Oncoclínicas do Brasil Serviços Médicos (ONCO3) Q2 2024 earnings summary

Executive summary

• Gross revenue grew 16% year-over-year in Q2 2024 to R$1.7 billion, outpacing the oncology market and gaining share despite regional disruptions.

• EBITDA ex-LTIP/ex-PILP reached R$300 million (19.2% margin), up 25% sequentially and 11.9% year-over-year, reflecting operational efficiency.

• Net income ex-LTIP/ex-PILP was R$29.4 million in Q2 2024, up 15.8% sequentially; LTM net income ex-LTIP/ex-PILP was R$316–317 million, up over 19.5% year-over-year.

• Major R$1.5 billion capital increase completed, strengthening the balance sheet, reducing leverage, and ending the controlling shareholder agreement.

• First international joint venture launched in Saudi Arabia, with significant investment and majority ownership.

Financial highlights

• Net revenue for Q2 2024 was R$1,567.6 million, up 15.3% year-over-year, driven by higher procedure volumes and price increases.

• Cash gross profit margin improved by 60 bps sequentially to 33.9% (34.7% normalized), with cash operating expenses down to 14.7% of net revenue.

• Operating cash flow turned positive at R$35.2 million in Q2 2024, reversing a negative result in Q1.

• Net financial result was negative R$179.4 million, a 6.5% sequential improvement.

• Net working capital days improved by 17 days sequentially, ending at 42 days.

Outlook and guidance

• Year-end 2024 leverage guidance reaffirmed at 2x net debt/EBITDA, with Q2 at 2.5x and further deleveraging expected.

• Revenue growth for the rest of the year expected to align with historical trends, with Q2 impacted by one-off events such as floods.

• International expansion planned via JV in Saudi Arabia, targeting US$550 million revenue and US$150 million EBITDA in year 5.