Profarma 2Q12
Transcript of Profarma 2Q12
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Profarma Overview
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Profarma makes herein statements about future events that are subject to risks and uncertainties. Such statements are based on the beliefs and estimations of the
Company’s Management and information to which it currently has access. Statements about future events include information regarding our present intentions,
beliefs or expectations, as well as those of the members of the Company’s Board of Directors and Executive Officers’ Committee. The qualifications in relation to
statements and forward-looking information also include information regarding potential or presumed operating results, as well as statements that are preceded or
followed by or include the words "believe", "may", "will", "continue", "expect", "forecast", "intend", "plan", "estimate" or similar expressions. The forward-looking
statements and information are not guarantees of performance. They are subject to risks, uncertainties and beliefs because they refer to future events, thus
depending on circumstances that may or may not materialize. Future results and creation of value for shareholders may differ to a material degree from those
expressed or suggested by statements in relation to the future. Many of the factors that determine such results and amounts are beyond Profarma’s ability to control
or predict matters.
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Period Highlights
Gross Revenues Increase
Ebitda Increase
Arpmed Acquisition
Prodiet Revenues and Ebitda
Margin Increase
Positive Cash
Generation
Growth of Generic
Sales
Net Profit Increase
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ArpMed Acquisition
2Q12 Results
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ArpMed Acquisition
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Established in 1998, ArpMed focuses on special, higher value-added pharmaceuticals by means of two
complementary business units that provide services for industries dealing with specialties.
Business Units:
Distinct Features:
• It is possible to reduce the number of steps in the distribution process (Manufacturer–Points of Sale–Client), thus speeding
it up, reducing costs and increasing margins;
• Supply can be optimized through an automatic replenishment policy;
• Delivery at home or doctors’ offices provides comfort and convenience for clients;
• All the steps in the logistics process comply with the regulations of ANVISA [Brazilian National Health Surveillance Agency
• Each unit sold is tracked;
• The Company’s relationship with laboratories and nutrition industry companies provides a solid basis to increase volumes
and launch new high value-added products.
Management, logistics, sale and marketing solutions for special, niche high-cost cold-chain products or Rx
products that need to be repositioned or require market information
Sales
Services and Consulting
Synergy
ArpMed | Company Overview
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The Company:
• ArpMed already serves several Brazilian and international laboratories.
• It focuses on the segment of high-priced prescription medication (average ticket upwards of R$600.00).
• It specializes in products that require specific procedures, and follow-up and support services.
• It has a sound product portfolio, comprising fertility, ophthalmology and oncology products; breast implants; hearing aids
and diabetes medicines among others.
• It has a tradition in providing ancillary services for the industry and is, therefore, a solution to manage the channel as a
whole and serves as a reference for laboratories.
• 53% of its gross revenues come from sales with ancillary services.
• New contracts are being negotiated.
Suppliers:
• Laboratories need a logistics partner able to offer a different system from that used for conventional products.
• Even though profitable, the distribution of these products is a complex process due to the volume (low amounts: 2,000-
5,000 products for the whole country), the careful handling required by the product, the dispersal of users, and the follow-up
and tracking processes involved.
ArpMed | Company Overview
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Laboratories Patients
Doctors and
Clinics
Structure
- Cold Chain
- Experienced Pharmaceutical Team
- Approved packaging process
- Process complying with the standards in effect
- Regular internal and independent audit
Distribution Storage Receipt
ArpMed | Flow of Operations
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ArpMed | Specialties and Operational highlights
Specialties
• 121,000 orders in 2011
• Average ticket upwards of R$600.00
• 260 sold items
• About 170 employees
Operational Highlights Geographical Coverage
Sales through Own Call Center - % Sales with Ancillary Services - %
54%
Through
Call Center
46%
Others 53%
W/
Service
47%
W/o
Service
Sales
• Plastic Surgery (breast implants)
• Dermatology
• Endocrinology (hormones and insuline)
• Gynecology
• Ophthalmology
• Orthopedics
• Rheumatology
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Leadership
Growth
Potential
Synergy
Experience
• One of the leading companies in direct sale of specialty and high-cost medications
• Strong presence in the Southeast Region, and competing for leadership in São Paulo and Rio de
Janeiro and
• Present in several states through a network of partner companies
• A 24% year-over-year increase in 2011
• Planned growth in existing markets
• New markets
• Increased amount of purchases, which allows improving the relationship with manufacturers
• Synergies in the administrative and operational areas
• Mr. Guilherme Porto and Mr. Guilherme Rocha have each over 10 years’ experience in the
industry and
• Both executive management and the consolidated management structure will be strengthened.
ArpMed | Drives for the Transaction
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Primary Offer:
• 40% paid on Execution Date
• 30% paid one year after the Execution Date
• 30% paid two years after the Execution Date
Secondary Offer:
• 50% paid on Execution Date
• 50% paid 12 monthly installments from the Execution Date.
Earn-out:
• Payment of an additional secondary offer in the first three years, based on EBITDA and the Cash Cycle.
Payment Schedule
Contingency Coverand
• ArpMed’s current shareholders will be liable for all contingencies arising from taxable events prior to the Execution Date.
Description of Guarantees:
• Capital Stock Adjustment via Subscription Bonus, Escrow Account and Retained Payments.
Contingency Cover and Description of Guarantees
ArpMed | Acquisition Model
Acquisition of an 80% stake in Arpmed’s total capital stock.
