Corporate Presentation July New growth cycle and value innovation

Transcription

1 Corporate Presentation July 2017 New growth cycle and value innovation

2 Index 1 Dental benefits: an incipient sector in Brazil 2 Inside OdontoPrev 3 Strategic competitive advantages 4 Financial and Operational Performance 5 Working for the future 6 Capital Markets 2

3 Dental benefits: an incipient sector in Brazil 3 1

4 Brazilian dental care: national figures 74% of dental treatments occur at private clinics, not at government related dental care offices 4 Source: IBGE (National Bureau of Statistits) 2013 National Health Care Survey

5 Brazil leads the global ranking of dentists Number of dentists per country (thousand) 286 ¹ 12% of the dentists in the world are located in Brazil Source: FDI World Dental Federation The Oral Health Atlas 2009 ¹ Federal Council of Dentistry Brazil (June 2017)

6 Brazilian dental opportunity Although 12% of world s dentists are located in the country, only 11% of brazilians have a dental plan 60% 11% % of the population covered by a private dental plan 14 6 Source: OdontoPrev

7 Great portion of middle class don t have dental plan Potential Market of 78 Million people in the middle class Million people already dental plan members million people 7

8 Cost per client Cost per client Attractive cost dynamics Over time, OdontoPrev Dental Plans present a predictable Medical Plans OdontoPrev 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 8 and more attractive cost profile than Medical Plans.

9 OdontoPrev Prepaid Business Model High predictability of cash flow No working capital needs Low CAPEX requirements Positive cash flow generation every day Customers Fee per user Dental care reimbursement R$ R$ Accredited dentist network 9

10 Inside OdontoPrev2

11 OdontoPrev: 10 years of sustainable value creation since IPO Net revenues (R$ million) 1,070 1,156 1,250 1,365 1, IPO APR16 MAR17 11

12 Individual plans & SME: higher growth and better returns 1Q17 AVERAGE TICKET (R$ / member / month) Contribution Margin 38 Individual Plans Revenues R$71 M (+34% YoY) 54% Corporate SME Revenues R$227 M (-2% YoY) Revenues R$51 M (+16% YoY) 46% 42% 12 ¹ M: million High Low NUMBER OF COMPETITORS

13 Individual plans & SME: higher growth and better returns APR16 MAR17 AVERAGE TICKET (R$ / member / month) Contribution Margin 37 Individual Plans Revenues APR16-MAR17 R$261 M (+41% YoY) 54% 19 Corporate SME Revenues APR16-MAR17 R$194 M (+16% YoY) 43% 17 Revenues APR16-MAR17 R$925 M (+0% YoY) 38% ¹ M: million High Low NUMBER OF COMPETITORS 13

14 Strategic competitive advantages 3

15 Strategic competitive advantages World Class Dental IT Platform Largest and Specialized Dentist Network Innovation Driven Company Exclusive Distribution Channels 100% Dental Focused 15

16 Strategic competitive advantages World Class Dental IT Platform Largest and Specialized Dentist Network Innovation Driven Company Exclusive Distribution Channels 100% Dental Focused 16

17 Proprietary IT Platform: information-driven decisions + Complete dental record of all beneficiaries + 29 years of actuarial data + Risk Management and fraud prevention 17

18 Proprietary IT Platform: information-driven decisions + Quality assurance + Clear barrier to entry + Cost control 18

19 Strategic competitive advantages World Class Dental IT Platform Largest and Specialized Dentist Network Innovation Driven Company Exclusive Distribution Channels 100% Dental Focused 19

20 Innovation driven Company + OdontoPrev online: individual plans sold at the web + New App for the accredited network of dentists 20

21 Innovation driven Company Premium individual plans NEW Welcome call tool, to increase retention 21

22 Innovation driven Company Top quality dental materials delivered door to door to the dentist free of charge Exclusive agreement to prevent oral cancer 22

