Auna F1/A Registration statement (foreign) (amended)

Auna (AUNA) F-1/ARegistration statement (foreign) (amended)

As filed with the Securities and Exchange Commission on August 25, 2021

Registration No. 333-249161

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Auna S.A.A.

(Exact name of Registrant as specified in its charter)

Republic of Peru

8011

Not Applicable

(State or other jurisdiction of
incorporation or organization)

(Primary Standard Industrial
Classification Code Number)

Avenida República de Panamá 3461

San Isidro, Lima, Perú

+51 1-205-3500

(I.R.S. Employer
Identification Number)

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

(212) 947-7200

Copies to:

Maurice Blanco

Manuel Garciadiaz
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017

Francesca L. Odell

Adam Brenneman

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

†	The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

CALCULATION OF REGISTRATION FEE



Title of each class of securities to be registered(1)	Proposed maximum aggregate offering price(2)(3)	Amount of registration fee(4)
Class A shares, par value per share S/1.00	US$100,000,000	US$12,980

(1)	All class A shares will be in the form of American Depositary Shares, or ADSs, with each ADS representing class A shares. ADSs issuable upon deposit of the class A shares registered hereby are being registered pursuant to a separate registration statement on Form F-6.

(2)	Includes additional class A shares in the form of ADSs that the underwriters have an option to purchase. See “Underwriting.”

(3)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act based on an estimate of the proposed maximum offering price.

(4)	Previously paid.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion dated August 25, 2021

PRELIMINARY PROSPECTUS

LOGO

American Depositary Shares

Auna S.A.A.

(incorporated in the Republic of Peru)

Representing Class A Shares

This is an initial public offering of American depositary shares, or ADSs, of Auna S.A.A. (“Auna” or the “Company”). Each ADS represents class A shares.

We anticipate that the initial public offering price will be between US$ and US$ per ADS (equivalent to approximately S/ and S/ per class A share, based on the US$/ to S/1.00 exchange rate on , 2021). We intend to apply to have the ADSs listed on the New York Stock Exchange (“NYSE”) under the symbol “AUNA.” We intend to apply to have our class A shares listed on the Lima Stock Exchange (Bolsa de Valores de Lima or “BVL”) under the symbol “ .”

We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to additional ADSs, at the initial public offering price, representing class A shares, less underwriting discounts and commissions.

We have two classes of common stock, class A common stock and class B common stock (collectively, our “common stock”). Each share of our common stock represents the same economic interest, except that, as provided in our by-laws, the class A shares benefit from the right to receive a preferred dividend consisting of 100% of any dividends distributed until we have distributed US$1 billion (or its equivalent in soles) in the aggregate in cash dividends. Each class B share of our common stock is entitled to one vote on any matter submitted to a vote of the shareholders. Each class A share of our common stock is entitled to one vote (together with class B shares) on only the following matters submitted to a vote of the shareholders: (i) approval of corporate management and financial statements; (ii) approval of capital increases or reductions; (iii) appointment, or delegation to our board of directors of the appointment, of our independent auditors; and (iv) application of profits. See “Description of Our Share Capital.”

Each class B share is convertible into one class A share automatically upon transfer, subject to certain exceptions. For so long as either Enfoca (as defined herein) and Luis Felipe Pinillos Casabonne hold in the aggregate 10% or more of the outstanding amount of class A shares, we will have a dual class structure. However, if, on any given date, the class A shares held directly or indirectly by Enfoca and Mr. Pinillos Casabonne represent in the aggregate less than 10% of the outstanding amount of class A shares on a combined basis, then on the date of the call for the next annual shareholders meeting following such event, all the class A shares and all the class B shares will automatically convert into one class of common shares with full and equal economic and political rights as provided under Peruvian law on a one-to-one basis.

Following the completion of the offering, Enfoca, our controlling shareholder, will own approximately % of our class B shares and % of our class A shares, representing approximately % of the combined voting power of our outstanding common stock assuming no exercise of the underwriters’ option to purchase additional ADSs. The remaining % of the class B shares will be owned by Mr. Pinillos Casabonne and certain of our minority shareholders. All class B shares will be held in trust under a trust agreement (the “Trust Agreement”), pursuant to which the trustee will vote all class B shares held in trust as directed by Enfoca irrespective of Enfoca’s aggregate ownership of our common stock at any given time. See “Description of Our Share Capital—Trust Agreement.”

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Neither the ADSs nor the offering has been or will be registered in the Republic of Peru and therefore neither the ADSs nor the offering is or will be subject to Peruvian laws applicable to public offerings in Peru. The information contained in this prospectus has not been, and will not be, approved or disapproved by the Peruvian Securities Commission (Superintendencia del Mercado de Valores or “SMV”) or the BVL. The ADSs may not be offered or sold in Peru except in compliance with the securities laws of Peru.

We are an “emerging growth company” under the U.S. federal securities laws and will be subject to reduced public company reporting requirements.

Investing in the ADSs involves risks. See “Risk Factors” beginning on page 27 of this prospectus.


	Per ADS	Total
Public offering price	US$	US$
Underwriting discounts and commissions	US$	US$
Proceeds, before expenses, to us	US$	US$

Delivery of the ADSs will be made on or about , 2021.


Morgan Stanley

The date of this prospectus is , 2021.

TABLE OF CONTENTS


	Page
Presentation of Financial and Other Information		ii
Forward-Looking Statements		v
Summary		1
The Offering		17
Summary Financial and Other Information		21
Risk Factors		27
Use of Proceeds		56
Dividends		57
Capitalization		58
Dilution		59
Management’s Discussion and Analysis of Financial Condition and Results of Operations		60
Industry		87
Business		106
Management		139
Principal Shareholders		144
Related Party Transactions		146
Description of Our Share Capital		149
Description of American Depositary Shares		163
Taxation		174
Underwriting		180
Expenses of the Offering		188
Legal Matters		189
Experts		189
Where You Can Find More Information		190
Enforcement of Judgments		191
Index to Financial Statements		F-1

Neither we nor the underwriters have authorized anyone to provide you with any information other than that included in this prospectus or in any free writing prospectus prepared by or on behalf of us. We do not take any responsibility for, and can provide no assurance as to the reliability of, any information that others may give you. Neither we, the underwriters, or any of our or their affiliates have authorized any other person to provide you with different or additional information. Offers to sell, and solicitations of offers to buy, the ADSs are being made only in jurisdictions where such offers and sales are permitted. You should assume that the information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ADSs. Our business, financial condition, operating results, and prospects may have changed since such date.

No action is being taken in any jurisdiction outside the United States to permit a public offering of our class A shares or the ADSs. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restriction as to this offering and the distribution of this prospectus applicable to those jurisdictions.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Certain Definitions

All references to “we,” “us,” “our,” “our company” and “Auna” in this prospectus are to Auna S.A.A., an openly held corporation (sociedad anónima abierta) organized under the laws of Peru and, unless the context requires otherwise, its consolidated subsidiaries.

The term “U.S. dollar” and the symbol “US$” refer to the legal currency of the United States; the term “sol” and the symbol “S/” refer to the legal currency of Peru; and the term “Colombian peso” and the symbol “COP” refer to the legal currency of Colombia.

All references to “EPS” and “EPSs” in this prospectus are to Entidades Proveedoras de Salud in Peru or Entidades Promotoras de Salud in Colombia, as the context requires. EPSs in Peru are private health insurance companies that provide EPS plans, a type of private insurance plan funded through a percentage of contributions to Seguro Social de Salud del Perú (“EsSalud”), the social security regime in Peru. EPSs in Colombia are institutions responsible for collecting and managing funds contributed to the social security system in Colombia and for providing health insurance plans mandated by law in Colombia. See “Industry—The Peruvian Healthcare Sector” and “Industry—The Colombian Healthcare Sector,” respectively, for more detail.

All references to “Enfoca” in this prospectus are to Enfoca Sociedad Administradora de Fondos de Inversión S.A. and/or to the group of entities affiliated with Enfoca Sociedad Administradora de Fondos de Inversión S.A., as the context requires.

Change of Corporate Name and Form

On December 30, 2019, we changed our corporate name from Grupo Salud del Perú, S.A.C. to Auna S.A. Any references to Grupo Salud del Perú herein are references to our company prior to the change in our corporate name. On September 14, 2020, our shareholders approved our conversion to an openly held corporation (sociedad anónima abierta), along with the related amendment to our by-laws and corporate name change from Auna S.A. to Auna S.A.A. Registration of the amendment to our by-laws in the corporations registry of the Peruvian public registry (the “Corporations Public Registry”) was completed in November 2020.

Financial Statements

Our consolidated financial statements included in this prospectus have been prepared in soles. The audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (“IFRS”). The financial information contained in this prospectus includes our audited consolidated financial statements as of and for the years ended December 31, 2020, 2019 and 2018 included elsewhere in this prospectus.

Our fiscal year ends on December 31. References in this prospectus to a fiscal year, such as “fiscal year 2020” refer to our fiscal year ended on December 31 of that calendar year.

We have translated some of the sol amounts contained in this prospectus into U.S. dollars for convenience purposes only. Unless otherwise indicated or the context otherwise requires, the rate used to translate sol amounts to U.S. dollars was S/3.8498 to US$1.00, which was the exchange rate reported on June 30, 2021 by the Peruvian Superintendency of Banks, Insurance and Private Pension Fund Administrators (Superintendencia de Banca, Seguros y AFPs, or “SBS”). We have also translated certain Colombian peso amounts contained in this prospectus into Peruvian soles or U.S. dollars for convenience purposes only. Unless otherwise indicated or the context otherwise requires, the rate used to translate Colombian peso amounts to Peruvian soles was COP971.3356 to S/1.00 and the rate used to translate Colombian peso amounts to U.S. dollars was COP3,756.67

to US$1.00, which in each case was the exchange rate reported on June 30, 2021 by the Central Bank of Colombia. These translations are provided solely for convenience of investors and should not be construed as implying that the soles, Colombian pesos or other currency amounts represent, or could have been or could be converted into, U.S. dollars or Peruvian soles, as applicable, at such rates or at any other rate.

On December 27, 2018, we acquired 97.3% of the outstanding share capital of Promotora Médica Las Américas S.A. (“Grupo Las Américas”), a leading healthcare services provider located in Medellín, Colombia. The aggregate purchase price was S/589.3 million (US$153.1 million). We acquired an additional 2.5% of the share capital of Grupo Las Américas on January 3, 2020.

Rounding

Certain figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the figures that precede them.

Non-GAAP Financial Measures

We use EBITDA, Segment EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, in this prospectus. A non-GAAP financial measure is generally defined as one that purports to measure financial performance but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure.

We calculate EBITDA as (loss) profit for the period plus income tax expense, net finance cost and depreciation and amortization. EBITDA is a key metric used by management and our board of directors to assess our financial performance. We calculate Segment EBITDA as segment profit before tax plus net finance cost and depreciation and amortization. We calculate Adjusted EBITDA as (loss) profit for the period plus income tax expense, net finance cost, depreciation and amortization, pre-operating expenses for projects under construction, business development expenses for expansion into new markets, change in fair value of assets held for sale, loss on sale of investments in associates and gain from purchase.

We present EBITDA, Segment EBITDA and Adjusted EBITDA because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, management and our board of directors use EBITDA, Segment EBITDA and Adjusted EBITDA to assess our financial performance and believe they are helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding the growth of our business.

EBITDA, Segment EBITDA and Adjusted EBITDA are not measures of operating performance under IFRS and have limitations as analytical tools. You should not consider such measures either in isolation or as substitutes for analyzing our results as reported under IFRS. Additionally, our calculations of Segment EBITDA and Adjusted EBITDA may be different from the calculations used by other companies for similarly titled measures, including our competitors, and therefore may not be comparable to those of other companies. For reconciliations of EBITDA and Adjusted EBITDA to (loss) profit for the period and Segment EBITDA to segment profit before tax for the period, in each case, the most directly comparable IFRS measure, see “Summary Financial and Other Information—Key Performance Indicators.”

Medical Loss Ratio

We use medical loss ratio, or MLR, in this prospectus. MLR is calculated as (i) claims for medical treatment generated by our prepaid oncology plans plus (ii) technical reserves relating to plan members treated pursuant to such plans, whether at our facilities or third-party facilities, divided by revenue generated by our prepaid oncology plans. We believe that MLR is an important measure of our operating performance in our healthcare

iii

coverage business as it is an indicator of the percentage of payments under our oncology plans that is used for medical treatment as compared to administrative costs and is widely used in the healthcare industry as a measure of operating efficiency.

Market Information

We make estimates in this prospectus regarding our competitive position and market share, as well as the market size and expected growth of the healthcare industries in Peru and Colombia. We have made these estimates on the basis of our management’s knowledge and statistics and other information from the following sources: EsSalud, the Peruvian Superintendencia Nacional de Salud (“SUSALUD”), the Peruvian Ministry of Health (“MINSA”), the Colombian Superintendencia Nacional de Salud (“SUPERSALUD”), the Colombian Ministry of Health and Social Protection (“MinSalud”), the World Health Organization (“WHO”), the SBS, Fitch Solutions, Emerging Markets Information System (“EMIS”) and the Economist Intelligence Unit (“EIU”), among others. We believe such sources are the most recently available as of the date of this prospectus, from government agencies, industry professional organizations, industry publications and other sources. We believe these estimates to be accurate as of the date of this prospectus.

Offering Information

All amounts contained in this prospectus that have been adjusted to reflect the estimated net proceeds of the offering are based upon the sale of ADSs at an assumed public offering price of US$ per ADS (the midpoint of the price range set forth on the cover page of this prospectus). Unless otherwise indicated, all information contained in this prospectus assumes no exercise of the underwriters’ option to purchase up to additional ADSs, representing class A shares.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. Forward-looking statements convey our current expectations or forecasts of future events. These statements involve known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” which may cause our actual results, performance or achievements to differ materially from the forward-looking statements that we make.

Forward-looking statements typically are identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “project,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,” or other similar expressions. Any or all of our forward-looking statements in this prospectus may turn out to be inaccurate. Our actual results could differ materially from those contained in forward-looking statements due to a number of factors, including, among others:

•

our brands’ reputation among our plan members, patients, the medical community and our suppliers in the regions in which we operate;

•

our ability to estimate and control healthcare costs, or if we cannot increase our prices to offset cost increases or expenditure increases, at our hospitals and clinics and with respect to our oncology plans;

•

the negative impact of the COVID-19 pandemic on our business;

•

our relationships with third-party payers;

•

competition in a fragmented market like Peru and in Colombia;

•

our ability to recruit and retain quality medical professionals;

•

acquisitions, partnerships or joint ventures that we make or enter into;

•

our ability to integrate our acquired facilities or obtain the expected benefits from such acquisitions;

•

our operation of Torre Trecca, and any additional public-private partnerships we may enter in the future;

•

our ability to execute our organic growth plan, which includes the construction of additional hospitals and clinics as well as expansion of our existing facilities;

•

our ability to continue growing our business at historical rates;

•

our ability to provide high-quality, advanced care for a broad array of medical needs to maintain and expand our markets;

•

our ability to develop and commercialize new products and services under Oncosalud;

•

our reliance on a limited number of suppliers of medical equipment, medicines and other supplies needed to provide our medical services;

•

our compliance with extensive legislation and regulations in Peru and Colombia;

•

our ability to obtain registrations, authorizations, licenses and permits for the establishment and operation of our hospitals and clinics;

•

our exposure to liabilities from claims brought against our healthcare professionals or our facilities;

•

our exposure to litigation and other legal, labor, administrative and regulatory proceedings to which we are subject;

•

insufficiency of our insurance policies to cover potential losses;

•

our compliance with privacy laws to which we are subject;

•

a failure of our IT systems;

•

our ability to maintain sufficient funds to settle current liabilities;

•

any loss of members of our senior management team;

•

our ability to maintain favorable labor relations with our employees;

•

our reliance, as a holding company, on our subsidiaries to conduct all of our operations, and the ability of our subsidiaries to pay dividends and make other distributions to us which could adversely affect our ability to pay dividends;

•

changes to IFRS accounting standards;

•

economic, social and political developments in Peru, including recent political instability, inflation and unemployment;

•

economic, social and political developments in Colombia, including political and economic instability, violence, inflation and unemployment;

•

adverse climate conditions and other natural disasters;

•

the concentration of our operations in Lima and Medellín;

•

corruption and ongoing high-profile corruption investigations in Peru and Colombia which could have an adverse effect on the Peruvian and Colombian economies;

•

political and economic conditions in Venezuela which could have an adverse impact on the Peruvian and Colombian economies;

•

developments and the perception of risk in other countries, especially emerging market countries;

•

increased inflation in Peru or Colombia which could have an adverse effect on the Peruvian and Colombian economies;

•

variations in foreign exchange rates;

•

changes in tax laws in Peru or Colombia which may increase our tax liabilities;

•

disparity in the voting rights between the classes of our shares which could have an adverse effect on the value of the ADSs, and may limit or preclude the ability of certain of our shareholders to influence our corporate matters; and

•

other factors identified or discussed under “Risk Factors.”

The forward-looking statements in this prospectus represent our expectations and forecasts as of the date of this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.

SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you, and we urge you to read this entire prospectus carefully, including the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and our consolidated financial statements and notes thereto included elsewhere in this prospectus, before deciding to invest in our ADSs.

Overview

We are one of the largest and most recognized players in the Peruvian healthcare industry and have a growing presence in Colombia. With more than 30 years of experience in the healthcare industry, we provide oncology healthcare plans in Peru and operate hospitals and clinics in Peru and Colombia that provide high-quality medical services at all levels of complexity. Our mission is to transform healthcare in the countries in which we operate by providing excellent patient outcomes and positive, streamlined patient and plan member experiences at an affordable cost. We believe we are well positioned to fulfill this mission due to our patient-centric culture, scale, innovative use of technology, unique vertically integrated oncology platform in Peru and high degree of horizontal integration in our Peruvian and Colombian healthcare networks, all of which allow us to scale nationally and regionally with cost efficiencies and further advance our strategic development. Furthermore, we believe that we are uniquely positioned to disrupt the health-tech market in Latin America. Leveraging on the breadth of our healthcare network, we intend to expand and accelerate our strategic technology platform to launch one of Spanish-speaking Latin America’s (“SSLA”) largest one-stop healthcare ecosystems in terms of members, providing our current and future users with an end-to-end, personalized and immediate healthcare solution that we believe will result in us becoming the true digital healthcare leader in the region.

Our business was founded in Peru in 1989 as Oncosalud, a healthcare coverage provider selling prepaid plans covering a full range of services for the prevention, detection and treatment of cancer for a modest monthly payment that varies based on plan type and age of plan members and was on average S/54.2 (US$14.1) per month for the year ended December 31, 2020. Our prepaid oncology plans addressed an unmet need in the healthcare coverage market in Peru at the time and quickly began to grow. Starting in 1997, we began to build our own network of Oncosalud facilities to primarily treat our plan members but also patients of private payers, including patients covered by private insurance. Clínica Oncosalud, our flagship hospital in this network, has a Diamond accreditation from Accreditation Canada International (“ACI”). Oncosalud had 830,643 members as of December 31, 2020, which was more than each of the private insurance and EPS systems in Peru as of that date. Measured by number of plan members, we had a market share of 28.0% of all private healthcare plans in Peru in 2020 and had the second largest market share of any single private healthcare plan, according to data from SUSALUD. Oncosalud currently operates two specialized oncology hospitals and three oncology clinics. Through its vertically integrated model, Oncosalud has achieved high levels of both effectiveness and efficiency: during the year ended December 31, 2020, 97% of Oncosalud members were treated in our facilities, which allows us to control medical costs, manage treatment protocols and provide high-quality cancer treatment. Notably, for the cohort of patients diagnosed between 2010 and 2015, Oncosalud’s 5-year cancer survival rate was 75.5%. In addition, we had an MLR of 43.0% as of December 31, 2020, which we believe is one of the lowest in Latin America, based on the MLRs published by other publicly-traded healthcare companies in Latin America that provide prepaid healthcare plans or health insurance coverage. During 2020 and 2019, through our Oncosalud network of facilities, we treated more than 12,800 and 12,500 patients, respectively. By guiding our plan members from prevention through early detection of cancer and then through the full treatment cycle, we take the uncertainty and fear out of cancer treatment and provide top quality care in a compassionate and humane manner.

in Peru. Through the development and acquisition of facilities since that time, we have built a network of hospitals and clinics located in all of the major cities in the country, with premium clinical capabilities and a wide range of medical specialties and subspecialties. Today, with our Auna Peru network, we own and operate five hospitals and two clinics as well as numerous other facilities providing complementary services, such as pharmaceutical, diagnostic imaging and clinical laboratory services. We are a provider to essentially all of the private payers in the Peruvian healthcare sector, including traditional private insurers, EPS providers and prepaid plan operators. Our Auna Peru network is horizontally integrated, meaning that patients can access all of their treatment, diagnostic imaging, laboratory and pharmaceutical needs at one of our facilities instead of having to go to different providers for each service. Additionally, for certain high-complexity procedures that cannot be performed at our regional hospitals, patients can be treated at Clínica Delgado, our high-complexity facility in Lima and the flagship hospital of the Auna Peru network. Moreover, we were the first private institution in Peru to implement an electronic medical records (“EMR”) system in 2013 as part of our modern hospital information system (“HIS”), and today all of our hospitals in Peru use our HIS, which allows us to closely monitor and anticipate patient health needs, efficiently manage costs across our patient population and improve medical outcomes and the quality of our services. Through this horizontal integration, we are able to foster a seamless, positive patient experience across each of our networks in Peru. In addition, we are also able to centralize processes, such as procurement of equipment and medicines, and increase our negotiating power with payers, which allows us to more efficiently manage our costs and price our services competitively.

In our Auna Peru network, we own and operate premium medical facilities, employ some of the leading medical professionals in the country and are able to achieve excellent patient outcomes. Our flagship hospital in this network, Clínica Delgado, which we opened in 2014, is the country’s leading high-complexity hospital and has quickly established itself as a standard setter in Latin America, as evidenced by its Diamond accreditation from ACI and its ranking among the best hospitals in Peru across a wide range of categories by Global Health Intelligence (“GHI”) in 2018. We also have six other primary facilities that we acquired, modernized, expanded and relaunched after a series of strategic acquisitions in 2011 and 2012 and now have a presence in all of the major urban areas in Peru. We treated more than 184,000 and 198,000 patients during 2020 and 2019, respectively, at facilities in our Auna Peru network, which had a total of 287 beds as of December 31, 2020.

In 2018, we leveraged our experience and success in providing integrated patient experiences and outstanding outcomes in Peru and expanded into Colombia with our acquisition of Grupo Las Américas, one of Colombia’s leading healthcare providers located in the country’s second largest city, Medellín. In 2020, we began the process of rebranding Grupo Las Américas as our Auna Colombia network and completed such process during the first quarter of 2021. In addition, in September 2020, we further expanded our Auna Colombia network with our acquisition of Clínica Portoazul S.A. (“Clínica Portoazul”), a premium high-complexity private hospital located in the country’s fourth largest city, Barranquilla. Our Auna Colombia network provides healthcare services to patients covered by a range of payers in Colombia, including both public and private insurers, and currently consists of two hospitals and five clinics in Medellín and one hospital in Barranquilla, as well as a range of facilities providing complementary services. Similar to our Auna Peru network, our Auna Colombia network is also horizontally integrated, which enables us to be a one-stop shop for all of our patients’ needs and provide them with a seamless patient experience. In our Auna Colombia network, we also have premium medical facilities, employ some of the leading medical professionals in the country and are able to achieve high quality patient outcomes. The flagship hospital in our Auna Colombia network, Clínica Las Américas, is the leading private hospital in Medellín and was ranked the 7^th best hospital in Colombia in América Economía’s 2020 Best Hospitals Ranking. We also own the Instituto de Cancerología (“IDC”) in Medellín, one of the country’s largest and leading private oncology hospitals and the only institution in Colombia that is a sister

institution of the University of Texas MD Anderson Cancer Center (“MD Anderson”), one of the leading cancer care providers in the United States. We currently have more than 440 beds and have treated more than 263,000 and 246,000 patients during 2020 and 2019, respectively, in the Auna Colombia network.

In all of our networks, we seek to focus proactively on our plan members’ and patients’ health, rather than simply providing services when prescribed to treat disease or other medical conditions. We do this by emphasizing innovation, focusing on healthy lifestyle habits, offering digitalization of services and promoting regular medical check-ups to help ensure our plan members and patients remain healthy and disease is detected early. We believe this emphasis on health allows us to build life-long relationships with our plan members and patients and save lives by detecting and treating disease early on.

Our Hospitals’ Geographic Footprint

LOGO

the year ended December 31, 2020. In the year ended December 31, 2020, revenue generated by the Oncosalud segment contributed 45.7% to our consolidated revenue. Revenue, segment loss before tax and Segment EBITDA generated by the Healthcare Services in Peru was S/476.4 million (US$123.7 million), S/(27.0) million (US$(7.0) million) and S/7.9 million (US$2.1 million), respectively, in the year ended December 31, 2020. In the year ended December 31, 2020, revenue generated by the Healthcare Services in Peru segment contributed 33.0% to our consolidated revenue. Revenue, segment loss before tax and Segment EBITDA generated by the Healthcare Services in Colombia was S/419.6 million (US$109.0 million), S/(56.9) million (US$(14.8) million) and S/39.3 million (US$10.2 million), respectively, in the year ended December 31, 2020. In the year ended December 31, 2020, the Healthcare Services in Colombia segment contributed 29.1% to our consolidated revenue.

We currently operate in countries that have experienced rapid economic growth and improvements in per capita income and the emergence of growing middle classes in recent years, which we expect will increase healthcare spending in both markets over time. We also believe that the regulatory frameworks in these countries are conducive to further growth in the industry. However, the healthcare markets in these countries are characterized by deficits in medical capacity,poor quality of services and fragmented healthcare service industries with relatively low competition, and we believe that each of these markets possesses high growth potential. We believe that our integrated networks in each market provide us with a significant competitive advantage to capitalize on this growth. We plan to continue to grow in these markets by expanding the capacity in each of our networks and developing new products, such as new healthcare coverage options for our patients. We also plan to explore opportunities in other similar markets in Latin America where we believe our scale, experience and capabilities will give us an advantage.

Our Integrated Networks

Through our operating model, we strive to achieve regional scale and a high degree of both horizontal and vertical integration, adapting to the specific characteristics of each of the markets in which we operate. We currently have three networks: Oncosalud, Auna Peru and Auna Colombia.

Through our Oncosalud network in Peru, we sell prepaid oncology plans covering the prevention, detection and treatment of cancer. For a modest payment that varies based on plan type and age of plan members and was on average S/54.2 (US$14.1) per month for the year ended December 31, 2020, Oncosalud covers plan members for periodic cancer screenings. In turn, if a member is diagnosed with cancer, Oncosalud covers that member for all consultations, treatments and medication associated with their cancer care, as well as palliative care services. During 2020, approximately 67% of the services that we covered for Oncosalud plan members were provided at our Oncosalud network facilities, 30% were provided at facilities in our Auna Peru network and only 4% were provided at third-party facilities. Because the vast majority of services provided to our plan members are provided at our own facilities, we are further incentivized to optimize costs and focus on patient outcomes.

information and manages administrative services, such as hospital admissions and billing, in addition to housing our EMR system. Today our sophisticated technology and advanced data management allow us to closely monitor and anticipate patient healthcare needs, coordinate with our physicians and staff in multiple locations, establish standardized protocols at our facilities and manage and control costs. We have just launched a new medium-complexity hospital in Chiclayo (“Auna Chiclayo”) and expect to start operations at the end of August 2021 and as a result, we have added approximately 68 additional beds to our capacity. We are also expanding our capacity in Clínica Vallesur in Arequipa, which we expect to add approximately 40 additional beds there between 2021 and 2022.

While we currently provide services only to private payers in our Auna Peru network, we are evaluating opportunities to participate in public-private partnerships (“PPP”) with EsSalud, Peru’s social security program. Approximately 9.3 million people, or 24.4% of the Peruvian population, receive healthcare coverage through EsSalud. We are awaiting approvals from EsSalud for certain project milestones and necessary amendments to the concession agreement to rebuild Torre Trecca, an outpatient facility (which is currently not in use) providing healthcare services to patients covered through EsSalud, as a high-rise treatment center, and begin operating it through a PPP on behalf of EsSalud. This partnership will allow us to provide outpatient services to a large segment of the population that is receiving care through the public sector, a patient population we do not currently address. Through this partnership, once we are able to begin operations we expect to handle approximately 15% of EsSalud’s yearly outpatient volume, or about 1.5 million outpatient appointments per year.

Our Auna Colombia network is currently centered on our facilities in Medellín, including two hospitals, Clínica Las Américas and IDC, one medical laboratory and five clinics, and in Barranquilla, including one hospital, Clínica Portoazul. Our flagship hospital in this network, Clínica Las Américas, is one of Medellín’s leading private hospital focused on high-complexity services and specializes in cardiology and bone-marrow transplants, among other specialties. We also operate one of the leading cancer care facilities in Colombia, IDC, and are able to share best practices learned at IDC with Oncosalud and vice versa. Our strategy for our Auna Colombia network is similar to what we have already executed in Peru: we aim to be a horizontally integrated provider with high quality facilities in most of Colombia’s large metropolitan areas. We have already begun expanding our operations and solidifying our presence in Colombia—we are currently completing the construction of Clínica del Sur in Envigado, a city located to the south of Medellín, which we expect to begin operations and add approximately 155 additional beds in 2022. The completion of Clínica del Sur will strengthen our presence in the Antioquia region. We are also actively analyzing acquisition opportunities in the country’s other key urban areas, such as Bogotá and Cali.

We intend to leverage the foundation of our healthcare network to fully implement our digital strategy. Through our Oncosalud network, we have developed a highly successful operating model treating oncological populations in Peru, providing our plan members with an end-to-end, personalized healthcare solution that offers last-mile integration through both our proprietary and third-party networks, supported by what we believe to be some of the industry’s best data and technology assets. We will build on these insights to develop a digital healthcare platform that integrates our current specialized plans and a wide range of new general healthcare plans that will serve as the entry point and cornerstone of our digital health ecosystem as it will allow us to connect and build trust with our customers. Additionally, our Auna Peru and Auna Colombia networks will provide us with valuable last-mile capabilities in those markets, enabling us to deliver end-to-end customer journeys through both online interactions, including teleconsultations and remote diagnosis, among others, and offline interactions, including hospital consultations and diagnostic centers, among others. As we continue to expand our ecosystem in the region through new digital and last-mile ventures, we believe geographical limitations will significantly diminish.

Our Competitive Strengths

We believe that our key strengths include:

Vertically integrated oncology services network in Peru providing first-class patient outcomes and experiences at an affordable cost

Through our Oncosalud network in Peru, we operate Latin America’s only fully vertically integrated oncology program. The prepaid Oncosalud plans we sell offer our plan members the certainty of a full range of services in cancer prevention, detection and treatment, including surgery, chemotherapy and radiotherapy, as well as palliative care. We provide these services to our plan members as well as third party payers at an affordable cost, using our networks of Oncosalud and Auna Peru facilities. Our vertical integration has allowed us to be highly efficient and effective, as evidenced by Oncosalud’s 43.0% MLR as of December 31, 2020 and 75.5% 5-year cancer survival rate for the cohort of patients diagnosed between 2010 and 2015. The average age of Oncosalud plan members as of December 31, 2020 was 34.

Moreover, we believe our prepaid oncology plans meet an important need in the Peruvian market, where the vast majority of the population either lacks health insurance or is reliant on the public sector for healthcare coverage, where long waiting periods for consultations and treatments are common and the quality of services is mixed. Cancer is a potentially life-threatening disease, and the prospect of waiting for cancer treatment after being diagnosed is a strong motivation for individuals to seek enhanced coverage. Our prepaid oncology plans take the uncertainty out of cancer care at an affordable cost and cover all aspects of what can be a catastrophic medical condition. We believe the growth in our Oncosalud membership from 266,000 in 2008 to over 830,000 as of December 31, 2020 shows the appeal of our innovative plans. Our plan members include healthcare consumers who do not have any other healthcare coverage, members who are covered by EsSalud but want supplemental coverage for cancer, and individuals who have healthcare coverage from another private payer but want access to our leading expertise in oncology and our integrated care platform.

While 67% of the services covered by our plans were provided at Oncosalud facilities in 2020, Oncosalud is also a significant purchaser of services from our Auna Peru network, with 30% of covered services in 2020 provided by Auna Peru network facilities. We believe that our distinctive platform has enabled us to provide holistic, quality care and produce improved patient outcomes while building a trusted connection with our plan members.

Horizontally integrated regional healthcare networks providing excellent outcomes, seamless patient experiences and significant network-level efficiencies

Our Auna Peru and Auna Colombia networks are horizontally integrated, which we believe allows us to produce excellent patient outcomes and foster a seamless patient experience, while leveraging significant network-level efficiencies to provide our services at an affordable cost. Our Auna Peru network consists of five hospitals, two clinics and several facilities offering complementary services, such as diagnostic imaging and clinical laboratories, while our Auna Colombia network consists of three hospitals, five clinics and several facilities offering similar complementary services. We offer a wide range of medical services, from primary care to high-complexity medical services, and have premium clinical capabilities in both networks. In addition, each of our networks is comprehensive and well-coordinated across departments and clinical areas, enabling us to work with the most complete information for each patient and maintain disciplined population health management. This in turn allows us to closely monitor and anticipate patient health requirements, offer patients a streamlined experience and achieve excellent medical outcomes. By covering all of our patients’ healthcare needs in a coordinated manner, we enhance customer satisfaction and bolster our reputation for quality and our brand awareness, which results in greater customer loyalty and demand for our services.

In addition to providing high quality patient outcomes and experiences, our Auna Peru and Auna Colombia networks provide us with multiple network-level efficiencies that we believe would be difficult for competitors to replicate. For example, our scale as a healthcare provider allows us to negotiate favorable rates for the procurement of medicines and medical equipment, providing us with sizeable cost efficiencies. The scale of our network also allows us to attract the best doctors and management talent in the market. We are able to implement systems, such as information technology (“IT”) and enterprise resource planning systems, on a centralized basis, which also provides us with substantial cost savings. Finally, we believe that our horizontal integration provides us with increased negotiating power with third party payers, particularly private insurance companies and other healthcare payers. Due to our high-quality care and scale, we have become a “must carry” provider for major private health insurers in both countries, meaning that including our Auna Peru and Auna Colombia facilities in their in-network coverage has become important for their plans to be competitive within their markets. This has allowed us to negotiate favorable prices for our healthcare services.

Premium clinical capabilities at all levels of complexity

We currently operate five general hospitals, two specialized oncology hospitals and five clinics in Peru with a total of 396 beds in both our Oncosalud and Auna Peru networks and two general hospitals, one specialized oncology hospital (IDC) and five clinics in Colombia with a total of 441 beds in our Auna Colombia network. Our facilities specialize in medium and high-complexity medical services, such as oncology, cardiology, neonatal care, neurology, trauma and organ and bone-marrow transplants. Our flagship hospital in our Auna Peru network, Clínica Delgado, which has a Diamond accreditation from ACI, is one of only two private hospitals in the country that are licensed to perform organ transplants and is renowned for having one of the best neonatal intensive care units and maternity wards in Peru. Clínica Delgado physicians also performed the first ever thorax abdominal aorta endoprosthesis implant in Peru, and only the third in Latin American history. Our flagship hospital in our Auna Colombia network, Clínica Las Américas, is the leading private hospital in Medellín specializing in high-complexity services, including oncology, cardiology and bone-marrow transplants, and was ranked as the 7^th best hospital in Colombia in América Economía’s 2020 Best Hospitals Ranking. In Peru through our Oncosalud network, we believe we are one of the best radiotherapy institutes in the country and are one of the only private healthcare providers with a PET scan and cyclotron, which led Clínica Oncosalud to receive a Diamond accreditation from ACI in November 2019. Clínica Delgado and Clínica Oncosalud are the only two facilities in Peru with a Diamond accreditation from ACI. Our premium clinical capabilities are central to the strength of our reputation and our brand, our “must carry” status with health insurers, our ability to attract the best doctors and, most importantly, our ability to provide high-quality care to our patients and plan members.

Proven track record of inorganic and organic growth with active expansion plans in progress

The scale of our networks has been a key component of our success to date, and we believe increasing our scale will increase our efficiency and competitiveness in the future. We have a proven track record of inorganic and organic growth that we believe provides us with the know-how and experience to continue expanding our networks. We have grown inorganically by successfully negotiating seven strategic acquisitions in Peru in 2011 and 2012 to launch our Auna Peru network, which included expanding into Callao, Arequipa, Piura, Trujillo and Chiclayo, urban areas where we did not previously have a presence through Oncosalud. After each acquisition, we invested in upgrading and standardizing each facility to conform to our standards for how a facility should be laid out, equipped and operated. In addition, we acquired Grupo Las Américas on December 27, 2018, marking our entry into the Colombian healthcare market and the launch of our Auna Colombia network.

oncology services. In addition, it provides us access to Barranquilla, the fourth largest city in Colombia and a market with an attractive demand that is currently covered by low-quality services. Our expansion into this new market increases the potential to create a multi-city healthcare franchise in Colombia with high negotiation power with insurance companies.

We have a dedicated integration team with more than eight years of experience and we believe we have been able to achieve these improved operating results in our Auna Colombia network primarily due to the implementation of our protocols and our consolidation and streamlining of its operations. We expect our integration team will continue to have a positive effect on our profitability and growth in the near future as we continue to expand through acquisitions in Peru, Colombia and other similar markets in Latin America.

We have also grown organically by building our own facilities and expanding the existing facilities. For example, we built our flagship hospital in Peru, Clínica Delgado, from the ground up in the Miraflores district of Lima, one of the city’s prime residential areas. Clínica Delgado was designed by Gresham Smith & Partners, one of the leading architecture firms for healthcare facilities in the United States. We commenced planning and construction in 2011 and started operations in 2014. By 2017, Clínica Delgado had established itself as the leading high-complexity hospital in the country, offering more than 40 specialties and subspecialties.

We are also currently expanding our existing facility in Clínica Vallesur, where we expect to add approximately 40 additional beds between 2021 and 2022. We also expect to start operations at the end of August 2021 in our new hospital in Chiclayo, Peru that will have approximately 68 beds, and we are currently building Clínica del Sur in Envigado, which we expect to add approximately 155 beds to our Auna Colombia network in 2022.

The successful execution of organic and inorganic initiatives has allowed us to increase the number of beds in our networks on an aggregate basis from 130 in 2012 to 837 as of the date of this prospectus and we expect to add over 277 beds by the end of 2023.

Solid financial growth backed by strong operating fundamentals

We believe that the quality of our services, the scale of our networks and our focus on cost efficiency has allowed us to achieve market-leading financial performance, even as the Peruvian and Colombian economies have experienced moderate growth levels as compared to the previous decade. In the year ended December 31, 2020, we generated revenue of S/1,443.8 million (US$375.0 million), loss for the year of S/(5.4) million (US$(1.4) million), EBITDA of S/184.4 million (US$47.9 million) and Adjusted EBITDA of S/186.4 million (US$48.4 million). Although we generated a loss for the year ended December 31, 2020 due primarily to the COVID-19 pandemic, we maintained a gross margin of 36.7%. We believe our gross margin historically and for the year ended December 31, 2020 solidly places us among the most profitable healthcare network operators in South America, including those in countries with more advanced healthcare systems such as Brazil and Chile, based on gross margins published by other publicly-traded healthcare companies in South America.

Management team, board of directors and shareholders with industry know-how and strategic vision

our controlling shareholder. Our chief financial officer, Pedro Castillo, served as CFO between 2010 and 2014 of Maestro Perú S.A. (“Maestro”), which had been acquired by Enfoca and expanded to become Peru’s leading home improvement retailer. Mr. Castillo was a key player in Maestro’s strong performance during the period, as well as in its landmark sale to Falabella Perú in 2014.

Our controlling shareholder, Enfoca, is one of Latin America’s foremost investment firms and has a proven track record of more than 14 years as an active investor in private equity, contributing to our and other consumer-facing companies’ growth in the region. Enfoca has introduced strategic initiatives aimed at fostering innovation, developing talent, increasing efficiencies and implementing best-in-class corporate governance practices that we believe positions us well for sustainable long-term growth. In addition, Enfoca has actively participated in many of our management-level committees, including our executive, infrastructure and human talent committees, and helped drive the execution of our growth strategy. We believe that our controlling shareholder’s continuing support, engagement with management and long-term vision for growth gives us a competitive advantage.

We believe we will be able to continue to attract and retain the best talent in the healthcare industry in our markets, as our brand and our networks have become among the most prestigious in the healthcare industry in the Andean region.

