Earnings call transcript: Rede D’Or Q3 2025 sees strong growth in revenue and net income

Rede D’Or São Luiz SA (RDOR3) reported robust financial results for the third quarter of 2025, with significant year-over-year growth in revenue and net income. The company’s focus on oncology services and operational efficiency has been key to its performance. The stock saw a notable increase of 6.81% following the earnings announcement.

Key Takeaways

• Revenue increased by 10.6% year-over-year to 15.6 billion BRL.
• Net income rose by 20% year-over-year, reaching 1.5 billion BRL.
• Hospital occupancy was strong at 81%, with a 21% increase in surgical volumes.
• Operational cash flow improved significantly, up 22.6% year-over-year.

Company Performance

Rede D’Or demonstrated strong performance in Q3 2025, driven by its strategic focus on oncology services and operational efficiencies. The company expanded its market presence, particularly in the oncology segment, which saw a 22% year-over-year growth. This aligns with broader industry trends, as healthcare providers increasingly emphasize specialized services.

Financial Highlights

• Revenue: 15.6 billion BRL, up 10.6% YoY
• EBITDA: 2.9 billion BRL, up 15.6% YoY
• Adjusted EBITDA: 3.3 billion BRL, up 21.8% YoY
• Net Income: 1.5 billion BRL, up 20% YoY
• Operational Cash Flow: 6 billion BRL, up 22.6% YoY
• Net Debt/EBITDA: 1.54x, reduced by 0.4x

Market Reaction

Following the earnings release, Rede D’Or’s stock price surged by 6.81%, reflecting investor confidence in the company’s growth trajectory and operational efficiency. The stock is trading close to its 52-week high of 46.82 BRL, indicating strong market sentiment.

Outlook & Guidance

Looking forward, Rede D’Or is focused on maintaining operational efficiency and exploring opportunities for margin expansion. The company plans to allocate capital selectively and aims to keep leverage around 2x Net Debt/EBITDA. Potential dividends are under consideration, contingent on growth opportunities.

Executive Commentary

Paulo Moll, CEO, emphasized the company’s commitment to efficiency and growth, stating, "We are still at the inception of an important agenda of efficiency and growth." He also highlighted the potential for productivity gains, noting, "We have a lot of mapped gains in productivity and areas of support."

Risks and Challenges

• Economic fluctuations in Brazil could impact healthcare spending.
• Integration of new operational beds and systems presents execution risks.
• Competition in the healthcare sector remains intense, requiring continuous innovation.

Q&A

During the earnings call, analysts inquired about the migration of clients from pre-payment to post-payment models and efforts to manage medical material costs. The company highlighted strong surgical volumes and improvements in patient days, underscoring its operational leverage potential.

Full transcript - Rede D’Or São Luiz SA (RDOR3) Q3 2025:

Moderator, Rede D’Or: Good morning, everyone. Welcome to the earnings call of the third quarter of 2025 of Rede D’Or. We have here today with us Mr. Paulo Moll, CEO, Rodrigo Gavina, CEO of Hospitals, Otávio Lascano, VP of Finance and Investor Relations, and Raquel Reiss, CEO of Health and Dental of SulAmérica. The event will last for one hour. The recording will be available at the IR website of the company. After the presentation, we’re going to start the Q&A, and then we will provide more information before moving on. Any forward-looking statements that might be done during the earnings call regarding the business perspectives of Rede D’Or, projections and operational goals, financial goals, are based on beliefs and premises of the board of directors based on information that is currently available.

Forward-looking statements are not a guarantee of performance, and they involve risks and uncertainties, and they refer to events and circumstances that may or may not take place. Investors should understand that general economic conditions, industry conditions, and other operational factors may affect the performance of the company and may lead to results that are materially different from the forward-looking statements. Now, Mr. Paulo Moll will start the call. Mr. Moll, the floor is yours. Thank you. Good morning. Let’s discuss a few numbers. Here are the main ones, and then Raquel Otávio will have the opportunity to get into the deep details. A few highlights of the third quarter. Our revenue has reached BRL 15.6 billion, which is a growth year-on-year of 10.6%. The EBITDA, BRL 2.9 billion, which is a growth of 15.6% and adjusted EBITDA.

