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Good afternoon, everyone. Thank you for waiting. Welcome to Alliança's First Quarter 2024 Earnings Release Conference. We'll begin the presentation, which will be conducted by Mr. Ricardo Sartim, who is the company's Chief Medical Officer and Chief Operating Officer. Also present is Mr. José Ramos, who is the Legal Director and Investor Relations Director.
[Operator Instructions] This conference will be recorded and be made available at the company's Investor Relations website, along with the complete material from our earnings release. To begin, we'd like to highlight a few important reminders. We'd like to emphasize that the information presented here as well as any statements that may be made during the conference about business prospects, projections and operating targets are assumptions and beliefs of the company's management. They should, therefore, not be construed as guarantees of future performance. Future considerations involve risks and uncertainties that may or may not materialize. Investors should understand that factors such as general economic conditions, market conditions and other operational aspects may influence the company's future performance.
I'll now give the floor to Mr. Ricardo Sartim to begin the presentation.
Thank you for the introduction. Good afternoon, everyone. Ricardo Sartim, Company's Chief Operating Officer, Medical Officer. I would like to thank you all for being here. It's a pleasure to be with you to announce the results for first Q '24. We have José Ramos, Company's Executive Director for Investor Relations; Juliana Angelini from the Investor Relations team. Starting our presentation, going straight to Slide #4, where we recorded stable gross revenue against first Q '23 and around BRL 301 million. This marginal drop of 3% in gross revenue was already partially expected, taking into account a seasonally weaker quarter with fewer working days than the same period last year.
In addition, we had one-off impacts from adjustments to our service network as well as renovations in some units that will be approached throughout the presentation. Now specifically on EBITDA, we maintained the levels of 4Q '23. Compared to the first Q '23, there is a drop in EBITDA, which is explained by the retraction of the gross margin, notably due to the increase in personnel costs, result of previous actions to internalize the clinical analysis sector, which has already been widely commented on our previous quarters.
EBITDA margin reflects increase in this cost that I have just mentioned and show stability compared to the previous quarter. And even with this one-off drop in margin this quarter, management is confident that the actions taken over the last year in line with the diligent execution of the strategy to increase operating cash generation will result in us operating at higher levels of operating margin.
Now Slide #5, quarterly revenue remained practically stable y-over-y, even with the seasonally weaker quarter and fewer working days. This is a reflection of the company's focus on evaluating its investments, which included the closure of 4 service units which have not been showing adequate profitability for Allianca's current moment. Maintaining the strategy of improving the operating structure in order to increase cash generation remains the main agenda guiding the company's decision making.
In addition, we took advantage of the seasonal nature of the quarter to carry out specific, structural reforms in some units, thus expanding the installed capacity in the units that were already performing better. Now talking a little about our commercial positioning. We continue with our positive agenda of strengthening our relationship with health care operators in the markets we operate in. We had an increase in our average ticket of 1% in imaging exams and around 2% in clinical analysis exams against first Q last year. And remember that the anniversary as a consequence, renegotiation of the main contracts with operators will take place over the next quarters.
The company is also increasingly firm in building alliances and partnerships in the B2B segment. And an example of this are some of the contracts signed recently, one of which was with a major health care operator in Brazil to provide MRI exams in the city of São Paulo. I would also like to highlight another contract with one of the largest and most renowned hospital chains in the country to provide diagnostic imaging services. It's important to note that both contracts provide for exclusivity and consequently increase not only Allianca's production of exams but also our capillarity and positive reinforcement of our brands in the markets we already operate in.
Finally, I'll comment a little on the actions implemented to strengthen our capital structure. As previously communicated to the market, the capital contribution made by the controlling shareholder in the amount of BRL 250 million in 2 phases by means of an AFAC, Advance for Future Capital Increase, enabled for the settlement of important debt and financial deleveraging of the company.
