Morning, ladies and gentlemen, and thank you for holding. Welcome to Qualicorp Webcast to discuss the results for the Q1 2024. Present with us today are Mr. Maurício Lopes, the company CEO; Mr. Carlos Vasques, the IRO and CFO; and Mr. Eduardo Garcia, Investor Relations Superintendent. Some statements in this webcast may be projections or statements about future expectations. Such statements are subject to known and unknown risks and uncertainties that may cause such expectations not to be realized or to be materially different from what was expected.
This event is also being broadcast simultaneously over the internet and can be accessed at ri.qualicorp.com.br, where the respective presentation is also available. We would like to inform you that this event is being recorded and participants will be able to listen to the webcast during the company presentation. Ensuing this, we will go on to the Q&A session. I would now like to turn the floor over to Mr. Maurício Lopes, who will begin the presentation. Mr. Lopes, you may begin.
Morning, everybody. It is a pleasure to be with you for another earnings results. Folks, before we speak about the call per se, on behalf of the entire Qualicorp team, I would like to offer our solidarity to the population of Rio Grande do Sul that is undergoing unprecedented problems. Now, through our teams, we're working on donations from our associates, but also corporatively, we will carry out donations through two local partners to mitigate the pain that the local population is undergoing. Once again, we offer the solidarity on behalf of all of the associates of Quali. Now, to speak about our quarterly results, the phrase that best explains what we are doing is that the turnaround project is being carried out exactly as planned.
It has been seven months since we have begun this project. It began on the first opportunity with a restructuring, a redesign of operations, acceptance, and a huge focus on allocation and use of our capital. Now, this agenda is well advanced. We're collecting positive results every quarter. In the capital allocation turnaround, we had an issuance of BRL 200 million to help us roll over our debt, and we're very comfortable with the size of our cash and the ability of the company to pay off its debts in the short and long term. Regarding the product portfolio, we continue to work diligently to enhance the process of acceptance, to have a better designed portfolio.
We're offering the operators a huge range of products to attain sustainability, which means lower readjustments in the short term, longer permanence of beneficiaries, portfolios that are more adherent, a more geared network, a more gauged participation, and brokers that work more towards what clients need with a better resolution and well-defined protocols. This is what we're doing here. Day after day, we launch new products, and we're doing well. In the last few months, we had the relaunch and a price re-rating in several areas, a re-rating of products in areas where the portfolio had been weakened. We're working with operators where we did not really have a portfolio and repositioning of some products we had lost some time ago. So these seven months give us the certainty that we're on the right path when it comes to the portfolio. It's not a short-term journey.
We are restructuring, but when we look at the sales volume for the last two months, we are convinced that, once again, we are on the right path. The health sector continues to be very challenging with high levels of claim. People are still hesitant in maintaining some products. But when we look at what we're building here, we're quite optimistic once again, and we're building this with technical skill, with capacity, with the operators, and an ever-greater focus on acceptance. Now, to look at this, I would like to give Mr. Carlos Eduardo Santos the welcome. He becomes a Statutory Director of the company as Chief Medical Officer, and most of his mission here is to guarantee a sustainable portfolio, guarantee the acceptance process, and to ensure that the portfolio adheres to the market needs.
I would also like to make the most to welcome two advisors, Ricardo Mota and Luiz Cruz, both with enormous experience in the health market. In the past, they have held executive and investment roles in the sector, reinforcing the concept that we have at Quali of having a benefit management that can offer integral products to our beneficiaries, to our entities, products that are sustainable and adhere with the long-term model of the sector. I think that is well done so that we can have less readjustments, more permanence without cancellations in the long term. Thank you once again for our two counselors. I thank Carlos Eduardo for becoming a statutory director. I would like to thank the Quali people who have been working night and day. I will give the floor now to Carlos Vasques to speak about our performance for the Q1 2024.
Thank you very much. Well, thank you, Maurício, and a good afternoon to all of you. We're going to speak about our financial performance and the main indicators that reflect the message that was just mentioned by Maurício. We look at the first slide at the top left. We had a reduction in the base of clients, and the managed portfolio reached 63,000 beneficiaries. One of the challenges we face with all of these actions is linked to the portfolio management, product management, as described by Maurício. Despite this, alongside with this strategy, we're also continuing on with our turnaround project.
You can see that this is the reflection of joint effort of a group that is now coordinating the company, coordinating all of the fronts, very attentive to the actions that need to be adopted to face this challenging moment in the company and in the healthcare sector. Net revenue, as you can see, with a drop similar to the base, 12% sequentially. We look at annual basis, although the base dropped 18%, the net revenue dropped 9%. We see the internal efforts in the company enabling us to reach BRL 152.9 million of EBITDA CAC sequentially vis-à-vis the Q4 2023, and very similar to what we saw last year of BRL 146 million. We see a beginning of stabilization in the company cash to favor this movement that we saw as of the second half of last year. Next slide, please.
