Corporate Presentation July New growth cycle and value innovation

Transcription

1 Corporate Presentation July 2018 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 14 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 sector March 2018 (thousand members) 6,338¹ 28% market share 1,886 1,605¹ 1,561¹ 523 1,054¹ ¹ Dental / Total (Revenues) 100% n/a 4% 5% 1% n/a 100% n/a 1% 8 ( ) ( ) Source: ANS ¹Companies Earnings Release (Mar/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 2014 Net income/loss (R$ million) Source: Amil (Valor Econômico) -672

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 23,017 20, Others DEC15 With 13% of market share, two companies represented 45% of the growth of the sector since MAY18 16 Source: ANS

17 Quarterly net additions Dental sector Q17 2Q17 3Q17 4Q17 1Q18 APR18- MAY18 17 Source: ANS

18 Quarterly net additions Thousand members Q17 2Q17 3Q17 4Q17 1Q18 APR-MAY18¹ 18 Source: Hapvida Earnings Release ¹ANS

19 Quarterly net additions Thousand members Q17 2Q17 3Q17 4Q17 1Q18 APR-MAY18 19 Source: ANS

20 Quarterly net additions - OdontoPrev Thousand members Q17 2Q17 3Q17 4Q17 1Q18 APR-MAY18¹ 20 Source: OdontoPrev ¹ANS

21 OdontoPrev x Peers growth in 1Q18 ( % ticket; % members) Membership Growth (-5%; 23%) (0%; 18%) (1%; 13%) Ticket Decrease (6%; 2%) (6%; 0%) Ticket Growth Membership Loss 21

22 1Q18 Dental Revenues (R$ million) and Average ticket In 1Q18 OdontoPrev average ticket was 50% above Peer s average Average ticket # beneficiaries 6,338,350 1,054,000 1,560,000 1,604, ,000 Dental / Total (revenues) 100% 1% 5% 4% 1% 22 Source: OdontoPrev

23 1Q18: Members and Revenues of OdontoPrev x Peers 11 million R$563 million 5% 5% 10% 10% 14% With 57% of 9% beneficiaries of listed 10% 14% Peers, OdontoPrev represented 66% of revenues in 1Q18. 57% 66% Members Revenues 23 Source: OdontoPrev

24 Average ticket evolution (R$ / member / month) Source: OdontoPrev

25 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% 25 Source: ANS

26 Strategic competitive advantages

27 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 27 and more attractive cost profile than Medical Plans.

28 Proprietary IT Platform: information-driven decisions 28 Complete dental record of all beneficiaries 3 decades of actuarial data Risk management and fraud prevention

29 Innovation driven Company Top quality dental materials delivered door to door to the dentist free of charge individual plans sold at the web 29

30 OdontoPrev competitive advantages X Peers Dental focus Strategy Membership market-share Revenue market-share Bank Channels Dental IT platform Dental as % of revenues 1Q18 Average Ticket (R$/member/month) Yes Value driven 27% 46% Yes Yes 100% 20 Peers No Volume/Cross-sell 73% 54% No No <2%¹ 14¹ 30 ¹Peers: Porto Seguro, Sul América, GNDI (Bain Capital) and Hapvida

31 IDSS Performance Index of Suplementary Health: evolution Source: ANS ¹ Consolidated scores with Medical, except OdontoPrev. ² Scores vary between 0.0 and 1.0.

32 1Q18 Results

33 OdontoPrev: 11 years of sustainable value creation since IPO Net revenues (R$ million) 1,365 1,437 1,456 1,070 1,156 1, IPO APR17 MAR18 33

34 Individual plans & SME: higher growth and better returns APR17-MAR18 AVERAGE TICKET (R$ / member / month) Contribution Margin 39 Individual Plans Revenues R$289 M +10.6% YoY 48% 21 SME Revenues R$230 M +18.2% YoY 47% 17 Corporate Revenues R$927 M +0.2% YoY 42% 34 High Low ¹ M: million NUMBER OF COMPETITORS

35 Non-corporate: from 25% in 2014 to 37% of Revenues in 1Q18 Segment % of Revenues 13% 12% 25% 13% 13% 26% 18% 14% 32% 20% 15% 35% 20% 17% 37% 75% 74% 68% 65% 63% Q18 Corporate SME Individual Plans 35

