Earnings Release 4Q14

Transcription

1 Earnings Release 4Q14

2 Earnings 4Q14 Fleury ON (Bovespa FLRY3) (Bloomberg FLRY3 BZ; Thomson FLRY3-BR) Debentures: BRFLRYDBS007, BRFLRYDBS015 e BRFLRYDBS023 On December 31 st 2014: Shares Outstanding 156,293,356 shares Shares Outst Diluted 156,303,265 shares Free float 62,407,506 (39.9%) Share price R$ / US$ 6.13 Market cap R$ 2,544 MM / US$ 958 MM Cash and Cash Equivalents R$ 505 MM / US$ 190 MM Investor Relations Phone ri@grupofleury.com.br Conference Call February 27 th 2015 English 12:30 (10:30 EDT) Portuguese 11:00 (09:00 EDT) Phone: Participants from Brasil: Participants from US: (+1) Other countries: (+1) Code: Fleury Webcast: São Paulo, February 26 th 2015 Grupo Fleury (BM&FBOVESPA: FLRY3) announces today its 4 th Quarter (4Q14) and full year 2014 (FY14) results. Consolidated financial information is presented according to IFRS and accounting principles adopted in Brazil. All figures are compared to the same period of 2013, unless otherwise stated. Management comments: The year of 2014 represented for the company the beginning of the recovery in margins and cash generation, after adjustments performed during 2H13, primarily in Rio de Janeiro operations. Tighter costs and expenses controls, along with the selection of the portfolio of services and health plans, keep the planned progress in margins. Thus, results in 4Q14 and FY14 have improved compared to the previous periods. EBITDA margin reached 18.4% in FY14 and 16.3% in 4Q14 (against 16.8% in FY13 and 11.6% in 4Q13) and operating cash flow reached a historical record of R$ MM in the year and R$ 86.8 MM in the quarter. Growth was affected by the qualification of revenues and services reduction in RJ, implemented mainly in 4Q13. Growth reached 1.2% in FY14, whilst the 6.5% increase in 4Q14 shows the prospective recovery to higher levels of expansion. Net revenue also shows progress after the mentioned measures: YoY increase of 8.4% in the quarter and 1.3% in FY14. The highlight continue to be Fleury brand s growth, +11.4% in both the quarter and the full year, as well as for operations in hospitals (+10.4% in 4Q14 and +3.1% in the year). Regional brands except RJ grew 3.1% in the year and 2.4% in the quarter. For the operations in Rio de Janeiro, the reduction in the offering since 2H13 resulted in a decrease of 20.6% in the year and 3.4% in 4Q14. The continuous capturing of the growing demand for exceptional diagnostic services, mainly through Fleury brand, and the rebuilding of the business portfolio profitability remain as the focus in Profitability recovery in Rio de Janeiro, capacity expansion in premium brands, and better asset utilization in regional brands are under way to strengthen value creation. Financial highlights: Gross revenue of R$ 470 MM in 4Q14 (R$ 1.9 billion in 2014), a 6.5% growth (+1.2% in 2014). Patient Service Centers (PSCs): gross revenue of R$ 388MM, a 6.1% growth (+6.4% SSS). o Fleury brand grows 11.4%. o Regional brands excl-rj grows 2.4%. o RJ decreases 3.4% (+3.4% SSS). Diagnostic Operations in Hospitals: gross revenue of R$ 70 MM, 10.4% growth (+7.7% SSS). Gross profit reached R$ 99 MM in 4Q14, a 23.3% margin on net revenue (17.1% in 4Q13). In FY, R$ 400 MM (23.8% margin). EBITDA of R$ 69 MM in 4Q14, a 16.3% margin on net revenue (R$ 308 MM in FY14, a 18.4% margin). EBIT of R$ 40 MM, a 9.4% margin (R$ 194 MM in FY14, an 11.6% margin). 1

