Labs DOr Acquisition TODOS OS DIREITOS RESERVADOS 2011 Disclaimer - - PowerPoint PPT Presentation

TODOS OS DIREITOS RESERVADOS – 2011

Labs D’Or Acquisition

FLRY3

IBGC – 2010 Corporate Governance Award Listed Companies IBGC - Brazilian Institute

• f Corporate Governance

Disclaimer

This document contains forward-looking statements. Such statements reflect Company s management vision and expectations. As such, words as “anticipates”, “believes”, “estimates”, “expects”, “forecasts”, “plans”, “predicts”, “project”, “targets” (and similar) are intended to identify statements which, necessarily, include known and unknown risks and uncertainties. Known risks and uncertainties include (but are not limited to) the impact of competitors movements regarding service levels and pricing, recognition of the services by the consumer market, regulatory approval, exchange rate fluctuations, changes on the services portfolio and other risks which are described in the Company s reports. Forward-looking statements represent the best information available in the date when they are prepared and Fleury Group does not undertake any obligation to update them when new information becomes available or future events happen.

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26 acquisitions since 2002

Timeline of Acquisitions – Fleury Group

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2002 2004 2005 2007 2008

Paraná Rio de Janeiro São Paulo Bahia São Paulo Paraná Pernambuco Bahia Rio de Janeiro São Paulo

2009

Rio de Janeiro Rio Grande do Sul

2010

São Paulo

2011

Bahia Rio de Janeiro

National Presence

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Strong brand portfolio

Fleury – Best and most trusted brand in Brazilian Market; leader in A/B plans “a+” – National brand, great potential for capturing B/C plans. Weinmann – Leader in Rio Grande do Sul for A/B plans Campana – Competitive

• ffer

for basic plans in São Paulo Diagnoson – New acquisition, adding Imaging services in Bahia

Labs D’Or + Felippe Mattoso + Menezes da Costa

Bahia Pernambuco Rio Grande do Sul Paraná São Paulo Rio de Janeiro DF

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In the MoU announced on Dec 15th, 2010, Fleury Group communicated the intention to acquire several diagnostic medicine assets from “Rede D’Or” (Labs D’Or). Over the past 6 months Financial, Legal and Operational Due Diligences were performed and transaction documents were negotiated (Investment Agreement, Shareholders’ Agreement and Operational Contracts). We can now announce that the deal has been signed by all parts involved. As a result, subject to its shareholders approval, Fleury Group has acquired 57 Patient Service Centers (concentrated in Rio de Janeiro state) and became responsible to provide Diagnostic Services in 21 hospitals. Some relevant information about Labs D’Or: Owns 35 MRIs, 17 CT scans and 1 PET-CT in RJ, being the state’s leader in Image Diagnostics. Services more than 200 thousand patients per month (circa 500 thousand tests). In 3 out of the 21 hospitals (Hospitais “São Luiz” - São Paulo), besides Clinical Analysis, Fleury Group will be responsible for Image Services.

Overview

Fleury Group’s estimated annualized Net Revenue will soon exceed R$ 1.5 billion. Number of PSCs in Rio de Janeiro state increases from 27 to 83; number of Hospitals where the Group operates increase from 9 to 30. Fleury Group becomes leader in Image Diagnostics in Rio de Janeiro and Diagnostic Operations in Hospitals. Positive outlook for growth and knowledge exchange, due to the strategic alliance established with “Rede D’Or”/ “São Luiz” Hospitals. Companies aligned regarding the emphasis given to Operational Excellence, Relationship with Physicians networks, design of differentiated portfolios of Services and Brands and, most importantly, Customer Satisfaction. Projected savings add up to R$ 20 millions per year Materials and Outsourcing R$ 6.3 millions Fixed Cost - Clinical Analysis R$ 9.1 millions Fixed Costs (PSCs and SG&A) R$ 4.7 millions Potential for Goodwill amortization.

