Report on review of Quarterly Information - ITR

Transcription

1 KPMG Auditores Independentes Rua Arquiteto Olavo Redig de Campos, 105, 6º andar - Torre A São Paulo/SP - Brasil Caixa Postal CEP São Paulo/SP - Brasil Phone +55 (11) , Fax +55 (11) Report on review of Quarterly Information - ITR To the Board of Directors and Stockholders Fleury S.A. São Paulo - SP Introduction We have reviewed the accompanying interim financial information, individual and consolidated, of Fleury S.A. ( The Company ), comprised in the Quarterly Information Form - ITR for the quarter ended June 30,, comprising the balance sheet as of June 30, and the respective statements of income and comprehensive income for the three and six month period ended at that date and changes in equity and cash flows for the six month period ended at that date, including the footnotes. Management is responsible for the preparation of the individual interim financial information in accordance with the Technical Pronouncement CPC 21(R1) - Interim Financial Information, and the consolidated interim financial information in accordance with CPC 21(R1) and the international standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, such as for the presentation of these information in accordance with the standards issued by the Brazilian Securities Commission - CVM, applicable to the preparation of Quarterly Information - ITR. Our responsibility is to express a conclusion on these interim financial information based on our review. Review scope We conducted our review in accordance with the Brazilian and International standards on reviews of interim information (NBC TR Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for the financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the audit standards and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. KPMG Auditores Independentes, uma sociedade simples brasileira e firmamembro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 1

2 Conclusion on interim financial information Based on our review, nothing has come to our attention that causes us to believe that the individual and consolidated interim financial information included in the Quarterly Information - ITR referred to above has not been prepared, in all material respects, in accordance with CPC 21(R1) and IAS 34 applicable to the preparation of Quarterly Information - ITR, and presented in accordance with the standards issued by the Brazilian Securities Commission - CVM. Others matters Interim statement of value added The interim financial information, individual and consolidated, related to statement of statements of value added (DVA), related to the six month period ended June 30,, prepared under the responsibility of the Company s management, presented as supplementary information under IAS 34, were subject to the same review procedure jointly with the Company s Quarterly Information ITR. To former our conclusion, we assess if these statements were reconciled with the interim final information and accounting records, as applicable, and if the form and information were according with criteria defined on Technical Pronouncement CPC 09 Statement of Valeu Added. Based on our review, nothing has come to our attention that causes us to believe that the statements of value added referred to above has not been prepared, in all material respects, in accordance with the individual and consolidated interim financial information taken as a whole São Paulo, July 25, KPMG Auditores Independentes CRC 2SP014428/O-6 (Original report in Portuguese signed by) Marcos Antonio Boscolo Accountant CRC 1SP198789/O-0 KPMG Auditores Independentes, uma sociedade simples brasileira e firmamembro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ( KPMG International ), uma entidade suíça. KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. 2

3 AND SUBSIDIARIES STATEMENT OF FINANCIAL POSITION (In thousands of Brazilian reais - R$) Note Parent Company Note Parent Company Assets 6/30/ 12/31/2017 6/30/ 12/31/2017 Liabilities and equity 6/30/ 12/31/2017 6/30/ 12/31/2017 Current assets Current liabilities Cash and cash equivalents Financing Marketable securities Debentures Derivative financial instruments Finance lease Trade receivables Trade payables Inventories Payroll and related charges Taxes recoverable Taxes and contributions payable IRPJ and CSLL to offset Accounts payable - company acquisition Receivables Dividends payable and interest on equity Receivables from related parties Other accounts payable Other assets Total current liabilities Total current asset Noncurrent liabilities Financing Noncurrent assets Debentures Receivables Finance lease Other assets Deferred income tax and social contribution, net Judicial deposits Provision for tax, labor and civil risks Taxes and contributions payable Accounts payable - company acquisition Total noncurrent liabilities Equity Share capital 26a Capital reserve - options granted recognized Revaluation reserve Investments Legal reserve Property and equipment Retained profit Intangible assets Profit for the period 26b Total noncurrent assets Total equity Total assets Total liabilities and equity

4 AND SUBSIDIARIES STATEMENT OF INCOME SIX-MONTH PERIODS ENDED JUNE (In thousands of Brazilian reais - R$, except earnings per share) Note Parent Company 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 1/01/ to 6/30/ 1/01/2017 to 6/30/2017 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 1/01/ to 6/30/ 1/01/2017 to 6/30/2017 Revenue from services rendered Cost of services 29 ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) Gross profit Operating income (expenses) General and administrative 30 (74.445) (67.231) ( ) ( ) (74.652) (67.241) ( ) ( ) Other operating income (expenses), net 31 (3.250) (1.271) (4.671) (5.789) (3.197) (1.270) (4.583) (5.789) Reversal (provision) for tax, labor and civil risks 23 (1.103) (702) (2.106) (462) (1.103) (702) (2.106) (462) Equity in the earnings (losses) of subsidiaries Operating profit before financial result Financial income Financial expenses 32 (24.006) (24.343) (44.448) (55.553) (24.901) (24.727) (45.781) (55.936) Financial result (13.891) (12.821) (24.578) (29.866) (14.844) (12.699) (25.567) (29.617) Earnings before income tax and social contribution Income tax and social contribution Current 22 (32.041) (12.554) (58.789) (30.229) (33.982) (12.905) (60.969) (30.580) Deferred (4.632) (7.498) (28.590) 928 (4.389) (6.983) (28.378) Net profit for the period Earnings per share attributable to the Company's shareholders Basic earnings per share (weighted average) 33 0,28 0,28 0,58 0,54 0,28 0,28 0,58 0,54 Diluted earnings per share (weighted average) 33 0,27 0,27 0,57 0,53 0,27 0,27 0,57 0,53 The notes are an integral part of the interim financial information

5 AND SUBSIDIARIES STATEMENT OF COMPREHENSIVE INCOME SIX-MONTH PERIODS ENDED JUNE (In thousands of Brazilian reais - R$, except earnings per share) Parent Company 6/30/ 6/30/2017 6/30/ 6/30/2017 Net income for the period Other comprehensive income Items that will be reclassified to profit (loss) in subsequent periods Items that will not be reclassified to profit (loss) in subsequent periods Total comprehensive income for the period The notes are an integral part of the interim financial information

6 AND SUBSIDIARIES STATEMENT OF CHANGES IN EQUITY SIX-MONTH PERIODS ENDED JUNE (In thousands of Brazilian reais - R$) Share capital Capital reserve Note Share capital Share issue expenses Options granted recognized Revaluation reserve Legal reserve Retained earnings Profit for the period Additional dividends proposed Equity Balances on December 31, (22.784) Realization of revaluation reserve Capital increase Stock option plan Net income for the period (R$0.54 per share) Dividends paid (71.133) (71.133) Balances on June 30, (22.784) Balances on December 31, (22.784) Stock option plan Net income for the period (R$0.58 per share) Dividends paid 26b ( ) - - ( ) Balance on June 30, (22.784) The notes are an integral part of the interim financial information

7 AND SUBSIDIARIES STATEMENT OF CASH FLOWS SIX-MONTH PERIODS ENDED JUNE (In thousands of Brazilian reais - R$) Note Parent Company 6/30/ 6/30/2017 6/30/ 6/30/2017 Net profit Items not affecting cash: Income tax and social contribution Financial income and expenses Depreciation and amortization 29 and Equity in the earnings (losses) of subsidiaries 12 (2.307) (1.636) (522) (731) Stock option plan Constitution (reversal) of provision for tax, labor and civil risks Estimated losses with doubtful accounts and disallowances Profit sharing Other Cash flow from operating activities before variations in assets and liabilities (Increase) in accounts receivable 7 (42.875) (89.039) (40.135) (87.591) (Increase) decrease in inventories 8 (6.239) (6.744) (Increase) in taxes recoverable 9 (8.258) (5.508) (9.419) (5.542) (Increase) in judicial deposits 10 (704) (5.263) (740) (5.260) (Increase) decrease in other assets (2.915) (4.344) Increase in trade payables Increase (decrease) in payroll and related charges (14.008) (14.008) Increase (decrease) in tax liabilities (79) (953) (Decrease) in taxes paid in installments (9.988) (1.441) (10.147) (1.441) (Decrease) in other liabilities (3.725) (626) (3.806) (628) Total variation in assets and liabilities (54.389) (99.424) (52.547) (98.811) Income tax and social contribution paid (47.536) (27.129) (48.831) (27.388) Net cash from operating activities Acquisition of property and equipment and intangible assets 13 and 14 (83.934) ( ) (86.005) ( ) Sale of property and equipment Marketable securities - funding and earnings 5 ( ) (88.293) ( ) (89.536) Marketable securities - redemptions Payment of acquired companies less cash and cash equivalents - (585) (39.829) (585) Payment of dividends - - (17.500) Increase in related parties (1.481) - (1.063) - Paid-up capital (92.500) Income from financial investments (classified as cash) Net cash used in investing activities ( ) ( ) ( ) ( ) Financing/debentures Settlement (principal) of financing and debentures 15 and 16 ( ) (9.882) ( ) (9.882) Interest paid in financing and debentures 15 and 16 (36.978) (51.137) (37.052) (51.137) Financial fees and others 32 (1.947) (1.630) (1.947) (1.630) Derivative financial instruments (269) (449) (269) (449) Capital increase Dividends and/or interest on equity 26 ( ) (71.133) ( ) (71.133) Related parties 25 (56) (56) Net cash used (applied) in financing activities ( ) ( ) (Decrease) increase in cash and cash equivalents ( ) (45.619) ( ) (45.935) Cash and cash equivalents At the beginning of the period At the end of the period Variation in cash and cash equivalents ( ) (45.619) ( ) (45.935) The notes are an integral part of the interim financial information

8 AND SUBSIDIARIES STATEMENT OF VALUE ADDED SIX-MONTH PERIODS ENDED JUNE (In thousands of Brazilian reais - R$) Parent Company 6/30/ 6/30/2017 6/30/ 6/30/2017 Restated Restated Revenue Revenue from services rendered Estimated losses with doubtful accounts and disallowances (22.825) (23.664) (22.842) (23.626) Other revenue Input acquired from third parties ( ) ( ) ( ) ( ) Cost of services ( ) ( ) ( ) ( ) Materials, electricity, outsourced services and others (36.251) (31.465) (36.585) (31.475) Loss/recovery of asset values (802) (396) (802) (396) Gross value added Depreciation and amortization (87.153) (67.032) (88.714) (67.338) Net value added Value added received through transfer Equity in the earnings (losses) of subsidiaries Financial income Total value added to distribute Distribution of value added ( ) ( ) ( ) ( ) Personnel and charges ( ) ( ) ( ) ( ) Direct compensation ( ) ( ) ( ) ( ) Benefits (79.562) (71.030) (80.120) (71.030) Charges (18.379) (15.766) (18.649) (15.765) Taxes, fees and contribution ( ) ( ) ( ) ( ) Federal ( ) ( ) ( ) ( ) Municipal (41.612) (36.869) (42.779) (37.007) State Interest, rental and other operating expenses ( ) ( ) ( ) ( ) Rental (76.973) (65.947) (77.439) (65.947) Interest (44.448) (55.553) (45.370) (55.553) Other operating expenses (6.874) (8.608) (6.997) (8.608) Retained earnings ( ) ( ) ( ) ( ) The notes are an integral part of the interim financial information

9 Earnings 2Q18 Conference call: July 27 th 11AM (10AM EDT) Phone: Brazil: USA: Replay: Code: Fleury Webcast: In June 29 th, : Total shares 315,312,192 Market cap R$ 8,340MM US$ 2,163MM Share price R$ /US$ 6.86 Fleury ON B3: FLRY3 Bloomberg: FLRY3 BZ Thomson Reuters: FLRY3-BR Debentures BRFLRYDBS007 BRFLRYDBS015 BRFLRYDBS023 GrupoFleury Investor Relations ri@grupofleury.com.br

10 Earnings 2Q18 São Paulo, July 26 th, Grupo Fleury announces today its 2 nd quarter (2Q18) results. All figures are compared to the same period last year, unless otherwise stated, and are rounded to the nearest thousand, but may have differences when compared to the financial statements due to decimal digits. Highlights Net Revenue of R$ million (+12.7%). Cancellations represented 1.4% (stable). EBITDA of R$ million (+18.1%), with 26.6% margin (+122 bps). Net Income of R$ 86.6 million (-1.4%), impacted by the cumulative adjustment of the effective tax rate in 2Q17. On a comparable basis, growth in Net Income would have been 14.9%. Operating Cash Generation of R$ million (+31.3%). Return on Invested Capital (ROIC 1 ), excluding goodwill, reached 41.9% (+213 bps). NPS reached 76.5% (+186 bps). Launch of 4 new a+ PSCs 2 : 3 of them in São Paulo and 1 in Pernambuco. In July/18, opening of 3 a+ PSCs in São Paulo. 73% of the area launched in the Expansion Plan is in initial stage of maturation with under 12 months of operation. In July/18, we announced a distribution of Interest on Capital in the amount of R$ 57.6 million related to 6M, corresponding to R$ per share. 1 Excludes the goodwill of the stockholder s equity. 2 Patient Service Center 3 Considers the price of FLRY3 shares as of 12/28/2017 and the net amount of total earnings distributions through interest on shareholder s equity and dividends. Financial Indicators Financial Indicators (R$ MM) 2Q18 2Q17 Variation 6M 6M 2017 Variation Gross Revenue % 1, , % Net Revenue % 1, , % Gross Profit % % EBITDA % % Net Income % % Net Cash Income % % Operating Cash Flow % % Cancellations (% Gross Revenue) -1.4% -1.4% -01 bps -1.4% -1.8% 44 bps Gross Margin % 31.7% 31.3% 42 bps 32.2% 32.8% -68 bps EBITDA Margin % 26.6% 25.3% 122 bps 27.5% 27.4% 11 bps Effective Tax Rate -27.6% -16.4% -1,117 bps -27.1% -25.8% -126 bps Net Income Margin % 12.9% 14.7% -184 bps 13.8% 14.3% -49 bps Net Cash Income / Net Revenue 12.7% 15.4% -271 bps 14.3% 16.7% -236 bps Operating Cash Flow / Net Revenue 118.5% 106.6% 1,192 bps 86.6% 76.2% 1,040 bps ROE (LTM) 20.0% 18.2% 186 bps 20.0% 18.2% 186 bps ROIC (LTM) 15.3% 13.9% 140 bps 15.3% 13.9% 140 bps ROIC without goodwill (LTM) 41.9% 39.8% 213 bps 41.9% 39.8% 213 bps Net Cash Income : excludes the impact of deferred income tax 1

11 Management Comments Following the execution of our Expansion Plan, we added 3 a + brand PSCs in São Paulo and 1 in Pernambuco in the second quarter. In April, we inaugurated the first a + brand PSC in Guarulhos, with a full range of imaging exams and clinical analyzes. In May, we inaugurated the Casa Forte small PSC in Pernambuco. In the city of São Paulo, we inaugurated 2 fast-site PSCs, Ipiranga in June and Funchal in May, expanding the offer of clinical and imaging analyzes. In July, we inaugurated an additional 3 a+ fast-site PSCs in São Paulo (Vila Andrade, Brazil and Alphaville Rio Negro). Counting these, we totaled 8 new units in and 41 new PSCs in total since the beginning of the Expansion Plan. The execution of the Expansion Plan will be intensified in the second half, mainly in the a + brand in São Paulo and also in Rio de Janeiro with the brands Felippe Mattoso and Labs a+. Our Customer Satisfaction, measured by the Net Promoter Score (NPS), reached 76.5% in the quarter, an increase of 186 bps compared to 2Q17, highlighting operations in Paraná, Pernambuco and Rio de Janeiro, with both Felippe Mattoso and Labs a+. At the same time, we have intensified our digital transformation journey, with the aim of streamlining and simplifying customer service. After the launch of the pilot phase of the digital reception at the a+ Queiroz Filho PSC, the digital service project is now available at the a+ Morumbi PSC. In the coming months, the initiative will be implemented in the other a+ PSC s in São Paulo, Fleury and, later, to other brands of the Group. Our initiatives in digital transformation and innovation were acknowledged with the achievement of the 2nd place in the ranking of the Value Innovation Brazil Award in the Medical Services category. The publication acknowledged the large investments that companies have made in artificial intelligence, with the Fleury Group as a prime example. Excellence in customer service also secured the Top of Mind Rio Grande do Sul 2017 Award, which listed the Weinmann brand as the most remembered in the category of Clinical Analyzes Laboratory. The Fleury Group led the category of Diagnostic Medicine in the Modern Consumer Award for the 17th year. The 2Q18 result registered growth of 12.6% in Gross Revenue and 12.7% in Net Revenue. EBITDA increased by 18.1% and registered R $ million, with a margin of 26.6%. Net Income totaled R$ 86.6 million. The quarter was marked mainly by the truckers' strike in May, in addition to the World Cup in June. During the strike, all our PSC s maintained their normal operation despite supply difficulties, as a result of a combined effort of planning and engagement to deliver quality healthcare to our patients, physicians and hospital partners. During this period, we noticed a lower demand attributed to people's difficulty in mobility due to fuel shortage, as well as a reduction in medical requests for tests, which prolonged the impact in the weeks following the end of the strike. At the end of the quarter, we noticed a similar effect during the World Cup, attributed to the postponement of medical consultations and demand for tests. In May/18, we expanded our hospital portfolio with the start of clinical analyzes operations in the traditional Vera Cruz Hospital, a reference in Campinas city, in the state of São Paulo, with about 800 thousand tests per year. In June/18, we initiated a partnership with the Sabin Group for international technical-scientific cooperation, in which we jointly invested in Qure, a venture capital for startups in healthcare of the Israeli investment fund Ourcrowd, for the development of artificial intelligence, remote diagnostics, data security, among others. It is also important to highlight the launch, through the Genomic platform, of Oncofoco, the first genomic diagnostic test developed with the use of artificial intelligence in Brazil in partnership with IBM Watson Health. Based on Next Generation Sequencing, the test is able to evaluate the mutation of genes related to different types of tumors. The exam is directed to oncology patients with complex situations with the objective to indicate a therapeutic alternative. In the quarter, we also obtained the renewal and update, in accordance with the new standards, of ISO 9001 and ISO certifications, including for the first time the certification for Felippe Mattoso brand and Central Lab in Rio de Janeiro. In early July, we published our Annual Sustainability Report, according to the international guidelines established by the Integrated Report and the Global Reporting Initiative (GRI). Click here to access it. Finally, we announced, on this date, the distribution payment in the amount of R$ 57.6 million related to Interest on Capital (IOC) referring to the earnings of the first half of, corresponding to R$ per share. The payment to shareholders will occur on August 15th, according to the shareholders position (record date) of July 31st. In the second semester, we will continue working on relevant projects, focused on maintaining the sustainable growth of our operations, based on our positioning: technical, medical, customer service and management excellence. 2

