20-F: Auna S.A. Files Form 20-F: Details Annual Report for Fiscal Year 2024

Auna S.A. files its annual report on Form 20-F, detailing its financial performance and operational activities for the fiscal year ended December 31, 2024.

Summary

• Auna S.A., a Luxembourg-based company, has filed its Form 20-F annual report.
• The report covers the fiscal year ended December 31, 2024.
• The document details the company's financial performance, including consolidated statements of financial position, profit or loss, changes in equity, and cash flows.
• Auna S.A. is a healthcare provider operating in Mexico, Peru, and Colombia.
• The company's mission is to transform healthcare in South America by expanding access to high-quality, affordable care.
• Auna operates through a horizontally integrated network of healthcare facilities and vertically integrated healthcare plans.
• As of December 31, 2024, Auna had 15 hospitals with 2,323 beds and 16 outpatient facilities.
• The company's healthcare plans include oncology and general healthcare coverage.
• Auna is focused on high-complexity diseases such as oncology, traumatology, cardiology, and neurological procedures.
• For the year ended December 31, 2024, Auna reported revenue of S/4,386.1 million and a profit of S/124.0 million.
• The company's EBITDA was S/1,011.7 million, and Adjusted EBITDA was S/993.2 million.
• Auna faces competition in fragmented markets in Mexico, Peru, and Colombia.
• The company is subject to extensive legislation and regulations in the countries where it operates.
• Auna's ability to pay dividends is restricted under Luxembourg law.
• The company is exposed to political, economic, and social risks in Mexico, Peru, and Colombia.
• Auna's class A shares may experience significant price fluctuations and lack liquidity.
• The company is an emerging growth company and a foreign private issuer, which may make its shares less attractive to investors.
• Auna is exposed to the risk of potential expropriation or nationalization of its assets in some of the countries where it operates.
• The company is exposed to the risk of potential expropriation and nationalization of our assets that are located in the various countries in which we operate; therefore, we cannot assure you that the local governments will not impose retroactive changes that could affect our business, or that would force us to renegotiate our current agreements with such governments.
• The occurrence of such events could materially affect our financial condition, results of operations and prospects.

Sentiment

Score: 7

Explanation: The document presents a mixed sentiment. While there are positive financial results and growth initiatives, there are also significant risks and challenges that temper the overall outlook.

Positives

• Auna reported increased revenue and profit for the year ended December 31, 2024.
• The company has a strong EBITDA and Adjusted EBITDA Margin.
• Auna has a large and integrated healthcare network across multiple countries.
• The company has a high cancer survival rate for its oncology plans.
• Auna is expanding its services and geographic reach.
• The company is investing in technology to improve operations and patient care.
• Auna is committed to ESG practices.

Negatives

• Auna faces intense competition in fragmented markets.
• The company is subject to extensive legislation and regulations.
• Auna's ability to pay dividends is restricted under Luxembourg law.
• The company is exposed to political, economic, and social risks in Mexico, Peru, and Colombia.
• Auna's class A shares may experience significant price fluctuations and lack liquidity.
• The company is an emerging growth company and a foreign private issuer, which may make its shares less attractive to investors.
• Auna is exposed to the risk of potential expropriation or nationalization of its assets in some of the countries where it operates.
• The company has a significant amount of debt and debt service obligations.

Risks

• Negative impacts on Auna's brand reputation could harm its business.
• Inability to control healthcare costs or raise prices could adversely affect operating results.
• Deterioration in relationships with third-party payers could negatively impact revenues.
• Failures in IT systems could disrupt business operations.
• Difficulty in recruiting and retaining medical professionals could increase labor costs.
• Non-compliance with regulations or failure to obtain necessary licenses could hinder operations.
• Acquisitions and integration challenges could limit expected benefits.
• High indebtedness and reliance on subsidiaries for payments may limit financial flexibility.
• Political, economic, and social instability in Mexico, Peru, and Colombia could negatively impact operations.
• Adverse climate conditions, natural disasters, or future pandemics could disrupt operations.
• Perceptions of risk in emerging markets could negatively affect the market value of Auna's securities.
• Increased inflation, fluctuations in foreign exchange rates, and changes in tax laws could adversely impact Auna's financial condition.
• The concentration of voting control with Enfoca could lead to conflicts of interest.
• The market price of class A shares may experience significant fluctuations, and the lack of an active market could prevent shareholders from selling shares at desired prices.
• Reduced reporting requirements and the ability to follow alternative governance standards may make class A shares less attractive to investors.
• Luxembourg's corporate disclosure and accounting standards differ from those in the United States, and minority shareholders in Luxembourg have fewer protections.
• Investors may face difficulties in pursuing legal actions, and any judgments from Luxembourg courts related to class A shares will be payable only in euros.
• Our ability to pay dividends is restricted under Luxembourg law.

