2nd quarter 2011 data - relações com...
TRANSCRIPT
2nd Quarter 2011 data
2
Disclaimer
The material that follows is a confidential presentation of general background information about Qualicorp S.A. and its subsidiaries (collectively,
“Qualicorp”) as of the date of the presentation. It is information in summary form and does not purport to be complete. No representation or
warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information.
This confidential presentation may contain certain forward-looking statements and information relating to Qualicorp that reflect the current views
and/or expectations of Qualicorp and its management with respect to its performance, business and future events. Forward looking statements
include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may
contain words like “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “plan”, “predict”, “project”, “target” or any other words or phrases of similar
meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors
could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation,
including: market acceptance of Qualicorp’s products or services; volatility in the healthcare industry, the Brazilian economy and the financial
markets; changes in legislation, accounting standards, taxation and government policies affecting the healthcare sector; ability to stay abreast of
changes in technology; ability to continuously introduce competitive new products and services, while staying competitive in existing ones. In no
event, neither Qualicorp nor any of its affiliates, directors, officers, agents or employees, nor the selling shareholder, placement agents or
underwriters, shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on
the information and statements contained in this presentation or for any consequential, special or similar damages.
All forward-looking statements in this presentation are based on information and data available as of the date they were made, and Qualicorp
undertakes no obligation to update them in light of new information or future developments. This presentation and its contents are proprietary
information and may not be reproduced or otherwise disseminated in whole or in part without Qualicorp’s prior written consent.
Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the United States Securities
Act of 1933, as amended. Any offering of securities to be made in the United States will be made solely by means of a confidential offering circular
that may be obtained from the placement agents or the underwriters. Such confidential offering circular will contain detailed information about
Qualicorp and its business and financial results, as well as its financial statements. This presentation does not constitute an offer, or invitation, or
solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of
any contract or commitment whatsoever.
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Investor Relation Executives
Wilson Olivieri
CFO and Investor Relations Officer
Elton Carluci
Planning, M&A and IR Executive
Heráclito de Brito Gomes Júnior, MD
CEO
Former CEO of Bradesco Saúde
Over 25 years of experience in Brazilian managed care
industry, health consulting and sales
Former member of Odontoprev and Fleury boards
E-Mail: [email protected]
Phone: 55-11-3191-4008
Financial and Administrative Officer of Fidelity BPO and
Fidelity Processadora de Cartões from 2005 to 2008
35 years of experience, including Medial Saúde from 2001 to
2004, Philip Morris, PepsiCo Group among others.
E-Mail: [email protected]
Phone: 55-11-3191-4040
Working with Qualicorp for more than 10 years
Responsible for all M&As, Planning and IR reporting
E-mail: [email protected]
Phone: 55-11-3191-4032
4
Qualicorp and Market Overview
Hyperinflation
Junior - Individual
Salesman
First Affinity
Contract
Foundation of
Qualicorp
General
Atlantic
Carlyle
1986 1987 1997 2008 2010
Until 1994
Private Healthcare
Plan Law
1998
Creation of
ANS
2000
ANS Regulations
on Affinity Plans
2009 2011
Present
First set of
acquisitions
and TPA
Public Co.