23 Strategic competitive advantages World Class Dental IT Platform Largest and Specialized Dentist Network Innovation Driven Company Exclusive Distribution Channels 100% Dental Focused 23

24 OdontoPrev: Market leadership since 1998 Key players, brazilian dental sector (JUN 2017 thousand members) 6,213¹ 27% of Market Share of beneficiaries¹ 430 1,941 1,614 1,558 1, Source: JUN17, ANS Sala de Situação ¹MAR17 ( ) ( )

25 Dental Plans sector evolution Million lives JUN17¹ 25 Source: ANS Tabnet ¹ ANS Sala de Situação

26 3 cycles over the last decade accelerated growth bringing new shareholders to the dental sector

27 Cycle 01: Bradesco Dental (million lives) Dental Plans sector Source: ANS Tabnet

28 Cycle 02: Amil to UnitedHealthcare (million lives) Dental Plans sector Source: ANS Tabnet

29 Results Net loss (R$ million) Source: Amil (Valor Econômico)

30 Cycle 03: Hapvida & Interodonto JUN17 (million lives) Dental Plans sector Jun/ Jun/ Jun/17 30 Source: ANS Tabnet and Sala de Situação Jun/17

31 Change in control brings a new strategy of peers Thousand lives ( ) 1,878 2,062 1,808 1,846 1,945 1,941 1,336 1,260 1,264 1,558 1, ,011 1,054 ( ) JUN/17 MAI/17 31 Source: ANS

32 Dental plans sector evolution DEC14 JUN17 Thousand lives ,669² 20,707¹ Others DEC14 Three companies represented 71% of the sector growth JUN17 32 ¹ ANS Tabnet ² ANS Sala de Situação JUN17

33 Dental plans sector evolution DEC16 JUN17 Thousand lives Others 22,552 21,819 DEC16 Two companies represented 72% of sector growth of the quarter JUN17 33 Source: ANS Sala de Situação JUN17

34 Average ticket evolution (R$/member/month) N/A Source: ANS

35 Strategic competitive advantages World Class Dental IT Platform Largest and Specialized Dentist Network Innovation Driven Company Exclusive Distribution Channels 100% Dental Focused 33

36 Best in class distribution channels Direct selling Bank channels Brokers Online selling Retailers Medical Plan Organizations 36

37 The largest bancassurance platforms in Brazil Clients + 80 million + 60 million National footprint Exclusivity 20 years 48% of branches & 52% of brazilian bank clients 37

38 Banks: strong and committed long-term partners + Back-office Price maker Product design Customer relationship Dentist network management Front-office Price takers Selling National footprint capilarity Bank branches and brokers distribution 38

39 Strategic competitive advantages World Class Dental IT Platform Largest and Specialized Dentist Network Innovation Driven Company Exclusive Distribution Channels 100% Dental Focused 37

40 Largest and best dentist network 28,000 dentists at 2,200 cities National distribution Differentiated academic background Continuous education 24/7 call center 38

41 OdontoPrev: 4 Financial and Operational Performance

42 Net Revenues R$ million 8.6% ,070 1,156 1,250 1,365 1,277 1, % APR15 MAR16 APR16 MAR17 1Q16 1Q17 40

43 Quarterly revenue evolution per segment R$ million Q16 2Q16 3Q16 4Q16 1Q17 Corporate SME Individual Plans 41

44 Revenue growth per segment in 1Q17 R$ million R$ million +34.0% +6.6% % % 71% 13% 65% 20% 15% Q16 1Q17 1Q16 1Q17 Corporate SME Individual Plans 42

45 1Q17 Members, revenues and contribution margin Members Revenue Contribution Margin 75% 15% 10% 65% 20% 15% 61% 24% 15% Corporate SME Individual Plans 43

46 SME & Individual Plans: revenue evolution (R$ million & %Sales) 74 25% SME & Individual Plans Revenues (R$ million) 78 26% 84 27% 93 28% 97 29% % of Sales % 31% % % 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q Q16 1Q17

