Welcome to the secon d quarter 2023 earnings conference call of Hapvida. Joining us today are Jorge Pinheiro, CEO, Mauricio Teixeira, VP of Finance, and Guilherme Nahuz, IRL. Should you need simultaneous translation, please click on the interpretation button represented by the globe icon on the bottom toolbar and choose your preferred language. This event is being recorded and will be made available on the company's IR website, where the complete earnings release materials are already available. You can download the presentation by clicking on the chat icon. The disclaimers are shown at the end of the presentation. During the company's presentation, all participants will be in a listen-only mode. After the company's remark, there will be a question-and-answer session. In order to ask a question, please click on the Q&A button on the bottom of your screen and write your name, company, and language to enter the queue. Now, I'd like to turn the floor over to the CEO, Jorge Pinheiro, who will start the presentation. Hello. Good morning, everyone, and thank you very much for joining us for our second quarter 2023 earnings conference call. Mauricio, Guilherme, Andre, Bello, and I are all gathered here today with our IR team to share the second quarter results with all of you, confident about the execution of the plan that was presented to the market at the beginning of the year, and later detailed in our Hapvida Day. We have all been working tirelessly to deliver with great focus and discipline. I would like to thank everyone who has been aligned with our greater purpose, which is to provide affordable and high-quality healthcare to the greatest number of people possible. Getting started on slide two, we have another quarter in which we remained on our consistent trajectory of margin recovery. We have been doing that even with the several macro and regulatory factors that have been impacting our industry in recent years, in addition to the pandemic itself. Later on, when I give you a breakdown of the numbers, you'll see that our business model remains robust and resilient, with Hapvida NDI's characteristic discipline. Historically, our MLR increases by two to three percentage points from the first to the second quarter, affected by the typical seasonality of these periods. In the second quarter, we maintained our ticket recomposition strategy, which, together with cost management, discipline in managing admin expenses, increased vertical integration, and the launch of new products, resulted in an MLR that is slightly below historical seasonality. As we mentioned in our earnings call last May, we received the funds from the sale and leaseback and from the follow-on operations, which reinforced our cash position by approximately BRL 2.2 billion. It's worth mentioning that my family contributed with around BRL 1.6 billion of this amount, reinforcing our commitment, confidence, and long-term vision. As a result, and benefited by the cash position, our leverage went from 2.3x to 1.6x EBITDA. This issue remains a priority for the board of directors and our management. Even though it's one of the lowest leverage ratios in the healthcare industry, we'll continue to seek further reductions to deleverage the company. Moving on to slide three, I would like to share some updates with you. This is a rendering of accounts related to what we shared with you in June on our Hapvida Day. Our combined and consolidated readjustments in June achieved 13% for large companies and 16.2% for business plans. In other words, we're maintaining the pace of implementing the readjustments needed for the financial balance of our contracts. We strictly complied with the timeline set for systems deployment in the acquired companies, CCG in May, Clinipam in July, and in Santa Martha and Duque de Caxias hospitals in Rio de Janeiro this August. Our next wave is already scheduled, and it will take place on October 1st at the NDI units in Minas Gerais. It's important to mention that we're also making progress on the integration of corporate systems, such as the fully integrated HR systems platform and our telemedicine platform, which is also integrated. We continue to execute with great discipline our vertical integration plans. The highlight of the quarter goes to therapy rooms. More than 45 autism spectrum disorder therapy rooms have already been delivered, and many others are on the way. The vertical integration in Regional One exceeds 80%. In Regional Two, we exceed 30%, but with plans to reach a similar level to that of Regional One in HMO products by the end of the year. Still related to vertical integration, as you can see on slide four, we'll soon open two new hospitals. Hospital Rio Solimões, which will be an exclusively pediatric hospital, adding a fourth hospital to the city of Manaus. This will be an innovation for the state of Amazonas, as we'll have hospitals with a distinct characteristic and profile. The unit will have a total capacity of 41 beds, 31 of them in the general inpatient ward and 10 in the ICU. The other will be Hospital São José do Rio Preto. In the countryside of the state of São Paulo, this