Fleury S.A. (FLRY3) Q4 FY2025 Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Grupo Fleury's Fourth Quarter 2025 Earnings Conference Call. Joining us today are Ms. Jeane Tsutsui, CEO; Mr. Jose Filippo, CFO; and Mr. Renato Braun, IRO. I'd like to mention that this event is being recorded and that we are providing simultaneous interpretation into English. We'll first go through the presentation of our results, and then we'll open the floor for the Q&A session. At the end of the Q&A session, Ms. Jeane will provide her final remarks. All figures we will mention today are compared to the same period in 2024, unless otherwise stated and they have been rounded to the nearest 1,000. Before proceeding, I'd like to clarify that this presentation may contain forward-looking statements. Such statements are not merely historical facts, but rather reflect the management's current beliefs and expectations. Words like believe, expect, plan, anticipate, estimate, project, aim and similar expressions are intended to identify statements that necessarily involve known and unknown risks. Known risks include uncertainties which are not limited to the impact of price and service competitiveness. Uncertainties also include market acceptance of our services, service transactions of the company and its competitors, regulatory approvals, currency fluctuations, changes in the mix of services offered and other risks described in the company's filings. I would now like to turn the call over to Mr. Jeane Tsutsui.

Good morning, everyone, and welcome to Grupo Fleury's Fourth Quarter 2025 Earnings Call. On our agenda today, we'll cover an overview of our business, then we'll discuss one of Grupo Fleury's main competitive advantages, which is our medical culture, and we'll conclude with our financial highlights, looking at both the fourth quarter and the full year of 2025. Grupo Fleury has been delivering consistent results over the past few years. We closed 2025 as a benchmark for quality in diagnostic medicine nationwide, thanks to a combination of discipline, operational efficiency and medical and technical excellence. Grupo Fleury's strengths are also rooted in our constant pursuit of innovation and the adoption of cutting-edge technologies, which translate into operational efficiency and differentiation in the services we provide to our clients. Slide 5 reinforces the strategy we have adopted at Grupo Fleury, a focus on both organic and inorganic growth in our diagnostic medicine core, which comprises our B2C and B2B businesses. In B2C, we are present with patient service centers under various brands catering to the premium, mid-tier and basic segments, and we continue to expand our footprint in a continuous and disciplined manner. Through B2B, we serve partner laboratories and hospitals across the country, operating on a large scale and fast processing, which brings us operational efficiency and greater competitiveness across our businesses. Beyond diagnostic medicine, we offer services focused on prevention and continuous health monitoring such as vaccination, checkups and primary care services. In certain New Links specialties, we also operate in consultations and outpatient treatments, solidifying our position as an integrated provider that reinforces our core business and contributes to the health care system's sustainability. On Slide 6, we have a more detailed view of each business unit. B2C diagnostic medicine accounts for 69% of our total revenue and includes 573 patient service centers across 14 states. This unit delivered significant growth in 2025 through both organic and inorganic expansion. Another growth lever was our mobile units, which represent 8% of the group's total revenue or 11.2% of B2C revenue. The performance of our mobile unit reflects the expansion of service routes and a shift in customer behavior who increasingly values convenience and excellent quality of our services. B2B diagnostic medicine represents 22% of the total revenue and includes Lab-to-Lab, which serves over 8,000 clients in 2,200 municipalities across Brazil as well as 35 hospitals. In '25, we significantly expanded Lab-to-Labs productive capacity by winning new clients and introduced innovations that resulted in greater operational efficiency in our processing areas. In the New Links unit, we consolidate services focused on prevention and continuous care. This unit accounts for 9% of the group's revenue operating across 5 specialties. New Links integrates diagnostic prevention and treatment services, offering solutions that complete the patient's outpatient care journey. On Slide 7, we provide a visual representation of 2 pillars of our strategy: consistent growth and revenue diversification. The chart on the left shows there is revenue growth trajectory with a CAGR of 13.7% per year from 2012 to 2025. Since 2021, we have accelerated this growth and more than doubled our revenue, going from BRL 4.2 billion to BRL 9 billion in 2025. We have always believed that a diversified portfolio would make the group healthier and more resilient. And on the right-hand chart, you can see our success on this front. The Fleury brand has grown at 9% CAGR since 2012 and currently represents 25% of the group's revenue, while other Sao Paulo brands have gained share. Geographic expansion has also been key with a significant presence in regions like Minas Gerais and Rio de Janeiro. It's worth noting that B2B and New Links have been gaining share and contributing consistently in recent years. This diversification of revenue and payer sources gives Grupo Fleury a greater ability to capture market share. On Slide 9, we highlight one of our main competitive advantages, which has been key in building Grupo Fleury's history, our medical culture, which values career development, knowledge sharing and innovation. At the end of '25, our medical staff comprised of 5,200 specialized professionals in fields ranging from radiology to telemedicine, orthopedics to neurology located in all regions of the country and recognized for their work by patients and referring physicians. At Grupo Fleury, physicians are hired based on criteria such as education, experience, academic affiliations and expertise, and they have the opportunity to grow based on their technical management and leadership skills following a W-shaped career path. This has made us one of the largest medical platforms in the country and a hub for attracting new talent. In '25, Fleury professionals published nearly 100 peer-reviewed papers in some of the world's most important scientific journals. This is knowledge that strengthens medicine, has a real impact on patient well-being, increases the effectiveness of treatments and contributes to the sustainability of the system. We'll now move on to the financial highlights on Slide 11. In Q4 '25, gross revenue reached BRL 2.2 billion with notable growth of 12.2%. The highlight was the B2C unit, which advanced 13.4% with 10.2% coming from organic growth. The Fleury brand, which will celebrate its centenary in '26 and is at the company's origin, demonstrated strong resilience with 8.6% growth in Q4 '25. Other Sao Paulo brands grew 12% organically and 25% when including the acquisitions of Confiance and Sao Lucas Lab. Rio de Janeiro once again showed strong growth of 14.1% and Minas Gerais posted organic growth of 14.4% and 21.3% when including the acquisition of Hemolab. B2B and New Links grew by 4.1% and 24.4%, respectively. EBITDA reached BRL 455.9 million, an increase of 12.5% against Q4 '24 with margins of 22.1%. Net income was BRL 96.3 million, up 14.7%. Net margin was 4.7%, 11 basis points above that recorded in Q4 '25 -- '24. Consistency and discipline are reflected in our consolidated results for the full year of 2025. Our annual gross revenue surpassed BRL 9 billion with growth of 8.2%. Disciplined cost and expense management remained a cornerstone of our execution with EBITDA reaching BRL 2.1 billion in '25 with a stable margin of 25.8% despite the change in the mix of brands and businesses. Net income was BRL 612.8 million, stable compared to '24 with a net margin of 7.4%. Cash generation reached BRL 2.1 billion for the year, a growth of 10.5%. Cash conversion reached 99.9% of EBITDA, reflecting the efficiency of our business model. Finally, we maintained ROIC growth, which reached 16.6%, up 260 basis points against Q '23 when we completed the business combination between Grupo Fleury and Pardini. I will now turn the call over to Jose Filippo, CFO and IRO, who will comment in more detail on our financial performance.