An unique Strategic Alliance between Leaders

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Beyond Savings and Fiscal Benefits, Revenues Synergies Opportunity:

• High Complexity Clinical Analysis tests in Labs D´Or units.
• Increase in Clinical Analysis tests´ portfolio in Hospitals.
• Expansion Plan for Felippe Mattoso (premium brand).
• Expansion Plan in Rede D´Or / São Luiz Hospitals (# of beds)

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An unique Strategic Alliance between Leaders

Gross revenues breakdown by business line Gross revenues breakdown by type of Test

Fleury Group & Labs D’Or

A Diversified and Differentiated Business Profile

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Assets being acquired generate R$ 444MM of Annualized Net Revenue and an absolute EBITDA of R$ 111MM (25% Margin on Net Revenue). Estimated Consideration is R$ 1,19 BN; Net Debt is R$ 23,5 million. First Stage – July 31st - acquisition of 50% of Labs D’Or for R$ 620MM (i) R$ 434MM in Aug 1st (ii) R$ 186MM to be paid in 6 months after the signing Second Stage – After acquisition approval (Special Shareholders Meeting) 24.9 million FLRY3 common shares (to be issued) – 15,94% stake. Other Relevant Financial KPIs: Working Capital: R$ 55MM CapEx Investment (only Expansion) until Apr 30th: R$ 8MM Book Equity Value: R$ 248MM.

Financial Indicators

Valuation and Multiples – Expected Values

Annualized

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R$ Million

Fleury Group Labs Combinado* Gross Revenus 1.085 460 1.545 Net Revenue (R$ million) 1.015 444 1.459 EBITDA (R$ million) 235 111 346 % Margem 23.2% 25.0% 23.7% Patient Service Centers 137 57 194 Operations in Hospitals 9 21 30 Employees 4.950 3.000 7.950 Physicians 630 500 1.130

R$ MM

Enterprise Value

1.189

Net Debt

(24) Equity Value 1.166

x EBITDA Labs (pre-sinergy)

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* Synergies and Savings not included

Follow-up and Schedule

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MoU ................................................................................................. Dec 15th 2010 Due Diligence (Financial, Legal and Operational) .............................. 1Q11 Documents Definition – SPA, Shareholders Agreement .................... 2Q11 Transaction Approval - Board of Directors ......................................... July 13th 2011 Signing .............................................................................................. July 13th 2011 Reorganization / Consolidation ......................................................... End of July 2011 Direct acquisition of quotas – 50% of Labs D´Or ................................ July 31st 2011 Financial Audit – Opening Balance Sheet .......................................... September 2011 Transaction Approval - Shareholders Meeting ................................... October 2011 New FLRY3 Shares Issuance .............................................................. October 2011 Shares Incorporation ......................................................................... October 2011 Transaction Approval – Administrative Council of Economic Defense - to be defined

Corporate Governance

Maintenance of the highest Corporate Governance standards. Agreements with “Rede D’Or / São Luiz” Hospitals established at market conditions. Labs D’Or shareholders will receive common shares (to be issued), corresponding to a 15.94% stake. The shares will be subject to lock-up restrictions. After the Incorporation of Labs D’Or shares, their current owners will have the right to recommend 2 Board members (1 of them Independent ), who shall be approved by the Shareholders. Number of Board seats will increase from 9 to 10.

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Shareholder Structure

After Deal

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62.7% 77.7%

131 million voting shares

22.3% 31.8% 5.4%

Before Deal

Integritas Bradseg and “Core” Partners

Free Float Bradseg “Core”

52.8% 77.7%

156 million voting shares

22.3% 26.8% 4.5%

Integritas Bradseg and “Core” Partners

Free Float Bradseg “Core”

D’Or

Shareholders

15.9%

TODOS OS DIREITOS RESERVADOS – 2011

ANNEX

Labs D’Or Patient Service Centers Rio de Janeiro

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Hospitals

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Copa D’Or (RJ) Quinta D’Or (RJ) Rios D’Or (RJ) Barra D’Or (RJ) Hospital Brasil (ABC Paulista) Esperança (PE) Assunção (ABC Paulista)

Hospitals

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Hospital São Luiz - Morumbi (SP) Hospital São Luiz - Itaim (SP) Hospital São Luiz - Anália Franco(SP) Joari (RJ) Bangu (RJ) Provita (RJ) Fluminense (RJ)

Hospitals

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Badim & Israelita (2) (RJ) São Marcos (PE) (2) Rio de Janeiro (RJ) Protolinda (PE)