Good morning, everyone, and thank you for waiting. You're welcome to Viveo's fourth quarter of 2025 earnings release video conference. I would like to highlight to those who need simultaneous interpretation that we have this tool available on the platform. To access, just click on the interpretation button in the globe icon at the bottom of the screen and choose your language of preference, Portuguese or English. For those listening to the video conference in English, there's an option to mute the original audio in Portuguese by clicking on "Mute Original Audio." We inform you that this video conference is being recorded and will be made available on the company's RI site, www.viveo.com.br/ri, where the complete material of our earnings announcement is available. You can also download the presentation using the chat icon, even in English. During the company's presentation, all participants will have their microphone disabled.
We will begin the Q&A session. To ask questions, click on the Q&A icon at the bottom of your screen and write your question and company to join the queue. Upon being announced, a request to activate your microphone will appear on the screen, you must activate your microphone to ask questions. We advise that questions are asked all at once. We emphasize the information contained in this presentation and any statements that may be made during the video conference related to the business perspectives, projections, and operational and financial goals of Viveo constitute beliefs and assumptions of the company's management as well as information currently available. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions as they refer to future events and therefore depend on circumstances that may or not occur.
Investors should understand that general economic conditions, market conditions, and other operating factors may affect the future performance of Viveo and lead to results that differ materially from those expressed in such forward-looking statements. Today, we have Mr. André Clark, CEO of Viveo, Frederico Oldani, Vice President and Financial Administrative, Leonardo Byrro, and other directors. Please, Mr. Leonardo, you may proceed.
Good morning. Thank you, everyone, and thank you for being here with us for the 4th quarter of 2025 earnings release video conference. I would like to start by talking about the priorities to the market, and I would like to remind you that in 2024 we had an extensive diagnosis of all of the operational improvements that had to made in the company, and we started 2025 absolutely focused on operational discipline in each and every one of these fronts.
The second and fourth quarter had to do with evolution of controls and systems and integration of the different acquisitions that were made. After the second quarter, we improved our cash, renegotiated our contracts and accounts receivable. The stocks went down and were totally funded by our accounts receivables and have always been in the core of our business. After the third quarter, we resumed growth of the business, especially in the third quarter. In the fourth quarter, we grew above 6% when compared to the previous year. This was aligned to our plan that was presented to our investors and debtors at the end of the fourth quarters. We reduced the speed of growth and improved our EBITDA margin.
As we can see in the next slides, all of these initiatives took place not only in the last quarter, but throughout all of the quarters of the year. In the third quarter, we had a resumption of net revenue growth, including clinics and hospitals, but other channels as well. We had a record cash generation, our main priority in the year, reaching BRL 20 million in cash generation, another record cash generation. Our cash cycle went down since the first quarter of 2025. That had to do with a reduction of our stocks and also the adjusted accounts receivable. Our EBITDA margin has grown for the fourth consecutive margin. We had a decrease in expenses, which also contributed for the growth of our EBITDA margin. With that, we had a leverage of 3.97x as adjusted. It's part of our plans for the upcoming quarters.
In the next slide, we're in the middle of our succession process. Once again, I welcome André. I wish him luck. The company is in excellent hands, Fred and all other directors of the company. The process has been gradual and connected to our main business parts, including clients and vendors, with an active participation of our team. Therefore, we are confident about the possibility of having Viveo's operational transformation with the support of our partners so that we can continue evolving and improving Viveo's results. I now turn over to Fred, but I would like to thank all of our partners, investors, and above all, Viveo employees transforming the healthcare market. I will be following the company, supporting the company, and cheering for the company.
Thank you, Leo. I will start with slide number seven, and we'll talk about the performance of our channels.
I wanted to highlight the hospitals and clinics development in the fourth quarter. We grew 6.6%. This is very important. It shows that after some orders of adjustments where we went from different contracts, as we had already anticipated in the end of 2024 according to our strategy, where we have contracts with better results for the company, our business selectivity would be much better. We resumed growth after the fourth quarter, with better contract bases than we had before. Therefore the results are very important. They demonstrate that we were able to grow once again, even after significant adjustments in our business strategy. As anticipated in the year, we had a minor decrease. It was all according to plan.
