Diagnosticos da America SA

BOVESPA:DASA3

Earnings Call Transcript 2022-Q1

[Operator]

Good afternoon, everyone, and thank you for waiting. Welcome to the Video Conference of the Results of the First Quarter of 2022 of Dasa. [Operator Instructions] We inform that this video conference is being recorded, and be made available on the IR page of the company where the complete material of our results presentation will be posted. [Operator Instructions]

I'd also like to point out the information point in this and any details which may be made during the video conference relative to the future business projects, projections, operational and financial goals of Dasa are beliefs of the company as well as based on information currently available. Future considerations are not guarantees of behavior. They involve risks and [ premises ] regarding future events. Therefore, depending on circumstances that may or may not happen, investors should understand that economic conditions, market conditions and other factors -- operational factors may affect the performance -- the future performance of the company and relates -- I'll now pass the word over to Director of IR of Dasa.

[Andrew Campbell;Diagnósticos da América S.A.;Director, Investor Relations and Value Capture, executive]

Thank you. Good afternoon to everyone. We'll start our presentation with the considerations of Pedro Bueno, President of Dasa; followed by Felipe Guimaraes, Financial Director. We also have with us Sergio Ricardo Santos, Director of Strategy and ESG; Andrea Dolabela, Director of Product Marketing and Experience; Emerson Gasparetto, General Director of Oncology; Rafael Lucchesi, General Director of Outpatient Care, Diagnostics and Coordination; and Carlos de Barros, General Director of Dasa. They will also be available to answer your questions when we open the Q&A session right after we finish our presentation.

I would now like to pass it over to Pedro Bueno.

[Pedro de Godoy Bueno, executive]

Hi, everybody. Welcome to our results call. It's a pleasure to announce the results of the first semester of 2022. We've had important evolution in the standpoint of growth, execution of our strategy and operational improvements, principal in the hospital and oncology area. We know that there's still lots of opportunities to capture, and we're focused on the execution of these fronts, which should direct the country during the year. This quarter we also present to you Rafael Lucchesi. As we communicated recently to the market, he took over the Directorship of Outpatient and Diagnostics. Lucchesi is really -- he's with us for 10 years. He's a real important part of our team, and he's a leader in diagnostics.

He's already been focused 3 quarters of this business unit, 3 fourth of the revenue. He'll be available for your questions at the end. If you have any questions, welcome, Lucchesi our earnings release call. It's a great pleasure to have you here. Now let's go to Slide 3. Today, we're going to talk about 5 topics in our presentation. First, I'm going to talk about the highlights of the quarter, the consolidated results. Then I'm going to talk about the development of our core business, the Hospitals and Diagnostics and also the development of Nav, our digital platform and our navigation platform as well.

And then Felipe will go about our numbers and our balance. Now go to Slide 4, Slide number 4, please. In the first quarter, we saw important advances in several strategic objectives announced to the market. First of all, in terms of financial results, the first quarter marked the beginning of the return to the levels of profitability that were more compatible with our performance prior to the fourth quarter at the same time that we maintain a high level of growth of revenue. As we had signaled in our previous call, the results from the fourth quarter were affected by various popular effects. However, the operational has returned -- the operational results have returned in the first quarter. We took an important step, but we're still not satisfied, and we're working to capture the principal opportunities of profitability that are before us.

Beyond that, before our IPO, we've been signaled that we will seek a complete infrastructure. This has been evident in the first quarter with the revenue coming from the Hospital and Oncology sector arriving at 48% of our total revenue. We will continue to seek opportunities for growth for our business. We should also mention that this change has been significant in our mix and our revenue mix occurred without deteriorating relevant deterioration of our gross margins, profit margins compared to the previous quarter. In our core business, in the first quarter, it was very clear that our initiatives of efficiency and our playbook of integration for hospitals presented results with better performance as we planned.

This outstanding was a 4 point improvement of our gross profits in Hospitals and Oncology with an increase of 5.5 percentage points compared to the first quarter of '21 and 12.9% compared to the fourth quarter of last year. These results were very exciting due to our initiatives are still in the beginning. And as we advance our playbook, we will see opportunities -- significant opportunities for bigger advances. In the first quarter, it was also an important market in our oncology sector, which has been growing quickly, and we are already the third largest player, independent player in oncology remembering that this is a business that we started practically from nothing just 2 years ago.

