Oncoclínicas do Brasil Serviços Médicos S.A. ($ONCO3)

Good morning, and welcome to the audio conference of Oncoclínicas. [Operator Instructions] Please remember that this audio conference is being recorded. I would also like to pass the microphone to Carlos Gil, CEO of Oncoclínicas Group. Carlos, please go ahead.

Good morning. It's a pleasure. For anybody who doesn't know me, I'm Carlos Gil. I assumed as CEO 5 weeks ago, and we're confronting an environment which is sure for the decisions that need to be taken. My first contact with you, I wanted to talk a little bit about where we are and where we're headed. We're passing through important structural changes in the country in recent weeks, and the major objective is a simplification of the structure and increase the level of financial discipline. This involves operations in the corporate structure, which now will be much more aimed at the structure of what is aimed, looking at the efficiency -- operational efficiency and contracts with suppliers and also reaching a budget level. The allocation of capital, we are going forward with that, which has been defined in the beginning of the capital restructuring. And we're in the final phase with the sale of the hospital of UBS in Belo Horizonte. There was a contract that was undone with these operations with UBS. And these decisions are reflecting a change of focus, the allocation of capital and the prioritization of the core business of the company, which is the outpatient work. Today, we're working with a scenario of pressure on our liquidity, which is not a surprise to anyone. And the administration is 100% focused in taking decisions, structural decisions to address these questions. This includes in the capital of resources, reorganization -- financial reorganization and with the objective of looking at the operational assistance of our patients and the absolute priority of the company at this time is to maintain our operational activities in the outpatient clinics. And we have several strategies in this direction that are in execution and we are following and we will update the market as these conditions continue. With that, I'm going to pass it over to our CFO, who's going to detail a little bit for you the status of the negotiations with our creditors, the M&A front and also the results of the fourth quarter. Thank you.