3 Net income of R$ 12 MM in 4Q14 and R$ 86 MM in 2014 (R$ 0.08 and R$ 0.55 EPS, respectively). "Cash Net Income" 1 of R$ 25 MM in 4Q14 and R$ 144 MM in FY14 (R$ 0.16 e R$ 0.92 EPS, respectively). Operating cash flow of R$ 87 MM, R$ 286 MM FY Cash Net Income : excludes the impact of deferred income tax Financial Indicators R$ MM 4T14 4T Gross Revenue % 1, , % Net Revenue % 1, , % Gross Profit % % EBITDA % % Net Income % % Net Income Cash % % Operating Cash % % Number of Shares (million) Number of Shares diluted (million) Gross Margin % 23.3% 17.1% 625 bps 23.8% 22.5% 137 bps EBITDA Margin % 16.3% 11.6% 474 bps 18.4% 16.8% 159 bps Effective Tax Rate 0.0% 0.0% 0 bps 0.0% 0.0% 0 bps Net Income Margin 2.9% -0.2% 313 bps 5.1% 3.7% 142 bps Net Income Cash / Net Revenue 6.0% 0.7% 531 bps 8.6% 6.7% 184 bps Operating Cash / Net Revenue 20.5% 19.6% 92 bps 17.0% 12.6% 437 bps EV/EBITDA (LTM) P/E (LTM) ROE (LTM) 5.3% 3.6% ROIC (LTM) 6.0% 5.2% Adjusted ROIC (LTM) 9.1% 7.9% P/E = [(Last Price) x (number of shares)] / (Net Income LTM) EV/EBITDA = [(Last Price) x (number of shares) + (Non-Current Debentures, Borrowings and Financings) (Cash and Equivalents)] / (EBITDA LTM) ROIC (LTM): NOPLAT LTM (tax=34%) / Capital Employed (Shareholders Equity + NEt Debt) Adjusted ROIC (LTM): NOPLAT LTM (effective rate) / Capital Employed (Shareholders Equity + Net Debt) Highlights: In November, Grupo Fleury opened the a+ Braz Leme Patient Service Center (PSC) in the former address of Fleury brand PSC. In 2014 first half, the Fleury brand PSC was transferred and expanded to another building on the same Avenue, on the North region of São Paulo city. Grupo Fleury launched a new molecular test for the chikungunya virus diagnosis. Pioneer in the diagnostic medicine private market, the test was elaborated by the Research and Development area of the company, being processed in Brazil and identifying the virus within one day of illness. Grupo Fleury integrates, for the second consecutive year, the Sustainability Index of BM&FBOVESPA (ISE). The answers to the selection process questionnaire were made public this year. Click in the link below for more information about the index and to access the Company's answers: The company was elected, for the 4 th consecutive year, one of the 61 most sustainable companies in Brazil by the 2014 edition of Exame Sustainability Guide, the largest survey of corporate sustainability in the country. In addition to the presence in the overall ranking, the company stood 2

4 out in the healthcare services sector. The Company was also named one of the Entrepreneurial Companies in Sustainability in LIDE Award for Entrepreneurship in Grupo Fleury held, in November, the fourth edition of Fleury Investor's Day, the annual meeting with investors and analysts of the financial market. The presentation and the videos of the event are available on the Company's Investor Relations website. Click in the link to access: Economic scenario and sector Macroeconomics The federal government reduced one more time the expectation for the GDP growth, from 0.9% to 0.5% for 2014, according to the 5 th bimonthly report of revenues and expenses, released by the Ministry of Planning in December. The Brazilian Central Bank expectation, according to the Quarterly Inflation Report, also released in December, is a 0.2% GDP growth. The 2014 GDP will be released in March 27 th. According to the Focus research, released by Brazilian Central Bank on February 20 th, the expectation is a decrease of 0.5% in the Brazilian GDP of The current expectation for the Brazilian Consumer Price Index (IPCA, acronym in Portuguese) is of 7.33% for 2015, according to the same research mentioned above. In 2014, the inflation reached 6.41%. The Monetary Policy Committee (COPOM) increased the Selic rate (Brazil's prime interest rate) to 12.25% at its meeting on January 21 st. Employment In 2014, 397,000 new net formal jobs were created, a 64% decrease compared to the 1.1 MM created in In macroeconomic areas where the company is present, the net jobs created in the last 12 months are as follows: São Paulo (city): 50 thousand (+1.1%) Rio de Janeiro (city): 23 thousand (+1.0%) Recife: -3 thousand(-0.5%) Porto Alegre: 8 thousand (+1.4%) Curitiba: 7 thousand(+1.0%) Salvador: 1 thousand (+0.1%) Federal Capital (Brasília): 9 thousand(+1.1%) Sector According to IESS data (Institute of Supplementary Health Studies), the hiring of health plans increased 2.5% in 2014, a 1.26 million growth over 12 months, totaling R$ million beneficiaries. Corporate group plans reached a 3.3% growth in 12 months, adding 1.07 million beneficiaries. Water and energy supply crisis Since the beginning of 2014, Grupo Fleury has established contingency plans to mitigate the possible increase in the crisis of water and energy supply. These measures were additional to sustainable practices in the use of these resources, already established in the company. Among the measures taken are: Most PSCs have water reserves. In addition, Grupo Fleury has already established contracts with water tank trucks. Most of the PSCs also have independent power generators to ensure the continuous operation in case of shortages. 3

