CM Hospitalar (VVEO3) Q1 2025 earnings summary

Executive summary

• 1Q25 results reflect progress after a year of reorganization, with improved gross and EBITDA margins despite a 5.7% revenue decline.

• Strategic focus on profitability, contract renegotiations, and operational efficiency continues, with optimism for future quarters.

• Free cash flow consumption was R$52.2 million, the lowest Q1 outflow since 2021.

• Celebrated 90 years of Kramer/Cremer brand and completed major plant consolidation, with a new wet wipes plant to be inaugurated in 2Q25.

Financial highlights

• Gross margin reached 13.8%, the highest in five quarters, up 0.3 percentage points year-over-year.

• Adjusted EBITDA margin expanded to 5.7%, up 0.4-0.6 percentage points year-over-year.

• Expenses decreased by almost 6% year-over-year; general and administrative expenses down 9.6%.

• Adjusted EBITDA was R$159.6 million, up 1.3% year-over-year.

• Free cash flow improved to -R$52.2 million, the best Q1 result since 2021.

Outlook and guidance

• Inventory levels impacted by lower March sales are expected to normalize in 2Q25.

• Further benefits from contract renegotiations and expense reductions anticipated in Q2 and Q3.

• New wet wipes plant launch in 2Q25 expected to drive synergies.

• Guidance for leverage to return to 3.5x by June 2026, with no divestments required.