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

Hello, ladies and gentlemen. Thank you for standing by, and welcome to RD Saúde's Third Quarter of 2026 Earnings Call. The slide deck can be found at the company's Investor Relations website at ri.rdsaude.com.br. The conference's 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 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's 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 are Mr. Renato Raduan, CEO; and Mr. 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. It is a pleasure to join you this morning to talk about RD Saúde's Third Quarter 2026 Earnings. It is a pleasure for us to be here, talk about our numbers and answer your questions. Good morning, Flavio. We will go over the results very briefly. We are happy because yesterday, we released the press release, the results released earlier. And I'm sure that you had time to take a look at the results and interpret them. But now we have the chance to talk about them directly. I'll try to be brief in the presentation to leave more time for Q&A. But before I start, I'd like to thank all of you in the Extel ranking voting about the market professionals, you recognized us and our Investor Relations team and the whole company. So thank you very much for that. It was an honor for us to be voted by you in such significant numbers. And I'd like to underscore our commitment to bringing results and facts with maximum transparency and honesty to help you see reality in the best way possible, trying to clear up the fog so that you can do your analysis in the best way possible. So I'd like to confirm our commitment to transparency and honesty in our company. That's how we deal with you and also our Board, our controlling shareholders, executives and everyone really. We want trust and credibility in everything that we say. And again, thank you very much. I didn't even know that award existed to be honest, but thank you so much for that incredible recognition. Now let me give you an overview of the results. This quarter was very strong. It was a very strong quarter, as you usually put it. Let me show you the operational results and also some financial highlights. We finished the period with 3,770 stores in operation. We are about to reach the 4,000 stores. We'll do it in less than 12 months. We opened 92 stores and closed 9. We opened 333 stores in the last 12 months, getting near to the guidance of 330 to 350 openings. And I can tell you that we are going to be closer to the upper range of the guidance, closer to 350 than 330. So it was a very healthy year in terms of expansions. We are aiming at the upper range of the guidance that we informed you about a few months ago. We had 53 million active customers in the last 12 months, about 25% of the Brazilian population. We are very proud of that. And we had almost 120 million transactions in the quarter with an NPS of 91. The customers are telling us that our performance is top notch. So we need to be proud of the number of transactions, but also the quality of those tickets. As you can see, the revenue was very solid and the base from last year was already very high. So we can see that GLP-1 drugs will start slowing down, but still the growth was at about 16% and a nominal increase of BRL 1.8 billion quarter-on-quarter. In mature stores, we had an increase of 8.4% with 5.6 points above the CMED price inflation adjustment index. We grew by 110 bps in market share. In the last quarter, it was 18% market share, now it's 19.1%. As I told you in the previous call, we had grown by 170 bps, and that was very much related to GLP-1 drugs. And here, we are still growing our market share on GLP-1, but that gain will be diluted as the growth in that segment decreases. But this is very much in line with what I told you in our last call. On digital, BRL 3.8 billion with a retail penetration increase of over 200 bps. There is a quarterly effect that slows down our penetration this quarter, but it is 100% related to GLP-1, where people are going to brick-and-mortar stores to buy the products and not so much to digital channels. 75% of GLP-1 drugs were made on digital channels. Now it's brick-and-mortar. But if we exclude that effect, quarter-on-quarter, the results are in line with our expectations. And we closed the quarter with BRL 1 billion EBITDA with almost 15% growth and a margin of 7.8% with a drop of 0.1 percentage points. Our adjusted earnings before taxes came to BRL 548 million with a very strong growth of 31% and a margin of 4.2%, in line with last quarter. And our adjusted net income, BRL 439 million rather, with a margin of 3.3% and a growth of 9.2%. If we exclude 4Bio, from last year and this year in relation to the financial revenues coming from the disposal of 4Bio, the growth would have been about 20% in net income, excluding 4Bio. So it's a very strong number. And cash generation and leverage came to BRL 160 million in free cash flow. Flavio will give you more color on that later. And our leverage is getting more stable with a net debt over EBITDA ratio of 0.8x. As I told you, we grew by 16%. There's a double effect here. We had the Stix loyalty program effect that is now consolidated. So we have that positive effect of 0.4 percentage points, but we also have a calendar effect of minus 0.3. So one really offset the other. And if we exclude that, we can see that we grew by 16%. It could have been better if seasonality had been more favorable. You can see that most of the growth comes from our branded medications. And then you can see that in the previous quarter, it was about 9% to 10%. And starting in the last quarter last year, the base came to 12% in Generics, and that's where we are right now, 12%, 12.5%. Most of the growth comes from the Branded Rx medications and HPC grew by 13.4% and OTC grew less because we had a winter seasonality that was not so strong as last year. So anti-flu, anti-cold medications related to the flu season, they were not so strong. And even Generics, excluding antibiotics, they underperformed our expectations. If it weren't for the seasonality effect, OTC and Generics would have been in line with the growth that we had in HPC. And even HPC could have been better. September was an exceptionally rainy month for us. So we didn't have the winter season that we expected. And also the summer season, the beginning of summer season, we was weak in terms of the sales of sunscreens and the like because it was very rainy. Our inventory was robust, but it didn't sell that well as we expected. But you can see that HPC still grew by 13.4%, although we had those seasonality negative effects. And excluding those one-off effects, the other categories are performing well, too. We grew by 16%, as I said, and in mature stores, we grew by 8.4%. The growth is comfortably above the inflation index and also the CMED index. And for the fourth quarter in a row, we grew by over 100 bps, and we grew across the board, across all regions, 210 bps in São Paulo and the Southeast, 110 bps in the Midwest and the South by 50 bps. And the South did not expand so much in terms of new stores. So we should bear that in mind. And the Southeast and the Northeast, the North are growing as well. And the Northeast will probably be the third largest region for us in terms of market share. We expect that to happen soon. So you can see that the results -- the top line results were very solid. Now I'll turn it over to Flavio, and I'll be back for Q&A.