I would like to highlight that this decrease in revenue was compensated by the increase in our margin, and I can assure you that we had significant growth in the gross results for the company. In the Laboratories and Vaccine segment, we grew almost 20% in the year. This growth is mainly due to the Vaccine segment, where we had a series of launches throughout the year. They have changed the dynamics of the Vaccine segment. We have vaccines focusing on the adult group, and we continue growing steadily for the year. This channel is the highlight for performance in 2025. We also continue growing when compared to the other quarters, and we are making a series of adjustments in price-ification, portfolio, product mix in retail, and we maintain the same strategy for 2026.
I would also like to mention that we had an important increase in market label. This is something that we had lost or decreased in 2024. In retail, the margin was higher than in other segments, and we will continue invest to improve this channel. The year was very challenging, especially because the impact of a series of contracts that we lost due to verticalization of some important clients. We resumed growth after the fourth quarter, especially based on the internalization of DFLog and growth in PSP programs. With that, we conclude 2025 with our revenue basically stable when compared to 2024, but already indicating that growth was resumed in the fourth quarter, even though the year had a contraction. In the fourth quarter, we grew. We can clearly see the evolution over the quarters.
Of course, in the first and second ones, we had less revenue. In the first quarter because of seasonality issues, in the second and third because of the company's strategy to be more selective with contracts. We can see that after this adjustment, we can see the demand, and the company remains as one of the main providers of products, services, and materials for hospitals, clinics, and our clients. Our demand remains strong despite the selectivity we have chosen to use as a business strategy. As anticipated before, we had significant growth over the year. We expanded our gross profit in 1.1 percentage points in the fourth quarter with a 15.7% of gross profit. Our strategy was to be more selective, but the profitability increase would compensate, and we clearly saw this happening throughout the year.
I highlight that in the fourth quarter, in general, the gross profit is usually lower than in the third because of the different mix. In the year, we conclude with an expansion of our net margin. Here I think that we can say with some confidence that everything we were committed to doing at the end of 2024 has been delivered. The business' strategy was more selective. We left some contracts, had a gross profit and margin expansion. With that, we could also have a better working capital and therefore we can consider that the strategy has been successfully implemented, and we can improve profitability, decrease working capital. In the next slide, we can see the expenses over the year. We had a significant decrease in sales expenses and general and administrative expenses.
I highlight that we had some expenses in 2025 that we didn't have in 2024. When we look at the increase in total expenses over the year, we considered it as a good result because we changed our provision models of doubtful debtors. With that, we had an additional expense of greater than BRL 30 million, which was not present in 2024. When we look at it closely, we can see that this is very positive despite the growth when compared to the past year. Moving on to slide 12, I would like to talk about the EBITDA. We grew more than 19%, 0.7% of margin expansion. We can also see an increase in the EBITDA margin, and it is consistent quarter-over-quarter.
We concluded the year with an EBITDA of BRL 706 million and a 0.5% margin growth. This was significant evolution and we still do not consider that these results are as we wanted them to be, and they do not completely show our potential, but we're very happy with what we delivered in 2025. We understand that in 2026 we still can have operational results to be delivered. The financial results, we had a decrease of 10.5% in expenses. There are different reasons for that. Some of them are non-recurring. The main aspect here is that even in a year when we had significant increases in interest rates, our result was more or less constant.
Our adjusted result, at the end of the day in the year we had a profit. For non-recurring effects, if we exclude them, we had a slight improvement when compared to the previous year, even in a scenario where interest rates were very high and use all of the company's cash generation for the year. Now in the next slide 14, we have the cash flow. Here we have the most significant improvement we had when compared to the past year and the previous years. The free cash flow, we were able to generate BRL 515 million of operational capital. This is significant not only when compared to 2024, but to the other years in the previous cycles. We were focused on growth, which consumed a lot of cash.
In 2024 we changed our strategy and focused on cash generation. Now we change the level of cash generation close to BRL 500 million. We can clearly show here that we recovered our working capital with over BRL 600 million in gains. We can see the main areas of working capital and we see that all of them improved when compared to the previous year. We expect to continue generating substantial cash amounts as we did in 2025. This is likely to happen not only in 2026, but in upcoming years. This improved cash generation will be essential for us to support the deleveraging process of the company. In slide 15, we can see the cash cycle. We have had our lowest cash cycle.
