Earnings call transcript: RD Saude’s Q3 2025 shows strong digital growth

RD Saude (RDSA3) reported robust financial performance for the third quarter of 2025, highlighting significant growth in its digital channels and a notable reduction in net debt. The company’s gross revenue increased by 12.7% to 12 billion BRL, while its EBITDA margin stood at 7.5%. Despite the absence of specific earnings per share (EPS) forecasts, RD Saude’s strategic focus on digital transformation and market expansion has positioned it favorably in Brazil’s pharmaceutical retail market.

Key Takeaways

• Gross revenue rose by 12.7% to 12 billion BRL.
• Digital channel revenue surged by 62%, reaching 3 billion BRL.
• Net debt decreased from 3.9% to 3.4%, with leverage at 1.1x EBITDA.
• Market share increased by 80 basis points to 16.8%.

Company Performance

RD Saude’s performance in Q3 2025 was characterized by strong revenue growth and an increase in market share, particularly in the digital domain. The company opened 88 new pharmacy units, contributing to its expansive reach with 51 million active customers, which accounts for 25% of Brazil’s population. The strategic emphasis on digital channels has paid off, with 27% digital penetration and 97% of deliveries completed within 60 minutes, underscoring its competitive advantage in speed and convenience.

Financial Highlights

• Gross Revenue: 12 billion BRL, up 12.7% year-over-year
• EBITDA: 990 million BRL, with a margin of 7.5%
• Adjusted Net Income: 420 million BRL, with a margin of 3.3%
• Free Cash Flow: 648 million BRL
• Net Debt: Reduced from 3.9% to 3.4%

Outlook & Guidance

Looking ahead, RD Saude remains optimistic about its growth prospects for Q4 and 2026. The company is preparing for the upcoming Black Friday with an enhanced strategy and anticipates a significant expansion in the GLP-one drug market, particularly with the entry of generics. The forecast for 2025 and 2026 shows a steady increase in both EPS and revenue, with expectations of continued digital channel growth.

Executive Commentary

Renato Raduane, CEO of RD Saude, emphasized the company’s strategic positioning: "We believe that the best is still to come." He highlighted the substantial investment in digital capabilities, noting that "many players don’t have the financial capacity to do the same." Raduane also expressed confidence in the company’s market share in GLP-one drugs, stating, "We are going to see a very high market share in GLP-one drugs, and we earned it."

Risks and Challenges

• Market Saturation: As RD Saude expands, it faces the risk of saturating key markets.
• Supply Chain Issues: Continued efficiency in inventory management is crucial to maintaining margins.
• Macroeconomic Pressures: Economic fluctuations in Brazil could impact consumer spending.
• Competition: The entry of new players in the digital space could challenge RD Saude’s market position.

RD Saude’s Q3 2025 results underscore its strategic focus on digital transformation and operational efficiency, setting a strong foundation for future growth amid an evolving pharmaceutical retail landscape.

Full transcript - RAIADROGASIL ON NM (RADL3) Q3 2025:

Unidentified Moderator, Conference Call Moderator, RD Saude: ladies and gentlemen, and thank you for standing by. Welcome to R. D. Saoide’s Third Quarter of twenty twenty ’5 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 later at the website. All participants will be on a listen only mode during the company’s presentation. After the presentation, we will have a Q and A session. 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’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 Raduane, CEO and Flavio Correa, Head of Investor Relations and Corporate Affairs.

I’d like to turn the conference over to Mr. Raduane. You may proceed. Good morning, everybody, and welcome to our third quarter twenty twenty five earnings call. It is an honor to join you this morning to give you more details of our numbers and help you interpret them.

And Fabio, first of all, good morning to you. Hello, good morning, Renato. Fabio will be here to address your questions and give you more details as well. Well, first of all, I’d like to apologize because our release was published a little bit later than expected. So sorry for that.

And now let’s talk about the third quarter’s results. Before talking about the highlights, I need to tell you that we are very happy about this quarter. I remember that in the fourth quarter last year and the first quarter this year, I was transparent and humble and said to you that the results were lower than our expectations. And I told you that we are going to turn the key in the second quarter. And now I have to tell you that we have solid results, and we are very proud of that.

There are three factors that led us to solid results in the third quarter. First of all, we went back to the sales top line level. We were at a 12% growth, and we told you at the time that we needed to go back to 14%, right, Flavio? And now we are at 15.5% in the core business, the retail business. So that is the first factor that we are very happy about in the third quarter.

And the second factor is the management of expenses. I believe that the market was positively surprised when we adjusted the costs in the second quarter, but people were afraid that the costs would go up again in the third quarter, but we managed to keep the same levels as the second quarter. We have a very healthy level of expenses in the third quarter, and we need to be proud of that as well. And the third factor, the most impressive one, is a 7.5% EBITDA margin in the consolidated results. If you look at the track record for a third quarter, it should be about 6.9 to 7%.

Last year, it had been 7.5% exceptionally due to nonrecurring one off events. And if you were to exclude them, it would have been 6.9% to 7%. So the top line grew, costs were under control, and the structural EBITDA margin came to 7.5%, which is very solid, very consistent. And now I’d like to delve deeper into the results. First, operational results.

We finished the quarter with 3,453 units, 88 openings and six closures. Over the past twelve months, the expansion is at about three thirty openings. But more important than that is quality. Our IRR is very healthy in the new stores. So this is one of the drivers that is keeping us moving ahead.

And now we are almost at the level of 3,500 units in operation. We reached 51,000,000 active customers, 25% of the Brazilian population in the last twelve months, and we had 111,000,000 tickets in the quarter. And again, we’re not proud of the number of tickets itself, but rather the quality of the service according to the customers themselves. You can see that the NPS is 91, and that’s the customer saying that we are providing a great service quality. And we had gross revenue of BRL 12,000,000,000 this quarter, a consolidated growth rate of 12.7.

And I’m going to give you more details about that on another slide. We shouldn’t just look at the weighted average of retail and nonretail businesses. The two stories are different. And I think that the main story behind this is the 15.5% growth in retail, very solid result with almost a five percentage point real gain in mature same store sales. We had a record breaking market share with 16.8%, almost 17%.

Over the last twelve months, it was one of the biggest number that we had with almost 80 bps in only twelve months. And as for digital, we got a BRL 3,000,000,000 revenue. If you annualize that, it would be BRL 12,000,000,000 in digital revenue with a 62% increase in the digital business with a penetration of 27%. I’m going to give you more details about that later. Our EBITDA was BRL $9.00 9,000,000, almost BRL 1,000,000,000, in line with the growth in sales of 12.5%.

