Core Insights - The article emphasizes the importance of identifying high-quality and mispriced investment opportunities, suggesting that great investment ideas should be intuitive and involve purchasing strong companies at favorable prices [1]. Group 1 - The focus is on the role of an investment analyst in uncovering valuable investment ideas, highlighting the necessity of thorough research and analysis [1]. - The article suggests that successful investments are characterized by a combination of quality companies and attractive pricing, which can lead to significant returns [1].

Financial Data and Key Metrics Changes - Auna reported consolidated revenue and EBITDA growth of only 41% on an FX neutral basis, which was lower than expected [7][8] - Net income was positive for the fifth consecutive quarter, indicating underlying financial stability despite operational setbacks [12][22] Business Line Data and Key Metrics Changes - Peru's operations outperformed, with a 10% increase in revenue driven by higher surgery volumes and improved pricing, while adjusted EBITDA increased by 19% [20][22] - In Mexico, revenues decreased by 4% and adjusted EBITDA by 5% on an FX neutral basis, attributed to operational setbacks and a challenging macroeconomic environment [15][22] Market Data and Key Metrics Changes - Capacity utilization in Peru increased by 4.4 percentage points year-over-year, while it decreased by 0.9 and 2.1 percentage points in Mexico and Colombia, respectively [14] - Colombia saw a 5% revenue increase in local currency, driven by risk-sharing models and diversification of the payer portfolio [21] Company Strategy and Development Direction - The company remains committed to transforming healthcare in Spanish-speaking Latin America through its value-based care model, with a focus on high complexity services [29] - Auna is diversifying its payer mix in Colombia to manage risk and stabilize cash flows, while also aiming to recover growth momentum in Mexico [30][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged operational setbacks in Mexico but expressed confidence in recovering growth momentum as corrective measures are implemented [8][12] - The company is optimistic about the long-term potential in Colombia and continues to focus on improving payment flows and cash cycle [30] Other Important Information - Auna's debt leverage remained unchanged, with a commitment to reach a midterm target of three times or less [12][28] - The company has maintained a solid cash position despite a 15% decrease in cash, generating PEN165 million of pretax operating cash flow [24][27] Q&A Session Summary Question: Update on Mexico's operations and transition to the Auna Way - Management clarified that the transition is necessary for long-term growth and efficiency, emphasizing the importance of aligning physician practices with the Auna model [35][36] Question: Update on Colombia's risk-sharing agreements - Management indicated that approximately 20% of revenues are now from risk-sharing models, with a target of 30% by the end of the year [37] Question: Guidance for Mexico's performance - Management refrained from providing specific guidance but expressed confidence in recovering growth in the coming quarters [48][49] Question: CapEx guidance and impairments in Colombia - CapEx is expected to remain at or below $50 million annually, with ongoing impairments in Colombia as part of a derisking strategy [52] Question: Acceptance of the Auna Way in Peru - Management noted that acceptance took several years in Peru, but they expect a quicker transition in Mexico due to lessons learned [63]

Financial Data and Key Metrics Changes - The company reported a disappointing quarter with revenue and EBITDA increasing by only 41% on an FX neutral basis [6][7] - Net income was positive for the fifth consecutive quarter, indicating underlying strength despite operational setbacks [12][22] Business Line Data and Key Metrics Changes - Peru's operations outperformed, with a 10% increase in planned memberships and a 19% increase in adjusted EBITDA [14][20] - In Mexico, revenues decreased by 4% and adjusted EBITDA by 5% on an FX neutral basis, attributed to operational setbacks and market softness [15][22] Market Data and Key Metrics Changes - Peru's total capacity utilization increased by 4.4 percentage points year over year, while Mexico and Colombia saw decreases of 0.9 and 2.1 percentage points, respectively [14][15] - Colombia experienced a 5% revenue increase in local currency, driven by risk-sharing models and diversification of the payer portfolio [21] Company Strategy and Development Direction - The company remains committed