Comprehensive digital platform with robust data and technology architecture that enables us to deliver immediate, digital-first end-to-end patient experiences

Through our Auna mobile application (the “App”), we currently power the digital healthcare journey of our members and patients, offering them an immediate and personalized way to manage all their healthcare needs. We believe that we possess some of the industry’s best data and technology assets in SSLA, providing us with fundamental capabilities that will propel our growth strategy going forward. The Auna App leverages on our data system (the “Auna Data Engine”), which currently manages data from more than one and a half million users, including from Auna’s oncological and general healthcare plan members and patients, as well as data developed from Auna’s last-mile services in its hospitals, clinics and laboratories. Going forward, the Auna Data Engine will centralize all the data from all of our plan members and patients, enabling us to structure personalized, preventative and timely medical guidance for each of our patients. It will also allow us to anticipate user needs and identify patterns and trends, and will support medical resolution efforts by predicting diagnoses based on collective medical cases. We intend to roll this App out in Colombia and in other markets in the near-to-medium term.

To drive our data and technology architecture, we have strengthened our management team with some of the finest digital talent in the region and the industry, which we believe will shape the future of healthcare in SSLA. We have been able to attract senior data and technology management professionals bringing innovation, data analytics and business intelligence experience that we believe provides us with a unique competitive edge. Our Auna innovation lab is a clear reflection of our lean and agile business model, with tightly integrated teams supported by specialized centers of excellence.

We have made several investments in technology infrastructure in the recent past, such as our retail digital pharmacy with last-mile delivery, Farmauna, and our telehealth platform, Clinica 360, which provides for clinical intervention with patients through remote access to physicians and other clinicians and telemedicine solutions. These prospects are all integrated with the Auna App and deliver a unique and immediate patient experience. Since we launched these initiatives in January 2021, 16,614 prescriptions have been filled and delivered using Farmauna, and 21% of our patient consultations are held remotely.

Given the size of the market and our unique value proposition, in its next phase we envision that the Auna App will become a true healthcare one-stop shop that provides automated healthcare management tools individualized to each of our users, AI-supported telemedicine and AI-powered diagnostics, as well as other automated services based on population segmentation.

Our Strategy

Our mission is to transform healthcare in the countries in which we operate by providing excellent patient outcomes and a positive and streamlined patient experience, all at an affordable cost. We believe our patient-centric culture, our use of technology and agile teams to enact change, and our capacity to scale with cost efficiencies nationally and regionally drive our strategic development. To achieve our mission and strategic direction, we rely on the following:

Leverage our culture to continue enhancing the experience of our plan members and patients and our ability to provide first-class medical outcomes at an affordable cost

We believe that demand for our services is driven by our ability to offer high quality healthcare services that produce first-class medical outcomes at integrated facilities that meet all of our patient needs and that provide a seamless experience at an affordable cost. As a result, our ability to continue enhancing the experience of plan members and patients within our networks is central to our growth strategy. We believe we have a unique patient-centric culture that focuses on proactive interactions with our plan members and patients to promote health objectives, including through innovative uses of technology, with the goal of fostering life-long relationships with them. We believe we can leverage our culture to continue enhancing the plan member and patient experience in the future.

In our Oncosalud network, we put significant emphasis on healthy lifestyle habits and regular medical check-ups to help ensure our plan members remain healthy and that cancer and any other illnesses are detected early. With our focus on healthy living, we are well positioned to detect and treat disease early. This allows us to have a greater impact on plan member health as treating disease early typically provides better patient outcomes. Early detection also strengthens our connection with each patient and enhances the likelihood that we will be the provider of choice for patients for other services over time. In addition, detecting diseases and conditions early also allows us to control costs, as many diseases, including cancer, are both less expensive to treat and more likely to be cured if detected earlier. Incorporating best practices learned over 30 years of experience in Oncosalud, we are increasing our prevention and early detection services in our Auna Peru and Auna Colombia networks as well. As we continue to roll out prevention and early detection programs, we expect to significantly increase the utilization of population management techniques and data analysis that further enhance our preventive medicine approach.

In recent years, we have increasingly differentiated our networks by harnessing technology that enhances the patient experience throughout the treatment cycle. For example, we were the first medical group in Peru to launch an EMR system that is accessible to doctors and staff, and we currently have our HIS in place at all of our hospitals in Peru. We intend to expand our HIS to the Auna Colombia network as well. We also have introduced kiosks and a mobile app, which allow our patients to make and pay for appointments in a convenient manner. These investments in technology allow us to provide standardized information in a timely and accessible manner to our healthcare providers, which not only eases the burden on our healthcare staff, but also enables us to provide efficient service to patients and their families. We plan to continue investing in technology to enhance

the patient experience at our networks and that will allow us to stay in closer touch with our patients after they have left our direct care.

Expand our patient and member universe and leverage compelling socioeconomic dynamics in the markets where we operate

As the Peruvian and Colombian middle classes continue to expand over the next decade, we expect their constituents will increasingly demand high-quality healthcare services and products at an affordable cost, particularly if public sector capabilities and infrastructure continue to lag behind. Our more than 30-year track record provides us with extensive knowledge about our patient and plan member populations. With our growing Auna platforms, we believe we are well positioned to capture a significant portion of this currently underserved market in Peru and Colombia. In order to do so, we intend to expand our offerings, focusing particularly on the underserved segments of the population, and enter new market segments. For example, in Oncosalud, we have recently launched three new plans, a new lower-cost plan covering the most common and treatable cancers, which is expected to be within the economic reach of a larger segment of Peru’s population, a prepaid plan covering general healthcare services and a plan covering a range of other potentially catastrophic diseases and conditions that require hospitalization and/or complex treatments. We are also considering introducing other prepaid plans in Peru covering other healthcare services. In addition, we are entering new market segments. For example, through the Torre Trecca PPP, once we are able to begin operations, we will provide services to a patient population previously attended only by public sector service providers, and we may seek to enter into additional PPP agreements in the future. We believe expanding our patient and member universe will not only increase our brand awareness and demand for our services, but also provide us with increased economies of scale, allowing us to continue increasing our efficiency levels over time.

Continue to expand our networks through organic and inorganic growth

The scale of our integrated healthcare networks in Peru and Colombia is central to our success – it increases our brand awareness, allows us to achieve cost efficiencies at the network level and improves our bargaining power with third parties, including third party payers and suppliers of medicines and medical equipment. As a result, our scale provides us with the resources to continually improve the quality and breadth of our healthcare services. Due to the relatively low penetration of healthcare services in both Peru and Colombia, deficits in medical capacity and, particularly in Peru, the generally poor quality of most public and many private healthcare alternatives, we believe there is significant room for growth and we intend to continue investing in our business and adding facilities to each of our networks. Our goal is to have a presence in all of the major urban centers in the countries in which we operate, and in doing so increase our patient and member universe. Although we have a well-established presence in Lima and other large cities in Peru, there are several cities in Peru where we do not currently have a presence that have sufficient potential demand to be attractive markets to enter. Additionally, in Colombia, we currently only operate in the Medellín metropolitan area and Barranquilla and we are seeking to establish a presence in several of Colombia’s other major cities. We seek to add facilities to our networks that meet our standards of quality in terms of expertise of available medical staff, modern infrastructure that enables efficient operation and ease of access for patients and plan members in terms of location.

Auna Model, sets forth what we believe are ideal parameters in terms of number of beds and number of outpatient, emergency and operating rooms at a facility in order launch the new facility, or add capacity at an existing facility, and reach profitability effectively and efficiently. We are currently using the Auna Model for the expansion of Clínica Vallesur in Arequipa and for the opening of our new 68-bed facility that we believe will be the leading hospital in Chiclayo.

In Colombia, given the market fragmentation and the relatively larger number of high-quality facilities operated by third parties than in Peru, we are currently focused primarily on inorganic growth. In September 2020, for example, we acquired Clínica Portoazul, a private hospital located in Barranquilla, Colombia. We have identified a robust pipeline of other opportunities that can help us continue to expand our presence in the country, and we believe our proven integration capabilities position us as a natural market consolidator. Our acquisition strategy in Colombia is focused on the key urban areas in the country, such as Bogotá and Cali. We are also pursuing organic growth in Medellín where we already have a strong presence through the construction of Clínica del Sur, a state-of-the-art hospital providing medium and high-complexity services in Envigado, a city bordering Medellín that has low hospital penetration. We are using the Auna Model to build Clínica del Sur and expect to launch operations at the facility in 2022, which will further strengthen our position in the Antioquia region of which Medellín is the capital.

In addition, we are continually evaluating expansion opportunities in other markets in Latin America that are structurally and demographically similar to Peru and Colombia and may seek to enter new markets in the future. As we expand our healthcare networks, we will increase our horizontal integration, which we believe will allow us to continue capturing increased demand for our services and generating substantial cost savings and synergies across facilities.

Continue enhancing and increasing the value proposition of our networks

Our ability to offer high quality healthcare services across our Auna Peru and Auna Colombia networks has been a significant contributor to demand for our healthcare services and has made us a “must carry” for healthcare coverage providers in Peru and Colombia. Through the breadth of our networks, we are able to be a one-stop shop for our patients, offering treatments in addition to diagnostic imaging, pharmaceuticals and laboratory services within our network of facilities. In addition, with the benefit of our technology and the standardized information it provides across facilities, we are able to provide patients care at any of our facilities, even if it is not the usual location at which they obtain healthcare services. For example, if a patient typically receives healthcare at one of our lower complexity facilities, but needs a high-complexity service, we can access their medical records at another facility that is able to provide the high-complexity service, which allows us to provide efficient service across our network. We intend to place a greater focus going forward on differentiating the role that each of our facilities has within the networks so that we can increase the value proposition of our networks overall. While high-complexity services will be centered at Clínica Delgado in Peru and Clínica Las Américas in Colombia, we intend to increase the complexity of services that all of our facilities can handle in each of our markets where the need for higher-complexity services justifies it, particularly in the hospitals in provinces outside of Lima and Medellín. To complement our existing network, we intend to open new lower-complexity facilities in residential areas closer to our patients, providing easy access to care. We believe this will increase our touchpoints with patients, boost our brand awareness and foster further loyalty to our networks, while also deepening our horizontal integration and our ability to achieve network-level efficiencies.

Continue expanding our ecosystem to position the company as one of the largest healthcare platforms offering immediate experiences throughout SSLA, via tailor-made healthcare plans supported by AI and end-to-end online and offline solutions, significantly raising entry barriers

Chile, Colombia, Mexico and Peru are highly fragmented and underserved, forcing users to navigate among different providers to solve their needs, which is costly, inefficient and leads to high out-of-pocket expenditures. Traditional players continue to expand with a very limited digital footprint, and SSLA is not a priority for many global players as they struggle to navigate the complexities of the region’s key markets. In parallel, venture capital flows into the health-tech space remain unprioritized and most of the region’s health-tech startups are in early-stage phases. Against this backdrop, Auna plans to disrupt the industry by building an integrated healthcare ecosystem that we believe will provide our current and future users with an unparalleled, end-to-end healthcare experience, allowing us to accompany patients at every step of their healthcare digital journey. As the healthcare industry in SSLA evolves, we believe that our technology investments and underlying technology infrastructure will facilitate improved productivity and patient outcomes. Some of the key projects that form our integrated healthcare ecosystem, all of which will be fully integrated with the Auna App, include:

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Farmauna, a retail digital pharmacy with last-mile delivery. We believe that Farmauna will provide us with scalability, proximity to customers and valuable data collection about consumption patterns of consumers in the healthcare space. We utilize a dark store delivery model to reduce transaction times and utilize customer micro-segmentation analysis to uncover pathology concentration and predict demand per nano-location. We believe that Farmauna will help us to generate critical mass in one of the most competitive segments of Latin America’s healthcare market.

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Romina, our digital healthcare membership initiative that integrates our healthcare plans into the Auna App, offering segmented and tailor-made digital memberships to each user. Healthcare memberships are the cornerstone of our healthcare ecosystem, as they will allow us to build trust with customers, improve customer engagement and increase overall healthcare access. Romina will help strengthen Auna’s competitive advantage and will raise entry barriers through scale and end-to-end resolution.

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Clinica 360, a telehealth platform offering complementary online and offline health services. We envision Clinica 360 as a main entry point for telehealth delivery, yet differentiated from standalone telemedicine by seamlessly delivering last-mile services, such as diagnostics, pharmacy and/or treatment. In its next phase, Clinica 360 will incorporate AI support to maximize scalability and will leverage on Auna’s regional network to tackle constraints that limit international teleconsultations.

We intend to continue to expand our healthcare ecosystem throughout SSLA, including where we do not have last-mile capabilities. We aim to consolidate the region’s fragmented healthcare markets at both the digital and last-mile levels with strategic alliances allowing us to strengthen our key growth levers and facilitating our entry into new markets throughout SSLA. As we arrive in new markets, the Auna App, utilizing the Auna Data Engine, will be deployed in those markets providing users with instant access to our expanding ecosystem, which, in turn, will contribute to drive our regional scalability. In addition, we believe that our “digital hooks,” such as Farmauna and Clinica 360, will allow us to generate critical mass and enhance our last-mile delivery while also serving as key entry points into our ecosystem. Furthermore, we believe that our healthcare plans and the expansion of our healthcare plans into new regions will serve to improve our members’ engagement and allow us to build their trust in our services. We believe that the knowledge and information that our Auna Data Engine will accumulate over time will enable us to anticipate our plan members’ and patients’ needs and further enhance healthcare access. Finally, we plan to provide last-mile services through Auna’s premium infrastructure and, in markets where we do not have infrastructure to provide last-mile services, strategic partnerships with previously vetted and certified third parties. This approach will ensure that we deliver a distinctive end-to-end experience in every market where we operate. To help us manage our strategic alliances, we intend to develop a healthcare marketplace that will deliver services through third-party healthcare provider networks. We expect that our marketplace will expand our capabilities to deliver healthcare in hard-to-reach areas where it is inefficient to implement proprietary last-mile services and strengthen our understanding of customer behavior and their decision-making process through marketplace data collection. As we continue to achieve scale in the region, our multi-country last-mile footprint will help to tackle SSLA’s regulatory and cultural constraints, further raising entry barriers.

Summary of Risk Factors

Investing in the ADSs representing our class A shares involves risks. You should carefully consider the risks described in the “Risk Factors” section beginning on page 27 before making a decision to invest in the ADSs representing our class A shares. If any of these risks actually occur, our business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of the ADSs representing our class A shares would likely decline, and you may lose all or part of your investment. The following is a summary of some of the principal risks we face:

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we depend substantially on our brands’ reputation among our plan members, patients, the medical community and our suppliers in the regions in which we operate, and any negative impact on those brands could have a material adverse effect on us;

•

our operating results may be adversely affected if we are not able to estimate or control healthcare costs, or if we cannot increase our prices to offset cost increases, at our hospitals and clinics and with respect to our oncology plans;

•

we may not have sufficient funds to settle current liabilities and as a result we may continue to have negative working capital from time to time;

•

our business has been and continues to be impacted by the COVID-19 pandemic and the extent to which the COVID-19 pandemic impacts our business, financial condition and results of operations will depend on the duration and severity of the pandemic and the level of continued disruption to regional and global economic activity, which are impossible to predict at this time;

•

we have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses or otherwise fail to maintain an effective system of internal controls, we may not be able to prevent or detect a material misstatement of our financial statements, and may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and the price of our ADSs;

•

our revenues and results of operations are affected by our relationships with third-party payers, and any change to, or deterioration in, these relationships could have a material effect on us, such as, for example, due to limitations on reimbursement and, in some cases, reduced levels of reimbursement for healthcare services as a result of changes in Colombia’s social security system, the Sistema General de Seguridad Social en Salud (“SGSSS”), in recent years;

•

the healthcare industries in Peru and Colombia are competitive, and if we are not able to maintain or grow our competitive positions, our business, financial condition and results of operations may be adversely affected;

•

our performance depends on our ability to recruit and retain quality medical professionals, and we face a great deal of competition for these professionals, which may increase our labor costs;

•

any acquisitions, partnerships or joint ventures that we make or enter into could disrupt our business and harm our financial condition;

•

our performance is dependent on economic, social and political developments in Peru and Colombia, and our results of operations may be negatively affected by recent political instability in Peru;

•

following the completion of the offering, Enfoca, our controlling shareholder, will own approximately % of our class B shares and % of our class A shares, representing approximately % of the combined voting power of our outstanding common stock assuming no exercise of the underwriters’ option to purchase additional ADSs. The remaining % of the class B shares will be owned by Mr. Pinillos Casabonne and certain of our minority shareholders. All class B shares will be held in trust under the Trust Agreement, pursuant to which the trustee will vote all class B shares held in trust as

directed by Enfoca. Certain of our officers and a majority of our directors may be employed by or otherwise affiliated with Enfoca, which could give rise to potential conflicts of interest; and

•

we are an “emerging growth company,” and the reduced reporting requirements applicable to emerging growth companies may make our ADSs less attractive to investors.

Corporate Structure

A simplified organizational chart showing our corporate structure is set forth below.

LOGO

*	We own 100% of all of our operating subsidiaries, other than Clínica Miraflores, Clínica Vallesur and Clínica Portoazul, of which we own 94.17%, 88.23% and 61.00%, respectively.

Corporate Information

Our principal executive offices are located at Avenida República de Panamá 3461, San Isidro, Lima, Peru. Our telephone number at this address is +51 1-205-3500.

Investors should contact us for any inquiries through the address and telephone number of our principal executive office. Our principal website is http://auna.pe/. The information contained in, or accessible through, our website is not incorporated by reference in, and should not be considered part of, this prospectus.

Implications of Being an Emerging Growth Company

As a company with less than US$1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable generally to public companies in the United States. These provisions include:

•

an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; and

•

to the extent that we no longer qualify as a foreign private issuer, (1) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (2) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation, including golden parachute compensation.

We may take advantage of certain of these provisions for up to five years following our initial public offering or such earlier time that we are no longer an emerging growth company. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual revenues of at least US$1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our class A shares that is held by non-affiliates exceeds US$700 million as of the prior June 30th, and (2) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three-year period. We may choose to take advantage of some but not all of the above-described provisions. For example, Section 107 of the JOBS Act provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. Given that we currently report and expect to continue to report under IFRS we have irrevocably elected not to avail ourselves of any extended transition period provided for by IFRS and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the International Accounting Standards Board. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies. References to an “emerging growth company” in this prospectus shall have the meaning associated with that term in the JOBS Act.

THE OFFERING

The following is a brief summary of the terms of this offering and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. For a more complete description of our ADSs and common stock, see “Description of Our Share Capital” and “Description of American Depositary Shares” in this prospectus.

Issuer

Auna S.A.A.

Securities Offered

ADSs, representing of our class A shares.

Offering Price

We expect the offering price will be between US$ and US$ per ADS.

Option to Purchase Additional ADSs

We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to additional ADSs at the initial public offering price, representing class A shares, less underwriting discounts and commissions.

ADSs

Each ADS represents class A shares held by Citibank, N.A., the depositary. The ADSs may be evidenced by American depositary receipts, or ADRs, issued under a deposit agreement among us, Citibank, N.A., as depositary, and the holders and beneficial owners of the ADSs issued thereunder (the “deposit agreement”).

Use of Proceeds

We estimate that the net proceeds from this offering will be approximately US$ , or approximately US$ if the underwriters exercise their option to purchase additional ADSs in full. These amounts assume an initial public offering price of US$ per ADS (the midpoint of the price range set forth on the cover page of this prospectus), after deducting the estimated underwriting discounts and commissions and offering expenses. We intend to use the net proceeds from this offering for general corporate purposes, including acquisitions, expansion of our existing facilities, other capital expenditures and the repayment of indebtedness from time to time. See “Use of Proceeds.”

Lock-Up Agreements

We, our directors and officers and our existing shareholders have agreed, subject to limited exceptions, not to sell any shares of our common stock or ADSs for a period of 180 days after the date of this prospectus without the prior approval of Morgan Stanley & Co. LLC. See “Underwriting.”

Share Capital Immediately Prior to and Following the Offering

Our share capital is divided into class A shares of common stock and class B shares of common stock.

Immediately prior to the offering, we had class A shares and 1,000 class B shares issued and outstanding. After giving effect to the offering, we will have class A shares and 1,000 class B shares outstanding. Following the completion of the offering, Enfoca

will own approximately % of our class B shares and % of our class A shares, representing approximately % of the combined voting power of our outstanding common stock assuming no exercise of the underwriters’ option to purchase additional ADSs. The remaining % of the class B shares will be owned by Mr. Pinillos Casabonne and certain of our minority shareholders. All class B shares will be held in trust under the Trust Agreement, pursuant to which the trustee will vote all class B shares held in trust as directed by Enfoca irrespective of Enfoca’s aggregate ownership of our common stock at any given time. See “Description of Our Share Capital—Trust Agreement.”

No Preemptive Rights Offer

Because all of our existing shareholders have agreed to waive their preemptive rights under Peruvian law in connection with this offering, there will not be a preemptive rights offer for our shares in connection with this offering. See “Description of Our Share Capital—Preemptive and Accretion Rights.”

Voting Rights

Each share of our common stock is entitled to one vote. Each class B share of our common stock is entitled to vote on any matter submitted to a vote of the shareholders. Each class A share of our common stock is entitled to vote (together with the class B shares) only on the following matters submitted to a vote of the shareholders: (i) approval of corporate management and financial statements; (ii) approval of capital increases or reductions (other than as described below); (iii) appointment, or delegation to our board of directors of the appointment, of our independent auditors; and (iv) application of profits. The class A shares will not have voting rights on any other matter subject to shareholders’ approval.

Therefore, the class A shares will not vote on, among other matters, the election and removal of directors and fixing of directors’ compensation; our issuance of debt securities; amendments to our by-laws (other than in connection with capital increases or reductions); the sale, in a single transaction, of assets with a value exceeding 50% of the our share capital; the merger, spin-off, division, reorganization, transformation or dissolution of the Company; and special investigations and audits.

In September 2020, our shareholders delegated to our board of directors the authority to approve one or more capital increases of up to S/236,546,679, which delegation will remain in place for five (5) years thereafter and will allow our board of directors to determine the timing, amount, and conditions of each such capital increase, without requiring further shareholders’ approval. This approval also included an express advanced waiver of any preemptive rights that would apply in connection with any such capital increases. This delegation may only be revoked by a vote of the class B shares.

Subject to Peruvian law and the terms of the deposit agreement, a holder of ADSs will generally have the right to instruct the depositary

how to vote the class A shares represented by its ADSs. See “Description of Our Share Capital” and “Description of American Depositary Shares.”

Subject to the terms of the Trust Agreement, Enfoca will generally have the right to instruct the trustee how to vote the class B shares held in trust. See “Description of Our Share Capital—Trust Agreement.”

Conversion

Each class B share will convert automatically into one class A share upon any transfer, except for transfers of class B shares by Enfoca, our chief executive officer and certain of our minority shareholders to a trust established pursuant to the Trust Agreement or in case of transfers of class B shares in favor of Enfoca or of Luis Felipe Pinillos Casabonne, as appropriate.

For so long as either Enfoca and Luis Felipe Pinillos Casabonne hold in the aggregate 10% or more of the outstanding amount of class A shares, we will have a dual class structure. However, if, on any given date, the class A shares held directly or indirectly by Enfoca and Mr. Pinillos Casabonne represent in the aggregate less than 10% of the outstanding amount of class A shares on a combined basis, then on the date of the call for the next annual shareholders meeting following such event, all the class A shares and all the class B shares will automatically convert into one class of common shares with full and equal economic and political rights as provided under Peruvian law on a one-to-one basis. See “Description of Our Share Capital—Conversion.”

Dividends

Each share of our common stock represents the same economic interest, except that, as provided in our by-laws, the class A shares benefit from the right to receive a preferred dividend consisting of 100% of any dividends distributed until we have distributed US$1 billion in the aggregate in cash dividends (or its equivalent in soles).

Subject to the terms of the deposit agreement, holders of our ADSs will be entitled to receive dividends, if any, paid on the class A shares represented by the ADSs. Cash dividends on our class A shares will be paid in soles and will be converted by the depositary into U.S. dollars and paid in U.S. dollars to the holders of ADSs, net of fees, expenses and any taxes. Under Peruvian law, dividends are subject to a withholding tax of 5% if paid to non-Peruvian holders. See “Dividends” and “Description of American Depositary Shares.”

Depositary

Citibank, N.A.

Listing

We intend to apply to list our ADSs on the NYSE under the symbol “AUNA.”

We intend to apply to list our class A shares on the BVL under the symbol “ .”

Risk Factors

See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our ADSs.

Unless otherwise indicated, all information contained in this prospectus assumes:

•

no exercise of the option granted to the underwriters to purchase up to additional ADSs; and

•

ADSs will be sold at US$ per ADS, which is the midpoint of the range set forth on the cover page of this prospectus.

SUMMARY FINANCIAL AND OTHER INFORMATION

The following information is only a summary and should be read together with “Presentation of Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, including the notes thereto, included elsewhere in this prospectus.

The summary statement of income and other comprehensive income and statement of financial position as of and for the years ended December 31, 2020, 2019 and 2018 of the Company are derived from the audited consolidated financial statements included elsewhere in this prospectus. Due to our acquisition of Grupo Las Américas at the end of 2018, our results of operations for the year ended December 31, 2019 are not directly comparable to the year ended December 31, 2018.

We maintain our books and records in soles and prepare our consolidated financial statements in accordance with IFRS.

The following table sets forth our summary consolidated financial data as of and for the years ended December 31, 2020, 2019 and 2018.


	Year ended December 31,
	2020			2020			2019			2018
	(in millions of US$)(1)			(in millions of *soles*)
Statement of Income and Other Comprehensive Income Data:
Revenue
Premiums earned	$	147.1			S/566.4			S/522.3			S/467.6
Health care services revenue		182.8			703.7			658.9			229.6
Sales of medicines		45.1			173.7			201.3			164.0

Total revenue from contracts with customers		375.0			1,443.8			1,382.6			861.2
Cost of sales and services		(237.5	)		(914.4	)		(844.5	)		(497.8	)

Gross profit		137.5			529.4			538.0			363.4
Selling expenses		(34.6	)		(133.1	)		(132.5	)		(120.7	)
Administrative expenses		(71.0	)		(273.4	)		(236.5	)		(154.4	)
Loss for impairment of trade receivables		(4.3	)		(16.4	)		(6.0	)		(2.8	)
Other expenses		(0.08	)		(0.3	)		(1.4	)		—
Other income		3.1			12.1			5.5			5.3

Operating profit		30.8			118.4			167.1			90.8
Finance income		1.0			3.8			1.5			0.6
Finance costs		(35.5	)		(136.7	)		(56.1	)		(38.2	)

Net finance cost		(34.5	)		(133.0	)		(54.5	)		(37.5	)
Share of profit of equity-accounted investees		0.3			1.3			2.4			1.0

(Loss) profit before tax		(3.4	)		(13.2	)		115.1			54.2
Income tax expense		2.0			7.8			(41.2	)		(17.5	)

(Loss) profit for the year	$	(1.4	)		S/(5.4	)		S/73.9			S/36.6

(1)	Calculated based on an exchange rate of S/3.8498 to US$1.00 as of June 30, 2021.


	As of December 31,
	2020		2020		2019		2018
	(in millions of US$)(1)		(in millions of *soles*)
Statement of Financial Position Data:
Cash and cash equivalents	$	89.2	S/	343.5	S/	36.1	S/	110.9
Total assets		688.6		2,651.1		1,891.3		1,740.1
Total liabilities		519.2		1,999.0		1,312.5		1,206.8
Total equity		169.4		652.1		578.8		533.3

(1)

Calculated based on an exchange rate of S/3.8498 to US$1.00 as of June 30, 2021.


	Year ended December 31,
	2020			2020			2019		2018
	(in millions of US$)(1)			(in millions of *soles*)
Segment Financial Data:
Revenue
Oncosalud Peru:	$	171.2		S/	659.1		S/	591.9	S/	530.6
Healthcare Services in Peru:	$	123.7		S/	476.4		S/	469.9	S/	405.3
Healthcare Services in Colombia(2):	$	109.0		S/	419.6		S/	409.4	S/	4.8
Operating profit
Oncosalud Peru:	$	28.3		S/	109.0		S/	106.8	S/	78.4
Healthcare Services in Peru:	$	(4.0	)	S/	(15.4	)	S/	22.3	S/	16.4
Healthcare Services in Colombia(2):	$	6.3		S/	24.2		S/	42.5	S/	(0.6	)
(Loss) profit before tax
Oncosalud Peru:	$	22.6		S/	87.0		S/	97.0	S/	60.2
Healthcare Services in Peru:	$	(7.0	)	S/	(27.0	)	S/	15.1	S/	11.9
Healthcare Services in Colombia(2):	$	(14.8	)	S/	(56.9	)	S/	11.4	S/	(7.4	)

(1)	Calculated based on an exchange rate of S/3.8498 to US$1.00 as of June 30, 2021.

(2)	We acquired Grupo Las Américas, which constitutes our Healthcare Services in Colombia segment, on December 27, 2018. As a result, we only had five days of results of operations for our Healthcare Services in Colombia segment in 2018.

Key Performance Indicators


	Year ended December 31,
	2020		2020		2019		2018
	(in millions of US$)(1)		(in millions of *soles*)
EBITDA(2)	$	47.9	S/	184.4	S/	226.3	S/	123.7
Segment EBITDA(3)
Oncosalud Peru:	$	33.2	S/	128.0	S/	121.5	S/	91.0
Healthcare Services in Peru:	$	2.1	S/	7.9	S/	43.9	S/	31.9
Healthcare Services in Colombia:	$	10.2	S/	39.3	S/	58.4	S/	(0.5	)
Adjusted EBITDA(4)	$	48.4	S/	186.4	S/	234.4	S/	131.5


	Year ended December 31,
	2020			2019			2018
Oncology Services:
Number of plan members(5)(6)		830,643			922,945			896,838
Average monthly revenue per plan member(7)	S/	54.2		S/	48.1		S/	44.0
Number of preventive check-ups		57,920			104,898			92,364
Number of patients treated(8)		15,651			14,230			12,646
Medical loss ratio(9)		43.0	%		51.9	%		52.4	%
% of cost of services related to preventive check-ups		4.2	%		9.1	%		7.3	%
% of cost of services related to treatment provided by Oncosalud network facilities		64.3	%		66.2	%		67.7	%
% of cost of services related to treatment provided by Auna Peru network facilities		28.5	%		21.8	%		21.7	%
% of cost of services related to treatment provided outside our networks		3.0	%		3.0	%		3.2	%

Healthcare Services:
Number of beds(5)
In Peru:		287			284			282
In Colombia(10):		441			305			—
Number of patients treated(11)
In Peru:		184,094			198,664			175,605
In Colombia(10):		263,660			246,864			—
Average revenue per patient
In Peru:	S/	2,588		S/	2,365		S/	2,307
In Colombia(10):	S/	1,591		S/	1,659		S/	—
Total number of outpatient consultations
In Peru:		367,836			541,934			459,407
In Colombia(10):		59,342			54,044			—
Total number of emergency treatments
In Peru:		76,532			113,519			98,359
In Colombia(10):		65,725			62,743			—
Total number of days hospitalized(12)
In Peru:		56,552			58,046			56,314
In Colombia(10):		120,771			88,783			—

(1)	Calculated based on an exchange rate of S/3.8498 to US$1.00 as of June 30, 2021.

(2)	EBITDA is a non-GAAP financial measure. See “Presentation of Financial and Other Information—Non-GAAP Financial Measures.” The following table shows a reconciliation of EBITDA to (loss) profit for the year for each of the years presented.


	Year ended December 31,
	2020			2020			2019		2018
	(in millions of US$)(1)			(in millions of *soles*)
(Loss) profit for the year	$	(1.4	)	S/	(5.4	)	S/	73.9	S/	36.6
Income tax expense		(2.0	)		(7.8	)		41.2		17.5
Net finance cost		34.5			133.0			54.5		37.5
Depreciation and amortization		16.8			64.7			56.7		32.0

EBITDA	$	47.9		S/	184.4		S/	226.3	S/	123.7

(3)	Segment EBITDA is a non-GAAP financial measure. See “Presentation of Financial and Other Information—Non-GAAP Financial Measures.” The following table shows a reconciliation of (loss) profit before tax to Segment EBITDA for each of our segments.

Year ended December 31, 2020

Oncosalud
Peru

Healthcare
Services in
Peru

Healthcare
Services in
Colombia

Total
Reportable
Segments(a)

(in millions of soles)

(Loss) profit before tax

87.0

(27.0

)

S/ (56.9)

3.1

Net finance cost(b)

22.3

11.7

82.1

116.1

Depreciation and amortization

18.7

23.3

14.1

56.1

Segment EBITDA

128.0

7.9

39.3

175.3

Year ended December 31, 2019

Oncosalud
Peru

Healthcare
Services in
Peru

Healthcare
Services in
Colombia

Total
Reportable
Segments(a)

(in millions of soles)

(Loss) profit before tax

97.0

15.1

11.4

123.5

Net finance cost(b)

10.8

7.3

32.4

50.5

Depreciation and amortization

13.7

21.5

14.5

49.7

Segment EBITDA

121.5

43.9

58.4

223.7

Year ended December 31, 2018

Oncosalud
Peru

Healthcare
Services in
Peru

Healthcare
Services in
Colombia

Total
Reportable
Segments(a)

(in millions of soles)

(Loss) profit before tax

60.2

11.9

S/ (7.4

)

64.7

Net finance cost(b)

19.1

4.4

6.8

30.3

Depreciation and amortization

11.6

15.5

0.1

27.2

Segment EBITDA

91.0

31.9

S/ (0.5

)

122.2

(4)	Adjusted EBITDA is a non-GAAP financial measure. See “Presentation of Financial and Other Information—Non-GAAP Financial Measures.” The following table shows a reconciliation of Adjusted EBITDA to (loss) profit for the year for each of the years presented.


	Year ended December 31,
	2020			2020			2019		2018
	(in millions of US$)(1)			(in millions of *soles*)
(Loss) profit for the year	$	(1.4	)	S/	(5.4	)	S/	73.9	S/	36.6
Income tax expense		(2.0	)		(7.8	)		41.2		17.5
Net finance cost		34.5			133.0			54.5		37.5
Depreciation and amortization		16.8			64.7			56.7		32.0
Pre-operating expenses(a)		0.9			3.4			1.8		0.7
Business development expenses(b)		1.0			4.0			1.2		7.0
Retention bonus for doctors(c)		(0.3	)		(1.0	)		3.7		—
Change in fair value of assets held for sale(d)		—			—			0.5		—
Loss on sale of investments in associates(e)		—			—			0.9		—
Gain from purchase(f)		(1.2	)		(4.5	)		—		—

Adjusted EBITDA	$	48.4		S/	186.4		S/	234.4	S/	131.5

(a)

Pre-operating expenses consist of legal and administrative expenses incurred in connection with projects under construction, such as the new hospital in Chiclayo, costs relating to the Torre Trecca PPP and legal and administrative expenses incurred in connection with the acquisition of land banks for future projects.

(b)

Business development expenses consist of expenses incurred in connection with projects for the expansion into new markets, including through greenfield projects and M&A activity. In 2018 and 2019 these expenses were related to the acquisition of Grupo Las Américas, including legal fees.

(c)

Retention bonus for doctors employed by Grupo Las Américas to secure their continued employment by Auna during the first year of operations after the acquisition of Grupo Las Américas.

(d)

Change in fair value of assets held for sale consists of the change in fair value of certain land held for sale by Grupo Las Américas at the time of its acquisition by Auna.

(e)

Loss on sale of investments in associates consists of losses incurred in connection with the sale of our stake in Hospital en Casa S.A., a company in which we acquired a minority stake through the acquisition of Grupo Las Américas.

(f)

Gain on bargain purchase for the acquisition of Clínica Portoazul resulting from purchase price adjustments pursuant to the acquisition agreement. See Note 1 to our audited consolidated financial statements included elsewhere in this prospectus.

(5)	As of year-end.

(6)

Includes active plan members as well as plan members that have not paid monthly fees due on their plans for up to three months, during which time their plans remain active. Once such three-month period has passed, their plans are terminated and they are not included in our total number of plan members. As of December 31, 2020, we had 800,828 active members and 29,815 inactive members.

(7)	Total revenue for the year corresponding to premiums earned in the Oncosalud Peru segment divided by the average number of plan members during the period, divided by the number of months in the period.

(8)	Number of individual plan members receiving treatment for cancer during the year, which may include multiple instances of treatment per plan member.

(9)	MLR is calculated as (i) claims for medical treatment generated by our prepaid oncology plans plus (ii) technical reserves relating to plan members treated pursuant to such plans, whether at our facilities or third-party facilities, divided by revenue generated by our prepaid oncology plans.

(10)

We acquired Grupo Las Américas on December 27, 2018. The information in this table for the year ended December 31, 2018, as it relates to Grupo Las Américas, is based on data provided to the Company by Grupo Las Américas. We believe it is reliable, but it does not form part of our consolidated operating history. We acquired Clínica Portoazul, which has added 148 beds to our Auna Colombia network, in September 2020 and as such, the information in this table does not include data for Clínica Portoazul.

(11)	Number of individual patients that received healthcare treatment during the year, which may include multiple instances of treatment per plan member.

(12)	Total number of days in which any of our beds had a hospitalized patient.

RISK FACTORS

Investing in our ADSs involves a significant degree of risk. The material risks and uncertainties that management believes affect us are described below. Before investing in the ADSs, you should carefully consider the risks and uncertainties described below in addition to the other information contained in this prospectus. In general, investing in the securities of issuers in emerging market countries, such as Peru, involves a higher degree of risk than investing in the securities of issuers whose operations are located in the United States or other more developed countries. Any of the following risks, alone or together with risks and uncertainties that we do not know or currently deem immaterial, could have a material adverse effect on our business, financial condition, results of operations or prospects. As a result, the trading price of the ADSs could decline, and you could lose some or all of your investment. When determining whether to invest, you should consider all of the information in this prospectus, including our financial statements and the notes thereto. Further, the risk factors below include cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. See “Forward-Looking Statements.”

Risks Related to Our Business

We depend substantially on our brands’ reputation among our plan members, patients, the medical community and our suppliers in the regions in which we operate, and any negative impact on those brands could have a material adverse effect on us.

We operate our business through several brands. Our principal brands are Auna, our primary brand, as well as Oncosalud, Clínica Delgado and Clínica Las Américas, all of which we believe are viewed positively and associated with high-quality healthcare services in the markets in which we operate. Our brands’ reputation is fundamental to driving demand for our healthcare services and prepaid plans and to our ability to attract and retain qualified medical personnel to work at our facilities. In addition, our brands’ reputation is key to our ability to negotiate favorable contracts with third parties, such as insurance providers and medical suppliers. Our ability to maintain our reputation is contingent on offering high-quality and efficient healthcare services. Accordingly, if we are unable to offer high-quality healthcare services and/or maintain our brands’ reputation among our plan members, patients and medical professionals, our business, financial condition and results of operations may be adversely affected.

In addition, there has been a marked increase in the use of social media platforms and other forms of internet-based communications that provide individuals and businesses with access to a broad audience of consumers and other interested persons. The availability of information on social media platforms, including reviews, is virtually immediate, as is its impact. Many social media platforms allow the publishing of the content posted by their subscribers and participants, often without filters or checks on the accuracy of such content. If we receive negative reviews on social media or other negative publicity, even if such reviews are inaccurate, our brands’ reputation could suffer, affecting demand for our healthcare services, or we may have more difficulty attracting and retaining qualified medical personnel to work at our facilities, any of which could affect our ability to offer high-quality healthcare services and could have a material adverse effect on our business, results of operations and financial condition.

Our operating results may be adversely affected if we are not able to estimate and control healthcare costs, or if we cannot increase our prices to offset cost or expenditure increases, at our hospitals and clinics and with respect to our oncology plans.

Our operating results depend in large part on our ability to estimate and control the future costs involved in providing healthcare services at our hospitals and clinics. According to data published by the Instituto Nacional de Estadística e Informática (“INEI”) in Peru and the Departamento Administrativo Nacional de Estadística in Colombia, healthcare costs increased in Peru and Colombia by 3.4% and 5.0%, respectively, during 2020.

The main factors affecting healthcare costs and expenditures, and our ability to offset increases in those include:

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increased cost of medical supplies, including pharmaceuticals, whether due to demand, inflation or otherwise;

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the cost of acquiring new equipment and technologies, or upgrading existing equipment and technologies, needed to provide our services;

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annual renegotiations of contracts with insurance providers and their ability to pay for our healthcare services; and

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periodic renegotiations of contracts with doctors and medical support personnel as well as other medical services providers and suppliers.

Many of these factors are outside of our control. In addition, certain aspects of our growth strategy may also result in increased operating expenditures, such as opening new facilities or hiring additional personnel, which may not be offset by an increase in our revenue, resulting in diminished operating margins.

In addition, with respect to our oncology plans, differences between predicted and actual healthcare costs as a percentage of revenues attributable to our oncology plans can result in significant changes in our results of operations. Costs at our oncology business vary by the number of patients that are diagnosed in any given period as well as the stage of diagnosis (i.e., Stage I versus Stage IV) and type of cancer diagnosed. Later-stage diagnoses typically involve more costly treatment regimens, and certain types of cancer may be more likely to require newer, more expensive treatment options, which may also impact our costs. We adjust our plan pricing on an annual basis to reflect current cost projections and this adjusted pricing is automatically applied to any plans that are automatically renewed for another year. However, because our oncology plans are prepaid for one-year terms, any increase in costs in excess of our cost projections within a given period cannot be recovered in that plan period by increasing pricing.