5 The technical area has nine power generators, and it is provided with an artesian well water. Financial Performance Gross Revenue Gross revenue reaches R$ 470 MM in the quarter, a 6.5% growth over 4Q13. In 2014, gross revenue reached R$ 1.9 billion, a 1.2% increase comparing to the previous year. Gross revenue (R$ MM) CAGR +17.3% + 6.5% 1.2% Robust double-digit growth in premium brands. Selection of the portfolio of payers, services and locations especially in Rio de Janeiro PSCs (reduction of 25 PSCs, or ~5k m² since 1Q13) and Diagnostic Operations in hospitals (reduction of 11 operations in 4Q13) still affecting comparative basis. Actions regarding price adjustments and balancing of the mix of services and exams, brands and payers are still increasing the company s average revenue per test: 6.1% in 2014 (1.2% in 4Q14). Business lines performance 4Q14x4Q x 2013 Grupo Fleury 6.5% Grupo Fleury 1.2% PSCs 6.1% PSCs 1.2% Fleury brand 11.4% Fleury brand 11.4% Regional brands excl. RJ 2.4% Regional brands excl. RJ 3.1% Regional brands RJ -3.4% Regional brands RJ -20.6% Operations in Hospitals 10.4% Operations in Hospitals 3.1% Reference Laboratory -0.5% Reference Laboratory -2.7% Preventive Medicine 1.0% Preventive Medicine -10.3% 4

6 Portfolio distribution Average gross revenue per exam (R$) 4Q14 4Q Grupo Fleury % % - Patient Service Centers % % - Operations in Hospitals % % - Lab to Lab % % Patient Service Centers (PSCs) Revenue increased 6.1% to R$ 388 MM, while the average gross revenue per PSC grew 10.3% (14.4% YoY). Gross revenue per m2 kept the level registered in 4Q13, offsetting the inauguration of new m2 (opened in 1H14, to mature in the upcoming periods) with the efficiency gained in existing ones. PSCs Assets Efficiency Gross Revenue per m2 per quarter (R$ thousand) Gross Revenue per PSC (R$ MM/quarter) % Fleury brand grows 11.4% vs. 4Q13 (+9.5% SSS). In the first half of 2014, Fleury brand had an addition of 4.7 thousand m², 5

7 expanding the capacity and capturing demand for the brand s differentiated quality services. Still, some PSCs keep operating at high capacity utilization levels, limiting the Same Store Sales growth for the upcoming periods. A new PSC will be opened in the first half of 2015 and new expansions are planned for The total regional brands revenue has decreased 0.7% vs. 4Q13 (-10.5% FY14 YoY), still impacted by the selection of the portfolio of payers and services, mainly in Rio de Janeiro operations. Regional brands gross revenue excluding Rio de Janeiro grows 2.4% (+3.1% YoY); Rio de Janeiro s PSCs gross revenue decreased 3.4% (-20.6% YoY). 4Q14 vs 4Q13 Fleury Brand Regional Brands exc l. RJ Brands RJ Total (PSCs) Indicators PSCs - Gross Revenue 11.4% 2.4% -3.4% 6.1% - SSS 9.5% 0.6% 3.4% 6.4% - Gross Revenue / Number of Tests 4.5% 0.4% -6.9% 2.4% - Gross Revenue / Sq. Meter -1.3% -3.1% -0.3% 0.5% - Gross Revenue / PSC 6.8% 2.4% 9.4% 10.3% B2B 1. Diagnostic operations in hospitals Gross Revenue of R$ 69.6 MM in 4Q14, up 10.4% over the same period in In FY14, this business line grew 3.1%. The discontinuity, during the 4Q13, of eleven (11) small operations in hospitals aligned to the Company s strategic positioning to provide differentiated services and exams for bigger hospitals with higher complexity was partially offset by the beginning of a new contract in Brasília (Federal Capital). Same Hospitals Sales (SHS) grew 7.7% in 4Q Reference Laboratory (Lab-to-lab) Gross Revenue reaches R$ 6.4 MM in the 4Q14, a decrease of 0.5% comparing to 4Q Preventive Medicine Health Assessment (Executive Check-up) revenue increases 9.0%, reaching R$ 6.0 MM. Health Promotion achieves R$ 571 thousand. Revenue s Tax and Cancellations/Deductions Revenue s taxes are stable at 6.3% (6.2% in 4Q13). Allowances and deductions amount to R$ 17.9 MM in the quarter (3.8% of gross revenue). Deductions (Glosas + PDD) accounted for 3.4% of gross revenue (4.9% in 4Q13). Provisions related to over 120 days cover 63% of the amount (63.7% on 4Q13). Accounts unpaid for more than 120 days represent 18.1% of total receivables. Provisions can be reverted if a payment related to receivables due to more than 120 days is identified. Accounting provision policy: 6

