Raia Drogasil S.A. (RADL3) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to RD Saude's Second Quarter of 2026 Earnings Call. The slide deck can be found at the company's Investor Relations website at ri.rdsaude.com.br. This conference replay will also be made available at the website. [Operator Instructions] Before we begin, we would like to inform you that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the company's management's beliefs and assumptions as well as on information currently available to the company. Forward-looking statements do not guarantee performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that overall economic conditions, the industry conditions and other operating factors may affect the company's future results and lead to results that differ materially from those expressed in such forward-looking statements. Today, with us at the RD Saude studio are Mr. Renato Raduan, CEO; and Flavio Correia, Head of Investor Relations and Corporate Affairs. I'd like to turn the conference over now to Mr. Raduan. Please go ahead, sir.

Hello. Good morning, everybody, and welcome to our second quarter earnings call. As always, it is a pleasure to be here with you to delve deeper into our numbers that I'm sure you have taken a look at already. And good morning, Flavio.

Hello. Good morning, everybody. Good morning, Renato.

I'll try to be brief in the beginning of the presentation, try to give you an overview of the figures and leave some time for Q&A. Before we go into the operational details, I'd like to tell you that we are very happy with the second quarter results. They were very solid, very consistent both in absolute and relative numbers comparing our company against our previous results and the industry in general. We finished the quarter with 3,687 units. In 12 months' time, we will tell you that we reached 4,000 units next year. But so far, the number is 3,687. We opened 76 units and closed three. Our IRR is extremely healthy, and it is contributing to the results. Besides the expansion to 3,687 units, we have 53 million active customers in the last 12 months, almost 1/4 of the Brazilian population and 119 million tickets in the quarter with an NPS of 91. Flavio, this number is part of the landscape at this point. It seems like nobody cares about this number anymore, but it is the reason why we have such a great performance per pharmacy. It is about the experience that the customers have, everything that we offer in terms of quality and service. It is the first quarter in which we have the three consecutive quarters in the year with an NPS north of 91. And that is also a signal that our plan is working in terms of improving the pharmacy staff, and that effort has been recognized by the customers. We closed the quarter with a growth of BRL 12.8 billion, 18.3% growth. And we should remember that last year, the GLP-1 sales put us in a very good position. We already had Mounjaro in May last year. So although the sales base was already very high, we were able to grow by 18.3%. And in our mature stores, the growth was 10.9%, almost 11%, 8 percentage points greater than the CMED index and slightly more than our direct competitors. It was a very solid result in absolute and relative terms. 19.7% national market share, almost 20%. We're getting closer and closer to 20% with 170 bps more than last year. And last year, we had already grown by 170 bps in comparison with the previous year across all regions. So that's why this result, as I said, is very consistent and solid. And as for digital, we reached almost BRL 4 billion, 55.2% growth and a penetration of 31%. I was actually doing the math. And of course, it is just a theoretical exercise. The digital side is so strong because of our brick-and-mortar presence. But if we were to split the digital from the brick-and-mortar operation, the digital operation would very soon be the first player in the [ other ]pharma industry. And I think that, that will happen in the near future. It's a very solid result. And that took us to BRL 1 billion in adjusted EBITDA, 18% growth with a stable margin of 8%. We were able to absorb a