Auna S.A.'s Q2 2025 Earnings Call: Contradictions Emerge in Mexico Expansion, Market Share, and Oncology Strategy

Date of Call: August 20, 2025

Financials Results

• Revenue: No consolidated revenue amount provided; segment context: Mexico revenue +5% YOY, Peru revenue +8% YOY (Peru also referenced as +5% on Slide 8), Colombia revenue flat YOY (management intentionally tempered growth)
• Operating Margin: Adjusted EBITDA margin just over 22%, practically unchanged YOY; FX-neutral adjusted EBITDA +5% YOY, as-reported adjusted EBITDA -3% YOY

Guidance:

• Mexico: expect capacity utilization and volumes to recover as physician recruitment/engagement stabilizes and AunaWay implementation is calibrated.
• Colombia: continue payer diversification and expand risk-sharing contracts to safeguard cash flows; collections and cash cycle expected to keep improving.
• Peru: expected to continue delivering solid growth and profitability as mature, scaled operations.
• Capital structure: committed to reducing leverage toward 3x net debt/EBITDA; anticipate organic free cash flow recovery in H2 to help cover interest.

Business Commentary:

* Regional Growth and Financial Performance: - Auna reported a 5% FX-neutral EBITDA growth in Q2 2025, driven by its Mexico, Colombia, and Peru operations, resulting in a 2.5 percentage point decrease in capacity utilization to 64%. - This growth was due to increased surgery volumes in Peru, stabilization of doctor relationships in Mexico, and effective risk mitigation strategies in Colombia.

• Peru's Contribution to Revenue Growth:
• Peru's healthcare services revenue grew 5%, while OncoSalud revenue increased 7%.

• This was attributed to increased surgery volumes, price increases, and an improved services mix across Auna's network of facilities in Peru.

• Mexico's Volume Recovery and Market Conditions:

• Mexico's revenue grew 5% year-over-year despite fewer surgeries and emergency treatments, with EBITDA growth of 2% in local currency.

• The recovery in volumes was due to adjusted implementation of the AunaWay model and ongoing efficiency initiatives, while market softness was attributed to tariff uncertainty in Mexico.

• Colombia's Risk Mitigation and Payer Diversification:

• Colombia's EBITDA increased 9%, and its margin expanded 1.4 percentage points, despite flat revenue.

• This improvement was due to implementing risk-sharing models, diversifying payer base, and effective management of contracted services to mitigate payment risk.

• OncoSalud's Performance and Market Potential:

• OncoSalud Mexico achieved nationwide coverage through a network of doctors and hospitals, with membership in oncology plans growing 2%.
• The performance was driven by the offering of nationwide coverage and the potential of OncoSalud as a new insurance product in the Mexican market.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted "consolidated FX-neutral EBITDA growing 5%," said results are "encouraging," that they "remain bullish in the medium to long term," noted Peru "continues making solid contributions," and emphasized that operational adjustments in Mexico and Colombia should drive improvement.

Q&A:

• Question from Leandro Bastos (Citigroup): First, update where you are considering the headwind at the beginning of the year with physicians and suppliers in Mexico and how we should think about volume growth going forward given top-line improvement but still weak volumes; second, on oncology MLR (record lows) — is there room to go further down or will you reinvest more on prices?
  Response: Physician and supplier relationships in Mexico have stabilized with nascent volume recovery expected over time as AunaWay implementation progresses; oncology MLR is managed within a predictable ~50–54% range and quarter-to-quarter dips are not viewed as structural.

• Question from Artur do Amaral Alves (Morgan Stanley): Are you making new agreements in Colombia, particularly additional risk-sharing contracts and what is the relationship with the new player — any new developments?
  Response: Collections and cash cycle in Colombia have materially improved, provisions declined, concentration of intervene payers has been reduced and risk-sharing models now represent just over ~10% of Colombia revenue, with further payer diversification underway.

• Question from Alex Zefferson (Mangrove): What gives you confidence that utilization in Mexico will increase given market softness?
  Response: Confidence stems from Auna's model gaining traction (including higher volumes from recently acquired oncology groups), the expectation that high-complexity and capitated contracts will drive utilization, and the view that delayed demand will return despite macro softness.

• Question from Majunder (HSBC): What is your market share in Monterrey?
  Response: Auna represents over ~30% of private-sector beds in Monterrey, but high-complexity/oncology market share is under 10% today and management aims to more than double that over the next five years.

