Earnings Release - 3Q21

Earnings

3Q21

Conference Call:

October 29th |11 am (10 am ET)

Brazil: [phone]

Exterior: [phone]

Replay: [phone]

Code: 1539

Webcast: www.fleury.com.br/ir

On September 30, 2021:

Total shares

317,943,966

Market price R$ 7.0 Bn | US$ 1.3 Bn Share Price

R$ 22.12 /US$ 4.07

Fleury ON

B3: FLRY3

Investor Relations

www.fleury.com.br/ir | [e-mail] | [phone]

Earnings 3Q21

São Paulo, October 28th, 2021 - Grupo Fleury announces today its third quarter 2021 (3Q21) results. All figures are compared to the same period of the previous year, unless otherwise stated, and are rounded to the nearest thousand. However, there may be differences when compared to the financial statements due to decimal digits.

Highlights

• Gross Revenue sets a new record, reaching R$ 1.1 billion in 3Q21, growth of 17.3% in the quarter and 10.2% compared to 2Q21. In the year, Gross Revenue reaches R$ 3.1 billion (+39.4% vs 9M20):
  o Client's home service presents growth for the sixth consecutive quarter, with gains of 0.5% in the quarter, representing 7.3% of Gross Revenue.
  o Relevant growth in both clinical analysis and imaging tests, which for the second consecutive quarter recorded strong growth of 16.8% compared to 3Q20 and 12.6% compared to 2Q21, already operating on higher than pre-pandemic levels (+10.6% vs 3Q19).
  o Tests for Covid-19 representing 6.0% of the Gross Revenue, with more than 400 thousand tests performed in the quarter (RT-PCR and serology).
  o Net Revenue reached R$ 1.03 billion in 3Q21, growth of 17.6% in the quarter and 10.4% compared to 2Q21. In the year, the Net Revenue reached R$ 2.9 billion (+39.7% vs 9M20).
• Inorganic expansion of the core of diagnostics:

1. Integration of Pretti and Bioclínico Labs in the state of Espírito Santo.

• 1. Acquisition of Laboratório Marcelo Magalhães, in order to complement and expand operations in the state of Pernambuco.
• Acceleration of the New Links strategy and strengthening the Saúde iD platform:
• 1. Growth of existing links and consolidation of the latest acquisitions, with growth of 541.5% compared to 3Q20 and 110.9% compared to 2Q21, representing 7.8% of Gross Revenue.

1. Integration of Clínica Vita de Ortopedia operations.

1. Revenue from the Platform grew 4.0%, totaling R$ 10.9 million in 3Q21, and the boosted revenue in the quarter from the platform was R$ 7.0 million, an increase of 157.4% compared to 3Q20.

• 1. More than 720,000 telemedicine consultations performed since the beginning of the service, with 178 thousand consultations performed in the quarter.
• Recurring EBITDA of R$ 300.7 million (-7.1%), with a recurring margin of 29.2% in 3Q21. In the year, recurring EBITDA of R$ 835.4 million (+54.9%) with a recurring margin of 29.3%.
• Adjusted Net Income of R$ 103.5 million (-21.7%) with an adjusted net margin of 10.1% in 3Q21. In the year, adjusted net income of R$ 308.7 million (+162.8%) with an adjusted net margin of 10.8%.
• Operating Cash Generation of R$ 255.7 million (+46.0%) in 3Q21, and in the year R$ 741.4 million (+97.8%).
• Return on Invested Capital (ROIC¹) without goodwill of 46.5% in the quarter.
• The NPS² of the Group reached 68.7% and in client's home service 82.4% in 3Q21.
• • As of 1Q21, we present the ROIC with the effects of IFRS-16 | 2 Net Promoter Score