unit will have 73 beds, including 53 general inpatient ward beds, 10 adult ICU beds, four pediatric ICU beds, and six neonatal ICU beds, rapidly expanding our own structure in a region where we recently started operating after the acquisition of HB Saúde. In June, we also showed you our plans to streamline our group's corporate structure. We have had several acquisitions since then, as you can see on the slide, including hospitals, holdings, and we're also advancing with the integration of Ultrasound by Hapvida Assistência Médica. We have been executing our plan while remaining focused on quality of care and affordability, maintaining our values such as punctuality, kindness, respect, sustainability, and cost efficiency. Speaking of quality, the group has been investing heavily in maintaining and improving our care quality indicators. Even in units where we don't have our systems deployed yet, we managed to advance in production and standardization of these parameters. We have operational teams that are specialized in this type of monitoring, and a quality care committee, headed by the chairman of the board. It's important to highlight that we have outperformed national or even international benchmarks. Now, I'd like to turn the floor over to Mauricio, our CFO, who will go into more details about our operational and financial data. Mauricio, you have the floor. Thank you, Jorge. Good morning, everyone. Let me start by talking about revenue on slide five. There has been a 12.4% growth in revenue year-over-year, and 1.7% quarter-on-quarter. This growth is concentrated in healthcare plans, with an evolution of 14.8% in revenue year-over-year, due to our readjustment strategy that was needed to recompose our business margins. For dental plans, our revenue has been stable, and in hospital services, that includes other revenues such as rescue, the drop can be explained by the deconsolidation of our unit, São Francisco Resgate, which was sold this quarter, and the closing happened in August. Moving on to slide six, you can see details about our health plans. This quarter, we had a loss of 116,000 lives. This is due to the optimization of our portfolio that focuses on maintaining profitable contracts and on continuing with a negative turnover, which is the net reduction of employees in segments where we have a lot of exposure. When it comes to ticket, we had an increase of 12.2% as a consequence of an average readjustment of 13.5%, reaffirming our strategy to recompose our margins. Let's talk about MLR on slide number seven. In Q2 '23, we had a cash MLR of 73.9%, up 1.6 percentage points quarter-on-quarter. As Jorge mentioned, this growth is below what we expected, considering the historical seasonality in the regions where we operate. The increase in the vertical integration, added to the price readjustment, helped us to partially offset this seasonal effect. Moving on to slide number eight, we can see admin expenses. In Q2, there was a nominal drop in the group's admin expenses. We had an one-off benefit of the sale and leaseback operation, with a benefit of BRL 22 million. In this presentation, we have a backup breakdown that shows all the effects on our balance sheet. If you have any additional questions, you can come and talk to our IR team. We also had two negative effects of termination clauses that were due to our synergy plans. In the contingency lines, there was an enhancement because of the review of provisions in acquired companies, where we don't have the possibility of compensation with their sellers. Now, if you look at revenues over expenses, there is a dilution that is a consequence to a two-digit readjustment above inflation levels and the discipline in getting the most of the synergies, reaching a level of 9.1% of our revenue. Moving on to slide number nine, you can see our selling expenses. We had a dilution in almost all selling expenses line. We recovered credit in the sales of hospital services to third parties. This has been a strong initiative. Also in the discipline of collection in sales of hospital services, we also had a stabilization of the default rates of individual plans. In commissions, we see a reduction related to the first quarter, especially due to a unification of our commercial policies, which is a synergy and best practices between Regional One and Regional Two. On page 10, you can see our adjusted EBITDA. EBITDA achieved BRL 606 million in Q2, and even with a favorable seasonality, we were able to recover margins in SG&A, which had stability, and that also proves how scalable our unified platform is. We had a margin of 9 percentage points, a small drop compared to last quarter, but a smaller drop than the increase in MLR. On slide 11, we can see our cash flow. This is the second quarter in a row in which we had improvement in our cash flow. Recovery of EBITDA and CapEx discipline enabled us to improve our leverage, and we had 2 inorganic effects with the follow-on of BRL 1 billion and the sales of hospitals, corresponding to BRL 1.2 billion. We were able to decrease our debt over EBITDA level to 1.6x, a much more comfortable position