If any of the above events occur and we are unable to rapidly adapt in proportion to the increase in costs for the provision of healthcare services, our business, financial condition and results of operations may be adversely affected.

Our business has been and continues to be negatively impacted by the COVID-19 pandemic.

Since December 2019, a novel strain of coronavirus (COVID-19) has spread around the world, including in Peru and Colombia. The Peruvian government closed its international borders and ordered an initial national lockdown on March 16, 2020 that lasted until June 30, 2020. In connection with the lockdown, all non-essential businesses were ordered to close. On July 1, 2020, the national lockdown was lifted and non-essential businesses gradually reopened; however, as a result of a subsequent increase in COVID-19 cases, on January 26, 2021, the Peruvian government announced new measures which applied to regions based on the region’s classification from high, very high and extreme. These measures included quarantines, limitation of activities, suspension of inter-provincial land trips and curfews. Auna’s activities are mainly carried out in the department of Lima, Peru, which was originally classified as extreme and was subsequently classified as high. On August 14, 2021, the Peruvian government declared an extension of these measures, which will become effective on September 3, 2021, until March 1, 2022. Furthermore, as the economy gradually recovers, Peru continues to be one of the countries with the highest mortality rates from COVID-19. Similarly, the Colombian government closed its borders and ordered a national lockdown on March 25, 2020 until August 31, 2020. However, at the end of August 2020, it announced a selective quarantine phase from September 1, 2020 until November 30, 2020. The lockdowns in Peru and Colombia effectively restricted nearly all economic activity in both countries, significantly impacting both the financial and operating performance of our business.

restricting our services to emergency care only for the duration of the lockdowns. As a result, revenue from our Healthcare Services in Peru and Healthcare Services in Colombia segments presented a low level of growth of 1.4% and 2.5%, respectively, for the year ended December 31, 2020 compared to the year ended December 31, 2019. We have also seen a significant increase in the cost of sales and services throughout 2020 due to an increase in the purchase of gloves, masks and other personal protective equipment for all medical and administrative personnel who are in direct patient contact. At the same time, we have seen an increase in the prices of personal protective equipment, which has been in short supply around the world. In addition, we have experienced staffing shortages at our hospitals and clinics as medical personnel, working on the front lines, have contracted COVID-19 at high rates. We have covered these shortages by hiring temporary personnel and granting special bonuses to medical personnel caring for patients with COVID-19, which has increased our labor-related costs. As a result of increased costs, gross profit in our Healthcare Services in Peru and Healthcare Services in Colombia segments decreased 25.4% and 8.5%, respectively, for the year ended December 31, 2020 compared to the year ended December 31, 2019.

Moreover, the healthcare systems in several countries, including Peru and Colombia, have been overwhelmed with hospitals lacking the supply and personnel to treat the influx of COVID-19 patients and there have been several reports in the media containing misinformation about COVID-19 testing and COVID-19 treatment. As a result, we have seen public trust in healthcare facilities decline more broadly. Although such conditions have not been present in our facilities as of the date of this prospectus, if such conditions occur in our facilities and we have difficulty treating the influx of patients, we may face claims for damages and experience reputational damage and loss of public trust in the quality of our healthcare services.

The COVID-19 pandemic has also led to disruption of regional and global economic activity, and to volatility and a downturn in the financial markets, which is expected to continue at least in the near term. In our Oncosalud segment, we have seen a decline in sales of our prepaid oncology plans as much of our sales force is working from home and our sales channels gradually adjusted to virtual sales. The disruption has also led to a significant increase in unemployment and discretionary expenses and as a result, we have seen an increase in the number of plan members cancelling their plans, which led to a 10% decrease in our number of plan members from 922,945 in December 2019 to 830,643 in December 2020. Plan members cancelling plans were primarily younger members who are at less risk of developing cancer. Because plan prices increase by age, this demographic trend had a positive impact on our segment revenue during the first half of the year and acted as an offset to other declines. We cannot predict whether the changes in the demographics of our plan members and Peruvian government policies in response to COVID-19 will continue to have a similar offsetting impact going forward. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of COVID-19” for more detail.

We took certain measures in 2020 to bolster our capital position as a result of the economic uncertainty. For example, four of our subsidiaries, Medic Ser S.A.C. (“MedicSer”) (Clínica Delgado), Oncocenter Perú S.A.C. (“Oncocenter”), Oncosalud S.A.C. and GSP Servicios Generales S.A.C. (“GSP Servicios Generales”), each applied for and received a loan of S/10 million and Clínica Vallesur S.A. applied for and received a loan of S/7.5 million, in each case under a loan relief program offered by the Peruvian government in response to the COVID-19 pandemic. In addition, our subsidiaries Grupo Las Américas and Instituto de Cancerologia S.A.S. applied for and received loans of COP12,837.0 million and COP4,069.0 million, respectively, under a loan relief program offered by the Colombian government in response to the COVID-19 pandemic. On November 20, 2020, we issued US$300 million aggregate principal amount of 6.500% Senior Notes due 2025 (the “2025 Notes”). We used the net proceeds from the issuance of the 2025 Notes to repay US$255.9 million of indebtedness outstanding under the Credit Agreements and other facilities, including COVID-19 loans received from the Peruvian government and for general corporate purposes, including payment of dividends.

Due to the nature of COVID-19 treatments, we shifted some of our capital expenditure budget to address the necessity for additional ventilators and adequate temporary isolation units in some of our clinics, including refitting of our Bellavista and Guardia Civil hospitals. While our capital expenditure projects were also delayed during lockdowns, we resumed our organic projects during the second half of 2020 and as of the date of this prospectus we expect to inaugurate three projects in Peru and one project in Colombia during 2021.

The extent to which the COVID-19 pandemic impacts our business, results of operations, liquidity and financial condition will depend on the duration and severity of the pandemic and the level of continued disruption to regional and global economic activity, which are impossible to predict at this time. Future developments with respect to COVID-19 are highly uncertain and new information may emerge concerning the severity of the COVID-19 pandemic and the actions necessary to mitigate or contain its impact. While such actions may be relaxed or rolled back if and when COVID-19 abates, the actions may be reinstated as the pandemic continues to evolve. The scope and timing of any such reinstatements is difficult to predict and may continue to materially affect our financial and operating performance in the future.

Any future pandemic, epidemic or outbreak of a contagious disease in the markets in which we operate or that otherwise impacts our facilities could adversely impact our business.

The operation of a hospital involves the treatment of patients with a variety of infectious diseases. Previously healthy or uninfected people may contract serious communicable diseases in connection with their stay or visit at hospitals. In addition, these germs or infections could also infect employees and thus significantly reduce the treatment and care capacity at the medical facilities involved in the short-, medium- and long-term.

Any future pandemic, epidemic, outbreak of a contagious disease or other public health crisis could similarly disrupt our operations, diminish the public trust in our healthcare services, especially if we fail to accurately or timely diagnose any future contagious diseases and adversely affect our business, financial condition and results of operations. In addition, the introduction of new laws and regulations, or changes to existing ones, as a response to COVID-19 or a future pandemic, epidemic or public health crisis is difficult to predict and could materially affect our business. Our facilities could also be affected by the withdrawal of licenses, permits or authorizations as a result of a pandemic, epidemic or outbreak. Although we have disaster plans in place and operate pursuant to infectious disease protocols, the potential impact of a pandemic, epidemic or outbreak of a contagious disease with respect to our markets or our facilities is difficult to predict and could adversely impact our business.

We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses or otherwise fail to maintain an effective system of internal controls, we may not be able to prevent or detect a material misstatement of our financial statements, and may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and the price of our ADSs.

We have identified material weaknesses in our internal control over financial reporting. A company’s internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive and principal financial officers, or persons performing similar functions, and effected by a company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

As an emerging growth company, we currently are not required to comply with the Sarbanes-Oxley Act. As a result, neither our management nor an independent registered public accounting firm has performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act. Had we or our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional material weaknesses may have been identified. The report on the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 will not be required until our annual report on Form 20-F following the date on which we cease to qualify as an “emerging growth company,” which may be up to five full fiscal years following the date of this offering.

The material weaknesses identified in our internal controls relate to (i) the adequacy of our information technology (“IT”) security management, including segregation of duties and access and privileged users, (ii) the comprehensiveness of our accounting policies and procedures manuals and (iii) the formalization of controls in key areas of the accounting process, including relating to the documentation and implementation of IFRS reporting requirements. If these weaknesses are not remediated, they could result in material misstatements in our annual or interim financial statements.

We have made progress on remediation of the aforementioned weaknesses, including: (i) implementing a segregation of duties and privileged users’ activities monitoring in our SAP RP systems, including having an information security officer and currently implementing a cybersecurity roadmap based on industry best practices; (ii) updating all of our accounting policies and procedures manuals according to current IFRS reporting requirements with the support of a Big Four accounting firm; and (iii) deploying an internal project for the implementation of our internal control over financial reporting based on Sarbanes-Oxley 404 standards (we have completed the control documentation and design assessment phase and are currently in the internal testing phase).

These remediation steps are monitored by the audit and risk committee and senior management.

We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to these material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses.

Our revenues and results of operations are affected by our relationships with third-party payers, and any change to, or deterioration in, these relationships could have a material adverse effect on us, such as, for example, due to limitations on reimbursement and, in some cases, reduced levels of reimbursement for healthcare services as a result of changes in the SGSSS in recent years.

During 2020, in our healthcare services business in Peru and Colombia, 79% of payments came from third-party insurance providers, including the Peruvian and Colombian governments, and 21% were paid out-of-pocket by our patients. In Peru, our accounts receivable are typically collected in an average of 105 days whereas in Colombia, these are typically collected in 157 days. An increase in this timing can significantly impact our ability to convert recognized revenue into payments, lengthening our cash conversion cycle. In addition, certain of our principal third-party payers also run their own hospital networks and therefore compete with us. See “—We face competition in a fragmented market like Peru and Colombia, from our current competitors and from future competitors that might enter the sector.”

In Peru, a facility must be included on an insurance provider’s approved list of healthcare facilities for an individual to be reimbursed for the services they receive at that facility. We negotiate with private insurance providers to ensure that we are on their list of approved facilities and to agree on the prices at which we are reimbursed for services provided to their plan members. As a large hospital network with one of the premier hospitals in Lima and leading hospitals in several other key cities, we have historically been able to renegotiate contracts at favorable rates with insurance providers on an annual basis. However, we expect continued third-party efforts to aggressively manage reimbursement levels and control costs. Moreover, our negotiating position could decline in the future if our brands’ reputation suffers. See “—We depend substantially on our brands’ reputation among our plan members, patients, the medical community and our suppliers in the regions in which we operate.”

In Colombia, approximately 95% of the population receives healthcare insurance through the government’s social security system, the SGSSS. Funds contributed to the SGSSS are administered by a government trust and distributed to private healthcare coverage providers, or EPSs. Changes in the SGSSS in recent years have resulted in limitations on reimbursement and, in some cases, reduced levels of reimbursement for healthcare services. Moreover, payments from SGSSS funds are subject to statutory and regulatory changes, administrative

rulings, interpretations and determinations, requirements for utilization review, and funding restrictions, all of which could materially increase or decrease program payments, as well as negatively affect the cost of providing service to patients and the timing of payments to facilities. We are unable to predict the effect of recent and future policy changes on our operations, and any such changes could have a material adverse effect on us.

In addition, like in Peru, EPSs in Colombia provide plan members with an approved list of facilities and plan members can choose which of those facilities to go to, although under certain circumstances, a plan member can challenge that decision and request to go elsewhere in the EPS’ network. If we do not maintain our reputation among EPSs and/or patients as one of the leading healthcare providers in Medellín and Barranquilla, EPSs may choose to send their plan members to, or patients may choose to go to, other facilities, which could have a material adverse effect on our business, financial condition and results of operations.

We face competition in a fragmented market like Peru and in Colombia, from our current competitors and other competitors that might enter the sector.

The healthcare industry in Peru and Colombia is competitive. In Peru, we face competition from other privately-operated hospitals, clinics and healthcare networks for the provision of healthcare services, many of which are operated by our principal third-party payers. While our Auna Peru network is currently one of the few private healthcare networks in the country with broad geographic reach, and the market is generally fragmented, it is possible that healthcare services providers operating other private hospitals and clinics will consolidate and further integrate their operations across facilities, which could cause us to lose market share. For example, Rímac Seguros y Reaseguros S.A. (“Rímac”) and El Pacífico-Peruano Suiza Compañia de Seguros y Reaseguros S.A. (“Pacífico”), two of the main insurance providers in Peru that are also significant third-party payers for Auna services, own and operate their own hospital networks that compete with us. Moreover, our flagship hospital, Clínica Delgado, faces competition from other high-complexity hospitals and clinics in Lima, such as Clínica Ricardo Palma, Clínica San Pablo and Clínica Sanna San Borja, which is operated by Pacífico. If demand for Clínica Delgado’s services decline, demand for services at our network overall may decline and/or our negotiating position with insurance providers and other third parties could suffer, any of which could have a material adverse effect on our business, financial condition and results of operations.

Currently, the quality of public sector medical services in Peru, principally provided by EsSalud and Seguro Integral de Salud (“SIS”), is widely considered deficient and over capacity, with long scheduling times, short appointments with doctors and a shortage of facilities, and we do not currently face substantial competition from government providers in Peru. We may face competition from government providers in the future if the Peruvian government allocates additional financial resources to EsSalud and/or SIS and/or they are able to improve their infrastructure and increase their capacity and the quality of care they provide.

At Oncosalud, our vertically integrated oncology plan provider, we also face competition from companies that offer healthcare plans covering oncology services, including traditional insurance providers and other companies offering prepaid plans. While we offer specialized and vertically integrated services that we believe provide us with a competitive advantage, our competitors may enhance the quality of their offerings in the future. Our competitors Rímac and Pacífico are the two main insurance providers in Peru, both of which have substantial financial resources. If any of our competitors, including Rímac and Pacífico, is able to offer more comprehensive or less expensive oncology services, we may lose market share in Peru, which could have a material adverse effect on our business, financial condition and results of operations.

Unlike in Peru where the market is more fragmented, there are several existing large hospital systems in Colombia and the gap between the quality of services provided by state-owned facilities and privately-owned facilities is much smaller. As a result, our Auna Colombia network faces competition in Colombia from both public and private healthcare services providers. Moreover, although healthcare coverage providers in Colombia typically dictate which facility a patient can go to for services, patients can, and frequently do, challenge these decisions, which fosters competition among healthcare providers in the market.

In Medellín, where a majority of our Colombian operations are currently located, we face competition from other hospital networks with premium facilities, including San Vicente de Paul, Pablo Tobón Uribe and El Rosario. In Barranquilla, where Clínica Portoazul is located, we also face competition from other hospital networks, including Clínica Iberoamericana (Grupo Keralty/Sanitas), Clínica del Caribe, Organización Clínica General del Norte y Bonnadona. Certain of our competitors may have greater financial resources, be better equipped and offer a broader range of healthcare services than we do. If we are unable to maintain or grow our competitive position in Colombia, our business, financial condition and results of operations may be adversely affected.

Our performance depends on our ability to recruit and retain quality medical professionals, and we face a great deal of competition for these professionals, which may increase our labor costs and negatively impact our results of operations.

We believe we have a unique, patient-centric culture that is important to our mission of transforming healthcare in the countries in which we operate. The success and competitive advantage of our hospitals and clinics depends in large part on the number, quality and experience of the physicians and other medical professionals at our facilities, as well as their ability to fit into our culture and our ability to maintain good relations with those professionals. The majority of our physicians in Peru and Colombia are hired on a fee-for-service basis. As a result, and because these arrangements are non-exclusive, there is significant competition between us and our competitors to ensure that the best qualified and most renowned physicians are treating patients at our hospitals. If we are unable to provide high-quality treatment for our patients, ethical and professional standards, adequate support personnel, technologically advanced equipment and facilities and research opportunities that meet their professional needs and goals, our physicians may choose to practice at other facilities. We may not be able to compete with other healthcare providers on some or all of these factors.

Physicians may also refuse to enter into new contracts with us, demand higher payments or perform treatments or procedures that result in higher medical expenses without generating corresponding revenue. In addition, a small number of physicians within each of our facilities generate a disproportionate share of our inpatient revenues and admissions, in particular physicians specializing in oncology, cardiology, trauma, neurology and general surgery. The loss of one or more of these physicians, even if temporary, could reduce patient demand for our services and cause a material reduction in our revenues. In addition, it could take significant time to find a replacement for any of our top physicians given the difficulty and cost associated with recruiting and retaining physicians, which may in turn adversely affect our ability to recruit and retain other doctors.

Our medical support staff, in particular our nurses, are also critical to our success and competitive advantage. Our medical support staff is on the front lines of a patient’s experience at our hospitals and clinics, and we depend on their efforts, abilities, and experience to maintain our reputation as a high-quality provider of healthcare services. In recruiting and retaining qualified hospital management, nurses and other medical personnel, such as pharmacists and lab technicians, we compete with other healthcare providers, including government hospitals.

Historically, there has been a shortage of qualified nurses and other medical support personnel in Peru and Colombia, which has been a significant operating issue for us and other healthcare providers. This shortage may require us to enhance wages and benefits to recruit, train and retain nurses and other medical support personnel or require us to hire expensive temporary personnel. Moreover, our failure to recruit and retain enough qualified nurses and other medical support personnel could result in loss of customer goodwill and a negative impact on our reputation.

We cannot predict the degree to which we will be affected by the future availability or cost of attracting and retaining talented medical support staff. If our general labor and related expenses increase, we may not be able to raise the rates we charge for our services correspondingly. Our failure to either recruit and retain qualified

hospital management, nurses and other medical support personnel or control our labor costs could harm our business, financial condition and results of operations.

Any acquisitions, partnerships or joint ventures that we make or enter into could disrupt our business and harm our financial condition.

Acquisitions, partnerships and joint ventures are an integral part of our inorganic growth strategy. We evaluate, and expect in the future to evaluate, potential strategic acquisitions of, and partnerships or joint ventures with, other hospital networks and complementary businesses. However, we may not be successful in identifying acquisition, partnership and joint venture targets or we may use estimates and judgments to evaluate the operations and future revenues of a target that turn out to be inaccurate.

In addition, we may not be able to successfully finance or integrate any hospitals or other businesses that we acquire or with which we form a partnership or joint venture, and we may not achieve the anticipated benefits of such project. Furthermore, the integration of any acquisition, partnership or joint venture may divert management’s time and resources from our core business and disrupt our operations. As a result of any of the foregoing, we may spend valuable management time and money on projects that do not increase our number of patients or revenue. Acquisitions also involve special risks, including the potential assumption of unanticipated liabilities and contingencies. Even if such liabilities are assumed by the sellers, we may have difficulties enforcing our rights, contractual or otherwise. Moreover, our competitors may be willing or able to pay more than us for acquisitions, which may cause us to lose certain acquisitions that we would otherwise desire to complete. We cannot ensure that any acquisition, partnership or joint venture we make will not have a material adverse effect on our business, financial condition and results of operations.

In addition, the acquisition of a healthcare provider may require approval of the relevant antitrust regulator, such as the Superintendencia de Industria y Comercio (the “SIC”) in Colombia. In Peru, entities administering public health insurance funds (Instituciones Administradoras de Fondos de Aseguramiento en Salud Públicas or “IAFASs”), such as Oncosalud, must provide written notice to SUSALUD of any transfer of shares within 10 business days from such transfer. In addition, newly enacted legislation in Peru became effective in March 2021 establishing a merger control regime that will require us to comply with antitrust clearance for certain acquisitions. If the relevant regulator delays or withholds its approval for acquisitions in Peru, Colombia or elsewhere, we may not be able to implement our business strategy on a timely basis or grow our operations in the timeframe that we expect, which may have a material adverse effect on our business, financial condition and results of operations.

We may not be able to successfully integrate our acquired facilities or obtain the expected benefits from such acquisitions.

Our strategic growth plan, particularly in Colombia, depends on the acquisition and integration of existing medical care facilities into our network. We may not be able to successfully and efficiently integrate the operations of the facilities we acquire, including their personnel, financial systems, distribution or operating procedures. In 2018, we completed the acquisition of Grupo Las Américas in Medellín, Colombia and in 2020, we completed the acquisition of Clínica Portoazul in Barranquilla, Colombia. The integration process for both acquisitions is ongoing. We may also be unable to retain physicians and other medical support staff, in particular if the acquired facilities are in other countries with different cultures, and our relationship with current and new professionals, including physicians, may be impaired. If we are not able to manage our expanded operations and the corresponding integrations effectively, our business, financial condition and results of operations could be materially adversely affected.

Our operation of Torre Trecca, and any additional public-private partnerships we may enter in the future, may subject us to additional risks and uncertainties.

In 2010, we entered into an agreement for our first PPP with EsSalud to rebuild Torre Trecca, an outpatient facility (which is currently not in use) providing healthcare services to patients covered through EsSalud, as a

high-rise treatment center, and begin operating it on behalf of EsSalud. There are substantial risks and uncertainties associated with this agreement, and any additional PPPs that we may enter into in the future. For example, we signed our initial agreement with EsSalud in 2010, but have not been able to begin the partnership because approval of certain project milestones and amendments to the relevant concession agreement, which are necessary to make the project viable, remain pending with EsSalud and other government bodies. Once we receive approval of the applicable milestones, we expect it to take 18 to 24 months to rebuild and redevelop the Torre Trecca facility, which is currently not in use, and begin operations. If the relevant Peruvian governmental authorities delay or withhold their approval of the applicable project milestones and amendments to the concession agreement required to start operation of the Torre Trecca PPP, the concession agreement may be terminated. Even if we receive approval to begin operating the PPP, we have not previously operated a PPP, and we may underestimate the level of resources or expertise necessary to make the Torre Trecca partnership, or any future PPPs, successful or to otherwise realize expected benefits. Moreover, given the nature of PPPs, we expect this business, as well as any future PPPs, to generate lower margins than our current business segments have historically generated. In addition, the quality of medical services provided by EsSalud is widely considered deficient and over capacity, and our association with EsSalud and any complaints of the quality of government health services may adversely affect our reputation. We may face similar reputational risks with other PPPs in the future. Our failure to successfully manage these risks could have a material adverse effect on our business, results of operations, financial condition and prospects.

Our organic growth plan includes the construction of additional hospitals and clinics as well as expansion of our existing facilities.

Our organic growth plan includes building additional hospitals and clinics, in particular in Peru. We are identifying suitable locations in Peru and Colombia for future facilities by considering a number of factors, including regional market size, existing competition and potential strategic partners. There are uncertainties regarding how successfully we can identify the suitable market and obtain required government approvals in a timely manner. We are currently constructing hospitals in Piura and Chiclayo as well as Clínica del Sur in Colombia. In addition, we consider the expansion of our existing facilities to be an important part of our organic growth plan and we are currently working on expanding Clínica Delgado and Clínica Vallesur in Arequipa, Peru.

While we believe our Auna Model provides an effective framework for building and expanding our facilities, our current and future construction projects are and will be subject to a number of risks, including:

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engineering problems, including defective plans and specifications;

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delays in obtaining or inability to obtain necessary permits, licenses and approvals;

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disputes with, defaults by, or delays caused by contractors and subcontractors and other counterparties;

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environmental, health and safety issues, including site accidents and the spread of viruses;

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fires, earthquakes, adverse weather events and other natural disasters;

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geological, construction, excavation, regulatory and equipment problems; and

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other unanticipated circumstances or cost increases.

The occurrence of any of these developments or construction risks could increase the total costs, delay or prevent the construction or opening or otherwise affect the design and features of any existing or future construction projects that we might undertake.

Furthermore, planning, designing and constructing new facilities is time-consuming and complex. In addition to diverting management’s time and resources from our core business, there are typically several years of significant capital expenditures before a facility becomes operational and generates income. If we cannot successfully implement our organic growth strategy and convert new and expanded facilities to profitability on a timely basis, our business, financial condition and results of operations may be adversely affected.

We may not be able to continue growing our business at historical rates.

Our revenue has experienced substantial growth since 2008 and our strategy is to continue to grow our operations, through organic and inorganic growth. However, we may not be able to continue to grow at a rate consistent with our recent performance or to continue growing at all in the future due to factors beyond our control. For example, we expect gross domestic product (“GDP”) growth to continue to slow in Peru and Colombia in 2021 as compared to years before 2020, in particular as a result of the COVID-19 pandemic, which could affect healthcare spending in these countries. Our growth could also be impacted by changes in laws or regulations or delays in construction or acquisition of new facilities, any of which could make the execution of our strategic growth plan more difficult. In addition, as we grow our business, we will need to expand our internal controls and administrative and IT systems, among other functions, and hire additional personnel to continue effectively operating our business. The market for qualified personnel that are able to fill management and key operational roles is highly competitive in Peru and Colombia due to the limited number of professionals that have the requisite training and experience, and we may be unable to hire sufficient qualified personnel to support our growth. Demand for qualified personnel may also increase as a result of the COVID-19 pandemic. Any inability to adequately scale our operations to meet the increased size of our business may have a material adverse effect on our ability to continue growing our business and/or on our financial condition or results of operations.

If we are unable to provide high-quality, advanced care for a broad array of medical needs, demand for our healthcare services may decrease.

Demand for our healthcare services is driven in large part by our ability to offer high-quality, advanced care for a broad array of medical needs, which is in turn contingent on our having state-of-the-art medical equipment at our facilities, as well as our ability to access high-quality medicines. The technology used in medical equipment and related devices is constantly evolving and, as a result, manufacturers and distributors continue to offer new and upgraded products to healthcare providers. Moreover, new and improved medicines are constantly being introduced to the market. To compete effectively, and to attract doctors and recruit and retain medical staff, we must continually assess our equipment needs and invest in upgrades when significant technological advances occur in order to continue providing access to advanced treatment, and we must ensure that we have access to high-quality, cutting-edge medicines for any given treatment. Such technological equipment costs represent significant capital expenditures. If our facilities do not stay current with technological advances in the healthcare industry and/or we do not offer access to high-quality, cutting-edge medicines, patients may seek treatment from other providers or insurance providers may send their patients to alternate facilities, which could result in decreased demand for our services and have an adverse effect on our business, financial condition and results of operations.

If we fail to successfully develop and commercialize new products and services under Oncosalud, our operating results may be materially and adversely affected.

The future growth of our Oncosalud business depends on our ability to develop and introduce new products and services, including plans that are financially accessible to a larger segment of the population and plans that cover additional medical specialties. Our ability to successfully roll out new and innovative products and services depends on a number of factors, including significant investments in research and development, efficient management of resources and an effective sales effort. Our research and development efforts may not yield the benefits we expect to achieve in a timely manner, or at all. To the extent that we are unable to execute our strategy for Oncosalud of introducing new and innovative products, diversifying our product portfolio and satisfying consumers’ changing preferences, we may not be able to grow our plan member base and our results of operations may be adversely affected. Even if we are able to add new products and services under Oncosalud, these may not lead to our anticipated results, potentially reducing our return on investment.

We rely on a limited number of suppliers of medical equipment, medicines and other supplies needed to provide our medical services.

A substantial portion of the medical equipment, medicines and other supplies used in our hospitals and clinics is highly complex and produced by a limited number of suppliers. For example, we purchased 71% and 52% of our medicines and 43% and 14% of other medical supplies in Peru and Colombia, respectively, from our 10 largest suppliers in of 2020 via purchase orders, and whose commercial terms are renegotiated annually. In addition, in many instances, there are only a small number of suppliers that provide a particular type of medicine or other supplies, which increases their bargaining power. Any interruption in the supply of medical equipment, medicines or other supplies from these suppliers, including as a result of the failure by any of these suppliers to obtain required third-party consents and licenses for production or import/clearance, may compromise our ability to provide effective and adequate services in our hospitals and clinics, which could have a material adverse effect on our business and on the market value of the ADSs.

We are subject to extensive legislation and regulations in Peru and Colombia.

We are subject to extensive legislation and regulations in Peru and Colombia, including in relation to the provision of healthcare services and prepaid healthcare plans, environmental protection, health surveillance and workplace safety and management of waste by a variety of national, regional and local governmental authorities, and we are supervised by a number of governmental bodies and agencies. The regular functioning of hospitals and clinics depends, among other things, on obtaining and maintaining valid registrations, licenses, authorizations, grants and permits for installation and operations, including for the sale of medicines and the operation of medical equipment, as well as for the collection, deposit or storage of products; utilization of equipment; import of merchandise and biological materials; handling, treatment, transport and disposal of contaminant wastes, radioactive materials and controlled chemical products; and use of water resources (including installing wells to supply water and disposing of wastewater in accordance with applicable laws and regulations). Moreover, as a provider of prepaid healthcare plans in Peru, we are subject to various economic and financial related regulations, including minimum capital requirements, investment requirements and limitations on asset allocations and indebtedness, among others. We are subject to government inquires, inspections and auditors from time to time. For example, in August and September 2020, the Peruvian National Institute for the Defense of Competition and the Protection of Intellectual Property (Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual) (“INDECOPI”) began inquiries in order to assess if private clinics, such as us, have been involved in horizontal collusion in connection with the prices of medicines and sanitary equipment. We are fully cooperating with these inquiries. We are unable to predict the effect of the conclusion of such inquiries on our operations, and if any such consequences of those inquiries could have a material effect on us. If we fail to comply with applicable laws and regulations, if such laws or regulations change in a manner adverse to us or if we cannot maintain, renew or secure required registrations, permits, licenses or other necessary regulatory approvals, we may be unable to operate our business, suffer administrative penalties, civil liability and criminal charges and fines, have our registration or operating license suspended or revoked, or incur additional liabilities from third-party claims, any of which may also have a negative impact on our brand and reputation. For example, in 2017, the competent environmental authority of Medellín’s Metropolitan Area (Área Metropolitana del Valle de Aburrá) (“AMVA”) alleged that Grupo Las Américas, along with other healthcare facilities, needed to comply with certain newly implemented requirements for processing and disposing wastewater. Grupo Las Américas has implemented the necessary procedures and we believe it is currently in compliance with such requirements based on a third party report. If Grupo Las Américas or other facilities in our Auna Colombia network fail to comply with regulations related to the processing of wastewater in the future, AMVA may initiate administrative proceedings and ultimately, issue sanctions against us. See “Industry—Regulation of the Colombian Healthcare Sector—Environmental Regulations.” No assurance can be given that any investigations, proceedings or penalties will not occur and will not materially and adversely affect our businesses and results of operations and financial conditions with respect to our recently acquired businesses or any of our other businesses.

Furthermore, we contract with third parties to assist in the collection, treatment, transport and disposal of biohazardous materials. Any failure by these third parties to comply with applicable laws and regulations in the regions in which we operate could also subject us to significant administrative fines, civil liability or criminal charges.

We cannot ensure that the Peruvian and Colombian legislation and regulations applicable to our industry will not become more severe or subject us to greater costs in the future, or that the Peruvian and Colombian authorities or regulatory agencies will not adopt more restrictive or more rigorous interpretations of existing laws and regulations, including with respect to obtaining and renewing the licenses, permits and registrations, or the environmental, solvency, minimum capital, health surveillance and workplace safety laws and regulations to which we are subject. For instance, in December 2019, the Peruvian government began requiring that all pharmacies carry generic versions of medicines appearing on a list published by MINSA, which currently includes 34 medicines, with the goal of giving patients the option to purchase lower cost alternatives of common medicines at every pharmacy. In addition, around the same time, an emergency decree established that uninsured Peruvians will be able to access the SIS regardless of their socioeconomic classification. We are unable to predict the effect of recent and future policy changes on our operations, and any such changes could have a material adverse effect on us.

Moreover, we cannot ensure that the fees, charges and contributions owed to the competent authorities and to professional trade associations, such as El Colegio Médico del Perú and El Colegio Médico Colombiano, will not be increased as a result of new legislative or regulatory measures. Any one of these factors may involve the incurrence of unforeseen additional costs by us and/or capital expenditures, thereby adversely affecting our business and operating results.

We may be unable to obtain the registrations, authorizations, licenses and permits for the establishment and operation of our hospitals and clinics.

The establishment and operation of our hospitals and clinics depend on a number of registrations, authorizations, licenses and permits that we have to obtain and maintain in force from national, regional and local government agencies in both Peru and Colombia. Moreover, our hospitals are subject to the inspection of health surveillance agencies in the regions in which we operate, which may conduct periodic audits of our facilities to ensure compliance with applicable standards.

Furthermore, we may also need to obtain authorizations, licenses and permits to offer new types of healthcare services at our facilities, which may cause a delay in offering new services to our patients.

Any failure to obtain or renew required registrations, authorizations, licenses or permits may prevent us from opening and operating new hospitals and clinics or force us to close our hospitals and clinics currently in operation. We may also be subject to fines and other penalties and suffer damage to our reputation. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

We may be subject to liabilities from claims brought against our healthcare professionals or our facilities, including medical malpractice lawsuits.

We and our healthcare professionals are subject to medical malpractice lawsuits, product liability lawsuits and other legal actions in the ordinary course of business. Some of these actions may involve large claims, as well as significant defense costs and potential reputational damage. We cannot predict the outcome of these lawsuits or the effect that findings in such lawsuits may have on us. In an effort to resolve one or more of these matters, we may choose to negotiate a settlement, which may have negative implications. Amounts we pay to settle any of these matters may be material. All professional and general liability insurance we purchase is subject to policy limitations. We believe that, based on our past experience, our insurance coverage is adequate considering the claims arising from the operations of our hospitals, clinics and oncology plans. While we

continuously monitor our coverage, our ultimate liability for professional and general liability claims could change materially from our current estimates. If such policy limitations are partially or fully exhausted in the future, or payments of claims exceed our estimates or are not covered by our insurance, it could have a material adverse effect on our business, financial condition and results of operations. See “—Our insurance policies may be insufficient to cover potential losses.”

We are subject to litigation and other legal, labor, administrative and regulatory proceedings.

We are regularly party to litigation and other legal proceedings relating to claims resulting from our operations in the normal course of business. These matters have included or could in the future include matters related to Oncosalud’s healthcare benefits coverage and other payment claims (including disputes with plan members, physicians, other healthcare professionals and members of its salesforce), tort claims (including claims related to the delivery of healthcare services, such as claims of medical malpractice by medical professionals employed by us or physicians with whom we have a contractual relationship), labor claims (including disputes with employees, former employees and independent contractors) and administrative and regulatory claims (including retroactive tax claims or challenges arising out of our failure or alleged failure to comply with applicable laws and regulations). In addition, we have certain ongoing lawsuits, which include claims against Grupo Las Américas, relating to events that took place prior to our acquisition of Grupo Las Américas. Pursuant to the share purchase agreement we entered into in connection with the acquisition, the sellers contributed an amount in cash to an escrow account to cover these claims. At this time, the amounts held in escrow cover what we believe is our potential exposure pursuant to these ongoing proceedings. However, if additional claims are asserted against us as a result of our acquisition of Grupo Las Américas and one or more of these claims results in an adverse decision against us, these amounts may not be sufficient to cover our exposure. In addition, the interpretation and enforcement of certain provisions of our existing or any future agreements (including those related to force majeure clauses in the context of pandemics) may result in disputes among us and our patients or third parties. Litigation and other legal proceedings are subject to inherent uncertainties, and unfavorable rulings may occur. We cannot assure you that the legal, labor, administrative and regulatory proceedings in which we are or may become involved will not materially and adversely affect our ability to conduct our business in the manner that we expect, or otherwise adversely affect our business, financial condition and results of operations. See “Business—Legal Proceedings.”

Our insurance policies may be insufficient to cover potential losses.

We maintain insurance coverage in accordance with normal market practice in order to cover losses arising in connection with our hospital networks and oncology plans. Certain risks are not covered by insurers in the market (such as war, acts of God and force majeure, the interruption of certain activities and human error, including in relation to medical errors). Furthermore, natural disasters, adverse meteorological conditions and other events may cause physical damage and loss of life, business interruption, equipment damage, pollution and environmental damage, among others. We cannot ensure that our insurance policies will be suitable and/or sufficient in all circumstances or against all risks. The occurrence of a significant loss for which we are not insured, in full or in part, may require us to expend significant amounts. Furthermore, we cannot assure you that we will be able to maintain insurance coverage at reasonable commercial rates or on acceptable terms, or to contract insurance policies with the same or similar insurance companies. Any of the aforementioned developments may adversely impact us, our business, financial condition and results of operations.

We are subject to certain privacy laws and any failure to adhere to these requirements could expose us to civil and criminal penalties, and damage our reputation.

Our business operations and current and future arrangements with medical professionals, third-party payers, plan members and patients expose us to various laws and regulations protecting the privacy and security of health information and personal data, including personal data protection laws in Peru and Colombia. We have made significant investments in technology to adopt and utilize electronic health records and to become meaningful

users of health IT, and as a result, we are in possession of a significant amount of protected health information and other data subject to these privacy laws. We may be required to expend significant capital and other resources to ensure ongoing compliance with applicable privacy and data security laws. If our operations are found to be in violation of any of these privacy laws or if we are found to have used private information incorrectly, we may be subject to administrative fines and penalties, civil liability and criminal charges and could result in harm to our reputation. See “Industry—Regulation of the Peruvian Healthcare Sector” and “Industry—Regulation of the Colombian Healthcare Sector.”

A failure of our IT systems could adversely impact our business.

We rely extensively on our IT systems to manage clinical and financial data, communicate with our patients, payers, suppliers and other third parties and summarize and analyze operating results. In addition, we are subject to various laws and regulations protecting the privacy and security of health information and personal data, including personal data protection laws. A failure of our IT systems may be caused by, among other things, defects in design or manufacture of hardware, software or applications we develop or procure from third parties, human error, cyber security incidents, damage from natural disasters, power loss, telecommunications failure, unauthorized entry or other events beyond our control. In certain circumstances we may rely on third-party vendors to process, store and transmit large amounts of data for our business whose operations are subject to similar risks. Our IT systems also depend on the timely maintenance, upgrade and replacement of networks, equipment and software, as well as preemptive expenses to mitigate the risks of failures.

Any failure of our IT systems could materially disrupt our business activities. For example, because we are reliant on our IT systems to manage clinical information and patient data, a material disruption of our IT systems could negatively impact our ability to treat our patients for the duration of the disruption and result in injury and loss of lives, which could subject us to significant litigation or other losses and have a material adverse impact on our reputation, business, financial condition and result of operations.

A failure of our IT systems could also expose us to various security threats and vulnerabilities that may result in the theft, destruction, loss or misappropriation of protected health information or other data subject to privacy laws in Peru or Colombia or loss of proprietary business information. Breaches of our security measures and the unauthorized dissemination of sensitive personal information, proprietary information or confidential information could expose us, our customers or other third parties to a risk of loss or misuse of this information, including exposing our customers to the risk of financial or medical identity theft, result in litigation and potential liability, such as regulatory penalties, for us, damage our brand and reputation or otherwise harm our business. The failure of our IT systems, including the costs to eliminate or address security threats and vulnerabilities before or after a system failure, could have a material adverse effect on our business, financial condition and results of operations.

We may not have sufficient funds to settle current liabilities and as a result we may continue to have negative working capital from time to time.

Our board of directors has the ultimate responsibility for liquidity risk management. It has established an appropriate framework allowing our management to handle financing requirements for the short-, medium- and long-term. As of December 31, 2020, we had working capital of S/269.5 million (US$70.0 million). Our management believes that our available cash and cash equivalents and cash flows expected to be generated from operations and borrowings available to us under our revolving credit lines, will be adequate to satisfy our capital expenditure and liquidity needs for the foreseeable future. However, we may require additional capital in the form of additional debt or equity to meet our long-term objectives relating to the expansion of our business. As a result, we may have negative working capital from time to time. It may be difficult for us to obtain additional financing in the future, on acceptable terms or at all, given that all of our assets are currently collateralized. If we are unable to access the capital markets to finance our operations in the future, this could adversely affect our ability to obtain additional capital to grow our business and have an adverse effect on our business, financial condition and results of operations.

Any loss of members of our senior management team could have an adverse effect on us.

Our success depends in large part on performance of our senior management. If any members of our senior management leave the Company, we may not be able to replace them with equally qualified professionals. Competition for qualified personnel in the Peruvian and Colombian healthcare industries is strong given the limited number of professionals with appropriate training and/or proven experience in this area. Furthermore, we may be delayed or unsuccessful in hiring, training and integrating new members of our senior management. The loss of any member of our senior management and/or any difficulties encountered in replacing them may adversely affect our business and prospects. See also “—We may not be able to continue growing our business at historical rates.”

Our performance depends on favorable labor relations with our employees. Any deterioration in these relations or increased labor costs may adversely affect our business.

Our employees are not unionized and have not entered into collective bargaining agreements. However, nothing prevents them from doing so in the future. Conflicts with our employees and organized labor actions could result in increased legal and other associated costs and divert management attention. In addition, requirements to increase employee salaries and/or benefits as a result of future collective bargaining agreements, governmental regulations or policies or otherwise could cause us to suffer a material adverse effect on our financial condition and results of operations.

