Rede D'Or Sao Luiz SA
BOVESPA:RDOR3
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Rede D'Or Sao Luiz SA
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Good morning, everyone. Welcome to the earnings call of the second quarter of 2023 of Rede D'Or. We have here with us Mr. Paulo Moll, CEO; Otavio Lazcano, VP, Finance and IR; Rodrigo Gavina, VP of Operations; Leandro Reis, VP of Medical Area; Raquel Reis, CEO of Health and Dentistry of SulAmérica; and Marcelo Mello, President of SulAmérica. We're going to have a 1-hour event, and the recording will be available at the IR site. After the start, we're going to start the Q&A where we're going to get more information.
Before we continue, we would like to clarify that any forward-looking statements that might be made throughout this call regarding the business perspectives of Rede D'Or, projections, operational goals and financial goals are based on beliefs and premises of the Board of Directors as well as information that is currently available. Any forward-looking statements are not a guarantee of performance. We have risks and uncertainties because these are referring to events and circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operational factors might affect the future performance of the company and might lead to results that are materially different from the forward-looking statements.
Now I would like to give the floor to Mr. Paulo Moll. He will start. Please, the floor is yours.
Good morning, everyone. I'm going to start with our operational highlights. The consolidated gross income in the second quarter of 2023, BRL 12.4 billion. This is a growth of 13.5% (sic) [ 3.5% ] in regards to 2023. The EBITDA, BRL 1.615 billion, 20% higher than the first quarter of '23. This is better efficiency. Well, the net income, BRL 435.4 million, 43.3% higher growth in regards to the first quarter of '23. And the adjusted net income, I would like to highlight that it's BRL 489 million due to 2 adjustments: amortization accounting of the portfolios that we're taking with the M&A of SulAmérica that do not have a cash effect and also some nonrecurring expenses that we cut because we optimize. Also great indicators, therefore. So we are living in -- still with the high interest rates. And also, we have, well, at SulAmérica, the delinquency controlled.
Well, in the second quarter, we have the BRL 7.2 billion, so a growth of 10% in regards to the second quarter of '22, a growth of 5% in regards to the first quarter of '23. The ticket in the second quarter of '23 is growing 7.5% in regards to the second quarter of '22 due to our readjustments and also the mix and complexity. Quarter-on-quarter, we have a reduction in the ticket of 3.3%. This is a nonrecurring effect annualized, well, in the first quarter of '23 in specific special materials. Without that impact, we would have a drop just of 1.5%. Due to the mix that is different, therefore -- well, this doesn't change our general overview of growth of ticket. And we understand that this is the correct math quarter-on-quarter. We have the seasonality to be taken into consideration in this comparison. Therefore, we should see our ticket growing above inflation, which is due to the readjustments that are coming in the middle of the year, all based on the inflation. As you know, we have a big set of readjustments that are for July and August.
Occupancy, 33% (sic) [ 83% ], very strong, even though we are considering the second quarter 0.4% (sic) [ 0.4 percentage points ] in regards to the second quarter of '22. Record number of patient-day, 725,000. And we have new operational beds, 184 of these, larger, but more in the second quarter. We would like to say that we launched the São Luiz Campinas Hospital at the end of May. Also, we managed to have the registration with most of the big health care operators, and we are on track to reach the breakeven in the 6 months of working online with our greenfields that were successful.
Gross margin. We got 23.8%, a margin that is higher than the first quarter of '23, and a slight growth in regards to the second quarter of '23, which was 23.7%. The administrative expenses is 3% of the gross revenue against 3.2% in the first quarter of '23. EBITDA, BRL 1.6 billion, growth of 12% in regards to the second quarter of '22 and growth of 11% in regards to the first quarter of '23; a margin of EBITDA of 25.2%, higher than the 24% that we presented in the second quarter of 2022. We still see that we can continue to evolve in our margins, improving our best [ standards ] of margins that were already delivered.
At SulAmérica, we would like to highlight the growth that we had very important in the beneficiary base, 6.2% in health and dentistry compared to the second quarter. Therefore, reaching over 5 million lives. We have growth in the net revenue, about 18% also comparing with the second quarter of '22. Well, the consolidated delinquency, 23.3% (sic) [ 86.3% ]. There is a drop of 2.1% (sic) [ 2.1 percentage points ] in regards to the 88.2% (sic) [ 88.4% ] that we had in -- well, the loss ratio, I apologize. So comparing to the first quarter of '23 when we had 38.2% (sic) [ 88.6% ].
