Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Quali's Second Quarter 2024 earnings conference call. Joining us today are Mr. Maurício Lopes, CEO, Mr. Carlos Vasques, IRO and CFO, and Mr. Eduardo Garcia, IR Superintendent. Some statements in this webcast may be projections or future expectations. Such forward-looking statements are subject to known and unknown risks, as well as uncertainties that may lead results to differ materially from those that were expected. This event is being broadcast simultaneously over the Internet and can be accessed at www.ri.qualicorp.com.br, where the respective presentation is available. We would also like to inform you that this event is being recorded, and all participants will be in a listen-only mode during the company presentation. After the company's presentation, there will be a Q&A session when further instructions will be given. Now, I would like to turn the floor over to Mr. Maurício Lopes, who will begin the presentation. Mr. Lopes, you have the floor. Good morning, everyone. It's a pleasure to be with you once again in our earnings conference call. I would like to thank the presence of our investors, partners and peers who have joined us here today. Our industry is still reorganizing and under pressure with high loss ratios, although we still see some signs of reduction in loss ratios, as indicated by some HMOs in the last quarter, and we believe that this quarter we will see good news. This is what our conversations with many HMOs have been telling us informally. But anyway, consultancy companies, HMOs, doctors, healthcare operators, they're all trying to find their relative weight and their role in this environment, in a market with higher loss ratios. More important than that, an environment with a new pattern of healthcare use, a new pattern of distribution, a new pattern of profitability. These ways and roles that are being redefined have not yet been consolidated. They are still being established, and this process is not over yet. We believe here at Quali, that while this market is getting organized, the most resilient companies will be able to find a better market in the future, although we're still under a lot of pressure in the industry for now. At Quali, we continue attentive and working hard to make our whole technical skill available, as well as our distribution and product administration capillarity, in order to redefine this industry. We can generate results. We have been proving this in a resilient way in recent quarters while the market doesn't get reorganized. And more than that, we continue growing our capacity to be the leaders among the main players of the industry, redesigning the distribution model, the administration model and the management model for members and service providers in a sustainable way. This is a journey towards sustainability that belongs to all of us all, and we will continue as leading actors of this process. We will help redesign, as much as possible, our industry. And this is being done in a resilient way, quarter after quarter. Our turnaround has been executed as planned, although we have had some unilateral cancellations, just to mention an example, but we are consistently on the journey that we defined ten months ago. This call is a mark of the 10-month project of reconfiguration, starting with this major redesign at the company, redesigning the acceptance model, subscription model, team model, focusing on the right sizing of our company, which is bearing fruit quarter after quarter, as you can see in our numbers. We have also been restructuring our capital structure. We have been deleveraging the company in a consistent way in recent quarters and will continue to do so. I think that a good indicator for those that see our numbers is the spread was quite open in our debt papers, over 6.5% as related to the paper price. Now, this is down 0.8%, and this has been consistently dropping, which shows our resilience and our cash generation capacity, as well as our capacity to repaying our loans, as we have been telling you throughout the year. So yet another indicator right there. On the product side, we've also been advancing consistently. We're going to talk a bit more about that during this presentation, after we give you some of our numbers. We continue working hard to show that you can create a product portfolio that is sustainable, has good distribution, and brings members the healthcare that they expect. So we've been putting our efforts in this, in spite of the difficult market moment, as you'll see during the presentation. But we believe that these actions of redesigning the company and relaunching products will take us towards our goal that was defined 10 months ago, and we are confident that we'll be able to go throughout this journey with the HMOs and the distribution channel to get to what we consider to be a sustainable market. market. The portfolio cancellations that we had throughout the quarter were quite harsh and difficult for members. We, as an administrator, management company, worked really hard to make sure that the care would still be provided to everyone. Unfortunately, the market doesn't have products for everyone. We tried the best we could to mitigate those cancellations that were quite relevant in the industry as a whole. Qualicorp was one of the companies that suffered those cancellations, but this was actually seen in a more widespread manner throughout the whole market. But we are very