Odontoprev SA

BOVESPA:ODPV3

Earnings Call Transcript 2020-Q3

[Stella Hong, executive]

Good morning, everyone, and thank you for holding. Welcome to the Odontoprev presentation and discussion of the third quarter 2020 earnings. I'm Stella Hong, and today we have us, Mr. Rodrigo Bacellar, CEO; and José Roberto Pacheco, the IR Officer.

This webcast is mainly available online at www.odontoprev.com.br, where the respective presentation is also available. You can control the slide presentation. Next, we'll start the Q&A session in which questions should be sent via e-mail to [e-mail]. This webcast is being recorded and will be available on Odontoprev's IR website in a couple of hours.

Before proceeding, I'd like to clarify that any statements that are made during this webcast related to the company's business perspectives, operating and financial goals and projections are based on the beliefs and assumption of Odontoprev management as well as information currently available. Future considerations are not guarantees of performance as 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 overall economic conditions, industry conditions and other operating factors could affect the future performance of the company and could lead to results that materially differ from those expressed in such future considerations.

Now I'll turn the conference over to José Roberto Pacheco to begin the presentation. You may begin.

[Jose Robert Pacheco, executive]

Good morning, everyone. Welcome, and thank you very much for your interest and trust. We are Odontoprev. I would like to thank you for attending this webcast in the new format to present the results of the third quarter and first 9 months of 2020.

Now to begin the presentation on Slide #3, we can see data from ANS since 2006 with the dental plans. And the industry was still young. We've had continuous growth even during the difficult years of the recession. That's facing now 26 million members, while the health care plans industry, which is more mature, has had the same number of members for almost a decade.

On the next slide, Slide #4. Now more specifically about 2020, we can see the growth picking up in addition to the health care industry following the declines caused by the pandemic and the consequent recession. When compared to June, the peak of the crisis, the medical plans have already grown by 187,000 lives, while dental plans in the same period added more than 0.5 million new members.

On our next slide, #5, we can see the revenues and average ticket with main health care plans in Brazil. In the last 12 months and in the first half year, we see Bradesco Saúde, Amil and SulAmérica with outset in revenue average sales prices in line with high standards of delivery and excellence.

On our next slide, #6, we show the same framework with the main players in the dental industry, showing the Odontoprev portfolios in the corporate segment with more than BRL 1 billion of annualized portfolio and noncorporate with about BRL 700 million in the last 12 months.

On our next slide, #7, similar to the rest of the industry, we've observed at Odontoprev a resumption in the growth of members. We ended the quarter, as you have seen, with an addition of 121,000 members. It was the best seasonal sales performance since 2011, particularly in the last month of September, as we will see on our next slide, #18 (sic) [ #8 ], with 33,000 new SME plans and 86,000 new individual plans after the month of the decrease since the beginning of the pandemic in April.

On our next slide, #9, we show the annual evolution of net revenue per business segment, which are quite different from each other. The highlight is the growing share of noncorporate plans with an average rate of annual organic growth of 15% in SME revenues and 21% in individual plan revenues in the past years. These levels are much higher than the industry and our main peers, which reinforces the beauty of the strategy with profitability with -- that is much higher to market levels.

On Slide 10, in 3Q '20, we observed, month after month, the gradual resumption of frequency of use, resulting in a dental loss ratio of 40% in the quarter compared to 48% in 3Q '19 and 33% in the last quarter, which was the beginning of the pandemic.

On our next slide, #11, the individual plan segment had a loss ratio of 41% in the quarter, counting on lower residual nontechnical provisions of BRL 4 million in the quarter related to free choice of dentist plan in the bank channel. If we exclude these provisions, the dental loss ratio would have been 36% in the quarter.

On the next slide, #12, we have gains and efficiency with lower administrative expenses by BRL 12 million in the quarter in these parts of 2020. Among the positive highlights, we had lower office expenses and office rental costs across Brazil in addition to lower costs with advertising.

On the next slide, #13, we see that bad debt was 3.2% in the quarter, lower than the levels in 2019, given the transition of the individual plans portfolio in recent years, moving from the traditional retail channels to the newer, more resilient and more profitable bank channels, which are Odontoprev's exclusive partners.

