Rede D'Or Sao Luiz SA
BOVESPA:RDOR3
Rede D'Or Sao Luiz SA
Rede D'Or São Luiz SA stands as a prominent figure in Brazil's healthcare landscape, weaving its narrative through a network of hospitals and healthcare facilities that span the country. Founded in 1977, the company has cultivated a robust business model focused on the provision of high-quality, comprehensive healthcare services. It operates through a substantial portfolio of hospitals, oncology clinics, and surgical centers, reflecting a commitment to expanding healthcare accessibility and enhancing patient experiences. The company thrives in a space where it addresses the increasing demand for private healthcare services, driven by an aging population and growing affluence in Brazil.
The financial engine of Rede D'Or is powered by a multifaceted revenue stream predominantly comprising hospitalization and associated medical services. The company strategically leverages its vast infrastructure, clinical excellence, and brand reputation to maintain and grow its market share. Investment in state-of-the-art medical technology and facilities further supports its business model, enhancing operational efficiency and service quality. By offering a diversified range of healthcare services, the company ensures a constant and stable flow of revenue, buttressed by long-term contracts and partnerships with insurance companies. This, in turn, allows Rede D'Or to continually reinvest in expanding its network and upholding the high standards that defined its inception.
Earnings Calls
In the first quarter of 2025, Rede D'Or achieved impressive financial results, with gross revenue of BRL 14.1 billion, marking a 7% increase year-on-year. EBITDA reached BRL 2.3 billion, up 22%, and net income climbed 21.1% to BRL 1 billion. The company generated robust operational cash flow of BRL 3.2 billion, an 86% rise, while reducing its debt-to-EBITDA ratio to 1.7x. With 10,356 operational beds, an increase of over 500 beds this year, Rede D'Or anticipates continued growth. It aims for sustainable growth in 2025 by focusing on strategic expansion and efficient patient care while maintaining a strong cash position.
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Good morning, everyone. Welcome to the earnings call of the first quarter of 2025 of Rede D'Or. Here with us today, Mr. Paulo Moll, President; Rodrigo Gavina, CEO of Hospitals; Otavio Lazcano, VP of Finance and Investor Relations; and Raquel Reis, CEO of Healthcare and Dental of SulAmérica. This event should take about 1 hour, and the recording will be available at the IR website of the company. After this presentation, we will start with a Q&A session. You will receive further instructions.
Before continuing, any forward-looking statements that are done in this earnings call in regards to the business projections, operational goals, financial goals are based on premises and beliefs of the Board of Directors based on information that is currently available. Forward-looking statements are not guarantees of performance, and they involve risks and uncertainties. They refer to events and circumstances that may or may not take place. Investors should understand that macroeconomic conditions, industry conditions and other operational factors may affect the performance of the company, and might lead to results that are different from the forward-looking statements.
I'd like to give the floor to Mr.Paulo Moll. He will start the earnings call. The floor is yours.
Thank you. Good morning, everyone. Great to be here. Another earnings call with solid results, strong results, reinforcing the success of the combination of businesses, Rede D'Or and SulAmérica. This joint venture was concluded over 2 years ago. The numbers show our great results and the resilience of the company going through challenging moments.
In the gross revenue, we got to BRL 14.1 billion, which is 7% growth. EBITDA consolidated is BRL 2.3 billion, a growth of 22% year-on-year, a margin of 17.7%. If we add the technical reserves of the insurance, we got to BRL 2.6 billion of adjusted EBITDA with a margin of 20%. Net income. We delivered BRL 1 billion, which is a growth of 21.1% year-on-year. I will let Raquel and Otavio to get into the details of SulAmérica and Rede D'Or individually.
Also in the financial part, we have a generation of cash -- operational cash that is very strong, BRL 3.2 billion, a growth of 86% year-on-year, a reduction of the leveraging of the company. And remember that the company distributed through this period, the interest of our capital. We had a repurchasing program, very successful. Still, we did a CapEx that is important with the expansion of beds, and still a reduction of the EBITDA relation to debt in the first quarter of '25. So it's 1.7x the indebtedness of the EBITDA debt.