Hello. Good morning again. Now let's take a look at some more numbers about the third quarter. Our digital sales were very solid. We reached BRL 3.8 billion with a 29% penetration on sales. The penetration is a little lower than our penetration in the second quarter this year due to one single factor. In the past, we had the sales related to GLP-1, very strong on digital channels. But now starting in the third quarter, we are bringing those efforts to our brick-and-mortar stores, the same type of offer. So the customers that go to the stores, they can buy the medications there and that makes a huge difference. We are removing part of that overhang that we had on digital channels for GLP-1 drugs, and we are bringing that to our stores. If we exclude that effect this quarter and the previous quarter as well, we can see that the digital performance was very good. The quality of the digital sales is still very high, best-in-class with 83% of digital sales taking place on our app. And then we have the other channels, 9%, our website, 3% other websites or apps. So the quality proposition is great with an 80 and an NPS of 80, which is great. And if we look back, we can see that the digital sales over the last 12 months reached almost BRL 15 billion. That number in and of itself is at the same level as other major chains that we have here in Brazil. So it's an incredible number really. Now let's talk about our gross profit. Our margin came to 28.8%, 10 bps growth year-on-year. And those 10 bps come from the integration of the Stix point-based loyalty program into our result. And that number will add to our gross profit. If we exclude that effect, our gross profit is very much in line with last year. It's very healthy with a nominal growth of 16.5% year-on-year, reaching BRL 3.8 billion in comparison with BRL 3.260 billion. And the net present value had an effect that put pressure on our gross profit, but we also had the growth of GLP-1 growing year-on-year and quarter-on-quarter. So we were able to offset those one-off situations that were putting pressure on our gross margin. Now selling expenses. Selling expenses came to 18.5% as a percentage of the gross revenue. We also had the employee value proposition investments made in the fourth quarter of 2025. And those investments put a lot of pressure on our results at that time, a pressure of 50 bps. That's why there's such a big difference between the different quarters. We still can see some of that effect in the third quarter of 2026, but they were absorbed by the operational leverage, the fact that our mature stores are growing by 8.4% per year. That incredible growth offsets those expenses. Although the effect was still a little bit negative in the last mile logistics costs and also security. Now our G&A expenses, they came to 2.6% as a percentage of our gross revenue. It's the same number that we had in 3Q '25. And we have the Stix loyalty program effect here as well. It accounts for about 20 bps in this number. We can see that operational deleveraging movement here going from 2.6% to 2.4%. But now because of Stix, that number went up to 2.6%. With that, our EBITDA margin came to 7.8% in comparison with 7.9% year-on-year, and that can be explained by all of the points that I already mentioned. And still, our EBITDA came to over BRL 1 billion this quarter, which is an extremely solid result. Now our cash cycle, we can see that the cycle is at 54.2 days, 2.4 days better than last year. And that comes from basically 2 effects. First, the suppliers' term of delivery and also the inventories that increased from 101 days to 102.4 days, and that's related to what Raduan said, that happened because we did not have a cold winter season here in Brazil. And we are also putting together the inventories for the summer season. So the inventory is slightly up. It is not a structural problem. It's just a hiccup that is very natural. And the inventories that we accumulated during the winter season, they sell very fast. So they -- we will be able to sell those products over the coming months. And now we see the financial expenses. It drops dramatically from 1.9% to 1.3% year-on-year. This is basically due to a debt that has been reduced over the course of time as well as the Selic base interest rate that is also reducing. This is approximately 40 bps, and