• Question from Gerard Forbes (Sura): Your effective tax rate has shown volatility; what drove the normalization and what should investors expect as a sustainable effective tax rate in the short and medium term?
  Response: Volatility was driven by prior deferred tax benefits and tax credits from 2022–2023; going forward the effective tax rate should be more stable at roughly 35%–38%.

• Question from Alex Stefensen (Mann): What's your view on the negative free cash flow after interest costs and liquidity?
  Response: YTD organic free cash flow was impacted by Q1 Colombia collections and a one‑time PEN19m payment to Opción Oncología doctors; historically cash flow improves in H2 and management expects organic FCF to recover and better cover interest costs later in the year.

Contradiction Point 1

Volume and Model Transition Challenges in Mexico

It highlights differences in the company's reported progress and challenges in implementing the AunaWay model in Mexico, which is critical for volume growth and market penetration.

Can you provide an update on physician and supplier activity in Mexico and your outlook for regional volume growth? - Mauricio Cepeda (Morgan Stanley, Research Division)

2025Q2: The implementation of Auna's model is progressing, with some dislocation due to physicians seeking high commissions elsewhere. - Jesús Antonio Zamora Leon(CEO)

Can you provide more detail on operational challenges in Mexico? - Alex Stevenson (Webcast Platform)

2025Q1: Main source of loss volumes was due to close relationships between suppliers and physicians. Auna's disruptive model challenged traditional practices. - Jesús Zamora Leon(CEO)

Contradiction Point 2

OncoMexico Expansion and Market Penetration

It involves differing accounts of the progress and timeline for the expansion of OncoMexico, which is crucial for the company's growth strategy and investor expectations.

What is the current status of Oncosalot's deployment in Mexico? - Omar benchmark (Webcast Platform)

2025Q2: OncoMexico is expanding rapidly, closing national networks in four major cities. Progress is significant, with strong demand and pipeline coverage. - Jesús Antonio Zamora Leon(CEO)

What is the current status of Oncosalot's deployment in Mexico? - Omar benchmark (Webcast Platform)

2025Q1: OncoMexico is expanding rapidly, closing national networks in four major cities. Progress is significant, with strong demand and pipeline coverage. - Jesús Zamora Leon(CEO)

Contradiction Point 3

Market Share and Growth Strategy in Monterrey

It involves discrepancies in the reported market share and growth plans for the high complexity services market in Monterrey, which is essential for market dominance and revenue growth.

What is your market share in Monterrey? - Majunder (HSBC)

2025Q2: Auna represents over 30% of private sector beds in Monterrey. Oncology services market share is lower, around 10%, with a focus on increasing it. - Jesús Antonio Zamora Leon(CEO)

How long did it take for AunaWay to be fully adopted by suppliers and physicians in Peru? - Indiscernible (Webcast Platform)

2025Q1: Auna represents over 30% of private sector beds in Monterrey. Oncology services market share is lower, around 10%, with a focus on increasing it. - Jesús Zamora Leon(CEO)

Contradiction Point 4

Oncology Medical Loss Ratio (MLR) Stability and Strategy

It involves the company's strategy and stability of the oncology medical loss ratio, which is crucial for financial forecasting and investor expectations.

Can you explain the lowest oncology MLR and future strategy? - Leandro Bastos (Citigroup Inc., Research Division)

2025Q2: The oncology MLR has fluctuated around 50% for years due to continuous cost containment and price adjustments. The company aims for MLR to remain in this range, emphasizing predictability and strategy consistency. - Jesús Antonio Zamora Leon(CEO)

How significant is the risk to your MLR guide from medical cost inflation? - Jason Ader (William Blair & Company)

2024Q4: And we continue to expect our medical loss ratio or MLR to be in the 40s for the full year. - Ruth Porat(CFO)

Contradiction Point 5

Market Share in Mexico and Growth Expectations

It involves the company's growth expectations and market share in Mexico, which are crucial for understanding the company's market position and future prospects.

What is your market share in Monterrey? - Majunder (HSBC)

2025Q2: Auna represents over 30% of private sector beds in Monterrey. Oncology services market share is lower, around 10%, with a focus on increasing it. The company aims to more than double its high complexity market share in the next 5 years. - Jesús Antonio Zamora Leon(CEO)

How should we think about your market share in Mexico evolving over the coming quarters? - Vivek Arya (Bank of America Securities)

2024Q4: We have positioned Auna as one of the leading operators in the country, with more than 65% of the beds in the private sector and major presence in 3 of the 4 main healthcare regions. - Jesús Antonio Zamora Leon(CEO)