Fleury SA
BOVESPA:FLRY3
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Fleury SA
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Good morning to all of you. I would like to welcome you to the results conference call for the Grupo Fleury for the third quarter '22. Today, we have with us Mrs. Jeane Tsutsui, the company CEO; Mr. Jose Filippo, the Chief Financial Officer; and Renato Braun, the IR Officer. I would like to mention that this event is being recorded and that we are also making available simultaneous translation into English.
Initially, we're going to present the company results and ensuing this, we will begin the question-and-answer session. At the end of this session, Mrs. Tsutsui will make her closing remarks. All of the figures that we're mentioning here are compared to the same period of the year 2021, except when specified and they have been rounded to the closest thousand.
Before proceeding, we would like to clarify that this presentation may contain information about future events. Such information is not just based on historical facts but would reflect the wishes and expectations of the company management. The words believes, expects, plans, anticipates, estimates, projects, aims and the like are intended to identify statements, which necessarily involve known as well as unknown risks. Known risks include uncertainties which are not limited to the impact of competitive pricing and services. Uncertainties may include market acceptance of services, service transactions of the company and that of its competitors, regulatory approval, currency fluctuation, changes in the mix of services being offered and other risks described in the company reports.
At this point, I would like to turn the floor over to Mrs. Jeane Tsutsui.
A good morning to all of you. First of all, thank you for your participation here today. Before I highlight the third quarter '22, we have had a record in revenue generation, which shows a consistency in the delivery of results. Our strategy to build an integrated health journey has been executed with discipline.
As you have been accompanying in our disclosures, the flow on slide 4 illustrates how we have built this journey, and diagnostic medicine is part of this journey, helping with prevention and treatment of patients. Presently, we have different brands that reinforce our differentiated positioning in diagnosis in 11 states of the country.
Besides the diagnostic medicine, we have also broadened our offer with special services, as you can see at the bottom of Slide 4. We have prevention services such as checkups, vaccination and genomics. In primary care, we show medical services, in-patient service centers as well as through telemedicine. In secondary attention, we work in ophthalmology, orthopedics and medication. And finally, in tertiary care, we carry out surgeries and therapeutic procedures in the hospitals.
With the growing aging of the Brazilian population and an increase in chronic disease, there will be an ever-growing demand not only for diagnostic medicine but other services. The Fleury Group has built a unique positioning with full outpatient services following the entire journey of the patient and contributing to the sustainability of the system.
It is through this integrated system that we have reinforced the growth of the Fleury Group. As you can see on Slide 5, the first is our core business of diagnostic medicine where we continue to grow both organically and inorganically capturing synergies at large scale. The second avenue for growth are the new links, the focus, to build a relevant performance in the value chain. Thirdly, we have the health care platform, offering digital solutions that will allow for a better engagement of customers.
Of course, our differentiations in innovation and medical excellence as well as our reputation have allowed us to take consistent strides and have set us aside in the health market that is undergoing transformation. Ever more, the use of data will enable us to work with a more customized offer that will face the needs of our customers.
On Slide #6, we show you the highlights of the third quarter '22. Once again, we had a record quarterly revenue of BRL 1.6 billion (sic) [ BRL 1.6 billion ], a growth of 11.4% and vis-à-vis the same period last year. If we don't take into account the revenues with the COVID test that had the lower share, since the beginning of the pandemic, we have grown 16.7% vis-à-vis the third quarter '21. Our organic growth was up 6.3% and showing the strength of diagnostic medicine in all of our brands and the recognition of the products and services offered by the group.
Mobile services had a growth of 36% if compared to the third quarter '21 and represents 9% of our total revenues, confirming the differentiation of the service that meets the change in customer behavior. We reached a record EBITDA with a margin of 29%, a robust result for a business that continues under expansion with more new links than last year. Our commitment with maintaining a cost and discipline was fundamental for these results. We have increased our productivity per employee and have made a better use of each square meter in our units, also increasing the number of exams carried out.
