Hello. Good morning. Welcome to the teleconference earnings call of the second quarter of 2021 of Rede D'Or São Luiz. We have here with us today Paulo Moll, President. Otávio Lazcano, VP of RI and Finance. Maurício Lopes , VP Executive, and Leandro, VP Medical. Be informed that this event is going to be recorded and will be available at our website. After the initial presentation, we will start with the Q&A, where additional instructions will be provided. Before we proceed, we would like to clarify that anything that may or may not be said during the teleconference about the perspectives of business projections, operational goals, financial goals, and beliefs of the Board of Directors, based on information that is currently available. This does not guarantee performance, involves risks and circumstances that may or may not occur.
The investors must understand that general economic issues, industry, and other operational issues may affect the performance of the company and may lead to results that are different from the future considerations. I would like to give the floor to Mr. Paulo Moll. He will start. Good morning. Thank you for the opportunity. The floor is yours.
Good morning, everyone. Thank you for this opportunity to show you the conference call, the earnings call. Before we present the great results, I wanted to update you on the evolution on a few strategic issues. Let's start by our digital platform. It has been an important source for capturing our business, responsible for a third of our appointments. We've done 13 million accesses on the portal, against if you compare it to five million in the same period of 2020.
According to this platform, we delivered all the data on the patients. We focus on prevention and coordination of service, increasing how much the patients use our services. Also we are going through a sustainability issue here in the healthcare sector, but we are moving on. We have a very important relevant strategy. We have surgeries of high complexity, we do the share of the complex surgeries that has increased quarter -by -quarter. We can see a very good performance. We've done our investment in infrastructure, HR, equipment, offering to our physicians and our patients the best structure possible for these complex procedures. In our growth agenda, we've had over the first six months of 2021, a CapEx that was roughly BRL 3.1 billion organic. 43 organic projects in development.
Some are in advanced stage, such as Maternidade São Luiz Star, that will be done by the end of the year. We have the new tower of the Hospital Vila Nova Star. We have the increase of the Northeast as well, region. We are in the advanced building of Hospital Memorial Star in Recife. In Salvador, we are expanding the São Rafael. We have investments in these six months of BRL 610 million. M&A. We've had a lot of investments, BRL 2.3 billion in investments. Up until this first quarter of 2021, since October 2020, we acquired 12 hospitals and we added 1,637 beds. This has strengthened our position in Rio de Janeiro, São Paulo with the acquisitions of several hospitals. We have a very good strategy to diversify our geographic positioning, accessing new markets, very interesting markets.
Here I would compare that in the same way that we are accessing Bahia's market in 2018, acquiring the first hospital. Today we have three hospitals in Salvador and Feira de Santana. Recently we have the hospital in Feira de Santana, which is the biggest city in the North, Northeast, and Center East, Center West, actually. We have over 1,000,600 beneficiaries. We're accessing this market, this platform, to achieve an opportunity of organic growth. We will be able to implement in Minas Gerais 5.3 million people being benefited through the acquisition of Biocor, a hospital with 350 beds. We also have the state of Paraíba. We bought the company that was the lead in the market, 400,000 beneficiaries in Nossa Senhora das Neves. That's the hospital that we bought. Also, Proncor in Mato Grosso do Sul, 136 beds, 600,000 beneficiaries.
This is an opportunity to really open new frontiers, trying to achieve leadership in these states. I think that it's fundamental for our strategy to rise the standards of care, align with our purpose of increasing access to good quality, high medicines here in the country. We've already mentioned in the last call the expansion of our relationship with adding 21 new hospitals, over 1,300,000 beneficiaries from the operator. In July, we have a partnership with Vale through the management of two hospitals in the state of Pará, in Carajás, to increase the services. Through a joint venture as well, we are positioning ourselves in the city of São Paulo, either by building a hospital or an M&A that might service the region. That's a strategic vision, really, very relevant issue, and we hope that we can repeat this in the future.