Let's just look at health care and dentistry. We have a drop. We still see a lot of pressures. We're talking about 87.2%. But with an improvement of 2 percentage points when you compare it to the last quarter -- or the first quarter of this year. We're talking still about the loss ratio. Administrative expenses, a very strong effort on synergies and optimization of the structures. We managed to reduce to 6.1% of the net revenue. This is 1.5 percentage points below the '22 comparison, but we can decrease this line. We have synergies that are already undergoing, and most of them are incorporated in this number. A great deal will be incorporated in the next few months. So we have a total of BRL 520 million of synergies, a great deal in the administrative areas, a bit in materials and medications that will reflect in the reduction of the loss ratio. Within this number, of course, we don't have synergies in the part of revenues between the companies.
Well, the floor will be Otavio's. He will continue with the presentation. Thank you.
Hi, Paulo. Thank you once again. Page 5. Let's start with the graph on your left. As Paulo has mentioned, the average occupancy, 83% in the second quarter of '23, completely aligned, a historical record for the company for the second quarter. Also, we reported 725,000 patients per day -- patient-day. So this is a growth of 8.6% if you compare it to the previous quarter, a growth of 2.5% year-on-year.
Graph to your right. We also reported the evolution of the total number of surgeries, 125,000 growth in the quarter analysis where the previous one, a growth of 5.4% year-on-year. The big surgeries have a growth of 8% if you compare it to the previous quarters, a growth of 6.8% year-on-year, another historical series.
Next page, Page 6. So we can see the graph on your left. 9,646 operational beds in the second quarter of 2023, a growth of 134 (sic) [ 184 ] beds and a growth of 208 beds year-on-year. So on the right, we have the reported 11,512 beds -- total beds in the second quarter of '23, stability facing the previous quarter, growth of 46% if you compare it to 2020. Biggest highlight, the launch -- inauguration of Hospital São Luiz Campinas.
Next page, #7, gross revenue and average ticket in the hospital services. Let's start to the left. Well, the company reported the gross revenues in that segment of BRL 7.2 billion almost in the second quarter of 2023, a growth of 5% facing in comparison to the previous quarter result, while it increases the number of patient days growth of 8% and a drop of -- in the average ticket that we already mentioned. If we do the adjustment on the last, as Paulo has commented, there would be a decrease of 1.5% with our [ PME ]. And every single analysis of the evolution of the average ticket that is done quarter-on-quarter has to be done with care because of seasonal factors, the variation of complexity, indices and other factors.
In the annualized analysis, the revenue for the second quarter of '23 has a growth of 10.2%, the result of an increase of patient days and then an average increase of the ticket of over 7%. In 6 months, the company reported over BRL 14 billion in gross revenue in that segment, a growth of 12.3%. The result which is the growth in the number of patients of 3% and also the growth of the average ticket of 9%. We realized all throughout this quarter that there is stability, the indicators for the complexity and I would like to say, the percentage of the growth revenue. ICU, they represented 30%, a few percentage points than the previous quarter. So completely aligned with what was the second quarter of '22. So we talk about surgeries, which is 20% of the gross revenue, even -- well, we can see the same indicator verified with the previous quarter, 1 percentage point with what is year-on-year.
Next page. Page 8, gross revenue and average ticket for the segment of oncology. Once again, let's start to the left. Company reported the gross revenue of BRL 665 million, a growth of 1.5% facing the first quarter of '23, a result in the increase of the average ticket of 1.9% and stability in the number of infusions. In the annualized analysis, growth year-on-year, 13.6%. So this is the result of the average ticket of 16% growth, a small decrease in the number of infusions, minus 2%. In 6 months, the gross revenue of that segment was higher than BRL 1.3 billion, a growth of 21%, which is the increase of the value of the ticket and the increase of the number of infusions.
Now Page 9, cost and expenses, in the cost with hospital services. Let's start to the left. The company reported costs of about BRL 4.9 billion in the second quarter of 2023, a growth of 3.4% if you compare it to the previously -- the previous quarter. Annualized comparison, growth, 10.3%. If you adjust it by the effect of the portfolios of SulAmérica, the valuation with the incorporation at Rede D'Or, the growth would have been 8.7%. In 6 months, the total cost of the cost and expenses is a total of BRL 9.6 billion, a growth of 10.4% and in the same way, adjusted by the effect in the amortization of the portfolios. If we would have done that, we would have had just a growth of 8%. Now the revenue growth in any of the analysis faster than the cost. So we expanded the margin of the company, therefore, to 23 -- well, we increased 25% in the second quarter of '23, which is higher than the second quarter of '22.