Net revenue totaled BRL 99.6 million (sic) [ BRL 96.7 million ] with a margin of 8.4%, an increase of 0.3% when compared to the same quarter the previous year. As you have been able to see, on October 17, we announced the approval of the group's capital increase through private subscription with an issuance between BRL 34.9 million and BRL 70.6 million at a price of BRL 17.27. This amount is equivalent to a potential increase between BRL 0.6 billion and BRL 1.2 billion. The funds will be used to maintain the inorganic growth strategy to continue the organic expansion plans, reduce consolidated financial leverage and for general corporate use.
But the highlights of the third quarter '22 were not only in the robust results presented, as shown on Slide 7. On September 26, we announced the acquisition of Retina Clinic in the city of São Paulo, a reference in the treatment of retinopathies, reinforcing our positioning in ophthalmology, of which later, we announced the acquisition of Méthodos Laboratory, a diagnostic company operating in the south of Minas Gerais. This operation not only marks our progress in building an integrated ecosystem but is in line with our regional expansion strategy. Through Méthodos, we have entered a geography where we did not operate before. We also completed the acquisition of Saha, a reference in drug infusions in São Paulo.
We also undertook significant organic expansion efforts in diagnostic medicine and new links with the opening of 3 Campana brand laboratory units as well as 3 orthopedic units of our Vita brand and as CIP immunobiological infusion drug unit. We also opened 3 offices of the Moacir Cunha eye clinic inside Fleury units, intensifying our use of square meters to expand the integrated offer of services.
In summary, the company has attained one of the best recognitions of its history. It was chosen the company of value of the year. And we were cited in the 22nd edition of the magazine drafted by Valor Econômico. Besides the financial indicators as part of the evaluation criteria, they also included ESG, which is one of the premises of our sustainable growth. The results and highlights of the quarter show that we're harvesting the fruit of our strategy that we began 18 months ago. We are advancing at consistent steps in terms of the ecosystem, and we're building a relevant action and new links with a focus on the integration of care. With the adequate capital structure, with a broad knowledge of the health market and capacity and execution, we are ready to continue on with our organic expansion.
I would now like to give the floor to Jose Filippo, the CFO, who will speak in more detail on our financial performance.
Well, thank you, Jeane, and a good day to all of you. I will continue on with the presentation, offering you more detail on the financial highlights of 2022. On Slide 9, we had a record quarterly revenue of BRL 2.2 million (sic) [ BRL 1.2 billion ] with a growth of 11.4% vis-à-vis the same period last year. If we discount the effects of the COVID tests, this increases to 17%. Despite the acquisitions, organic growth was 6.3%, showing the strength of our diagnostic medicine.
In mobile services, we continue to grow with an expansion of 36.6%, representing 9% of total revenue. We see that once again, the share of COVID test in gross revenue had a drop in the third quarter of '22 vis-à-vis the same period last year. It corresponded to 1.5% in the quarter, reaching the lowest level since the beginning of the pandemic.
We go on to Slide 11, and we see that gross revenue in all diagnostic medicine brands reached BRL 986.2 million, an increase of 17.7% vis-à-vis the same period last year with the highlight for the Fleury brand of 8.7% and the brand a+ São Paulo. There is a preference of these brands for elective exams. The recent acquisitions represented 3.1% of our growth. In our regionals, a growth of 58.9% in the period shows the integration of Marcelo Magalhães and Bioclínico. In Rio de Janeiro, although there was a contraction in supplementary medicine, the brands grew 12.3%, increasing our share in the state.
We go on to the results of new links and the health care platform on Slide 12. Together, they had a growth of 17% in the quarter. In the third quarter '22, the gross revenue reached BRL 101.4 million, representing 8.2% of the gross revenue of the group. In the first 9 months of '22, the gross revenue of new links and the health care platform had a growth of 89.9% compared to the first 9 months of 2021, reaching BRL 269 million. The revenue of new links is BRL 88.5 million compared to BRL 77 million in the same period last year, showing a growth of 16.8%. The healthcare platform had [ 2,199,000 ] teleconsultations, a significant growth and revenues totaled BRL 12.9 million for the period.
