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0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”....

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1 DASA 2006 and 4Q06 Earnings
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Page 1: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

1

DASA2006 and 4Q06 Earnings

Page 2: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

2

Disclaimer

This document contains “forward-looking statements”. Forward-looking

statements may be identified by words such as “expects”. “intends”. “plans”.

“believes”. “seeks”. “estimates” or words with similar meaning. The

statements contained in this presentation about the Company’s forward-looking

statements. including business prospects. operating and financial projections

and potential growth are merely forecasts based on management’s expectations

in relation to its future performance. Such estimates are highly dependent on

market behavior. on Brazil’s economic performance and on industry and

international market conditions. As such. they are subject to change.

Page 3: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

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FY 2006 and 4th Quarter 2006 Financial Highlights

Gross Revenues

Net Revenues

Gross Profit

Gross Margin

EBITDA

R$ million

EBITDA Margin

Adjusted EBITDA

Adjusted EBITDA Margin

Net Earnings / Losses

Net Earnings / Losses Margin

Shareholder’s Equity

Net Cash/Debt

Change4Q054Q06

23.3%

(7.6)-5.7%

+ 28.5%

+ 33.0%

+43.6%

+44.9%

+ 27.8%

N.A.

30.7

190.0

175.4

35.2

20.0% 39.2

22.4%

1.7 1.1%

147.8

36.3

27.5%

52.1

29.7%

131.9

24.3

18.4%

469.7

(53.8) (148.0)

266.0 +76.6%

Change20052006

25.7%

10.21.9%

+ 26.5%

+ 26.9%

+36.8%

+15.4%

+ 23.5%

+62.6%

135.9

729.7

670.5

137.4

20.5%167.8

25.0%

16.52.5%

576.9

165.9

31.4%

227.0

33.9%

528.3

119.0

22.5%

469.7

(53.8) (148.0)

266.0 +76.6%

- 63.7% -63.7%

Page 4: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

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Gross RevenuesRevenues increased 28.5% in the 4Q06, favored by: growth in imaging services. performance

of the companies acquired during 2005 and strong growth in reference lab operations. In a yearly basis. the growth was 26.5% and overcame the last 4 years average CAGR;

The 5.9% decrease in the average revenue per requisition in the 4Q06 is a result of the mix of companies acquired during 2006 and also lower prices charged by Alvaro (only clinical). The decrease observed in the annual figures comes from mix improvements from imaging services that sustained average revenue per requisition practically flat (0.45% decrease);

Although 2006 same-unit-sales growth was 5.6%. After the negative effects experienced in 2Q06, when holidays and the World Cup affected the flow of patients in patient service centers the recovery of patient flows during the 2H06 pulled the rate back to its historic average (6.8% in 4Q05).

Gross Revenues Evolution (in R$ million) Growth Drivers (excluding Reference)

* Alvaro Reference Lab Revenues

190.0147.8

323.8399.8

491.4576.9

729.7

16.3*

60.4

2002 2003 2004 2005 2006 4Q05 4Q06

28.5%

26.5%

CAGR = 21.2%

3.33.9

4.65.2

1.3 1.6

6.1

112.2

105.697.4

102.0 102.5 110.4 109.9

2002 2003 2004 2005 2006 4Q05 4Q06

Average Revenue per RequisitionRequisitions

Page 5: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

5

Gross Revenues per Service Line

Clinical Analysis revenues went up by 17.2%, mainly driven by the maturity of acquisitions settled in 2005 and new labs acquired during 2006;

Revenues from imaging services grew 18.0% quarter over quarter reaching 37.8% of Outpatient & Inpatient gross revenues. Image Memorial (Oct.’ 05) and Vita (Oct.’06) acquisitions as well as 7 new mega units opened in 2005 and 2006 helped to boost imaging revenues;

DASA’s national presence combined with Alvaro’s price competitiveness. helped lab to lab operations to increase the number of labs served and to offer more tests per lab. leveraging revenues by 43.8% in the 4Q06 (49.0% in 2006).

