Hapvida Participacoes e Investimentos (HAPV3) Q1 2025 earnings summary

Executive summary

• Achieved 7.3% year-over-year net revenue growth in 1Q25, reaching R$7,499.5 million, driven by health plan price adjustments and higher average ticket values, despite a slight decline in beneficiaries.

• Strong cash generation and leverage reduction, with net debt/EBITDA down to 0.98x from 1.06x in 4Q24, supporting ongoing deleveraging and financial flexibility.

• Maintained operational efficiency and margins despite seasonality, with continued investment in expanding and qualifying the own network and IT infrastructure.

• Focused on operational efficiency, cost control, and quality-of-care improvements, reflected in lower NIPs and improved care indicators.

• Launched ConnectaMed, an online medical education platform, with 14,000 active physicians and over 200 lectures, supporting continuous upskilling.

Financial highlights

• Net revenue grew 7.3% year-over-year to R$7,499.5 million, with health plan revenue up 7.8% and dental plan revenue down 1.9%.

• Adjusted EBITDA reached R$1,003.9 million (13.4% margin), up 0.5% year-over-year, despite increased litigation pressures.

• Adjusted net income was R$416.4 million (5.6% margin), down 15.8% year-over-year, reflecting higher legal and contingency costs.

• Free cash flow was R$570.3 million, with cash position increasing to R$9,950.9 million and strong cash conversion (86.4% EBITDA to operating cash).

• CapEx of R$198.6 million in Q1 2025, mainly for IT and healthcare infrastructure, up 48.5% year-over-year.

Outlook and guidance

• Expect a return to organic member growth for the remainder of 2025, supported by commercial initiatives and network expansion.

• Anticipate more moderate average price hikes in 2025, with price increases below competitors but sufficient to recover and expand margins.

• Positive outlook for G&A synergies and further cost reductions as integration benefits are realized by Q3/Q4 2025.

• Continued focus on deleveraging, aiming for a net cash position while pursuing organic and inorganic growth opportunities.

• Ongoing focus on price recovery, cost control, and verticalization to sustain margins.