Good morning, everyone. Welcome to the first quarter earnings conference result from Rede D'Or. We have Paulo Moll, we have Paulo Lazcano, and we have Mauricio Lopez, VP, Executive VP. We have the VP of Operations, Leandro Reyes. Medical VP, Raquel Reyes, CEO of Health and Odonto and Dental. Marcelo Lehman, he is the investor responsible for investments. Now, this call will take one hour, and it will be available at the RI Investor Relations website of the company. After the presentation, we're gonna start the Q&A. Before we continue, I would like to make clear that any statements that might be done throughout this earnings call regarding the business perspectives of Rede D'Or, projections, operational goals are based on beliefs and premises of the board of directors, based on information that is currently available. These are not assurances of performance.
They involve risks and uncertainties. They are referring to events or circumstances that might or may not occur. General economic conditions and industry conditions and other operational issues might affect the future of the company and might lead to results that are materially different from what we expect. I'd like to give the floor to Mr. Paulo Moll. The earnings call will start. The floor is yours.
Thank you. Welcome everyone. Welcome to our conference call results. Let's start by the operational highlights. In the first quarter, BRL 12 billion in revenue, BRL 304 million in revenue. Great result. I would like to say that we delivered this result still with the high interest rates. We're pressured by the interest rates and also the loss at SulAmérica that is still at a high threshold. We have better numbers than the fourth quarter of 2022.
If we adjust the amortization, accounting amortization by the M&A of SulAmérica, there is an amortization that has a cash flow effect and also other effects that are recurring. For the optimization of structures, we also have a net revenue of BRL 374 million in that period. Looking at Rede D'Or in and on itself, we registered BRL 6.8 billion of gross revenue, 14% growth in regards to the first quarter of 2022. A growth of the average ticket, if you compare to 2022, 10.7%. This is due to the readjustments and a better mix of procedures.
As well as a few exclusions of not so profitable contracts, an average occupancy that is 0.4% above what we had in the first quarter of 2022. It's aligned with the performance of the company in the pandemic period. The number of patient stays, we have a growth also in regards to the first quarter of 2022, as you can see on the slide. Well, the capacity to execute, this is a very important characteristic of this company. We have a focus. We are highlighting over the last earnings call in gains of efficiency and profitability. We have an EBITDA of BRL 1.5 billion, a growth of 20% in regards while year-on-year first quarter 2023, an EBITDA margin of 23.8%, above the first quarter of 2022.
These are Rede D'Or numbers stand alone. SulAmérica, we have a growth in net revenues 18.3% in regards to the first quarter of 2022. We got just BRL 6.4 billion. We have a growth of beneficiaries of 12.1% membership evolution, reaching 5.1 million in health and dental. Loss ratio, still, a bit high, but with an improvement in regards to the fourth quarter of 2022, when we had reported 92.5% of loss ratio. Now we have 88.6%. We hope to have an improvement, but it's still a very challenging scenario for SulAmérica and loss ratio. Some indicators that we would like to highlight. Speaking of the first quarter this year at SulAmérica, we managed to have a reduction of the administrative expenses.
They were at about 8% of the revenue in the first quarter of 2022, and now we give you 6%. We have done our homework, the administration of SulAmérica, and also synergies for corporate daily operations. These synergies are getting to BRL 412 million. This is always taking a look at annualized data over the last 12 months, and we have subdivided it in three parts. Reduction in administrative expenses or structures, so we're talking about BRL 175 million, always year- on- year.
We also have the second part, which is material and medicines. If we use the scale of Rede D'Or here, applying this threshold, BRL 108 million, we have a third part, a third pillar, which are contracts that we already renegotiated, that we have defined, such as the change in the headquarters of the company, but still respecting the last months of the contract for rent. This is executed, and it will impact positively our result in BRL 129 million also, year-on-year. Before we go to give the floor to Otávio, he will continue with our presentation. I'd like to highlight the launching of Hospital São Luiz Campinas. City of Campinas is 100 kilometers from São Paulo. We have a...
