Rede D'Or Sao Luiz SA
BOVESPA:RDOR3
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Rede D'Or Sao Luiz SA
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Good morning, and welcome to our conference of the first quarter of 2024 by Rede D'Or. Today, we have Mr. Paulo Moll, President; Rodrigo Gavina, CEO in Hospitals; Otavio Lazcano, Financial and IR VP; and Raquel Reis, CEO for Health and Odontology at SulAmérica.
We inform you that we're going to have a 1-hour event, and its recording will be available in the website of the company. [Operator Instructions] We would like to clarify that any statements that may be made during the conference call regarding Rede D'Or's business prospects, projections, operational and financial goals constitute beliefs and assumptions of the Board as well as currently available information. Future considerations are not guarantees of performance and involve risk, concerns and uncertainties as they refer to events and circumstances that may or may not occur.
Investors should understand that general economic conditions, industry conditions and other operating factors may affect the company's future performance and may lead to results that differ from those expressed in such forward-looking statements.
I would like to turn it over now to Mr. Paulo Moll, who will begin. Mr. Paulo, you have the floor.
Thank you. Good morning, everyone. First of all, I would like to show our solidarity here at Rede D'Or with the entire population in the south of Brazil for the tragedy that is happening right now. We've been organizing ourselves in our hospitals in the region with materials and equipment to send help to the population in South of Brazil.
Well, let's continue with our first slide now. Before I turn it over to my colleagues here to talk about our quarter in depth, I just wanted to say a couple of words like an overview of what has brought us here. This is really a screenshot, let's just say, of the moment that we're living right now. We are in a very solid position in the health care setting. And I think there are a couple of things that I just wanted to highlight.
First of all, the people that we have here, we have over 75,000 people and great talent in our company. We've been working to train and retain them. In the past few years, we've been working with HR to work with any leadership positions that we have. We've been working with operational directors with general directors here in company. We have an MBA program actually, an internal MBA program, where we have teachers, who are other people in the company, who have more experience. They are teaching other people. So we have the first group, the first team being trained in 2019, and all of them, pretty much all of them are leaders now or managers in company now.
And I just wanted to highlight that in our C level, we have the President and VP of the company. We're a very stable, very experienced team, 3 of us have over 20 years of experience here in the company. And of course, that is a great competitive advantage for us. When it comes to capital allocation, I just wanted to also mention a couple of things. I think it is something that we do not delegate. I mean when it comes to operations, we try to have a budget discussion that is very strict for us before the beginning of the year. But after that, we decentralize. We try to give people autonomy so that each director, each leader can make decisions as they should.
When it comes to capital allocation, then we are really focusing on the C level to make decisions. And it's on a daily basis. We're always discussing what our priorities should be. We have the intense participation of the Chairman, my father, the founder, Heráclito, the former CEO of the company. So I think this gives us great effectiveness really when it comes to capital allocation. And I think we have an important return in that regard.
If we think about our past, back in 2020, we acquired many hospitals, many important reference centers. And we did all that with a very good level of returns. After the IPO in 2021, we also saw a lot of liquidity in the health care scenario, and we saw a reduction in the return that was expected for that kind of assets, important assets in the market with a higher scale, with a bigger scale.
So we decided to look at intermediary assets. Looking at the 17 acquisitions that we had after the IPO, we also had very good results for the company after we adjusted the capital allocation in our strategy. Recently, we started prioritizing organic growth. We understand that there is an important need for beds in different markets, quality beds in different markets in Brazil. And we see that, that need is now stronger with the operational challenges in smaller or midsized hospitals in Brazil that find it hard to be competitive.
I just wanted to talk about the strategy of the company in the long run as well. I think one of our characteristics has to do with the ability to adjust the way we're working to be better positioned in the market. There was also an interesting movement here done by [ Georgie ], which was diagnosis going to hospitals. The first one in 1998, as you know, in Barra D'Or and it wasn't an obvious thing to do. At the time, diagnostics was working with high margins, but they had a very low entrance barrier. So as you know, there is a huge importance of that in our history. And now a more recent example, we had the acquisition of SulAmérica in 2022. It was a delicate moment.