The EBITDA was stable. The EBITDA margin was stable at 7.5%. But we should remember that last year, we had one off events. And in retail alone, it was 7.9%. Our adjusted net income came to $4.00 2,000,000 with a 3.3% margin, two percentage points, 0.2 percentage points higher than last quarter and a free cash flow of BRL $648,000,000.

Now let me give you more details about our revenue. The consolidated number shouldn’t be interpreted on its own. We need to break it down into the two stories here. First, retail with a growth of 15.5% and a drop in revenue of 17% in 4Bio. And what explains this drop is the fact that we had a pendulum effect.

We wanted to grow at any cost in the beginning, but then we told you that we wanted to balance things out. And now I think that we got a little too conservative in terms of growing sales to protect profitability. But half of that drop is not even related to that. It is related to the laboratory that we used in the state of Sao Paulo for distribution through the distribution center in Sao Paulo. And the lab decided to supply products to the state of Sao Paulo through the state of Spirito Santo, and we don’t have a distribution center there.

And that accounts for half this drop. And that happened in the middle of the second quarter. We had that effect in the second quarter, but now it hit us fully in the third quarter. And now we are signing a contract with a distribution center in the state of Spirito Santo to keep the supply coming to Sao Paulo, but also to use it for the other lines of Forbio. We already have an action plan in course to address that, signing a contract this week with a new distribution center and also because we need to balance things out.

And another factor here is the growth of 15.5%. I believe that we had some important wins here. If we look at last year, we had an increase year on year. But also quarter on quarter, from the first quarter to the second and to the second to the third, we were stable for three consecutive quarters with BRL 10,000,000,000. And of course, in the first quarter, we have a negative calendar effect.

And revenue had become stagnant for three quarters. But now we can see that there was an increase since the first quarter of this year. And when we look at where this growth came for, of course, GLP-one drugs factored in here. But not only that, we grew in HPC at 10.9%, which is a normal level. We did not need to invest more than we were already investing in the second quarter.

For HPC, we continued the same level of investment, and the results are now better, almost at 11%. And last year, it had been 6%, then 8%. We wanted to go back to double digit numbers. And now here it is. And generics.

Generics is not are not related to GLP-one. It grew by almost 20%, thanks to competitiveness and prices, but also it is related to the loss of a few patents. And when a patent expires, it benefits the generics, but it has a negative impact on the brand name medications. And our own brand products grew by 21%, which is very solid. And GLP-one, to be very transparent, is beneficial to us.

It helps us. But again, we earned it throughout our history. We positioned ourselves as the best store to serve the high income segment because we always invested in a good experience inside our stores. Some years ago, I remember that people asked us about the fact that we were so high income that we wouldn’t be able to cater to the lower income segments as if it were a bad thing. But I believe that we found our way of catering to the lower income communities as well without losing that differentiating factor that puts us in a good position in the high income segment.

And now we are reaping the benefits of that. We are going to see a very high market share in GLP-one drugs, and we earned it, thanks to everything that we did in the past. So this is a very solid sales level, much higher than the past. And that took us to an increase of 7.8% in mature stores. There’s a calendar effect here.

This is a record breaking growth in mature stores. You can see here that we grew by 7.8%, almost 5% above inflation, much more solid than the growth posted in the previous quarters. It’s a very solid growth. And that takes us to an impressive level of EUR 1,200,000.0 per mature store. And we have just about 1,700 mature stores that are selling more than BRL 1,000,000.

So this is a very solid growth trend. And the last month in the quarter was better than the first, which points to growth as well.

Renato Raduane, CEO, RD Saude: When we go into the digital channel, we see 42% growth in our digital channels getting to a penetration of 26.7. There is also a point here with the penetration and sales of GLP-one, which is offering more attractive prices in digital channel. But even without this effect, all categories have grown at least 30% in digital channels and have got improved penetration. GLP-one analogs has improved our penetration numbers, but all categories have grown at least 30% in digital channels, extremely robust. Of the BRL 3,000,000,000, 80% of it was from the app, which is a major strength of us, and 97% of our deliveries are provided within sixty minutes.

So convenience to our customers, which is really a landmark. Customers are happier with our experience with an NPS in the app and also delivery, But we have 6,000,000 digital customers. Of the 50,000,000 customers, 30,000,000 bought in the quarter, 6,000,000 bought through digital channels, and they represent 41 of our sales, online sales, 26.7%. But digital customers who buy online, they amount to 41% of our sales. This is a very important strength.

When you have nearly 40% of your sales of customers who are used to our app, who are operating in the digital channels, they really benefit from that sixty minute delivery period while having customers migrating to other competitors would be hard because they would have to have an excellent offer, really, value proposition to make them migrate. So these are digital customers who are very well served by us. Another important achievement in the quarter was the share, 16.8% with 18 bps of growth, and we have gained share in all regions. Highlighted Sao Paulo here. It stands out.

We’ve got 120 bps highest rate of growth. Southeast, 70 Central West, Midwest, 140% in the South, 20% in the Northeast and in the North, 60%. Consolidated North, Northeast, about 30 bps or bps. In Sao Paulo, there has been an increased growth because we expanded the opening of pharmacies in Sao Paulo. In the Northeast, let me find it here.

It used to be 22%, and then it went down. So this is part of our expansion strategy, but we have gained share in all regions. Another point that I would like to make out of the chart is the 30% sell in, sell out share. We have 30% of share in Sao Paulo with Droga Araya and Drogaazil. The second most relevant network in Sao Paulo would have 16%, 18% share.

So there are two networks in Sao Paulo getting to 50% of market share. In addition to that, there are some small players in different areas, but this is highly consolidated market. It’s quite hard for new incumbents even for those that are already in the market with a relevant share. With this kind of level of consolidation and strong brands, I would say that I don’t believe competitors can benefit from any expansion of growth. State of Sao Paulo amounts to 30% of medication market.

And the market is quite hostile to small players or new incumbents, and this is the kind of consolidation that we see in this region but not in others yet. So with that, I would like to hand it over to Flavio, who’s going to talk about profitability, and then I’ll be back. Thank you, Radwan. Now going into details about the financial results, let’s go into gross profit. It was BRL 3,300,000,000.0, 27.4% margin.