The group began the offer of telemedicine in 2018. Since then, we have carried out in 1.6 million teleconsultations. We here show you an increase in our gross profit, a growth of 9.3% vis-à-vis the same period last year with a margin of 29.2% in the first 9 months of '22. Gross margin reached BRL 960.2 million with a growth of 28.7% compared to the same period in '21.
We go to Slide 14, and you can see the operational expenses, which show you the discipline in our management. In the third quarter, these expenses had a contraction of 2 basis points (sic) [ 202 basis points ] vis-à-vis the same period last year, representing 9.8% of net revenue. This is due to a reduction in fixed cost and a lower depreciation.
In Slide 15, we show you a record EBITDA of BRL 332.4 million, a growth of 10.5% vis-à-vis 2021 and a margin of 29%. In the first 9 months of '22, EBITDA reached BRL 957 million with a margin of 28.6% and a growth of 14% (sic) [ 15% ] when compared to 2021.
We go on to Slide 16, and we see that in the third quarter, net income of the quarter was BRL 96.7 million, a growth of 0.3% and a margin of 4% (sic) [ 8.4% ] when compared to the same period last year. We had higher financial because of the increase in interest rate and a higher net income (sic) [ net debt ]. Net income reached 96.7% (sic) [ BRL 96.7 million ] with a margin of 0.3%.
In Slide 17, we can see that in the quarter, CapEx totaled BRL 105.8 million with an increase of 16.5% when compared with the same period in 2021. This is the result of an increase in investments, in digitization, in IT services, the expansion of units and an assembly of a new technical area in São Paulo. This reached BRL 285.1 million compared to BRL 228 million in the 9 months of 2021.
In the third quarter, operating cash generation reached BRL 349.2 million, 36.6% higher than the same period last year due to the increase in EBITDA, the rate of conversion stood at 105%. In the first 9 months of 2022, operating cash generation reached BRL 706.9 million compared to BRL 741 million in the first 9 months of '21.
We go on to Slide 19, and we see that the net debt remained relatively stable with an increase of only 1.3% in the third quarter '22 compared to the second quarter '21. The debt reached BRL 2 million (sic) [ BRL 2 billion ] with a reduction of 3% vis-à-vis the previous quarter. At the end of the quarter, leverage was 1.7x compared to 1.8x in the second semester of '22, below the 3.0x set forth by the covenant limit.
The return on invested capital reached 14.3%, aligned with the previous quarter. Without the effect of speculation, this was 76.4% (sic) [ 37.4% ] in the third quarter. If we follow up on the Net Promoter Score, this indicator represented 78.6% in the third quarter '22, maintaining that trend for improvement with an almost 10% increase since the third quarter of '21.
Before we go on to the question-and-answer session, I would like to give the floor to Jeane for her to conclude the presentation.
Well, thank you, Filippo. The results that we obtained until the third quarter '22 shows that we are the most resilient group to leverage our growth. I would like to thank the physicians and employees of the Fleury Group who daily devote themselves to enhancing the health of people by offering quality services that make us ever more present in the care of people. We continue on with discipline, building a more accessible, more integrated and more sustainable health ecosystem. Thank you very much. We're now at your entire disposal for the Q&A session.
Our first question is from Vinicius Ribeiro from UBS.
We have 2 questions in truth. The first, if you could give us an idea of how your growth has been reported vis-à-vis the industry. And what is it that you are thinking of for the coming year? The second question also refers to 2023 and to your organic growth. You should have a more normalized diagnostics growth, thanks to that new technical center that you have. So what are you thinking of in terms of leverage and the part of imaging?
Well, thank You, Vinicius, for the question. You're quite right. We have shown very strong growth in our volume at the patient care units, in general. And this growth has been followed up on consistently throughout the quarters of 2022. When we compare this with the growth of the industry, our conclusion is that we are gaining market share. If you look at the beneficiaries in a very general way, there was an increase, but the increase has been lower. Our conclusion is that we have a growth in market share.