Many investors didn't understand what was happening at the time, the movement that was happening. I think many people now understand what we did. I think at the time, we had Rede D'Or training -- trading with 40x the income. And we decided to change that into shares for the right capital allocation. So again, we see the contribution of SulAmérica now in the group. We now can see that it generated a lot of value for our group. So when it comes to strategy, that's good.
For us, it's not bad to go against what is mainstream. I think if we're following our convictions, if we're following what we understand is best for the company, that's what we do. We many times look at things in the long run. Again, so another example, when we created the Star brand in Rio de Janeiro, it was a lot that was addressed in front, a lot was addressed in front of the hospitals that we had. And we were looking at a good return with a low risk of execution. And of course, it was -- it had its risks and uncertainties, but it was a great thing that we did. It was very successful. It is a very successful brand, lots of technology, very good care for our patients. That's coming from that trend, Star.
Also, we announced the organization of a group in transplantation that is probably going to be a great revolution in Brazil in that regard, and I'm sure we'll see good return after a while. And it's going to be a great benefit for the population. And last but not least, I also wanted to mention our purpose. I mean what really moves us is offering high-quality medicine for more people in Brazil. I think the perceived quality that Rede D'Or is offering, which makes it the first choice really for people, for physicians, I think that's what moves us. I think that's our priority, and that's what's going to make us very sustainable in the long run as well.
Well, having said all that, I'm going to turn it over to Raquel Reis now to start an overview of SulAmérica. And then I am going to turn it over to Rodrigo Gavina and Otavio Lazcano. Thank you so much.
Thank you. Thank you, Paulo. Good morning, everyone. Well, our last call was recent and many of the highlights are the same. It shows a very consistent growth, very good improvement in loss ratio. Of course, all this has a maturation that usually takes 12 to 15 months. It's never too fast. For instance, the PME adjustment that we announced last year was applied now for 2023-'24. And the last month of application was now in April '24, and that's why we're looking at right now a more mature level for these shares.
I also wanted to talk about the broad activities. There was a reimbursement now. It's up to 8% representative. So we're better, I would say, than last year. Also, the results show an improvement of 6.4% versus the first quarter in 2023 and an improvement of 2.4 points against the previous quarter. Even though we have the same reserves, we have the underwriting, the risk subscription and also the readjustment being applied, of course, for the new cycle, we had a reduction in that. I can give you an example of the PME, which we had a reduction of 24 to 19.7 basically. And that's due to an improvement in the loss ratio.
Of course, whenever we can, we tell our clients to try and have more sustainability in their contracts as an alternative to increasing prices. So for instance, co-pay or modular activities or the reimbursement on old products or extending the contract or having cross-sell in odontology, [ Vida ], for instance, now being supported. So we're always looking at the long term, of course. We have clients that have been with us for over 50 years now.
I just wanted to mention as well that we have 150,000 lives and -- with the modular reimbursement. So that is very interesting as well for the future. Well, we'll continue to focus on growth and sustainable growth, especially. Gavina?
Raquel, thank you. I wanted to mention a bit of what we had in the first quarter. Just to show you that if you have access to Slide #5, you can see here what our occupancy rate is. So it was quite good. I think if we compare to the first quarter in 2023, it's 4.7% more, a very good occupancy rate and 1.2 percentage points above the first quarter of '23. I mean the volume of patient stay is very significant, very high occupancy rates, so that shows lots of efficacy and efficiency.
Now the number of surgeries is in line with what we had in the first quarter of '23 and also the fourth quarter of '23. Now on Slide 6, we see here the increase in operational beds. Of course, we had a higher volume. We had higher occupancy rate. We have this responsibility that we have to increase the total beds, so 270 beds basically. If we compare that with the last quarter of 2023, it's 131 more beds.