lower CMED inflation adjustment, and we were able to keep an EBITDA margin that is stable. Our adjusted net income grew as well and the adjusted EBT also grew by 33.4%, which is good. But once your profit before taxes grows, what happens is that taxes will grow as well. We had to pay more taxes. Our free cash flow came to BRL 550 million with BRL 1.190 billion in total generation. And our financial leverage should be highlighted as well because it is the result of a reduction in our net debt and our increase in our EBITDA. Those two factors led to a reduction of 0.5 in terms of leverage. Now I'd like to turn it over to Flavio. But before that, again, it is a quarter in which we grew very consistently by almost BRL 2 billion, going from BRL 10.8 billion to BRL 12.8 billion, an 18.3% rather quarter-on-quarter and year-on-year actually. And again, GLP-1 contributed a lot to this growth. But even if we were to exclude GLP-1 and private label, all the categories would have grown at about 13.5%. It is very stable, very healthy. HPC, as you can see here, I told you in the last quarter that it grew by 12.8% but repellents and sunscreens had not sold so much because it rained a lot. And if we were to exclude that, the growth would have been 14%. And that's exactly what you can see here, the structural growth that I told you about. It's important to remind you of all of that because it builds credibility in everything that we tell you every quarter. So you can see that the growth was very healthy across the board, excluding GLP-1. Now over to the next slide. Once again, you can see the growth of 18.3% overall and almost 11% in mature stores. We should remember, Flavio, that 11% in mature stores is important because we are already at a base that is higher than last year. And if you add a percentage growth on top of that, it means that our gap between ourselves and the competitors actually grew over the last 12 months. So congratulations, and thank you to the entire staff for your delivery, your hard work. The customers are recognizing your effort and the gap between ourselves and the competitors is increasing more and more. And also, we have an expansion engine that cannot be replicated by anyone, and that will continue to make that gap even larger. Now let me give you some more details about these numbers. But again, this is old news. We gained 170 bps in market share across all regions. In Sao Paulo, 230 bps in the Southeast region as well, 140 bps. In the Midwest, 240 bps, not so much in the South. In the South, the expansion pace is a little slower. We're gaining less share there. And the Northeast and the North, we can see a 150 bps expansion. Those are all significant growth rates. That are not happening just in one or another region, but across the board around the country. And here on this side of the chart, I would like to highlight this. Less than 40% of our pharmacy footprint is where everything started in Sao Paulo. We are a nationwide network. We're not just constrained to Sao Paulo. Most of our business comes from other regions in the country. And that is important because if we are to grow in the next 5 to 10 years, we already have strong brands and the way paved for our growth in the rest of the country. 60% of our pharmacies of our brands and teams and inventory located all around the country, which will allow us to grow around the country. And the competitors cannot do the same. We have 13% market share in the Northeast, 12% in the South, 14% in the Southeast. Of course, we are not going to reach 35% in those places overnight. But look at what happened in the Midwest, 25% share already. So we have a great possibility of growing all around the country with the assets that we've built over the years, which our competitors cannot do. Another thing that I'd like to remind you of is that our EBITDA includes 25% of the stores that are not mature yet, that are not at their optimal level of revenue generation. So we need to take that into account as well. If 90% of the stores were mature, our EBITDA would be higher than that. And now I'd like to turn it over to Flavio, and I'll come back later.