Considering the financial result of the assets getting to BRL 3.3 billion, it gives you a growth of 21.8% year-on-year, net income BRL 1.5 billion, which is almost 20% growth year-on-year. When we exclude the amortization of the portfolios of SulAmérica, the cash generation in the first nine months’ operational cash flow. We get to BRL 6 billion, a growth of 22.6%. We reduce our leverage, our debt, 1.54 times net debt over EBITDA. This is 0.4 times less than the third quarter of 2024. We did a very strong occupancy, 81%. This is due to a growth in surgeries over 21% year-on-year. The hospitals had an interesting operational gain. We have more turnover with the surgical patients, so we get to levels of occupancy that are higher. Oncology accelerated the growth due to the good strategy of organic growth. Connected to the main hospitals.

We’re talking about 22% growth in oncology year-on-year. These are strong results. Strong results, and we should celebrate all the employees of Rede D’Or, our physicians, everybody that collaborates from SulAmérica, the partners, the distribution channel, the investors that support and believe in the company. Also, we have to have the surety that, in our opinion, we’re still at the inception of an important agenda of efficiency and growth. We have a lot of mapped gains in productivity and areas of support. A lot of work to be done. Improving the revenue cycle, reducing mistakes and losses. We want to have more automation, more organization of the areas. We have a change in systems. As I told you, we are making the systems of the company very homogenous. We had a lot of M&As. We grew fast. We’re still dealing with a legacy.

The challenge of integration, and of course, that will be stabilized. Once we have that, we will have efficiency gains. Also, we have the opportunity of growing in a few units that are not at full potential. Services as well. High demand. We are adding in a few units that we’ve identified opportunities, medical specialty services, oncology, diagnosis. We still see important work to be done, and we will continue to diligently improve efficiencies. We are, once again, at the beginning of a journey with results that are important, robust. That makes us ever more motivated to continue to work and grow in our company. Focusing on quality, technical quality. Quality perceived by the clients. Now I’ll give the floor to Raquel. I will be with you during the Q&A. Thank you. Thank you, Paulo. Good morning.

It’s always good to be here to talk about the highlights of SulAmérica. In the third quarter, once again, we had an increase of the membership. In over 70,000 clients, 68,000 in health, 104,000 in dental. It’s a positive trend that we’ve presented all throughout the year. It’s important to highlight that this growth is aligned with a profitability that is sustainable. We closed the quarter with the consolidated loss ratio. That is an improvement of 2 percentage points. And also an improvement in regards to the third quarter, 1.3 percentage points. The trend is to continuously improve gradually in the lines that we are commenting. In the same direction of efficiency and discipline, expenses and administrative expenses, we have to comment that it’s controlled, representing 4.3% of the revenue. Now, at the end of 2025 and the agenda for 2026, we will continue to grow.

With sustainability and profitability that we are presenting. This is our main objective. I would like to reinforce the thank you to all the team. Thank you to the SulAmérica team from all areas. That is it. Now I will give the floor to Gavina. I will remain here for the Q&A. Hi, good morning. Great to be here with you once again. Everybody talks about this, and you recognize how challenging it has been. It has been to work in this current context, very challenging. We need to celebrate a good result facing a scenario such as this. It is a lot of joy. Once again, thank you to all the collaborators in general, Rede D’Or, SulAmérica, the performance of everyone, so that we can reach these objectives, the trust of our patients and physicians. Every day, we work just a bit to increase this improvement.

To improve the trust in the investors that believe in our company and believe in the strength of the company. Now, let’s talk about the volumes. You’ve seen on page 5 that we had the occupancy record. Average rate was 79% for this period, and we went over 81%. This is due to a lot of work and dedication of all of our employees. Going back to that issue of trust, so that our physicians and our patients will have more trust. They feel safe. They feel that they’re getting an excellent service. Our surgeries have grown. We are a mature company. We’ve grown 21% quarter on quarter. We are not satisfied with this. Paulo has commented, and we are working, seeking operational excellence and operational efficiency in many aspects. This is from the best dispensation of medications until the best.

Charging system and automation, working to gain efficiencies for the operation. We believe that regardless of these results, we have a lot of work to be done, and this makes us excited. We are not at the top of our efficiency. We still have a lot of work to do. Page 6. Let’s see the beds. We realized the growth in the first nine months of this year in regards to the last year. We’ve grown over 586 beds operational. This is extremely significant, and it improved the capacity to have a level of occupancy. Always concerned about having an optimal level of occupancy. We know that hospitals are hospitals that have pediatrics. They have a seasonality with maternity wards, and the occupancy can vary with that. To finish with page 6, we see that we’ve grown in over 200 beds recently this year, total beds.