Any significant increase in labor costs, deterioration in relations with employees, or work stoppages at any of our hospital units, whether due to union activities, employee turnover, labor inspections or other factors, may adversely affect our operating results and financial condition.

We are a holding company and all of our operations are conducted through our subsidiaries. Our ability to pay dividends to you will depend on the ability of our subsidiaries to pay dividends and make other distributions to us.

As a holding company, all of our operations are conducted through our subsidiaries. Accordingly, our ability to pay dividends to you will depend upon our receipt of dividends and other distributions from our subsidiaries. There are various restrictions in Peru and Colombia that may limit our subsidiaries’ ability to pay dividends or make other payments to us, such as their obligations to maintain minimum regulatory capital, reserves and minimum liquidity. For example, both our Peruvian and Colombian subsidiaries must maintain mandatory legal reserves, and certain of our Peruvian subsidiaries must maintain minimum capital requirements in their capacity as providers of healthcare coverage plans and our Colombian subsidiaries must maintain certain capital allocations, in each case reducing their net income and the cash available to pay dividends to us. Moreover, our subsidiaries in countries other than Peru, such as our Colombian subsidiaries, may be subject to exchange controls in the future that prevent them from making distributions to us.

Furthermore, we have certain existing indebtedness, and may incur additional indebtedness or enter into other arrangements in the future, that contain terms that restrict or prohibit our subsidiaries from paying dividends, making other distributions and making loans to us. The restrictions on these subsidiaries’ ability to pay dividends to us have not to date had a material impact on our liquidity or our ability to pay dividends to our shareholders because several of our key operating subsidiaries remain able to pay dividends to us. However, we cannot assure you that we will not need to take out additional loans under these programs in the future, or that the agreements governing our existing or future indebtedness will permit them to provide us with sufficient dividends or distributions or permit us to loan money or enter into other similar arrangements to fund dividend payments.

To the extent our subsidiaries do not have funds available or are otherwise restricted from paying dividends to us, our ability to pay dividends to our shareholders will be adversely affected.

Our indebtedness could adversely affect our financial condition and ability to operate our business.

As of December 31, 2020, we had S/1,208.7 million of long-term debt outstanding. Our indebtedness, combined with our other financial obligations and contractual commitments, could have important consequences for our business. For example, it could:

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make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations under any of our debt instruments, including restrictive covenants, could result in an event of default under the agreements governing such indebtedness;

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require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing funds available for working capital, capital expenditures, acquisitions, business development and other purposes;

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compromise our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, due to our debt and the restrictive covenants in the indenture that governs our 2025 Notes and the Chiclayo Hospital Financing Agreement;

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limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;

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limit our ability to borrow additional funds, or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions and other corporate purposes;

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prevent us from raising the funds necessary to repurchase all the notes tendered to us upon the occurrence of certain changes of control, which would constitute a default under the agreements governing such indebtedness;

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limit our ability to redeem, repurchase, defease or otherwise acquire or retire for value any subordinated indebtedness we may incur; and

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limit our ability to pay dividends.

These restrictions could adversely affect our financial condition and limit our ability to successfully implement our growth strategy.

In addition, we may need additional financing to support our business and pursue our growth strategy, including for strategic acquisitions. Our ability to obtain additional financing, if and when required, will depend on investor demand, our operating performance, the condition of the capital markets and other factors. We cannot assure you that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to those of our common stock, and, in the case of equity and equity-linked securities, our existing stockholders may experience dilution.

Our financial results may be impacted by changes to IFRS accounting standards.

We report our financial condition and results of operations in accordance with IFRS. Changes to IFRS may cause our future reported financial condition and results of operations to differ from current expectations, or historical results to differ from those previously reported due to the adoption of new accounting standards on a retrospective basis. We monitor potential accounting changes and, when possible, we determine their potential impact and disclose significant future changes in our financial statements that we expect as a result of those changes. For further information, see note 3 to our audited consolidated financial statements included elsewhere in this prospectus.

Risks Relating to Peru and Colombia

Economic, social and political developments in Peru, including recent political instability, inflation and unemployment, could have a material adverse effect on our businesses and our results of operations may be negatively affected by recent political instability in Peru.

We derived 70.9% of our revenues from operations in Peru in 2020. As such, our results of operations are substantially dependent on the ability of patients in Peru to pay for services at our hospitals and clinics and our oncology plans. Our business, financial condition and results of operations could be affected by changes in economic and other policies of the Peruvian government (which has exercised and continues to exercise substantial influence over many aspects of the private sector) and by other economic and political developments in Peru, including devaluation, currency exchange controls, inflation, economic downturns, corruption scandals, social unrest and terrorism.

Peru has experienced political instability from time to time, spanning a succession of regimes with differing economic policies and programs. Although Peru has been widely considered a stable democracy in recent years, on September 30, 2019, President Martin Vizcarra took executive action to dissolve the Peruvian Congress and called for a new election of congressional members, giving rise to a protracted period of political crisis. On January 14, 2020, the Peruvian Constitutional Court ruled on a constitutional action challenging President Vizcarra’s closing of Congress, declaring the executive action to be constitutionally and legally valid. Congressional elections were held to form a new Congress, which was highly fragmented. In the aftermath of these elections, the Peruvian executive and legislative branches have been at odds over several important economic and social measures, including initiatives to address the economic and social impacts of the COVID-19 pandemic on Peru, In October 2020, a group of congressmen introduced a motion to hold impeachment proceedings against President Vizcarra on the basis of allegations that he received illicit payments from construction companies when he was the governor of Moquegua between 2011 and 2014. In November 2020, Congress approved the impeachment and, because Peru did not have any designated Vice President at such time, the then-President of Congress, Manuel Merino, assumed the role of acting President. Following multiple protests across the country, Merino resigned from his role as acting President, and Congress selected congressman Francisco Rafael Sagasti Hochhausler as president of Congress, and therefore as acting President.

Peru’s general elections to elect a new president and all 130 members of Congress for the 2021-2026 period were held on April 11, 2021 and resulted in increased economic uncertainty and a climate of intense political polarization. Since no presidential candidate achieved an outright majority, a run-off election was held on June 6, 2021, leading to the election of Pedro Castillo Terrones, a member of the left-wing Peru Libre party. The new government took office on July 28, 2021, and will face challenges in aligning initiatives with and obtaining support from Congress, in which no political party has achieved clear majority and which, with at least ten political parties holding minority representations, is highly fragmented. In his first official speech, Castillo made clear his interest in a left turn in economic matters, granting the State a greater participation in the economy. While he reaffirmed that his government will not expropriate or nationalize private businesses and will not impose price or FX controls, he reiterated his intention to draft a new Constitution through a Constituent Assembly, which would include a change in the economic model in order to shift from a generally passive and subsidiary role to granting the State a more active role in the economy. Moreover, Castillo appointed an ideologically-charged and inexperienced cabinet and a prime minister very much aligned with the radical left faction of the Peru Libre party, indicating Castillo’s intention to confront Congress, where his party has little representation and faces an ironclad opposition, and exacerbating fears of further tensions between powers in the coming months. Although the President of the Peruvian Central Bank, Julio Velarde, recently agreed to remain in his post and it is expected that his continued presence will help preserve a sense of stability at a time of acute market volatility due to uncertainties over Castillo’s policies, we cannot guarantee that we will remain in this position nor that the Castillo administration will continue to pursue business-friendly and open-market economic policies that stimulate economic growth and stability, a key feature of the Peruvian economy over the past 30 years. Moreover, the political instability that may result from Castillo’s policies could materially adversely affect the Peruvian economy, our business, financial condition, results of operations and cash flows.

Until the recent political crisis, Peru has experienced a period of relative economic and political stability since the early 2000s. Peru’s GDP growth rates, low inflation, and external surplus reflect, in part, the strength of the fundamentals of Peru’s economy. However, a deterioration of the global economy, including as a result of the global coronavirus outbreak, or a sharp decrease in commodity prices may adversely affect Peru’s economy. In addition, an economic contraction or weak economic growth in Peru’s trading partners may have an adverse effect on Peru’s economy. Despite Peru’s ongoing economic growth and stabilization, the social and political tensions and high levels of poverty and unemployment continue. Future government policies to preempt or respond to social unrest could include, among other things, expropriation, nationalization, suspension of the enforcement of creditors’ rights and new taxation policies. There can be no assurance that Peru will not face political, economic or social problems in the future or that these problems will not adversely affect our business, financial condition and results of operations.

A deterioration of political stability as a result of the current political crisis or otherwise and any resulting effects on the Peruvian economy could affect our patients’ ability to afford our healthcare services, our ability to expand and grow consistently with our strategic plans or otherwise negatively affect our business, financial condition and results of operations.

Economic, social and political developments in Colombia, including political and economic instability, violence, inflation and unemployment, could have a material adverse effect on our businesses, financial condition and results of operations.

In 2020, we derived 29.1% of our revenues from operations in Colombia. As such, our results of operations are substantially dependent on the ability of patients in Colombia to pay for services at our hospitals and clinics. Decreases in the economic growth rate, periods of negative growth, increases in inflation, changes in law, regulation, policy, or future judicial rulings and interpretations of policies involving exchange controls and other matters such as (but not limited to) currency depreciation, inflation, interest rates, taxation, banking laws and regulations and other political or economic developments in or affecting Colombia may affect the overall business environment and may, in turn, impact our financial condition and results of operations.

Colombia’s central government fiscal deficit and growing public debt could adversely affect the Colombian economy. The Colombian fiscal deficit was 7.8% of GDP in 2020, 2.5% of GDP in 2019 and 3.1% of GDP in 2018. According to projections published in March 2021 by the Ministry of Finance and Public Credit, the Colombian government expects a fiscal deficit of 8.6% of GDP for the year 2021. In 2020, the Colombian economy deteriorated as a result of the COVID-19 pandemic and the collapse in oil prices in April 2020. If the Colombian economy continues to deteriorate as a result of these or other factors, our business, results of operations and financial condition could be adversely affected. The Colombian government frequently intervenes in Colombia’s economy and from time to time makes significant changes in monetary, fiscal and regulatory policy. In addition, Colombia held presidential elections in May 2018 with runoffs in June 2018. Iván Duque Márquez was elected president and took office in August 2018. In November 2019, a national protest movement erupted demanding that the Colombian government invest in social measures and turn away from fostering big business, among other demands. We cannot predict what policies will be adopted by the Colombian government and whether those policies would have a negative impact on the Colombian economy or our business and financial performance. Our business and results of operations or financial condition may be adversely affected by changes in government or fiscal policies, and other political, diplomatic, social and economic developments that may affect Colombia.

Furthermore, Colombia has suffered from periods of widespread criminal violence over the past four decades, primarily due to the activities of guerrilla groups such as the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia) (the “FARC”), paramilitary groups and drug cartels. In regions of the country with limited governmental presence, these groups have exerted influence over the local population and funded their activities by protecting and rendering services to drug traffickers. Despite efforts by the Colombian government, drug-related crime, guerrilla paramilitary activity and criminal bands subsists in

Colombia, and allegations have surfaced regarding members of the Colombian Congress and other government officials having ties to guerilla and paramilitary groups. In November 2016, former President Juan Manuel Santos signed a peace deal with the FARC, and FARC guerillas began a process of disarming, which was completed in February 2017. Although the Colombian Congress has approved certain regulations to implement the peace deal, opposing members of Congress have expressed their intention to make amendments to the peace deal and regulations implementing the peace deal. In addition, in August 2019, the former second in command FARC leader, Iván Márquez, announced his return to arms. The former leader of the FARC criticized Márquez’s position and reiterated the FARC’s commitment to peace. It is unclear what effect the objections of members of Congress, or the subsequent announcement of rearmament, will have on the implementation of the peace deal. If the peace deal is only partially implemented, or not implemented at all, violence associated with the FARC may escalate. In addition, although the Colombian government and the National Liberation Army (“ELN”) were in talks since February 2017 to end a five-decade war, the Colombian government suspended the negotiations in January 2019 after a series of rebel attacks, including a car bombing at a police academy in Bogotá resulting in 21 people dead and many injured. The continuation or escalation in the violence associated with the FARC or the ELN may have a negative impact on the Colombian economy or on us, which may affect our patients, employees, assets and projects in the region, as well as our ability to acquire new assets, which could have a material adverse effect on our business, financial condition and results of operations.

Our operations could be adversely affected by adverse climate conditions and other natural disasters.

Peru and Colombia are affected by El Niño, an oceanic and atmospheric phenomenon that causes a warming of temperatures in the Pacific Ocean, resulting in heavy rains off the coast of Peru and Colombia and various other effects in other parts of the world. The effects of El Niño, which typically occurs every two to seven years, include flooding and the destruction of fish populations and agriculture, and it accordingly can have a negative impact on the Peruvian and Colombian economies. For example, in early 2017, El Niño adversely affected agricultural production, transportation services, tourism and commercial activity in Peru, caused widespread damage to infrastructure and displaced people and resulted in a 1.5% drop in GDP growth in 2017 relative to 2016 figures. The Peruvian government estimated that El Niño caused US$3.1 billion in damages in affected regions. Although El Niño did not have a material adverse effect on our business, we were forced to temporarily close certain facilities in the northern part of Peru.

Peru is also located in an area that experiences seismic activity and occasionally is affected by earthquakes. For example, on May 26, 2019, an earthquake of 8.0 magnitude struck a remote part of the Amazon in Peru, resulting in collapsed buildings, certain power failures and two reported deaths. This was the strongest earthquake in Peru since 2007, when an earthquake with a magnitude of 7.9 on the Richter scale struck the central coast of Peru, severely damaging the region south of Lima. Although none of our hospitals and clinics in Peru and Colombia have been materially affected by natural disaster to date, a major earthquake, volcanic eruption or other natural disaster caused by El Niño or otherwise could damage the infrastructure necessary to their operations.

Our insurance may not be adequate to cover the damages our infrastructure experiences and the occurrence of an earthquake in particular and any other natural disasters in general could adversely affect our business, results of operations and financial condition. See “—Our insurance policies may be insufficient to cover potential losses.”

In addition, natural disasters, accidents and other similar events, including power loss, may discontinue the normal operations of our hospitals. Any such event could adversely affect our ability to provide services to patients and result in loss of lives and injury. Any of these events and other factors beyond our control could have an adverse effect on the overall business sentiment and environment, our reputation and materially and adversely impact our business, financial conditions and results of operations.

Our operations are highly concentrated in Lima and Medellín.

For the year ended December 31, 2020, 66.9% and 25.6% of our revenues were derived from operations in Lima and Medellín, respectively. As such, our results of operations are particularly dependent on economic conditions in these cities and the ability of patients in these cities to afford our healthcare services or purchase our oncology plans, as applicable. In addition, any earthquakes or other natural disasters, or any other disruptive occurrences such as political or social unrest, sustained power failures, or outbreaks of epidemics or pandemics, such as the novel coronavirus outbreak, that have a negative impact on our infrastructure in these cities could have a disproportionate impact on our ability to provide healthcare services to our patients. As a result, if Lima or Medellín experience a decline in economic conditions or a serious natural disaster, it could have a material adverse effect on our business, financial condition and results of operations.

Corruption and ongoing high-profile corruption investigations may hinder the growth of the Peruvian or Colombian economy and have a negative impact on our business and results of operations.

Peruvian and Colombian authorities are currently conducting several high-profile corruption investigations relating to the activities of certain Brazilian companies and their regional partners in the construction and infrastructure sectors, which have resulted in suspension or delay of important infrastructure projects, which were otherwise operational or permitted. These investigations have resulted in political turmoil in both Peru and Colombia. For example, in 2018 Peru suffered its worst institutional crisis since 2000 due to, among other factors, the resignation of former President Pedro Pablo Kuczynski, several corruption scandals involving other previous presidents, political candidates, prominent members of the judicial system and the district attorney’s office (each of whom is currently facing prosecution).

Similarly, on January 12, 2017, the Colombian Fiscalía General de la Nación initiated a corruption investigation into the activities of Odebrecht and its local partners. While the investigation is ongoing, to date, five individuals have been convicted, including two former public officials. These investigations involve Corficolombiana, a subsidiary of Grupo Aval, one of Colombia’s largest financial institutions and its former CEO José Elias Melo. On September 14, 2018, the SIC initiated a corruption investigation in Colombia into Corficolombiana’s actions in relation to the adjudication of the Ruta del Sol II highway concession. Meanwhile, on December 6, 2018, the Administrative Tribunal of Cundinamarca imposed on Episol (a Corficolombiana subsidiary) and others a fine of COP8.0 billion (US$213.0 million) to be paid jointly and severally for the damages caused to popular rights (access to public services, free competition, public morality) as a result of the alleged corruption acts involving the Ruta del Sol II agreement. This decision was appealed and will be decided by the Council of State.

Nevertheless, the potential outcome of such investigations, or any other potential high profile corruption proceeding, on the relevant companies, projects involved or Peruvian or Colombian government officials is uncertain. We cannot predict how long these or other corruption investigations may continue or whether new allegations against Peruvian or Colombian government officials or other companies with operations in Peru or Colombia will arise in the future. We cannot predict how these or future corruption scandals or investigations may affect the Peruvian or Colombian economy and indirectly have a material adverse effect on our business, financial condition and results of operations.

The political and economic conditions in Venezuela could have an adverse impact on the Peruvian and Colombian economies.

Venezuela, under the rule of President Nicolas Maduro, has suffered economic collapse and mass emigration since 2015. In connection with this mass emigration, approximately 1.7 million Venezuelans had entered Colombia and approximately 860,000 had entered Peru as of the end of 2019. The influx of migrants to Colombia and Peru has put strains on both countries and threatens to increase political and economic instability and social conflict in the region. Any negative impact from the migrant crisis on the political and economic stability of Colombia or Peru could have a material adverse effect on our business, financial condition and results of operations.

Developments and the perception of risk in other countries, especially emerging market countries, may adversely affect the market price of many Latin American securities, including our ADSs.

The market value of securities issued by companies with operations in the Andean region, including Peru and Colombia, may be affected to varying degrees by economic, political and market conditions in other countries, including other Latin American and emerging market countries. Although macroeconomic conditions in such Latin American and other emerging market countries may differ significantly from macroeconomic conditions in Peru and Colombia, investors’ reactions to developments in these other countries may have an adverse effect on the market values of our securities. For example, in recent months, political and social unrest in Latin American countries, including Ecuador, Chile, Bolivia and Colombia has sparked political demonstrations and, in some instances, violence. In October 2019, presidential elections were held in Bolivia, Uruguay and Argentina, which resulted in controversial outcomes in Bolivia and Uruguay, including violent protests and claims of fraudulent elections in Bolivia and a runoff election in Uruguay, and the transition of the political party in power in Argentina. As a result of this political turmoil, investors have viewed investments in Latin American with heightened caution in recent months and further turmoil could have an adverse effect on the market price of the ADSs. Similarly, economic problems in emerging market countries outside of Latin America (such as the Asian financial crisis of 1997, the Russian financial crisis of 1998 and the Turkish and South African crises of 2018), have also caused investors to view investments in emerging markets more generally with heightened caution. Crises in world financial markets, such as those of 2008, could affect investors’ views of securities issued by companies that operate in emerging markets. Crises in other emerging market countries may hamper investor enthusiasm for securities of Peruvian issuers, including the ADSs, which could adversely affect the market price of our ADSs. This could also make it more difficult for us and our subsidiaries to access the capital markets and finance our operations in the future on acceptable terms, or at all.

Increased inflation in Peru or Colombia could have an adverse effect on the Peruvian and Colombian economies generally and, therefore, on our business, financial condition and results of operations.

In the past, Peru and Colombia both have suffered through periods of high inflation and hyperinflation, which has materially undermined their economies and their respective governments’ ability to create conditions that support economic growth. High inflation and hyperinflation have the effect of making our services more expensive for our patients and decreasing their ability to afford our services. Any such impact on the Peruvian or Colombian economy from inflation may have a material adverse effect on our business, financial condition and results of operations.

Variations in foreign exchange rates may adversely affect our financial condition and results of operations.

The Peruvian and Colombian currencies have fluctuated against the U.S. dollar, each other and other foreign currencies over the last four decades. For the year ended December 31, 2020, we generated 70.9% of our revenues in Peruvian soles and 29.1% of our revenues in Colombian pesos. Our consolidated statement of income and other comprehensive income is presented in Peruvian soles and is impacted by the translation of income and expenses of transactions in Colombian pesos to Peruvian soles. The Colombian peso has been volatile in recent years, which in turn creates volatility in our results of operations. In particular, the Colombian peso experienced significant depreciation against both the U.S. dollar and the Peruvian sol in March and April 2020 as a result of the collapse in energy markets. Fluctuations in the exchange rates of the Colombian peso to the Peruvian sol could impair the comparability of our results from period to period and depreciation in such exchange rate could have a material adverse effect on our results of operations and financial condition.

We are also exposed to the foreign exchange rate risk associated with our U.S. dollar-denominated debt. Although we have entered into hedging arrangements with respect to all of our U.S. dollar-denominated debt, we recognize gains and losses from this debt and the related hedging instruments resulting from exchange rate differences between Peruvian soles, Colombian pesos and U.S. dollars in profit or loss. For more information see Note 26 to our audited consolidated financial statements.

Depreciation of the Colombian peso against the Peruvian sol or the Peruvian sol or Colombian peso against the U.S. dollar and/or other currencies may therefore adversely affect our business, financial condition and results of operations.

Changes in tax laws in Peru or Colombia may increase our tax liabilities and, as a result, have a material and adverse effect on us.

The Peruvian government regularly implements changes to its tax regulations and interpretations. Potential changes may include modifications in the taxable events, the taxable bases or the tax rates, or the enactment of temporary taxes that, in some cases, could become permanent taxes. These changes could, if enacted, indirectly affect us. For instance, the Peruvian government has recently introduced several changes related, among others, to thin capitalization rules, indirect transfer of shares and the concept of permanent establishment.

On May 7, 2019, the Peruvian government approved regulations establishing substantive and procedural provisions for the application of the General Anti-Avoidance Rule (“GAAR”), lifting the suspension in place since 2014. Subsequent guidance published by the Superintendencia Nacional de Aduanas y de Administracion Tributaria (“SUNAT”) clarified that the GAAR may be applied to transactions occurring on or after July 19, 2012, the date that GAAR became effective, including during the time in which its application was suspended. GAAR gives SUNAT the power to reclassify certain transactions that are exclusively performed in a manner solely driven by tax reasons, resulting in tax savings or advantages that otherwise would not have been available. As a result, GAAR may have an impact on our taxable base.

In addition, through the enactment of Urgent Decree No. 005-2019, the Peruvian government modified and extended the application of the tax exemption on capital gains derived from the sale of securities through the BVL until December 31, 2022.

We are currently unable to estimate the impact that such reforms may have on our business. The effects of any tax reform that could be proposed in the future and any other changes that could result from the enactment of additional reform or changes in interpretation have not been, and cannot be, quantified. Any changes to the Peruvian tax regime may increase our and our subsidiaries’ tax liabilities or overall compliance costs, which could have a material adverse impact on our business, financial condition and results of operations.

The Colombian government also regularly implements changes to its tax regulations and interpretations. Colombia has gone through four tax reforms in the last six years, but the Colombian government continues to face serious budgetary constraints and pressure from rating agencies that could lead to future tax reforms, with potential adverse consequences on our financial results. On December 27, 2019, a tax reform was implemented by means of Law 2010 of 2019 intended to strengthen the mechanisms to prevent tax evasion and introduced other substantial changes to the then-existing tax legal framework. As a result, payments made to foreign entities are subject to an income tax withholding rate of 20%, however, this general rate does not apply to foreign indebtedness exceeding one year, in which case the applicable income tax withholding is 15%. Dividends paid by our subsidiaries to us out of profits that were previously subject to corporate income tax are subject to a withholding tax of 10% (increased from 7.5% in 2019 and 5% in 2018) and dividends paid out of profits that were not previously subject to corporate income tax are now subject to a withholding tax of 32% for 2020, 31% for 2021 and 30% for 2022, plus the foregoing 10%, which applies to any amount remaining after the 32%, 31% or 30% withholding is applied, in accordance with the applicable taxable year.

We cannot assure you that Peruvian or Colombian tax laws will not change or may be interpreted differently by authorities, and any change could result in the imposition of significant additional taxes or increase our current tax liabilities. Differing interpretations could result in future tax litigation and associated costs. Moreover, the Peruvian and Colombian governments have significant fiscal deficits that may result in future tax increases. Additional tax regulations could be implemented requiring additional tax payments, negatively affecting our business, financial condition and results of operations.

Risks Relating to the Offering and Our ADSs

The market price of our ADSs may fluctuate significantly, and you could lose all or part of your investment.

Volatility in the market price of our ADSs may prevent you from being able to sell your ADSs at or above the price you paid for them. The market price and liquidity of the market for our ADSs may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, among others:

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actual or anticipated changes in our results of operations, or failure to meet expectations of financial market analysts and investors;

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investor perceptions of our prospects or our industry;

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operating performance of companies comparable to us and increased competition in our industry;

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new laws or regulations or new interpretations of laws and regulations applicable to our business;

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general economic trends in Peru and Colombia, and Latin America in general;

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catastrophic events, such as earthquakes and other natural disasters; and

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developments and perceptions of risks in Peru, Colombia and other emerging markets.

Following the completion of the offering, Enfoca, our controlling shareholder, will own approximately % of our class B shares and % of our class A shares and certain of our officers and a majority of our directors may be employed by or otherwise affiliated with Enfoca, which could give rise to potential conflicts of interest.

As of December 31, 2020, Enfoca, our controlling shareholder held approximately 69.5% of our outstanding shares and voting power. Following the completion of this offering, our controlling shareholder will own approximately % of our class B shares and % of our class A shares, and as such, will continue to be our controlling shareholder following the completion of the offering. All class B shares will be held in trust under the Trust Agreement, pursuant to which the trustee will vote all class B shares held in trust as directed by Enfoca irrespective of Enfoca’s aggregate ownership of our common stock at any given time. See “Description of Our Share Capital—Trust Agreement.” As a holder of ADSs representing class A shares, you will only be entitled to vote on only certain matters submitted to a vote of the shareholders. As a result of its ownership of the majority of our class B shares and class A shares and its right to direct the voting of all or substantially all of the class B shares and a significant portion of the class A shares, Enfoca will have the power to, among other matters, elect all the members of the board of directors and decide upon major corporate transactions, such as a corporate reorganization or acquisitions and divestments of assets under the terms of the Ley General de Sociedades – Law N° 26887 (the “Peruvian Corporations Law”) and our by-laws. Enfoca will retain this control over significant corporate matters for as long as it, either by itself or together with Mr. Pinillos Casabonne, holds in the aggregate at least 10% of the outstanding class A shares. See “Description of Our Share Capital.” As a result, Enfoca may use its significant influence over our business without regard to the interests of other shareholders, including in ways that could have an impact on your investment in the ADSs.

In addition, certain of our officers and a majority of our directors may be employed by or otherwise affiliated with Enfoca. Although these directors and officers attempt to perform their duties within each company independently, such employment relationships and affiliations could give rise to potential conflicts of interest when a director or officer is faced with a decision that could have different implications for the two companies. These potential conflicts could arise, for example, over matters such as the desirability of changes to our business and operations, funding and capital matters, regulatory matters, matters arising with respect to agreements with Enfoca, board composition, employee retention or recruiting, labor, tax, employee benefit, indemnification and our dividend policy and declarations of dividends, among other matters.

Holders of ADSs may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable results to the plaintiff(s) in any such action.

The deposit agreement governing our ADSs provides that holders of ADSs, including purchasers in secondary transactions and holders of ADSs that withdraw their class A shares, waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our class A shares, the ADSs or the deposit agreement, including any claim under U.S. federal securities laws. If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement, by a federal or state court in the City of New York, which has non-exclusive jurisdiction over matters arising under the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before entering into the deposit agreement.

If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us or the depositary. As a result of the jury waiver provision, it may also be more costly for you to bring a claim against us or the depositary, including a claim for a breach of the U.S. federal securities laws. Moreover, if a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action.

Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder.

You may not be able to sell ADSs you own or the class A shares underlying the ADSs at the time or the price you desire because an active or liquid market for these securities may not develop.

Prior to this offering, there has been no public market for our ADSs or for our class A shares underlying our ADSs. We intend to apply to list our ADSs on the NYSE and we intend to apply to list our class A shares on the BVL. We cannot predict whether an active, liquid public trading market for our ADSs will develop or be sustained. Active, liquid trading markets generally result in lower price volatility and respond more efficiently to orders from investors to purchase or sell securities. Liquidity of a securities market is often a function of the volume of the underlying shares that are publicly held by unrelated parties. We expect % of our class A shares to be held by unrelated parties following this offering. In addition, although ADS holders will be entitled to withdraw class A shares underlying our ADSs from the depositary at any time, the BVL is generally a less liquid trading market than major world equity securities markets.

Substantial sales of ADSs or class A shares after this offering could cause the price of our ADSs or class A shares to decrease.

Our existing shareholders will hold a large number of our common shares after this offering. We and our existing shareholders will agree with Morgan Stanley & Co. LLC not to offer, sell, contract to sell or otherwise

dispose of or hedge any class A shares, class B shares or ADSs, without the prior written consent of Morgan Stanley & Co. LLC, during the 180 days following the date of this prospectus, subject to certain exceptions. After this 180-day period expires, these securities will be eligible for sale. The market price of our ADSs could decline significantly if we or our existing shareholders sell securities of our company or the market perceives that we or our existing shareholders intend to do so.

The disparity in the voting rights between the classes of our shares may have a potential adverse effect on the value of the ADSs, and may limit or preclude your ability to influence our corporate matters.

The class A shares underlying the ADSs are only entitled to vote (together with the class B shares) on the following matters submitted to a vote of the shareholders: approval of financial statements; approval of capital increases or reductions (other than as described below); appointment, or delegation to our board of directors of the appointment, of our independent auditors; and payment of dividends. The class A shares will not have voting rights on any other matter subject to shareholders’ approval.

As a result of the foregoing, the class A shares, including any ADSs representing the class A shares, will not be entitled to vote on, among other matters, the election and removal of directors and setting of directors’ compensation; our issuance of debt securities; amendments to our by-laws (other than in connection with capital increases or reductions); the sale, in a single transaction, of assets with a value exceeding 50% of our share capital; the merger, spin-off, division, reorganization, transformation or dissolution of the Company; and special investigations and audits.

In September 2020, our shareholders delegated to our board of directors the authority to approve one or more capital increases of up to S/236,546,679, which delegation will remain in place for five years thereafter and will allow our board of directors to determine the timing, amount, and conditions of each such capital increase, without requiring further shareholders’ approval. This approval also included an express advanced waiver of any preemptive rights that would apply in connection with any such capital increases. This delegation may only be revoked by a vote of the class B shares.

Because of the difference in voting rights between our class B and class A shares, the holders of our class B shares will control significant matters submitted to our shareholders following this offering. The different voting rights of our class A shares and class B shares will remain in effect until Enfoca and Mr. Pinillos Casabonne own in the aggregate less than 10% of the outstanding amount of class A shares. This will limit or preclude your ability to influence corporate matters for the foreseeable future, which may have an adverse impact on the value of the ADSs.

Holders of ADSs may be unable to exercise voting rights with respect to our class A shares underlying the ADSs at our shareholders’ meetings.

As a holder of ADSs representing class A shares being held by the depositary on your behalf, you may exercise voting rights with respect to the class A shares represented by the ADSs only in accordance with the deposit agreement relating to the ADSs. Holders of our class A shares will receive notice of shareholders’ meetings through publication of a notice in an official gazette in Peru, a Peruvian newspaper of general circulation, the daily bulletin of the BVL and through the website of the SMV, and will be able to exercise their voting rights by either attending the meeting in person or voting by proxy. ADS holders will not receive notice directly from us. Instead, pursuant to the deposit agreement, we will notify the depositary, who will mail to holders of ADSs the notice of the meeting and a statement as to the manner in which voting instructions may be given. To exercise your voting rights, you must instruct the depositary how to exercise the voting rights for the class A shares which underlie your ADSs. Due to these additional procedural steps involving the depositary, the ADS holders may not be able to exercise such voting rights on time.

Holders of ADSs also may not receive voting materials in time to instruct the depositary to vote the class A shares underlying their ADSs. In addition, the depositary and its agents are not responsible for failing to carry out

voting instructions of the holders of ADSs or for the manner of carrying out such instructions, unless such failure can be attributed to negligence or bad faith on the part of the depositary or its agents. Accordingly, you may not be able to exercise voting rights, and you will have little, if any, recourse if the underlying class A shares are not voted at all or as requested.

Holders of ADSs may be unable to exercise preemptive or accretion rights with respect to the class A shares underlying their ADSs.

Under the Peruvian Corporations Law, if we issue new class A shares as part of a capital increase, our shareholders will generally have the right to subscribe to a proportional number of common shares of the class held by them to maintain their existing ownership percentage, which is known as preemptive rights. In addition, shareholders are entitled to the right to subscribe for the unsubscribed common shares of the class held by them or, if expressly provided for in our by-laws or approved by our shareholders, other classes that remain unsubscribed at the end of a preemptive rights offering, on a pro rata basis, which is known as accretion rights. See “Description of our Share Capital—Preemptive and Accretion Rights.” You may not be able to exercise the preemptive or accretion rights relating to class A shares underlying your ADSs unless a registration statement under the Securities Act is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement with respect to the class A shares relating to these preemptive and accretion rights, and we cannot assure you that we will file any such registration statement. Unless we file a registration statement or an exemption from registration is available, you may receive only the net proceeds from the sale of your preemptive and accretion rights by the depositary or, if the preemptive and accretion rights cannot be sold, they will be allowed to lapse. As a result, U.S. holders of our ADSs may suffer dilution of their interest in our company upon future capital increases.

We are entitled to amend the deposit agreement and to change the rights of ADS holders under the terms of such agreement, without the prior consent of the ADS holders.

We are entitled to amend the deposit agreement and to change the rights of the ADS holders under the terms of such agreement, without the prior consent of the ADS holders. Any change related to an increase in ADS fees or charges or any modification that might hinder the rights of the ADS holders will be effective 30 days after the ADS holders have received notice of such change or modification and such holders will have no right to any compensation whatsoever.

We are an “emerging growth company,” and the reduced reporting requirements applicable to emerging growth companies may make our ADSs less attractive to investors.

We are an “emerging growth company” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of Sarbanes-Oxley, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could lose that status sooner if our gross revenues exceed US$1.07 billion, if we issue more than US$1.0 billion in nonconvertible debt in a three-year period or if the fair value of our common shares held by non-affiliates exceeds US$700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our ADSs less attractive because we may rely on these exemptions, or if we choose to rely on additional exemptions in the future. If some investors find our ADSs less attractive as a result, there may be a less active trading market for our ADSs and the market price of our ADSs may be more volatile.

Our by-laws provide that the courts of Peru will be the exclusive forum for the resolution of all shareholder complaints other than complaints asserting a cause of action arising under federal or state securities laws of the United States, and that the United States District Court for the Southern District of New York will be the exclusive forum for the resolution of any shareholder complaint asserting a cause of action arising under federal or state securities laws of the United States.

Our by-laws provide that the courts of Peru will be the exclusive forum for resolving all shareholder complaints other than shareholder complaints asserting a cause of action arising under federal or state securities laws of the United States, and that the United States District Court for the Southern District of New York will be the exclusive forum for resolving any shareholder complaint asserting a cause of action arising under federal or state securities laws of the United States, including applicable claims arising out of this offering. These choice of forum provisions may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such provision with respect to suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Additionally, our shareholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. If a court were to find either choice of forum provision contained in our by-laws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our results of operations and financial condition.

Peru has different corporate disclosure and accounting standards than those you may be familiar with in the United States.

Financial reporting and securities disclosure requirements in Peru differ in certain significant respects from those required in the United States. There are also material differences among IFRS and U.S. GAAP. Accordingly, the information about us available to you will not be the same as the information available to holders of shares issued by a U.S. company. In addition, the Peruvian Securities Market Law, which governs open or publicly listed companies, such as us, imposes disclosure requirements that may be more limited than those in the U.S. in certain important aspects. Although Peruvian law imposes restrictions on insider trading and price manipulation, applicable Peruvian laws are different from those in the United States, and the Peruvian securities markets may not be as highly regulated and supervised as the U.S. securities markets.

Our status as a foreign private issuer allows us to follow alternate standards to the corporate governance standards of the NYSE, which may limit the protections afforded to investors.

We are a “foreign private issuer” within the meaning of the rules under the Securities Act. Under NYSE rules, a foreign private issuer may elect to comply with the practices of its home country and not to comply with certain corporate governance requirements applicable to U.S. companies with securities listed on the exchange. We currently follow certain Peruvian practices concerning corporate governance (which are not mandatory under Peruvian regulations) and intend to continue to do so. Accordingly, holders of our ADSs may not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements.

For example, NYSE listing standards provide that the board of directors of a U.S.-listed company must have a majority of independent directors at the time the company ceases to be a “controlled company.” Under Peruvian corporate governance practices, a Peruvian company is not required to have a majority of independent members on its board of directors.

The listing standards for NYSE also require that U.S.-listed companies, at the time they cease to be “controlled companies,” have a nominating/corporate governance committee and a compensation committee (in

addition to an audit committee). Each of these committees must consist solely of independent directors and must have a written charter that addresses certain matters specified in the listing standards. Under Peruvian law, a Peruvian company may, but is not required to, form special governance committees, which may be composed partially or entirely of non-independent directors.

In addition, NYSE rules require the independent non-executive directors of U.S.-listed companies to meet on a regular basis without management being present. There is no similar requirement under Peruvian law.

The NYSE listing standards also require U.S.-listed companies to adopt and disclose corporate governance guidelines. In July 2002, the SMV and a committee comprised of regulatory agencies and associations prepared and published a list of suggested non-mandatory corporate governance guidelines called the “Principles of Corporate Governance for Peruvian Companies.” Although we have implemented a number of these measures, we are not required to comply with the corporate governance guidelines by law or regulation.

As a foreign private issuer, we are exempt from certain provisions applicable to U.S. domestic public companies.

As a foreign private issuer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short-swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. The information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, holders of our ADSs may not be afforded the same protections or information that would be made available to our shareholders if we were a U.S. company.

Minority shareholders in Peru are not afforded equivalent protections as minority shareholders in other jurisdictions, such as the United States, and investors may face difficulties in commencing judicial and arbitration proceedings against our company or the controlling shareholder.

Our company and the controlling shareholder are organized and existing under the laws of Peru, and a majority of our directors and all of our officers reside in Peru or Colombia. Accordingly, investors may face difficulties in serving process on our company, our directors and officers or the controlling shareholder in other jurisdictions, and in enforcing decisions granted by courts located in other jurisdictions against our company, our directors and officers or the controlling shareholder that are based on securities laws of jurisdictions other than Peru.

In Peru, there are no proceedings to file class action suits or shareholder derivative actions with respect to issues arising between minority shareholders and an issuer, its controlling shareholders or directors and officers. Furthermore, the procedural requirements to file actions by shareholders differ from those of other jurisdictions, such as in the United States. As a result, it may be more difficult for our minority shareholders to enforce their rights against us, our directors, officers or controlling shareholder as compared to the shareholders of a U.S. company. The deposit agreement provides that the depositary has no obligation to commence or become involved in any judicial proceedings and any other legal actions relating to the ADSs or the deposit agreement, either on behalf of the ADS holders or on behalf of any other person.

Judgments of Peruvian courts with respect to our class A shares will be payable only in soles.

If proceedings are brought in the courts of Peru seeking to enforce our obligations in respect of the class A shares, we will have the right to discharge our obligations in soles. Under Peruvian law, an obligation in Peru to pay amounts denominated in a currency other than soles and except where there is express agreement to the

contrary, may be satisfied in Peruvian currency at the exchange rate published by the SBS. The then-prevailing exchange rate may not afford non-Peruvian investors with full compensation for any claim arising out of or related to our obligations under the ADSs.

You will experience immediate and substantial dilution in the book value of the class A shares and ADSs you purchase in this offering.

Because the initial offering price of the ADSs being sold in this offering will be substantially higher than our net tangible book value per common share, you will experience immediate and substantial dilution in the book value of the class A shares underlying your ADSs. Net tangible book value represents the amount of our tangible assets on an adjusted basis, minus our total liabilities on an adjusted basis. As a result, at the assumed initial public offering price of US$ per ADS (based on the midpoint of the price range set forth on the cover page of this prospectus), we currently expect that you will incur immediate dilution of US$ per ADS if you purchase in this offering (assuming no exercise of the underwriters’ option to purchase additional ADSs).

Our newly issued class A shares from this offering will initially be represented by certificados provisionales and you will not be able to cancel your ADSs and withdraw the deposited class A shares until the definitive class A shares are issued.