Hello. Good morning, everybody. Well, let me give you some more details about the digital business. It is a huge success, very consolidated. This is an activity that generated BRL 3.9 billion in revenue this quarter with a 52% year-on-year growth. So although it accounts for 30% of our sales, it's still growing with 52% growth year-on-year. That's very positive, not only on quantitative terms, but also qualitative terms as well. We have our proprietary channel, the app, consolidating 80% of our digital sales. And that also comes from our operating strength with 96% of the deliveries being performed in less than 60 minutes, less than one hour. That is an undisputed strength for us. If you put that together with an 81 NPS and with the access that our customers have to our website and app with 1.1 billion visits, that takes us to this incredible success and solid numbers. Now when it comes to gross profit, we came to 28.9% in a percentage of our gross revenue, and it consolidates our operating resilience. Here, we have sales gains and lower losses, and they almost offset the negative points because we had a higher share of GLP-1 in our sales this quarter. The CMED rate was 30 to 40 bps lower than last year. So it pushed our results a little lower, but we have our operating strength, which almost was able to offset the lower points coming from last year. Now let's take a look at the expenses. Our selling expenses came to 18.6%. We have been talking about that for a few quarters now, right, Renato. We have been talking about how we have been working with our results. The top line can grow by 18% because of the strength of our brand and operations. And in the recent quarters, we decided to propose a different employee value proposition to our staff, and that took our expenses to a higher level, but it can deliver the results that we expect to deliver to the customers. So we are making investments here. It's not really about expenses. And this amount is higher, but it was also diluted by the higher revenue generation that we had this quarter and the year for that matter. And the weight of our EVP also led to an increase in our last mile due to the digital penetration and also the third-party services. But those effects were minimized by an improvement in the lease costs. Now let's take a look at the G&A expenses. This is a big strength that we have. We changed the structure last year and we have already captured the effects. We did so in the second quarter last year, we were able to cut off almost 40 bps in G&A expenses in 2025. And now in 2026, we are also capturing another 30 bps due to our solidity in our management of expenses in the company as a whole, but also because of the dilution coming from the growth in our sales. So this result makes us very happy about the performance this quarter. And our EBITDA margin came to 8%, which is stable. But when we look at the absolute numbers, we can look at the financial result growing by 18% year-on-year, which is very solid. In 2026, things have been very challenging for retail as a whole. And the second quarter, when we look around to other retail segments, things have been very tough, but our bottom line is growing by 18%, which is just another way of showing how solid we are. We also have a cash flow that has been very positive if we're looking at this year-on-year, and they're mostly coming from our line of vendors. We have gained 11 days in terms of gains, and we have two different effects. One of these effects is coming from the ICMS taxes, the drop that we saw in this type of tax in the state of Sao Paulo. So these results in terms of taxes are now coming back to our numbers, and this represents about half of the gain that we had in this vendor line, the supplier line. The other part of this is about our commercial and operational fortress, the negotiations in our trade business, commercial business, et cetera. So this is a very solid result, and it is structural. There are, of course, some standouts because of our half. But if we remove this question, then this should be able to be kept throughout the next cycles. Thinking about financial expenses now, we have expenses that have dropped 40 bps year-on-year. So this is a very low number if we compare it to our historical numbers. Of these 40 bps, 30 of them are coming because of a decrease in our debt, our total debt and because of a decrease on the costs that we face of selling those services. This is 3/4 of the financial expenses. And then we have 3 bps that's about receivables because of the 4Bio sale. This is something that helps us structure everything else, and we will be seeing effects on this for the next five, six years because of those receivables. This is going to be recurring results for us from now on. When we take a look at our EBT, we see that this is very good information. We are getting to BRL 542.7 million in this quarter. It is a growth of 33% over the same basis of last year. It's a very solid growth, again, 40 bps year-on-year. Now if we take a look at other details that Raduan had talked about, we had the low light of the results, which is about the increase in taxes that we're paying. We're generating more revenue, which means we're going to pay more taxes. There is taxes in absolute numbers that increased by BRL 60 million year-on-year. We landed at BRL 118 million. And the growth of this is about the EBT that grew along the way and the JCP that's proportionately a little bit lower than last year if we think about the interest on capital. We saw this in 2025, but it's not as strong in 2026. This was a result that we were expecting. We were not caught off guard by this. But of course, this is low due to the increase in the overall number. So we came to an adjusted net income of BRL 432 million with 3.4% on the gross revenue, which is a very solid result. Now if we exclude the 4Bio results from our basis this year and last year, we saw a percentage that is being kept year-on-year, but with a basis that is increasing quite strongly year-on-year in absolute numbers, in terms of cash, again, very positive. We read a lot of the analyses that were created overnight. And one thing that was mentioned over and over again, and that is quite positive is our generation of cash flow for the period. We have now a very solid number with BRL 880 million total after investments and then before BRL 550 million. When we add that to the situation of the sale of 4Bio and those receivables, we are now looking at a total number of BRL 1.190 billion in terms of total cash for this period. This is a very strong number. We can't say that it's a surprise number, but it did surprise many people, nonetheless. So we are evolving our debt that is going from BRL 3.99 billion to BRL 3 billion. We are looking at a very impressive reduction, which comes to about a BRL 1 billion reduction, meaning our leverage goes from 1.3x to 0.8x the EBITDA. So that's another very positive number. And with that, I would like to give the word back to Raduan.

