SAO PAULO (Reuters) – The medicine group NotreDame Intermédica announced this Wednesday a net loss for the third quarter, in a result worse than expected by the market and which reverses a profit of nearly 200 million registered a year earlier.
The company had a negative result of 90.7 million reais between July and the end of September, pressured by a strong increase in the loss ratio, which rose from 68.6% in the third quarter of 2020 to 80.1%.
Cash generation measured by earnings before interest, taxes, depreciation and amortization (Ebitda) adjusted fell 70.8% in the period, to 132 million reais, with the margin falling 12.7 percentage points, to 4.1%.
Analysts, on average, expected Intermédica to report net income of 92 million reais in the third quarter and Ebitda of 306.8 million, according to data from Refinitiv.
The company is the target of a takeover offer made by today’s rival Hapvida and has a vertical integration strategy, offering health plans that are served by its own network. The system was heavily criticized by Covid-19’s CPI, which it considered as a factor that contributes to cost-cutting pressure on customer service.
According to the balance sheet, Intermédica’s loss ratio, which started to rise from the third quarter of last year, reached a peak of 80% due to a series of factors that include seven merger and acquisition operations that are in the process of integration, in addition to “High cost of Covid patients with long treatments during the third trimester” in the accredited network of hospitals.
The company also cited costs with additional demobilization of care used during the peak of the pandemic in the country and an increase in costs with materials and medicines in its own network.
As a result, the “medical bills” line, the company’s most important cost, jumped 39.2% in the third quarter over a year earlier, to around 2.6 billion reais, above the 19.3% growth in the net revenue in the period.
According to the company, the treatment of patients with Covid-19 negatively impacted the company’s loss ratio by 247 million reais (7.7 percentage points), both in its own network and in the accredited network in the third quarter.
Despite this, the company stated that “hospital admissions for Covid-19 decreased significantly over the third quarter, allowing for an important improvement in most of the company’s operating performance indicators, and with a clear indication of a return to normality”.
(By Alberto Alerigi Jr.)
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