optimistic about what we are doing. Although we are cautious right now, we think that we have good entry angles, and the portfolio launches that we'll mention during the presentation are proof of that. So this is just the background information that I wanted to share with you before I turn the floor over to Vasques. How the market is still under pressure, but we see now a horizon of a lower pressure in the medium term. In terms of our resilience, capacity and result generation, we can be interlocutors to create new portfolios that will favor members in a sustainable way for HMOs. This is exactly what we planned 10 months ago, although we did have some difficulties with cancellations along the way. Now I'd like to turn the floor over to Vasques, and I'll come back for the Q&A session. Thank you very much. Vasques, you have the floor. Thank you, Maurício. Good morning, everyone. Let me give you some figures so that we can reflect upon the context that Maurício has just described to us, which has been used as a baseline to define the actions and the strategies of the company. The company closed the second quarter of 2024 with 688.9 thousand members in the managed portfolio, a drop of 8.6% against the previous quarter, and 25.8% year-over-year. We are working on the product portfolio, as Maurício said, in order to work on this trend. On the other hand, if you look at the upper right corner, you can see that the company has reported a net revenue of BRL 398.8 million, a drop of only 1.2% quarter-over-quarter and only 8.3% year-over-year. This is materially inferior than what we see in the portfolio, which shows how resilient our business model is. Now, in the lower right corner, you can see the impacts of our internal actions. Our adjusted EBITDA minus CAC totaled BRL 152.9 million in the second quarter of 2024, so flat as compared to the previous quarter and 8.1% higher year-over-year. This shows how the company has been able to maintain its resilience in these times of turbulent seas. A churn of 14.7%. I just wanna highlight that one quarter of this churn, that is 25% of this churn in Q2, is related to that extraordinary movement of cancellations that we have seen this quarter. Now, on the following slide, we're going to talk about recurring costs and expenses, giving you further details about what I told you in the previous quarter and the resilience of our cash flow. In the first chart on the left, you can see that the company has had fixed expenses totaling BRL 123.2 million in Q2 2024. If we exclude the one-off event in Q1, that would be almost flat quarter-over-quarter and a BRL 20 million reduction year-over-year. This quarter, we have had 30.9% of the revenue against 28.8%. So around the 30% that we have been working on, which reflects a strong pillar of operational efficiency. Now, on the chart in the middle, you can see our variable expenses. They are more related to the distribution channels and the costs related to revenues and volumes of the company. This quarter, this number totaled BRL 94.6, that is 23.7% of the revenue. So the percentage is lower than the previous quarter and still a little bit above what it was one year ago, but already showing a more reasonable level, closer to 20% than 30%. This reflects our strategy of doing this commercial realignment overall in the company. And in the final chart on the right, you can see that CAC over net revenue consumed 7.1% of our revenue this quarter, against 8.9% the previous quarter and 12.3% in Q2 2023. This shows the discipline of capital allocation in our company. The company has been very diligent in its decision-making process when it comes to investments, so that we can find a sustainable way forward in the coming years. Would we like to increase this? Oh, yes. Linked to the, I mean, the discipline of capital allocation linked with a good portfolio and product management, we should be moving towards a more sustainable journey. So we do expect this number to go up with time. Now, let's talk about cash generation. This is the peak of this whole process. The company has kept a strong cash flow, BRL 129.2 million in free cash flow before debt and dividends this quarter. Even if we exclude the one-off effect of the sales of QSaúde of BRL 102 million, we still have a company that is reporting BRL 103.6 million in cash flow in one single quarter in a recurrent way. It's important to highlight the BRL 240 million of free cash generation throughout the semester, and BRL 216.7 million in a recurring way. So the numbers of the second quarter were in line with those of the first quarter, and similar to those of recent quarters as a whole, in spite of the fact that we're still suffering here when it comes to the number of members. This all leads to a more and more robust indebtedness level. A year ago, we had a net debt of BRL 1.324 billion, with a leverage of 1.55x. Now we closed in the second quarter of 2024, BRL 1.096 billion, a debt that is around BRL 230 million lower than it was previously, with a leverage of 1.48x. This leverage went to a peak of 1.58x, and now it's at 1.48x, and we think that this is the trend that we expect for the future. This concludes the main financial highlights, and now I'd like to turn the floor back to Maurício. Good morning once again. We have created an interesting slide here to share with you. We have been working hard to generate a new product portfolio. What is the scenario? Quali is still the healthcare administrator that has