Auna S.A.(AUNA) - 2025 Q1 - Quarterly Report

1Q25 Financial Results Overview 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 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] - Peru was a standout performer, with strong growth in members, volumes, and pricing, demonstrating the strength of the AunaWay model when fully implemented[4] - Strategic actions include taking corrective measures in Mexico, deepening collaboration with insurers, intensifying physician recruitment, and prioritizing cash flow over growth in Colombia[10] Overview of 1Q25 Consolidated Results 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] - 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] - 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] 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 Auna's segment performance varied, with strong growth in Peru offsetting declines in Mexico and challenges in Colombia Healthcare Services Mexico 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] - 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] Peru Operations 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] Healthcare Services Peru 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][24] - Total capacity utilization rose by 4.4 p.p. to 74.0% as a result of increased patient flows[25] Oncosalud Peru 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] 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 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] - 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] - 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] Financial Position and Cash Flow 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 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] - Auna remains focused on its medium-term target of achieving a Net Debt-to-Adjusted EBITDA ratio of less than 3.0x[33] Cash Flow Analysis 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] - 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] Subsequent Events & Company Information 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 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] About Auna & Conference Call 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] - A conference call to discuss 1Q25 financial results was scheduled for 8:00 a.m. Eastern time on May 21, 2025[40] 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 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 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][73] - The appendix includes the detailed Consolidated Income Statement for the three months ended March 31, 2025[74] - The appendix includes the detailed Consolidated Statement of Cash Flows for the three months ended March 31, 2025[75][76] Historical and Operating Metrics 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] - 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]