than we had in the beginning of the year. Now, to wrap up my part, on slide 12, you can see the evolution of regulatory capital, with the increase in the solvency going to BRL 942 million. Technical provisions that require guarantees are stable, which considerably increase our regulated cash, that is now at BRL 4.4 billion. I would like to thank you all for your confidence. Now I'd like to turn the floor over to Jorge again. Thank you, Mauricio. I just want to reinforce that we are writing a 2023 in a balanced and diligent way, disciplined in executing our plan to recompose average tickets, opening new units, and working to recover our margins. I would like to thank you all for your contribution, all of our employees, the management, the admin employees, back office employees, and also all of our doctors, dentists, brokers, and suppliers. Thank you for your confidence, and the strategic word of our board of directors has been key. We wanna thank also our shareholders and, of course, our clients. That's the reason why we're here. Now we would like to open for questions. Thank you very much. We are now going to start the Q&A session to investors and analysts. When your name is announced, you get a request to enable your microphone on your screen. Please enable your microphone and ask your question. Please ask all your questions at once. Getting started with our first question by Vinicius Figueiredo, sell-side analyst at Itaú BBA. Vinicius, we're going to enable your mic so that you can ask your question. Go ahead, Vinicius. Good morning, everyone. Thank you for taking my question. I'd like to start by exploring your operations in the North and Northeast. You mentioned that the more mature operations on the Hapvida side was already running at similar margins to what you had before the pandemic. Has this been maintained in Q2? Also, considering that you already have a more normal MLR in that region, are you planning to have a lower readjustment in order to be more competitive and gain market share in the region? That's an important point in our organic growth premises. Another point that the buy side has been talking about was related to the selling expenses. We saw an improvement in PDD this quarter and also improvement in the coverage level. I just want to understand how this line is expected to behave from now on. Do you see anything relevant affecting these results in Q2? Finally, a third question about the nursing salary floor. Do you have any updates about your negotiation with the unions? Thank you very much. Thank you for your questions, Vinicius. I'll start by answering the first and third questions, and then Mauricio will answer the second. About the North and Northeast regions, they are now what we refer to Regional One. These two regions have mature operations, and we also have the Center West, which is a more recent region, Minas Gerais, which was incorporated to Regional One, and we have relatively recent acquisitions made by Hapvida and NDI in the state of Minas Gerais. I mentioned earlier that we are deploying systems... In half of our operations in Minas Gerais, by the end of October, the other half already had the systems deployed earlier. We also have the countryside of the state of São Paulo as part of Regional One. All the rest of our operations compose what we call Regional Two. Regional One is a region in which we have a very high vertical integration level. Talking about verticalization, exceeding 80% for low complexity outpatient procedures, and over 90%, reaching 94% in hospital services in the more mature regions. We see a better MLR here within the expected levels. In Regional One, as a result, we have a lower need to apply readjustments. I'm talking about two to three points of readjustments below our average readjustment. Looking at all of the channels, we sell individual, small and medium businesses, affinity, medium and large companies. We today have levels that are slightly above 15% of readjustment. Regional Two has rates of readjustment that are a bit higher than that, and Regional One has readjustments a bit below there. That enables us to expand our operations in Regional One and to continue gaining market share in those regions. With regards to the nursing salary floor, once again, I'd like to emphasize how important this category is for us. Donna Anna, my mother, is a nurse by background. Her legacy can still be felt in our operations and in the nursing area of the company. Answering your question, we're still waiting for the final decisions. We know that there are still appeals in the Superior Court awaiting a decision, and we are expecting the final say in order to make any type of provisioning, if need be. In addition to that, we continue with union agreements happening in many regions in the country. Now I'd like to ask Mauricio to answer your second question. Mauricio. Thank you for your question. To talk about PDD, Provision for Doubtful Debt, I would break down PDD into three elements: individual book, which was an offender since Q4 and is now showing signs of improvement. We've been making a great effort in the financial area to