Moving on to cash generation. According to Slide 14, we see that with the drop in the cost of services, the gains in administrative efficiency, lower bad debt, there's the natural increase of the adjusted EBITDA by 46% with the margin increase from 20% to 31%.

On the next slide, #15, we see the historical perspective of annualized dental loss ratio since the IPO and also the EBITDA margin. It's worth noting the major predictability of the comeback of the company, a resilience of the unique business model even in economic retraction cycles, such as the current.

On Slide 16, in the 9 first months of the year, the company generated BRL 407 million in cash, already exceeding cash generation observed in 2019, ending the period with a net cash of BRL 874 million with no debt.

Now moving on to the end of this quick presentation. As we see on Slide 17, the evolution of net cash and the excess from solvency. At the end of the quarter, we achieved BRL 146 million. After the [indiscernible] the difference in the market [indiscernible] to the new industry [ pools ] that enable to capture the stable regulatory capital.

On Slide 18, we see cash flow since the IPO and the discipline in capital allocation, the priority to compensate shareholders especially through dividends. The dividends approved yesterday by Board of Directors and cash dividends already paid totalized 100% payout in the quarter.

We'd also like to highlight that we're very proud to see the growing number of individual shareholders, as you can see on Slide 19, which has more than doubled in 2020; and the globalized shareholder base of the company as our last slide, #20, with 86% of the free float with investors from over 30 countries.

Once again, we would like to thank everyone for their interest and trust in Odontoprev. Now I'd like to hand over to begin with Q&A session and our regular practice of a 45-minute webcast. As Stella has already mentioned, please submit your questions by e-mail to [e-mail]. Thank you very much, everyone.

[Stella Hong, executive]

Now we'll begin the Q&A session. As Pacheco mentioned, if you have any questions, please send them to the e-mail.

Our first question is from Leandro Bastos from Citi. He's saying that he -- [ what's the ] positive in all categories and how do you view -- and the direction for 2021?

[Rodrigo Bacellar, executive]

Leandro, welcome to the call. Thank you for your question. As you've highlighted, we had a growth in the quarter in all segments and [indiscernible] was demonstrating the recovery, that's closely connected to the [ flexiblization ] in relation to the pandemic, opening shop, malls. The banking branches are operating again. So I believe that that's because of the resumption of sales activities. And that's very positive. It's coming back and an interesting rate that we can follow.

And how we see the fourth quarter in your question about 2021, right? If we're -- if we would dare to comment, we're optimistic about the fourth quarter. We'll see how this recovery behaves, if it does, if it doesn't. But without a doubt, the government objective really was very positive to that. But we're being cautiously optimistic. And for 2021, I think we'll have a better idea in December. I think it's still early to say anything about 2021. Thank you.

[Stella Hong, executive]

Our next question is from Roberto Otero from Merrill Lynch. He's also talking about strong growth of members that we've had in the last quarters in the SME segment. And he is asking what's the maturity of the product channel category? What should we expect?

[Rodrigo Bacellar, executive]

Roberto, thank you. An important thing. Well, these things are a reflection. The company never stopped working with or without pandemic. We're working hard to build solutions that would provide facilities for our commercial partners, our brokers in the bank channels and also facilities for our members. So what we see now is not because of a specific action in the quarter but actually a reflection of many improvements and innovations that the company is always having to -- in order to provide.

In SME, as you're asking specifically about that area, we've had solutions [ with apps ] where sales at the end are much easier. It flows better, capturing and signing. And similarly, the -- everything is easier. Another interesting thing but now thinking of product not just in technology improvements but considering product, we had a sub-segmentation in the SME segment. So it's usually from 3 to 199 members. The behavior is different in a company with 4 or 5 members compared to a company with 150 members. So we sub-segmented that, the specific products and pricing. Therefore, it's the result of continuous work that the company has always been doing and focusing on and using intelligence to understand distribution channel, the end users. That's -- what we see is a reset of what we've seen in previous quarters. Thank you.