We have accounts receivable, stocks, and in the funding of stocks, here we can see that in 2025 we had significant adjustments. In 2026, we expect to continue having adjustments, but they will not be in the same order as the evolutions we had in 2025. In 2026, we continue focusing on improving working capital. The main focus will be on accounts receivable. We still have clients with deadlines that are higher than we would like them to be. We made important adjustments this year. We will conclude these adjustments, and all our clients will use the same timeframe that we consider to be healthy, and this will take place as of next month when we will start renegotiating new contracts.
For inventory, we still see a possibility of improving our inventory, but you will no longer see the same level that we saw in 2025. The focus on reducing the need for working capital remains a focus of the company. Debt. As Leo anticipated, we closed the year with a leverage below 4x . At the end of 2024, we renegotiated our covenants. We had a decreasing cover throughout 2025. In the fourth quarter, our covenant was 4.5 x. We ended below 4x. This is a very important improved over the quarters in 2025. The first quarter is usually a more challenging one in terms of cash generation because of CEMAD.
We can see that we decreased over 0.5x in EBITDA when compared to the beginning of the year, demonstrating the administration's focus on keeping leverage at least stable in 2025, keeping in mind that the expenses we had with interest rates was significant and even so, our net debt remained stable because of the improvements in our operational results. 2025, we delivered our commitments. In 2026, we will conclude this process. Improving operational efficiency, improving our revenue, this is something that is already ongoing. We believe that the numbers for 2025 place us at a very favorable position to discuss with our creditors. This is what we have for 2025. I now turn over to André Clark, our new CEO, to comment about his arrival and what he sees for 2026. Thank you very much.
Well, thank you, Fred. Good morning, everyone. This is André Clark. I come from a long chain industry with diversified products with a very regulated market. Environments which are not very different from Viveo's environment. I would like to highlight and thank Leo, Fred, and the whole team for the transition process that they have enabled me to have. I had an opportunity to get to know the company's operation. I find a company with first-line assets, very singular companies, logistic chains that are well consolidated, equipment with high technology, and a technology platform which is excellent, even though maturing still. 2026 will follow the same lines, but it will be much more intense. If I can choose a word, the word is focus. Focus and discipline with clear strategic priorities where we have to deliver results.
We have to deliver cash, deliver what we promised our clients and our vendors. Of course, we will pursue a better capital structure. Simplification is the name of the game in this environment, removing complexity from the systems, making the lives easier for those who operate in the company with a lot of focus. It is important to highlight that Viveo has industrial assets, new logistic networks that are maturing, which is challenging, but also gives a lot of opportunities. We will be able to deliver better results to our clients with simplification and methodology. Of course, sustainability must be highlighted. Viveo has a risk management and governance, which is essential to ensuring business stability and long-term sustainability. Last, but not least, culture is very important.
It can be strengthened with team engagement, talent development and developing a merit-based and safe environment. I thank you all and wish you a good day. I now turn over the operator for the Q&A session.
We will now start the Q&A session. I would like to remind you that to ask questions, you should click on the Q&A icon at the bottom of the screen and write your question to join the queue. Upon being announced, a request to activate your microphone will appear on the screen, then you must activate your microphone to ask questions. We kindly request that questions be asked all at once. Our first question comes from Mr. Felipe Amancio from Itaú BBA. Please proceed with your question.
Good morning, everyone. Actually, I have two questions. The first one is regarding hospitals and clinics. Then we have the contract renegotiations.
I would like to understand how the performance for this quarter is adjusted for 2026, and whether it makes sense for us to expect vertical growth for 2026, and how big will it be. My second question is more about the sector. After this period that the sector went through in from 2022 to 2024, 2025 seems to have shown better results. To what extent do you feel that negotiation with hospitals, especially the smaller ones, has improved, and do you think that this will go on in 2026 as well?
Well, thank you, Amancio. This is Fred. Hospitals and clinics, we've seen a very favorable environment after the fourth quarter. We expect that 2026 will follow the same lines. We've seen the competition with distributors, the demand has been significant, especially from the industry asking us to take over more contracts.