The first installment of this capital injection took place in March '24 and it was BRL 130 million. As a subsequent event, in the first half of April, the company received the second installment, BRL 220 million, totaling BRL 250 million, I mentioned. This contribution reflects the controlling shareholders' confidence in the strategy already underway and guarantees a commitment requires in the capital structure by reducing financial leverage and also reprofiling debt, extending the terms and negotiating better rates in the light of a slightly more favorable current macroeconomic scenario.
As a result, the company paid off its main short-term debt, a total of BRL 210 million. Allianca remains confident that it's on the right track to secure a sustainable growth horizon despite the expected seasonal drop in some of the revenue lines I mentioned earlier and has so far given priority to the review of its structures and processes, able to make this promising scenario viable.
Moving on to Slide 6. I'm going to comment a little on the asset swap that was communicated to the market via [ Fatos Relevantes ] on May 8, shortly after the closure of the first quarter. The company entered into a multi-strategy equity investment fund in which it [ pledged ] to exchange all the equity interest held by the company in its 3 arms: RBD Imagem, Cartão Aliança, IDr and also by the concession at the Emergency and Urgency Hospital Rondônia, which had already been communicated to the market for the entire equity interest held by the FIP in Hemera Serviços Médicos e Holding, which is the current owner of CEPEM and ProEcho brand units in Rio. The swap is part of the company's business plan as it represents one more step towards specializing its core activity in the segment that's specific of diagnostic medicine as well as expands its operational capacity and its expansion in the metropolitan region of Rio de Janeiro, the second largest supplementary health market in Brazil. The conclusion of this operation, of course, which is subject to approval at the Extraordinary General Assembly already called for May 29 this year will increase the company's presence in the state of Rio Grande do Sul by 12 units and brands that are recognized in the local medical community.
Slide 7, the swap operation, if approved at the next Extraordinary General Assembly, this will be the company's new structure post operation, showing our positioning with the brands in each of the markets we operate in.
Now let's move on to Slide #9, where we will go into a little more detail about the evolution, composition of our revenue. In the first quarter of '24 adjusted gross revenue totaled BRL 301 million, a decrease of 3% against the same period last year. Among the factors that contributed to this margin reduction in revenue, it is worth highlighting the impact of the reduction in working days in the calendar due to extended holidays and commemorative dates with the Easter holiday falling in the first quarter, the closure of 4 units due to the lower-than-expected return for the company's current strategy that I mentioned earlier, one-off structural reforms in units with higher performance that will enable the expansion of the production of not only imaging exams but also clinical analysis and the new equipment recently incorporated during the first Q of '24 that are still in ramp-up. In the graph on the right, you can see that the imaging exams have sustained their volume level in recent quarters and that the mix between imaging exams and clinical analysis that we saw in previous quarters has been maintained.
Now the next slide in the breakdown of our revenue. As you can see, revenue from MRI showed a marginal reduction as previously commented, mainly due to the impact of the closure of the 4 units and specific structural renovations that had an impact specifically in MRI. The other modalities remained stable, even with a seasonally weaker quarter and fewer working days. In the graph on the left, we can see our revenue distribution. The issue of holidays and commemorative dates ends up having a more significant impact on clinical analysis tests since patients postpone this type of exams, which are usually [indiscernible] without prior scheduling.
Now Slide #11 where we'll go over cost and expenses. We're firm on the strategy of strict cost control in order to maximize operating cash generation. Despite the increase in personnel costs against the first Q '23, costs have stabilized at post-restructuring levels in the second Q last year, which reflects the hiring of new employees in order to meet the verticalization of clinical analysis services already in place, widely commented in the last quarters as well as one-off increases in staff of RBD to meet the PPP expansion schedule as well as the natural adjustments of the operation.