to transforming healthcare in Spanish-speaking Latin America through a value-based care model, with a focus on high complexity services [28][29] - The strategic direction includes recovering growth momentum in Mexico and expanding oncology capabilities [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in Mexico due to the transition to the Auna Way, emphasizing the need for gradual implementation to avoid volume loss [33][41] - The outlook for Colombia is positive, with improved cash flows and a target to increase revenue from risk-sharing models to 30% by mid-next year [36][29] Other Important Information - The company maintained a healthy debt structure and is focused on reducing net debt leverage to a target of three times net debt to EBITDA [27] - CapEx is expected to remain at or below $50 million annually, with ongoing investments in the business [50][57] Q&A Session Summary Question: Update on Mexico's operations and transition to Auna Way - Management clarified that the transition is not a cleanup but a necessary transformation to align physician practices with the Auna Way, which is critical for growth in high complexity services [33][34] Question: Update on Colombia's risk-sharing agreements - Approximately 20% of revenues are now from risk-sharing models, with a target of 30% by the end of the year [36] Question: Details on operations in Mexico - The main source of lost volumes was due to close relationships between suppliers and physicians, but management is seeing early signs of recovery [41][42] Question: CapEx guidance and impairments in Colombia - CapEx is expected to remain consistent, and impairments in Colombia will continue as part of a derisking strategy [50] Question: Effective tax rate outlook - The effective tax rate is expected to stabilize around 38% this year, influenced by intercompany payments and deferred tax benefits [57] Question: Business development expenses in Mexico - Business development expenses were related to upfront payments to doctors and are nonrecurring [59][60] Question: Acceptance timeline for Auna Way in Peru - The acceptance in Peru took several years, while in Mexico, it is expected to be quicker due to lessons learned [61][62]

Company Performance - Auna S.A. reported quarterly earnings of $0.19 per share, exceeding the Zacks Consensus Estimate of $0.10 per share, and showing an increase from $0.10 per share a year ago, representing an earnings surprise of 90% [1] - The company posted revenues of $281.43 million for the quarter ended March 2025, which was 5.95% below the Zacks Consensus Estimate and a decrease from $286.43 million in the same quarter last year [2] - Over the last four quarters, Auna S.A. has surpassed consensus EPS estimates two times and topped consensus revenue estimates only once [2] Market Comparison - Auna S.A. shares have increased by approximately 3.2% since the beginning of the year, outperforming the S&P 500's gain of 1.4% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $314.67 million, and for the current fiscal year, it is $0.77 on revenues of $1.23 billion [7] - The estimate revisions trend for Auna S.A. is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Medical Services industry, to which Auna S.A. belongs, is currently ranked in the top 22% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Auna's consolidated revenue for Q1 2025 was S/ 1,042 million, a decrease of 3% year-over-year, but an increase of 4% on a foreign exchange neutral basis[19] - Adjusted EBITDA for Q1 2025 was S/ 222 million, down 8% year-over-year, but up 1% on a foreign exchange neutral basis, with a margin of 214%[19] - Adjusted Net Income increased 15x year-over-year, marking the fifth consecutive quarter of positive Adjusted Net Income[48] - The leverage ratio remained flat at 36x[16] Segment Performance - Healthcare Services in Mexico saw a revenue decrease of 21% to S/ 243 million, impacted by new doctor/supplier standards[25] - Healthcare Services in Peru & Oncosalud Peru experienced a revenue increase of 10% to S/ 460 million[28] - Healthcare Services in Colombia reported a revenue decrease of 3% to S/ 339 million[34] Cash Flow and Debt - End-of-period cash decreased 15% compared to Q4 2024[54] - The company successfully offered an additional $621 million in aggregate principal amount of the 10000% senior secured notes due 2029 in May 2025[57] - Consolidated debt was S/ 3,735 million, with more than half in direct local currency funding and the remaining US$ debt 94% hedged to PEN[57]

