Enterprise Project Banco Itaú BBA. April 13 th, 2018 São Paulo

Transcription

1 Enterprise Project Banco Itaú BBA April 13 th, 2018 São Paulo

2 Enterprise Project Objectives Develop the world s largest automated laboratory platform Implement changes in the production model, to increase operational efficiency and the quality of tests: Update the technological platform with higher degree of process automation Increase NTO s (Central Lab) production capacity Higher level of control and predictability of material consumption per test Production time reduction Replicate NTO methodologies in the NTAs Advanced Technical Centers located in the cities of Belo Horizonte, Goiânia, São Paulo and Rio de Janeiro Continue to ensure reliable and high quality results Renegotiate the existing commercial conditions in the agreements with the key suppliers of laboratory technology: Reduction of operating costs Detached payment for inputs, equipment and services Enable the digitalization of the relationship with Lab-to-Lab clients: New value proposition for clients in this segment 2

3 Enterprise Project Planning 1 Planning steps Understanding the needs and the current situation Description Collection of information on current situation and technical needs Definition of broad criteria for suppliers selections 2 Demand analysis and specifications review Analysis of the current specifications Identifying opportunities for cost reduction Baseline definition 3 RFI (Request for Information) launch and suppliers market analysis Suppliers information request through RFI Selection of suppliers for the competitive process 4 RFP (Request for Proposal) launch Specifications conception and redesign Definition of price range expectations Elaboration and launch of RFP 5 Negotiation with suppliers Analysis of proposals and definition of finalist suppliers Negotiation 6 Results validation and approval Results presentation Winning bid confirmation 7 Project Execution Change plan confirmation Facilities refurbishment planning Tests validation Go live 3

4 Key results from Enterprise Project Technological Innovations World s largest automated laboratory platform, according to Siemens Increase in the level of plant automation: We will be able to process 82% of the results of clinical analysis tests in up to 6 hours Pre-analytical phase (samples separation) will be performed in up to 1 hour Greater safety for customers, with less human interference and risk of damages Business Model Innovations Simplifying the billing process: Siemens should set up a subsidiary within the NTO in Vespasiano, and will be in charge of controlling the inventory of inputs and equipments Just-in-Time supply: Inventory management will be carried out directly by Siemens in a Just-in-Time material replacement model Implementation of cutting-edge technologies: Siemens Atellica platform and other complementary supplier machines \ Installation of a high-speed conveyor belt with more than 300 meters long Reduction in water and electricity consumption in the production process Automated storage cabinets Greater control of the production process Control Room will allow monitoring remote operations Suppliers remuneration format Detached payment for inputs, equipment and services New input payment model, more aligned with Pardini's interests Lab-to-Lab client digitalization: New value proposition for the segment Centralized platform will allow customers to solve the technical, financial and administrative demands 4

5 Balance Sheet Income Statement Enterprise Project Topic Initial Expectation Outcome from Negotiations Reduction in cost of reagents Reduction ~10% reduction > 10% New supplier payment format, according to the number of reported tests N/A Supplier will be in charge of process inefficiencies (> 5% potential gains) Others N/A - Reduction in logistics costs, due to reduction in the number of test tubes; - Reduction of water, energy and compressed air consumption; - Others Inventory reduction N/A ~ 50% reduction in reagents inventories, as suppliers will be in charge of inventory management Suppliers Payables N/A Extension in the payment tenor conditions, when compared to existing agreements 5