On the expense side, we saw a 21% reduction in this item, which reflects the operational restructuring underway in the back office, already mentioned in the previous quarter, improving our administrative efficiency and rendering the company lighter. And YoY, personnel costs are flat. Now turning on to the cost of medical [indiscernible] maintain our efforts to gain productivity by integrating our clinical staff. And we had a marginal increase of 1 percentage point in cost as a result of the lower dilution of fixed costs in this item due to the seasonal drop in the volume of exams. We had a significant 13% reduction in the cost of hospital medical supplies and services compared to the previous year. In this area, we maintained our strategy already mentioned previously that was to review the care protocols, standardize and control the use of supplies, reduce waste, renegotiate the main supplies, establish strategic partnerships with suppliers reducing deadlines, even in a macroeconomic scenario of inflation and also lengthening of average payment deadlines, the internalization of employees to collect clinical analysis tests and renegotiation with the current support laboratory partner.
As for third-party and other services, we had an increase due to the variation in the provisions for doubtful debtors, of course, with no cash effect. In addition, we had one-off impacts from the termination of contracts with specialized consultancy firm, which partnered us in restructuring, as mentioned above as well as [indiscernible] expenses to enable us to have more accurate controls such as outsourcing our payroll processing.
As you can see now on Slide 12, we're going to talk a little bit about our strategy to improve our capital structure. After the capital contribution made at the beginning of the year through the AFAC, the company settled short-term debt, contributing to a significant reduction in its debt levels. As a result, there was a 6% reduction in total net debt in the first Q '24 against the same period '23, totaling BRL 831 million, in addition to the lengthening of the remaining debt, reducing short-term cash pressure, although the current net debt over adjusted EBITDA was stable at 3.8x in the quarter.
When the second capital contribution from BRL 120 million AFAC in the first half of April is taken into account, as already reported in Fatos Relevante in maintaining the other conditions, the leverage ratio would be considerably lower. It's worth noting that the company maintains its commitment to strengthening cash generation as the main challenge for the coming quarters, with a view to recover margins and improve the capital structure continuing to be priorities throughout 2024.
As we come to the end of the presentation, I would like to draw your attention to the fact that on the capital structure improvement side, in the first quarter, we had, in addition to the settlement of the company's main short-term debt, as I mentioned, we also had the settlement of the third installment of debenture with a reduction of BRL 43 million in debt and the payment of other financial equipments in the amount of BRL 30 million. These actions, combined with everything that has been presented so far opened space for the possibility of cheaper funding with better conditions.
On the side of organic expansion, technological modernization, we have always positioned ourselves as a pioneer company in the use of technology to deliver accurate diagnosis to our customers, clients and partner doctors, always striving for operational efficiency. The MRI equipment start-up schedule, already commented last quarter, has been maintained with some operations ramping up marginally better than we expected even in a seasonally weaker quarter.
Allianca believes that all these reviews carried out along with the action plans already in place will enable continuous improvement of its indicators. We reaffirm our firm commitment to the future through the delivery of excellent services to our clients and partners, continued search for avenues of growth whether through potential M&A and the improvement of efficiency and position in the markets where we already operate, always with a focus on the proper profitability of operations for our shareholders. I would like to thank you all for listening. Thank you.
Thank you, Dr. Ricardo. Now we'll go to Q&A session. [Operator Instructions] Good afternoon, everybody, we have a few questions that came via chat. We're going to wrap them concerning AFAC, or AFAC, and most important topics where the values have been reflected in the indicators of net debt and EBITDA in first Q '24. And the other question about this subject is where are these resources going to be directed to.
Thank you, Juliana. Excellent questions. Regarding the first question, whether those values have reflected in the leveraging point of the company, since the second installment enter in the second quarter, this is not reflected as yet. The company does not give guidance or makes projection but only to mention with this BRL 120 million, taking into account that all the other variables remain stable, deleveraging [indiscernible] would be around 3.2x.
Second question about the destination of the resources. As I commented, part of the resources from AFAC were used first to pay the short-term debt and those that were longer, so the company is less pressed in the short run, and it enables better conditions of timing and also rates for the other debts. And part of those resources will be given for one-off investments to increase our organic capacity, always focusing on profitability.