[1Q25 Financial Results Overview](index=1&type=section&id=1Q25%20Financial%20Results%20Overview) Auna's Q1 2025 results fell short of expectations, with modest FXN revenue growth and operational challenges, despite strong Peru performance [Executive Summary & Consolidated Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Consolidated%20Highlights) Auna's Q1 2025 performance was below expectations due to market softness and operational issues in Mexico and Colombia, offset by strong Peru growth | Metric | 1Q25 Value | YoY Change (Reported) | YoY Change (FXN) | | :--- | :--- | :--- | :--- | | Consolidated Revenue | S/1,042 million | -3% | +4% | | Adjusted EBITDA | S/222 million | -8% | +1% | | Adjusted EBITDA Margin | 21.4% | -1.1 p.p. | N/A | | Adjusted Net Income | S/55 million | +150% | N/A | | Leverage Ratio | 3.6x | -0.7x | N/A | - The company's performance was below expectations due to a softer market and temporary operational setbacks in Monterrey, Mexico, as well as continued challenges in Colombia[3](index=3&type=chunk) - Peru was a standout performer, with strong growth in members, volumes, and pricing, demonstrating the strength of the AunaWay model when fully implemented[4](index=4&type=chunk) - Strategic actions include taking corrective measures in Mexico, deepening collaboration with insurers, intensifying physician recruitment, and prioritizing cash flow over growth in Colombia[10](index=10&type=chunk) [Overview of 1Q25 Consolidated Results](index=3&type=section&id=Overview%20of%201Q25%20Consolidated%20Results) Consolidated revenue saw FX-neutral growth despite reported declines, while Adjusted EBITDA was near-flat FXN, and Net Income improved significantly due to reduced finance costs - Consolidated revenue decreased **3% YoY** as reported, but increased **4%** on an FX-neutral basis; in local currency, revenues grew **10%** in Peru and **5%** in Colombia, but decreased **4%** in Mexico[12](index=12&type=chunk) - Adjusted EBITDA's near-flat performance in FXN terms was attributed to low revenue growth and **S/10 million** in impairment losses in Colombia; reported results were also negatively impacted by the depreciation of the Mexican Peso (**22%**) and Colombian Peso (**9%**) against the Peruvian Sol[14](index=14&type=chunk) - Net finance costs fell from **S/168 million** in 1Q24 to **S/80 million** in 1Q25, mainly due to non-recurring impacts in the prior year and a positive non-cash FX effect of **S/37 million** in 1Q25[15](index=15&type=chunk) Net Income Metrics | Metric | 1Q25 | 1Q24 | | :--- | :--- | :--- | | Net Income (Loss) | S/38 million | S/(8) million | | Adjusted Net Income | S/55 million | S/22 million | | Adjusted Net Income per Share | S/0.70 | S/0.35 | [Business Performance by Segment](index=4&type=section&id=Business%20Performance%20by%20Segment) Auna's segment performance varied, with strong growth in Peru offsetting declines in Mexico and challenges in Colombia [Healthcare Services Mexico](index=4&type=section&id=Healthcare%20Services%20Mexico) Mexico's segment revenue and Adjusted EBITDA declined due to a soft macro environment, reduced physician engagement, and higher prices, leading to lower volumes and utilization Metric (YoY Change, Local Currency) | Metric (YoY Change, Local Currency) | 1Q25 Value | YoY Change | | :--- | :--- | :--- | | Segment Revenue | S/243 million | -4% | | Segment Adjusted EBITDA | S/81 million | -5% | | Segment Adjusted EBITDA Margin | 33.2% | -0.4 p.p. | | Surgeries | 4,700 | -6% | | Emergency treatments | 8,100 | -18% | | Total capacity utilization | 39.8% | -0.9 p.p. | - The company's decision to reduce legacy medical suppliers to align with the AunaWay model and payor best practices inadvertently led to reduced physician engagement and lower volumes, as it underestimated the economic impact on physicians[6](index=6&type=chunk) - Revenue decline was also attributed to a softer macroeconomic environment and higher ticket prices at Doctors Hospital, which caused a downstream effect on hospitalizations and ICU stays[19](index=19&type=chunk) [Peru Operations](index=5&type=section&id=Peru%20Operations) Peru operations delivered strong performance with double-digit revenue and Adjusted EBITDA growth, driven by both Healthcare Services and Oncosalud segments Metric (Peru Consolidated) | Metric (Peru Consolidated) | 1Q25 | YoY Change | | :--- | :--- | :--- | | Revenue | S/460 million | +10% | | Adjusted EBITDA | S/102 million | +19% | | Adjusted EBITDA Margin | 22.1% | +1.7 p.p. | - The growth in Adjusted EBITDA was primarily driven by higher revenues, while effective management of COGS and SG&A helped sustain operating margins[26](index=26&type=chunk) [Healthcare Services Peru](index=5&type=section&id=Healthcare%20Services%20Peru) Healthcare Services Peru revenue grew 9% YoY, driven by increased surgery volume, pricing adjustments, and outpatient appointments, leading to higher capacity utilization - Revenue for Healthcare Services Peru increased **9% YoY** to **S/263 million**, driven by higher surgery volume (**+5%**), pricing adjustments, and increased outpatient appointments; Adjusted EBITDA grew **12% YoY**[23](index=23&type=chunk)[24](index=24&type=chunk) - Total capacity utilization rose by **4.4 p.p.