Thank you, Jeane. Good morning, everyone. We'll now continue with a detailed look at our financial information for the last quarter and full year 2025. On Slide 12, we see that gross revenue for the quarter was BRL 2.2 billion, with significant growth of 12.2% compared to 2024. This result is a consequence of the expansion seen across our 3 business units. B2C, up 13.4%, B2B up 4.1% and New Links up 24.4%. For the full year, gross revenue reached BRL 9 billion with growth of 8.2%. Moving to Slide 13, we detail the revenue performance of our B2C unit. As seen earlier, our growth was robust at 13.4% in the last quarter, with a strong performance across all regions. This result already reflects the acquisitions of Confiance, Sao Lucas Lab and Hemolab, which expanded our footprint in the interior of Sao Paulo and Minas Gerais. Excluding acquisitions, we had organic growth of 10.2% in the quarter. And the mobile units now generate revenue equivalent to 72 physical patient service centers. For the full year, total growth for the B2C units was 11.1%, with 9.5% being organic. On Slide 14, we see the evolution of our B2B business. In Q4, revenue grew 4.1%, reaching BRL 485 million with a good performance from Pardini's Lab-to-Lab operations that managed to offset the loss of a significant hospital client contract that ended in the end of '24. Revenue remained stable for the full year '25 compared to the previous year, reaching BRL 1.96 billion. Turning now to Slide 15. We see the New Links business grew 24.4% in Q4 with revenue of BRL 217 million. For the year, total revenue was BRL 818.5 million with growth of 7.3%. The Q4 growth was driven by a strong performance across all business lines within the unit and was positively impacted by the application of high-cost drugs. The New Links unit represented 9% of our revenue in '25. On Slide 16, you can see that gross profit grew 8% in the quarter, reaching BRL 490.1 million. Gross margin was 23.8% down 88 basis points. This performance was negatively impacted by the application of 2 doses of high-cost drug in the quarter and positively impacted by the personnel and medical services line, which benefited from recurring cost optimization programs. For the year, gross profit reached BRL 2.2 billion, up 2.9% year-over-year. On Slide 17, we see operating expenses, which decreased as a percentage of the net revenue, both in the quarter and for the full year. This change is mainly a consequence of a reduction in general and admin expenses, reflecting the company's disciplined cost management. On the other hand, we had an increase in depreciation and amortization, also seen in the previous quarter. This is a result of higher investments in technology, which have been enabling productivity gains. On Slide 18, we present our EBITDA, which was BRL 455.9 million in Q4 '25 with a stable margin of 22.1%. Growth in the quarter was 12.5%. For the year, EBITDA grew by 7.7%, reaching BRL 2.153 billion with a stable margin of 25.8%. Net income presented on Slide 19, grew by 14.7% in the quarter, totaling BRL 96.3 million with a net margin of 4.7%. In the quarter, we had a positive impact from the [ Lada ] bank tax incentive, which led to an effective income tax rate of 4.3%, offsetting the increase in interest expenses and depreciation and amortization. For the full year '25, net income was BRL 612.8 million, practically in line with the previous year. Now on Slide 20, you can see our capital investments, which totaled BRL 117.7 million in Q4, 18.4% lower than the same period the previous year. It's worth highlighting the over 37% growth in investment in new units, service expansion and technical areas, which results in increased footprint, greater productive capacity and improved efficiency. For the year, CapEx grew 3.7%, totaling BRL 506.1 million. More than half of this investment was in technology, enabling productivity gains that are paramount for Grupo Fleury's development and performance. On Slide 21, we highlight operating cash flow, which grew 7.5% in the quarter, reaching BRL 605.9 million. For the year, operating cash generation reached BRL 2.133 billion. Cash conversion was 99.9% of EBITDA. Moving to Slide 22. Here, we show the consolidation of our ROICs upward shift since the business combination with Grupo Pardini. We closed the year with ROIC of 16.6% 260 basis points above the second quarter of '23. In a period of high interest rates, we maintained low leverage at 1x EBITDA, which allows us to take advantage of good opportunities for inorganic expansion. On Slide 23, we can see the company's comfortable cash position. In a hypothetical scenario, our current cash would be sufficient to cover all debt maturities for the next 3 years. Over the past 2 years, we have continuously improved our debt profile, which now has a lower cost and a higher credit rating. Before we begin the Q&A session, I'll turn the call back to Jeane for her concluding remarks. Thank you.