collect this and to focus on the policies of suspending services and working on digital channels in order to accelerate the collection services and talk to customers, because when the income is restricted, we need to work fast so that our bills can be paid first. Now, for group plans, we don't have any problems with large customers. This has been quite stable indeed. For large accounts, this is quite stable. We're being paid on time, so we don't need any specific provision for credit risk. We don't see any need for additional provisions for large accounts. Then something that is more one-off, which is related to the sales of services. Together with the sales of services, we have a VP that covers the sales of hospital services to other plans, and we've been very strict in suspending service, rescheduling and talking to these companies in order to make sure we are paid, so that we can continue providing services. We were paid for many, these bills that were accumulating. Here, of course, we have denials and delinquency that get mixed up, and it's quite complicated to separate them. We are working hard in order to get paid for, what is actually delinquency rather than denial. In individual, we see a consistent improvement once again, and we're working in order to keep this improvement going. Large accounts, we have no major problems related to that. For the sales of hospital services, we were able to recover overdue payments, and we are now going to work on continuing with a normal pace of payments. That was great. Thank you very much, and congratulations on your results. Our next question is by Mauricio Cepeda, sell-side analyst at Credit Suisse. Mauricio, we're going to enable your mic so that you can ask your question. Go ahead. Good morning, Jorge, Maurício, and Nahuz. Thank you for this opportunity. My first question is about regional differences. I understand that some parts of Brazil have not yet reached the ideal vertical integration, and you were planning to have a BRL 400 million CapEx in vertical integration efforts throughout the year. Are you planning to review these numbers now in order to accelerate vertical integration and decrease MLR? On the other hand, in regions where you already have enough capacity, what is the growth of the member base like in those regions, which could make the most of your vertical integration? My second question is related to your third-party network portfolios. How is this portfolio evolving? Are you reducing this? What is your relationship with your third-party network during this transition? Is it something smooth for members? Thank you very much. Hi, Cepeda. Thank you for your question. About your first question, regional differences and CapEx for the year. We have projected something around BRL 400-450 million in CapEx in 2023. We are already working on our budget for 2024, we think that this number might be expanded, aiming to implement our own network and have it more qualified and closer to our customers, and we've been able to do that. We have been able to increase vertical integration in all regions where we operate. Regional One, Regional Two, opening new units, expanding existing units, buying new equipment for ORs, for diagnostic clinics, oncology. We've been enhancing our own network, and that's a national historical movement that we have been making, investing in our own units, in our own network. We firmly believe in this, and we think this may be our main competitive differentials. Offering services from the sales of products to all outpatient procedures, all the way to high complexity procedures, we're very much focused on that in all regions of the country. We have investments all around the country to make this happen, in 2024, we're working on our budget, and we're planning to intensify this even more. About PPO products, we have made a strategic decision a few months ago to maintain this product available, especially in the main Brazilian cities, São Paulo, Rio de Janeiro, Belo Horizonte, and a few other cities with a lower video presence. Our goal is to keep the percentage of our portfolio the same, we wanna keep this percentage because we believe there is significant synergy between our HMO products that currently account for 95% of our customer base, we don't want to expand the PPO percentage more. We wanna keep it at the same level, but we don't wanna decrease this portfolio either. We don't wanna shrink this portfolio either. Now, about our relationship with the third-party network in PPO products, I'd say it's really good. In this type of product, we don't have major ambitions to reach the same vertical integration level that we have elsewhere. We have vertical integration of 10%, 11% in those PPOs, and we see a natural movement of our members going to our own network. This is completely spontaneous. Now, our users go and resort to our own network because of the quality of care that is provided. Great. Thank you very much, Jorge. Our next question is by Artur Alves, sell- side analyst at Morgan Stanley. Artur, we have enabled your microphone. Go ahead and ask your question, please. Good morning, Jorge, Rodri