Corporate Presentation 1Q18. New growth cycle and value innovation

Transcription

1 Corporate Presentation 1Q18 New growth cycle and value innovation

2 Index 1 Dental benefits: an incipient sector in Brazil 2 Inside OdontoPrev 3 Sustainability 4 Strategic competitive advantages 5 Financial and Operational Performance 6 Capital Markets 2

3 Dental benefits: an incipient sector in Brazil 3 1

4 Brazil leads the global ranking of dentists Number of dentists per country (thousand) 291 ¹ 19% of the dentists in the world are located in Brazil¹ ² 63 47² 43² ² Source: FDI World Dental Federation The Oral Health Atlas 2009 ¹ Federal Council of Dentistry Brazil (October 2017) ² Eurostat

5 Brazilian dental opportunity Although 19% of world s dentists are located in the country, only 11% of brazilians covered by a dental plan 77% 11% % of the population covered by a private dental plan 14 5 Source: OdontoPrev

6 Great portion of the middle class without a dental plan Brazil s population: 200 million people 100 million people in the middle class 100 million people outside the middle class 23 million people with a dental plan 77 million people without a dental plan 6

7 Inside OdontoPrev2

8 Cost per client Cost per client Attractive cost dynamics Over time, OdontoPrev Dental Plans present a predictable Medical Plans OdontoPrev Plans Price Cost Price Cost Time Cost increases by medical inflation and better technology Short-term contract: 1 year tenor TIme Predictable cost evolution due to prevention Long-term contract: 2 year + duration 8 and more attractive cost profile than Medical Plans.

9 OdontoPrev asset light Business Model High predictability of cash flow, prepaid revenues No working capital needs Low CAPEX requirements Positive cash flow generation every day Customers Fee per user Dental care reimbursement R$ R$ Accredited dentist network 9

10 OdontoPrev: 11 years of sustainable value creation since IPO Net revenues (R$ million) 1,365 1,437 1,456 1,070 1,156 1, IPO APR17 MAR18 10

11 Revenue & membership market share: Revenue market Share (%) Membership market Share (%) ¹ Source: ANS and OdontoPrev ¹ OdontoPrev membership portfolio ex-bradesco

12 Individual plans & SME: higher growth and better returns APR17-MAR18 AVERAGE TICKET (R$ / member / month) Contribution Margin 39 Individual Plans Revenues APR17-MAR18 R$289 M (+10.6% YoY) 48% 21 SME Revenues APR17-MAR18 R$230 M (+18.2% YoY) 47% 17 Corporate Revenues APR17-MAR18 R$927 M (+0.2% YoY) 42% 12 High Low ¹ M: million NUMBER OF COMPETITORS

13 Members, revenues and contribution margin 1Q18 Members 74% 16% 10% Revenues 63% 20% 17% Contribution Margin 60% 21% 19% 1Q14 81% 12% 7% 75% 13% 13% 12% 13% 74% 13 Corporate SME Individual Plans

14 3 Sustainability

15 Sustainability The concept of Sustainability is part of OdontoPrev s culture since our foundation Since 2008, OdontoPrev has been a signatory of the United Nations Global Compact s 10 Principles Environmental Policy released in

16 Apoena Project Amalgam recycling program ECOnnomizar program Emission management Water management 16 Since 2005 Partnership with Sao Paulo University 3,100 dentists involved 18kg of recycled content Campaign to raise awareness of energy consumption at: OdontoPrev offices Accredited network of dentists Employees houses Carbon neutral program Since ,363 trees planted, an area equivalent to 13 soccer fields to offset 1,300 tons of CO2/year issued by the Company Monitor and awareness of the importance of saving water In 2016, water consumption declined 31.2 m³ against 2015, due to initiatives taken

17 Social Actions OdontoPrev seeks to offer society, especially the less privileged ones. The social interventions of OdontoPrev are related to the support of needy children of chosen communities or linked to supporting needy children and youth partner institutions. 17

18 Social actions Friends of the Future action OdontoPrev s initiative aimed at helping partner institution or creating projects focused on oral health and supporting needy children. In 2016, the Company supported 23 institutions. Assistance to low income communities - Since Free services to local residents - 18 dental offices implemented Continued care program Dental care services to needy children 6,765 children and teenagers assisted +108,000 dental procedures since

19 Our partners in Social Responsability 19

20 Strategic competitive advantages 4

21 Strategic competitive advantages World Class Dental IT Platform Largest and Specialized Dentist Network Innovation Driven Company Exclusive Distribution Channels 100% Dental Focused 21