55
Qualicorp Has a Unique Business Model and is Strategically
Positioned Within the Healthcare Market
Qualicorp Adds Value to All Constituents
Broker
Benefit
Administration
Health Management
Administration
“Service company” without underwriting / reimbursement risk
Client‟s Ownership
Infrastructure
IT Proprietary
Knowledge / intelligence
Services
Billing
Collection
Call center
Scale
Sales Force
MLR
TPA, HCIT, PBM
and PPO
66
Bridging the Gap and Capitalizing on the Existing Cost
Opportunities of the Private Health System
Health Insurance Company Profitability
Cli
en
t P
rem
ium
Individual Market Price
Administrative Expenses
Brokerage
Claims
Without QualicorpIn
su
ran
ce
Pre
miu
m
Qualicorp Helps to Reduce
Market Costs
Qualicorp Price
Benefit Administrator Fee
Cli
en
t P
rem
ium
Health InsuranceCompany Profitability
Claims
Ins
ura
nc
e P
rem
ium
Administrative Expenses
Brokerage
With Qualicorp
Investment Opportunity and Industry Dynamics
8
Fast Growing, Underpenetrated and Large Addressable Market
Proprietary IT platform and superior operational capabilities
Leading market position in Brazil‟s most attractive markets
Leading Position with Significant Scale and Long-Standing Customer Relationships
Management Team Led by Respected Industry Pioneers
Unique Business Model which Creates Value for All Constituencies and does not take Underwriting nor Reimbursement Risk
Industry-Leading Financial Profile with Proven Track Record
Key Investment Highlights
Multiple Large and Attractive Growth Channels
9
Economic Growth is Driving Healthcare Penetration
08‟-10‟ CAGR: 6.0%
Source: World Health Organization Statistics 2010 – Data as of 2007, World Bank, ANS and Analise Institute.
Dramatic Shift in Income Classes
Classes A/B: monthly income above R$4,855 | Class C: monthly income between R$1,126 and R$4,854 | Class D: monthly income between R$706 and R$1,125 | Class E: monthly income below R$705
56
20
7696
66 93113
13
31
0
50
100
150
200
2003 2008 2014E
Class D/E Class C Class A/B
+18 mm(2003-14E)
+47 mm(2003-14E)
Less Than One-Quarter of Population is Covered
31.8 33.7 35.1 36.9 38.6 40.6 42.145.6
21.3%
23.9%
18.0%18.8%
19.0% 19.7%20.3%
21.9%
2003 2004 2005 2006 2007 2008 2009 2010
Millions of Lives Covered Penetration
(Million of people)
Record low
unemployment
GDP Growth
Significant increase in
income classes A/B/C
Healthcare spending
highly correlated with
disposable income
Private healthcare plans
generally one of the first
things families buy with
disposable income
increases
Low private health plan
penetration
Free Public Health
System has limitations
03‟-10‟ CAGR: 5.3%
10
76%
8%14%2%
Large Addressable Market is one of the Fastest-Growing
Category and Still Under Penetrated
Affinity Market Still Under Penetrated
Source: Target, IBGE, Qualicorp and ANS, as of December 2010.
142M lives
Current estimated potential
affinity market size
24 No plan,
eligible
Affinity
others
Indiv.
plans newQualicorp
affinity
~50M lives
Affinity market is one of the
fastest growing category
within private health plans
Further development
and growth of the
affinity segment will
help alleviate the
burden on the public
health system
Qualicorp is the affinity
market leader: ~10x larger
than the next competitor
Market penetration is
around ~2% of the
estimated potential
addressable affinity
market
Brazil
Population
11
Well Positioned to Aggregate Interests and Demands in the
Affinity Market
Accountants Medical Lawyers DentistsPublic
ServantsBank
EmployeesEngineers
400* 100* 1,000* 500* 400* 300* 300*
Brokerage
Health Insurance
Favorable Demographics
Pooling of Risk
Relationship with the Beneficiary and
Professional Associations
Ability to Negotiate good Terms
* Hypothetical numbers
3,000*
Professional Associations
12
Public Policy Supports Qualicorp Business Model
November 2009 ANS passed resolutions to regulate
relationships between health plan operators, benefits
administrators, and associations
Framework positions Qualicorp for further private health
