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PRESENTATION:
4Q17
The material that follows is a presentation of general background information about RaiaDrogasil S.A. (the “Company”) as of the date of
the presentation. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice
to potential investors. This presentation is strictly confidential and may not be disclosed to any other person. No representation or
warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of the
information presented herein.
This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 (the
“Securities Act”) and Section 21E of the Exchange Act of 1934. Such forward-looking statements are only predictions and are not
guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may
be, subject to many risks, uncertainties and factors relating to the operations and business environments of the Company that may
cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-
looking statements.
Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable
based on information currently available to the Company’s management, the Company cannot guarantee future results or events. The
Company expressly disclaims a duty to update any of the forward looking-statements.
Our securities have not been and will not be registered under the Securities Act or under any state securities laws in the United States,
and are being offered under exemptions from registration under the Securities Act. Securities may not be offered or sold in the United
States unless they are registered or exempt from registration under the Securities Act. Any offering to be made in the United States will
be made by means of an offering circular that may be obtained from the agents.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities.
Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.
2
COMPANY
HIGHLIGHTS
DIFFERENTIATED BUSINESS MODEL
RD has a Merger between Raia S.A. and Drogasil S.A., with 196 years of combined history,
differentiated with shared control by shareholders who are members of the founding families.
Rated AAA-Br by Fitch;
business model,
superior scale, Brazil’s largest drugstore chain and 5th largest retailer: Revenues of R$ 13.9 billion,
efficiency and EBITDA of R$ 1,130 MM and adjusted net income of R$ 512.5 MM in 2017.
geographic presence, Launched ADR Level 1 in the NYSE.
which has resulted in More than 1,600 stores in 20 states of Brazil, which represent 94% of the Brazilian
an unique organic pharmaceutical market, and a national market share of 12.0%
growth track-record
in Brazilian retail Unparalleled business model, based on an unique portfolio of Healthcare and
Wellness assets: RD Pharmacies (Raia, Drogasil, Farmasil), RD Services (4Bio and
Univers) and RD Brands (Needs, B-Well, Triss, Caretech and Nutrigood)
Unique growth track record in the Brazilian retail market: more than doubling our
store base between 2011 and 2017 while relying on organic growth.
4
ESSENCE
Belief
People Taking Care of
People
Purpose
Taking Close Care of
People´s Health and Well-
being during all Times of
their Lives
Values
Efficiency
Ethics
Innovation
Relationships of Trust
Long-Term View
UNIQUE PORTFOLIO
Our business model is based on a unique portfolio of integrated healthcare & wellness assets
HEALTHCARE WELLNESS
SPECIALTIES
PBM
6
MULTIPLIED STORES BY 2X, SALES BY 3X AND EBITDA BY 4X FROM 2011 TO 2017
Unique track-record of accelerated organic growth with margin expansion
2 5 3,952 243
3,383 192
2,475
1,837 120
745 894 1,081 1,304 1,539 78
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Gross Gross
EBITDA EBITDA Brazil Ranking Revenues Stores
Brazil Ranking Revenues Stores
(million) (million) (billion)
(billion)*
Source: Companies, Brazilian Supermarket Ranking: Supermercardo Moderno, 2016 and Valor Economico Newspaper
Only considers retailers which operate with own stores.
As of 2016.
* Panvel Gross Revenues do not consider wholesale operations
8
STRONG MARKET SHARE GROWTH DRIVEN BY ORGANIC EXPANSION
RD is positioned in 20 states that account for 94% of the Brazilian pharmaceutical market
PA 22.5%22.9% 4Q16
DISTRIBUTION CENTERS
Ribeirão Preto DC
›
8
1 ›
São Paulo (SP)
Area: 18,000 m²
›
9
2 ›
Embu (SP)
Area: 22,700 m²
›
4 3 ›
Ribeirão Preto (SP)
Area: 18,500 m²
›
5 4 ›
Aparecida (GO)
Area: 15,000 m²
3 ›
5 ›
Contagem (MG)
Area: 8,500 m²
7 ›
6 2
1
6 ›
S. J. dos Pinhais (PR)
Area: 12,900 m²
›
7 ›
Barra Mansa (RJ)
Area: 10,400 m²
›
8 ›
Jaboatão (PE)
Area: 10,300 m²
› Salvador (BA)
9 › Area: 8,500 m²
10
HIGH STANDARDS OF CORPORATE GOVERNANCE
Members of the founding families of both Raia and Drogasil as long-term majority shareholders
63.8%
The number of locked-up shares is presently 30% of the stock capital and will remain unchanged until Nov, 2021.