Thank you, Gil. Good morning, everyone. I'm Marcel Cecchi. I'm here in the position of CFO, interim acting CFO, in recent weeks since April of last year, I'm still in the council of the company. So I've been accompanying what has been happening with the company since the development of the strategies and since the beginning of the middle of last year, talking about the results in 2025, and then we're going to look at -- converse more about this in the question-and-answer session. As far as the state for 2025, Gil commented a little bit about the -- we've had -- our revenue was affected by -- we had a shrinking of revenue by the measures which we took in terms of clients, especially Unimed, the nonpayment buyer, some of these clients, which changed the direction in which we had a constant growth over the years. 2025 was a year in which we had this retraction, but the fruit of these results principally with Unimed where we lost a lot of revenue. Over the year, we have looked at -- we've discontinued our services since the 1st of August. Internally, with the administration of this revenue, we had a lowering of costs, which did not happen in 2025 with revenue falling by 7% and the EBITDA by more than 30%. Today, we're operating to revert that picture and the results for 2025, what was -- that was our result for 2025, a diminishing of the revenue and even higher reduction in EBITDA. What we saw in 2025 from the standpoint of strategic moves, as Gil has mentioned a little bit in the introduction, but we did a redirectioning of the company, going back to the oncological outpatient treatment, which is the way the company was created and has been operating over the years. With that, we promoted -- we announced the disinvestment in the line of business in hospitals. The company had originally 3 hospitals, Uberlandia, which is UMC, the sale of which was completed in February. This hospital has been sold and delivered. And the Vila da Serra Hospital in Belo Horizonte, which is in the final phase of negotiation. The purchaser is concluding the due diligence, and we're discussing the details for the closing of that. And the Marcos Moraes Hospital in Rio de Janeiro, this hospital was sold last year. However, the purchaser backed out after the due diligence due to some questions that they had, and it has come back to the company's portfolio. But we're here now looking at that situation again and deciding what we should do about that situation. Two projects of growth the company had 3 projects for the construction of cancer centers, the build-to-suit cancer centers, 2 of them were rescinded. The contracts were rescinded for Sao Paulo and Belo Horizonte. And neither one of those 2 cases did they have any problem with the company's cash. We were able to restructure in a way that the company did not have to realize any payments. We made a project, which was the Goiânia project, which we are seeing. We're looking for a redirectioning of that. This is a project which is quite advanced. And so it would be very expensive for us to rescind this contract. So the company has a waiting the final end of the construction to look at any possible local players to be able to possibly sell that operation. As far as cash flow, the commercial policy, restrictive commercial policy, which we have adopted, obviously affected our cash flow. It has -- we have been able to leave companies which had a very bad cycle of cash flow for us that reduced our revenue. And with the maintained our cost, however, the cash flow was affected. There were 2 series of events, which was the Unimed Ferj, which had owed us more than BRL 800 million, which have not paid and is not paid. This has been provisioned in the third quarter. And the fact is that we did not have those receipts. We also had the event of Banco Master in which the company lost cash which have been deposited when the bank was liquidated BRL 430 million. And obviously, this has had an impact on our cash. So the liquidity of the company was hit by more than BRL 1.2 billion just with these 2 events outside of everything else that we've seen as far as the movements of the reduction in revenue and the lack of dilution of fixed costs, which has affected the liquidity of the company. This has reflect -- this has been reflected on the -- last year, at the end of November, we concluded the increase in capital, which is focused on the conversion of debt. The company was able to -- a vision of BRL 1.4 billion which converted into capital in the fourth quarter. This alleviated the indebtedness of the company, and we closed BRL 4.1 billion of net debt, and we closed the fourth quarter with BRL 2.9 billion, including the effect of the conversion of debt into capital. Since we converted debt into capital was just a swap, a debt equity swap, the conditions of the company in this liquidity, which had been pressured over the second half of the year had a certain amount of relief due to this operation of increased capital. Looking at the numbers, the results in volume on the next pages, we're going to look at what showed the left-hand side is the -- on the left-hand side is the quarter the annual -- the quarterly and annual numbers. The average ticket increased in comparison quarterly and annually. We reached at the end of the year BRL 10,100 in average ticket. It was BRL 9,800 average has [ income ] in an increased value per procedure which diminished was the number of procedures, fruit of what we had said in the diminishing of revenue by leaving the operation with the operators with whom we had a negative cash flow. And so in the third quarter was BRL 138 million. And for the year, BRL 633 million, a reduction from BRL 692 million, which had been in 2024. The reflection of that was on revenue. The revenue for the third quarter diminished by the third quarter, which we did not have Unimed Ferj anymore, having a diminishing of other payers and also adding that to the Unimed reflection in our numbers. We had annual revenue of 7% related to compared to last year and to BRL 6.4 billion. Over the last 4 years, we still have a growth. But in the last year, we had a lowering of 7%. Net revenue was the same exact effect, reducing the deductions. In the fourth quarter, we had an effect which is the PCLD, which is mentioned in the release. We had a reversion of losses, losses in the fourth quarter and a diminishing of net revenue in that quarter, how it was smaller than the gross revenue and with the effect of the PCLD together with the -- what had been historical loss of