Still talking about the cost structure of the company, we have a stability in the main items in costs. So we have personnel, 23.3% in the second quarter of '23, absolutely in line with what was reported in the first quarter of this year and the previous year. Third parties, 16% in the second quarter of '23, also very much aligned with what was reported in the previous quarter. And also, the mat and med is the same behavior. We have the materials -- there is a growth -- accelerated growth in the number of surgeries, notably, the big surgeries. So we have these factors taken into consideration in our analysis. This item of our cost structure is already positioned in the same levels that we had in the pre-pandemic.
Graph to you're right. We presented, therefore, in the second quarter of '23 BRL 262 million of administrative expenses. Once again, just talking about the hospital costs segment, represented 23% of the revenue of the company in monetary value [indiscernible] decrease of 1.1% if you compare it to the first quarter of '23. In the comparison -- annualized comparison, a growth of 15.2%, as you can see. When adjusted with the reversion of the provision for the payment of profit sharing in the second quarter of '22, there is a growth of 6%. In 6 months, the administrative expenses and general expenses, BRL 528 million, a growth of 20% if you compare it to the first 6 months of '22. Once again, once you adjusted the one-off, the reversion of the provision for the profit sharing payment, and the second one-off in the first quarter of '22 with the changes of prognosis and several other legal demands, it resulted in a growth of 7.7%.
Let's go to Page 10, EBITDA and net income, segment: hospital services. To your left, the company reported over BRL 1.6 billion of EBITDA in the second quarter of '23, a growth of 11.2% if you compare it to the first quarter of '23, growth of 12.8% annualized comparison. So in the 6 months, almost BRL 3.1 billion of EBITDA, a margin of 24.6%, a growth of almost 20%, as Paulo has commented at the beginning of the presentation.
On the right, we have the net income consolidated. The company is reporting the net income of BRL 435 million in the second quarter of '23, adjusted by the expenses with the capture of synergies of SulAmérica. Once again, the amortization of the added value of the portfolios, we have a net income of almost BRL 490 million. In 6 months, the net income of BRL 639 million, a growth of 26.7% if you compare it to the same exercise in the previous year. Once again, we have the items that are -- well, as I mentioned, we get to the almost BRL 865 million if you do the adjusted math.
Once again, SulAmérica net revenues. As Paulo has mentioned, the net revenue of BRL 6.6 billion, a growth of 18.1% year-on-year. On the graph to your right, we have the consolidated loss ratio, a drop of 2.3 percentage points in the quarter analysis, a drop of 2.1 percentage points in the year-on-year. And there is a drop of 6.2% (sic) [ 6.2 percentage points ] in the consolidated loss ratio. Still, below, health and dental beneficiaries, we have the comparison annualized, plus 6.6%.
I am almost done, debt profile. On the top left, we can see the cash equivalent, BRL 30 billion almost. If we remove the technical provisions, we have the technical reserves, BRL 15.6 billion almost. The net -- the gross debt is BRL 31.6 billion. The company closes this period with a net debt of BRL 16.2 billion; net debt/LTM EBITDA, 2.6x. The company is reporting all throughout the next quarter -- well, the last quarters the improvements in leverage. So it was 2.8x at the end of 2022, and it was improving in the first quarter. And now we get to 2.6x the net debt over LTM EBITDA. But also, the net debt with the inclusion of insurance reserves, which would be something about BRL 11 billion. The leverage index now, 1.9x, but we do not use this calculation for the decision-making process for the finance -- for deleveraging of our finance, anything that impacts the capital structure of the company itself.
The message here that I would like to give you is that the company is more protected against changes in the monetary environment in the country. If you take into consideration the big cash -- well -- and the technical provision for the insurance. We have always the evolution of the average cost of debt very much controlled. CDI [ rate ] plus, the percentage, 0.8% actually. And here is the amortization. The cash which is in our hands is enough to face any payment until 2028, including the debt amortization schedule.
Last page, 14, the managerial cash flow. Starting on the left, a reconciliation of the EBITDA with the cash -- delta cash of the company. So therefore, we start with an EBITDA reported for 6 months of BRL 3 billion. We have BRL 239 million of working capital that we are bringing back to the company. This is a result of a big effort of SulAmérica to adopt terms of payment and receivables that are in agreements with the practices of the market with the service providers and also the good management of working capital. Also, thereafter, we have BRL 144 million that are negative with the other balance sheet items. And here, we have judicial deposits, taxes. There are some smaller categories.
Then we have the leasing at BRL 366 million. Thereafter, we have BRL 299 million in taxes. The investment activity, almost BRL 1.5 billion of investments. BRL 408 million in the development of the greenfields, BRL 592 million in the development of the brownfields, BRL 159 million investment in IT, BRL 155 million in maintenance, BRL 33 million related to the activities of M&A and BRL 35 million of acquisition of real estate assets to do the land bank of the company. So thinking about the future growth.
