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01/11 11:27
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture. Positive aspects include revenue growth in Mexico and OncoSalud, improved EBITDA in Colombia, and strong adjusted net income. However, concerns include flat revenue in Colombia, decreasing cash position, and vague management responses about growth in Mexico. The Q&A revealed optimism about margin maintenance and risk-sharing in Colombia, but also highlighted ongoing challenges in Mexico. Given these mixed signals and lack of a market cap, a neutral stock price movement is expected.
Consolidated FX-neutral EBITDA Grew 5% year-over-year. This growth was driven by contributions from all three geographies (Mexico, Colombia, and Peru), showcasing the strength of the regional healthcare platform.
Peru Revenue Growth Increased by 8% year-over-year. This was mainly due to total planned member growth, surgery volume growth, and price service mix improvements.
Peru EBITDA Grew 8% year-over-year. The margin remained unchanged at 21%, supported by strong revenue growth and operational efficiencies.
Mexico Revenue Growth Increased by 5% year-over-year. This was attributed to higher average tickets for surgeries and emergency treatments, as well as repricing of services like radiology and chemotherapy.
Mexico EBITDA Grew 2% in local currency. Growth was driven by revenue increases and cost efficiency measures, though partially offset by higher expenses related to physician productivity initiatives. Adjusted EBITDA margin remained at 32%.
Colombia Revenue Remained flat year-over-year. This was due to intentional growth tempering to focus on risk mitigation and improving cash conversion cycles.
Colombia EBITDA Increased by 9% year-over-year. The margin expanded by 1.4 percentage points, driven by a more profitable mix of payers, improved payment flows, and lower impairments on accounts receivables.
OncoSalud Revenue Growth Grew 7% year-over-year. This was driven by a 10% increase in total planned membership and price increases relative to inflation in the medical services sector.
OncoSalud Oncology MLR Decreased for the fourth consecutive quarter to below 50%, reflecting efficiencies gained in pharmaceutical costs.
Adjusted EBITDA Increased by 5% in FX-neutral terms but decreased by 3% on an as-reported basis. The margin remained practically unchanged at just over 22%, with currency depreciation impacting results.
Adjusted Net Income Increased 6x year-over-year. This was positively impacted by FX and EBITDA growth, as well as an FX variance related to the appreciation of the Peruvian sol against the U.S. dollar.
Cash Position Decreased by 13% versus the first quarter but remained at a healthy level. Free cash flow was PEN 143 million, compared to PEN 155 million in the same period last year.
OncoSalud Mexico: Expanded nationwide coverage through a network of doctors, hospitals, labs, and preventative care services. This includes cities like Mexico City, Guadalajara, and Tijuana.
Opción Oncología: Recently acquired practice group to scale oncology offerings, aiming to be best in class.
Mexico: Revenue grew 5% year-over-year due to higher average tickets and repricing of services like radiology and chemotherapy. However, surgery volumes and emergency treatments were lower.
Peru: Revenue grew 5% in healthcare services driven by increased surgery volumes, price increases, and improved service mix. OncoSalud revenue grew 7% with a 10% increase in total plan membership.
Colombia: Revenue remained flat year-over-year as growth was intentionally tempered to mitigate risks. However, EBITDA increased 9% with margin expansion of 1.4 percentage points.
Operational Adjustments in Mexico: Stabilized doctor and supplier relationships, enabling physicians to transition to Auna's standards and practices. Efficiency initiatives lowered pharmaceutical and surgical equipment costs.
Risk Mitigation in Colombia: Implemented risk-sharing models and diversified payer base to improve cash flows and operational stability. Lower impairments on accounts receivables due to timely payments.
AunaWay Model: Proven model to transform healthcare in Spanish-speaking Latin America by modernizing and integrating patient care.
Debt Refinancing: Refinanced over $62 million of short-term debt, improving maturity profile and leveraging favorable debt market conditions.
