Fleury SA

BOVESPA:FLRY3

Earnings Call Transcript 2021-Q1

[Operator]

Good morning, and thank you for holding. At this point, we would like to welcome you to the conference call for the Grupo Fleury for the first quarter '21. We have with us today, Mrs. Jeane Tsutsui, the CEO; and Fernando Leao, the CFO, the IRO. We would like to inform you that this event is being recorded. [Operator Instructions] This event is also being broadcast simultaneously over Internet via webcast and can be accessed at the address www.fleury.com.br/ri, where the respective presentation can be found.

You can watch the slides at your own convenience. The replay of this event will be available soon after closing. We would like to remind the webcast participants that they can post through the website questions for the Fleury Group. Before proceeding, we would like to clarify that forward-looking statements made during this conference call referring to the Grupo Fleury business outlook, projections, operational goals and financial goals are based on the beliefs and premises of the company management as well as on information currently available to the Fleury Group.

These future-looking statements are no guarantees of performances that involve risks, uncertainties and premises as they refer to future events, and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, sectoral conditions and other operating factors could affect the future results of the Fleury Group and lead to results that differ materially from those expressed in these forward-looking statements. We would now like to turn the floor over to Mrs. Jeane Tsutsui, who will begin the presentation. You may proceed, ma'am.

[Jeane Tsutsui, executive]

A good day to all of you, and welcome to the earnings release for Fleury for the first quarter 2021. Here, at the Fleury Group, we are obsessed with the acceleration of growth. We believe that the most important metrics for a company based on a health care platform are the increase in revenue, the number of lives served and the ability to integrate new products and services. We are satisfied with the growth presented in the first quarter of this year, 25.1% compared to the same period in 2020, reaching a revenue of BRL 964.3 million, but we want more.

It is worth noting that this growth in revenue, in addition to representing strength in our core business operation, was accompanied by a significant increase in the live service by the group through Saúde iD, our health care platform launched in September of last year. Of the approximately 1.1 million lives serviced by the group in the first quarter '21, 9.8% came from Saúde iD. The percentage is double the recorded in the fourth quarter '20. In just over 6 months of operations, the platform has already managed to generate a substantial volume of lives serviced.

Now what lies ahead? The answer is more growth. It is important to say that, in addition to the strong growth recorded in the quarter, we maintained robust results. EBITDA increased 45% vis-à-vis the same period 2020, reaching BRL 285.5 million and net income reached BRL 118.6 million, a 102% higher than the result of the first quarter 2020. The potential of the marketplace becomes ever more evident when we analyze that this crop of lives was generated only by the B2B business.

The B2C version of Saúde iD launched in February is still in a pilot phase. When it is open to individuals from throughout Brazil, there will be a health service subscription with monthly, half yearly or annual plans, entitling individuals to telemedicine consultations, routine tests and other offers. In our view, the B2C version represents an option for access to quality health care for all Brazilians. Additionally, it is another step of the group in its mission to democratize access to health in Brazil, generate a positive social impact and contribute to the sustainability of the entire health sector.

No front of the group's operations has expanded more than the telemedicine service. Since it was created until present, there have been more than 300,000 teleconference patients. However, more impressive than the absolute number is the growth curve. If in June 2020, the company carried out 3,000 consultations per month, this is done in a single day now. Because of this, in the first quarter '21, there were 177,707 teleconsultations, a volume greater than the entire volume of 2020 combined and an increase of 104% vis-à-vis the fourth quarter '20. Out of the total number of patients seen in the first quarter '21, almost 82% of them were using the service for the first time.

In order to offer a high-quality telemedicine services with a resolution rate of 89%, Saúde iD has more than 670 hired physicians. The advancement of telemedicine proved 2 of our most important premises for the future growth of the company. The first one is that health consumption will be increasingly hybrid with patients accessing products and services in-person as well as digitally. An interesting fact in this regard is that almost 40% of the teleconsultations performed by the group originated in places where the company does not have a physical presence, including abroad in countries such as the United States, England and Portugal.

