hours a month of human customer service when we look at stores, shared service centers, and WhatsApp. We're looking at all of the pillars below because we understand that there's a lot that can be done with AI. This is just the beginning, and Panvel, once again, is leading the way and providing benefits, and we're going to create one more competitive advantage versus our competitors.
Finally, this is done to service our customers well. We have to conclude by talking about our customers. We have a dedicated team. We're placing all of our efforts there so that we can service them more and better. This is providing us with more customers as a result. We have over 25 million customers registered in our base, so most of the southern region has bought with Panvel, and we continue activating customers and making them more loyal. Activation is, you know, looking at the space and making people purchase at least one with Panvel. This continues to grow, and then you have to create loyalty. It's not only about buying once, but they have to buy more than once. Again, going back to that pool and increasing frequency, and the number of loyal customers is over 1.6 million.
This refers to customers who buy at least once every two weeks. Behind this is our digitalization strategy. We've grown our omni-customers, the ones that buy through physical and digital channels, and this also connects to frequency in stores. This accelerates this virtual cycle of increased frequency and increased consumption. That concludes the first part of our meeting. We're now available for your questions, and then we'll have a closing remark. We will now begin the questions and answer 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 lower your hand to remove yourself from the queue. The first question will be asked by Yan Cesquim from BTG Pactual. Go ahead, sir. Good morning, everyone. I have two questions. First, some impressions from the beginning of the third quarter.
If you think that these positive trends are continuing, especially with this growth in OTC and generics, and also, I'd like to ask about your margins. This quarter, we also saw higher operational leverage and productivity and also a mix effect by removing wholesale. How do you imagine your margins will behave from now on? That is, it is no longer as impacted by the mix effect. Thank you, Yan. To talk about some trends for the third quarter, we already have the month of July. We're literally in the middle of August, and so far, our perception has been very positive in sales. Obviously, the level of sales in the third quarter is different from the third because of the comparison. So far, we are seeing the same trends that we saw in the first quarter, with a strong two-digit growth in the third quarter as well.
Concerning our margins, when we look at the product mix, it is still very balanced. We see the same behaviors between branded products and OTC. Hygiene and beauty continues to do well, and this should keep us balanced in the third quarter where we have some different pressures. Also, as you mentioned, since the comparison basis no longer has wholesale, this effort we're making in diluting expenses will be clearer. Great. Thank you. Thank you, Yan. The next question will be asked by Mr. Vinicius Pretto from Itaú BBA. Go ahead, sir. Hi. Thank you for taking my question. I'd like to ask about GLP-1. In May, Mounjaro was launched, and it had a very positive impact to the market. How do you see this for the next months? Was there any impact on demand by the fact that prescriptions are required?
Next year, since we will have generics in this segment, do you think that will expand your addressable market, and can that increase your margins? Thank you. Thank you. GLP-1 was definitely important in the second quarter, and we continue to have a very positive impression on their share throughout the next quarters. We currently have more demand than a supply of products. We expect inventories to start balancing out, and this will definitely create more potential for sales. We're far from this limit because if you go to the stores today, we don't have Mounjaro fully available. Yes, this expanded the market rather than making SKUs cannibalize each other. We still don't know what the real size of this market is because it continues to grow. It's a very positive sign. It's a great opportunity, and we will definitely grow in sales above our expectations with this molecule.
When we look at next year, and we have many launches in generics, this is also being seen positively because there's a part of the population, which is significant, that does not have access to these products due to the price. With generics, we will definitely expand this market significantly, and this will give opportunities for pharmacies, not only in sales, but also in gross margins. Right now, the gross margins are very small. Excuse me. For 2026, our perspectives are better than for 2025 with GLP-1. Also, when we look at these categories in generics, Panvel, which is at a premium level that has a better sales capacity and that is leading in the South, we would have preference versus our competitors.
We would be able to lead the way since we have better volumes and a better part of this category, then it's natural to think that we would have a competitive advantage. Thank you. I think we answered all of your questions, right? Yes, you did. Thank you. The next question will be asked by Mr. Pedro Caravina from XB. Go ahead. Hi, everyone. First, congratulations on your results. Thank you for taking my question. I'd like to ask you to talk about the evolution of HPC. There was a slight deceleration this quarter, 1%. I'd like to ask if you have faced any impacts from the marketplace, from competition with other chains, and I'd like to understand your branded product penetration.