go, and Nahuz. I'd like to understand the reduction of your contracts that were in deficit in your member base. Is this going to continue in the coming quarters? How much has this impacted MLR since the increase was lower than the historical increase we see in Q2 as compared to Q1? Thank you very much. Hi, Arthur. Thank you for your question. We have been making adjustments and analysis in our customer base. That we can maintain balance and sustainability. We have been assessing this, especially in Regional Two, namely in more recent operations. In situations where we don't have our own network, and where we are not planning to invest in the medium term, in these situations, we've been reassessing, especially corporate contracts at large scales, and in these situations, in which the only solution would be to increase prices in contracts that are deficient, we have been making the decision to discontinue the contracts in some regions where this is happening. On the anniversary of every contract, we will go back and reassess that contract. The more vertical products are highly competitive in the market because of the quality of the services provided and also affordability, competitive prices that we offer. In situations in which we rely on a third-party network and where we don't have that PPO characteristic, as I mentioned earlier, because, yes, there are regions in which we're not planning to invest, but where we have a higher exposure level, and in those regions, we'll continue to review these portfolios, and we might discontinue those that we find are not sustainable. With regards to the positive impact on our MLR, this is not the only measure. Actually, we have taken a set of measures that gained strength recently. The readjustment that we made with great discipline also had a positive impact on MLR, but other measures, such as increasing the vertical integration of HMO products, the process of integrating acquired companies, which is running at full speed, and we expect this to be done by May and June next year. All of the assets that are part of the NDI, help with the group and also supply and other set of measures that enable us to offset the seasonal curve that would lead us to two-three percentage points higher MLR this quarter, but that was kept at 1.6 only. We continue working hard to continue implementing all of these measures, even if part of them don't bring short-term results, such as the integration process, that exerts pressure and cost, implemented systems as well. Also, the vertical integration process exerts pressure because you have duplicate costs for two-three months. Even though, we continue working with discipline so that we can implement all of the measures that we believe will be sustainable in the long run. I'm sorry for the long answer, but it's a whole set of measures that are implemented together and that enable us to reduce MLR and offset seasonal factors as well. You were talking about the specific impact about of nonprofit customers, but the impact is small because these customers, they leave throughout the quarter, and since these customers depend on the accredited network, I mean, the They leave, but their bills will still come during 180 days. This is actually going to impact MLR later rather than on the quarter they left the portfolio. Okay, thank you very much. Our next question is by Gustavo Nieves, sell-side analyst at Goldman Sachs. Gustavo, we're going to enable your mic so that you can ask your question. Go ahead. Good morning, Jorge, Mauricio, Nahuz. Thank you for taking my questions. I actually have three questions. First, can you share with us your observations related to frequency in the months of June and July? When we compare this to other third quarters, we're a bit short-sighted because of the change in the complexity level that we see happening throughout the whole industry. Can you talk about size and frequency in your own network with us? Now, a more technical question about the financial result. We noticed that the cash compensation line is going up together with the CDI% this quarter. What leads to this performance? What are the main drivers? I believe there is an effect of the average cash, now with the sale and leaseback and the follow-on operations, this is probably helping the financial results. Is there a change in profitability in any of the other assets that you have in-house? Now, a third question, which is a bit more straightforward. Going back to the selling discussion, you mentioned that part of the improvement came from unifying your internal policies. Has this covered the whole quarter or only part of the last three months, so that we can calibrate this assumption for the rest of the year? Thank you very much. Hi, Gustavo. Thank you for your questions. I will answer the first question, and then Maurício will address the other two. About frequency. Since we operate in all five Brazilian regions, we have a privileged view on how seasonality works, magical seasonality, more specifically. We see that Regional One, and namely the North, starts to face viral seasonal diseases in the beginning of the year, in