8 From 120 days to 180 days: 15% of provision; From 180 days to 360 days: 50% of provision; More than 360 days: 85% of provision. Net Revenue Net revenue amounts to R$ 423 MM in the quarter, an 8.4% increase. In 2014, it reached R$ 1.7 billion, a 1.3% growth. CAGR +16.4% Net Revenue (R$ MM) 8.4% 1.3% As a result of growth in gross revenue and deductions in taxes and cancellations, the composition of net revenues by business line is as follows: Net revenue breakdown 4Q14 4Q13 R$ MM % R$ MM % Patient Service Centers % % 8.2% Operations in Hospitals % % 11.1% Reference Laboratory % % -1.2% Preventive Medicine % % 1.3% Total Net Revenue % % 8.4% R$ MM % R$ MM % Patient Service Centers 1, % 1, % 1.2% Operations in Hospitals % % 4.1% Reference Laboratory % % -2.6% Preventive Medicine % % -11.5% Total Net Revenue 1, % 1, % 1.3% Cost of Services 7

9 The cost of services amounted to R$ 324 MM in 4Q14, 76.7% of net revenue, a 625 bps reduction compared to 4Q13. In FY 2014, it was a 137 bps reduction from 77.5% to 76.2% of net revenue. Cost control and productivity improvements enabled the dilution of fixed costs, partly offsetting inflation effects. In addition, the restructuring process had added costs to 4Q bps, as reported at the time. Cost of Services (R$ MM) Personnel and medical General services, rentals and General The main costs lines are as follows: Personnel and Medical Services are the Company s main cost and represent 37.5% of net revenue in the quarter (a 288 bps reduction compared to the 40.4% in 4Q13) and 36.8% in FY14 vs. 38.1% in FY13 including 1,743 physicians (1,711 in 4Q13) and 8,756 employees (8.822 in 4Q13). Materials and Outsourcing cost accounts for 10.2% of net revenue, an 80 bps reduction. General Services, Rentals and Utilities represent 16.6% of net revenue, a 120 bps reduction compared to 4Q13. General Expenses, which include mainly IT front-office systems and call center infrastructure expenses, represent 7.0% of net revenue in the quarter (8.6% in 4Q13). Depreciation and Amortization account for 5.3% of net revenue in 4Q14, stable compared to 4Q13. R$ MM 4Q14 % Net revenue R$ MM % Net revenue % Net revenue Personnel and medical services % % 36.8% 38.1% Materials and outsourcing % % 10.1% 10.7% General services, rent and utilities % % 16.4% 15.5% General expenses % % 7.5% 8.2% Depreciation and Amortization % % 5.3% 5.0% Cost of Services % % 76.2% 77.5% 4Q13 8

10 Gross profit Gross profit achieves R$ 99MM, which represents a 23.3% margin on net revenue (17.1% in 4Q13). Operating Expenses and Other Operating Expenses (G&A and Depreciation) amount to R$ 60.6 MM in 4Q14, 14.3% of net revenues (14.6% in 4Q13). Provisions for contingency, Other Expenses and Subsidiaries share of profit sum R$ 1.6MM, 0.4% of net revenue. Comparison with 4Q13 is shown below: 4Q14 4Q R$ MM % Net revenue R$ MM % Net revenue % Net revenue General and Administrative (Excl. Depreciation) % % 11.0% 11.5% Depreciation and Amortization % % 1.5% 1.6% Other Operating Income (Expenses), net % % -0.4% 0.1% Provision for Contingency % % 0.2% -0.9% Subsidiaries' share of profits % % 0.0% 0.0% Operating Expenses % % 12.3% 12.2% General and administrative expenses (excluding depreciation) reached R$ 53.9MM in 4Q14 (R$ 50.8MM in 4Q13), 12.7% of net revenue (13.0% reduction vs. 4Q13). In 4Q14, R$ 1.4 MM is related to dismissal expenditure in the administrative structure. Provision for contingencies totaling an R$ 1.2 MM reversal in 4Q14, compared to R$ 8.6 MM reversal in 4Q13, a negative effect of 193 bps in EBITDA. Subsidiaries share of profits: 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 as Subsidiaries share of profits because the operation is characterized as a Joint Venture and Grupo Fleury holds 51% of this business. Find below the performance of Grupo Papaiz YTD. R$ thousand Net Revenue 14, % Net Revenues EBITDA 2, % Net Income % Net Income attributed to Grupo Fleury (51%) 16 EBITDA EBITDA reaches R$ 69 MM in 4Q14, a 16.3% margin, 470 bps above 4Q13. In the year, this indicator reaches 308 million, an 18.4% margin bps increase compared to the previous year. 9