We know that the environment for distributors in general, we can see other distributors going through the same thing in 2025 that we went through in 2024. We've absorbed part of this demand, but not all of the demand that we see. We remain being selective, and it shows us that we could grow faster than we're growing, but we are choosing our contracts and the ones that make sense to us, and this will be our dynamics for 2026. We do expect to grow in 2026, but we will continue making adjustments. We still have deadlines that are not optimal yet, but we will reduce them. We will probably lose some of these contracts, but we understand that the demand that we can see make up for the contracts that we will end. We do see growth for 2026.
In line with what you've seen close to the fourth quarter, I would like to highlight that it will grow because we are selective. If we were to capture all of the demand we see, we could grow more. We will not do that because we are focusing on profitability and also improving our working capital. I think that answers your first question. For the sector in general, yes, we do see important results in the hospitals, in the operators. They are better. That decreases a little bit of the pressure we've seen for 2023, 2024 in working capital, trying to push some of the pressure we've seen in the whole chain. The distributors suffered some. We can see that hospitals, clinics, and clients, the situation has improved. In terms of our competitors, the situation has worsened. Our competitive environment for 2026 is very competitive.
I don't know whether you want to add anything.
Oh, this is perfect. Thank you for the answers. Have a good day.
Our next question is from Mr. Renan Prata from Citi. Please proceed.
Good morning, everyone. Thank you for the opportunity. My question has to do with costs. You talked about the competitive environment. Thinking about costs, what are the opportunities you see? I wanted to better understand the dynamics and the magnitude of growth, efficiency for 2026, also credit. Fred talked a little bit about the renegotiation debt. I wanted to understand what the macro perspective is, negotiation deadlines, and liability management as well. Thank you very much.
Well, thank you. Regarding efficiency, in 2025 we had significant efficiency gains. In 2026 they will be lower in different fronts. I will start with the industrial aspect.
In the second quarter last year, we had, the wipes, plant. We were able to escalate that to the production level we had before. A new plant always takes some time for the ramp-up. We were able to reach at the end of the year running at productivity level according to plan. This year, now, we will have a good part of the synergism we had planned for 2025. Or what we planned for 2025 will be captured in 2026. When we look at the industry, our wipes plant, will be—t he results will be captured this year. The fact that we had a significant decrease in exchange rates leads to changes in the price of raw materials, which will lead to a positive impact. So the combination of factors will be favorable.
At the end of the quarter, we concluded the DFLog negotiation. Our RFL operation with the DF that we acquired throughout 2025, I'm sorry, 2026, we will see significant improvements because of this integration. Yes, we've had evolutions in freight, logistic network, operational planning. We had important changes in our model. This year we believe that our efficiency will be better with better delivery routes or we will reduce expenses with the less default payments. In terms of expenses, we still have some sites where we are planning to close actually throughout the year. We will only be able to conclude the delivery this year. There's a lot to be done. I only mentioned some of the areas we're working with. Undoubtedly, in 2026 we have a lot of homework to do.
I want to make it clear that we do not expect to have the same magnitude of gain we had last year, but we do expect to have significant improvements in 2026 regarding debt renegotiation, liability management. We've already started this process. We're talking to banks, debenturists, so that we can deal with anticipated payments of debts to be made this year. We understand that the results for 2025 places us at a very favorable position. The creditors are the same. Because we renegotiated covenants at the end of 2024, we made a series of commitments. The numbers in 2025 demonstrate that they have been delivered 100%, and therefore our position is very favorable for successful negotiation. Throughout the second quarter, we expect to have concluded this renegotiation process. This is our perspective regarding this process.
Very clear. Thank you, Fred.
I remind you that to ask questions, you should click on the Q&A, write your name and language to enter the queue. The Q&A session is now over, we would like to turn over for the company's final comments.
I wanted to thank you all for being present at our earnings conference for 2025. Thank you very much, we will talk to you once again when we close the first quarter of 2026 earnings release video conference.
Viveo teleconference is now over. The RI department is available to answer other questions and concerns. Thank you, I wish you all a good day.