** to **74.0%** as a result of increased patient flows[25](index=25&type=chunk) [Oncosalud Peru](index=6&type=section&id=Oncosalud%20Peru) Oncosalud Peru achieved 11% YoY revenue growth and 25% YoY Adjusted EBITDA increase, supported by membership growth and preventive check-ups - Oncosalud Peru's revenue grew **11% YoY** to **S/281 million**, reflecting annual price adjustments for medical inflation; Adjusted EBITDA increased by a strong **25% YoY**[24](index=24&type=chunk) Oncosalud Peru Operating Metrics | Oncosalud Peru Operating Metrics | 1Q25 | YoY Change | | :--- | :--- | :--- | | Plan memberships | 1,365,000 | +10% | | Preventive check-ups | 34,000 | +25% | | Patients treated | 36,000 | +16% | | Medical Loss Ratio (MLR) | 56.6% | +1.5 p.p. | [Healthcare Services Colombia](index=7&type=section&id=Healthcare%20Services%20Colombia) Colombia's segment revenue grew 5% YoY in local currency due to risk-sharing models, but Adjusted EBITDA declined 10% due to impairment provisions, with a strategic focus on cash generation Metric (YoY Change, Local Currency) | Metric (YoY Change, Local Currency) | 1Q25 Value | YoY Change | | :--- | :--- | :--- | | Segment Revenue | S/339 million | +5% | | Segment Adjusted EBITDA | S/41 million | -10% | | Segment Adjusted EBITDA Margin | 12.2% | -2.1 p.p. | | Surgeries | 9,000 | -22% (Reported) | | Emergency treatments | 29,000 | -19% (Reported) | - Revenue growth was supported by the gradual implementation of risk-sharing models, such as Prospective Global Payments (PGP), which offset declines in traditional services like surgeries and emergency visits[28](index=28&type=chunk) - Adjusted EBITDA was negatively impacted by increased provisions for impairment losses of **S/10 million** in 1Q25, compared to a negligible amount in 1Q24[30](index=30&type=chunk) - The company's focus on cash generation led to proactive management of contracted services and hospital beds, resulting in a **2.1 p.p.** YoY decrease in total capacity utilization to **76.9%**[29](index=29&type=chunk) [Financial Position and Cash Flow](index=7&type=section&id=Financial%20Position%20and%20Cash%20Flow) Auna's financial position shows stable net debt and improved leverage, while operating cash flow decreased due to collection challenges in Colombia [Balance Sheet and Debt Profile](index=7&type=section&id=Balance%20Sheet%20and%20Debt%20Profile) Gross debt decreased YoY, while net debt remained stable, maintaining a leverage ratio of 3.6x, with a medium-term target below 3.0x Debt Metric | Debt Metric | Mar-25 | Dec-24 | Mar-24 | | :--- | :--- | :--- | :--- | | Gross Debt | S/3,735 M | S/3,768 M | S/3,980 M | | Net Debt | S/3,534 M | S/3,532 M | S/3,667 M | | Leverage Ratio | 3.6x | 3.6x | 4.3x | - The YoY decrease in gross debt was mainly due to a **S/330 million** positive FX impact from MXN/PEN depreciation and **S/108 million** in amortizations, partially offset by an increase in short-term debt for working capital[32](index=32&type=chunk) - Auna remains focused on its medium-term target of achieving a Net Debt-to-Adjusted EBITDA ratio of less than **3.0x**[33](index=33&type=chunk) [Cash Flow Analysis](index=8&type=section&id=Cash%20Flow%20Analysis) Net cash from operating activities decreased significantly due to lower collections in Colombia, while investing and financing activities saw increased cash usage Cash Flow Metric | Cash Flow Metric | 1Q25 | 1Q24 | YoY Change | | :--- | :--- | :--- | | Net cash from operating activities | S/106 M | S/154 M | -31% | | Net cash used in investing activities | S/(64) M | S/(31) M | +106% | | Net cash used in financing activities | S/(78) M | S/(59) M | +32% | - The decline in operating cash flow was mainly due to a drop in collections in Colombia, particularly from Nueva EPS in January and February, which was only partially recovered in March[36](index=36&type=chunk) - The cash conversion cycle improved to **-2 days** from **10 days** in the LTM Dec-24 period, driven by an increase in Days Payable Outstanding[35](index=35&type=chunk) [Subsequent Events & Company Information](index=4&type=section&id=Subsequent%20Events%20%26%20Company%20Information) Auna completed a **USD 62.1 million** debt issuance in May 2025 and provided an