Auna S.A. (AUNA) Earnings

Management highlights

- Overall Platform Performance * The company achieved a strong start to 2026, with building commercial momentum across its regional integrated healthcare platform, restored growth in Mexico, and strong cash flow generation. * Total system-wide bed utilization increased 1.4 percentage points to 66%, with management focused on growing utilization of higher-margin high-complexity services rather than just general occupancy. * The company completed a 2025 refinancing exercise that generated $8 million in annualized interest and tax payment efficiencies, reduced short-term debt by 40% vs Q3 2025, and improved FX hedging: 55% of debt is denominated in local currency, 85% of USD-denominated debt is hedged to the Peruvian sol, and 75% of Mexican floating-rate debt is hedged to fixed rates. The company has 109 million USD in undrawn revolving credit capacity, providing sufficient financial flexibility for growth. * Working capital management and supplier financing initiatives improved cash conversion across all markets, increasing free cash flow substantially. - Strategic & Operational Updates * Mexico: Stabilized and restored growth to the hospital platform, with the renegotiated ECLEON contract delivering substantially improved margins. A new state-of-the-art radiotherapy facility in Monterrey will open within 1-1.5 months, expected to boost both volumes and margins. Management sees significant opportunity from Mexico's new integrated universal healthcare initiative, which will expand public-private partnership opportunities for private providers like AUNA. * Peru: Continued growing revenue by expanding high-complexity services and growing insurance plan membership, particularly in the fast-growing B2B segment. The company has shortened internal billing cycles to mitigate future payer reconciliation penalties, and the 18-24 month construction of Torre Treka, an ambulatory care tower in Lima that will expand the company's addressable market, will begin immediately after construction contractor award this week. * Colombia: Successfully navigated the fallout from 2025 payer interventions, emerging with stronger growth and a more resilient revenue mix focused on predictable, cash-generating risk-sharing agreements with large, well-capitalized payers.

Guidance

- Management reaffirms full-year 2026 revenue and adjusted EBITDA guidance, with Q1 2026 performance providing confidence the company will hit full-year targets. * Full-year growth is expected to be concentrated in the second half of 2026, which was incorporated into original guidance; Q1 is typically a softer quarter historically, so the soft first half performance is not a surprise. * Medium-term target leverage is 3.0x, with positive post-interest cash flow expected to grow in 2026 to support this target while continuing to fund growth investments. * Mexico: Management expects to reach a structural consolidated EBITDA margin of 20% over the medium term, with margins improving throughout 2026, particularly in the second half, driven by operating leverage from scaling oncology volumes, variable cost efficiencies, and continued gains from the renegotiated ECLEON contract. * Peru: Management expects the impact of Q1 2026 revenue adjustments and delayed rebates to be mitigated in future quarters by shortened billing cycles, and growth will accelerate in the second half as revenue normalizes. * Colombia: Management expects margins to stabilize and expand from current Q1 levels as risk-sharing business scales, with continued growth in revenue and cash flow.

Segment performance

Consolidated total revenue for Q1 2026 reached 1.2 billion soles, with 10% year-over-year growth in FX-neutral terms, and all three segments contributed to top-line growth. Consolidated adjusted EBITDA decreased 5% year-over-year FX-neutral, primarily due to two extraordinary items (revenue adjustments in Peru and one-time payroll/leadership compensation increases), with a 2.9 percentage point margin contraction. Operating profit increased 11% to 155 million soles. Free cash flow grew 2.6x year-over-year to 152 million soles. Leverage ratio was 3.7x, impacted by non-cash FX effects. 1. Mexico Segment: Revenue grew 8% year-over-year, driven by new preferred provider tier status with two major payers, an improved contract for ECLEON, expanded B2B service packages, and growth in the out-of-pocket segment. Adjusted EBITDA increased 23% year-over-year and 19% quarter-over-quarter (vs Q4 2025), with a 3.5 percentage point margin expansion quarter-over-quarter. Surgery volumes grew 15% sequentially and oncology volumes grew 32% sequentially, as the segment shifted toward higher-complexity services. 2. Peru Segment: Revenue grew 9% year-over-year, with healthcare service revenue up 7% and insurance segment (ConcoSalud) revenue up 12%. ConcoSalud grew total plan membership 6% (oncology plans 3%), adding 20,000 new members via a new large group policy for Peru's national judiciary. Adjusted EBITDA decreased 3% year-over-year (a 7% increase excluding one-time revenue adjustments), with a 2.3 percentage point margin contraction, impacted by payer revenue reconciliation penalties, delayed pharmaceutical rebate recognition, and increased physician compensation. The oncology segment's medical loss ratio (MLR) was below 50%, in line with expectations. 3. Colombia Segment: Revenue grew 13% year-over-year, the fastest growth among the three segments. The segment rebalanced its revenue mix: risk-sharing agreements with healthy payers now represent 21% of segment revenue (up 6 percentage points year-over-year), revenue from intervened payers fell to 14% (down 5 percentage points), and revenue from new payers grew 1.5x year-over-year to represent 12% of total revenue. Capacity utilization returned to 2024 pre-rebalancing levels. Adjusted EBITDA increased 7% year-over-year, with a 1.7 percentage point margin contraction, primarily due to the higher proportion of lower-margin initial risk-sharing contracts and higher variable costs from growing high-complexity service volumes.

