Corporate Presentation 2Q18. New growth cycle and value innovation

Transcription

1 Corporate Presentation 2Q18 New growth cycle and value innovation

2 Index 1 Dental benefits: an incipient sector in Brazil 2 Inside OdontoPrev: strategic competitive advantages 3 Financial and Operational Performance 2

3 Dental benefits: an incipient sector in Brazil

4 Brazil leads the global ranking of dentists Number of dentists per country (thousand) 291 ¹ 19% of the dentists in the world are located in Brazil¹ ² 63 47² 43² ² Source: FDI World Dental Federation The Oral Health Atlas 2009 ¹ Federal Council of Dentistry Brazil (October 2017) ² Eurostat

5 Brazilian dental opportunity Although 19% of world s dentists are located in the country, only 11% of brazilians covered by a dental plan 77% 11% % of the population covered by a private dental plan Source: OdontoPrev

6 Great portion of the middle class without dental plan Brazil s population: 209 million people 124 million the middle class 85 million people middle class 23 million people with dental plan 101 million people without dental plan 6 Source: Bradesco, considers families within the B and C classes

7 Dental and medical plans membership evolution Million members Medical plans Dental plans ,7 +41 thousand thousand MAY MAY18 7 Source: ANS

8 Focused & dental only leadership since 1998 Key players, brazilian dental benefits 2018 (thousand members) 6,455¹ 27% market share 542 1,935 1,603 1,488 1,067 1, Dental / Total (Revenues) 100% n/a 4% 5% 1% n/a 100% n/a 1% 8 ( ) ( ) Source: ANS MAI/18 ¹Companies Earnings Release (Jun/18)

9 Revenue & membership market share: Revenue market share (%) Membership market share (%) 41% 42% 43% 44% 44% 44% 46% 46% 25% 29% 30% 34% 33% 32% 32% 31% 30% 28% 27% 23% 22% 21% Source: ANS and OdontoPrev ¹ OdontoPrev membership portfolio ex-bradesco

10 3 accelerated growth cycles, over the last decade, brings new investors to the sector

11 Cycle 01: Bradesco Dental (million members) OdontoPrev EBITDA (R$ million and % Sales) Average ticket (R$/member/month) % 23.3% 23.9% % Source: ANS

12 Cycle 02: Amil from 2010 to 2013 (million members) OdontoPrev EBITDA (R$ million and % Sales) Average ticket (R$/member/month) % 24.9% 23.8% 25.5% * 12 Source: ANS *Sold to UnitedHealthcare

13 Negative result in Brazil since the acquisition in 2013 Net income/loss (R$ million) Source: Amil (Valor Econômico)

14 Cycle 03: Hapvida & Bain Capital since 2015 (million members) OdontoPrev EBITDA (R$ million and % Sales) Average ticket (R$/member/month) % 26.2% 24.5% 25.2% % ¹ APR17 MAR18¹ 2015 MAY MAY18 14 Source: ANS ¹Excludes Bradesco Dental and OdontoPrev INSS reversals

15 Change in control brings a new strategy of peers Thousand lives ( ) 2,132 2,003 1,846 1,946 1,907 1,935 1,286 1,197 1,550 1, ,056 1,257 1,552 1, MAI18 15 Source: ANS

16 Dental plans sector evolution DEC15 MAY18 Thousand members +1,107 23, ,994 Others DEC15 With 13% of market share, two companies represented 45% of the growth of the sector since MAY18 16 Source: ANS

17 Cross-selling dental/medical has limited upside May 2018 Players Dental (A) Medical (B) A / B 1,603 2,011 80% 1,488 2,318 64% 17 Source: ANS

18 Average ticket evolution (R$/member/month) Q , N/A Q18 Source: OdontoPrev 18

19 Strategic competitive advantages

20 Attractive cost dynamics Cost per client Cost per client Over time, OdontoPrev Dental Plans present a predictable Medical Plans Price Cost Price Cost Time Cost increases by medical inflation and better technology Short-term contract: 1 year tenor Time Predictable cost evolution due to prevention Long-term contract: 2 year + duration 20 and more attractive cost profile than Medical Plans.