[Stella Hong, executive]

Now going into corporate plans. There was a question about how to win back these plans.

[Rodrigo Bacellar, executive]

[ Mauricio ], so what I mentioned in the previous question is we're winning back all these. So with corporate, sometimes it starts off 8 months before the members come in. So we can't just consider 1 quarter for that. "Oh, they did something different in that quarter." We're always implementing solutions and innovations and facility and strong commercial contact and interesting commercial planning, sales planning. And with that, we reap the results throughout the period.

I think it's worth noting though the improvement in terminations. There was -- 2 months, as of April were heavy terminations. And then in August, since September, that was lower in relation to terminations. So in this quarter, I believe there are sales efforts that, as a general rule, started 8 months before. Even the current implementation applies. On the other side, [ however little, we ] stopped the bleeding rates. So we didn't have job recoveries, but at least we stopped the bleeding, and that's very important. Thank you.

[Stella Hong, executive]

Now about noncorporate. Mauricio Cepeda from Credit Suisse is asking about Bradesco's role in the noncorporate. What can we expect moving forward?

[Rodrigo Bacellar, executive]

The growth is from [ demand ]. Think of the customer base that the bank has and how it's disseminated around Brazil and the strength of distribution, be it an actual bank, the brokers. So it's a huge benefit of having that kind of partner like Bradesco in distribution. We can expect growing [ profit ]. At least that's the development of apps, such as the one that I mentioned for brokers. It's interesting and it benefits them directly at their distribution. So we can expect traction being achieved, and that makes us very optimistic. Pacheco, would you like to say a few words on that?

[Jose Robert Pacheco, executive]

[indiscernible] very important [indiscernible] the share of [ this dental ]. It's dominating in the SME portfolio. The ticket is higher than corporate. That portfolio has a higher addressable market than the traditional corporate market. And through that, especially through the Bradesco plans or plan, the company was able to bring in, in the past 5 years, the growth in -- of 15% in SME, on average. So the portfolio has a higher average ticket with higher returns compared to the market and a potential size that's very expressive through the bank channels. And particularly, the company has the privilege of having the 2 largest bank insurance channels, Bradesco and -- in Latin America, Bradesco and Bank of Brazil. So we can achieve 1 million members with a portfolio that's, above all, very resilient, represents clear signs of recovery and in a way disconnected to the job movement and GDP movement. So it's a potential market that's really interesting for us, especially in the company's strategic plan for the next years. The SME is a highlight. And as Rodrigo mentioned, the bank channels and the company partners and with the long-term commitment, without a doubt, are instrumental element for us to develop and support that type of portfolio more and more.

[Stella Hong, executive]

And still [ about ] members, I'm going to compile 3 questions that we received from the retail channel and individual plans. They're asking -- they're saying that this -- a quick retail channel was faster. Is it our action? Did we launch cheaper products? Or was it a stronger demand? What exactly was the reason for that?

[Rodrigo Bacellar, executive]

The retail channel was probably the ones that were most affected -- one of the most affected. It was closed for 7 months. But now we've observed that the dental product is easy to sell, easy to use, easy to understand. So after shopping centers were allowed to open again, there was a repressed demand on the customer side. There was also the note to offer that product to those channels. So now what we see is a robust demand, customers that were going to these places with that repressed demand and the channels on the other side that wanted to offer the product and meet customers' needs. So in general, in summary, that's what we've observed.

[Jose Robert Pacheco, executive]

I'd like to comment as well in relation to the individual plans. Actually, they were highly affected by the pandemic. So there was a [ moderate ] retraction in the past quarter, second quarter. And now the effect is quite the opposite. Now that stores are opening back again, the shopping malls, as Rodrigo mentioned, to -- and even the [ bank ]. Now the company has seen this recovery in individual to the more constructive pattern. And you've observed that. We disclosed, month by month and each of the 1 to 6 months, the net additions. And in September, that's very clear that we have the highest number of additions in the third quarter.

