Diagnosticos da America SA

BOVESPA:DASA3

Earnings Call Analysis

Dasa Posts 10% Quarterly Revenue Growth

Dasa achieved a solid quarter with gross revenues reaching BRL 4 billion, marking a 10% increase from the same period last year due to more service volume, increased complexity, and contractual adjustments. The adjusted gross profit hit BRL 1.2 billion, with adjusted gross margins rising by 2 percentage points to 31.3%. Operational improvements and reduced expenses raised adjusted EBITDA by 13% to BRL 683 million. Despite investment cuts and a cash reduction of BRL 452 million influenced by a BRL 443 million rise in accounts receivable, the firm moves towards cash generation, now a primary goal.

Revenue and Gross Profit Growth

The company finished the quarter with BRL 4 billion in gross revenue, indicating a consolidated growth of 10% year-over-year. This uplift reflects increased service volume, service complexity, and contractual adjustments. Adjusted gross profit reached BRL 1.2 billion, with an adjusted gross margin rise to 31.3%, a 2.0-point sequential improvement. This suggests progress in operational quality across both business units.

EBITDA Performance and Net Revenue Increase

EBITDA, though indiscernibly specified, grew approximately 6%, translating into a net revenue improvement exceeding BRL 100 million. Hospital & Oncology (BU1) reported a 13% increase in revenue over the previous year and Diagnostics & Care Coordination saw a 7% rise. Noteworthy is BU1's gross revenue of BRL 2 billion, spurred by patient volume growth and a higher average ticket. Diagnostics & Care eschewed the impact of COVID-19 tests and international operations, showing a 12% upswing, exclusive of these factors.

Operational Focus and Investment Reduction

Notwithstanding earning growth, the company reduced investments by 36% over the last nine months, aiming to enhance cash generation and slash debt. This trend is expected to continue, with incoming management systems and goal metrics pertaining to return on capital planned for 2024. Despite revenue growth and investment curtailment, a cash position contraction to BRL 2.4 billion was noted, chiefly due to a BRL 443 million swell in accounts receivable and elongated collection periods.

Operational Priorities and Cash Generation Efforts

The company is concentrating on cash generation to support organic growth. New dynamics are set for capital allocation, concentrating on asset profitability and optimal investment levels. Among operational enhancements, focus is given to expense reduction and operational execution. Current initiatives involve reviewing supply processes and making competitive improvements, integrating hospital networks to optimize the use of materials and medicines, and restructuring relationships with payment providers for better cooperation and efficiency.

Earnings Call Transcript 2023-Q3

[Operator]

Good afternoon and thank you for waiting. Welcome to Dasa's Q3 2023 Earnings Call. We'd like to inform you that this event is being recorded. [Operator Instructions]

The link to access the webcast with audio and slides is available on the Dasa Investors Relations website at www.dasa3.com.br. The presentation is also available for download on the website.

We emphasize that the information contained in this presentation and any statements that may be made during this event regarding Dasa's business prospects projections and operational and financial goals constitute beliefs and assumptions of the company's management as well as currently available information. Future considerations are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that the general economic conditions, market conditions and other operational factors may affect Dasa's future performance.

Now I'll give the floor to Mr. Glauco Desiderio, who will begin the presentation.

[Glauco Desiderio, executive]

Good afternoon, and thank you very much for listening. We will begin the presentation with considerations from Pedro Bueno, President of Dasa; followed by Lício Cintra, General Director of Operations; and André Covre, General Director of Finance. Also here with us, Emerson Gasparetto, General Director of Hospitals & Oncology; and Rafael Lucchesi, General Director of Diagnostics. Now I give the floor to Pedro Bueno to begin the presentations.

[Pedro de Godoy Bueno, executive]

Thank you, good afternoon, everyone. This would be my last call as a CEO. So I would like to thank my whole team, not just the executive committee who is here in the room, but everyone who's part of Dasa, our clients. Next January, I will celebrate 9 years as the company's CEO, a company that has been through great transformation. We acquired Dasa in 2014, and I joined the company 2015 when it was losing revenue, rentability and quality.