Sequence. Well, the finance activities -- we have almost BRL 1.1 billion, that's cash. We have the capture of BRL 1.894 billion. We had the payment of [ debt ], BRL 3 billion. The financial expenses, cash of BRL 489 million in the period of 6 months. On your right, we have the average days receivables and the outstanding and the payable outstanding, 121 days of average days received in the market, reflecting the effort of SulAmérica to adopt practices that are in agreement with the market along with all these service providers, including the hospital branch of the company. Well, except for this change in the receivables payment, we would have a stability in the days receivables, but also a stability in the inventory and the days payable outstanding.
This is the part of the results presentation, and now we are here open for the Q&A. Thank you.
[Operator Instructions] First question is Joseph Giordano from JPMorgan.
Now I wanted to explore 2 points. The hospital and SulAmérica. On the hospital, we've seen the short term. But looking at the ticket, it has, it seemed, seasonality than maybe it was atypical. And maybe you can explain a bit what was the improvement of SulAmérica? Also in more details, I would like to ask what is the change in the complexity profile all throughout this quarter. So we're talking about a change -- seasonal change in the first quarter. It's a bit better than normal. Do you think that there was an impact in that demand of the second quarter? Also, I would like to understand, looking ahead, how do you foresee the next negotiations that are unfolding in terms of receivables, deadlines and the ticket itself? We can see the operators are improving in the sequential basis. So this is improving as well.
My second question in SulAmérica, the -- well, really, the consolidated loss ratio surprised and you talk about 18, 24 months for the normalization of this loss ratio. Well, given the numbers that you published, who do you think that we could get to this number in a deadline that is shorter also? The efficiency gains are stronger. I wanted to understand if there is some buffer since we have 500 million [ left ] from SulAmérica, the result is 1 billion, is very substantial. So do you have any leeway in that sense?
Let me answer the first question of the complexity of the ticket. We had a great stability in complexity in the second quarter if you compare it to the first quarter of '23. I mentioned very briefly in the presentation, when we -- while the relevance of the gross revenue of the company, the -- in the second quarter of '23, 30%. In the first quarter of '23, it was 28%. Very similar. Surgeries, 20% is in the [ now ] quarters. The first point was ICU. Now the patient day number, the movement in the ICUs, 45% in the second quarter of '23, 44% in the first quarter of '23. We are stable.
In the chapter ICU, patients with ventilated assistance, [ 22% ] in the -- [ 8% ] in the first quarter, [ 8% ] in the second quarter, much below the indicator that was verified for the second quarter of '22, which is 10.2%. These are the indicators of complexity at a very low rate. And counterpoint in that, the big surgeries. And total surgeries grew from 7.1% in the previous quarter to 7.5% in this quarter, relatively similar to what we've realized in the second quarter of '22. So I believe that there is a certain stability in the level of complexity of the company.
Once again, I believe that the analysis of the evolution of the average ticket in the quarter -- quarter-on-quarter are very complex. There is a myriad of factors that affect that indicator. And I truly believe that the analysis with the windows have to be more dilated windows. These are more illustrative of the performance of the company. Therefore, I highlighted the increase of the average ticket of 7.5% and the annualized comparison between the gross revenue that is reported in the second quarter of '23 facing the gross revenue of the second quarter of '22. Strong evidence of what I am stating that in 6 months, the annualized comparison -- well, the 6 months of '23 and '22, the evolution of the average ticket was 9%.
Certainly, this is a strong evidence for the methodology for the pricing of our services. It is implemented, and it remains that line that we had for you because of the IPO where our services are adjusted. In regards to the [ IBCA ] rate, maybe 1 percentage point of spread. And as we advance quicker with the other segments, for example, diagnosis oncology, maybe we can capture a few more percentage points of revenue. Besides that, Paulo just mentioned in his presentation, we have the concentration of readjustments in the payers in the third quarter and the negotiations point to the direction in the methodology -- to the methodology that we already published for you with the readjustments of the average ticket of the company all throughout several FYs.
Makes sense.
Joseph, Raquel Reis here. Well, in regards to the improvement of the loss ratio, certainly, very relevant 2 percentage points improvement. We've been in that market. We know how complex it is to do that. But 87.2, still a number that is high. Challenging number, a number that pressures negotiations in all parts of the chain. I believe that we have to look at an improvement of another case. First, we were looking at something more 18, 24 months. Maybe we're going to get before -- we're going to get there before. These improvements are sequential, and we have seasonalities that are different quarter-on-quarter. Also, I would like to highlight the effort of the teams for the readjustment. Also, with the customers, they have great elasticity in the application of these adjustments, not just the number of the readjustment itself. It's to become these products more sustainable.