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Operational Efficiency Relationship with
Manufacturers
New Segments New Business
Opportunities
ArpMed | Sinergy Gains
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2Q12 Results
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2Q11 1Q12
954.5
779.4
2Q12
919.5
Financial Numbers | 2Q12 Results
Branded
Generic
OTC
Health and Beauty Products
Hospitals and Vaccines
Total
2Q12
517.2
66.3
132.5
67.9
135.6
919.5
2Q11
512.2
45.7
141.3
53.9
26.3
779.4
Chg. %
1.0%
45.0%
-6.3%
26.1%
416.7%
18.0%
1Q12
552.7
93.7
126.3
69.1
112.7
954.5
Chg. %
-6.4%
-29.3%
4.9%
-1.8%
20.4%
-3.7%
(R$ million)
Gross Revenues Evolution Gross Revenues Breakdown
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Financial Numbers | 2Q12 Results
Gross Profit
Revenues from Services to Suppliers
Gross Profit Margin(%)
2Q11
27.4
42.9
10.7% 12.4% 10.2%
1Q12
37,8
45.0
2Q12
42.0
52.8
2Q11 2Q12
64.5
8.4% 7.5%
49.5
1Q12
61.1
7.5%
(R$ million and % Net Revenues)
Gross Profit and Revenues from Services
to Suppliers
Operating Expenses - SGA
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Financial Numbers | 2Q12 Results
Ebitda and Ebitda Margin
2Q11 2Q12
31.2
2.5%
4.1%
20.7
1Q12
20.2
3.2%
2Q12
10.5
2Q11
8.8
1Q12
7.2
Net Financial Expenses
1.3% 1.4%
0.9%
(R$ million and % Net Revenues)
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Net Profit
2Q12
12.4
2Q11
9.5
1Q12
9.5
1.6% 1.4% 1.2%
Financial Numbers | 2Q12 Results
* Average
(1) Average of Gross Revenues in the Quarter
(2) Average of COGS in the Quarter
(3) Average of COGS in the Quarter
Cash Cycle - Days *
Accounts Receivable (1)
Inventories (2)
Accounts Payable (3)
2Q12
59.1
47.4
48.9
37.1
1Q12
54.6
50.7
49.7
45.8
2Q11
60.4
39.4
53.1
32.0
Cash Cycle
(R$ million and % Net Revenues)
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2Q12
18.2
30.5
(12.3)
52.7
34.2
(93.5)
(5.7)
(2.7)
(4.2)
11.3
2Q11
50.0
19.8
30.2
37.3
46.3
(48.7)
(4.6)
(1.8)
(51.0)
(2.8)
Chg. %
-63.6%
53.7%
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41.3%
-26.0%
-91.9%
-23.2%
-51.1%
91.8%
-
1Q12
(72.2)
20.0
(92.3)
(64.5)
(13.0)
(11.1)
(3.7)
(1.7)
61.6
(12.3)
Chg. %
-
52.0%
86.7%
-
-
-741.3%
-53.7%
-63.4%
-
-
Summary of Cash Flow
Financial Numbers | 2Q12 Results
(R$ Million)
Cash Flow Generated / (Used) in Operating Activities
Internal Cash Generation
Operating Assets Variation
Trade Accounts Receivable
Inventories
Suppliers
Other Items
Cash Flow (Used) in Investing Activities
Cash Flow Generated / (Used) by Financing Activities
Net Increase / (Decrease) in Cash
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Indebtedness: Net Debt and Net Debt / Ebitda
2Q12
202.0
2.2x 2.3x
2Q11
157.1
1Q12
197.2
2.1x
Capex
2Q12
2.9
0.2% 0.3%
2Q11
1.9
1Q12
1.7
0.4%
Financial Numbers | 2Q12 Results
(R$ million and % Net Revenues)
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Stock Performance
Ibovespa (1)
IGC (1)
Share Price
03/30/12
Preço da Ação
06/29/12
Note (1): Comparative evolution in Index base points
R$ 10.10 54,355 6,992
Chg. (%) 4.0% -15.7% -8.2%
Shares - Comparative Performance
R$ 9.71 64,511 7,613
Financial Numbers | 2Q12 Results
104
84
100
92
Turnover (R$) PFRM 3 PFRM3 IBOV IGCX
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Company Analyst Telephone E-mail
Credit Suisse Marcel Moraes (55 11) 3841-6302 [email protected]
Banco Fator Iago Whately (55 11) 3049-9480 [email protected]
Raymond James Guilherme Assis (55 11) 3513-8706 [email protected]
BTG Pactual João Carlos dos Santos (55 11) 3383-2384 [email protected]
Juliana Rozenbaum (55 11) 3073-3040 [email protected] Itaú BBA
Javier Martinez Cerdan (1 212) 761-4542 [email protected] Morgan Stanley
Andre Parize (55 11) 5171-5870 [email protected]
Marco Richieri (55 11) 5171-5873 [email protected] Votorantim
Merrill Lynch Mauricio Fernandes (55 11) 2188-4236 [email protected]
2Q12 Results | Analyst Coverage
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Max Fischer | CFO and IRO
Beatriz Diez | IR Manager
www.profarma.com.br/ir
Telephone.: 55 (21) 4009-0276
E-mail: [email protected]
Market
Maker:
Ticker
BM&FBOVESPA:
independent
Auditors:
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IR Contacts
Max Fischer | CFO and IRO
Beatriz Diez | IR Manager
Phone.: 55 (21) 4009-0276 | E-mail: [email protected] | www.profarma.com.br/ri