Once again, that makes us cautiously optimistic for future quarters. If we can count on the traditional growth in the corporate market plus new growth [ in part ] to be shown in small and medium-sized companies and then also building on many different distribution channels, not just the traditional retail stores but also channels that are connected to department stores and also -- and mainly this new, more profitable portfolio that's more resilient and visible, which is the bank shareholder portfolio. So that's a very important strategic transition that increases the profitability of individual plans. It's very hard to be replicated by the competition. And therefore, that enables us to have tickets that are 4 or 5x higher than what the competition would achieve. And as we've observed, the revenue in individual plans and the company are greater than the revenues of any direct competitor and their total portfolio of members. We are very well positioned to capture the many, different opportunities across Brazil and the entire market segment as well as being supported by a distribution platform with no one equal to that in Brazil.

[Stella Hong, executive]

Next question is from Joseph Giordano from JPMorgan. He's asking about individual members. What has been the behavior in October in sales? When you see the average ticket set of profile for new sales, is there any difference in sales performance according to the different regions?

[Jose Robert Pacheco, executive]

That's a good point. The individual plan portfolio has been changing. [ So perhaps you're right ]. In the past, it's mainly originated, specifically 10 years ago, in department stores. Now you don't see a higher presence -- or actually, you see a higher preference of plans originated in banks. Another important thing that we've been expecting in the market is a higher possibility that Odontoprev [ prepares ] to have more mainstream products, such as lower cost. Everybody remembers when we acquired Odonto System. Their model was very specific with low cost -- free shipment, low cost. And gradually, we are already present and we're starting this launch in the southeast, particularly São Paulo, Rio de Janeiro, and [ miniaturizing ] some specific plans. So that diversification is very important.

Not -- and the question is for October. Usually, we don't comment about that. We're in more of the prospectives that the company expects for the upcoming quarters because [ it's plain to say ] that the company does believe or expect through the next years the diversification of individual plans. We started off in individual plans with higher tickets for class A and B, but it's gradually at the national level and creating this dentist [indiscernible]. We mainly are working on many different distribution channels simultaneously. That would lead to interesting volumes and diversification and a source of revenue not necessarily based on tickets but also based on volume with different profitability, [ renewals ]. As you know, the company is focused on value and not volume. That's the temperament of the strategic plan in individual plans for the upcoming years.

[Stella Hong, executive]

And in line with what you just answered, we [indiscernible] these 2 questions from [indiscernible] and the other one from Joseph Giordano from JPMorgan. [indiscernible] is asking if we have any update on [ the march ] of lower ticket demand? And Giordano is asking about the trend of the average ticket. As we've seen a drop in the past quarters, can we see any strategic changes on the company side in relation to members and ticket?

[Jose Robert Pacheco, executive]

I'll answer it. We have to remember is that that's a lower -- had lower cost in time. And that's very natural. It happens in the corporate market, where the company would have corporate tickets with higher profitability. So there's a very direct correlation between the long-term projects, between the behavior of average ticket connected to cost behavior. It's not that in 2020, the company, the industry has faced lower costs. Therefore, it's natural that we would also have lower tickets [indiscernible] focused in the long terms. In individual plans, there's no difference. So that's obviously the reality for individual plans. And we should highlight in time with the continuous launch of products that are affordable or mainstream products so the company, in time, will be able to show many different profiles for individual plans that will exist as part of the portfolio. And in relation to the strategy of the employee, multi-distribution focused on many different markets given the robustness and size of exclusive distribution channels that the company has. Rodrigo, would you like to talk about the Odonto System rollout and Odonto System model?

[Rodrigo Bacellar, executive]

Just to add. Pacheco, you explained that very well. We're bringing in the Odonto System model. We are -- we have customer sales taking place. It's part of the company portfolio. We have to present that [indiscernible] data, [ BP dental ] Odonto System, the first access. So we have a very robust portfolio of [indiscernible]. We have to orchestrate that throughout Brazilian territory. We have brands with different types of partners and distribution channels so we can service each one of the customer segments that we have. And that is [ fair ]. We will see even more [indiscernible] more than the other [ or plan ]. That's normal. Well, we introduce new plans and new regions. That's what I wanted to add. Thank you. That was perfect, Pacheco.

