Auna’s 1Q25 Results: A Test of Resilience in Unstable Markets

In a quarter marked by currency volatility, regulatory headwinds, and operational turbulence, Auna’s 1Q25 results reveal both challenges and opportunities. While revenue dipped 3% YoY in local currency terms, the company’s ability to stabilize margins, preserve cash flow, and pivot strategies in key markets positions it as a resilient player in Latin America’s healthcare sector. Let’s dissect the numbers and assess whether this is a buying opportunity.

Revenue: Diversification as a Shield Against Volatility

Auna’s top-line performance underscores the importance of geographic diversification. While Mexico’s revenue fell 4% L.C. due to AunaWay implementation hiccups, Peru and Colombia delivered strong growth: 10% and 5% L.C. respectively. This regional balance is critical. Mexico’s struggles with physician adaptation to new protocols highlight execution risks, but the fact that Peru’s EBITDA outperformed expectations shows that Auna’s model works when implemented effectively.

Margin Pressure and Cost Control: A Balancing Act

Adjusted EBITDA margins dropped 1.1 percentage points to 21.4%, driven by currency headwinds (Mexico’s peso fell 22% vs. Peru’s sol) and Colombia’s S/10 million impairment loss. Yet, Auna’s focus on cost optimization is paying off. In Peru, vertical integration and efficiency initiatives boosted profitability, while Colombia’s shift toward risk-sharing payor programs is stabilizing cash flow. Management’s decision to right-size costs in Colombia—without sacrificing growth—could be a turning point.

Strategic Shifts: Mexico’s OncoSalud and Colombia’s Payor Play

Two initiatives stand out:
1. Mexico’s OncoSalud Expansion: Auna is targeting the high-margin oncology market, which is underpenetrated and less regulated. This could offset Mexico’s current operational slumps.
2. Colombia’s Payor Diversification: Redirecting volumes away from intervened EPSs (health insurers) to private payors has improved receivables. This strategic move reduces dependency on volatile public payor systems.

Leverage and Liquidity: A Strong Foundation

Auna’s leverage ratio remains stable at 3.6x, a testament to Peru’s strong cash flow offsetting weaker regions. Net finance costs nearly halved to S/80 million YoY, thanks to hedging gains and reduced debt. With adjusted net income up to S/55 million, the company is financially equipped to weather near-term storms.

Catalysts for Growth: Why Now Could Be the Inflection Point

• Peru’s Model Replicability: If Auna can replicate Peru’s success in Mexico—by refining the AunaWay rollout—margins could rebound.
• OncoSalud’s Scalability: The oncology initiative taps into a high-growth market with limited competition.
• Currency Hedging: Call-spread hedges have insulated Auna from exchange rate swings, making its financials more predictable.

Risks: Currency, Regulation, and Execution

• Currency Volatility: Mexico and Colombia’s depreciating currencies remain a drag.
• Regulatory Uncertainty: Interventions in Colombia’s payor system could disrupt growth.
• Operational Hurdles: Mexico’s physician adaptation challenges must be resolved to unlock volumes.

The Investment Thesis: Buy the Dip?

Auna’s stock trades at 9.5x forward EV/EBITDA, a discount to regional peers. While near-term risks linger, the company’s financial discipline, geographic diversification, and strategic pivots (e.g., OncoSalud) suggest a turnaround is brewing. Investors who can tolerate short-term volatility stand to benefit if Auna’s operational improvements materialize.

Final Verdict

Auna is navigating a volatile market with the tools to outperform: a cash-generative core in Peru, disciplined cost management, and high-margin growth avenues like OncoSalud. The stock’s current valuation leaves room for upside if execution improves in Mexico and Colombia. For investors seeking a leveraged play on Latin America’s healthcare sector, Auna offers a compelling risk-reward profile—if you’re willing to bet on its resilience paying off.

Act now while the stock remains undervalued, but stay vigilant to regional economic shifts.