There was a growth of operational beds. Total beds, growth in occupancy. And more complex surgeries. This gives you dedication and the work for all the team. I’m going to give the floor to Otávio to talk about the growth revenue on page 7. Gavina, once again, thank you. Now we follow the IFRS 17 to facilitate the analysis in the records. And the best follow-up of the indicators, page 7, gross revenue and average ticket, hospital services, graph on the left. Third quarter on this year, gross revenue of this was BRL 9.3 billion, growth of 16.2% in the year-on-year. This is an increase of the average ticket of 5.6% and an increase of volume of the patient days of over 10%. The quarterly increase of 4.5%. And an increase in the number of day patients of half a percent. In the center of the page.

Gross revenue of the segment in the first nine months. We got to BRL 26.294 million, a growth of over 12%, an increase of the average ticket of 7.7%, and an increase of patient days of 4.4%. On the right, we have graphically the average ticket evolution. Page 8. Gross revenue and average ticket in the oncology segment. Third quarter. Totaled BRL 1.55 billion, a growth of 28.1% year-on-year. An increase in the average ticket of 10.4%, an increase in the volume of 16%. In the comparison quarterly, the increase is 12.2%, an increase of the average ticket of 2%, the volume of 10.1%. In the center of the page, the gross revenue of this segment accumulated in nine months. BRL 2.863 million, a growth of almost 21%. An increase in the average ticket of 11.7%, increase of volume 8.3%.

On your right, we see graphically the evolution of the average ticket. Page 9. On the graph on the left, third quarter of this FY, the cost and hospital services, BRL 6.17 billion. A growth of 13.4% comparison year-on-year, growth of 2.3% in the quarterly comparison. Once the revenue of the company grew faster than the cost, we had an expansion of the margin. In both temporal analysis. At the center of the page, the cost with the hospital services accumulated in nine months totaled BRL 17.7 billion, a growth of 13.1%. On the right. The records of the general administrative expenses, that total third quarter, BRL 253 million, a reduction of 17.2% in the year-on-year, reduction of 22.4% in the quarterly comparison. Here is an event on recurrent positive. We got a win in the justice system.

Involving the correction index that should be applied over the base. Over the ISS tax base calculation. The company here is SulAmérica. On the extreme right. Administrative accumulated expense of BRL 907 million, 5.9% higher than those reported in the same period in FY 2024. Page 10, EBITDA and net income. EBITDA. In the hospital services reported for the third quarter of this FY, BRL 2,323 million. A growth of 8.6% in the annual comparison, a comparison of 13% in the quarterly comparison, and in the center of the page, the EBITDA reported by the segment accumulated nine months total BRL 6,054 million. A growth of 7.4%, a margin EBITDA of 26%. On the right, we see graphically the evolution of the company. Net income consolidated third quarter, we added BRL 1.5 billion and accumulated nine months BRL 3.7 billion.

When we adjust to the accounting effect of the amortization of the SulAmérica portfolios that we took on when we did the M&A at the end of 2022. Page 11. Data of SulAmérica. Top left, net revenues total of the third quarter, BRL 8.4 billion. Year-on-year, almost 11% growth and almost 4% in the quarterly comparison. An increase in the base of clients and also the readjustments of the premiums. On the top right, the consolidated loss ratio. 80.1%, 2 percentage points lower than the one reported for the third quarter of the previous fiscal year. The consolidated loss ratio, 80.2%. A drop of 2 percentage points in the annual comparison and 1.3 percentage points in the quarterly comparison. Still on the right, at the lower part of the page, the graphic evolution. We got 7.4 million beneficiaries. And at the end.

On the left, Adjusted EBITDA third quarter to BRL 1.24 million. 68% higher than the one reported on the year. And 40.4% higher in the comparison quarterly. Let’s go to page 12, indebtedness. At the top left, September 30, a cash and cash equivalence position. Real estate. Almost BRL 45 billion. The technical reserves, BRL 25.3 billion. The net debt, BRL 16.9 billion. Net debt over EBITDA, 1.54 times. Once we insert the technical provisions for insurance in a reading to calculate the exposure to monetary shocks, the net debt over EBITDA is lower than 0.9 times. The average cost of debt on the right, CDI plus a year, and the increase of the debt amortization to 5.8. And we see the schedule once again of the amortization. Page 13. Managerial cash flow. We reconcile the reported EBITDA with nine months with the cash variation of the company.