plan uptake
Regulations dictate strict standards to define
eligible association
Direct relationship between operators and
associations is highly limited
Qualicorp experienced strong growth before resolution was passed and is well-positioned to take advantage of the ANS framework
The Qualicorp Solution
14
Qualicorp is the Leading, Full-Service Benefits Administrator
Supporting Key Constituents in the Brazilian Healthcare System
Partners with leading Brazilian professional
associations and health plan operators to offer
health plans to association members at reduced
prices
Offers value-added services to over 200
professional associations
Direct relationship with beneficiaries
1,234,000 lives (including life insurance policies)
Association of Supreme
Court Employees
Medical Association - SP
Commerce Federation- SP
Engineers and Architects
Association of São Paulo
Benefits consultant and health plan broker
Third-Party Administrator (TPA)
Connectivity (Medlink)
Mass insurance products sale (PraxiSolutions)
2,142,000 lives
Over 80 Insurance Partners
Affinity (Professional Associations) Corporate and Other (Companies / HR)
Association of the Civil
Servants of Sao Paulo
Lawyers Association of
Rio de Janeiro
Total of 3,4 million lives
15
Underwriting
risk
Unique Affinity Business Model as the Primary Interface with
the Beneficiary
Health Plan Operator
Professional
Association
Individual
Beneficiary
Qualicorp deals directly with the beneficiary
Pro
vid
es
he
alth
ca
re c
ove
rag
e to
be
ne
ficia
ries
Sells and
service direct
the individual
members of
association
Initiates
exclusive
distribution
relationship
Designs and
negotiates
options with
health plan
operators
Delinquency
risk
16
Revenue-sharing
agreements with Qualicorp
provide source of income -
helps attract new members
Improves
negotiating power
Professional Associations
Individual Beneficiaries
Discounts up to 50% compared
to individual plans
Improved
access to
private healthcare
Health Plan Operators
Lower MLRs and zero
delinquency
Most effective
way to address
individuals
Qualicorp Adds Significant Value to All Constituents in
The Affinity Segment
Additional value-added services
Brazilian Government
Improves accessibility of private
healthcare system
Augments association database through
tracking and data management
17
Corporate Segment Extends Qualicorp‟s Reach
Services Provided
Benefits Consulting
Brokerage
TPA / Connectivity
Health Management / Mass insurance products
Source: Company.
# of Lives („000s)
1.5001,481
1.344
394314
171698 644
752
2006 2007 2008 2009 2010 2Q 2011
2,0422,125Corporate & SME
TPA
2,142
Value-added, Consultative Approach Differentiates Qualicorp from Competitors
1,390
18
Sophisticated Marketing Strategies
Captive and Third-Party Brokers Close the
Deal
Captive Salesforce Third-Party Brokers
Large database of more than 6 million names
Unique analytical techniques generate
qualified leads (Business Intelligence Dept)
160 professionals
Receive inbound
leads
Active outbound
calling effort
200+ brokerage
firms with over
2,500 brokers
Lower fixed costs
Benefit from
Company’s
marketing efforts
Marketing campaigns build brand awareness
and generate leads
Call center gathers inbound leads
Direct Marketing Strategy
Indirect Marketing Strategy
19
Significant Barriers to Entry Give Qualicorp a Strong
Competitive Advantage
Value Proposition for All Constituents Involved
Long-Standing Relationships with the Associations and Beneficiaries
High Switching Costs for Associations
Distribution Platform with good Brand, Marketing and Distribution Channels
(individual door to door sales process)
Proprietary IT Platform and Operational Capabilities
Solid Health Plan Operator Partnerships
Significant Scale Creates Positive Negotiation Conditions With Health Plan
Operators
Growth Strategy
21
Multiple Avenues to Continue to Drive Long Term
Sustainable Growth
Organic
Geographic
expansion
Cross-sell
new products
Acquisitions /
Partnerships
