Strategy and Competitive Advantages

Strategy

 

Qualicorp’s goal is to continue to be the leader in the administration, management and sales of Affinity and Corporate health plans in Brazil. The Company has a complete products and services platform, offering plans from the main HMOs, several types of coverage, national or regional, and in all price ranges.

The growth strategy key components are:

Beneficiary base expansion by increasing penetration with partners Professional Associations and/or Class Entities.
Currently the Company database has over 6.2 million potential customers on Affinity segment. Thru advanced analytical techniques there is a search to identify which product has the best fit to each potential beneficiary’s profile. In addition, Qualicorp is focused on expanding health plan options offered to its current Professional Association partners and/or Class Entities in order to include lower price plans that are affordable to a greater number of association members.

Continue to expand the membership database of partners Professional Associations and/or Class Entities.
There are potential clients in Qualicorp’s database, who are not currently members of a Professional Association and/or Class Entities despite their eligibility. The Company believes that its brand “Qualicorp”, the wide and affordable health plans offer, the superior customer service provided to beneficiaries and also marketing expertise enable it to access these eligible individuals and to attract them to enroll with partners Professional Associations and/or Class Entities. As new members join these Professional Associations and/or Class Entities, the pool of potential beneficiaries is increased, which contributes to the Company’s growth and success.

Develop relationship with new Professional Associations and/or Class Entities.
Qualicorp plans to leverage its leading market position, brand recognition, effective customer service history and strong reputation to continuously increase the number of Professional Associations and/or Class Entities covered on Affinity segment. There is a dedicated sales team that manages its relationships with existing Professional Associations and/or Class Entities partners and proactively getters new partnerships throughout the country. The Company intends to capitalize the existing relationships with each Professional Associations and/or Class Entities to expand into other geographic regions, in which there are the same professional category, class and sector.

Geographic expansion to new markets in Brazil.
Given its highly scalable infrastructure, strong reputation and vast experience in Affinity segment, Qualicorp believes to be capable of enter new geographic markets quickly and effectively. The Company expansion to new markets is initially made through third-party brokers before building its own sales force. This enables the Company to keep lower initial costs and increases investments as it expands its presence in each market.

Cross-sell new products and services to existing customers’ database.
In the Affinity segment, Qualicorp maintains an ongoing contractual and direct relationship with the beneficiary, an important aspect of its strategy that allows the Company to cross-sell other products and services in addition to traditional private health plans. These opportunities are prospected, among other forms, through call center, direct mail sent to beneficiaries with the monthly fee charge.
In the other segments (Corporate, SME and Gama), the Company recently created the new products department, in order to take specific actions to implement the new products strategy to cross-sell them to the beneficiaries’ base, through the platform called Qualiseguros.

Company’s beneficiary base and product offerings expansion through selective acquisitions and strategic partnerships.
To complement the organic development, Qualicorp adopted the growth strategy. In Affinity segment the focus is to make acquisitions regarding stipulation rights, management and sales of private health plans with several brokers throughout Brazil. Therefore, we will be able to  expand the clients’ base, build new portfolio in new regions we still don’t act, establish new partnerships with Professional Associations and/or Class Entities, increase network with third-party brokers and generate synergies by migrating these portfolios to its IT and operating platform.
In the Corporate and Others’ sector, through diverse select acquisitions, Qualicorp acquired new products and services to offer its clients, such as health management data and analysis, and risk management services. The Company believes its management team’s proven ability to successfully identify opportunities for acquisitions and strategic partnerships that complement its existing portfolio and create synergies with its business, and to effectively integrate them into the existing operations, will continue to play an important role in Qualicorp’s expanding business.

Leverage its existing platform to explore new private healthcare market opportunities.
Qualicorp has actively monitored the healthcare market in Brazil, since it’s foundation, looking for new solutions to existing and evolving market demands. The Company believes that there is substantial opportunity to leverage healthcare information technology to continue to improve service’s condition to its beneficiaries, lower medical loss ratio to its partners and increase operational efficiencies. In addition, the Company has implemented an acceptance department in order to inhibit and/or reduce fraud and risks, in terms of new lives in the portfolio, as well as credit risk that aims to reduce delinquency and, consequently, the Bad Debt Provision.
Considering the platform’s quality, the Company believes it can benefit the creation of new markets and future growth opportunities that will generate gains and synergies in the healthcare industry.

Competitive Strengths

 

Qualicorp believes the following competitive strengths are essential to its success:

Unique business model that creates value for the hole chain.
The Company’s unique business model in Affinity segment created considerable value for all parties involved: Individual Affinity beneficiaries, HMO’s and Professional Associations and/or Class Entities.

Significant scale with a leading position in Brazil’s most attractive markets.
Qualicorp is the largest and most distinct healthcare plan’s platform in Brazil and is leader on Affinity segment. Due to its significant scale, has greater bargain power with HMO’s, therefore creating more value for beneficiaries. The Company continues to grow especially in São Paulo and Rio de Janeiro as private health plan penetration increases. In addition, the relationship with HMO’s, brand recognition, penetration, administration and management capabilities enables the Company to cover the growing demand for private health plans in the Affinity and Corporate segments and in new markets.

High standard relationships and retention with clients.
Qualicorp has a diverse portfolio and it’s connected with the main Professional Associations and/or Class Entities among the professional, industry and sector categories across all Brazilian regions. Corporate and Other segments beneficiaries are represented by the main national, multinational and main government entities. As a result of the diverse value-added services, since it’s foundation the Company continues to maintain a good relationship with the Professional Association and/or Class Entities within the Affinity segment, besides increasing retention rates in the Affinity segment itself and also in the Corporate segments, due to investments in the Company’s retention department.

Individualized and tailor-made approach in healthcare services to corporations and SMEs organizations.
Qualicorp stands out on tailor-made services based on market intelligence and data analyses as well as through its extensive Health Plan Operator relationships. The Company provides for its corporate clients vast analysis of all available options for employee medical benefits, and then develops and implements new products to meet their specific needs. Qualicorp also uses a consultative approach to brokerage health plans for SMEs focused on policies up to 29 Beneficiaries, with a differentiated distribution strategy that the Company believes better suits the needs of this fragmented portfolio.

Proprietary and superior IT platform that operates as medical information and data exchange hub.
Qualicorp has strongly invested in the IT infrastructure since its foundation. The Company believes that its IT platform and operational capabilities provides significant differentiation from its competitors, providing high quality services for its clients, as well as provides data to support HMOs with actuarial methodologies. The Company is positioned in the healthcare chain among the key HMOs, beneficiaries and providers, which enables it to act as a medical information source and data exchange hub while maintaining security and privacy standards.

Solid financial profile, exceptional growth with strong and recurring profitability.
Qualicorp’s financial profile is based on a recurring revenue model that has demonstrated exceptional growth, profitability and cash flow generation. Adjusted EBITDA has a high conversion rate to free cash flow given the Company’s minimal regulatory capital requirements, low capital expenditures and the neutral working capital characteristics of its business model.

Experienced management team with performance-based incentives.
The Company’s senior management team has significant experience in the healthcare industry, having served as an executive or board member at leading Brazilian companies in the sector. In addition, the interests of the management team are aligned with the shareholders, as Qualicorp’s executives have stock-based compensation, through the Restricted Stock Plan which is tied to some goals. The board of directors provides the Company with vast perspectives on the healthcare industry, both in Brazil and from abroad.

Last update: August 28, 2023

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