And after 2 or 3 years of turnaround, we had the threshold, the EBITDA of the company. With the turnaround we improved quality NPS. We gained customers' confidence. We gained market share. Throughout '17 and '18, we embraced a new strategy, which I'm so proud of that. We created this proposal to perform a good medicine, best practices to provide the medical services, which is generally concerned about to provide the correct medicine, which will guarantee sustainability to the sector.

We became the second hospital network. We are within the 3 top rewards of oncology. We have a platform with over 8 million users. We are a very important player in genetics. We have Alta, which is consistently gaining market share in the premium market. We have a great hub in artificial intelligence in Latin America. We have created a culture which works on humanized care, which fosters innovation and, of course, not everything is being sold.

We still have relevant challenges. And my last legacy as a CEO is the team that we are bringing together this year. That is a combination of people that have been in the house for 10 years, like Emerson and Lucchesi among some others and some other more recent collaborators that they have excellent experiences that will add to our Dasa's team like André as a CFO and Lício -- I'm talking about Lício and his transition. He's doing really well. I'm so amazed with his strategic direction. He's adding so much to our company.

And also due to his ability to foster strategic relationship to our operators and customers to advance towards that strategy to become the best option for all operators into the market. That transition was placed within 2 steps. The first 3 months of Lício was focused on building together more [ tides ] to the company and to design a budget and strategic planning for 2024. That was in August, September and October.

And since October, we are now stepping to a second step where I am giving more reliability to the executive decisions to Lício. And that is being taken place in very straightforward, organic way that will benefit the company. So during this call, you will perceive that I'm more like a passenger seat and Lício will be more in the front line of this call.

So once again, I'd like to thank you all, of course, our investors who have believed on us, in our company. And I'm so enthusiastic with this new cycle for me at Dasa with cash flow generation, efficiency to be able to grow, designing an ecosystem that will change the health sector.

Now I'd like to hand over to Lício for his official opening -- for his first official earning results call.

[Lício Cintra, executive]

Thank you so much. I feel so proud to be in charge of this project, a project which we you started 9 years ago. Good afternoon. It's a great honor to be participating at this first call. And for coincidence, it's the same day where I reached 100 days working for Dasa.

Before I get into the details for Q3 and this -- improving project for indicators, I would like briefly -- for those of you who haven't met me yet, I would like to tell you what were the main reasons why I am at this Dasa project. I have been working for the sector -- for the health sector for 20 years, almost from the payers perspective, representing health insurance providers with and without a network, but always from a provider's standpoint.

This is a result of more than 6 months conversation and discussion, not only with Pedro, but with some investors with the current executives, former investors. And during these months of reflection, some points were relevant that help me to reach my decision.

First, the way as how Pedro and his family understands health for the future, having a patient-centered approach to guarantee a care with more quality, more accessibility from a cost perspective. And I believe this is will -- this is what we will guarantee, sustainability to the sector. And Dasa is a pioneer in this area, and I believe that with the focus, we believe to reach amazing results in addition to those that we have already achieved.

Second, the time that the company is going through. After bringing together this great team, after a number of M&As, investment in technology, it's very clear to us that we have to focus on process execution, synergy, scale, rule out any stress that we might face on the way, projects that will demand time, financial resources that might be away from our core, which is hospitals, diagnostics and oncology.

I'm pretty sure that by doing that, we will be able to raise our profitability levels in relation to the size that we have right now within those 2 business units. Besides, what would be ideal would be an adjustment with the payers. Step out of all these denials, who has paid, who has not, have they applied to the proper material or not. More of the same that we have been following in the past years.

And now as a provider [ hat ], we'd like to have a more simplified products in alignment with the payer sources and to have a patient-centric. We have to include the patients as part of our process. I believe this is what will add benefits and success in the long run. In addition to this main point that were key for our decision making process and after 20 years in the health sector, 15 of those years at São Francisco, which was founded in the state of São Paulo, then it was disseminated to the whole state fourth in the rank and which was very compatible to vertical insurance companies, but amounting just 30% of in-house admission.