The second premise is that the technology and the development of the platform will increasingly offer an integrated solution and recurrent services given to the same client. If in the past, a patient would come to a brick-and-mortar unit of Fleury to carry out tests, they would go once or twice a year. Now the contact is much more frequent and takes place in multiple channels. And the service in each channel has the potential to lead the patient to new interactions with the group.

An example of how this happens in practice. In the first quarter of this year, Saúde iD boosted a revenue of BRL 6.1 million in services for all brands and patient service centers, double the amount recorded in the fourth quarter '20. Although the value is still modest, the growth curve shows the size of the opportunity that lies ahead. Another front that has been expanding strongly, in addition to telemedicine, is the client home service corresponding to 7.7% of the gross revenue of the quarter, an increase of 86% vis-à-vis the same period 2020. Today, the revenue generated by home service is greater than any patient service center under any banner of the group. By being able to identify the new needs of the consumer who seeks convenience of home service, the company was able to capture value and create a strong avenue of growth.

Maintaining the pace of acquisitions, in early April, we announced the acquisition of 66.7% of the São Paulo chain Vita, a reference in consultations in orthopedic surgeries as well as rehabilitation session. A relevant part of the investment will be destined to organic and inorganic expansion of orthopedic sessions in the country. It will also position the company with one more robust offer in this specialty. We already have the Advanced Center for Osteomuscular Imaging. The Vita acquisition is added to almost a dozen of other movements performed in the last 12 months, which contributed to make the company ever more a protagonist in the health care sector.

As a reminder, in this period, we launched the largest health care platform in the country, Saúde iD. We created one of the largest corporate venture capital funds in Brazil, Kortex. We started a continuing education service for physicians, health professional students and residents, Pupilla. We acquired the Moacir Cunha ophthalmological clinic and the infusion center in Pacaembu. We launched a genetic testing platform, Sommos DNA. We developed a consultancy service, the integrated care for companies. We now have 621 contracts. We inaugurated the Fleury Reproductive Medicine sector, all of this in the midst of the COVID-19 pandemic. All of these initiatives are connected to our mission of providing increasingly complete and integrated solutions for the management of people's health and well being.

We have said before, it is precisely because we are a medical origin company that we have a legitimacy to integrate what today is availed only in a fragmented way. At Grupo Fleury, we believe that the role of companies is to contribute to a better society. That is why, for decades, we have adopted the best social, environmental and governance practices. We are accelerating on this field to leverage the development of the work that is already performed by the company. We have announced the establishment of the group first ESG Committee formed by 4 members. The new committee will reinforce Grupo Fleury's permanent potential to ESG principles and the business strategy and will increase discussions on the topic in the company, always thinking of its impact in the long term.

In this quarter, we also created, in partnership with the Grupo Sabin, the Women's Heart Movement, a national initiative to raise awareness among the female population about the importance of preventing and adopting healthy habits to reduce the chance of developing heart diseases. Today, cardiovascular diseases are the main cause of mortality of women in Brazil.

With regard to governance, I would like to register here my thanks to Carlos Marinelli, who since 2014 has held the position of CEO in this group. He has left a fundamental legacy, laying the ground for several cycles of growth. Beginning now, the company will have, as its main factor, the significant expansion of the speed of its growth. That will take place in expansion in the number of lives serviced, acquisitions and a digital transformation with an offer of ever more integrated services as part of our health care platform.

Additionally, we will continue to move forward to become a benchmark company in all the ESG dimensions in the direction of a country and a sector that meets the necessary premises of sustainability. In this context, we are certain that what will be important is our market differential, which is trust. And it is a powerful and mandatory success asset in the health care sector, present in the relationship we maintain with all stakeholders and which makes us the preferred service provider through the leading brands that we have in most of the markets where we operate.

