By Brazil Stock Guide – Hapvida (HAPV3) has become the focus of a shareholder confrontation after Squadra Investimentos — one of Brazil’s most active funds — accused the company of delivering “one of the greatest destructions of value in the history of the Brazilian capital markets.”
The letter, addressed to Chairman Candido Pinheiro Koren de Lima, CEO Jorge Fontoura Pinheiro Koren de Lima — both members of the controlling Pinheiro family — and Investor Relations Director Luccas Augusto Adib, who is set to become the company’s incoming CEO, puts direct pressure on the company’s top leadership.
In the document, reviewed by Brazil Stock Guide, Squadra — which holds 6.98% of the voting capital — delivers a sweeping critique of the company’s strategy since its 2018 IPO. While Brazil’s benchmark Ibovespa index rose about 120% over the period, Hapvida shares have fallen roughly 85%, wiping out tens of billions of reais in market value.
The health insurance operator, once valued at more than R$100 billion, is now worth less than R$5 billion on the São Paulo stock exchange. Despite this, Hapvida remains the largest player in the sector by number of beneficiaries, with more than 8 million clients — a contrast that underscores what Squadra sees as a core issue: scale without returns.
Strategic missteps
The fund’s main criticism centers on capital allocation. According to Squadra, the company’s aggressive M&A strategy — particularly the combination with NotreDame Intermédica — diluted its core business and failed to deliver the promised synergies.
In practice, the outcome has been the opposite: roughly R$80 billion in market value has been destroyed since the transaction, while operational integration — especially in Brazil’s Southeast and South regions — remains problematic.
Operational deterioration has also raised concerns. Even as the private healthcare sector posted record profits in 2025, Hapvida lost beneficiaries in those regions, signaling declining competitiveness and weakening customer value perception.
At the same time, leverage increased significantly, pushing debt spreads above CDI+9%. Despite this, the company used R$384 million in cash to repurchase shares — a move the fund considers inconsistent with its financial condition.
Squadra also questions the quality of reported figures and management’s understanding of the business. “Maintaining R$44 billion in goodwill without recognizing any impairment, despite deteriorating results, loss of market share, rising cost of capital and unsuccessful turnarounds, is difficult to reconcile with the company’s operational reality.”
Governance under scrutiny
The criticism extends beyond operations to the company’s governance structure. Squadra points to a concentration of power within the Pinheiro family, the adoption of mechanisms such as poison pills that limit minority shareholders, and a board with limited independence.
Executive compensation is also under fire. The CEO — a member of the controlling family — received approximately R$110 million between 2023 and 2024. Meanwhile, the board of directors earned more than R$60 million per year, with bonuses reaching 94% of targets despite the company’s value destruction.
“The company’s inability to retain key executives has compromised the execution of its strategy. Of the seven executives presented to the market less than three years ago, only two remain — one of them the CEO from the controlling family,” the fund wrote.
The letter also cites restatements of financials, delayed recognition of liabilities and overly optimistic projections later revised downward — signs, according to Squadra, of limited managerial visibility over the business.
A board out of sync
Despite this track record, the company’s proposal for the 2026 shareholder meeting includes the full re-election of all nine board members, reduced independence and total compensation of R$57 million — about 20% of projected net income.
For Squadra, this reflects a board that is “out of sync” with the company’s reality.
Activist move
In response, the fund has taken a classic activist approach.
It requested the adoption of cumulative voting — a mechanism that strengthens minority shareholder influence — and nominated three independent candidates to the board: Tania Sztamfater Chocolat, Bruno Magalhães e Silva and Eduardo Parente Menezes.
The nominees bring experience in capital allocation, restructuring and governance — capabilities the fund sees as critical to reversing the company’s trajectory.
The objective is clear: reduce the influence of the controlling block, increase board independence and impose greater strategic discipline.
The shareholder meeting scheduled for April 30 is now shaping up as a critical turning point.
Break-up thesis
Squadra also argues that Hapvida should consider selling assets in the Southeast and South, where turnaround efforts have failed to gain traction.
According to the fund, those assets may be worth more outside the company than within it — effectively implying a structural rethink of the business model.
A divestment would allow Hapvida to reduce leverage, rebuild its balance sheet and refocus on its most profitable operations, particularly its core regions in the North and Northeast of Brazil.
This article was updated at 5:15 p.m. on April 4
Hapvida sent a statement to the press saying it had received a letter from Squadra late the previous day. The document is under review by the Board of Directors, and the company will comment on the matter in due course.
Leave a Reply