21 Proprietary IT Platform: information-driven decisions 21 Complete dental record of all beneficiaries 3 decades of actuarial data Risk management and fraud prevention

22 Innovation driven Company Top quality dental materials delivered door to door to the dentist free of charge individual plans sold at the web 22

23 2Q18 Results

24 OdontoPrev: 12 years of sustainable value creation since IPO Net revenues (R$ million) 1,365 1,437 1,477 1,070 1,156 1, IPO JUL17 JUN18 24

25 Net revenues annual growth (%) 5.6% 5.4% 5.9% 4.6% 4.4% 2Q17 3Q17 4Q17 1Q18 2Q18 25

26 Incremental revenue per segment (YoY) R$ million Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Corporate SME Individual Plans 26

27 Individual plans & SME: higher growth and better returns 6M15 AVERAGE TICKET (R$ / member / month) Corporate Non-corporate Net Revenues R$453 M (+6.1% YoY) Contribution Margin 45% Net Revenues R$152 M (+9.0% YoY) Contribution Margin 49% High Low NUMBER OF COMPETITORS 27 ¹ M: million Contribution Margin: Net Revenue (-) Cost of Services (-) Selling Expenses

28 Individual plans & SME: higher growth and better returns 6M18 AVERAGE TICKET (R$ / member / month) 32 Non-corporate Net Revenues R$269 M (+9.3% YoY) Contribution Margin 47% Corporate Net Revenues R$469 M (+3.2% YoY) Contribution Margin 44% Net Revenues R$453 M (+6.1% YoY) Contribution Margin 45% Net Revenues R$152 M (+9.0% YoY) Contribution Margin 49% High Low NUMBER OF COMPETITORS 28 ¹ M: million Contribution Margin: Net Revenue (-) Cost of Services (-) Selling Expenses

29 Non-corporate: from 25% in 2014 to 36% of Revenues in 6M18 Segment % of Revenues 13% 12% 25% 13% 13% 26% 18% 14% 32% 20% 15% 35% 20% 16% 15% 36% 75% 74% 68% 65% 64% M18 Corporate SME Individual Plans 29

30 Average Ticket per Segment R$ / member / month and YoY % % 13% 14% 8% % 4% 3% 3% 3% % 1H16 2H16 1H17 2H17 1H18 Corporate Non-corporate 30

31 6M Net additions Thousand lives H15 2H15 1H16 2H16 1H17 2H17 1H

32 6M net additions - Corporate Thousand lives H15 2H15 1H16 2H16 1H17 2H17 1H18 32

33 The largest bancassurance platforms in Brazil Clients + 50 million + 40 million National footprint Exclusivity 20 years 44% of branches & 54% of brazilian bank clients 33

34 Breakdown of individual plans Thousand lives +53% 79% 357K lives % 93K lives +236% 45% 312K lives 687 7% 48% 330K lives 2Q14 2Q18 Retailers 34

35 Positive effects of bank channels 2Q18 List prices & R$45.60 Retailers R$37.50 Selling expenses Profitability 10% - 15% Higher 25% - 45% Lower 35

36 Breakdown of SME lives Thousand lives +31% 81% 595K lives % 13% 19% 76% 730K lives 11% 2Q14 2Q18 36

37 Thousand lives Net additions JUL17- JUN18 37

38 Quarterly and LTM Cost of Services (% Sales) Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q¹ 3Q¹ 4Q¹ 1Q¹ 2Q¹ Quarterly LTM 38 ¹ Excludes Bradesco Dental and OdontoPrev INSS effects

39 Pricing power offsets higher cost of services 6M Corporate SME Individual Plans Cost of Services / member / month Average ticket 39

40 Adjusted EBITDA R$ million and % Sales , % % ¹ JUL17 6M17¹ 6M18 2Q17¹ 2Q18 JUN18¹ 40 ¹ Excludes Bradesco Dental and OdontoPrev INSS

41 2Q18: +339% of Adjusted EBITDA and +216% of Net Income R$ million Q17 3Q17 4Q17 1Q18 2Q18 Adjusted EBITDA Net income 41

42 Net Income and net margin R$ million and % Sales % % , ¹ JUL17 6M17¹ 6M18 2Q17¹ 2Q18 JUN18¹ 42 ¹ Excludes Bradesco Dental and OdontoPrev INSS

