Auna SA

Good morning, and welcome to ONA's third quarter 2025 earnings conference call. My name is Eric, and I will be the operator for today's call. At this time, all participants are in listen-only mode, and please note that this call is being recorded. There will be an opportunity for you to ask questions at the end of today's presentation. Now, I would like to turn the call over to Ana Maria Moura, Head of Investor Relations. Ma'am, please go ahead.

Thank you, operator. Hello, everyone, and welcome to AUNA's conference call to review our third quarter results. Please note that there is a webcast presentation to accompany the discussion during this call. If you need a copy of the presentation, please go to our investor relations website or contact AUNA's investor relations team. Please note that when we discuss variances, we will be doing so on a year-over-year basis and in FX neutral or local currency terms with regard to Mexico and Colombia, unless we know otherwise. Let's move to slide two. In addition to reporting an audited financial results in accordance with international financial reporting standards, we will discuss certain non-IFRS financial measures and operating metrics. including foreign exchange neutral calculations. Investors should carefully read the definitions of these measures and metrics included in our earnings press release of yesterday to ensure that they understand them. Non-IFRS financial measures and operating metrics should not be considered in isolation as a substitute for or superior to IFRS financial measures and are provided as supplemental information only. Before we begin our remarks, please also note that certain statements made during the course of today's discussion may constitute forward-looking statements, which are based on management's current expectations and beliefs and which are subject to a number of risks and uncertainties that could cause actual results to materially differ, including factors that may be beyond the company's control. This includes, but are not limited to, our target leverage ratio the expected solution of the issues with physicians, suppliers, and information systems in Mexico, the results of the key initiatives we are implementing in Mexico, the expected capacity and market of Torre Treka once built, the execution of our strategic plan, including the recovery of our growth levels and the rollout of the in Mexico, our collaboration with the Corporation of America, our planned investments in Mexico, and the creation of further growth and sustainable value for all stakeholders. For a description of these risks, please refer to our Form 20F filing with the U.S. Securities and Exchange Commission and our earnings press release. Slide three, please. On today's call, we have Sousa Zamora, our Executive Chairman and President, Giselle Remy, our Chief Financial Officer and Executive Vice President, and Lorenzo Massab, our Executive Vice President of Strategy and Equity Capital Markets. They will discuss AUNA's consolidated and segment financial and operating results for the third quarter. And we'll also provide updates on our various strategic growth initiatives. After that, we will open the call for your questions. Tuzo, please go ahead.