Our Outpatient Care units and Diagnostics and Care Coordination as market leaders, our revenue grew in relation to the first quarter of '21, even though we had the significant impact of lower revenue coming from the COVID crisis. And our initiatives or high-growth initiatives as a segment of Coordination of Care with companies, we continue to maintain the growth of revenue in double digits. Thirdly, our digital platform and our initiatives for navigation sustain a growing movement in the first quarter. The number of unique users on the platform advanced again. We added 1.4 million new users in the first quarter, a number 5x larger than in the first quarter of last year.

At the same time, the revenue coming from our initiatives, our navigation initiatives contributed positively to our growth with an increase of 170%. Now go to Slide 5, please. Dasa has demonstrated growth in expressive rhythm and consistently in the next -- in the last years, and the first quarter was no different. The growth of gross revenue went to 32% in the first quarter of '22, totaling BRL 3.3 billion, a record in the quarter for the company. Our business units of oncology, almost doubled its revenue compared to the previous year, an increase of 92.5%. We had an important part of this growth coming from acquisitions in line with our strategy.

And in the top line growth we saw in the last call has also permitted us to capture organic -- important organic growth of 10.7% in the period. In the outpatient diagnostics area we had a growth -- a solid growth of -- without COVID, 7.7%, not including COVID. And due to the implantation of digital initiatives, such as the web check-in and digital care, which we'll talk about more going forward. We'd also like to talk about the larger and larger high-growth contributions from our initiatives. The Coordination and Genomics altogether grew by more than 30% in the first quarter, and we're very optimistic about the opportunities for growth in these initiatives.

Slide number 6, please. Before we detail the details of the first quarter, I'd like to update you regarding our geographic presence taking into consideration the fast implementation of our expansion plans since our IPO and the contribution that these assets have registered in our results. Since the beginning of '21, we have increased the number of hospitals from 7 to 15, number of beds almost doubled, reaching 3,550 beds. With this growth, the number of medical -- doctors' offices more than doubled, now hitting 389, which are now integrated with our hospitals generating opportunities in the navigation of our patients.

Finally, in the Oncology segment, we went from 2 units at the beginning of last year to 29 units this year. And today, we are present in 7 states and Brazil, increasing our capacity to attend these clients during their entire journey in strategic and important cities. This helped us to offer a better experience for our users, increase our efficiency and advance in our ecosystem strategy. On Slide 7, we will talk about our results of the oncology hospitals. The revenue of this unit almost doubled in relation to the first quarter of '21, with a growth of 92.5% due to organic growth of 10.7% and the contribution of the M&As.

Our acquisitions were the principal factor which justified the growth of 77% in the number of installed beds. However, it's also worth mentioning that the increase in the number of operational beds was above a growth of 81%, a reflection of a higher index of operational beds as a percentage of installed beds and a better utilization of our infrastructure. The average ticket per day of 8%, an increase of 8% in the average ticket, helped the revenue to grow.

While this also includes the AMO contribution into our revenue, the average ticket, excluding AMO, also increased in relation the first quarter of '21 1.8%, which was very positive, considering that the rapid expansion in the number of beds and a huge contribution in the recurring revenue from the M&As last year might have diluted that average ticket. The average of the gross margin in the oncology units was the outstanding point of the quarter, an increase of 5.5% in relation to the first quarter of '21 and 12.9% compared to the fourth quarter of '21.

The better margins in the hospital and oncology unit was an important step showing our capacity to strengthen the operational performance to the execution of our playbook. These gains were gained quickly and in some cases, in hospitals administered by us for only a few months. Let's talk more about these drivers and this better profitability in the next slides. Slide 8, please. In practice, we're looking at our business in 2 different groups of hospitals. The first group, we have 1,467 beds in hospitals with higher margins, 31.7% average margin in the first quarter of '22. These hospitals are mature and hospitals that we've had for longer.

In spite of their satisfactory revenue, we have expenses of all the hospitals in the first group. On the other hand, 2,048 other beds or about 60% of our total are in hospitals with unacceptable margins of 16.2% basically, half of the profitability of the first group. These hospitals are usually less mature or hospitals that we recently acquired and are still in the turnaround phase. We believe that the opportunity here is clear as we implement our best practices and execute the restructuring of hospitals with lower profitability, reaching what we've already reached in these hospitals in the top-tier hospitals. The quick advance of the recently acquired hospital leaves us confident that we will be able to realize this restructuring.