Year over year, we are talking about margin dilution of 20 bps. But last year, 27.6% included the benefits of CMS, of tax of 20 bps. If we exclude that tax benefit, we are talking about stable margins year over year. And this is absolutely important. In 2025, we’ve had some tailwinds and headwinds concerning dilution because of GLP-one analogs, which were more prevalent in the market and because of competition in HPC, which was really offset by other efforts and other initiatives.

So much so that we got to the gross profit in the half year, similar to that of the third quarter, which is something off line because of the effect before the CMAT price adjustment. So we really should celebrate getting to such high gross profit. Now talking about expenses. Selling expenses was 17.3 in the quarter. Year over year, we are talking about worsening of 20 bps year over year.

But last year, we had also emphasized in our meeting that our headcount was higher, and we hadn’t really captured the expenses with the new headcount because they had joined the team later in the year. We are talking about expenses normalized by the team that we had at that time in terms of personnel would be 17.5%. Comparing 17.5% with this year, we are talking about a normalized dilution of 20 bps, which is really important. The expansion of headcount, we are talking about 16.5 people per store as of fifteen point nine. It was 0.6 headcount per store, which really provides better quality of service and also work and engagement of our teams in the stores.

This is really important. Now analyzing G and A, and this is the main achievement we have to celebrate, something that we have started capturing the second quarter and coming stronger in the third quarter. There was no rebound effect here. The SG and A in the quarter was BRL310 million, which is less than the number that we had last year, which was BRL323 million. There was a significant dilution here of 40 bps year over year, going from 3% to 2.6%.

There is stability of this level quarter over quarter because of some specific pressures related with tax provisions and other things which are expected in the operation. Our expectation is to keep on improving our performance in this indicator. Now going into EBITDA, which is a sum up of all the other elements. In a blank comparison year over year, we are talking about stability of EBITDA margin of 7.5% in this quarter, getting to BRL $9.00 9,000,000. But if we exclude offset elements, BRL 20 bps of ICMS tax and the 40 bps of personnel expenses, it would take us to a 7.5% performance as opposed to normalized values of 6.9% last year, major achievement.

This specific quarter is the best third quarter we’ve reached in terms of percentage EBITDA in our track record since the COVID time, major achievement. Operationally speaking, in our cash cycle, there was a decrease in our inventory levels and an improvement in cash cycle of three days. Now below the P and L, we have financial expenses, which was 1.6% in the quarter over last year, which was 1.3%. This increase is due to the increase in interest rate comparing those two periods. So this is the best explanation for this number.

It gets us to effective tax rate of 0.4%. And this is a result of what we observed here at 4,000,000,000. This rate, if we normalize it by the default number, we would get to 18, which is exactly what we would expect as recurrent tax rate for the future or at least for the short and mid term. And it takes us to million in adjusted net income or 20 bps increase year over year. Once again, we are not considering normalization of the basis comparing last year in terms of headcount and tax, but still very good result.

And finally, this is free cash flow of BRL558 million, very much aligned with what we expected, similar to what we used to have last year. Our net debt went down from 3.9 in the second quarter to 3.4% in the third quarter with an improvement in leverage levels getting to 1.1x EBITDA of over our debt. And back to you, Radwan. Well, we’ve decided to have more time for your questions during this call. But here, let me just emphasize our confidence in the quarter.

In the first quarter of my management trying to explain what had happened, I had never thought that we would get to such a strong quarter. I knew that we had strategy to improve. I believe that the results would be better because I know of the strength and the quality of our management team. But in the first quarter this year, I wouldn’t anticipate such fast recovery, and I’m so glad to celebrate that. It reinforces a number of our strengths.

Yes, there have been few financial and nonoperational deviations for two consecutive quarters, but we have really resumed our operational and financial strategy as a whole and performance. We have now the mature pharmacies performing quite well. Are We going to have an overshare in GLP-one agonist. It’s here to stay. That’s going to be part of our structure.

But it also involves HPC, something that we were all concerned about, also acceleration of generic medication. So I believe we’ve really resumed our operations to very good levels. At the same time, despite that, we’ve been strengthening other elements of our operations. We’ve seen the amazing numbers of our omnichannel, which we’ve grown 62%. And in addition, we offer a very good digital journey.

97% of deliveries made within one year. It’s difficult to come up with a value proposition better than that if you don’t have a good distribution and solid operations such as we do. We have also shown that we can have an efficient management. We’ve managed costs without impacting deliveries, without impacting services or the corporate deliveries to pharmacies and the distribution center. We’ve proved that we can have very good operational management.

Losses are starting to decrease, and we can see a downward trend, which is something that has impact our gross profit. And while we were fast tracking and adjusting our operations, we have reached over 25% IRR, over 25% in all regions of the country. And we’re still working on this wide distribution and logistics of our operations. It’s important to have presence and also to be located at the right spots or the right cities. It’s not only improving operations and believe that’s going to optimize sales forever.

You have to be placed at the right spots to sell more. Otherwise, you are just going to be limited to the potential of that specific venue. If you combine efficient operation and the best points of sale, then we can improve our operation. Our company has very robust financial health. We have very robust results.

We are improving our inventory levels, cash cycle, controlled leverage, which gives us the possibility of keep on investing where we believe we are going to make a difference.

Unidentified Moderator, Conference Call Moderator, RD Saude: And on top of that, we try to be as transparent as possible with all of you. We are not here to sugarcoat things and sell a scenario that is more favorable than it actually is. And when things are not so good, it is also our role to help people see what we see. And that is added to all of the differentiating factors that we build over the course of decades with the right team and our execution capacity. And that is part of a perennial company, a company that is here to stay, and all of that is built over decades and decades of hard work.

It is also impressive to see our ability to adapt fast. Maybe this year was the first year where we had to adjust things so quickly, and we managed to do it. And the results of the third quarter bear witness to that. And the market is going to continue to grow because the population is aging and also GLP-one drugs and other medications that will come make the landscape for us very optimistic. We believe that there’s a good trend that is leading us to the end of the year.

And with that, we would like to start the Q and A session. We’ll try to address as many questions as possible. Thank you very much. Just before we move to the Q and A session, there’s one thing I always tell investors about. We were talking about how the entry point in 2025 was so tough with a lot of pressure on HPC and some other lines that were pulling our results down.

And our ability to react, as you said, was so important for us to go back to a stable level. And that is going to be our proxy for 2026, 2027 and from then onwards. This is a very important position in the retail pharmaceutical market in Brazil. It is a very solid thesis as well when we think about how the population is aging. Now let’s start the Q and A session.