So the client is mixing the readjustment with the [ co-participation insertion ] or the increase of [ co-participation reduction ] of levels of reimbursement mainly in exams and therapies. So we have a great partnership of our clients, our customers. So we've explored as well, and I mentioned that previously, growth outside of the obvious access -- consolidated access of Rio de Janeiro, São Paulo. We are launching new products today. We have the launch of another 3 products just today. And the actions in the management of -- well, we -- this is in the DNA of the delinquency. And specifically, I would like to say that in the reimbursement, we have great results with the reduction of the entry for the submission of reimbursement. But there is still a lot to be done. I would like to remember the seasonality between the quarters, but the normalization is down the right path.
Next question, Mr. Samuel Alves, BTG Pactual.
Now 2 questions myself. First, could you please tell me more about the oncology segment? There is a drop in infusions in this quarter with the ticket that is a bit stronger. Was there any mix issue that can explain that? Was a more difficult base in the volumes of infusion? Second question, still in the issue of loss ratio of SulAmérica. Could you share in July, well, the medical frequencies? Any color on that? Has that helped quarter-on-quarter? What -- any type of color would be useful.
Thanks, Samuel. I'm going to answer the first question. Oncology, the answer is simple. We discontinued a few contracts with operators. We've had -- we understood that there was an associated risk that was higher. They were enhancing the [ deadline ]. We understood that this was the best decision to discontinue these contracts. This has a short-term impact in volume. Nonetheless, we are hoping to replenish that throughout the quarters. Therefore, we did not see the same level of growth that we were presenting basically because of this issue. Raquel?
You know that we don't give the guidance by looking at the seasonality of previous years. July tends to be a month more pressured in the amount of events looking at the flu pediatrics in general. So July is always a bit more pressured.
Next question, Mr. Mauricio Cepeda, Crédit Suisse.
Now 2 questions. First, in regards to the portfolio of SulAmérica. It is stable quarter-on-quarter, which is a very positive scenario for the readjustment prices. But I wanted to explore the efficiency of this portfolio because even though the base is stable, you have the gross addition of lives. So my question is somehow, that should help your loss ratio consolidated over the next few months. Have you sold these plans directly? Or in fact, the loss ratios are doing a trade-off for tickets that are more attractive for the preservation of the portfolio. Second question has to do with the general strategy of the business. We understood that Rede D'Or has always a core business of health by its own nature, and SulAmérica brought insurance and other businesses that now are appearing in your results. Given all the months that have gone by for the integration, do you somehow have plans to make these businesses -- can you tell us more about the businesses that are not health related?
Cepeda, this is Raquel. Thank you. As you said it yourself, we are facing in a positive way the stability of the portfolio. In the second quarter, we have adjustments that are expressive. To give you color in the numbers. I have an entrepreneurial [ and real ] adjustment of 23.4%, and the [ PME ] payout, about 20.9. So when we look at readjustments of health in general, excluding the specificities of the individual, it's 22% average. So when you look at that through the official base, it's not always -- it's so simple to do this math because there is dentistry here, the adjustment of the 7%. So there is a great elasticity. The partner -- the customers are with partnership and understanding what is needed to be done now. But looking at more of the film and not so much the picture, well, the picture is very good for '23. There is a growth that is very expressive from January onwards.
So in regards to the second quarter -- the second part of your question, if we are focusing in products that have an average ticket that is higher and then -- well, this is a part of the strategy, as it is part of the strategy getting into new geographies with markets that are not explored. So we are working with all those fronts with a lot of balance, authority and focus in profitability, and we are renewing the portfolio and also focusing in new sales. Of course, idiosyncrasies depending on the geographies and the brands and the clients, it makes sense to have a differentiated strategy. But in general lines, the focus in profitability is absolute.
Cepeda, I'm going to get the second question about the other part of the business. Marcelo Mello, he leads all that part of the asset of lives. And well, we have a very solid team. The results are very good. The funds industry has had problems, but we captured and grew BRL 4 billion. So given the seniority, this has not been a distraction for us, welfare and pension. Of course, Rede D’'Or would be able to add any value. We have competency. We have great results with the [ senior entity ] that they work and this is not a [ distraction ] for us and they're delivering great results there.
Next question, Ricardo Boiati, Banco Safra -- Safra Bank.