Thank you, Filippo. Grupo Fleury's strategy reflected in the 2025 results we just presented and planned for the coming years combines organic and inorganic growth. Organic growth results from the expansion of the diagnostic medicine market, but also from an increase in our market share, driven by new partnerships with payers, portfolio expansion, optimization of physician schedules and increased revenue per square meter in existing units. Our mobile unit operations have been an important growth lever, currently generating revenue equivalent to 72 physical points of service without the need for additional CapEx. In '25, we significantly expanded our lab-to-lab production capacity, and we have already begun to win new clients. Our M&A focus has been on diagnostic medicine assets where we can integrate quickly and capture synergies. In '25, we closed the acquisition of Confiance in Campinas, the acquisition of Hemolab in Minas Gerais, Sano Lucas Lab in Rio Claro and announced the acquisition of Femme, which is waiting CADE's approval. For all acquisitions, we always evaluate the strategic fit, the cultural alignment and the financial parameters. In '26, we'll maintain the same discipline while seeking new opportunities. On the operational efficiency front, we have invested in structuring projects that enable productivity gains, such as digital scheduling implemented in our a+ Sao Paulo Fleury and a+ Labs in Rio de Janeiro. In '25, we have already captured efficiency gains from digital scheduling, and our goal is to increase its usage over time with the potential to implement it across the group's other brands. Additionally, we continue our focus on differentiation and improving customer experience. Strengthening our brands is key to enhancing our relationships with payers, physicians and patients. As part of Grupo Fleury's Centennial celebration in '26, we will open the Fleury Marco 100 unit in the coming months, featuring a complete diagnostic medicine portfolio and a reference center for healthy longevity. Our positioning as a provider of high-quality outpatient solutions creates value for all stakeholders. We ended '25 as a stronger, more resilient company with broad confidence from the medical community, a strong position in science, technology and innovation in national footprint and operational efficiency. We would like to thank our more than 23,000 employees and 5,200 physicians who every day strengthen our organizational culture and our relationship with clients. Our solid financial structure and clarity of direction allow us to increasingly reinforce Grupo Fleury's position as one of the leaders in the Brazilian health care sector. We begin '26 with a certainty that the science and trust that have brought us this far will take us even further. Thank you very much. We're now available for the Q&A session.