Now on Slide number 9, please. The advances in profitability in our hospital is the result of the implementation of a workflow, which we're working on, which we're advancing. In relation to revenue, an example of the flow is the increase of average ticket per patient. On this front, we had an increase of 4.2% compared to the fourth quarter. From the optic of costs, we reduced 267 headcount due to higher efficiency per bed. These are just a few examples within our journey of the utilization of our hospitals. Now go to Slide 10. As we discussed previously, our process of integration after the acquisition of hospitals was through 3 steps: first, focused on god people and culture with a priority for a first round of cost reduction.

Secondly, increasing revenue with more complexity and an offering of service -- a wider range of services; and third, expansion of the number of beds through brownfield projects. The results of the first quarter show the efficiency of this playbook. In the acquired hospitals, the process of integration has contributed with 13 percentage points in the advance of gross margins in the first quarter in relation to the fourth quarter of last year. The focus of phase 2 and increase the complexity and expand the range of services contributed with growth of 12% in the average ticket in relation to the fourth quarter specifically for those hospitals for acquired hospitals.

And finally, in the Sao Domingos Hospital, we inaugurated a new tower, which will permit a brownfield expansion of 96 beds in the next quarter. We're going to continue to execute our playbook for assets which came in during the first quarter looking at the great opportunity, while the hospitals pass through these 3 phases of integration. Now go to Slide 11. I want to share with you a case study of Leforte. To show how the implementation of this playbook works we're going to bring the Leforte case. The Leforte Group has 3 hospitals in Greater Sao Paulo, with 670 beds being the largest acquisition that we've executed since the integration of [ IMPPA ] in 2019.

We concluded this acquisition in September of last year. And since then, we have increased the gross margins by 5.7 percentage points. In the first phase of our playbook, we hired 2 new Directors to lead these hospitals, and we implemented our management model. Following that, we consolidated the administrative areas, and we did the first cost reduction wave leveraging Leforte. These savings have -- based on standardization of processes and medications and tables of -- price tables with our suppliers. In the second phase, we focused on increased revenue.

We are reinforcing new specialties such as oncology and neurology, improving our surgical centers and seeking important certifications. With these measures, we had better conditions to bring procedures of high complexity. Looking at the future, we have -- we still have more steps to be implemented, generating an increase of the complexity in revenue, a second wave of cost reduction and opportunities for retrofit and a brownfield expansion in some of the Leforte units. Let's go to Slide number 12, Oncology. At the beginning of 2022, we also advanced in our oncology strategy offering DASA -- positioning us as the third largest independent player in the market.

We concluded in January, the AMO clinic, leader in oncology in the states of Bahia, Sergipe and Rio Grande do Norte, reinforcing our position in Bahia, a strategic city for us due to the presence of our laboratories and of the hospital, Hospital da Bahia. Including AMO, the oncology revenue grew by 67% in relation to the first -- when compared to the first quarter of '21. In April 1, we announced an agreement for the acquisition of clinic -- a reference clinic in Rio de Janeiro, with a good reputation for care directed by oncologists, Dr. Daniel a reference in the area.

We also reinforced our team Dr. Gustavo Fernandes, a well-known oncologist, who was the President of the Brazilian Society of Oncology. Dr. Gustavo leads today our Division of Oncology nationally. Oncology is a specialty, which has strategic importance for Dasa due to the potential for integration and the patient journey, which includes close to the early detection in our laboratories, predictive algorithms and the care in our clinics and hospitals. Let's go to Slide 13. Moving to another business unit; our patient clinics had growth of revenue in relation to the first quarter of '21 in spite of the negative impact equivalent to 5.1% due to the reduction of COVID testing. Excluding the COVID effect, we grew 7.7% in relation to the first quarter of '21.

Our premium brand Alta continues to perform very well, with growth above the market in general with an increase in revenue of 27% in relation to the first quarter of '21. The revenue from the coordination with companies grew at a healthy rate as well due to the increase in the number of lives. The lives under contract grew 35% compared on an annual basis, while the lives of Dasa companies grew by 31% during the quarter. The gross profit grew in line with the first quarter of '21, while the gross margin had a fall of 0.7 percentage points due to a change in the mix of the types of exams were being offered.

Slide 14, please. We continue investing in technology, digital initiatives, trying to potentialize the experience of the user in our units. Our initiatives to accelerate the digitalization and the kind of experience gains strength in the first quarter, bringing benefits for the users as well as for Dasa in preparing us for a scenario with greater profitability in the future. Our web check-in services went through 1 million check-ins since it launched last year, including 590,000 in the first quarter of '21 -- '22, where our services were offered 21.5% of these services were done through web check-in.