Revenues - Reference (Lab to Lab) MarketRevenues per Service Line (as a % of Gross Revenues)

108.0

55.7

65.7

92.1

4Q05 4Q06

147.8

190.0

18.0%

17.2%

16.3*

28.5%

62.2%

37.8%

37.7%

62.3%

* Alvaro Reference Lab Revenues

27.2

40.5

11.416.3

60.4

18.0

2003 2004 2005 2006 4Q05 4Q06

49.7%

43.8%

Page 6: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

6

Gross Profit

Gross margin improved 220 bps. to 29.7% in the 4Q06 from 27.5% in the 4Q05. This reflects not only scale gains in the central labs and PSCs. but also synergies from the integration of acquisitions done during 2005. In 2006 gross margin went up to 33.9%. 250 bps over 2005;

Reference Lab operations favored services and utilities dilution by 3.9 p.p. as a result of its fast growing pace, but affected material costs because of its differentiated cost structure;

Personnel costs went up on a yearly basis due to productivity gains yet to be captured from acquired companies.

Cash-GOGS Drivers (4Q05 vs. 4Q06) Cost of Services Rendered

4Q05 CashCOGs

PersonnelMaterialsServices andUtilities

GeneralExpenses

4Q06 CashCOGs

64.8%

61.0%

0.7 1.3

3.9

0.4

4Q06 4Q05 4Q06 4Q05

Personnel 36,0 28,0 20,5% 21,3%

Materials 31,1 21,7 17,7% 16,5%

Services and Utilities 38,7 34,2 22,1% 25,9%

General 1,2 1,4 0,7% 1,1%

Depreciation and Amortization 16,3 10,2 9,3% 7,7%

Cost of Services Rendered 123,3 95,6 70,3% 72,5%

% of Net RevenuesIn R$ Million

2006 2005 2006 2005

Personnel 132,6 100,7 19,8% 19,1%

Materials 116,7 91,0 17,4% 17,2%

Services and Utilities 141,8 122,2 21,1% 23,1%

General 4,6 12,4 0,7% 2,4%

Depreciation and Amortization 47,8 36,1 7,1% 6,8%

Cost of Services Rendered 443,5 362,4 66,1% 68,6%

In R$ Million % of Net Revenues

Page 7: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

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Operating Expenses Operating expenses grew by 5.2% in the 4Q06 reaching R$ 45.6 million, mainly driven by

SG&A higher expenses. This increase was offset by lower goodwill and financial expenses;

Parent Company G&A remained stable after the improvements on the management team, quality and IT were implemented. Consolidated G&A increases came mainly from the new acquired subsidiaries;

In 2006 the 31.4% growth reflects capital market related expenses, accrued as non recurring expenses.Operating Expenses (R$ million)

General and Administrative Expenses (R$ million)

2006 2005 %Dillution

(p.p)

General and Administrative (151,1) (88,7) 70,2% 5,7

Net Financial (10,8) (21,0) -48,8% -2,4Goodwill Amortization (30,1) (35,7) -15,7% -2,3

Other Operating Revenues/ Expenses 1,7 0,8 126,6% -0,1

Operating Expenses (190,2) (144,7) 31,4% 1,0

2006 vs 2005In R$ Million

4Q06 % Net Rev. 2Q06 % Net Rev. 1Q06 % Net Rev. 4Q05 % Net Rev.

General and Administrative (38,2) -21,8% (37,0) -23,0% (42,1) -27,3% (23,7) -18,0%

Parent Company (21,5) -12,2% (21,1) -13,1% (18,3) -11,9% (12,4) -9,4%

Non Recurring Expenses (4,1) -2,3% (7,4) -4,6% (16,7) -10,9% (6,4) -4,9%

Profit Sharing Program (0,7) -0,4% (1,7) -1,0% (1,4) -0,9% 0,3 0,2%

Depreciation (3,9) -2,2% (3,1) -1,9% (2,2) -1,4% (1,3) -1,0%Subsidiaries (8,1) -4,6% (3,7) -2,3% (3,5) -2,3% (3,8) -2,9%

