Viveo shares debut at Brazil’s B3; company aims to build one-stop-shop healthcare ecosystem

RIO DE JANEIRO, BRAZIL – Viveo, formerly known as CM Hospitalar, indirectly controlled by Brazil’s billionaire Bueno family, has revived its plans to go public, according to people familiar with the matter. It is the country’s leading company in distributing disposable medical supplies and medicines,

The group is controlled by funds managed by DNA Capital, an investment firm in which the Buenos now own a majority stake. However, the Mafra family, who founded Mafra Hospitalar, has been the driving force and the real engine of the company’s meteoric rise over the years.

The company plans to expand its range of products and management solutions with technology.

Today, August 9, Viveo debuts on Brazilian stock exchange B3, with the ticker VVEO3, after completing its initial public offering (IPO) that generated R$ 2 billion (US$380 million).

It will be a debut of great weight on the stock market: Viveo is the Brazilian market leader in the distribution of disposable medical supplies and pharmaceuticals, operating in the main channels (hospitals, clinics, and laboratories) and with a customer list that includes some of the largest companies in each of these segments.

It is a market that moves an estimated R$223 billion (US$42 billion) per year, according to the offer prospectus.

The ambitious plan is to build out the country’s largest healthcare ecosystem under a one-stop-shop model, where customers have access to various products, services, and smart management solutions in the same environment.

Growth will be guided by the addition of new product categories and technology services that can simplify and enhance the offering for customers, in this case, hospitals, labs, and clinics.

With the funds from the initial offering, the company plans to invest in accelerating growth and strengthening its market-leading position, both organically and through acquisitions (M&A).

Viveo, for example, sells products that account for 90% of the drugs demanded in hospitals, but that share is dropping to 60% in disposables, representing an expansion opportunity.

EMPIRE MADE BY MAFRA AND BUENO FAMILIES

In just three years, the two families transformed a distributor of hospital supplies into an ecosystem of manufacturing, distribution, and services that was already dominant in the healthcare sector.

Founded in 1996 by Carlos Alberto Mafra, Mafra was the leading distributor of disposable products for hospitals (gloves, gauze, and cotton).

Seeing an opportunity to exploit the sales channel better, Mafra attracted DNA Capital, which in 2016 bought 37% of the business.

The strategy: to transform the company into an ecosystem capable of serving hospitals, clinics, and laboratories simultaneously.

The first acquisition came in 2017 with the purchase of Tecnocold, a company that distributes vaccines from giants like Sanofi, Pfizer, and GSK to clinics – a channel where Viveo did not yet operate.

A year later, Mafra paid R$ 500 million for Cremer, manufacturing disposable products for hospitals and gaining a brand present in more than 90% of Brazilian pharmacies.

To integrate the assets and continue growing through acquisitions, DNA recruited Leonardo Byrro, a young executive who has already worked at Ambev, Tarpon, and BRF and had already been Cremer’s CEO for four years.

Last year, after a R$700 million capitalization – which included Temasek, Signal Capital, Brazilian family offices, and the Bueno family – Viveo made five more M&As to deepen its presence in its three sales channels.

The first target was Expressa, a competitor of Mafra in the distribution of hospital products. Next came Flexicotton, a competitor of Cremer that manufactures ‘white label’ products for pharmacies and supermarkets.

What was missing was a better strategy to penetrate the laboratories market. In this channel, Viveo already sold disposable materials – such as tubes and gloves – but not the main one: the reagents used in clinical analysis, representing 87% of the purchases of a DASA or a Fleury.

In a single move, Viveo bought Vitalab, Byogene, and Biogenetics, the largest distributors of reagents, from Roche, the leader in this market in the country.

Together, all the acquisitions made by Viveo increased its addressable market from R$60 billion to more than R$200 billion.

Viveo is also trying to monetize its relationship with hospitals through Health LOG, which handles everything from disposable product inventory management to demand planning, warehousing, and logistics.

In its current form, Viveo’s ecosystem generated pro-forma net revenues of R$5.6 billion last year, and EBITDA of R$360 million, plus R$150 million in net income.

To invest in the last missing channel – a direct relationship with the end consumer – Viveo bought Far.me, a drug subscription startup that emulates PillPack, the startup acquired by Amazon.

Far.me delivers a box to the patient’s home with all the medications they will need for the month, organized in sachets for each day. The focus is on recurring medication patients – the elderly and chronically ill – a R$15-20 billion market.

Many patients are discharged from the hospital and later readmitted because they did not take the correct medication treatment. If Viveo can prove that patients who subscribe to Far.me go back to the hospital less often, perhaps even health plans might want to pay the monthly fee.

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