Let me update you about the COVID-19 pandemic. We had an expressive reduction of admitted to the ICU patients. We had, at the end of July, 800 patients in comparison to over 3,000 patients before. Regardless of that, we have a high occupancy rate and a growth of service to the other pathologies in a way that we can sustain these occupancy rates that are very high. This is interesting to deliver our results. I would like to highlight that we've gone over the threshold of BRL 300 million in donations, and we raised over BRL 100 million with partners. We are very proud. We take a lot of pride in helping the local population. Once again, I would like to thank you all the collaborators of Rede D'Or, all of our employees. Also, I would like to thank the shareholders.
Thank you for the trust that was invested over the years. I give the floor to Otávio. He's going to go over the numbers. Otávio.
Thank you, Paulo. Good morning, everyone. Thank you for taking part in this earnings call. Once again, Rede D'Or is announcing very solid results and some records, historical numbers established by the company in the last quarter. Rede D'Or has reported almost BRL 50 billion in assets, BRL 14.6 billion of cash flow immediately available. A patrimony net that shows the financial muscle to continue to grow. If you go to page four. Regardless of the drop in 34% in the number of COVID-19 patients, we can see between March and June, the number of patients has grown. Well, the patient daily average has grown 4.3%, and ex-COVID increased 12% quarter-by-quarter. The next page.
As you can see, we have the operational indicators, evolution of total surgeries. We also see the diagnostic sales. We can see that actively, we have all the operational costs for surgeries, and therefore, we can have a high occupancy rate based on the enormous amount of operational beds. This is a record number of surgeries and a growth of 6.6% in the same hospital sales base quarter-by-quarter. Page six. We have the data in regards to the oncology volume of procedures and patient day volume and average occupancy rate. Other graph on the left, year-on-year, we have 628,000 patients stay in the second quarter for 2021, a record 62% higher than the previous year. Average occupancy rate for a set of 58 hospitals has gotten to 83%. On the right, you can see the data regarding ambulatory oncology.
Over 52,000 procedures, another record, 21.3% higher than the same period in 2020. Page seven. We can see the hospital bed evolution. We've talked about that, the operational and total beds. 1,500 operational beds were added, actually by 1,578 since the start of the pandemic. 8,788 operational beds are for the second quarter of 2021, another record, 597 beds higher than what was reported in the previous quarter. We can see 532 that come from M&A. We have 9,611 total beds. That's a record. 1,600 from M&A by 12 hospitals that were added to the portfolio since the IPO. Moving on. Take a look at the gross revenues. Total gross revenues on the left. You can see BRL 5.8 billion in the second quarter, 10.7% higher than the first quarter of 2021, and you can see almost 89% higher than the second quarter of 2020, another record.
Quarter-on-quarter growth of 63.4%. Let's continue. On the right, the gross revenues for oncology infusions or ambulatory. We can see BRL 445 million second quarter, 34% higher than the second quarter 2020. Another record on quarter-by-quarter, the growth is 30.5%. In the first six months, gross revenue, oncology infusions ambulatory has reached the landmark BRL 852 million. Let me take a look at page nine. On your left. Rede D'Or has reported in the second quarter of 2021, the cost of services BRL 3,918,000,000, a growth of 37.6%. We have the total revenue and a growth of 42.6% in comparison to the six months of 2020 when we reported a cost of BRL 2,741,000,000 . We have the services for subcontracted parties that has been related to the patient base and the additional beds over 1,800.
Those are the impacts on the second quarter of 2021 to 2020 and the oncology expansion as well. Semester-on-semester, the cost for administrative and general costs, there was a decrease of 10%. You can see the decrease here on your right in expenses. As we have mentioned, the expenses of BRL 258 million of 2021, a growth of 16% in regards to the previous quarter and a reduction of 32% facing the same period of the previous year. The growth of impact in comparison to the previous quarter is the impact of non-recurring stock options, the high expenses with profit sharing, the collective bargaining agreements that we're mentioning and their positions. The reduction in regards to the previous year, we have less expenses with the stock options and more expenses for the profit sharing for the workers. Those are the provision values.