January, and then that goes to the Northeast, usually in the months of February, March and April, and then this goes further south with the colder temperatures in the Southeast in the months of June and August. This wave of seasonal diseases usually close by the end of Q3. In July, more specifically, we see greater pressure for appointments and tests, in the states that are part of Regional Two, but we see a decrease of other indicators, such as patient day. I think that these factors combined will lead to a third quarter that will show seasonal behaviors as expected, and Q3 is usually very similar to Q2. We're going to work hard and show you all the actions we take in order to continue on this curve of margin enhancement. That's the commitment we made for the first cycle, we gave you lots of details about this. This is a cycle that is closed in June 2024, with all of the readjustments made, all of the assets integrated, so that we can move on with continued planning, considering all the seasonality effect, seasonal effect, to the end of this journey that will be completed by June 2024. Mauricio, you have the floor. About cash compensation. What happened in Q2 was a recovery of the secondary market of corporate debt. Our cash, either free cash or other cash, is applied through restricted funds in which assets manage the cash and buy that with policies that we determine, focused on AAA bonds and corporate credit bonds. We saw in Q2, many companies having credit issues. Know some famous cases, I don't want to mention any names, but the credit market was impacted, and we see the bonds opening up, and that penalized our quotas in Q1. Even for AAA corporate debts, they were negotiated at a different level. The market, in the market was way below the curve for many bonds, not only ours, but of others that we buy in our funds. In Q2, what we saw was the recovery of the secondary market in Brazil, with a higher flow in fixed income, corporate and institutional bonds. That helped our quotas recover. It was a technical issue of market markings. When we look at the average cash of the quarter, it's what we expected due to the follow-on and the sale and leaseback. About commissions and commercial policies. The commission and the callback of the churn in cases of customers that we pay commission in sales and when they leave. We make an adjustment for future commissions. This is actually a market practice, and that's very strong in Regional Two, not that much in Regional One. We unify these practices, and not only this, but other conditioning practices, and that is something that started in the beginning of the year, and now we start to see the effects of those initiatives. That is very clear. Thank you, Mauricio and Jorge. Our next question is by Joseph Giordano, sell- side analyst at JP Morgan. Joseph, we're going to enable your audio so that you can ask your question. Go ahead, Joseph. Hello. Good morning, everyone. Thank you for taking my question. I'd like to talk about loss ratio. Your MLR was a bit better than we expected, in spite of the negative effects of the season. You talked about the pressure of therapies, when you talked about vertical integration, you mentioned that you have new therapy rooms being opened. In Q1, we had 1.0 to 1.2 points of effect on MLR in Q1. How do you see the evolution of this pressure that started mid last year? Now, my second question is about expenses. We see a sequential improvement in G&A. The company is highly committed here to accelerating the integration processes. Thinking about G&A level, I would like to ask you whether we can think about something flat or even a downward curve year-over-year. The first guidance that you gave, I'm not sure we should be still considering this, but when we look at the synergy numbers, numbers in the expense and cost basis, were they conservative, benchmark? Thank you, Joseph, for your question. Specifically about MLR and therapies, you're right. That was a type of procedure that, due to the regulatory changes, impacted us and the whole industry strongly and quickly last year. When it comes to that, the company has been taking action also quickly, but of course, we have an implementation deadline. The first thing we did was to create a specialized area to develop efficient protocols and guidelines, and to implement our own network throughout the country. As I mentioned earlier, we have already opened several units in all regions of the country. By the end of the year, our pipeline aims to get to high levels of vertical integration in all of our HMO products everywhere we operate. We want to provide functional care with optimized protocols and guidelines, being cost efficient and reducing the impact that, yes, has become a relevant cost and is already impacting our company. We are confident that we'll be able to curb this impact in the coming quarters, by the end of the year, when we are going to have all the units already operational in the HMO products. When it comes to MLR, we are working and preserving the conditions we have without any major changes. We're working so that this first cycle, with all of the