Finally, I would like to thank the dedication of our 12,000 employees and 3,000 physicians in times of an exacerbation of the COVID-19 pandemic, the commitment and the diligence of this incredible team are ever more necessary to ensure that the group will carry out its mission of offering quality health to the entire country. At the same time that they allow us to be protagonist in the transformations that we lead in the sector.

I would now like to give the floor to Fernando Leao, our CFO and IRO. Fernando, you can continue, please.

[Fernando Leão, executive]

Thank you, Jeane. A good day. I will now continue with the presentation, offering the financial results for the first quarter. On Slide 6, we see the performance of consolidated growth revenues for the group. Growth revenue attained its second highest historical level in the quarter, totaling BRL 964.3 million, a growth of 25.1%. The Patient Service Centers presented a growth of 22.9% and a B2B 36.8%.

In the next slide, #7, we show you in the top graph the evolution month-after-month of revenues in the first quarter '21 vis-à-vis the first quarter '20. We continue to observe the strong growth of revenue in the last months. I would like to highlight the important expansion in the months of January and February of 2021 from 11% to 15.4%, respectively, considering that the base of comparison for the same period the previous year, that is to say, January and February of 2020, has not been impacted [Technical Difficulty] quoted at that time a 2-digit growth.

In the month of March 2020, as we know we were strongly impacted by the restrictive measures adopted at the beginning of the pandemic and now we present an expressive growth of approximately 56% in the month of March of 2021. Now the same growth movement can be observed in the B2B that presented an expressive expansion of 36.8% in the quarter. Thanks to the higher volume of elective procedures and the contribution of COVID-19 tests in hospitals and reference laboratories.

In the graph below, we show you the share of the COVID-19 exams and the results. There were approximately 600,000 exams in the quarter, but essentially compared to the total revenues, the RT-PCR and serology tests recorded a small reduction when compared to the previous quarter, representing 9.7% of total gross revenues compared to 11.1% in the fourth quarter '20. They also represented 7% of the revenues of the PSCs and 22.4% of the B2B revenues. The share of COVID-19 exams compared to the growth revenues of the company had the lowest representatives this quarter since the beginning of the pandemic.

We now go on to Slide #8, and we see in greater detail the performance of our brand portfolio. Growth revenue of our Patient Service Centers had a growth of 22.9% in the quarter, reaching BRL 795.5 million. All of the company brands had a relevant growth in the period, as you can observe in the graph.

On the next slide, #9, we highlight the evolution of costs and operating expenses. In the graph to the left, you can observe that we had an increase of 15.2% in the cost for the quarter. The variation is mainly due to cost with direct material and the intermediation and exams due to the cost of acquisition of reagents to carry out the COVID-19 exams and PPE equipment for service in the units.

The cost of personnel and medical services had an increase of 8.9%, representing 31.7% of net revenue, a reduction of 474 base points vis-à-vis the previous year. Once again, recording a relevant gain in productivity, accompanying the higher level of demand that we had in our service units. To the right of the slide, we present the operating expenses. This quarter, we had an increase of 12.6%. The increase is mainly due to expenses relating to provisions for participation in profit and the long-term incentive plan for the company.

We go on to Slide #10 where we observe that EBITDA reached BRL 285.5 million in the quarter, a growth of 45.7% with a 31.9% margin, an expansion of 450 basis points vis-à-vis the first quarter '20. In Slide 11, net income for the period reached BRL 118.6 million, a growth of 102% when compared to the same period 2020. Net margin was 13.3% compared to 8.2% in the first quarter '20.

In the next slide, #12, to the left of graph, you see the operating cash flow that recorded BRL 199.2 million for the quarter, an increase of 52.2%, impacted mainly by the strong EBITDA growth during the period. In working capital, the variation of accounts receivable had a more relevant impact due to the growth of revenues in the quarter and an increase in receivables when compared to the fourth quarter '20 and also in the balance of the suppliers' account, due to the higher level of investments carried out during the quarter. To the right, the CapEx for the first quarter totaled BRL 51.3 million, with a growth of 26%.