Therefore, 84% of the current controlling shareholders’ shares will remain under lock-up. Controllers own 6% in
free shares that were not sold.
12
HIGH GROWTH
INDUSTRY, IN THE
PROCESS OF
CONSOLIDATION
13
BRAZIL IS UNDERGOING AN UNPRECEDENTED DEMOGRAPHIC TRANSFORMATION
The senior population will escalate from 16 million to 30 million over the next 15 years
30.0
Spain (1947 - 1992) 45 +6.4 MM Seniors
25.0 CAGR = 3.4%
15.0
Canada (1944 - 2009) 65
10.0
USA (1944 - 2013) 69 5.0
-
Australia (1938 -2011) 73
2000
2003
2006
2009
2012
2015
2018
2021
2024
2027
2030
2033
2036
2039
2042
2045
Sweden (1890 - 1975) 85 65 a 74 Years > 75 Years > 65 Years
Source: World Bank. 2011: Growing Old in an Older Brazil and IBGE % of Total Population 14
AS A RESULT...
The pharmaceutical market, which grew significantly over the last 15 years, shall sustain a strong growth
pace for another 15 years.
95.5
87.2
79.0
66.0
58.2
50.0
42.9
36.2
30.2
25.0
19.2 21.4 21.5
14.8 17.3
11.2 11.6 13.1
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
15
THE DRUGSTORE MARKET REMAINS VERY FRAGMENTED
This allows RD to lead the industry´s consolidation & enhance the productivity edge versus our peers
9.7 300,000
91.2 200,000
90.8
90.6
89.3 55.1
88.0 51.5
49.1
86.6 48.3 47.9
85.6 46.8 46.0 47.0 46.1 47.0
85.5 46.2
84.5
83.6 100,000
83.0
-
2007 2009 2011 2013 2015 2017 2007 2009 2011 2013 2015 2017 2007 2009 2011 2013 2015 2017
Source: IMS Health and Abrafarma. RD ABRAFARMA #2 TO #5 SUPERMARKETS OTHER CHAINS INDEPENDENTS
16
DECOUPLING FROM OUR PEERS
9,239 668
7,659 626
618 622
6,464 8,400 599
588
5,594 7,300
4,730 546 607
6,400 591
5,600 5,832 544 575
5,000 4,809 549
4,500 4,378 539
527 525
3,719 508 503
2,875 3,249
2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
Operating Expenses Adjusted EBITDA
% of Gross Revenues % of Gross Revenues
8.5%
24.1%
8.1% 8.0%
23.5%
23.2% 7.6% 7.6%
22.3% 23.6% 7.1% 7.0%
7.0%
22.2% 22.9%
21.6% 6.2%
6.0%
22.1% 22.1% 5.7% 6.5%
21.5% 21.7% 5.3%
21.2% 21.3% 21.3% 5.8%
20.9% 20.9% 5.8%
5.3%
5.0%
19.9%
4.4%
2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
% OUT OF POCKET
0 0 % GENERICS
1989
2001
1980
1981
1982
1983
1984
1985
1986
1987
1988
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2002
2003
2004
2005
2006
2007
DRUGSTORE SHARE
EBITDA%
MARKET CAP EBITDA NET MARGIN
EV/EBITDA P/E
* WAG´s financial performance in lieu of its market share increase and of industry trends (generics increase and out of pocket payment substitution by third-party payors) 18
DIFFERENTIATED
ASSETS &
COMPETENCIES
DRIVING AN UNIQUE
EXECUTION
WE HAVE A UNIQUE SET OF ASSETS AND COMPETENCIES
That constitute a very significant entry barrier both against local and global new entrants
ASSETS
21
… WITH DIFFERENTIATED & COMPLEMENTARY POSITIONING
DROGA RAIA: Upscale Wellness Format, focused on Women and on Families