[Operator Instructions] Now I'd like to turn the floor over to Mr. Renato Braun, who will moderate the session.

The first question is by JPMorgan, Joseph Giordano.

Can you talk about margin trends in the medium and long term this quarter? You had 2 high complexity infusions that brought the margins down a bit. But on the other hand, you had a lean G&A. You did very good work on this front. So looking at the coming quarters, Fleury growing close to 9%, but the other brands are in double digits. So looking ahead, what will the EBITDA margin look like? Will it remain flat or go down? And maybe we still have some M&A effects over the year, but small, right?

Joseph, thank you for your questions. As I said, we've been able to keep a stable EBITDA margin despite the mix changes that you mentioned. That is we have a robust growth in the Fleury brand, which grew 7.7% in the year of '25, while other regional brands are growing faster. Other brands in Sao Paulo, Rio and with double-digit organic growth in addition to our M&As. And we've been very disciplined in terms of operational efficiency and control to maintain margins in spite of the mix changes. But I'd also like to draw your attention to our ROIC. Increasingly more, we have services that may offer lower margins but higher ROIC. An example of that is the Lab-to-Lab where we have slightly lower margins than our service units. But since we already have some productive capacity, it has an ROIC similar to that of service units. And throughout time, this composition is very healthy. We're growing, maintaining margins and increasing ROIC with 260 basis points increase in ROIC since our business combination with Pardini. So we'll continue looking at our margins with great discipline. Of course, in the future, there will be possible levers for EBITDA margin growth, especially coming from our digital transformation front. We are already investing in that, and this will bring efficiency gains with time. But of course, it takes some time for us to make the most of it. Now we have also been making M&As with well-structured integrations that enable us to capture synergies. We've been doing that with a lot of discipline as well. But the acquisitions made in '25 were not that large. And in '26, we still have Femme to come after CADE's approval. So overall, we're quite positive when it comes to our growth strategy, and we are very disciplined when it comes to our margins and ROIC growth.

Our next question is by Morgan Stanley with Mauricio Cepeda.

I'd like to talk about your insertion in Brad Seguros and how this can impact your strategy, especially diversification and B2B. Bradesco is not the only shareholder at Fleury, of course, but you're clearly inserted in this context of Brad Seguros listing. So can you talk about diversification and new links within this new context? Have you talked to Bradesco about that? Now about the JV with Croma Oncology, this is nothing new, but Brad Seguros works close to [ Riddedor. ] So we know how this is going to impact you. And now with the bargaining power that Bradesco has as a payer, can this somehow open B2B opportunities with hospitals in general, not only hospitals from [ Riddedor, ] but also other hospitals with whom Bradesco has a close relationship.

Thank you, Cepeda Well, Brad Seguros announcement was made recently, and we saw that as a very positive movement. We have an institution the size of Bradesco investing in the potential of the health care industry in Brazil. That means a lot. Now another point is that we now have a listed company with a revenue of BRL 52 billion. And this also tells the capital market how the industry has great potential. We've been emphasizing how the population is growing older. There is an increase in chronic diseases and how important the health care industry is. Now another point I'd like to mention is that Bradesco is one of our shareholders. They have been a shareholder since 2009, that is 17 years. They are part of our Board of Directors, and they are a great supporter of our management. It's also worth noting that our strategy remains the same. It's actually been approved by the Board of Directors and the growth in the different business lines, not only B2C, but also B2B, as you mentioned, we see how important our services are for the different HMOs and for Bradesco itself. We have that oncology J,V, Fleury, Bradesco and BP own 1/3 each. Croma Oncology is operating with 4 service units with accreditation. So we've seen throughout time how this JV has great potential. And we also saw the potential of oncology considering the epidemiological factors that I mentioned earlier. Of course, in our view, having relevant players, healthy players who, throughout time will enable us to have great partnerships and offer differentiated products means a lot. And we have relationships with all HMOs. But recently, we've been seeing product positioning in the premium segment, which favors the Fleury brand. And it also favors the acknowledgment of our brand with the medical community with services offered that are increasingly integrated. The New Links journey approved by the Board of Directors offering outpatient services to complete the journey is another important step. So overall, we are optimistic, Cepeda.