I’m going to start with the information on the left, and very slowly, I will move to the right. We started with a reported EBITDA nine months, BRL 7.678 billion. We had a positive working capital variation, BRL 534 million in this period. The consumption of working capital, Rede D’Or. The positive cash flow of SulAmérica, BRL 1.4 billion. We’re moving once again to the right. We have other items of the balance sheets, negative, BRL 728 million. Here we have GSH, BRL 417 million of cash. That asset was in the quarter previously reclassified as available for selling, BRL 600 million in contingencies and judicial deposits. We have advancements, BRL 200 million, and other items. We have leasing, BRL 596 million. Once again to the right, payment of taxes, BRL 896 million. BRL 367 million, Rede D’Or, BRL 529 million, SulAmérica. We have 2.

BRL 7 billion positive. That stem from the financing activities. Here we have captures, new captures of the market resources. Amortizations of credit lines, BRL 3.1 billion. We have net expenses of BRL 1 billion, payment of dividends and interest of capital, BRL 1.1 billion, and BRL 380 million of repurchasing of shares. To the right, we have investments, BRL 1,963 million. Among BRL 860 million in Greenfield Brownfield investments, BRL 381 million in small expansions. We have receivables of BRL 383 million regarding the transference of Campinas Hospital to under JV. And we have receivables of BRL 371 million of the D’Or consultancy that was done last year. We have a cash variation of BRL 6,789 million or BRL 4,468 million once we exclude the variation of private pension technical resource balances from the private pension of the company. I finished the presentation. We’re ready for the Q&A.

Thank you. We’re going to start the Q&A session. For investors and analysts, if you want to ask a question, please raise your hand. If your question is answered, you can lower your hand. Due to the limitation of time, we kindly ask the analyst to limit to just two questions. Therefore, more people can take part. First question, Gustavo Mieli, Goldman Sachs. Floor is yours. Good morning, Paulo. Paulo Octavio Garavina. Two topics. First, SulAmérica. When we look at the addition of beneficiaries quarter on quarter, just looking at the portfolio of health, we see a positive performance, naturally decelerating versus performance that’s very robust over the last quarters. I wanted to get the help of Raquel to try and reconcile how this performance is broken down between growth, additions, and canceling. Maybe this is an important discussion because I understand that a great deal of this improvement.

In the consolidated loss ratio has been coming from the recycling of portfolios and more. If you can help us to this impact, it would be interesting. Second topic, maybe more direct. Let’s see a take on how it’s been the evolution of the gains of margins, of efficiencies, of the assets of JV. Paulo already commented a bit of the midterm expectations, but I want to understand what is the evolution of the previous quarters for the improvement in these assets. How much has this contributed for this strong margin in the quarter? Thank you. Hi, Mieli. Thank you for the question. Okay. Improvements of consolidated loss ratio in general, we always say we never have a short-term action. We start to see the results in eight months. Everything that started at the inception, beginning of 2022, beginning of 2023, reworking the synergies of Rede D’Or.

In regards to materials, medications. Maybe a cleanup. All of that has evolved and brings us to where we are. Directly speaking to your first point on the prepayment. This quarter, we have the migration of three clients, a total, a very relevant number of lives, from pre-to-post payment. It was a combined and orchestrated action by both sides. It makes sense. Clients with a high volume of lives are those that leave the prepayment. A lower margin and a migration to the post-payment made all the sense. What maintains our presence of market share is our bargaining power due to the insured mass, whether if it’s in pre and post. Pinpoint, this is what happened. The migration of three clients, but the volume of sales and the retention of the clients in the house have been doing very well. Thank you.

I’m going to take the second one about the JV hospitals. We’re very satisfied with the ramp-up of these assets. They’re growing and they’re delivering margin in a more accelerated way than we projected. Every quarter, we are growing revenue, and still with a lot of space to ramping up the beds and adding more margin. We have great expectations moving up ahead. Very clear. Thank you. I’d like to congratulate you for the consistency in the results. Thank you, Mieli. Next question comes from Flavio Yoshida, Bank of America. Floor is yours. Hi, good morning, Paulo, Raquel, Otávio Gavina. Congratulations on the strong results. I have a few questions on my side. First, hospital margin. Our vision is that it was a strong number, so I want to understand how much of this improvement of margin was because of a better seasonality. We had more business days.

Is it a structural improvement that you’re delivering? Because I think that in the last call, Paulo said that there could be an expansion of margin. I wanted to understand if that’s part of the sale. Can you find these 200 basis points of improvement in the margin? The second question is in regards to the consolidated loss ratio of SulAmérica. We see an improvement in the results. I want to understand if there is a space for improvement. There is a competitive environment that is very high, but we understand that you have a series of internal initiatives in regards to co-participation, control of frauds, improvements. I want to understand what should we expect when we get this into the same equation. Thank you. Flavio, let me start by the first. It’s really multifactorial.

