FLRY3 IBGC – 2010 Corporate Governance Award Listed Companies IBGC - Brazilian Institute of Corporate Governance Labs D’Or Acquisition TODOS OS DIREITOS RESERVADOS – 2011
Disclaimer This document contains forward-looking statements. Such statements reflect Company s management vision and expectations. As such, words as “anticipates”, “believes”, “estimates”, “expects”, “forecasts”, “plans”, “predicts”, “project”, “targets” (and similar) are intended to identify statements which, necessarily, include known and unknown risks and uncertainties. Known risks and uncertainties include (but are not limited to) the impact of competitors movements regarding service levels and pricing, recognition of the services by the consumer market, regulatory approval, exchange rate fluctuations, changes on the services portfolio and other risks which are described in the Company s reports. Forward-looking statements represent the best information available in the date when they are prepared and Fleury Group does not undertake any obligation to update them when new information becomes available or future events happen. 2
Timeline of Acquisitions – Fleury Group 26 acquisitions since 2002 2002 2004 2005 2007 2008 2009 2010 2011 Pernambuco Paraná Rio de Janeiro Bahia São Paulo São Paulo Rio de Janeiro Bahia Rio de Janeiro Rio Grande São Paulo Rio de Janeiro São Paulo Bahia do Sul Paraná 3
National Presence Strong brand portfolio Fleury – Best and most trusted brand in Brazilian Market; leader in A/B Pernambuco plans “ a+ ” – National brand, great potential for capturing B/C plans. Weinmann – Leader in Rio Grande Bahia do Sul for A/B plans DF – Campana Competitive offer for basic plans in São Paulo Paraná Diagnoson – New acquisition, adding Rio de Janeiro Imaging services in Bahia Rio Grande do Sul São Paulo Labs D’ Or + Felippe Mattoso + Menezes da Costa 4 4
Overview In the MoU announced on Dec 15 th , 2010, Fleury Group communicated the intention to acquire several diagnostic medicine assets from “Rede D’Or” (Labs D’Or) . Over the past 6 months Financial, Legal and Operational Due Diligences were performed and transaction documents were negotiated (Investment Agreement, Shareholders’ Agreement and Operational Contracts). We can now announce that the deal has been signed by all parts involved. As a result, subject to its shareholders approval, Fleury Group has acquired 57 Patient Service Centers (concentrated in Rio de Janeiro state) and became responsible to provide Diagnostic Services in 21 hospitals. Some relevant information about Labs D’Or : Owns 35 MRIs, 17 CT scans and 1 PET-CT in RJ, being the state’s leader in Image Diagnostics. Services more than 200 thousand patients per month (circa 500 thousand tests). In 3 out of the 21 hospitals (Hospitais “São Luiz” - São Paulo), besides Clinical Analysis, Fleury Group will be responsible for Image Services. 5
An unique Strategic Alliance between Leaders Fleury Group’s estimated annualized Net Revenue will soon exceed R$ 1.5 billion. Number of PSCs in Rio de Janeiro state increases from 27 to 83; number of Hospitals where the Group operates increase from 9 to 30. Fleury Group becomes leader in Image Diagnostics in Rio de Janeiro and Diagnostic Operations in Hospitals. Positive outlook for growth and knowledge exchange, due to the strategic alliance established with “Rede D’Or”/ “São Luiz” Hospitals. Companies aligned regarding the emphasis given to Operational Excellence, Relationship with Physicians networks, design of differentiated portfolios of Services and Brands and, most importantly, Customer Satisfaction. Projected savings add up to R$ 20 millions per year Materials and Outsourcing R$ 6.3 millions Fixed Cost - Clinical Analysis R$ 9.1 millions Fixed Costs (PSCs and SG&A) R$ 4.7 millions Potential for Goodwill amortization. 6
An unique Strategic Alliance between Leaders Beyond Savings and Fiscal Benefits, Revenues Synergies Opportunity: • High Complexity Clinical Analysis tests in Labs D ´ Or units. • Increase in Clinical Analysis tests ´ portfolio in Hospitals. • Expansion Plan for Felippe Mattoso ( premium brand ). • Expansion Plan in Rede D ´ Or / São Luiz Hospitals (# of beds) 7