Of course, this relates to the actions that we're carrying out. For example, through time, we have increased the supply of services at our patient care units, making a better use of our square meters. We have gained volumes and revenues in our mobile services. You saw that we had a growth of 36.6% during the quarter, and we're increasing this throughout the country. We're launching new products and services because innovation is a strong characteristic of Fleury. And we take all of the applications of these tests to our physicians that use this as reference for their patients, and the use of NPS shows you the quality of our attention.
So very generally, we are always very aware of what is happening in the market of Rio de Janeiro where we have not had a growth of beneficiaries but we have had a growth in market share. When we look at our organic growth going forward in 2023, we're speaking about a global trend that is happening: a greater aging of the population, more chronic diseases and people being more concerned with their health care. But with discipline, we have to keep looking at the opportunities for both inorganic and organic growth, our commercial contracts and acquisition of companies that make sense.
We know that the market is still very fragmented. What we have worked on, Vinicius, is to focus on productivity. You mentioned this new technical area. And doubtlessly, this new technical area will increase our ability at production because the present day technical center is at the very top of its capacity. And through time, we will bring in a higher volume to dilute our fixed costs. That outlook for diagnostic medicine in our assessments, we have maintained so far a growth that is somewhat above the market growth, showing that we are gaining share.
You spoke about the hospitals. Hospitals are a business line where we have contracts. We have entered new hospitals with novel contracts. We have had a greater impact of the drop in COVID. We have a very low percentage of revenue coming from COVID tests. It had reached 16% to 17% in a hospital. However, we do have a very large contract. And although we have worked with other contracts, we still have that ramp-up period. If we exclude that effect, our growth in hospital same-store sales was in line with the general growth. And of course, the coming year, after the approval of the CADE, we'll see that the B2B line will become ever stronger because we do know that we're very strong in terms of B2B. Thank you, Vinicius, for your question.
The next question is from Gustavo Miele from Goldman Sachs.
We also have 2 questions. First, a question referring to Rio de Janeiro. Jeane mentioned in the previous question that you have had a market share increase in all the PSCs. Is this true in all of your units in Rio as well? I know there was no increase in the number of beneficiaries, but perhaps the revenue per beneficiary in that area increased or if this is just organic growth.
The second question refers to mobile services. You had an increase during the quarter, 9% of your total revenues. Which is your strategy of the company for mobile services for 2023 when the urban strategy will be further normalized, are you going to diversify the type of services? Or do you have another strategy? Or do you think that mobile services will perhaps train some of your demand? I would truly like to hear a bit more about this outlook.
When it comes to Rio de Janeiro, Gustavo, we follow up on the number of beneficiaries that is not growing. We have closed additional contracts, and we believe that the better performance in the patient care units will be very strong because we're servicing more lives in Rio de Janeiro with Felippe Mattoso, Labs a+ and other brands. And Rio de Janeiro does have an increase in mobile services. We have increased the number of routes, increased the mobile services, and this has helped us to gain market share. Yes, we are gaining market share in Rio de Janeiro.
To speak about your question in mobile services. During the pandemic, there was a soar in services. Now mobility is back. But among those that experimented mobile services, there was a change in behavior, a change in the customer profile. Formerly, this was to service elderly people that could not move around. Nowadays, all customers that had contact with the mobile services in the pandemic continued to use the services, which is our outlook in this. There are different degrees of maturities in our brands. In some brands we began the mobile services during the pandemic. We have an outlook for growth in those brands. Once people get to know the services better, we also increased the number of routes, and we have worked very strongly in terms of these routes to gain efficiency.
We have several mobile service routes that come out of different PSCs. We have this capillarity, almost 300 service units throughout the country. The person collecting exams leaves a unit, will then return to that unit to process the exams. This enables us to shorten the route and gain productivity. We continue on with that work of looking at opportunities and brands where we can continue to grow and gain productivity. We also have a portfolio of clinical analysis, some imaging exams, ultrasound in specific brands. More specifically, we're trying to capture the awareness of our customers regarding this service that has a very high Net Promoter Score. Thank you, Gustavo.
The next question is into Vinicius Figueiredo from Itaú BBA.