We have one more question from Enrique Mercado from [indiscernible] Capital, and he asks how many units were restructured in the period? And for how long they were not working. Excluding those units from calculation, what would be the revenue growth performance.
Thank you for the question. As I commented, I think both the strategy of closing the units be it for reformation was with the intention of maximizing operational performance. So we make continuous analysis of our assets to capture the best performance possible. So when you talk about that, we're not talking about the units as far as care is provided. Actually, they were one-off infrastructure and equipment, so retrofitting of the rooms in MRI, upgrade of equipment, equipments that were old already, we prolong their lives for about 10 years more. So there was impact in 7 units.
However, those impacts were very specific, did not impact inflow. So in the revenue, the impact was very particular, especially in MRI. That's where these adjustments of infrastructure were focused. The days -- the addition of the days, we can provide you because since it was focused on infrastructure, focusing on niche equipment, some of them were stopped for some time. But as an average, when you redo the room for MRI, we're talking about 30 days. Juliana is writing down the question, and we will answer in detail to give you the revenue in detail.
Next question from Enrique Mercado from [Indiscernible] Capital. How is the process in the search for a new CEO?
Thank you, Enrique. Thank you for your question. As we have commented, Dr. Isabella Tanure, Vice President of the Board, also has this function in the entering as CEO, and she really is quite acquainted with the health market, and she has been in the board for a long time. So we have her leadership on the daily basis of the company. And also, I think that what the focus of the company is, she has been very careful in looking for the CFO and this has been shared by Dr. Isabella along with the rest of the board, and we'll maintain the market informed as soon as we have any changes in Allianca's Board.
Last question. What's the expectation of mean ticket adjustment with the health companies in the coming quarters?
Excellent question. More and more, we have -- the supplementary health market is quite pushed. But as I have commented, we have had a very good relationship with health care operators, always providing good solutions and also sharing the objectives of being synergic. As I commented in the fourth Q '23, we have been able to have adjustments above official inflation. In our expectation, it goes along those lines. We are not just positioning in the large centers where the pressure for lower readjustment is stronger, but we also have a sense in important places, not just in Rio and Sao Paulo and that contributes for us to improve our readjustments.
And also, as I have commented, we have a participation of an increase in partnership and alliances that are B2B, as I commented. That also improves or diversifies the company's revenue. It has a positive effect that will improve our revenue cycle because we have shorter payment prices. And also, we have important participation in the private market. That also has been quite relevant for the company. So we are -- we have good hopes for the readjustments of our tickets for the rest of the year.
One more question. John Carlo, what are the possible M&As? Where will the resources come from, operational, generation cash or third parties?
Excellent question, John. The company is always analyzing opportunities for our inorganic growth via opportunistic M&As. However, the focus today, as I commented, is to deleverage the company. So every M&A that is considered or discussed takes into account, especially operations that include minimum cash, basically exchanging actions or shares and more importantly, with companies that has a levering rate that's even better than Allianca currently. So this leveraging agenda is our most important focus.
Next question from [ Abeona ]. Could you further detail the swap operations.
Yes, of course. Thank you, Victor, for the question. The terms and conditions for swap have been presented to the market in Fatos Relevantes on May 8. After the approval of the operation that will be submitted to the General Assembly at the end of the month, we will communicate the market with the details of the operation because it involves -- we're waiting for the approval during the General Assembly.
[Operator Instructions] Since there are no further questions, I give the floor to Dr. Sartim for his final considerations.
Thank you, Juliana. Thank you, everybody who has questions. Any further questions you may have, please talk to us via the website on Investor Relations, chat, WhatsApp, we'll answer them all. I want to thank, once again, everybody, for the presence here the first Q '24 earnings conference. And I think we are on a good journey to construct more and more robust company with excellent results. So I thank you all. Good afternoon.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]