changes that will be made by June next year, put us closer to our historical MLR levels. We wanna be closer to those levels, but it's worth mentioning that we have many acquisitions, and each one of those acquired companies have their own history of asset correction through different ways, you know, optimization of outpatient services, hospital services, but we're very confident in the execution of our plan. We feel confident that we are on the right track, but we will have to wait for the implementation timeline of each one of them with gradual reduction of the MLR. That's our plan. Now, Mauricio is going to talk about G&A. About G&A, Joseph, we have many initiatives mapped. We have a G&A committee that gets together every Friday morning to map the opportunities and then follow up on their execution. There's a lot to be done. We're working to readjust the ticket and keep G&A stable or at inflation levels at most, but we are committed to decreasing the nominal base of G&A. There are several opportunities related to IT technology. Rather than performing management, maintenance of two different systems, we're going to have one single core system, half of the system being deployed in Minas and São Paulo, so that you can stop paying for software license or server costs to the system. There's a lot of synergy in technology and licenses of major software, trips, third-party services, consultancies. We are mapping all of this to see what we can eliminate in terms of G&A costs in the acquired companies. After being incorporated, some of these services make no sense. We're going to work in order to reduce our nominal G&A base, in order to offset the inflation rate that incur in those contracts and also the collective bargaining agreement of our payroll. There is a lot to be done. I don't wanna give you any guidance, but we're working hard to reduce this percentage even further. Great. Thank you, Jorge and Mauricio. Our next question is by Samuel Alves, sell-side analyst at BTG Pactual. Samuel, we're going to enable your mic so that you can ask your question. Samuel, go ahead. Hi. Good morning, Jorge, Mauricio, and everyone. I have two questions here on my side. The first question is about the competitive landscape. Can you tell us about this? Do you still have a favorable ticket pass-through environment, especially in São Paulo? We heard some companies are now more aggressive when it comes to margins. Can you talk about the competitive landscape in São Paulo? Now a second question that is also related to that: Should we expect sequential ticket increase quarter on quarter if we consider the carry-on effect of the readjustment, or is there any other effect we should be concerned about? Thank you. Thank you for your questions. About the competitive landscape, I would say that the most important point where we focus is on building a care structure that provides quality services and that enable us to be competitive when needed. We might see one or another situation in which operators produce prices that are not sustainable. We saw that throughout decades operating in this industry. Our main concern, which is something that is crucial, is to make sure that we provide high quality care, but something that is in a way that is affordable for our customers and sustainable for us. Sometimes with the operators, without a cost structure. If you look at the public data that is made available, we can see that they have a short-term portfolio composition strategy, without any type of medium-term and long-term sustainability, and that's not what we want. What we want is to build a network that will enable us to be a competitor of trust, and we've been able to expand our customer base with this philosophy. We can deliver services from end to end. Now, I'd like to ask Mauricio to answer your question about the ticket recomposition strategy. Yes, thank you for your question. Our pass-through, price pass-through discipline remains the same. We follow up on this every week, and we see the same levels of price readjustment. The average ticket is also related to mix, because as we mentioned earlier, we had a price increase of 13.5%, but the mix, led to an average ticket growth of 12%, and we expect this to continue since we're losing lives in products with open network. These are products with a higher ticket, and we're recomposing in locations where we have available beds in a stable verticalized model, or in places where we are undergoing this verticalization process with lower tickets, and that's key for our business model. This can lead to ticket reduction, but the magnitude of what we're doing is much greater. You say that was 30%, that will continue to be around 13%-15%. There is a lowering of the average ticket on the mix, but in total, that's going to lead to a recomposition of tickets. Okay, thank you. Have a great day. Our next question is by Ricardo Boiati, sell-side analyst at Banco Safra. Ricardo, we have enabled your mic. Please go ahead and ask your question. Hello, good morning, everyone. I have a follow-up question related to ticket. Rafael mentioned that the negotiation for large accounts