First question, expansion of the hospital division at Rede D'Or. Obviously, you have an indicator of the projects for the expansion -- organic expansion, greenfield, brownfield. But if you can give me a bench of what you expect in terms of concentration of beds -- the beds that are predicted for '23, '24, they are more concentrated towards the end of the year, just so we can try to understand better the evolution of this prediction for organic expansion in the hospital segment [indiscernible]. Also, in regards to the inorganic expansion vertical, that vertical, the company has not done M&As for quite a while in the hospital segment. Is there any market that you see that is hitting? What is the market dynamic for acquisitions in the segment of hospitals. Those would -- well, that would be the first question.
And the second question is in regards to the competitive environment in insurance. Raquel, if you can comment, how do you see that competitive dynamic and the -- and how receptive the clients are in regards to the readjustment? I agree that the dynamic -- the trade-off has been very favorable in readjustment and loss lives. It's very favorable. Could you comment if the level of co-pay has increased, [ decreased ] the changes to alternative health care insurance? So I want to understand what is the commercial dynamic in health insurance policies. Could you tell me more?
All right, Boiati. This is Paulo. First part of your questions. We have a schedule. We don't have any updates to do on that schedule because we just published it. The works are doing very well. We have important launches over the next few quarters. And I would like to highlight, well, the ones that we think that are important. We have Novo Barra [indiscernible] if you go through there. It's in front of Barra [indiscernible] on the other side of the street. You can see the building being built, advanced phase for the launch in the first quarter of '24. Also, we have in São Paulo the new tower of Vila Nova Star. If you see it, it's already well advanced the works. The hospital had a high occupancy. So we are looking forward for launching this expansion. Certainly, there will be a ramp-up that will be very quick due to the high occupancy and the success of Nova Star.
We have 2 São Luiz that are very big, 1 in Guarulhos, 1 in Alphaville in the great São Paulo area. Well, they're going well with the schedule. The works of [ torres Star at Aliança, torres Star ] of the Memorial Hospital in Recife, very advanced. We're very satisfied with the advanced of these works. Also another decision alongside hospital Assunção, building a new tower that will have São Luiz in the expansion of the hospital. This is an area that we have had a high occupancy, and they're lacking a more complete, larger structure.
So we are very excited, optimistic. We have Macaé as well. It's very advanced and an area that really lacked beds. So to continue with more details well, there is the launch -- so we don't talk about the launch one-on-one. We published a list of projects. But I wanted to comment a few to say that this is the rationale of the importance of this organic growth for us.
In regards to the acquisitions, as I commented on the previous call, we always have a pipeline of talks. Nobody has an asset in Brazil without talking with Rede D'Or. Nobody sells it without talking to us. We are in a privileged position to evaluate these assets. We had a period where the adjustment of prices, and the public sector happen in a very quick way, the adjustment of expectations many times in private transactions takes longer. Some of these transactions that we have in the pipeline, which didn't -- what we have the expectations that we consider that are very high regardless of the timing.
We did not change the vision of the return on investment. If you see the acquisitions that we've seen, that we've done throughout 2021, these are acquisitions that we didn't see the differential for multiple for Rede D'Or. So a great deal of the market did that. We ended up being outside of these big transactions, and we are focusing on where we will get the same level of return. We are buying a hospital to operate forever, to be an asset for the company forever. So we're not thinking about dividends. So we have discipline and many of these stocks, they start to gain traction as some of these sellers also start to adjust to a reality that is the market reality itself. So we are optimistic that we can within this pipeline of talks. We can -- we're going to have these conversations for many years, and then we can have a replenishment of some of these transactions that might be interesting to add to our portfolio.
I will give the floor to Raquel to talk about the SulAmérica.
[indiscernible] Honestly, I see the market behaving better in terms of commercial dynamics. So I think it's very clear for everyone that if we planned the contract poorly, we're going to have a negotiation of readjustments in the first year, second year, very complex and the chance of you losing that contract thereafter is increased. So everybody is doing the readjustments that are significant.
Of course, for you to keep an account in-house is much cheaper than bringing a new account in-house, specifically when it's sub-price. So in general, given specific situations, do we have a very dynamic issue, but the picture of the market is more rationale, which is a great news, more rational market. So talking about the participation of the alternatives, these are growing the corporate [ sufficient ]. So when we look at the entrepreneurial, very short while ago, we saw the stock of entrepreneurial 60% of the stock with some level of co-pay.
Now we have over 75% of the stock with the level of co-pay. And remember when we're talking about new sales over 90%, 92%. So the contracts that had some type of core participation, giving -- well, increasing the core participation, taking some steps and getting it into certain other groups of procedures that we didn't have.