12 Financial Performance Gross Revenue In the quarter, the Company reached Gross Revenue of R$ million, corresponding to an increase of 12.6%. Highlight to the growth of regional brands excluding RJ (+36.2%) and Rio de Janeiro brands (+16.4%). Disregarding PSC s resulting from the Serdil and IRN acquisitions consolidated in 1Q18 and 2Q18, respectively, Gross Revenue in the quarter registered organic growth of 9.8%. Highlight to the growth of regional brands excluding Rio de Janeiro (+20.0%) and Rio de Janeiro brands (+16.4%). In 6M, Gross Revenue increased by 11.3%. Highlight to the growth of regional brands excluding Rio de Janeiro (+29.0%) and Rio de Janeiro brands (+16.4%). Similarly, without considering PSC s resulting from the Serdil and IRN acquisitions consolidated in 1Q18 and 2Q18, respectively, Gross Revenue in 6M registered organic growth of 9.5%. Highlight to the growth of regional brands excluding Rio de Janeiro (+18.8%) and Rio de Janeiro brands (+12.5%). Gross Revenue (R$ MM) +12.6% Gross Revenue (R$ MM) +11.3% 1, , Q17 2Q18 6M M Grupo Fleury Business Line Performance 2Q18 vs. 2Q17 9.8% 2.9% 12.6% Grupo Fleury Business line performance 6M vs. 6M % 1.8% 11.3% 1.1 PSCs 9.9% 3.4% 13.3% 1.1 PSCs 9.5% 2.1% 11.7% Fleury brand 4.1% Fleury brand 5.3% Regional brands excl. RJ 20.0% 16.2% 36.2% Regional brands excl. RJ 18.8% 10.2% 29.0% Regional brands RJ 16.4% Regional brands RJ 12.5% 1.2 Operations in Hospitals 9.9% 1.2 Operations in Hospitals 9.9% Effect of Serdil and IRN acquisitions Effect of Serdil and IRN acquisitions Business Portfolio Business Portfolio 16.3% 16.4% 17.7% 15.8% 17.0% 21.4% 16.1% 16.4% 17.7% 15.8% 16.6% 20.5% 49.6% 45.9% 49.9% 47.2% 2Q17 2Q18 6M M B2B Regional brands RJ Regional brands excl. RJ Fleury brand B2B Regional brands RJ Regional brands excl. RJ Fleury brand 3

13 Gross Revenue and Asset Efficiency from Patient Service Center (PSC s) Gross Revenue from PSC s reached R$ million in 2Q18, a 13.3% increase. Disregarding PSC s resulting from the Serdil and IRN acquisitions consolidated in 1Q18 and 2Q18, respectively, Gross Revenue from PSC s in the quarter registered an organic growth of 9.9%. In 6M, the Gross Revenue from PSC s totaled R$ 1.2 billion, an 11.7% increase. Similarly, without considering PSC s resulting from the Serdil and IRN acquisitions consolidated in 1Q18 and 2Q18, respectively, Gross Revenue from PSC s in 6M registered organic growth of 9.5%. The asset efficiency indicators reflect the Expansion Plan that added a significant Patient Service Area to our portfolio of brands. At the same time, the new PSCs are advancing in the maturity curves according to plan, to reach their revenue potential and profitability. In 2Q18, asset efficiency measured by Gross Revenue per square meter presented a 1.2% reduction compared to the same period of 2017, while Gross Revenue efficiency per PSC decreased by 4.0%, reaching R$ 3.5 million per PSC in the quarter. Gross Revenue per m² Gross Revenue per PSC (R$ MM) % % Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 PSCs Quarterly Average Gross Revenue per m² (R$ thousand) Thousands m² PSCs 2Q17 2Q18 Since the announcement of our Expansion Plan in the 4 th quarter of 2016 up until June/18, we inaugurated 38 PSCs, corresponding to a gross increase of 12.7 thousand square meters of patient service area. Of this total, 73% were launched less than 12 months ago, which means that they are in the early stages of the maturity curve. In addition to the PSCs launched in the Expansion Plan, we added 5 new units resulting from acquisitions, 1 from Serdil brand (Porto Alegre) and 4 from IRN brand (Natal), representing 4,8 thousand square meters of patient service area. Patient Service area - Expansion plan (m² thousand) 3.7 (29%) 3.4 (27%) 0.6 (5%) 1.6 (12%) 12.7 (100%) 3.5 (27%) 73% launched in the last 12 months >12 months 9 to 12 months 6 to 9 months 3 to 6 months <3 months Total 4

14 Gross Revenue per Exam Gross Revenue per exam increased by 2.1% in the quarter. This growth reflects the mix of exams, brands and segments carried out in the period, as well as the new price list resulting from the annual readjustment. In 6M, growth was 1.8%. PSC s: Gross Revenue per exam grew 1.0% in the quarter and 0.7% in 6M. This growth is due to the mix of exams and brands, as well as the annual price readjustment that reflects the lower level of inflation, significantly below compared to the previous year; Hospital Operations: Gross Revenue per exam registered growth of 2.0% in the quarter and 2.5% in 6M. The increase is a result of the maturation process of the mix of exams in new hospital operations, which has been observed in the previous quarters; Lab to Lab: decreased by -1.2% in the quarter and -2.4 in 6M. Gross Revenue per exam 2Q18 2Q17 Variation 6M 6M 2017 Variation Grupo Fleury % % - Patient Service Centers % % - Hospital Operations % % - Lab to Lab % % Gross Revenue from PSCs In 2Q18, Gross Revenue from PSCs grew 13.3%. Disregarding PSCs from acquisitions, growth was 9.9%, with Same Store Sales (SSS) increasing by 3.8%. In the quarter, we recorded the effects of the truckers strike, in addition to the World Cup, which impacted demand across in all segments, especially the brands with predominant clinical analyzes such as the Fleury brand. In addition to the impact of lower demand for tests on strike days at the end of May, we verified a prolonged impact in June, due to the reduction in the number of tests requests resulting from fewer medical consultations during the strike period. The brands with predominance of imaging tests that require scheduling presented less impact, such as the Rio de Janeiro region. In 6M, Gross Revenue from PSCs grew 11.7% and 9.5%, excluding PSCs from acquisitions. Fleury Brand Fleury brand s gross revenue increased 4.1% in the quarter and 5.3% in 6M, with most of the growth derived from volume, mix of exams and demand captured with the launch of 8 PSCs in the 12- month period ended June/18, 4 fast sites, 2 large units and 2 medium units. However, the Fleury brand was the most impacted by the effects of the truck drivers' strike, both on strike days due to fuel shortages, as well as the subsequent period, due to fewer medical requests, in addition to the World Cup. The Fleury brand has a higher proportion of clinical analysis tests which were the most impacted tests in this period, since they don t require prior scheduling in contrast to the imaging tests, which due to the need for pre-scheduling were less impacted. The Fleury brand SSS is impacted by the new PSCs. This effect is related to the distribution of clients, old and new, between existing PSCs and the new PSCs in the same geographic area of influence ("Clusters"). In addition, in this quarter we made several substitutions of equipment for others stateof-the-art, especially in the Paraíso PSC in São Paulo, the largest PSC of the brand. Our goal is to maintain and develop the Fleury brand as a reference in the premium segment. These investments, together with the effect of the strike and the World Cup, affected the growth indicators of the brand. The new PSCs are still maturing according to plan, advancing in their revenue potential and better serving regions/neighborhoods where we had limited service offerings. This way, we continue to grow 5

15 significantly, despite the decrease in beneficiaries in the Brazilian private health system according to ANS. It is worth noting that in addition to the impacts of strike and World Cup, we registered a lower level of price readjustment due to significant lower inflation rates. Regional Brands excluding Rio de Janeiro Gross Revenue of Regional Brands excluding Rio de Janeiro registered growth of 36.2% (+20.0% organic), with the highlight on the Gross Revenue increase in a+ SP brand (+30.0%), in which all growth is organic; Rio Grande do Sul region (+19.0%), due to Serdil acquisition, consolidated in 1Q18, and Northeast region (+72.3%), due to IRN acquisition, consolidated in 2Q18. In 6M, the growth was 29.0% and 18.8%, disregarding the PSCs resulting from acquisitions. The strong growth of these regional brands, despite the effects of the strike and World Cup, is explained, mostly, by: (i) increase in volume of services, (ii) expansion of supply with the inauguration of new PSCs and expansion in homecare routes, (iii) medical relationship, and (iv) increasing recognition of our brands by physicians and clients. In the last twelve months ended June/18, the revenue increase was also a result of the 12 PSCs launched, composed of 6 fast sites, 5 medium and 1 large PSC. Rio de Janeiro Brands Gross Revenue of Rio de Janeiro Brands increased 16.4% in the quarter and 12.5% in 6M. In this quarter, it is possible to observe an acceleration trend in growth, compared to previous quarters. This is due to several factors, among which are: (i) increase in clinical analysis, (ii) expansion and optimization of the offer with an expanded agenda in imaging tests, (iii) accreditation of new healthcare insurance companies started since the 4Q17 (iv) expansion of homecare routes, (v) medical relationship, and (vi) increase of service to the beneficiaries of the Company's main health insurance partners. In the last twelve months ended June/18, the revenue increase was also a result of 7 new PSCs launched in 4Q17, composed of 6 fast sites in Labs a+ and 1 in Felippe Mattoso. Indicators Gross Revenue Indicators 2Q18 vs. 2Q17 Fleury Brand Regional Brands excl. RJ Brands RJ Total (PSCs) - Gross Revenue 4.1% 36.2% 16.4% 13.3% - SSS -2.0% 10.0% 14.6% 3.8% - Gross Revenue / m 2* -3.5% 1.7% 11.4% -1.2% - Gross Revenue / PSC* -7.8% 19.4% 1.6% -4.0% * Operational Efficiency Indicators reflect the impact of the Expansion Plan on Fleury and Regional brands in which the new PSCs are still advancing on the maturity curve. Gross Revenue from B2B Hospital Operations Gross revenue totaled R$ million in the quarter, an increase of 9.9%. In Same Hospital Sales, there was an increase of 4.4% in the same period. In 6M, Gross Revenue registered growth of 9.9%. In May/18, we initiated operations for clinical analyses operation in Vera Cruz Hospital in Campinas City, in São Paulo, which performs about 800 thousand tests per year. Lab-to-lab Gross revenue reached R$ 8.2 million, an increase of 7.2%. This increase is mainly due to the growth in new customers. Preventive Medicine Gross revenue reached R$ 1.5 million in the quarter and R$ 2.6 million in 6M. 6

16 Revenue Tax and Cancellations/Deductions Revenue taxes represented 6.3% in the quarter, stable when compared to same period last year. In the quarter, cancellations and deductions accounted for 1.4% of Gross Revenue, R$ million, stable compared to 2Q17. In 6M, cancellations and deductions accounted for 1.4% of Gross revenue, R$ million, representing a 44 bps decrease compared to the same period in This result reflects the ongoing improvement in systems and processes of the accounts receivable cycle and renegotiations with healthcare payers. Disregarding these one-time effects, the indicator of cancellations and deductions would have been 1.6% in 2Q18 and 1.8% in 2Q17. Since 1Q18, the accounting standard CPC 48 was enforced, which, among other requirements, impacted the Company with a new classification for estimated losses resulting from bad debt. Until 2017, the classification of these losses was carried out as a reduction of gross revenue and will now be accounted for in Other Operating Expenses (Notes letter "e" and 31). On a managerial basis, we continue to report the percentage of cancellations and deductions including the estimated losses with bad debt. Deduction + Cancellation/Gross Revenue and Deduction and Cancellation (R$ MM) + 1 bps 1.4% (-9.0) 1.4% (-10.3) Deduction + Cancellation/Gross Revenue and Deduction and Cancellation (R$ MM) 1.8% (-23.7) -44 bps 1.4% (-20.2) 2Q17 2Q18 6M M Net Revenue Net Revenue totaled R$ million, an increase of 12.7%. In 6M, Net Revenue increased 11.9%. Net Revenue (R$ MM) +12.7% Net Revenue (R$ MM) +11.9% 1, , Q17 2Q18 6M M 7

17 Cost of Services The Cost of Services in 2Q18 amounted to R$ million, an increase of 12.0%. The Cost of Services accounted for 68.3% of Net Revenue, a 42 bps reduction over the same period in In 6M, there was an increase of 13.1%, a 68 bps dilution over Net Revenue. Cost of Services breakdown R$ MM 2Q18 2Q17 Variation % Net Revenue R$ MM % Net Revenue % bps Personnel and medical services % % 9.5% -100 bps General services, rentals and utilities % % 14.3% 27 bps Materials and Exam Intermediation % % 6.9% -52 bps Depreciation and Amortization % % 39.8% 93 bps General Expenses % % -14.1% -10 bps Cost of Services % % 12.0% -42 bps Cost of Services breakdown R$ MM 6M 6M 2017 Variation % Net Revenue R$ MM % Net Revenue % bps Personnel and medical services % % 12.4% 14 bps General services, rentals and utilities % % 13.7% 31 bps Materials and Exam Intermediation % % 5.4% -58 bps Depreciation and Amortization % % 38.2% 92 bps General Expenses % % -18.2% -10 bps Cost of Services % % 13.1% 68 bps Below, the analysis of the main Cost of Services in 2Q18 compared to 2Q17: Personnel and Medical Services (+9.5%) are the Company s main costs and accounted for 34.1% of Net Revenue, a 100 bps decrease. The efficiency gain of this line is related to: (i) reduction of costs with our employees' healthcare plans, with more efficient management and use of this resource, and (ii) salaries, which presented growth of only 6.3% in headcount, as well as annual readjustment of about 1.7% as a result of collective labor agreements as of May/18. General Services, Rentals and Utilities (+14.3%) represented 19.5% of Net Revenue, an increase of 27 bps, impacted by the account of equipment rental in the Central Laboratory, due to the new a procurement model for reagents negotiated with one of our suppliers. Materials and Exam Intermediation (+6.9%) represented 9.6% of Net Revenue, a decrease of 52 bps. The reduction in relation to the Net Revenue is due to the new procurement model for reagents negotiated with one of our suppliers of the Central Laboratory. The new model with this supplier reduces the cost of reagents, having as a counterpart the increase in the rental of equipment allocated in the line of "General Services, Rentals and Utilities". This initiative will result in a positive impact on the EBITDA margin. Depreciation and Amortization (+39.8%) accounted for 4.8% of Net Revenue, a 93 bps increase compared to the previous period. The growth is the result of the Company's Expansion Plan with an increase in property and equipment related to improvements and new imaging equipment. General Expenses (-14.1%) represented 0.3% of Net Revenue, a decrease of 10 bps. The reduction can be explained by lower expenses with labor and civil lawsuits. Gross Profit Gross Profit amounted to R$ million, representing an increase of 14.2%. The Gross Margin reached 31.7%, an increase of 42 bps. In 6M, Gross Profit increased 9.6%. The gross margin reached 32.2%, a reduction of 68 bps. 8