the best product portfolio in Brazil. We are absolute leaders in the product portfolio, but our product portfolio needs to be renewed. We need to have more retail, more sustainable, more capillarity, and more eligibility, appropriate products. With time, the HMOs have removed from the retail channel, products that had no co-participation or that had too broad eligibility, and have implemented many restrictions from mid-2022 to the end of 2023. So we saw that cycle of product offer reduction, and the market still lacks products right now. But what we see is that we have the ability of devising new product portfolios with a well-done and correct acceptance model, guiding products, guiding customers to the best products that are the best fit to their reality, and in a sustainable way, which is aligned with the reality of the industry. This has been opening the doors of Qualicorp to a major group of HMOs, culminating with good price conditions, as well as the launch of new products. Just like the launch that we had last Monday, when we launched a very interesting regional portfolio with an HMO, and a very comprehensive national portfolio for another HMO. That shows our ability to design and go live with new products. This is what we've been doing here in the background, and that may not be too visible to everyone. If all these products are well-designed and well put in the distribution channels with a well-done acceptance process, we believe that we will have a long-lasting portfolio that will set itself apart in the longer term. We have a redesigned acceptance process. We did that when Carlos joined the company as technical director at least eight months ago, and we have been showing HMOs the ability we have to create a different affinity product. And the sales offers that we have are very well-balanced and well-priced, and this will bring us and members much more stability for them to remain in a healthcare plan. And that's what everyone wants today. For a member, a beneficiary or a prospect that wants to buy a healthcare plan, just as important as knowing whether they will be able to afford the plan, is knowing whether the plan will be in force in the long run. And this is what we've been working really hard to make sure, that we'll have a very long-term portfolio in the healthcare industry. So this is the hard work that we've been doing with two portfolios launched last Monday. The fourth of August, if I'm not mistaken. So that was all we wanted to share with you. We can now open for questions, if you have any, and we're here available for you. Thank you. We're now going to start the question and answer session. If you wanna ask a question live, just type your name and the name of your company in the Q&A session. Our first question is by Mr. Felipe Amancio at Itaú BBA. Mr. Felipe, you have the floor. Good morning, everyone. Thank you for taking my questions. I have two questions here on my side. The first is about variable expenses. Unlike what we saw in recent quarters, this quarter, we saw a significant drop in recurring expenses. So you said that this is the result of the commercial work that you have been doing, but can you give us a bit more color about this? Do you see a possibility of achieving further gains in this area? And the second question is a bit more strategic related. We have seen the turnaround strategy that you have been executing in your operations, but I want to understand a bit better, at which point of this turnaround you are right now? We have seen a significant profitability improvement and efficiency gains. Do you think that this profitability work is close to being completed, or are you ready to start a new phase, or do you expect this to happen in a more gradual manner? Thank you very much. Good morning, Felipe. I have two comments here. This is Maurício speaking. So let me tell you a bit about the turnaround, and then I'll tell you about the expenses. Right at the beginning, we had the expectations of doing the right sizing of the company very quickly when it comes to fixed expenses, and then have a longer track for variable expenses due to the complexity related to those expenses. So thinking about recontracts with our distribution partners. And what we see is when it comes to fixed expenses, we were able to deliver most of what was planned. We have not yet delivered everything, of course. This is a continuous type of work, and the team here is obsessed about operational efficiency, and that's our target. If the company is efficient, then the size will be right. Regardless of whether the number is high or low, the company needs to be effective. So we have to be able to issue fast, register products fast, design products fast, make products available on the shelf fast, and solve collection issues fast. So that's what we have been doing 24 hours a day. We have had changes in our COO a while ago. We have Jean, very experienced in the market, a founder of healthcare benefits companies, and he's now working with the operations team to have a more efficient company. And I am convinced that we have a huge possibility of increasing the efficiency of the company even more. This is a journey that has just started. So when it comes to fixed expenses, I think we have not yet reached the point we wanna reach. And when it comes to variable expenses, I would like to say that we worked really hard with the implementation of a new commercial model. In December and January, we were able to sign most