Now before questions and answers, we try to anticipate some of the questions that might arise. So we wanted to tackle those. I would say that sometimes there is a bit of apprehension regarding the future of GLP-1. And honestly, we are in this sector, we are managing this, and we are not apprehensive. We're not as apprehensive as the market seems to be, and the numbers really are on our side in terms of this lack of apprehension. So let me get down to this. I just want to use data that can be reported right now before July. But the average added price of GLP-1, this is always -- I'm sorry, I lost my point. Okay, here we go. I'm just going to go through this slowly so that we make clear some questions. If we look at GLP-1 in the first quarter, we had the average price -- sale price of all the ingredients and our revenue. We see that the second quarter showed a decrease in average price of 7%, but there was an added volume that made up for that, which means that our gross revenue increased. So even though there was this decrease in price, we did have an increase in volume. If we break this down between semaglutide and tirzepatide, we see that semaglutide is where we are looking at the generic medication. Now the average consolidated of the whole quarter, if we think about the three months, average price went down by 22%, and that was integrally offset by this volume that I'm talking about, meaning that it brought us to the same gross revenue with an important caveat here. It composed this gross revenue even with restrictions and an issue with inventory. If we had been able to rely on unrestricted availability of all options, then this would not been 100. It would have been more. So right now, we're looking at semaglutide, it is an offset that is happening between this decreased price with the increased volume, which is leading us to similar revenue. And that's for now. I think, of course, competition will increase, which means our gross margin will increase as well. And then on the other side, we're looking at tirzepatide that showed a small decrease in the average price. I think there were discounts and incentives. There's a mixed effect. Sometimes you sell at a discount, but you have a more expensive presentation. We're looking at an average price of 100, but volume grew by 12%. So in terms of quarter 1 to 2, again, that decrease in price generated more revenue because of the volume. The second thing, which is, I think, even more important is what we see over here. You know because of data from the market and we read your reports, there are good estimates that approximately 70% of the market is tirzepatide. And tirzepatide is completely bulletproof in terms of this loss of patent in the short term and from generics. Its price is going to be kept. The challenge of tirzepatide is about how you attract the parallel market and then you take care of the black market and you want to make sure you migrate those clients to us, we see that if we bring some elasticity, we will get demand. And then semaglutide, which is 30% of the market, which is where the price is dropping, but being compensated by volume. I said this during the last call, and this is something that we've been very transparent about. GLP is about 12% for us. And in the second quarter, GLP had a higher share than in the first quarter. So again, higher in the second quarter. Of those 12% that I mentioned, we're saying that semaglutide is about 30%, then it's about 3.5% of our total revenue that is resting on semaglutide. 8.5% is on tirzepatide. Those 3.5%, as we know, they don't operate at a margin of 30%. They're operating at a gross margin of 18%, so the contribution of semaglutide of our revenue in general is about 2%. I think this will keep. I think that competitiveness will improve our gross profit based on what we see in other countries. Even if that doesn't happen, we're saying that this 2% could be 1.8%, 1.7%. Sometimes we may be projecting a doomsday scenario because of prices and competition. But again, we are thinking about a 2% ballpark number of the contribution of our gross profit in the company. It has shown to be elastic, and it's not going to be deteriorated further with competition with new products. We are going to see this being kept. And again, tirzepatide is bulletproof. There's very little migration from tirzepatide to semaglutide because of a lower price. There is legitimate concern, of course, but we have to put things into perspective in terms of how much that is applied. We have been focusing a lot on this, but I was just trying to give you some perspective of the impact. And we are not looking at tirzepatide enough, which is going to keep its patent for a long time. There's a lot of market to gain of the parallel informal market. And in addition to that, we will have other ingredients. We are going to have oral medications coming in. There's a lot of innovation, a lot of growth that we are projecting for GLP-1 as a whole, and that is very significant. We do, do multiyear exercises. We look at pessimistic, optimistic scenarios, realistic scenarios, but even the most pessimistic one is predicting a destruction of GLP-1 value in the future. We may be wrong, of course, but we are much more optimistic in terms of GLP-1. So having said that, of course, you are welcome to ask any questions about this. Another very important point here, and I want to talk about it further is the strength of our digital channels and how much that has become a fortress to us. This is a tool