47 Incremental revenue per segment (YoY) R$ million Q15 2Q15 3TQ15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Individual Plans SME Corporate 45

48 Average Ticket per Segment (R$/member/month and YoY % ) +4.8% % % +5.9% +8.2% % % % % % % % % % % Q16 2Q16 3Q16 4Q16 Corporate SME Individual Plans 1Q17 46

49 Revenue & membership market share: Revenue market Share (%) Membership market Share (%) ¹ Source: ANS and OdontoPrev ¹ OdontoPrev membership portfolio ex-bradesco

50 Breakdown of individual plans Thousand lives +11% 54% 586 4% 42% 247k lives +14% 44% 283k lives 652 2% 54% 1Q16 1Q17 Retailers 48

51 Individual Plans: increasing distribution of Bradesco Thousand lives Retailers + BB 40.8% 42.6% 43.0% 43.4% Q16 3Q16 4Q16 1Q17 49

52 Positive effects of bank channels 1Q17 List prices & R$41.40 Retailers R$29.90 Annual Plan / Internet Yes No Selling expenses 10% - 15% 25% - 45% Profitability Higher Lower 50

53 Breakdown of SME lives Thousand lives +6% % 83% 16% 79% 7% 14% 713k lives 716k lives 1Q16 1Q17 51

54 Quarterly and LTM Cost of Services (% of Sales) Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Quarterly LTM 54

55 Dental Loss Ratio (% of Sales) per segment Corporate SME Individual Plans 1Q16 2Q16 3Q16 4Q16 1Q17 55

56 Key metrics per segment (% of Sales) Q16 1Q17 1Q16 1Q171Q16 1Q17 1Q16 1Q17 1Q16 1Q171Q16 1Q17 1Q16 1Q17 1Q16 1Q17 1Q16 1Q17 Corporate SME Individual Plans Cost of Services Selling expenses Contribution Margin 54

57 G&A (% of Sales) Personnel Others # of employees 1, , , ,588 1, , ,505 1Q17 55

58 Allowance for doubtful receivables R$ million and % of Sales Q16 2Q16 3Q16 4Q16 1Q17 Allowance for doubtful receivables (R$) % of Sales 56 58

59 Adjusted EBITDA and Adjusted EBITDA margin R$ million and % of Sales ¹ 300¹ 322¹ 302¹ ¹ 25.2¹ 26.6¹ 25.7¹ 88¹ 90¹ 22.0¹ 21.8¹ APR15 MAR16 APR16 MAR17 1Q16 1Q17 57 ¹Including Brasildental EBITDA Pro Forma

60 Net Income & ROE R$ million % 20% 27% 29% 34% 32% 34% 32% APR15 MAR16 ROE APR16 MAR17 1Q16 1Q17 58

61 Net cash (R$ million) ¹ Payout ratio 110% 110% 110% 110% 100% 80% 80% Q17 61 ¹ Includes R$14.2 million of long-term investments.

62 IT driven capex: low portion of EBITDA R$ million ¹ 300¹ 88¹ 90¹ Q16 1Q17 Adjusted EBITDA CAPEX 60 ¹Including Brasildental EBITDA Pro Forma

63 1Q17 Cash Flow R$ million 27.5% of Sales Net Cash DEC16¹ - - Net Cash + Cash - Acquisitions Capex Cash = Generation Dividends MAR17² 61 ¹ Includes R$14.2 million of long-term investments ² Includes R$88.5 million of technical provisions and R$287.6 million of social security deposits for individual dentists.

64 Cash Flow since the IPO R$ million +1, % of Sales Share buyback Capital reductions -1,338.2 Cash Dividends , Net Cash DEC = Cash Generation Acquisitions Capex Shareholder Remuneration Stock Options¹ Net Cash MAR17² 62 ¹ Share repurchase to cover the Stock Options Plan, net of strike price. ² Includes R$88.5 million of technical provisions and R$287.6 million of social security deposits for individual dentists.