6 Agenda Additional Slides for Q&A 6

7 Agenda Company Overview Competitive Advantages 4Q17 Results Enterprise Project 7

8 Company Overview Business Segments Geographic Footprint Gross Revenue by Business Segment (2017) +1,900 cities covered 5,745 clients Lab-to-Lab: performs clinical analysis tests for other laboratories and hospitals, serving over 5,700 clients nationwide PSC: 122 stores (patient service centers) in Minas Gerais, Goiás, São Paulo, and Rio de Janeiro, offering clinical analysis, imaging tests, vaccines, check-ups and others # 122 PSC (1) 31 Regional Labs (NTAs) Central Lab Vespasiano (NTO) Progenetica and Diagnóstika Lab-to-Lab Presence Business segments Highlights PSC: Regional leadership PSC: Gross revenue per type of test (2017) Total volume of tests (2017) Leadership Position in the metropolitan region of Belo Horizonte (MG) Lab-to-Lab: 64.6 million (+17.1% YoY) ~50% Market Share in the metropolitan region of Goiânia (GO) PSC: 21.9 million (+10.7% YoY) 1 In December

9 Hermes Pardini Track Record Hermes Pardini Track Record : Foundation and Creation of New Segments : Professionalization As of 2011: Accelerated Growth Strategy Business segmentation into Lab-to-Lab and PSC Professionalization of management and 10-yr strategic plan definition Lab-to-Lab: Specialization and market share expansion, organically and through M&A PSC: Build national presence organically and through M&A Beginning of diagnostics operations Launch of Labto-Lab services Launch of vaccine services Inauguration of NTO to support Lab-to-Lab expansion Lab-to-Lab and PSC M&A strategy: Launch of Hermes Pardini brand in SP PSC M&A stretegy: Launch of imaging and anatomic pathology services Creation of the human genetics department Implementation of Corporate Governance Entry of Gávea Investimentos to support M&A strategy and further professionalization Lab-to-Lab and PSC M&A strategy M&A streategy Rio de Janeiro Acquisition of CMNG IPO Enterprise Project 9

10 Brands Lab-to-Lab Brands Strategy: Product portfolio diversification through complementary specialized tests and market share expansion PSC brands Strategy: Build national presence organically and through M&A Reference in Lab-to-Lab segment with 20 years of experience. National presence with over 5,500 clients Largest laboratory in Minas Gerais, with a well recognized brand and a diversified portfolio. Has 58 years of experience Reference in anatomic pathology, located in São Paulo and Rio de Janeiro. Highly specialized medical team, 32 years in the market with expertise in 19 segments of anatomic pathology Largest lab in Goiás with 31 years of experience and 31 centers. Portfolio includes clinical analysis, imaging and vaccines. Acquired in Reference in oncogenetics with a 17-year track record, located in Rio de Janeiro. Specialized test portfolio as key rationale for the acquisition by Hermes Pardini. Among 1 st labs to implement high complexity molecular testing Acquired in December 2016 as an opportunity to increase market share in Rio de Janeiro. It has 9 centers. Reference in multi-specialty imaging tests with 46 years of experience. Acquired in March, 2017, Labfar develops activities related to toxicological exams with high degree of specialization, focusing on tests of detection of drug abuse. Reference in cardiology imaging exams, it has almost 30 years of experience and 3 units. Acquired in December, Acquired in December, 2017, Humberto Abrão is a diagnostic laboratory in the city of Belo Horizonte, and has been operating for almost 40 years, been a reference in clinical analysis segment. 10

11 Management Team Executives Position Years at Hermes Pardini Previous Experience and Education Dr. Roberto Santoro CEO 15 Prior to becoming CEO, Dr. Santoro was Hermes Pardini s Medical Diagnostics Director Undergraduate and graduate medical degree from UFMG. Executive MBA at Fundação Dom Cabral and post-mba at Kellogg Camilo de Lelis CFO / IR 8 Prior to joining Hermes Pardini, Mr. de Lelis worked in the mine and automotive industries with London & Scandinavian Metallurgical and Fiat (Brazil, Mexico and USA) Bachelor in Accounting Sciences from Universidade Newton Paiva. Graduate degree from UNA and MBA from Harvard-UDEM Alessandro Ferreira Commercial Officer 20 Prior to joining Hermes Pardini, Mr. Ferreira was a biotechnology and biochemical professor at the post-graduate level Bachelor in Biochemical Pharmacy at UFMG. Master and doctorate degree from UFMG and MBA degree from IBMEC Dr. Guilherme Collares Operations Officer 8 Technical Director for 5 years at Lab Rede. Previous Emergency coordinator at UFMG Hospital das Clínicas and president of the Clinical Pathology Dep. (MG) Medicine undergraduate and master degrees from UFMG. Executive MBA from FGV Adriana Linhares Business Officer 19 Prior to becoming Business Director, Adriana Linhares was Hermes Pardini s PSC Corporate Manager Bachelor in Biochemical Pharmacy from UFMG. Graduate degree in Clinical Analysis from UFMG and executive MBA degree from IBMEC 11