Thank you very much, Radwan and Flavio, for the introduction. The first question comes from Luis Guanais with BTD Pactual. Over to I have two questions on my side, both about GLP-one drugs. Radwan, if you could give us more color about the weight of GLP-one drugs in your sales in comparison with the previous quarters. We can see that the number is increasing.

It is getting to a high single digit or a low double digit. So that’s the first question. And the second question about LGP GLP-one. I’d like to know the effect of them on your working capital. Are you planning an aggressive policy to installment payments related to installment payment on those drugs?

Please, Guanais, go ahead. The second question is about working capital. If you can give us more color about the effect of the growth of GLP-one drugs on your working capital. And if you plan to offer installment payment in this category since starting next year, we are going to see generics coming in this segment as well. Thank you for your question.

Well, the first question about penetration of GLP-one drugs. Your numbers seem correct to me. In the third quarter, we stood at a high single digit, not a low double digit. And in the past, it was five percent. Now we are higher than that.

And if you think about the potential of this molecule when we have a limited inventory, which didn’t happen yet, I believe that we are going to move to double digit results. But in the third quarter, we were not there yet. But there’s a huge potential. And obviously, when we see the generic dual PO on drugs coming, the average price will go down, but excess will increase. I think this will eventually become a category on its own.

Just like OTC, HPC, we are also going to have the GLP-one category. That’s how big the potential is. And about your second question, we offer different payment methods for these drugs. In some cases, we offer a six installment payment method for customers. And by doing that, we can improve access.

Part of the population cannot pay all of that upfront in one single installment. But of course, we need to be responsible. We shouldn’t just generate that demand and have problems in the future because of that. But good news is part of the industry is helping us fund that payment installments because they want to increase access as well. And also, that puts pressure on receivables.

But on the other hand, we are managing the inventory very well. We decreased our inventory significantly. We have been doing that throughout the year, and we see more room to do that, to continue doing that. It was a technical movement, a scientific movement even, integrating departments. And the impact on the cash cycle as a whole should not be that great because we have been decreasing the inventory coverage at the same time.

Just to add another point to this answer about the potential the growth potential of this category. We’re talking about 1,000,000 consumers of GLP-one drugs in Brazil per month. Out of the two fifteen million in our population, 1,000,000 people are the target audience for that product. And as the access increases, I’m sure that we’ll be able to capture more of that. And we should remember that we have a very high market share in this category of about onethree, which is very positive.

Thank you, Fabio. Thank you, Luis. Now the second question comes from Josef Giordano with JPMorgan. Hello. Good morning.

Morning, Flavio and Raduon. Thank you for taking my question. I’d like to talk more about working capital. Over the past two or three quarters, we have seen an increase, an improvement. And Raduane talked about the coverage of inventory.

But I’d like to know more about the logistics. What have you been doing in terms of allocating inventory in the different stores and the different neighborhoods? I’d like to know if there’s more room to improve that side of the business. And also about 4Bio, we saw a 17% decrease in your revenue in that segment. And you said that part of that is related to one specific contract.

My question is when you open the distribution center in the state of Spirito Santo, should we expect for Bayer to go back to its previous sales levels? So after the contract is signed, the financial loss would be lower. Is that correct? You, Joe, for your questions. About the first question about cash cycle.

Well, last year, considering the operating challenges that we had, they included logistics issues in some specific distribution centers, which led us to take a closer look at what was happening and also to improve our policies and inventory allocation. And we realized that part of the problem with the DCs was an excess inventory that build up at some point in time for specific reasons. And again, we had to be very humble to understand exactly what we needed to do to improve inventory management as a whole in procurement and also regular supply to distribution centers or the pharmacies themselves. And we started that very strong movement led by Marcelo, our COO, and he started to take care of supply procurement and operation departments, bringing everybody together on the same commitment of reducing that inventory. Now we have an inventory coverage that is six to seven days lower than in the past with the same disruption level that we had.

It’s actually lower than the past four to five years. So we are actually improving the service to our customers with available inventory, but a lower inventory as a whole, which makes our operations easier. We are not going to have so many problems with expiration of medications and losses entailed by that. So I think that our management did a great job, and I’d like to take this opportunity to thank them for that. And there’s still more to be done.

I believe that there are other levers that are very clear for us to improve the cash cycle, which is very important when the interest rate is at 15%. So we are going to see the benefits of that on our financial expenses too. Now for Bio, indeed, the DC Inspirito Santo is going to help us. We are signing the contract, and we are going to resume supply to the lab in the state of Sao Paulo. And that is going to decrease the drop in sales.

And that should take place relatively fast. 4Bio is a solid business. It continues to make money, and the projection for revenue is more than 3,000,000,000 per year. Now that we are adjusting things, now that we are not so conservative in terms of protecting our profitability at all costs And after the operation resumes from the state of Spirito Santo, I feel certain that we are going to exceed BRL 3,000,000,000 in annual revenues. Even without that DC, the third quarter had a better performance than the second quarter because of that balanced movement.

And for Bio continues to be a good business with an annual revenue in excess of BRL 3,000,000,000. We restructured our operations. We divested in some other businesses, and it was not the case with ForBio. We decided to continue with it, and we just need to adjust things to go back to the levels that we expect to have. And Araduane, if we look at the gross margin in the company that is fed by FurBio, of course, but other categories as well, I think the market gets a bit anxious about our gross margin throughout the year.

If we look at the potential dilution of our gross margin due to GLP-one drugs and due to ForBio as well, If you do the math, you are going to see that the sales are growing at about 12.5%, and the gross profit is increasing by the same rate, 12.5%. So despite the headwinds, we are still growing. Despite the potential dilutions, we are still growing. And if we have any additional performance that we can capture, we are going to distribute even more value. So I think the results are very positive across the board when it comes to profitability.

Thank you, Joe. And now the next question comes from Mauricio Zapita with Morgan Stanley. I have two questions too. First, about GLP-one and the expiration of patents. Raduon said a few things that are in line with our thoughts about the competitive landscape after the expiration of the patents.

You said that there is low availability right now, but we also know that the national laboratories are going to start producing those drugs under licenses. So in your perspective, do you think that with the low availability, the semaglutide price will continue to be high, at least in the beginning? Or maybe that won’t be the case. Maybe the competition will be very aggressive. And the players for similars and the pure generics, do you think that they are going to offer you more discounts than other players than what we see in the small molecule market?