So we have a strong cash flow of the company without considering the technical reserves, we're talking about BRL 19.4 billion. That places us at a situation that is very flexible. So we can analyze new investments, organic or inorganic. With our debt, we have the average cost that is very competitive, CDI plus 0.9%, with an average deadline of 5.5 years.
Talking about the expansion. At the beginning of the year, we have the new Barra D'Or. We also consolidated the structure of São Luiz Campinas in Atlântica D'Or, and still a good expansion of the operational beds. This was a point that we really discussed in the fourth quarter, where we had a closing of the year '24, with a growth that was lower than the expectation with the operational risk.
Nonetheless, in the first quarter, even though we still have the first 2 months of the year, where until Carnival with movements and frequencies in regards to previous year that is lower in comparison, we still closed the quarter with 10,148 operational beds, a growth of 291 beds in regards to the closing of last year, a growth of 409 beds in regards to the same quarter of '24. We still see this dynamic of the closing of the quarter until the -- today. Today, we got to 10,356 operational beds, a growth in the year of over 500 operational beds.
Still in this first quarter, we have an important contract in Rio de Janeiro that was discontinued. Nonetheless, we still had a growth, very accelerated after Carnival and the beginning of the proper year here in Brazil. We had lower frequencies in regards to the same profile of last year. We had dengue, respiratory diseases that were earlier on in the year.
Perspectives of the year. We hope to have an accelerated ramp up. The assets in Atlântica D'Or, you've been following up on them. A series of organic projects that should be delivered over the next 2 years. Still strong in these investments. It works. And annually, we have updated you through the reference form.
Keeping our financial discipline with a leverage on control with the cash generation that is strong, as I discussed with a lot of flexibility to take a look at opportunities, organic or inorganic, accelerating the repurchasing of shares, as we have done the careful capital allocation of the company. Trustworthy that we will have a sustainable growth for '25 and the following years with the characteristics -- the DNA of the company and innovation, efficiency and care for our patients.
Now I'll give the floor to Raquel, and I am available for the Q&A.
Thank you, Paulo. Welcome. Great to be here to talk about the numbers of the beginning of the year of SulAmérica. We started the year as we finished '24 growing, keeping the growth that is responsible. Almost 100,000 new beneficiaries in the quarter, 65,000 in health and 34,000 in dental, keeping a positive trend over the next months, and the cross-sell strategy is ever more present in our day-to-day.
As I reinforced in the previous calls, after a few difficult years where agents were necessary, you remember, we still have a profitability that is controlled, which allowed us to go back to sustainable growth, expanding access to quality health care, launching new products, new regions and better utilization of our partners. The claims of 79.3 improved in the same period of last year. Going back to the current standards of the first quarters that we used to see in the pre-pandemic period.
Still we kept the discipline in the administrative expenses. We got to 4.2% of the revenue. That's a big characteristic of the new SulAmérica. Discussing the new SulAmérica, I would like to thank all the team. In fact, you are very much responsible for all the results that we've achieved at the insurance company.
I'll give the floor to Gavina. I remain at your service for the Q&A.
Thank you Raquel. Good morning. Let's start from where you ended. Thanking all the team of Rede D'Or and SulAmérica for all the results that this company has delivered. Regardless of all the difficulties and the challenges that we have in our market, Paulo has mentioned a few. In regards to the new configuration with the health care plans operators, we delivered on Page 5, you can see the number of patient day.
Respecting the seasonality of the quarter, we delivered a number of patient days that is similar to last year, regardless of all the adjustments. And remember the last year, our doors, emergency doors were very much fuller. Obviously, that brought us a bigger challenge, and we managed to compensate a great deal of this with the growth of surgeries. That we can follow up on the graph on the right. We have a growth of surgeries and also growth of complex surgeries in the order of almost 9%.