I would like to explore the new link further. With them, you have gained significant growth of 16% quarter-on-quarter. If you could break this down, how much of this came from new openings? You mentioned that during the year, you had some inaugurations. And what was your productivity gain? I would also like to understand the environment for accreditation in these clinics, these new links, and if there is still room in the Fleury units where you could operate these new links outside of your peak schedules.
And if you allow me a second question, I know that this is very difficult to break things down, your expectation of how much of this volume -- because the volume was very strong, how much of this comes from a backlog due to the pandemic, a backlog in medical consultations, in checkups? And if this shows a greater concern with health and if you have observed this everywhere by regions, if you could remark on this.
Well, thank you, Vinicius. Regarding the growth of new links, yes, we have had a consistent growth. Of course, last year, we had acquisitions. And this year, we are able to show organic growth. We have opened up Vita brand units and the ophthalmology offices and these openings are very recent. Some were carried out at the end of September and beginning of October. So most of this growth truly comes from organic growth from the existing units. And through time, what we expect are greater revenues from these new links inaugurated. A growth of 16.8% was predominantly in existing services. We have been working towards optimization of the service schedules and skills to be able to expand our attention in the existing structures.
Now accreditation part of the revenues for new links refers to private attention. And eventually, the customer will ask for reimbursement. In Vita, we have a high number of private consultations and private procedures. Of course, we're working with accreditation. And the advantage there is that we know that these are well-recognized brands in terms of quality. And secondly, this outpatient solution means that for urgency treatment, the customer does not need to pay more. So we have worked with our commercial task force on accreditation. But of course, we can work with this out of the health plan and then the customer will ask for reimbursement. Now when we compare the revenues per square meter very generally, in differentiated brands like Fleury, comparing the year '22 to 2019 before the pandemic, we had a significant increase in revenue per square meter because we carried out a retrofit in the Fleury brand, and we have expanded our service offer.
We do have some opportunities, of course, especially in the afternoons to occupy other services. And we have been doing this with the infusion of immunobiologics. In the morning period, we carry out endocrine test. And in the afternoon, we work with infusions. In the Moacir Cunha eye clinic, we use the office to carry out the checkup visits. And in the afternoon, we offer ophthalmological consultations for all the customers of this Moacir Cunha clinic. We do not have too much idle space. So we're trying to occupy the space with more services. But we do have a very good occupation of our units. In the afternoon, in the Fleury brand, we still have some opportunities. In the other brands, we have carried out commercial contracts and we gear the greater volume to the afternoon period.
To respond to your question on backlog, we truly believe that this is demand. It's not about a backlog in diagnostic medicine. Nothing has been held back in truth. People are more concerned. And we have to understand that perhaps in some situations, we have higher seriousness of patients that did not carry out an appropriate follow-up during the pandemic. Chronic diseases, for example, we have a higher incidence of oncological cases with greater severity, simply because the patients did not carry out follow-up during the pandemic. So we do believe that this volume is a recurrent volume that we have at our PSCs. Thank you, Vinicius, for your question.
The next question is from Estela from JPMorgan.
The first question, which would be the optimal capital for the company in terms of leverage? The second question, what is happening with your SG&A in the company? What's your goal?
Regarding our capital structure, what we have in terms of an increase and, of course, always thinking about leverage, formerly, you will recall that we were thinking of 1.5x, 2x net debt/EBITDA, which seems to be a very reasonable level, below the 3.0x, which is what we have as a guidance. Now we have a situation where the level of interest rates in the country for longer funding changed. We revisited this, and we're working at lower rates. The capital increase that we're undergoing at present will also readjust this. Besides what was mentioned at the beginning of the presentation, we want to maintain inorganic and organic growth, among other factors and also adjust leverage to 1x or 1.5x lower levels. This is what we're focusing on. It's something that has to do with the present time moment of the company where we have greater pressure, and the leverage would be 1x or 1.5x. But once again, we are quite common in terms of using this leeway that we have in leveraging that, we'll never go beyond 3.0x.