[Stella Hong, executive]

Our next questions are about corporate tickets. Roberto Otero from Merrill Lynch is asking how is the average ticket behaving in relation to [indiscernible]. What can we expect the average given the inflections of -- and additions in corporate and results from churn or it's a reasonable gross sales?

I'd also like to add the question from [indiscernible] from Santander about corporate ticket. [indiscernible] is asking about price [indiscernible] price increase for 2021. Is there a risk of drop given the lower loss ratio in 2020?

[Jose Robert Pacheco, executive]

Basically, we have 2 topics to profile, the additions and the behavior of average ticket. In corporate, it's -- as we've already mentioned before, it's very important to think that the average ticket in contracts is connected to loss dental ratio. So in average with the lower dental loss ratio, it's normal to have a distribution part of the value generation and distributing that with customers in the long-term relationship. So the average ticket has been lower, yes, in 2020. And it's proportional to the behavior of costs. It's natural that in 2021, we would expect a dental loss ratio closer to historical records and a recovery of the average ticket at the same speed. So that's an important point.

Now the portfolio has been very resilient, and that's a very important characteristic in 2020 in the corporate segment to observe the resilience of [indiscernible]. So even with some level of unemployment, the company must be able to attract new contract at competitive prices and attractive margins. Once again, difficult to be delivered by the competition as [ dental center ] first the value or offer. But given the fact that we're 100% dedicated to dental and all the contracts, we are generating value in the long term. And that strategy, we're able to have most of our revenues and cash generation given very specific aspect in the competition that we focus on other business segments and not necessarily dental.

So to summarize, I think that the vision of 2021, the dental loss ratio going back to historical pattern is different than what we've seen in 2020. That will have a direct impact in the possibility of adjusting tickets especially in corporate market given that that's still the main market for the company and portfolio and very -- will be -- still be very important next year.

[Stella Hong, executive]

Now I'll ask 2 questions about -- before we go into [indiscernible] is asking is it difficult to get off [indiscernible]? Is that because of the mix and the different payments or because of cheaper products? In parallel, [indiscernible] from Santander is also asking if the company doesn't plan on reviewing the strategy of individual plans, the retail channel [ give ] this low profitability of that channel.

[Jose Robert Pacheco, executive]

That's a very true and interesting point in the strategy of approaching the individual plans. Yes, that's true. In the past months, we had an important increase in the retail segment that has a ticket that's lower than the bank channel. So that's the main reason why we had a lower average ticket in the quarter. That doesn't mean that in the 2021 vision, for instance, that there's no prospective of growth and what we will balance out in '21. So the growth of retail, it has a lower ticket compared to the bank channel. The launch of new products, products for access that mostly have lower ticket, and then that should generate relevant volume and enable us to balance out the growth of revenue in individual plans that certainly are above the market and above the actual corporate portfolio in general terms. And the growth of individual plans was over 20% per year in the past 5 years. So it's a strategic portfolio of -- the interest of the company. So we will diversify and launch products and more products that -- more access mainstream through the Odonto System and model, now Brazil [indiscernible] but also it's through the digital bank channels and retail channels that are working with us but always focused on -- and aiming on value and healthy margins.

[Stella Hong, executive]

Now about dental loss ratio. We have some questions already, and one is from Mauricio Cepeda from Credit Suisse. How was the ramp-up of DLR at the end of the third quarter and beginning of [indiscernible] would expect us to get back to normal? Will we have [indiscernible]? And he also asked the authorization requests have been greater and what's the percentage of non-serviced requests.

[Rodrigo Bacellar, executive]

About the [ clients ], we were [indiscernible] we've [ managed that on a material basis ]. We have meetings every day where we call it [ topmost ] request. So when it went down to almost 0 during the first week of [indiscernible], it was slowly rising and already had 87% of our customer base, service and urgencies -- emergencies. We saw that [indiscernible] that was very important [indiscernible]. The first step [indiscernible] the customer apps we had to the dentist with all the [indiscernible], so for safety measures. So right now, members [indiscernible] make sure the equipment gets serviced, be it remotely, in-person in emergencies. And that -- the recovery -- the opening up of the economy. So we go from 0. And then in the last 12 weeks, we've seen a very stable pattern. It went from [indiscernible] to 12%. Well -- and what would be normal for each of these periods.