43 Net cash R$ million JUN18 43

44 Capex: low portion of adjusted EBITDA R$ million ¹ ¹ M17 6M18 Adjusted EBITDA CAPEX 44 ¹ Excludes Bradesco Dental and OdontoPrev INSS

45 Cash flow since the 2006 IPO R$ million +2, % of Sales Share buyback Capital reduction -1,635.5 Cash dividends , Net Cash DEC = + Cash Acquisitions Capex + Shareholder Generation Remuneration Stock Options¹ Net Cash JUN18 45 ¹ Share repurchase related to Stock Options Plan

46 Acquisition of : EGM on 08/06/18 Dental-only player, #3 player in the Northeast region 622K beneficiaries: 65% corporate / 35% non-corporate. 9x 2017 adjusted EBITDA (R$199 million) and 2019 earn-out; Central Bank, ANS and Anti-trust approvals, with no restrictions. EGM on 08/06/18. 46

47 Feedback from the Street One of the world s best emerging markets business models We continue to view OdontoPrev as the best business model in the healthcare segment, combining a high return and cashflow-generation profile. The only Company in LatAm with an IT competitive advantage Strong fundamentals stand out on current environment. We believe that high multiples are supported by: 1) strong FCF generation; 2) balance sheet with no debt; 3) dividend yield and 4) high earnings visibility. 47

48 Global shareholder structure: investors from 33 countries JUNE18 Management 1.46% Treasury 0.54% 7.7% 6.4% 5.6% 5.3% Others 2.2% 1.4% 50.01% Free Float 47.99% 18.8% 1.3% 1.2% 40.9% 1.2% 1.2% Total Capital 531,294,792 Shares Source: OdontoPrev 48% Free float 254,999,114 Shares 0.5% 48

49 Corporate Governance and professional management team AGM Fiscal Council Personnel Management Committee External Audit Board of Directors CEO Rodrigo Bacellar 2 years* Audit Committee Internal Audit IR and Strategic Planning Officer Administrative and Finance Director Corporate Commercial Director Retail Commercial Director Clinical Operational Director Human Resources Director IT Director José Roberto Pacheco 12 years* Luis Andre Blanco 9 years* Elsen Carvalho 2 years* Carlos Rogoginsky 6 years* José Maria Benozatti 19 years* Rose Gabay 10 years* Marcelo Galvão 3 years* * Number of years at OdontoPrev 49

50 Key metrics for management s compensation Quantitative goals Perception Studies Revenue EBITDA (R$) Number of members Beneficiaries Dentists HR managers Quality of services 50

51 Upcoming IR events Date Country Broker Event Aug 7, 2018 Aug 22, 2018 Sep 10-12, 2018 Sep 13, 2018 Sep 18, 2018 Oct 24, 2018 Oct 25, 2018 Oct 26, 2018 Nov 13-14, 2018 Nov 19-20, 2018 Nov 21, 2018 Nov 28-30, 2018 Jan 07-08, 2019 Santander Brazil Trip - São Paulo JP Morgan 12th Healthcare Check-Up - São Paulo Morgan Stanley LatAm Conference - London NDR HSBC - London UBS VII Healthcare Day - São Paulo 3Q18 Earnings Release 3Q18 Webcast Investor Presentation - São Paulo Bradesco 8th Annual CEO Forum - New York Itaú BBA's 11th LatAm Conference - London NDR - Itaú BBA JP Morgan Brazil Opportunities Conference - São Paulo JP Morgan Global Healthcare Conference - San Francisco 51

52 Why OdontoPrev? Largest and best network of dental specialists Proven & sustainable business model State-of-the-art IT platform Superior corporate governance standards Solid capital structure Proven management with an incentive to drive shareholder value Multiple growth drivers High returns on capital 52

53 Contact Investor Relations José Roberto Pacheco Executive Director & IRO Mariana Ferraz IR Supervisor Darcio Nunciatelli IR Analyst Stella Hong IR Analyst Heriane Silva IR Intern Phone: + 55 (11) ir@odontoprev.com.br : OdontoPrevIR Corporate Headquarters Avenida Marcos Penteado de Ulhôa Rodrigues 939 Torre II / Edifício Jatobá / 14 th floor Barueri, São Paulo, Brazil Custodian & Market Maker Independent Auditors B3 Ticker 53