A Victim of Its Own Success | Cut to Hold

Research evidence excerpt

A Victim of Its Own Success | Cut to Hold

Latin America | Healthcare Services

Rede D`Or Sao Luiz SA EquityMayResearch11, 2026

RATING | TARGET | ESTIMATE CHANGEA Victim of Its Own Success | Cut to Hold

We still like the fundamentals and LT prospects, but at 17x 2026 P/E Rede RATING HOLD (BUY)

D’Or embeds ~32x earnings for the hospital segment - which would make it PRICE R$37.74^

the 2nd highest P/E stock in Brazil. In addition, we see SulAmerica’s strong PRICE TARGET | % TO PT R$37.70 (R$36.70) | -0%

performance fading, given employment-linked demand and saturation in 52W HIGH-LOW R$48.41 - R$31.76

SP/RJ, contrasting optimistic market assumptions. Also, MLRs normalized FLOAT (%) | ADV MM (USD) 49.6% | 69.01

and ROEs near peak limit further margin upside. We downgrade to Hold. MARKET CAP R$86.0B | $17.5B

TICKER RDOR3 BZ

Where our numbers differ ^Priornoted.trading day's closing price unless otherwise

The recent healthcare industry expansion is unlikely to persist, since ~75% of beneficiaries rely

on employer-paid plans and unemployment rates are near lows. Furthermore, gaining share in

a commoditized industry is challenging and growth outside core regions adds execution risk. FY (Dec) CHANGE TO JEFe JEF vs CONS

As a consequence, SulAmerica (SulA)’s strong 2024-25 performance looks hard to repeat, so 2026 2027 2026 2027

we see market expectations for sustained 4-5% volume CAGR as unrealistic. EBITDA +11% +5% +1% -5%

EPS -6% -10% NM -8%

In addition, after peaking near 90% in 2022, SulA's Medical Loss Ratio (MLR) fell to 79%,

returning to pre-Covid levels and driving ROE to historical highs (>25%). Hence, we see limited

scope for further gains, as we do not believe consistent improvements in margins/ROE are

Exhibit 1 - Industry-wide and big insurers ROEs