By Brazil Stock Guide — Rede D’Or (B3: RDOR3), Brazil’s largest private hospital operator, signaled on Friday (November 13) that it could step up acquisitions in the coming years after a period dominated by organic growth. The company also believes its financial strength could allow it to gain market share if Brazil faces an economic downturn in 2027.
During the company’s third-quarter earnings call, CEO Paulo Moll said Rede D’Or maintains a dedicated mergers and acquisitions team that continues to evaluate expansion opportunities. While he did not disclose any specific transactions under negotiation, Moll made clear that acquisitions could once again play a more prominent role in the company’s growth strategy.
“We still have an M&A team in-house evaluating a range of opportunities, and we expect to be more active than we have been over the past four years,” Moll said.
The shift would mark a potential acceleration for a company that built much of its nationwide hospital network through acquisitions but has more recently focused on opening new facilities, expanding existing hospitals and developing additional healthcare services.
Asked by Bank of America whether a weaker economic environment could create opportunities, Moll said Rede D’Or had historically managed to increase its market share during downturns by maintaining a stronger financial position than many of its competitors.
“No one is hoping for a crisis. No one wants a more challenging economic environment next year, or a recession,” he said. Nevertheless, Moll argued that the company’s ability to keep investing through difficult economic conditions provides a competitive advantage that could help it capture additional market share.
Rede D’Or ended September with net debt of R$22.3 billion ($4.1 billion), equivalent to 1.65 times EBITDA under management’s more conservative leverage methodology. The company reported third-quarter adjusted EBITDA of R$3.61 billion, up 11.6% from a year earlier, alongside operating cash flow of approximately R$2.8 billion.
Despite its renewed appetite for acquisitions, Moll emphasized that Rede D’Or would not compromise its investment return requirements. The company intends to remain focused on businesses where it has established expertise and can generate attractive returns. Share buybacks also remain an option for capital allocation, while additional dividends could be considered if cash generation exceeds the funding needs of organic expansion, acquisitions and repurchases.
On the organic growth front, Rede D’Or plans to prioritize higher-margin markets, particularly in Brazilian states where it already operates. Moll highlighted projects in São Paulo state, including Guarulhos, Sorocaba, Taubaté and Jundiaí, as well as the Alphaville area. Management believes substantial expansion opportunities remain within its existing geographic footprint, reducing the need to enter additional states.
The company also plans to continue investing in more complex, higher-value medical procedures, including oncology, robotic surgery and organ transplants. According to Moll, growing patient volumes at hospitals with higher average revenue per patient has helped lift profitability, even as overall inpatient volumes have shown limited growth.
Moll provided neither acquisition targets nor a timetable for potential transactions. His message to investors was that Rede D’Or intends to maintain financial discipline while remaining ready to deploy capital to accelerate expansion and strengthen its position in Brazil’s private hospital market.
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