In accordance with Peruvian law, our class A shares underlying the ADSs will be represented by preliminary stock certificates (certificados provisionales) until the capital increase allowing for the issuance of such class A shares is recorded in the Corporations Public Registry. We cannot assure you that the Corporations Public Registry will not delay the recording of our capital increase. Once the capital increase has been recorded, we will issue definitive stock certificates in exchange for the preliminary stock certificates. Only after the capital increase has been recorded with the Corporations Public Registry, and we have issued definitive stock certificates in exchange for the preliminary stock certificates, will you be able to cancel your ADSs and withdraw the deposited class A shares.

Our ADSs may not be a suitable investment for all investors, as an investment in ADSs presents risks and the possibility of financial losses.

The investment in our ADSs is subject to risks. Investors who wish to invest in ADSs are thus subject to asset losses, including loss of the entire value of their investment, as well as other risks, including those related to the class A shares, the Company, the industry in which we operate, our shareholders and the general macroeconomic environment in Peru and Colombia, among other risks. Each potential investor in ADSs must therefore determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:

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have sufficient knowledge and experience to make a meaningful evaluation of the ADSs, the merits and risks of investing in ADSs and the information contained in this prospectus or any applicable supplement;

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have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in ADSs and the impact the shares will have on its overall investment portfolio;

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have sufficient financial resources and liquidity to bear all of the risks of an investment in the ADSs; and

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understand thoroughly the terms of ADSs and be familiar with the behavior of any relevant indices and financial markets; and be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

USE OF PROCEEDS

We estimate that the net proceeds to us from this offering will be approximately US$ million, or US$ million if the underwriters exercise their option to purchase additional ADSs in full. These amounts assume an initial public offering price of US$ per ADS (the midpoint of the price range set forth on the cover page of this prospectus), after deducting the estimated underwriting discounts and commissions and offering expenses payable by us.

The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our common stock, and facilitate our future access to the capital markets. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us from this offering. We currently intend to use the net proceeds from this offering for general corporate purposes, including acquisitions, expansion of our existing facilities, other capital expenditures and the repayment of indebtedness from time to time.

We routinely evaluate acquisition and investment opportunities that are aligned with our strategic goals, so we may also acquire, or invest in, businesses or assets that are complementary to our core business. However, we do not have agreements or commitments to enter into any acquisitions at this time. We also routinely evaluate opportunities to expand existing facilities as an important part of our growth plan. We cannot assure you that we will find opportunities that we consider to be favorable to us, whether we will be able to take advantage of such opportunities should they arise, or the timing of and funds required by such opportunities. In addition, we expect to finance these opportunities with a combination of cash on hand, net proceeds from this offering, new borrowings and/or financial contributions from partners, depending on a variety of commercial considerations at such time. Accordingly, we will have significant flexibility in applying the net proceeds from this offering. As a result, our actual use of proceeds from this offering could vary significantly from the currently expected use.

Each US$1.00 increase (decrease) in the assumed initial public offering price of US$ per ADS, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately US$ million, assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions payable by us. Each increase (decrease) of 1.0 million shares in the number of ADSs sold by us in this offering, as set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately US$ million, assuming the assumed initial public offering price of US$ per ADS, the midpoint of the price range set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions payable by us. The information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing.

DIVIDENDS

Dividend Policy

Our dividend policy has historically been to distribute up to S/10 million per year of our net profit obtained from the preceding year. Following this offering, we intend to retain all available funds and future earnings, if any, to fund the expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will be subject to approval by holders of our class A shares and class B shares voting together at our annual shareholders’ meeting. Any determination by our board of directors to recommend for approval the declaration and payment of dividends will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. Our dividend policy notwithstanding, under Peruvian law, shareholders representing 20% of our outstanding common shares have the right to compel us to distribute at least 50% of the net profit of the previous fiscal year.

Each share of our common stock represents the same economic interest, except that, as provided in our by-laws, the class A shares benefit from the right to receive a preferred dividend consisting of 100% of any dividends distributed until we have distributed US$1 billion (or its equivalent in soles) in the aggregate in cash dividends.

Under the Peruvian Corporations Law, companies may distribute up to 100% of their profit (after payment of income tax) subject to a mandatory 10% legal reserve requirement until the legal reserve equals 20% of shareholders’ equity and provided that no accumulated losses exist. According to Article 40 of the Peruvian Corporations Law, in order to distribute dividends, profits must be determined based on the individual financial statements of the company.

In order to allow for the settlement of securities, under the rules of the SMV, investors who purchase shares of a listed company will have the right to receive the dividend payment, provided that such transaction has been executed by the corresponding cutoff date (fecha de corte). Holders of shares are not entitled to interest on accrued dividends. In addition, under Article 232 of the Peruvian Corporations Law, the right to collect dividends declared by a company expires three years after the original dividend payment date (unless, like us, it is a publicly held company, in which case the right to collect dividends declared by the company would expire ten years after the original dividend payment date).

Because we are a holding company and all of our business is conducted through our subsidiaries, we pay, and we expect to continue paying, dividends, if any, from funds we receive from our subsidiaries. Accordingly, our ability to pay dividends to shareholders is dependent on the earnings of, and dividends and other distributions from, our subsidiaries. The ability of our subsidiaries to make distributions to us may be restricted by law or by the terms of our existing or future indebtedness. Although the restrictions on our subsidiaries’ ability to pay dividends to us have not to date had a material impact on our liquidity or capital resources, we cannot assure you that the agreements governing our existing or future indebtedness will permit our subsidiaries to provide us with sufficient dividends or distributions or permit us to loan money or enter into other similar arrangements to fund dividend payments. In addition, the indenture governing our 2025 Notes contains terms that restrict us from paying dividends to our shareholders. See “Risk Factors—Risks Related to Our Business—We are a holding company and all of our operations are conducted through our subsidiaries. Our ability to pay dividends to you will depend on the ability of our subsidiaries to pay dividends and make other distributions to us” and “Risk Factors—Risks Related to Our Business—Our indebtedness could adversely affect our financial condition and ability to operate our business.”

In 2019 and 2020, we paid dividends to our shareholders of S/10 million (or US$2.6 million) each year. These amounts were approved at our annual shareholders’ meetings during each year.

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2020:

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on an actual basis; and

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as adjusted to give effect to net proceeds amounting to US$ (S/ ) for the sale of our ADSs in the offering, which reflects the sale of ADSs at an assumed initial public offering price of US$ per ADS (the midpoint of the price range set forth on the cover page of this prospectus), after deducting estimated underwriting discounts and commissions and offering expenses payable by us.

The as adjusted information in the table below assumes no exercise of the underwriters’ option to purchase additional ADSs.

The table below should be read in conjunction with “Presentation of Financial and Other Information,” “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and our consolidated financial statements included in this prospectus.


	As of December 31, 2020
	Actual				As Adjusted
	(in millions of US$)(1)		(in millions of S/)		(in millions of US$)(1)	(in millions of S/)
Loans and borrowings (current portion)(2)	$	4.8	S/	18.4	$	S/
Loans and borrowings (non-current portion)(2)		309.2		1,190.2

Total loans and borrowings		314.0		1,208.7
Total equity		169.4		652.1
Total capitalization	$	483.3	S/	1,860.8	$	S/

(1)	Calculated based on an exchange rate of S/3.8498 to US$1.00 as of June 30, 2021.

(2)	As of December 31, 2020, we had S/36.3 million (US$9.4 million) guaranteed secured loans and borrowings and S/1,172.3 million (US$304.5 million) guaranteed unsecured loans and borrowings.

DILUTION

Purchasers of our ADSs in this offering will experience immediate and substantial dilution to the extent of any difference between the initial public offering price per ADS and the net tangible book value per ADS upon the completion of the offering.

Net tangible book value represents the amount of our total assets, less our total liabilities and excluding goodwill. Net book value per class A share is determined by dividing our net book value by the number of our outstanding class A shares.

As of December 31, 2020, our net tangible book value was S/ million, or S/ per class A share (equivalent to US$ per ADS). Based upon an assumed initial public offering price of US$ per ADS (the midpoint of the price range set forth on the cover page of this prospectus), our net tangible book value would increase to S/ per class A share or US$ per ADS, and the immediate dilution to purchasers of our ADSs in the offering will be S/ per class A share or US$ per ADS or % following the offering. The following table illustrates this dilution per class A share and per ADS, assuming no exercise of the underwriters’ option to purchase additional ADSs:


	As of December 31, 2020
	Per ADS	Per class A share
Assumed initial public offering price	US$	S/
Net tangible book value
Dilution to new investors

If the underwriters exercise their option to purchase additional ADSs in full, our net tangible book value following the offering would increase to S/ per class A share or US$ per ADS and the immediate dilution to purchasers of ADSs in the offering would be S/ per class A share or US$ per ADS.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements as of and for the years ended December 31, 2020, 2019 and 2018 and the notes thereto, included elsewhere in this prospectus, as well as the information presented under “Presentation of Financial and Other Information.”

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in “Forward-Looking Statements” and “Risk Factors.”

Overview

We are one of the largest and most recognized players in the Peruvian healthcare industry and have a growing presence in Colombia. With more than 30 years of experience in the healthcare industry, we provide oncology healthcare plans in Peru and operate hospitals and clinics in Peru and Colombia that provide high-quality medical services at all levels of complexity. Our mission is to transform healthcare in the countries in which we operate by providing excellent patient outcomes and positive, streamlined patient and plan member experiences at an affordable cost. We believe we are well positioned to fulfill this mission due to our patient-centric culture, scale, innovative use of technology, unique vertically integrated oncology platform in Peru and high degree of horizontal integration in our Peruvian and Colombian healthcare networks, all of which allow us to scale nationally and regionally with cost efficiencies and further advance our strategic development. Furthermore, we believe that we are uniquely positioned to disrupt the health-tech market in Latin America. Leveraging on the breadth of our healthcare network, we intend to expand and accelerate our strategic technology platform to launch one of SSLA’s largest one-stop healthcare ecosystems in terms of members, providing our current and future users with an end-to-end, personalized and immediate healthcare solution that we believe will result in us becoming the true digital healthcare leader in the region.

Our business was founded in Peru in 1989 as Oncosalud, a healthcare coverage provider selling prepaid plans covering a full range of services for the prevention, detection and treatment of cancer for a modest monthly payment that varies based on plan type and age of plan members and was on average S/54.2 (US$14.1) per month for the year ended December 31, 2020. Our prepaid oncology plans addressed an unmet need in the healthcare coverage market in Peru at the time and quickly began to grow. Starting in 1997, we began to build our own network of Oncosalud facilities to primarily treat our plan members but also patients of private payers, including patients covered by private insurance. Clínica Oncosalud, our flagship hospital in this network, has a Diamond accreditation from ACI. Oncosalud had 830,643 members as of December 31, 2020, which was more than each of the private insurance and EPS systems in Peru as of that date. Measured by number of plan members, we had a market share of 28.0% of all private healthcare plans in Peru in 2020 and had the second largest market share of any single private healthcare plan, according to data from SUSALUD. Oncosalud currently operates two specialized oncology hospitals and three oncology clinics. Through its vertically integrated model, Oncosalud has achieved high levels of both effectiveness and efficiency: during the year ended December 31, 2020, 97% of Oncosalud members were treated in our facilities, which allows us to control medical costs, manage treatment protocols and provide high-quality cancer treatment. Notably, for the cohort of patients diagnosed between 2010 and 2015, Oncosalud’s 5-year cancer survival rate was 75.5%. In addition, we had an MLR of 43.0% as of December 31, 2020, which we believe is one of the lowest in Latin America, based on the MLRs published by other publicly-traded healthcare companies in Latin America that provide prepaid healthcare plans or health insurance coverage. During 2020 and 2019, through our Oncosalud network of facilities, we treated more than 12,800 and 12,500 patients, respectively. By guiding our plan members from prevention through early detection of cancer and then through the full treatment cycle, we take the uncertainty and fear out of cancer treatment and provide top quality care in a compassionate and humane manner.

in Peru. Through the development and acquisition of facilities since that time, we have built a network of hospitals and clinics located in all of the major cities in the country, with premium clinical capabilities and a wide range of medical specialties and subspecialties. Today, with our Auna Peru network, we own and operate five hospitals and two clinics as well as numerous other facilities providing complementary services, such as pharmaceutical, diagnostic imaging and clinical laboratory services. We are a provider to essentially all of the private payers in the Peruvian healthcare sector, including traditional private insurers, EPS providers and prepaid plan operators. Our Auna Peru network is horizontally integrated, meaning that patients can access all of their treatment, diagnostic imaging, laboratory and pharmaceutical needs at one of our facilities instead of having to go to different providers for each service. Additionally, for certain high-complexity procedures that cannot be performed at our regional hospitals, patients can be treated at Clínica Delgado, our high-complexity facility in Lima and the flagship hospital of the Auna Peru network. Moreover, we were the first private institution in Peru to implement an EMR system in 2013 as part of our modern HIS, and today all of our hospitals in Peru use our HIS, which allows us to closely monitor and anticipate patient health needs, efficiently manage costs across our patient population and improve medical outcomes and the quality of our services. Through this horizontal integration, we are able to foster a seamless, positive patient experience across each of our networks in Peru. In addition, we are also able to centralize processes, such as procurement of equipment and medicines, and increase our negotiating power with payers, which allows us to more efficiently manage our costs and price our services competitively.

In our Auna Peru network, we own and operate premium medical facilities, employ some of the leading medical professionals in the country and are able to achieve excellent patient outcomes. Our flagship hospital in this network, Clínica Delgado, which we opened in 2014, is the country’s leading high-complexity hospital and has quickly established itself as a standard setter in Latin America, as evidenced by its Diamond accreditation from ACI and its ranking among the best hospitals in Peru across a wide range of categories by GHI in 2018. We also have six other primary facilities that we acquired, modernized, expanded and relaunched after a series of strategic acquisitions in 2011 and 2012 and now have a presence in all of the major urban areas in Peru. We treated more than 184,000 and 198,000 patients during 2020 and 2019, respectively, at facilities in our Auna Peru network, which had a total of 287 beds as of December 31, 2020.

In 2018, we leveraged our experience and success in providing integrated patient experiences and outstanding outcomes in Peru and expanded into Colombia with our acquisition of Grupo Las Américas, one of Colombia’s leading healthcare providers located in the country’s second largest city, Medellín. In 2020, we began the process of rebranding Grupo Las Américas as our Auna Colombia network and completed such process during the first quarter of 2021. In addition, in September 2020, we further expanded our Auna Colombia network with our acquisition of Clínica Portoazul, a premium high-complexity private hospital located in the country’s fourth largest city, Barranquilla. Our Auna Colombia network provides healthcare services to patients covered by a range of payers in Colombia, including both public and private insurers, and currently consists of two hospitals and five clinics in Medellín and one hospital in Barranquilla, as well as a range of facilities providing complementary services. Similar to our Auna Peru network, our Auna Colombia network is also horizontally integrated, which enables us to be a one-stop shop for all of our patients’ needs and provide them with a seamless patient experience. In our Auna Colombia network, we also have premium medical facilities, employ some of the leading medical professionals in the country and are able to achieve high quality patient outcomes. The flagship hospital in our Auna Colombia network, Clínica Las Américas, is the leading private hospital in Medellín and was ranked the 7th best hospital in Colombia in América Economía’s 2020 Best Hospitals Ranking. We also own the IDC in Medellín, one of the country’s largest and leading private oncology hospitals and the only institution in Colombia that is a sister institution of MD Anderson, one of the leading cancer care providers in the United States. We currently have more than 440 beds and have treated more than 263,000 and 246,000 patients during 2020 and 2019, respectively, in the Auna Colombia network.

Segment Reporting

Operating segments are components of a company about which separate financial information is available that is regularly evaluated by the chief operating decision maker(s) in deciding how to allocate resources and assess performance. We have determined that our reportable segments are: (i) Oncosalud Peru, (ii) Healthcare Services in Peru and (iii) Healthcare Services in Colombia. Our Oncosalud Peru segment consists of our prepaid oncology plans and oncology services provided at our Oncosalud facilities in Peru, including services provided under our prepaid plans and third-party healthcare plans and paid for out-of-pocket by our patients. Our Healthcare Services in Peru segment consists of healthcare services provided at any of our facilities in Peru other than those in the Oncosalud network. Oncosalud Peru is a payer to Healthcare Services in Peru, as are other third-party payers, for oncology services provided to it by our Healthcare Services in Peru segment, and the cost of such services are reflected as a cost to our Oncosalud Peru segment and a revenue to our Healthcare Services in Peru segment in our segment reporting. Our Healthcare Services in Colombia segment consists of healthcare services provided at any of our facilities in Colombia. The accounting policies we follow for these segments are the same as those for the Company on a consolidated basis.

Factors Affecting Our Results of Operations

We believe that the most significant factors affecting our results of operations include:

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Utilization and Mix of Healthcare Services. One of the most important factors affecting our financial condition and results is the rate of utilization of the healthcare services provided to our patients, including the number of outpatient consultations, emergency services, surgeries and hospitalizations that we provide in a period, as well as our ability to adequately cross-sell complementary services such as pharmaceutical, diagnostic imaging and clinical laboratory services. Our utilization rates are dependent on the number of plans for which our facilities are considered in network. As the number of plans for which we are in network increases, so does our patient universe and consequently our utilization rates. As our utilization rates increase, so does our revenue and our margins because it allows us to increase our economies of scale, as our asset base is largely a fixed cost. Likewise, as utilization rates decrease, so do our margins, and because a portion of our costs are essentially fixed, higher utilization rates drive higher margins in our business. The mix of healthcare services provided in a period also impacts our revenue, as we derive higher revenue from high-complexity procedures, such as complex surgeries, than low-complexity procedures.

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Growth of Oncosalud Membership and Balanced Age Demographic. Increasing the total number of Oncosalud plan members is vital for the continued growth of our business. As we increase our plan member population, the rate of cancer incidence among our plan members generally stays steady or increases at a stable pace. Through new plan members, we obtain additional resources to treat our plan members that are diagnosed with cancer and are able to spread the costs of treatment across a larger population, while also increasing our profitability. In addition, we seek to maintain a balanced age demographic in our member population. Younger patients pay lower plan rates, which tends to lower our average revenue per plan member, but their likelihood of being diagnosed with cancer is significantly lower, which reduces our expected average medical cost per plan member in any given period. Additionally, expected lifetime revenue is greater for younger plan members. The average age of our plan members as of December 31, 2020 was 34. Keeping a balanced mix of younger and older patients helps us manage our revenue and costs.

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Medical Inflation. Our financial condition and results are driven by our ability to control the costs of providing healthcare services, including oncology services, and appropriately price oncology plans in our Oncosalud Peru segment and negotiate reimbursement levels in our other segments. Our strong reputation in the market also depends on our having access to the newest technologies and medicines to diagnose and treat our patients, all of which can be expensive, and therefore places upward pressure on our costs. Moreover, we face significant competition for qualified medical personnel in both Peru and Colombia, which may require us to increase salaries and other benefits provided to our personnel. If we are unable to continue providing high quality care while managing these cost increases in our Oncosalud Peru segment, our operating profit could decline or we may be required to pass these cost increases onto our plan members via the pricing of our oncology plans, which could make our plans less attractive and also impact our profitability. We continually focus on balancing the pressures of medical inflation with the benefits of providing the best quality healthcare services at affordable prices in order to continue to build the strength of our brands, which helps us grow our revenues and manage our costs.

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Acquisition of Grupo Las Américas. We acquired 97.3% of the shares of Grupo Las Américas on December 27, 2018, which has been consolidated into our results of operations from the date of acquisition. We acquired an additional 2.5% of the share capital of Grupo Las Américas in January 2020. The main asset of Grupo Las Américas is Clínica Las Américas. The acquisition was recorded using the purchase method of accounting, which recognizes assets and liabilities at their estimated fair values at the date of purchase, including identifiable intangibles not recorded in the financial statements of each acquired entity, pursuant to IFRS 3 Business Combinations. In connection with our acquisition of Grupo Las Américas, we identified S/172.8 million (US$44.9 million) of goodwill. Because we only owned Grupo Las Américas for five days in 2018, our results of operations for the year ended December 31, 2019 are not directly comparable to the year ended December 31, 2018. In order to facilitate a more useful comparison of our results of operations period-to-period, we isolate the effect of the acquisition of Grupo Las Américas in certain explanations below.

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Expansion of Our Network. Our ability to expand our network of healthcare facilities is one of the most important factors affecting our results of operation and financial condition. Historically, our business growth has been primarily driven by planning and building new hospitals or expanding existing hospitals and by acquiring new hospitals from third parties, and we expect these activities to continue to be key drivers for our future growth. Each additional facility that we develop or acquire increases the number of patient cases treated in our network and contributes to our continued revenue growth. However, building new hospitals requires several years of capital expenditures and ramp up of operations prior to a facility becoming profitable, and it takes time and resources to integrate new hospitals acquired from third parties into our existing networks.

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Foreign Exchange Rates. Our functional currency is the Peruvian sol and we present our consolidated financial information in Peruvian soles. However, we generated 29.1% of our revenue in 2020 in Colombian pesos. In addition, a significant portion of our debt is U.S. dollar-denominated. Although we have entered into hedging arrangements with respect to all of our U.S. dollar-denominated debt and we also hedge our exposure to the Colombian peso, we recognize gains and losses from this debt and the related hedging instruments resulting from exchange rate differences between Peruvian soles, Colombian pesos and U.S. dollars in profit or loss.

Impact of COVID-19

Peruvian government announced new measures which applied to regions based on the region’s classification from high, very high and extreme. These measures included quarantines, limitation of activities, suspension of inter-provincial land trips and curfews. Auna’s activities are mainly carried out in the department of Lima, Peru, which was originally classified as extreme and was subsequently classified as high. On August 14, 2021, the Peruvian government declared an extension of these measures, which will become effective on September 3, 2021, until March 1, 2022. Furthermore, as the economy gradually recovers, Peru continues to be one of the countries with the highest mortality rates from COVID-19. Similarly, the Colombian government closed its borders and ordered a national lockdown on March 25, 2020 until August 31, 2020. However, at the end of August 2020, it announced a selective quarantine phase from September 1, 2020 until November 30, 2020. The lockdowns in Peru and Colombia effectively restricted nearly all economic activity in both countries, significantly impacting both the financial and operating performance of our business.

Our hospitals in Peru and Colombia are essential businesses, however, as a result of the pandemic, we were ordered to cancel all elective, non-emergency procedures and outpatient consultations in Peru and Colombia, restricting our services to emergency care only for the duration of the lockdowns. As a result, revenue from our Healthcare Services in Peru and Healthcare Services in Colombia segments presented a low level of growth of 1.4% and 2.5%, respectively, for the year ended December 31, 2020 compared to the year ended December 31, 2019. We have also seen a significant increase in the cost of sales and services throughout 2020 due to an increase in the purchase of gloves, masks and other personal protective equipment for all medical and administrative personnel who are in direct patient contact. At the same time, we have seen an increase in the prices of personal protective equipment, which has been in short supply around the world. In addition, we have experienced staffing shortages at our hospitals and clinics as medical personnel, working on the front lines, have contracted COVID-19 at high rates. We have covered these shortages by hiring temporary personnel and granting special bonuses to medical personnel caring for patients with COVID-19, which has increased our labor-related costs. As a result of increased costs, gross profit in our Healthcare Services in Peru and Healthcare Services in Colombia segments decreased 25.4% and 8.5%, respectively, for the year ended December 31, 2020 compared to the year ended December 31, 2019.

The COVID-19 pandemic has also led to disruption of regional and global economic activity, and to volatility and a downturn in the financial markets, which is expected to continue at least in the near term. In our Oncosalud segment, we have seen a decline in sales of our prepaid oncology plans as much of our sales force is working from home and certain of our other sales channels are shut down completely. The disruption has also led to a significant increase in unemployment and discretionary expenses and as a result, we have seen an increase in the number of plan members cancelling their plans, which led to a 10% decrease in our number of plan members from 922,945 in December 2019 to 830,643 in December 2020. Despite the decrease in plan members, our Oncosalud Peru segment’s revenue and gross profit increased 11.4% and 9.2%, respectively, for the year ended December 31, 2020 compared to the year ended December 31, 2019. The increase in revenue was due to an increase in plan prices upon renewal to account for increased medical costs. The increase in gross profit for our Oncosalud Peru segment was due to a decrease in services provided to plan members as part of the Peruvian government’s restrictions on outpatient consultations, including preventive check-ups, which tend to be more costly services. See “Risk Factors—Risks Related to Our Business—Our business has been and continues to be negatively impacted by the COVID-19 pandemic.”

We took certain measures in 2020 to bolster our capital position as a result of the economic uncertainty. For example, four of our subsidiaries, MedicSer, Oncocenter, Oncosalud S.A.C. and GSP Servicios Generales, each

applied for and received a loan of S/10 million and Clínica Vallesur S.A. applied for and received a loan of S/7.5 million, in each case under a loan relief program offered by the Peruvian government in response to the COVID-19 pandemic. In addition, our subsidiaries Grupo Las Américas and Instituto de Cancerologia S.A.S. applied for and received loans of COP12,837.0 million and COP4,069.0 million, respectively, under a loan relief program offered by the Colombian government in response to the COVID-19 pandemic. On November 20, 2020, we issued US$300 million aggregate principal amount of 6.500% Senior Notes due 2025. We used the net proceeds from the issuance of the 2025 Notes to repay US$255.9 million of indebtedness outstanding under the Credit Agreements and other facilities, including COVID-19 loans received from the Peruvian government and for general corporate purposes, including payment of dividends.

Components of Our Results of Operations

Total Revenue from Contracts with Customers

Total revenue from contracts with customers. We generate revenue from (i) premiums earned on our oncologic healthcare plans, which we also refer to as our oncology plans, in our Oncosalud Peru segment,(ii) the sale of healthcare services, which occurs in all of our segments, and (iii) the sale of medicines, which also occurs in all of our segments.

Oncology plans. We sell prepaid oncology plans in Peru to plan members for one-year terms, which are automatically renewed and adjusted for price increases at the end of the term, unless terminated by either party. Most of our plan members make payments pursuant to these plans on a monthly basis, while a smaller percentage of them make payments on an annual basis. The premiums we receive from the sales of oncology plans are recognized as revenue proportionally during the period in which a patient is entitled to healthcare services under his or her plan. Premiums related to the unexpired contractual coverage period under an oncology plan are recognized in the accompanying balance sheet as unearned premiums reserve.

Healthcare services. The revenue we generate from the sale of healthcare services is recognized as services are rendered to our patients and includes amounts related to the services provided as well as the products and supplies used in providing such services. The price of healthcare services is determined by the rates set forth in reimbursement arrangements that we have with individual healthcare providers for patients that have healthcare coverage or by reference to our standard rates for patients that do not have healthcare coverage and are generally paying out-of-pocket.

Sales of medicines. The revenue we generate from the sale of medicines is recognized when medicines are provided to our customers and in cases when our patients are hospitalized, when medicines are administered to them.

Cost of Sales and Services and Gross Profit

Cost of sales and services. Our cost of sales and services is primarily comprised of costs incurred in providing healthcare services, including the cost of medicines; personnel expenses for medical staff; medical

consultation fees; surgery fees; depreciation of medical equipment; depreciation of buildings and facilities; amortization of software; cost of services provided by third parties, primarily lease payments to third parties for certain of our facilities, service and repair costs at our facilities, custodial and cleaning services and utilities; cost of room services for inpatients; cost of clinical laboratories; and technical reserves for healthcare services.

Gross profit. Our gross profit is the difference between the revenue generated by the sale of our oncology plans, healthcare services and medicines and the cost of sales and services.

Operating Expenses, Loss for Impairment of Trade Receivables, Other Expenses and Other Income

Selling expenses. Our selling expenses include personnel expenses for our dedicated sales and marketing team; cost of services provided by third parties, primarily sales commissions paid to brokers, call centers and other third parties that assist with our sales efforts, as well as advertising costs; and other management charges, such as office rental for our sales team, advisory fees for market studies and sales team recruiting fees.

Administrative expenses. Administrative expenses consist primarily of costs incurred at the administrative level at each of our facilities, including personnel expenses for administrative staff; cost of services provided by third parties, primarily advisory and consulting fees and lease payments to third parties for office space; depreciation, primarily of buildings and facilities; amortization of intangibles, such as IT and software; various other administrative expenses, such as insurance; and tax expenses. We also allocate a portion of administrative expenses at the corporate level to each of our operating segments. For example, in 2018, we completed Project Galeno, an efficiency evaluation of our pharmacy management protocols in Peru. This project benefited both the Oncosalud Peru segment and the Healthcare Services in Peru segment, and as such, we allocated a portion of the expenses relating to that project to each segment.

Loss for impairment of trade receivables. Loss for impairment of trade receivables consists of the estimate for impairment of trade receivables. This estimate generally consists of provisions for services to patients who, after a certain period of time and in accordance with our impairment policy, do not pay for those services provided, either by themselves or through insurance companies. We calculate the estimate for impairment of trade receivables using an expected loss model whereby we estimate expected losses on our trade receivables based on our historical experience of impairment and other circumstances known at the time of assessment in accordance with IFRS 9. We record a gain for impairment of trade receivables for any recovery we make in excess of our estimated losses on trade receivables. The amount of the provision made for impairment of trade receivables is written off from the balance account when there is no expectation of cash recovery.

Other expenses. Other expenses consists of the change in fair value of assets held for sale and the loss on sale of investments in associates related to the sale of our stake in Hospital en Casa S.A. in December 2019.

Other income. Other income consists of (i) rental income from property owned and rented by us for investment purposes, (ii) the parking fees we charge those who park in the parking lots at our facilities and (iii) the increase in fair value of our investment properties.

Finance Income and Finance Cost

Finance income and finance cost consist of interest income, interest expense, net gain (loss) on financial assets, foreign currency gain (loss) on financial assets and financial liabilities and the reclassification of net gains (losses) on instruments used to hedge interest rate and foreign currency exchange rate risk previously recognized in other comprehensive income.

Income Tax Expense

Income tax expense consists of taxes on income generated during the period. Our effective tax rate in 2020 was 59.3%.

Results of Operations

We have derived the information included in the following discussion from our consolidated financial statements included elsewhere in this prospectus. You should read this discussion along with such financial statements.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

The following table summarizes our results of operations for the year ended December 31, 2020 and 2019:


	Year Ended December 31,						% Change
	2020			2019			2020 vs. 2019
	(in millions of *soles*)
Revenue
Premiums earned		S/ 566.4			S/ 522.3			8.4	%
Health care services revenue		703.7			658.9			6.8	%
Sales of medicines		173.7			201.3			(13.7	)%

Total Revenue from contracts with customers		1,443.8			1,382.6			4.4	%
Cost of sales and services		(914.4	)		(844.5	)		8.3	%

Gross profit		529.4			538.0			(1.6	)%
Selling expenses		(133.1	)		(132.5	)		0.5	%
Administrative expenses		(273.4	)		(236.5	)		15.6	%
Loss for impairment of trade receivables		(16.4	)		(6.0	)		173.3	%
Other expenses		(0.3	)		(1.4	)		(78.6	)%
Other income		12.1			5.5			120.0	%

Operating profit		118.4			167.1			(29.1	)%
Finance income		3.8			1.5			153.3	%
Finance costs		(136.7	)		(56.1	)		143.7	%

Net finance cost		(133.0	)		(54.5	)		144.0	%
Share of profit of equity-accounted investees		1.3			2.4			(45.8	)%

(Loss) profit before tax		(13.2	)		115.1			(111.5	)%
Income tax expense		7.8			(41.2	)		(118.9	)%

(Loss) profit for the year		S/ (5.4	)		S/ 73.9			(107.3	)%

Revenue


	Year Ended December 31,						% Change
	2020			2019			2020 vs. 2019
	(in millions of *soles*)
Total revenue from contracts with customers
Oncosalud Peru		S/ 659.1			S/ 591.9			11.4	%
Healthcare Services in Peru		476.4			469.9			1.4	%
Healthcare Services in Colombia		419.6			409.4			2.5	%
Holding and Eliminations		(111.3	)		(88.7	)		25.5	%

Total		S/ 1,443.8			S/ 1,382.6			4.4	%

Our total revenue from contracts with customers was S/1,443.8 million in 2020, representing an increase of S/61.2 million, or 4.4%, from S/1,382.6 million in 2019. This increase was primarily driven by the increase in revenue in our Oncosalud Peru segment due to the increase in plan prices to upon renewal account for an increase in the average revenue per plan member.

Revenue from our Oncosalud Peru segment was S/659.1 million in 2020, representing an increase of S/67.2 million, or 11.4%, from S/591.9 million in 2019. This increase was primarily driven by a 12.6% increase in the average revenue per plan member, which contributed S/64.0 million to the increase and was due to an increase in plan prices upon renewal to account for an increase in medical costs and a stock of plan members with a higher mix of products, partially offset by a 3.6% net decrease in the average number of Oncosalud plan members, which had a negative effect of S/19.1 million.

Revenue from our Healthcare Services in Peru segment was S/476.4 million in 2020, representing an increase of S/6.5 million, or 1.4%, from S/469.9 million in 2019. This increase was primarily driven by the increase of the average revenue per patient, which contributed S/41.0 million to the increase and was due to an increase in the number of high-complexity procedures related to COVID-19 treatment, partially offset by a 7.3% decrease in the number of patients, which had a negative effect of S/34.5 million.

Revenue from our Healthcare Services in Colombia segment was S/419.6 million in 2020, representing an increase of S/10.2 million, or 2.5%, from S/409.4 million in 2019. This increase was primarily driven by the acquisition of Clínica Portoazul in Barranquilla in September 2020, which contributed S/50.4 million, or 12.0%, of segment revenue in 2020. This was partially offset by a 2.8% decrease in the number of patients and a 7.3% decrease in average revenue per patient within our operations in Medellín, which had a negative effect of S/11.4 million and S/28.9 million, respectively.

Cost of sales and services


	Year Ended December 31,						% Change
	2020			2019			2020 vs. 2019
	(in millions of *soles*)
Cost of sales and services
Oncosalud Peru		S/ (312.2	)		S/ (274.3	)		13.8	%
Healthcare Services in Peru		(392.9	)		(357.9	)		9.8	%
Healthcare Services in Colombia		(317.5	)		(298.0	)		6.5	%
Holding and Eliminations		108.3			85.7			26.4	%

Total		S/ (914.4)			S/ (844.5)			8.3	%

Our total cost of sales and services was S/914.4 million in 2020, representing an increase of S/69.9 million, or 8.3%, from S/844.5 million in 2019. This increase was primarily attributable to an increase of costs related to COVID-19, such as medical staff costs and an increase in the cost and use of personal protective equipment.

Cost of sales and services in our Oncosalud Peru segment was S/312.2 million in 2020, representing an increase of S/37.9 million, or 13.8%, from S/274.3 million in 2019. This increase was primarily attributable to (i) an increase in the number of patients treated, which increased costs by S/27.4 million and (ii) an increase in the average cost of treatment per patient due to the inclusion of new treatments for cancer and an increase in the cost and use of personal protective equipment as a result of the COVID-19 pandemic, which increased cost of sales and services by S/10.5 million.

Cost of sales and services in our Healthcare Services in Peru segment was S/392.9 million in 2020, representing an increase of S/35.0 million, or 9.8%, from S/357.9 million in 2019. This increase was primarily attributable to an 18.5% increase of the average cost per patient due to the increase in medical staff costs of S/30.2 million in connection with the hiring of additional medical staff in response to the COVID-19 pandemic and the granting of special bonuses to personnel caring for COVID-19 patients.

Cost of sales and services in our Healthcare Services in Colombia segment was S/317.5 million in 2020, representing an increase of S/19.5 million, or 6.5%, from S/298.0 million in 2019. This increase was primarily attributable to the acquisition of Clínica Portoazul in Barranquilla in September 2020, which accounted for S/39.4 million, or 12.4%, of the segment cost of sales in 2020. This was partially offset by a 2.8% decrease in the number of patients and a 3.5% decrease in the average cost per patient within our operations in Medellín, which had a positive effect of S/8.3 million and S/10.2 million, respectively.

Gross profit and gross margin

For the foregoing reasons, our gross profit was S/529.4 million in 2020, representing a decrease of S/8.6 million, or 1.6%, from S/538.0 million in 2019. Our gross margin in 2020 was 36.7%. By segment, our gross margin was 52.6% in Oncosalud Peru, 17.5% in Healthcare Services in Peru and 24.3% in Healthcare Services in Colombia. Overall, our gross margin decreased by 2.2 percentage points in 2020, from 38.9% in 2019.

Selling expenses

Our total selling expenses were S/133.1 million in the year ended December 31, 2020, representing an increase of S/0.6 million, or 0.5%, from S/132.5 million in the year ended December 31, 2019.

Selling expenses in our Oncosalud Peru segment were S/120.1 million in the year ended December 31, 2020, representing an increase of S/1.0 million, or 0.8%, from S/119.1 million in the year ended December 31, 2019. The increase in selling expenses was primarily a result of an increase in cash collection fees from credit cards of S/0.7 million due to the increase in revenue.

Selling expenses in our Healthcare Services in Peru segment were S/7.1 million in the year ended December 31, 2020, representing a decrease of S/1.6 million, or 18.4%, from S/8.7 million in the year ended December 31, 2019. The decrease in selling expenses was primarily due to certain measures implemented to manage expenses in order to mitigate the effect of COVID-19-related incremental expenses in the segment such as a S/0.7 million decrease in marketing expenses and S/0.5 million decrease in sales staff expenses.

Selling expenses in our Healthcare Services in Colombia segment were S/2.8 million in the year ended December 31, 2020, representing a decrease of S/0.5 million, or 15.2%, from S/3.3 million in the year ended December 31, 2019. The decrease was primarily due to certain measures implemented to manage expenses in order to mitigate the effect of COVID-19-related incremental expenses in the segment such as a S/0.7 million decrease in sales staff expenses.

Administrative expenses

Our total administrative expenses were S/273.4 million in the year ended December 31, 2020, representing an increase of S/36.9 million, or 15.6%, from S/236.5 million in the year ended December 31, 2019.

Administrative expenses for our Oncosalud Peru segment were S/119.4 million in the year ended December 31, 2020, representing an increase of S/27.2 million, or 29.5%, from S/92.2 million in 2019. The increase was primarily attributable to S/25.2 million in additional corporate-level expenses, primarily for innovation advisory services and a corporate reorganization through which we created regional management teams for Peru and Colombia.

Administrative expenses for our Healthcare Services in Peru segment were S/96.6 million in the year ended December 31, 2020, representing an increase of S/14.4 million, or 17.5%, from S/82.2 million in 2019. The increase was primarily attributable to a S/10.1 million in additional expenses for external IT and innovation advisory services at the corporate level, and a corporate reorganization through which we created regional management teams for Peru and Colombia.

Administrative expenses for our Healthcare Services in Colombia segment were S/79.1 million in the year ended December 31, 2020, representing an increase of S/15.6 million, or 24.6%, from S/63.5 million in the year ended December 31, 2019. The increase was primarily attributable to (i) the acquisition of Clínica Portoazul in Barranquilla in September 2020, which accounted for S/4.1 million, or 5.2%, of the administrative expenses in 2020, (ii) S/2.1 million related to expenses associated with the acquisition of Clínica Portoazul and (iii) S/3.2 million in administrative expenses at the corporate level in connection with a corporate reorganization through which we created regional management teams for Peru and Colombia.

Loss for impairment of trade receivables

The total loss for impairment of trade receivables was S/16.4 million in the year ended December 31, 2020, representing an increase of S/10.4 million, or 173.3%, from S/6.0 million in the year ended December 31, 2019.

The loss for impairment of trade receivables was S/2.8 million in the year ended December 31, 2020 in our Oncosalud Peru segment, representing an increase of S/1.9 million from S/0.9 million in the year ended December 31, 2019. The increase in the loss for impairment of trade receivables in our Oncosalud Peru segment was primarily due to an increase in the number of patients with COVID-19 paying out-of-pocket that had a payment plan with Auna, but could not complete all of their payments on time.

The loss for impairment of trade receivables was S/8.1 million in the year ended December 31, 2020 in our Healthcare Services in Peru segment, representing an increase of S/6.1 million from S/2.0 million in the year ended December 31, 2019. The increase in the loss for impairment of trade receivables in our Healthcare Services in Peru segment was primarily due to an increase in the number of patients with COVID-19 paying out-of-pocket that had a payment plan with Auna, but could not complete all of their payments on time.

The loss for impairment of trade receivables was S/5.4 million in the year ended December 31, 2020 in our Healthcare Services in Colombia segment, representing an increase of S/2.4 million, or 80.0%, from S/3.0 million in the year ended December 31, 2019. The increase in the loss for impairment of trade receivables in our Healthcare Services in Colombia segment was primarily related to financial performance of some insurers during 2020 that changed certain assumptions in determining the weighted-average loss rate.

Operating profit


	Year Ended December 31,						% Change
	2020			2019			2020 vs. 2019
	(in millions of *soles*)
Operating profit
Oncosalud Peru		S/ 109.0			S/ 106.8			2.1	%
Healthcare Services in Peru		(15.4	)		22.3			(169.1	)%
Healthcare Services in Colombia		24.2			42.5			(43.1	)%
Holding and Eliminations		0.6			(4.4	)		(113.6	)%

Total		S/ 118.4			S/ 167.1			(29.1	)%

For the foregoing reasons, our operating profit was S/118.4 million in 2020, representing a decrease of S/48.7 million, or 29.1%, from S/167.1 million in 2019.

