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

Executive summary

• Gross revenue reached BRL 1.7 billion in Q2 2024, up 16%-16.1% year-over-year, outpacing the oncology market and gaining share through volume and partnerships.

• EBITDA ex-PILP/LTIP was BRL 300 million (19.2% margin), up 25% sequentially and 11.9% year-over-year; net income ex-PILP/LTIP was BRL 29.4 million, up 15.8% sequentially.

• Significant reduction in leverage to 2.5x net debt/EBITDA, supported by a BRL 1.5 billion capital increase and strong EBITDA growth.

• Announced first international JV in Saudi Arabia, targeting US$550 million revenue and US$150 million EBITDA in year 5.

• Recognized as #1 Overall Best CEO, CFO, and IR Officer in the 2024 Latin America Executive Team awards.

Financial highlights

• Net revenue for Q2 2024 was BRL 1.6 billion, up 15.3% year-over-year and 7.5% sequentially.

• Gross margin improved by 60 bps sequentially to 33.9% (34.7% normalized); cash gross profit margin reached 34.7%.

• Cash operating expenses dropped to 14.7% of net revenue, a 50 bps year-over-year improvement.

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

• Net financial result improved to negative BRL 179.4 million, a 6.5% sequential improvement.

Outlook and guidance

• Targeting a net debt to EBITDA ratio of 2x by year-end 2024, with no revision to leverage guidance.

• International expansion planned via JV in Saudi Arabia, with ongoing projects in Goiânia and Rio de Janeiro.

• Revenue growth for the remainder of the year expected to align with historical trends, as Q2 was impacted by one-off events in Rio Grande do Sul.

• CapEx expected to phase out as expansion projects complete, with future levels closer to maintenance CapEx.