of the contracts we have with our distribution partners. There are only a few left that we're still working on, but month after month, we've been working in order to reduce this cost. And it's not just cost reduction per se, for the sake of it, but to make sure that we will have a sustainable product. So if the sales process is done correctly, with the right due diligence, and the product is right for the customer, we will have an even better compensation on that channel. But if you sell the wrong product and we have a high early churn, and the company has a health statement that is not correct, then the compensation of the channel will be different. And it's important that we're all aligned to do the right thing. We have to offer the right product in an appropriate manner for each one of the members that want to go into the healthcare market. So variable expenses are going through a process that will bring us good results, and this is only the beginning, and the fixed expenses journey has not finished yet. This is a journey of efficiency gains with a consequent reduction in fixed expenses. That's our goal. Now, when it comes to the turnaround, in our planning, we would be in this quarter with a much more comprehensive product portfolio, and we would be able to focus only on sales. That's what we wanted, but that's not what happened. The whole harsh environment, the harsh external environment that I mentioned in the beginning of our conversation, created some shock waves throughout the whole segment, you know, affinity, corporate, small and medium enterprises, and all of that. And these shock waves have distracted the company from having a journey with stronger sales gains. Let me give you some numbers to illustrate this. Our CTR of everything that we buy in terms of leads in the market has dropped to lower than one-third during the two harsher months of crisis. I'm talking about the cancellation crisis. If you reduce that, and the lead is your main tool for acquisition, of course, it's going to be harder for you to commercialize. Then it's only natural that the company focused more on trying to find spaces for members that are being canceled whenever, wherever it's possible, either affinity, individual, SME, it doesn't matter. What we tried to do in a diligent way was to put the members in the right products, to try to find the right fit. We have allocated them in different types of products, but that distracted the company on having a greater focus on selling. That was the offer side. And on the demand side, the customers were trying to maintain their products, and therefore, this affected the numbers. But in the month of July, this has improved. CTR is going up again. It had dropped to one-third, but it's now double what it was last month, and we think that this is getting better from now on, especially with the launch of new portfolios. But the turnaround is on track, but it had this small setback, so to speak, or a hiccup in the last three months, which was something quite complex for the industry as a whole. You all saw that happening throughout the industry, but we continue firm with our goal in spite of those small hiccups or setbacks. Great. That was very clear. Thank you for your answers. Our next question is by Mr. Samuel Alves at BTG Pactual. You have the floor, sir. Good morning, Maurício, Carlos, and everyone. I have two questions here on my side. The first is about the unilateral cancellations that you saw this quarter. You said in your earnings release that you have implemented a series of actions that led to a partial offset of those cancellations. So can you share with us numbers of the related to the lives that were preserved with the actions that you took? That's the first question. Now, the second question is about what you mentioned in the last slide of your presentation about the new product grid. I believe the company is now focused on doing a thorough analysis of the loss ratio in this new line of products in order to persuade the HMOs to adopt the new grid. Can you tell us more about the magnitude of the loss ratios that the new product portfolios have had as compared to the previous ones? I believe this is not yet very mature, but do you have any initial signs of different medical loss ratio, ratios? That would be quite helpful. Thank you very much. Hi, Samuel. Thank you for your question. This is Maurício speaking. Let me go back one chapter in the story of the cancellations, because I think we should understand the overall picture. The first step in this whole cancellation discussion is to try and persuade the HMO to maintain the portfolio. We put 60% of our energy here, I'd say. We had a million meetings, interactions, negotiations, because if we're able to keep the portfolio and find a way to solve the profitability of the portfolio, the members will have their care provided, which is our utmost goal. This is a business of recurrence, and recurrence comes from satisfied members. In terms of the magnitude of the numbers, we were able to revert over 50% of the cancellation requests with the HMOs. So the cancellation would have been double what it was had we not taken those actions. A lot of work, a lot of portfolio design, and led to the retention of almost half of the portfolio of the main HMOs that have requested cancellations. So after that, a more tactical action is to try and find a place for those members. Our difficulty and the difficulty of the market as a whole is that