By Brazil Stock Guide – Oncoclínicas (ONCO3), one of Latin America’s largest oncology care platforms, has breached its financial covenants after leverage reached 4.3 times EBITDA under contractual terms, leaving the company close to a technical default as it negotiates with creditors and advances restructuring talks with Porto Seguro and Fleury.
The company had called debentureholder meetings in late March to approve a waiver, but the meetings failed to be installed due to lack of quorum, preventing formal approval of measures needed to avoid debt acceleration.
At the end of the fourth quarter of 2025, net financial debt plus acquisition-related liabilities totaled R$2.94 billion. Reported leverage stood at 3.5 times adjusted EBITDA, but under covenant definitions the ratio reached 4.3 times, exceeding contractual limits due to more conservative EBITDA calculations.
Beyond leverage, the company also breached its interest coverage ratio, which measures its ability to service financial expenses through operating results. The metric stood at 1.35, below the minimum required level of 1.75, expanding the scope of covenant breaches and increasing the risk of debt acceleration by creditors.
As a result, approximately R$2.9 billion in obligations previously classified as long-term were reclassified to short-term liabilities, significantly increasing near-term liquidity pressure.
Operating performance helps explain the deterioration. In 2025, the company reported a 7% decline in revenue and a 32% drop in EBITDA, posting a net loss of approximately R$1.5 billion. Results were impacted by significant impairments, roughly R$430 million in losses related to Banco Master, and elevated receivables risk in the healthcare system, including around R$865 million linked to Unimed FERJ.
Signs of financial stress are also reflected in governance and audit disclosures. Deloitte, the company’s auditor, included a paragraph highlighting material uncertainties related to the company’s ability to continue as a going concern, while the Fiscal Council warned shareholders about the risk of further financial deterioration.
In the near term, the company is seeking to stabilize its liquidity position. Oncoclínicas said it reached an agreement with part of its creditors to suspend debt collections until May 31, 2026, effectively creating a partial standstill period while negotiations continue. Even so, the company remains dependent on broader creditor alignment and formal waiver approvals.
According to sources familiar with the matter, the company is also evaluating the possibility of seeking a precautionary court measure to prevent debt acceleration if negotiations fail to progress within the expected timeframe.
At the same time, Oncoclínicas is negotiating a restructuring with Porto and Fleury involving the creation of a new entity to house operating assets and up to R$2.5 billion in liabilities. The proposal includes an approximately R$1 billion capital injection, split between equity and convertible instruments, and could lead to significant changes in the company’s ownership structure. The exclusivity period for negotiations is set to expire on April 13, subject to potential extensions.
The outcome of the restructuring will depend on creditor coordination and the successful execution of waiver agreements. Without that, the company may face further liquidity constraints and increased pressure on its capital structure, with the next developments likely to unfold over the coming weeks.