So the news of the moment is that [ PMA ], I don't know if you remember some 2 years ago, the small and medium companies. SulAmérica didn't have that [ PME ] with corporate sufficient and commercialization, it took some time to lever, but now we see over 30% of the new sales with co-participation. So these are all the crops that are being planted, and we hope that they are very sustainable.
Talking about innovative products in a very broad way, we launched a few months ago. It's going to be 3 months actually. A new concept for the small and medium sized, but also entrepreneurial and -- well, the modular reimbursement. Well, thinking out loud, usually, the reimbursement would be useful for 2 things: for appointments and honorarium for surgeries.
So that would be first and second place in representativeness of the reimbursement. All of a sudden in 2 years post-pandemic that became first exams. It doesn't make any sense. And then nonmedical therapies then appointments and then honorarium. So that's why we are launching specifically for products of the basis of the pyramid, they tend to be returned the reimbursement to their utilization in the correct way.
So the product for the base of the pyramid, you have the basic. Well, they had less than 0.5% of its loss ratio and reimbursement. And -- so it doesn't make sense. We've done so. We've done that. And new clients have accepted this very well. Also, with the inception of new products being launched, [indiscernible] with all the logic of co-participation and reimbursement, modular reimbursement.
The launch as well of a special product, which is a product that is very much consolidated in the market with all the service providers that are part of [indiscernible], we are providing a step that is a product between [indiscernible] specifically in the region of Sao Paulo, which is special maximize plus special that all the service provided in the [indiscernible] have the [ Alta ] laboratory of [indiscernible]. So we have actions coming, and we are retaining the clients in-house. That's it in general terms.
Next question, Vinicius Figueiredo from Itau BBA. The floor is yours.
One, I would like to talk about the expectation in nursing. In the results in the second quarter from what we've seen, it doesn't seem to have any provisioning effects. But if you can give us some color in regards to the negotiations that were done with the union of nursing that would be very useful.
A specific point in regards to CapEx. Given that there was a review and looking at the greenfield and brownfield parts, should we wait a deceleration in the reimbursement of CapEx, disbursement of CapEx over the next few quarters?
I'm going to take the first question, and then I will give the floor to Otavio, Paulo. The nursing base, we have first competency that will impact in October. And we are still having a few discussions with the -- with that, what based on what was decided, you should have realize that the base is for 120 hours. So a great deal of the hospitals for a private hire for 180 hours to have a proportionality. So the impact is much less than what we predicted. And if we consider some of the operations, for example, that impact of the motion is not going to be -- it's not existing because we already pay above the basis of the salary.
There were some collective bargaining agreements with the union for installments for payment installments of the base of the salary along with these actions, we are discussing with the unions. And a series of actions that we have for optimization of administrative areas and decreasing the cost with a series of opportunities for the reduction of expenses in several other areas. We understand that we will be able to do a neutralization that is complete of this impact that will happen from October on.
I'll give the floor, Otavio.
Vinicius, if you compare it to the investment plan, up until now inserted in the reference form of the company that closed at the end of the FY of '25, certainly, there is an improvement in the distribution of disbursement of the cash for all these projects, having taken into consideration that the cycle of investment calls until the end of 2027.
Now I believe that it is important to highlight that we always observe the -- our own capital cost with the third party, the balance of the company, that's how we do the decision-making for the investments. But more important than that, the monetary environment for the decision for the review of the investment plan, we've had a myriad of licenses for works that we do not obtain at the time to execute these investments according to the investment plan that was published.
So the company has a balance that is extremely robust, over BRL 90 billion of total assets. BRL 30 billion in titles and real estate, titles. So we have BRL 27 billion net. And the indebtedness, we have very good for -- so we have financial strength to work with these investments that historically, in the case of greenfields, the deleverage returns over 20% of a year. In the case of the brownfields, deleveraged about above 40%.
Next question, Gustavo Miele, Goldman Sachs.
Two questions, very quick on the hospital business. First, materials and medications. I would like to understand how do you think the evolution of the cost for the rest of the year. We are looking at the short term, there is a volatility because of the mix, there is the oncology. I wanted to understand how the talks with the -- of the company is with the materials providers. Do you think that the company that -- do you think that as a company gains scalability? Is there a possibility for you to negotiate -- renegotiate the terms with these partners? Maybe there is a dilution there that is ever higher looking at the future. If you can comment on that, I would like to thank you.
Also, second issue, brief. Just wanted to get an update from you in regards to San Luis Campinas. Paulo commented at the beginning of the presentation that the registrations that you got into that asset. And the expectation is that it's going to be a breakeven in the 6 months. So maybe the end of the year. But if you can share some KPIs about occupancy, margin, whatever you can share, ticket as well, in regards to the expectation towards the end of the year about that hospital? That would help very much.
