3Q10 Results FLRY3 The most valuable brand in the Brazilian - - PowerPoint PPT Presentation

TODOS OS DIREITOS RESERVADOS – 2010

3Q10 Results

November, 2010

FLRY3

“The most valuable brand in the Brazilian healthcare industry The 6th most valuable brand among the service companies The 25th most valuable Brazilian brand” Millward Brand / BrandAnalytics “The Company of the Year” “Gestão RH” magazine 1st in the sector Financial Sustainability and Corporate Governance “Istoé Dinheiro” magazine 1st in the sector Value Generation and Margin from Operations “Valor 1000” magazine

Disclaimer

This presentation may contain forward-looking statements. Such statements are not statements of historical facts and reflect the beliefs and expectations of the Company s management. The words “anticipates”, “believes”, “estimates”, “expects”, “forecasts”, “plans”, “predicts”, “project”, “targets” and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. Known risks and uncertainties include but are not limited to the impact of competitive services and pricing market acceptance of services, service transactions by the Company and its competitors, regulatory approval, currency fluctuations, changes in service mix

• ffered, and other risks described in the Company s registration statement. Forward-looking

statements speak only as of the date they are made and the Fleury Group does not undertake any

• bligation to update them in light of new information or future developments.

All mentioned comparisons are against the same period in 2009 – 3Q09 - except when stated differently.

Highlights

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Fleury Group growth rate accelerates to 20.7% YoY. EBITDA expands to R$ 60 million (25.9% margin). Net Income reaches R$ 44.6 million (19.2 margin), year to date achieves R$ 100 million. During 2010, 60 PSCs will receive some form of intervention in order to be better prepared to meet increasing demand and improve the Group´s asset usage efficiency. In 2011 the number of PSCs under intervention will be lower (40) but total area (m2) in scope will be 3 times larger than 2010 (including 17.500 m2 of additional space). More details about 2010 / 2011 CapEx will be presented later in this presentation.

Gross Revenue Evolution

(R$ million)

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Organic growth has achieved 11.9% 24.0% growth excluding discontinued operations and Lab-to-Lab services portfolio review.

Gross Revenue - Breakdown

Gross Revenue breakdown by business line

Patient Service Centers, a 19.6% increase in revenues. 68.6% growth in Diagnostic Operations in Hospitals. Preventive Medicine (ex-FHD) has increased by 45.9%.

3Q10 3Q09 R$ million % R$ million % r Patient Service Centers 208.0 83.7% 173.9 84.5% 19.6%

Diagnostic Operations in Hospitals

25.8 10.4% 15.3 7.4% 68.6% Lab-to-lab and Clinical Trials 9.6 3.9% 10.6 5.1%

• 9.3%

Lab-to-lab 8.7 3.5% 8.6 4.2% 1.8% Clinical Trials 0.9 0.4% 2.0 1.0%

• 56.5%

Preventive Medicine

5.1 2.1% 6.0 2.9%

• 14.7%

Preventive Medicine (ex-FHD) 5.1 2.1% 3.5 1.7% 45.9% Fleury Hospital-Dia (Day-Hospital) 0.0 0.0% 2.5 1.2%

• 100%

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Patient Service Centers

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Average revenue per PSC

(R$ million)

19.6% increase in gross revenue (15.9% in 9M10), amounting R$ 208 million in the quarter. The average revenue per square meter grew 13.4%. The average revenue per PSC grew 10.2%. Expansion in the number of patients by 15.6% compared to 3Q09. “Same store sales” (only same existing PSCs during the comparison period), has grown 12%. Average revenue per square meter and total square meters

Number of PSCs

Diagnostic Operations in Hospitals

A 68.6% increase in the 3Q10 compared to the 3Q09, achieving R$ 26 million, 10.4 share in the total revenue of Fleury Group due to: Organic Growth – volume and mix have been improving significantly, a consequence from the strong demand over the past 12 months; The acquisition of Weinmann brought 2 leading hospitals in Rio Grande do Sul. The acquisition of Di enabled the expansion of partnership with Hospital Alemão Oswaldo Cruz (São Paulo). Number of tests and average revenue per test

Thousands and R$

Number of tests Average revenue per test

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Lab-to-Lab and Clinical Trials

1.8% variation in the 3Q10 compared to 3Q09 in Lab-to-Lab, R$ 8.7 million in the quarter. There was a 0.7% increase compared to the previous quarter. Progressive discontinuation of the Clinical Trials business. The R$ 2.0 million revenue of the 3Q09 decreased to R$ 0.9 million in the 3Q10. The total revenue considering both business lines decreased 9.3%. Number of tests and average revenue per test (ex-Clinical Trials)

(Thousands and R$)

Number of tests Average revenue per test

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Gross Revenue – breakdown by type of test

Imaging tests & Other Diagnostic Specialties increased 17.5%, driven by continuous organic expansion of Imaging Services in the PSCs and mix improvement.

• +7% in number of tests.

Clinical Analysis’ revenue grew 24.9%, mainly driven by Operations in Hospitals and Weinmann’s acquisition.

• +27.9% in number of tests.

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Breakdown in PSCs:

• 14,4% Organic growth in Imaging tests &

Other Specialties Revenue;

• Clinical Analysis’ Revenue increased 23,0%,

driven by organic growth and Weinmann’s acquisition.