4Q06 4Q05 %Dillution

(p.p)

General and Administrative (38,2) (23,7) 61,0% 3,7

Net Financial 0,2 (9,2) -102,6% -7,1

Goodwill Amortization (8,7) (10,5) -17,0% -3,0

Other Operating Revenues/ Expenses 1,0 0,1 1636,2% -0,5

Operating Expenses (45,6) (43,3) 5,2% -6,9

In R$ Million 4Q06 vs 4Q05

Page 8: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

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EBITDA and Adjusted EBITDA

The strong 44.9% EBITDA growth in 4Q06 was leveraged by higher revenues. dilution of costs and reduction of operating expenses. Adjusted EBITDA grew 27.8% to R$ 39.2 million in 4Q06. with 22.4% margin;

On a yearly basis. Adjusted Ebitda reached R$ 167.8 million and outperformed the 2002 – 2005 4 year CAGR. by growing 23.5%.

EBITDA and Adjusted EBITDA (R$ million)

64.984.1 84.6

119.0137.4

24.3 35.2

15.5

15.338.5

16.9

30.4

6.44.0

2002 2003 2004 2005 2006 4T05 4T06

123.1

99.4

80.4

135.9

167.8

30.739.2

EBITDA

Non Recurring Expenses

Adjusted EBITDA

CAGR = 19.1%

23.5%

27.7%

2002 2003 2004 2005 2006 4T05 4T06EBITDA Margin 21.8% 23.1% 18.9% 22.5% 20.5% 18.4% 20.0%Adjusted EBITDA Margin 27.1% 27.3% 27.5% 25.7% 25.0% 23.3% 22.4%

64.984.1 84.6

119.0137.4

24.3 35.2

15.5

15.338.5

16.9

30.4

6.44.0

2002 2003 2004 2005 2006 4T05 4T06

123.1

99.4

80.4

135.9

167.8

30.739.2

EBITDACAGR = 19.1%

23.5%

27.7%

2002 2003 2004 2005 2006 4T05 4T0621.8% 23.1% 18.9% 22.5% 20.5% 18.4% 20.0%27.1% 27.3% 27.5% 25.7% 25.0% 23.3% 22.4%

2002 2003 2004 2005 2006 4T05 4T0621.8% 23.1% 18.9% 22.5% 20.5% 18.4% 20.0%27.1% 27.3% 27.5% 25.7% 25.0% 23.3% 22.4%

Page 9: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

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The Company cash generation was mainly employed on organic growth during 2006;

The capital markets operations helped to finance DASA’s acquisition plans and net debt reduction. by 63.7% y-o-y;

DASA still have R$ 325.9 million in cash and cash equivalents to finance 2007 expansion plans.

Indebtedness

Net Debt (Cash) Evolution (R$ million)

(148.0)

2005Net Debt

Cash Flow Generated

100.2

(129.9)

Capex

Follow on

178.6

(54.7)

Acquisitions

(53.8)

2006Net Debt

202.5

DebetureProgram

Page 10: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

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Growth Strategy Update

Investments1 (R$ million)

Note: 1 Exclude acquisitions

The R$ 129.9 million Capex invested in 2006 exceeded the R$ 85.0 million proposed initially. mainly due to additional needs from subsidiaries and also to accelerate the expansion plan for imaging services and opening of new PSCs planned for 2007;

The R$ 95.0 million proposed for 2007 will be mainly driven to finance 20 new PSC (8 Mega Units) and purchase of equipments to expand imaging services.

40.0

65.071.0

28.6 20.7 26.1 32.6

107.9

95.0

9.5 10.01.41.0

22.0

2003 2004 2005 1T06 2T06 3T06 4T06 2006 2007E

Parent Co. Subsidiaries Consolidated

30.021.7

35.642.6

129.9

Page 11: 0 DASA 2006 and 4Q06 Earnings. 1 Disclaimer This document contains “forward-looking statements”. Forward-looking statements may be identified by words.

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