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Main Financial Indicators

Financial Indicators		3Q21		3Q20		Variation	9M 2021		9M 2020		Variation
(R$ MM)
Gross Revenue	1,107.4	943.8	17.3%	3,076.9	2,206.6	39.4%
Net Revenue	1,028.8	874.6	17.6%	2,854.7	2,043.5	39.7%
Gross Profit	306.5	313.2	-2.1%	852.0	503.3	69.3%
EBITDA	288.6	323.8	-10.9%	793.8	539.4	47.2%
Net Income	95.0	132.1	-28.1%	279.1	117.5	137.6%
Cancellations (% Gross Revenue)	-0.9%	-1.1%		13 bps	-1.0%	-1.2%		17 bps
Gross Margin %	29.8%	35.8%		-601 bps	29.8%	24.6%		521 bps
EBITDA Margin %	28.0%	37.0%		-898 bps	27.8%	26.4%		141 bps
Effective Tax Rate	-29.3%	-35.0%		565 bps	-29.3%	-34.8%		551 bps
Net Income Margin %	9.2%	15.1%		-587 bps	9.8%	5.7%		403.0 bps
Recurring EBITDA	300.7	323.8	-7.1%	835.4	539.4	54.9%
Adjusted Net Income	103.5	132.1	-21.7%	308.7	117.5	162.8%
Recurring EBITDA Margin %	29.2%	37.0%		-780 bps	29.3%	26.4%		287 bps
Adjusted Net Income Margin %	10.1%	15.1%		-505 bps	10.8%	5.7%		506 bps
Operating Cash Flow	255.7	175.2	46.0%	741.4	374.9	97.8%
CAPEX	90.9	31.5	188.1%	228.1	112.5	102.8%
ROIC (LTM)	16.3%	10.2%		608.0 bps	16.3%	10.2%		608.0 bps
ROIC without goodwill (LTM)	46.5%	33.5%		1294 bps	46.5%	33.5%		1294 bps

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Management Comments

Grupo Fleury's accumulated gross revenue grows 39% in the year

For the second consecutive quarter, Grupo Fleury registered record in gross revenue, reaching R$ 1.1 billion in 3Q21. This is a double-digit growth on any comparison basis: an expansion of 17.3% compared to the same period in 2020 and 10.2% compared to 2Q21. In the first nine months of the year, the growth in gross revenue reached 39.4% compared to the same period in 2020. It is noteworthy that, compared to the pre-pandemic period, Grupo Fleury grew 29.6% compared to the first nine months of 2019.

The Group grew on all its fronts - from diagnostics to the new links in the chain. We are growing - and in a profitably way. Recurring EBITDA for the quarter reached R$ 300.7 million (margin of 29.2%), and in the year we reached R$

835.4 million (margin of 29.3%), an increase of 287 bps compared to the same period of 2020. Adjusted net income for the quarter reached R$ 103.5 million, and R$ 308.7 million for the year, 162.8% higher than in the same period in 2020. These results demonstrate our discipline in a scenario of greater stability when compared to the previous year, heavily affected by the Covid-19 pandemic.

In line with our goal of accelerating growth, both organically and through acquisitions, a few days ago we announced the acquisition of Laboratório Marcelo Magalhães, a reference in diagnostics with clinical analysis tests in Pernambuco. With this acquisition, which is awaiting approval by the Conselho de Administrativo de Defesa Econômica (CADE), we will strengthen our presence in the State and increase our capilarity to 31 PSCs in the metropolitan region of Recife, where the Company already operates with clinical analysis and imaging tests, through the brands a+ Medicina Diagnóstica and Diagmax. In the quarter, we also concluded the acquisition of Pretti and Bioclínico laboratories, two traditional brands in the Espírito Santo market, adding another 40 PSCs in the metropolitan region of Grande Vitória.

Our ambition to build a complete healthcare ecosystem, in fact capable of accompanying the patient throughout their healthcare journey, has been consolidated with relevant movements such as the integration of Clínica Vita de Ortopedia. We started to offer our clients consultations, complete diagnostic tests, treatment with physiotherapy, surgeries and orthopedic procedures performed in a Day Clinic environment, in addition to preventive services at the Vita Care centers, with a great focus on integrated healthcare and well-being.

In 3Q21, the Group's progress in new links in the chain and in Saúde iD, our healthcare platform, represented a growth of 541.5% compared to 3Q20 and 110.9% compared to 2Q21, with a share of 7.8 % of gross revenue. If we consider that this diversification movement began to be intensified just a year ago, the potential growth that lies ahead is evident.