that is helping us accelerate our gain in share, but it is a defense tool that is very important for new players and digital players that may be coming in. We have 11.8 million of our clients that are digital, and these 11.8 million represent about 41% of our sales. Very soon, half of our sales are going to be coming of digitalized clients that sometimes buy online and sometimes buy in person. Of course, we've been able to create this digital fortress because this is sitting on a very important physical structure that creates a unichannel that it is one single asset and platforms that don't have their brick-and-mortar cousins can't do that. We have our 3,700 stores that are going to be our delivery hub. We have customers wanting to do click and collect. They have the option of receiving at home, but most of them want to just do click and collect. If competition is digital only, they don't have that option. We are now getting to 700 municipalities with pharmacies. And in those, we are able to deliver in 1, 2 hours max. So we are highly advanced. We have our inventory. Our brand is there. Our high-income clients is very well assisted. We have 15,000 pharmacists. We created a platform and a digital experience that is very strong. We can clearly see that in numbers by the digitalization of clients because of the NPS of 81 that we've come to and more than that, Flavio, it's more about what clients do than what they say. And we're seeing that clients are increasing the recurrence of purchases in digital channels. In the past, under 60% of our clients were from recurring customers, but now that number is increasing more and more. So clients are coming in, they're buying. They like the experience and then they come back. And that has been creating this fortress, which we believe is very important. Sometimes we have lots of debates like it's an MBA, we're looking at company A, company B, and we forget about the client. And it is the client that will decide who will be successful. And for somebody to leave a company where they feel well assisted and go to another, someone has to be offering something that is much better than what we offer. Now days, we have proximity. We deliver very quickly in main capitals, we deliver in 30 minutes. If you see more downtown neighborhoods that can be down to 15 minutes, we have competitive prices because we have good purchasing power. We deliver that with a well-known brand with good reputation. It's Drogasil. We are not unknown. So we have a very high value proposition. Is it unbeatable? Well, no, nothing is unbeatable, right? But for someone to be able to persuade a client to leave us and go somewhere else, they're going to be having to offer a much better value proposition, which is not an easy thing to do. Another important thing that I'd like to mention is that in a sector where there is consolidation where you have two, three consolidated players, any external events or economic crisis or a new player is going to impact the segment, but of course, the consolidated players as well. But for a segment that is not consolidated, we're talking about a segment that can be affected by any type of situation. So we are seeing interest rates that are high -- persistently high that is hurting the small business, and that helps us. If tomorrow, there is different legislation in labor laws and staff becomes more expensive, companies that have higher payroll expenses have lower financial capacity, they're going to be hurt more. If we have companies that don't have good digital journeys, they're going to have a harder time as well. So because we're well consolidated, macro events can help us more than hurt us. So I think that is something important to keep in mind. And now just a final thing before we go into our Q&A. Starting on Wednesday, 10 in the morning, I would like to invite you to Raia Conceito, which is a flagship store that we're opening. It's a symbolic moment. There are some moments in a company life and they're unforgettable, and I believe this will be one of them. We have been thinking about this since last year. Marcello had hinted at this, at future trends. And last year, we started to listen to our clients based on the challenges we faced with HPC, and we were understanding how much our clients wanted to have a multi-brand store where they could have an in-person experience with consultants, and they felt that they didn't have this option in terms of pharmacies in Sao Paulo. We then visited Saudi Arabia and different international locations. We talked to vendors who became our partners for this. And in a year where we were elaborating this new baby of ours, we are now coming up with this store that is adding more depth to beauty, more premium beauty cosmetics. We're bringing a lot of new brands, 50 new brands, and it will be in the neighborhood of Itaim Bibi, very close to Lima, our financial district. It's easy to be visited. Starting on Thursday, 10 a.m., we will be open. We know that this is a necessity. It is a demand that we've been hearing about, and we are excited to create this sensory experience. Pictures are beautiful, but the store is actually even more beautiful. And the cherry on top is our people, our staff who have been trained for this. They're not part of the picture. But if you go and you visit the store, you will be surprised that it's even more beautiful. You're all invited to join us and thank you very much. We will now open the floor for Q&A, and we can then go deeper into different subjects.