If we go to Page 6, rectifying the words of Paulo, we grew quarter-on-quarter, close to 4.3 operational beds. So without the responsibility of growth and the ramp-up of the beds of the new hospitals so that we can respect all the events of growth of the hospitals and the technical quality, perceived quality that we deliver along with these financial results and the responsibility that we had. We managed to grow 4.3% operational beds. And if we look at the total beds quarter-on-quarter, it grew over 11%.
So I'll give the word to Otavio, so he can continue with the presentation. Thank you.
Thank you, Gavina. Once again, good morning. We are on Page 7. The gross revenue and average ticket exclusively of hospital services. Let's start in the graph on the left. The company reported in the first quarter of '25, the gross revenue in the segment, BRL 7.9 billion, a growth of 6.8% if you compare to the first quarter of '24. Stability in the number of patient days and the increase of the average ticket, 6.8%, also growth of 0.2% in the comparison with the fourth quarter of '24, a result of the increase of the patient day of 1.6%, a drop in the average ticket, 1.3%. So that there is no doubt on the pricing and the results of the company when we compare the average ticket of the first quarter of '25 with the first quarter of '24, it increased 6.8%. When we do the same thing with the fourth quarter of '24 and the fourth quarter of '23, the increase was 10% of the average ticket. The third quarter of '24 with the third quarter of '23, also a growth in the second quarter of '24 also increased in comparison to last year.
Ladies and gentlemen, please wait for our speakers to reconnect to the call. [Technical Difficulty]
Can you hear us now? Just a minute, we had an issue with the power and we are reconnecting.
Let's go to Page 8, the gross revenue and average ticket exclusively of oncology always started on the left. The company reported the gross revenue for the segment of the first quarter of '25, BRL 869 million, a growth of 16.5% in the annual comparison, an increase in the number of infusion, 3.8% and the average ticket increase of 12.2%. In a comparison, quarterly, the growth is 4.8%, a growth in the number of infusions, 3.8% and the average ticket increase of 2.5%. On the right, we present graphically the evolution of the average ticket since the first quarter of '24.
Page 9, the costs and expenses. Once again, hospital services. On your left, the company reported the total cost of BRL 5.5 billion in the first quarter of '25, a growth of 10% in comparison to the first quarter of '24, a drop of 1.3% in regards to the previous quarter.
On the right, we have graphically the evolution of the general and administrative expenses. In the first quarter of '24, we have a positive BRL 65 million, a reversal of provision questioning of the records of SulAmérica because of the entry on the capital of many, many years ago. Regardless, we had a one-off positive in the fourth quarter of '24 of BRL 18.5 million regarding to the transference of operational expenses in the general and administrative expenses for the cost of the company. I'm saying that because the SG&A in the first quarter of '24 -- '25 of BRL 327 million which corresponded to 4.1% of the growth revenue of the company with the serious -- with the adjustments in the historical record, this number is stable throughout.
Page 10. EBITDA and net income of the hospital services. As always, starting on your left, company reported an EBITDA accounting in the first quarter of '25, BRL 1.672 billion, a growth of 0.9% in the annual comparison, a growth of 9.1% in comparison with the previous quarter, and a margin EBITDA of 23.8%. On your right, the evolution graphically of the net income. The company had an accounting net adjusted of BRL 1.17 billion and BRL 1.70 billion, respectively, in the first quarter of '25.
Page 11. Data on the performance of SulAmérica. Let's start on the left. Net revenues in the first quarter, BRL 8.47 billion, a growth of 1.2% in the annual comparison still above on the right. The consolidated loss ratio dropping to 3.9%, 78.6% in the first quarter of '25.
Still on your right below, growth of beneficiaries, clients of the company getting to, 5.4 billion -- 5,400 beneficiaries in the -- sorry, 5 million beneficiaries of the company. An adjusted EBITDA of BRL 986 million. When we add the financial revenue on the guaranteeing assets, the EBITDA of the company, therefore, is BRL 2.332 billion. The consolidated adjusted EBITDA was BRL 2.641 billion, a growth of over 21% in comparison year-on-year.