Now another important thing at the end of '23 is that we had an increase in capacity that is going to help us in the future as well. Let me turn it over to Otavio now, who is going to show us more details.
Thank you, Gavina. Thank you again. I am now on Slide #7. Let's start with the graph on the left. We're looking at the total gross revenues for hospital services. It is BRL 7.416 billion, so a growth of 5.6% -- actually, 8.3% if we compare that to the first quarter of 2023. We see the average ticket going up 3.5%. Against the previous quarter, the growth in hospital services is 5.6% because of the higher volume in patients. And we see an average ticket going up 1.7% against the previous quarter. So here on the right, actually, we see that evolution of the total average ticket.
Now on Slide #8, we're looking at the gross revenue and average ticket, especially for oncology. So it is BRL 746 million, so a growth of 13.7% year-on-year. So that's a higher volume in infusions of 2.1%. And here, we have the average ticket as well. If we compare that to the previous quarter, it is a growth of 4.3% because the infusions went up as well. And on the right, we have, again, the graph and the evolution of this segment year-on-year.
Now Slide #9, starting on the left, we're looking at the cost and expenses. Cost with hospital services, BRL 5.018 billion in the first quarter of '24. Costs going up 6.3% year-on-year. It is a slower growth than the revenue. So that allows us to have BRL 1.516 billion, so we have an important growth here in the gross revenue. If we compare to the previous quarter, we have costs going up 4.5%. It is also lower than the revenue, so that allows us to have a gross margin that is very good, over 3%.
So of course, we were able to reduce costs, especially in staff, equipment, medications. Severances was 23% in the first quarter of '23. In the first quarter of '24, it's now 22% approximately. And now we are going from 21% in the first quarter of '23 to 19.2% year-on-year for contingencies and others. So we see the evolution of general and administrative expenses here on the right. The first analysis shows assortment stability around 3.5%, 3.7%. But actually, the company has been very successful when it comes to a series of tax factors coming from SulAmérica as an independent company still. So that allowed us to revert a series of reserves. In '23, for instance, we were successful with ICMS and loss ratio in Rio de Janeiro, BRL 29 million approximately also in the hospital segment. Anyway, we have a reversion in provision in the third quarter of '23. We also have fees and confins being paid on financial activities. In the first quarter of '24, another victory for us, something related to a societary transaction. So that allowed us to revert BRL 64 million in provisions and reserves.
So considering all these events, we had an increase in SG&A, which is 19.2%. And now for reserves, we have BRL 22 million. So as you can see, we have prospective results of the company being better right now. We have reviewed our models and that increases the reserves that we have, the cash. We also have BRL 12 million in information technology, a reclassification of legal expenses of BRL 6.6 million.
Let me now go to Slide 10. Let's start on the left here. We have an accounting EBITDA in hospital services, that is BRL 1.658 billion in the first quarter of 2024, growth of 13.7% year-on-year. The EBITDA and margin is here. Now the consolidated is BRL 1.9 billion, approximately 20% growth. The adjusted is [ BRL 2.182 billion ] and a growth of 35% when we compare.
On the right, what we can see here is the evolution of the net income, BRL 840 million approximately to BRL 892 million in the first quarter of '24. This is net income and the adjusted net income, respectively.
Now on Slide 11, we're starting here on the graph on the left. On top, we see the net revenue for SulAmérica, BRL 7.171 billion in the first quarter of '24, 12% year-on-year, so important growth. And now clock-wise, here, we can see here the consolidated loss ratio. We have a reduction against the previous quarter where over 6% was already -- had been already reduced against the beginning of the year. Now we have the adjusted EBITDA. Actually, we have the health and dental beneficiaries here. Here on the left, finally, we have the adjusted EBITDA, which was BRL 477 million in the first quarter of '24, over 300% growth as you can see, and against the previous quarter, 58% growth.