And the second question is, you mentioned in your release that the market is going generic because it took advantage of the recent patent expirations, and that helped you grow, especially in the prescription lines. But now looking forward, we can see that there’s less opportunity in the generic space with the exception of semaglutide, but we can see less opportunities of losses of patents. But do you continue to be confident in the contribution of generics? And how much can it exceed the contribution of brand name medications? Because we can see that there are molecules that are very competitive.

Some manufacturers have a huge capacity. So do you think that the unit contribution from REPRESENTATIVE:] generics will still be significant in comparison with the brand name medications?

Renato Raduane, CEO, RD Saude: Thank you very much for your questions. I’m going to go with the first one. But I don’t know the answer for sure. I know what everybody knows about theory. The more competitors you have in the market, the more the prices get readjusted, and then price setters have to get readjusted.

Mounjaro in the market, for example, has taken to readjustment of the other molecules in the market so that they wouldn’t lose their share. The more players in the market, as generics or as brand names, the tendency is to have readjustment of the reference brands. But that repositioning of prices, which brings down the average ticket of the molecule because of generics or licensed products, in our opinion, it will be compensated by the increased access. Another important thing is that there seems to be semaglutide as is liraglutide, and then there would be generics coming in, that will be it. No.

The industry is still investing in innovation. So Mounjaro and all the product brands, the pharma industry is developing new products, reducing side effects, etcetera. So much more than having one single product with a reference product, generic and similar product, there are going to be other molecules coming into the market with different price points. And those who can afford will end up buying the most advanced drugs, and the others will keep on buying the already existing ones. We’ve already had two experience.

There was the MS generic. We bought it. It’s sold. EMS could not replace the levels. And now there is a licensed product by Europharma, which is available in the pharmacies.

But it all depends on medical prescriptions. Those products are not interchangeable. It’s not simple, simply to replace the prescription. We have to work. The doctors have to prescribe it.

In the short term, I don’t think the average prices will go down. But eventually, as there are more products, more generic and licensed products, the prices will come down. But as a market, I believe there is still room for growth because of access. Thank you for questions. And I think the most challenging one is the word that you are using for having the market go all generic, right?

The Brazilian population consumes about 1,000,000 Brazilians by GLP analogs every month. But we talk about thirty percent of the population having obesity. It would be thirty million people who would fancy using the product in addition to the cosmetic aspects of the use of the drug. I would say the market still has a huge possibility of growth. If the prices come down, we would have an increased demand.

And generic medications, whenever a product expires its patent, there is an increase in gross margin when we start selling the generic. We have to find the balance point. But in terms of cash, we are going to be able to generate more gross profit when the patent is expired and when we start offering new launches. For other molecules and generics, we still have very healthy gross margin. Similarly to our expected levels, by having the highest market share, we are the main client of the generic manufacturers.

We have a very transparent, open process. It’s an auction of molecules, as we call it. We have it every year, once a year or more frequently to know who are the ones interested in having a higher presence in our stores. And the pharma industries offer the best conditions for these molecules so that they can be more represented on our shelves. Very well transparent process.

The pharma industry is aware of that. And we have maintained very healthy, safe margins because of our network of over 3,500 stores. So very healthy margins. I’ll just have a quick complementation. What about the unit prices?

The prices are lower. So is it still significant? UNIDENTIFIED I think it’s very solid and significant. This is not something that we see as a concern for our profitability for the future. In our round of discussions, we have had quite many to identify challenges and emphasize our strategies.

This has never been considered a topic of relevance. Thank you. Thank you, Sepera. Let me now invite Irma Skars with Goldman Sachs. I would like to go back to gross margin.

Could you please tell us more about what you’ve seen in terms of gross margin, excluding GLP-one effects and for Bio. I would like to understand really the need to keep on investing in prices and the progress that you have had in the loss of products. I would also like to know more about how we can understand the behavior of gross margin, discounting mix effects and what we can anticipate for 2026, for the fourth quarter and also Black Friday. It’s a kind of promotional campaign that you haven’t joined previously. And what about this year?

Have you had anything in mind? Do you have anything in mind, Anmene? First question, the most difficult one, right, this equation and this fine tuning. If we exclude for Bio, I think we have good news, as we pointed out. From the second to the third quarter, we’ve maintained our stable gross margin.

At corporate sales, despite GLP-one pressures, the second quarter has higher gross margin because of the pre price increase. The third quarter, despite that, we navigated quite well, and we had almost 40 bps of negative pressure because of GeoPio one. But there were some other effects that contributed to our improvement. They had had a difference over last year. Our distribution center in Goias, where we are consolidating the loads to improve the service in our regional operations.

It also impacts our gross margin and tax effects. Price management. We are still very competitive in HPC with the same level of competitiveness. But in other categories, online and off line, we’ve been very carefully adjusting prices product by product to have pricing efficiency gains. We haven’t invested more in the third quarter than the second quarter because of competitiveness, and still, we had better performance.

I haven’t told you, but the performance of HPC was nearly 11% over the basis of last year that had increased 10%. We still haven’t come across the low basis of HPC, which starts in the fourth quarter. The third quarter last year, HPC growth was 10%. This year, it’s 10.9%. As of the next quarter, we probably are going to find lower levels.

Yes, there are pressures on our margins. HPC, we are operating at a stable margin but offering more promotions than we used to, and we probably will maintain it. But I believe our team is finding offsets to really maintain healthy margins. Concerning Black Friday, we have told you very candidly that we were not as aggressive as we should have. And that was part of the why HPC didn’t grow last year.

Of course, we are much better prepared for this year’s Black Friday campaign. Our team has been working with it since August with the industry, with suppliers. So we are highly optimistic and confident that the Black Friday this year is going to be much better than last year. We are very optimistic for the fourth quarter, not because of the upward trend of the third quarter, but because we know the Black Friday is going to be much better than last year. Thank you, Irma, for your participation.

Let’s go now into our next question. We have now Vanessa Strano with UBS. One about selling expenses. How can we understand the future of selling expenses? What about personnel in your stores?

And something else about hiring. Do you still think there are investments to be made to work on selling expenses. And in terms of inventory levels, what results from the higher turnover of sales of GLP-one? And how much of the inventory optimization has resulted from other strategies so that we can get to a normalized cash cycle? You, Vinicius.

Going to your first question. Selling expenses. As Flavio pointed out, we had a lot of suppression in the third quarter last year. We were understaffed, as we stated, and we have come up with an appropriate headcount, 16.5%, to reduce the work overload of our own staff and to improve the quality of services. And it was an investment that made sense.