Page 12, debt profile. On the left, you can see the cash and cash equivalents and real estate titles of BRL 41 billion. Let me exclude the technical reserves, the net cash flow of BRL 19 billion. The gross debt of the company is BRL 36.8 billion, the net debt, BRL 17.3 billion. The net debt over EBITDA, 1.7x. When we add to the calculation, the technical provisions for insurance reserves that net debt over EBITDA drops to 1.1x.
Center of the page, the evolution of the average cost of debt, very much controlled CDI plus 0.9%. On the right, we see the schedule of amortization of the commitments until the longest deadline of the debt.
Last page, 13, managerial cash flow. Let's start on the left. Basing ourselves and reported EBITDA of the first quarter with a cash variation also of the first quarter, of course, starting with an EBITDA reported BRL 2.332 billion. We have a cash -- working capital of BRL 1.463 billion. We have negative BRL 102 million of other balance sheet items in the sequence leasing BRL 187 million of payment of these.
On your right, we have the payment of taxes, BRL 314 million. We have negative BRL 1.634 billion coming from the financial activities. Here is amortizations, payment of interests, the revenues on the investment of the cash, the distribution of dividends and repurchasing of shares of the company.
In the end, negative investments, BRL 208 million. Here, we have the investments in greenfields, brownfields, BRL 471 million. We have additionally the investments of minus BRL 120 million, and we have the return of investments done on the Campinas Hospital of BRL 383 million as we transfer this enterprise to the joint venture with Bradesco, we are reimbursed proportionately to the investments that were already done. On the right, we see graphically the evolution of the average days receivables and DIO and DPO.
We finished the presentation here, and we open this page for Q&A.
[Operator Instructions] First question, Leandro Bastos, Citi Bank.
2 questions. First, on the operational bed expansion. We would like to -- well, when we have the updated figure close to 500 this year, I wanted to understand how you imagine the seasonality of the evolution of beds? We see that until Q2, there is a big expansion. And then the second semester is a bit weaker with the closing. Should it be like that, the operational or due to the projects and the ramp-ups of the different hospitals, we have a space to see something different. That would be the first question.
Second, the part of intercompany of SulAmérica, growing in participation and growing in the hospital segment. So what are you selling in opportunities? Do we have a cycle of gaining the participation of the hospitals that are within the network of SulAmérica. But what is the commercial context of -- with the other operators? What do you see of markets and conditions with other players?
Leandro, thank you for the questions. Let's talk about seasonality. Last year, we had, obviously, any year, you have first and fourth quarter with less frequency than the second and third. That is the trend. Nonetheless, last year, we had, specifically in the first quarter that was stronger than usual. Second quarter, very strong. A few months of the quarter that were the strongest in the year.
This year, we -- even you can still expect the first and fourth quarter naturally with lower frequencies, we still expect to have a seasonality that is a bit different from last year, where we accelerated the growth of beds in the first and the second quarter of this year, due to the fact that we're doing the ramp-up of several new units as we have discussed.
Our growth, in the comparison with the previous year, and I'm talking about the hospital part. It tends to be stronger in the second quarter of the year than in the first quarter of the year because of the reasons that we've just discussed.
On growing the intercompany. SulAmérica is growing its portfolio, of course. The participation of Rede D'Or, it naturally evolves. And if you look at the percentage, let's remember that we have discontinuations that were important that we mentioned throughout the year, including this first quarter. So that makes it that within the mix of operators, big operators such as SulAmérica and Bradesco, have a trend of growing within our mix.
Next question, Raphael Elage from XP.
Two. First, in regards to the claims of SulAmérica. If Raquel can give us some more detail of what is this effect, the positive results, how can it be something of the market? When you commented on the previous call, the less occupancy of the hospital beds, maybe there is a positive effect in the claims, not just discussing the issue of the hospitals of the network.
But the second point would be to understand from the growth of tickets of the hospitals. Otavio anticipated the capacity of the company of adjusting the pricing. But I wanted to understand the readjustment of the pricing on the table and the evolution of the mix, how do they influence the results?