36 The largest bancassurance platforms in Brazil Clients + 50 million + 40 million National footprint Exclusivity 20 years 44% of branches & 54% of brazilian bank clients 36

37 Breakdown of individual plans Thousand members +39% % 651 6% 79% 21% 98 K lives 44% 288 K lives 50% 1Q14 1Q18 Retailers 37

38 Positive effects of bank channels 1Q18 List prices & R$45.60 Retailers R$35.90 Selling expenses Profitability 10% - 15% Higher 25% - 45% Lower 38

39 Breakdown of SME members Thousand members +35% 81% % % 13% 77% 1Q14 1Q18 39

40 Average Ticket per Segment R$ / member / month and YoY % % 13% 14% 8% 8% % 4% 3% 3% 3% 1H16 2H16 1H17 2H17 1Q18 Corporate Non-corporate 40

41 Consolidated net additions (thousand lives) H15 2H15 1H16 2H16 1H17 2H17 1Q18 APR18¹ 41 ¹Source: ANS

42 Net additions Corporate segment thousand members H15 2H15 1H16 2H16 1H17 2H17 1Q18 42

43 Corporate segment revenues turning positive YoY growth +0.6% +1.2% +2.1% -0.9% -1.4% -2.3% -2.7% 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 43

44 Effective tax ISS (Service tax) 1% 3% 2% Until 2017 Jan and Feb/18 Mar/18 ISS charged and collected at headquarters Complementary Law 157/16 Average estimated tax of municipalities where customers are located Supreme Court preliminary decision 44

45 Cost of Services since 2006 IPO R$ million and % Sales % 47% % % % % 85 IPO % % 44% 46% 47% 46% 45% ¹ APR17 MAR18¹ 45

46 Pricing power offsets higher cost of services APR17 MAR Corporate SME Individual Plans Cost of Services / member / month Average ticket 46

47 Adjusted EBITDA since 2006 IPO R$ million and % Revenues % 23% 24% % % 26% 26% 26% 25% 26% % 22% 22% IPO ¹ APR17 MAR18¹ 47 ¹ Excludes Bradesco Dental and OdontoPrev INSS

48 Adjusted EBITDA and EBITDA margin 23.3% 24.5% 15.9% % 1.3 9,4% 1.8 1Q17 2Q17 3Q17 4Q17 1Q18 R$ million % Revenues 48

49 Net Income since 2006 IPO R$ million IPO ¹ APR17 MAR18¹ 49 ¹ Excludes Bradesco Dental and OdontoPrev INSS

50 Net cash (R$ million) 508¹ 522¹ MAR18 50 ¹ Includes R$121.4 million dedicated to ANS.

51 Cash Flow since the 2006 IPO R$ million +2, % of Sales ,0 Share buyback Capital reductions -1,617.4 Cash dividends , Net Cash DEC = Cash Generation Acquisitions Capex Shareholder Remuneration Stock Options² Net Cash MAR18¹ 51 ¹ Includes R$121.4 million dedicated to ANS ² Share repurchase related to the Stock Options Plan

52 Acquisition of Dental-only player, #3 player in the Northeast region 622K beneficiaries: 65% corporate / 35% non-corporate. 9x 2017 EBITDA and 2019 earn-out; LTM figures as of June 2017: Revenues: R$97.5 million Average ticket of ~ R$13 DLR ~35% Adjusted EBITDA: R$17.7 million (18.1% margin) Central Bank, ANS and Anti-trust approvals to come in 2H18 52

53 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. 53

54 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% Source: OdontoPrev 54 Total Capital 531,294,792 Shares 48% Free float 254,999,114 Shares 0.5%

55 Evolution of number of shareholders Institutional and individual investors 4, , , ,727 3,652 3,383 6, ,643 7, ,588 JUN17 SEP17 DEC17 MAR18 JUN18 Institutional investors Individual investors 55

56 Upcoming IR events Date Country Broker Event Jul 25, Q18 Earnings Release 56 Jul 26, 2018 Jul 27, 2018 Jul 31, 2018 Aug 1-2, 2018 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 14-15, Q18 Webcast Investor Presentation - São Paulo NDR Credit Suisse - Boston Credit Suisse Mid-Summer Conference - New York 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

57 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 57

58 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 58