Let's see page ten. We will start on the left. The EBITDA, BRL 2,379,000,000 for the first quarter of 2021. Margin of almost 24%, a record. As well as the EBITDA adjusted. Reported for the second quarter of 2021, BRL 1,565,000,000, a growth of 607% in regards to the previous quarter. Operational cash flow adjusted, here we can see the generation of BRL 887 million. Over BRL 500 million after taxes. Net revenue, BRL 447 million. Now to continue. Let's talk about the debt profile on the left. As of June 30th, we have a gross debt of BRL 22 million. The gross debt average CDI 1.3%. Gross debt average term, 5.7 years. A percentage of the foreign currency that is subcontracted, we have 37.6%. We can see the credit lines. Many companies are affected by the exchange rates.
The company, as it was mentioned, has reported a cash of BRL 14.6 billion. We have a net debt of BRL 7 billion. The net debt over the 12 months, 1.7 x. The same calculation relates to Well, if you reduce it will be 1.4 x. We can see the gross debt per index, and you can see on the right the debt amortization schedule. Last but not least, before we open for Q&A. On the left, we have the performance of our shares in connection to the index of the stock exchange after the IPO. On the right, we have a few more information in regards to the treasury. The average daily traded volume, et cetera. I think that we will stop the presentation now for the benefit of time, and then we will open for Q&A. Thank you. Let's start the Q&A.
To ask your question, type asterisk nine in your telephone. We have a few questions. Dilcio from J.P. Morgan, the floor is yours.
Good morning. Congratulations for the presentation. Let's talk about the trend that seems very good ex-COVID. To try and understand the average ticket, the numbers, maybe it will grow in this last quarter. Do you see any accommodation in regards to the average ticket? We have to see the profitability rates. We have seen that after there was a drop in the COVID-19 patients. From now on, I think that we're going to get better numbers. The M&A is favorable. I think that the issue of M&A seems to be very low. Will you continue to do this geographical expansion?
Well, let me start with the M&As, and then I will give the floor to Otávio, and then he can continue with your questions. We are very excited with our pipeline for M&A. We've been talking about this in our IPO. I think that this is maybe even if we consider the effect of COVID-19 in some of the average-sized hospitals are having more difficulties, in their books, it has an impact in the pipeline. There's even the issues of expectations. We had an accommodation and a gradual return to levels that are according to the records, and we are very excited, nonetheless, with the size of our pipeline. We hope that we have good news for the next following quarters. We don't guide tickets quarter -by -quarter through the market.
If you allow me, we believe that as we manage actively the surgeries and we use the operational cash flow of the company, this will compensate the drop in the revenue that comes from the COVID-19 patients. As Paulo has said at the beginning of the presentation, there is a trend in drop of these patients. We are here in August, and the company will report the operational beds, which is very similar to the occupancy rate that was reported for the period of June. I think that in that way, I'm answering your question without trying to compromise the company with KPIs or guidance. It all depends on the way that you're working with these numbers.
Thank you.
Very well. Next question will be from Fred Mendes, Bank of America. The floor is yours.
Good morning, everyone. Thank you for the call. I have a few questions.
I think that the next question is just like the one from Dilcio. The occupancy rate is the same one as 2019, now above 80%. I wanted to understand from your standpoint, how much of it is sustainable? Can we think that the regrowth is stronger? Can you think about that level that is stronger up ahead? Secondly, I wanted to understand if there was an impact, relevant impact, or maybe these are more recent data. The biggest impact should take place over the next quarter. What do you think?
Hello, Fred. I'm going to start with your second part, and then I will talk about the occupancy. Fred, having to ramp- up is within our ear. It's what's expected. Of course, you have an impact for some relevance over the next few months, but it's beyond the potential.
There is a time for the physicians and the population. We hope that this is a process that will take a few quarters so we can get to the potential. Remember, as we had said in other earnings calls, this is the first step, and we have to have expectations of increasing our relationship with our investors.