Our next question comes from Leandro Bastos with Citi.

I have 2 questions. The first, can you talk about the performance of the Fleury brand? You had another quarter of great growth. And can you give us some more color about the main drivers? Was that because the market was better? Was there -- did you have any market share gain? And can you talk about your growth prospects for the year? That's my first question. Now the second question is about B2B. I'd like to explore the Lab-to-Lab business a bit more. Can you tell us about the growth of Lab-to-Lab, both in terms of volume and prices? And what is the competitive landscape like in that sector? Some other relevant companies have been making some moves. So I'd like to hear your take on the competitive environment there as well.

Thank you for your questions. About the Fleury brand, we've been focusing on the resilience of our brand, which is now celebrating 100 years, and that has shown growth throughout time in a premium segment whose number of members grows in a limited way, but we do have a relevant market share, and we have seen a growth in our market share. In the Fleury brand, we've been talking about new services, innovation, new tests, but also services with integrated centers. We have an integrated center of neurology, another one for endometriosis, and it's impressive to see the strength of the Fleury brand with the medical community, especially for complex procedures with great innovation and physicians who are referenced in diagnostic medicine. The prospects for the brand as a year in which we'll celebrate 100 years of operation, and we'll launch the Marco unit with a complete portfolio of diagnostic medicine, a center for those who want higher quality of life. So we're looking at prevention and health promotion. We grew 7.7% in the year. Of course, every quarter, we have different influences because of the number of working days and the comparison basis. So the first quarter of '25 was more impacted by long weekends and holidays as we predicted and the second half of the year that was stronger. But we're very confident in the Fleury brand. Of course, the growth of the Fleury brand is not as huge as the other brands in Sao Paulo, given that the Fleury brand market share is already very large. And in the other brands, we still have room for growth in terms of market share. As I said in my previous answer, we've seen payers seeking premium services, and that also strengthens the Fleury brand. So we are very optimistic about the Fleury brand. About B2B, Lab-to-Lab maintains good growth. Of course, a large hospital left in this comparison of our B2B businesses. In Lab-to-Lab, the lab support services grew 8.1% in Q4. This shows that our strategy in Lab-to-Lab is right. In 2025, we also expanded our productive capacity with a new technical area in Rio Grande do Sul, a new technical area in Sao Paulo in our headquarters with state-of-the-art technology. We are the largest lab in the world with the LPA technology. And we have already won more clients with the expansion of our productive capacity. And the Lab-to-Lab volume is growing strongly. Of course, the competitive environment has good players also working in Lab-to-Lab, but our position is really strong there, expanding access to health care. So we are very confident about our potential to keep on growing in the Lab-to-Lab business.

Now Felipe Amancio from Itau.

I have 2 questions on my side. The first is about Rio. Once again, we saw strong performance in the Rio de Janeiro brands. Is there any specific HMO that is gaining share here or any commercial initiative you are implementing in Rio that has been boosting your growth? And my second question is about your relationship with payers. We've seen payers working in products with excellence providers with a leaner accredited network, improving efficiency. And how is Fleury dealing with that? [ Amil ], Bradesco regional product or others, are they a good opportunity for you?