This is Otavio. I'm going to take the first question about mat, med. Well, the cold analysis of the aggregated numbers of materials and medications in a percentage of our revenue, allow me, well, the deep analysis and the observation that [indiscernible] item on item, material and medications. We are item-on-item on the position that prevailed before the pandemic. This is 1 of the great levers of this company because of its relevance within the segment where we are obsessed by efficiency cost controls. And yes, you should expect that sequential improvements all throughout the next quarters, not necessarily all quarters will be captured by the company.
Now I would like to bring your attention to the fact that the accelerated growth in the number of surgeries, notably the big surgeries that demand, items, materials and medications with a higher cost. The aggregated analysis of the numbers is 1 of the problems. So -- but we have great levers of the company, and it's better [indiscernible].
Now talking about Campinas. Well, about these new projects, we are expecting to open 80 beds a year. So the hospital will have 300 beds once it's the full occupancy, so you're talking about 4 years of maturation. Now we can obviously make it profitable before that. You operate in a hospital such as this, we opened with 50 beds. It's registered for 50. Today, we have over 70% of occupancy on the 50 beds. If you run a full month with that average, you have a breakeven. And that's why we were projecting that before the 6 months, we should have breakeven and we are accelerating the opening of more beds.
When this hospital is running in the -- well, 100 and 120 beds given that the position is San Luis, we're following the price positioning of San Luis, we are servicing health insurances that are SulAmérica special and above, especially and the other operators done the same threshold the position is of a higher ticket given all the differentials that the hospitals offers.
So this is a hospital that when it runs with the 100 and 120 beds, we can deliver margins for the company. We are very happy, optimistic that with the deliverables with -- in Campinas. And also the great acceptance of society, Medical Society in Campinas, the companies, it's a big impact, positive impact for the region that deserved to have a high standard hospital.
Next question. Fred Mendes, Bank of America.
2 questions. First question is hospital. There is an improvement in the operational beds in this quarter, but still close beds, a number that is very relevant. So how does that talk with the expansion plan of the company and we have a seasonality. Can we wait for the trend of stronger for the quarter, the opening of the operational beds?
Now second one, which is more technical in terms of SulAmérica stronger results, but it brings your attention to the provisions of health. The Note 14 is increasing in 500 million per quarter since you took the company in the fourth quarter. So I wanted to understand if this is a more conservative vision of the company in regards to the individual health care plans or the math just lead you to that threshold [indiscernible]? I just wanted to understand that line for the next quarters.
Fred, this is Otavio. By your first question, operational beds. We are always going to have a gap between the total beds and operational beds. We always have hospitals ramping up. Off the top of my head, we have big hospitals going over ramp-up. We have other enterprises that are in the final phase of ramp-up. So we are always going to have a gap between the number of total beds and the operation of it. Well, a rule of thumb that we always use is 80 beds open per year in any hospital. So for example, of a hospital of 240 beds, we finished the ramp-up process in 3 years.
Second question, provisions in SulAmérica. I would like to say part is being conservative, but also part is the adoption of deadlines, payments, receivables depending on the side of the table they are, SulAmérica imposes practices that are more conducive to most of the actors of the market alongside the service providers. It's a bit of both.
Our next question, Leandro Bastos, Citibank.
2 quick questions. First, synergies of SulAmérica, could you comment -- well, how many millions were captured in this second quarter and thinking about the opportunities that are not in the numbers? Do you have any more color on the fiscal opportunities on the price of capital with SulAmérica? That's it. All right.
All right. In terms of synergies, we have synergies in million reals and many millions real, and expenses that would be avoided in 2022, I understand that the value is substantial. Part of that is captured with the previous quarters and remember that there was costs, one-offs in regards to the capture of the synergies. From now on, you will follow up on the evolution of the capture of synergies. For the quality of the results of the company. Also, we will follow up in terms of costs and expenses and administrative expenses and relevance of SG&A when it's measured against the gross revenue of the company.
Could you repeat the second question?
It's about opportunities -- fiscal opportunities for the capital structure with SulAmérica. Any color?
Yes, we advanced substantially. We almost finished the analysis. But there is a tax reform that is approved at the lower chamber, now the Senate, all the actors on the Brazilian economy taking part. And the discretional decision will be taken so long as we get the final picture. You understand what I'm saying?
Yes. Thank you.
Since we don't have any more questions, the Q&A session is closed. We would like to give the floor to Mr. Paulo Moll for the final -- closing of the earnings call.
Everyone, thank you very much for taking part in our call, and we will see each other briefly. Thank you.
The earnings call of Rede D'Or is closed. Thank you for your participation. Have a nice day.