Thank you, Renato and Flavio. Now let's open the floor for Q&A. The first question comes from Luiz Guanais with BTG Pactual.

I have two questions. First, in the same vein of what you said, Raduan, about the elasticity, I would like to know also the margins about GLP-1 drugs and your negotiations with the industry. Still about margins, if you could give us more color about the HPC margins because HPC was a big highlight in the quarter. We saw a sharp growth in the quarter. And we know that you have been working very hard on pricing and repositioning due to the pressure from e-commerce. So if you can update us on the negotiations with the industry, that would be helpful.

Thank you very much. Now let me answer the first question about GLP-1 margin. It has been very stable over the past 9 to 12 months at about 17%, 17.5%, 18%. Yes, things evolved. In the beginning, we had smaller margins and then we started receiving tirzepatide products and then the margins improved. And since the margins have been stable. Now looking forward, according to my opinion, I think tirzepatide should continue to be the same as it is right now because there's not a lot of competition. Now with semaglutide, I think that similar drugs will come, and there is a trend for lower margins. Of course, we have to insist on origination. So there's an investment to be made there. But I believe that there is a trend for an incremental improvement in margins, especially for semaglutide. But for now, it has been stable. And the same thing happens with HPC. Again, we are very happy about all the lessons that we have learned and the muscles that we have been exercising trying to strike a balance between margins and sorting. And the margin has been very similar to what it was a few quarters ago. And the performance that caused us trouble a few months ago now is bearing fruit. This new pharmacy that we just opened came from that need that was created in the past, thinking about things that we -- different things that we could do. And also, we started to understand how to acquire more competence and try to work on the margins and also promotions. We know that Black Friday was not so good last year, but HPC margins have been stable to directly address your question.

The next question comes from Joseph Giordano with JPMorgan.

My question, I actually have two. The first one is about cash conversion. It has been very strong. I would like to understand a little bit better what the supplier dynamic has been like. I understand that ICMS-ST tax is affecting another category now. So it will cause structural changes moving forward. And we are going to see some distribution centers maturing from now on. So maybe you will have suboptimal inventory in some parts of your operation. I'd like to know more about that. Your market share gain has been significant for many quarters now. I would expect 100 bps, but now it's closer to 100 bps. So I'd like to know your perspective about the competition in a high interest scenario. Raduan talked about closing smaller units. So how should we be thinking about that, especially on the side of suppliers? You became a safe harbor for suppliers, but some wholesalers might be struggling. I'd like to know more about that.

Yes. It's surprising for us even to see 170 bps increase year-on-year. but most of the share gain does not come from GLP-1. It does help, but it doesn't even account for 50%. But of course, as the GLP-1 base grows, it's getting closer to 12%, we expect the gain in market share to become smaller, less than 170 bps. But we are gaining share in sell-in and sell-out. We can see the networks, the chains advancing and gaining market share from the independent stores. And that happens due to high interest, of course, but also because the smaller chains are not taking so much advantage of the GLP-1 drugs. Only the larger chains are enjoying that benefit. But when we look at the sell-out side, when we look at the big chains, we can see that we are also gaining market share. And I don't think that's due to any financial difficulty of the other players, but also because we are offering higher performance and experience, a better experience, including in the digital channels. We are evolving more than they are, and that causes that gap. We are not facing hiccups and struggles, which is natural. Five years ago, we had a number of issues on the app, for example, excess of traffic during the Black Friday period. It's natural. That happens, but you need time and also a lot of money to invest to overcome those challenges. That part of our history is behind us. Now we have a very solid app. So the big chains have been losing market share to us because of the experience that we provide. Now about the cash cycle, the result has been very solid, as we said, with 11 days. We expect that result to be recurring looking forward. And the big issue here is ICMS-ST tax. The tax substitution is not going to happen anymore. We are going to start paying tax from the moment we sell the product and not when we buy the product. So that ICMS inventory, if you will, that was retained with the government will come back to the result. And that accounts for six days in our cash cycle. So it's going to be a benefit for us. And also the ICMS-ST tax is going to bring some benefits in our inventory. The inventory will go down by three days. It is going to cause an effect in our inventory, and it is going to affect the COGS and the inventory, and it will affect COGS faster than the inventory. So the inventory line is a bit polluted because of that. That one day gain that we see in our line -- in the inventory line, it is actually more than that, but it is minimized because of the tax substitution effect. But that situation is here to stay. It is not a one-off effect on our result. The tax substitution will be removed from our base. So looking forward, that result will be perennial. That same level will be kept from now on, and that's a major strength for us. So the conversion should be easier for us looking forward.

The next question comes from Bob Ford with Bank of America.

