Financial Performance - EBITDA for the year ended December 31, 2024, was US$268.8 million, an increase from US$802.4 million in 2023, reflecting a 33.5% growth[511] - The adjusted EBITDA for 2024 was US$263.9 million, up from US$824.8 million in 2023[511] - Adjusted EBITDA for 2024 reached US$263.9 million (S/993.3 million), up from US$824.8 million in 2023, indicating a year-over-year increase of 20.4%[529] - The Adjusted EBITDA Margin for 2024 remained stable at 22.6%, compared to 21.3% in 2023[529] - Total income for the period in 2024 was US$32.9 million (S/124.0 million), a significant recovery from a loss of S/214.3 million in 2023[531] Membership and Patient Growth - The number of plan memberships increased to 1,365,028 in 2024, up from 1,270,930 in 2023, representing a growth of 7.4%[512] - The number of patients treated rose to 58,559 in 2024, compared to 57,022 in 2023, indicating a growth of 2.7%[513] - The number of plan members treated increased by 1.6% year-over-year, attributed to general healthcare plan coverage[584] - Oncosalud membership base increased by 7.4% for the year ended December 31, 2024, driven by growth in general healthcare plans[584] Operational Metrics - Average monthly revenue per plan membership slightly increased to S/58.9 in 2024 from S/58.3 in 2023[512] - The total number of outpatient consultations in Peru increased to 938,655 in 2024, up from 830,032 in 2023, a growth of 13.0%[513] - The total number of surgeries performed in Mexico was 21,033 in 2024, compared to 20,641 in 2023, reflecting a growth of 1.9%[513] - Bed utilization in Peru increased by 4.2 percentage points, in Colombia by 3.3 percentage points, and in Mexico by 0.3 percentage points for the year ended December 31, 2024[584] Financial Position and Capital Structure - The company reported a negative working capital of S/241.4 million as of December 31, 2024[538] - The Adjusted Leverage Ratio was reported at 3.56x as of December 31, 2024[536] - As of December 31, 2024, total contractual obligations amounted to S/3,767.7 million, including S/3,619.8 million in loans and borrowings[553] - The company aims to improve its capital structure through potential public or private equity or debt financings[539] - The company has access to revolving credit lines of up to S/600 million, with S/446 million drawn as of December 31, 2024[579] Cash Flow and Investments - Net cash from operating activities for the year ended December 31, 2024 was S/668.5 million, an increase of S/86.1 million compared to S/582.4 million in 2023, driven by revenue growth across all segments and an improved cash conversion rate from 15.0% to 15.2%[542] - Net cash used in investing activities for the year ended December 31, 2024 was S/(236.8) million, an increase from S/(173.2) million in 2023, primarily due to a S/141.8 million investment in facility maintenance and medical equipment[543] - Net cash used in financing activities for the year ended December 31, 2024 was S/(418.1) million, compared to S/(370.0) million in 2023, including S/502 million in interest payments[544] - Capital expenditures for the year ended December 31, 2024 were S/178.7 million, with 37.9% allocated to land and facilities, 32.8% to medical equipment, and 29.4% to intangibles[549] - The company plans to allocate S/177.3 million for capital expenditures in 2025, primarily for maintenance, financed through operational cash and additional debt[552] Debt and Financing Agreements - The company redeemed US$57.8 million of 2025 Notes at a redemption price of 101.625% on December 23, 2024[557] - The 2029 Notes, issued on December 18, 2023, have an aggregate principal amount of US$310.8 million and bear interest at a rate of 10.000% per year[561] - As of December 31, 2024, the company's Leverage Ratio was 3.56:1.00 and Interest Coverage Ratio was 1.87:1.00, in compliance with the covenants of the 2029 Notes Indenture[562] - Oncosalud entered into a financing agreement for S/70.0 million to build a new hospital in Chiclayo[568] - The Credit Agreement includes term loans of US$550.0 million, with US$533.7 million used to repay existing obligations[572] Research and Development - Auna Ideas manages over 120 active clinical trials and conducts more than 50 ongoing applied research projects[582] - The company expects future expansions to result in temporary increases in costs due to integration and ramp-up efforts[583] - Auna Peru plans to grow organically by expanding installed capacity and evaluating additional expansion opportunities[585] - A strategic partnership with Opción Oncología was announced on March 7, 2025, to enhance oncology services in Mexico[585] - The company expects to invest in the expansion of existing facilities and new plan products throughout 2025[585] Cost Structure - The medical loss ratio (MLR) increased to 57.3% in 2024 from 53.8% in 2023, suggesting higher claims relative to revenue[513] - Pharmaceutical costs represented 47.8%, 41.8%, and 46.3% of the cost of services in Mexico, Peru, and Colombia, respectively[587] Risk Management - As of December 31, 2024, 37.2% of the company's liabilities were denominated in U.S. dollars, with 94% of these liabilities hedged[736] - The company maintains a general policy of holding financing at fixed rates, mitigating interest rate risk[737]