18 Operating Expenses and Equity in Subsidiaries Operating expenses amounted to R$ 78.8 million in the quarter, representing an increase of 14.3%. In relation to Net Revenue, this line represented 11.7%, a 16 bps growth compared to the same period in In 6M, Operating Expenses increased by 14.3%, up 23 bps in relation to Net Revenue. Operating Expenses breakdown and Equity in Subsidiaries R$ MM 2Q18 2Q17 Variation % Net Revenue R$ MM % Net Revenue % bps G&A % % 10.5% -18 bps Depreciation and Amortization % % 13.5% 1 bps Other Operating (Income) Expenses % % 151.7% 26 bps Provision (Reversal) for Contingency % % 57.0% 5 bps Equity in Subsidiaries (0.2) 0.0% (0.3) -0.1% -33.2% 2 bps Operating Expenses and Subsidiaries' Share of Profits % % 14.3% 16 bps Operating Expenses breakdown and Equity in Subsidiaries R$ MM 6M 6M 2017 Variação % Net Revenue R$ MM % Net Revenue % bps G&A % % 13.8% 15 bps Depreciation and Amortization % % 17.5% 9 bps Other Operating (Income) Expenses % % -20.8% -14 bps Provision (Reversal) for Contingency % % 355.9% 12 bps Equity in Subsidiaries (0.5) 0.0% (0.7) -0.1% -28.6% 2 bps Operating Expenses and Subsidiaries' Share of Profits % % 14.3% 23 bps Below, the analysis of the main lines of operating expenses in 2Q18 compared to 2Q17: General and Administrative Expenses (+10.5%) represented 9.3% of Net Revenue, an 18 bps dilution. Lower expenses related to marketing and technical services contributed to this improvement. Depreciation and Amortization (+13.5%) represented 1.8% of Net Revenue, a decrease of 1 bp. The increase is due to the growth in the amortization of software. Other operational Income / Expenses (+151.7%) represented 0.5% of Net Revenue, an increase of 26 bps. The growth is related to the increase in miscellaneous provisions. Provision for contingencies (+57.0%) represented 0.2% of Net Revenue, an increase of 5 bps, impact of provisions for civil risks recorded in the quarter compared to reversals in the previous period. Equity in Subsidiaries Grupo Papaiz, a dental diagnostic company in São Paulo, was acquired by Grupo Fleury and Odontoprev in the end of The figures have been reported by the equity equivalence method considering the form of a Joint Venture in which Grupo Fleury holds a 51% stake of the business. Below is the performance in 2Q18 and 6M : Equity in Subsidiaries Papaiz R$ thousand % Net Revenue R$ thousand % Net Revenue Net Revenue 5, , % % bps EBITDA 1, % 1, % 0.4% -340 bps Net Income % % -33.2% -522 bps 2Q18 2Q17 Variation Net Income attributed to Grupo Fleury (51%) % 9

19 Equity in Subsidiaries Papaiz R$ thousand 6M % Net Revenue R$ thousand 6M 2017 % Net Revenue Net Revenue 11, , % Variation % bps EBITDA 2, % 2, % -0.5% -353 bps Net Income 1, % 1, % -28.6% -559 bps Net Income attributed to Grupo Fleury (51%) % EBITDA EBITDA reached R$ million in the quarter, an 18.1% increase. EBITDA margin reached 26.6%, up 122 bps, demonstrating the strength of our portfolio of brands as well as our continuous effort to gain operational efficiency. This result was achieved despite the launch of 38 PSCs of the Expansion Plan until June/, which are largely in the initial phase of maturation, in addition to the aforementioned one-time effects of trucker s strike and World Cup. In 6M, EBITDA increased 12.4%, resulting in a margin of 27.5%, an expansion of 11 bps. EBITDA (R$ MM) and margin (%) +18.1% EBITDA (R$ MM) and margin (%) +12.4% % 26.6% 27.4% 27.5% 2Q17 2Q18 6M M EBITDA R$ MM 2Q18 2Q17 Variation % Net Revenue R$ MM % Net Revenue % bps Net Income % % -1.4% -184 bps Financial Result % % 16.9% 8 bps Depreciation and Amortization % % 31.4% 94 bps Income Tax and Social Contribution % % 91.1% 201 bps Equity in Subsidiaries (0.2) 0.0% (0.3) -0.1% -33.2% 2 bps EBITDA % % 18.1% 122 bps EBITDA R$ MM 6M 6M 2017 Variation % Net Revenue R$ MM % Net Revenue % bps Net Income % % 8.1% -49 bps Financial Result % % -13.7% -57 bps Depreciation and Amortization % % 31.7% 101 bps Income Tax and Social Contribution % % 15.3% 15 bps Equity in Subsidiaries (0.5) 0.0% (0.7) -0.1% -28.6% 2 bps EBITDA % % 12.4% 11 bps 10

20 EBIT (Operational Income) EBIT amounted to R$ million in the quarter, an increase of 14.3%. The margin was 19.9%, an increase of 28 bps. In 6M, EBIT expanded 7.3% reaching a 20.8% margin, representing a 89 bps reduction. EBIT (R$ MM) and margin (%) +14.3% EBIT (R$ MM) and margin (%) +7.3% % 19.9% 21.7% 20.8% 2Q17 2Q18 6M M Financial Result The financial result reached R$ million, an increase of 16.9%. Financial expenses increased by 0.7%, while financial revenues decreased by 16.4%. This expansion is due to the 22.9% increase in the Company's net indebtedness, as well as the lower interest rates of the economy, with an impact on the interest income of financial investments. In 6M, the financial result decreased by 13.7%. Financial Result (R$ MM) 2Q18 2Q17 Variation 6M 6M 2017 Variation Net financial income (14.8) (12.7) 16.9% (25.6) (29.6) -13.7% Financial income % % Earnings on financial investments % % Interest and inflation adjustment % % Financial expenses (24.9) (24.7) 0.7% (45.8) (55.9) -18.2% Interest on debentures and financing (19.9) (21.0) -5.3% (35.9) (45.4) -20.8% Interest and inflation adjustment (5.0) (3.7) 35.1% (9.8) (10.5) -6.8% Indebtedness In the quarter, the ratio net debt over EBITDA LTM reached 0.8x, a slight increase when compared to the same period in Composition of Net Debt (R$ MM) 2Q17 1Q18 2Q18 Next 12 months Gross Debt (Debentures and Borrowings and Acquisitions ) , Cash, Cash Equivalents and Marketable Securities (433.8) (470.5) (883.6) Net Debt Net Debt / EBITDA LTM 0.7x 0.7x 0.8x EBITDA LTM / Financial Result LTM 12.6x 14.7x 14.6x In the quarter, we raised R$ 500 million through the 4 th issuance of debentures (click here to access the Material Fact) and re-paid R$ 7.2 million related to other financing. In addition, we paid R$ 15.2 million in interest, including debentures and financing. 11

21 In 6M, we raised R$ 500 million through the 4 th issuance of debentures, re-paid R$ million related to the 2 nd issuance of debentures and R$ 16.7 million related to other financing. The total of interest paid in the period amounted to R$ 37.1 million related to debentures and financing. Income Tax and Social Contribution In the quarter, the income tax and social contribution totaled R$ 33.1 million. The effective tax rate reached 27.6% compared to 16.4% in 2Q17, which at the time accounted for the effect of retroactive linearization of Interest on Capital (IOC) of two consecutive quarters (1Q17 and 2Q17). In 6M, the income tax and social contribution totaled R$ 68.0 million. The effective tax rate reached 27.1% compared to 25.8% in the same period of Income Tax and Social Contribution (R$ MM) 2Q18 2Q17 Variation 6M 6M 2017 Variation Earnings Before Tax (EBIT) % % Expected taxes (40.7) (35.8) 13.8% (85.3) (77.6) 9.9% Non-deductible expenses and incentives % % Effective taxes linearization % % Subsidiaries share of profits % % Income tax and social contribution (33.1) (17.3) 91.1% (68.0) (59.0) 15.3% % EBIT 27.6% 16.4% 1,117 bps 27.1% 25.8% 126 bps Current (34.0) (12.9) 163.3% (61.0) (30.6) 99.4% Deferred 0.9 (4.4) % (7.0) (28.4) -75.4% Below is the expectation for the goodwill amortization for tax purposes, which reduces the cash tax. Expected Amortization of Goodwill Period Balance R$ MM Net Income Net income reached R$ 86.6 million, a decrease of 1.4%. The net margin reached 12.9%, a decrease of 184 bps. It should be noted that the reduction in Net Income was impacted by the cumulative adjustment of the effective tax rate in 2Q17. On a comparable basis, the growth in net income would have been 14.9%. In 6M, Net Income reached R$ 183,1 million, an 8.1% growth. Net margin reached 13.8%, representing a decrease of 49 bps. Net Profit (R$ MM) and margin (%) -1.4% (14.7%) (12.9%) % Net Profit (R$ MM) and margin (%) +8.1% (11.7%) 80.1 (11.9%) 14.3% 13.8% 2Q17 2Q18 Interest on Capital Effective Rate Benefit 6M M

22 Cash Flow In the quarter, operating cash flow registered R$ 211,9 million, representing an increase of 31.3%. The conversion rate (operating cash flow/ebitda) reached 118.5% versus 106.6% in 2Q17. This improvement reflects the increase in the percentage of accounts receivable conversion, with an average receivables collection period reaching 67 days, stable in comparison with 2Q17, and the lengthening of the average payment term that reached 52 days, 4 days more than 2Q17, impacting suppliers account. Investment activities recorded R$ million, compared to R$ million in 2Q17. In the quarter, we recorded an increase in investments in securities due to the proceeds of the 4 th issuance of debentures in the amount of R$ 500 million. Financing activities reached R$ million compared to R$ million in 2Q16 due to the 4 th issuance of debentures in the amount of R$ 500 million. In 6M, Operating Cash Flow totaled R$ million, an increase of 27.7%. The conversion rate (operating cash flow/ebitda) reached 86.6%. Investment activities amounted to R$ million, compared to R$ million in the same period of 2017.Financing activities totaled R$ 31.5 million versus R$ million in 6M Cash Flow (R$ MM) 2Q18 2Q17 Variation 6M 6M 2017 Variation Net Income % % Items not affecting cash: Financial revenues and expenses % % Depreciation and amortization % % Income tax and social contribution % % Provisions (Reversals) % % Others 0.9 (0.2) 529.9% % Net Income before non-cash effects % %? Working capital: Accounts receivables % (40.1) (87.6) 54.2% Suppliers % % Salaries / Charges % 4.8 (14.0) 134.4% Others Assets and Liabilities (17.0) (11.9) -43.4% (31.4) % Other Operating Cash Flow: Income tax and social contribution (31.0) (15.3) % (48.8) (27.4) -78.3% Cash Flow from Operating Activities % % Investment Activities: Acquisition of fixed and intangible assets (53.5) (54.7) 2.2% (86.0) (110.9) 22.5% Interest income and dividends received % % Marketable Securities (382.3) (86.3) % (327.1) (72.9) % Acquisitions Payments (17.5) (0.6) % (57.3) (0.6) % Others Investment Activities (1.3) % (0.3) % Cash Flow from Investing Activities (451.3) (136.5) % (462.4) (167.4) % Financing Activities Borrowings and Debentures Issue (2.8) % % Others Financing Activities (25.6) (20.2) -26.7% (264.2) (63.1) % Dividends and/or interest on capital (204.2) % (204.2) (71.1) % Capital increase % % Cash Flow from Financing Activities (14.6) % 31.5 (125.8) 125.0% Cash Flow (469.2) % (615.1) (45.9) % Cash Flow Adjusted by Marketable Securities (86.9) % (288.0) % Conversion (Operating Cash Flow / EBITDA) 118.5% 106.6% 1,192 bps 86.6% 76.2% 1,040 bps 13

23 Account Receivables Comparing the quarters, there is a continuous improvement in the aging profile of current receivables which accounted for 87.1% of the total receivables compared to 86.4% in 2Q17. The amount due over 121 days decreased from 6.7% in 2Q17 to 5.0% in 2Q18 and Accounts Receivable (CR) provisions due over 121 days accounted for 71.2% of this amount (84.2% in 2Q17). Aging Account Receivable R$ MM 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Trade Receivables Current Up to 120 days past due to 360 days past due Over 361 days past due Sales Deductions Provisions (49.5) (40.9) (41.6) (40.6) (28.0) (23.0) (19.2) (21.4) (19.5) Total Current / Trade Receivables 76.1% 78.6% 78.6% 84.4% 86.4% 85.9% 87.4% 88.9% 87.1% Up to 120 days past due/ Trade Receivables 8.0% 8.1% 8.2% 6.1% 6.9% 8.3% 6.8% 6.0% 8.0% Over 121 days past due / Trade Receivables 15.9% 13.3% 13.1% 9.5% 6.7% 5.8% 5.8% 5.2% 5.0% Provisions / Over 121 days past due 66.4% 66.1% 71.4% 81.7% 84.2% 77.9% 62.0% 71.3% 71.2% 14

24 Expansion Plan In 2Q18, Fleury Group launched 3 PSC s of a+ brand in São Paulo and 1 PSC of a+ brand in Pernambuco. In July, another 3 PSC s in a+ brand in São Paulo were launched. Therefore, from October 2016 to July, 41 PSC s were launched. These correspond to 56% of the minimum and 46% of the maximum bounds of the Company's Expansion Plan, which forecasts the launch of 73 to 90 PSCs by Fleury Brand Complexity Patient Service Area (m²) State Date 1 Fleury Santo André Medium 587 São Paulo feb/18 2 Fleury Carlos Weber Medium 681 São Paulo oct/17 3 Fleury Alameda Jaú Fast site 380 São Paulo set/17 4 Fleury Morumbi Large São Paulo jul/17 5 Fleury Anália Franco Large São Paulo jun/17 6 Fleury Heitor Penteado Fast site 183 São Paulo jun/17 7 Fleury São Caetano do Sul Fast site 411 São Paulo may/17 8 Fleury Cerro Corá Fast site 233 São Paulo apr/17 9 Fleury Ipiranga Fast site 206 São Paulo mar/17 10 Fleury Brasil Fast site 235 São Paulo jan/17 11 Fleury Moema Fast site 126 São Paulo dec/16 Regional South Complexity Patient Service Area (m²) State Date 1 a+ João Bettega Small 128 Paraná dec/17 2 a+ Água Verde Small 171 Paraná may/17 3 Weinmann General Vitorino Small 113 Rio Grande do Sul may/17 4 a+ Ecoville Small 47 Paraná feb/17 5 a+ Champagnat Small 81 Paraná feb/17 6 a+ Centro Small 29 Paraná feb/17 7 a+ Batel Small 134 Paraná dec/16 8 a+ Nossa Saúde Small 79 Paraná oct/16 a+ São Paulo Complexity Patient Service Area (m²) State Date 1 a+ Vila Andrade Fast site 235 São Paulo jul/18 2 a+ Brasil Fast site 348 São Paulo jul/18 3 a+ Alphaville Rio Negro Fast site 230 São Paulo jul/18 4 a+ Ipiranga Medium 359 São Paulo jun/18 5 a+ Funchal Fast site 240 São Paulo may/18 6 a+ Guarulhos Large 832 São Paulo apr/18 7 a+ Pedroso de Morais Medium 421 São Paulo dec/17 8 a+ Leôncio Magalhães Medium 544 São Paulo nov/17 9 a+ Queiroz Filho Medium 673 São Paulo oct/17 10 a+ Santo André Medium 437 São Paulo jul/17 12 a+ Augusto Tolle Fast site 392 São Paulo jul/17 13 a+ Itaim Bibi Fast site 207 São Paulo may/17 Regional RJ Complexity Patient Service Area (m²) State Date 1 Felippe Mattoso Ipanema Fast site 239 Rio de Janeiro dec/17 2 Labs a+ Catete Fast site 145 Rio de Janeiro dec/17 3 Labs a+ Shopping Santa Cruz Fast site 131 Rio de Janeiro dec/17 4 Labs a+ Mariz e Barros Fast site 134 Rio de Janeiro dec/17 5 Labs a+ Uruguai Fast site 129 Rio de Janeiro nov/17 6 Labs a+ Santa Rosa Fast site 148 Rio de Janeiro oct/17 7 Labs a+ Campo Grande Fast site 281 Rio de Janeiro set/17 Regional Brasília Complexity Patient Service Area (m²) State Date 1 a+ Asa Sul Fast site 58 Brasília aug/17 2 a+ Sudoeste Fast site 119 Brasília aug/17 Regional Pernambuco Complexity Patient Service Area (m²) State Date 1 a+ Casa Forte Small 151 Pernambuco may/18 Total 41 PSCs sqm In addition, we listed below the 5 PSC s resulting from acquisitions, of which 4 are from the Institute of Radiology of Natal (IRN) and 1 from Serdil. PSC Complexity Patient Service Area (m²) State Date 1 IRN - Instituto de Radiologia Matriz NA Pernambuco NA 2 IRN - Instituto de Radiologia Parnamirim NA 477 Pernambuco NA 3 IRN - Instituto de Radiologia Zona Sul NA Pernambuco NA 4 IRN - Harmony Center NA 98 Pernambuco NA 5 Serdil NA Rio Grande do Sul NA Total 5 PSCs by acquisition sqm 15

25 Investments Capex (additions to fixed and intangible assets) totaled R$ 51.1 million in the quarter, of which 51.9% were concentrated in the Expansion Plan and improvements in PSC s. Compared to 2Q17, there was a reduction of 24.7%. In 6M, investments reached R $ 83.7 million, with 51.9% dedicated to the Expansion Plan and improvements to PSC s. The Company will continue to invest in the Expansion Plan and the improvement of PSCs, with these investments more concentrated in the coming quarters. The Others group is composed of strategic projects, infrastructure, IT and equipment renewal. CAPEX (R$ MM) -24.7% % 51.9% CAPEX (R$ MM) -32.6% % 51.9% 33.5% 48.1% 34.3% 48.1% 2Q17 2Q18 Expansion and improvement in PSCs and Central Labs Others 6M M Expansion and improvement in PSCs and Central Labs Others Stock Market Performance Fleury shares (B3: FLRY3) at the end of 2Q18 were quoted at R$ The Average Daily Trading Volume (ADTV) in the period was R$ 50.4 million, 76% higher than the volume registered in the same period in Average Daily Trading Volume (ADTV) R$MM IN ADTV 0.697% 0.541% 0.610% 0.555% 0.375% 0.374% 0.246% 0.086% 0.057% T T T T T T18 * NI: Negotiability Index Investor Relations Phone: ri@grupofleury.com.br Website: Address: Avenida General Valdomiro de Lima, São Paulo, SP Brasil 16