I'm going to take the second question, and then I'll give the floor to Raquel. We always request that all of the investors and analysts look at our evolution of the ticket with care and looking at in an annual basis. We never do a sequential quarter comparison.
You can see that all throughout our history, 1 year or 2 years, 3 years, 10 years. We have been going over a few -- 1 or 2 points above the inflation. That is the best way that I would suggest that you keep looking -- always looking at a period of 12 months because you can have fluctuations quarter-on-quarter because of the profile, the seasonality that you have.
Last year, for example, you had dengue fever, you have more volume, but there is an impact in the ticket. So always to give amortization and avoiding the mistake in the analysis, looking at the year-on-year period.
Well, a part of the answer in regards to the first quarter is given to the seasonality, and Paulo has answered the part. Last year, when you compare specifically to last year, we had dengue before we had the emergency room fuller and that impacts our consolidated loss ratio. So what we've seen thus far is a seasonality that is much more known. What we used to see in previous years.
It makes a lot of sense. We have to observe the carnival if it's in the middle of the year, and all of that causes an impact for the insurance company and also the hospital. And as you know, we are a big ship. Any decision that you make, it demands 12 months to impact the phase of the clients. So what we are seeing in the first quarter of consolidated loss ratio, it went over the recomposition of pricing with the new sales, with the readjustments, the modularity products. And [indiscernible], 64,000 increase of lives last year, all of them got into this new logic of products. This year, another 65,000 lives also in this new logic.
If we look at co-participation, which is a fundamental factor so we can have a rational use of the health care benefit, we also see our growth in the retail, which is 100% sold, 40% of the small companies, small and medium-size companies also with co-participation. So when we add all that, that is the answer that you are seeking for this consolidated loss ratio.
Next one is from Joseph Giordano from JPMorgan.
Paulo and Raquel, so I wanted to explore that strong growth in SulAmérica that is connected to a very healthy margin. You commented on the co-participation and I wanted to understand how do you see that network issue, if it's a regional product? If you can work the network in a more adequate way. And we've been working hand with the hospital side.
Second question for Gavina. Of course, the seasonality hinders the reading of the ramp-up of the new beds. But I wanted to see how do you see the schedule outside of the Bradesco SulAmérica Binomial with the new assets? How do you see this acceleration of the occupancy of these beds and what we have for the next quarter?
Well, the optimism and care -- well, with optimism, we have a few negotiations with the market with carefulness. Now remember that these geographies are different. The assets are in different geographies and therefore, that would make us do different negotiations where the business has more power with other operators that are not Bradesco and SulAmérica.
Yes, we have a few registrations outside of Bradesco and SulAmérica. We have negotiated with other operators, and we continue with the negotiations with the others. So we believe that this will grow and evolve. Remember, the ramp-up has been very positive.
This is Raquel. Thank you for the question. When we look at the growth, there is a factor that I have to mention before any other. Obviously, we have a very robust commercial team, they're day-to-day talking to all the insurance companies, all the companies, trying to get disruptive products, not just delivering what we have available on the shelf, but more and more assembling along with our clients with the insurance representative, something that makes sense for a company. But it's not just a commercial area. This is the big differential.
So when I look at the SulAmérica team and the Rede D'Or team, everybody is always generating a lead, purchasing, procurement is always remember SulAmérica on the other hand. That synergy is fundamental. So we can achieve this growth along with all the strategy of launching in non-obvious regions.
I mentioned Parauapebas, the regional product of João Pessoa. In a few places, yes. It makes sense to have a product that is closed and it has an average ticket that is lower. But what we see in growth of beneficiary, the basis is also in our products that are more traditional. They have an average ticket that is higher. And for that, we've done a strategy of concierges, not just attracting new clients, but keeping these clients for as long as possible. So we have an exclusive area that is dedicated to the satisfaction of these clients so that they remain with us longer. The growth and the base is always a product between selling and noncanceling. These 2 points are equally important for the team.
Next question, Samuel Alves from BTG Pactual.