Fleury Group & Labs D’Or A Diversified and Differentiated Business Profile Gross revenues breakdown by type of Test Gross revenues breakdown by business line
Financial Indicators Assets being acquired generate R$ 444MM of Annualized Net Revenue and an absolute EBITDA of R$ 111MM (25% Margin on Net Revenue). Estimated Consideration is R$ 1,19 BN; Net Debt is R$ 23,5 million. First Stage – July 31st - acquisition of 50% of Labs D’Or for R$ 620MM (i) R$ 434MM in Aug 1 st (ii) R$ 186MM to be paid in 6 months after the signing Second Stage – After acquisition approval (Special Shareholders Meeting) 24.9 million FLRY3 common shares (to be issued) – 15,94% stake. Other Relevant Financial KPIs: Working Capital: R$ 55MM CapEx Investment (only Expansion) until Apr 30th: R$ 8MM Book Equity Value: R$ 248MM. 9
Valuation and Multiples – Expected Values Annualized R$ Million Fleury Group Labs Combinado* Gross Revenus 1.085 460 1.545 Net Revenue (R$ million) 1.015 444 1.459 EBITDA (R$ million) 235 111 346 % Margem 23.2% 25.0% 23.7% Patient Service Centers 137 57 194 Operations in Hospitals 9 21 30 Employees 4.950 3.000 7.950 Physicians 630 500 1.130 * Synergies and Savings not included R$ MM 1.189 Enterprise Value (24) Net Debt Equity Value 1.166 10.7 x EBITDA Labs (pre-sinergy) 10
Follow-up and Schedule MoU ................................................................................................. Dec 15 th 2010 Due Diligence (Financial, Legal and Operational) .............................. 1Q11 Documents Definition – SPA, Shareholders Agreement .................... 2Q11 Transaction Approval - Board of Directors ......................................... July 13 th 2011 Signing .............................................................................................. July 13 th 2011 Reorganization / Consolidation ......................................................... End of July 2011 Direct acquisition of quotas – 50% of Labs D´Or ................................ July 31 st 2011 Financial Audit – Opening Balance Sheet .......................................... September 2011 Transaction Approval - Shareholders Meeting ................................... October 2011 New FLRY3 Shares Issuance .............................................................. October 2011 Shares Incorporation ......................................................................... October 2011 Transaction Approval – Administrative Council of Economic Defense - to be defined 11
Corporate Governance Maintenance of the highest Corporate Governance standards. Agreements with “Rede D’Or / São Luiz” Hospitals established at market conditions. Labs D’Or shareholders will receive common shares (to be issued), corresponding to a 15.94% stake. The shares will be subject to lock-up restrictions. After the Incorporation of Labs D’Or shares, their current owners will have the right to recommend 2 Board members (1 of them Independent ), who shall be approved by the Shareholders. Number of Board seats will increase from 9 to 10. 12
Shareholder Structure After Deal Before Deal “Core” “Core” Bradseg Bradseg 22.3% 22.3% 77.7% 77.7% Bradseg Bradseg and Free Float Free Float D’Or and “Core” “Core” Integritas Integritas Shareholders Partners Partners 62.7% 52.8% 26.8% 5.4% 31.8% 4.5% 15.9% 156 million voting shares 131 million voting shares 13
ANNEX TODOS OS DIREITOS RESERVADOS – 2011
Labs D’Or Patient Service Centers Rio de Janeiro 15
Hospitals Copa D’Or (RJ) Quinta D’Or (RJ) Rios D’Or (RJ) Barra D’Or (RJ) Assunção (ABC Paulista) Esperança (PE) Hospital Brasil (ABC Paulista) 16
Hospitals Hospital São Luiz - Morumbi Hospital São Luiz - Anália Hospital São Luiz - Itaim (SP) (SP) Franco(SP) Bangu (RJ) Joari (RJ) Provita (RJ) Fluminense (RJ) 17
Hospitals Badim & Israelita (2) Rio de Janeiro (RJ) Protolinda (PE) São Marcos (PE) (2) (RJ) 18
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