And I have a very close relationship to the network exchanging, an indicator, best practice, analysis based on indicators. All of that added to 3 years working for Hapvida, which has acquired São Francisco and working closely to their daily routine, leaded by Jorge. I'm sure that, that may add to the current Dasa's team. And what is the best part of all. I'm so glad with everything that I've seen so far.

Of course, then we have huge challenge such as leverage and other issues. But I'm convinced that we have several opportunities, opportunities that have already been mapped and which will be translated within best performances. We have a team which knows exactly what they have to do. They are skilled for that. And now we have to focus and engage that team to speed up the execution process.

And to close, my first talk, or my first participation, by thanking Pedro. The way he actually talks about Dasa project is amazing. He's very engaging, and he has dedicated his past 10 years of his life totally to this company. And he's going to be a great supporter to all changes and transitions Dasa's executive team. They are amazing. They were very well coming and are facing challenges in a very constructive way, and they understand that some changes will be necessary to improve and increase our profitability.

Well, after this brief introduction, I would like now to hand over to André.

[André Covre, executive]

Thank you, Lício. Thank you, Pedro. Good morning, good afternoon. It's a great honor to be here for the first time to share Dasa's results and I'd like to start our presentation on Slide 3, with Dasa's consolidated performance in Q -- third quarter of 2023. We ended the quarter with gross revenue of BRL 4 billion with growth in both BUs, reflecting 3 aspects and increase in the volume of services provided, greater complexity of services and contractual readjustments.

The company's consolidated growth was 10% this quarter compared to the same period last year. Consolidated adjusted gross profit was BRL 1.2 billion in the period with a year-over-year adjusted gross margin of 31.3%, which represents a sequential growth of 2.0 points, showing progress in the quality of operations of both BUs.

Furthermore, at the company, we began a new phase of reviewing management process and organizational structure, prioritizing activities, renegotiating contract, resulting in lower expenses and investments, which contributed to adjusted EBITDA of BRL 683 million this quarter, a growth of 13% when compared to the same period of the previous year. EBITDA [indiscernible] has grown around 6%. Such a significant evolution of operation. Our results has allowed an improved of over BRL 100 million in our net revenue.

Going to Slide 4, where we bring the performance of the Hospitals & Oncology business segment, which we call BU1. This quarter, we had a 13% growth in growth revenue compared to the same period last year and 5% compared to the previous quarter, resulting in gross revenue of BRL 2 billion. The increase in revenue compared to last year is due to the 3% growth in the volume of patients per day and the 10% higher average ticket.

Four factors collaborated to this growth. First, a 1.2 percentage points higher occupancy rate, which reached 78.5%; second, the increase in the complexity of treatments and management; third, annual contract readjustments; and fourth, the 36% expansion of the oncology segment, which also reflects the maturation of the oncology units opened last year in the Brasília Asa Sul hospital, Águas Claras, Christóvão da Gama and Leforte Morumbi hospitals.

In addition to the growing use of technology to the identification of oncological diseases in preliminary stages within our units, which opens up the possibility of anticipating the start of treatment and thus can generate greater quality and longer life for patients and lower costs for paying sources.

Adjusted gross profit grew 5% lower than the evolution of revenue and consequently, there was a reduction of 2.2 percentage points in the margin. This is due to four elements. First, the stronger comparison basis for the 3Q '22. The margin of BU1 in the first half of '21 was 26.3% and the third quarter of '22, 29.1%. And this year, the margin in the first quarter was 25.8%, second quarter, 26.4% and now 26.8%, showing positive evolution.

Second factor, we have new units in Barra and Alphaville, still under maturation and in which, therefore, we have a large part of the cost without the counterpart in revenues. Third, we had higher medical costs, a fundamental area of the company in which we have invested. And fourth, higher cost of materials and medicines also influenced by the greater participation of the oncology segment. In the sequential comparison of the quarters, these elements had no relevant effect and the margin showed an expansion of 0.4 percentage points.