Part of the recovery of sales, self-service and recovery of losses resulted from the fact that we have larger teams in our pharmacies. What hasn’t been reflected yet, but it’s going into the fourth quarter, is the fact that we are going to have that package of benefits for distribution center personnel and pharmacist personnel so that we can improve our employee value proposition so that we can have them more engaged, happier, reducing staff turnover. We are launching a benefit, a package of benefit. We have heard our own people, managers, pharmacists, service operators, distribution center operators, to know what would be the most relevant things for them so that they would be more satisfied and engaged. We wouldn’t invest in something that would make no sense to them.

So we listen to their request, and the packet of benefit is going into effect as of October 1. I cannot tell you exactly how much was invested, but we believe it’s something that’s going to be diluted within our financial results. I still believe in the fourth quarter, we will have lower selling expenses than the quarter last year. Of course, this is not guidance despite all the improvements and also the improvement on our package of benefits. Once again, this is all going to be part of financial performances, which are equally good.

In terms of inventories, your question is quite good. Part of the reduction of cycle, I’d say, nearly 40% of the cycle reduction resulted from GLP-one, which has very high turnover. The sales turnover is quite high, but there is 60% of the inventory reduction, which has nothing to do with GLP-one. It’s related to our structural work that had been done by the team, which is really improving our structure as a whole. And we believe there is more to come.

These are the two points: GLP-one, 40% of inventory improvement. The other, non GLP-one, 60% reduction. Thank you.

Unidentified Moderator, Conference Call Moderator, RD Saude: The next question comes from Daniela Eiger with I have a few follow-up questions. The first one is about HPC. You were talking about competitiveness, and I think that we can see that in our track record, you are more and more competitive and you are getting closer to the marketplaces, but the price comes at a premium still. I would like to know what your endgame is when it comes to competitiveness. Do you believe you will have to stabilize the prices for some products?

We can see that you are very aggressive in some categories. So I’d like to know more about your perspective about the HPC pricing dynamic. And also, if you believe that you are at a sustainable or maybe comfortable level? And still about HPC, I have a question about Black Friday. You said that the performance will be better, but how much better?

At the same time, we can see a very intense competition among the marketplaces. So I think that marketing will be more expensive. So is your strategy focusing on the same customers with your own data pushes? If you could give us more color on your strategy, that would be great. And a question about GLP-one.

You said that you have not reached double digit numbers in that category. And you also said that the limited supply is a constraint. But we can already see a higher availability in the fourth quarter with higher doses, which also have higher tickets. So maybe in the fourth quarter, we are going to get there in the double digit numbers. I believe that there will be an improvement.

And in the previous call, you talked about the higher doses that you would receive. So I’d like to know more about that as well. And very briefly, I’d just like to know more about the DC for ForBio. When do you expect it to open in the state of Spirito Santo? Well, first, about the relative price.

We know that we don’t have the same prices as the horizontal marketplaces, and we don’t think we have to. Many customers, many surveys have told us that we have strengths that the marketplaces don’t have. They have the price, but we have guarantee when it comes to the origin of the products. And customers know that in some products, that’s very important. The customers, when they don’t know the origin of certain products in marketplaces, they buy from us, and they are willing to pay more for that.

And also, we have sixty minute shipping times, which no marketplace can offer. So we have other advantages, which allow us to have a premium price. But of course, it shouldn’t be that much higher. As you said, we are getting closer to their prices. And from the second to the third quarter, we saw performance going back to double digits, and we believe that, that is sufficient to sustain a healthy performance.

If we put together the lower price, a price that is closer to the marketplace’s prices and our benefits, the benefits that we offer that they can’t, we believe that, that is sufficient to sustain the performance. And of course, if we feel that we need to invest more on that at some point, we are. You asked a very good question about the bloody war that will probably happen between the marketplaces during Black Friday. In the past, we had some similar awards, for example, free shipping. But what we can tell you is that we have an ambition to grow in sales.

We are going to do more things than we did last year. We have a target with some industries that we want to reach, and those targets are much higher than last year with a negotiated margin. So we are going to do our bit better than we did last year, but competition will tell what the end of the story will be. But we are confident that Black Friday will be better for us despite the red ocean in Black Friday. And the next question was about GLP-one, about the doses, right?

Yes. In the third quarter, as I said, we did not reach double digit numbers in that category. I think that will happen, but I can’t tell you if it’s going to happen in the fourth quarter. I think it’s going to happen even before the generics come or the licensed medications come. Once we have a full month with availability for all doses and all products, I believe that we are going to exceed double digits.

But I don’t know when it’s going to happen because it depends on the industry, but I am optimistic about the increase in penetration in this category. And the four BiodCs, well, they are smaller. They have 1,000 square meters in area, and they require little automation. This week, we are going to sign the contract. It has been negotiated already.

We already know the location. And I was talking to the ForBio CEO this morning because I knew you were going to ask that question. And he told me that we are going to sign a contract this week. And after it is signed, it is very easy to get it running because there’s little automation. We just need to have the inventory there.

And another point that I would like to add about HPC, I believe last year, the competition against the marketplaces, it was stabilized because now we can show that we have benefits to offer. I believe that we, in six months, were able to digest a headwind of five points in the speed of growth of this category. And we also are supported by the industry so that we can have a stronger footprint in this category. Our growth thesis for HPC is very much based on that partnership. A partnership brings benefits and exclusive assortment that customers can’t find anywhere else.

And we are omnichannel, which is critical for us. We have the beauty consultants inside the pharmacies. So all of those attributes are extremely important in this competition against the digital marketplaces. We don’t think we are lagging behind at all. Next question comes from Leandro Bastos with Citi.

I have two questions. The first one is about expenses. You said that you are going to offer more benefits to the employees, and I’d like to know more about your 5.2 journey. Are you going to implement it? We can see some competitors in the state of Sao Paulo running on this new mode of operation.

So if you can talk more about that, that would be great. And the second question is about the tax benefits. I believe that you had it in three states. So I’d like to know more about that and what is the potential that you see in this Arena. Can you just please repeat the second question because the audio was a bit choppy?

Sure. Is it better now? It’s about the investment tax benefit. You recognized the benefits in three states, and I’d like to know a little bit more about that. I’m going to answer the first question, and Flavio is going to answer the second question.

Yes, we are going to convert the pharmacies to the 5.2 mode of operation. And there’s one thing related to this is the working hours. The working hours add up to forty four hours per week. When people started working from home during the pandemic, the working hours remained the same. And the 5.2% is the same with forty four hours per week, but the employee has two options.