12 Consistent Gross Revenue Growth R$mm Gross Revenue and Gross Margin - Consolidated¹ # of tests (MM) Average ticket (R$) Gross Margin 34.3% 34.3% 32.7% 33.0% Lab-to-Lab: Gross Revenue and Gross Margin PSC: Gross Revenue and Gross Margin # of tests (MM) # of tests (MM) Average ticket (R$) Average ticket (R$) Gross Margin 37.5% 38.7% 37.5% 37.8% Gross Margin 30.5% 28.5% 25.4% 27.1% Note: ¹ includes eliminations. Acquisitions 12

13 Evolution of Profitability Levels R$mm Adjusted EBITDA and margin Net income and margin 25.3% 24.1% 22.2% 12.1% 10.9% 11.5% 22.1% 11.6% 13

14 Low Leverage with Superior Returns R$mm Net Debt and Net Debt / EBITDA annual evolution ROIC (without goodwill) -26.5% -26.6% 31.6% 50.9% Net Debt and Net Debt / EBITDA 4Q17 x 3Q17 ROIC (with goodwill) 0.23x 0.51x 14

15 Agenda Company Overview Competitive Advantages 4Q17 Results Enterprise Project 15

16 Growth Avenues Key Differentiating Attributes Competitive advantages 1 Centralized production with efficient logistics 2 Lab-to-Lab: Unique Value Proposition 3 PSC: High Reliability and Operational Excellence 4 Focus on R&D: High Specialization and Development of New Tests 5 Organic growth opportunities 6 Experience in M&A activities 16

17 1 Centralized production with efficient logistics Centralized production... supported by regional sites (NTA) and an efficient logistics network: Central Lab: NTO Vespasiano RH Rio de Janeiro RH RH Belo Horizonte Central Lab NTO Goiânia RH Oncogenetics Pathol. Anatomy RH São Paulo RH Central Laboratory (NTO) 4 supporting regional sites (NTAs) 2 supporting specialized sites (NTAs) Lab-to-Lab Clients 122 Pardini PSCs 17

18 2 Lab-to-Lab: Unique Value Proposition Fast Turnaround Time R&D and Broad Test Menu IT Integration Reliability of Results Lab-to-Lab Competitive Cost Structure Medical Support 18

19 3 PSC: High Reliability and Operational Excellence Medical excellence, broad portfolio and expertise with customer care increases the value perceived by patients and physicians, while operating excellence allows Hermes Pardini to offer competitive prices for HMOs High Value Perceived by Patients and Physicians + Operating Excellence 1 Excellence in Patient Care 1 Competitive Cost Structure 2 Brand Recall and Reliability of Results 2 Expertise in Cross-Selling 3 One-Stop-Shop 3 Real-Time Operations Monitoring One-Stop-Shop Real-Time Monitoring Real time monitoring of KPIs Clinical Analysis Imaging Tests Vaccines Nutrition Check-ups OTC Wellness Products Precision Medicine 19