Now switching on to the Diagnostics & Care Coordination business on Slide 5. We see that the revenue of the quarter amounted approximately BRL 2 billion, a growth of 7% compared to the second quarter of last year. Excluding COVID-19 tests and international operations, whose revenue was strongly impacted by the devaluation of the Argentina peso currency, growth was 12% compared to last year.

The increase in the segment in the annual comparison is a result of the 8% higher volume of exams brought about by new commercial agreements and greater use without there have been an expansion in the number of service units, whereas the decline in the average ticket is the result of the greater participation of the B2B segment, which has a smaller average ticket, a lower volume of COVID-19 tests and the devaluation of Argentina peso currency. Once again, disregarding the effect of COVID-19 and international operations in both the periods, the average ticket grew by 4%.

Moving now on to the adjusted gross profit. We had an expansion in the annual comparison of 4% linked to the higher volume of exams, partially offset by the mix effect of the period. Comparing to the previous quarter prior year, the margin expansion reflects the nonrecurring effect of Q2 '23 and operational excellence initiatives in service units, such as regular use of digital check-in, evolution of scheduling systems and investments in accelerators in imaging equipment that among other benefits, enhance our customers' experience and improve the use of space in our units.

Moving now to Slide 6. Here, we will present evolution of our expenses and EBITDA in this quarter. We had a 5% reduction in adjusted expenses compared to the third quarter of 2022, despite the growth in the volume of operations and the year-to-date inflation in the last 12 months, measured by IPCA of 5%. This reduction reflects, as I mentioned at the beginning, the company's increase in focus on reviewing its management processes and organizational structure, prioritizing activities and renegotiating service provision contracts. In comparison, adjusted general and administrative expenses increased by BRL 18 million, 4%, maintaining the proportion in relation to the net revenue of 13.1%.

Moving to the right side of the slide, we present the evolution of adjusted EBITDA, which grew 13% compared to the same period of the previous year, reflecting greater volume of services provided and the improvement in the quality of operations at both BUs, in addition to the reduction of expenses. In the sequential comparison, adjusted EBITDA showed growth of 17%, providing a margin expansion of 2 percentage points.

Now on Slide 7. The company's earning growth has been occurring despite the reduction in investments, seeking to generate cash and reduce debt. This has been possible due to the quality of investments in the recent past and the company's focus on profitability. This has been happening since the beginning of the year. In the first quarter of the year, investments were 17% lower than the same period last year and in the second quarter, 35% lower. In the third quarter, we amplified this momentum and invested 4% to 6% less than the third quarter of last year, amounting a 36% reduction in total investments over the last 9 months.

This process should continue in the coming quarters and should be enhanced by the implementation for 2024 of management systems and goals linked to return on capital metrics. The company ended the third quarter with a cash position of BRL 2.4 billion, a reduction of BRL 452 million compared to the end of the second quarter despite the growth in results and the reduction in investments.

The increase of BRL 443 million in accounts receivable contributed to this negative evolution in the company's cash flow, mainly due to the longer average collection period a matter on which the company's management is engaged, including Pedro and Lício, to develop solutions together with paying sources.

In summary, I consider that the company had a good quarter of results with growth in volumes and progress in the quality of operations which, together with lower investments, puts the company in the direction of cash generation. This is everyone's #1 objective at this moment with accounts receivable as an important part of this work.

In connection with this, I now turn it over to Lício so that he can comment a little bit more on our work priorities.

[Lício Cintra, executive]

Thank you, André, for your presentation. And I would like to close this quarter's results presentation by exploring our current priorities of Dasa executives at this time, which we -- I will present on Slide 8. Firstly, as André said, focusing on cash generation is a priority to ensure that we have an appropriate structure to support the organic growth of our operations. In fact, we have countless examples of actions already implemented in the company's routine and reflect the total commitment of senior leadership.

Secondly, as shown in the quarter's results, we have a new dynamic implemented for capital allocation that ensures focus on the profitability of existing assets and adequate investments for the company's current needs.