We had a great reception from the local population in the region. 325 beds. 160 of these are equipped for operations. 12 floors, 47,000 square meters, we are offering the pediatrics maternity, 40 medical specialties. We continue firm in the purpose of Rede D'Or of broadening the access to quality medicine for more Brazilians. I will remain here for the Q&A, and I will give the floor to my colleagues. Thank you. Thank you, Paulo. Once again, welcome everyone. Let's start with a graph on the left. We have the first quarter of 2023, an average rate of occupancy, 78.5%, 3.4 percentage points above year-on-year and still above if you compare it to the previous quarter.
This occupancy rate is online with the average occupancy rate reported for the first quarter, if you look at 2015 to 2023, which is 78.3% the average. The company also reported, well, the production patient day evolution, we have 73,000 an increment. Stability in the quarter-over-quarter comparison. On the graph on the right, we have the patient day evolution for the COVID Rede D'Or units. From March 2021 and April 2023. You can see the numbers for yourself. Next page. We're gonna start with a graph on the left. Company reported the evolution of total number of surgeries, 121,000 in the first quarter of 2023. A growth of 10.1% if you compare it to the annual.
Well, a growth of 5.1% if you compare it to the quarter. These big surgeries, we have had a growth of 7.5% if you compare it year-over-year, and a growth of 1% if you compare it to the previous quarter. On the graph on the right, we present the same data statistical in the same asset base. Company reports a growth of 8.6% in the number of surgeries in the same basis of assets, and a growth of 7.2% if you compare it quarter-over-quarter. Let's see the next page. Company reported in the first quarter of 2023, the total beds, 11,500 operational, 9,500 about.
A growth of 45% and 31% respectively speaking, when you compare it to the total number of beds and operational beds in the first quarter of 2020. Next page. On your left, we have the total gross revenue of hospital services of almost BRL 6.9 billion. This is a growth of 14.5% if you compare it year-on-year, a result of the average ticket of 10.7%, combined with the growth of volume of 3.4%. Quarter-on-quarter, the revenue increased 6%. This is the result of the growth of the average ticket of 6.6% and stability in volumes. Next page.
On the left, we report the BRL 656 million in gross revenues of oncology infusions and therapies first quarter of 2023. This is a growth of 30.3% year-on-year. an increase of average ticket of 22.5% and an increase of volume of infusion 6.4%. If you compare it quarter-on-quarter, the revenue grew 6.2%, which is an increase of the average ticket, 2.6% and an increase of volume of 3.5%. 59,000 infusions that were done in the first quarter of this year. Next page.
If you start on the left, company reported in the first quarter of this year, cost with hospital services, BRL 4.7 billion, a growth of 4.3% if you compare it to the previous quarter, and 10.4% if you compare it to year-on-year 2022. Paulo already mentioned The SulAmérica M&A, if you adjust those numbers to show the non-cash effect, the growth of average cost would be 2.7% if you compare it quarter-on-quarter, and 8.7% if you compare it year-on-year. Much lower than the growth for these periods and the gross revenues of the company for the same period.
If you see in the first quarter of 2023, BRL 256 million, BRL 265 million of General Administrative Expenses, you can see the comparison with the previous period. We have here BRL 50 million of provisioning for profit sharing, 2023. I would like to say in the second quarter of 2022, we didn't have the complementary provision in regards to the FY 2022, given the scenario that was more challenging. Given a budget for 2022, that was very challenging. We have BRL 17 million, a few IT licenses that will justify the differences in the number for the first quarter to the fourth quarter. If you see year-over-year, a growth of 25.1%.
If you just look at the first quarter of 2022, we had the reversal of contingencies of up to BRL 30 million. The message here is that regardless of these one-offs, the company has administrative expenses, BRL 230 million, regardless of the rate of inflation and regardless of the rate of growth of our company, which is growing. If you look at the next page. Company reported the EBITDA for hospital services, BRL 1.4 billion. Paul already mentioned this, it's almost 28% growth if you compare it year-over-year, or 20% if you compare it quarter-on-quarter on EBITDA margin accounting of 23.8%. Next page, we have a few data for SulAmérica.