22 Strategic competitive advantages World Class Dental IT Platform Largest and Specialized Dentist Network Innovation Driven Company Exclusive Distribution Channels 100% Dental Focused 22

23 Proprietary IT Platform: information-driven decisions 23 Complete dental record of all beneficiaries 3 decades of actuarial data Risk management and fraud prevention

24 Strategic competitive advantages World Class Dental IT Platform Largest and Specialized Dentist Network Innovation Driven Company Exclusive Distribution Channels 100% Dental Focused 24

25 Increasing online search for dental plans in Brazil Number of dental plans online search in Brazil (000 / month) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

26 Innovation driven Company Top quality dental materials delivered door to door to the dentist free of charge + OdontoPrev online: individual plans sold at the web + Launched NEW September 1st 26

27 Wide range of unique dental care solutions Best-seller OdontoPrev online Baby tooth Well being Dental Aesthetics Dental Orto Dental VIP 27

28 Strategic competitive advantages World Class Dental IT Platform Largest and Specialized Dentist Network Innovation Driven Company Exclusive Distribution Channels 100% Dental Focused 28

29 Dental and medical plans membership evolution Million members Medical plans Dental plans , thousand thousand MAR MAR18 29 Source: ANS

30 Focused & dental only leadership since 1998 Key players, brazilian dental sector MARCH 2018 thousand members) 6,338¹ 27% market share of beneficiaries 2,033 1,588 1, , ( ) ( ) Source: ANS ¹Companies Earnings Release (Mar/18)

31 3 accelerated growth cycles, over the last decade, brings new investors to the sector 31

32 Cycle 01: Bradesco Dental (million members) OdontoPrev EBITDA (R$ million and % Sales) Average ticket (R$/member/month) % 23.3% 23.9% % Source: ANS

33 Cycle 02: Amil from 2010 to 2013 (million members) OdontoPrev EBITDA (R$ million and % Sales) Average ticket (R$/member/month) % 24.9% 23.8% 25.5% Source: ANS *Sold to UnitedHealthcare *

34 Negative result in Brazil since the acquisition in 2014 Net income/loss (R$ million) Source: Amil (Valor Econômico) -672

35 Cycle 03: Hapvida & Interodonto: Since 2014 (million members) OdontoPrev EBITDA (R$ million and % Sales) Average ticket (R$/member/month) % 26.2% 24.5% 25.2% % ¹ APR17 MAR18¹ 2014 MAR MAR18 35 Source: ANS ¹Excludes Bradesco Dental and OdontoPrev INSS reversals

36 Dental plans sector evolution DEC14 MAR18 Thousand members +1,884 23,244 20, Others DEC14 With 14% of market share, two companies represented 38% of the growth of the sector since MAR18 36 Source: ANS

37 Quarterly net additions Thousand members JAN17 FEB17 MAR17 APR17 MAY17 JUN17 JUL17 AUG17 SEP17 OCT17 NOV17DEC17 JAN18 FEB18 37 Source: ANS -10

38 Thousand members 100 Quarterly net additions JAN17 FEB17 MAR17 APR MAY17 JUN17 JUL17 AUG17 SEP17 OCT17 NOV17 DEC JAN18 FEB Source: ANS

39 Change in control brings a new strategy of peers Thousand lives ( ) 1,550 2,132 2,003 1,846 1,946 2,000 2,033 1,550 1,588 1,286 1,197 1, ,056 1, MAR18 39 Source: ANS

40 Cross-selling dental/medical has limited upside March 2018 Players Dental (A) Medical (B) A / B 1,588 2,015 79% 1,561 2,270 69% 40 Source: ANS

41 Average ticket evolution (R$/member/month) N/A Source: ANS

42 Focus on the dental value chain PROPRIETARY CLINICS SERVICES JOINT VENTURE WITH BB SEGURIDADE PREMIUM BRAND DENTAL MATERIALS DISTRIBUTION DENTAL SOFTWARE REGIONAL BRAND NORTHEAST REGIONAL BRAND MINAS GERAIS ONLINE SCHEDULING JOINT VENTURE IN MEXICO DENTAL IMAGING DISGNOSIS 42

43 The largest bancassurance platforms in Brazil Clients + 80 million + 60 million National footprint Exclusivity 20 years 48% of branches & 52% of brazilian bank clients 43

