Hapvida Participacoes e Investimentos (HAPV3) Q4 2024 earnings summary

Executive summary

• Successfully concluded a major integration cycle, unifying all acquired entities and systems by December 2024, positioning for a new growth phase in 2025 with a focus on digitalization and network expansion.

• Maintained recovery trajectory with strong cash generation, reduced leverage, margin improvement, and increased investments in network expansion and systems integration.

• Overcame significant operational challenges in 2024, including major floods and a dengue epidemic, while maintaining service quality and controlling claims.

• Achieved historic improvements in customer satisfaction and operational efficiency, with a strong emphasis on technology and AI-driven initiatives for 2025.

• Integration of Hapvida and Notre Dame Intermédica operations, especially in São Paulo, improved care quality and beneficiary satisfaction.

Financial highlights

• Net revenue reached R$7,472.4 million in 4Q24 (+7.8% vs. 4Q23) and R$28,952.1 million in 2024 (+5.8% vs. 2023), driven by health and dental plan growth and price adjustments.

• Adjusted EBITDA was R$1,063 million in 4Q24 (+19.4% vs. 4Q23) and R$3,795 million in 2024 (+34.9% vs. 2023), with margin expansion.

• Adjusted net income totaled R$514.7 million in 4Q24 (+98.8% vs. 4Q23) and R$1,836.3 million in 2024 (+170% vs. 2023).

• Cash MLR improved to 67.9% in 4Q24 (down 1.4 p.p. vs. 4Q23) and 69.2% in 2024 (down 2.7 p.p. vs. 2023).

• Free cash flow was R$1,517.6 million in 2024, with net cash increasing by R$1,365.1 million to R$9,225.0 million at year-end.

Outlook and guidance

• Positive outlook for 2025, expecting average contract readjustments to normalize to pre-pandemic levels and continued organic growth in beneficiaries.

• Started 2025 with the inauguration of three new hospitals in strategic regions, aiming to further expand and improve care quality.

• Focus on capturing synergies, digital transformation, and further expansion and upgrading of the healthcare network.

• Anticipates further cost efficiencies and margin improvements as integration and digitalization efforts mature.

• Management highlights strong free cash flow conversion and balanced leverage, with net debt/EBITDA at 1.06x.