Finance income and finance cost

Finance income was S/3.8 million in the year ended December 31, 2020, representing an increase of S/2.3 million from S/1.5 million in the year ended December 31, 2019. This increase was primarily due to increased interest income generated by time deposits derived from the proceeds of the 2025 Notes issued in November 2020.

Finance cost was S/136.7 million in the year ended December 31, 2020, representing an increase of S/80.6 million, or 143.7%, from S/56.1 million in the year ended December 31, 2019. This increase was primarily attributable to an increase in debt (both loans and borrowings, and financial leases) to fund organic and inorganic growth projects.

Income tax expense

We had an income tax benefit of S/7.8 million in 2020, representing an increase of S/49.0 million, from an income tax expense of S/41.2 million in 2019. The decrease in income tax expense was primarily attributable to the decrease in profit before tax as a result of the impact of the COVID-19 pandemic on our operations as described above. In addition, our effective tax rate increased from 35.8% in 2019 to 59.3% in 2020, primarily attributable to an increase of 18% in the effective tax rate of our subsidiaries in Colombia, partially offset by a decrease in our consolidated profit before income tax.

(Loss) profit for the year

For the foregoing reasons, loss for the year was S/5.4 million in 2020, representing a decrease of S/79.3 million, or 107.3%, from a profit of S/73.9 million in 2019.

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

The following table summarizes our results of operations for the year ended December 31, 2019 and 2018:


	Year Ended December 31,						% Change
	2019			2018			2019 vs. 2018
	(in millions of *soles*)
Revenue
Premiums earned	S/	522.3		S/	467.6			11.7	%
Health care services revenue		658.9			229.6			187.0	%
Sales of medicines		201.3			164.0			22.7	%

Total Revenue from contracts with customers		1,382.6			861.2			60.5	%
Cost of sales and services		(844.5	)		(497.8	)		69.6	%

Gross profit		538.0			363.4			48.0	%
Selling expenses		(132.5	)		(120.7	)		9.8	%
Administrative expenses		(236.5	)		(154.4	)		53.2	%
Loss for impairment of trade receivables		(6.0	)		(2.8	)		114.3	%
Other expenses		(1.4	)		—			N/A
Other income		5.5			5.3			3.8	%

Operating profit		167.1			90.8			84.0	%
Finance income		1.5			0.6			150.0	%
Finance costs		(56.1	)		(38.2	)		46.9	%

Net finance cost		(54.5	)		(37.5	)		45.3	%
Share of profit of equity-accounted investees		2.4			1.0			140.0	%

Profit before tax		115.1			54.2			112.4	%
Income tax expense		(41.2	)		(17.5	)		135.4	%

Profit for the year	S/	73.9		S/	36.6			101.9	%

Revenue


	Year Ended December 31,						% Change
	2019			2018			2019 vs. 2018
	(in millions of *soles*)
Total revenue from contracts with customers
Oncosalud Peru	S/	591.9		S/	530.6			11.6	%
Healthcare Services in Peru		469.9			405.3			15.9	%
Healthcare Services in Colombia		409.4			4.8				*
Holding and Eliminations		(88.7	)		(79.4	)		11.7	%

Total		S/ 1,382.6			S/ 861.2			60.5	%

*	Not meaningful.

Our total revenue from contracts with customers was S/1,382.6 million in 2019, representing an increase of S/521.4 million, or 60.5%, from S/861.2��million in 2018. This increase was primarily driven by the acquisition of Grupo Las Américas in Colombia in 2018, which accounted for S/409.4 million, or 29.1%, of our revenue in 2019. Our Oncosalud Peru and Healthcare Services in Peru segments accounted for 42.8% and 34.0%, respectively, of our revenue in 2019.

Revenue from our Oncosalud Peru segment was S/591.9 million in 2019, representing an increase of S/61.3 million, or 11.6%, from S/530.6 million in 2018. This increase was primarily driven by a 8.7% increase in the average revenue per plan member, which contributed S/44.8 million to the increase and was due to an increase in plan prices upon renewal to account for an increase in medical costs and an increase in the average age of our plan members, as well as a 2.4% net increase in the average number of Oncosalud plan members, which contributed S/13.7 million to the increase.

Revenue from our Healthcare Services in Peru segment was S/469.9 million in 2019, representing an increase of S/64.6 million, or 15.9%, from S/405.3 million in 2018. This increase was primarily driven by a 13.1% increase in the number of patients treated, which contributed S/53.2 million to the increase and was due to an increase in our utilization rates, and a 2.5% increase in average revenue per patient in 2019, which contributed S/11.5 million to the increase and was due to an increase in the number of high-complexity procedures and an increase in the price of medicines sold to our patients.

Revenue from our Healthcare Services in Colombia segment was S/409.4 million in 2019 compared to S/4.8 million in 2018.

Cost of sales and services


	Year Ended December 31,						% Change
	2019			2018			2019 vs. 2018
	(in millions of *soles*)
Cost of sales and services
Oncosalud Peru	S/	(274.3	)	S/	(258.6	)		6.1	%
Healthcare Services in Peru		(357.9	)		(313.5	)		14.1	%
Healthcare Services in Colombia		(298.0	)		(3.5	)			*
Holding and Eliminations		85.7			77.9			10.0	%

Total	S/	(844.5	)	S/	(497.8	)		69.7	%

*	Not meaningful.

Our total cost of sales and services was S/844.5 million in 2019, representing an increase of S/346.7 million, or 69.7%, from S/497.8 million in 2018. The increase was primarily attributable to the acquisition of Grupo Las Américas in Colombia in 2018, which accounted for S/298.0 million, or 35.3%, of our cost of services in the year 2019. Our Oncosalud Peru and Healthcare Services in Peru segments accounted for 32.5% and 42.4%, respectively, of our cost of sales and services in 2019.

Cost of sales and services in our Oncosalud Peru segment was S/274.3 million in 2019, representing an increase of S/15.7 million, or 6.1%, from S/258.6 million in 2018. This increase was primarily attributable to an increase in the number of patients treated, which increased cost of sales and services by S/32.4 million, partially offset by a decrease of the average cost of treatment per patient due to Project Galeno benefits, which decreased cost of sales and services by S/16.7 million.

Cost of sales and services in our Healthcare Services in Peru segment was S/357.9 million in 2019, representing an increase of S/44.4 million, or 14.2%, from S/313.5 million in 2018. The increase was primarily attributable to (i) a 16.6% increase in the cost of medicines and medical consultation fees driven by the increase in revenue in the segment, which increased cost of sales and services by S/31.0 million, and (ii) a 17.2% increase in medical staff costs in connection with the hiring of additional physicians and nurses to meet expanded capacity at our facilities, which increased cost of sales and services by S/14.0 million.

Cost of sales and services in our Healthcare Services in Colombia segment was S/298.0 million in 2019, compared to S/3.5 million in 2018.

Gross profit and gross margin

For the foregoing reasons, our gross profit was S/538.0 million in 2019, representing an increase of S/174.6 million, or 48.0%, from S/363.4 million in 2018.

Our gross margin for the year was 38.9%. By segment, our gross margin was 53.7% in Oncosalud Peru, 23.7% in Healthcare Services in Peru and 27.2% in Healthcare Services in Colombia. Overall, our gross margin decreased by 3.3 percentage points in 2019, from 42.3% in 2018, mainly as a result of the acquisition of Grupo Las Américas, which added several facilities to our operations and as a result increased our fixed costs on an aggregate basis.

Selling expenses

Our total selling expenses were S/132.5 million in 2019, representing an increase of S/11.8 million, or 9.8%, from S/120.7 million in 2018.

Selling expenses in our Oncosalud Peru segment were S/119.1 million in 2019, representing an increase of S/5.2 million, or 4.5%, from S/113.9 million in 2018. The increase in selling expenses was primarily a result of an increase in the number of salespeople, which led to an increase in sales staff cost of S/5.0 million, and an increase in credit card collection fees of S/1.5 million, partially offset by lower expenses related to advisory services for commercial services and product related studies of S/0.9 million, compared to 2018.

Selling expenses in our Healthcare Services in Peru segment were S/8.7 million in 2019, representing an increase of S/0.2 million, or 2.0%, from S/8.5 million in 2018. The increase in selling expenses was primarily due to an increase of credit card collection fees of S/0.6 million.

Selling expenses in our Healthcare Services in Colombia segment were S/3.3 million in 2019 compared to S/0.03 million in 2018.

Administrative expenses

Administrative expenses for our Oncosalud Peru segment were S/92.2 million in 2019, representing an increase of S/7.1 million, or 8.3%, from S/85.1 million in 2018. The increase was primarily attributable to (i) an increase of S/4.2 million due to the hiring of additional personnel for our technical, risk and product teams and (ii) S/4.3 million in additional expenses for external IT and innovation advisory services at the corporate level.

Administrative expenses for our Healthcare Services in Peru segment were S/82.2 million in 2019, representing an increase of S/13.1 million, or 19.0%, from S/69.1 million in 2018. The increase was primarily attributable to a S/3.4 million increase in administrative expenses related to the hiring of additional administrative personnel at our facilities and S/9.9 million in additional expenses for external IT and innovation advisory services at the corporate level.

Administrative expenses for our Healthcare Services in Colombia segment were S/63.5 million in 2019, compared to S/2.0 million in 2018.

Loss for impairment of trade receivables

The total loss for impairment of trade receivables was S/6.0 million in the year ended December 31, 2019, representing an increase of S/3.2 million, or 111.9%, from S/2.8 million in the year ended December 31, 2018. The increase was primarily attributable to the acquisition of Grupo Las Américas in Colombia in 2018, which accounted for S/3.0 million, or 49.4%, of our loss for impairment of trade receivables in 2019 and was primarily related to contracts with certain insurance providers. Our Oncosalud Peru and Healthcare Services in Peru segments accounted for 15.5% and 33.3%, respectively, of our loss for impairment of trade receivables in 2019.

The loss for impairment of trade receivables was S/0.9 million in the year ended December 31, 2019 in our Oncosalud Peru segment, representing an increase of S/0.3 million, or 50.0%, from S/0.6 million in the year ended December 31, 2018. The increase in the loss for impairment of trade receivables in our Oncosalud Peru segment was primarily due to treatments provided at certain Oncosalud facilities to individuals that are not members of Oncosalud and tend to take longer to pay amounts due in connection with their treatments.

The loss for impairment of trade receivables was S/2.0 million in the year ended December 31, 2019 in our Healthcare Services in Peru segment, representing an increase of S/0.04 million, or 2.0%, from S/2.0 million in the year ended December 31, 2018. The decrease in the loss for impairment of trade receivables in our Healthcare Services in Peru segment was primarily due to a decrease in provisions for individual clients as compared to 2018 as a result of improvements in our cash collection processes for these clients.

Operating profit


	Year Ended December 31,						% Change
	2019			2018			2019 vs. 2018
	(in millions of *soles*)
Operating profit
Oncosalud Peru		S/ 106.8			S/ 78.4			36.2	%
Healthcare Services in Peru		22.3			16.4			36.0	%
Healthcare Services in Colombia		42.5			(0.6	)			*
Holding and Eliminations		(4.4	)		(3.4	)			*

Total		S/ 167.1			S/ 90.8			84.1	%

*	Not meaningful.

For the foregoing reasons, our operating profit was S/167.1 million in 2019, representing an increase of S/76.4 million, or 84.1%, from S/90.8 million in 2018.

Finance income and finance cost

Finance income was S/1.5 million in 2019, representing an increase of S/0.9 million from S/0.6 million in 2018. This increase was primarily due to S/0.9 million of finance income from our investment in short-term deposits of excess cash we received from shareholders to partially fund our acquisition of Grupo Las Américas.

Finance cost was S/56.1 million in 2019, representing an increase of S/17.9 million, or 46.8%, from S/38.2 million in 2018. This increase was primarily attributable to an increase in indebtedness of (i) S/368.6 million to finance the acquisition of Grupo Las Américas and (ii) S/100.1 million in the form of additional working capital credit lines, partially offset by a decrease in the average interest rate payable on such indebtedness due to the refinancing of our loan with Scotiabank Perú S.A.A. (“Scotiabank”) in December 2018.

Income tax expense

Income tax expense was S/41.2 million in 2019, representing an increase of S/23.6 million, or 135.4%, from S/17.5 million in 2018. The increase was primarily attributable to the increase in profit before tax as a result of the acquisition of Grupo Las Américas and an increase in profit before tax due to growth of operating profit in our Oncosalud Peru and Healthcare Services in Peru segments. In addition, our effective tax rate increased from 32.4% in 2018 to 35.8% in 2019, mainly due to an increase of non-deductible expenses from S/1.7 million in 2018 to S/7.1 million in 2019, which resulted in an increase of our effective tax rate of 3.4%.

Profit for the year

For the foregoing reasons, profit for the year was S/73.9 million in 2019, representing an increase of S/37.2 million, or 101.9%, from S/36.6 million in 2018.

Liquidity and Capital Resources

Our financial condition and liquidity is, and will continue to be, influenced by a variety of factors, including (i) our ability to generate cash flows from our operations; (ii) the level of outstanding indebtedness and the interest payable on this indebtedness; and (iii) our capital expenditure requirements.

Overview

Our primary source of liquidity is our operating cash flow from premiums earned on oncology plans and the sale of healthcare services and medicines. Our oncology plans are prepaid plans pursuant to which plan members typically pay us a fixed amount per month over the course of a year. During 2020, in our healthcare services business in Peru and Colombia, 79% of payments came from a limited number of third party insurance providers and 21% came out-of-pocket from our patients on an aggregate basis. In Peru, our account receivables are typically collected in an average of 105 days whereas in Colombia, these are typically collected in 157 days. Our principal liquidity needs include paying the cost of medicines, personnel expenses, cost of services provided by third parties, medical consultation fees and other selling and administrative expenses.

As of December 31, 2020, our cash and cash equivalents were S/343.5 million, and we had working capital (defined as current assets less current liabilities) of S/269.5 million. See “Risk Factors—Risks Related to Our Business—We may not have sufficient funds to settle current liabilities and as a result we may continue to have negative working capital in the near future.”

On November 20, 2020, we issued US$300 million aggregate principal amount of 6.500% Senior Notes due 2025 (the “2025 Notes”). We used the net proceeds from the issuance of the 2025 Notes to repay US$255.9 million of indebtedness outstanding under the Credit Agreements and other facilities, including COVID-19 loans received from the Peruvian government and for general corporate purposes, including payment of dividends.

We believe that our available cash and cash equivalents and cash flows expected to be generated from operations and borrowings available to us under our revolving credit lines, will be adequate to satisfy our capital expenditure and liquidity needs for the foreseeable future. Our principal economic activities provide predictable cash flows, as they consist primarily of the sale of prepaid plans that have monthly prepayments agreed for one-year terms that are automatically renewed and the provision of healthcare services, for which we are reimbursed by third party healthcare providers that also have one-year terms and automatically renew each year, unless renegotiated. Given the predictability of these cash flows, we can operate with negative working capital.

Our ability to expand and grow our business in accordance with management’s current plans and to meet our long-term capital requirements will depend on many factors, including those mentioned above. To the extent we pursue one or more significant strategic acquisitions, we may be required to use our borrowings under the 2018 Credit Agreements (as defined below), incur additional debt or sell additional equity to finance those acquisitions.

Comparative Cash Flows

The following table sets forth our cash flows for the years indicated:


	Year Ended December 31,
	2020			2019			2018
	(in millions of *soles*)
Net cash from operating activities	S/	156.3		S/	152.4		S/	109.3
Net cash used in investing activities		(125.9	)		(125.9	)		(580.0	)
Net cash (used in) from financing activities		272.7			(99.5	)		552.6

Net (decrease) increase in cash and cash equivalents		303.1			(73.0	)		81.9

Cash and cash equivalents at beginning of period		36.1			110.9			32.5

Effect of movements in exchange rates on cash held		4.3			(1.8	)		(3.5	)

Cash and cash equivalents at end of period	S/	343.5		S/	36.1		S/	110.9

Year ended December 31, 2020 Compared to Year ended December 31, 2019

Net cash provided by operating activities for the year ended December 31, 2020 was S/156.3 million compared to S/152.4 million for the year ended December 31, 2019, an increase of S/3.9 million. This increase was primarily the result of an increase of S/6.8 million in cash collected driven by the increase in revenue in all of our segments, partially offset by a deterioration in our cash management, which led to a decrease in our cash conversion rate (i.e., the rate at which we convert our revenue to cash, which is calculated by dividing our net cash from operating activities by our total revenue from the same period) from 11.0% to 10.8%, which resulted in a reduction of S/2.9 million in cash as compared to the year ended December 31, 2019.

Net cash used in investing activities for the year ended December 31, 2020 was S/(125.9) million, compared to S/(125.9) million for the year ended December 31, 2019. The primary use of funds in the year ended December 31, 2020 was S/90.7 million for infrastructure improvements at our facilities and medical equipment, including special treatment tents and medical equipment for COVID-19 patients, and S/38.2 million for software and other intangibles.

Net cash from financing activities for the year ended December 31, 2020 was S/272.7 million, compared to net cash used in financing activities of S/(99.5) million for the year ended December 31, 2019. Net cash from financing activities for the year ended December 31, 2020 primarily reflected S/1,481.6 million of proceeds from loans and borrowings, which includes US$300 million principal amount of the 2025 Notes. The proceeds of the 2025 Notes were used to repay certain existing indebtedness and financial obligations, make certain interest payments and make dividend payments of S/10.0 million.

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Net cash provided by operating activities for the year ended December 31, 2019 was S/152.4 million compared to S/109.3 million for the year ended December 31, 2018, an increase of S/43.1 million. This increase was primarily the result of (i) an increase in cash from operations of S/7.2��million from our Colombian operations, which we acquired at the end of 2018, (ii) an increase of S/14.2 million in cash collected from our Peruvian operations driven by the increase in revenue in our Oncosalud Peru and Healthcare Services in Peru segments, and (iii) an improvement in our cash management in our Oncosalud Peru and Healthcare Services in Peru segments, which led to an increase in our cash conversion rate (i.e., the rate at which we convert our revenue to cash, which is calculated by dividing our net cash from operating activities by total revenue from the same period) from 12.7% to 14.9%, and provided an additional S/21.7 million of cash as compared to 2018.

Net cash used in investing activities for the year ended December 31, 2019 was S/(125.9) million, compared to S/(580.0) million for the year ended December 31, 2018. The primary use of funds in 2019 was S/104.6 million for infrastructure improvements at our facilities and medical equipment and S/21.2 million for software and other intangibles. The primary use of funds in 2018 was S/533.7 million for the acquisition of Grupo Las Américas and S/39.0 million for infrastructure improvements at our facilities.

Net cash used in financing activities for the year ended December 31, 2019 was S/(99.5) million, compared to net cash from financing activities of S/552.6 million for the year ended December 31, 2018. Net cash used in financing activities for the year ended December 31, 2019 primarily reflected the payment of financial obligations and interest of S/278.1 million, payments to counterparties of S/9.9 million in connection with our hedging arrangements and dividend payments of S/10.0 million and S/12.8 million of advance payments used to finance the acquisition of additional shares amounting to 2.5% of the outstanding share capital of Grupo Las Américas from minority shareholders, partially offset by borrowings of S/215.9 million from additional debt instruments we entered into during the year. Net cash used in financing activities in 2018 primarily reflected the payment of financial obligations and interest of S/330.6 million and dividend payments of S/10.0 million, partially offset by borrowings of S/649.3 million provided by our credit lines.

Capital Expenditures

We define capital expenditures as the acquisition of intangible assets and property, furniture and equipment. Our capital expenditures for the year ended December 31, 2020 were S/128.9 million, 50% of which was for infrastructure improvements at our facilities related to treatment of patients with COVID-19 and for Clínica Chiclayo, and for the expansions of Clínica Vallesur and Clínica del Sur in Colombia, 29% of which was for medical equipment and 21% of which was for software development.

Our capital expenditures for the year ended December 31, 2019 were S/125.8 million, 73.7% of which was for infrastructure improvements at our facilities and the acquisition of landbanks for the expansions of Clínica Chiclayo, Clínica Delgado and Clínica Vallesur as well as for new construction projects and 16.2% of which was for medical equipment, furniture and fixtures. In 2018, our capital expenditures were S/46.3 million, 63.3% of which was for the acquisition of land for the expansions of Clínica Delgado and Clínica Vallesur and for infrastructure improvements for our facilities, and 20.1% of which was for medical equipment, furniture and fixture.

For 2021, we have a capital expenditures budget of S/271.6 million, which we expect to use primarily for the expansion plan for our healthcare networks in Peru and Colombia, including the construction of a facility in Chiclayo and the expansion of Clínica Vallesur. We intend to finance these capital expenditures with a combination of cash from operations and additional indebtedness. We may also use the proceeds of this offering for our expansion plans. See “Use of Proceeds” for more information.

Contractual Obligations and Commitments

The following table presents information relating to our contractual obligations as of December 31, 2020:

Total

Less than 1 year

1-2 years

3-5 years

More than 5 years

(in millions of soles)

Loans and borrowings(1)

1,599.0

87.3

86.6

1,353.7

71.4

Lease liabilities

201.0

26.1

22.8

69.8

82.3

Derivative financial instruments

33.6

—

33.6

—

Total

1,833.6

113.4

109.4

1,457.1

153.7

(1)	Includes interest.

Senior Notes

On November 20, 2020, we issued US$300 million aggregate principal amount of 6.500% Senior Notes due 2025 (the “2025 Notes”). We used the net proceeds from the issuance of the 2025 Notes to repay US$255.9 million of indebtedness outstanding under the Credit Agreements and for general corporate purposes, including payment of dividends.

The 2025 Notes were issued pursuant to the indenture, dated as of November 20, 2020, among Auna S.A.A., the guarantors party thereto and Citibank, N.A. as trustee, paying agent, registrar and transfer agent (the “Indenture”). The 2025 Notes bear interest at a rate of 6.500% per year and interest on the 2025 Notes is payable semi-annually in arrears on May 20 and November 20 of each year. The 2025 Notes will mature on November 20, 2025. We are entitled to redeem some or all of the 2025 Notes at any time at the redemption prices set forth in the applicable indenture.

The Indenture limits our ability to incur incremental indebtedness, as we may only incur indebtedness to the extent that, upon the issuance of such indebtedness, our consolidated net leverage ratio would not exceed (i) 5.00x before November 20, 2021, (ii) 4.50x between November 20, 2021 and November 19, 2022, (iii) 4.25x between November 20, 2022 and November 19, 2023 and (iv) 3.75x on or after November 20, 2023, in each case, at the time debt is incurred. In addition, pursuant to the terms of the Indenture, we are also required to have a consolidated interest coverage ratio of at least 2.25x in order to incur more debt.

The 2025 Notes contain customary representations and warranties, affirmative and negative covenants and events of default, including customary restrictions on our ability to pay dividends.

Credit Agreement^1,²

Scotiabank Perú

On February 3, 2020, Oncosalud S.A.C. entered into a financing agreement (the “Chiclayo Hospital Financing Agreement”) with Scotiabank for S/70 million. The proceeds of the financing are being used to build a new hospital in Chiclayo (the “Chiclayo Hospital”). In addition, on July 21, 2020, Oncosalud S.A.C. entered into a financing agreement (the “Chiclayo Equipment Financing Agreement” and together with the Chiclayo Hospital Financing Agreement, the “Chiclayo Financing Agreements”) with Scotiabank for an amount up to S/21 million to acquire equipment that will be used in the Chiclayo Hospital. The Chiclayo Financing Agreements mature in 2027. Interest on the Chiclayo Financing Agreements is calculated using an annual effective rate of 6.30%. The Chiclayo Hospital Financing Agreement is secured by a surface right over the real estate property where the Chiclayo Hospital will be located and a mortgage over the Chiclayo Hospital. The Chiclayo Financing

¹	To date, Oncosalud S.A.C. has not requested any disbursement under the Chiclayo Equipment Financing Agreement.

²	The financial covenants related to the consolidated leverage ratio were modified by an Amendment to the Chiclayo Hospital Financing Agreement executed on March 31, 2021.

Agreements are further secured by an assignment agreement (the “Chiclayo Assignment Agreement”) over the cash flows that Oncosalud S.A.C. will be entitled to receive from the operation of the Chiclayo Hospital.

The Chiclayo Financing Agreement contain financial covenants requiring us to maintain a consolidated debt service ratio equal to or higher than 1.2x and a consolidated leverage ratio lower than or equal to 5.0x until December 1, 2021, 4.5x until December 1 2022, 4.25x until December 1 2023 and 3.75x from December 1, 2023 onwards.

As of June 30, 2021, we were in compliance with the consolidated debt service and consolidated leverage ratios under the Chiclayo Financing Agreement. EBITDA as calculated for purposes of the Chiclayo Financing Agreements excludes certain expenses relating to Torre Trecca that are not excluded from EBITDA as defined under “—Non-GAAP Financial Measures.” In addition, the Chiclayo Assignment Agreement requires Oncosalud S.A.C. to maintain a minimum debt service ratio, defined as the ratio of assigned rights to long term debt plus financial expenses, of 1.0x during 2021 and 2022 and 1.2x during 2023 to 2027.

The Chiclayo Financing Agreement contain consent requirements for certain transactions, such as a merger, consolidation or internal reorganization, as well as certain restrictions, such as restrictions from transferring or encumbering assets related to the Chiclayo Hospital.

Credit Lines

We have access to available revolving credit lines of up to an aggregate of S/269.5 million with other recognized financial institutions that we use for short-term capital needs. Our revolving credit lines bear interest at varying fixed rates, ranging from 2.30% to 5.5%. As of December 31, 2020, we had drawn S/58.4 million, and had S/329.7 million of available borrowings, under our revolving credit lines, maturing between 2021 and 2022. We are subject to various covenants under our revolving credit lines, including reporting requirements, restrictions on incurring future debt and consent requirements for certain transactions, such as a merger, consolidation or internal reorganization, and were in compliance with these covenants as of December 31, 2020. Lenders may terminate our revolving credit lines under certain events, including nonpayment of our monetary obligations, acquiring debt that is senior to our obligations under our revolving credit lines, failing to maintain our corporate existence, certain changes to our corporate purpose and a change of control, whether directly or indirectly, among others.

Trends

Our Oncosalud membership base decreased 10.0% in 2020 primarily as a result of younger members choosing not to renew their plans, which we believe was due to the economic hardship generated by the COVID-19 pandemic. However, due to the automatic increases in premiums upon renewal, the average revenue per plan member increased by 12.6%, which led to a 11.4% increase in revenue in the Oncosalud Peru segment compared to 2019. In addition, the number of plan members treated during 2020 increased by 10.0%, mainly due to an increase of non-oncological plan members from 454 in 2019 to 2,748 in 2020. Oncological plan members treated decreased by 6.3% due to government restrictions on non-critical services in response to COVID-19, which led to a decrease in MLR to 43.0% in 2020 from 51.9% in the 2019. In our Healthcare Services in Peru segment, the number of patients treated during 2020 decreased 7.3%, also due to government restrictions on non-critical services in response to COVID-19, compared to 2019. In our Healthcare Services in Colombia segment, the number of patients treated during 2020 increased 6.8%, due to the acquisition of Clínica Portoazul in Barranquilla, which represented 9% of all patients treated in the segment.

In our Auna Peru network, we will continue to grow organically by expanding our network’s installed capacity. For example, we are currently expanding Clínica Vallesur, which we expect to add approximately 40 beds to our capacity by 2022, and at the end of August 2021, we expect to start operations at our new hospital in Chiclayo with approximately 68 beds. We are also evaluating other opportunities to expand our Auna Peru network beyond these current projects. In Colombia, we plan to focus on expanding the range of services offered in our existing and new facilities and entering into potential strategic acquisitions. Throughout the remainder

2021, we expect to invest in the expansion of our existing facilities and the development of new facilities in Medellín. In the fourth quarter of 2019, we launched operations at Arkadia, a clinic in Medellín that is next to Clínica Las Américas and in the third quarter of 2020, we acquired Clínica Portoazul in Barranquilla.

In all of our networks, we expect to benefit from these expanded and new facilities as our greater capacity will allow us to treat additional patients and generate additional revenue. However, we also expect these expansion projects to temporarily increase our costs and we may need to temporarily close down some of our capacity while under construction.

In addition, we are awaiting approval of certain project milestones as well as negotiating certain amendments to the concession agreement relating to the Torre Trecca PPP, which we expect will require approximately 18 to 24 months to redevelop following approval before we can begin operations. This PPP will increase the patient population that we can address, provide us with additional synergies through increased scale and increase our revenues. However, given the nature of PPPs, we expect this business, as well as any other PPPs that we may enter into, to generate lower margins than our current business segments have historically.

Our pharmaceutical costs represented 38% and 46% of our cost of services in our Healthcare Services in Peru and Healthcare Services in Colombia segments and 37% and 38% of our cost of services in our Oncosalud Peru segment in the years ended December 31, 2020 and December 31, 2019, respectively. During 2018, we completed an efficiency evaluation of our pharmacy management protocols, which we refer to as Project Galeno, with the help of an outside advisory firm. The outcome of this evaluation was several recommendations for improving the efficiency of our pharmacy management, such as streamlining the processes for approving new molecules, strengthening communication between the medical and administrative teams handling prescriptions, forming dedicated committees to analyze the cost effectiveness of new pharmaceuticals and related technologies and creating an enhanced directory of approved pharmaceuticals with quality ratings, among other recommendations. Following the implementation of all of these recommendations, which we completed in 2020, we have been able to more efficiently manage our pharmaceutical costs in our Healthcare Services in Peru and Oncosalud Peru segments while still maintaining our standard for high quality healthcare services.

We have also been impacted by the COVID-19 pandemic. See “—Impact of COVID-19” and “Risk Factors—Risks Related to Our Business—Our business has been and continues to be negatively impacted by the COVID-19 pandemic.”

Off-Balance Sheet Arrangements

As of December 31, 2020, we did not have any off-balance sheet arrangements.

Supplemental Financial Information for the Three Months Ended March 31, 2021 and the Three Months Ended March 31, 2020

This data has been prepared by, and is the responsibility of, our management. Our independent registered public accounting firm has not audited, reviewed or performed any procedures with respect to this financial data or the accounting treatment thereof.

We are required to report certain financial information under the indenture governing the 2025 Notes. In accordance with Item 4 of Form F-1 and Item 8.A.5 of Form 20-F, set forth below is supplemental financial information for the three months ended March 31, 2021 and March 31, 2020, as we have published such interim financial information, which covers a more current period than is otherwise required to be included in this prospectus, pursuant to the requirements under the indenture governing the 2025 Notes.

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020:


	Three Months Ended March 31,						% Change
	2021			2020			2021 vs. 2020
	(in millions of *soles*)
Revenue
Premiums earned		S/ 150.8			S/ 137.5			9.6	%
Health care services revenue		269.4			156.9			71.7	%
Sales of medicines		50.7			43.0			17.9	%

Total Revenue from contracts with customers		470.8			337.4			39.6	%
Cost of sales and services		(294.8	)		(211.7	)		39.3	%

Gross profit		175.9			125.6			40.0	%
Selling expenses		(33.7	)		(35.1	)		(4.1	)%
Administrative expenses		(92.5	)		(63.1	)		46.7	%
Loss for impairment of trade receivables		(3.4	)		(3.0	)		12.6	%
Other expenses		—			—			N/A
Other income		1.9			1.5			25.1	%

Operating profit		48.3			26.0			85.6	%
Finance income		6.2			1.6			87.8	%
Finance costs		(26.3	)		(86.4	)		(69.5	)%

Net finance cost		(20.1	)		(84.8	)		(76.2	)%
Share of profit of equity-accounted investees		0.6			0.3			76.2	%

(Loss) profit before tax		28.8			(58.4	)		149.2	%
Income tax expense		(8.2	)		19.3			142.5	%

(Loss) profit for the year		S/ 20.6			S/ (39.1	)		152.6	%

The following table sets forth our cash flows for the three months ended March 31, 2021 and 2020:


	As of March 31,
	2021			2020
	(in millions of *soles*)
Net cash from operating activities		S/43.0			S/19.2
Net cash used in investing activities		(52.4	)		(37.6	)
Net cash (used in) from financing activities		(9.8	)		62.6

Net (decrease) increase in cash and cash equivalents		(19.3	)		33.2

Cash and cash equivalents at beginning of period		343.5			36.1

Effect of movements in exchange rates on cash held		1.7			(1.4	)

Cash and cash equivalents at end of period	S/325.9			S/78.9

The following tables set forth our summary financial data as of March 31, 2021:


	As of March 31, 2021
	(in millions of *soles*)
Statement of Financial Position Data:
Cash and cash equivalents		S/ 325.9
Total assets		2,720.5
Total liabilities		2,092.4
Total equity		628.1


	As of March 31,
	(in millions of *soles*)
Segment Financial Data:
Revenue
Oncosalud Peru:		S/ 191.1
Healthcare Services in Peru:		S/ 165.2
Healthcare Services in Colombia:		S/ 158.9
Operating profit
Oncosalud Peru:		S/ 29.7
Healthcare Services in Peru:		S/ 3.3
Healthcare Services in Colombia:		S/ 14.4
(Loss) profit before tax
Oncosalud Peru:		S/ 23.9
Healthcare Services in Peru:		S/ (0.6	)
Healthcare Services in Colombia:		S/ (2.1	)

EBITDA

The following table sets forth our EBITDA and shows a reconciliation of EBITDA to (loss) profit for the period for each of the periods presented:


	Three months ended March 31,
	2021		2020
	(in millions of *soles*)
(Loss) profit for the period		S/ 20.6		S/ (39.1	)
Income tax expense		8.2		(19.3	)
Net finance cost		20.1		84.8
Depreciation and amortization		17.7		16.1

EBITDA		S/ 66.6		S/ 42.5

Quantitative and Qualitative Disclosures About Market Risks

In the ordinary course of our business activities, we are exposed to market risks that are beyond our control and which may have an adverse effect on the value of our financial assets and liabilities, future cash flows and profit. The market risks that we are exposed to include foreign currency risks and interest rate risks.

Our functional currency is Peruvian soles and we present our financial statements in Peruvian soles. However, the majority of our liabilities (primarily US$300 million of the 2025 Notes) are denominated in U.S. dollars, which exposes us to exchange rate risk. As of December 31, 2020, 97.4% of our liabilities were denominated in U.S. dollars. To mitigate our U.S. dollar exposure, we use derivative financial instruments, such as call spreads and forwards, to hedge our exposure to these risks.

Interest rate risk is the risk that the fair value or future cash flows of our financial instruments may fluctuate as a result of changes in market interest rates. Our general policy is to hold financing at fixed rates, although certain of our borrowings accrue interest at floating rates. Any variations of the sol-to-U.S. dollar exchange rate outside of this range is reflected as a gain or loss in Exchange difference, net. Because the majority of our financing is at fixed rates and we have hedging arrangements in place for all of our borrowings held at floating rates, we do not consider interest rate risk material to our business.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with IFRS. The preparation of our financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and significant assumptions. We base these estimates on our historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results experienced may vary materially and adversely from our estimates. Revisions to estimates are recognized prospectively. To the extent there are material differences between our estimates and the actual results, our future results of operations may be affected. We consider the accounting policies that govern revenue recognition, regulatory or technical reserves and income taxes to be the most critical in relation to our consolidated financial statements. These policies require the most complex and subjective estimates of management.

Business Combinations

We account for business combinations using the acquisition method when control is transferred to the Company. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on bargain purchase for the acquisition resulting from purchase price adjustments pursuant to the acquisition agreement is recognized in profit or loss immediately. Transactions cost are expensed as incurred.

Subsidiaries are entities that we control. We control an entity when we are exposed to, or have rights to, variable returns from our involvement with the entity and have the ability to affect those returns through our power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. We eliminate all transactions between subsidiaries upon consolidation in the consolidated financial statements.

For each business combination, we elect whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets as of the date of acquisition. Changes in our interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Goodwill

Goodwill arises from the acquisition of subsidiaries and represents the excess between the cost of an acquisition and the fair value of our interest in the net identifiable assets at the date of the acquisition. Goodwill arising from a business combination is allocated to each cash-generating unit (“CGU”) or group of CGUs that are expected to benefit from the synergies of the combination. Each CGU or group of CGUs to which goodwill is allocated represents the lowest level of cash-flow generating assets within the entity at which goodwill is monitored by management. Goodwill is tested for impairment at least annually and recorded at cost less

accumulated impairment losses. The carrying amount of goodwill is compared to the recoverable amount, which is the greater of value in use and fair value less costs to sell. Any impairment is recognized immediately as an expense and cannot be reversed.

Revenue Recognition

We generate revenue primarily from premiums earned on oncology plans and the sale of healthcare services and medicines. On January 1, 2018, we adopted IFRS 15 as our revenue recognition standard for revenue related to the sale of healthcare services and medicines. Under IFRS 15, revenue we generate from the sale of healthcare services is recognized as such healthcare services are provided to our patients. Similarly, the revenue we generate from the sale of medicines is recognized when medicines are provided to our customers and, in cases when our patients are hospitalized, when medicines are administered to them. Prior to January 1, 2018, we used IAS 18 as our revenue recognition standard and our results of operations for periods prior to January 1, 2018 have not been restated to reflect our adoption of IFRS 15. There was no material impact on our consolidated financial statements as a result of the adoption of IFRS 15.

We rely on IFRS 4 as an exception to IFRS 15 as our revenue recognition standard for revenue related to the premiums earned on oncology plans. Under such method, the premiums earned on oncology plans are recognized as revenue proportionally during the period in which a patient is entitled to healthcare services under his or her plan. Premiums related to the unexpired contractual coverage period under an oncology plan are recognized in the accompanying balance sheet as unearned premiums reserve.

Technical Reserves for Healthcare Insurance Contracts

Our technical reserves for oncology plans are provisions set aside for obligations that may arise from healthcare services provided to plan members that have not been reported (“IBNR”) and unearned premium reserves. IBNR is an estimate of the amount of claims that may have occurred but not be reported in a period. We calculate IBNR based on historical claim rates from the last ten years and our management’s judgment.

Income Taxes

Current income taxes are provided on the basis of our financial reporting and the financial reporting of each of our subsidiaries, including adjustments in accordance with the regulations of the relevant tax jurisdiction. As such, we must make critical judgments in interpreting tax legislation in the jurisdictions in which we operate in order to determine our income tax expenses.

Deferred income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purpose.

Recent Accounting Pronouncements

The International Accounting Standards Board, or other regulatory bodies, periodically introduce modifications to the financial accounting and reporting standards under which we prepare our consolidated financial statements. Recently, a number of new accounting standards and amendments and interpretations to existing standards have been issued and were effective as of January 1, 2019, including IFRS 16—Leases, or IFRS 16, and IFRIC 23— Uncertainty over Income Tax Treatments, or IFRIC 23. In addition, the amendments to IAS 37—Onerous Contracts—Contract Performance Cost and IAS 16—Property, Plant and Equipment—Proceeds Before Intended Use are scheduled to become effective on January 1, 2022 and IFRS 17—Insurance contracts, or IFRS 17, and the amendment to IAS1—Classification of Liabilities as Current or non-Current are

scheduled to become effective on January 1, 2023. We have adopted COVID-19 Related Rent Concessions—Amendment to IFRS 16, under which we are not required to assess whether certain eligible rent concessions that are a direct consequence of the COVID-19 pandemic are lease modifications. For more information on the potential impact of these new accounting requirements on our consolidated financial statements, see notes 3 and 4 to our consolidated financial statements included elsewhere in this prospectus.

IFRIC 23—Uncertainty over Income Tax Treatments

This interpretation clarifies how to apply the recognition and measurement requirements of IAS 12 when there is uncertainty over income tax treatments. IFRIC 23 is effective for annual periods beginning on or after January 1, 2019. We adopted the new standard as of January 1, 2019. The adoption of IFRIC 23 did not have a significant impact on our consolidated financial statements.

IFRS 16—Leases

IFRS 16 was issued in January 2016. It introduces a lease accounting model within the consolidated statement of financial position. A lessee recognizes right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments. IFRS 16 is effective for annual periods beginning on or after January 1, 2019.

We have adopted the new standard as of January 1, 2019 and applied IFRS 16 using the cumulative effect approach, under which the cumulative effect of initial application is recognized as retained earnings as of January 1, 2019. Consequently, there is no obligation under this method to restate the financial information for the years ended on or before December 31, 2018.

With respect to all qualifying leases, as of January 1, 2019, we recognized right-of-use assets and corresponding lease liabilities. The impact of the initial application of IFRS 16 is summarized in the table below:


	As of January 1, 2019
	(in millions of *soles*)
Right-of-use assets—recognition on initial application of IFRS 16	S/	33.5
Right-of-use assets reclassified from property, furniture and equipment		183.1
Right-of-use assets reclassified from intangible assets		3.1

Total right-of-use assets as of January 1, 2019		219.7
Lease liabilities—recognition on initial application of IFRS 16		33.5
Lease liabilities reclassified from loans and borrowings		92.8

Total lease liabilities as of January 1, 2019		126.3
Other accounts payable		(4.3	)
Deferred tax assets		1.3
Retained earnings		3.1

Right-of-use assets and lease liabilities from qualifying leases for the year ended December 31, 2020 were S/141.3 million and S/146.2 million, respectively.