20 4 Focus on R&D: High Specialization and Development of New Tests Hermes Pardini s R&D excellence allows for a leading positioning in development of exclusive tests New Test Development Research Production and Quality Recognition American Association of Clinical Chemistry 1 st Place in Personalized Medical Research 3 nominations 2 oral presentations Quality Certificates Zika Virus case study: 1 st lab in Brazil to develop inhouse methodology for viral detection Zika virus test was only offered by laboratories outside Brazil with an avg. cost of R$1,000 and 50 days of turnaround time Hermes Pardini developed this test in-house and was able to reduce patient cost by 50% and the turnaround time to only 1 week R&D department developed 94 projects throughout the year, with 32 new testes and R$ 4.4 million positive impact on gross revenue (1) Source: Folha de São Paulo 20

21 5 Organic Growth Opportunities Multiple avenues for organic value creation Lab-to-Lab Strategy PSC Strategy Short Term Growth Strategy: 1 Increase Share of Wallet in Client Labs 2 New Labs in Existing Routes 3 New Labs in New Routes 4 Lab Portfolio Expansion and % Outsourced + Expansion Strategy: Strengthen presence in southeast region and expand to key metropolitan cities in the south and northeast Increase bargaining power with payers Continue to focus on higher return clinical analysis with imaging as a support Cross-selling leverage New PSCs will be offered in a one-stop-shop format: units with ~1,500m², broad menu of clinical analysis and imaging tests, vaccines, check-ups and anatomic pathology PSCs per Region 1 Long Term Growth Strategy: Further develop relationships in Pharma Increase volume of toxicology tests Expand telemedicine Focus on precision medicine (1) December 2017, including the stores acquired through Guanabara laboratory, in Rio de Janeiro and Ecoar and Humberto Abrão, in Minas Gerais 21

22 6 Experience in M&A activities Experience in M&A activities Revenue and Margin Expansion Business Diversification December 2016 Strengthen penetration in Rio de Janeiro Complete portfolio of tests (mainly nuclear medicine and radiology) July 2013 Increase in specialized anatomic pathologic tests production capacity Renowned medical team Acquisition of clinical analysis market leader in Mid-West region July 2013 December 2012 Entry in São Paulo diagnostics market, largest national market Focused on imaging tests. Opportunity to expand in clinical analysis and vaccines Opportunity to use its lab as a NTA for Labto-Lab clients in São Paulo December 2012 Acquisition of national paternity test leader, strengthening biotechnology portfolio Opportunity to acquire local authority portfolio Acquisition of Pregenetica s genetics and personalized medicine know-how Acquisition of imaging tests reference in the metropolitan region of Belo Horizonte. October 2012 Specialized on high complexity molecular tests December 2017 December 2017 Expansion in the city of Belo Horizonte, especially in the premium segment. March 2018 Strengthen company s portfolio of specialized exams. 22

23 Agenda Company Overview Competitive Advantages 4Q17 Results Enterprise Project 23

24 Operating Highlights for 4Q17 Labfar Acquisition 2018 Enterprise Project Ecoar and Humberto Abrão 94 new projects by the Integration R&D team in 2017 Labfar Acquisition strengthens our position in the Lab-to-Lab segment and in line with our strategy to develop a forensic toxicology business unit; Completion of the first stage of the Enterprise 2018 Project, with the definition of the laboratory automation partners with whom we will be working over the next few years, negotiations regarding the commercial conditions and the choice of technologies that will be implemented at the central lab (NTO); Fast pace in the integration process of recent acquisitions, with significant advancements in the backoffice and IT integration of the companies Ecoar and Humberto Abrão; The Research & Development team completed 94 projects in 2017, with a R$4.4 million growth in revenue during the year. 24