44 Banks: strong and committed long-term partners + Back-office Price maker Product design Customer relationship Dentist network management Front-office Price takers Selling National footprint capilarity Bank branches and brokers distribution 44

45 Largest and best dentist network 28,000 dentists at 2,600 cities National distribution Differentiated academic background Continuous education 24/7 call center 45

46 OdontoPrev: 5 Financial and Operational Performance

47 Revenues R$ million 1,250 1,365 1,437 1,456 1,070 1, % APR17 MAR18 1Q17 1Q18 47

48 Revenues evolution per segment R$ million R$ million +5.4% +4.4% +19.8% % 61 20% % 15% % 63% 17% 1Q17 1Q18 1Q17 1Q18 Corporate SME Individual Plans 48

49 Incremental revenue per segment (YoY) R$ million Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Corporate SME Individual Plans 49

50 Corporate segment quarterly revenues increase evolution +0.6% +1.2% +2.1% -0.9% -1.4% -2.3% -2.7% 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 50

51 Average Ticket per Segment (R$/member/month and YoY %) 8.2% % % Q17 1Q18 1Q17 1Q18 1Q17 1Q18 Corporate SME Individual Plans 51

52 1Q18 Net additions per segment (thousand members) Corporate SME Individual Plans 1Q18 52

53 1Q Quarterly net additions (thousand members) Q15 1Q16 1Q17 1Q18 53

54 Net additions Corporate (thousand members) Q17 1Q18 APR16- MAR17 APR17- MAR18 54

55 Net additions (thousand members) Q17 3Q17 4Q17 1Q18 APR17- MAR18 55

56 Breakdown of individual plans Thousand members +39% % 651 6% 79% 21% 98 K lives 44% 288 K lives 50% 1Q14 1Q18 Retailers 56

57 Positive effects of bank channels 1Q18 List prices & R$45.60 Retailers R$35.90 Selling expenses Profitability 10% - 15% Higher 25% - 45% Lower 57

58 Breakdown of SME members Thousand members +35% 81% % % 13% 77% 1Q14 1Q18 58

59 Quarterly and LTM Cost of Services (% of Sales) Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q¹ 3Q¹ 4Q¹ 1Q¹ Quarterly LTM 59 ¹Excludes Bradesco Dental and OdontoPrev INSS effects.

60 Pricing power offsets higher cost of services 1Q Corporate SME Individual Plans Cost of Services / member / month Average ticket 60

61 Key metrics per segment (% of Sales) Q17 1Q18 1Q171Q18 1Q171Q18 1Q17 1Q18 1Q171Q181Q17 1Q18 1Q17 1Q18 1Q17 1Q18 1Q17 1Q18 Corporate SME Individual Plans Cost of Services Selling expenses Contribution Margin 61

62 G&A (% of Sales) Personnel Others # of employees 1,587 1,560 1,588 1,581 1,460 1, ¹ 1,589 1Q18 62 ¹Excludes Bradesco Dental and OdontoPrev INSS

63 Allowance for doubtful receivables R$ million and % of Sales Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 R$ million % of Sales 63

64 Adjusted EBITDA and Adjusted EBITDA margin R$ million and % of Sales % ¹ APR17 1Q17 1Q18 MAR18¹ 64 ¹ Excludes Bradesco Dental and OdontoPrev INSS

65 Adjusted EBITDA quarterly evolution % 15.9% 1Q17 1Q18 R$ million % Sales

66 Net Income R$ million % % 34% 32% 30% 31% 18.9% ¹ APR17 1Q17 1Q18 MAR18¹ ROE 66 ¹ Excludes Bradesco Dental and OdontoPrev INSS

67 Net cash (R$ million) 508¹ 522¹ Q18 67 ¹ Includes R$121.4 million dedicated to ANS.

68 Capex: low portion of EBITDA R$ million ¹ Q17 1Q18 Adjusted EBITDA CAPEX 68 ¹ Excludes Bradesco Dental and OdontoPrev INSS

69 Cash Flow since the IPO R$ million +2, % of Sales ,0 Share buyback Capital reductions -1,617.4 Cash dividends , Net Cash DEC = Cash Generation Acquisitions Capex Shareholder Remuneratiom Stock Options² Net Cash MAR18¹ 69 ¹ Includes R$121.4 million dedicated to ANS ² Share repurchase related to the Stock Options Plan