Well, 2 questions on our side. On the consolidated loss ratio of SulAmérica, Raquel commented on seasonality and the other levers that can be captured. The question is the company believes that you got to a threshold that is optimal. When we look at the numbers, consolidated loss ratio is below to what was delivered in the first quarter of '19 with the prepandemic threshold. The question is, can you go further? Can you find other additional levers to reduce even more?
And the second question is you even opened the impact of the assets that were recently launched with the EBITDA. Could you give us an idea of the magnitude of the margins, just so we can understand if these assets, they send that margin lower or the drop of the margin was due to the lower occupancy rate in January and February, as you commented in the previous call.
Samuel, so let me start with the second question. We do not give the opening of the margin. But -- so you can understand. The first quarter is a margin that is below the company. And our expectation, given that the ramp-up is doing very well, is that this will converge in the aggregate to a similar margin for the company with the assets that is superior to the assets of the company because of the level of the ticket, the mix in the second quarter.
Samuel, thank you for the question. I would say that the threshold that we are reaching in the consolidated loss ratio is a good threshold, recognized by the market. On the other hand, I have shareholders that are demanding that are always looking for an improvement in this number. So that is a constant following up along and very balanced with our growth of the base -- the growth of the base of the beneficiaries.
We always try to pass on part of that gain and the readjustment in the pricing with new clients. So we have that beneficiary basis. We have 3 million lives serviced in health, getting close to another position in the ranking of the biggest operators in the market.
Another relevant point that I can mention in this slide is the reduction in your readjustment of the pool. The small contracts up until 29 lives, we did a readjustment for the April, 4 percentage points less than last year. So it's a combination of these 2 factors, but always improve -- seeking the improvement of the consolidated loss ratio. Thank you.
Next question is Mr. Mauricio Cepeda from Morgan Stanley.
Paulo, Raquel, Gavina, Otavio, first, I would like to start by a sectorial question, the issue of regulation of ANS. There seems to have a lot of issues going on in the reduced coverage, the adjustment of the individual, the size of the pool, even discussions at the Senate level on the canceling unilateral, the judicialization of the sector discussed with the judicial powers. If you, Raquel, can give us a vision on how is your opinion of where that is progressing, what seems to be a trend and how can that impact you?
And the second question, going back to the previous theme, that trade-off of profitability versus expansion of the portfolio. We can see that clearly, the profitability is increasing. I imagine that the profitability of the contracts is increasing, either by design on how the plan is done or priced, but it's still very strong with the profitability of the contract. So do you see space to continue with this profit -- with the profiting levels? Or should you migrate? And when should you migrate because of the expansion of the portfolio? And in this expansion of portfolio, the type of clients that you're looking after? You, Raquel, you mentioned the higher tickets. But if this new logic of products as you've discussed, is that opening other profiles of clients that allow for an expansion of the portfolio?
Let's start by the most difficult one. Talking about the regulations. There is several public consultations ongoing. Some are more publicized than others. There is vacancy of a few chairs in the regulatory body. So we are, at a moment, that is complicated in terms of regulation.
Last night, there is a new fact. I don't know if everybody knows, the public consultation 145 that dealt with 4 themes, a readjustment of individual co-participation, selling online, a new grouping of the pool, determining the risk of consolidated loss ratio to be followed.
When we published [indiscernible], which is one of the associations that represent the health care plans, got in with the request of an appeal. There was a judge that was ruling. And yesterday, it was approved, the appeal, indicating the suspension of the public consultation 145, demanding that ANS regulator presents all the studies of analysis of regulatory impact. This is fundamental for the market.
There was -- well, at the moment of the public consultation, but they didn't consider it. So we're breathing calmer. And now there will be more data to face these themes. So the suspension, all of that analysis of the regulatory impact, there should be discussion of each of the themes individually, very important for the market, and that there is a deadline so that this analysis and -- so this occurs.
So the deadline was 90 days. In several others, there is one that changes the value of the fines, the issue of the ambulatory plans. There is a lot of things happening. And we defend the evolution, and I think that there is always a space so that there is regulatory changes. But we always have to increase the access, so we can help the public health care system. We have to work with an agenda that is of the Ministry of Health, all in all.