We go on to Slide 13, where the ROIC without goodwill reached 47.2% in the first quarter '21. To the right, we show you the follow-up of the NPS score that reached 73.1% with an improvement when compared to the fourth quarter '20.

Finally, on Slide 14, we include the events that have already been confirmed in the market for the coming months. We would now like to go on to the question-and-answer session. Thank you very much for your attention.

[Operator]

[Operator Instructions]

Mr. Joseph Giordano would like to pose a question.

[Joseph Giordano, analyst]

My first question refers to the footprint that your service centers have, which is the company strategy and which is your medium-term guidance that seems to be coming to an end. Are you thinking in more openings? Or are you thinking of rationalizing the footprint? Another thing we have been questioned about is the growth. We understand that in this first quarter, there was quite a bit of noise, especially at the end of the quarter. I would like to know if you can share with us which would be a more normalized underlying growth? And finally, if we could further explore all of the new initiatives. You spoke a great deal about Saúde iD, which will be the size of these businesses in the coming 3 to 5 years, for example, in terms of representivity revenues and EBITDA?

[Jeane Tsutsui, executive]

This is Jeane. We hope that you are all well. Now when it comes to those questions, Giordano, first, about the footprint of our Patient Service Centers, we would like to remind you that in the last years, we opened up 54 units through an organic growth and added 64 units through acquisitions. Yes, we do focus very carefully on all possible opportunities. We just inaugurated a new Fleury Patient Service Center and Reproductive Medicine. And we, of course, consider new opportunities and new acquisitions in areas where we do not have diagnostic medicine. We're very cautious in this, and we pay a great deal attention to all opportunities.

And we should remind you of the growth we have had in mobile services where we don't need a patient service center. We grew 80% this quarter, and we're seeking more opportunities. Now when we look at our present day centers, perhaps we can add other services, especially in the afternoon period where we seem to have a lower flow of patients. I would like to remind you that since the beginning of the COVID-19 pandemic, we have all of the safety protocols in the service centers, and we have to make adjustments to service our clients, even though we do maintain distancing. We're very attentive to this type of look. And as I mentioned, we're also looking at whatever will make sense to allow us to grow organically and to carry out acquisitions.

In terms of the growth of COVID, you observed that this quarter, we have a COVID revenue of 19.7%, that is lower than what we had in previous quarters. In the fourth quarter, it was 11.1% of revenues from COVID. This is a reality. There is uncertainty in terms of the behavior of the pandemic this year. Unfortunately, we have reached 400,000 deaths. The vaccination program moves forward. Everybody is thinking of having vaccination for priority groups until September. But we will continue to have revenue from COVID this year, although it will decrease through time. We had a robust growth, Giordano, even without COVID, which shows the strength of our brands, the strength of diagnostic medicine. And I would like to remind you that we have a large group of people that have stopped carrying out exams to care for their health.

In the cardiovascular part, oncology, we have data that the population had exacerbation in the follow-up of chronic diseases. And this leads us to think that we will have a growth in the diagnostic business. Now to refer to the new revenues as part of other strategies, I would like to underscore the figures that we just presented giving you more visibility of the exponential growth that we have had in number of lives.

The telemedicine consultations only in the first quarter were 177,000, more than the entire year of 2020. This is a trend and Saúde iD is growing significantly. Another relevant data when we speak about the platform concept is the number of lives connected to the platform. This figure of 9.8% of lives serviced in the first quarter come from Saúde iD. This is double the previous quarter and shows you how much we can grow. When it comes to new businesses, our vision is that we will have hybrid services. And although we grow the digital solutions, we also see opportunities of opening up new avenues that we tend to call other services we refer to ophthalmology, orthopedic, the infusion of medication, and our vision is to have a large avenue for growth.