there are another 20 bps that come from AVP or rather NPV, net present value, and they are offset. This is the financial result. And now let's look at the EBT. We get almost BRL 150 million in this quarter. It's growing strong 50 bps year-on-year. It's a 31% nominal growth. This is a solid recurring result that we delivered to the market. When we look at the income tax, it grows slightly and is now at 8% of sales -- 8% of revenue. It's basically because the IoE, the interest on equity had a lower impact, but it's natural to the business. So we get to the end of the quarter with a 19.8% share, slightly higher than what we had last year. I think that's it. The net income is BRL 439 million in the quarter with a 3.3% share of our gross revenue. Our comparison base was 3.5% in the third quarter 2025, that had the 4Bio impact as well, there was a particularly favorable quarter for 4Bio because there were tax credits they had recovered, and we were quite clear about it. And if we deduct it, then this number goes down. It goes down to a level that we would have a 10 bp increase on our recurring base in comparison to what we had last year. So instead of seeing a number that drops 20 bps, we have a 10 bps increase year-on-year, excluding the 4Bio effect. The cash flow. We have BRL 56.8 million in the quarter. I think the result that most caught the eye of the sell side has to do with our cash flow. The explanation was already given around the inventory. So the ready-to-sell inventory in winter that was less cold and also the ready-to-sell inventory to be sold in summer. So this is part of our normal flow. This is not structurally different. It's just a point where we're taking the measures in the second half of the year. We go from 1.1 to 0.8x EBITDA quarter-on-quarter -- pardon me, year-on-year. And we also have the impact of the 4Bio sales. This is something that we can take into account and see as a very healthy result of the company. And just one last point to wrap up. I will talk a little bit about this slide, and Raduan will also say a few words about it. Considering the level of uncertainty there is in the market, considering the political picture, I think we should step away from this fire and take a look at it from a broader perspective. So RD is a company that navigates a structurally strong market, the pharmaceutical market in Brazil. The CAGR of the market has been 13% of the year, not mentioning RD, but it's been growing this level from the start of the century. We are a thriving company in a thriving market. We're a solid company in a thriving market. We've been growing here at 1.1 points in market share year-on-year. It's 50 bps that we have had since we had the merger and with the NPS, with our solidity, with our expansion, a number of factors, also having a more digital client experience or customer experience. So all of that has had a positive impact for us. And this has caused us to have an organic growth that is very solid, 16% growth year-on-year. An important point to mention is that if we look at the last 12 months sales, we surpassed the [ EUR 50 billion ] in sales for the very first time. That's a very relevant number, a very satisfactory number, very satisfying. And growing the profitability even faster than we're growing our revenue. So our EBITDA is growing about 20% a year. And when we look at all of the new seeds that we're laying all over the country with our expansion, this expansion can grow or contribute in 25% IRR in all these years. So whenever we sow a new seed, there is a profitability that is growing. So that's very positive. We do not depend on one single channel, one single category. We have a lot of diversity in our portfolio. We have a best-in-class execution. And this gives the base for a number of situations in the pharmaceutical market. So being more digital and the GLP-1, the vaccine initiative. Any new trend in the market is something that we are able to capture almost twice as much the market share we normally have. So normally, we have 20% market share, and we have 30% to 40% whenever we see a new market, an innovative market opening up. And to wrap up, we still have a company that is reducing its leverage, reducing the weight of our debt and the cash contribution we can have in the course of time. Would you like to make any other comments?