Preventive Medicine

10 10

45.9% increase excluding Fleury Hospital-Dia operations. The Chronic Disease Management service has reached 27.0 thousand lives under contract. The Executive Health Assessment revenue increased by 28.1%, with a 31.6% growth in the number of assessments.

10 10

Quarterly gross revenue – Preventive Medicine

(R$ millions)

Costs of Services

11 11

R$ Million 3Q10

% Net Revenue

3Q09

% Net Revenue

New criterion Previous criterion

Personnel and medical services 65.5 28.2% 28.0%

28.4%

General services, Rent and Utilities 25.9 11.2% 11.1%

13.8%

Materials and Outsourcing 25.9 11.2% 11.1%

11.7%

General Expenses 12.7 5.5% 5.4%

3.1%

TOTAL 130.1 56.0% 55.5%

110.0

56.9%

Gross Margin

12 12

(% of Net Revenue)

Operational Expenses

13 13

General and Administrative Expenses (excluding the provisions for Profit Sharing Plan and Depreciations) amounted to R$43.6 million, 18.8% of the Net Revenue – which includes R$ 5,2 million in marketing expenses for the midia campaign. Depreciations amounted R$ 8.0 million, PSP R$ 2.5 million. Other Operational Revenues (Expenses), net amounted R$0.9 million:

• R$ 8.8 million (revenue): tax credit;
• R$ 5.4 million (expense): bad debt provisions;
• R$ 2.2 million (expense): provision adjustments for ICMS – state tax for imported machines;
• R$ 0.2 million (expense): other expenses;

Income Tax and Social Contribution

14 14

1- Other: Non Recurring Provisions, Non-Deductible Expenses, Equity in Subsidiaries

Net Income

15 15

29.4% growth, adding up to R$ 44.6 million. The profit margin represented 19.2% of net revenue. R$ 100 million in 9M10, 56.9% growth. Net Income and Profit Margin

(R$ million)

6.6% 4.6% 6.2%

10.9%

17.8%

19.2%

11.2%

15.3%

EBITDA

EBITDA margin of 25.9%, 136 basis points higher than 2Q10 and 192 basis points below than 3Q09. 11.7% increase, achieving R$ 60.0 million. EBITDA and EBITDA margin on net revenue

(R$ million)

19.5% 17.9% 22.9%

23.3% 25.9%

27.8%

24.2%

24.4%

R$ million % net revenue Net Income 44.6 19.2% Financial Expenses (Income) (8.0) (3.4%) Depreciation and amortization 8.0 3.5% Income Tax and Social Contribution 15.3 6.6% EBITDA 60.0 25.9% 16

EBITDA Analysis

Item

% of Net Revenue

EBITDA Reported 25.9%

R$ 60.0 MM

Acquisitions +20 bps Cost of Services – Non recurring and pre-operational +75 bps

R$ 1.7 MM

Administrative Expenses – Fleury brand marketing expenses +225 bps

R$ 5.2 MM

Other Operating – Prefis tax credit

• 380 bps

R$ 8.8 MM

Other Operating – Provision adjustments for ICMS + 95 bps

R$ 2.2 MM

Reserve for contingencies

• 215 bps

R$ 5.0 MM

ADD-BACK TOTAL

• 180 bps

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Investments

18 18

CAPEX amounted R$ 13.7 million in 3Q10 Movements related to investments in PSCs achieved 1.6 thousand square meters CAPEX demand 2010-2011 adjusted to R$ 269 million: 9M10 = R$ 40.8 million 4Q10 + 1H11= R$ 135 million 2H11 = R$ 93 million

R$ 40.8 million

CAPEX Breakdown - 9M10

Cash Flow, Accounts Receivable and Debt

Cash Flow R$ MM Net Income 44.6

• Op. Cash Flow

39.6 Net Cash Flow 4.7 Accounts Receivable R$ MM June 30th 200.1 Quarter´s Revenue 248.5 Collection from Customers (217.9) September 30th 230.7 Bad Debt Provision (31.8) Accounts Receivable (net) 198.9 Debt Position Total (R$ MM) Next 12m Loans 99.7 35.8 Acquisitions 41.0 7.7 Taxes 79.1 11.1 TOTAL DEBT 219.9 54.6 Cash and Equivalents 572.9

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Capital Market

20 20 FLRY3 Close (09/30/2010) R$ 21.00 3Q10 High R$ 23.17 3Q10 Low R$ 19.82

+31.3% +1.2%

Shares and Market Cap - 09/30/2010 Shares Outstanding 131,298,550 Free Float 41,792,510 (31.8%) Market Cap R$ 2.76 billion Stock performance 3Q10 +5.1% 9M10 +14.2% IPO +31.3%

IR Schedule – Upcoming events

2010 Events Nov 16-19 Non-Deal Roadshow Brazil, Argentina and Chile Nov 18 Deutsche Bank CEO Day – Sao Paulo – Brazil Nov 26 Public Meeting (APIMEC) – Sao Paulo – Brazil Nov 30 - Dec 01 UBS Seventh Annual LAT/EMEA Investor Conference – New York – USA Dec 01 CSLA Healthcare: Opportunities in Emerging Markets – New York – USA Nov 29 - Dec 09 Non-deal Roadshow USA and Canada 2011 Events Jan 11-13 15th Annual Latin America CEO Conference – Cancun – Mexico Feb 7-8 UBS 21th Annual Global Healthcare Services Conference – New York – USA Feb 24 Release of 2010 Year and 4Q09 Results Mar 25 Annual Shareholder´s Meeting

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