Strategy and Competitive Advantages


Qualicorp’s objective is to be the leading, full-service healthcare benefits administrators and healthcare service providers in Brazil. The following are key components of its strategy for growth:

Gain additional membership by further penetrating professional associations with whom it has existing relationships.
Currently the Company has a database of more than 6.4 million potential customers to which it applies advanced analytical techniques in order to identify through marketing strategies the product that best matches the profile of each potential beneficiary and to expand the number of potential customers in its proprietary database. Qualicorp is also focused on expanding the set of health plan options that it offers to its current professional association partners to include lower premium plans that are accessible to a greater number of association members.

Continue to expand the membership of professional associations with whom it has existing relationships.
Currently the Company’s proprietary database of more than 10 million names, there are potential clients that are not currently members of a professional association despite their eligibility. Its brand, high quality and affordable private health plan offerings, superior customer service and marketing expertise enable it to access these eligible individuals and to attract them to enroll with the professional associations with whom the Company has partnered. As new members join those professional associations, it increases the target pool of prospective beneficiaries for its offerings, contributing to its growth and success.

Develop relationships with additional professional associations.
The Company currently has well-established relationships with over 470 professional associations throughout Brazil. The Company plans to leverage its leading market position, brand recognition, track record of effective customer service and strong reputation to continue growing the number of professional associations it serves. Qualicorp has a dedicated sales team that manages its relationships with existing professional associations and proactively cultivates new partnerships with professional associations throughout the country. The Company capitalizes on its existing relationships with the associations to expand into other geographic regions.

Expand geographically to new markets in Brazil.
Given its highly scalable infrastructure, strong reputation and breadth of experience in the affinity group health plan market, Qualicorp believes that it can enter new geographic markets quickly and effectively. When the Company expands to new markets, it typically initiates its expansion activities through third-party brokers before building its own sales force, which allows it to keep market entry costs low as it grows in each new market. This enables the Company to keep the initial costs 100% variable and low, increasing investments as it expands its presence in each market.

Cross-sell new products and services to existing customers.
In the affinity group health plan segment, Qualicorp maintains an ongoing contractual and direct relationship with the beneficiary, which is an important aspect of its strategy as it allows the Company to cross-sell other products and services in addition to traditional private health plans. These opportunities are prospected, among others, through the call center and through direct mail sent to beneficiaries together with the monthly fee payment slips.

In the corporate and other segment, Qualicorp is also pursuing cross-selling strategies by exploring demand from its current client base for additional value-added services. The Company has recently created a new products department that will allow it to cross-sell new products and services to the beneficiary base.

Expand the Company’s beneficiary base and product offerings through selective acquisitions and strategic partnerships.
Qualicorp has an addition growth strategy to its organic growth. In the Affinity segment the Company targets selected acquisitions of rights to stipulate, manage and market private health plans within the affinity segment throughout Brazil as a means to grow the client base further, build a portfolio of new clients in new regions, establish new partnerships with professional associations, expand Qualicorp’s network of third-party brokers and generate synergies by migrating these portfolios to its IT and operating platform.
In the Corporate and Other sector, through a number of select acquisitions, Qualicorp has acquired new products and services to offer its corporate clients, such as data and analysis of health management, 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 expanding Qualicorp’s business.

Leverage its existing platform to new private healthcare market opportunities.
Since its inception, Qualicorp has actively monitored the healthcare market in Brazil for solutions to existing and evolving market demands. The Company believes that there is tremendous opportunity to leverage healthcare information technology to continue to improve the quality of service to its beneficiaries, lower medical costs to its partners and increase efficiencies.
Given the quality of Qualicorp’s platform, the Company believes it can help drive the potential creation of new markets and future growth opportunities that will generate gains and synergies in the healthcare industry.

Competitive Strengths

Qualicorp believes that the following competitive strengths are key to its success:

Unique business model with measurable value proposition for all constituents.
The Company’s unique business model in the affinity group health plans segment has created considerable value for all parties involved: Individual affinity beneficiaries, Health Plan Operators and Professional associations and/ or industry associations.

Significant scale with a leading position in Brazil’s most attractive markets.
Qualicorp is one of the largest health care brokers and full-service providers of healthcare benefits administration services in Brazil. Due to its significant scale, it has greater negotiating power to obtain more attractive terms from Health Plan Operators, ultimately creating more value for its beneficiaries. The Company continues to grow in the states of São Paulo and Rio de Janeiro as private health plan penetration increases. In addition, the Health Plan Operator relationships, brand recognition and distribution, administration and management capabilities position the Company favorably to meet the growing demand for private health plans in the affinity segment and for health plans for corporate clients in new markets.

Nounderwriting or reimbursement risk.
Qualicorp believes that its position between Health Plan Operators, beneficiaries and providers while undertaking no underwriting or reimbursement risk is unique, and provides it with a differentiated service offering in the Brazilian healthcare market.

Established client relationships and high client retention.
Qualicorp has a highly diversified client base, and maintains close relationship with the major professional associations and/ or industry associations in diverse professional, industry and sector categories across different regions of Brazil. The beneficiary clients in the affinity group health plan segment represent a variety of prestigious professional associations. The clients in the corporate and other segment represent a number of high-profile national, multinational and government employers. As a result of the broad range of first-rate value-added services, since inception the Company has never lost a client association within its Affinity group health plan segment, besides registering high retention rates in its Corporate and Other segment.

Personalized and consultative approach in healthcare services to corporations and small- and medium-sized organizations.
Qualicorp differentiate itselve through personalized services based on market intelligence and data analyses as well as through its extensive Health Plan Operator relationships. The Company provides its corporate clients with comprehensive analysis of their 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 broker health plans for small- and medium-sized enterprises (“SMEs”) with up to 400 beneficiaries, with a differentiated distribution strategy that the Company believes better suits the needs of this fragmented client base.

Proprietary and superior IT platform that serves as a medical information and data exchange hub.
Qualicorp has strongly invested in the IT infrastructure since its formation. The Company believes that its IT platform and operational capabilities provide it with significant differentiation from its competitors, allowing the Company to provide its clients with high quality services, as well as provides Health Plan Operators with data to support their actuarial methodologies. The Company’s position between the key healthcare constituents it serves, Health Plan Operators, beneficiaries and providers, allows it to act as a medical information and data exchange hub while maintaining security and privacy standards.

Sound financial profile, exceptional growth coupled 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 without assuming any underwriting or reimbursement risk. Adjusted EBITDA has a high conversion rate to free cash flow given the Company’s minimal regulatory capital requirements, low capital expenditures and the negative 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 those of the shareholders, as Qualicorp’s top 14 executives have share options. The board of directors provides the Company with a variety of perspectives on the healthcare industry, both in Brazil and from abroad.

Last update: February 24, 2014

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