Improvement of margin, we cannot say that it has a single origin. I had pinpointed that once those nine assets are mature, that they’re ramped up, they could contribute with two margin points, and this is in a long period. We see the complete maturity almost of these assets, the coverage of beds, and the expansion of margin. The contribution for this last quarter comes from these assets. The rest comes from several efficiency actions. Reiterating what I just mentioned, we have a lot of things to do. When we look at the hospital, it’s an indicator, and all of our hospitals have opportunities of gains of performance. Improvement of the cycle of the rest. We can add services. This is the journey that we have. We do not give guidance of margin, as you know. We are extremely excited. We have great opportunities of gains of efficiencies.

For the performance of the company. Flavio, hi, this is Raquel. If there is space, there is always space for improvement. When we look at the current number, we look at it with good eyes. We are comfortable with them. We’re looking at a constant search for balance between the growth of the base and the profitability. Now, going back to a point that I commented with Mieli, these are long-term actions. I’m going to give you an example that I always comment. I always defend co-participation. We would only have sustainability and balance in this sector when we can involve all the action, all the agents in this sustainability. In that sense, co-participation is a strong tool. Three years ago, co-participation didn’t even exist for the retail. Now, I would like to say that almost 25% of all the portfolio of small-sized companies, we have co-participation.

When I look at new sales, specifically for this year, over 36%. And with that, I could give you other numbers. This is just to exemplify. The lives, the people, the clients that come with the logic of the modular reimbursement, better rationality, and the correct utilization. All of that generates better margins. Therefore, it gives you space to replenish, to reposition the prices and the readjustments because our objective is always to have the best price, the smallest readjustment possible that can allow us to rebalance this. Of course, we are going to have a strategy with higher investment that is growing in a region or to achieve a certain brand or a client that is relevant for the strategy as a whole. Internal lines, that’s it. Thank you. Very clear. The next question, Joseph Giordano from JP Morgan. The floor is yours. Hi, good morning, everyone.

I want to explore a small part of the business, but that had a very strong result. Oncology, a very strong growth. I want to understand. We are delivering a competitive environment in this segment. The capture of new physicians is a great factor to bring volume to the company. How is the competitive positioning of the company? Do you have opportunities higher to explore given the weakness of this competition? Talking about the expansion. I want to explore how do you see the opportunity of medical tourism. I understand that Brazil is still very relevant for the growth and the occupancy that you’ve shown. Do you have any opportunities in that sense? Hi. Oncology. We’ve always positioned ourselves in oncology, and this is a big differential of what we offer.

As well, integrating a complete solution for the oncologic patient and of every need that they have, integrating the oncology clinics, radiotherapy, with the hospital structure and diagnosis. The oncologic patient needs diagnosis. They’re going to go through intervention, biopsy, surgery, chemotherapy, radiotherapy. For you to be able to service these patients and all their needs is a differential, in our opinion. That’s why we invested diligently in the integration of our services with the main hospitals, developing cancer centers that are connected to the hospitals, having a complete integration of these multidisciplinary teams. The result of this is clear. Of course, this is the moment of the market that we’ve been looked for in patients and physicians, that seeing the differential in excellency in the services that we observe. With all the integration, which is the great differential. About the medical tourism.

You talked about the international. We see a search for services in São Paulo, Rio de Janeiro, and other capitals where we are present in the Federal District, in Salvador, Recife. You see Brazilians from smaller cities looking for these centers. Yes, there is an internal tourism that is strong. It is relevant within our numbers. When we talk about international patients, that is a bit more restricted to a small number of hospitals where we’re still growing, and we still see an opportunity of growth. Vila Nova Estade. So it’s the number of foreign patients that is growing, and we see opportunities for these business units. If you look at this number in regards to everything that Rede D’Or works with, it’s well-diluted. It’s not going to move the pointer so much of Rede D’Or. I guess that’s it. Thank you, Paulo. Next question is from Leandro Bastos, Citibank.

Floor is yours. Hi, guys. Good morning. Two questions. First, in hospitals. We have an important volume. If you can discuss a few points that have helped with this result. There is a specific utilization that has called your attention for the quarter. Is this trend of utilization strong, and it has kept with what you have of visibility for October? That would be the first point. Second, in regards to SulAmérica, the competitive environment. We see the numbers improving a lot. Better profitability and more competition. What do you see if, what calls your attention here? Thank you very much. Hi, Raquel. I’m going to start by the last one, and then I’ll give you the floor to Gavina. Of course, we see more aggressiveness of one region or another or some competition. We are very consistent, very sure of our strategy of pricing.