This reduces the average waiting time for users compared to the traditional model of check-in and 96% of -- 95% of our users classified it as a positive experience. We expect to have important reductions in costs in our servicing units, especially in cost in relation to reception. At the same time, the volume of tests set up online increased by -- to a total of 900,000 schedulings. The percentage that was effectively set up online increased from 23.7% to 31.9%. The online scheduling resulted in a strong falloff in the number of users who need interaction with one of our attendants in the call center.

This also resulted in higher rates of productivity for our call center attendants. These gains of efficiency also grew as our online scheduling grows -- scales up. Slide 15, please. The number of new users, unique users on the Nav platform showed an inflection point in the fourth quarter of '21. This movement maintained itself in the first quarter of '22. The number of users, patient users went up to 1.4 million users in the fourth quarter. Afterwards, it jumped to 1.2 million in the fourth quarter. The total number of users registered on the platform reached 3.5 million at the end of March.

Beyond these patients, Nav Pro, an interface for the doctors, kept its movement growing. We had 4,000 new users in the fourth quarter. The number of users registered in Nav Pro reached 27 million at the end of March. The robust growth of the number of users, it happened at the same time that we maintain high valuations by the users in the stores. The Nav received a note from the user of 4.5 of a total of 5, 4.9 out of 5 based on the average of the iOS and Android. With the biggest validation of the experience of our users this evaluation grew and raising to the 3.7 points registered in June of '21.

We hope that the Nav platform will become a more and more important channel of connection between patients and their doctors for strengthening the client experience and the doctor generating efficiency for the health sector. Now go to Slide 16. As we discussed in previous quarters, an important component of our growth is the application of our users in our ecosystem through experience, which generate involvement, which permits better results and better efficiency for our clients. We observe this continuously, this evolution during the first quarter with an increase of 121% in the number of patients navigated compared to the first quarter of '21.

Since the average ticket of navigated patients also increased the growth of revenue from the navigation initiative grew even faster by 160%. Our number of consultations through telemedicine grew by 77%. At the same time, the number of users who were involved engaged in the service through telemedicine went from 9.3% to 11.2%; remember 5% always looking at the clinical questions.

And I'm going to pass it along to Felipe Guimaraes, who will give us an update about our M&A.

[Felipe Guimaraes;Diagnósticos da América S.A.;Group CFO, executive]

Thank you, Pedro. On Slide 17, I'm going to present an update on our M&A initiatives. In the last quarter, we continue with the growth of the solid M&A base of Dasa and in this next quarter, we expect to continue. As we mentioned earlier, in January of 2022, we acquired AMO, an oncology clinic in the northeast of the country. Beyond that, we finished the hospital -- Parana Hospital in March, which will contribute to our results for the first quarter -- in the second quarter of the year. This operation, we consolidated all of the acquisitions of oncology hospitals announced in 2021.

Last night, we announced also the conclusion of the acquisition of -- announced in November of last year. This will increase the offering of several business of outpatient and diagnostics in our network increasing the possibility for navigation of our patients. We'll now go to Slide 18. We want to comment on our financial results. We closed the first quarter with growth of 32% in revenue compared to the first quarter of BRL 21 million pushed by a strong increase in the hospital and oncology sector. The adjusted EBITDA registered growth of 23%, totaling BRL 616 million, with a fall in the margin from 1.2% to 19.6% due to a change in the mix coming from the hospital and oncology area, an increase of general administrative expenses to sustain our strategy for growth.

In the first quarter of '22, other operational revenues were instigated by another BRL 50 million and has contributed positively to our adjusted results. Even excluding this item, we had our 560 still shows a margin of 20%, and we recovered 5.6% compared to the first quarter -- for the last -- previous quarter. Going to Slide 19, we're going to talk about our position -- our debt and cash position. We closed the first quarter with a net debt to EBITDA of 3.1x adjusted EBITDA, excluding expenses or stock options and nonrecurring expenses. When we consider the -- that the nonrecurring expense and stock options, our leverage goes to 4x.

The leverage grew during the quarter due to the payments for the acquisitions acquired. We reached BRL 9.2 billion [ of gross debt ] and BRL 2.9 billion of commercial paper. After the closing of the first quarter, we also complied with the emission of 2 more debentures in local debt in the range of BRL 4 million, and it shows how we continue to access the capital markets with favorable terms, improving our investment thesis and our growth in the sector. We believe that the company will continue well positioned to take advantage of both organic as well as inorganic opportunities in the future.

Now we'll start our question-and-answer session.

[Operator]

[Operator Instructions] Our first question comes from Mauricio Cepeda, sell-side analyst from Credit Suisse.