And to continue on, Estela, regarding Marcelo Magalhães, we would like to remind you that we began to compare the results beginning in May. It's an operation of clinical analysis with very good results. Of course, for all of the assets, we bring in costs with an higher number of headcount. And through time, we will gain productivity and more stability. As part of our cost structure, we have included a somewhat higher cost in percentage terms due to the acquisitions, and this will be readjusted through time. Marcelo Magalhães is an extremely healthy operation that is quite efficient and that has very good customer satisfaction as well as our unit in Espirito Santo. We're quite satisfied with Marcelo Magalhães.
Our next question is from Mauricio from Credit Suisse.
We have 2 questions here, more relating to the medium term. we perceive that you have had an increase in clinical analysis as part of your mix for several reasons, both in the inorganic and organic part. The question is, which is your vision of the Fleury of the future, in 2 to 5 years, if there is a trend of migration in your mix or will you see a new wave of growth in imaging, not cross-selling but perhaps make the best of your customer base when it comes to exams? And in terms of your mix, you have increased the mix of brands that have a lower ticket, if in 2 or 3 years, this will continue on, removing your dependency on the more premium segments? And if there is a potential merger with Pardini, if this corroborates this vision of a different mix for Fleury in the future? These are my questions, all relating to the medium term and the composition of your portfolio.
The second question refers to productivity gains that have been exceptional because you have made some inorganic movements along the way. And all of this came about very naturally. Which is your vision of you in the medium term in terms of productivity gain? Or have you reached a point of saturation?
Thank you, Mauricio Cepeda, for the questions. You're right in the acquisitions, we have brought about assets, well, at least in the last 3 that are having an impact on our third quarter. They are assets for clinical analysis, predominantly. And we do have a growth in mobile services. When we look at our growth in volumes and the number of exams per patient card, there is a consequent reduction of ticket per exam. This is due to the mix. Now all of this is very healthy because we're also increasing the percentage of revenues in terms of new links in new links. In new links, structurally, they have a lower margin, although they are very important to maintain the customer engagement in our ecosystem. And new link also brings about diagnostic exams. So this balance has been very healthy.
Looking forward, we always have that strategy of offering a set of services, diagnostic medicine as well as other services for the customers in Pardini and, of course, we're awaiting the approval of CADE. The mix is somewhat different. They focus on clinical analysis. So the Pardini mix is very strong in clinical analysis when compared to our mix. And with this, of course, we will have a greater gain in synergy in terms of processing, in the technical areas and logistic areas. What we foresee looking forward is a growth in mix, bringing together images and clinical analysis. We think that imaging is important, and we follow up on this on each exam. For ultrasound, we see how many clinical analysis we do. And through time, we also observed growth associated to a growing percentage of revenues coming from new services that go beyond diagnostic medicine, which is our goal in the medium term, to bring about an ecosystem with digital solutions.
I go into your second question, which is our ability to continue to increase our productivity. Of course, to bring in more clinical analysis, services will help us in this gain in productivity. Nowadays, we have services that are highly dependent on people. And through time, our strategy and our digital investments can aid and abet us in gaining productivity. In the Campana brand where we enter the basic segment, we have attention that does not have a box or people carrying out attention. We're using totems, using our digital tools. So we truly do have a challenge before us, but we believe that this strategy can help us to bring about a balance where we will continue to grow, gaining market share with healthy results as we have maintained. And doubtlessly, we will have several gains in synergy. The initial figure is BRL 160 million, BRL 190 million in incremental EBITDA by joining the businesses of Pardini. After the approval of CADE, we hope to be able to capture these synergy gains.
Our next question is from BTG Pactual.
I have 2 questions, the first about new links. We see that you have gained a new level of stability. Well, of course, there's still the natural ramp-up. I would like to know if you can share with us which is a margin of the new links at present and what it is that we can think about for the longer term?
The second question, a follow-up on what was asked by our colleagues, mobile services. We perceive that this is very important for the growth of the company. There is a relevant growth pipeline for mobile services. Are you imagining a magical figure, something that could gain better representation, without, of course, cannibalizing the core business of the company?