Risks & headwinds

- Foreign exchange volatility: Depreciation of the Peruvian sol below the range of the company's reset hedging structure resulted in non-cash FX losses in Q1 2026, though the new hedging structure is expected to reduce future FX volatility and potential losses compared to the prior regime. * Peruvian payer risk: Peruvian insurance payers have tightened billing controls and increased penalty application for delayed billing, creating short-term headwinds to revenue recognition, though management has proactively shortened internal billing cycles to mitigate this risk. * Colombian regulatory and political risk: A potential change in the Colombian presidency could create less favorable regulatory conditions for private healthcare, though management has rebalanced the revenue mix to reduce exposure to intervened government payers, and AUNA's unique positioning as a leading high-complexity provider with preferred payer status provides protection against future policy changes. * Execution risk: Delivery of the company's strategic plan, including Aunaway rollout in Mexico, continued growth in all three markets, and completion of the Torre Treka project, is subject to execution risk that could impact actual results compared to forward-looking guidance.

Analyst Q&A

• Q: With Mexico shifting toward more oncology services, what is the medium-term margin trajectory for the segment? Is oncology structurally dilutive, or will operating leverage drive margin expansion? /

  A: Q1 2026 Mexico margin was modestly impacted by non-recurring severance and leadership payroll costs. Oncology already has higher revenue per case, and while chemotherapy has slightly lower margins, higher-margin radiotherapy (with a new Monterrey facility opening soon) will offset this. As oncology volumes (currently growing double-digit) scale, operating leverage and variable cost efficiencies will drive margin expansion, with the segment targeting a 20% consolidated EBITDA margin, recovering toward a structural 30% margin over time.

• Q: With lower exposure to intervened payers in Colombia, how protected is AUNA's cash generation if a future government introduces less favorable healthcare regulation? /

  A: Management believes the worst of regulatory and political upheaval has already occurred under the current administration, and future policy changes are unlikely to be more negative than what has already been experienced. AUNA's diversified revenue mix, with 21% of revenue now from stable risk-sharing agreements, unique positioning as a leading high-complexity provider, and preferred status with major payers, creates strong protection against policy changes and supports stable cash conversion. Supplier financing initiatives further strengthen the cash conversion cycle.

• Q: What is management's outlook for share buybacks, once the 3.0x leverage target is hit? /

  A: The board is actively discussing potential uses of excess cash, including a buyback program, but no final decision has been made to implement one. Any future action will be aligned with creating sustainable value for investors.

• Q: What is driving the expected second half 2026 growth acceleration needed to hit full-year guidance, and are the delayed Peruvian pharmaceutical rebates a permanent issue? /

  A: Soft first half growth was baked into original guidance, as Q1 is always a slower quarter for AUNA historically. The delayed rebates are specific to Peru, are only a timing delay (not a permanent loss) related to annual inventory management, and will be recognized later in 2026. Growth acceleration will come from continued improving trends in Mexico, revenue normalization in Peru as billing cycle improvements mitigate penalties, and sustained growth in Colombia, putting full-year guidance well within reach.