11 EBITDA (R$ MM) CAGR +12.2% +10.9% +52.7% 4Q14 4Q R$ MM % Net revenue R$ MM % Net revenue % Net revenue Net Income % % 313 bps 5.1% 3.7% 142 bps Financial Result % % -71 bps 3.0% 3.5% -51 bps Depreciation and Amortization % % 16 bps 6.8% 6.6% 24 bps Income Tax and Social Contribution % % 217 bps 3.4% 3.0% 42 bps Subsidiaries share of profits % % -2 bps 0.0% 0.0% 2 bps EBITDA % % 474 bps 18.4% 16.8% 159 bps Segment Analysis: (i) In PSCs, EBITDA reached R$ 270,7MM in (ii) B2B (Integrated Medicine) EBITDA amounts to R$ 37.6MM in EBIT (Operating Profit) EBIT reaches R$ 40 MM in the quarter, a 9.4% margin (4.8% in 4Q13). In 2014, EBIT amounts to R$ 194MM (11.6%) vs. R$ 169MM (10.2%) in CAGR +10.8% EBIT (R$ MM) +111% +14.8% Financial Result and Financial Leverage 10

12 Net financial expenses totaled R$ 14.4MM in 4Q14 and R$ 36.1MM in 2014, as shown below: R$ million 4Q14 4Q Financial income (expenses), net (14.4) (16.1) (36.1) (42.2) Interest and inflation adjustment (32.8) (30.0) (119.7) (97.2) Exchange rate change and hedge (0.7) 0.1 (0.8) (1.1) Interest received Bank fees and other expenses (5.7) Financial income Financial expenses (34.8) (31.5) (117.2) (115.5) The Company issued three series of debentures in the last three years, amounting to R$ 950 million to be paid until February, 2020 as follows: 1st Issuance (First Series): R$ 150 MM; maturity in 2016; remuneration of CDI % per year. 1 st Issuance (Second Series): R$ 300 MM; maturity in 2018; remuneration of CDI % per year. 2 nd Issuance: R$ 500 MM; maturity in 2020; remuneration of CDI % per year. R$ million 4Q13 3Q14 4Q14 next 12 months Gross Financial Debt 1, , , Loans and Financing , Acquisition Cash & Cash Equivalents (539.9) (518.8) (505.3) Net Debt Net Financial Debt / EBITDA LTM EBITDA / Net Financial Expenses Debentures Covenant: Net Financial Debt / EBITDA LTM < 3x EBITDA / Net Financial Expenses > 1.5x The first due date of the first issuance (US$ 50 MM + interest) occurred in 4Q14. Income Tax and Social Contribution Due primarily to the goodwill amortization, the effective rate of tax (cash tax) was zero (0%) in the quarter, resulting in an improved Cash Net Income. The deferred income tax was R$13 MM in 4Q14 (51.1% of EBT). (R$ MM) 4Q13 4Q Earnings Before Taxes (EBT) Standard (34%) Non-Deductable Expenses Recurring Taxes % EBT 233.3% 45.8% 44.4% 38.2% Hedge Income Others (2.7) 1.3 (3.2) 3.1 Accounting Taxes % EBT 130.2% 51.1% 45.0% 40.4% Current Taxes Deferred Taxes

13 Expected Amortization of Goodwill Period R$ MM Net income Net income reached R$ 12.3MM in the quarter, 2.9% margin on net revenue (-0.2% in 4Q13). In FY14, net income totaled R$ 85.8 MM (5.1%) compared to R$ 61.1 MM in 2013 (3.7%). Excluding the impact of deferred taxes (Cash Net Income), the result is R$25.2 MM (R$ 2.6 MM in 4Q13), margin of 6.0%. In FY14, this indicator reached R$ 143.6MM (8.6%) compared to R$ 111.1MM (6.7%) in the previous year. Net income (R$ MM) CAGR +12.7% +40.3% CAGR +34.2% Net Cash Income (R$ MM) +868% +29.2% * In 2010 financial result was R$ 27 MM positive, reflecting cash resources from the IPO (December, 2009), which were used in mid Cash flow Operating cash flow improved 36.3% in FY14 compared to FY13, and 13.5% in 4Q14 compared to 4Q13. This result is due primarily to a lower consumption of working capital and improved profit before taxes (EBT) - an increase of R$ 32.4MM between periods. 12

14 R$ MM 4Q14 4Q Net Income Deferred Income Tax Cash Net Income Depreciation and amortization Provisions Working Capital Others Operational Cash Flow Changes in PP&E and IT System Acquisitions Financing Activities Cash Flow Conversion (Operational Cash Flow / EBITDA) 126% 169% 93% 75% Working Capital / Gross revenue 4.3% 9.5% -3.4% -7.5% Account Receivables R$ MM 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Trade Receivables Current Up to 120 days past due to 360 days past due Over 360 days past due Sales Deductions Provisions (70.5) (70.4) (77.6) (86.3) (87.4) (103.9) (73.3) (50.2) Total Provisions / Over 121 days past due 59.0% 61.3% 62.6% 63.7% 61.1% 65.7% 66.3% 63.0% Investments Capex (additions to the permanent and intangible assets) totaled R$ 40.8 million in 4Q14, mainly concentrated in the structuring technology platforms. In 2014, expansions of PSCs were responsible for 45% of investments concentrated mainly under Fleury brand. 13

