Hapvida Participacoes e Investimentos (HAPV3) Q1 2025 earnings summary

Executive summary

• Net revenue grew 7.3% year-over-year to BRL 7,500 million in Q1 2025, driven by health plan price adjustments and higher average ticket, despite a slight decline in beneficiaries.

• Adjusted EBITDA reached just over BRL 1 billion (13.4% margin), up 0.5% year-over-year, with margins impacted by contingencies and litigation.

• Adjusted net income was BRL 416 million (5.6% margin), down 15.8% year-over-year, reflecting higher legal and contingency costs.

• Strong cash generation and leverage reduction, with net debt/EBITDA down to 0.98x, supported by free cash flow of BRL 570 million.

• Operations fully integrated, including NDI Saúde, with ongoing investments in network expansion, technology, and quality-of-care improvements.

Financial highlights

• Net revenue: BRL 7,500 million (+7.3% YoY); health plan revenue up 7.8%, dental plan revenue down 1.9%.

• Adjusted EBITDA margin: 13.4% (down 0.9pp YoY); adjusted net income margin: 5.6%.

• Net debt reduced to BRL 4,165 million (0.98x EBITDA), down from 1.18x in Q1 2024.

• CapEx increased to BRL 199 million, focused on IT and healthcare infrastructure.

• Free cash flow conversion remained strong, supporting deleveraging and financial flexibility.

Outlook and guidance

• Expect a return to organic member growth in H2 2025, supported by commercial initiatives and network expansion.

• Anticipate moderate price increases in 2025, below competitors but sufficient for margin recovery.

• Continued focus on operational efficiency, cost control, and deleveraging.

• Ongoing investment in network and IT infrastructure, with positive outlook for G&A synergies.

• 9th debenture offering of BRL 1.5 billion in May 2025 to optimize capital structure and reduce debt cost.