On the left, we have the net revenue of BRL 6.4 billion, a growth of 18.3% year-on-year on 2022. On the right, the consolidated loss ratio, we have a drop of 4 percentage points since the last quarter of 2022. On the right, at the bottom, 5.1 million beneficiaries, a growth that is substantial since the previous quarter, if you compare it year-on-year on 2022. Next page. Net profile. Company reported the cash and cash equivalents, BRL 32 billion. Now, once we remove the technical reserves, we have a net cash of BRL 17.2 billion. If you take into consideration the gross debt at March of 2022 of BRL 2.7 billion, we have a net debt of BRL 15.5 billion.
If you just see the net debt over LTM EBITDA 2.7 times, this is growing as reported at the end of the previous quarter. In the center of the page, we have the average term of our debt, 5.4 years, the CDI + 0.8%. We also have the schedule for amortization of the derivatives. That amortization schedule, sorry, on the right. Almost at the end, we have the managerial cash flow. We will start on the left. Reported EBITDA for the first quarter of 2023, BRL 1.3 billion, BRL 46 million. We have the managerial operational cash flow. We have the SulAmérica provisions, BRL 1.1 billion. We have a negative impact of BRL 38 million.
In other balance sheet items, we have a negative impact of BRL 177 million. In leasing, we have the payment of taxes, BRL 232 million, and working capital, BRL 163.5 million. Once again, managerial operational cash flow, BRL 1,061 million with the EBITDA and managerial operational cash flow above 100%. On the right, we have some statistics on the average day for receivables, DIOs and DPO. An improvement in the receivables for 116 days, 49 days, I apologize, for the average inventory days and the hospital service payment. A stability and an improvement in regards to what was reported in the previous quarter. I will finish the presentation now, and I open the space for the Q&A session.
Thank you very much.
We will start with the Q&A session for investors and analysts. Should you want to ask any questions, please type reaction and then you can click on raise your hand. If the question is answered, then you can lower the hand. Due to the time limitation, we request to the analyst to limit to two questions each, therefore more people can take part.
The first question comes from Mr. Fred Mendes from Bank of America. Fred Mendes, the floor is yours.
Hello, everyone. Thank you for the call. I have two questions. First question is the Med-Mat line materials. We had a better expectation is worse than what we had. If you can talk about that line and your trust in that we can reduce those numbers evermore. The second question, I think that Otávio already talked about the cash flow improvement, slight improvement. Is that slight improvement coming from the scenario that is more positive from the sector with the paying parties? These are Well, internal initiatives of the company.
Thank you for the questions, Fred. Well, we do have an effect in the third quarter, especially because of OPME. We've been trying to accelerate a few approvals. That has an effect on income and also a corresponding effect in the average number. We were able to accelerate some of these processes, and that helped us have a higher value in this regard. Also we have an effect on the income, on the total income. When we are looking at the comparison against income, we didn't see that trend that we had in the previous quarters, where we are usually diluting that. The idea is that for the next quarters, without that effect, we're going to continue to see that happening. Negotiations are going well right now. We have an extensive work of standardization. We're looking for better negotiations, better deals.
We've been doing that ever since the pandemic when we had a lot of pressure in that regard. It is our idea to continue to improve in that sense. As for working capital, as we said in our previous call, given the current scenario, we are analyzing a few of the requests for a delay in payment, especially when it's a monthly request. We've been trying to look at more efficient processes. We've been trying to do our homework, basically. There is a lot of opportunities still to improve that scenario. Even though the current scenario now in terms of claim rates is not the best. We do have many extensions for deadline extensions.
Excellent. Thank you, Paulo. Thank you, Fred. Our next question is from Samuel Alves from BTG Pactual. Mr. Alves, you have the floor.