15 In the year, there was an increase of 4.7 thousand m2 in Fleury brand with the opening of the Ponte Estaiada PSC, which also has the Integrated Centre for Cardio-Neurovascular Diseases, the expansion and transfer of location for Braz Leme PSC, and the addition of a new floor in Rochaverá PSC. Over the next two years circa 7 thousand m2 shall be added to Fleury brand. A new PSC opening is underway for the first half of The proposed CAPEX for 2015 is R$ 189 million. Stock Market Performance Fleury shares (BOVESPA: FLRY3) end up the 4Q14 at R$ 16.28, down 11.5% LTM. Average Daily Trade Volume (ADTV) in 2014 was R$ 5.5MM, 27% lower than previous year. Free Float breakdown Average Daily Trade Volume (ADTV) R$ MM Source: Fleury data, December 2014 Disregarded: Integritas (Grupo Controlador), and members of this Group. * Negotiability Index Investor Relations Department Phone: ri@grupofleury.com.br Website: Address: Avenida General Valdomiro de Lima, São Paulo, SP Brasil 14

16 Performance Indicators According to the accounting principles adopted in Brazil and IFRS Income Statement Description Unit 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Gross Revenue Gross Revenue R$ MM Net Revenue Gross Revenue - Tax (ISS) - Cancellations R$ MM COGS Personnel and Medical Services + Materials and Outsourcing + General Services, Rent and Utilities + R$ MM (301) (321) (340) (323) (305) (321) (329) (324) General Expenses + Depreciation SG&A Does not include Other Operating Expenses / Revenues neither Contingency Provisions R$ MM (45) (55) (59) (57) (52) (47) (50) (61) EBIT Earnings Before Interest and Taxes R$ MM Finance Income (Costs) Interest Revenue - Interest Expenses R$ MM (15) (14) (14.0) (16.1) (3.8) (15.7) (16.5) (14.4) Net Income Net Profit R$ MM (1) EBITDA Earnings Before Interest, Taxes, Depreciation and Amort R$ MM Gross Margin Gross Profit / Net Revenue % 23.6% 26.0% 22.6% 17.1% 22.9% 21.5% 27.2% 23.3% EBIT Margin Earnings Before Interest and Tax / Net Revenue % 11.4% 13.0% 11.1% 4.8% 11.2% 10.1% 15.2% 9.4% EBITDA Margin Earnings Before Interest, Tax, Depreciation and Amortization / Net Revenue % 18.6% 19.4% 17.2% 11.6% 18.2% 17.0% 21.6% 16.3% Effective Tax Rate Current Tax / Earnings Before Tax % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Net Income Margin Net Profit / Net Revenue % 5.5% 5.1% 4.2% -0.2% 6.6% 4.0% 6.9% 2.9% Balance Sheet Cash & Equivalents Cash & Equivalents R$ MM Current Assets Current Assets R$ MM 1,204 1,187 1,155 1,055 1,059 1,003 1,065 1,017 PP&E, net Tangible Fixed Assets R$ MM Total Assets Total Assets R$ MM 3,301 3,280 3,249 3,211 3,242 3,185 3,242 3,210 Short Term Debt Loans and Financing - Current Liabilities R$ MM Current Liabilities Current Liabilities R$ MM Long Term Debt Loans and Financing - Long Term R$ MM Total Liabilities Total Liabilities R$ MM 1,573 1,529 1,522 1,522 1,526 1,552 1,578 1,637 Total Equity Total Equity R$ MM 1,728 1,751 1,727 1,689 1,716 1,633 1,664 1,573 Market and Multiples Price Closing price in the last day of the quarter R$ P/E (Price-to-Earnings Ratio) Quarter Closing Price / Net Income LTM / # Shares Multiple Quarter Closing Price / (Asset excl. Intangibles) / # P/B (Price-to-Book Ratio) Multiple Shares Quarter Closing Price / Gross Revenue LTM / # P/S (Price-to-Sales Ratio) Multiple Shares EV/EBITDA (Market C apitalization + Short and Long Term Debt - Cash and Equivalents) / EBITDA LTM Multiple Financial Debt Debt / Equity Loans and Financing - Short and Long Term / Equity % 62% 57% 57% 58% 57% 60% 59% 66% Net Debt / Equity (Loans and Financing / Short and Long Term less Cash and Equivalents) / Equity % 23% 21% 24% 26% 27% 31% 28% 34% Debt / Assets Loans and Financing Short and Long Term / Total Assets % 32% 31% 30% 31% 30% 31% 30% 32% Net Debt / EBITDA (Loans and Financing / Short and Long Term less Cash and Equivalents)/ EBITDA LTM. Include Acquisition debt. Multiple Liquidity Cash / Current Liability Cash & Equivalents / Current Liabilities # Quick Ratio Current Assets (wo/ Inventory) / Current Liabilities # Current Ratio Current Assets / Current Liabilities # Profitability and Return ROE (LTM) Net Income LTM / Shareholders Equity % 6.9% 6.2% 5.7% 3.6% 3.8% 3.5% 4.3% 5.3% Adjusted ROE (LTM) Cash Net Income LTM / Shareholders Equity % 9.8% 9.8% 9.5% 6.6% 7.1% 6.4% 7.3% 9.1% ROIC (LTM) NOPAT LTM (tax = 34%) / C apital Employed (Shareholders Equity + Net Debt) % 6.4% 6.4% 6.2% 5.2% 5.1% 4.7% 5.3% 6.0% Adjusted ROIC (LTM) NOPAT LTM (effective rate) / C apital Employed (Shareholders Equity + Net Debt) % 9.7% 9.7% 9.3% 7.9% 7.8% 7.1% 8.0% 9.1% 15