Thirdly, the company brings a renewed approach to operational execution and expense reduction to ensure excellence in delivering our results, supported by an adequate and optimized structure. Here are some examples of ongoing actions to deliver these results, such as a review of the supply process, using volume to become more competitive, to speed up on materials and medications, integrating all hospitals of the network, to focus on exams, to allow existing assets.

Moving on to the fourth item on our list. We understand that this is the ideal time to restructure the relationship with paying sources, as I said in my introduction, creating an environment of greater cooperation, aiming at claims management and consequently building the basis for strength in entire country's health chain.

And finally, but not least important, we reinforce more than ever, Dasa's focus is on core business. The company's ecosystem strategy continues to exist and move in parallel with the flow. But we understand that at this moment, the priority and focus must be on ensuring operational excellence in our 2 units, Hospitals, including Oncology and Diagnostics.

With this, we come to the end of our presentation, and now we may proceed to the question and answer session. Thank you.

[Operator]

[Operator Instructions] And our first question is from Artur Alves, Morgan Stanley.

[Artur do Amaral Alves, analyst]

First, we still see an increase in the leverage during this quarter. How about the initiatives? And at what extent that guidance of [indiscernible] will rely on that? Second, a little bit of evaluation. I would like to understand what has motivated that in the BU2? Was there any change? Any discontinuation?

[André Covre, executive]

Artur, this is André speaking. Nice to meet you, even though remotely. I'm pretty sure that we're going to have a chance to meet each other face-to-face. In fact, as you said and as I mentioned, there was an increase in the leverage during this quarter. We have exceeded an indicator, which is followed by the experts. We increased 0.13, our indicator of net debt over EBITDA.

And as I said, that is intertwined to the accounts receivable increase. As a matter of fact, if we see that in the long run, accounts receivable has increased BRL 1 billion this year. So this is a problem which draws the company's attention as a whole. All the rest is going towards a positive trajectory. Results are growing. CapEx is being reduced. As I said, that's possible as the company has done excellent investments in the recent past.

So our project for cash flow generation is a way to extrapolate what Lício said is to keep on working to increase our volume and to increase our average ticket throughout more complexity, services throughout Diagnostic or in the hospitals with our patients in more complexity, operational excellence in our expenses, where we are going to have lower expenses and more revenue, if possible, to reach an absolute reduction of expenses and CapEx reduction. Elements like sales leaseback as well. This is a topic still to be discussed and that we will rely essentially on some conditions.

And since I joined the company, I am reassessing. And I don't believe we are in the right pathway to engage into a relationship of 20 or 25 years as it is the case. Having said that and considering all the information I have available so far, that vision of not leveraging the company by the end of 2024, which I believe was the publication timing, is still the same. The guidance relies on those figures until the end of 2024.

About BU1 numbers that you mentioned -- no, BU2, sorry. I -- to be very honest, that's not very clear to me. So I would suggest that if we could talk individually later, I'm asking Glauco to write that down so we can better understand your question and then we can get back to you, if you don't mind. Is that fine?

[Artur do Amaral Alves, analyst]

Yes, that's fine.

[Operator]

Our next question is from [ Rafael Barros, XP ].

[Unknown Analyst]

I have 2 questions, if you allow me. The first one has to do with the relationship with the payment sources. We have seen some payers working on a more integrated way, some transactions. And the main one it's Rede D'or with SulAmérica. I would like to hear from you if that will change the competitive market or not as long as we see this kind of development taking place into the market. Do you see that as an opportunity to become an independent player? That's my first question.

Second, about working capital. Do you see -- in addition to the work that you have been doing with the paying sources, do you see any window for opportunity for the storage for the stock number, stock volume.

[Lício Cintra, executive]

[ Rafael ], this is Lício speaking. I will answer your first question, then I will hand over to André. First, recently transactions mentioned by you. Well, that puts us even closer to the paying sources. If we understand that there is a large authorization and capitalization with one single payment source, Dasa as a whole, I think -- I see a positive result, if I weigh that out.

And I'm pretty sure that if we continue management our business based on indicators with a medicine of quality, with a patient-centered approach, with a more accessible and affordable cost, I believe we are going to continue to be a great option as an impartial and independent health provider. Now I hand over to André to answer your second question about working capital.