Good morning, Paulo. Good morning, Otávio. Good morning, everyone. I do have two questions, two quick questions. First of all, I wanted to know the following. Could you tell me more about claim rate, what the index is for SulAmérica, so insurance? We've seen a decrease in the first quarter, I would like to know if you think there's space to have still a better reduction in the claim rate index for the next few quarters. Do you think that's going to change according to the tickets or not? Do you think that claim rate is going to go up by the end of the year? Also still on tickets, we've seen an increase in that regard, especially in hospital operations. Could you tell us more on how much of that is connected with a higher complexity or also negotiations with the payers? Hello, Samuel.
Thank you for the questions. I will start with the second question on ticket, and then I'll turn it over to Raquel. Raquel, she is going to be talking more about the claim rate index. Well, we have adjusted that in alignment with what we did in the past. I mean IPCA plus a certain fee. That comes from a change in our mix. We have more complex surgeries. We have a few reference hubs as well for certain specialties, medical specialties. I think that probably answers your question. We also have a few other specific things that we're doing on certain contracts with lower tickets. We've been able to have a better occupancy, a better patient day index. Now let me turn it over to Raquel.
Hello, Samuel. This is Raquel.
Well, about the claim rate index, we still see that there is a lot of pressure in that regard. As we said in our previous call, we thought this was going to improve, and in fact it did. It is around 4 percentage points, 4 percentage points already. Of course, we still have to be very careful. We shouldn't just look at the whole scenario. We have to also deep dive and understand all of the factors. For instance, with winter, we might see a certain variation. There's a lot of flu and other diseases during winter. What we've been doing is, with our partners, we've been trying to focus on something that is more sustainable for the market. Right now in this segment, That's what we're doing.
We're trying to look at these deals, we're bringing everyone to the table to think about the best solutions for the future. For sure, we have a new cycle of adjustments right now. Adjustments and new sales as well. Just wanted to highlight that these figures are very important. PP&E, for instance, 24.7, but that's going to be applied for each contract specifically. Usually for every month, we have an adjustment of one-twelfth of that total amount, but still we've seen a very positive result.
Thank you, Raquel. Thank you, Paulo. Now I have a question from Leandro Bastos from Citi. Mr. Bastos, you have the floor. Hello, good morning. I have two quick questions as well. The first one, I just wanted to have an update on the unit in Campinas.
How is that working, the registration, how many beds, and also for the next few quarters, how is that going to be working? The second question is about the text of the new possible bill that is being processed right now. Leandro, thank you for the question. In Campinas, just like the other greenfields, what we're doing is we usually think about around 80 beds per year. We have approximately four years to have the complete amount, the full number. We are very optimistic right now about Campinas. We're already doing the registration with SulAmérica, Porto Seguro, Omint, Vivex, which is also important in the state of São Paulo. We see some other companies and local companies very interested in taking part. They have visited the hospital, they seem very interested in having access to that structure.
It is going to be a very good structure for Campinas and other cities close to Campinas. The possible bill, well, we know that that's still going to be processed, and it's going to be valid as of June first, if that's the case. We are usually focusing on Rio and São Paulo, the largest capitals. That's easier for Rede D'Or, but I'm sure it's going to be complicated for actually medium-sized hospitals. Any hospitals that are still looking at certain difficulties in terms of sustainability, that's going to be complicated. For us, it is an opportunity to accelerate our consolidation. Again, small and medium-sized hospitals might have an issue with that new text, but we'll have to see if the court is going to approve that text. Okay. Thank you.
Our next question is from Joseph Giordano from JP Morgan. Mr. Giordano, you have the floor. Hello. Good morning, Paulo, Otávio. Thank you for showing us these results. I wanted to talk to Raquel about SulAmérica. Well, you've been working with the expenses of the company. You've been talking about BRL 400 million approximately for the future. I wanted to understand if you can still work on internal efficiency and also on strategy. I actually wanted to know more about your strategies. Do you think now we'll have more of a customized scenario for SulAmérica, depending on the region where you're working, so that we can have more share from a number of customers' perspective? Another question for Otávio. When it comes to liabilities, liability management, is there something that we can still do with SulAmérica?