Now on Slide 12, we are looking at indebtedness, the debt profile. We have a net debt money of reserves that are very good for the company. We have a cash position of BRL 32 billion. The net is BRL 15.7 billion, and we have the ratio here of 12.2 approximately, a small reduction against the end of 2023, 1.7 if we consider reserves as well, technical reserves for the net cash.
Here, we also see the evolution of the average cost and the breakdown. As you can see here, in the first case, we have a CDI plus 1.1%. Substantially all of the assets of the company are free of any collaterals or anything that is similar to that. Last but not least, we have the net debt breakdown here per indexes after derivatives and the amortization schedule.
Now looking at the managerial cash flow on Slide 13. I think this is self-explanatory. We have the cash flow reconciliation, the managerial cash flow. As you can see, it is higher than the debt. So -- and if you put the CapEx and all taxes, we still have a very interesting number here. We're looking at 120% with cash conversion reaching that number. We had an excellent management of the working capital in the company, BRL 130 million coming back to the balance of the company over the 15 -- the past 15 months. We also had working capital returning to the cash flow of the company. And on the right, we have here the ADR. We have the days inventory outstanding and days payable outstanding of hospital services.
Well, that would be all. Now we have time for our Q&A session.
[Operator Instructions] The first question is from Ricardo Boiati from Safra.
I wanted to know more about the complexity of surgeries per day -- per patient per day. I think complexity went down if we compare that to the first quarter of '23 or the previous quarter. And I think that might be connected with the ramp-up of the operations, the recent ramp-up. So my question is, do you think it makes sense to think that the ticket for this quarter has more complexity? I mean, if you're thinking about Star, which is recent or other recent assets, as you do that ramp up, do you think that is going to contribute to accelerate the average ticket? That would be my first question.
And my second question is about capital allocation and M&A. I think Paulo summarized that very well. He talked about the profile of the company, about capital allocation, about making decisions. And what I wanted to know is for the future, if we think about the macro scenario, if we think about the changes that we have observed in the sector, in the segment and societary changes really, so a lot of people are talking about selling assets nowadays. So I wanted to know if the company now has a higher appetite for combining that organic growth, let's say, with inorganic growth. I mean new movements, new M&As. Those would be my 2 questions. Thank you.
Ricardo Boiati, thank you for the questions. The first question, about complexity. About that, in the first 3 months, it is true that we had a very important number of emergency services, I mean, due to respiratory issues, due to dengue fever. So yes, we had a variation in our mix in our care units, and I think in this first quarter, we noticed that there was an impact on the ticket due to that.
Of course, the first quarter of last year, when we compare that, there was an impact that is positive. We recognize that, the revenue here for special materials. If we adjust that in our expectations and if we think about the rest of the year, we'll continue to try and have a number that is higher than IPCA because of all the readjustment that is usually higher than IPCA. And in terms of complexity, it is our job to always try to find in our mix who the most complex patients are.
Now about M&A, we still have appetite for the M&A. I think the company has a good track record, a very good capacity for integration. The thing is we have to assess opportunities and the return that we're expecting. I think it's not usual for anyone to sell a hospital asset in Brazil without talking to us. We are usually part of the conversation or part of the process, and we're always interested in trying to progress in that regard, if we have the adequate return.
So of course, for any process that we have in the future, we will continue to be part of that. And we will make an effort to acquire that if we think that the return is adequate.
Our next question is from Vinicius Figueiredo from Itaú BBA.
I wanted to know more about SulAmérica. There are a couple of things that you mentioned about the loss ratio quarter-on-quarter that has evolved very, very well. If we look at technical reserves, it also went up quarter-on-quarter. So that makes me think that, that would also increase or improve actually loss ratio, but it's a loss ratio connected to the cash. So I wanted to know the following. Is what I'm saying correct? Is my understanding correct?