No, I'll make my last comments in the final remarks. Let's open up for the Q&A.

The first question comes from Luiz Guanais from BTG Pactual.

I've got 2 questions actually. Can you talk a little bit more about the GLP-1? There is some stabilization here in terms of sales penetration. How has the generic been behaving? What is the difference in terms of consumers? Is there any overlap considering semaglutide and any other nongeneric and the generic products? Did you hear my question?

Yes, please go ahead.

So the capital structure. My second question has to do with that and capital allocation. In the third quarter, we see a greater consumption of working capital, but still generating cash, still reducing leverage. What can we expect in terms of capital allocation in the next 12 to 24 months?

Thank you, Guanais, for your questions. I'll detail out the first answer a bit more because I think other analysts will have that question. So GLP-1 has been at about 12%, and let's break it down into 2 worlds. We have semaglutide. In that world, that scenario is very stable, 3.4%, 4%, 2/3 Mounjaro, 1/3 tirzepatide and 1/3 semaglutide. There has been an increase in volume in semaglutide that has been offsetting the impact. We did not have unlimited access for all of the pharmacies, we expect now to have more product availability in the next quarter. We understand that maybe the average price may be lower than the volume uplift. We did the recent analysis for Generics and similar products and almost 2/3 are new customers. They had never bought this type of product with us. So these are new customers in the market. Maybe they were our customers already, but they were not buying GLP-1 or they were not our customers at all. So about 1/3 of the customers is migration also semaglutide to similar products. There was a very small migration from tirzepatide and Mounjaro. For now, we see a lot of stability there, 3.4% or to 4% -- 3.5% to 4% and semaglutide has been quite stable. You probably saw this data in the public databases from -- I mean, tirzepatide, when the combo started, there were some peaks in the demand. And after that, it went down a bit, but it's still on the same level of penetration. So there was a peak and then it went back down. So combining all of that, we continue on the 12% level. We believe that next year, there should be an increase in penetration, be it due to more availability, more competition in semaglutide with unlimited inventory levels, be it because of some oral medications that should be available at the end of the first half of next year. So we have an optimistic perspective when it comes to the increase in penetration next year. So I try to flesh out the answer as much as possible because many of the analysts here probably have questions around the semaglutide. As for the second question, in the last quarter, we normally improve the cash cycle even further. There were some spot-on impact, but we should be able to reduce leverage even further. We're revisiting our guidance around how fast our expansion or how much faster expansion can get. Our concept pharmacy has surpassed our initial expectations. Of course, we had high expectations, but it still surpassed them. And we are going to accelerate and convert some pharmacies. This also consumes some of the cash. We have to continue to invest in our logistics and infrastructure so that we continue to have the lowest rupture levels that we have ever had. So part of the cash is devoted to that. We've been making the necessary investments for technology, for AI in the organization. So these have been the main allocations of our capital and will be for next year. If there's anything that is new that we understand would yield better returns, we will let you know, and we'll invest in there.

These are excellent problems for a company to have in a more challenging scenario as retail has been in Brazil. We have a very solid company that has been generating more and more cash. So it's good to know that we can really count on more cash to invest in what we want. We will probably give you more color around that on our Investor Day at the start of December. As for GLP-1, and we have been talking about this for a while. The new players, these new players in the market will encourage competition. And this competition will increase our profitability in this category. So we see some light being shed there. So these are imminent proposals. We're probably going to see this growth in the course of time as these new products come into the system.

Vinicius Strano from UBS.

I'd like to ask a question around your gains in the commercial settings and how you've been seeing the commercial relationship with GLP-1 customers. And you talked about the inventory effect, the impact in the third quarter regarding the weather. But as you prepare for the Black Friday, what do you expect here for the end of the year as well?

Thank you for your question. Our gross margin is very robust, and it doesn't only come from negotiations with the customer. It has to do with very accurate pricing analysis and negotiations. It also has to do with having a strong partnership with the industry. We have almost 20% of the market share. But in some specific products, we have up to 40% of the market share. So we need to use this bargaining power to negotiate terms that are favorable with the industry. Other factors have to do with managing losses. We've been managing our inventories better. We have the lowest inventory waste in our history. So this robust and stable gross margin doesn't only arise from good negotiations with the customer, but from these other side elements that combine to a very substantial impact. As I already said, we have worked on a project with a consultant. They've been doing a fantastic job with the commercial team. We're revisiting our practices and methodologies, category pricing, negotiation management. We've been using AI and data trying and being as scientific as possible. So we're very optimistic looking forward with price competitivity, competitiveness on the one side and margin protection on the other. There are several initiatives that make us comfortable and confident that we'll have good news in the future. As to the inventory, we're also optimistic about Black Friday. Black Friday was strong last year. It was the best Black Friday we've ever had. And we learned a lot from the Black Friday previous experiences, what has worked and what hasn't. So we're making substantial investment in inventory and commercial investments as well. And on the other side, we're also managing inventory as accurately and scientifically as we can. The snapshot shows the cash cycle as slightly less favorable. That is not keeping us awake at night. We are really comfortable when it comes to the inventory management. We have one leader for inventory and commercial departments. We have a new executive there also helping us see new opportunities and helping us make progress there. So structurally speaking, we're very comfortable with these improvements on inventory and with the cash cycle.