I think that we still have space to grow through M&As and diagnostic medicine, to also grow with the new services that are but beginning now, but we have the great opportunity to continue to grow with these services because they're in accordance to the needs of individuals based on the platform concept, enabling us to have an integrated health care during the entire journey. A healthy individual can have the help of the digital part, helping to improve his health.

Now when we have situations of disease, you also require physical care. And this is how we will complement our service portfolio with different specialties to be able to accompany the individual in the full health care journey. And without a doubt, this digital transformation will focus on the lives that are connected to the platform and that through time will enhance our interaction with them. If somebody comes from diagnostic medicine, we can offer telemedicine consultations or offer mobile services so they can come to our patient unit. Should they have any ophthalmological problem, they can go to our ophthalmology center, which means that throughout the patients or clients life, we will be able to offer all of the necessary services. We do have an outlook for robust growth in these new strategies as well, besides the digital strengthening.

Thank you, Giordano, I don't know if I responded to all of your questions.

[Joseph Giordano, analyst]

Please allow me a follow-up to quantify, especially the part of medication infusion, which seems to be more scalable. Do you have an estimate of the market size for that? And secondly, you spoke about accelerating the mergers and acquisitions. There has been a very rapid consolidation in the health care chain. And what are you thinking about in terms of larger movements in M&A, in the outpatient and diagnostic part?

[Jeane Tsutsui, executive]

Thank you. In terms of infusion, we began this business using the physical space in our patient service units. We included infusion in the units where we already have an appropriate infrastructure, and we saw that this could be scaled up. With the acquisition of -- in the periods of closing of the business, we're still working, but we have 100 million of revenues per year to the group with the use of immunobiological medication, and this group has 6 patient service units.

With this, we also have a higher power of negotiation with our suppliers because we become the more relevant player in São Paulo when it comes to the infusion of immunobiological medication, and we can spread out to the rest of Brazil. When it comes to growth, of course, we look upon all opportunities of growth. We're beginning this cycle, not only with an eye on diagnostic medicine for new links and all of the growth that we could have with startups. Do remember that we inaugurated Kortex Center, which is a CVC for healthtech. So we're looking at all opportunities. Now when you speak about larger M&A, they are also on the table, but of course, they will depend on other motivations, but all of this is within our radar.

[Operator]

Mr. Gustavo Miele from Itaú BBA would like to pose a question.

[Gustavo Miele, analyst]

Thank you for the presentation. I have 2 very quick points at our end. I would like to know about the price with the operators. This will probably be a year that will be below average. And I would like to know if you're thinking about a relevant change in dynamic vis-à-vis what we have observed in previous years?

My second point is very much aligned with the questions posed by Joseph. It refers to the revenues and new businesses. Will there be a backlog because of the elective procedures? And what this represents in the coming quarters? Will this represent a bottleneck because of this repressed demand that there seems to be? If you could, therefore, refer to this backlog of exams that will have to be carried out in the coming quarters? These are my 2 points.

[Operator]

Ladies and gentlemen, please remain connected. The Fleury conference call will be back in a few instances.

Once again, the call from Grupo Fleury is back. You may proceed.

[Jeane Tsutsui, executive]

We do apologize, Gustavo.

[Gustavo Miele, analyst]

Can you hear me?

[Jeane Tsutsui, executive]

Yes, we can hear you.

[Gustavo Miele, analyst]

Well, and I would like to know if you were able to hear my questions.

[Jeane Tsutsui, executive]

Yes, we did hear your questions. I will once again begin the response because we had a drop in line. In terms of the adjustment for operators, we have worked very closely with them, and I think everybody follows up on the reduction of claims of operators in the past. And of course, there's a balance between the treatment of COVID and a reduction of other chronic health issues, but we don't see a great deal of difficulty in terms of a readjustment. What we would like to underscore is that we have always been very aligned in terms of how to better integrate the system, how to reduce the potential for waste. And this is something that will aid us when it comes to working with a more sustainable system.