eligibility, that is, the entities that can sell products to members, have been reduced greatly in the years of 2022 and 2023. And therefore, in 2024, we had less space to place these members to get their care provided. We had more complex cases and simpler cases as well. We had HMOs A and B, different stories, but I don't have a final number to give you. But we saw situations in which we were able to retain less than 10% of the mass, so very low retention rate, up to situations in which we had an appropriate eligibility. So it was a plan for engineers, and I had another plan for engineers, so we were able to allocate those engineers quickly. But the main target was to keep the services provided as much as possible. And during stress moments, if everyone can look ahead and see a better world in front of us, understanding that the loss ratio will go down, we will be able to maintain those lives. This is, was pretty much the conversations we had with the HMOs. Now, having a product that is more appropriate to retail, to the retail market, I've talked about that in recent quarters. I think that the retail product will have co-participation and selection in a more selected network. I think that's what we are going to see in the coming years. So products with co-participation, managed products, added to a more appropriate acceptance model, and just as a reminder, here at Qualicorp, for almost 9 or 10 months, we've been doing an acceptance process that includes a video interview to almost 100% of the mass. We have been able to find segments with a statistically substantially better performance than the rest of the portfolio. So if the portfolio has index numbers of 100, we have segments in which we have index numbers of 60, so 40% below the portfolio loss ratio. So we've been doing this better and better. This is a complex process. Nevertheless, it's fairer to the collective group. So we want to have more sustainable products in the long run. We should always focus on the long run. The HMO needs to feel comfortable in having this product to distribute in the retail channel. But the problem here is not having services provided to small entrepreneurs, individuals, or freelance, self-employed people. So we need to have a portfolio, either in the SME affinity or elsewhere, that is able to serve that audience as well. Thank you, Maurício. Our next question is by Mr. Renan Prata from Citi. You have the floor, sir. Good morning, everyone. Thank you for taking my question. It's just a brief question related to what Maurício said here in the last answer, and also related to the reduction of CAC per life this quarter. So I just want to understand, these new products, are they already a consequence of this more personalized distribution channel, and this is already leading to this lower CAC per life? Or what was the dynamic? Why did we have such a great reduction in CAC per life this quarter, if the gross adds is in line or even higher than recent quarters? Thank you. Thank you for your question, Renan. Yes, we believe that we can have a CAC per life that is more efficient than what we had last year, and more related to products that will be more sustainable in the longer run, and more aligned with the commercial partners that have high quality sales. Let me give you some numbers to illustrate what I mean. We had sales seasons last year that had an early churn, that is, contract cancellation in less than 3 months. That was at least twice as high than the number that we have shared with you today. So you have admin expenses to sell the product, and the product is sold in an inappropriate manner. The member cannot afford the product or did not understand what the product was, or the sales was not high quality, and then the contract is canceled after a request of the member in less than three months. So this product has high cost for the HMO, for us, for everyone. This is a product that consumes a lot of CAC, and we're no longer doing that. We have segmented our distribution channel in at least six modalities, and in those modalities, we also have at least four compensation models, be it regional or related to the product characteristics or the distributor characteristics. And this more complex distribution model requires more work to be managed, of course, but this has shown a longer permanence of members and a reduction of early churn. Although, yes, we have a lower sales volume with that, but the company is confident that this is a long run game, not a short run game. Having, you know, investing in low quality sales with a high CAC, will lead to unilateral cancellations or early churn. This is very bad for members. So we would rather have better sales, maybe in lower volumes than we would like, but to make sure that we're going to have lower adjustment rates later on. So this is a trade-off that we're willing to face, a nd, we're going to make it work with our operational capacity. While the company can distribute well and generate the cash flow, generate the results we need, becoming more and more efficient, we will have an extremely resilient company. Once the market is able to go through a calmer moment, we will continue as the leading actors with our very sustainable portfolio. Yes, we're going to keep a lower CAC, while we see that we have higher sales quality with this model. For now, we think that this is the way to go, a well-calibrated CAC over life. Great. Thank you, Maurício. Our next question is by Estela Strano from