They can either come six days a week and rest for one day only with little time for personal their personal lives, or they will come for five days working a little bit longer each day. And the benefit on that daily effort is resting for two days instead of one. And, again, we decided to listen to our people to understand if that’s what they wanted. In some states, we have 30% to 40% of our pharmacists working according to the model. And last year, we converted all of our pharmacists to that model.

And still this year, we converted the supervisors as well, and we are in a transition phase right now. We had to listen to our employees to understand what was relevant to them. And on average, they decided to have the five days per week and to rest. And we actually had a vote to understand the collective preference. And 75% of the employees preferred that model of working five days a week.

So we are already converting the working hours to that model, And we had to adapt and understand what time they should get there and what time they should leave so as to not impact customer service. And things are going well. I think our employees are happier because of that. And that’s why we are doing it. We’re doing it for them.

For us, it doesn’t make that much of a difference because the forty four hours won’t change, but we are doing what our employees want to be happier, to have more free time to spend with their families. And of course, it doesn’t apply to everybody. Managers work in a different way. There are many particulars involved, but we are moving forward on this. About the tax benefits, nothing changed when it comes to taxes.

This quarter, we are using the same interpretation that we had in the previous quarters when it comes to tax subsidies. And the differential tax in BRL 70,000,000 affecting our results positively is a specific case from 2022. We had some court decisions favorable to us being passed in the previous weeks. We were able to refer those numbers. Eugenio used to say that we are one of the very few companies that actually report on a lower revenue than it is in reality.

We usually don’t report those numbers that come from subsidies. We are considering that these numbers came from the past, and we are not including them in our numbers for this quarter. But yes, we had BRL70 million coming from these subsidies. Now next question, Robert Ford with Bank of America.

Renato Raduane, CEO, RD Saude: Good morning, and congratulations on your excellent results. What’s the impact of ultra pharma issues in your market share? And how can we understand ultra pharma from now on? In addition to working with four bio suppliers, are there any other benefits that we have to consider about the distribution center in Spirit Santos? Well, thank you.

Thank you for your comments and for celebrating our results. We haven’t really measured the ultra fauna effect and all the event that they’ve been involved in. But our market share in the state of Sao Paulo had been in place even before ultra pharma issues. We’ve been growing very positively in the state of Sao Paulo much before the problems they have had, the expansion of our new stores with very high IRR, mature stores. So we don’t account for any growth resulting from Ultrapharma’s issues because we’ve been growing like that very steadily for a while.

Spiritu Santo’s distribution center. We are going with a team there tomorrow to officially open our own distribution center of RD, fully automated. And we would like to show you in future interactions, highly automated, very modern with robots, with less manual intervention in one single box, there might be a much higher productivity and lower operational cost. If it opens, of course, it’s going to enable also a revisitation of currencies, current DC and future ones. For bill, distribution center is different.

It’s going to serve the pharmacies in Hispiro D’Santo, part of the state of Rio De Janeiro, especially closer to the frontier of the state. So the distribution center is really important there. We open about three thirty to three fifty pharmacies every year. We inevitably have to build one new distribution center every year so that we can keep up with our expansion. This is in the Spirit Santos, and there are others that are going to be open in upcoming periods in different states so that we can keep up with our logistic challenges.

Great. Let me go into the next question. Thank you, Robert. Now Rodrigo Gastin with Itau BBA. I have two questions.

First, going back to GLP. You’ve mentioned the expectations of market expansion once patents expire. But what about the economics aspect after GLP expiration? I know it’s hard to draw any conclusions yet, but what would you have in terms of gains? We know, yes, the generics bring different margins.

But in terms of economics, what would be your best guess about future margins? A second topic. In the opening remarks, you said in the first quarter, you didn’t expect to be so well positioned now in the second half of the year. And my question is, what has happened that surprised you? Could you please share with us the two, three points that have positively surprised you in the past six months for taking us to that better position today?

These are my two questions. Thank you. Thank you, Agustin. Thank you for the questions. I’m going to give you my suggestion, but I don’t think it’s going to be any better than yours or anyone else’s.

We’ve been trying to analyze all data. We have a Board member who is a physician, and we ask about perspective. Today, we are reading a McKenzie study to get more references. But there is a consensus that once there is an increased access through genetic, the demand will at least have a three- or fourfold increase over the current demand of not 2024, but there should be a threefold increase over of the references. This year, we have an average price that would be cut by half.

It doesn’t mean that our profitability is going to cut by half because they’re going to sell more generic and so on. But all in all, we believe that the gross margin in cash generated by it in the total balance will be positive and better because of the multiplication of access. We don’t have the precise number, but we understand that total cash generated from GLP-one will be higher despite lower prices, despite lower margins, because of the expansion of access. Once again, this is my best guess, but the time will tell. This is what we’ve been learning.

And we talk a lot with the pharma industry to hear from them their perspective, but this is my best guess. Now your second point, we have to be extra careful because very few people trust the company so much as I do. I’ve been in the company for thirteen years. I know it quite well because of all the positions that I have taken. I know the strengths, culture, the source, logistics, expansion, qualification of the team, which has been really improved in the past five years, digital transformation.

So all the things I’ve seen in the past thirteen years have really assured me of the potential the company has for the future. So when I say that in the first quarter and second quarter, I did not expect that much of results, not because I didn’t trust the company or the team. No, I strongly believe in all of us. But it was a great increase, 10,000,000,000 to BRL 12,200,000,000.0 to structure EBITDA of BRL7.5 billion when the structured EBITDA for the quarter was BRL7 billion. You used to say we are priced to perfection.

When we had a price to perfection, our EBITDA in the third quarter was seven. Now it’s 7.5 EBITDA, with 50 bps over the previous situation of price to perfection. So I think the intensity and the speed of growth have been marked. And I think that despite our strengths, the pride of our history, our company has very candidly understand that sometimes for two or three quarters, we can get off track. Maybe we haven’t operated as much as we could, but we’ve recognized our mistake humbly decided to make quick adjustments in cost structure, corporate structure, making the right investment allocations.

If we had made wrong investments, we wouldn’t have had return. It was a joint work of leadership, the support of the Board, our head office team and operations team really also by our side. And this is why we’ve reached so good results in the third quarter. I think it’s a result of our management capabilities and our assets. Two or three deviated quarters are not going to really derail us.

They do not ensure permanently good results, and the numbers of the fourth quarter and first quarter of the year did show that. But we had assets. Assets. We focused our energy, our best efforts, reinvested in value proposition, reinvested in propositions to our own staff. And as a consequence, we’ve reached good results.