[André Covre, executive]

[ Rafael ], straightforward answer, yes. I think it would be useful to elaborate a little bit more about, yes. I am a newcomer in the company. I have the following perspective about the past years. Dasa is a result of several companies, which in a short period of time, most of them during COVID, and what the company did correctly in my opinion was to prioritize integration in everything that deals with the customers and patients. That was really well done. And as a consequence, we see that in the revenue growth, we see wonderful NPSs. We also see that in the users' recurrence. So the forefront was really prioritized and extremely well done.

Now we are missing to do in a more relevant way the backward integration, such as to improve our inventory and also the payment methodologies. In our initial speech, some initiatives are being done regarding inventories, such as standardization, unify the purchase. If we are able to see the whole purchase package in a more centralized way, we'll be able to manage better our inventories, and we will be able to choose -- to set a different sort of relationship with some of our providers.

And here, we'll be able to reduce our inventory times and to set more productive relationships with our providers, including longer deadlines. Well, our average inventory for Q3 has even improved a little bit in relation to the past one. But as if we are -- as we are talking about a significant change, the main benefits they will become more material by the beginning of next year.

[Operator]

Our next question is from Samuel Alves, BTG Pactual.

[Samuel Alves, analyst]

I have 2 questions, Pedro, Lício. The first one is a follow-up from your Slide 8 on short-run priorities. Even taking into account Lício's great experience and expertise, what would be a feasible timeline to set the company to a more humanized trajectory, especially the integration of the company's ecosystems? You answered that before, a strong improvement by the end of next year, centralizing purchase. What do you have in mind in terms of schedule, addressing your Slide 8?

My second question now. A transition that took place in Q3, the receivables, is that concentrated in few payment sources? Or is that more kind of spread from the receivable accounts by the company?

[Lício Cintra, executive]

Samuel, thank you for your question. This is Lício talking. I will answer the first one and then hand over to André to answer your second question. Slide 8, stands up to the first item, cash flow generation, which leads to a number of other actions. It's quite clear that there are many, many actions and several opportunities, all of them with a different execution time.

Some with a short run, others long run. What makes me feel so optimistic about that, we don't have just only one silver bullet, but we have a set of actions, which are already mapped. The only complexity relies on execution. Most of them, they depend on execution. Therefore, the level of control that we have among them is quite high.

Having said so, we don't have one set date to start our [ cruise ] line, but future cycles with small gains that will take us to a level for execution and attack. Our main commitment, our internal commitment is to speed actions up. Many, many of them were already mapped, and now we want to give total focus to that, and we have been doing that where we don't prioritize those less impacted actions. We are removing any sort of distractions from the table.

Now it's with you André, as to increase of receivables.

[André Covre, executive]

For the first time, the end of the quarter was during a weekend, Saturday and Sunday. With that, the receivables, they are postponed to Monday, which is already the following quarter. This is one of the reasons why we have such an increase in the receivables in addition to more -- in addition to some other issues. Therefore, the amount concentration is within good payment sources with good additional credit, and we feel comfortable with that.

[Operator]

Our next question is from Leandro Bastos from Citi.

[Leandro Bastos, analyst]

I have 2 questions as well. The first one is still along receivables. So for Q4, can we already see any sort of evolutions?

[Unknown Executive]

Yes, we can barely hear you, Leandro. Can you speak up loud, please?

[Leandro Bastos, analyst]

Is it any better now?

[Unknown Executive]

Yes, much better.

[Leandro Bastos, analyst]

Two questions. First one, along receivables and the calendar effect by the end of the last quarter. How about Q4? Can we expect any evolution? So this is my first question.

Second, leverage. Talking about leverage, André talked about some conditions which are not the most desirable one. What do you see for some other inorganic initiatives to improve the capital structure? How do you see that agenda, internal agenda.