22
PRIME LOCATIONS
Brazil’s top corners, streets and commercial centers
Location Profile
0.4%
15.3%
Pedestrian Stores
Savassi, Belo Horizonte (BH)
Shopping &
73.9% Commercial Centers
Shopping Leblon, Rio de Janeiro (RJ)
Corporate Stores
Itaú HQ Store, São Paulo (SP)
As of December 2017. 23
PROPRIETARY PLATFORMS
Proprietary, cutting-edge platforms, with CRM-driven retail execution
1. Enroll 2. Shop
Identified Revenues as % of Total
7.0%
Identified
93.0%
Not Identified
4.5%4.4%
4.2% › Focus on Surprise and Delight
3.7%
4.1%
3.9% 3.9%
3.3%
3.0% 3.1%
› Higher focus in up-sell instead of cross-sell
2.7%
3.5% 2.6%
2.2%2.0% › Higher accuracy and relevance for the Exclusive
1.8%1.8% 1.6%
2.3% Offers
1.3%
1.1%
› Measurement of the loyalty level by store
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Mar-13
Mar-15
Mar-16
Mar-17
Mar-14
Dec-12
Dec-13
Dec-14
Dec-16
Dec-17
Dec-15
24
PROPRIETARY PBM
32 MM beneficiaries, over 1,100 institutions
PBM System
NOVA PBM
Processing &
Eligibility Check
ACCREDITED PHARMACY
25
4BIO HAS BECOME THE LEADER IN SPECIALTY RETAILING
Strong growth due to managed care expertise and a focus in Oral Oncology and Hepatitis C
Gross Revenues
R$ million
86% 113% 91%
X ELEGIBILITY 61% 81% 67%
39% 46% 43% 47% 53% 49%
X DISPENSING 142.4
153.6
4BIO CARE HEALTH 131.6
118.1
OPERATORS 89.5 93.1
103.0
X PATIENT MONITORING 70.9
& ADHERENCE 56.8
48.7
34.0 35.2 38.2 41.9
X COST MANAGEMENT & 27.4 28.7
WASTE PREVENTION
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
Annual Growth Gross Revenues
Sales by Category Sales by Channel
4Q13 4Q14 4Q15 4Q16 4Q17 4Q13 4Q14 4Q15 4Q16 4Q17
Others Gyneco + Infertility Rheumatology Onco + Infecto Hospitals & Clinics Individuals Operators
26
ATTRACTIVE FORMATS …
27
... WITH HIGH MARGINAL RETURNS ON INVESTED CAPITAL
(1) Does not consider G&A and DCs expenses. Source: Company internal estimates
(2) ROIC calculation includes the full CAPEX (gross PP&A instead of Net PP&A),
and therefore no depreciation in the NOPAT
28
1Q13 100.0 1Q13 100.0 1Q13 100.0
2Q13 98.9 2Q13 103.0 2Q13 94.7
3Q13 95.0 3Q13 97.1 3Q13 86.0
4Q13 100.1 4Q13 83.6 4Q13 92.9
1Q14 86.0 1Q14 99.2 1Q14 95.0
2Q14 91.3 2Q14 93.1 2Q14 89.6
3Q14 91.1 3Q14 89.6 3Q14 70.9
4Q14 108.7 4Q14 77.8 4Q14 49.8
1Q15 74.9 1Q15 85.3 1Q15 56.4
2Q15 77.7 2Q15 84.8 2Q15 58.5
3Q15 72.2 3Q15 78.5 3Q15 52.6
4Q15
Cash Cycle
4Q15 70.3 4Q15 50.2
Stock-Outs
50.5
1Q16 65.7 1Q16 84.8 1Q16 61.1
Inventory Losses
2Q16 53.5 2Q16 88.2 2Q16 58.5
3Q16 54.7 3Q16 78.6 3Q16 38.2
4Q16 51.3 4Q16 70.4 4Q16 43.8
1Q17 49.3 1Q17 84.1 1Q17 41.7
2Q17 54.4 2Q17 89.6 2Q17 55.8
Improved Supply Chain Management
+
1Q13 100.0 1Q13 100.0
2Q13 102.2 2Q13 99.3
3Q13 93.9 3Q13 102.0
4Q13 89.6 4Q13 105.4
1Q14 99.5 1Q14 107.4
2Q14 91.9 2Q14 110.7
+4.5 days). Mature Store Revenues and EBITDA were adjusted to 1Q13 CPI levels.