would be more challenging, and we see a slowdown in ticket readjustments from May to June. These were the numbers reported for large contracts and corporate contracts as a whole. I would like to understand, if this ticket movement is more stabilized, or is there greater slowdown ahead of us in the level of contract readjustment? The readjustment above 13% is still very, very good, I know, but is there any slowdown in the readjustment expected to come, or is this going to be kept at the same level from now on? Finally, about non-profitable contracts, I would like to know if you have a more consolidated view on your customer base, how much cleanup this non-profitable contract base still needs. Just so we understand this dynamic, in order to have a healthier portfolio with contracts that do not need any significant readjustments, because after you clean up your base, the adjusted NARADs, if you look at the portfolio that you wanna keep in-house, it wasn't as bad as the loss of lives you had this quarter. Just want to have a more normalized view of your healthy member base. Thank you. Thank you for your question, Boiati. First, about the persistency of the readjustment level. Indeed, we have shown that this was at around 15%, and that was going to apply on 50% of the May contract. As Rafael said, and you mentioned this, the easier negotiations are solved first, and those that take longer to be solved are the more complex ones. You know, large contracts with major retailers that receive a lower readjustment than average because of their bargaining power and also the scale that this contract brings us, diluting costs and diluting our G&A basis. These are contracts with a contributory gross margin. The main contracts were completely readjusted, including those contracts that have a readjustment level a bit below average, and the June contracts are now happening as well. I think this has not lost momentum. Just the larger contracts have pulled this number down a bit. If we look at the June and July readjustments, as we do weekly, we see the same pace happening, and we have not changed our strategic decision on readjustments. We keep on applying readjustments to correct contracts that are in deficit. About unprofitable contracts, still, I don't have a number to give you about how many contracts are subject to the risk of us not reaching a consensus when it comes to the readjustment. This is something we do on the contract anniversary, and this is a cycle of contract optimization that will only end in May next year, so after a whole year of readjustments. What matters the most is that the revenue mass is going up, so the power of readjustments at this two-digit level, that is already happening and will continue to happen until the end of the cycle, is more than enough to offset the loss of non-profitable lives. At the end of the day, what we have is a positive vector that will impact MLR positively. Thank you, Mauricio, and congratulations on the improvements you achieved this quarter. O ur next question is by Leandro Bastos, sell-side analyst at Citibank. Leandro, we have enabled your mic. Please ask your question. Hi, everyone. Thank you. I have two questions. My first question, still talking about what Mauricio mentioned. The second half of the year, do you think this is going to be a slower semester with a timid growth, or you think there will be an acceleration when it comes to net adds. About systems integration, you talked about your SSG. What was the process like, and what can you expect in terms of portfolio and working capital? Thank you. Thank you, Leandro, for your question. As we told you on our Hapvida Day, and Mauricio restated today, we have a year to go to reassess all of the contracts, and every week we have a meeting to assess the contracts on their anniversary, and this is expected to continue until next year. We want to get there with a healthy and sustainable portfolio within the premises of what we believe is sustainable and guaranteeing high quality services delivered, but also in conditions for us to continue expanding, growing and investing. Yes, we'll continue with the same readjustment discipline and reassessing the portfolio in the coming quarters, three quarters. About the integration process, of course, we need to deploy systems and processes, and this is usually something very complex, but we're used to this. We have dedicated teams. It's a very complex process, but in some situations we send 300, 400 employees, or even more sometimes, to the unit so that they can perform systems training for weeks. This integration process takes from 60 to 90 days until it can be stabilized. Things are advancing well. Of course, it is challenging, but in our accelerated schedule, we've been working well. There are points to correct. We always discuss them and assess with our specific committees, but we are on the right track. Okay, thank you. Have a great afternoon. This concludes the question and answer session. We are now closing the second quarter 2023 earnings conference call. The IR team will remain at your disposal should you have any other questions. Thank you.