Our best impression that is today -- is that today, I'd be anticipating that should continue. We still have about 20% of people that are [ opting ] with consultation. There's so much. Some -- maybe you're seeing the dental [indiscernible] ended to be positive. That could be adopted by more people that trust you in that more -- that they can travel first or visit with a video call. And since our video call, we now save in expense. So we'll part -- because of that, we have [ a part ] because of the risk [ that are free ] and exposing themselves. So by December, we believe that the behavior that we've seen in the past 12 weeks should remain. So it's about 9% to 12% lower than what we would expect would be the average [indiscernible]. Next year, we have to see what's going to happen with the vaccine. So I believe by December, we should have a better idea to know what's going to happen in 2021. In general, that's been the behavior and that's what we expect, and it has already started this quarter.

[Stella Hong, executive]

Rodrigo, as we mentioned about the teledental, again [indiscernible] asking about that for [indiscernible] an online trend of screening, lowering the number of [indiscernible] visits.

[Rodrigo Bacellar, executive]

Thank you for your question. I think, yes, we've seen already over 6,000 patients with teledental. So it's important that the first visit is about giving them guidance. So if [indiscernible] of using the specific product or let's say anti-inflammatory or toothpaste and that will help or to refer them to right specialists, that's a huge gain. And so [ are able ] to prep them to the one that understand that it has to be treated. Or you're having a visit but it's what you have [ missed ] just by treating them. It's [ a cumbersome thing ]. So we believe that, that will give traction. I think the pandemic really helped in that sense, the relationship, trusting digital and video. I think that would be important. We can coexist with that. Many people are adapting to that and accepting it even more in the virtual consults. There's a lot of benefits not only for patients but also for the companies [ too ]. I think that without a doubt, an important part of that is here to stay.

[Stella Hong, executive]

Also for DLR, I was talking of provisions for individual plans. [indiscernible] from BTG is asking [indiscernible] of additional nontechnical provisions in free choice plans in the individual segment.

[Jose Robert Pacheco, executive]

The nontechnical provisions in individual plans, that began in 3Q '19 and is becoming lower and lower quarter after quarter. In the third quarter, it was no different. We still have a smart portfolio of free choice individual plans in the main channels that are [ inside of -- to ] treatment that could take place at the end of the year, beginning of the next year. There are small provisions, residual provisions. That's a relevant topic, planning for 2021 and significant -- we don't say significant for 2021.

[Stella Hong, executive]

About expenses, Leandro Bastos from Citi is asking the dilution now we have in sales, expenses [ and SGV ] in the third quarter. Is that part of the effect? Or is that derived from [indiscernible] address the trend in bad debt?

[Rodrigo Bacellar, executive]

Leandro, let me start and then I'll hand over to Pacheco but [indiscernible]. As I mentioned, the teledental, we went into many other things in [ individual plan ]. We had to go through an operation in the company. They know which is the companies that have the enrollment plans as well as churn, the ways that are terminated and then [indiscernible]. So we go back to talk about the products and/or help in these companies. We [ believe ] that we can educate [indiscernible] the needs and get more contracts in a digital manner. So we've been very successful in using this kind of technology that we're using right now to do that. So we're saving on sales, transportation, travel. There's also safety, a simpler product [indiscernible] have to go back and forth all the time. So a large number, that's the savings that we are able to achieve during the pandemic. [indiscernible] definitely be included in other practices. So that's also here to stay, as the example of the teledental. And we're already planning for 2021 how we can make this a permanent gain. Now I'm going to hand over to Pacheco.

[Jose Robert Pacheco, executive]

We did have some one-off gains. These [indiscernible] is atypical [indiscernible]. And we also had some permanent gains. All the management of the sales offices in Brazil were renegotiated. So we had permanent, important gains in that digital processes and processes to implement that number of [indiscernible]. So the company [indiscernible] and cost effectivity in many different areas, implementation of AI in some clinical audit processes. It's already in interesting stages in making those to have savings as well. So in general terms, Leandro, the digital rollout is a very important thing for the company. And we definitely had important progress this year that [ transported ] into G&A ratio that was lower compared to previous years. That's not overrated, and we're looking for more scalability in the upcoming years.