17 FLEURY S.A. CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31, 2014 AND DECEMBER 31, 2013 (In thousands of Brazilian R$) Consolidated Consolidated Assets 12/31/ /31/2013 Equity and Liabilities 12/31/ /31/2013 Current Assets Current Liabilities Cash and cash equivalents 505, ,943 Borrowings and financing 78,264 73,432 Derivative financial instruments - 9 Derivative financial instruments - - Accounts receivables 390, ,063 Accounts payable 105, ,312 Inventories 13,678 16,860 Payroll and related taxes 53,946 49,447 Recoverable taxes 101,560 84,751 Taxes payable 24,017 23,753 Prepaid expenses 678 1,950 Payables - business acquisitions 3,536 9,079 Other 6,051 11,070 Other payables Total current assets 1,017,434 1,054,646 Total current liabilities 265, ,148 Non-current Assets Non-current Liabilities Long-term assets: Borrowings and financing 960, ,094 Judicial deposits 31,465 12,970 Deferred income tax and social contribution 323, ,191 Deferred income tax and social contribution 132, ,317 Provision for tax, labor and civil risks 20,334 18,089 Other 29,779 27,435 Taxes payable 52,068 63,258 Total long-term assets 193, ,722 Payables - business acquisitions 15,018 16,354 Total non-current liabilities 1,371,723 1,261,986 Investments 7,741 7,806 Equity Property and equipment 458, ,556 Share capital 1,379,747 1,379,747 Intangible assets 1,532,775 1,534,437 Capital reserve - recognized options granted 5,809 7,680 Total non-current assets 1,999,012 1,996,799 Revaluation reserve Legal reserve 37,846 33,556 Investment reserve 136, ,082 Retained earnings 12,117 - Total Equity 1,572,964 1,689,033 Total Assets 3,209,768 3,211,167 Total Equity and Liabilities 3,209,768 3,211,167 16

18 FLEURY S.A. CONSOLIDATED NET INCOME STATEMENT FOR THE PERIODS ENDED DECEMBER 31, 2014 AND DECEMBER 31, 2013 (In thousands of Brazilian R$, except earnings per share) Consolidated Consolidated 4Q14 4Q Service revenue 422, ,867 1,678,900 1,656,896 Cost of services (323,932) (323,248) (1,278,921) (1,284,920) Gross Profit 98,612 66, , ,976 General and administrative expenses (60,558) (56,895) (209,440) (216,026) Other operating income (expenses) ,032 (2,038) Provision for tax, labor and civil risks 1,198 8,646 (3,452) 15,240 Share of profits (losses) of subsidiaries (84) (137) Operating profit before finance income (costs) 39,675 18, , ,507 Finance income 20,417 15,449 66,636 57,143 Finance costs (34,832) (31,536) (117,173) (115,472) Finance income (costs) (14,415) (16,087) (50,537) (58,329) Net income before income tax and social contribution 25,260 2, , ,177 Income tax and social contribution: Current Deferred (12,870) (3,397) (57,796) (50,034) Net income for the period 12,390 (788) 85,802 61,144 Earnings per share attributable to owners of the Company Basic earnings per share 0.08 (0.01) Diluted earnings per share