I will give you an example, Gustavo, when we say that we have carried out more consultations this quarter vis-à-vis the last year, we also have a very high-resolution rate. In 89% of the cases, we were able to resolve the patient's problem through telemedicine. And ensuing this, we propose physical care when it's necessary. And of course, it is difficult because hospitals are now treating patients with COVID. So we have a greater efficiency in the health care system.

Very generally, we're adopting these integrated solutions to gain efficiency, to improve quality, and of course, to remain sustainable. This is our vision. Now when it comes to a demand for exams that hasn't been fulfilled during the COVID pandemic, yes, we believe that we do have a situation in which many patients, especially patients with chronic diseases, have stopped having a very close follow-up. Many have stopped carrying out diagnostic exams, unfortunately, because we do have a serious health condition in the country that requires attention.

Some diseases, of course, do require follow-up. If they're chronic or an early diagnosis, this will avoid a higher cost of the disease. And we have the society of cardiology, the society of oncology showing that several patients have stopped carrying out their follow up. And of course, we will have to begin to focus on this follow-up, and we do have some proposals. As Grupo Fleury, we are ready to offer this service. We have teams that have been trained. They attain high satisfaction levels among the clients. This is something we have done very well in the pandemic. Our personnel is ready. So we are here to offer support to all of the population that requires this type of service.

[Operator]

Mauricio from Crédit Suisse would like to pose a question.

[Mauricio Cepeda, analyst]

We do have some questions thinking strategically about the basic business. If you still have room to continue to consolidate the sector and M&A strategy as there is quite a bit of fragmentation in the country, those who cannot follow what you're doing, what do you think about this?

And the main brand, Grupo Fleury, is a premium brand. And it's -- you do have companies that co-participate giving coverage to Fleury if you could use the platform and enhance the flow of other brands besides that of the Grupo Fleury? And I would like to speak about diversification. If, in fact, telemedicine will be the driver of this diversification, if this is the main vector for the platform, how are you going to get organized in terms of business units going forward because you have very different businesses in hand?

[Fernando Leão, executive]

This is Fernando Leao. Thank you for the question. I will refer to the M&A question, and then Jeane will continue to respond to your questions. When it comes to the M&A, we're continuing on with that. We do have significant appetite for that. And we're looking not necessarily only in the diagnostic market, of course, we're also looking at additional markets where we have had this growth in other specialties. Yes, there is quite a bit of space going back to your question. There are very relevant markets in the country where we still do not have a foothold, and of course, this is one of our priorities to look upon M&As. And there are other timely opportunities in other markets as well, with the possibility of, once again, beginning our presence there.

The pipeline is quite robust. The team has considerably increased its capacity to analyze and tap the M&A processes. From the financial viewpoint, the company is extremely well prepared for this journey of growth through mergers and acquisitions. We have very robust results, a very healthy cash generation and a leverage and indebtedness that are both very comfortable, which gives us room to look at several different alternatives, not only in the diagnostic market but in the other fronts of new services that we are launching. Jeane, would you like to complement this?

[Jeane Tsutsui, executive]

Yes, Fernando. Thank you for the questions. And you bring out very important themes. The first topic that I would like to highlight is that last year during the very difficult year that we went through, we saw that health became more valued by everybody. We have data that says that even though we have an increase of unemployment in the country. Unfortunately, we have also had an increase in the number of beneficiaries in health plans. And we see this deployment that shows that people are valuing their health ever more. And we have had an increase in number of beneficiaries of access to our brands. Doubtlessly, sustainability is a very important factor. And if we offer solutions that will truly fulfill the needs of the clients, the patients, the physicians, and if we have a greater efficiency in the sector, we will continue to grow with our present day business, the businesses that presently are positioned in the premium and middle and upper levels.

What you asked about the platform is very interesting. What is important for us is to have an individual connected to a system that could fulfill all of their needs constantly. All of the health exam results can be put in the platform, all of the health needs can be put there. And then these individuals will be part of an ecosystem, the platform, and helping us in caring for health in this way. There are people who truly trust our brand to do this.