We have a logic that privileges products that have better profitability. That privileges regions where we have a higher presence by the expansion of beds, opportunities, GDP, whatever it is. Relevant brands. We have had much success in growth, also in wholesale and retail. I want to mention the flexibility with which we have done the customized products for the big clients. We have a company that on the fifth is 130 years, the flexibility and agility with which we are working. We are making a product along with these clients. That is what we are looking for. Mainly for this last quarter, we are growing strongly with retail, with small companies, and the best and the bigger ones, mentioning those up to 500,000 lives. Yes, there is some movement, but nothing that will make us change the strategy. That is well. Success.

That is well succeeded. In 2024 and 2025. I do not see anything different up ahead. Thank you, Leandro Gavina. Leandro. So the question. Taking the question regarding volume, this is due to the surgical volume that has increased, especially surgeries that are more complex. Of course, when you grow the surgeries, you grow it as a whole. Giving you some color. We have two points here. First, the patient has to believe and know that they are being cared with a safety protocol that is very robust, and they feel safe. The improvement of the line. They are not waiting. They are getting service. Being heard and having their problem solved. Also, it is important the work of medical relations because the physicians that bring their patients and they are our clients, they end up having demands that we need to understand and service.

Maybe these two points are very strong over the last times. Nothing is overnight. We’ve been working with this for a long time. Now we’re getting the low-hanging fruits of our work with the increase of the surgeries and, as Paulo commented, increasing the cash flow and the occupancy. Great. Thank you. Next question, BTG Pactual. Samuel Alves. The floor is yours. Hi, Paulo, Otávio, Raquel, Gavina. Good morning. Two questions on our side. First, about the sustainable level of medical material cost. We noticed an improvement in this line. I wanted to understand the directives of this improvement, and is this more of a recurrent level up ahead, once this is a variable cost line? If you can explore this theme, this is the first question. Second question is extraordinary dividends.

It was yesterday, the approval at the Senate, the law that taxes the dividends 10% for foreign. Deposits for people that are resident here. It seems that the controller and the foreign shareholders are sensitive to this. So the question is, the company is evaluating the payout this year. And how long can you take the leverage of the company? Can we take it over two times? If you can discuss this theme, thank you. Hi, good morning, Samuel. About, as you know, we have a very strong focus in the area, looking for more standardization, integration with the medical teams. We have good quality, and we have more competitiveness. It is a continuous work. It is difficult to mention. I consider that we are in good levels. It is difficult to say, to give you guidance. Sometimes quarter on quarter, you have effects and small variations.

I’d say that we are focused with several actions of looking for products that are not in Brazil through partners. Even our distribution area has a strong focus in developing products to bring competitiveness for the area. This has a mixed effect. When you grow oncology, the medications are a bit more expensive. Depending on the surgery, it can be also heavy. It is a combination of actions. I can tell you that I am very happy with the work that we are developing. We had a very harsh post-pandemic period where the cost has gone up, and now we are satisfied to deliver. It is a maintenance effort. I had the opportunity of better reduction. We have to be careful not to be holding out to a quarter number. We always like to look at some lines, longer period.

You will normalize some of these effects. About the payment of extraordinary dividends, there is no decision being taken. Of course, we will understand and wait on how the approvals will be, the impact that we will have. Being very directive to your question about the comfort of leverage, we would not like to run this company above two times net debt over EBITDA unless there is a reason, pinpoint reason, extraordinary reason. But the level that we would like to run with the EBITDA is two times the net debt over EBITDA. Thank you, Paulo. Good morning. Thank you, Samuel. Our next question comes from Vinicius Figueiredo from Itaú BBA. Please. Good morning, everyone. Thank you for taking my question. I wanted to ask, I wanted to continue with the follow-up with the hospitals. Seems that a few colleagues have tried to understand the recurrence of this volume.

We can understand that it’s a stronger surge of the client and the paying, and a migration of physicians that come from a few more stressed players. For us to understand and try to get this in a model, this movement with surgeries and strong, should it motivate a higher occupancy, a few basis points above what is the records or what we’ve seen in this third quarter, it should be translated into a rhythm of opening the beds that is better for 2026, or maybe accelerating one or the other projects of Brownfield. The second question in SulAmérica, I’ve heard the answer about the ESO. This is a tool that maybe SulAmérica can do better than the rest of the market. We have probably still the tools of being, using the Rede D’Or as an important player for the post-payment.