Also, do you think the company is going to feel more confident in the future and reduce that level of conservatism, let's just say? I think if we think about quarter-on-quarter results, have you noticed a difference in your cash flow? I mean there are certain providers looking at a very challenging scenario right now. They see that this quarter was quite challenging. Do you think that's bottom-up? And do you think that's related to an improvement in the processes of denials, disallowances? What can you tell me about that?
Hello, Vinicius. This is Raquel. Thank you for your question. Well, I think in this segment, we should never just look at the screen shot at the picture of the quarter. We have to see the entire scenario, right? We have to zoom out and understand what's happening. I think we're always trying to improve loss ratio, of course, but without using any -- without doing anything that's out of what's planned, let's just say.
I think your understanding is correct, but I wouldn't say that we're being protective. I don't think it's conservatism. I think it's really being careful, being responsible. If we think about what we have right now, I think it's the right situation to have. And I think let me turn it over to Otavio now to add to that.
Look, Vinicius. I think it comes and goes in the sense that as payers feel more pressure, it is natural that they will demand more working capital from their providers -- service providers. So that's what we've noticed ever since the pandemic started. At Rede D'Or, we have multidisciplinary teams working. I think it's one of the most complex things that we have, also billing, accounts receivable. I mean, we have optimized our practices to try and have good working capital coming to the company in the medium and long run.
We understand that there is space to increase the hospital services segment. But I think that's going to happen in the future as everything evolves and our best practices are more effective as well.
I just wanted to add one more thing here to what Otavio was saying. Here at Rede D'Or, we were pioneers when it comes to alternative payment models, so global fees and all that. And we continue to advance in that regard. So I think that brings a great benefit in terms of revenue because you reduce the complexity of billing receiving these payments. And also, there is a good expectation in terms of reducing denials for allowances.
Our next question comes from Carlos -- or actually, Gustavo Miele from Goldman Sachs.
That was a great presentation. I just wanted to ask you 2 questions. The first one on SulAmérica for Raquel. Raquel, we've seen an interesting thing, which is the level of readjustment this quarter. It's not going to be based on the beneficiaries of the company, especially when we eliminate the administered -- the managed product. I wanted to know if you could tell us more about the gross sales and churn within this stability. I mean, within this base of beneficiaries, do you have an acceleration of those gross sales? Could you tell us more about the level of readjustment on these new sales against what was applied in the portfolio? I think it would be interesting, so that we understand a bit more of what is behind that robust ticket on SulAmérica. That's my first question.
And the second one has to do with hospital services. If we are thinking about the last 12 months, even if we adjust that to the oncology costs of the company, I think it is a very good level right now. Even if we compare it to before the pandemic, it's very good results right now. So I wanted to know what your initiatives are for the future. Have you been thinking about any activities in that regard as you talk to your providers and all that? That's my question really.
Okay. Thank you, Gustavo. This is Raquel. I think it is very important for us to have a good balance between readjustments and growth. I think in the past couple of months, we've been trying to work on that very strongly. When it comes to the average ticket and ticket growth, of course, there are certain factors that we have to consider. As I mentioned during the slide presentation, we offer certain possibilities to our clients. But we always focus on sustainability, of course.
So the modular products, as I mentioned before, we have 150 -- over 150,000 lives in that kind of product, and they have a lower ticket than other products with full reimbursement, for instance. In 2023 and in 2024, we now see there's a macro scenario that leads to a slight growth in portfolio. So we're going to keep the fish in the aquarium, let's just say, the most that we can because once they multiply, you're not going to have a full cost for new structure and to find new clients. So that is happening.
Yes, of course, there is a cleanup movement. There is a cleanup activity. As we said last year, there were contracts that had a deficit, and we had an important correction to do, and it would take more than 2 years. No matter what, 2023 was a very good year. We had over 1 million lives. And considering health and dental, 1.7 million, if I'm not wrong, 1,070,000. And this is a strong movement in the first and second quarters of 2024 as well. So growth continues to be one of our main purposes in maintaining our stock. That readjustment is still leveraged in 2024, but surely less than 2023. So PME is a very good number, I think, when it comes to 5% as we've seen.