[Mauricio Cepeda, analyst]

I have a few questions here. A little bit more about future strategy. First of all, you spoke a little bit about the leverage, but this could limit you from inorganic expansion, for example, oncology. Are you doing well in the organic side, inorganic side, but how can you expand inorganically in that area? The second question is it's more about costs. We see that not only you but the other competitors have worked very hard on this area. There's a lot of inflationary pressures. There's pressure on the tickets themselves, and we see that you're working on several fronts. Can you detail, please, what are the principal fronts that you're working on for cost reduction?

And my third question is about the diagnostic area, which seems to be, that's more stable -- what have you thought of as avenues for growth for that business and what the other health services that you have in the group have generated? And fourth question, a little bit more disconnected. We were discussing a lot about this base salary for nursing subject that was seemed less probable but now it seems to be advancing. What is the impact that you foresee if this diagnosis exposes your professionals for the collection of biological material?

[Pedro de Godoy Bueno, executive]

Let me start here in the order in which you asked. First of all, as far as inorganic expansions, how do we see our leverage? Our leverage, as we mentioned to the market, we reached a peak right now in the first quarter. And with the generation of our EBITDA and cash in the company, we will see this rate of leverage going down during the year. So we still have some space to make inorganic expansion.

We also have, as we mentioned, approximately BRL 500 million of opportunities through the leaseback of real estate, which came with the acquisitions which we did in recent years. So we still have space. We've also used the strategy of parceled payments of time payments, which permits us to get better negotiations, both in terms of multiples as well as in the number of payments and time payments over time. So we're concerned with M&A, but very assertively and prioritizing what it is that makes most sense within our strategy.

What are the acquisitions that you -- that we'll never actually do again? So we don't want to do dozens of M&As as we did in the past. We expect to be more careful now and only acquire what's really relevant. Of course, if an opportunity appears a very good opportunity, we can also do a compensation in our CapEx, internal CapEx plan and prioritize it over other projects, which we're working on. So there's still space. I'm going to pass it to Felipe to ask you about -- to answer your question about costs and the nursing salary floor.

[Felipe Guimaraes;Diagnósticos da América S.A.;Group CFO, executive]

In relation to costs, we have a series of initiatives open. I would say 4 of them. The first is the area of digitalization of our business of our diagnostic business, both in the units as well as in the service area. The second one which is very important is the standardization of our materials and medications and the amplification of this, which is also extremely key to our profitability. The third, we still have opportunities, which we've taken advantage of over the year of the reduction in G&A of people, administrative people.

So that's also a third front, which is extremely relevant. And finally, of the price list with this consolidation of volumes in the hands of less suppliers. And with this larger volume coming from the integrated companies, we've already captured good opportunities and some we still have space to capture additional opportunities. So these 4 fronts are the principal places that we see improvement going forward. In relation to the nursing salary -- minimum salary for nurses, the expectation this year of a smaller impact of 0.5% to 1% of our EBITDA. In '23, it could be something closer to below 2%, but close to 2%. You want to answer about oncology?

[Pedro de Godoy Bueno, executive]

Our principal focus is on organic growth, and the actions are, first of all, with the arrival of Gustavo Fernandes, one of the leaders in the country, we're bringing new teams. We're attracting new medical teams, which is very important for oncology. And we also have new sign-ups and certifications in the oncology area, which also helps us in our growth. The third lever -- 4, is the beginning of our activities in oncology units, which -- in the units which were acquired.

For example, in the Leforte Group, which is where it's very relevant, I can't tell which in the navigation of business such as happens in Salvador with the patients already being navigated to the hospital, a hospital of da Bahia. And this means that our brands of diagnostic brands, [indiscernible] will be now sending them to AMO. So these are the 4 levers for the setup for the growth of AMO. We have a good installed park there. The acquisition of Dr. Daniel's clinic is also strategic to bring synergies to our business.

Talking about diagnostics, we have important growth fronts, which we can mention here [indiscernible] as a whole. We have the premium segment with Alta, which gains market share this quarter with a growth of 27% compared to last year. We also have [indiscernible] we grew by 47% in 2021 and now continues to grow. It's important this is not including COVID. These are service which will be fundamental for us in the long haul.

But we also want to know all of the diagnostic with a growth of 47% in the first quarter compared to the first quarter of last year and the services of collection with growth of 37% -- 35% compared to the first quarter of last year. Of course, the Dasa companies, the professional line, making these companies -- helping these companies to have access to access Dasa services and also pushes our growth. And now the second part of the question, which is a question of services coming from other services of the group. I'm going to pass it over to Sergio, who will give you some more information about that.