I mean, working with regulatory affairs, working with that scenario. Thank you.
Hello, Joe. On that first question about SulAmérica, obviously, we still have around five months into the operation. The speed that we've been able to execute here is very impressive. I think it's something that we always try to do. The figures that we've shown already in FCPA, et cetera, are very good. Of course, in five months, you can't really map all of the opportunities. We still expect to continue to evolve and dilute, as I was saying before, all that, comparing with the total income. It is very good for SulAmérica, historically speaking. Our focus is going to be the claim rate index. Even if we have a better SG&A scenario, we're still looking at a certain or an important percentage of the total income.
We are going to continue to focus on the claim rate, and this is the entire team working on that. As for product, we have a great mix of products now. New products that are being launched. We're focusing on the commercial area, and I just wanted to highlight two things here, two references that we have right now. There are very good opportunities for SulAmérica to launch new products in Fortaleza and in Aracaju, in the northeastern region of Brazil. We see very good opportunities to capture market share and to do something that is going to be very beneficial for the services that we have in that region. We're going to also lever more sales in these important hubs in those cities. Raquel, let me turn it over to you. Thank you. Thank you, Raquel.
When it comes to capital, I think it's important to remember that we have that limitation of BRL 600 million. As for products, as Paulo mentioned, we have these two launches in Fortaleza and Aracaju. We're no longer just looking at Rio and São Paulo. I think now it's easier to see this commercial momentum, I would say. We have addressed the potential of this region, and we've been able to bring SulAmérica as an important brand to these places. Another important thing, Joseph, is that right now we're looking at a new management cycle, so to speak. Anyway, we're starting this new journey with these new products and better pricing, more solid pricing for sure. We're also working with other new partners and vendors, and we expect to have very good results over the next few months, and also new products.
Hello, Joseph, this is Otávio. I think we still have this great opportunity to restructure the capital of the company, especially when it comes to indebtedness, for instance. What we've been doing is we had the BRL 2.7 billion in debt that we had standalone before, so we inherited that, and now we're working with certain bonds to deal with that. I'm talking about some of the real estate certificates specifically. There are a few other processes in the, in the timeline of the company, so we are trying to cut on certain expenses. There is a very good planning process for that, of course. Finally, we have the possibility of using some other assets of Rede D'Or to try and have more liquidity. We have some advanced studies right now ongoing.
We are still awaiting conclusion of those studies. We also believe that there is going to be a tax reform approved by the Congress in Brazil. We want to wait to see how that's going to work. Okay. Thank you very much.
Our next question is from Gustavo Miele, Goldman Sachs. You have the floor, Mr. Miele. Hello, Paulo, Otávio, Raquel. Good morning. I have two questions. The first one is on the cost structure and hospital operations. You were talking about that, and I wanted to know more about staff, about the third-party companies that you're working with. We've seen an important reduction in quarter-over-quarter, so I wanted to understand what the expectations are for this year. Do you have any ongoing initiatives right now to have better results for 2023?
I know you've talked about some opportunities of working with third-party companies for certain services. You mentioned that in previous calls, I wanted to know if that's an initiative for the next few quarters. Also, on CapEx, I know the sector has been discussing pressures related to inflation, the inflation rate right now. For CapEx, for greenfield and brownfield, what are the negotiations that you have right now with your main partners? Thinking about also construction for your hospitals in the next few quarters. Hello, Gustavo. Well, let me start with the cost structure. We're working right now to have the same cost structure that we had before the pandemic. As Paulo was saying, he was talking about OPME and the income.
I would say we've had an overall improvement if we compare our results with the fourth quarter, 2022. That's because of the following: staff was around 20%. In the first quarter, now it is 24. It was more than 24. Now it's 24.2%. Again, still on what Paulo was saying. Now on the average, we were around 28%. Now it's 20% in the first quarter of 2023. As for third party services, it was 17.2%, fourth quarter of 2022. Now it's around 16% in this quarter. We've been looking at these improvements quarter-on-quarter, especially lately. In your position, what I would do is I would be very conservative.
