Financial Data and Key Metrics Changes - Consolidated FX neutral EBITDA grew by 5% year over year, indicating a recovery trajectory [6][17] - Adjusted EBITDA increased by 5% in FX neutral terms, while it decreased by 3% on an as-reported basis, with the margin remaining just over 22% [17][18] - Adjusted net income increased six times year over year, positively impacted by FX neutral EBITDA growth and a favorable FX variance [20] Business Line Data and Key Metrics Changes - Revenue in Mexico grew by 5% year over year, driven by higher average ticket prices despite fewer surgeries and emergency treatments [10] - Peru's healthcare services revenue grew by 5%, primarily due to increased surgery volumes and price increases [12] - Colombia's revenue remained flat year over year, but EBITDA increased by 9%, with a margin expansion of 1.4 percentage points [13][16] Market Data and Key Metrics Changes - Total capacity utilization decreased by 2.5 percentage points to 64%, mainly due to intentional growth management in Colombia [9] - In Mexico, capacity utilization declined due to lower surgery volumes and emergency visits, but improvements in physician recruitment are expected to aid recovery [9] - The oncology MLR in Mexico fell below 50%, reflecting efficiencies gained in pharmaceutical costs [9] Company Strategy and Development Direction - The company is focused on modernizing and integrating patient care to improve medical outcomes and drive long-term shareholder value [24] - There is an emphasis on risk-sharing models and diversifying the payer mix in Colombia to safeguard cash flows and operational stability [26] - The company remains optimistic about the recovery of volumes in Mexico and the potential of its oncology offerings [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges in Mexico and Colombia but believes operational adjustments will lead to improved performance [25] - The near-term growth outlook is uncertain due to trade and tariff issues in Mexico, but the Peru business continues to show strong growth potential [26] - Management expects volumes in Mexico to recover as physician relationships stabilize and align with the company's model [32][40] Other Important Information - The company refinanced over $62 million of short-term debt, improving its maturity profile [22] - Cash position decreased by 13% compared to the first quarter, but remains healthy [20] Q&A Session Summary Question: Update on Mexico's physician and supplier situation - Management reported stabilization in physician relationships and expects volume growth to improve, although the transition may take time [32][34] Question: Future of oncology MLR - Management indicated that MLR is expected to remain within a predictable range, with continuous cost containment and price adjustments [36] Question: New agreements in Colombia - Management confirmed progress in collections and a decrease in provisions, with an increase in risk-sharing contracts contributing to revenue growth [48] Question: Confidence in utilization increase in Mexico - Management believes the model is gaining traction and anticipates recovery in volumes despite current market softness [52] Question: Market share in Monterrey - Management stated that they represent over 30% of private sector beds in Monterrey and aim to increase their market share in high complexity services [56][58] Question: Normalization of effective tax rate - Management explained that the effective tax rate has stabilized due to consistent profit before tax and net profit, projecting a rate of around 35% to 38% going forward [60][62] Question: Negative free cash flow after interest costs - Management noted that organic free cash flow is expected to improve in the second half of the year, covering interest costs [62]
Auna S.A.(AUNA) - 2025 Q2 - Earnings Call Transcript