Thank you for your question. About Rio, yes, we've been saying that this is a challenging market. The number of members is not growing as fast as our overall growth. The quarter performance was quite strong at 14.1% and also double digits for the full year, and we've been working with all HMOs. There's no growth of a specific HMO, but we do have a commercial strategy to reinforce the differentiation of our services. In Rio, we have 4 brands, Felippe Mattoso [ Labs ], Centro de Medicina and LAFE with great footprint with a large number of units. And in Rio, we worked really hard to expand physicians' appointment hours. In this release, we talked about medical culture and how important this is in our history. And this has boosted our B2C results in '25. We've been able to attract physicians not only because of the career plan that we offer, but also because of a close relationship with our medical team offering state-of-the-art equipment and scheduling and this ability to attract new physicians enabled us, especially in Rio, to expand our hours in more distant units, which is a challenge for physicians to commute there, but we see that we've been able to meet that demand. So we are working very closely with them in Rio, looking into every opportunity in detail. And overall, we're very happy with the organic growth we achieved in Rio. And in Minas Gerais, we also had organic growth in the last quarter of 14.4%. Of course, there was also the acquisition of Hemolab. But we're working closely with them and we are now able to gain market share and offer services as well as medical hours. About the payers, yes, we see a more positive scenario now. The recent data from the private healthcare agency shows that MLR is at lower average levels than the pre-pandemic numbers. So the pressure we felt after the pandemic is behind us. Now HMOs are fighting hard to fight fraud and we're partners of them and they're trying to offer more products to attract new clients. And our acknowledged brands can participate in differentiated offers of payers. So we've been working closely with all HMOs to create agnostic algorithms and to offer differentiated products. Once again, I would like to reinforce the importance of our brands and how acknowledged they are. This is something that attracts clients, and this is very positive for us. And once again, we not only offer well-positioned brands in diagnostic medicine, but also offer integrated outpatient services to follow up on chronic patients and to contribute to the system's sustainability.

Our next question is by Gustavo Miele with Goldman Sachs.

I have two questions here on my side. The first is actually connected to Jeane's last comment on the relationship with payers and the healthier MLR environment that we see now with insurers. Does that have any upside for denials? This is the sixth quarter in a row where we see denials at over 1.4% of revenue. That's a change compared to the 1 point level we saw in '24. So do you think there is an upside here? Do you think that this number will normalize now? Since they need more margin, will they loosen up when it comes to denials? Now about the mix of revenues in PSC, '25 closed with growth close to 11% for the full year. And in line with what you said earlier, this growth comes in the form of volume. The revenue per test is virtually flat in '25 when compared to '24. So can you talk about price and volume for '26? Do you think that ticket can gain relevance in this composition? And can it maybe bring benefits to your EBITDA margin in '26?

Thank you for your questions. I'll start with your last question. You saw our chart about volumes, revenue per test and tests per service. As a reminder, we also have a mix of AC and CD. Our last PSC acquisitions were assets of clinical test, Confiance in Campinas, Hemolab in Minas and Sao Lucas Lab in Rio Claro. And that, of course, influences our mix. We've been growing more in lab tests than imaging tests. And this brings a larger number of tests. In Q4, we saw growth of 13.6% in the volume of tests. This also brings an increase in the number of tests per service. In Q4, we had a growth of 9.2% and this makes the revenue per test to be maintained at a flat level. That is when you grow more in clinical analysis tests, the volume goes up and the number of tests per patient goes up because if you do a clinical lab test, you do complete CBC, cholesterol and hormones. So the number of tests per patient increases. But when we look at the ticket per test, it is lower if you compare clinical lab test to like an MRI. So overall, we've been able to pass through our prices. It's always around 50% to 7% of IPCA and we've seen volume growth because many of our commercial negotiations focus on bringing more volume. So we can be more competitive since we can dilute our fixed costs, but we are being very careful with this. As I said earlier, we are in constant contact with the HMOs. Our commercial team works closely with the payers. And of course, we want to have the highest possible prices to continue our journey of offering great service, but also having a company that grows in a healthy way. About denials, I think Filippo can talk about that.

About denials, yes, they've been kept stable since the previous year. And just as a reminder, we've mentioned this earlier about the management of the receiving cycle. So our financial department has taken over this responsibility in shared services, and they've been working closely with the commercial area of the HMOs. So this is linked to what you mentioned, the relationship with the HMOs. As a service provider, of course, we don't want to execute a service that will be discussed with the HMO. We want to be as effective as possible and meet their expectations and this relationship helps. If you have pre-approval processes, an understanding of the HMOs expectation, this gives us greater efficiency. And therefore, the denial level is not impacted. In the future, of course, we want to evolve in this process. If we can lower the level of denials that would be great. I think that the HMO doesn't want to increase this level either. And I think that building a good relationship with HMOs can help. But most importantly right now is to maintain the denials level stable. We don't want to have any increase in our denials provisioning.