Fred, hi. Congratulations for your career. I know that this is another interesting step for you. Fred, occupancy 83% is not our record. In 2018, we had an occupancy rate, I don't remember the numbers, but it was higher. Here, we talk about the business model that we have. We have the ICU. The occupancy rate, 79%, all throughout the investment of the company. I believe that this is a good information for you and the correct way of answering your question.
Now, Fred, if you look at page five, the graph on the right, we can see the total surgeries, the same base. Here, historically, we can accelerate and recover some movement for surgeries with the same administrative base. As Paulo had said, I am very excited with the results, and we are excited for the future. I think that we will have a good occupancy rate, and we will have the long-term results.
Thank you, Paulo.
Thank you.
Well, thank you. The next question will be from Samuel Alves from BTG Pactual.
Good morning, everyone. I have two questions for you. First, still about occupancy rate, could you tell us how was the occupancy rate on the second quarter? Did we improve or did we optimize this as the COVID-19 cases dropped in your network?
Now we saw that there was an acceleration quarter -by -quarter regarding COVID-19. If you can tell us a little bit more details, expenses with COVID-19 that are being adjusted, the results, just so we can understand this evolution quarter -by -quarter.
Samuel, the occupancy rate all throughout the quarter was stable. We had great fluctuations, and we have 58 hospitals, of course. Now, in regards to your question, non-recurring COVID-19 and the peak of the second wave was manifested in the first quarter. Obviously, we have resources, we have expenses, and we had to mobilize all throughout the second quarter as the number of cases is increasing. That's the response.
Thank you.
Thank you. Next question will be from Mauricio from Credit Suisse. Mauricio.
Good morning, everyone. Thank you for your availability.
I have a few questions. I would like to go back to a few points that the colleagues have mentioned. We've had many conversations. The selection processes, they're not affected by the COVID. You can see that COVID, it even became a problem for the elective procedures. I wanted to know how much that occupancy does it take away from the occupancy of the rates of COVID versus the other one. Let's see this from a different angle. You have those expense courses and the adjustment of the EBITDA. This doesn't impact the revenue. How much do you estimate COVID, and how much has it helped the revenue? Third quarter. Variable payout, you see the number that is still interesting because of the different action plans. What should we expect as a normal threshold for the recovery?
When things are becoming recurrent, well, since you're getting into the volume of complex surgeries, will you talk about this volume so that it becomes a proxy that is better for you? [Ready, sir. Go.]
Let's talk about the first part of your question about the COVID-19 demand and the elective surgeries. It's important to talk about this. We had a behavior at the beginning of the pandemic, where we had an expressive drop of the elective services through all pathologies, without necessarily having a growth of COVID-19 in all the hospitals. Actually, the occupancy rates are low, and that has had a very high effect in the results of second quarter of 2019. After the second quarter of last year, we see a normality, a growth in the electives. We understand that the flows are segregated. Of course, they were safe.
We go back to normality in the occupancy of the hospitals. Of course, if you see a moment such as March of last year, where we had over 3,000 patients admitted to the hospital simultaneously, then we have to see the less complexity surgeries, and we see the other non-emergency pathologies. We delay these, so we would have the human resources to actually service our patients and for the other surgeries and pathologies that couldn't have their treatment delayed. That's why we see an expressive drop in the elective surgeries. Now, as you have a drop, and this is what we observed from April, week by week, we had a drop in the number of COVID-19 patients. We start to create an increase. We see an increase in the service of other pathologies, and we can do that with a lot of competency.
We managed to do the reduction of COVID and the increase of other services in an organized way, keeping high occupancy rates. We have clarified that part. Now I will let Otávio and the team to talk about the other issues.
Okay. A lot of questions, a lot of answers. The items that we highlight as extraordinary, non-recurring regarding COVID, and that we use to calculate the adjusted EBITDA are the items that are not invoiced by the company. We do not have the reimbursement from the paying. The share of revenue by the COVID-19 patients unbound the expenses that occurred in regards to the quarter, the RSU. We have gathered the taxes and the labor costs, and we do not expect in this quarter an extraordinary recurring impact.