26 Performance Indicators Operational Indicators Description Unit 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Income Statment Gross Revenue Gross Revenue R$ MM Net Revenue COGS SG&A Gross Revenue - Tax (ISS and PIS/COFINS) - Cancellations Personnel and Medical Services + Materials and Outsourcing + General Services, Rent and Utilities + General Expenses + Depreciation and Amortization Does not include Other Operating Expenses / Revenues neither Contingency Provisions R$ MM R$ MM R$ MM EBIT Earnings Before Interest and Taxes R$ MM EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization R$ MM Net Finance Income Interest Revenue - Interest Expenses R$ MM Net Income Net Income R$ MM Net Cash Income Net Income - Deferred income tax R$ MM Result Indicators Cancellation Index Cancellations / Gross Revenue % -2.8% -2.7% -2.4% -2.3% -1.4% -1.7% -1.5% -1.4% -1.4% Gross Margin Gross Profit / Net Revenue % 28.8% 30.6% 25.2% 34.5% 31.3% 31.4% 26.4% 32.7% 31.7% EBIT Margin Earnings Before Interest and Tax / Net Revenue % 16.3% 18.9% 12.1% 23.8% 19.7% 20.7% 15.7% 21.7% 19.9% EBITDA Margin Earnings Before Interest, Tax, Depreciation and Amortization / Net Revenue % 23.2% 25.7% 19.3% 29.5% 25.3% 26.5% 22.4% 28.5% 26.6% Effective Tax Rate Current Tax / Earnings Before Tax % -35.1% -32.9% 32.3% -33.8% -16.4% -25.8% -21.8% -26.6% -27.6% Net Margin Net Profit / Net Revenue % 8.8% 11.7% 14.3% 13.9% 14.7% 14.1% 11.1% 14.8% 12.9% Net Cash Income Margin (Net Income - Deferred income tax) / Net Revenue % 11.0% 15.0% 14.4% 18.0% 15.4% 18.3% 14.1% 16.0% 12.7% Financial Debt Cash & Equivalents Cash, Equivalents and Marketable Securities R$ MM Gross Debt Short and Long Term Debts (Borrowings and Debentures) R$ MM , ,418.1 Net Debt Gross Debt - Cash and Cash equivalents R$ MM Net Debt / EBITDA LTM (Gross Debt - Cash and Cash equivalents) / EBITDA LTM Multiple 0.6x 0.3x 0.9x 0.9x 0.7x 0.6x 0.6x 0.7x 0.8x Profitability and Return ROIC without Goodwill (LTM) NOPAT LTM (tax= 34%) / Capital Employed (Shareholders Equity + Net Debt - Goodwill) % 26.8% 31.5% 32.5% 35.6% 39.8% 43.6% 43.8% 43.6% 41.9% 17

27 CONSOLIDATED Balance Sheet as of June 30, and December 31, 2017 (In R$ thousands) Assets 6/30/ 12/31/2017 Liabilities and equity 6/30/ 12/31/2017 Current Current Cash and cash equivalents 222, ,544 Financing 29,261 30,948 Marketable securities 661, ,286 Debentures 283, ,693 Derivative financial instruments Financial lease Accounts receivable 533, ,241 Derivative financial instruments - - Inventories 28,289 21,545 Trade accounts payable 162, ,485 Taxes recoverable 19,309 27,028 Payroll and related taxes payable 122, ,354 IRPJ e CSLL recoverble 39,397 22,258 Taxes and contributions payable 36,457 30,634 Credits receivable 3,770 3,854 Accounts payable - company acquisition 15,738 1,855 Related Parties 56 - Dividends payable 20 41,420 Other assets 22,039 8,264 Other accounts payable Total current 1,529,940 1,267,037 Total current 651, ,146 Non-current Non-current Credits receivable 7,470 12,694 Financing 90, ,949 Other assets 5,456 9,555 Debentures 966, ,334 Judicial deposits 48,262 47,521 Financial lease 6,507 6,769 Deferred income tax and social contribution, ne 370, ,777 Provision for tax, labor and civil risks 28,596 30,480 Taxes and contributions payable 29,001 29,549 Accounts payable - company acquisition 31,958 12,800 Total non-current 1,524,186 1,181,658 Equity Share capital 1,413,608 1,413,608 Capital reserve - options granted recognized 22,110 17,923 Revaluation reserve Investments 11,920 11,296 Legal reserve 70,681 70,681 Property and equipment 649, ,920 Retained earnings 183, ,238 Intangible assets 1,612,783 1,537,309 Additional dividends proposed - - Total non-current 2,335,515 2,260,295 Total equity 1,689,537 1,706,528 Total assets 3,865,455 3,527,332 Total liabilities and equity 3,865,455 3,527,332 18

28 CONSOLIDATED Income Statement as of June 30, and 2017 (R$ thousands) 2Q18 2Q17 Revenue from services rendered 673, ,625 Cost of services rendered (460,138) (410,864) - - Gross Profit 213, ,761 Operating income (expenses) General and administrative (74,652) (67,241) Other operating income (expenses), net (3,197) (1,270) Provision for tax, labor and civil risks (1,103) (702) Equity in the earnings (losses) of subsidiaries Operating profit before financial result 134, ,850 Financial income 10,057 12,028 Financial expenses (24,901) (24,727) - - Financial result (14,844) (12,699) Earnings before income tax and social contribution 119, ,151 Income tax and social contribution: Current (33,982) (12,905) Deferred 928 (4,389) - - Profit for the period 86,631 87,857 Earnings per share attributable to owners of the Company Basic earnings per share (weighted average) Diluted earnings per share (weighted average)

29 CONSOLIDATED Statements of Changes in Equity as of June 30, and December 31, 2017 and 2016 (R$ thousands) Share Capital Capital Reserve Investment Reserve Share Capital Share issue expenses Options granted recognized Revaluation reserve Legal Reserve Profit Reserve Investment Reserve Profit for the period Additional dividends proposed Equity Balances on December 31, ,402,531 (22,784) 5, , ,762-10,766 1,655,439 Capital increase 20, ,706 Realization of revaluation reserve (165) Stock option plan - - 3, ,629 Profit for the period (R$1.46 per share) , ,749 Dividends from previous period (216,853) - (10,766) (227,619) Profit allocation: Legal Reserve , (11,437) - - Interest on own capital (110,425) - (110,425) 'Dividends (106,887) 71,133 (35,754) Balances on December 31, ,423,237 (22,784) 9, , ,133 1,535,725 Realization of revaluation reserve Capital increase 13, ,155 Stock option plan - - 8, ,511 Profit for the period (R$1.02 per share) , ,618 Profit allocation Legal Reserve , (16,031) - - Interest on own capital (100,349) (71,133) (171,482) Dividends ,238 - (204,238) - - Balances on December 31, ,436,392 (22,784) 17, , , ,706, Stock option plan - - 4, ,187 Profit for the period (R$1.02 per share) , ,060 Dividends (204,238) (204,238) Balances on December 31, ,436,392 (22,784) 22, , ,060-1,689,537 20

30 CONSOLIDATED Statements of Cash Flow as of June 30, and 2017 (R$ thousands) 2Q18 2Q17 Profit for the period 86,631 87,857 Items not affecting cash: Income tax and social contribution 33,098 17,294 Financial and expenses income 19,702 17,159 Depreciation and amortization 44,510 33,868 Equity in the earnings (losses) of subsidiaries (201) (302) Stock option plan 2,032 1,822 Constitution (reversal) of provision for tax, labor and civil risks 1, Estimated losses with allowance for doubtful accounts 9,743 8,949 Profit sharing 8,938 6,286 Other 1, Cash flows from operating activities before changes in assets and liabilities 206, ,717 - (Increase) decrease in accounts receivable 13,627 3,748 (Increase) decrease in inventories (11,640) (2,704) (Increase) decrease in taxes recoverable (1,476) 3,104 (Increase) decrease in judicial deposits (217) (3,611) (Increase) decrease in other assets (109) (2,195) Increase (decrease) in trade accounts payable 20,813 4,569 Increase (decrease) in payroll and related charges 18,859 6,529 Increase (decrease) in tax liabilities (1,690) (4,346) Increase (decrease) in taxes paid in installments (1,026) (824) (Increase) decrease in other liabilities (876) (1,300) Total variation in assets and liabilities 36,265 2,970 Income tax and social contribution paid (31,046) (15,301) Net cash from operating activities 211, ,386 Acquisition of property and equipment and intangible assets (53,470) (54,660) Sale of fixed assets Marketable securities and interest earned (382,336) (86,335) Redemption of marketable securities - - Payments (17,500) - Payments excepted cash - (575) Related parties increase (2,031) - Interest earned from financial investments 3,255 5,084 Net cash used in investing activities (451,314) (136,486) Borrowings and debentures 500,000 (2,801) Settlement (principal) of financing and debentures (8,770) (4,940) Interest paid in financing and debentures (15,160) (14,081) Financial expenses paid (1,336) (1,086) Derivative financial instruments (269) (98) Capital integralization - 8,396 Dividends and / or interest on shareholders' equity (204,238) - Dividends - - Net cash used in financing activities 270,171 (14,610) - - (Decrease) increase in cash and cash equivalents 30,781 10,290 Cash and cash equivalents At the beginning of the period 191, ,609 At the end of the period 222, ,899 Variation in cash and cash equivalents 30,781 10,290 21

31 CONSOLIDATED Statements of Value Added as of June 30, and 2017 (R$ thousands) 06/30/18 06/30/17 Revenues 1,413,679 1,265,132 Goods and products sold and services rendered 1,434,049 1,288,503 Estimated losses with allowance for doubtful accounts (22,842) (23,626) Other revenue 2, Inputs purchased from third parties (502,459) (455,376) Cost of goods and products sold and services rendered (465,072) (423,505) Materials, electricity, outsourced services and others (36,585) (31,475) Loss/recovery of asset values (802) (396) Gross value added 911, ,756 Depreciation and amortization (88,714) (67,338) Net value added 822, ,418 Value added received through transfer 21,288 27,886 Equity in the earnings (losses) of subsidiaries Financial income 20,766 27, Total value added 843, , Distribution of value added (843,794) (770,304) Personnel and charges (313,374) (276,833) Direct remuneration (214,605) (190,037) Benefits (80,120) (71,030) Charges (18,649) (15,766) Taxes, fees and contributions (217,554) (193,943) Federal (174,775) (156,935) Municipalities (42,779) (37,008) State - - Interest, rental and other operating expenses (129,806) (130,107) Interest (77,439) (65,947) Rental (45,370) (55,553) Other operating expenses (6,997) (8,607) Dividends and/or Interest on Equity - - Legal Reserve - - Retained earnings (183,060) (169,421) 22

32 Table of contents Parent company and consolidated interim financial information Statement of financial position... 1 Statement of income... 2 Statement of comprehensive income... 3 Statement of changes in equity... 4 Statement of cash flows... 5 Statement of value added... 6 Notes to the parent company and consolidated interim financial information 1. General information Presentation of the financial statements and summary of the main accounting practices adopted Risk management Cash and cash equivalents Marketable securities Derivative financial instruments Parent Company and Trade receivables Inventories Taxes recoverable Judicial deposits Receivables Investments Property and equipment Intangible assets Financing Debentures Finance lease Trade payables Payroll and related charges Taxes and contributions payable Accounts Payable Company acquisition Income tax and social contribution Deferred Provision for tax, labor and civil risks Operating lease Related parties Equity Employee benefit Revenue from services rendered Cost of services General and administrative expenses Other operating income (expenses), net Financial result Earnings per share Segment reporting Insurance Page 7 of 56

33 1. General information 1.1 The Company Fleury S.A. ( Fleury, Parent Company or Company and, jointly with its subsidiaries, Grupo Fleury or Group ) is a publicly-held company listed in the Novo Mercado special segment of the BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros, under ticker FLRY3. The Company is headquartered in the city of São Paulo and operates in the states of São Paulo, Rio de Janeiro, Rio Grande do Sul, Paraná, Bahia, Rio Grande do Norte, Pernambuco and the Federal District. The Company s purpose is to render medical services in the diagnostic, treatment and clinical analysis areas. The Company can also hold equity interests in other companies as a partner, shareholder or quotaholder, as well as create appropriate conditions for the good practice of the medical profession, and support research and studies that contribute to the scientific progress of medicine. On June 30,, the Company had 177 patient service centers and 23 operations in hospitals in Brazil s main economic centers, distributed across eight brands: Fleury, Weinmann, Clínica Felippe Mattoso, a+, Labs a+, Diagnoson a+, Serdil and Instituto de Radiologia de Natal (IRN). On March 1,, Fleury S.A. acquired 100% of the share capital of the companies comprising Instituto de Radiologia de Natal (IRN), a company that provides diagnostic imaging services and has four units in the Rio Grande do Norte State. 2. Presentation of the financial statements and summary of the main accounting practices adopted 2.1. Basis of presentation a) Parent company and consolidated interim financial information Fleury s parent company and consolidated interim financial information has been prepared in accordance with the Brazilian Accounting Pronouncement CPC 21 (R1) (Interim Financial Reporting) and the international standard IAS 34 Interim Financial Reporting, issued by the International Accounting Standards Board IASB, and presented in conformity with the standards issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of the Interim Financial Information Form ITR. The accounting practices and policies (which include measurement, recognition, and asset and liability assessment principles), in addition to the main accounting judgments and sources of uncertainties on the estimates adopted when preparing this interim financial information are consistent with those adopted and disclosed in Note 2 of the annual financial statements referring to the year ended December 31, 2017, and, therefore, must be analyzed as a whole, except for policies related to the financial assets and liabilities and revenue recognition originally disclosed in items 2.3, Page 8 of 56

34 2.9 and 2.13, respectively, which changed due to the first-time adoption of CPC 47 and CPC 48, described in items 2.2 and 2.3. The interim financial information is presented in thousands of Brazilian reais (R$), which is the Company s functional currency and the Group s reporting currency. Grupo Fleury s interim financial information was approved by the Board of Directors at a meeting held on July 25,. b) Consolidation The Company consolidates all the entities it controls, i.e. when it is exposed or has rights to variable returns from its investee and is able to manage important activities of the investee. Intercompany transactions, balances and unrealized gains and losses in intragroup transactions are eliminated. The subsidiaries accounting practices are consistent with those adopted by the Company. The consolidated interim financial information includes the balances of Fleury S.A., subsidiaries and special purpose entities represented by the exclusive investment funds, as shown below: Interest held in the share capital % Company and subsidiaries: Type 6/30/ 12/31/2017 Description Fleury Centro de Procedimentos Médicos Avançados ( Fleury CPMA ) Direct 100% 100% Diagnostic imaging activities in certain hospitals Serdil Serviço Especializado em Radiodiagnóstico Ltda. Instituto de Radiologia de Natal Ltda. ( IRN ) Indirect 100% 100% Diagnostic imaging Indirect 100% - Diagnostic imaging Cardionuclear Natal Ltda Indirect 100% - Diagnostic imaging Radiodonto Natal Ltda Indirect 100% - Diagnostic imaging Exclusive investment funds: Bradesco Fundo de Investimento em cotas de Fundos de Investimento Renda Fixa Crédito Privado Exclusivo Beta Santander FI Exclusivo Alpha Renda Fixa Crédito Privado Longo Prazo Direct 100% 100% Exclusive investment fund Direct 100% 100% Exclusive investment fund Page 9 of 56

35 c) Joint venture Interest accounted for by the equity accounting method, as follows: Interest held in the share capital % Company Type 6/30/ 12/31/2017 Description Papaiz Associados Diagnóstico por Imagem S/A Ltda. d) Business combination Indirect 51% 51% Dental radiology operation In order to complement its existing offering of clinical analysis in the North region and reinforce the positioning of its diagnostic medicine portfolio, on March 1,, the Company acquired 100% of the share capital of the companies jointly referred to as Instituto de Radiologia de Natal (IRN), a traditional medical diagnostic company specialized in imaging services that has been operating for nearly 50 years in the city of Natal, in Rio Grande do Norte State. IRN was acquired for R$90.5 million, which corresponds to 5.9x EBITDA of the last 12 months ended in October 2017, of R$15.3 million. Of the R$32.0 million retained, R$1.0 million was retained for price adjustment purposes after final analysis of working capital and net debt and R$31.0 million will be held in an escrow account and released as follows: i) R$11.0 million upon entry of the real estate registrations; ii) R$1.6 million for litigations whose terms are not contractually agreed upon; and iii) R$18.4 million have not been allocated (other losses), 1/3 of which will be released on the third anniversary, 1/3 on the fourth anniversary and 1/3 on the fifth anniversary of the closing date. The report to appraise the fair value of assets and liabilities is being prepared by an independent appraiser. Gross acquisition price 90,500 (-) Payment in cash (58,500) Retained balance 32,000 Current 13,564 Noncurrent 18,436 The assets and liabilities acquired and recognized on the acquisition date are as follows: Assets 3/1/ Cash and cash equivalents 18,671 Trade receivables 2,348 Page 10 of 56