In regards to the previous theme of consolidated loss ratio and profitability versus the expansion of beds, a lot of things that what we are seeing now go through the mix of products, mix of regions and a strategy that is well performed by the commercial team. Obviously, we choose to get into a region. So we choose to get with a higher claims to start a region or we have a higher claims ratio in a geography because I need the doors that it opens with the service provider. So this analysis is done case by case. And we have weekly committees that will define this.
Next question is Gustavo Miele, Goldman Sachs.
Two questions as well. I wanted to ask the first question on SulAmérica. Without trying to be repetitive on the commercial side, but I wanted to explore an angle that is geographical growth strategy of the company. We -- looking at the first quarter, we've seen a competitive environment in Sao Paulo that is ever more challenging. Rio de Janeiro is a market issue. There was a big erosion of the base of beneficiaries in the first quarter, very expressive drop.
So my question is, how do you see the prioritization of regions for the growth of portfolio throughout '25? You commented on the focus of Sao Paulo and Rio. But as you see the relevance of other geographies that might have in the gross add strategy throughout '25 and '26. If you can give us your two cents on that, I would really -- thank you.
Second question, more objective. On hospital CapEx and expansion. There is a drop that is expressive, sequential and year-on-year. I wanted to understand if this can indicate an improvement of commercial conditions for the providers of works? Can we have a delay of CapEx throughout the year, but we see the nature of the CapEx that is lower than we've seen.
Gustavo, thank you for the question. Commercial. First relevant point, we have grown all throughout Brazil. So there is a team of 400 people spread through the regions of the country, looking for growth everywhere. Because when we get a big company, most of the time, that company has a capillarity that is spread out, and we have to have a network to service.
Talking about the regions, of course, there is a big growth and focus in the regions that are obvious, Rio and Sao Paulo. But we also have the Curitiba arm, which is a sector with big industries. And we've looked at it with a lot of care. The Northeast has been focused and Minas Gerais as well. And we've tried to, as I mentioned, Parauapebas and other regions as well.
In Rio de Janeiro, you're right. We have a market that is a warm up growth of base that is very relevant, not only in this quarter, but since last year, we got records of sales.
In Sao Paulo, I see a market that is more aggressive in terms of one player or the other, but remember what I told you at the beginning. Growing with responsibility, so we can keep this trajectory sustainable.
We're very sure of the pricing, specifically talking about wholesale, that this table is very coherent so we can keep a balanced consolidated loss ratio. So we do not participate for a long time of commercial war, and Sao Paulo, I see one or other operator zooming a price that we have difficulty understanding, but in general lines, this is the strategy.
Second question. Well, the best public information to help you to model the investment is established in the reference form of section 2.3, which is the annual plan of growth for organic growth of the company. To help you in this fiscal year, the greenfields, brownfields investments should be very similar to what was done in the last FY.
In the first quarter, the company has BRL 208 million of cash flow resulting from the activities of investments, including BRL 383 million, but I am going to say it's a reimbursement of investments as we transferred Campinas Hospital from JB to Bradesco. And the fact that as we have the investments that have been done by the company over the last years, they reach more maturity.
We go through the ramp-up of the hospitals that are expanded. The company goes through a financial deleveraging process and it's expedited. The net debt was BRL 40 billion and it dropped to BRL 36 billion. The net debt over EBITDA also dropped this year. It's our best expectation as we go through the cycle of investments and they go through the ramp up, and they have a higher level of maturity. The deleveraging of the company, it advances, and the company gains more financial health.
Next question is from Mr. Andre Salles from UBS.
Paulo, I have a question. It's more general, but I just wanted to understand how the company works in regards to capital allocation. There was a strong cash generation this quarter. We also had selling of assets. With this new volume of money that is getting into the company, how do you see the level of payout? What do you see in terms of opportunities up ahead? The cost of capital that is higher, if you can go over a few more details, I would like to -- thank you.