Here we observe some of the effects that have driven the impacts on the CAC EBITDA, mainly linked to operational efficiency and capital allocation. We are undergoing a renewed culture of operational efficiency in the company. We're rationalizing the scope of activities. We keep asking ourselves if this is the right time to do things, and we're focusing on what truly creates value for the company. Now, besides this, we implemented since last year and have become more mature in effective implementation of new strategy and discipline in capital allocation. We have already captured some benefit in fixed and current expenses, redefining the scope of efficiency, focusing on the core and what can allow us comparative differences, a sequential drop, a significant one of 24%.
If we adjust for the BRL 12 million, as we described in the release impacting this group, we would still reach BRL 116.8 million reais of fixed expenses, a reduction of 22% year-over-year, and a gain of margin of 32.9%-29.8% last year, four percentage point gains. We have relevant challenges that are being addressed. We hope to obtain the benefits soon. Here we observe the impact of operational challenges linked to invoicing and efficiency in the revenue cycle of the company, as well as some effects of contingencies due to an increase in complaints because of the readjustments carried out recently. We believe that this is a moment of attention. The company is very attentive to that, and we will seek normalcy going forward. In the third chart to the left, you see the capital allocation.
Since last year, we were investing 14% of our revenues in customer acquisition. We have reached a value of 7.9 last year, and now we're speeding up investments once again as the products are once again put on the company's shelves so that we can reach ever more customers in our addressable market. The company is ready to speed up on the path towards sustainability. Next slide, please. All of this ends up in a strong cash generation, operational cash generation for the company. I would like to highlight that net debt of the company fell BRL 269 million in the last 12 months. One year ago, our debt was BRL 1.480 billion, as you can see to the right of the slide. Presently, we ended the Q1 with BRL 1.149 billion, a significant reduction in the net indebtedness of the company.
Free cash flow in the quarter was BRL 111 million, a very strong conversion of adjusted CAC EBITDA of 63%, and culminating in a robust cash of BRL 1.1 billion. Now, the figures that you see here are a sign of our commitment of resuming sustainability in the company with operating parameters that seek the best efficiency benchmarks. I believe that this reduction in indebtedness begins to show the effects of the restructuring of the capital structure of the company. Of course, we look at the products, but we also look at the entire company to have a company that is ever more balanced through the coming quarters. I would also like to ask you to look at the cash flow, the table at the left. We are speaking of the company's working capital. This quarter was negative in 25. It will fluctuate during the quarters.
This is what tends to happen. But in the last 12 months, we were positive in BRL 7.3 million, and this is how we would like to continue to manage that part of the company. I draw your attention to the Maintenance CapEx. It does not include the CAC. We see this in the line of commissions, but the CapEx of maintenance includes enhancements, technological advance in the company. In the last period, it was BRL 13.9 million. This year, it is at BRL 7.6 million. We understand that we can continue to work with this level, rationalizing the scope and the cost center at the company. Well, with this, I would like to end the main financial highlights of the company. I now offer the floor for the Q&A.
Thank you. We will now go on to the question and answer session. So if you wish to pose a question through audio, please write in your name and the company name in the Q&A section or click on Raise Hand. The first question comes from Leandro Bastos from Citibank. You may proceed, sir.
Good morning, everybody, and thank you. We have two questions at our end. The first, we see the news of large operators moving away from the channel, especially since the last call. Which have been the initiatives for retention that you're working on in your portfolio, and how successful has this cleaning out of your portfolio been? This is the first question. The second question refers to CAC. In the last call, you mentioned that you were working with elasticity, that you are somewhat below the optimal cost of acquisition of customers. Now, when can we expect an acceleration of the CAC, and which is the dynamic of investment in this channel? Thank you.
Hello, Leandro. This is Vasques. I will begin to answer your questions. I begin with the CAC, and then we will speak about our portfolios. The CAC has a new investment. Since the Q4 of last year, we put a brake on our investments to once again include the parameters within the benchmarks. Through the Q1 of this year, we have been able to obtain the first results of this portfolio management. Thanks to this, we have been able to gradually resume our sales. Because of this, there was an increase of investments from 7.9-8.9. Now, if we look at our background, this figure was almost 20%, 14%, and we believe that a figure standing at 14% will be more reasonable through time.
But we will only make investments if we have the opportunity to do so. We can't invest if we don't have the opportunity. We're running after opportunities, building new avenues in the company to make investments with discipline and the profitability standards that we expect for investments in CAC. We want customers, but we want customers that guarantee our performance. Sequentially, we have had some growth, and this figure should be closer to 15% through time in net revenue, and we're making efforts to attain that goal. Those were my remarks on CAC.
Leandro, thank you for the question. Let's speak about the cancellation and the offer of products. Now, let's go back to the film that you mentioned. You are right. We're trying to organize things. Operators try to maintain products, the sale of products during some time. The claim levels continue to be high.