Yes, it is possible to have this projection of sequential improvements for the next few quarters. As for your second question, our company has an investment plan. It is public. It is something that we have published already. There is no change that is going to be applied to that right now. I think even with a different financial scenario, it's still going to be the same. We just started with the hospital in Campinas. Paulo was saying we just launched that. We were very conservative with the budget. We also have considered the inflation rate for materials. We know that that happened with the expansion of the Sinops Brasileiro Hospital before. I would say we have so many projects happening right now. Memorial, for instance, Itaim, that hospital in Guarulhos, the hospital in Alphaville, the new hospital hub that we're going to have.
That would be all, Gustavo. Thank you.
Our next question is from Mr. Mauricio Cepeda from Credit Suisse. The floor is yours.
Hi, Paulo, Otávio, Raquel. Thank you for the opportunity. My two questions is regarding SulAmérica. The 1st one is more on the commercial strategy. If you can tell us about what you're doing for the corporate ticket. I mean, how are you going to renegotiate the tickets? Are you implying on a downgrade or a few cancellations? What is the average for the corporate ticket, and how has that been reflected in practice? PME, small and medium-sized companies, the number of beneficiaries is a bit smaller, and at the same time, you have that strategy of the direct implementation all throughout the country. What do you think about those companies? It's about the commercial strategy, that's the 1st question.
The second question, very technical. I understand that you opened a lease. You had opened it in the fourth quarter, 93.7% of loss ratio in the percentage in the fourth quarter, this is the base for comparison, over 90%. Maybe eventually those complimentary provisions that you've done due to the liability side equation, is it influencing that number, or is it more regarding the cash and the technical provisions, that number is pertaining to those routine numbers? That's my question.
Hi, Cepeda. Thank you for the question. Well, talking about the commercial dynamics, I think that the entirety of the sector agrees that this is a number, a moment for the recomposition of the margins. This is the tone at the top, even though that is a growth represent, more timid growth at the base.
Unfortunately, we see the commercial dynamics of the competition as well, with a tone for the stronger readjustment, given the readjustments that were published, readjustment in the tables for sales, strong readjustment in the entrepreneur, the ICMS is about 19% for SulAmérica, for the companies. This is what we've done. A recomposition that regardless of the pandemic still being close, like you said, we still have the average ticket pressures that we're stemming from the pandemic. The sector grew with a premium of two digits. In 2020, 2021, we were pressured with a growth of 1% or 2%, so extremely marginal. There's still one or another company doing movements that are more complex to try and understand the commercial dynamics, but that has decreased.
I see an isolated movement of some pricing, more aggressive pricing in Rio de Janeiro. We strongly believe That will change, and there will be more rationale for the market when there is a new sale through the readjustment. In regards to our portfolio of products that you mentioned, when we have 113, the direct is not an isolated strategy. We try to have a broad portfolio of products that can encompass the client, whatever the moment is. We need to keep the fish inside of the tank. When it starts to procreate and growth and we have a more economic favorable scenario, we continue to grow. We don't have a very high downgrade. There are other issues that can be addressed. We can have a more palatable readjustment.
We are discussing on the reduction of reimbursement, for example, we're talking about the increase of corporate participation. Everything that you've heard many, many times. In regards to the provisions, yes. We have factors that are more conservative, that are more stabilized in the post-pandemic world, and that impacts the liabilities. Well, Cepeda, something else that Raquel has mentioned, well, in regards to the provisions with the PPA and the balance sheet we reported. Well, there is no changes in those provisions. They remain as is. They're established. Okay, thank you. I've seen that they haven't varied quarter-on-quarter, but they got into the calculation of that loss ratio. Well, thank you.
Next question is from Mr. Vinicius Figueiredo, Itaú. Your microphone is open.
Thank you for accepting my question.