Now Gustavo, let me tell you more about [ Match Med ]. It's true that we're looking at a very good level, as you were saying right now. In the short run, I didn't want to put any goals for that indicator. Of course, we're still discussing certain negotiations. If we think about the long term, yes, we have very good expectations for that. I think we can still improve that number. We have certain ideas to develop new products, things that we still cannot find in Brazil or producers or manufacturers that we still don't have in Brazil. And I think that's something for the future. These are things that are not going to impact the next few quarters. I think the main impact is going to be really in the long term.
We now have a question by Joseph Giordano from JPMorgan.
I wanted to talk about the occupancy rate. We see that there was an increase in beds. And I wanted to understand a bit more about that. There are new hospitals being considered now. But what I wanted to know is the following. When it comes to everything that you authorized last year, everything that you embedded lower that became part really of that list, is that being accounted for? And also, I wanted to understand, is it all new hospitals? Or is it capacity that you already had in already mature hospitals? That was my first question, so about occupancy rate.
And the second one about accounts payable, accounts receivable. I wanted to see the following. We can see an improvement. We see that payers are now affecting cost. So I think it was a challenging quarter against the previous quarter. I think this was a more challenging quarter in that regard. So I wanted to know more about that, about AP and AR.
Well, hello, Joseph. I don't have all of the numbers, all of the details, but what I can tell you about that first part of the occupancy rate, part of it was in our existing base of hospitals. Yes, some of them had a previous reduction of operational beds before, especially in June last year. So they had a ramp-up afterwards. They continued to grow, and then we opened more beds as we've noticed that the demand went up as well. So that's part of it.
And the other part is hospitals that are in Campinas for instance and month-on-month, we're looking at the demand to see if we have to increase the number of operational beds. I don't really have the exact figures, but it was in part what we already had, the recent brownfield. And also partly, we had the growth of existing hospitals. I can tell you, for example, year-on-year, we had São Vicente. In the first quarter of last year, it was 80-something beds. And now in the first quarter of '24, we see a capacity of 50 more beds. Otavio, do you want to add to that?
Yes, that is correct. Copa, Jabaquara, UDI, all those are examples of hospitals that we're managing now. We're looking at the quality of receivables. We're looking at a better interaction with payers and then we had more beds. There are just a few beds coming from the greenfields. I think in Campinas, it was 20 beds, if I'm not wrong. But Joe, I am not sure about your second question. If you could repeat that, I forgot.
Well, it was about AP and AR. Thank you for answering the first question. The second question was about payers. I am looking at the effect on the calendar here. We're ending the quarter on March 28, right? So I wanted to know if there's maybe something else there that wasn't presented in the previous conference.
No significant impact really, Joe. Nothing to worry about.
Our next question is from Samuel Alves from BTG Pactual.
I have 2 questions. My first question has to do with the seasonal activities and loss ratio. Raquel was saying that quarters have different seasonalities, so to speak. So about that atypical behavior, about that recent seasonality, do you think -- did you think that it would be possible to think about sequential improvements in the next few quarters of the year, even though we need to consider that diverse seasonality? What I'm saying is do you think that seasonality is going to be less intense? So that's my first question.
And the second one is about CapEx. We've noticed this acceleration in this first quarter, but could you tell us more about that? I mean do you think this could change in the next quarters? And also, if you could tell us more about the probable investment that you're going to have this year, if it's going to be different from last year. And by the way, thank you and congratulations on the great results.
Samuel, this is Raquel. Thank you for the question. About seasonality, yes, there could be a change depending on the quarter. There could be some variation. But some things are hard to change. I mean the second quarter usually has a great impact due to flus and that kind of issues or the mosquito, Nile fevers due to mosquitoes. We've seen that very strongly now. Now we have over 7 hours of wait, many times, people [ chewing ] in hospitals due to that. So of course, we have to consider that, that sequential activity really is going to have that variation. Gavina?