36 Inventories 577 Other assets 2,108 Property and equipment and intangible assets 10,210 Total assets 33,914 Liabilities Trade payables 1,450 Tax obligations 340 Labor obligations 1,162 Profit and dividends payable (*) 16,000 Other liabilities 1,109 Equity 13,853 Total liabilities 33,914 (-) Cash acquired from the subsidiary IRN 18,671 (=) Cash paid for the control of IRN, net of acquired cash 39,829 The goodwill calculated in the business combination is as follows: Gross acquisition price 90,500 Equity of IRN (13,853) Goodwill 76,647 (*) The total amount paid to previous owners related to dividends was R$ 17,5 million. e) Changes in the main accounting policies The Group adopted CPC 47/IFRS 15 and CPC 48/IFRS 9 using the cumulative effect method, with effect of initial adoption on January 1,. Consequently, the information presented for 2017 was not restated; it was presented as previously reported in accordance with CPC 30/IAS 18, CPC 17/IAS 11 and related interpretations. Regarding CPC 47, on June 30,, there were no impacts on the statement of financial position, statement of income, statement of comprehensive income and statement of cash flows, given that the Company s operations already met the criteria required by the new standard, except for the disclosure of qualitative information, which is being reported in this quarterly information to comply with the new standard. Regarding CPC 48/IFRS 9, there was an impact on the presentation of estimated default losses, previously reported as a deduction of gross revenue, which, as of January 1,, were recorded under Other operating expenses. On June 30,, said amount totaled R$1,386. Page 11 of 56

37 2.2 New accounting policy for Financial Instruments (effective as of January 1, ) a) Financial Assets Classification The Company classifies its financial assets in the following categories: i) at amortized cost and ii) at fair value through profit or loss. These classifications are based on the business model adopted for asset management and on the characteristics of contractual cash flows. - Amortized cost Financial assets held to generate contractual cash flows are recognized at amortized cost. These flows are received on specific dates and exclusively comprise payment of principal and interest. The following assets classified in this category are Trade receivables and Other receivables. - Fair value through profit or loss Assets recognized at fair value through profit or loss comprise: i) those that do not fit the business models that allow the classification at amortized cost or fair value through other comprehensive income; ii) equity instruments at fair value through profit or loss; iii) financial assets managed to obtain cash flow from the sale of assets. The following assets classified in this category are Cash and cash equivalents, and Government bonds and Secured short-term investments classified as Securities and Derivative financial instruments. Initial measurement Upon initial recognition, the entity s financial assets and liabilities are measured at fair value, taking into consideration the transaction costs attributable to the acquisition or issue of a financial asset or a financial liability. Trade receivables are initially measured at transaction cost. Subsequent measurement Based on asset classification, subsequent measurement is as follows: - Amortized cost Assets are accounted for using the effective interest rate method less expected credit losses. In addition, the principal amount paid is included in the calculation of amortized cost. - Fair value through profit or loss Assets classified under this business model are accounted for based on the recognition of gains or losses recorded in profit/loss for the period. For the current period, no other financial assets have been classified at fair value through profit or loss except for those already mentioned in Note 2.2 of the financial statements for the year ended December 31, Impairment Page 12 of 56

38 The Company records a provision for expected credit losses for assets classified at amortized cost. The impairment test is carried out prospectively, based on historical data and models created for such purpose. In addition, the financial assets credit risk changes are tested for impairment every month in order to reflect the risk of default to which the Company is subject and the amount to be used as a base for the recognition of losses, i.e., if the credit risk does not significantly increase, a credit loss should be recognized on the outstanding balance for the next 12 months and, if the Company identifies a significant increase in credit risk, it records loss based on the total outstanding amount for the entire life of the financial instrument. The following financial assets held by the Company are subject to the creation of a provision for impairment: Trade receivables (see Note 7); Receivables (see Note 11). b) Financial Liabilities Classification The Company s financial liabilities are classified at: Amortized cost, represented by Trade Payables, Borrowings and Financing, and Finance Lease; Fair value through profit or loss, represented by Derivative financial instruments. Initial Recognition Financial liabilities are initially recognized at fair value plus transaction costs (in the case of borrowings, financing, and accounts payable). The Company s financial liabilities comprise accounts payable, borrowings, financing, financial guarantee agreements and derivative financial instruments. Subsequent measurement Based on asset classification, subsequent measurement is as follows: - Amortized cost Liabilities classified at amortized cost are accounted for using the effective interest rate method, in which gains and losses are recorded in profit or loss when liabilities are written-off and upon recognition of amortization. - Fair value through profit or loss Liabilities classified at fair value through profit or loss are accounted for through the recognition of their gains or losses in profit/loss for the period. The summary of the new classification is as follows: Financial Asset/Liability Previous classification IFRS 9 Cash and cash equivalents Fair value through profit Fair value through profit or loss or loss Operating trade receivables Borrowings and receivables Amortized cost Marketable securities Government bonds Fair value through profit or loss Fair value through profit or loss Page 13 of 56

39 Marketable securities - Secured shortterm investments Assets held to maturity Fair value through profit or loss Receivables Borrowings and receivables Amortized cost Judicial deposits Borrowings and receivables Amortized cost Trade payables Other financial liabilities Amortized cost Financial instruments Fair value through profit Fair value through profit or loss or loss Borrowings and financing Borrowings and receivables Amortized cost Operating lease Other financial liabilities Amortized cost 2.3 New accounting policy for revenue recognition (effective as of January 1, ) Services rendered Revenue is recognized when control and all other rights and benefits arising from the provision of services flow to the client, i.e. when test results are issued, approximately at the same time as the test is performed. The allocation of compensation for services provided mainly refers to clinical analysis that have a single defined performance obligation (test/analysis) and whose transaction price is agreed upon between the Company and its respective clients. In this case, there is no variable consideration, return or refund obligations, as well as no significant financing component or remaining performance obligations. The agreements entered into between the Company and its respective clients have a commercial substance since they are approved by the parties, and the rights of each party, as well as payment conditions, are identified. The performance obligation in these agreements refers to the execution of clinical analysis tests, which begins with the collection of the material and ends with the issue of diagnostic test results that are available to users on the Company s website or in the patient service centers. Diagnostic medicine and integrated medical services do not differ regarding the performance obligations to be complied with. Revenue from services rendered is already net of any estimated rebates, discounts and disallowances. a) Main service lines Diagnostic Medicine Laboratory and image exams for clients assisted in Grupo Fleury s own units. Integrated Medicine It caters to hospitals that integrate diagnostic services with specialized clinical staff and clinical analysis exams, providing high added value diagnostic information to the physicians of said institutions. It also comprises check-up and reference laboratory (LARE) services. Page 14 of 56

40 Dental Dental imaging exams conducted by the joint venture Papaiz and the indirect subsidiary Radiodonto Natal b) Expected remuneration Services rendered to clients are remunerated as follows (amounts contractually agreed upon): i) clinical analysis services, based on the volume of analyses; and ii) defined clinical analysis packages, based on pre-defined procedure packages (check-up). c) Estimated losses with disallowances Based on historical analysis and commercial trends. In 2Q18, the estimate adopted by the Company was 1.3% of revenue (1.4% in 2Q17), billed or not. This estimate is reviewed by the Company at the end of each reporting period. d) Estimated losses with doubtful accounts Estimated losses with doubtful accounts are recorded based on the historical negotiation average, confession of debt with late installments and negotiation with a low probability of success, as mentioned in item 2.2 and Note 7. There was no impact related to accounting adjustments arising from the adoption of CPC 48, given that the previous practice adopted by the Company already reflected the items required by the new standard New standards, amendments and interpretations of standards issued by IASB and the CPC The following standard was issued by IASB but is not yet effective for. Although encouraged by IASB, early adoption is not allowed by the Brazilian Accounting Pronouncements Committee (CPC). IFRS 16 Leases establishes the principles for the recognition, measurement, presentation and disclosure of leases for both parties to an agreement, i.e., customers (lessees) and suppliers (lessors). This standard shall be adopted as of January 1, The Company is evaluating the effects of the adoption of this standard with the different internal departments in order to identify existing lease contracts, internal controls and the systemic environment involved in this amendment, mainly those that can be generated on the recognition of operating lease agreements (see Note 24) Disclosure expansion Page 15 of 56

41 On June 30,, the Company expanded the presentation of the statement of value added, mainly related to the distribution of value added, in order to provide more transparency of the figures reported. Below are the impacts of the reclassifications in the immediately preceding period: Parent Company 6/30/2017 6/30/2017 6/30/2017 6/30/2017 (previously (previously Reclassification (reclassified) Reclassification (reclassified) disclosed) disclosed) Revenue 1,258,248 (120) 1,258,128 1,265,252 (121) 1,265,131 Revenue from services rendered 1,281,658 (120) 1,281,538 1,288,624 (121) 1,288,503 Estimated losses with disallowances and doubtful accounts (23,664) - (23,664) (23,626) - (23,626) Other revenue Input acquired from third parties (448,084) (1,817) (449,901) (453,558) (1,818) (455,376) Cost of services (338,183) (79,857) (418,040) (343,656) (79,849) (423,505) Materials, electricity, outsourced services and others (109,505) 78,040 (31,465) (109,506) 78,031 (31,475) Loss/recovery of asset values (396) - (396) (396) - (396) Gross value added 810,164 (1,937) 808, ,694 (1,939) 809,755 Depreciation and amortization (67,032) - (67,032) (67,338) - (67,338) Net value added 743,132 (1,937) 741, ,356 (1,939) 742,417 Value added received through transfer 27,323 1,243 28,566 27, ,886 Equity in the earnings (losses) of subsidiaries 1,636-1, Financial income 25,687 1,243 26,930 26, ,155 Total value added to distribute 770,455 (694) 769, ,406 (1,103) 770,303 Distribution of value added (770,455) 694 (769,761) (771,406) 1,103 (770,303) Personnel and charges (324,606) 47,773 (276,833) (324,606) 47,774 (276,832) Direct compensation - (190,037) (190,037) - (190,037) (190,037) Benefits - (71,030) (71,030) - (71,030) (71,030) Charges - (15,766) (15,766) - (15,765) (15,765) Taxes, fees and contribution (143,027) (50,372) (193,399) (143,560) (50,382) (193,942) Federal - (156,530) (156,530) - (156,935) (156,935) Municipal - (36,869) (36,869) - (37,007) (37,007) Interest, rental and other operating expenses (133,401) 3,293 (130,108) (133,819) 3,711 (130,108) Rental - (65,947) (65,947) - (65,947) (65,947) Interest - (55,553) (55,553) - (55,553) (55,553) Other operating expenses - (8,608) (8,608) - (8,608) (8,608) Retained earnings (169,421) - (169,421) (169,421) - (169,421) 3. Risk management The main risk factors the Company and its subsidiaries are exposed to are financial and operating risks, including market, foreign exchange, interest rate, credit and liquidity risks. These risks are inherent to the Company s activities and are managed through internal controls and policies. The policies set forth are supervised and monitored through monthly managerial reports. Fair value hierarchy The assumptions used by the Company to determine the hierarchy and disclose the fair values of financial instruments are: Level 1: prices quoted in active markets for identical assets or liabilities; Page 16 of 56

42 Level 2: other techniques for which all inputs which have a significant impact on the recorded fair value are observable, either directly or indirectly; Level 3: techniques which use inputs that have a significant effect on the recorded fair value that is not based on observable market data. a) Accounting classification and fair values Financial Assets Level 1 Level 2 Level 3 Total Cash equivalents, marketable securities 3, , ,620 Derivative financial instruments Financial Liabilities Financing and Debentures - (1,370,426) - (1,370,426) Finance lease - (7,117) - (7,117) On June 30, 3,802 (497,605) - (493,803) On December 31, ,264 (391,716) - (390,452) Given the nature of the balances, we assume that the fair value of the Company s financial instruments is close to their carrying amounts. The comparison between the recorded amounts and the fair values did not show differences material enough to be disclosed. b) Capital management The objectives of capital management are to safeguard the continuous return to the Company s shareholders and benefits to other stakeholders, and maintain an ideal capital structure to reduce this cost. In order to maintain or adjust its capital structure, Grupo Fleury can review the dividend payment policy, return capital to shareholders, buy back treasury shares, issue new shares or sell assets to reduce the indebtedness level. Grupo Fleury monitors its capital based on the consolidated financial leverage ratio, which corresponds to net debt divided by equity. Net debt, in turn, corresponds to total loans and financing and accounts payable from company acquisitions, as disclosed in the consolidated statement of financial position, less cash and cash equivalents and financial investments. Financial leverage ratio 6/30/ 12/31/2017 Financing and debentures 1,370,426 1,054,924 Accounts payable from acquisitions 47,696 14,655 Cash and cash equivalents (222,272) (337,544) Page 17 of 56

43 Financial investments (marketable securities) (661,348) (334,286) Net debt 534, ,749 Equity 1,689,537 1,706,528 Financial leverage ratio c) Financial and market risks Exchange rate risk The Company and its subsidiaries have trade receivables and accounts payable to suppliers denominated in foreign currency (mainly in U.S. dollars). The risk related to these assets and liabilities arises from the possibility of the Company and its subsidiaries incurring losses due to exchange rate variations. On June 30,, liabilities in foreign currency exposed to this type of risk accounted for 0.12% of total consolidated current liabilities. Grupo Fleury has assets in foreign currency (trade receivables), equivalent to 0.13% of total consolidated accounts receivable on June 30,, which contribute to reduce its exposure to trade accounts payable from suppliers contracted in foreign currency. The Parent Company contracted derivative financial instruments to hedge against exchange rate fluctuations when acquiring products and services in foreign currency. Below, the Company s net exposure on June 30, (US$ R$3.8552) and 2017 (US$ R$3.3074): 6/30/ 12/31/2017 US$ 000 R$ 000 US$ 000 R$ 000 Trade receivables Trade payables (201) (776) (261) (863) Derivative financial instruments (Note 6) Net exposure (115) (380) Interest rate risk The Company has financing in domestic currency subject to interest rates pegged to indices, including the CDI interbank rate, as well as balances of updated taxes paid in installments indexed to the benchmark interest rate (SELIC). The risk inherent in these liabilities arises from the possibility of fluctuations in these rates with an impact on cash flows. The Company and its subsidiaries do not have derivative contracts to hedge this risk because they believe that the risk is mitigated by the existence of assets indexed to the CDI (financial investments). Page 18 of 56

44 Credit risk Credit risk is the risk that a business counterparty may fail to comply with an obligation set forth in a financial instrument or customer agreement, resulting in a financial loss. Grupo Fleury is exposed to credit risk in its operating activities reflected in the statement of financial position under Trade receivables. The Company analyzes, at the end of each reporting date, changes in its clients credit risk in order to check default possibilities that would reduce the amount receivable. Considering the Company s operating segment and business model, it concentrates receivables in specific client groups and, based on the historical analysis of losses of said groups, pursuant to CPC 48, the Company records a provision for estimated losses with a corresponding entry in Other operating expenses, in the statement of income. The purpose of this calculation is to represent the Company s actual receivable amount and the maximum loss per credit risk. Additionally, the Company constantly analyzes each client s economic-financial situation, and adjusts limits or enters into specific agreements in more risky cases. The Company and its subsidiaries are also subject to credit risks related to their operations with financial institutions, represented by bank deposits, financial investments and derivative instruments. In Management s opinion, the risk is low since these operations are carried out with top-tier banks and there are treasury policies with specific limits for the allocation of funds. Liquidity risk Grupo Fleury s cash flow estimation is carried out by the Finance Department. This area monitors the continuous estimates of Grupo Fleury s liquidity requirements to ensure it has sufficient funds to meet its operating needs. It also maintains enough free space available in its credit lines at any time, so that Grupo Fleury is in compliance with the limits and covenants of financing and debentures (when applicable) in all its credit lines. This estimate takes into consideration the group s debt financing plans, compliance with covenants and internal balance sheet ratio targets and, if applicable, legal or external regulatory requirements, such as currency restrictions. The surplus cash maintained by the operating entities, in addition to the balance required to manage working capital, is used in investments with proper maturities or with liquidity sufficient to provide the necessary margin determined by the abovementioned estimates. The table below analyzes Grupo Fleury s liabilities and financial instruments by maturity date, corresponding to the period remaining in the statement of financial position until the contractual maturity date. The amounts disclosed represent the undiscounted cash flows contracted and, therefore, cannot be reconciled with the carrying amounts. Page 19 of 56

45 On June 30, Carrying Contracted Between Between 2 Less than More than 1 and and amount amount 1 year 2 years 5 years 5 years Debentures 1,250,286 1,558, , , ,168 - Financing 120, ,269 33,591 32,432 65, Finance lease 7,117 15,770 1,352 6,758 7,660 - Trade payables 162, , , Accounts payable company acquisition 47,696 57,456 22,239 3,474 31, Other payables Policy on the use of derivative financial instruments Grupo Fleury maintains a policy to contract derivative financial instruments in order to manage related risks and ensure that these instruments are accurately recorded in its financial statements. The Company and its subsidiaries do not contract derivative instruments for speculation in the financial market and no margin is given as guarantee in the existing contracts. The amounts are calculated based on models and quotations available in the market, which consider current or future market conditions and gross amounts, before taxes. Due to variations in market rates, these amounts can change until the maturity or early settlement of the transactions. The fair value of these instruments on the date of the financial statements by counterparty is recorded under Derivative financial instruments (Note 6). d) Management of Operating Risks In accordance with the Brazilian Institute of Corporate Governance (IBGC), operating risk is associated with the possibility of losses (of production, assets, customers, revenues) resulting from flaws, deficiencies or inadequacies of internal processes, people and systems, as well as from external events including natural disasters, frauds, strikes and terrorist attacks. Operating risks usually reduce, degrade or fully or partially interrupt activities and have a negative impact on the Company s reputation, in addition to potentially generating contractual, regulatory and environmental liabilities. With the aim of properly managing its operating risks, Grupo Fleury has striven to establish a governance structure that involves the Senior Management, including the structuring of the Risk Management and Internal Audit departments and ensuring the involvement of the entire leadership positions in implementing initiatives to reduce the Company s exposure to this type of risk, ensuring this commitment through incentives suitable to the organization s reality. The main initiatives carried out by the Company to properly manage operating risks include: Page 20 of 56