Well, Raduan already mentioned the inventory, but about the cash cycle, there is one specific point that we mentioned, and that was a very important factor to our results, the COGS return, right -- the COGS rebate. This will continue to happen for a few months. There are some payments that will be recovered next year still. And this is about the state of São Paulo. There are other states that are analyzing this proposal. So we may have good news coming from the other states in the categories that we sell in. But for now, it's just an expectation. It's not something that we are accounting for in the business yet.

Mauricio Cepeda from Morgan Stanley is up next.

I have 2. The first one is about the digital value proposition. You said that you brought GLP-1 to the brick-and-mortar stores with the same strategy that you had on digital and the customers preferred to go to the stores and buy it there. Does that make you rethink the digital value proposition in terms of everything that you build on the digital channels? Have you reconsidered the implications of bringing the customers back to the brick-and-mortar stores? Doesn't that have an impact on security expenses, for example? But maybe that can also offset the last mile logistics costs that have gone up. If you can talk more about the digital strategy, that would be great. And the second question is about your working capital. Now with uncertainty around interest rates, how are you going to negotiate with suppliers? It seems that the suppliers are a very important part of the working capital because of supplier financing. What should we expect going forward? Is it going to be sustainable? And I imagine GLP-1 drugs have an influence on that because the inventory turn is better and you have to sell, maybe you can pay installments. What is sustainable in terms of working capital financing right now?

Thank you, Cepeda. I'm going to address your first question. That's a very good thinking process, but it's very hard to extrapolate the GLP-1 situation to other categories. The price difference between brick-and-mortar prices and digital prices was BRL 100. It's a lot. That's why the GLP-1 penetration in digital channels was 75%. There is no other SKU that will give us that break between digital and brick-and-mortar stores. And the driver between -- behind that was that discount of BRL 100. And in many cases, the customers were buying on a click-and-collect basis. They would go to the store and talk to the pharmacists and the pharmacists would tell them that it would be cheaper for them to buy on the app. So many of them would go to the store anyway. It's a very specific situation. I don't think we can extrapolate that experience to the entire digital channel value proposition, which is still very strong. If you exclude that, the digital penetration is still about 25%. The price differences are BRL 2 or BRL 3, BRL 5, not as significant as the GLP-1 price difference. And that was the single driver behind that situation. I don't think that weakens our belief that the digital channels are extremely important in our value proposition. We are also bringing the prices at the stores closer to the digital prices. And still, the penetration has not dropped on the digital channels with the exception of GLP-1. So we still believe that the value proposition is very strong for digital channels. And to have another SKU with a 75% penetration in digital channels, that was a one-off situation. So we will continue to strengthen the digital channels.

Still about the digital strategy. We should remember that we have 53 million customers. It's 1/4 of the Brazilian population, and we are adding 2.5 million customers every year, but only a fraction of that customer base buy online. Those are digital people, but they are -- but many of them are not buying online. They are happy with their brick-and-mortar experience, and we are creating a differentiated experience on the digital side as well to bring more and more customers. The digital customers, the regulars usually spend 30% more per year than those customers that are not buying online frequently. So digitization has many layers, and there is a lot of benefit to be captured as we expand digital presentation to those customers that are not there on the digital channels yet. Now as for working capital, there's not much to be said. Inventories as a whole have been a focus of ours. João and his team have been working on a number of initiatives to make sure that we are going to get better and better results with more quality. Today, the inventory is structurally smaller than last year, but there was an inventory disruption that was a lot better than last year. So that shows that we are more efficient than we used to be. And suppliers is one area where we still have to capture more opportunities and things tend to improve. We don't intend to go back on that line. And when it comes to payment terms, payment conditions, that line really depends on how the customers want to be treated and how they want to transact with us, but that line does not represent a pressure or a benefit for us. Our working capital management has been very positive.

