Hypera Sa S/Adr

Good morning, ladies and gentlemen. Welcome to Hypera Pharma's third quarter of 2026 results conference call. Today with us we have Mr. Breno Oliveira, CEO, and Mr. Ramon Sanches, CFO and IRO. Today's live webcast may be accessed through the company's investor relations website at www.ri.ibera.com.br We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company's presentation. After the closing remarks, there will be a question and answer session when further instructions will be given. We would also like to inform you that statements during this conference may constitute forward-looking statements. Such statements are subject to known and unknown risks and uncertainties that could cause the company's actual results to differ materially from those set forward in the forward-looking statements. Now, I'll turn the floor over to Mr. Breno Oliveira who will begin the presentation. Mr. Breno, you may begin the conference. Good morning, everyone.

It's great to be here with you for a earnings call.

Once again, we delivered sell-out growth along with market share gains in the categories where we operate. Our sell-out grew by 6.6%, while our target market grew by 5.4%. Our target market grew at a slower pace compared to the first half of this year, mainly due to a 15% decline in sales of flu medication, driven by a 23% decrease in reported flu cases in the third quarter of 2026. On the other hand, we performed well in skincare, gastroenterology, cardiology and diabetes, driven by investments in strengthening our brands and recent product launches. Notably, Semavi, our semaglutide-based medication. We began selling Semavi in September, and it contributes to the extension of our portfolio of products related to chronic disease treatment, which is in line with our medium and long-term strategies. In its very first month of sales, Semavi achieved sell-out sales of approximately 93,000 units and a market share exceeding 11% in the injectable semaglutide market. We sold Semavi in more than 18,000 pharmacies in Brazil, which contributed to an 11.3% growth in the injectable semaglutide market from August to September in units. In October, growth remains very strong and exceeds our expectations. It already positions Semavi as the company's stock selling product in sell-out. and we're still only in the product's second month of sales. The initial launch of Semavi along with our customers and the recent growth in sell-out have enabled us to achieve a net revenue of 2.4 billion Brazilian Reais, 9.4% higher than the third quarter of last year, with an EBITDA of 782 million almost entirely converted into operating cash flow. Contributing to a reduction in the company's net debt of approximately 300 million during the quarter. Ramon will now comment in further detail about the quarter's results starting with the next slide. Thank you, Breno. Good morning, everyone. Our revenue reached 2.4 billion Reais with a 9.4% growth this quarter. This growth came from the increase in sell-out and the start of some of these sales to our customers. Gross profits grew 9.7%, reaching 1.5 billion with a gross margin of 61.3%, flat compared to the previous year. Marketing expenses grew 13.1% in the third quarter of 2026, and totaled $415 million. This growth exceeded the increase in sell-out for two reasons. Increased media investments to support recent product launches and the expansion of medical sales teams. Sales expenses totaled $272 million, a level close to that of the second quarter of the year and represented 11% of our net revenues. Compared to the third quarter of 2025, this growth stems mainly from the lower benefit under the Les Deux Bains Law. 17 million was recorded this quarter, compared to 38 million in the previous year. Excluding this effect, sales expenses would have increased by 5.5%. General and administrative expenses accounted for 3.8% of net revenue, remaining at the same level as in the third quarter of 2025. As a result, EBITDA from continuing operations was $782 million with a margin of 32%. Net income grew by 16% driven by a 42% decrease in interest expenses. This reflects a reduction in net debt and lower interest rates compared to the previous year. Moving on to slide 5. We had one more quarter of strong conversion of EBITDA into operating cash flow, which stood at 97.5%. This reflects the continued discipline we have had in working capital management. We once again reduced investments in working capital. We ended the quarter with 186 days of inventory compared to 194 in the second quarter of the year. As a result, working capital fell to 27% of Our annualized net revenue for the quarter compared to 28% in Q226 and 30% in Q325. We invested 139 million in fixed assets, including the expansion of our production capacity, notably the in-house production of brands acquired in the recent years and the new factory for the institutional market. Investments in intangible assets totaled $70 million, focused on R&D projects aimed at strengthening the innovation pipeline. Our cash flow was positive by $57 million, reflecting the inflow of $1.35 billion from our 22nd debenture issuance, conducted this quarter at CDI plus 0.72%, as well as the partial redemptions of the 16th and 17th issues, which had a cost of approximately CDI plus 1.3%, totaling $1.2 billion. Thank you Ramon. Thank you, Ramon. We continue to grow our sales with robust operating cash flow and a reduction in our net debt. In addition, we've made progress in expanding our market reach through the launch of new products in relevant markets. We currently operate in 61% of the Brazilian pharmaceutical market, a 3 percentage point increase compared to last quarter. We have room to further increase our share of the pharmaceutical market with new product launches planned for the coming years, particularly in the area of chronic care medications. The combination of these launches with the strength and resilience of our brand portfolio, the line extensions of our leading brands, and our strong cash generation puts us in a prime position to capture the key growth opportunities in the Brazilian pharmaceutical market. Thank you, and we will now move on to the questions and answers session. We will now begin the questions and answers session for investors and analysts. If you have a question, please click on the raise hand button. If your question has been answered, you can leave the queue by clicking on lower hand. The first question comes from Mr. Vinicius Scrunner from UBS. Go ahead, sir. Good morning, Breno, good morning, Ramon, and good morning, Douglas. I'd just like to ask about your sell-out dynamics for the future. I'm looking at the retail channel, and what do you expect from the flu medication category? I know that the comparative basis last year was very high, so is this a one-off effect for this quarter? I'd just like to understand what your expected sell-out will be. and specifically on flu medication. What here is recurring and what is not recurring? Also, if you can tell us about the competitive dynamics in your main markets. Additionally, if you can tell us a little bit more about your costs. I understand that we are expecting more and Hello Vinicius, good morning, this is Breno. I'll take your first set of questions about the market, and Ramon will answer the second part concerning the costs. So, speaking about our sell-out dynamics for the future, starting with flu medication, we understand that this is partially an effect of El Niño. We saw that average temperatures in Brazil were slightly higher than last year. And we also saw a reduction in acute respiratory syndrome cases as reported by the government. It was below what we saw in the same quarter last year, about 20% below what we saw in the third quarter of 2025. So, there is that. There is El Niño, which should continue until the end of the first quarter or the beginning of the second quarter of 2027. So, we believe that now, in the fourth quarter, this will not have such an effect on our portfolio. There will be some impact, but it will not be as relevant as we saw in the third quarter. We have to understand how far this is going to last, if this is going to impact So I think that's the main impact. So, as I said, we will probably see a negative impact from the flu category until the first quarter, but it won't be as significant because it usually doesn't affect us as much during the fourth and first quarters. On the other hand, we have Sema V, which is a launch that is doing better than we expected.