I would like to start, well, in regards to the first question of Fred, how much of that worsening of the medical materials was seen with the participation of ambulatory oncology in your revenue mix and also the number of surgeries? Does it make sense to think about that number going back to the thresholds of 2019, even oncology is here to stay, let's just say. There is another point. There is a stronger volume surgeries. The volumes were very strong. At the same time, we have an environment that is very challenging for the paying parties. You're opting to, well, deregister some. How can you take those two factors in the conversion of the non-operational beds to convert them into operational beds for the next quarters and the next point?
You commented on the loss ratio on the last answers. Do you think that it makes sense to think about the loss ratio numbers? We have readjustment cycles, maybe this year and next. A threshold that is similar to what the company was before the M&A, before the pandemic. What can you tell us about that?
Vinicius, this is Otávio. I'm gonna take the first question. In the fourth quarter of 2022, the medical materials was 20.8%. Reading the cold numbers for the published numbers, that number increased to 21.2%. You've seen the previous comment of Paulo with the registry of costs and revenues. Well, it was minimum changes for the results of the company.
If it wasn't, the PME and the relevance of medical materials in the cost structure of the company would drop from that number to 20%. Everything is related to that accounting of the PME. As oncology, well, as a portfolio as a whole, and the organic growth and the increase of the medications, the mission of bringing that relevance to that item to our cost structure for the position that prevailed before the pandemic is a more challenging lesson. We think that this is few improvements quarter-on-quarter and not on all quarters.
Okay. Well, the other part of your question, Vinicius. Of course, this analysis that we do is hospital on hospital.
The level of tolerability for the lower ticket is different if the hospital is on full throttle without the option of the growth of beds, if you compare it to another hospital that you have beds that is still going to be launched. This is a case-by-case analysis, and we eventually will forgo the volume of the lower ticket. This is where we trust that we will replenish that with better tickets, and we've observed such volume, strong volumes in general since the start of the year, and we will continue thereafter. In regards to your question about the loss ratio, of course, this is a long process. To meet the requirements of the short term, but we have the expectation. Medium to long term, we can aim for loss ratio levels that are the same to the pre-pandemic.
This is a desire and still depending on the long work ahead, but in fact, this is what we are going to seek.
Yes. Thank you, Paulo.
Our next question is regarding Ricardo Boiati from Banco Safra.
Hello, everyone, thank you for taking my question. Very quick, two questions. In regards to M&A, the environment of M&A, how do you foresee, marginally speaking, the units that you've involved in negotiations in this very challenging scenario for the sector with the adequate capital cost? If you can give us an update on that would be interesting. Second question in regards to the loss ratio of SulAmérica. I wanted to understand what is the impact of the therapy, specifically condition to some conditions of neurodevelopment and the autism spectrum?
We have a few smaller operators, smaller than SulAmérica, that those therapies are impacting two to three percentage points for loss ratio for the treatment of autism disorders. We wanted to understand how that is impacting your loss ratio.
Hi, Ricardo. Well, I'm gonna take on the first question of the M&As, and then I'll give the floor to Raquel. The company has always been disciplined in its analysis of M&As and acquisitions. It's natural that you have moments with more opportunities, with a stronger pipeline, and there are moments that you have some difficulty, a larger difficulty because of the expectations of the providers are taking time to adjusting to the interest rates or realities of the market and discount rates. We will continue with our focus on discipline.
I believe that Rede D'Or has differentiated itself once again in the short-term past once we've done M&As that were not the larger transactions in the market, but we were very active, and we managed to acquire a large set of assets with returns that are very attractive. It's not what we've seen in many cases on the market. At this moment, we have a few conversations ongoing and what makes sense in terms of return of investment and composition of our strategy, we will advance. It's natural that we have stronger years, better opportunities and moments with less opportunities. These are cyclical, as it always been in our 20 years doing M&As with hospitals. We will have stronger cycles, weaker cycles. The fact is that we will continue to focus in the organic growth when the opportunity presents itself.
Now the floor is to Raquel.