Remembering that we also incurred expenses of profit sharing for the people that are higher than the provisioning that we, for the fiscal year that we are in regards for 2020. This is due to the dedication that is not questionable of all of the workers of the company. Last but not least, Cepeda. I do not know the number of surgeries, high complexity ones. Just to show you. This is very interesting, which is using the operational flows all throughout time. We do not want to provide that granularity to the investors in a recurring way. Once again, the KPIs, they have good things and bad things. Either they're good or bad, and it all depends on how we use them. Not all of the details has the granularity that we will report in a recurring way.
We will report, of course, the information as we think that it helps the beneficiaries from the balance sheets, so they can have a better understanding of the operational results, financial results of the company. Okay. Thank you. It was maybe a proxy better than beds for the revenue and the ticket. A proxy that is more related to the generation of revenue. Regardless, thank you very much. We will talk about this, Cepeda. We always have a good relationship with you. Once again, we interact during the IPO. We discussed the pricing model to give more sustainability for the sector. Here, obviously, we have the question: Well, where do we get this revenue growth? It comes from the number of complex procedures that are being done by the company. The good news, epidemic is present quarter -by -quarter. The number of complex surgeries has increased. It's 6%.
Thank you. Next question will be from Vinicius Ribeiro from UBS. Vinicius.
Hello. Thank you. I have two questions. Just to talk about the issue of the non-recurrent, something that I want to understand. There was a demobilization of resources, assets. I just wanted to understand. This means that you closed operational beds during the quarter, can we expect that there was more beds than the 788 that you've shown, or is it something else? What if your idea is to occupy these collected beds? Another question. About the infusion ticket. I know it represents a little from your revenue, when we compare it to the previous quarter, there was a significant increase. I just wanted to understand, what should we expect up ahead?
Thanks for the question. All right. Let's talk about the expenses.
The subcontracted expenses and the end of the first quarter, when the pandemic was taking place in the beginning, and they were recognized via accounting. There is no closing of operational beds. As it was said in the presentation, we increased the rate of operational beds even in comparison to the first quarter, and we had the record results of the company. What we had also is the elimination of subcontracted additional workforce, subcontracted at the end of the first quarter, when the first wave was manifesting itself. Now, as the time goes by, the number of COVID-19 decreases in our units. We expect that these are non-recurrent expenses in the future. Thank you very much. Well, the second point about the infusion oncology, if you can comment a little bit on that. What can we expect on that? What is the baseline that we should consider?
This is along the lines of the long-term modeling of the company. We have an increase of 9%. This is on the long term that we shared in the IPO. If you can give us more qualitative things about this.
Well, from an update that I got from the president of oncology, and we have a number of new drugs to be launched, and this influences, of course, the dynamics of the tickets by infusion for chemotherapy. It is difficult to see the impact on the long term for the new drugs. If you wanted a more short-term, medium-term, that dynamic of the increase of tickets is higher than the ticket and other services, medical services, and they will continue to happen. This dynamic is very important for the launch of new drugs and therapies. Well, let me just talk about the quarter.
In the second quarter, the infusion average was 8,400. It was lower in the second quarter, there might be a mix issue.
What are the two parameters that we should consider for the rest of the year, what is the baseline that we should assume for the long term?
About the ticket detail. Well, the 10.8 is an increase quarter-on-quarter of the previous fiscal year. Absolutely aligned with the long-term model of the company. Now, this quarter against the previous quarter, the increase of ticket is 7.8%.
Perfect. I just wanted to understand if there was a specific thing, this is clear.
If I was in your position, I would continue to model the 10% of increase of tickets year-on-year, which is what the company uses.
Thank you.
Very well.
Remember that to ask a question, you just need to type asterisk nine in your phone. If there are no more questions, we close the Q&A session. Therefore, we return the floor to Paulo Moll. Please.
Once again, thank you for your participation. Our investor relations team will be available should you have the need to talk about these other issues, and thank you for your time. Therefore, the audio conference of Rede D'Or São Luiz is closed. Thank you for your participation. Have a wonderful day