And this, of course, is highly relevant. We have that intimacy to care for the health of all. And without a doubt, this is the vision that we have that we're going to grow through new businesses. We are discussing that view of having business units because, yes, they are somewhat different businesses. Now we began with a laboratory, then we went on to diagnostic centers. We now have treatment, integrated office and the platform, without putting aside the fact that we have other businesses such as the channel business that had a growth this quarter of 31%. And if we look at the future of precision medicine, it is highly promising.

So very generally, we're quite optimistic with this strategy, and more than a strategy, the execution of the strategy. We have a team ready to execute this strategy.

[Operator]

Vinicius Ribeiro from UBS would like to pose a question.

[Vinicius Ribeiro, analyst]

And my question is very objective. It's a question that I'm going to propose in parts which has been the behavior of the margins if we compare this with the year 2019 and 2020. My second question, looking forward, and you have spoken about growth and several strategies, which is the impact of SG&A that we signed 2020, 2021, if the savings are going to be reinvested, if it makes sense to imagine that the same scenario will be upheld going forward?

[Fernando Leão, executive]

Vinicius, thank you for the question. Let me begin answering it, and then Jeane will add to the response. As you mentioned, we have several moving parts when we look at the company results. And this is the dynamic, especially revenues because of the effects of the pandemic will have a considerable impact and all of the references that we had way back until the year 2019. And there is a growth curve with periods of instability, and of course, impacting the revenues as well.

What I would like to say in terms of margin is that the company is working very diligently on cost and expenses. Presently, we understand that it is absolutely necessary to have a core business operation that will deliver relevant results as we continue to grow and gain market. This will enable us to enter a cycle of new investments, whether it is in the digital part, in Saúde iD, with new services, with new platforms, so that we can work based on a financial discipline that we have already embarked on. So we do observe efficiency and productivity gains. And I tend to say that whenever the company gains a few additional points in growth and revenue we have that very good role of bringing those additional gains, transforming this and operational leverage, and this is how we have been working.

Now the second part of your question regarding new fronts for margins that we may have or how the margin that will come from these new initiatives? Each new initiative has a specific level of margin for that business front, for that business unit. And very generally, some will have a higher level of profitability than our business at present, others will have lower margin levels, of course.

But the important message here is that in acquisition, we try to have sustainability. And we have an installed base of units. It is quite large. And what we're attempting to do is to connect all of, this that integrated offer of services that we have through our platform will also leverage the growth of these new specialties, these new services. And doubtlessly, this will also contribute to enabling us new possibilities.

When we enter a new business, we will not only leverage the business but also its profitability. Now the combined margins of the group will depend on the speed of each of these movements vis-à-vis what we have going forward. We carried out a relevant acquisition that has brought more than BRL 100 million of revenues for the unit, which means that this happened at a very fast pace. And it will have a relevant contribution in terms of the margin. This is additionally to what we are offering to the company portfolio. Jeane, if you would like to add to this?

[Jeane Tsutsui, executive]

I think that the message that we have for the future is that we're going to pursue this growth, as we mentioned, and insofar as possible with a great deal of synergy. But yes, we do need to grow and to build this journey of integrated health care. And in some situations, we are able to grow with lower investments. If you have many lives connected to a platform, you have a network effect with even other businesses not only offering our own services but also offering the services of other parties through our platform.

So we can't do this without necessarily having new investments, we become more asset-light. But at this point in time, we're still in a phase where we will have to invest. We have to grow and the efficiency balance, which is what we always look, will come when we are able to attain synergy. The focus now is growth, transformation, digital transformation and to strengthen the platform strategy ever more.

[Operator]

[Operator Instructions]

Gustavo from Bradesco would like to ask a question.