Hi, Boiati. Thank you for the question. Let's talk about the panorama for reimbursement as a whole. Therapy is a big offender of reimbursement, but in their network, but also reimbursement. We've invested diligently in management, auditing and artificial intelligence and education for beneficiary. Well, it's important that the beneficiary understands that when there is any sort of abuse of procedure, even therapy, they are hurting directly the loss ratio of the of the hiring party, and they're going to be having a higher readjustment. We are investing diligently on that. Historically, appointments and exams were the two larger offenders of reimbursement, and we have inverse. Well, we've inverted that that snapshot, exams by reimbursement outside of the network and then therapy.
The number by the smaller operators seems to be reasonable. Here, the advantage of having a group of our size, we've thought about development of our own centers for non-medical therapies to be able to encompass the demand, that avalanche of demand that is coming through and providing a quality service and without abuse. Still talking about that access part, we are discussing with. We are investing actually with technology and facial recognition. Login and password has to be treated as a bank. You don't subcontract your login, so nobody can move it. That has to be the healthcare plan, the same way as a bank, and we are certain that this will help with the fraud and that we see in therapies as well.
Thank you, Raquel, Paulo.
Next question. Mr. Marcio Osako from Bradesco. The floor is yours.
Good morning, everyone.
I have two questions on my side, both related to SulAmérica. The first is commercial. If you can comment on the performance on the addition of new corporate contracts. You've had a performance that was very strong. We have growth above the market. I wanted to understand if there is a component for more aggressiveness on the price and the growth, and how that growth in lines has affected the loss ratio of the company. First question. Second question in loss ratio. Have you worked with the readjustments and the clients? Have you worked with costs but with a review of the service provider tables? Those are the two questions.
Hi, Marcio. Thank you. I will start with the second question. The loss ratio is always a derivative of price and the loss itself.
We're working with these, we're working with the service providers, and we are thinking about disruptive models for payment, for capitation, of global packages, the daily fees. These are initiatives that have taken a long time, and we are increasing that model. The service providers, the hospitals, the laboratories, therapies, we have to think about the formats for payment, what is different, because we want to have a larger market and not smaller markets. High readjustment pressure, the pocket of the consumers, and we have to be creative on our side to think about models that will withhold that pricing. We are having that conversation. That is very intense, I would like to say. On the commercial side, I will recap something that I've done. The tone of the year is profitability of the portfolio.
Of course, we can never lose the commercial appetite and our thirst for the growth in the beneficiary base. The first quarter was intense with important implementation that is very relevant. You've noticed that in the prepayment and the post-payment, we've had some relevant, well, implementations. Given our profitability threshold, there wasn't any type of sacrifice in pricing to address those clients that were in a longer process for renegotiation of this type of negotiation that doesn't happen in two months. It takes longer, it's three, four, five months prior. Small and medium-sized companies, we have a weaker performance, but an increase of tables in all players.
We expect that with that tone of readjustment, higher readjustment, and sales readjustments that are corrected by the loss ratio, current loss ratio, that has an improvement in the results that we've just mentioned. Thank you.
Thank you, Raquel. One question, actually, quick in the part of M&A. If you can discuss how much was the repetition of the provision for contingencies in SulAmérica in the quarter.
Well, Marcio, this, it was 90 million BRL. Two issues. We are talking about the ISS tax, the incidence, tax, and we have the ICMS interstate tax as well for the banks. Thank you.
The Q&A session is closed. Now, I would like to give the floor to Mr. Paulo Moll, so he can give us the closing of the session.
Well, thank you very much for everyone.
I would like to thank everyone that was following us in the call, our investors that have trusted in our company. We are very positive with our work that we're developing, always with a long-term view. I think that the results are appearing. We are very trusting in the growth of the company and the quality of the services that are delivered in our hospitals, our patients. It's an environment that we can offer the level of technology and equipment. We will continue with that long-term view, building a stronger medicine for the supplementary health here in Brazil. Thank you.
The earnings call of Rede D'Or is closed. Thank you for your participation. Have a nice day.