Congratulations on the results. What are the updates about tirzepatide and GLP-1 drugs and compound pharmacies? And what are you doing independently and also in partnership with the sector to raise awareness among users? And I would also like to know about your perspective of the factors that will sustain your market share gain in terms of GLP-1. Is it going to be assortment? Is it going to be margin, price? And do you think that you are going to gain even more market share? Or do you think that the competitors are becoming stronger?

Thank you very much, Bob. I didn't quite get the last part of your question, but Flavio can help me. Our estimates about this are exactly the same as the ones that you hear and read about. Tirzepatide market right now in terms of units in the informal market is even higher than the formal market. But in terms of revenue, it is at least the same. And there's also the compound part of the market that may be the same size as the other 2. We believe that the informal market is even bigger than the compound. But we think it is distributed like that. And that is a very worrisome issue for us in terms of public safety because people don't know where the product comes from. If they even knew that the product is guaranteed and it is high quality, that wouldn't be so troublesome. But it is also a health care risk for the users. We have been conducting campaigns on our Instagram page trying to raise awareness about the risks of using medications that have not been approved by ANVISA and that are not sold through the accredited channels. So we have been joining forces and also working isolatedly on our digital channels. We have always talked to Abrafarma about the campaigns, and all members of Abrafarma are very much engaged in fighting the informal market. So we have been doing whatever we can. We're trying to understand what makes people resort to that, and it's clearly about the price difference. People need to have access to those medications, and tirzepatide is not affordable for a big part of the population. And there's also an issue related to getting the prescriptions. So that's what we have been doing about this, but we have still a long way to go in terms of winning this battle. Now, if we can do that, if we can make those medications more accessible and affordable, and if we can raise awareness about the risks and make that migration, there's a lot to be gained. And as I told you, GLP-1 is very important for us in terms of market share, but it's less than 50%. We have been expanding. That's always on our minds, and we have been very successful in that effort. So the market share gain comes from the expansion that surpasses the expansion of our competitors, not only in the pace of the expansion, but also the quality of the points of sale. And also the digital channels have been growing, and it's also about the solidity of our operations. We finished last month with the lowest inventory stockout that we had for many months. We were able to reduce that, but also we've done many other things, including working on our NPS, adding more staff in our pharmacies. So it's very hard to put our finger exactly on what factor made the biggest difference. All of those factors are important, and many of those factors are structural ones.

And also, Raduan, one thing that I would highlight is that there is no informal market for any other molecule in Brazil right now. The only case in Brazil is GLP-1. It is abnormal, completely abnormal. And we believe that happens because there's a desire on the part of the population for this product, and there's also scarcity on the side of supply and the average price is still very high. Looking forward in this category, we should move to what happens in other categories, not having an informal market or anything like that. And things should go back to normal. Once we address the scarcity, we are going to see more volume of these products coming to Brazil due to the high interest in them, and the price is going to go down as well. And tirzepatide and semaglutide are very important molecules, but also in this quarter, ANVISA approved other 5 products in the semaglutide segment, and we expect to see another 7 products being approved by ANVISA until the end of the year. So the supply is going to increase and the average price will reversely go down. That gap of 22 points in the average price happens because of the new semaglutide molecules. And Bob, also, what I can tell you is that with the new competitors, they should balance this category. And we can see the increase in our market share quarter-on-quarter. And we grew with a decrease in our prices of about 20 points. That average price was surprising to the entire market. We received many calls about the price of this new product. And we believed that the price would go down at some point, but it happened much earlier than we expected. So indeed, it impacted many players in the whole chain. And on our side, well, we are retailers. We buy and sell. If the product can be bought at a good price, we are going to sell it at a better price as well. So it's good for us. And right now, we believe that we are by far the best player in the GLP-1 segment. Our market share is extremely significant in this category. The market is growing, and we are growing as well, so much so that this business is growing as a share of our operation. And one positive aspect that I would highlight is that the market has been very anxious about that. It is the big wave of change in health care in the pharmaceutical sector. And everybody is looking at things from a short-term standpoint. But actually, the margin right now for the products is not that relevant if you think of the big picture and the potential. That's very clear. Now about the consolidation, considering the pressures in the segment, do you think that, that can cause an acceleration in the consolidation movements? Well, if you look at recent data, you can see that, that is already happening. And I believe it will continue. I don't see anything changing. The interest will continue to be high. Some categories are exclusive to the big chains. There are some things that can be more difficult for the independent units. So I believe that the consolidation movement will accelerate.