Well, hello, Samuel. We had a total investment of BRL 738 million in the first quarter, including over BRL 340 million in brownfield and greenfield, BRL 118 million in small expansions, BRL 84 million in IT, and BRL 88 million in maintenance. We don't have any -- this acceleration in investments, that is being done on purpose, let's just say, in the first quarter. These investments are running as planned. And in terms of the budget, the total CapEx for 2024 is BRL 2.7 billion. We probably have a similar number for 2025.
And by the way, when we were suggesting that budget at the end of the fiscal exercise when we were talking to the Board, to the ex co, we are going through the peak of investments right now. And our best expectation for the cash flow in the firm is that it tends to be 0 or slightly positive from now on. The company is going to benefit from that extra cash flow coming from all of the investments being done in the company.
Our next question is from Leandro Bastos from Citi.
I have 2 questions. The first one on SulAmérica. You mentioned the modular reimbursement plan. Is there anything that allows us to understand the difference in loss ratio? You were saying that the ticket is slightly lower. But with the loss ratio, how could you -- can you compare that with the legacy? That's my first question.
And the second question, you were talking about expenses. And I wanted to know the following. There is an acceleration in third-party services, right? So I wanted to know more about that. For the next quarter, do you think you could tell us more about complexity and trends in that regard?
Leandro, thank you for the questions. About the modular reimbursement plan, I mean, even though we have a very expressive, very significant number, 150,000 lives, it's still growing. I mean we started selling that in April last year. Very slowly, we started to extend that, especially in the last quarter of 2023, and we're accelerating that right now. So it's too soon to tell, but it seems like it's going to have an interesting behavior. It's going to continue to expand. So that utilization and reimbursement, in the beginning, it could be subject to fraud. But now, it is within our network and it is highly qualified.
We have all the minimum criteria, the requirements. And we see a frequency of utilization in exams, for instance, that seems to be lower than in the rest of the portfolio, as we have seen in the co-payment contracts with 20%, 30% approximately. So it's still too soon to tell, but I will give you more news probably in the second semester of this year. Otavio?
Well, when you were talking about third-party services, when it comes to that, we are usually talking about IT. And also, when we have a more surgical profile, let's just say, we have this kind of change. I mean in the first quarter of 2024, that was 17.6%. It is in line with what was informed for the last quarter of '23, which was 17.5%.
Our next question is from Mauricio Cepeda from Morgan Stanley.
I wanted to say that Paulo's intro was very good, very interesting. And I have a few questions on that. About the future strategy, the first one about the impact of the 585 resolution, the impacts that, that could have on the system. It might be more difficult to change the network, to change providers. So about that resolution, where do you see the company having more difficulties in terms of that resolution? Because you have both hospitals and also health care plans and insurance plans. So do you think that's going to help or not? Is it going to be organic help? Anyway, how do you see that happening?
And the second question has to do with strategic interest in Qualicorp. I understand you're still shareholders there. And the market is not as strong as it used to be. So is there any interest in continuing with that?
Thank you for the questions, Cepeda. When it comes to the national resolution, it's true. There has been a lot of discussion to see if it's going to be more difficult. I think it's going to be different, not necessarily more difficult. We'll have to adjust certain things, for sure. But we understand that the protection that we have as health care providers is that we can choose the client. I mean, that's the way we see it. Employers, family members, patients, they want to continue to access our services because of that. So we see all these factors as the secondary factors. I think what has helped us in the past was clients migrating because they wanted to continue to come to our services and not due to regulatory barriers.
And about your second question, Qualicorp, isn't it? So about Qualicorp, when it comes to insurance plans, it's true, in the past, we've had certain issues with costs. Right now, we have a position that we're not willing to let go right now because our commitment when we invested in that was in the long term.