More elective tests, fewer Covid-19 tests

During this period, clinical analysis tests had an expansion of 9.1% compared to 3Q20 and 7.9% compared to 2Q21. Imaging had an even stronger growth: 16.8% and 12.6%, compared to 3Q20 and 2Q21, respectively. In addition, for the first time, we recorded a higher volume than in the pre-pandemic period, an expansion of 10.6% compared to 3Q19. It is also important to highlight the continuous expansion of our activity in precision medicine. The genomics area showed revenue growth of 43.5% in 3Q21, compared to the same period last year.

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Regarding the Covid-19 tests, the third quarter showed a consistent decrease in the share of the Group's revenue. 400,000 exams were performed in the period, equivalent to 6% of gross revenue - the lowest rate since we started offering this service. The growth in revenue from elective exams reflects the lower reliance on Covid-19 exams.

Organic and inorganic expansion

In 2016, Grupo Fleury presented its organic expansion plan and disclosed a guidance of opening from 73 to 90 PSCs by 2021. Since then, we have opened 55 PSCs. In parallel, we accelerated the expansion of our client's home service, a trend that was intensified during the pandemic in response to our clients' needs and desires. In 3Q21, this service grew for the sixth consecutive quarter, reaching 7.3% of the Group's total revenue and equivalent to the average revenue of 25 physical PSCs. Thus, we reinforced our commitment to the sustainable growth of our operations and we are still focused on our omni-channel strategy, evaluating opportunities for organic expansion. Additionally, we have increased our market share through inorganic growth. Between 2016 and 2021, 112 PSCs were incorporated in the Group through acquisitions.

We remain confident that recent changes in client's behavior, such as the desire for client's home service, are here to stay. We believe that healthcare must be integrated, preventive and hybrid, combining physical and digital offerings. We also believe that the best thing for the patient - and for the entire sustainability of the system - is that low-complexity healthcare needs are addressed outside hospitals. That's why we are so confident in the potential of the healthtech Saúde iD. In just over a year, through our healthcare platform, we performed more than 720,000 medical teleconsultations, which positions the Group as one of the largest providers of this type of service in the country.

The platform started as a B2B2C service, which today has 25 million potential clients. Recently, after pilot testing and investing in User Experience - UX, we upgraded the marketplace to B2C. In order to meet the needs of the target audience - clients of classes C and D, without access to a healthcare plan -, the platform is starting to offer medical teleconsultations and individual tests, at competitive prices. In addition, in 3Q21, Saúde iD expanded its offer of surgeries, reaching almost 50 types of procedures, performed in partnership with hospitals and day hospitals. Today, there are already signed contracts with six institutions: BR Surgery, Day Clinic Fleury, SP Plus, Rede Opty, Rede Opera and Bupa Clinic.

Another potential expansion front of our platform is the recent partnership with AMIGOapp, a reference in digital solutions for the healthcare market. The more than 20 thousand physicians registered in the AMIGOapp will have access to the Clinic iD, an Saúde iD solution for physicians, which currently offers access to tools such as telemedicine, electronic medical records and tests monitor for 4 thousand registered physicians. The partnership's thesis is to leverage the strengths of both players, generating more and more value to the medical community and patients.

Focus on Innovation and Artificial Intelligence

To provide more autonomy to the patients and make their journey even more digital, Grupo Fleury signed a partnership with IBM in September. Using artificial intelligence and automation technologies, the project will develop a new experience for clients in the Group's different service channels (including the creation of a virtual service agent), in addition to supporting the business expansion with the offer of new services and cloud native products. The search for agility in service meets the demand of an increasingly digitally engaged public and scales up the self- service option for the entire Group's customer base.

In addition to innovation through partnerships, we have intensified our efforts in research and development. As a result, over the course of this year, we developed 204 new products and made methodology changes in another

106. An important example of progress in this field was the launch of the post-Covid checkup in 3Q21. The new product includes tests to diagnostic of residual changes in the respiratory, cardiovascular, neurological and other systems (estimates indicate that up to 20% of patients who contract the disease have some type of sequel).

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