[Sergio Ricardo Santos;Diagnósticos da América S.A.;VP of Strategy, Legal and ESG, executive]

In truth, Cepeda, what we have here in the growth of the navigated revenue has been growing 170%, and we see a lot of opportunities there. It's been contributing to the growth of all of our businesses. However, what we're most excited about is the opposite, which is navigation of patients that we capture through diagnostics, identifying who is the seriously ill patient who needs oncology, who needs a more complex care, could be oncology or in a center or a hospital. And on this front, as we mentioned, it will contribute to all of our businesses, especially in our highly complex business, high complexity business.

[Operator]

Our next question comes from Ricardo Boiati, sell-side analyst from the Safra Bank.

[Ricardo Boiati, analyst]

Good afternoon guys. Thank you for taking my question, which I wanted to reinforce to Cepeda and your other breakdown about the disclosure of the presentation and for the clarity in your estimates of the impact of the nursing salary effect. My first question is in relation to the [ gains ] within this inflationary scenario, which we're living not only for healthcare, but for the economy as a whole, if you see any worsening in terms of the clinics or the healthcare operation or this is not a problem?

It's not a fact that concerns you looking forward? That's my first question. My second question, which if you can give him a little bit of color. You have cash to cover 2 years of payments on your principal debt, and you're working on with additional lengthening of that debt to be able to reinforce more of your balance sheet since the leverage will diminish gradually with the improvements in EBITDA. But thinking about due dates and cash availability and opportunities for M&A, how do you look at the balance of the company looking at these next months and years?

[Pedro de Godoy Bueno, executive]

I'm going to start here with the first question about affordability. First of all, I think you've accompanied this, even though some of the challenges, the market has started to grow. We see a growth of people with healthcare plans, which we haven't seen for a long time. Obviously, the crisis, the COVID crisis brought even more -- gives them more will to sign up for healthcare and they leave other things aside, they tighten up other parts of their budget to be able to continue to pay their healthcare plans.

So I think that this is a point which benefits our sector. Of course, it's clear the problem of affordability is a huge problem. It's the biggest problem. The fragmentation of the sector, which generates these increasing costs, which we saw in 2017, started to pivot our business, and we started to position ourselves to be able to address this problem together with other players in the sector, other operators, the doctors, etcetera, and we try to solve this problem.

So we see this as an opportunity for Dasa because we've been positioning ourselves as the player who is looking at the importance of clinical use efficiency, the journey of -- in a more integrated and more intelligent way. So obviously, this is a big opportunity for us to gain more share together with the operators compared to other service providers who do not have the same value proposition. And that's what we're working on this year, and we hope to gain these -- to capture these gains. I'll pass it over to Felipe to talk about our debt.

[Felipe Guimaraes;Diagnósticos da América S.A.;Group CFO, executive]

We're working hard on the lengthening of our debt horizon. As you saw in our last 2 issues, we issued BRL 2 billion with a 5-year horizon and another issue of another BRL 2 billion with a 6-year horizon, a little bit more than 6 years, which means that today our operation is close to 3 years of cash on hand. We still have lots to do. We have several issues with even longer maturities, acre with longer-term loans closer to 10 years to put to get our duration of our loans to a longer and longer horizon.

[Operator]

Next question comes from Gustavo Miele, sell-side analyst from Goldman Sachs.

[Gustavo Miele, analyst]

2 quick questions from our side. In listening to Nav, I call our attention was the fact that it has been able to expand the number of users quite well in patients in the platform without sacrificing the perception of quality, which I think is a very positive point. But I wanted to understand a little bit better what are the unit economics of this user who is entering into the base? Have you been able to evaluate that in terms of the traffic that it does inside of the network, you see a user who goes from a different -- goes to the different business units or not?

Is he more simple to the legacy base of clients that you have? And I want to understand how much is user base through M&As and how much is a little bit more organic, focus a little more on the profitability of this user in relation to the older users. My second question is a little bit more specific in relation to the average ticket. I wanted to understand a little bit about the growth of 4% that you mentioned in your business in the hospitals and oncology units without the AMO clinic.

How much of this comes from the impact that you commented on in the previous quarter about the postponing of the readjustments of prices with several clients from October to January? If you adjusted these effects, would you be able to have an estimate of how much of the average ticket increase? And also jumping on this same point, what are the, so we can predict a mix over the year. And these 2 questions basically, economics of the new users of Nav and the average ticket, outlook for the average ticket?