3Q14 79.6 3Q14 108.5
4Q14 74.9 4Q14 104.4
1Q15 73.6 1Q15 101.3
2Q15 81.3 2Q15 95.8
3Q15 75.3 3Q15 87.9
4Q15 62.3 4Q15 80.6
1Q16 55.0 1Q16 72.8
Improved Service
Cultura RD
People
Management
30
REINVENTING
THE EXECUTION
FOR THE NEXT
15 YEARS
MAIN STRATEGIES
We have established four main strategies and three core enablers to deliver on them
1
Accelerate the Organic
Expansion 5. Attract, Develop,
Engage & Retain People
2
MAIN STRATEGIES
CORE ENABLERS
Introduce New
Formats
32
1 – ACCELERATE ORGANIC EXPANSION
131 131
Main Solutions
99 101
› Expanded the Real Estate Team
34
INTRODUCING NEW FORMATS
Farmasil
CAIEIRAS
PERUS
VILA BRASILÂNDIA
ITAIM PAULISTA
VILA MARIA
VILA BUARQUE BRÁS ARTUR ALVIM
Pedestrian and low income public
IPIRANGA
Differentiated and innovative store format
EMBU DAS ARTES
CAMPO LIMPO SANTO ANDRÉ
CAPÃO REDONDO
Low operating cost CIDADE ADEMAR
SANTO AMARO
JARDIM ÂNGELA
INTERLAGOS
GRAJAÚ
35
3 – ENHANCE CATEGORY MANAGEMENT & SHOPPING EXPERIENCE
36
4 – INVOLVE, UNDERSTAND & POTENTIALIZE CUSTOMERS
Dunnhumby › Long term partnerships with global retail leaders such as Tesco,
Kroger, Casino and Macy’s
› Focus on Surprise and Delight, in substitution for the current Earn and Redeem points scheme
New Loyalty › Enhance customer experience in all phases of the shopping cycle, in and out of store
Program
› Higher focus in up-sell instead of cross-sell
› Complex algorithms allowing higher accuracy and relevance for the Exclusive Offers
Personalization › Measurement of the loyalty level by store and improved tracking of the customer profile
37
PROVEN TRACK
RECORD IN
DELIVERING HIGH
GROWTH WITH
MARGIN EXPANSION
STRONG REVENUE GROWTH
Consolidated Revenue Growth Same Store Sales Growth* Mature Stores Growth*
25.5%
24.5%
21.1%
14.3%
18.7% 13.2% 9.8%
12.5%
17.1%
15.9% 11.4% 8.5%
8.1%
14.2%
9.3%
6.5%
7.2%
4.7%
4.7%
3.1%
0.8%
2013 2014 2015 2016 2017 4Q16 4Q17 2013 2014 2015 2016 2017 4Q16 4Q17 2013 2014 2015 2016 2017 4Q16 4Q17
* Only considers retail. 39
PHARMACEUTICAL PRODUCTS HAVE BEEN THE HIGHLIGHT
Maintaining a very strong growth pace in an unfavorable macro scenario
13.9
HPC
27.0% 27.2% 27.4%
10.2%
11.8
OTC
19.1%
7.8
Generics
11.5% 11.4% 11.4% 11.4% 11.4% 11.1%
6.6 16.0%
5.7
4.8
4.0
Branded Rx
3.7
3.4
3.1 44.1% 43.8% 44.2% 44.6% 44.0% 44.2%
2.5 17.1%
1.8
1.5
1.3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 4Q16 4Q17 2014 2015 2016 2017 4Q16 4Q17
* Services 40
DELIVERING ACCELERATED LONG-TERM GROWTH WITH MARGIN EXPANSION*
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 4Q16 4Q17 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 4Q16 4Q17
744
544
17.8 18.4 18.2 18.6 18.8 18.3 18.7 18.3
15.8 15.0 15.2 15.2 14.7 15.6 16.6 377
294 340 289
243 236
193
53 78 78 118
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 4Q16 4Q17 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 4Q16 4Q17
2011 2012 2013 2014 2015 2016 2017 4Q16 4Q17 2011 2012 2013 2014 2015 2016 2017 4Q16 4Q17
Income Tax Adjusted Net Income
R$ million, % of Gross Revenues R$ million, % of Gross Revenues
2011 2012 2013 2014 2015 2016 2017 4Q16 4Q17 2011 2012 2013 2014 2015 2016 2017 4Q16 4Q17
* Pro-forma. 42
STRONG OPERATING CASH FLOW GENERATION TO FINANCE INVESTMENTS
44
RD – COMPANY HIGHLIGHTS
Proven Track Record of Accelerated Organic Growth with Margin & ROIC
6 Expansion
45