Also, on gross margins, if you can tell us a little bit about the impacts of GLP-1 and its mix this quarter, that will help us project for the future. If I could ask more about that, I'd like to ask a little bit about what leverage do you see for the future to accelerate this growth in operational leverage as wholesales are removed from the comparison. Great. That was a lot. We're going to start with HB, Health and Beauty. Excuse me, Hygiene and Beauty. The message is that differently from other chains, our H & B strategy has always been at our core. It's never been a side business for us. Panvel, especially with its store, is always focusing on having the right mix, working with categories like cosmetics, hair, and so on. Throughout the years, we are working on the destination for these products.
This, without even mentioning our own brands, is definitely an advantage in comparison to other marketplaces. When we look at the market, of course, competition has increased, and it's stronger in some categories. It's weaker in others, but Panvel, and you can see this in our figures, continues to grow above the market because we believe in this differentiation, and we're also betting on our own brand. This is not going to change. We know we have customers who only come to Panvel because they are looking for certain products or certain brands, and we believe that continuing to invest in that will help us grow in H & B. If we look at our total growth, the long-term trends are that we will continue to grow to the percentages you are seeing, we're talking about HB growing 16% and medication growing 18%.
We believe that this will continue to happen in 2025 and 2026 as well. In no way do we interpret this as a weakening HB or rather strengthening it. This is how we think about defending ourselves from this competition in HB. Pharmacies continue to have a competitive advantage. Maybe Panvel even has more than others because when we have a very strong digital world with an ability to deliver, the pharmacy, due to its convenience, will always have a competitive advantage. We believe in that. We've been investing in that, and this is giving us results. Beauty is connected to trying things, new launches, new products. Having a journey in which you can do that is a significant competitive advantage looking at pharmacies versus pure play.
Not only are we addressing this at the core of our strategy, we also can increase the customer's experience, improve their experience, which is something that e-commerce is unable to do. Now let's talk about gross margins. When we look at the third quarter, this gross margin naturally will be smaller or more seasonal, but it's within expectations. What we're seeing, as I mentioned before, is that these factors that helped in the second quarter are still present. We continue to sell well, over the counter, own brand, generics are balanced as well, and this should sustain our gross margin balance. We don't see a lot of pressure ahead of us or any great risk. We have a high comparison, of course. It is higher in the third quarter, but we don't see any changes in behavior.
I think we're operating in our price policies very well in a very assertive way. Yes. In the third and the first quarter, we expanded our gross margins. It was stable. Mounjaro was not a trigger to work with a better mix from the beginning of the year, and we had already been discussing this. We've had a strong strategy in balancing our mix and negotiating with the industry. As this happened over the year, our plan was ready. It was designed. We have a plan for the second half of the year as well. This is not a reactive strategy. This is something that we've been doing from the beginning of the year. To answer your last question about operational leverage and future margin gains, we've talked about sales. With the good performance we've been having there, we will continue to see, especially in expenses, further dilution.
Expenses with stores, I think this is very clear in our retail EBITDA. We also have logistics expenses, which are also going down versus last year. These are trends that should remain in the next quarters as well. Our expectation is to see a dilution of our expenses with sales in the next quarters. We will have better opportunities as sales improve, but administrative expenses will not provide the best results because they're low and stable. We've been flat for a long time. Some of it will happen due to sales, but most of the gains will truly happen based on expenses with sales. Great. That was very clear. Thank you. Thank you, Pedro. This concludes the questions and answers session. We'll now hand it back to Mr. Antonio Napp for his closing remarks. Again, I would like to thank you for being here, for your questions.
I'd also like to thank Ismael for being with us for this call. We're very proud of what we did this quarter, and this is a very good growth sequence. I have to give special thanks to the Panvel team. I know that many of them are watching the call. These results were created by you, and they are for you as well. I hope to see you again in our third quarter earnings call, and our stores are always open for those of you in our region. Please feel free to visit us, test things out, and buy from us as well. Our investor relations team is available. If you have any questions, we're always available. Thank you, and have a good day. This concludes the company's conference call. Thank you, and have a good day.