Thank you very much, Rodrigo. Alice Gronello with Safran, you have the floor. I have a question concerning SG and A and your growth on the online channel, especially because of GLP-one sales. In the quarter, it was 2.6, And that level of it, that level of expenses will keep on be at this level. But don’t you expect to reinvest in digital as you did last year?

Concerning the losses over income, the 10 bps that you had year over year and quarter over quarter, is it resulting from a reduction of staff? Or do you have better inventory management and right assortment? What has impacted that? Thank you, Carlos. Excellent questions.

The first one is really important. I would like to make a clarification. Reduction and restructuring of the company to operate COMPANY lightly and more efficiently has not reduced our capacity to deliver. In the past six months, we have had the highest level of deliveries and releases in the digital channel despite the restructure. And why?

For a number of reasons. First, the team has become more mature, more seasoned, therefore, can work better. We’ve been working with generative AI to generate code, and that has meant improved productivity and efficiency. As a team, we’ve brought together digital operations and direct business areas, developing things that can really make a difference to our customers. This is an important question because we can make it clear that our corporate improvement had nothing to do or was not at the cost of impacting deliverables and also customer deliveries.

Our NPS in the app is better than we used to have. Our NPS of delivery is better than we used to have. And we have a recurrence level, 66% of our customers. So twothree of the customers are recurring clients. They like the journey, so they come back.

We keep on investing in building our future, our ambidexterity. We have to be efficient in both channels, and it requires investing in the future, and we are being extra careful. We are going to keep on investing in digital channel, supporting the operation, but it doesn’t mean that we have to go to a G and A of 2.8 or 2.9 or go back to the three point level. Concerning losses, I think we have to combine a number of things. Some reductions of thefts in stores, some specific actions to avoid shoplifting.

Also, the products that got expired and we then have to get rid of, and we’ve reduced that number of expirations. There is no silver bullet, I have to say. This is the combination of a number of small actions. And when built together, they produce better results. And we are very confident that we can keep on reducing that.

It was not just one action. It’s a combination of a number of small actions. Great. We now are going to hear from Ruby Caudo with Santander for the last question of our Q and A. I just you have online, you have Black Friday.

I would like to hear your expectation, not for the fourth quarter, but for 2026. Do you think that’s going to be additional investment source? Please tell us more about that.

Unidentified Moderator, Conference Call Moderator, RD Saude: UNIDENTIFIED Well, I’ll start and Frabio can complement. I believe it’s going well. It’s growing more than we expected. It’s growing more than the core revenues as expected. And the growth will be double digit for a long, long time.

And Fabi and her team have been doing a great job, and they have been making progress according to expectations. We do have a good problem, though. If you look at our first slide, our EBITDA in the quarter was $9.00 9,000,000, almost 1,000,000,000. In order for you to do something that is going to move the needle in a mass of BRL 1,000,000,000 in revenue, it has to be something extremely significant. But it is a good problem to have.

But we should remember that the business has always almost BRL 3,500,000,000.0 or 4,000,000,000 per year. Any additional revenue stream will help us. We continue to be very optimistic about this business. And any additional penny will help both on the revenue side and on the cost reduction side. And Black Friday is going to be a good opportunity for us to leverage the push.

It is a very good moment for us to get to a new level there. We have a different experience with some ads, and we now have different interpretations on the impact of those ads, and they are going to help us capture that share. Just to wrap up, I believe that we are using AI more and more in our activities, and that is helping us gain scale and depth in our deliveries. Fabi is leading that initiative together with a number of other departments in our company. The ads are dealt with the entire business side of the company, bringing more value proposition than just ads alone.

And with that, we are capturing an ROI much above the average in other companies or other service providers. So I believe we are going to have some tailwinds that will help us grow in this activity even further. Thank you. That concludes the Q and A session for today. And now I’d like to turn the conference over to the executives for his for their closing remarks.

Well, let me check if I have a slide about that here. I’d like to invite you to the Ardesaude Day. It is going to take place on December 1. It is going to take place here in the headquarters from 02:30 to 6PM. You will have the chance to meet all the executives, not just me and Flavio.

So you’re all invited. It will be a pleasure to have you here and talk to you some more about our strategies and everything we have been doing to build an even brighter future. So save the date, and we hope to see you all here. Some closing remarks. First, I’ll repeat the obvious.

Thank you. Thank you to everybody in our company. This result was extremely solid, as we said, and I am not the one responsible for that. Everybody, the 70,000 people working in this company are responsible for that. 70,000 people working according to our culture, providing the best service to our customers in the pharmacies, in the head office, in our distribution centers, they are the ones that worked hard to deliver such great results in the third quarter, exceeding our expectations.

I think it exceeded your expectations as well. If you expected such a strong result in the third quarter, maybe that’s because you regained the trust that you had in us. And we continue to be extremely confident and optimistic about the results in the fourth quarter in 2026 and from then on. And again, I’ll keep my commitment of being as transparent as possible in hardship and also in happy moments. I will always be here talking candidly to you without sugarcoating the results, but rather speaking my mind.

And I continue to believe that the best is still to come. This company has been around for over one hundred years. We have a lot to be proud of, but I am certain that what future holds for us is even better. We had strengths. We have strengths that are difficult to replicate.

A brand that was built over the course of one hundred and twenty years with credibility, trust and a culture that is easily recognized by customers that cannot be built overnight. And we are in the best locations in every neighborhood and that it cannot be replicated overnight. Not everybody can do that. The digital capability that we invested so much in, many players don’t have the financial capacity to do the same. The 70,000 people that work with us already have our culture, and they are growing in their careers.

The managers used to work as pharmacists, the regional directors, the operation directors, they all started their careers here, and that is very difficult to replicate, too. International companies tried to do that here in Brazil. They were not successful. Other pharmacy chains tried to do the same. They were not successful.

So the marketplaces won’t easily succeed either. There are players that indeed have very strong assets. And if we keep working on our strengths and if we continue to have a sharp focus on doing what’s relevant for our customers and our employees, protecting the execution in the present and also looking at the future with the right speed. If we put all of that together, our assets and the capacity that our team has, makes me truly believe that the best is yet to come and that we are going to celebrate many happy moments in our earnings calls, and we will be able to make our society even healthier. So thank you very much for your trust in us, for your interest in our results, and see you in the Saudi Day or the next earnings calls.

Thank you. Thank you very much for joining us this morning. This concludes RDI Saudi’s earnings call for today. Have a good one. Hi.

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