By Brazil Stock Guide – Brazil’s healthcare sector closed 2025 in a paradoxical position. At the macro and regulatory level, many of the risks that dominated the debate at the start of the year proved more contained than initially feared. At the company level, however, financial and market performance exposed one of the widest dispersions of the past decade, separating structural winners from businesses still trapped in deep adjustment cycles, according to a report from BTG Pactual.
From a sector perspective, the operating environment was less hostile than expected. Regulatory initiatives, persistent concerns over litigation and fears of an economic slowdown had only a limited impact over the year. Demand also proved resilient. Data from Brazil’s private health regulator show that the number of beneficiaries covered by private medical plans reached about 53 million people in 2025, posting net growth over the year, largely supported by employer-sponsored group plans. A resilient labor market and relatively firm household income helped sustain private healthcare demand.
Profitability Recovery, But Not for Everyone
As a result, the sector advanced in a gradual normalization of profitability after years of margin compression. Consolidated indicators point to a recovery in operators’ return on equity (ROE), still below historical peaks but clearly on an upward trajectory through 2024 and 2025. That aggregate improvement, however, did not translate into homogeneous performance across listed companies. The dispersion between stocks became one of the defining features of the year, highlighting how execution and cost discipline increasingly outweigh scale alone.
Rede D’Or: The Sector’s Compounding Story
Rede D’Or São Luiz (B3: RDOR3) stood out as the sector’s main positive outlier. Shares in the country’s largest hospital network rose close to 80% in 2025, supported by a rare combination in Brazilian healthcare: consistent revenue growth, margin expansion and strong cash generation.
The rally drove a meaningful re-rating of the company controlled by the Moll family. Market consensus migrated from roughly 13 times estimated 2026 earnings to levels closer to 18 times, reflecting growing confidence in execution quality and the recurring nature of results.
Beyond operating performance, the investment case remains supported by additional growth vectors. These include projects within the joint venture with Bradesco, selective acquisition opportunities and the acceleration of its oncology strategy — a segment characterized by higher complexity, larger ticket sizes and more meaningful barriers to entry. BTG’s projections point to a rising trajectory for both adjusted EBITDA and net income, reinforcing the view of Rede D’Or as a long-term compounding asset within Brazilian healthcare.
Hapvida: A Deep Reset in Expectations
At the opposite end of the distribution, Hapvida (B3: HAPV3) represented the most challenging case in coverage during 2025. Shares fell about 57% over the year, are down more than 60% over 12 months, and trade over 90% below their historical peak. The underperformance reflects a convergence of pressures hitting results and expectations simultaneously. These include higher costs associated with new hospital openings, increased medical utilization, a sharp rise in litigation expenses, pressure on commercial costs and weaker-than-expected beneficiary dynamics. The year was marked by successive downward revisions to EBITDA and net income, effectively forcing a full reset of market expectations.
Other Names, Different Problems
Other healthcare companies also faced significant challenges, albeit for different reasons. Viveo (B3: VVEO3) and Oncoclínicas (B3: ONCO3) were pressured by a mix of asset integration issues, cost structures, regional competition and execution risks. According to BTG, these cases illustrate how difficult it has become to sustain a single narrative for the sector. Risk and return drivers vary widely across business models, geographies and maturity stages, making stock selection increasingly decisive.
2026: Execution Over Narratives
For BTG, this asymmetry is likely to persist into 2026. Investors are expected to remain focused on execution, capital discipline and cash generation, rather than purely defensive narratives or aggressive growth promises. The bank’s conclusion is that while Brazilian healthcare exited 2025 with stronger fundamentals than initially feared, market premiums will remain concentrated in companies able to convert scale into sustainable profitability. In an environment still sensitive to interest rates, cost of capital and governance, healthcare remains a structural theme — but one increasingly intolerant of operational missteps and undelivered promises.