We have adopted COVID-19 Related Rent Concessions—Amendment to IFRS 16, under which we are not required to assess whether certain eligible rent concessions that are a direct consequence of the COVID-19 pandemic are lease modifications.

IFRS 17—Insurance Contracts

In May 2017, the International Accounting Standards Board issued IFRS 17, which provides a more uniform approach for measurement and presentation of all insurance contracts, including by requiring insurance liabilities

to be measured at a current fulfilment value. The standard is effective for annual periods beginning on or after January 1, 2023, with early adoption permitted for entities applying IFRS 9 and IFRS 15 on or before the initial application date of IFRS 17.

We have not early adopted this standard. Our analysis of the expected effects of the application of IFRS 17 is still ongoing and, as of the date of this prospectus, such analysis has not yet been completed. Accordingly, we have not yet been able to reliably and reasonably quantify the full implications of its adoption.

Amendments to IAS 37—Onerous Contracts—Contract Performance Costs

In May 2020, the International Accounting Standards Board issued an amendment to IAS 37, which clarifies the types of costs that a company can include as contract performance costs when evaluating whether a contract is onerous. As a consequence of this modification, entities that currently apply the “incremental costs” approach will need to recognize larger provisions and a greater number of onerous contracts.

Our analysis of the expected effects of the application of this amendment is still ongoing and, as of the date of this prospectus, such analysis has not yet been completed. Accordingly, we have not yet been able to reliably and reasonably quantify the full implications of this standard.

Amendments to IAS 16—Property, Plant and Equipment—Proceeds Before Intended Use

In May 2020, the International Accounting Standards Board issued an amendment to IAS 16, which provides guidance in accounting for sales and costs that entities can generate in the process of making an item under property, plant and equipment available for use. Such costs must be recognized in the income statement together with the costs of producing such goods.

Emerging Growth Company Status

We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Given that we currently report and expect to continue to report under IFRS, we have irrevocably elected not to avail ourselves of any extended transition period provided for by IFRS and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the International Accounting Standards Board.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an emerging growth company, we may rely on certain of these exemptions, including without limitation, providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. We would cease to be an emerging growth company upon the earliest of: (1) the last day of the fiscal year ending after the fifth anniversary of our initial public offering; (2) the last day of the fiscal year in which we have more than US$1.07 billion in annual revenue; (3) the date we qualify as a “large accelerated filer,” with at least US$700.0 million of equity securities held by non-affiliates; or (4) the issuance, in any three-year period, by our company of more than US$1.0 billion in non-convertible debt securities held by non-affiliates.

INDUSTRY

We currently operate in the Peruvian and Colombian healthcare sectors. Peru and Colombia have some of the strongest macroeconomic fundamentals in the Latin American region, after having consistently implemented market and investor-friendly policies over the past two decades. According to industry sources, in 2020 Peru had a nominal GDP of US$205 billion and a population of 32.8 million, which was equivalent to a nominal GDP per capita of US$6,241. Similarly, in 2020, Colombia had a nominal GDP of US$272 billion and a population of 50.9 million, which was equivalent to a nominal GDP per capita of US$5,337.

Real GDP Growth (%)

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Source: EIU database.

The Peruvian and Colombian Healthcare Sectors from a Global Perspective

According to Fitch Solutions, total spending in local currency in the Peruvian public and private healthcare sector grew at a CAGR of 4% between 2015 and 2020 and is expected to reach US$14.1 billion in 2021 while in Colombia, total healthcare spending in local currency grew at a CAGR of 13% between 2015 and 2020 and is expected to reach US$27.3 billion in 2021. Growth in both markets has been driven mainly by favorable demographic factors, including an expanding middle class demanding more and higher quality healthcare services and an aging population requiring additional healthcare services.

The Peruvian and Colombian healthcare sectors remain significantly underpenetrated, as evidenced by the total healthcare expenditure as a percentage of GDP and healthcare expenditure per capita, shown in the charts below. Spending levels are not only significantly below developed markets, but are also below key regional reference markets, such as Brazil and Chile.

2020 Healthcare Spending as a % of GDP

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Source: Fitch Solutions Colombia Pharmaceuticals and Healthcare Report Q3 2021, Fitch Solutions Peru Pharmaceuticals and Healthcare Report Q3 2021, Fitch Solutions U.S. Pharmaceuticals and Healthcare Report Q3 2021, Fitch Solutions Chile Pharmaceuticals and Healthcare Report Q3 2021, Fitch Solutions Mexico Pharmaceuticals and Healthcare Report Q3 2021, Fitch Solutions Europe Pharmaceuticals and Healthcare Report Q3 2021.

Peru Healthcare Expenditure (US$ Bn)

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Source: Fitch Solutions Peru Pharmaceuticals and Healthcare Report.

Colombia Healthcare Expenditure (US$ Bn)

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Source: Fitch Solutions Colombia Pharmaceuticals and Healthcare Report.

2020 Healthcare Spending per Capita (US$)

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Source: Fitch Solutions Chile Pharmaceuticals and Healthcare Report Q3 2021, Brazil Pharmaceuticals and Healthcare Report Q3 2021, Mexico Pharmaceuticals and Healthcare Report Q3 2021, Colombia Pharmaceuticals and Healthcare Report Q3 2021 and Peru Pharmaceuticals and Healthcare Report Q3 2021.

Consistent with the relatively low levels of healthcare spending in Peru and Colombia, both countries possess clear gaps in hospital infrastructure, as beds per 1,000 people are significantly below the WHO recommended average of 3 beds.

2020E Hospital Beds per 1,000 People

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Source: EIU U.S. Healthcare Industry Report 2Q 2021, EIU Chile Healthcare Industry Report 2Q 2021, EIU Brazil Healthcare Industry Report 2Q 2021, EIU Peru Healthcare Industry Report 2Q 2021, EIU Colombia Healthcare Industry Report 2Q 2021, EIU Mexico Healthcare Industry Report 2Q 2021, EIU database.

Moreover, as both countries’ economies continue to grow, fertility and mortality rates are expected to fall, which will increase life expectancy and invert the age pyramid. We expect this to lead to an increased demand for healthcare services and growth in healthcare spending in both countries. We expect penetration to increase and infrastructure gaps to decrease as a result of these positive demographic trends.

Population Pyramid Evolution (%)


Peru 2021E		Peru 2050E


Colombia 2020E		Colombia 2050E

Source: United Nations—World Population Prospects.

As these countries continue to grow and to expand GDP per capita, the middle classes in Peru and Colombia are also expected to continue to grow, which we believe will increase demand for more and higher quality healthcare services and will increase the percentage of the population that chooses to purchase healthcare services through the private healthcare systems in each country.

Middle Class* as a % of Total Population

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Source: EIU database (latest information available).

*	Middle class defined as the percentage of households with nominal disposable income between US$15,000 and US$50,000 per year.

The Peruvian Healthcare Sector

Structure of the Peruvian Healthcare Sector

Healthcare coverage in Peru is provided through either public programs or private healthcare coverage providers, with the type of coverage that a person has dictating the facilities at which he or she can obtain healthcare services. According to SUSALUD, approximately 76.9% of Peru’s population was covered by some form of healthcare coverage as of December 2020. Moreover, 4.6% of the population was covered by more than one form of healthcare coverage as of December 2020.

According to Fitch Solutions, the total spending in the Peruvian healthcare sector in December 2020, excluding pharmaceuticals, amounted to US$13.29 billion, with public sector spending amounting to US$8.76 billion (66% of the overall spending). Despite only covering 4.6% of the population, private sector spending amounted to US$4.54 billion, or 34% of the overall spending, in December 2020. It should be noted that Peru has no limitation on vertical integration.

Distribution between the Private and Public Sectors in Peru as of December 2020

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Source: Boletín Estadístico 2020, SUSALUD and Fitch Solutions Peru Pharmaceuticals and Healthcare Report Q3 2021.

*	Excludes pharmaceuticals. Health expenditures data is as of the end of 2020.

The Peruvian healthcare sector is structured as follows:

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Source: EsSalud.

The Peruvian government plays a major role in providing healthcare coverage. As of December 2020, approximately 72.4% of the population in Peru was estimated to be served by one of the main government-managed programs and the government’s objective is to reach universal healthcare coverage by 2021. The main government-managed programs available to the public are:

•

EsSalud: A social security regime, also known as the direct contribution regime, which offers coverage for employees, the self-employed, agricultural workers and their families. Employers’ participation in EsSalud is mandatory and EsSalud is financed via monthly contributions from employers amounting to 9% of workers’ aggregate monthly salaries. As of December 2020, 9.57 million people were covered by EsSalud. EsSalud operates hospitals, clinics and primary care facilities through 29 healthcare assistance units throughout Peru, and members of EsSalud can only obtain healthcare services at facilities that EsSalud operates. EsSalud has identified a number of problems in its provision of services, including delays in obtaining appointments, difficulties accessing surgeries and hospitalization due to shortages in available facilities, shortages of medicines and medical supplies, inadequate infrastructure and deficient hospital equipment.

•

SIS: A subsidized social security regime, also known as the indirect contribution regime, for the unemployed, informally-employed or persons that are otherwise below the poverty line. Coverage under this program has also been extended to expectant mothers, children under the age of five and newborns whose parents are uninsured. SIS is mostly financed via government resources and occasional donations from intergovernmental cooperation programs. It functions as the insurer of last resort for Peruvians who are not covered by EsSalud or private healthcare coverage and lack the means to pay for healthcare services out of pocket. As of December 2020, 23.28 million people were covered by SIS. Participants in SIS must obtain healthcare services at facilities operated by MINSA or by the health departments of provincial governments. Pursuant to Urgent Decree N° 017-2019 enacted by the Peruvian government in November 2019, SIS was authorized to cover all Peruvian residents who have no healthcare coverage, in order to ensure universal access to healthcare. The government has 120 days to finalize the implementation and funding for this expansion of public healthcare coverage. When implemented, Urgent Decree N° 017-2019 is expected to significantly reduce the percentage of Peru’s population that is currently uninsured. Because those newly insured through Urgent Decree N° 017-2019 will receive coverage through SIS, we do not expect this new law to have a significant impact on our business.

•

Armed Forces and National Police healthcare agencies: The Armed Forces and National Police have their own healthcare agencies that are funded by the Peruvian Ministry of Defense and the Ministry of the Interior. According to SUSALUD, 704,846 people were covered by these agencies as of December 2020, representing a combined 2% of Peru’s population. Members of these agencies must obtain healthcare services from facilities operated by the Armed Forces or the National Police, as applicable.

As of December 2020, approximately 4.6% of Peru’s population was served by private healthcare coverage providers. Private healthcare coverage providers in Peru can be divided into two main categories:

•

EPS Providers: Private health insurance companies acting as providers of EPS plans. EPS plans are healthcare plans funded by a portion of contributions to EsSalud, as described in more detail below. As of December 2020, there were five companies providing EPS plans with 829,416 active members.

•

Other Private Providers: Private health insurance companies that provide (i) various coverage plans that are mostly sold through large and medium-sized private sector employers and (ii) prepaid plans, which provide certain levels of either general coverage or coverage of specific diseases for a fixed periodic fee and may also be offered by employers or purchased directly by individuals. As of December 2020, there were more than 30 companies providing private healthcare coverage other than EPS plans with 2.1 million active members.

People that receive coverage through EPSs or through other private providers may obtain healthcare services at for-profit private facilities, including facilities operated by such providers and facilities approved by such provider, such as our Auna facilities, which serve beneficiaries of most of the EPSs in Peru, as well as most other private healthcare plans.

In addition to for-profit facilities operated by private healthcare services providers such as Auna, there is also a non-profit sector, mostly comprised of non-governmental organizations, the Peruvian Red Cross, the Volunteer Firefighter Companies and healthcare providers affiliated with religious institutions. These providers typically serve underserved populations and are almost wholly financed via donations.

The following chart presents a breakdown of the population by type of coverage as of December 2020.

Breakdown of Population by Type of Coverage

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Source: Boletín Estadístico 2020, SUSALUD.

*	Private coverage includes EPS and persons with more than one type of coverage.

Private Healthcare Plan Market

Healthcare coverage providers, whether traditional insurance companies or prepaid plan providers, are considered IAFASs that are regulated by SUSALUD. There are four types of private healthcare plans provided by private IAFASs in Peru:

•

EPS Plans: Plans that provide additional or complementary services to those provided by EsSalud. EPS plans generally cover low-complexity services through a network of private institutions. Employers may choose to provide EPS plans to their employees in addition to EsSalud coverage, in which case 2.25% out of the 9% of workers’ aggregate monthly salaries contributed to EsSalud is contributed to the chosen EPS, with the remaining 6.75% contributed to EsSalud. These plans are regulated by the SBS, Peru’s banking and insurance regulator. There are five providers of EPS plans: MAPFRE Perú S.A. (“Mapfre”) EPS, Rímac EPS, Pacífico EPS, La Positiva S.A. (“La Positiva”) EPS and Sanitas Perú S.A. (“Sanitas”) EPS, each of which also provides private healthcare plans.

Breakdown of Members by EPS

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Source: Boletín Estadístico 2020, SUSALUD.

•

Private Insurance Plans: Private health insurance plans provided by traditional insurance providers. The main insurance providers in Peru are Rímac and Pacífico, which accounted for approximately 86% of the traditional private insurance market in Peru in December 2020. Other providers include La Positiva, Cardif and Mapfre. Traditional insurance plans may be purchased as additional protection on top of EPS and EsSalud coverage. These plans are regulated by the SBS and SUSALUD.

Breakdown of Members by Private Insurers

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Source: Boletín Estadístico 2020, SUSALUD.

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Prepaid Plans: Plans offered by hospitals and other medical service providers that are meant to be integrated with a hospital’s healthcare services offering. As these plans are not considered insurance programs, they are only regulated by SUSALUD and not the SBS. The prepaid plans that we offer through Oncosalud are examples of prepaid plans. Other prepaid plan providers include Ricardo Palma, San Pablo and CSalud (operating through its Maison de Sante brand), which offer general coverage limited to their own networks of hospitals and clinics. Within the prepaid plans market, Oncosalud accounted for 87% of all prepaid plan members in Peru in December 2020.

Prepaid Plans

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Source: Boletín Estadístico 2020, SUSALUD.

The number of Oncosalud plan members has grown at a double-digit rate over the past decade, growing at more than twice the rate of the EPS system, which is the next largest private healthcare plan type by number of plan members.

Oncosalud Plan Members (000s)

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Source: Company information.

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Self-Insurance Plans: Plans offered primarily by institutions such as universities, large public institutions and labor unions, guilds and industry associations. These plans pool member resources and function very similarly to prepaid plans. These plans are also regulated by SUSALUD.

Self-Insurance Plans

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Source: Boletín Estadístico 2020, SUSALUD.

Overall, the private healthcare coverage plan market breaks down as follows:

Private Healthcare Plan Market by Plan Type (000s Members)

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Source: Boletín Estadístico 2020, SUSALUD and Anuario Estadístico 2020, SUSALUD.

There is significant concentration in the private healthcare plan market, with the top 10 providers accounting for more than 94% of the market since 2014. Oncosalud has consistently maintained a strong position in the market, and as of December 2020, it held the highest share in the industry based on number of total plan members.

Largest Private Healthcare Plan Operators in Peru by Plan Members (000s)


2014						2020
Ranking		Plan Members		Market Share		Ranking		Plan Members		Market Share		CAGR
		(in thousands)		%				(in thousands)		%		%
1	Rímac⁽¹⁾		746		29.4	1	Pacífico⁽¹⁾		844		28.8		4.6
2	Oncosalud		711		28.0	2	Oncosalud		823		28.0		2.5
3	Pacífico⁽¹⁾		635		25.0	3	Rímac⁽¹⁾		813		27.8		1.4
4	Cardif		87		3.4	4	Sanitas⁽¹⁾		86		2.9		31.0
5	La Positiva		83		3.3	5	Mapfre⁽¹⁾		75		2.6		4.4
6	CSalud		72		2.8	6	San Pablo		47		1.6		0.7
7	Mapfre⁽¹⁾		58		2.3	7	Ricardo Palma		39		1.3		-4.1
8	Ricardo Palma		50		2.0	8	Protecta		21		0.7		N/A
9	San Pablo		45		1.8	9	La Positiva		18		0.6		-22.5
10	Sánitas⁽¹⁾		17		0.7	10	CSalud		16		0.5		-22.2
	Top 10		2,502		98.6		Top 10		1955		94.5
	Total		2,538		100.0		Total		2,929		100.0

Source: Anuario Estadístico 2020 and Anuario Estadístico 2015, SUSALUD.

(1)	Includes EPS plans and private insurance plans provided by these providers.

During the 2014-2020 period, aggregate private health insurance premiums and prepaid plan payments grew at an estimated CAGR of 4.1%, while Oncosalud’s total prepaid plan payments grew at a CAGR of 15% and represented 14% of the market in 2020.

EPS and Private Insurance Plan Fees (US$ million)

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Source: SUSALUD; SBS.

Oncosalud Plan Fees (US$ million)

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Source: Company information.

Healthcare Services Market

According to SUSALUD, as of December 2020, there were 22,535 healthcare facilities in Peru, which include hospitals, private clinics, medical centers, private consultation facilities and dental hospitals All facilities, whether public or private, that provide healthcare services to individuals in Peru are considered Instituciones Prestadoras de Servicios de Salud (“IPRESSs”) that are regulated by, and must be registered with, SUSALUD.

Upon registration with SUSALUD, each IPRESS is assigned an “attention level” classification by MINSA and an attention level category, with additional subcategories, which are valid for three years, depending on the degree of complexity associated with the services provided. After receiving their classification and upon registering with SUSALUD, IPRESSs are responsible for providing healthcare services within the parameters and principles determined by the applicable regulations for their respective classification. Level 1 facilities offer preventive low-complexity care and promote public health education. Level 2 facilities offer medium- to high-complexity care and services in basic specialties, including internal medicine, gynecology, general surgery and pediatrics. Finally, Level 3 facilities offer the highest complexity care in Peru, addressing highly specialized medical and surgical needs. IPRESSs are classified as follows:


Attention Level	Category	Institution Type
Level 1	I – 1	Health clinic
	I – 2	Health clinic with a doctor
	I – 3	Outpatient health center
	I – 4	Inpatient health center
Level 2	II – 1	General hospital with medical specialties and a general
	II – 2	ICU
	II – E	Specialized institution
Level 3	III – 1	General hospital with medical subspecialties and a specialized ICU
	III – 2	Specialized institution
	III – E	Specialized institution

Source: MINSA.

All of Auna’s hospitals in Peru are classified as Level 2, II – 2 with the exception of Clínica Delgado, which is classified as Level 3, III – 1.

As of December 2020, there were 562 Level 2 and Level 3 healthcare facilities in Peru. As of December 2020 (latest SuSalud information available), Level 2 and Level 3 hospitals had a total of 31,777 beds and 9,116 outpatient rooms, distributed as follows:

Beds & Outpatient Rooms per Sector


Sector	Beds		Beds Share (%)			Outpatient Rooms		Outpatient Rooms Share (%)
MINSA & Regional Governments		16,771		49.9	%		11,933		60.0	%
EsSalud		8,960		26.6	%		2,462		12.3	%
Private		6,079		18.1	%		4,588		23.1	%
Armed Forces, Police and Other		1,827		5.4	%		903		4.5	%
TOTAL		31,777		100.0	%		19,886		100.0	%

Source: SUSALUD.

As Peru’s capital and most-populated city, Lima and its metropolitan area have the highest concentration of individuals with some type of healthcare coverage and are home to most of the country’s largest and most sophisticated hospitals.

Beds & Outpatient Rooms of Lima’s Premium Hospital Segment


Hospital	Beds		Beds Share (%)			Outpatient Rooms		Outpatient Rooms Share (%)			Ownership
Ricardo Palma		186		18.0	%		216		31.6	%		Private
San Felipe		167		16.2	%		53		7.8	%		Private
San Pablo		130		12.6	%		99		14.5	%		Private
Delgado		120		11.6	%		80		11.7	%		Private
Sanna San Borja		109		10.6	%		60		8.8	%		Private
Internacional		103		10.0	%		0		0.0	%		Private
Angloamericana		90		8.7	%		69		10.1	%		Private
Javier Prado		66		6.4	%		58		8.5	%		Private
Sanna El Golf		62		6.0	%		48		7.0	%		Private
TOTAL		1,033		100.0	%		863		100.0	%

Source: SUSALUD.

The Colombian Healthcare Sector

Structure of the Colombian Healthcare Sector

Healthcare coverage in Colombia is primarily provided through the SGSSS, the social security system in Colombia, which has three different regimes. There is also a small but rapidly expanding private healthcare coverage market, primarily consisting of traditional insurance. Healthcare coverage is mandatory in Colombia, with approximately 95% of the population covered by the SGSSS as of December 2020. As of December 2020, up to 3% of the population covered by the SGSSS also enhanced their coverage through the private market. Only 5% of the population is estimated to have no insurance coverage as of December 2020, making Colombia one of the most advanced countries in the region in terms of healthcare coverage.

According to Fitch Solutions, total spending in the Colombian healthcare sector in 2020 amounted to US$24.3 billion, with public sector spending (excluding pharmaceuticals) amounting to US$18.6 billion (76% of the overall spending). Despite only covering approximately 3% of the population, private sector spending

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(excluding pharmaceuticals) amounted to US$5.7 billion, or 24% of the overall spending, in 2020. It should be noted that Colombia has a 30% limit on vertical integration.

Distribution between the Private and Public Sectors in Colombia as of December 2020

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Source: SGSSS.

*	Note: 95% of the Colombian population is covered by public health insurance, 3% has also enhanced their coverage through private health insurance.

**	Excludes pharmaceuticals.

The Colombian healthcare sector is structured as follows:

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Source: MinSalud.

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Healthcare coverage plans in Colombia are designated as one of only two types of plans: Planes Obligatorio de Salud (“POSs”) and Planes Adicionales de Salud (“PASs”), each of which can be provided by a variety of entities. POSs are obligatory plans offered under the SGSSS and include coverage for a series of medical services and medicines mandated by law. Unlike in the Peruvian market, where the government provides public healthcare coverage directly through EsSalud or MINSA, all public healthcare coverage in Colombia is provided by private entities other than coverage provided under the special and exempt regime, as described in more detail below. Contributions to the SGSSS are put into a fund owned by the government and administered by the Administradora de los Recursos del Sistema (“ADRES”). The ADRES contributes funds to EPSs, which are private institutions responsible for (i) collecting and managing funds contributed to the system and (ii) paying healthcare providers for the services provided to their plan members.

Since May 2019, and particularly during the COVID-19 pandemic, the Colombian government has adopted and implemented certain legal measures in an effort to increase the financial liquidity of the various actors of the SGSSS by addressing, at least in part, the limitations on reimbursement for healthcare services.

The SGSSS consists of three main regimes:

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Contributory regime: For employees or independent workers with payment capacity, defined as those with an income equal to or greater than the legal minimum wage. Plan members contribute 12.5% of their monthly salary to the system, 8.5% of which is contributed by the employer and 4% of which is contributed by the employee. As of December 2020, there were 14 companies providing POSs under the contributory regime with 25.5 million active members.

Top 5 Largest Contributory Regime EPSs by Number of Plan Members (000s)

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Source: SUPERSALUD as of December 2020.

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Subsidized regime: For those that do not have payment capacity and are subsidized by the contributory regime and the government. As of December 2020, there were 25 companies providing POSs under the subsidized regime with 21.8 million active members. This includes four types of EPSs: (i) Empresas Solidaria de Salud, which are non-profit organizations with the specific purpose of providing health insurance services to low-income households living in urban areas, (ii) Entidades Promotora de Salud, which are for-profit entities, (iii) Entidades Promotora de Salud Indigenas, which are for-profit entities providing healthcare coverage to indigenous populations and (iv) Cajas de Compensación Familiar, which are non-profit organizations that provide healthcare coverage and other services to local communities.

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Top 5 Largest Subsidized Regime EPSs by Number of Plan Members (000s)

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Source: SUPERSALUD as of December 2020.

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Special and exempt regime: For members of the security forces and Ecopetrol, the national oil company in Colombia. As of May 2020, there were 2.2 million active members under the special and exempt regime.

In Medellín, where the majority of our Colombian operations are currently located, 76% of the population is enrolled in the contributory regime, while only 24% is enrolled in the subsidized regime as of December 2020. The larger market in the contributory regime has created a more competitive environment for private healthcare providers in such regime. EPSs in the contributory regime offer more favorable payment terms and conditions to healthcare providers than EPSs in the subsidized regime.

The second type of healthcare coverage plan in Colombia, PASs, are offered by private healthcare coverage companies and financed directly by plan members. PASs are not mandatory, but in order to purchase a PAS, an individual must have a POS plan through an EPS. As a result, PASs usually include a wider range of benefits than those provided by POSs and are typically purchased to enhance the coverage an individual has under his or her POS plan.

According to EMIS Emerging Market, as of June 2019, 1.4 million people were covered by plans in the private healthcare coverage market in Colombia with a majority covered by the top three private healthcare coverage plan providers—Colsanitas, Coomeva and Colmedica.

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Market Share of Private Healthcare Plan Operators by Number of Plan Members as of June 2019 (latest information available)

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Source: Colombia Healthcare Reports EMIS

Healthcare Services Market

Unlike in the Peruvian market where people covered by the public system are required to obtain treatment in facilities operated by public healthcare plan operators, members participating in the public system in Colombia are able to obtain healthcare services at both state-owned and privately-owned IPSs, which include hospitals, private clinics, medical centers, private consultation facilities and dental hospitals, among others. According to EMIS Emerging Market, as of December 2020, Colombia had a total of 10,925 IPSs, of which 9,904 (90.7%) were privately operated, 1,003 (9.2%) were operated by the government and 18 (0.2%) were under mixed ownership meaning they are private facilities in which the government holds a stake, mostly structured as joint ventures with private players. Of the 9.3% of IPSs that are government-owned, the majority are managed by local governments. As of August 2020, just 10 facilities were under the direct control of the national government and five of those facilities were associated with the national police and the armed forces.

Private IPSs in Colombia include a significant number of medium-sized healthcare networks of around 5-10 facilities each. In addition, some private IPSs are directly controlled by EPSs.

According to MinSalud, out of all IPSs, 1,499 are hospitals, of which 996 (66.4%) provide low-complexity services while the remaining 503 (33.6%) provide medium- and high-complexity services. As of December 2020, hospitals in Colombia had a total of 85,918 beds and 9,186 procedure rooms, distributed as follows:

Beds & Procedure Rooms by Sector


Sector	Beds		Beds Share (%)			Procedure Rooms		Procedure Rooms Share (%)
Public		27,525		32.0	%		2,744		29.9	%
Mixed		1,176		1.4	%		63		0.7	%
Private		57,217		66.6	%		6,379		69.4	%
TOTAL		85,918		100.0	%		9,186		100.0	%

Source: MinSalud.

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Of the 57,217 beds in the private system, 24,664 (43.1%) of them were allocated for adult care as of December 2020. Beds in the private sector are distributed as follows:

Private Sector Beds by Type

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Source: MinSalud.

Clínica Las Américas, our hospital in Medellín, is positioned within Medellín’s premium hospital segment, due to its infrastructure, medical service capabilities and offered specialties. Installed capacity as of December 2020 for the premium hospital segment in Medellín was as follows:

Beds & Outpatient Rooms of Medellín’s Premium Hospital Segment


Hospital	Beds		Beds Share (%)			Procedure Rooms		Procedure Rooms Share (%)			Ownership*
Pablo Tobon Uribe		478		25.0	%		45		32.6	%	Not For Profit
San Vicente de Paul		474		24.8	%		32		23.2	%	Not For Profit
Medellín		379		19.8	%		14		10.1	%	Private
Las Américas		260		13.6	%		22		15.9	%	Private
Soma		172		9.0	%		11		8.0	%	Not For Profit
Las Vegas		151		7.9	%		14		10.1	%	Private
TOTAL		1,914		100.0	%		138		100.0	%

Source: MinSalud.

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BUSINESS

Overview

We are one of the largest and most recognized players in the Peruvian healthcare industry and have a growing presence in Colombia. With more than 30 years of experience in the healthcare industry, we provide oncology healthcare plans in Peru and operate hospitals and clinics in Peru and Colombia that provide high-quality medical services at all levels of complexity. Our mission is to transform healthcare in the countries in which we operate by providing excellent patient outcomes and positive, streamlined patient and plan member experiences at an affordable cost. We believe we are well positioned to fulfill this mission due to our patient-centric culture, scale, innovative use of technology, unique vertically integrated oncology platform in Peru and high degree of horizontal integration in our Peruvian and Colombian healthcare networks, all of which allow us to scale nationally and regionally with cost efficiencies and further advance our strategic development. Furthermore, we believe that we are uniquely positioned to disrupt the health-tech market in Latin America. Leveraging on the breadth of our healthcare network, we intend to expand and accelerate our strategic technology platform to launch one of SSLA’s largest one-stop healthcare ecosystems in terms of members, providing our current and future users with an end-to-end, personalized and immediate healthcare solution that we believe will result in us becoming the true digital healthcare leader in the region.

Our business was founded in Peru in 1989 as Oncosalud, a healthcare coverage provider selling prepaid plans covering a full range of services for the prevention, detection and treatment of cancer for a modest monthly payment that varies based on plan type and age of plan members and was on average S/54.2 (US$14.1) per month for the year ended December 31, 2020. Our prepaid oncology plans addressed an unmet need in the healthcare coverage market in Peru at the time and quickly began to grow. Starting in 1997, we began to build our own network of Oncosalud facilities to primarily treat our plan members but also patients of private payers, including patients covered by private insurance. Clínica Oncosalud, our flagship hospital in this network, has a Diamond accreditation from ACI. Oncosalud had 830,643 members as of December 31, 2020, which was more than each of the private insurance and EPS systems in Peru as of that date. Measured by number of plan members, we had a market share of 28.0% of all private healthcare plans in Peru in 2020 and had the second largest market share of any single private healthcare plan, according to data from SUSALUD. Oncosalud currently operates two specialized oncology hospitals and three oncology clinics. Through its vertically integrated model, Oncosalud has achieved high levels of both effectiveness and efficiency: during the year ended December 31, 2020, 97% of Oncosalud members were treated in our facilities, which allows us to control medical costs, manage treatment protocols and provide high-quality cancer treatment. Notably, for the cohort of patients diagnosed between 2010 and 2015, Oncosalud’s 5-year cancer survival rate was 75.5%. In addition, we had an MLR of 43.0% as of December 31, 2020, which we believe is one of the lowest in Latin America, based on the MLRs published by other publicly-traded healthcare companies in Latin America that provide prepaid healthcare plans or health insurance coverage. During 2020 and 2019, through our Oncosalud network of facilities, we treated more than 12,800 and 12,500 patients, respectively. By guiding our plan members from prevention through early detection of cancer and then through the full treatment cycle, we take the uncertainty and fear out of cancer treatment and provide top quality care in a compassionate and humane manner.

In 2011, we took our experience at Oncosalud as a provider of first-class patient outcomes at an affordable cost and began to apply it to the provision of a full range of healthcare services via a broader network of facilities in Peru. Through the development and acquisition of facilities since that time, we have built a network of hospitals and clinics located in all of the major cities in the country, with premium clinical capabilities and a wide range of medical specialties and subspecialties. Today, with our Auna Peru network, we own and operate five hospitals and two clinics as well as numerous other facilities providing complementary services, such as pharmaceutical, diagnostic imaging and clinical laboratory services. We are a provider to essentially all of the private payers in the Peruvian healthcare sector, including traditional private insurers, EPS providers and prepaid plan operators. Our Auna Peru network is horizontally integrated, meaning that patients can access all of their treatment, diagnostic imaging, laboratory and pharmaceutical needs at one of our facilities instead of having to

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go to different providers for each service. Additionally, for certain high-complexity procedures that cannot be performed at our regional hospitals, patients can be treated at Clínica Delgado, our high-complexity facility in Lima and the flagship hospital of the Auna Peru network. Moreover, we were the first private institution in Peru to implement an EMR system in 2013 as part of our modern HIS, and today all of our hospitals in Peru use our HIS, which allows us to closely monitor and anticipate patient health needs, efficiently manage costs across our patient population and improve medical outcomes and the quality of our services. Through this horizontal integration, we are able to foster a seamless, positive patient experience across each of our networks in Peru. In addition, we are also able to centralize processes, such as procurement of equipment and medicines, and increase our negotiating power with payers, which allows us to more efficiently manage our costs and price our services competitively.

In our Auna Peru network, we own and operate premium medical facilities, employ some of the leading medical professionals in the country and are able to achieve excellent patient outcomes. Our flagship hospital in this network, Clínica Delgado, which we opened in 2014, is the country’s leading high-complexity hospital and has quickly established itself as a standard setter in Latin America, as evidenced by its Diamond accreditation from ACI and its ranking among the best hospitals in Peru across a wide range of categories by GHI in 2018. We also have six other primary facilities that we acquired, modernized, expanded and relaunched after a series of strategic acquisitions in 2011 and 2012 and now have a presence in all of the major urban areas in Peru. We treated more than 184,000 and 198,000 patients during 2020 and 2019, respectively, at facilities in our Auna Peru network, which had a total of 287 beds as of December 31, 2020.

In 2018, we leveraged our experience and success in providing integrated patient experiences and outstanding outcomes in Peru and expanded into Colombia with our acquisition of Grupo Las Américas, one of Colombia’s leading healthcare providers located in the country’s second largest city, Medellín. In 2020, we began the process of rebranding Grupo Las Américas as our Auna Colombia network and completed such process during the first quarter of 2021. In addition, in September 2020, we further expanded our Auna Colombia network with our acquisition of Clínica Portoazul, a premium high-complexity private hospital located in the country’s fourth largest city, Barranquilla. Our Auna Colombia network provides healthcare services to patients covered by a range of payers in Colombia, including both public and private insurers, and currently consists of two hospitals and five clinics in Medellín and one hospital in Barranquilla, as well as a range of facilities providing complementary services. Similar to our Auna Peru network, our Auna Colombia network is also horizontally integrated, which enables us to be a one-stop shop for all of our patients’ needs and provide them with a seamless patient experience. In our Auna Colombia network, we also have premium medical facilities, employ some of the leading medical professionals in the country and are able to achieve high quality patient outcomes. The flagship hospital in our Auna Colombia network, Clínica Las Américas, is the leading private hospital in Medellín and was ranked the 7th best hospital in Colombia in América Economía’s 2020 Best Hospitals Ranking. We also own the IDC in Medellín, one of the country’s largest and leading private oncology hospitals and the only institution in Colombia that is a sister institution of MD Anderson, one of the leading cancer care providers in the United States. We currently have more than 440 beds and have treated more than 263,000 and 246,000 patients during 2020 and 2019, respectively, in the Auna Colombia network.

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Our Hospitals’ Geographic Footprint

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We operate our business through three segments: (i) Oncosalud Peru, (ii) Healthcare Services in Peru, which consists of our Auna Peru network, and (iii) Healthcare Services in Colombia, which consists of our Auna Colombia network. On a consolidated basis, in the year ended December 31, 2020, we generated revenue of S/1,443.8 million (US$375.0 million), loss for the year of S/(5.4) million (US$(1.4) million), EBITDA of S/184.4 million (US$47.9 million) and Adjusted EBITDA of S/186.4 million (US$48.4 million). Revenue, segment profit before tax and Segment EBITDA generated by the Oncosalud segment was S/659.1 million (US$171.2 million), S/87.0 million (US$22.6 million) and S/128.0 million (US$33.2 million), respectively, in the year ended December 31, 2020. In the year ended December 31, 2020, revenue generated by the Oncosalud segment contributed 45.7% to our consolidated revenue. Revenue, segment loss before tax and Segment EBITDA generated by the Healthcare Services in Peru was S/476.4 million (US$123.7 million), S/(27.0) million (US$(7.0) million) and S/7.9 million (US$2.1 million), respectively, in the year ended December 31, 2020. In the year ended December 31, 2020, revenue generated by the Healthcare Services in Peru segment contributed 33.0% to our consolidated revenue. Revenue, segment loss before tax and Segment EBITDA generated by the Healthcare Services in Colombia was S/419.6 million (US$109.0 million), S/(56.9) million (US$(14.8) million) and S/39.3 million (US$10.2 million), respectively, in the year ended December 31, 2020. In the year ended December 31, 2020, the Healthcare Services in Colombia segment contributed 29.1% to our consolidated revenue.

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healthcare spending in both markets over time. We also believe that the regulatory frameworks in these countries are conducive to further growth in the industry. However, the healthcare markets in these countries are characterized by deficits in medical capacity, poor quality of services and fragmented healthcare service industries with relatively low competition, and we believe that each of these markets possesses high growth potential. We believe that our integrated networks in each market provide us with a significant competitive advantage to capitalize on this growth. We plan to continue to grow in these markets by expanding the capacity in each of our networks and developing new products, such as new healthcare coverage options for our patients. We also plan to explore opportunities in other similar markets in Latin America where we believe our scale, experience and capabilities will give us an advantage.

Our Integrated Networks

Our Auna Peru network is one of the largest private healthcare providers in the country. We have facilities in Lima, Arequipa, Chiclayo, Piura and Trujillo, which are the principal cities in the five most populated departments in Peru, with each department having a population above one million. Our flagship hospital in this network, Clínica Delgado, is one of the most modern and sophisticated hospitals in Peru, with capabilities for the highest complexity procedures available in the country. For example, Clínica Delgado is one of only two private hospitals in Peru licensed to perform organ transplants and is renowned for having one of the best neonatal intensive care units and maternity wards in Peru. Our other hospitals are equipped for a wide variety of medium-complexity procedures. Due to the horizontal integration of our network, we are able to be a one-stop shop for our patients, offering all of the treatments they require in addition to diagnostic imaging, pharmaceuticals and laboratory services. We were the first private institution in Peru to implement an EMR system as part of our modern HIS in 2013. Currently used in all of our hospitals in Peru, our HIS also registers our patients’ contact information and manages administrative services, such as hospital admissions and billing, in addition to housing our EMR system. Today our sophisticated technology and advanced data management allow us to closely monitor and anticipate patient healthcare needs, coordinate with our physicians and staff in multiple locations, establish standardized protocols at our facilities and manage and control costs. We have just launched a new medium-complexity hospital, Auna Chiclayo, and expect to start operations at the end of August 2021 and as a result, we have added approximately 68 additional beds to our capacity. We are also expanding our capacity in Clínica Vallesur in Arequipa, which we expect to add approximately 40 additional beds there between 2021 and 2022.

While we currently provide services only to private payers in our Auna Peru network, we are evaluating opportunities to participate in PPP with EsSalud, Peru’s social security program. Approximately 9.3 million people, or 24.4% of the Peruvian population, receive healthcare coverage through EsSalud. We are awaiting approvals from EsSalud for certain project milestones and necessary amendments to the concession agreement to rebuild Torre Trecca, an outpatient facility (which is currently not in use) providing healthcare services to

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patients covered through EsSalud, as a high-rise treatment center, and begin operating it through a PPP on behalf of EsSalud. This partnership will allow us to provide outpatient services to a large segment of the population that is receiving care through the public sector, a patient population we do not currently address. Through this partnership, once we are able to begin operations we expect to handle approximately 15% of EsSalud’s yearly outpatient volume, or about 1.5 million outpatient appointments per year.

Our Auna Colombia network is currently centered on our facilities in Medellín, including two hospitals, Clínica Las Américas and IDC, one medical laboratory and five clinics, and in Barranquilla, including one hospital, Clínica Portoazul. Our flagship hospital in this network, Clínica Las Américas, is one of Medellín’s leading private hospital focused on high-complexity services and specializes in cardiology and bone-marrow transplants, among other specialties. We also operate one of the leading cancer care facilities in Colombia, IDC, and are able to share best practices learned at IDC with Oncosalud and vice versa. Our strategy for our Auna Colombia network is similar to what we have already executed in Peru: we aim to be a horizontally integrated provider with high quality facilities in most of Colombia’s large metropolitan areas. We have already begun expanding our operations and solidifying our presence in Colombia—we are currently completing the construction of Clínica del Sur in Envigado, a city located to the south of Medellín, which we expect to begin operations and add approximately 155 additional beds in 2022. The completion of Clínica del Sur which will strengthen our presence in the Antioquia region. We are also actively analyzing acquisition opportunities in the country’s other key urban areas, such as Bogotá and Cali.