19 FLEURY S.A. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONSOLIDATED) FOR THE PERIOD ENDED DECEMBER 31, 2014 (In thousands of Brazilian R$) Share Capital Capital Reserve Earnings Reserves Share Capital Expenditures on Issuance of shares Recognized options granted Revaluation reserve Legal Reserve Investment Reserve Net Income for the Period Equity attributable to the owners of the Company Balances at December 31, ,402,531 (22,784) 3,766 1,476 30, ,420-1,705,908 Realization of revaluation reserve (508) Stock option plan - - 3, ,914 Reversal of reserves (23,338) 23,338 - Profit for the period ,143 61,143 Allocation of profit for the period: Legal reserve ,057 - (3,057) - Dividends (81,932) (81,932) Balances at December 31, ,402,531 (22,784) 7, , ,082-1,689,033 Realization of revaluation reserve (347) Stock option plan - - (1,871) (1,871) Reversal of reserves ,802 85,802 Profit for the period Legal reserve ,290 - (4,290) - Dividends ,117 (12,117) - Balances at December 31, (22,784) 5, , ,941-1,572,964 18

20 FLEURY S.A. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED DECEMBER 31, 2014 AND DECEMBER 31, 2013 (In thousands of Brazilian R$) Consolidated Consolidated 4Q14 4Q ] Net income 12,390 (789) 85,802 61,143 Items not affecting net cash provided by operating activities Income tax and social contribution 12,870 3,398 57,796 50,034 Finance income (costs) 14,415 16,087 50,537 58,329 Depreciation and amortization 29,296 26, , ,762 Share of profits (losses) of subsidiaries (16) (354) EBITDA 69,055 45, , ,914 Stock option plan (3,587) 909 (1,871) 3,914 Recognition (reversal) of provision for tax, labor and civil risks (1,198) (8,646) 3,452 (15,240) Provision for doubtful accounts 16,201 22,382 74,039 73,974 Labor Provisions (15,255) (17,669) 6,706 6,387 Provisions for Suppliers (1,174) (4,511) (32,604) 9,426 Others 3,569 (1,011) (3,985) 654 Net cash provided by operating activities before changes in working capital 67,611 36, , ,029 Accounts receivables 11,612 28,784 (69,693) (118,038) Inventories (1,751) (4,378) 2, Trade payables / Payroll and Benefits 14,563 29,257 30,256 20,779 Other assets 1, (11,716) (12,931) Other liabilities (5,277) (12,844) (15,751) (30,073) Changes in working capital 20,391 41,753 (64,426) (139,774) Financial expenses paid (1,208) (1,962) (3,910) (7,641) Income tax and social contribution paid - (0) - (29) Net cash provided by operating activities 86,794 76, , ,585 Additions to property and equipment (40,804) (64,325) (117,948) (148,056) Sale of fixed assets ,134 1,094 Related Parties Acquired Companies: Payments - - (3,658) (17,673) Net Cash Provided Net cash used in investing activities (40,804) (64,131) (120,472) (164,635) Change in loans and debentures: Raising 102, , ,319 Settlement (50,839) (7,833) (52,622) (84,546) Interest paid (28,345) (23,110) (107,138) (66,155) Interest received (investments) 16,759 13,660 56,820 45,649 Dividends and Interest on Capital (100,000) (38,285) (200,000) (84,072) Net cash provided by financing activities (59,472) (55,568) (199,906) 314,195 Decrease in cash and cash equivalents (13,482) (43,217) (34,669) 359,145 Cash and cash equivalents At the beginning of the period 518, , , ,798 At the end of the period 505, , , ,943 Decrease in cash and cash equivalents (13,482) (43,217) (34,669) 359,145 19

21 FLEURY S.A. CONSOLIDATED STATEMENTS OF VALUE ADDED FOR THE PERIODS ENDED DECEMBER 31, 2014 AND DECEMBER 31, 2013 (In thousands of Brazilian R$) Consolidated Revenues 1,821,714 1,805,184 Sales of goods and services 1,879,359 1,856,215 Provision for doubtful accounts (74,039) (73,974) Other revenues 16,394 22,943 Inputs purchased from third parties (752,678) (781,458) Cost of sales and services (552,694) (566,078) Materials, electric power, outside services and other (199,279) (213,892) Impairment/Recovery of assets (705) (1,488) Gross value added 1,069,036 1,023,726 Depreciation and amortization (114,189) (108,762) Net value added 954, ,964 Value added received through transfer 66,652 57,497 Share of profits (losses) of subsidaries Finance income 66,636 57,143 Total value added 1,021, ,461 Distribution of value added (1,021,499) (972,461) Personnel and payroll charges (485,371) (492,385) Taxes and contributions (184,260) (175,234) Interest, rentals and other operating expenses (266,066) (243,699) Dividens and Interest on Own Capital (69,742) (58,594) Retained earnings (16,060) (2,549) 20