losses of nonpayments, which was in the quarter which causes this difference in the quarter. PCLD, which is a subject in which I have been talking about, we had in the last quarter, a negative number, how we're looking at the total value as compared to our historical recovery. Over the year, we've had a bad quarter in the second quarter. But in the year overall, we are looking at 3.3% of the revenue as the last 12 months and a negative number rather because of the adjustments that we made in the PCLD policies of the company. The next page is our profit, gross profit, cash profit without the effects of amortization and depreciation. And starting with this slide, we separate a little bit the operation of what was our gross revenue in total and our gross revenue, excluding the hospital operations where we had the investments underway announced and already underway at this time. The gross revenue for the quarter was BRL 482 million, about 37% and an evolution positive of this indicator in relation to its historical levels. And since we have a great deal of variable costs, the effect of revenue doesn't appear so much here, and it will show up more in our EBITDA numbers, the expenses that were not diluted. Looking at the annual basis, we had a reduction of profit due to volume, but a margin of 32%. We think that in the quarter, it's been 36%, and we still think this space to improve the gross margins. Expenses, they had -- expenses were impacted by the accounting -- the accounting value is great, much higher. There's an impairment of some operations, but there's also several accounting adjustments of BRL 104 million, which are included in our expenses. And these accounting expenses are with the questions of value of inventories and several losses in several partnerships, which were not successful and there's an expense which was very heavy for us in the quarter. And for the year, we had 25% of our revenue of the operation. If we take out the hospitals, we had 24%, 5.4%, which was in the third quarter of 16.9%. And on an annual basis, it was from 18.7% to 20% of the metrics without hospitals, not including hospitals. When we had a decreasing revenue with this level of expenses without reduction, we have on the next page an EBITDA suffering on an annual basis which was 20% last year to 14% this year. Even though in the quarter, it wasn't so bad. It was a 17% margin in the quarter -- in the fourth quarter and the annual basis was heavily weighted down by the first quarter. But as you see, we had a quarter which was very much pressured by the EBITDA in the beginning of 2025. At the end of the year, some important numbers, we finished the year with BRL 830 million of EBITDA, including nonrecurring expenses in the hospital operations, and it's still pre adjustments of the IFRS. So EBITDA, our best EBITDA looking forward part of this BRL 830 million, which was BRL 240 million in the fourth quarter in round numbers. Considering everything that we mentioned up until now, it was very negative in the accounting level, it was BRL 3 million and considering the adjustments that we made of exclusions and debits and excluding the accounting adjustments in the hospital operations, we had a net revenue of BRL 1.4 billion. Remembering that looking at the adjustments of Banco Master and everything else, this includes the Banco Master BRL 400 million just from that one operation. The cycle of working capital, which on the next slide is the principal highlight of this page here. Looking at the difficulties of liquidity, we had to support ourselves on our suppliers. And so accounts payable had an increase of 109 to 111 days. A little bit of our liquidity at the beginning -- at the end of the year. With our principal supplier here, our medications who has supported us in this refinancing in this refinancing moment. On this page, the reconciliation of the cash flow. We had a quarter-on-quarter cash position in the third quarter of almost BRL 500 million. We closed the year with BRL 518 million, having a positive operational cash flow. Looking at the cash flow, the working capital on the previous page, we had BRL 250 million from considering our operation after paying interest, had an increase in cash of BRL 494 million to BRL 773 million. And the numbers of the cash flow for CapEx and partnerships, which are smaller amounts, but we had here principally the Banco Master provision, which is BRL 213 million here. Including Banco Master, which in addition to what was already in the third quarter, we had already provisioned BRL 216 million in the third quarter. And so we had this additional provision of BRL 213 million corresponding our balance when the bank was -- when Banco Master was liquidated. Our cash was BRL 518 million in cash consumption, which is the cash that we had at the 31st of December of BRL 518 million. On the next page, we look at the graph, you'll see the number of 3.5x. This 3.5x is our level of debt, net debt and adjusted EBITDA. However, for covenants, we have to adjust by IFRS and adjustment. And for the covenants, our index was 4.27x or the 4.3x, which is on the slide. Our debt after the IFRS. And with that, we have had to have a negotiation of breaking of covenants together with our creditors. Looking at the first -- starting in the first quarter of this year, we have obtained from them some are negotiating with us, especially the series in which the holders are a series of debentures, which are polarized and several Cs, which are very polarized among different smaller investors, and we're having difficulty in the negotiations. With these breaking of covenants, we have had the debt of the company reclassified to short term. And as a consequence, the auditors elaborated a note about the operational company. Our debt is not late. We have several payments which are being negotiated with creditors, several expenses dispensations of covenants, which we need to obtain. But however, since it was not complete, this did not reclassify to long term. However, into the long-term borrowing. However, we have not had any formal declaration of nonpayments at this moment. So what we had to share with you, I think that we can have a question-and-answer session, any questions you might have.

[Operator Instructions] There's no questions at this time. I would now like to pass the microphone to Carlos Gil for his final comments. Sir, Carlos, please go ahead.

Thank you all for your presence. Once again, thank you, and have a good day.

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