Opportunities
from Market
Evolution
Currently, Qualicorp is pursuing all of these growth avenues
1
2
3
4
5
22
Significant Organic Growth Opportunities1
Penetrate Existing
Associations
Add New Associations
Expand Membership of
Existing Associations
23
25
46
14
55
7
44
Expand Geographically to New Markets in Brazil
Target high growth markets
outside São Paulo and Rio
de Janeiro
Identify attractive new
regions
Leverage strong local
partners
Successful expansions to-
date into Brasilia, Salvador,
Recife and Belo Horizonte
2
Current Geographic Location
Geographic Expansion
AM
AC
RR AP
PA
MT
RO
MS
GO
TO
MA
PI
BA
CE RNPBPEAL
SE
RS
SC
PR
SP
MG
ES
RJ
Current MarketsPriority New
Markets Rest of Brazil
With Health Plans Without Health Plans
(In million of lives)
24
Salvador Case Study
Aggressive local media
Highlights
38.067
1.523
11.652
31.863
2008 2009 2010 2Q 2011
# of Associations: 7 14 17 21
# of lives
2
Local presence with own management
Leverage strong local partners
25
7,1%
11,0%
25,4%
6,0%
2008A 2009A 2010A 2Q11A
Cross-Sell New Products and Services to Existing Customers
151
2.142
Medical Management Corporate
and Others
Only 7% of total
Corporate client base
Affinity (Professional Associations)
Dental insurance plans
Other non-risk products insurance
(life, auto, assistance)
Corporate (Companies / HR)
Qualicorp Health Management, TPA,
Connectivity and Mass insurance
products
Represents unique product offering
relative to other brokers / benefits
consultants
Take advantage of brand, association relationships, providerrelationships and existing customer base
% Cross Selling (% of Lives)
Corporate and Other (Lives in „000s)
3
26
Grow Through Selective Acquisitions and Strategic
Partnerships
Build scale and expand geographically through selected acquisitions of affinity
brokerage portfolios
Fragmented market Qualicorp is the natural consolidator
Operational leverage
Add new capabilities
Broaden product offering
Cross-sell new capabilities
Disciplined acquirer with strict selection criteria and successful integration track
record
1-Athon-Bruder
(Corporate and H.M.)
3-Med Company
(Affinity)
5-Medlink
(Connectivity)
7-Divicom
(Affinity)
2-Salutar
(Affinity)
4-75% stake in
Vectorial (Affinity)
6-Acquisition of the
Remaining 25% of Vectorial
8-Unimed-Rio
(Selected Portfolio)
June 2009 December 2009 July 2010 April 2011
4
Jun/Jull 2011 July 2011
9-PraxiSolution
(Mass Products)
27
Significant collection of medical data
Acquisition of one of the largest connectivity
companies in Brazil (Medlink)
12 million transactions with 17,000
providers nationwide
Acquisition of PraxiSolutions
Leveraging distribution channels
Leverage Existing Platform to Expand as Healthcare Market
Evolves
Healthcare
Information
Technology
(HCIT)
Mass Insurance
Products
PPO and PBM Being evaluated according to the opportunity
5
Third Party
Administrator
(TPA)
Services already provided by Qualicorp
Leading TPA in Brazil
Qualicorp Financial Overview
29
Multiple Recurring Revenue Streams
Payer Recurrence
Individual Beneficiary
Health Plan Operator
Monthly
Monthly
Monthly
Initial
Initial
Benefits Admin Fee
Brokerage
Royalty
Membership Fee
New Sales Fee
Around 90% of all revenues are recurring
Revenue to Qualicorp
30
Margin (%)
42
64
78
102
25
54
2007 2008 2009 2010 2Q 2010 2Q 2011
Consistent Revenue Growth and Profitability
167
228
309
470
111
160
2007 2008 2009 2010 2Q 2010 2Q 2011
64
89101
174
46
63
2007 2008 2009 2010 2Q 2010 2Q 2011
YoY growth (%)
YoY growth (%)
Adjusted EBITDA (R$ million) (1)Net Revenues (R$ million)
Adjusted Cash Net Income (R$ million) (1)
YoY growth (%)
(1) Excludes non recurring expenses.
Note: Cash Net Income = IFRS Net Income + Non-recurring/non-cash expenses + Stock options plan expenses.
37% 36% 52% 39% 13% 72%
52% 22% 31%
44%- 37%-
116%-
39% 33% 37% 39%40%
31
Key Takeaways
Powerful Organic Growth and Attractive Acquisition
Opportunities
Unique Business Model Creates Value for All
Constituencies
Large and Underpenetrated Market