And I think the company now is leaving behind the most difficult times in that. I think Mauricio is really helping with adjusting the products that are being offered, going back to having certain adjustments in formatting all that and focusing on profitability. So I mean we have to be patient. We are really long-term investors in that company.
Okay, Paulo. And about the first question, do you think that resolution for smaller providers, do you think they should be more available for acquisition?
Look, Cepeda, it's not something that we have discussed, to be honest. I do not think that there is going to be a significant change in that dynamic, something that would accelerate that consolidation process. I think this is happening due to other factors, so scale, costs, cost reduction. So I think there is more CapEx, access to cheap capital, I mean, operations in the network. I really think that's what is the most important when it comes to that consolidation trend.
Our next question is from Gustavo Tiseo from Bank of America.
I have 2 questions as well. First of all, I wanted to know more about receivables. Is there a percentage that is susceptible to a different period? I mean, everyone is reducing, improving that line for receivables. And the second question has to do with the tax reform. I wanted to know more about that. Could you tell us more about the impact or what might happen? And especially focusing on SulAmérica with secondary impacts and the benefit -- of not having the tax benefit. I mean, just for us to understand what the possible impact might be.
When it comes to receivables, if we think about the main operators, we have similar situations. I think we might have smaller operators that have a different deadline because they are having issues with their cash flow or financial issues and then they might need to have installments or pay in a different way. But I think the main partners that we have, have similar situations. There were similar variations as well, and there are some local smaller players that, of course, need more time, need more days, and then we talk to them and we adjust as necessary.
Now in terms of tax reform, we don't have a final study that we can anticipate. And then we are looking at this assessment. I think there is a great mobilization in the sector right now. We've been trying to have a neutral effect at the end of these discussions. But I think it's too soon to position ourselves to tell.
Next question comes from Caio Moscardini, Santander.
I think that there are 2 questions on my side. First, the competitive scenario of the main markets and we've seen, for example, Oswaldo Cruz closing, a hospital in São Paulo. And I wanted to understand if you've seen more availability of the small- and medium-sized hospitals and how has that translated to the opportunities for you? And the second question, about the new enrollment. I mean you -- how did you see the receptiveness of the paying parties to register new hospitals? Is this still a very complex discussion for the smaller readjustments in the table? If you can share this, it would be great.
Well, Caio, thank you for the questions. I talked about in my opening and you mentioned on this issue that we've discussed, which is a great opportunity for those that are best positioned in the sector. We see a big difficulty of hospitals, small and medium and even some big hospitals, when you have the relevant markets such as São Paulo, with difficulties to keep balances, some of them are leaving the market. You saw, over the last 10 years, the number of private hospitals reducing 500, a very representative number. And some of them are still in the market. But given the capacity of continuing to invest, the level of service is dropping and many times, these hospitals are repositioning to service a new niche from what we work with to have the lower ticket.
And they're not direct competitors in this flow of patients. We are benefiting, and this is going to be an important factor for our organic growth. And when we talk about the enrollment, registration of the hospitals that we've launched over the last years, they are aligned and quicker than what we expected. This doesn't mean that we could register 100% of the operators that are positioned with compatible tickets to these hospitals. Well, if you look, we try to find the markets we have with these places that we did the greenfields. And because of that, there is a big demand of patients, of decision-making -- for the decision makers, the employers, the families to have access to these structures.
So I believe that this has been the preponderant factor for the success of our operations. I don't see any negotiation of registration that would stall our negotiations of readjustment with the rest of the network.
The Q&A session is done. So now we will give the -- we would like to give the floor to close the call.
I would just like to thank you, all the investors, all the support that you've provided to us, some of you for many, many years. I would like to say that we are working diligently to growing the economy and delivering the results. Thank you very much for your support and partnership. We'll see you briefly. Thank you.
The earnings call of Rede D'Or is finished. Thank you for your participation. Have a nice day.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]