Our next question is by Samuel Alves with BTG.

I have two questions here on my side. The first is about M&A. We recently heard news about a change in the leadership in one of your main competitors from Sao Paulo. Have you looked into the asset? Have you made any offers or were there any challenges because of CADE's execution risk or valuation that affected your wish to make an offer there or not? And now a bit more detail about Lei do Bem. It helped your results in Q4, but can you tell us a bit more about this type of incentive, should this be more concentrated in the end of the year, like happened in '25, just so we can define the tax line more precisely?

Thank you for your questions. About M&A, we've said clearly that we want to seek opportunities for like smaller M&As like we've been doing or larger transformational M&As. But the strategic and cultural pillars are crucial as well as our discipline and financial parameters and capital allocation. So this is what we've been focusing on. Now we talk about an M&A pipeline that focuses more on diagnostic medicine. So this is really important. And so we assess all opportunities very strictly. We conduct a rigorous assessment when it comes to CADE's potential to interfere in this, but oftentimes, that's not going to be an obstacle. But we'll certainly continue to assess the opportunities as they arise. Our leverage enables us to go after that strategy. But of course, that needs to make sense considering a number of factors. So internally, we're very strict when it comes to our governance. We always consider many different factors, and you should always bear that in mind, Samuel. But in a way, I would say we are open to new possibilities, and we're open to taking the appropriate steps in each one of our business lines. About the Lei do Bem, Filippo will talk about the specific technical part, but I want to remind you that we've been investing in research, development and innovation for a long time. We are a benchmark in diagnostic medicine and new tests. We have teams of PhDs dedicated to this, data scientists teams and this is an area that has always been really important for Grupo Fleury, and innovation puts us in the vanguard of medicine and healthcare overall.

About Lei do Bem, this is actually associated to the effective tax rate. We've been normalizing this level quarter after quarter. We look at all the events and we define the effective tasks based on that. This can define the interest or the interest on equity and research and development and some other initiatives of our digital innovation. What happened in '25, there is a factor which was not one-off, but that impacted Q4 is that typically throughout the year, the visibility of how the Lei do Bem benefits will be used is actually something that happens in Q4, and that's what happened in '25. In '24, we actually were able to benefit from this in Q3 and 4. In '24, we used BRL 14 million from tax benefits. And in '25, BRL 16 million. So the numbers are close, but in '25, that happened only in Q4 and in '24 that happened throughout Q3 and Q4. As a result, when we compare the numbers, Q4 '25 had a lower effective tax rate than '24. But in '23, our effective tax rate was 22%. In '24, it was 23% and in '25, 21%. So quite stable, I'd say. It's more a matter of geography and how we use the benefits of that act. Considering this level of effective tax rate what we see ahead of us would not justify any type of reprogramming of our premises.

Our next question is by Flavio Yoshida with Bank of America.

I have a question about your mobile service. I just want to understand what we can expect in mobile services growth from now on? Mobile had been growing at double digits, but this quarter, we saw a deacceleration still with good growth, but was that because of structural reasons or was that a one-off effect? And do you see room to include more mobile services in new regions or new brands to lever the growth of your mobile business?

Flavio, thank you for your question. Well, mobile services had accelerated growth after the pandemic. And we have already expanded this to our regional offices, although there is still room to grow. And the penetration is different, of course, depending on how long we've been offering the service because this requires customer behavioral change. We have mature penetration with the Fleury brand, but throughout time, we've been able to grow the number of services in our mobile portfolio. And in other brands, the penetration is still lower. But of course, this is related to the culture, the size of the city or town. If you look at a city like Sao Paulo and Rio, you know, traffic impact clients, and so they prefer to use mobile services. In smaller towns, oftentimes, clients prefer to go to the unit, but overall, mobile services is quite important to us. Having a revenue here that corresponds that of 72 service units without having to have invested in those units is really important for our return on invested capital. Although the mobile service has a lower productivity as compared to that of the physical units, but customers like that, they value that convenience. And overall, we'd say there is still room to grow in mobile services, although the penetration in largest brands and largest cities is already higher than that of other brands in new regions. But when we acquire a new brand like Confiance and Campinas, we always assess the opportunity to expand the mobile services with that new brand. So though these are smaller brands, yes, we try to do that in those new regions throughout time.

