Rede D'Or São Luiz (RDOR3) Q2 2024 earnings summary

Executive summary

• Achieved record patient-day volume of 758,000 in Q2 2024, up 4.5% YoY, with a historic bed occupancy rate of 84.4% and strong patient satisfaction (NPS above 60).

• Net income surged 129.9% YoY to R$1.0 billion in Q2 2024, surpassing the one billion reais mark in a single quarter for the first time.

• Operational beds reached 1,891, with multiple hospital launches and expansions underway; over 1,900 new beds expected by end of 2024 and into 2025.

• SulAmérica net revenue was R$7.4 billion (+10.9% YoY), with a consolidated loss ratio of 83.6% (improved 2.7 pp YoY) and beneficiary base growth.

• Strong cash position and significant deleveraging, with net debt/EBITDA at 1.1x and cash at R$35.5 billion as of June 30, 2024.

Financial highlights

• Consolidated gross revenue exceeded R$13 billion in Q2 2024, with hospital services gross revenue at R$7.9 billion (+9.8% YoY) and oncology segment revenue at R$798.6 million (+20.0% YoY).

• Consolidated EBITDA reached R$2.1 billion (+28.5% YoY), with hospital services EBITDA at R$1.8 billion (+13.3% YoY), margin at 26.3%.

• Adjusted net income for Q2 2024 was R$1.053 billion; adjusted EBITDA for SulAmérica reached R$486.2 million (+107.5% YoY).

• Gross margin in hospital services expanded by 1.6 pp YoY to 25.5%; administrative expenses stable at 3.8% of revenue.

• Cash conversion ratio reached 119.6% in 6M24, up from 101.9% in 6M23.

Outlook and guidance

• Management expects continued growth in hospital and insurance operations, supported by ongoing expansion projects and integration of recent acquisitions.

• Anticipates further growth in surgery volumes, efficiency gains, and beneficiary growth through price adjustments.

• M&A pipeline remains open but selective, with preference for organic growth due to better returns and strategic positioning.