[Felipe Guimaraes;Diagnósticos da América S.A.;Group CFO, executive]

As far as the units of Nav, we've increased greatly the number of users from the first year. It focuses greatly now in the second year, we are doing a lot of engagement with this user. What we observe is that as the objective of the platform is to secure these people for Dasa, both for the doctors as well as for the patients, both in the use of the doctor as well as patients. Gaining share of wallet and a good example of this is in telemedicine, as Pedro mentioned, about 11.3% of our patients are able to use navigation through the hospitals or through diagnostics.

And so they use our -- so the platform is contributing, and it will contribute even more since we add new services and connect all of this user journey. As far as M&A, this is organic growth. It comes from our base -- our user base and not from M&A. We're using a strategy of using our core business to migrate users to the platform, and we're doing that based on the base that we already have. So the M&As are not really contributing to that. When you take an average user who uses the Nav compared to the doctors who don't use it, it is an important difference in an average of 3x more of Dasa service usage.

And the uplift he presents also is constantly higher. Of course, we're focusing on gaining quality and generating value for the doctor and for the user, our biggest focus is not to gain revenue. We don't want to burn the platform. We want to resolve the problem of the user of the doctor and then generate a lot of value for the users then we can start to work on the strategy to monetize that [indiscernible] even though it is already contributing to the short-term revenue as well.

And I'm going to pass it over to -- before I pass it to Emerson, I wanted to answer your question about the price readjustments, that postponement which we made in the fourth quarter was all in diagnostics. That effect only contributed to the numbers of the diagnostic -- when you look at the hospital units, the impact was zero. There was, in fact, an increase in ticket of 4%. And then Emerson can talk a little bit more about the other questions.

[Emerson Gasparetto, executive]

This increase was related to complexity, and we saw an increase in electives since the beginning of the year and it continues to be attendance to this increase of elective surgeries.

[Operator]

Our next question comes from Samuel Alves, sell-side analyst of BTG Pactual.

[Samuel Alves, analyst]

Just one question from my side, just to explain a little bit more the laboratory segment. You even said that the strategy involves separate collections, premium brands, new products, coordination care coordination, but to understand what's happening in the first quarter. The revenue was flat, practically flat year-on-year. But to understand what was this effect -- is this downsizing was related to COVID? If there's any brand of lower tickets losing share, but to understand the effect in the first quarter? And if you think that the downsizing of COVID over the year can also bring a negative impact to your margins? I'm not sure if that's what happened in the first quarter. However, do ex-COVID we'd like to understand a little better.

[Pedro de Godoy Bueno, executive]

If we take out the COVID our growth was almost 8% during the quarter. So we were able to continue to grow well. And we take away the COVID effect, we grew -- the growth was very strong. We think that the COVID will continue to fall over the next quarters. That's in our projections. And we're going to seek in every possible way to compensate with other lines of growth. Loss of margin is very, very limited. And basically, we had to and also in January, and we have a line of energy expense, which is very high at the beginning of the year due to the summer here. I don't think it will deteriorate margins going forward.

On the contrary, all of the actions in the check-in and optimization that we've mentioned, we're confident that we'll be able to gain productivity in the units, improve costs and control costs and have a good projection of margins going forward. Those are the principal points. And beyond that, we also have an important commercial front. In the first quarter, we have a very strong commercial team, all of the agreements that are signing to be able to continue with good numbers in the next quarters. Also very confident that taking out the COVID effect, they will continue to grow well.

[Operator]

Our next question is from [ Lucas Marchesini ], sell-side analyst at Itau BBA.

[Unknown Analyst]

It's in relation to the AMO Clinica. I know that some good -- oncology had some good growth in El Salvador, we see over there in oncology. [ And we cannot understand right now so get into this ] dynamic of any strategy for this segment?

[Pedro de Godoy Bueno, executive]

Lucas, as I mentioned, oncology is beyond being a high-growth business. In our company, it is totally benefited by our thesis of navigation. The early diagnosis is very relevant and it has a huge impact on lower cost and better results for the patients. We have seen this during the IPO. Our breast cancer cases, and we created here in the group a few weeks ago, we showed a tool where we seek out in the image exams alterations, which could indicate early diagnosis of cancer and then bringing these patients in for early care.