25 Operating Highlights for 4Q Prêmio Equilibrista 2017 Prêmio Minas Desempenho Empresarial NPS: 74 in 2017 in the state of Minas Gerais Self-service totems expansion 2017 Prêmio Equilibrista award from IBEF/MG: Excellence in Corporate Finance; 2017 Prêmio Minas Desempenho Empresarial award: one of the companies in the state of Minas Gerais that stood out the most in terms of economic performance; Hermes Pardini's NPS (Net Promoter Score) in the state of Minas Gerais ended the year of 2017 at a figure of 74, denoting stability in relation to previous months. In the state of São Paulo, the NPS registered 68 at the end of 2017, a 13-point increase against the position at the start of the year and reflects a number of initiatives that were implemented in the operation; Growth of the self-service totems, a technological innovation implemented by the Pardini Group, for the Aimorés and Mangabeiras units, in the State of Minas Gerais. 25

26 Revitalization of Units Buritis Unit Pampulha Unit During the 4Q17, we revitalized two units in the city of Belo Horizonte, in the state of Minas Gerais; The major objective is to improve the capacity of both units and provide better hospitality, infrastructure and convenience to our clients, reinforcing the atributes of Hermes Pardini brand. 26

27 New Units Morumbi Unit Jardim Canadá Unit During 4Q17, we have opened a new unit in the metropolitan region of Belo Horizonte, and during the 1Q18 we have opened a new unit in the city of São Paulo, both by the means of Herms Pardini brand. 27

28 4Q17 Highlights: Lab-to-Lab segment Consistent growth in volume of tests (+8.3%) and stability in revenue per client (+1.5%); Commercial strategy focused on the increase of the client base: 5,223 clients generated revenues during the 4Q17 (+6.5% YoY); Expertise on client relationship and high quality of services has resulted in the improvement of Same Lab Sales indicator (+5.9%). 28

29 4Q17 Highlights: PSC segment Acquisition of Guanabara, in Rio de Janeiro, focused on imaging tests, and Ecoar and Humberto Abrão, in Minas Gerais, has contributed to the increase in number of tests (+16.7%) and in gross revenue per m2 (+9.4%); Resilience in a market of high concentration of lives among a few healthcare operators: increase in same store sales (SSS) basis of 4.9%; NPS (Net Promoter Score) for Hermes Pardini reached 74 during

30 Consolidated Gross Revenues R$ MM 4Q16 4Q17 Variation Variation Lab-to-Lab % % PSC % % Eliminations % % Consolidated % , % Strong increase in gross revenue in both business units; Eliminations shown in the above table are mainly intercompany transactions which are excluded for calculating gross book revenues. 30

31 Gross Revenues of the Lab-to-Lab segment The increase in Gross Revenue (+8.1%) was due mainly to higher number of tests (+8.3%) and number of clients which generated revenue in the period (+6.5%); Gross revenue per client showed year-on-year growth of 6.5%, reflecting the strategy of improving the relationship with existing clients and increasing the share of wallet; Expertise on client relationship and high quality of services has resulted in the improvement of Same Lab Sales indicator, which grew by 5.9%. 31

32 Gross Revenues of the PSC segment Acquisition of Guanabara, in Rio de Janeiro, focused on imaging tests, and Ecoar and Humberto Abrão, in Minas Gerais, has contributed to the increase in number of tests (+16.7%) and in gross revenues from the PSC segment (+38.5%); Imaging tests represented circa 46% of gross revenues from the PSC segment; Gross revenues, in terms of same store sales, grew by 4.9%. 32

33 Deductions from Gross Revenues and Net Revenues % Gross Revenue 4Q16 4Q17 Variation Variation Disallowances 1.3% 1.2% -8 bps 1.3% 1.3% +5 bps Cancelled Sales and Other Rebates 0.4% 0.2% -18 bps 0.3% 0.3% +1 bps Taxes on Services 6.0% 6.0% -5 bps 6.0% 6.1% +6 bps Cancellations and Deductions / Gross Revenue (%) 7.7% 7.4% -31 bps 7.6% 7.7% +12 bps Total deductions represented 7.4% of gross revenues in 4Q17 and 7.7% in 4Q16; The purchase of Guanabara, Ecoar and Humberto Abrão increased the share of the PSC segment to 45.4% of our consolidated net revenue in 4Q17. 33