Our next question is by Eduardo Resende with UBS.

I have two questions. The first is about CapEx. We saw a lower level this quarter. In Q4, the previous year, we saw more investments in IT. Can you give us more color about your CapEx plans for '26? Have you been tracking opportunities in technology? You mentioned you want to use digital service and other brands in addition to Fleury and a+. Would that require greater investment? And would that be reproducible to other brands? That's my first question. My second question is about the New Links. In your last presentation, you said that the recent journey of New Links was more focused on integration and efficiency. Do you continue focusing on that in 2026? Or is there an update for this business unit?

Eduardo, about CapEx, we've seen the CapEx level that we always try to control. We've been growing our revenue and CapEx should be around 6.5% to 7% of revenue. That's the level we would like to maintain. However, in 2025, we had lower CapEx than in '24. BRL 506 million in '25, accounting for 6.1% of the revenue and in 2024, BRL 488 million, although smaller, it actually accounted for 6.8% of the revenue. So around those levels. And what is our CapEx management like? Well, all CapEx decisions although they are budgeted for and our management knows that, that has already been mapped, it requires another visit of the executive management. The decision needs to be revalidated, so to speak. So we check how important and feasible an investment is economically and financially. So we're very strict with that process. Our CapEx profile in recent years hasn't changed much, and it should be kept like that. Half of the CapEx is made in digital initiatives and the other half for unit renewal and equipment update. This is what we've been doing basically and we have still made investments in infrastructure. Jeane talked about those investments earlier. We invested in the lab-to-lab capacity in [indiscernible ], Santa Catarina, Brooklyn in Sao Paulo. We have a state-of-the-art production line for lab-to-lab productivity. So we've been making investments to increase our revenue. And of course, we always assess the returns and validate the decisions considering our capacity to maintain our management for the future. So overall, I'd say CapEx is well balanced. It's internal management model is mature and it's been disciplined, and this is related to our good cash generation as well. So we look at the CapEx, and we don't make investments that are not necessary. So this is very digital. And of course, this will continue to be made because CapEx is needed, but we're also going to keep on investing in infrastructure. About New Links, yes, we had an initial phase in which we made some acquisitions, then we had some organic expansion and more recently, an efficiency journey. And things are running according to plan. We are now focusing on execution. In New Links, we had expansion of certain units such as physical therapy, orthopedics, immunobiological infusion. And those units went through a good ramp-up phase. This enables us to reach a margin level that we want before we can start a phase of greater expansion. Now I'd like to draw your attention to the strategic importance of New Links. Our core is diagnostic medicine, and we've been growing the number of PSCs. New Links comes to complement the outpatient journey. And we now have product, let me give you an example, like breast cancer diagnostics. Here, we can create a faster and more seamless journey for patients here, and payers are interested in that because once the diagnosis is made, we can refer patients with breast cancer faster, and this helps reduce the total cost for HMOs, not to mention the benefits for patients' lives and for their experience. So this seamless journey is paramount, and it's been valued by HMOs. In New Links, we had some structuring being made. We implemented an electronic health record in '25 and also the diagnostic part in New Links. So a patient that goes to an orthopedics clinic and needs an MRI, the MRI revenue will be sent to the PSC, either the Fleury brand or the a+ brand. But journey integration is something we firmly believe in, and it makes sense as part of our positioning where we already have a relevant market share in diagnostics. So we can provide support to patients to keep them in our services and increase the share of wallet. So we're very happy with the New Links business. We've been investing in efficiency journey and integration journey, but we also see this as an important element in our strategy and something that can help us differentiate our diagnostic medicine services like with the Fleury brand.

Ladies and gentlemen, if there are no further questions, this concludes the Q&A session. I would like to turn the floor over to Ms. Jeane Tsutsui for her final remarks.

Thank you all for your presence here today. Once again, we showed consistent results. I would like to thank our clients, physicians and shareholders for their confidence throughout 2025, and also the support of our Board of Directors and the dedication of the Grupo Fleury leadership as well as the engagement of our employees and physicians who are key for our success. We started 2026 celebrating the Centennial of the Group, a century of innovation, excellence, strong organizational culture and deep respect for our stakeholders, for which we will continue to work tirelessly and to generate value to everyone. Thank you very much, and I'll see you in our next earnings conference call.

This concludes Grupo Fleury's conference call. Thank you all for joining, and have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]