Core Insights - AUNA presents a compelling investment opportunity due to its low valuation and effective management in a market characterized by high valuations [1] Group 1: Company Overview - AUNA is identified as a well-managed company with a low valuation, making it attractive for investment despite global valuation corrections [1] Group 2: Analyst Background - The analyst has extensive experience in investment banking, economic journalism, and portfolio management, focusing on sectors such as technology, retail, and banking [1]

Financial Performance - Consolidated Revenue increased 4% YoY to S/1,063 million, or +11% FXN in 4Q24, and increased 13% YoY to S/4,386 million, or +12% FXN in FY24[6][16] - Adjusted EBITDA increased 19% YoY to S/254 million, or +28% FXN in 4Q24, and increased 20% YoY to S/993 million, or +20.1% FXN in FY24[6][19] - Net Income improved to S/24 million in 4Q24 from a loss of S/219 million in 4Q23, and for FY24, Net Income was S/124 million compared to a Net Loss of S/214 million in FY23[23] - Adjusted Net Income was S/36 million in 4Q24, versus a loss of S/6 million in 4Q23, and for FY24, Adjusted Net Income was S/146 million compared to S/14 million in FY23[24] - Adjusted EBITDA for FY 24 was S/993 million, reflecting a 20% increase compared to FY 23, with an Adjusted EBITDA margin of 23.9%[66] - Operating profit for FY 24 increased by 40% to 784 million Soles[97] - Net income for FY 24 was 124 million Soles, up 158% from FY 23[97] - Total EBITDA for FY 24 was 1,012 million Soles, a 26% increase compared to FY 23[97] Operational Efficiency - Oncology Plans MLR was 53.0%, improving 2.4 p.p. from FY23, reflecting enhanced operational efficiency[6] - Total capacity utilization increased to 66.4%, up 2.6 p.p. from FY23, demonstrating improved resource utilization[6] - Total capacity utilization improved to 66.4% in FY 24 from 63.8% in FY 23, an increase of 2.6 percentage points[101] - The medical loss ratio increased to 57.3% in FY 24 from 53.8% in FY 23, indicating a 3.5 percentage point rise[101] Debt and Financial Flexibility - Leverage Ratio improved to 3.6x from 3.7x in 3Q24 and 4.5x in 4Q23, indicating a stronger balance sheet[6][7] - Consolidated debt decreased 4% YoY to S/3,768 million at the end of 4Q24, mainly due to a S/226 million decrease in FX and amortization of financial leases[43] - The leverage ratio decreased to 3.6x at the end of 4Q24, consistent with the company's deleveraging plan targeting less than 3.0x Net Debt-to-Adjusted EBITDA[44] - Auna plans to further reduce debt and generate additional excess cash flow in 2025, enhancing financial flexibility[14] Revenue Growth - Total revenue from Peru increased 10% YoY in 4Q24 to S/442 million, driven by a 7% rise in plan memberships and a 9% increase in Healthcare Services revenue[33] - Segment revenue from Colombia increased 14% YoY in 4Q24 to S/353 million, primarily due to the implementation of risk-sharing models and price adjustments[39] - Oncosalud Peru's revenue increased 13% YoY in 4Q24 to S/276 million, supported by a 7% rise in plan memberships[33] - Healthcare Services Peru's revenue reached S/245 million in FY24, reflecting a 13% increase compared to FY23[32] - Total revenue for FY 24 reached 4,386 million Soles, a 13% increase compared to FY 23[97] Cash Flow and Investments - Net cash from operating activities for FY 24 increased by 15% YoY to S/668 million, with cash generated from operating activities rising by 24%[49] - Net cash used in investing activities rose by 37% YoY to S/237 million, including a S/60 million reduction in inorganic CapEx related to the acquisition of Dentegra[50] - Net cash used in financing activities increased by 13% YoY to S/418 million, primarily due to S/502 million in interest and hedge premium payments[51] - Cash generated from operating activities for FY 24 was 842 million Soles, a 161% increase from FY 23[98] Corporate Governance and Structure - The company appointed two independent directors to its Board, enhancing its corporate governance structure[52] Market Expansion - The company is pursuing market expansion through greenfield projects and M&A activities, as indicated by the business development expenses[76] Miscellaneous - Auna signed a five-year exclusive agreement with a physician group in Mexico to strengthen its oncology services[10] - The company expects to maintain a guideline of 20% FXN Adjusted EBITDA growth annually, with performance in Colombia being a key factor[14] - Auna successfully closed a private placement of USD 57.83 million in December 2024, increasing the total outstanding amount of its 10.000% Senior Secured Notes due 2029 to USD 310.84 million[46] - Auna's network included 31 healthcare facilities with a total of 2,323 beds and 1.4 million healthcare plans as of December 31, 2024[54] - Days Sales Outstanding increased to 83 days in LTM Dec-24 from 74 days in LTM Dec-23, indicating a longer collection period[48] - Auna's cash and cash equivalents at the end of FY 24 were S/236 million, a slight decrease of 2% from FY 23[47] - Total assets decreased to 7,081 million Soles in December 2024 from 7,690 million Soles in December 2023, reflecting a reduction of 609 million Soles[95] - Current liabilities increased to 1,945 million Soles in December 2024 from 1,689 million Soles in December 2023, an increase of 256 million Soles[96] - Trade accounts receivable rose to 962 million Soles in December 2024, up by 101 million Soles from 861 million Soles in December 2023[95] - Non-recurring financial costs included a significant reduction in extraordinary costs, decreasing from 234.1 million Soles in FY 2023 to 35.2 million Soles in FY 2024[75] - The average monthly revenue per plan in Oncosalud Peru remained stable at S/61.19, with a 0% change YoY[33] - Average monthly revenue per plan member increased by 1.1%, from S/ 58.25 in FY 23 to S/ 58.92 in FY 24[101] - The number of patients treated increased by 2.7%, from 57,022 in FY 23 to 58,559 in FY 24[101] - Emergency treatments rose by 3.6%, from 353,303 in FY 23 to 365,942 in FY 24[101]