Operational setbacks in Mexico: Challenges in implementing Auna's care model in Mexico, which disrupts legacy medical protocols and practices, leading to lower surgery volumes and emergency visits. This has impacted capacity utilization and slowed growth.
Payment risks in Colombia: Intentional slowing of growth in Colombia to mitigate payment risks with intervene payers and prioritize a positive cash cycle. This has led to a decrease in capacity utilization.
Economic and tariff uncertainty in Mexico: Market conditions in Mexico remain soft due to the impact of tariff uncertainty, particularly in the northern region, affecting the overall economy and business performance.
Currency devaluation: Depreciation of the Mexican and Colombian pesos relative to the Peruvian sol has negatively impacted reported financial results, despite local currency growth.
Leverage and debt management: Leverage ratio remains unchanged, and the company is working towards a medium-term target of 3x net debt to EBITDA. Debt refinancing efforts are ongoing to improve the maturity profile.
Operational challenges in Colombia: Colombia's revenue growth was flat year-over-year due to risk mitigation measures, including diversifying the payer base and managing contracted services. This has impacted growth potential.
Physician recruitment and engagement in Mexico: Challenges in improving physician recruitment and engagement in Mexico have affected capacity utilization and the recovery of high-complexity services.
Revenue Growth: Revenue in Mexico grew 5% year-over-year despite fewer surgeries and emergency treatments. Peru's revenue grew 8%, driven by surgery volume growth and price service mix. Colombia's revenue remained flat year-over-year due to intentional growth tempering.
EBITDA Projections: Consolidated FX-neutral EBITDA grew 5% in Q2 2025. Colombia's EBITDA increased 9% year-over-year, with margin expansion of 1.4 percentage points. Peru's EBITDA grew 8%, while Mexico's EBITDA grew 2% in local currency.
Leverage Target: The company remains committed to reducing leverage to 3x net debt to EBITDA in the medium term.
Market Conditions and Recovery: Market conditions in Mexico remain soft due to tariff uncertainty, but volumes are expected to recover as adjustments to the AunaWay model improve physician engagement. Colombia's performance is expected to improve with risk-sharing models and payer diversification.
OncoSalud Expansion: OncoSalud in Mexico is expanding its coverage to include major cities like Mexico City, Guadalajara, and Tijuana, aiming to capitalize on the healthcare market gap. Membership in oncology plans grew 2%, and the MLR of these plans fell below 50%.
Operational Adjustments: Adjustments in Mexico to improve physician recruitment and engagement are expected to recover capacity utilization and growth. In Colombia, risk mitigation measures are proving effective, and payer compliance with payment plans is improving.
The selected topic was not discussed during the call.
The earnings call summary highlights strong growth in Peru and Colombia, strategic partnerships like the one with Sojitz, and expansion plans in Mexico. Despite some concerns about Mexico's revenue decline and system integration delays, the positive outlook on market recovery, margin improvements, and strategic investments suggest a positive sentiment. The Q&A section reinforced this with optimism about growth opportunities, despite some uncertainties in guidance. Overall, the positive aspects, especially the Sojitz partnership and expansion plans, outweigh the negatives, indicating a likely positive stock price reaction.
The earnings call presents a mixed picture. Positive aspects include revenue growth in Mexico and OncoSalud, improved EBITDA in Colombia, and strong adjusted net income. However, concerns include flat revenue in Colombia, decreasing cash position, and vague management responses about growth in Mexico. The Q&A revealed optimism about margin maintenance and risk-sharing in Colombia, but also highlighted ongoing challenges in Mexico. Given these mixed signals and lack of a market cap, a neutral stock price movement is expected.
The earnings call presents mixed signals: strong financial performance with revenue and EBITDA growth, but challenges in Colombia and lack of clear guidance. The Q&A reveals management's cautious stance and reluctance to provide specific forecasts, adding uncertainty. Despite positive financials, the strategic focus on cash flow over growth suggests limited short-term upside. The absence of a shareholder return plan and operational risks in Colombia further temper expectations. Overall, these factors balance out, leading to a neutral stock price prediction.
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