46 a) Biannual cycle of internal audit, covering the Company s main processes; b) Mapping and documentation of internal controls and risks; c) Internal procedures and policies; d) Periodic review of the risk portfolio; e) Monitoring of internal controls; f) Business continuity plans; g) Training of employees and third parties; h) Clear definition of scopes; and i) Implementation of initiatives to reduce exposure to risks, including the contracting of insurance, when applicable. All these measures are monitored and periodically reported to the Audit and Risk Management Committee established by Grupo Fleury s Board of Directors, which instructs and oversees Management during this process. e) Environmental Risk The Company implements the following procedures in order to mitigate socio-environmental risks: Waste: risks related to potential inappropriate disposal of waste generated in by operations. In order to mitigate that, Fleury created a waste management system based on legal requirements and voluntary commitments assumed by the Company. The program includes the implementation of work policies and instructions focused on the issue, the setting of annual targets to reduce waste generation, training programs and campaigns to raise employees awareness and continuous monitoring of disposal processes through indicators and based on internal audits. Natural resources: possible risks associated with reduced availability of natural resources. In this regard, the Company sets annual targets to reduce water and electricity consumption and implement employee continuing education programs and eco-efficiency measures designed to reduce the consumption of these resources, including the search for technology solutions to reduce water consumption and diversification of the Group s energy matrix. The Company s climate change program reinforces these initiatives. Suppliers: in order to reduce supply chain risks, Grupo Fleury has defined socio-environmental and compliance criteria to qualify and evaluate suppliers, including the adoption of evaluation surveys and the search for legal documentation. Moreover, suppliers are required to sign the Citizenship and Sustainability agreement and the Anti-corruption attachment when they are contracted. The sustainability and compliance performance of critical suppliers is monitored through the Program of Excellence in Supply Chain Relationship (PERC). f) Statement of sensitivity analysis Sensitivity analysis for changes in exchange rate The Finance Department periodically assesses the risk of exposure to variations in the U.S. dollar. In order to calculate the probable scenario, the Company used the exchange rate at the closing of this interim financial information (US$1.00 R$3.8552). These instruments are already recorded at fair value through profit or loss (probable scenario) and, therefore, there are no effects for this scenario. Page 21 of 56

47 In the Possible and Remote scenarios, the exchange rate was increased by 25% and 50%, respectively, before taxes: Possible Remote Maturity Risk (25%) (50%) Trade receivables US$ depreciation Trade payables US$ appreciation (194) (388) Derivative financial instruments US$ depreciation Net effect Sensitivity analysis for changes in interest rate In order to calculate the probable scenario, the Company used the reference rates obtained from the BM&FBOVESPA on June 30,. The Possible and Remote scenarios consider increases of 25% and 50%, respectively. The results, in nominal amounts, are as follows, and debenture interest expenses are calculated until the end of each indexed contract. Probable Possible Remote CDI (p.a.) 6.39% 6.39% 6.39% +25% +50% Accounting Balance Probable Possible Remote Financial investments classified as Cash and 6, ,470 13,960 3,490 Cash Equivalents Financial investments classified as Marketable 21, ,348 42,260 10,565 Securities Debentures (1,250,286) (79,893) (19,973) (39,947) Net exposure in CDI (370,468) (23,673) (5,918) (11,837) 4. Cash and cash equivalents Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Cash and banks 870 1,090 3,802 1,264 Cash equivalents: Fixed term deposits (i) 41,796 94,617 42,516 94,682 Repurchase agreements (ii) 170, , , ,581 Capitalization bonds , , , ,280 Page 22 of 56

48 213, , , ,544 (i) Refer to Financial Bills. The average profitability of these operations was 99.5% in the first six months of and 105.1% in (ii) On June 30,, the automatic investments were remunerated at an average weighted rate of 20% of the CDI (20% of the CDI on December 31, 2017), while the repurchase agreements were remunerated at an average rate of 98.8% in the first six months of and 96.4% in Marketable securities Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Government bonds (i) 70, ,139 72, ,394 Fund quotas indexed to the DI rate (ii) 555, ,759 - Secured short-term investments 1,942 1,892 33,455 1, , , , ,286 (i) Refer to investments of exclusive investment funds in Financial Treasury Bills with average profitability of 101.9% in the first six months of (102.4% in 2017). (ii) Refer to Fund quotas indexed to the DI rate, remunerated at an average weighted rate of 105.7% of the CDI in the first six months of. Short-term investments balance activity schedule (*) Parent Company 6/30/ 6/30/2017 6/30/ 6/30/2017 Opening balance 670, , , ,473 Investment 1,255, ,652 1,308, ,563 Acquisition of control IRN ,523 - Earnings 18,244 22,798 18,587 23,421 Redemption (1,102,295) (561,775) (1,136,036) (568,671) 841, , , ,786 (*) Fixed term deposits, repurchase agreements, government bonds and other financial investments classified as cash and cash equivalents and marketable securities. 6. Derivative financial instruments Parent Company and Pursuant to the Treasury policy, the Parent Company contracts derivative financial instruments to cover future disbursements with outsourced services and medical equipment. The contracted operations effective in the period ended June 30, are as follows: Page 23 of 56

49 Type Nominal amount (US$ 000) Currency Counterparty Maturity Contracted rate (R$) (Liability)/Asset 6/30/ NDF 147 USD Votorantim 9/28/ NDF 570 USD Santander 9/28/ NDF 471 USD Itaú 12/28/ NDF 92 USD Santander 12/28/ NDF 378 USD Votorantim 3/28/ (0) NDF 209 USD Itaú 6/28/ (1) Total 1, Trade receivables a) Balance breakdown Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Billed amounts 462, , , ,824 Amounts to be billed 83,264 95,379 86, , , , , ,454 Estimated losses with disallowances (1,768) (1,390) (1,768) (1,390) Estimated losses with disallowances and doubtful accounts (17,321) (17,823) (17,778) (17,823) (19,089) (19,213) (19,546) (19,213) Total receivable 526, , , ,241 The aging list of trade receivables is as follows: Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Current 474, , , ,596 Past due: Up to 120 days 43,355 35,298 44,084 35, to 360 days 22,047 24,845 22,098 24,848 Over 361 days 5,354 6,126 5,356 6, , , , ,454 Page 24 of 56

50 Changes of estimated losses with disallowances and doubtful accounts Parent Company 6/30/ 6/30/2017 6/30/ 6/30/2017 Balance at the beginning of the period (19,213) (41,610) (19,213) (41,648) Write-off of uncollectible instruments 19,730 37,233 19,748 37,234 Addition due to acquisition of subsidiary - - (459) - Additions of disallowances and doubtful accounts (Notes 28 and 30) (19,606) (23,664) (19,622) (23,627) Balance at the end of the period (19,089) (28,041) (19,546) (28,041) The Company and its subsidiaries have a certain degree of concentration in their customer portfolio. On June 30,, the six main customers accounted for 48.9% of the total portfolio (49.1 % on December 31, 2017). 8. Inventories Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Diagnostic kits 15,882 11,732 16,408 11,732 Collection and nursing material 6,793 4,953 6,829 4,953 Auxiliary laboratory materials 2,974 2,810 2,974 2,856 Administrative, promotional and other types of material 2,077 1,992 2,078 2,004 27,726 21,487 28,289 21, Taxes recoverable Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Income tax (IRPJ) and social contribution (CSLL) to offset 39,018 22,228 39,397 22,258 Social Integration Program Tax on Revenue (PIS) and Social Security Financing Tax on 8,636 7,406 8,935 7,514 Revenue (COFINS) Tax on services (ISS) 3,985 3,461 4,022 3,461 Withholding income tax (IRRF) 3,420 14,949 4,018 14,962 Social security tax (INSS) 2,334 1,091 2,334 1,091 57,393 49,135 58,706 49,286 Page 25 of 56

51 10. Judicial deposits Noncurrent Assets On June 30,, judicial deposits totaled R$48,123 at the Parent Company (R$47,419 on December 31, 2017) and R$48,262 in the (R$47,521 on December 31, 2017) and refer to lawsuits classified as remote or possible loss by the Company s legal counsel and for which, therefore, a provision for contingencies has not been recorded. Among these claims is an amount of R$12,279 related to ICMS tax levied on equipment imports (Note 23). Noncurrent Liabilities Judicial deposits referring to lawsuits considered as probable loss are recorded under noncurrent liabilities, reducing the balance of the related provision by R$7,379 on June 30, (R$6,810 on December 31, 2017). Judicial deposits also included R$8,534 related to ISS tax described in Note 20, in the Other item, net of the obligation in the same amount. 11. Receivables Parent Company and 6/30/ 12/31/2017 Balance receivable for the sale of the investment in Cruzeiro do Sul 11,240 16,548 11,240 16,548 Current 3,770 3,854 Noncurrent 7,470 12, Investments Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Fleury CPMA (direct subsidiary) 143,311 47, Papaiz (joint venture) ,021 9,499 Serdil (indirect subsidiary) ,652 IRN (indirect subsidiary) ,311 47,022 11,775 11,151 Page 26 of 56

52 Other ,456 47,167 11,920 11,296 The consolidation process of Serdil and IRN is based on the subsidiaries balance with a 30-day lag, a procedure provided for in article 10 of CVM Normative Instruction. This procedure implies that some intercompany balances are not eliminated. Subsidiary/joint ventures Reference date Number of shares of capital stock % of interest in paid-up capital Paid-up capital Equity Profit (loss) for the period Fleury CPMA 6/30/ 81, % 81, ,960 2,308 12/31/ , % 81,007 45,671 5,198 Serdil 6/30/ 6, % 6,914 5, /31/2017 9, % 968 1,983 n/a Papaiz 6/30/ 1,466 51% 1,466 4, /31/2017 2,875 51% 2,875 7,149 1,830 IRN 6/30/ 7, % 7,000 14,321 3,120 12/31/ Cardionuclear 6/30/ % 250 1,522 (473) 12/31/ Radiodonto Natal 6/30/ % 10 (18) 4 12/31/ Parent Company Investees Balance on 12/31/2017 Changes in investment balances Acquisiti on Paid-up capital Equity in the earnings (losses) of subsidiaries Other changes Balance on 6/30/ Fleury S.A. Fleury CPMA 47,022-92,500 2,308 1, ,311 Fleury S.A. Other Subtotal Parent Company 47,167-92,500 2,308 1, ,456 Fleury CPMA Papaiz 9, ,021 Fleury CPMA Serdil 1, (766) 886 Page 27 of 56

53 Fleury CPMA IRN Fleury S.A. Other Subtotal 11, , Property and equipment Average annual depreciation rate % Cost Parent Company 6/30/ 12/31/2017 Net balance Accumulated depreciation Net balance Machinery and equipment 8 543,413 (276,164) 267, ,390 Leasehold improvements ,563 (92,208) 158, ,564 Facilities ,086 (163,458) 102, ,946 Properties 2 32,915 (5,322) 27,593 27,867 Construction in progress (a) - 25,003-25,003 17,499 IT equipment 20 83,907 (63,502) 20,405 21,534 Land - 16,123-16,123 16,123 Furniture and fixtures 10 50,733 (38,097) 12,636 11,381 1,268,743 (638,751) 629, ,304 Average annual depreciation rate % Cost 6/30/ 12/31/2017 Net balance Accumulated depreciation Net balance Machinery and equipment 8 591,584 (307,810) 283, ,520 Leasehold improvements ,563 (92,208) 158, ,564 Facilities ,274 (164,568) 104, ,167 Properties 2 32,915 (5,322) 27,593 27,867 Construction in progress (a) - 25,003-25,003 17,499 IT equipment 20 86,861 (65,821) 21,040 21,651 Land - 16,123-16,123 16,123 Furniture and fixtures 10 53,218 (40,188) 13,030 11,529 1,325,541 (675,917) 649, ,920 (a) Mainly focused on expansion and improvement of units and technical areas. Changes in property and equipment are shown below: Changes - Parent Company Page 28 of 56

54 Balance on 12/31/2017 Additions Net writeoffs Depreciation Reclassifications / transfers Balance on 6/30/ Machinery and equipment 263,390 20,160 (464) (22,811) 6, ,249 Leasehold improvements 162,564 14,934 (119) (20,363) 1, ,355 Facilities 112,946 1,628 (113) (12,258) ,628 Properties 27, (274) - 27,593 Construction in progress (*) 17,499 19, (12,014) 25,003 IT equipment 21,534 2,473 - (3,828) ,405 Land 16, ,123 Furniture and fixtures 11,381 1,003 (33) (1,363) 1,648 12, ,304 59,716 (729) (60,897) (1,402) 629,992 Balance on 12/31/2017 Acquisitio n of subsidiary (b) Additio ns Changes - Net writeoffs Depreciation Reclassifications / transfers Balance on 6/30/ Machinery and equipment 270,520 9,816 20,365 (463) (23,974) 7, ,774 Leasehold improvements 162,564-14,933 (119) (20,363) 1, ,355 Facilities 114, ,439 (113) (12,258) ,706 Properties 27, (274) - 27,593 Construction in progress - 17,499 (*) 19, (12,014) 25,003 IT equipment 21, ,947 - (3,828) ,040 Land 16, ,123 Furniture and fixtures 11, ,055 (33) (1,363) 1,537 13, ,920 10,209 61,257 (728) (62,060) (974) 649,624 (b) Acquisition of the control of Grupo IRN. See Note 2. Changes - Balance on 12/31/2016 Additions Net write-offs Depreciation Reclassifications / transfers Balance on 6/30/2017 Machinery and equipment 181,250 30,811 (49) (19,761) (1,294) 190,957 Facilities 131,529 2,453 - (12,050) ,519 Construction in progress 34,509 55, (7,236) 82,645 Leasehold improvements 56,175 10,965 - (7,771) 7,307 66,676 Properties 23, (234) - 23,211 IT equipment 17,383 1,114 - (3,227) ,746 Land 13, ,637 Furniture and fixtures 12, (2,745) (1,347) 231 9, , ,138 (2,794) (44,390) (71) 524,434 Page 29 of 56

55 14. Intangible assets Average annual amortization rate - % Cost Parent Company 6/30/ 12/31/2017 Net balance Accumulated amortization Net balance Goodwill - 1,342,222 (44,413) 1,297,809 1,297,809 Licenses and software developed/acquired ,242 (155,658) 126, ,916 Customer contracts ,387 (104,211) 50,176 57,895 Intangible assets in progress (software and products) - 22,103-22,103 9,625 Trademarks and patents 7 13,226 (7,331) 5,895 6,360 Products internally developed ,815,164 (311,613) 1,503,551 1,505,589 Average annual amortization rate - % Cost 6/30/ 12/31/2017 Net balance Accumulated amortization Net balance Goodwill - 1,449,561 (44,414) 1,405,147 1,327,985 Licenses and software 283,747 (157,005) 126,742 developed/acquired ,062 Customer contracts ,573 (106,288) 50,285 58,223 Intangible assets in progress (software and products) - 22,103-22,103 9,625 Trademarks and patents 7 16,257 (8,735) 7,522 7,430 Products internally developed ,929,225 (316,442) 1,612,783 1,537,309 Changes in intangible assets are shown below: Balance on 12/31/2017 Additions Net writeoffs Changes - Parent Company Amortizatio n Reclassifications / transfers Balance on 6/30/ Goodwill 1,297, ,297,809 Licenses and software - developed/acquired 132,916 11,678 (18,072) ,584 Customer contracts 57, (7,719) - 50,176 Intangible assets in progress - (software and products) 9,625 12,540 - (62) 22,103 Trademarks and patents 6, (465) - 5,895 Products internally developed Page 30 of 56

56 1,505,589 24,218 - (26,256) - 1,503,551 Balance on 12/31/2017 Acquisition of subsidiary (a) Changes - Net Additions write Amortization -offs Reclassifications / transfers Balance on 6/30/ Goodwill 1,327,985 76, ,405,147 Licenses and software - developed/acquired 133,062-11,691 (18,072) ,742 Customer contracts 58, (7,938) - 50,285 Intangible assets in progress (software and 9,625-12, (64) 22,103 products) Trademarks and patents 7, (644) 736 7,522 Products internally developed ,537,309 76,647 24,748 - (26,654) 733 1,612,783 (a) Acquisition of the control of Grupo IRN. See Note 2. Balance on 12/31/2016 Additions Net writeoffs Changes - Amortization Reclassifications / transfers Balance on 6/30/2017 Goodwill 1,309, ,309,150 Licenses and software developed/acquired 53,290 4,978 - (14,459) 63, ,358 Customer contracts 74, (7,938) - 66,160 Intangible assets in progress (software and products) 78,852 18, (64,120) 32,791 Trademarks and patents 7, (551) - 7,334 Products internally developed ,523,724 23,037 - (22,948) (286) 1,523, Financing Funding - Funders Domestic currency R$ Charges Fixed rate Signature date Contracted amount Accumulated amount paid Final maturity FINEP PROMETHEUS I and II 4.00% p.a. 8/28/ , ,444 9/2022 FINEP % p.a. 8/06/ ,752 10,752 8/2020 BNDES FINAME 3.55% p.a. 1/31/2013 4,876 4,876 11/2023 Page 31 of 56