Company Overview - Auna S.A. (AUNA) is a notable stock within the Medical group, which consists of 1012 companies and is currently ranked 4 in the Zacks Sector Rank [2] - AUNA has a Zacks Rank of 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3] Performance Comparison - Year-to-date, AUNA has achieved a return of approximately 25.8%, significantly outperforming the Medical sector's average return of 6.9% [4] - In comparison, another Medical stock, BioMarin Pharmaceutical (BMRN), has returned 8.3% year-to-date, highlighting AUNA's superior performance [4] Industry Context - Auna S.A. operates within the Medical Services industry, which includes 59 stocks and is currently ranked 83 in the Zacks Industry Rank; this industry has seen an average gain of 4.1% this year [5] - BioMarin Pharmaceutical belongs to the Medical - Biomedical and Genetics industry, which has 510 stocks and is ranked 70, with a year-to-date increase of 7.1% [6]

Core Viewpoint - Auna S.A. (AUNA) has shown a significant price increase of 18.5% over the past four weeks, with analysts projecting a mean price target of $12.15, indicating a potential upside of 39.3% from the current price of $8.72 [1] Price Target Analysis - The average price target consists of four estimates ranging from a low of $11 to a high of $13, with a standard deviation of $0.87, suggesting a relatively high agreement among analysts [2] - The lowest estimate indicates a potential increase of 26.2%, while the highest suggests a 49.1% upside [2] - A low standard deviation indicates a strong consensus among analysts regarding the stock's price movement direction [7] Earnings Estimates and Analyst Sentiment - Analysts have recently revised their earnings estimates for AUNA upward, which is a positive indicator for potential stock price increases [4][9] - The Zacks Consensus Estimate for the current year has increased by 7.5% due to one upward revision and no negative revisions in the last 30 days [10] - AUNA holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, further supporting its potential upside [11] Caution on Price Targets - While price targets are often sought after by investors, they can be misleading and should not be the sole basis for investment decisions [5][8] - Analysts may set overly optimistic price targets due to business incentives, which can inflate expectations [6]

Company Performance - Auna S.A. has returned 27.1% year-to-date, significantly outperforming the average gain of 5.4% for Medical stocks [4] - The Zacks Consensus Estimate for Auna S.A.'s full-year earnings has increased by 3.3% over the past quarter, indicating improved analyst sentiment and earnings outlook [3] Industry Context - Auna S.A. is part of the Medical Services industry, which consists of 59 individual stocks and currently ranks 139 in the Zacks Industry Rank. This industry has gained an average of 4.3% year-to-date, showing that Auna S.A. is performing better than its peers in this sector [5] - Another notable stock in the Medical sector is BioNTech SE Sponsored ADR, which has returned 7.8% year-to-date and belongs to the Medical - Biomedical and Genetics industry, currently ranked 62 with a year-to-date gain of 13.5% [4][6]

Analyst Background - The analyst is a Latin American economist with over 10 years of experience in investment management and company analysis, specializing in finding discounted stocks [4] - The analyst has worked as a Portfolio Manager at a large financial institution and previously in investment banking and economic journalism, with experience mainly in tech, retail, and banking [2] - The analyst holds an Economic BS and an MBA, and focuses on bottom-up analysis as well as macro-driven situations [2] Investment Approach - The analyst is a fundamentalist investor searching for discounted stocks across Latin America and worldwide [2] - The analyst believes there is still room for finding Alpha in many stocks and taking advantage of market overreactions [4] Disclosure - The analyst has a beneficial long position in the shares of AUNA through stock ownership, options, or other derivatives [3] - The analyst wrote the article themselves and expresses their own opinions, without receiving compensation other than from Seeking Alpha [3] - The analyst has no business relationship with any company whose stock is mentioned in the article [3]