J.P. Morgan. You have the floor, ma'am. Hi, everyone. Good morning, and thank you for taking my question. My question is about capital structure, a very straightforward question. As we've been seeing in recent quarters, the company has been prioritizing cash generation, and you have talked about that quite a lot during the presentation and during the Q&A, but I'd like to know what the company mindset is like right now. You are prioritizing repayment of debt and cash generation, so what are the plans for an investor compensation, payment of dividends? When can we expect this to happen again? Thank you very much. Hi, Estela, this is Vasques speaking. Thank you for your question. Well, I think that you fully understand the moment the company is going through. As Maurício said, we are going through a difficult moment in the market, but we're still segment leaders and generating strong cash flow, once again, in order to face our obligation toward third parties. We are adjusting the company's debt level. We are reducing our leverage, but there are still some steps to go so that we can reach a long-term balance. We'll continue to deleverage and rebalance the capital structure of the company. I think that the credit market has been doing that. Maurício talked about the debenture rate closure at the secondary market, and having done that, I think we'll go back to a more balanced level, and then we can think about dividends in addition to the minimum compulsory level. So the challenge we have for this year and next year is to focus on the adjustments of our capital structure, and then we also have to think about shareholder value. So yes, we have to focus on dividends. I think you're right with your concern, but I think that readjusting the capital structure of the company creates a lot of value to our shareholders, and then we'll be able to pay more dividends in a sustainable way in the medium and longer terms. But in the short term, our focus is on adjusting our capital structure even further. Great, Vasques. Vasques, thank you very much. This concludes the Q&A session. Now, I'd like to turn the floor over to Mr. Maurício Lopes for the final remarks. Mr. Lopes, you have the floor. Just a quick comment, which I find very important, is the role of the administrator is to have the best possible trading process. But at the end of the day, we sell and we manage products from third parties. These products belong to the HMOs. Why am I saying this? Because at the end of the day, we would like to have a broader eligibility, lower prices, but this is not a decision that we can make on our own, because we're selling third-party products. So if the HMO, because of the times they're going through, decides to have lower eligibility because they don't want to sell products to one audience or another, this is something that they will decide. And what we're trying to do here, and I always repeat this because I find it very important, is we're trying to redesign a retail channel structure that is capable of giving HMOs the environment they need to feel comfortable. But this is a long-term journey, and we are at the forefront of this process. We have the best technical knowledge, the best technical know-how to be the leading actors in this process. You know, we have built this level of skills and expertise in recent decades, and looking ahead, I can say that we'll continue as the leading actors to consolidate this industry in the long term. Although we do rely on third-party products that are sold by us, so we can never forget this. I would like to thank all of our employees, our Qualis, as we call them, that have been working really hard with a lot of diligence, negotiation capacity, and this is part of our DNA. And they have been able to take our company to a better situation. But our resilience capacity and our capacity to redesign processes and efficiencies that we have shown, we have been able to get to where we are. So I think that we have been doing a very good job. Together with the board of directors, we have decided that we'll continue to follow on that journey while the market is getting reorganized. And quarter after quarter, we'll continue with our consistent conversations with the whole market. Consistent not only in the way we design the company, but also consistent in the way we manage our numbers and in the way we allocate capital, generate results, and generate efficiencies. We're all very engaged and confident in what we have planned. Just a final point that I find very important to mention, is that we are working hard on this capital structure and gaining efficiency, but you must remember that we, as society, had an emergency in the state of Rio Grande do Sul, with the major floods that happened there, and the whole society organized in order to solve the crisis. But now we need to focus on the chronic problem, because the floods are no longer there, but we have to rebuild the state. As company, as society, as individuals, we should all focus on working hard to help solve the chronic problem in the region there. That is just a friendly reminder. All of our Quali, myself, the company, we should continue to help them in any way we can. Thank you all again for joining. Have a great day, and I want to once again congratulate our united and engaged team that is working hard relentlessly to create a better quality for our members. Thank you. Thank you all for joining. This completes the second quarter 2024 earnings conference call.