It reduces the consolidated loss ratio, and it has a good combination because you carry over less of the onus of having this strong portfolio in the balance and the technical provision. Is there still opportunities? Was it a cycle that was more heavy of this migration, and it should not be repeated? Or do you still foresee that maybe we will see a market that is looking to the future, even other competitors, that you have a company that does not want to get a lot of readjustments? Have you perceived a warmer market in this specific part? Those are the questions. Thank you. Thank you for the questions, Vinicius. In the hospital, you observed very well. Of course, all the care that we have to look at the different seasonalities in the quarters. Even considering the third quarter as a strong quarter.

We had an occupancy that was above our records for the third quarter. The reason for this is that we grew a lot in surgeries. If you look at the stay of the surgical patient, it is less. You can have a turnover that is more efficient when you grow through surgery. That’s why we reached this level of patient day patients with the marginal growth of the operational beds. This brings a lot of efficiency, operational efficiency. I don’t want to give any guidance, but we have a strategy very strong for the capture of physicians, growing our ambulatory structures and all those strategies together that have helped us to deliver this result. If we keep levels of growth in surgeries that are very strong, we can reach occupancy levels that are, well, once again, taking into consideration seasonality, the third quarter with the third, with the second.

We have the surety of how this works. The surgical growth, it allows you to run the structures with occupancy rates that are higher. We are a hospital that needs to open beds. We are just improving the turnover. We need to do a review of the investment plan. This is very dynamic, very alive. Unit per unit. We do not have anything else to announce. We are aligned to expand the organic expansion that we have announced. The operational beds this quarter have grown. We are going 600 operational beds, the growth in this year. It is an accelerated rhythm than the previous years. We had effects of discontinuity of contracts with a few operators. Our growth was moderate. We hope to be at a new rhythm for the opening of the beds so we can continue for 2026. Raquel, the second question.

Vinicius, thank you. You already helped me. Thank you. You answered all the strategic part. In regards to the post-payment. We consider that, yes, there are differentiated conditions in that sense. Looking at the company as a whole, it is a part that we invest strongly. This movement that happened now was one client of 50,000 and the other two that had migration agreed. There is a fertile terrain. You see a lot of opportunities abroad, specifically with the customized products. We always design along with the client what they want. When the client is in post-payment or pre-payment and they have risk for appetite. Or even small companies that want to go over and they want to have a specialized company, more operational. There are opportunities. I always remind you, for example, today we are looking at a client, Marañón, Triângulo Mineiro, Campo Grande, and so on.

It’s another path of growth, certainly. Thank you for the answers and congratulations on the results. Thank you. Next question. Mauricio Zepeda, Morgan Stanley. Please, the floor is yours. Good morning, Paulo, Raquel, Otávio, Gavina. Two questions on my side. The first is intentions ahead. You are in a situation that is much more comfortable in the cash generation, strong cash generation. At the same time, you do not need so much cash for expansion. Proportionally, you are more comfortable in that sense. A question that I ask you, and I receive from a lot of investors, is if from now on, the idea would be to be more of a payment of dividends versus the situation that you had in the past. You had additional growth, and today you have a lot of higher growth by margin of beds and even the pipeline.

Proportionally lesser than what you had in the past. It is a thesis of dividends versus a thesis of more growth. That is the first question. Second question about operational leverage. I know you do not want to give any guidance from margin, but can we estimate this better on our side? With this strong progression of revenue, how much do you estimate that in the hospital part, your cost is fixed? Because you have several lines of cost. They have a mix of what is fixed and what is variable. If you can confirm that, what we can estimate, what is fixed, what is variable, so we can think about the expansion of margin. Thank you. Zepeda, this is Paulo. Thank you for the questions. About capital allocation and dividends, the way that we see this, we would love to add projects from now on with the same.

Days of return, and we are always looking for these opportunities. Organic or inorganic. We would love to accelerate the number of projects here as long as we find projects that make sense, that have the same level of historical return so we can allocate capital. If along the way, the opportunities, organic opportunities, more inorganic, are not enough for us to allocate the entirety of the cash allocation of the company, obviously respecting the levels of leverage that I commented that would make us comfortable, we can consider paying dividends. I do not have the clear response to give you. I cannot really see how many projects, what can we add in our strategies. Always with the foot in the ground, we are not going to change our threshold in regards to the level of return. The strategy of capital allocation.