Thank you, Annie. Good morning, everyone. and thank you for joining today's results call. In this quarter, we're reporting weaker financial results, a flat quarter, principally dragged down by our Mexican operations. However, in Mexico, we are seeing evidence of stable and growing operational activity. The strength of our business model, the stage of development of our operations, and the resilience of our own integrated regional platform were reflected in the strong results of our Peruvian and Colombian segments in the third quarter, which partially offset the 5% decline in total adjusted EBITDA that was a result of Mexico's performance. Peru's strong top line and EBITDA growth was driven by a still improving healthcare pricing mix and strong insurance MLR, as well as robust growth in plans. Our risk mitigation measures implemented in Colombia strengthened EBITDA and cash flow there. At our Mexico business, despite soft results, our hospital operations remained stable during the quarter, and we saw a second consecutive quarter of higher surgery volumes, as well as an increase in oncology and cardiology services. However, the quarter was marked by slower than expected recovery from legacy doctor's volumes and an impact from the implementation of new hospital information and ERP systems at doctors' hospitals. We are making important inroads that are positioning AUNA to capture the many long-term growth opportunities that we see in Mexico. We anticipate 2026 to be a year of full recovery in Mexico, and with the New Mexico team in place, we remain very bullish in the medium term. Despite lower adjusted EBITDA, Our owner's leverage was unchanged, thanks to less gross debt at the end of the quarter. Further, our debt profile improved significantly with our successful refinancing earlier this month. Our adjusted net income was a solid 58 million soles for the quarter. And now let's turn to slide five. Peru and Colombia drove the 1% increase in FX neutral consolidated revenue. Their top lines in local currency grew 9% and 4%, respectively, partially offset by Mexico's 12% decline. Capacity utilization, shown in the bottom left of the slide, decreased three percentage points to 64%, unchanged versus the second quarter. On a year-to-year basis, a 1.5 percentage point increase in Peru's total capacity utilization was more than offset by a 5.2 percentage point decrease in Colombia and a 4.4 percentage point decrease in Mexico. While lower utilization in Mexico was due to a year-over-year decrease in surgery volumes and emergency visits, Colombia's decrease has been a result of the risk mitigation measures that we implemented there earlier in the year, including proactively managing contracted services with government intervened payers, while Peru's decrease was a function of the addition of beds to the operating capacity. Finally, I'd like to highlight that the total and operating capacity utilization in Mexico modestly grew from the previous quarter. Planned memberships grew 8% at OncoSalud, while its MLR fell further to 49.3%. Now let's take a closer look at the segment results, beginning with Mexico on slide seven. Of course, there were several bright spots in Mexico during the quarter. First, surgery volumes increased for the second consecutive quarter, as I noted before. Oncology and cardiology services, which are integral to our long-term growth strategy, increased 48% versus second quarter 2025, accounting for 15% of Mexico's revenues. Let me highlight this. An important part of our high complexity footprint in Mexico is growing. And relatedly, third, the revenues from Opción Oncología increased 21% over the previous quarter as well. This is where AUNA makes a huge difference in the transformation of healthcare in Mexico. This is exactly where we make the difference with patients, payers, and physicians. Weighing on revenue this quarter was a slower market. Also affecting our revenue was a slower than expected recovery in volume, which were impacted by the doctor-supplier relationships that have slowed the implementation of the AUNA way model in this market. It is important to note that we have experienced similar hurdles when disrupting Peru's and Colombia's healthcare markets. Another factor was unexpected problems in migrating doctors' hospitals to new information and ERP systems, which affected billing. The implementation of these systems is part of a broader multi-year IT transition. to harmonize technology across AUNA's businesses and geographies, as well as to improve the quality of data and information that we use to manage AUNA and to serve patients. Lower revenues impacted Mexico's gross profit and therefore adjusted EBITDA. And there were other factors, including a higher mix of lower margin services related to service contracts that our OCA facility has for state employees. Nevertheless, the margin was 29% in the third quarter. Before discussing the performance of our other business segments, I'd like to give an update on the key growth initiatives that we have underway in Mexico, which we have summarized on slide eight. So attracting and retaining and investing in talent is integral to our growth strategy in Mexico. Healthcare talent is thin in the Monterey marketplace, However, we have revamped the leadership team in Mexico. Alejandro Torres leads our Monterey healthcare operations. Previously, he held senior roles at Star Medica and Tech Salud. We also hired a new chief medical officer, a prestigious and very credible physician in Monterey, who is having a significant and positive impact as we engage with physicians to grow our practices and improve medical resolution for our patients. We've also hired a new head of commercial operations joining the company this week, as well as other senior leaders for our Mexican hospitals. All of them bring to AUNA significant combined and complimentary experience in Mexico's healthcare market, as well as decades of experience in Monterrey. We are rolling out a series of package service offerings. and strengthening our collaboration with leading physicians to further penetrate three important market segments. This, of course, will expand revenue streams and increase capacity utilization at our healthcare facilities. One is the out-of-pocket segment, which is profitable and currently only represents 8% of our revenue in Mexico, and which we intend to increase to 20% by the end of next year. In the third quarter, we increased this segment by 15%. In the corporate segment, we continue developing attractive, cost-effective packages to deliver additional services to the employees of corporate clients. Another attractive segment is government agencies. Accordingly, we are evaluating tailored services for the employees of municipalities around Monterrey, as well as those of government entities within it. Physician engagement and productivity are also integral to our Mexico strategy, including attracting the best doctors and nurses in high complexity medicine. This includes a series of productivity and quality initiatives that have been gaining momentum. By targeting just 140 of our top physicians who represent approximately 25 to 35% of our revenues at each of our hospitals, we've improved our alignment with them. with payers and with suppliers as well. This simple initiative has enhanced medical practices, improves operating performance, cost predictability, and of course, control. Last month, half of those doctors experienced a double digit increase in productivity month over month. Additionally, in the same month, we were able to attract a group of 10 physicians from a competing local hospital. On the payer front, we aim to expand on its participation with some of Mexico's largest insurance companies preferred provider networks. Consequently, commencing in 2026, our healthcare facilities anticipate supporting heightened patient access and service volumes, thereby propelling capacity utilization. Scaling and enhancing AUNA's oncology capabilities is another key component of our growth strategy in Mexico. At the end of October, we hosted AUNA's second oncology congress in Monterrey, an event that gathered more than 70 oncologists from across Mexico. We also used the occasion to officially inaugurate a new onco center at our doctor's hospital. It will serve as a center of excellence providing oncology services in a single location and improving patient care and experience, while being integrated with AUNA's regional healthcare network. Our oncology efforts are already paying off, and this new center should significantly increase our activity in Monterrey. This is, again, the implementation of the AUNA way, which will grant AUNA the differentiating aspects that will sustain our high-growth ambitions in high complexity. Lastly, on this slide, there is the implementation of a new comprehensive IT system for our Mexico operations to bring it to our standards. Among many benefits, it will enhance the integration of financial and operational data, improve management visibility across the businesses, help us better control costs, as well as enhance decision-making at our healthcare facilities. Let's move to slide nine to discuss peru's third quarter performance our peru business i own a scalable integrated and best practice healthcare platform demonstrated the strength and predictability of our model when it's operating at scale as it further penetrated the country's healthcare market and expanded its business with third-party payers healthcare revenues grew nine percent mainly on increases in ticket and volume of emergency visits and ambulatory care. OncoSalud, the health plans business, increased revenues 8%, primarily due to the increase in memberships and to annual price adjustments. We continue to see substantial opportunity ahead and Peru will remain a key contributor to AUNA's growth. Peru's adjusted EBITDA increased 15%, with a margin increasing 1.1 percentage points to 22.7%. Driving EBITDA growth were higher efficiencies with respect to surgical procedures and improved pharmaceutical costs at OncoSalud, which contributed to its low MLR. Turning to Colombia on slide 10. Colombia's top line grew 5%, primarily the result of implementing risk-sharing models like prospective global payments, which are unique given the difficulty to replicate them, produce stable margins and high occupancy, and produce a reliable and positive cash cycle. These represented 18% of Colombia's revenues, up from 14% in the third quarter of 2024. Also, as of the end of the third quarter, the share of revenues from Nueva EPS, one of the major government intervened payers in Colombia, decreased from 20% in last year's quarter to 13%. And we added Salud Total as a payer under a new PGP program, reflecting the success of our efforts to diversify the payers that AUNA serves in the country. And despite the lower surgical volume stemming from us, limiting services to intervened payers, higher average tickets for surgery, and an increase in chemotherapy and imaging services more than offset this decrease and contributed to the quarter's revenue growth. That growth drove an 18% increase in Columbus adjusted EBITDA and margin expansion of 1.7 percentage points. In addition to lower impairment losses in the quarter, and offset by increases to doctor remuneration. That concludes my review of the quarter. Now over to Jise for her part of today's presentation.