34 Gross Profit and Gross Margin In the Lab-to-Lab segment, the decrease in gross margin observed in 4Q17 is related to a stronger structure developed throughout the year, in order to support the significant volume increase, as well as the lower number of workdays in 4Q17; In the PSC segment, gross margin increased due mainly to the incorporation of results from Guanabara and higher number of tests in the states of Minas Gerais and Goiás, through Hermes Pardini and Padrão s brand, respectively. 34

35 Operating Expenses (Selling, Administrative and Other) Variation of major Operating Expenses 4Q16 4Q17 Operating Expenses R$ MM % Net % Net R$ MM Revenue Revenue Selling Expenses % % General and Administrative Expenses % % Other Operating Income / Expenses % % Total Operating Expenses % % Operating Expenses R$ MM 2016 % Net 2017 % Net R$ MM Operating Expenses Revenue R$ MM % Net Revenue % Net Selling Expenses 57.0 R$ MM Revenue 6.3% 70.6 Revenue 6.3% General Selling Expenses and Administrative Expenses % 6.3% % 6.3% Other General Operating and Administrative Income / Expenses Expenses % 6.9% % 8.4% Total Other Operating Operating Expenses Income / Expenses % 2.7% % 1.1% Total Operating Expenses % % Operating expenses remained at 16.1% of net revenues in 4Q17 and represented 18.0% of net revenues in 4Q16. Selling Expenses increase is an effect of incorporation of Guanabara, Ecoar and Humberto Abrão s numbers and an increase in Publicity and Advertising Expenses in the state of Minas Gerais. General and Administrative Expenses variation occurred mainly as a result of Guanabara s numbers incorporation, an increase in personnel expenses and write-off of provisions in 4Q16 which were not repeated in 4Q17. 35

36 Financial result R$ MM 4Q16 4Q17 Variation Variation Net Finance Result % % Finance Income % % Income from financial investments % % Put Option % % Others % % Finance Costs % % Interest on borrowings % % Interest on installments % % Restatement of investment call option debt % % Other finance costs % % Foreign Exchange Variation % % Foreign exchange income % % Foreign exchange expenses % % The increase in Finance Expenses were influenced in R$ 4.6 million by interests in connection with the funds raised by the company in 1Q17 in the form of simple nonconvertible debentures; 36

37 Income tax / social contribution R$ MM 4Q16 4Q17 Variation Variation Earnings Before Taxes (EBT) % % Expected taxes (standard rate of 34%) % % Effect on the results of subsidiaries taxed under the presumed profit method % % Interest on capital n.m n.m. Write-off of deferred tax due to merger n.m n.m. Other exclusions (additions), net % % Income tax and social contribution % % % EBT -40.5% -7.9% bps -34.3% -25.6% +876 bps Current % % Deferred % % The decrease observed in the effective Income and Social Contribution tax rate when we compare 4Q17 to 4Q16 and also the 12-month period of 2017 with the same period of 2016 is mainly due to the R$10.2 million tax benefit obtained by the company as a result of R$30.0 million distribution to shareholders in the form of Interest on Own Capital, which took place in December

38 Net Income and Adjusted EBITDA R$ MM 4Q16 4Q17 Variation Variation Adjusted EBITDA % % margin 19.4% 16.8% -261 bps 22.2% 22.1% -4 bps Persistent high profitability margins: adjusted EBITDA margin of 22.1% and net income margin of 11.6% in 2017 thanks to improved operational margins in both segments; Non-recurring items which affected EBITDA in 4Q17 includes mainly expenses related to M&A projects, in the sum of approximately R$0.3 million. 38