57 Funders Domestic currency R$ 12/31/2017 Changes - Parent Company Incurred Interest Principal interest paid amortization 6/30/ FINEP PROMETHEUS I and II 127,052 2,374 (2,409) (13,351) 113,666 FINEP 2 5, (97) (992) 4,304 Other loans (LIS) 1, (1,263) - 133,613 2,469 (2,506) (15,606) 117,970 Capitalization cost (**) (1,216) (1,088) 132,397 2,469 (2,506) (15,478) 116,882 Current 29,922 28,621 Noncurrent 102,475 88,261 Changes - Funders Domestic currency R$ 12/31/2017 Incurred interest Interest paid Principal amortization 6/30/ FINEP PROMETHEUS I 127,052 2,374 (2,409) (13,351) 113,666 and II FINEP 2 5, (97) (992) 4,304 BNDES FINAME (*) 3, (74) (434) 3,258 Other loans 1, (1,384) - Working capital (687) - 138,113 2,543 (2,580) (16,848) 121,228 Capitalization cost (**) (1,216) (1,088) 136,897 2,543 (2,580) (16,720) 120,140 Current 30,948 29,261 Noncurrent 105,949 90,879 (*) Acquisition of medical equipment. The amortization of principal should not be included in the analysis of the Statement of Cash Flows. (**) The capitalization cost corresponds to the R$1,721 disbursed by FINEP to cover inspection and supervision expenses related to the Prometheus I and Prometheus II projects. On June 30,, the noncurrent installments of the financings matured as follows: Page 32 of 56

58 Parent Company ,215 14, ,767 28, to ,279 47,913 88,261 90,879 FINEP has a clause that obliges the Company to ensure the payment of any liability arising from the agreement by issuing a bank guarantee letter in the amount of the entire financing. This clause is indispensable to the signature of the agreement. Certain financings have covenants, including but not limited to the execution or formalization of collateral or personal guarantees, restrictions to the change, transfer or assignment of controlling interest, merger or spin-off without the creditor s prior consent, and the maintenance of financial and liquidity ratios measured every six months. On June 30,, the Company and its subsidiaries complied with all the above mentioned financial ratios, as well as with all the covenants. 16. Debentures The debentures were placed as follows: Issue amount (R$) Number of debentures Final maturity Semi-annual interest Total issued 1st Issue Second Series 10,000 30,000 Dec/18 CDI % p.a. 300,000 2nd Issue Single Series 10,000 50,000 Feb/20 CDI % p.a. 500,000 3rd Issue Single Series 10,000 30,000 Nov/22 CDI % p.a. 300,000 4th Issue First Series 10,000 25,000 Apr/21 CDI % p.a. 250,000 4th Issue Second Series 10,000 25,000 Apr/23 CDI % p.a. 250,000 The Company used the amounts raised with the debenture issues to strengthen its working capital, maintain its cash strategy, extend its debt profile and finance its investments and acquisitions in the coming years. The debentures issued are non-convertible and unsecured. 1st Debenture Issue The Company carried out its first debenture issue through a public offering for the distribution of simple debentures with restricted placement efforts, in two series, concluded on December 12, 2011, the First Series, totaling R$150,000, was totally amortized in the respective maturity dates until December 31, Page 33 of 56

59 The Second Series was issued to be amortized in three equal and annual installments. The second installment was amortized on December 12, 2017, and the third in, there being no optional early redemption or renegotiation. 2nd Debenture Issue This issue was carried out through a public offering for the distribution of simple debentures with restricted placement efforts, in a single series, concluded on February 19, The debentures will be/were amortized in three equal and annual installments on February 15,, 2019 and Payment of remuneration will occur every six months and there are no plans for renegotiation. 3rd Debenture Issue This issue was carried out through a public offering for the distribution of simple debentures with restricted placement efforts, in a single series; the Company issued thirty thousand (30,000) debentures, all registered, book-entry, with nominal unit value of R$10,000, totaling R$300,000. The debentures will mature in five (5) years as of the issue date and will be amortized in two annual installments, 50% of which on November 24, 2021, and 50% on November 24, th Debenture Issue The Company carried out its fourth debenture issue through a public offering for the distribution of simple debentures with restricted placement efforts, in two series, whereby the First series, totaling R$250,000, will be fully amortized on its maturity date, i.e. April 27, The Second series also totaled R$250,000 and will be fully amortized on its maturity date, i.e. April 27, Changes in debentures Parent Company and Domestic currency R$ 12/31/2017 Incurred interest Interest paid Principal amortization Release 6/30/ 1st Issue Second Series 100,374 3,783 (3,776) ,381 2nd Issue Single Series 515,826 13,627 (20,598) (166,667) - 342,188 3rd Issue Single Series 301,827 10,267 (10,098) ,996 4th Issue First Series - 2, , ,807 4th Issue Second Series - 2, , , ,027 33,398 (34,472) (166,667) 500,000 1,250,286 Current 284, ,619 Noncurrent 633, ,667 Page 34 of 56

60 The installments recorded under Noncurrent liabilities on June 30,, mature as follows: Maturity 2nd Issue 3rd Issue 4th Issue 4th Issue Single Series Single Series First Series Second Series , , , , , , , , , , , , , ,667 Covenants The debentures have covenants, and all obligations related to them will mature early if the Company fails to comply with the following financial ratios: (a) Net financial debt/earnings before interest, depreciation and amortization (EBITDA) ratio lower than or equal to 3.0 times and/or; (b) EBITDA/Net financial expense ratio equal to or higher than 1.5 times. On June 30,, the Company and its subsidiaries complied with all the above mentioned financial ratios, as well as with all the covenants. 17. Finance lease The Company signed the built to suit lease agreement of the Santo André II unit for 146 months, adjusted based on the annual accumulated variation of the IPCA Consumer Price Index. On June 30,, the financial lease liabilities are as follows: Minimum lease payments Parent Company and 6/30/ 12/31/2017 Less than 1 year 1,352 1,308 Between 1 and 5 years 6,758 6,540 More than 5 years 7,660 7,848 15,770 15,696 (-) Future financial charges (8,653) (8,321) Present value of the minimum payments 7,117 7,375 Current Noncurrent 6,507 6,769 Page 35 of 56

61 18. Trade payables Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Domestic 158, , , ,622 Foreign , , , , Payroll and related charges Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Provision for vacation and charges Provision for profit sharing Provision for Christmas bonus payable and charges Payroll charges payable Provision for health care and others 47,845 18,502 17,009 14,404 23,256 46,898 32,434-17,139 3,273 48,776 18,502 17,424 14,766 23,466 47,204 32,434-17,213 3, ,016 99, , , Taxes and contributions payable Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 REFIS Installment Law 11,941 30,110 39,960 31,262 41,186 IRPJ and CSLL 11,253-11,631 - PIS/COFINS on revenue 8,365 6,907 8,552 6,982 ISS on revenue 5,544 5,173 5,766 5,368 Other 2, ,013 1,274 PIS, COFINS and withholding social contribution (CSRF) 1,894 1,940 2,091 2,007 INSS withheld 1,486 1,614 1,520 1,623 Withholding income tax (IRRF) 1,076 1,011 1,110 1,032 ISS paid in installments (RJ and SP) Total 62,887 58,078 65,458 60,183 Current 35,236 29,878 36,457 30,634 Noncurrent 27,651 28,200 29,001 29,549 Page 36 of 56

62 On June 30,, noncurrent installments matured as follows: , , , , onwards 13,077 29, Accounts Payable Company acquisition Refer to debt incurred due to acquisition of companies, to be paid in accordance with the contractual terms, which are monthly restated, mainly by the IGP-M published by the Getulio Vargas Foundation (FGV) and the Extended Consumer Price Index (IPCA) published by the IBGE. On March 1,, Grupo Fleury acquired the control of the companies comprising Instituto de Radiologia de Natal and a portion of the acquisition, in the amount of R$32,000, was withheld and will be paid as described in Note 2.1 (d). Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Current ,738 1,855 Noncurrent 6,633 6,429 31,958 12,800 On June 30,, noncurrent installments matured as follows: 6,885 6,673 47,696 14, , , , ,737 Other (*) 12,639 31,958 (*) On June 30,, the maturities of specific installments are subject to final and unappealable decisions. It is, therefore, not possible to estimate payment for the coming years. Page 37 of 56

63 22. Income tax and social contribution Deferred Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Tax loss 60, ,700 69, ,852 Provision for tax, labor and civil risks 35,767 36,870 35,767 36,870 Estimated losses with allowance for doubtful accounts 19,089 19,213 19,089 19,213 Effective rate linearization 38,322-38,322 - Goodwill amortization is non-deductible until 2008 and deductible for tax purposes in future periods 24,782 24,782 24,782 24,782 Provision profit sharing 18,502 32,434 18,502 32,434 Stock option provision and other 35,565 26,303 35,300 24,082 Asset revaluation 5 (26) 5 (26) Net assets acquired from business combinations (14,242) (25,150) (15,328) (25,150) Goodwill amortization effects for tax purposes (a) (1,315,622) (1,324,048) (1,315,622) (1,324,048) Tax base (1,096,887) (1,072,922) (1,089,935) (1,066,991) Deferred income and social contribution taxes at a combined rate of approximately 34% (372,942) (364,793) (370,578) (362,777) Income tax and social contribution - Assets 92, ,239 95, ,025 Income tax and social contribution - Liabilities (465,562) (472,032) (466,430) (472,802) (a) Goodwill from mergers, mainly Labs Cardiolab. The net balance is recorded under noncurrent liabilities, pursuant to CPC 32. The estimated realization term of the deferred tax asset recorded in the is as follows: 26, , ,257 95,852 Current and deferred income tax and social contribution recorded in profit (loss) are reconciled as follows: Parent Company 6/30/ 6/30/2017 6/30/ 6/30/2017 Income before income tax and social contribution 249, , , ,379 Standard rate 34% 34% 34% 34% (84,778) (77,602) (85,344) (77,649) Page 38 of 56

64 Income tax and social contribution expenses standard rate Equity in the earnings (losses) of subsidiaries Effect of effective rate linearization 13,842 18,117 13,842 18,117 Other permanent (additions) exclusions 4, , Income tax and social contribution expenses: (66,287) (58,819) (67,952) (58,958) Current (58,789) (30,229) (60,969) (30,580) Deferred (7,498) (28,590) (6,983) (28,378) Effective tax rate - % 26.6% 25.7% 27.1% 25.8% 23. Provision for tax, labor and civil risks The Company is subject to tax, labor and civil risks in the normal course of its operations. Management periodically reviews known contingencies, assesses probable losses and adjusts the respective provision, taking into consideration its legal counsel s assessment and other data available at the end of the reporting periods, such as the nature of the lawsuits and past experience. On June 30,, the provision for tax, labor and civil risks was as follows: Parent Company 6/30/ 12/31/2017 6/30/ 12/31/2017 Tax 13,438 15,139 13,438 15,153 Labor 20,227 20,316 20,436 20,722 Civil 2,101 1,415 2,101 1,415 35,766 36,870 35,975 37,290 Judicial Deposits (Note 10) (7,379) (6,810) (7,379) (6,810) 28,387 30,060 28,596 30,480 Changes in the provision for tax, labor and civil risks () are as follows: Balance on 12/31/2017 Parent Company Addition/ Reversal Reclassification/ Payments Monetary restatement Balance on 6/30/ Tax 15,153-1,167 (3,676) ,438 Labor 20,722 (185) 317 (1,575) 1,157 20,436 Civil 1, (21) 85 2,101 37,290 (185) 2,106 (5,272) 2,036 35,975 Judicial Deposits (6,810) (149) (1,132) (7,379) Page 39 of 56

65 30,480 (185) 2,818 (5,421) ,596 a) Lawsuits classified as a probable loss, for which provisions were recorded: Tax The main federal matter refers to the challenge related to the exemption of COFINS granted to companies that provide services related to professions regulated by law. Supplementary Law 70/91, which created COFINS, addressed the exemption granted to this type of entity. Law 9,430/96, however, expressly revoked this exemption and required the contribution based on the service providers gross revenue. The Company s legal counsel understands that, since Law 9,430/96 is an ordinary law, it could not have revoked the exemption granted by Supplementary Law 70/91. Nevertheless, given that the Federal Supreme Court has already issued an opinion contrary to said thesis, the Company had a provision to cover risks of R$2,072 on June 30, (R$1,787 on December 31, 2017). Labor and Civil Lawsuits The Company considers that the provision for labor and civil lawsuits is sufficient to cover expected losses. The Group s legal counsel analyzes lawsuits on a case-by-case basis, classifying the risk of loss in accordance with the guidelines established by the Company in its policy. b) Lawsuits classified as possible loss The Company has tax, civil and labor claims that are not provisioned since they are classified as a possible loss by Management and its legal counsel. On June 30,, the consolidated amount was approximately R$431,600 (R$479,810 on December 31, 2017). Tax lawsuits classified as a possible loss amounted to R$293,469 (R$315,975 on December 31, 2017), mainly comprising, in the federal sphere: (i) R$129,142 (R$147,101 on December 31, 2017), mainly related to discussions on exemption from social contribution (CSLL), income tax (IRPJ), social security financing tax on revenue (COFINS), social integration program tax on revenue (PIS) and import PIS/COFINS; (ii) federal tax claims involving social security contributions totaling R$59,502 (R$62,740 on December 31, 2017); and (iii) sundry federal lawsuits totaling R$5,772 (R$4,627 on December 31, 2017). Regarding state taxes, lawsuits classified as a possible loss amounted to R$28,893 (R$40,473 on December 31, 2017) and mainly refer to state value-added tax (ICMS) on equipment imports. In relation to municipal taxes, lawsuits classified as a possible loss reached R$70,160 (R$61,033 on December 31, 2017) and mainly refer to claims involving tax on services of any kind (ISSQN). In the civil sphere, the Company s lawsuits classified as a possible loss totaled R$45,426 (R$36,480 on December 31, 2017), of which R$11,289 (R$13,156 on December 31, 2017) mainly related to Page 40 of 56

66 civil liability lawsuits claiming compensation for damages and pain and suffering due to, among others, alleged diagnostic errors or malpractice, and other lawsuits addressing different requests, totaling R$34,137 (R$23,324 on December 31, 2017). Labor lawsuits classified as a possible loss amounted to R$92,705 (R$127,348 on December 31, 2017), of which (i) R$82,125 (R$100,724 on December 31, 2017) refers to labor claims from former employees; (ii) R$10,339 (R$10,421 on December 31, 2017) refers to secondary liability lawsuits filed by employees of companies that render specialized services to the Company on an outsourced basis; and (iii) R$241 (R$16,203 on December 31, 2017) refers to ongoing administrative lawsuits. Also in the labor sphere, the Company was summoned in a public civil action suit pending at the Labor Court of Rio de Janeiro that essentially challenges the legality of hiring specialized medical companies. In addition, the request by the public civil action comprises the payment of R$3,935 for collective pain and suffering. The Company is fighting this lawsuit by proving the legitimacy of its practice of hiring medical companies, in accordance with the applicable laws, being supported by court precedents in favor of hiring legal entities to provide medical services. Confirming this thesis, the first instance court denied the claim; this decision was partially overruled by the 1st Region Appellate Labor Court. The Company filed motions for clarification, which were partially granted, and, subsequently, filed an appeal at the Superior Labor Court, which is currently pending trial. The likelihood of success has not changed in the opinion of the legal counsel given previous Superior Labor Court cases. 24. Operating lease A large share of the properties used in operating activities is rented, with terms and amounts established by agreements effective from four to six years. In the period ended June 30,, the Company s rent expenses totaled R$61,579 (R$58,673 on June 30, 2017). The agreement amounts are monetarily restated after the original maturity date (usually annual). This adjustment is calculated based on the General Market Price Index (IGP-M) variation. The consolidated rent commitments totaled R$433,806 on June 30, (R$460,300 on June 30, 2017). The consolidated position of these commitments is as follows: 58, , , , onwards 97, , Related parties a) Impacts on the statement of income and statement of financial position Page 41 of 56

67 Parent Company and 6/30/ 6/30/2017 Rent expenses Transinc Fundo Inv. Imobiliário (a) (4,486) (5,060) Amicabilis Participações e Empreendimentos Ltda. (a) (1,762) (1,649) Harmonikos 32 Participações e Empreendimentos Ltda. (a) (1,341) (1,305) Benefit expenses Companies associated with Bradseg (b) (66,899) (80,415) (74,488) (88,429) Parent Company and 6/30/ 12/31/2017 Statement of financial position: Assets Bradesco (c) 557, ,031 Loan (Parent Company x Indirect Subsidiary Serdil) 56 - Liabilities Transinc Fundo Inv. Imobiliário (a) (758) (742) Companies associated with Bradseg (b) (16,072) (4,868) Net balance 540, ,421 (a) These property funds have shareholders that are direct and indirect shareholders of the Company (Grupo Fleury). (b) Bradseg, a shareholder with a significant interest in the Company, holds an interest in and/or control of health insurance operators and companies that have a business relationship with the Company. Bradseg also holds an indirect interest in Odontoprev S.A., a dental care provider and parent company of Clidec Participações, partner of Fleury Centro de Procedimentos Médicos Avançados, subsidiary of the Company, in Papaiz Associados. These amounts refer to service agreements, mainly health insurance and food/meal and transportation vouchers, and private pension plans. A group of companies associated with Bradseg is among the Company s main clients. (c) Grupo Fleury holds financial investments and balances in bank accounts in Banco Bradesco. On June 30,, investment operations consisted of an exclusive fund classified as fixed revenue and repurchase agreements, whose yields are shown in Notes 4 and 5. b) Management compensation Page 42 of 56