Second part of the question, which is about the margins, what is fixed cost, variable cost? In our hospitals, we have 60% of our costs, which are fixed costs. We have operational leverage that is important when we grow the hospitals. Obviously, very relevant when you grow without opening the beds, without doing the brownfield, but also when you do brownfields. Just so you know, the high cost of personnel, you have the average of the Rede D’Or hospitals, about 6.6 employees per bed. When you open another one, you hire 3.5 employees. You have, even in the brownfields, a capacity. Once they are occupied, we bring a lot of margin. When we grow the average size of the hospitals, we have a good expectation that we can leverage the margin. I am satisfied that you are adjusting the models.

Thank you for the surety. Next question is from Andrés Sales from UBS. Thank you for the presentation. I have two here. In terms of capitalization and an update of that theme about the hospitals, the legacy system that you commented. Was there any relevant advancement in this quarter, in this front, anything that has helped in the quarter? The second question is about the expansion plan with Bradesco. We saw Gloria D’Or that appeared as an expansion project for this result. For us, it is clear the participation of the Greenfield projects. When we look at the 2,400 beds or so brownfield, what is the relevance of the participation of JV and its beds? Thank you. Let’s start by the part of the systems. I would like to say that it is a smaller impact.

Because these are implementations of uniformization of systems, but it’s a project that is very long. Very long-term. You should have an average of one hospital, two hospitals per month that will be implemented. Once they’re implemented, you have the period of stabilization. You can have a contribution for the margin. I wouldn’t say that this is a point for the quarter that went over, but as a point of more importance, even though the vision of the medium to long-term, all this work for uniformization can help us to have contribution in a few points of our margin. Now, going to the JV. We have an impact that is more important in the JV, not of the brownfield. You talked about Gloria. Gloria is maybe the only situation of short to midterm in a hospital that we are doing the brownfield.

The other units, since these are units of Macaé, Alphaville, Guarulhos, Campinas as well. These were launched a short while ago. The opportunities that we have is a ramp-up of the beds. So amongst the total beds and the operational beds, we have a difference amongst those units that are in ramp-up. The biggest benefits for the JV of Atlântica D’Or will be as we will have demands and growth, the ramp-up of these operational beds to get to these total beds. Thank you, André. Thank you, Paulo. The next question, Caio Moscardini from Santander. The floor is yours. Thank you for taking my question. I have two on my side, on the hospital side. You commented on the level of patient days, which is a higher level of surgeries. But I wanted to.

Ask if we can consider that the level of patient days is a new threshold for the company. We understand the seasonality, but it seems that there was, in fact, a scalability in the level of patients. Year-on-year comparison is a bit more difficult to do. Second question. How do you observe the competition in the hospital segment? We see the data open up. We see an occupancy that improves, but the margin of the sector still drops. Cash flow is under pressure. It seems that you’re navigating a competitive environment. I want to understand this point. Hi, Caio. Thank you for the questions. This year, we are at a threshold that is higher than last year. As a rhythm that we can accelerate our growth in regards to the previous years. We think about 2026.

It is more than the current, that speed of growth in the patient days and opening of beds, our expectation is that this current pace is kept. For the canceling of a few contracts in the previous years, we do not give more details. This is a way that we are challenging our operations, keeping this pace of growth. In regards to the competitive environment, we see for the market at a few, we see a lot of hospitals in Brazil, medium-sized hospitals, which is the reality of most of the Brazilian hospitals. The average size of the hospitals is 60 beds. Again, it is 170 beds in the United States. The hospitals that have a scale that is small, so we have a decrease of cost and efficiency. Brazil, over the last 10 years, has lost over 500 private hospitals. Cost of capital.

Is higher. As you said, a few issues of capital, of working capital that were increased in regards to three, four years ago. This makes the scenario more pressured. For many, many years, we see this as an opportunity. Consolidation pathway that the sector needs, but it needs, in our opinion, more efficient hospitals with scalability, more modern, and an investment in a new hospital is higher because of the new technologies. We understand that this benefits a company such as ours that has access to capital that is cheaper and has the capacity within in-house with the physicians, the managers. We can grow our units, and we can build the hospital units in places that are not well-served, and these are reference hospitals. We have a portfolio of brands that are very strong regionally and that we will continue to use.

In fact, we start to see the results of these good investments, good capital allocation that we’ve done over the few years, and the several projects of Rede D’Or that we have of expansion. This is the big differential of the company. When we look at the hospital market as a whole. Great, Paulo. Thank you. Since we do not have any more questions, we close the Q&A session. I would like to give the floor to Mr. Paulo Moll. He can close the session. I think we have gone over the time. Thank you for your participation once again. Thank you to all the collaborators of Rede D’Or and SulAmérica. We will see you briefly in the next call. Thank you. The earnings call of Rede D’Or is closed. Thank you for your participation. Have a wonderful day.

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