Future Outlook

Auna expects continued growth in its markets, focusing on increasing efficiencies across its network and expanding access to high-quality healthcare. The company plans to invest in the expansion of its existing facilities and new plan products throughout 2025.

Management Comments

• Our mission is to lead the transformation of healthcare throughout SSLA by expanding access to millions of Latin Americans and delivering high-quality, value-based, high-complexity, and affordable care, providing lifelong engagement for our population through both digital and physical channels.
• We operate hospitals and clinics in Mexico, Peru and Colombia and provide prepaid healthcare plans in Peru and Mexico.
• Our focus lies in providing access to healthcare, prioritizing prevention and concentrating on some of the high-complexity diseases that contribute the most to healthcare expenditures, such as oncology, traumatology and orthopedics, cardiology and neurological procedures.
• Our model offers an accessible and integrated healthcare experience to a broad segment of the population in the markets we serve.
• We offer an end-to-end healthcare ecosystem that provides our members and patients with access to lifelong healthcare and various healthcare plan options, which empowers them to be in control of their own health journey, while offering them exceptional patient experiences and medical resolutions in their disease care.
• Our care delivery approach reflects our human-centered and patient-obsessed lens.
• Our unique operating model is what we call the Auna Way.

Industry Context

The healthcare industry in Mexico, Peru, and Colombia is competitive and fragmented, with a mix of public and private providers. Auna is positioned as a leading integrated player in this market, aiming to address the lack of access, deficient healthcare, and limited investments in technology that characterize the region.

Comparison to Industry Standards

• Auna's net promoter scores (NPS) of 84.0 in Mexico, 72.0 in Peru and 84.4 in Colombia as of December 31, 2024 compare favorably with other large healthcare networks in Latin America, such as Rede D'Or and DASA, with scores of 56.0 and 71.0, respectively, as of 2023.
• The quality of public sector medical services in Peru and Mexico, principally provided by EsSalud and Seguro Integral de Salud (SIS) in Peru and Mexican Institute of Social Security (IMSS) and the Servicios de Salud del Instituto Mexicano del Seguro Social para el Bienestar (IMSS-Bienestar) in Mexico, is widely considered deficient and over capacity, with long scheduling times, short appointments with doctors and a shortage of facilities, and we do not currently face substantial competition from government providers in Peru and Mexico.
• Unlike in Peru and Mexico where the market is more fragmented, there are several existing large hospital systems in Colombia and the gap between the quality of services provided by state-owned facilities and privately-owned facilities is much smaller.
• In Colombia, we face competition from other hospital networks with premium facilities, including San Vicente de Paul, Pablo Tobn Uribe, El Rosario, San Jernimo, Clnica Montera, Clnica Iberoamerica (Grupo Keralty/Sanitas), Clnica del Caribe, Organizacin Clnica General del Norte and Bonnadona.

Corporate Governance

Legal Proceedings

• We are regularly party to litigation and other legal proceedings relating to claims resulting from our operations in the normal course of business.
• These matters have included or could in the future include matters related to Oncosaluds healthcare benefits coverage and other payment claims (including disputes with plan members, physicians, other healthcare professionals and members of its salesforce), tort claims (including claims related to the delivery of healthcare services, such as claims of medical malpractice by medical professionals employed by us or physicians with whom we have a contractual relationship), labor claims (including disputes with employees, former employees and independent contractors) and administrative and regulatory claims (including retroactive tax claims or challenges arising out of our failure or alleged failure to comply with applicable laws and regulations).

Related Party Transactions

• Enfoca, our controlling shareholder, owns approximately 72.9% of our class B shares and certain of our officers and a majority of our directors are employed by or otherwise affiliated with Enfoca, which could give rise to potential conflicts of interest with them and certain of our other shareholders.
• We are not a party to nor do we guarantee, nor are we otherwise liable with respect to the debt under, the Sponsor Financing.
• Our shareholders were required under the terms of the Sponsor Financing to repay the Sponsor Financing with proceeds they received from an equity offering by us (through a dividend, loan or other payment from the proceeds of that offering, or through a secondary sale of shares in us by our shareholders).
• We contributed US$329.0 million of the proceeds from our initial public offering to Auna Salud S.

Next Steps

• Continue to expand the network and services in Mexico and Colombia.
• Implement strategies to further create synergies in pharmaceutical costs.
• Continue to invest in technology solutions to provide accessible, immediate and timely access to healthcare.
• Refinance the indebtedness that remains outstanding under the Sponsor Financing in the near term.

Key Dates

Keywords

Auna, financial results, healthcare, Form 20-F, annual report, Luxembourg, Mexico, Peru, Colombia, EBITDA, risk factors, governance, financial statements, operations