68 For the period ended June 30,, Management compensation included salaries, management fees, benefits, payroll charges, stock options and bonus totaling R$12,362 (R$9,734 on June 30, 2017), which is recorded under General and administrative expenses in the statement of income. The compensation of Executive Officers and Management members did not exceed the maximum limit approved by the Meeting held on April 23,. The provision for employee and Management profit sharing totaled R$17,767 in the period ended June 30, (R$17,000 on June 30, 2017). Pursuant to CPC 33 Employee Benefits, the Company offers post-employment benefits to its Management, comprising private pension and life insurance. 26. Equity a) Share capital On June 30,, the fully paid-in share capital was R$1,436,392, represented by 315,312,192 bookentry, registered common shares with no par value. The net amount of share issue expenses was R$1,413,608. The Company is authorized to increase its share capital, regardless of an amendment to the Bylaws, upon resolution of the Board of Directors, up to the limit of 320,000,000 common shares. b) Dividends and Interest on Equity Shareholders are entitled to 25% of the annual profit, as minimum mandatory dividends, adjusted in accordance with Brazilian Corporation Law. On March 1,, the Board of Directors approved ad referendum of the Annual Shareholders Meeting the allocation of net profit for 2017, in the amount of R$320,618, as follows: (a) R$16,031 to the legal reserve; (b) R$100,349 as interest on equity, which was already distributed on July 27, 2017, and (c) R$204,238 ( per share) as dividends, paid on April 2,. 27. Employee benefit Private Pension Plan The Company sponsors a private pension plan which is currently managed by Bradesco Vida e Previdência S.A., whose main purpose is to complement the government pension. This definedcontribution plan is optional for all employees. In the period ended June 30,, the Company contributed R$1,029 (R$1,046 in the period ended June 30, 2017) to this plan, recorded under Cost of services and General and administrative expenses. Stock option plan The Company s Board of Directors is responsible for determining, at each grant, the participants of the plan, as well as the number of shares to be acquired when each option is exercised, the term, the exercise price, payment conditions and other conditions. Page 43 of 56

69 Under the current plans, no amount is paid or will be paid by the beneficiary when the option is received. The options do not grant voting rights or rights to dividends, until they are effectively exercised. Due to the stock split resolved on by the Extraordinary Shareholders Meeting of June 26, 2017, every one (1) share issued by the Company is now represented by two (2) shares of the same type. (i) 2010 to 2014 Grants The Extraordinary Shareholders Meeting of November 12, 2009, approved the Company s Stock Option Plan, authorizing the grant of stock options to employees selected by the Board of Directors. The options granted under this plan will be limited to 3% of the total shares of the Company s subscribed and paid-in share capital. Each stock option may be converted into one common share of Fleury S.A. upon the exercise of the option, which may occur at any moment, from the date the right is acquired to six years after the grant date, when the options expire. No amount is paid or will be paid by the beneficiary when the option is received. The options do not grant voting rights or rights to dividends, until they are effectively exercised. Participants will have at the most six years to exercise the options, as of the date the options are granted. The exercise price of the options will be based on the weighted average of the trading sessions of the month immediately prior to the signing of the option agreement. Exceptionally for the first grant, the exercise price of the options was equivalent to the price per share established within the scope of the first primary public offering of common shares issued by the Company ( IPO ). (ii) 2016 to Grants The Extraordinary Shareholders Meeting of July 25, 2016, approved the Company s new Stock Option Plan intended for its executives, management, and employees (beneficiaries). The options granted under this Plan may not exceed, during the term of the Stock Option Plan, the maximum accumulated limit of two point five percent (2.5%) of the total shares of the Company s subscribed and paid-in share capital on this date. In these contexts, 1,773,166 options were granted. Also under this plan, the following stock options were approved: Approval date Number of options Approval May 3, ,000 options Extraordinary Shareholders Meeting October 25, ,000 options Board of Directors December 15, ,000 options Extraordinary Shareholders Meeting Page 44 of 56

70 March 1, 140,000 options Board of Directors May 10, 375,000 options Board of Directors June 20, 47,000 options Board of Directors Each stock option may be converted into one common share of Fleury S.A. upon exercise of each portion of the option, which may occur at any moment, from the date the right is acquired to two years after the exercise date when the options expire. After exercising each portion of the option and subscribing the respective share, the beneficiaries will only be able to sell or transfer them after six months of the date of subscription. The option can be fully exercised by the beneficiaries within, at least, six years as of the signing of the respective adherence agreement. Each portion of the option can be exercised as follows: (i) 12.5% in the 24th month as of the signing of the agreement; (ii) 25% in the 36th month; (iii) 25% in the 48th month; (iv) 25% in the 60th month; and (v) 12.5% after the end of the 72nd month as of the signing of the agreement. The exercise price of the options will be based on the average closing price of the share in the ninety (90) trading sessions prior to the Board of Directors meeting that will resolve on said grant. The changes in the number of stock options and corresponding weighted average exercise prices are as follows: Balance on 12/31/2017 Granted Expired Balance on 6/30/ Grant date October 5, 2014 (5th Grant) July 27, 2016 (1st PN) May 3, 2017 (2nd PN) October 25, 2017 (3rd PN) December 15, 2017 (4th PN) March 1, (5th PN) May 10, (6th PN) June 20, (7th PN) Number of options 507,612 2,871, , , , Average exercise price Number of options , ,000 47,000 Average exercise price Number of options (48,420) (130,996) Average exercise price Number of options 459,192 2,740, , , , , ,000 47,000 Average exercise price From a total of 4,697,022 existing options on June 30, (4,712,835 options on June 30, 2017), 5,004 options can be exercised (43,072 options on June 30, 2017). On June 30,, the Company recorded pro-rata expenses of R$4,186 under General and administrative expenses (R$4,049 in the period ended June 30, 2017). The stock options outstanding on June 30,, had the following maturities and exercise prices: Page 45 of 56

71 Date Stock options granted Stock option exercise price** Position on 6/30/ Position on 6/30/2017 (**) Period price Number of options Number of options Period price 2017 Grant June 20, 47, , Grant May 10, 375, , Grant March 1, 140, , Grant December 15, , , Grant October 25, , , Grant May 3, , , , Grant July 27, ,586, ,740, ,567, Grant October 5, ,298, , , Grant April 30, ,378, , Grant May 2, ,465, ,697,022 2,356,415 ** The price of options will be restated by the IPCA Consumer Price Index variation, except for Grants between 2016 and. On June 30,, the market price of each share totaled R$26.45 (R$26.49 on June 30, 2017). Options granted between 2011 and 2014 were priced based on the binomial model and significant data included in the fair value pricing model of the stock options granted in the period were as follows: Vesting in 48 months - Grant on October 5, 2014 Volatility 28.4% Expected life for the exercise of the options 2 years Risk-free annual interest rate 10.33% Options granted between 2016 and were priced based on the Black & Scholes model and significant data included in the fair value pricing model of the stock options granted in this period were as follows: May 10, March 1, Vesting in 48 months - Grant on December 15, 2017 October 25, 2017 May 3, 2017 July 27, 2016 Volatility 29.49% 29.38% 28.97% 42.79% 29.12% 28.36% Dividend yield 3.22% 3.76% 3.17% 2.93% 3.09% 1.75% Expected life for the exercise of 2 years 2 years 2 years 2 years 2 years 2 years the options Risk-free annual interest rate 7.59% 7.71% 8.20% 8.04% 9.54% 12.70% 28. Revenue from services rendered Page 46 of 56

72 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 Parent Company 1/01/ to 1/01/2017 to 6/30/ 6/30/2017 Gross revenue 706, ,338 1,403,445 1,281,658 Taxes (43,797) (39,610) (86,883) (79,106) Disallowances (8,861) (8,988) (18,219) (23,664) Rebates (293) (73) (339) (120) Net revenue 653, ,667 1,298,004 1,178,768 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 1/01/ to 6/30/ 1/01/2017 to 6/30/2017 Gross revenue 728, ,492 1,434,388 1,288,624 Taxes (45,544) (39,845) (89,140) (79,498) Disallowances (8,864) (8,949) (18,236) (23,627) Rebates (293) (73) (340) (120) Net revenue 673, ,625 1,326,672 1,185, Cost of services 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 Parent Company 1/01/ to 1/01/2017 to 6/30/ 6/30/2017 Personnel and medical services (219,222) (207,165) (438,003) (398,751) Rent, occupancy and utility services (127,987) (115,155) (250,033) (223,361) Direct material and exam intermediation (63,551) (60,318) (123,122) (117,846) Depreciation and amortization (31,216) (22,891) (62,540) (45,957) General expenditures (2,036) (2,420) (3,548) (4,391) (444,012) (407,949) (877,246) (790,306) 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 1/01/ to 6/30/ 1/01/2017 to 6/30/2017 Page 47 of 56

73 Personnel and medical services (229,796) (209,927) (454,205) (404,216) Rent, occupancy and utility services (131,569) (115,155) (254,054) (223,361) Direct material and exam intermediation (64,473) (60,318) (124,231) (117,846) Depreciation and amortization (32,222) (23,044) (63,949) (46,263) General expenditures (2,078) (2,420) (3,593) (4,391) (460,138) (410,864) (900,032) (796,077) 30. General and administrative expenses 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 Parent Company 1/01/ to 1/01/2017 to 6/30/ 6/30/2017 Personnel and benefits (41,433) (36,611) (79,674) (72,179) Depreciation and amortization (12,289) (10,824) (24,613) (21,075) Marketing (5,444) (6,277) (9,556) (8,587) Institutional and legal matters (2,101) (2,307) (8,604) (4,351) Other general and administrative expenses (6,637) (3,840) (6,787) (6,972) Properties and utilities (2,989) (2,862) (5,883) (5,394) Third-party services (2,256) (3,023) (4,850) (4,499) IT and telecommunications (1,296) (1,487) (2,396) (2,684) (74,445) (67,231) (142,363) (125,741) 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 1/01/ to 6/30/ 1/01/2017 to 6/30/2017 Personnel and benefits (41,500) (36,611) (80,073) (72,179) Depreciation and amortization (12,289) (10,824) (24,765) (21,075) Marketing (5,449) (6,277) (9,584) (8,587) Institutional and legal matters (2,106) (2,308) (8,684) (4,351) Other general and administrative expenses (6,648) (3,849) (6,862) (6,982) Properties and utilities (3,040) (2,862) (6,271) (5,394) Third-party services (2,312) (3,023) (5,175) (4,534) IT and telecommunications (1,308) (1,487) (2,480) (2,684) (74,652) (67,241) (143,894) (125,786) Page 48 of 56

74 31. Other operating income (expenses), net 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 Parent Company 1/01/ to 1/01/2017 to 6/30/ 6/30/2017 Other income (expenses) (3,079) (1,221) (4,053) (2,995) Result from write-off/sale of assets 709 (50) 769 (2,794) Provision/losses with insolvent debtor (880) - (1,387) - (3,250) (1,271) (4,671) (5,789) 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 1/01/ to 6/30/ 1/01/2017 to 6/30/2017 Other income (expenses) (2,796) (1,221) (3,735) (2,995) Result from write-off/sale of assets 709 (49) 768 (2,794) Provision/losses with insolvent debtor (1,110) - (1,616) - (3,197) (1,270) (4,583) (5,789) 32. Financial result 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 1/01/ to 6/30/ Parent Company 1/01/2017 to 6/30/2017 Financial income: Income from financial investments - securities 5,815 5,474 9,899 6,339 Income from financial investments 3,514 4,629 8,345 16,459 Monetary restatement of taxes and judicial 746 1,658 1,866 3,763 deposits Derivative financial instruments Exchange variation and others PIS/COFINS on financial income (470) (554) (939) (1,244) 10,115 11,522 19,870 25,687 Financial expenses: Interest on debentures (18,688) (19,845) (33,398) (43,181) Exchange variation and others (1,451) (109) (2,716) (728) Interest on financing and other interest (1,228) (1,265) (2,512) (2,339) Monetary restatement of provision for tax, (803) (874) (2,036) (1,876) labor and civil risks Financial fees (1,336) (1,086) (1,947) (1,630) Page 49 of 56

75 Monetary restatement of payments in (498) (1,156) (1,708) (5,386) installments and accounts payable company acquisition Derivative financial instruments (2) (8) (131) (413) (24,006) (24,343) (44,448) (55,553) Net financial result (13,891) (12,821) (24,578) (29,866) 4/01/ to 6/30/ 4/01/2017 to 6/30/2017 1/01/ to 6/30/ 1/01/2017 to 6/30/2017 Financial income: Income from financial investments - securities 6,076 5,513 10,325 6,378 Income from financial investments 3,186 5,083 8,262 17,043 Monetary restatement of taxes and judicial 746 1,678 1,866 3,783 deposits Derivative financial instruments Exchange variation and others PIS/COFINS on financial income (498) (560) (975) (1,254) 10,057 12,028 20,214 26,319 Financial expenses: Interest on debentures (18,688) (19,845) (33,398) (43,180) Exchange variation and others (1,615) (493) (3,128) (1,111) Interest on financing and other interest (1,264) (1,265) (2,604) (2,339) Monetary restatement of taxes and accounts (1,193) (1,156) (2,537) (5,386) payable Monetary restatement of provision for tax, (803) (874) (2,036) (1,876) labor and civil risks Financial fees (1,336) (1,086) (1,947) (1,630) Derivative financial instruments (2) (8) (131) (414) (24,901) (24,727) (45,781) (55,936) Net financial result (14,844) (12,699) (25,567) (29,617) 33. Earnings per share Basic earnings per share Basic earnings per share are calculated by dividing the profit attributable to the Company s shareholders by the weighted average number of common shares issued in the period, excluding common shares acquired by the Company and held as treasury shares. Page 50 of 56

76 6/30/ 6/30/2017 Profit attributable to the Company s shareholders 183, ,421 Weighted average number of common shares issued/outstanding 314,902, ,413,211 Basic earnings per share - R$ Diluted earnings per share Diluted earnings per share are calculated by adjusting the weighted average number of outstanding common shares to assume the conversion of all diluted potential common shares. The Company had outstanding dilutive potential common shares in the period, related to the Company s Stock Option Plan, as follows: 6/30/ 6/30/2017 Profit attributable to the Company s shareholders 183, ,421 Weighted average number of outstanding common shares 314,902, ,413,211 (+) Adjustments due to stock options 7,881,262 5,762,202 (=) Weighted average number of common shares for diluted earnings per share 322,783, ,175,413 Diluted earnings per share - R$ Segment reporting Grupo Fleury s Management carries out analyses based on three significant business segments: Diagnostic Medicine, Integrated Medicine and Dental. The segments presented in the financial statements are strategic business units that offer different products and services. Diagnostic Medicine Period ended 6/30/ Period ended 6/30/2017 Integrate Diagnostic Integrated d Dental Dental Medicine Medicine Medicine Net revenue 1,091, , ,326, , ,602-1,185,379 EBITDA 325,786 38, , ,365 30, ,603 Equity in the earnings of joint venture Depreciation and (88,714) amortization (67,338) Financial result (25,567) (29,617) Income before income ,012 taxes 228,379 Page 51 of 56

77 Assets and liabilities by reportable segment are not being presented, in line with CPC 22, given that this information is not regularly presented to the main managers of the operations. Pursuant to accounting standard CPC 19 (R2) - Joint Arrangements, the indirect subsidiary Papaiz is accounted for by the equity accounting method because it is jointly controlled. Dental operations are broken down as follows: 6/30/ 6/30/2017 Net revenue 5,798 5,009 EBITDA 1,249 1,255 Depreciation and amortization (304) (217) Financial result (237) (149) Income before taxes Income tax and social contribution (184) (158) Profit Insurance The Company has the policy to contract insurance for possible risks related to its assets, loss of profit and/or liability in amounts sufficient to cover possible losses, considering the nature of its activities and in accordance with the assessment of Management and its specialized consultants. The Parent Company s net insurance premium for the policies in effect on June 30,, totaled R$728, while the came to R$749. The agreements are in effect until April 19, The maximum amounts insured by the main insurance on June 30, were as follows: Operating risks R$590,700 Civil liability R$105,000 International transport - imports US$ ( 000) 650 *** Carlos Alberto Iwata Marinelli CEO Page 52 of 56

78 Fernando Augusto Rodrigues Leão Filho Chief Executive Finance and Legal Officer Gisele Schneider Technical manager TCRC 1SP Page 53 of 56

79 BOARD OF EXECUTIVE DIRECTORS DECLARATION ABOUT FINANCIAL STATEMENTS Pursuant to subsection VI of Article 25 of CVM Instruction 480 of December 7 th 2009, the Executive Officers declare that they have reviewed, discussed and agreed with the Company's Financial Statements for the period ended on June 29 th, authorizing its conclusion on this date. São Paulo, July 26 th,. Board of Executive Directors Carlos Alberto Iwata Marinelli CEO Fernando Augusto Rodrigues Leão Filho CFO Viviane Behar de Castro IRO

80 BOARD OF EXECUTIVE DIRECTORS DECLARATION ABOUT INDEPENDENT AUDITOR S REPORT Pursuant to subsection V of Article 25 of CVM Instruction 480 of December 7 th 2009, the Executive Officers declare that they have reviewed, discussed and agreed with the contents and opinions expressed in the Independent Auditor s Report on the Company's Financial Statements for the period ended on June 29 sh, issued on July 25 th,. São Paulo, July 26 th,. Board of Executive Directors Carlos Alberto Iwata Marinelli CEO Fernando Augusto Rodrigues Leão Filho CFO Viviane Behar de Castro IRO