• Net Revenue: BRL2.2 billion for the second quarter.

• Operational Cash Flow: BRL624 million, representing 80% of EBITDA conversion into cash generation.

• EBITDA Margin: 34.5% for the quarter.

• Net Income: BRL491 million from continuing operations.

• Free Cash Flow: Nearly BRL460 million.

• Debt Reduction: BRL165 million reduction in the company's debt this quarter.

• Leverage: 2.4 times the expected EBITDA for the year.

• R&D Investment: 7% of net revenue.

• Interest on Own Capital: BRL185 million or BRL0.29 per share.

• Warning! GuruFocus has detected 5 Warning Signs with HYPMY.

Release Date: July 26, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hypera SA (HYPMY) reported a 6.3% increase in sell-out for the quarter, driven by strong performance in chronic and preventive treatments.

• The company achieved a record operating cash flow of BRL624 million, aided by a significant reduction in inventory levels.

• Hypera SA (HYPMY) is making substantial investments in research, development, and innovation, allocating about 7% of net revenue to R&D.

• The company has been included in the FTSE for Good Index series, highlighting its commitment to sustainability.

• Hypera SA (HYPMY) reported a net income of BRL491 million from continuing operations, showcasing strong financial performance.

Negative Points

• The performance in respiratory, pain, fever, and influenza medication was negative, impacting overall growth.

• Despite price increases and reduced idle time, gross margins were pressured due to a higher share of generics and increased commercial discounts.

• The company faces a challenging competitive environment, particularly in the generics market, which has become more aggressive.

• Hypera SA (HYPMY) anticipates potential foreign exchange impacts in 2025 due to current high inventory levels.

• The company's leverage remains at 2.4 times the expected EBITDA, indicating a focus on deleveraging amidst high interest rates.

Q & A Highlights

Q: How should we understand the comparative basis for the second half of the year, considering the guidance is still the same? A: Adalmario Ghovatto Satheler do Couto, Investor Relations Officer, explained that the first half of 2023 had a stronger comparison, especially in sell-in, while the second half was weaker. They expect a recovery in the influenza medication category, which is significant for them, and are confident in reaching their growth guidance for 2024.

Q: What should we expect for your working capital, considering that inventory reductions were a bit lower than expected? A: Adalmario Ghovatto Satheler do Couto stated that they have been working on reducing inventories and expect most improvements by the first quarter of 2025. The reduction in working capital is partly due to producing less to reduce inventory, which has increased idle times.