overview of its extensive healthcare network and upcoming conference call [Subsequent Event](index=4&type=section&id=Subsequent%20Event) In May 2025, Auna issued an additional **USD 62.1 million** in Senior Secured Notes due 2029, using proceeds to partially prepay existing debt - In May 2025, Auna closed an offering of **USD 62.1 million** in Additional **10.000%** Senior Secured Notes due 2029; proceeds were used to partially prepay other indebtedness[17](index=17&type=chunk) [About Auna & Conference Call](index=9&type=section&id=About%20Auna%20%26%20Conference%20Call) Auna operates 31 healthcare facilities with 2,323 beds and serves 1.4 million members across Latin America, with a Q1 2025 earnings conference call scheduled for May 21, 2025 - As of March 31, 2025, Auna's network includes **31 healthcare facilities** with a total of **2,323 beds**, and it serves **1.4 million healthcare plan members** across Mexico, Peru, and Colombia[39](index=39&type=chunk) - A conference call to discuss 1Q25 financial results was scheduled for 8:00 a.m. Eastern time on May 21, 2025[40](index=40&type=chunk) [Appendix](index=10&type=section&id=Appendix) The appendix provides definitions and reconciliations for non-IFRS financial measures, detailed unaudited financial statements, and historical operating metrics for comprehensive analysis [Non-IFRS Financial Measures & Reconciliations](index=10&type=section&id=Non-IFRS%20Financial%20Measures%20%26%20Reconciliations) This section defines non-IFRS financial measures like EBITDA and Adjusted Net Income, providing detailed reconciliation tables to their IFRS counterparts for transparency Reconciliation to Adjusted EBITDA (S/ millions) | Reconciliation to Adjusted EBITDA (S/ millions) | 1Q25 | 1Q24 | | :--- | :--- | :--- | | Profit (Loss) before Tax | 62 | 16 | | (+) Net Finance Cost | 80 | 168 | | (+) Depreciation and Amortization | 53 | 56 | | (=) EBITDA | 195 | 241 | | (+) Adjustments | 27.1 | 0.7 | | (=) Adjusted EBITDA | 222 | 241 | Reconciliation to Adjusted Net Income (S/ millions) | Reconciliation to Adjusted Net Income (S/ millions) | 1Q25 | 1Q24 | | :--- | :--- | :--- | | Net Income (Loss) | 38 | (8) | | (+) Adjustments (net of tax) | 17 | 30 | | (=) Adjusted Net Income | 55 | 22 | [Financial Statements](index=17&type=section&id=Financial%20Statements) This section presents the unaudited Consolidated Balance Sheet, Income Statement, and Statement of Cash Flows for the first quarter ended March 31, 2025 - The appendix includes the detailed Consolidated Balance Sheet as of March 31, 2025[72](index=72&type=chunk)[73](index=73&type=chunk) - The appendix includes the detailed Consolidated Income Statement for the three months ended March 31, 2025[74](index=74&type=chunk) - The appendix includes the detailed Consolidated Statement of Cash Flows for the three months ended March 31, 2025[75](index=75&type=chunk)[76](index=76&type=chunk) [Historical and Operating Metrics](index=22&type=section&id=Historical%20and%20Operating%20Metrics) This section provides historical quarterly financial metrics and key operating indicators for Q1 2025 versus Q1 2024, enabling trend analysis and performance comparison - A detailed table presents historical financial metrics on a quarterly basis from 1Q23 to 1Q25[77](index=77&type=chunk) - A summary table of key operating metrics for 1Q25 compared to 1Q24 is provided, covering Oncosalud Peru plan data and overall Healthcare Services capacity and volume statistics[78](index=78&type=chunk)

Core Viewpoint - Auna S.A. is expected to report flat earnings of $0.10 per share for the quarter ended March 2025, with revenues projected to increase by 6.7% to $305.6 million compared to the previous year [3][12]. Earnings Expectations - The upcoming earnings report is scheduled for May 20, and the stock may experience upward movement if earnings exceed expectations, while a miss could lead to a decline [2][3]. - The consensus EPS estimate has been revised down by 5.88% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, suggesting no recent differing analyst views [10][11]. - Auna S.A. holds a Zacks Rank of 3, making it challenging to predict an earnings beat conclusively [11]. Historical Performance - In the last reported quarter, Auna S.A. was expected to earn $0.15 per share but only achieved $0.12, resulting in a -20% surprise [12]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [13]. Conclusion - Auna S.A. does not appear to be a strong candidate for an earnings beat, and investors should consider other factors when making decisions regarding the stock ahead of the earnings release [16].

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]