[Stella Hong, executive]

Next question is from [indiscernible] from [indiscernible]. The -- with respect to cash generation, what do you expect as an average payout from now on?

[Jose Robert Pacheco, executive]

We had received good regulatory notes in April. The company was a pioneer in adopting the [indiscernible] 5 1, which is a possibility from the national agents in Brazil giving the players in the industry, freezing the solvency margin at a level of 55% that will be valid until the end of 2022, giving us stable regulatory capital. Therefore, the extra cash generation can be distributed to the market. And the payout -- as far as the payout of the first half have 50% and now close to 85%, 90% in second quarter. Now as everybody saw, it's achieved 100% in third quarter. The company is a traditional dividend player. And for the upcoming years, we would be on the distribution of most of the result [indiscernible] quarter-by-quarter, first of all through cash dividends and interest on capital. So we do want to be recognized as a company that is in line with capital allocation in a very clear manner in relation to shareholders.

[Stella Hong, executive]

Our last question, about growth in 2021. It's from Vinicius Ribeiro from UBS. Considering that the macro economy doesn't recover as fast as we thought, how should we see growth in margins in relation to Odontoprev? Thank you. What kind of initiatives you adapt to guarantee that you hold your share [indiscernible]. If the base case is a stronger macro, what are your expectations?

[Rodrigo Bacellar, executive]

About '21, an important point that have been mentioned since the beginning of the COVID, you see the result of one whereas -- actually is a result of the seeds we planted way back, so developing most planning, among other things. We have to do what we mastered and what we can commit. So there are a number of variables that we did not -- do not control, the virus for instance. What would we do internally? I believe that it's heavy, tough sales work, planning. I fully understand the insurance person, the distribution channel and the constant pursuit to develop -- that would provide facility, sufficiency.

And I will give you an example for members, anything that can make their lives easier. So they can use the app to contact us. And with a decision tree, they can say what kind of pain they feel if it's hot -- when it's hot, when it's cold. If it only hurts every now and then. And that decision tree can understand the possibilities about the problem at my command. Oh, you may have this. Therefore, you should see this dentist. And even more. Since you're at this location right now from geo-referencing, these are the dentists in your area. Would you like to schedule a consult? And it's kind of a road map for the customers.

So we're always considering developing innovation all the time. That's something we can control. Taking the highest quality service always, that's something we offer our members, take good care of our brands and distribution channels and that -- there's the external factor that it's just going to be what it's going to be. So we work hard to evolve in all those fronts. In 2021, we'll see what the external factors will show, but as the pandemic [ ended up ] difficulties that we adjusted through innovation and caused repressed demand, we have the technology to get through this [ weird phase that we're on ] the pandemic, we do have an ability of identifying the dangers and hazards modeling that. And answering, was I responsible with that? Pacheco, would you like to add?

[Jose Robert Pacheco, executive]

I'd like to leave you with an optimistic message. Our goal is to be innovative and once again, as Rodrigo mentioned, the quality level to all of Brazil and in all market segments. In 2020, when you start to think of it -- and again, as I said, in the first quarter, we had the best sales performance in the past years. And that's happening again in the third quarter. The exception was the beginning of the pandemic, which was the second quarter. So I do believe that we have an opportunity, especially in a better macro scenario in 2021, in all our market segments across Brazil, counting on efficiencies, leading [indiscernible] and the bank channels. You can expect value generation, organic growth and maybe even inorganic in the digital partnerships in person -- and in person. We'll really extend it. And I'd like to leave with an optimistic message. This year and 2021, let's -- hold your horses because we still have another quarter before 2021 to read results.

I'd like to thank everyone for taking part in this first event with image since our IPO in 2006. This is a great opportunity for everyone to share with us and see the behavior in this 90-day period and how we see the company moving forward. It was a pleasure to be here with you. Thank you very much, and I'll see you at our next meeting.

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