[Operator Instructions] The next question comes from Mauricio Cepeda with Morgan Stanley.

I have 2 questions. The first one is very financial, about capital allocation. You have an adjusted leverage at 0.8x, and you have an expectation to generate cash that is positive in the future. What is the leverage bracket that you want to be at? And considering that you are below what you have been historically, how do you plan to allocate this capital? Would you accelerate organic expansion, or with repurchase or dividends, et cetera, buyback? What would you suggest? And the second thing is about those benefits of GLP-1, et cetera. Are you ready to capture opportunities that go beyond the medication? Are there any strategies for complementary products, medical devices, supplements, scales, perhaps service for health care monitoring? I don't know if this is something that could be expected from the GLP-1 success.

Thank you so much. That is both great questions. So to start, yes, we are deleveraging. So we are creating investment capacity for things that we believe will give us a return now that interest rates are very high. We are not going to accelerate organic expansion too much, not because we lack the resources, but because we want to make sure that quality comes first. We want to expand at that rhythm of about 10%, as we have been saying, which is proving to bring the appropriate return. We have the resources there. If we think we should push further, we can. Now when you think about buyback and shares, et cetera, those are things that we are analyzing all the time, and we may, at any time, choose to do those things. It's important that we know that we are deleveraging at a time when costs are very high, knowing that we can contribute to the end results. Number two, we know that, that gives us space so that if we understand that there are projects where capital allocation makes sense because it will give us a better return, then we will do that. There is no one theme that I could talk about today to specify. The second question is good. We talk about GLP-1, but GLP-1 is one part of a whole care journey that goes through other products, other services, et cetera. And we've been focused on that quite a lot. We are developing internal solutions. Sometimes we are developing things with the industry that is more specialized than we are in terms of the weight loss journey. And we think about how we serve our patients during their journey continuously speaking, so they understand what additional products would make sense to complement their weight loss journey. We can monitor side effects, how to treat those side effects, how to have professionals close to them. And we are trying to engage our clients during this journey, not just in terms of assistance, but financial aid as well if perhaps there's a loyalty there and they get discounts that are progressive. And it's true; we often just talk about the product, the share, et cetera, but the point you bring up is very important. It is our role as health care providers that we build a more -- a healthier society, thinking about this journey. The pharmacy that we are going to inaugurate tomorrow, you will see a full section of supplements. It's very robust. You will see other devices that are there to help patients monitor their own health, and those are all there.

[Operator Instructions] Our next question comes from Tales Granello of Safra.

Another question about GLP-1. Would you have to share with us the percentage of migration that you saw from your client base going from Ozempic to the generic brand, the ones that we've been offering? And of new clients, how many clients of Ozivy are new clients to you, individual clients?

Well, these are preliminary data, and we have to be careful. Every time a new product is launched, we have to be careful. So it does need a prescription and we keep that prescription. So if someone is using an older product, they have to go through however much they have at home before they change and migrate to this new offer. I think preliminary data sometimes are not representative of what they will be once this initial cycle is over. I say that a little bit above 60% of Ozivy were new. We are seeing very little migration from tirzepatide to semaglutide, even though semaglutide is becoming cheaper. Within semaglutide, we have this new medication, Ozivy by EMS, and 60% of the clients were completely new to the category and the others were migrating. We don't know where that is going to plateau, but this is the number we have right now. I can't tell you if these 65% were clients previously, but were not part of a weight loss journey, or if they are completely new to the network as a whole. Unfortunately, I wouldn't be able to tell you that. But I believe those are recurring clients who were now starting a weight loss journey, having found out that there are cheaper products and are now talking to their doctors, et cetera, and started a treatment. I think that, that's what we're looking at. But again, we need to wait for doctor appointments. We need to wait for prescriptions, people who are midway through treatment with a different product, I think we still need some time to understand how this is going to play out.