They reached the conclusion that the products designed for the market with high reimbursement, open networks without co-participation are not good products for the retail market. Part of them are reformatting the retail format and launching new options. Of course, this will take time. That is why we have a mismatch between supply and demand. There's a set of operators, not only Quali, but the whole channel of retailers that have canceled some contracts. What is it that we did? We tried to find the best solution in the most transparent way possible for our beneficiaries that received a letter of cancellation. Obviously, we don't have products to service as we would like to. And when I say we, I'm not referring to Qualicorp. I'm referring to the market.
Several operators no longer have products made available to the retail market at this point in time, and this will happen in the coming months. But as part of what we have available in the sector, we have the largest portfolio with no comparisons whatsoever. Our portfolio is larger than we would like it to be, but it is the largest portfolio. Now, operators have to reformat their portfolios with greater speed to offer a larger number of products to the market. This should happen from now on until the end of the year. I see operators attempting to do this, but there are steps, designs, tasks that take longer than we had imagined. However, we have offered good coverage to most of our customers. Additionally, we have engaged strongly with operators to try to mitigate the cancellations that you mentioned. Now, the first wave were enormous numbers of cancellations.
We're engaged with them, saying, "There is a solution here. Let's maintain the portfolio that's designed, and let's do this alteration so that customers do not end up unattended." We have been successful in most cases, depending on the operator. We do manage on behalf of the beneficiary, not on behalf of the operator. And I think we have been able to revert 50% of the cases of cancellation. Otherwise, we're offering portability to see which is the best solution for unattended customers.
Thank you. Thank you very much. Have a good day.
Our next question comes from Gustavo Tasso from Bank of America. You may proceed, sir.
Thank you for taking our questions. We have two. One, I would like to explore what you have just mentioned, taking away the impact of these mass cancellations just happening with a new product, if we could have a flavor, if you have good traction, if you have had an increase in gross adds. Secondly, you're doing a good job in terms of expenses, as you mentioned in the presentation. Is there still room for further improvement? How can we imagine this going forward? Thank you.
This is Maurício, Gustavo. Thank you for the question. We see a recovery, yes. We have a very interesting part of the portfolio in some regions. We have been able to redefine some projects in larger operators. We have new pricing. Our pricing was highly detached, and in the last two months, we have already seen a volume of proposals that are transmitted, validated, and then accepted.
But we have had an increase in the number of transfer of proposals, and I think that the product portfolio has a better fit and is solidifying the new commercial structure that was regained, rebalanced in the last few months. Now, the sum of these two things brings us a more optimistic vision vis-à-vis past month . This is the only process we can undergo. There's no running away from this. If we didn't reach acceptance, we couldn't speak about products. If we didn't have new products for the retail market, we wouldn't have a portfolio. And if we hadn't trained the commercial areas for this moment, we wouldn't get anywhere. So everything is starting to fall in place in this new film that we're creating, and these last two months have shown better sales compared to the past.
Now, we do have a group of operators with which we have contracts for new products, new prices, and new launches in different regions. Regarding expenses, of course, there's room. We keep looking at fixed and variable expenses. Both still have room for improvement in fixed expenses. We received good results in our payroll. In terms of variable expenses, we're making strides, with the exception of some contingencies that came in now because of readjustments, cancellations, and, of course, this materialized a higher number of contingencies.
If we put aside the problem of contingency and see what happens with expenses, what is permanent, we are at a lower level, and there's room for further reductions. I think that part of the agenda is quite calm. The main challenge is the launch of new products that, of course, is progressing, but it's far from being what we wanted, and the regaining of commercial teams.
Thank you. Thank you very much, Maurício.
Once again, should you wish to pose a question through the audio, please write in your name and the company name in Q&A or click on Raise Hand. The question and answer session ends here. I would like to return the floor to Mr. Maurício Lopes for the closing remarks.
Once again, we would like to thank you on behalf of all of our associates that are working with a great deal of energy in this turnaround. We do have several achievements. The headlines are the same as they were in our previous call. We have had significant interaction with the market since the last call, but what we are building has not changed. We have written a new chapter in this film that we're producing. This new planning began seven months ago. The direction we're seeking is correct, and we're making strides despite the challenging moment in the market.
We have been able to increase cash, reduce expenses, work with operators, enhance internal processes, and show you the statements as we have restructured them, bringing members of the board that are very aligned with the healthcare sector. All of this will bring us a more stable moment in the healthcare with a focus on less adjustments and more productivity for the beneficiaries. This, of course, is the goal, to service the beneficiary as best we can so that they can have long-term plans that are more adherent to their needs. So we're all driven by this. Thank you once again for your attendance, and have a good afternoon.
We would like to thank all of you for your attendance. The earnings results presentation for Quali for the Q1 2024 ends here.