By Brazil Stock Guide — Hapvida (B3: HAPV3) said measures involving part of its customer portfolio review are tied to delinquent contracts and the renegotiation of large corporate health plans facing economic and financial imbalances, after Brazil’s health insurance regulator, ANS, issued a precautionary order suspending related price increases and contract terminations while it reviews the matter.
According to the company, negotiations involving those contracts take place during regular renewal periods, on a case-by-case basis and in compliance with ANS rules.
The regulator’s move comes just over a week after Hapvida told investors it was reviewing approximately 947,000 members, representing about 11% of its health-plan customer base, as part of a broader strategy to rebuild margins, strengthen cash generation and reduce leverage.
When reporting second-quarter results, the company said it was reassessing potentially loss-making contracts and applying stricter criteria to delinquent customers. During renewal cycles, its strategy includes seeking price increases sufficient to restore the economic balance of contracts and collecting overdue amounts.
The review has taken on greater significance following a sharp deterioration in Hapvida’s profitability and is a key part of management’s turnaround strategy. Adjusted Ebitda fell to R$504.4 million in the second quarter from R$905.4 million a year earlier.
On Thursday, ANS President Wadih Damous said the regulator had moved to temporarily block price increases and contract terminations linked to the initiative until the company provides further explanations. Damous said the scale of the review raised concerns about possible risk selection, a practice prohibited under Brazil’s supplementary health regulation.
Hapvida rejected the suggestion that it is pursuing a broad-based cancellation of its customer base.
“The review of these contracts does not necessarily mean they will be terminated,” Hapvida said in a statement. “The process involves negotiations with corporate clients and the search for terms that allow contracts to be rebalanced and maintained, in accordance with applicable contractual and regulatory requirements.”
“The decision to terminate or leave a contract will always rest with the client if sustainable terms cannot be reached within the framework of free enterprise,” the company added.
Hapvida also said it learned of the ANS precautionary order through the media and had not yet been formally notified of the measure.
The company requested a meeting with the regulator, saying it had not previously been called on to provide explanations or present the technical, contractual and regulatory information underlying the portfolio review.
Hapvida said it remains in ongoing dialogue with ANS and will provide the regulator with all requested information and clarifications.
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