39 Trade Receivables R$ MM 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Trade Receivables Current From 1 to 60 days past due From 61 to 120 days past due Over 120 days past due Other current amounts Allowance for doubtful accounts Provision for loss on services provided and not yet billed Disallowances Total Current / Trade Receivables 86.6% 85.4% 86.0% 83.8% 88.5% 86.2% 84.5% 82.1% Balance overdue until 120 days / Trade Receivables 8.4% 10.9% 10.5% 11.2% 7.0% 7.6% 11.4% 14.0% Provisions / Balance overdue for more than 121 days 100.0% 100.0% 100.0% 119.4% 113.7% 110.0% 100.0% 100.0% Net Revenue Days of Sales Outstanding Days of sales outstanding was down to 77.4 days in 4Q17, due mainly to higher participation of the PSC segment in the Company s revenue mix and changes in the payment policies of the sales area in the Lab-to-Lab segment; Our receivables portfolio is at an extremely healthy level: 82.1% of receivables are in order. we have set up a provision for all receivables overdue for more than 120 days. 39

40 Debt Net debt and Covenants R$ MM 4Q16 4Q17 Variation Gross Debt (Borrowings) % Cash and Cash Equivalents % Net Debt % Net Debt / EBITDA LTM 0.3x 0.5x 60.9% EBITDA LTM / Financial Result LTM % In 4Q17, we showed a net debt of R$ MM, mainly because of the Interest on Own Capital payment occurred on dec/17, at amount of R$30.0 MM and the payment for Ecoar and Humberto Abrão acquisitions, at approximately amount of R$ 55.2 million; Healthy capital structure (net debt / EBITDA LTM of 0.5x). 40

41 Cash Flow R$ Thousand 4Q16 4Q17 Variation Variation Profit for the period % % Itens not affecting cash % % Working Capital: % % Receivables % % Trade Payables % % Salaries / Charges % % Other Assets and Liabilities % % Income tax and Social Contribution and Other Payments % % Operating Cash Flow % % Investing Activities: % % Settlement of liabilities for purchase of investments n.m n.m Acquisition of Minorities Stakes % % CAPEX % % Other investing activities % % Financing Activities: % % Dividends and Interest on Own Capital % % Other financing activities % % Cash Flow % % Conversion (operating cash flow/ebitda) % -143% -14.5% % Net cash flow from operations amounted to R$ 43.3 million in 4Q17; 41

42 CAPEX and ROIC CAPEX (R$ MM) ROIC LTM without goodwill Most investments made during 4Q17 may be classified as maintenance CAPEX (renovation of the Guanabara units in Rio de Janeiro and improvements to the existing service units) and expansion CAPEX (opening of new units in SP and RJ); ROIC LTM without goodwill of 32.5% in 4Q17. 42

43 Lab-to-Lab Decelaration Lab-to-Lab Gross Revenue Growth Incorporation Effect Lab-to-Lab Gross Revenue (R$ MM) 4Q16 4Q17 Variation Lab-to-Lab % Eliminations % Adjusted Gross Revenue % Summary Table Lab-to-Lab Gross Revenue Growth 8.1% Adjusted Lab-to-Lab Gross Revenue Growth 9.5% Incorporation Effect on Growth Rate 1.4% Calendar Effect 4Q16 4Q17 Variation Lab-to-Lab Gross Revenue R$ 148,230 R$ 160, % # Workdays % Gross Revenue per Workday 2, , % 43

44 Agenda Company Overview Competitive Advantages 4Q17 Results Enterprise Project 44

45 Disclaimer and IR Contacts Disclaimer This presentation contains certain forward-looking statements concerning the business prospects, projections of operating and financial results and growth potential of the Company, which are based on management s current expectations and estimates of the future performance of the Company. Although the Company believes such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. Expectations and estimates that are based on the future prospects of the Company are highly dependent upon market behavior, Brazil s political and economic situation, existing and future regulations of the industry and international markets and, therefore, are subject to changes outside the Company s and management s control. The Company undertakes no obligation to update any information contained herein or to revise any forward-looking statement as a result of new information, future events or other information. Contact: Investor Relations ri@grupopardini.com.br site: Phone: +55 (31)