I'm going to begin to speak about new links. Presently, we haven't broken down the margins because this continues to be a segment that is development even in terms of maturity. We have already shared with you that structurally, new links has a margin that is lower than that of diagnostics. It's at a lower range. But as they grow and as they are developed, we will be able to gain productivity there as well. Of course, what we foresee in the figures reported this quarter is a combination of these things. And the margin, of course, includes all of that dimension, the diagnostics, the new links and mobile services. This is how we're working at present. And as new link gains maturity, we will be able to disclose more information.
I can simply give you a reference in terms of that activity. I'm going to speak about mobile services and perhaps respond to part of the question of Gustavo on the growth and the possibility of mobile services, perhaps cannibalizing what we do at the patient service units. It's a demand that we have to fulfill. Otherwise, we could lose to the competition. By going to the customer's house from the point of view of structure, we don't need a service unit to do this. I was saying that today, when we look at the revenues of mobile services, if we were to work at the PSCs, we have 30 additional units that we would need. Now this is interesting. By going to the customer's home, we no longer need a patient service unit and we don't need the square meter for customers. We can use this for imaging or for other tests. We see that this is a very interesting model we have grown in terms of percentages.
We don't have an estimate of where this could get to in terms of the percentage of our revenue. The fact is that as we have demand, this is an interesting model for growth. We remind you that the productivity per customer is somewhat lower but you don't have the other costs that are pegged to what we see in the patient service unit. So the model is very interesting for us. We want to continue to grow the routes and fulfill the demand with mobile services, in general. There would be no problem in having a minor cannibalization if this happens with our PSCs because we can see these patient service units working with other images, and we can make a very good use of the square meters we have. We follow up very closely on all of the numbers and figures. And this change in behavior of the customer, whether it is having greater comfort or more digital services, is a behavior that is here to stay, and we're going to accompany this behavior of the customer.
The next question is from Fred Mendes from Bank of America.
I have 2 questions here. The first, as part of our thesis and focused on the Fleury brand that has been growing, when we look at the background since 2017, 2018 and 2019 where you had very little growth, we see that the margins are higher. The question is the following. Structurally, the margin of the Fleury brand has to be higher because you will probably not be opening other units and you gain in volume and naturally, you would have to have a margin expansion structurally. This is the first question. The second question is more specific and refers to other expenses. There is an amount of BRL 10 million or something similar to that. If you could refer to that line item.
Fred, you're right. We did have a period of expansion of the Fleury brand. We're making the best use possible of the square meters. In the older unit, Fred, we also see an expansion of attention. The Itaim unit that was inaugurated in 2019, we recently carried out a retrofit, not only enhancing the experience but adding another floor in the Itaim unit. This unit already works with accreditation. We're working with MRI, ultrasound as well as other services. So we're working with that vision of offering more services. Now that was a mature unit, and we continue to grow with mobile services under the Fleury brand. This brand has proven to be very resilient, has an increase in NPS and it has the loyalty of our customers. The Fleury brand, we treat in a very differentiated way, and we're careful with the retrofit. We're enhancing the experience. And all of this took place in the years 2021, 2022. We work with a retrofit in 7 units, and we continue to expand services.
Filippo will answer the question on other expenses.
These refer to readjustments. We include items that do not fit into the other categories. They're adjustments in provisions basically. And the benefits of this quarter are associated to equipment, for example. The line item should not create an expectation that there will be a great deal of variation. Once again, it's related to items that we have difficulty in allocating. And of course, this is not something that we deem as recurrent. It refers to adjustments of provisions and we're working so that this will have the lowest impact possible. But once again, it was allocated here because it could not be allocated in other categories.
At this point, we would like to end the question-and-answer session. I will return the floor to Mrs. Jeane Tsutsui, the company's CEO for the final remarks. You may proceed, ma'am.
Once again, I would like to thank all of you for your presence for our conference call for the third quarter '22. We are confident in the creation of a more sustainable, more integrated health ecosystem.
The conference call for the Fleury Group ends here. We would like to thank all of you for your participation. Have a good day, and thank you very much.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]