70 Effective ta ISS (Service tax) Effective tax ISS (Service tax) 1% 3% 2% Until 2017 Jan and Feb/18 Mar/18 ISS charged and collected in Barueri Complementary Law 157/16 Average estimated tax of municipalities where the Company operates Liminal STF (Supreme Court) 70

71 Acquisition of Private dental plan operator 622K beneficiaries: 65% corporate and 35% non-corporate. #3 player in the Northeast region: ~14% market share 9x 2017 EBITDA and 2019 earn-out; In the 12 month period ended June 2017: Revenues: R$97,5 million Adjusted EBITDA: R$17,7 million Adjusted EBITDA margin: 18,1% Average ticket of ~ R$13,00 DLR ~35% 71

72 Capital Markets 6

73 Market Cap since the IPO (R$ billion, year end) IPO MAR18 73 Source: B3

74 OdontoPrev s total shareholder return since the IPO 800% 700% 600% +715% 500% 400% 300% 200% 100% 0% IBrX 158.3% ODPV3: +22.1% +30.8% -46.0% % +80.4% +8.0% +25.4% -5.2% +4.5% +0.1% +37.1% +30.4% -6.0% IBX: +6.9% +47.8% -41.8% +72.8% +2.6% -11.4% +11.5% -3.1% -2.8% -12.4% +36.7% +27.5% +11.3% 74 Source: B3

75 Global shareholder structure: investors from 34 countries MAR18 Management Treasury 1.41% 0.49% 7.6% 5.6% 6.2% 5.8% Others 3.0% 1.8% 50.01% Free Float 48.09% 19.4% 1.5% 1.2% 40.0% 1.1% 1.0% Total Capital 531,294,792 Shares 48% Free float 255,557,592 Shares 0.6% 75

76 Increasing number of shareholders Institutional and individual investors 6,480 record 5,570 4,457 3,789 4,074 MAR17 JUN17 SEP17 DEC17 MAR18 76 Source: B3

77 Corporate Governance and professional management team 77

78 Superior Corporate Governance Standards Chairman # CEO, since the 1990s Board of Directors without executive functions, 56% independent members AGM previous notice to shareholders of 30 days Disclosure of minimum, average and maximum annual compensation of executives 3 CEOs since the foundation in 1987, and 1 IRO since IPO 78

79 Key Metrics for management s compensation Quantitative goals Perception Studies Revenue EBITDA (R$) Number of members Beneficiaries Dentists HR managers Quality of services 79

80 Upcoming IR events 80 OdontoPrev s Investor Relations activities, including conference calls, webcasts, one-on-one meetings and public presentations are made by the Company s CEO and/or IRO since the 2006 IPO. Date Country Broker Event Apr 26, Q18 Webcast Apr 27, 2018 May 14, 2018 May 15, 2018 May 16, 2018 May 17-18, 2018 Jun 05-07, 2018 Jul 25, 2018 Jul 26, 2018 Jul 27, 2018 Aug 21-23, 2018 Sep 10-12, 2018 Sep 18, 2018 Oct 24, 2018 Oct 25, 2018 Oct 26, 2018 Nov 13-14, 2018 Nov 28-30, 2018 Jan 14-15, 2019 Investor Presentation - São Paulo NDR Credit Suisse - Montreal NDR Credit Suisse - Toronto NDR Bradesco - Chicago NDR Bradesco - New York BofA Merrill Lynch CALGEMs Conference - Los Angeles 2Q18 Earnings Release 2Q18 Webcast Investor Presentation - São Paulo JP Morgan 12th Healthcare Check-Up - São Paulo Morgan Stanley LatAm Conference - London UBS VII Healthcare Day - São Paulo 3Q18 Earnings Release 3Q18 Webcast Investor Presentation - São Paulo Bradesco 8th Annual CEO Forum - New York JP Morgan Brazil Opportunities Conference - São Paulo JP Morgan Global Healthcare Conference - Los Angeles

81 Your award winning Investor Relations Team José Roberto Pacheco Executive Director & IRO Roberta Carneiro IR Manager Mariana Ferraz IR Supervisor Darcio Nunciatelli IR Analyst Stella Hong IR Analyst Heriane Silva IR Intern Phone: + 55 (11) ir@odontoprev.com.br : OdontoPrevIR Corporate Headquarters Avenida Marcos Penteado de Ulhôa Rodrigues 939 Torre II / Edifício Jatobá / 14 th floor Barueri. São Paulo. Brazil Custodian & Market Maker Independent Auditors B3 Ticker 81