65 INSS: Important optionalities Until 2010 After 2010 Amount provisioned R$45 million R$288 million Approval July 10th, 2017 July 14th, 2017 Annual growth Selic (*) Selic (*) + R$ 45 million 63 * Brazilian interest rate

66 Capital Markets 6

67 Global shareholder structure: investors from 37 countries Management 1.44% Treasury 0.08% Others 3.6% % 6.4% 4.9% 4.2% 2.1% 1.4% 50.01% Free Float 48.47% 15.4% 1.3% 1.3% 5% 39.9% 1.0% 0.9% Total Capital 531,294,792 Shares 48% Free float 257,590,583 Shares 0.8% 65 Source: OdontoPrev

68 Increasing number of shareholders Institutional and individual investors 3,934 3,789 3,119 3,248 3,397 JUN16 SEP16 DEC16 MAR17 MAY17 66

69 Corporate Governance and professional management team 69

70 Superior Corporate Governance Standards Chairman # CEO, since the 1990s Board of Directors without executive functions, 56% independent members AGM previous notice to shareholders of 30 days Disclosure of minimum, average and maximum annual compensation of executives 3 CEOs since the foundation in 1987, and 1 IRO since IPO 70

71 Key Metrics for management s compensation Quantitative goals Perception Studies Revenue EBITDA (R$) Number of members Beneficiaries Dentists HR managers Quality of services 71

72 OdontoPrev: One of the 60 most valuable Brazil brands in Kantar Vermeer ranking, published by Revista Isto É Dinheiro May 2017.

73 OdontoPrev awarded for the 7th consecutive year... Best Healthcare Sector IR Program of Latin America 2010 / 2011 / 2012 / 2013 / 2014 / 2015 / Thank you! 73

74 Feedback from the street Well-run company, experienced and focused management team, complying with high Corporate Governance standards. Leadership position in a defensive market with favorable growth prospects. Strong balance sheet and cash generative business. The combination of product innovation + distribution power + implementation skills seems to be unique. 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 cash-flow-generation profile. #1 Company in Latin America with a technological 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. 74

75 Upcoming IR events Date Country Broker Event Jul 26, 2017 Jul 27, 2017 Jul 27, 2017 Aug 22, 2017 Sep 07, 2017 Sep 08, Q17 Earnings Release 2Q17 Webcast Investor Presentation - São Paulo JP Morgan 11th Healthcare Check-Up - São Paulo NDR BofA Merrill Lynch - Copenhagen NDR BofA Merrill Lynch - Edinburgh Sep 11-12, 2017 Morgan Stanley LatAm Conference - London Sep 19, 2017 Sep 27, 2017 Oct 3, 2017 Oct 12, 2017 Oct 13, 2017 Oct 25, 2017 Oct 26, 2017 Oct 26, 2017 Nov 1, 2017 Nov 13, 2017 Nov 14-15, 2017 Nov 16-17, 2017 UBS V Healthcare Day - São Paulo NDR Safra - Rio de Janeiro NDR Bradesco - Santiago NDR HSBC - Johannesburg NDR HSBC - Cape Town 3Q17 Earnings Release 3Q17 Webcast Investor Presentation - São Paulo NDR Credit Suisse - Rio de Janeiro ESG NDR UBS - New York Bradesco 7th Annual CEO Forum - New York ESG NDR HSBC - London Nov 20-21, 2017 Itaú BBA's 10th LatAm Conference - London 75 OdontoPrev s Investor Relations activities, including conference calls, webcasts, one-on-one meetings and public presentations are made by the Company s CEO and/or IRO since the 2006 IPO.

76 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 76

77 Your Investor Relations Team José Roberto Pacheco Executive Director & IRO Roberta Carneiro IR Manager Darcio Nunciatelli IR Analyst Stella Hong IR Analyst 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 BM&FBovespa Ticker 77