In Salvador, we have a clinic, which is an outpacing clinic, very strong. The brand is very relevant in there. It's one of the most principal brands in imaging, the opportunity to make early diagnosis to our diagnostic business. The AMO clinic is very strong, but it didn't have a reference hospital, which is essential for the oncological patient because whether he needs a more a surgical procedure or an urgency, if he needs an emergency room for some kind of urban care, now having a hospital that by, it's very strategic for that business.

So today, we have the entire ecosystem for oncology, door-to-door, especially oncology and Salvador, which puts us in a position a very favorable position to do this navigation and early intervention. And we have a line of care of the oncology patients in our group guaranteeing the lowest cost and the better results.

The strategy here at this time with the acquisition of AMO is very focused on organic growth, bringing in new medical teams, which is already happening with the arrival of Gustavo and our certifications. The impact of the early diagnosis is very relevant to the operators to the health plans. So we're having lots of new companies signing up and the acquired companies, this is our strategy for oncology and the City of Salvador is totally aligned with this because we have all of our services available there for our patients.

[Operator]

Our next question comes from Gustavo, sell-side analyst in Bank of America.

[Gustavo Tiseo, analyst]

Just one question on this side. I want to understand about the coordinated care. We've heard of this since the IPO and the update, what's the say -- so it was -- you had an all-time high in bringing the flow to you and wanted to understand if this is what's happening? And also, if these values of 15%, 20% consider -- continue to be viable in this coordinated care front?

[Pedro de Godoy Bueno, executive]

Basically, the adjusts that we mentioned here in this quarter were implemented. As we mentioned here, we focused clearly on the diagnosis. Readjustment is never easy, especially with the inflationary pressure that we're facing right now, but we've taken advantage of our scale. And the synergies which we have between our business is to have a good relationship we have with the payers to build business models, which create more incentives without hurting our profitability, which is the success that we have in this undertaking.

What we have postponed has already been implemented in January. So it's already impacting the first quarter numbers. And we have no contract -- relevant contract, which was readjusted by contract date in the first quarter. So the growth that we've seen in the first quarter is principally growth in complexity. And these -- the readjustments will come in the second and third quarters of the year when we get these price readjustments.

[Gustavo Tiseo, analyst]

I think I sent this question a little bit earlier, so I ask -- forgive me if it's repetitive. So talking about coordinated care -- if you could tell me what's your strategy for some of the payers are looking at that as a possibility of bringing more flow to your operation. And those benefits, which you saw in the past, well, 15% to 20% are really happening. I understand a little bit about the clinical care strategy.

[Pedro de Godoy Bueno, executive]

So I think here it's worth to mention your question again because when we talk about the Nav, we look at it as a platform of involvement, engagement of the user. We make it available for all the users and doctors. They use some Dasa server that's free, go in there and download it on the web. The strategy of the Nav platform is to simplify the journey of our users, solve these problems right there on the platform. And as much as we involve this engagement, we increased the lifetime value of these users. The coordinated care front is another business, 2 different things, just to make it clear.

The Care Coordination is a business that we have here inside the company, which we sell this to the operators. We do a co-management. And with the number of affordability and the number of claims, it's an opportunity to grow in this business, especially in the profit-sharing model, as we've done since the beginning of last year with a great deal of success together with some operators, some payers. We've been able to reduce both in comparison when we take a portfolio both -- the same portfolio from the 12 period and a control group in same period of patients who have the same profile, population profile but which are not being coordinated.

And both in one scenario as well as the other, we have seen reductions of 20% and sometimes above 30% -- as high as 35% in the reduction of cost of the entire portfolio, making the patients more healthy, more happy with the higher NPS and the services that we offer to these payers. And I think that this could be a gain of new contracts in this scenario. And obviously, this know-how of coordination of care that we have is very important for us to automate this model of coordination in Nav so that we can also use this intelligence to help the users navigate in our ecosystem, which is also part of our strategy. It's a business, but we also automate and digitalize this know-how to empower Nav as we go forward, getting more value for the users.

[Operator]

Our question-and-answer session is now ending. And I would like to pass the call over to the company for their final considerations.

[Pedro de Godoy Bueno, executive]

Thank you all very much for your participation. It was a great quarter for us to make a step in the direction of what we're dreaming of for the company here, both from a strategic point of view as well as operational efficiency, margin gains and profitability and we're very focused on what are the principal levers for us to continue bringing these benefits to our company and advancing and gain share and growth. Thank you all very much and until the next call have a good weekend. Thank you very much.

[Operator]

The video conference results for the first quarter of 2022 of Dasa is now closed. The IR department is available to answer any other questions you might have. Thank you very much for your participation and have a good afternoon.