[André Covre, executive]

This is André speaking. About receivables, this is a topic which draws the whole Executive Committee attention. Myself, Pedro, Lício, Emerson, Rafael from Commercial, Lucchesi. Everyone is involved. We are deeply engaged to deal with this topic in a very efficient and productive way. The timing will depend on the work that is being done. Is it still difficult to precise or to estimate a certain time? It may be 2, 3 months. We are working on that.

As to leverage where receivables is an important part, Lício has mentioned on Slide 8 that we have a priority on our central business, Hospitals, Oncology and Diagnostics. Our work -- our focus is on those 2 areas and eventual -- and other possible things that might be around that, but those are not our priorities. Therefore, we have to reassess our portfolio recurrently. The company is 24/7 analyzing the business composition.

[Operator]

Our next question is from Emerson Vieira, Goldman Sachs.

[Emerson Vieira, analyst]

I have 2 questions. The first one about average ticket dynamic for BU1 Hospital, 7% quarter after quarter. Could you explain what is the readjustment level that you are passing to the operators? And what is the complexity evolution behind that?

And second, could you explain a little bit more what you have been doing in terms of payment sources? What are those initiatives in this forefront? Is this relationship change going through any redesign of products or repositioning of assets?

[Unknown Executive]

Emerson, thank you for your questions. As to tickets increase, we have different realities at different hospital units. There are some hospitals that, throughout the years, they got investments, they received investments, and we will bump into price tables, adjustments. There are other regions that they are working with specified tables in their hospital units.

What we have been doing lately is to focus on the hospital mix, to prioritize the seats that the hospital is -- has that gift for it. And my margin is going to be higher even if that price is tight because I concentrate volume, I optimize OR and beds. So the growth, in fact, is a mix of different forefronts or front lines.

And we have 2 aspects. One, which is more conceptual in gains. They will be perceived in the middle to long run, where we think over and we discuss about the use of materials and how the payment source will work with that with physicians. Revenue is more harmonic between payment sources and insurance companies and operators. And I'm pretty sure that this is a pillar that in the middle to the long run has the ability to change that relationship with the payers. And in the short run, it's a matter of adjusting the process, giving more focus into the ability and agility of revenue/giving a feedback to the payer sources -- payers source.

[Operator]

Our next question is from Gustavo Tiseo, Bank of America.

[Gustavo Tiseo, analyst]

I have 2 questions. Could you elaborate a little bit more about the receivables. I know that much has been already talked about that. But has it -- have you reached the peak of suffering and that might improve from now on? Or that will become even worsening than it is?

And second, some of the benefits they have already been mapped more recently. You have a consultancy to reach more efficiency. Could you update us what has happened? Was there an improvement? Is there a room for improvement? Or have you reached a limit yet or not?

[Pedro de Godoy Bueno, executive]

Gustavo, this is Pedro speaking. About G&A, as we said, we did some work in the beginning of the year to map our possibility and activities, and G&A is being diluted constantly in relation to the revenue. And more recently, Lício, together with the team, without a consultancy support, we are doing that internally without our 2024 budget, we are -- where we are considering a second wave of opportunities to build out in a short run. So we hope to throw good news very soon in the near future.

About your question addressing working capital, it might be useful to set some numbers here in the evolution. Comparing receivables, less client's anticipation with the quarter revenue. That's not a very precise math because that's the last month of the quarter. And just to -- for you to have an idea. In this calculation, we have 98 days of receivables accounts.

In the first quarter, that was close to 90%. And last year, that was close to 80. So I cannot precise you if we have reached [ the limit ] or not, but our growth was very significant, and we expect to work together with the payers for something which is more normal, which replicates what we had in the past. Yes, this is what we are after, too.

[Operator]

Well, the Q&A session is now closed. Now I would like to give the floor to Mr. Pedro Bueno for his final considerations. You may proceed.

[Pedro de Godoy Bueno, executive]

Well, thank you so much for your participation at the earnings conference call for Dasa. And André, Lício, thank you. And we are very excited for what to come next year. Have a great weekend.

[Operator]

The earnings conference call for Dasa's third quarter 2023 is now closed. The Investors Relationship area is available to answer any other questions and queries. Thank you very much to the participants, and have a good afternoon.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]