Well, Andre, we are going to continue to analyze all the opportunities. We have a program announced for investments that are organic. We have a repurchasing program, and we have new projects under analysis in the company. So I cannot advance a precise number. We are always going to try and get to the level of leveraging of the company that is controlled. And what we are going to pay in dividends is also of the other decisions as have good opportunities of allocating capital, whether it's with the organic, inorganic, or repurchasing of shares with the adequate return level, we're going to do it. There might be a moment where the cash generation of the company is strong and the opportunities are not going to be enough, and then we're going to reevaluate the level of payment of dividends as a consequence.
Next question is from Mr. Vinicius Figueiredo from Itau BBA.
You commented a lot on the previous answers on the stronger frequency, the ramping of Atlântica D'Or as well being important for the margin of the company. But I wanted to explore on besides these levers, what would be the additional levers for the expansion of the margin of the legacy hospitals. We see -- I remember, that you commented on the last call, the integration -- systemic integration of the acquired hospitals in 2021. And you can be one of the promoters, but just to understand if that should be something relevant as a whole? And if there is an optimization?
And another question would be in regards to the hospitals that were deregistered. In the question of our colleague, he observed that the revenue of SulAmérica has been very strong. The ex-SulAmérica was with a lower growth. So what can you comment in regards to a recovery of the operational beds within these hospitals? How do you observe if this has impacted the margin of the hospitals and what would be the turning point? Those are the 2 points.
First of all, in regards to the additional margin, the opportunities. Obviously, 79 hospitals operating. You always have opportunities of improvement, automation. You have the hospital systems that have a standardization of processes and gains of efficiency that is important.
Of course, there is a lot of things that need to be done. But just to highlight one, that has to do with the second question. The leveraging due to opening new beds is very important. This is a structure with a very high fixed cost, and we have a lot of growth of brownfields, as you know, a great deal of our organic growth is brownfields. And they have high returns because you have a maintenance of -- in an incremental margin that is much higher than the margin of the company.
Just to give you an example, on our biggest cost, which is the employees, 6 employees per bed, every time that we get a bed, we have another 3.5 employees to get this additional bed working. And the other fixed costs. So that's the biggest opportunity that we have. And as we can grow in the operational beds, you highlighted that when the hospital loses a big registration and a decision with the -- you have an operational deleveraging and see inverse effect that we commented. And you have an effect on the margin of the hospital. And we managed to grow the operational beds even though we continued with the policy of discontinuing contracts that we were not interested. And as we discussed with Rio de Janeiro, the other contracts that we discussed. So we are very optimistic to work with these beds and the growth of the operational beds in these hospitals where we can see positive effects in the margin.
Next question, Flavio Yoshida, Bank of America.
The technical reserve of SulAmérica, we see that is growing a lot. And this growth even accelerated in regards to the standard in the fourth quarter, that is -- that was very strong. So I wanted to understand what leads this being so conservative? And when do you think we're going to get you a moment that there is a deceleration of growth and a growth that is aligned with SulAmérica as a whole?
Flavio, thank you for the question. In regards to the technical reserve, I think that in the last -- or the second and last call, it's a recurring theme, and we've manifested that we've adopted a posture that is more conservative for the technical reserve calculation very much adhering to the technical note that is approved in ANS.
The technical reserve is composed of those claims that occurred, but still not let us know then the claims that we know and they were not paid. So there is a compensation of the 2 factors and it oscillates in regards to the seasonality of each period. You look at the previous period that is longer, so we can prepare up ahead. So looking at the index, we're very much at ease with what we have as a reserve and is very coherent and there is no change in contact for the future. We're very at ease with what we have.
The Q&A session is adjourned. I would like to give the floor to Mr. Paulo Moll so he can close the event.
Thank you very much for your participation and the call. I'd like to reinforce our thanks to Raquel and Gavina, to our employees of SulAmérica and Rede D'Or. We are trustworthy that we will -- we're trusting that we're going to have great growth, good news in the side of the insurance and the hospital. Thank you very much.
The earnings call of Rede D'Or is adjourned. Thank you for your participation. Have a nice day.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]