[Gustavo Tiseo, analyst]

We have two. First refers to the 10% of lives connected to Saúde iD. If you could give us more color if these people have greater engagement? I know that it's very early on, but is there a greater recurrence of primary health care? Are there any signs of this? And the second question refers to your expansion plan. If there will be an expansion plan more connected to the outpatient or if you will have a long-term expansion in the next 3 or 5 years to include this in our valuation?

[Jeane Tsutsui, executive]

Thank you, Gustavo. When it comes to Saúde iD, we brought you the data of 10% of life. And through time, we observed not only the growth in the lives serviced across vis-à-vis the last quarter but also greater engagement. Our goal is to have the individual remain with us for permanent health care. And if they have the need for other services that we will be able to offer them? The answer is yes. We not only have had a number -- an increase in the number of live serviced but also greater engagement, greater recurrence.

We have 1.8 services per client at present. And another interesting piece of data, although it is modest is the revenue that comes from diagnostic medicine that allows us to treat the individual at several moments of their health care journey. When it comes to the expansion plan, as I mentioned, we're thinking of expansions via M&A in the core business or through new businesses. And we do have organic business units that we're going to seek out in those regions where there is room for us to grow more specifically. Thank you, Gustavo, for the questions.

[Operator]

Rafael Alves (sic) [ Samuel Alves ] from BTG Pactual would like to pose a question.

[Samuel Alves, analyst]

Two questions at my end, both referring to Saúde iD. First of all, about the economics on the platform. If you could comment on the revenues for the first quarter? And large part of this came from teleconsultations. We carried out some calculations, and we would simply know if these calculations makes sense to see which are the revenues coming from the platform. And what you're going to do so people adopt Saúde iD as your reference platform?

[Jeane Tsutsui, executive]

Thank you, Samuel. Simply to clarify this, we brought the figure of BRL 610 million, but this is the revenue of diagnostic medicine that arise from telemedicine consult patients. And it is not BRL 601 million -- now -- BRL 6.1 million, I'm sorry. Now why did we mention BRL 6.1 million? Because in some cases, the revenue will come only from the telemedicine consultation. At other times, when the individual is already in the platform and requires other services, they will also have that service and the other links. This is what we want to underscore as we grow the number of lives on the platform. This individual will increase the number of interactions with us and will receive other services that are not necessarily through telemedicine.

To give you an idea, presently, along with our new businesses, Saúde iD represents 2% of the total revenues of the Fleury Group. What is more important is our ability to give trust at this, not only through an increase in the number of lives but with revenues that will come from these clients that will remain with us through their life types, fulfilling their health care needs. So if we have more lives through time, we will be able to increase our revenue.

[Samuel Alves, analyst]

That was very clear. Regarding the second question about your conversation with the operators?

[Jeane Tsutsui, executive]

Yes, we have celebrated this conversation well, and I think there was a very good acceptance. When we bring about that vision of efficiency of appropriately using resources on site, I always say that health has several different levels of complexity. Now if you carry out the proper attention at the appropriate level, you improve the cost, you improve the outcome, and of course, this is good for operators, in general. And this is what we are speaking about. We have worked much more closely with operators to offer integrated solutions, and this has been very positive.

[Operator]

At this point, we will end the question-and-answer session. We will return the floor to Mrs. Tsutsui for the closing remarks.

[Jeane Tsutsui, executive]

I would like to thank all of you for your participation in our earnings results call for the first quarter 2021 and your interaction. We're beginning a new cycle that will have as its main vector, an increase in the speed of growth and the leverage will be expanding the number of lives that we service, intensifying acquisitions and speeding up our digital transformation even more with integrated services as part of our health platform strategy.

You can be sure that we will be ever more a relevant company that is present in the day-to-day of well-being and health of people as well as focusing on the sustainability of health care in our country. We have a differential in the market, which is the trust of all of the health care operators we are the preferred group for clients and physicians. Myself, Fernando Leao and our team are at your entire disposal; you can always count upon us. Have a very good day. And thank you very much again for your participation.

[Operator]

The Grupo Fleury conference call ends here. We thank all of you for your participation. Have a good day.

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