Now Joseph Giordano is up next with JPMorgan.

I still would like to talk about working capital. When we look at your past credit liabilities, we can see that the company is really a safe haven for many of your suppliers. If we think about the long tail, what's your perspective about opportunistic buying opportunities since we are probably going to have more uncertainties around credit? And also related to that, do you think that regional competition is slowing down? For example if the local players need better payment terms from suppliers, maybe that can hurt the competition and not you. Another question is about the labor reform, if you could share with us some more details about that. If there's any estimate about any impact that we might have and that we have and that we have to reflect on our analysis, that would be great. And also the tax reform, the PIS/COFINS tax credits that used to exist in the past don't anymore. Is any impact to be expected for 2027?

I'm going to answer the first 2 questions. Well, first, it's hard to say. Of course the interest rates are at 13.75% so it is an advantage for us to buy more at once, but it all depends on the numbers and the conditions. We have to do the math and see if it's worth anticipating our buys and we are trying to be as scientific as possible in our analysis. As I mentioned, we have a project with consultants to analyze our profitability in each supplier. And we are including the costs related to losses, logistics; all those hidden costs, we are trying to bring them to light to have more clarity about our situations with each supplier. So yes, I think that we can have some favorable conditions that we can take advantage of and buy more and bring forward some of our purchases to avoid interest rate impact. Now as for the labor reform, we are ready for the necessary adjustments. As you know, we already had a 5-day work week. Now we have to go from 42 to 40 work hours per week and that should happen in the next month. We know that. Well, let me talk about the pharmacies first. There's a number of pharmacies that work around the clock, almost 700 and we have pharmacist managers and we won't have to change a thing in those stores. Now the other stores that are not open 24/7, maybe what we have to do is to shorten the work hours by 20 minutes. So they would have to open later in the morning or close earlier and the impact wouldn't be that great because early in the morning and late at night, the flow of customers is not that big. And in some pharmacies, we close on Sundays and now we will have to close on Saturdays as well or add more staff. It's a scenario that deserves deep analysis and we are going to make the necessary adjustments. And the work hours don't really have that much to do with the opening hours, but really the throughput. We will lose 2 hours of work every week and we need to adjust the processes so we don't have to add more people. And for the customer service department, I don't think we are going to need any adjustments. We are not going to have a one-size-fits-all solution. We have to analyze each category of pharmacy and minimize the impact on our operations and also on our customers. Now Flavio, over to you to talk about the tax reform.

Well, it's a weird situation really. There is a theory, a world of theory and a practical world. In theory, the tax reform shouldn't impact our results. Although it is very difficult to implement, we shouldn't expect theoretically any impact. Our performance should remain the same despite those changes, but there are many things to be defined yet and in practical terms, things can look a lot different. We signed 2 letters together with Abrafarma and IDV in relation to an understanding that it would be healthy to delay the implementation of some new reform act. Today, we have a system plugged into the tax system of Brazil for banks, suppliers, ourselves; the entire tax operation. We have also an environment that is not performing as much as it should considering our operation flow. So we can attest to the functionality of many features, but not all especially at a large scale such as the case of our company. There are many things to be defined still in the tax reform. Many numbers will be validated on December 15. December 15 is very late in the year for us to do a number of things that need to be done for the migration to happen in a structured way. For example, we need to take into account the cost or the price of all pharmacy items that are regulated according to CMED. So it's not really just about looking at the cost in the market, but it's also a cost that has to be regulated by CMED. So we are short in time. We believe it would be healthy to delay that deadline. However, we are going to do whatever is necessary and whatever the law mandates. On the operational side, we are already working with most suppliers with the new system operating normally with all the different entries that are required by the Federal Revenue Service, but we still don't have that for some products that we do not resell, for example leases. So we are on the right way, on the right route. We expect to deliver everything on the deadlines. However, we think it would be healthy to look at the big picture and we believe that it would be beneficial to delay that deadline.

Now the next question comes from Bob Ford with Bank of America.

How effective has ANVISA been in fighting illegal GLP-1 products? And how much more semaglutide could you have sold if it weren't for the illegal products? And what is your perspective in terms of price elasticity considering generic semaglutide? And now that you have Stix, the loyalty program, what changes?