Hospitals and labs return to profit

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The pandemic affected Brazilian health groups in different ways. Operators and insurance companies saw their profits jump to record levels last year due to the cancellation of elective procedures – even leading the sector to register for the first time in its history a medical deflation.

Hospitals, clinics, and diagnostic laboratories, on the other hand, suffered losses or had negligible profits, since the bill for patients affected by Covid-19 is lower when compared to the costs of high-complexity surgeries and exams.

In 2021, things changed. Patients who had not set foot in a doctor’s office for nearly a year went back for medical procedures and, in March, came the second wave of the pandemic, at a much greater intensity.

The impact is clear in the earnings reports for the second quarter of publicly held companies operating in the sector. Hospitals and laboratories reversed negative results while operators and insurers, who pay these medical bills, lost or saw their profits drop up to 92%.

“We had the best quarter last year and now we have the worst in the company’s history,” said CEO of healthcare operator NotreDame Intermédica Irlau Machado. The company posted a loss of R$48 million in the second quarter, compared to a profit of R$223 million a year earlier. The costs of Covid-19 totaled, between April and June, R$358 million, almost R$100 million more compared to the first quarter.

Insurer Porto Seguro Saúde also went from a positive result of R$50 million to a negative one of R$1.3 million. Health plan and hospital operator Hapvida’s net profit fell 62.5% between April and June. At SulAmérica, profit dropped 92.6% and at Bradesco Saúde, the reduction was 56.8%.

Among service providers, practically all companies listed on the stock exchange went from loss to profit this quarter. Rede D’Or, which had suffered a negative result of almost R$300 million, saw the bottom line rise to a profit of R$445.5 million. The same happened with Dasa, which reversed the loss of R$343 million to an adjusted net income of R$451.5 million. Fleury went from a loss of R$73.3 million to close the second quarter with a profit of R$65.5 million, even considering the cyberattack suffered at the end of June.

The expectation is that this scenario of resumption of medical procedures will continue in the coming months. The volume of exams in laboratories has been growing, which could mean future surgeries, and there is still a so-called stock of procedures not performed in the past that could happen. In addition, there is the possibility of complex cases arising from patients who have not had their check-ups in recent months. However, it is worth considering that there may be changes in this scenario if the Delta variant spreads significantly.

“The results reflect the second wave of Covid-19, it is a transitory impact, but it will still bring some small impact in the third quarter,” said a report by analysts from Credit Suisse.

The vertical operators Hapvida and Intermédica tend to benefit the most from the reduction in hospitalizations of patients affected by the new coronavirus. This is because they are reducing the infrastructure for these services. Hapvida, for example, had 1,600 beds for Covid at the height of the pandemic and, currently, it has about 100. There was also an 80% reduction in the number of staff who saw patients with the disease.

Among the paying sources, Bradesco Saúde is the one that had the greatest impact on the costs of Covid-19 in the second quarter. The bill reached R$1.8 billion, which reflected in a loss ratio of 95.1%, an increase of 25.1 percentage points over the same period in 2020.

“The net income in the quarter was impacted by the increase in the loss ratio, which was affected by the frequency of events related to Covid-19, due to the increased need for hospital medical care, diagnoses, consultations, hospitalizations, post-Covid-19 effects, resumption of elective procedures”, informs Bradesco’s results report.

Despite the negative numbers in the profitability of operators, the revenue of all grew due to acquisitions and entry of new users. Even in a scenario of high unemployment, the demand for health insurance has been growing as the population wants access to private healthcare in times of pandemic. In the last 12 months, considering June, the sector recorded 1.5 million new users of health plans, totaling 48.2 million — the highest number since mid-2016.

Source: Valor international

Gonçalves family to leave controlling block of Hypermarcas

The Gonçalves family, the founder of laboratory Neo Química, has decided to leave the controlling block of consumer goods company Hypermarcas and its board of directors to have the freedom to unload itself of the stake, which until now wasn’t permitted. According to what a source heard, the partners have considered the hypothesis of selling their slice in a gradual manner or using part of the shares as collateral for debt payment. They are still considering, in a progressive sale of shares, using the funds in businesses already controlled by them, like a hotel and farm owned by the family in the north of Goiás.

According to information that circulates in the market, there is even the possibility that they enter into a new business, in the area of veterinary pharmaceuticals, and this would be possible with part of the funds from the stock sale. The family’s current stake in the total capital of Hypermarcas is 5.54%, the equivalent today to R$990 million. A business in the veterinary area wouldn’t be an impediment within the non-compete rules of the agreement signed between the two parties, which would apply for two years after the exit from the board. Contacted by Valor, the Gonçalves family did not answer to interview requests.

Other partners of the business have the right of first refusal in the purchase of the shares under the shareholder agreement, in a short window of 15 days. Considering the time frame, the recent stock gains, which make the transaction more costly, and amount that would be transacted in this deal, partners have decided not to exercise their right of first refusal.

João Alves de Queiroz Filho, aka Júnior, the founder of Hypermarcas, has shares in the company via vehicles like Igarapava Participações, Including him and Mexican partners (Esteban Malpica, Alfredo Harp Helu, and Roberto Ramirez), the controlling group reaches 40%. Today, Hypermarcas is interested in purchasing shares in the market, Valor has learned. The company has an open buyback stock program, and if it does take action, it will be through this plan. In any case, despite the company’s interest in its partners’ shares, due to its quiet period, Hypermarcas is barred from doing any negotiation of this type this week, recalls a source familiar with the subject. This period ends on Friday, after the publication of the quarterly report. Sought for comment, Hypermarcas didn’t comment on a potential repurchase the family’s shares.

Source: Valor Econômico S.A.