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• Net Income Growth: 15% average annual growth since 2019.

• Return on Equity: 39% for the quarter.

• Net Income per Share: 16% higher than the previous year.

• Quarterly Dividends: BRL123 million, with total payout of 100% of quarterly net profit.

• Revenue from Corporate Contracts: BRL1.2 billion in the last 12 months.

• SME and Individual Plans Revenue: Exceeded BRL900 million.

• Loss Ratio: 38% for the quarter, stable since 2020.

• Commercial and Administrative Expenses: 26% of revenue for the quarter.

• Adjusted Margin: Increased to 30% since 2020.

• Net Profit: BRL142 million for the quarter, BRL546 million for the 12-month period.

• CapEx: Investment in digital initiatives with a downward trend expected.

• Dividends and Interest on Capital: BRL549 million preserved for disbursement by Q2 2025.

• Treasury Shares: 5.6 million shares with an average acquisition cost of BRL10.91.

• Warning! GuruFocus has detected 3 Warning Signs with BSP:ODPV3.

Release Date: November 06, 2024

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

Positive Points

• Odontoprev SA (BSP:ODPV3) reported a net addition of 55,000 new lives to its Bradesco dental SME product, which has a higher average ticket than the corporate product.

• The company maintained a well-controlled dental loss ratio, with a stable and predictable level since 2020.

• Net income per share in the third quarter of 2024 was 16% higher than the previous year, showcasing strong financial performance.

• Quarterly dividends of BRL123 million were declared, totaling 100% of the quarter's income when combined with previously announced interest on capital.

• The penetration of dental plans among the Brazilian population has significantly increased, rising from 4% in 2006 to 70% currently, indicating a growing market for Odontoprev's services.

Negative Points

• The company experienced an atypical quarter with higher SG&A expenses, which were above the standard level, impacting profitability.

• There was a significant exit of a client, which, although isolated, affected the number of lives covered.

• The individual segment of the market is less developed and presents higher risks, leading to slower growth compared to other segments.

• The Mexican market, where Odontoprev operates, is still in its early stages, leading to volatility in revenue recognition.

• Despite a strong performance, the company faces intense competition in the corporate segment, with regional players being aggressive in different areas.

Q & A Highlights

Q: What caused the significant drop in cost per member across all segments in the third quarter? Is this a trend we can expect to continue? A: Jose Roberto Borges Pacheco, Administrative - Financial and Investor Relations Director, explained that the drop in cost per member is due to a more efficient loss ratio, which has been stable since 2020. The company has been changing its client profile, focusing on technology and risk management to maintain a controlled loss ratio. However, this is not a permanent trend, and costs are expected to stabilize over time.