Our Competitive Strengths

We believe that our key strengths include:

Vertically integrated oncology services network in Peru providing first-class patient outcomes and experiences at an affordable cost

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mixed. Cancer is a potentially life-threatening disease, and the prospect of waiting for cancer treatment after being diagnosed is a strong motivation for individuals to seek enhanced coverage. Our prepaid oncology plans take the uncertainty out of cancer care at an affordable cost and cover all aspects of what can be a catastrophic medical condition. We believe the growth in our Oncosalud membership from 266,000 in 2008 to over 830,000 as of December 31, 2020 shows the appeal of our innovative plans. Our plan members include healthcare consumers who do not have any other healthcare coverage, members who are covered by EsSalud but want supplemental coverage for cancer, and individuals who have healthcare coverage from another private payer but want access to our leading expertise in oncology and our integrated care platform.

Horizontally integrated regional healthcare networks providing excellent outcomes, seamless patient experiences and significant network-level efficiencies

In addition to providing high quality patient outcomes and experiences, our Auna Peru and Auna Colombia networks provide us with multiple network-level efficiencies that we believe would be difficult for competitors to replicate. For example, our scale as a healthcare provider allows us to negotiate favorable rates for the procurement of medicines and medical equipment, providing us with sizeable cost efficiencies. The scale of our network also allows us to attract the best doctors and management talent in the market. We are able to implement systems, such as IT and enterprise resource planning systems, on a centralized basis, which also provides us with substantial cost savings. Finally, we believe that our horizontal integration provides us with increased negotiating power with third party payers, particularly private insurance companies and other healthcare payers. Due to our high-quality care and scale, we have become a “must carry” provider for major private health insurers in both countries, meaning that including our Auna Peru and Auna Colombia facilities in their in-network coverage has become important for their plans to be competitive within their markets. This has allowed us to negotiate favorable prices for our healthcare services.

Premium clinical capabilities at all levels of complexity

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Clínica Delgado, which has a Diamond accreditation from ACI, is one of only two private hospitals in the country that are licensed to perform organ transplants and is renowned for having one of the best neonatal intensive care units and maternity wards in Peru. Clínica Delgado physicians also performed the first ever thorax abdominal aorta endoprosthesis implant in Peru, and only the third in Latin American history. Our flagship hospital in our Auna Colombia network, Clínica Las Américas, is the leading private hospital in Medellín specializing in high-complexity services, including oncology, cardiology and bone-marrow transplants, and was ranked as the 7^th best hospital in Colombia in América Economía’s 2020 Best Hospitals Ranking. In Peru through our Oncosalud network, we believe we are one of the best radiotherapy institutes in the country and are one of the only private healthcare providers with a PET scan and cyclotron, which led Clínica Oncosalud to receive a Diamond accreditation from ACI in November 2019. Clínica Delgado and Clínica Oncosalud are the only two facilities in Peru with a Diamond accreditation from ACI. Our premium clinical capabilities are central to the strength of our reputation and our brand, our “must carry” status with health insurers, our ability to attract the best doctors and, most importantly, our ability to provide high-quality care to our patients and plan members.

Proven track record of inorganic and organic growth with active expansion plans in progress

We further advanced our regional expansion in September 2020 through our acquisition of a controlling stake of Clínica Portoazul, a premium private hospital located in Barranquilla, Colombia. The aggregate amount of our initial capital contribution was COP69.417 million, which currently represents 61.00% of the outstanding share capital of Clínica Portoazul. We believe there are several value opportunities in our acquisition of Clínica Portoazul, including its premium infrastructure with opportunities for operational improvement and expansion in oncology services. In addition, it provides us access to Barranquilla, the fourth largest city in Colombia and a market with an attractive demand that is currently covered by low-quality services. Our expansion into this new market increases the potential to create a multi-city healthcare franchise in Colombia with high negotiation power with insurance companies.

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building Clínica del Sur in Envigado, which we expect to add approximately 155 beds to our Auna Colombia network in 2022.

Solid financial growth backed by strong operating fundamentals

Management team, board of directors and shareholders with industry know-how and strategic vision

We believe that the combined strengths and proven experience of our management team, board of directors and shareholders has succeeded in making Auna one of the premier companies in the healthcare industry in the Andean region. In addition, we believe the track record and depth of knowledge of our management team provide us with a distinct competitive advantage. Our chief executive officer, Luis Felipe Pinillos Casabonne, has been working at Auna in various roles for nearly 20 years, and led the expansion of our business into general healthcare services and the development of the Auna networks in Peru and Colombia in conjunction with Enfoca, our controlling shareholder. Our chief financial officer, Pedro Castillo, served as CFO between 2010 and 2014 of Maestro, which had been acquired by Enfoca and expanded to become Peru’s leading home improvement retailer. Mr. Castillo was a key player in Maestro’s strong performance during the period, as well as in its landmark sale to Falabella Perú in 2014.

Comprehensive digital platform with robust data and technology architecture that enables us to deliver immediate, digital-first end-to-end patient experiences

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We believe that we possess some of the industry’s best data and technology assets in SSLA, providing us with fundamental capabilities that will propel our growth strategy going forward. The Auna App leverages on our data system (the “Auna Data Engine”), which currently manages data from more than one and a half million users, including from Auna’s oncological and general healthcare plan members and patients, as well as data developed from Auna’s last-mile services in its hospitals, clinics and laboratories. Going forward, the Auna Data Engine will centralize all the data from all of our plan members and patients, enabling us to structure personalized, preventative and timely medical guidance for each of our patients. It will also allow us to anticipate user needs and identify patterns and trends, and will support medical resolution efforts by predicting diagnoses based on collective medical cases. We intend to roll this App out in Colombia and in other markets in the near-to-medium term.

Our Strategy

Leverage our culture to continue enhancing the experience of our plan members and patients and our ability to provide first-class medical outcomes at an affordable cost

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health objectives, including through innovative uses of technology, with the goal of fostering life-long relationships with them. We believe we can leverage our culture to continue enhancing the plan member and patient experience in the future.

Expand our patient and member universe and leverage compelling socioeconomic dynamics in the markets where we operate

Continue to expand our networks through organic and inorganic growth

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power with third parties, including third party payers and suppliers of medicines and medical equipment. As a result, our scale provides us with the resources to continually improve the quality and breadth of our healthcare services. Due to the relatively low penetration of healthcare services in both Peru and Colombia, deficits in medical capacity and, particularly in Peru, the generally poor quality of most public and many private healthcare alternatives, we believe there is significant room for growth and we intend to continue investing in our business and adding facilities to each of our networks. Our goal is to have a presence in all of the major urban centers in the countries in which we operate, and in doing so increase our patient and member universe. Although we have a well-established presence in Lima and other large cities in Peru, there are several cities in Peru where we do not currently have a presence that have sufficient potential demand to be attractive markets to enter. Additionally, in Colombia, we currently only operate in the Medellín metropolitan area and Barranquilla and we are seeking to establish a presence in several of Colombia’s other major cities. We seek to add facilities to our networks that meet our standards of quality in terms of expertise of available medical staff, modern infrastructure that enables efficient operation and ease of access for patients and plan members in terms of location.

In Peru, we are currently focused primarily on organic growth, as we have developed a proprietary model that we believe is the best vehicle for our expansion throughout the country. Since 2011, we have worked on developing a blueprint for the development of new medium to high-complexity medical facilities based on our experience to date in building, modernizing and expanding facilities. This blueprint, which we refer to as the Auna Model, sets forth what we believe are ideal parameters in terms of number of beds and number of outpatient, emergency and operating rooms at a facility in order launch the new facility, or add capacity at an existing facility, and reach profitability effectively and efficiently. We are currently using the Auna Model for the expansion of Clínica Vallesur in Arequipa and for the opening of our new 68-bed facility that we believe will be the leading hospital in Chiclayo.

Continue enhancing and increasing the value proposition of our networks

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their medical records at another facility that is able to provide the high-complexity service, which allows us to provide efficient service across our network. We intend to place a greater focus going forward on differentiating the role that each of our facilities has within the networks so that we can increase the value proposition of our networks overall. While high-complexity services will be centered at Clínica Delgado in Peru and Clínica Las Américas in Colombia, we intend to increase the complexity of services that all of our facilities can handle in each of our markets where the need for higher-complexity services justifies it, particularly in the hospitals in provinces outside of Lima and Medellín. To complement our existing network, we intend to open new lower-complexity facilities in residential areas closer to our patients, providing easy access to care. We believe this will increase our touchpoints with patients, boost our brand awareness and foster further loyalty to our networks, while also deepening our horizontal integration and our ability to achieve network-level efficiencies.

We believe that we are uniquely positioned to fill the healthcare gap in SSLA by providing our members and users with a personalized and immediate online and offline healthcare solution. The healthcare markets in Chile, Colombia, Mexico and Peru are highly fragmented and underserved, forcing users to navigate among different providers to solve their needs, which is costly, inefficient and leads to high out-of-pocket expenditures. Traditional players continue to expand with a very limited digital footprint, and SSLA is not a priority for many global players as they struggle to navigate the complexities of the region’s key markets. In parallel, venture capital flows into the health-tech space remain unprioritized and most of the region’s health-tech startups are in early-stage phases. Against this backdrop, Auna plans to disrupt the industry by building an integrated healthcare ecosystem that we believe will provide our current and future users with an unparalleled, end-to-end healthcare experience, allowing us to accompany patients at every step of their healthcare digital journey. As the healthcare industry in SSLA evolves, we believe that our technology investments and underlying technology infrastructure will facilitate improved productivity and patient outcomes. Some of the key projects that form our integrated healthcare ecosystem, all of which will be fully integrated with the Auna App, include:

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which, in turn, will contribute to drive our regional scalability. In addition, we believe that our “digital hooks,” such as Farmauna and Clinica 360, will allow us to generate critical mass and enhance our last-mile delivery while also serving as key entry points into our ecosystem. Furthermore, we believe that our healthcare plans and the expansion of our healthcare plans into new regions will serve to improve our members’ engagement and allow us to build their trust in our services. We believe that the knowledge and information that our Auna Data Engine will accumulate over time will enable us to anticipate our plan members’ and patients’ needs and further enhance healthcare access. Finally, we plan to provide last-mile services through Auna’s premium infrastructure and, in markets where we do not have infrastructure to provide last-mile services, strategic partnerships with previously vetted and certified third parties. This approach will ensure that we deliver a distinctive end-to-end experience in every market where we operate. To help us manage our strategic alliances, we intend to develop a healthcare marketplace that will deliver services through third-party healthcare provider networks. We expect that our marketplace will expand our capabilities to deliver healthcare in hard-to-reach areas where it is inefficient to implement proprietary last-mile services and strengthen our understanding of customer behavior and their decision-making process through marketplace data collection. As we continue to achieve scale in the region, our multi-country last-mile footprint will help to tackle SSLA’s regulatory and cultural constraints, further raising entry barriers.

Our History

Our company was originally founded to address an unmet need in the quality and accessibility of treatment for cancer in Peru. At the end of the 1980s, even though science continued to make advancements with respect to cancer treatment, Peru faced a deep economic crisis and most of the population could not access advanced care for cancer. Patients were usually treated by generalist physicians or specialists in other areas and therefore did not receive adequate treatments. To make matters worse, insurance companies did not provide coverage for cancer.

In 1989, Dr. Luis Pinillos and Dr. Carlos Vallejos, both former directors of INEN and Ministers of Health of Peru, founded Oncosalud to address this unmet need. Oncosalud began as a healthcare coverage program covering oncology services, which at the time cost US$1 per month per patient with no deductibles or copayments. The program provided unlimited coverage for cancer treatment through the end of the disease’s cycle, including medicines, surgeries and other treatments, in all cases provided by specialists. With the help of Victor Hugo Gonzáles and Juan Serván, renowned experts in healthcare coverage, and the medical leadership of Dr. Pinillos and Dr. Vallejos, Oncosalud quickly began to gain members at a rapid pace while we developed a dedicated network of facilities for preventing and treating cancer. Starting in 1997, we began opening clinics for cancer treatments. In 2014, we opened Clínica Oncosalud, a specialized oncology hospital and one of the most renowned oncology centers in Peru, offering a fully integrated platform for the prevention, detection and treatment of cancer.

In 2008, Enfoca, one of Peru’s foremost investment firms, formed a partnership with Oncosalud’s original partners, and together they launched Grupo Salud del Perú (today, Auna), which became the holding company of Oncosalud. In 2011, Grupo Salud del Perú launched the Auna brand and began its transformation into a full-fledged healthcare company. This transformation began with a series of acquisitions to expand our national footprint in Peru, including:

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In October 2011, we acquired Servimédicos, a clinic, in Chiclayo, one of Northern Peru’s key economic hubs with a population of more than 550,000 people;

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In November 2011, we acquired Clínica Camino Real, a hospital, in Trujillo, Peru’s third largest city with a population of more than 900,000 people;

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In December 2011, we acquired Clínica Bellavista, a hospital, in Callao, a province located next to Lima with a population of more than one million people;

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In March 2012, we acquired (i) a stake in Clínica Miraflores, a hospital, in Piura, another key hub in Northern Peru with a population of more than 470,000 people; and (ii) a stake in Clínica Vallesur, a

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hospital, in Arequipa, Peru’s second-largest city with a population of more than one million people; and

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In May 2012, we acquired R&R Patólogos, a medical laboratory, as well as Cantella, a clinic in Lima.

Following these acquisitions, in 2014, we launched Clínica Delgado, our network’s hallmark facility, and one of the leading high-complexity hospitals in Latin America, with over 40 specialties and state-of-the-art technology.

By 2017, we had built a unique, integrated healthcare platform in Peru with national reach. At the end of 2018, we launched our regional expansion plan with the acquisition of Grupo Las Américas, one of the leading private healthcare groups in Medellín, Colombia with key similarities to our Peruvian operations:

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Clínica Las Américas, one of the top 10 hospitals in Colombia, which is focused on high-complexity services, similar to Clínica Delgado; and

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IDC, one of Colombia’s largest and leading private cancer treatment institution, and the only healthcare provider in the country that is a sister institution with MD Anderson.

In September 2020, we expanded our regional presence in Colombia through the acquisition of Clínica Portoazul, a private hospital located in Barranquilla.

In 2020, in anticipation of this offering, we changed our corporate form from a sociedad anónima to a sociedad anónima abierta.

Our Corporate Structure

The ownership structure of our subsidiaries is shown in the following chart. Auna Salud S.A.C. owns 100% of Oncosalud as well as our other operating subsidiaries. Our wholly-owned Oncosalud subsidiary is both the seller of prepaid oncology plans as well as the owner and operator of the dedicated oncology facilities in our Oncosalud network, a 72.9% owner of Medic Ser, which holds Clínica Delgado, the flagship hospital of our Auna Peru network, and indirect owner of 99.8% of Grupo Las Américas and 61.00% of Clínica Portoazul, which together comprise our Auna Colombia network.

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A simplified organizational chart showing our corporate structure is set forth below.

LOGO

*	We own 100% of all of our operating subsidiaries, other than Clínica Miraflores, Clínica Vallesur and Clínica Portoazul, of which we own 94.17%, 88.23% and 61.00%, respectively.

Our Products and Services

We operate our business through three segments: (i) Oncosalud Peru, (ii) Healthcare Services in Peru and (iii) Healthcare Services in Colombia, which correspond to our three networks Oncosalud, Auna Peru and Auna Colombia, respectively.

Oncosalud Peru

Oncosalud Peru is a vertically integrated oncology platform through which we are both a healthcare payer and a provider. We sell oncology plans that provide healthcare coverage for the prevention, detection and treatment of cancer and provide oncology healthcare services to those covered by our plans as well as patients with other forms of private healthcare coverage, including traditional insurance and other prepaid plans, through our network of Oncosalud-dedicated facilities. Through this vertically integrated model, we offer our plan members a full range of services in cancer prevention, detection, treatment and palliative care at our network of facilities at an affordable cost. As of December 31, 2020, we provided oncology plans to over 830,000 Oncosalud plan members. During 2020 and 2019, we operated a total of 109 beds and treated more than 12,800 and 12,500 patients, respectively, through our network of three oncology clinics and two specialized oncology hospitals.

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Our Oncosalud Peru segment generated S/659.1 million (US$171.2 million) in revenue in the year ended December 31, 2020, 86% of which was related to premiums earned from oncology plans and 14% of which was related to the provision of oncology services at our facilities to patients that are not covered by our oncology plans.

We believe that our vertically integrated structure has been very effective at preventing, detecting and treating cancer while also managing the more serious and high-cost medical cases. Although only a small portion of our plan members are diagnosed with cancer each year, we provide regular screenings under each plan, which allows us to detect cancer at earlier stages and lowers the cost of treatment than if the cancer had been caught later. As a result, we have been able to achieve a 75.5% 5-year cancer survival rate for the cohort of patients diagnosed between 2010 and 2015, while at the same time maintaining MLR levels in our oncology plans at around 43% as of December 31, 2020. Comparatively, the 5-year survival rate in the U.S. during 2007 – 2013 (latest data available) was estimated to be 69% in 2018 by the American Cancer Society; the 5-year survival rate for Medicare PPS-exempt cancer hospitals in the U.S. was estimated to be 53% in 2015 (latest data available) by the Memorial Sloan Kettering Cancer Center; and the U.K.’s National Health Service estimated England’s 5-year survival rate at 50% in 2010. Oncosalud’s network of oncological facilities is much smaller than the hospital networks evaluated in such studies and only treats a small, relatively wealthy portion of the Peruvian population as compared to the U.S. and U.K. hospital networks evaluated in such studies. Moreover, certain cancers are harder to successfully treat than others and a higher incidence of such cancers in any one of these studies could have impacted the 5-year survival rate disproportionately as compared to the populations evaluated in the other studies. As a result of such factors, Oncosalud’s 5-year survival rate is not directly comparable to the 5-year survival rates presented in such studies. However, we believe that such studies provide some context for Oncosalud’s 5-year survival rate.

Oncology plans

Our oncology plans are prepaid healthcare plans, meaning that plan members pay a fixed amount per year which covers any service covered by the type of plan a member has.

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We currently offer eight different oncology plans. Approximately 740,912 plan members, or 89% of our plan members, purchase three of our plans, which had the following membership as of December 31, 2020: (i) OncoPlus, our premium plan that had approximately 384,918 plan members, (ii) Oncoclásico Pro, our mid-level plan that had approximately 253,366 plan members, and (iii) Oncoclásico, our basic plan, which had approximately 102,628 plan members. The main coverage details for our principal plans are as follows:


Type of Service	Level of Coverage (%)
Type of Service	OncoPlus		Oncoclásico Pro		Oncoclásico
Outpatient appointments, surgery procedures, home visits and anesthesia		100%		100%		100%

Chemotherapy		100%		100%		100%

Specialized biological therapy, including: – Monoclonal antibodies – White cell stimulants – Enzyme inhibitors – Immunotherapy		100%		70%		—

Non-biopsiable invasive cancer treatment		100%		100%		100%

Bone marrow transplants		100%		100%		—

Osteosynthesis		100%		70%		—

Breast reconstruction		100%		70%		—

Breast prosthesis		100%		70%		—

Annual screenings		1 every year		1 every 2 years		1 every 2 years

Monthly fees for each of our plans differ based on a plan member’s age, and as of December 31, 2020 the average age of our plan members was 34. The monthly fees for our three principal plans in 2020 were as follows:


Age range	OncoPlus		Oncoclásico Pro		Oncoclásico
0-25	S/	31	S/	25	S/	19
26-40	S/	90	S/	48	S/	38
41-45	S/	102	S/	55	S/	42
46-50	S/	120	S/	63	S/	50
51-55	S/	142	S/	98	S/	79
56-60	S/	174	S/	122	S/	99
61-65	S/	227	S/	162	S/	127
66-70	S/	293	S/	226	S/	182
71-75	S/	335	S/	291	S/	246
76-80	S/	365	S/	335	S/	264
81-85	S/	394	S/	370	S/	287
86-100	S/	412	S/	388	S/	297
100+	S/	417	S/	393	S/	301

*	For plan members between the ages of 36 and 85, monthly fees increase incrementally with each year. Monthly fees presented for age groups between 36 and 85 are average fees paid by members of that group.

Oncosalud introduced a pilot for and recently launched three new plans, a lower-cost plan covering the most common and treatable cancers, which is expected to be within the economic reach of a larger segment of Peru’s population, a prepaid plan covering general healthcare services and a prepaid plan covering a range of other potentially catastrophic diseases and conditions that require hospitalization and/or complex treatments, all of which are currently provided through Oncosalud.

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During 2020, while 67% of Oncosalud’s covered services were provided at Oncosalud facilities, 30% of services were provided at other facilities in our Auna Peru network and only 4% were provided at third-party facilities.

Oncology healthcare services

We provide healthcare services for the prevention, detection and treatment of cancer through a network of dedicated Oncosalud facilities to those covered by our plans as well as patients with third-party healthcare coverage. We operate two specialized oncology hospitals and three oncology clinics to provide our oncology services to our plan members and patients with third-party healthcare coverage. Our facilities have premier clinical capabilities. We believe Clínica Oncosalud is one of the best radiotherapy centers in Peru, as we are one of the only providers with a private PET scan and cyclotron and one of the only private providers in the country providing intraoperative radiotherapy, all of which has allowed us to obtain a Diamond accreditation from ACI. Supported by some of Peru’s best cancer specialists, we treated more than 12,800 and 12,500 patients at our Oncosalud facilities during 2020 and 2019, respectively.

The following table sets forth additional information with respect to our Oncosalud facilities:


Facility	Location	Owned / Leased	Type	Complexity Level	No. of Beds
Clínica Oncosalud	Lima	Owned	Hospital	High	75
Oncosalud San Borja	Lima	Leased	Hospital	Medium	34
Oncosalud Miraflores	Lima	Owned	Clinic	—	—
Oncosalud San Isidro	Lima	Owned	Clinic	—	—
Oncosalud Surco	Lima	Leased	Clinic	—	—

We are also one of the few providers in Peru with a dedicated palliative homecare unit, which allows us to remain in close contact with our patients until the very end of the disease’s cycle even when that outcome is not remission. This is an integral part of the Oncosalud value proposition, and something that we believe distinguishes us from competing services in the market.

Healthcare Services in Peru

We provide healthcare services in Peru through our Auna Peru network, a horizontally integrated network of hospitals, clinics, diagnostic imaging centers and clinical laboratories, making us one of the country’s largest, horizontally integrated private healthcare networks.

Our Auna Peru network is primarily centered around five hospitals and two clinics in Lima, Arequipa, Chiclayo, Piura and Trujillo, which are the principal cities in the five most populated departments in Peru, with each department having a population above one million. As of December 31, 2020, our Auna Peru network included 287 beds. We treated more than 184,000 and 198,000 patients at our facilities during 2020 and 2019, respectively.

Our Healthcare Services in Peru segment generated S/476.4 million (US$123.7 million) in revenue in the year ended December 31, 2020, 50% of which was paid by third-party private insurers and 31% of which was paid out-of-pocket by our patients, with the remainder of payments generated by intersegment transactions involving medical services performed at facilities within our network.

Through our Auna Peru network of facilities, we are focused on providing a seamless, integrated healthcare experience for our patients at varying levels of complexity. Our high-complexity services are centered at our flagship hospital in this network, Clínica Delgado, which we built from the ground up between 2011 and 2014 and which was designed by Gresham Smith & Partners, one of the leading architecture firms for healthcare facilities in the United States. We treated 77,617 and 91,264 patients, or 42% and 46% of our total patient

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volume, at Clínica Delgado during 2020 and 2019, respectively. Clínica Delgado has a Diamond accreditation from ACI and is ranked among the best hospitals in Peru in a wide range of categories by GHI’s Hospirank Peru 2018 report. Notably, it is one of only two private hospitals in Peru licensed to perform organ transplants and is renowned for having one of the best neonatal intensive care units and maternity wards in Peru. Clínica Delgado physicians also performed the first ever thorax abdominal aorta endoprosthesis implant in Peru, and only the third in Latin American history. In addition, we provide a wide variety of medium-complexity services at our regional hospitals and clinics outside of Lima.

Our Auna Peru network is horizontally integrated, meaning that our patients are provided with a seamless experience regardless of which of our facilities they access. We cover all of our patients’ healthcare needs in a coordinated manner by offering all of the treatments they require in addition to diagnostic imaging, pharmaceuticals and laboratory services. In addition, our sophisticated technology and advanced data management allow us to closely monitor and anticipate patient healthcare needs, efficiently manage costs across our patient population and improve medical outcomes and the quality of our services. Our HIS includes our EMR system, which was the first of its kind in Peru when we implemented it in 2013, and is implemented in all of our hospitals in Peru other than Clínica Bellavista, allows doctors and medical staff at any of our facilities to work with the most complete information on each patient and makes it easy for patients to transfer between facilities if needed. We also have kiosks and a mobile app, which allow our patients to make and pay for appointments in a convenient manner. By covering all of our patients’ healthcare needs in a coordinated manner, we enhance customer satisfaction, incentivize patients to remain within our networks and bolster our reputation for quality and our brand awareness.

The following table sets forth additional information with respect to the hospitals and clinics in our Auna Peru network:


Facility	Location	Owned / Leased	Type	Complexity Level	No. of Beds
Clínica Delgado	Lima	Owned(1)	Hospital	High	164
Clínica Vallesur	Arequipa	Owned	Hospital	Medium	45
Clínica Miraflores	Piura	Owned	Hospital	Medium	44
Clínica Bellavista	Callao	Owned	Hospital	Medium	26
Clínica Camino Real	Trujillo	Owned	Hospital	Medium	8
Servimédicos	Chiclayo	Owned	Clinic	Medium	—
Cantella	Lima	Owned	Clinic	Medium	—

(1)	We own the facility and have the right to use, enjoy and encumber the surface of the land on which Clínica Delgado sits via a surface rights agreement. See “—Material Agreements—Surface Rights Agreement.”

Throughout our network we provide more than 40 medical specialties and subspecialties, and we specialize in medium- and high-complexity medical services, such as oncology, cardiology, neonatal care, neurology, trauma and organ and bone-marrow transplants. Notably, Clínica Delgado is the only hospital in Peru providing all cardiology-related subspecialties, such as clinical cardiology, cardiovascular surgery, electrophysiology and pacemakers, hemodynamics and cardiological intervention, intensive cardiology, cardiology imaging, and pediatric cardiology (including congenital anomalies).

We are also beginning the process of entering into new markets in our Auna Peru network. While we currently only provide services to private payers, we are awaiting approval of certain project milestones and certain amendments to the Torre Trecca concession agreement, in order to rebuild Torre Trecca as a high-rise outpatient facility and begin operating Torre Trecca through a PPP on behalf of EsSalud. Once we receive approval of the pending documentation, we expect it to take 18 to 24 months to rebuild and redevelop the Torre Trecca facility, which is currently not in use, and begin operations. Through this partnership, once we are able to begin operations we expect to handle approximately 15% of EsSalud’s yearly outpatient volume, or approximately 1.5 million outpatient consultations per year. This partnership will allow us to expand the patient

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population we serve by providing services to patients that currently receive care through the public sector, which we believe will further raise brand awareness and increase demand for our services.

Healthcare Services in Colombia

We provide healthcare services in Colombia through our Auna Colombia network, which we launched through the acquisition of Grupo Las Américas, one of Colombia’s leading healthcare groups located in the country’s second-largest market and key economic hub, Medellín. We further expanded our network in Colombia through the acquisition of Clínica Portoazul, a healthcare services provider with state-of-the-art facilities and a premium customer portfolio located in Barranquilla, the fourth largest city in Colombia. We are in the process of integrating Clínica Portoazul into our Auna Colombia network. Our Auna Colombia network consists of two hospitals, Clínica Las Américas and IDC and five clinics in Medellín and one hospital, Clínica Portoazul, in Barranquilla, as well as a range of facilities providing complementary services. As of December 31, 2020, our network included 441 beds. We treated 246,000 and 263,000 patients at our facilities in 2019 and 2020, respectively.

Like in our Auna Peru network, our Auna Colombia network is focused on providing a seamless experience for our patients at varying levels of complexity through a horizontally integrated network of facilities with premium clinical capabilities. Our high-complexity services are centered at our flagship hospital in this network, Clínica Las Américas, and IDC. Clínica Las Américas is the leading private hospital in the city, specializing in cardiology and bone-marrow transplants and was ranked the 7^th best hospital in Colombia by América Economía’s 2020 Best Hospital Rankings. IDC is also renowned as one of the top oncology hospitals in the country and is the only healthcare institution in Colombia that is a sister institution of MD Anderson. To attain this relationship with MD Anderson, a cancer-fighting institution must be deemed by MD Anderson to have research- and education-based capabilities meeting certain of MD Anderson’s quality standards after undergoing an application process. Through an annual fee, we have access to educational tools, participate in collaborative research with MD Anderson and its global network of sister institutions and are able to send our IDC patients to MD Anderson’s facilities. IDC is also affiliated with the Union for International Cancer Control. These affiliations allow IDC to share best practices and new treatments with a wide range of institutions around the world.

The following table sets forth additional information with respect to the main facilities in our Colombian network:


Facility	Location	Owned / Leased	Type	Complexity Level	No. of Beds
Clínica Las Américas	Medellín	Owned	Hospital	High	293
Instituto de Cancerología(1)	Medellín	Owned	Hospital	High	—
Clínica Portoazul	Barranquilla	Owned	Hospital	High	148
CLA—San Fernando	Medellín	Owned	Clinic	—	—
CLA—City Plaza	Medellín	Owned	Clinic	—	—
IDC—Aguacatala	Medellín	Owned	Clinic	—	—
IDC—Rionegro	Medellín	Leased	Clinic	—	—
Arkadia	Medellín	Owned	Clinic	—	—

(1)	Overnight stays for Instituto de Cancerología patients are provided at Clínica Las Américas.

Our Future

We believe that our integrated healthcare networks in Peru and Colombia increase our brand awareness, provide cost efficiencies at the network level and improve our negotiating position with third parties, and as a result, provide us with the resources to invest in our business and continually improve the quality and breadth of our healthcare services. Due to the relatively low penetration of healthcare services in both Peru and Colombia, deficits in medical capacity and, particularly in Peru, the generally poor quality of most public and private

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healthcare alternatives, we believe there is significant room for growth and we intend to continue adding facilities to each of our networks. We seek to add facilities to our networks that meet our standards of quality in terms of expertise of available medical staff, modern infrastructure that enables efficient operation and ease of access for patients and plan members in terms of location. Because we are focused on the quality of the facilities we add to any of our networks, we will add to our networks both organically and inorganically, depending on what makes most sense in the particular market.

In Peru, we are currently focused primarily on organic growth because we have developed a proprietary model that we believe is the best vehicle for our expansion throughout the country. However, we do pursue acquisitions from time to time of facilities that will complement our growth plan. In Colombia, where there are more high quality facilities operated by third parties but the market remains fragmented, we are primarily focused on inorganic growth. We have identified a robust pipeline of opportunities in Colombia that can help us continue to expand our presence in the country, and we believe our proven integration capabilities position us as a natural market consolidator. Our acquisition strategy in Colombia is focused on key urban areas, including Bogotá, Cali and Barranquilla. For example, we recently expanded our network to Barranquilla through our acquisition of Clínica Portoazul. We believe expanding our network to other cities in Colombia will allow us to increase our horizontal integration and achieve the same level of efficiency and economies of scale that our Peruvian network has attained.

Our current pipeline of opportunities in Peru and Colombia includes the following:


Project	Country	Stage
Project A	Colombia	Ongoing due diligence⁽¹⁾
Project B	Peru	Ongoing due diligence⁽¹⁾
Project C	Peru	Ongoing due diligence⁽¹⁾
Project D	México	Ongoing due diligence⁽¹⁾
Project E	México	Ongoing due diligence⁽¹⁾
Project F	Colombia	Ongoing process⁽²⁾
Project G	Colombia	Ongoing process⁽²⁾
Project H	Colombia	Ongoing process⁽²⁾
Project I	Colombia	Ongoing process⁽²⁾
Project J	Peru	Ongoing process⁽²⁾
Project K	Colombia	Screening⁽³⁾
Project L	Colombia	Screening⁽³⁾
Project M	Colombia	Screening⁽³⁾
Project N	Colombia	Screening⁽³⁾
Project O	Latin America	Screening⁽³⁾
Project P	Latin America	Screening⁽³⁾
Project Q	Latin America	Screening⁽³⁾
Project R	Chile	Screening⁽³⁾

(1)	A data room has been opened and we have begun diligencing the asset.

(2)	We have engaged with the target and received preliminary operational and financial information.

(3)	We have engaged in preliminary discussions of an asset that may come to market in the future.

In Peru, we have just launched a new medium-complexity hospital, Auna Chiclayo, at the end of August 2021, which has added approximately 68 additional beds to our capacity. We are also expanding our facility in Clínica Vallesur in Arequipa, which we expect to add approximately 40 beds there. We expect to add around 108 additional beds to our aggregate capacity within the next three years, primarily in the markets in which we already operate.

We continue to pursue organic growth in Colombia through the construction of Clínica del Sur in Envigado, a city bordering Medellín that has low hospital penetration. We expect to launch Clínica del Sur in 2022 with approximately 155 beds. We expect this to further strengthen our dominant position in the Antioquia region where Medellín is the capital.

Over the past 8 years, we have worked on developing the Auna Model, a blueprint for the development of new medium- to high-complexity medical facilities based on our experience to date in building and expanding facilities.

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This blueprint sets forth what we believe are ideal parameters in terms of number of beds and number of outpatient, emergency and operating rooms at a facility in order to efficiently and expeditiously launch a new facility or add capacity at an existing facility. We have started using the Auna Model to standardize and optimize the facilities that we add to our network, either by acquisition or by new development and expansion, including for the expansion of Clínica Vallesur in Arequipa and the construction of the hospital in Chiclayo and Clínica del Sur.

In addition to building on our network of facilities, we are also seeking to increase demand for our services in other ways. For example, in order to continue to enhance the experience of our plan members and patients, we are working on developing new digital applications to allow us to increase touchpoints with our patients. We are also developing new healthcare coverage products, such as the three products for which we launched pilots through our Oncosalud subsidiary in 2019.

Employees and Medical Staff

As of December 31, 2020, we had 7,829 employees in Peru and Colombia, including 4,731 medical personnel, which includes physicians, nurses and technicians. Approximately 2% of our employees were part-time employees, the majority of which are physicians that are hired on a fee-for-service basis. We are subject to various laws that regulate wages, hours, benefits and other terms and conditions relating to employment. As of December 31, 2020, none of our employees were members of labor unions.

Our hospitals and clinics, like most institutions in the industry, have experienced rising labor costs. In both Peru and Colombia, attracting and retaining qualified medical personnel, in particular nurses, has become a significant operating issue for healthcare providers. See “Risk Factors—Risks Related to Our Business—Our performance depends on our ability to recruit and retain quality medical professionals, and we face a great deal of competition for these professionals, which may increase our labor costs and negatively impact our results of operations.” To address this challenge, we have implemented several initiatives to improve retention, recruiting, compensation programs and productivity, including:

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Flexible and highly competitive compensation mechanisms for physicians;

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A new training and support plan for nurses that includes professional development and wellness courses; and

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A corporate professional growth and development program in Peru called CRESER, which aims to develop talent within our corporate and administrative unit by providing a clear, structured career path for high potential employees.

Our hospitals and clinics are staffed by licensed physicians, including physicians employed by us, physicians working as independent contractors and physicians who are hired through contracts that we have with certain medical groups or doctors’ associations in Peru and Colombia. Any licensed physician may apply to be accepted to the medical staff of any of our hospitals or clinics, but each facility’s medical staff and the appropriate governing board of such facility, in accordance with established credentialing criteria, must approve the addition of each physician to the staff.

Our Operations

Suppliers

Our principal suppliers are contracted through purchase orders for the provision of the medicine, medical supplies and medical equipment needed to provide our services. Procurement of medicine and medical supplies for our networks is currently centralized at each country’s corporate level. We are also in the process of establishing systems and procedures that will allow us to coordinate our procurement process across countries. Our Quality Control Committee and, in the case of technology products, our Technology Evaluation Committee prepare an approved list of suppliers and products both in Peru and Colombia. From this list, our procurement

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department evaluates potential suppliers and products and selects which suppliers and/or products to use. As of December 31, 2020, we had 173 medicine suppliers in Peru and 36 in Colombia. For the year ended December 31, 2020, we purchased 71% and 52% of our medicines from our 10 largest suppliers in Peru and Colombia, respectively. For more information on our suppliers, see “Risk Factors—Risks Related to Our Business—We rely on a limited number of suppliers of medical equipment and supplies needed to provide our medical services.”

Procurement of medical equipment is also centralized at the corporate level and is principally managed by our Clinical Engineering Department. This department assesses the equipment needs at all of our facilities, evaluates various suppliers and selects which suppliers to purchase from. This department also oversees the installation of all purchased equipment and the ongoing maintenance of such equipment throughout its useful life.

Sales & Marketing Channels

We sell our oncology plans through a variety of channels, including:

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Our in-house sales force, which we employ directly and accounted for 24% of plan sales in 2020;

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Telemarketing, which is done by a third-party vendor and accounted for 40% of plan sales in 2020;

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Corporate channel, as some employers provide coverage to employees, which is done by an in-house team and accounted for 9% of plan sales in 2020;

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Partnerships with third parties, such as banks, through which plans are sold directly in bank branches and via call-centers, and credit card companies, which accounted for 11% of plan sales in the 2020;

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Independent brokers, which accounted for 11% of plan sales in 2020; and

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Digital advertising, which accounted for 6% of plan sales in 2020.

Approximately 60% of the revenues in our Healthcare Services in Peru segment and 96% in our Healthcare Services in Colombia segment were generated by payments from third-party private insurers in 2020. As a result, we focus primarily on negotiating contracts with private insurers to ensure that our hospitals and clinics are on their list of approved facilities. We have a dedicated commercial team to handle negotiations with insurance providers, with the objective of building and maintaining close relationships with them and ensuring that our network of hospitals and clinics is included in all their insurance plans.

Technology

We use three main IT systems in Peru:

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HIS, a specialized system used at our network of facilities, that, among other features, registers our patients’ contact information; manages administrative services, such as hospital admissions and billing; and houses our EMR system;

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SAP, our enterprise resource planning system, that handles all of our accounting and financial processes; and

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Oncosys, a specialized system responsible for the operation of our oncology plans, that, among other features, registers plan members for new plans; tracks procedures, schedules and outcomes; and processes the contractual documentation of our doctors. We expect to replace Oncosys with SAP in the near future as our main system for Oncosalud.

We also rely on two other supporting systems: RIS/PACS, a management system for diagnostic imaging; and LIS, a management system for our clinical laboratories. In addition, we have a patient app, which offers users the possibility of scheduling appointments at any of our seven hospitals in Peru in a convenient and accessible manner and is available at both Apple and Android stores.

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In Colombia, we primarily use three systems: Matrix, which supports the hospital network; LIS 4D, a management system for our clinical laboratories; and Servintec, our enterprise resource planning system for administrative and accounting processes. Following our acquisition of Grupo Las Américas in 2018, we are currently in the process of reevaluating these systems in an effort to optimize company resources, as we intend to expand the HIS we currently use in Peru to our Colombian healthcare network. In addition, we are in the process of implementing SAP in our Colombian healthcare network.

Trademarks

In Peru, ownership of trademarks can be acquired only through a validly approved registration with INDECOPI. A trademark registration is granted for a term of 10 years from its grant date and can be renewed for successive 10-year periods.

As of the date of this prospectus, we own 116 valid, registered trademarks in Peru. The main trademarks we use in our operations are “Auna,” “Oncosalud” and “AUNA Clínica Delgado Pasión por Cuidarte.”

In Colombia, ownership of trademarks can be acquired only through a validly approved registration with the SIC. A trademark registration is granted for a term of 10 years from the date on which the grant becomes enforceable and can be renewed for successive 10-year periods.

As of the date of this prospectus, we own 198 valid, registered trademarks in Colombia. The main trademarks we use in our operations are “Clínica Las Américas” and “Clínica Del Sur Las Américas.”

Competition

In Peru, we face competition from other privately-operated hospitals, clinics and healthcare networks for the provision of healthcare services. While we are currently one of the few private healthcare networks in the country with broad geographic reach and the market is generally fragmented, our flagship hospital, Clínica Delgado, faces competition from other high-complexity hospitals in Lima, including Clínica Ricardo Palma, operated by Quirónsalud, and Clínica San Pablo, both of which have more installed capacity than Clínica Delgado as well as Clínica San Felipe, operated by Banmédica/United Health, and Clínica Angloamericana, both of which have strong brand recognition in Peru. See “Industry—The Peruvian Healthcare Industry—Healthcare Services Market” for more information. Our regional hospitals outside of Lima principally face competition from the Sanna network, which is owned by Pacífico, the Clínica Internacional network, which is owned by Rímac, and the San Pablo network.

While we are the only provider of a vertically integrated oncology plan in Peru, Oncosalud also faces competition from companies that offer healthcare plans covering oncology services, including from traditional insurance providers and other companies offering prepaid plans covering oncology services. We believe that Oncosalud’s main competitors are Rímac and Pacífico, the two main insurance providers in Peru, both of which have substantial financial resources and provide both specialized oncology plans and general healthcare coverage covering oncology. See “Industry—The Peruvian Healthcare Industry—Healthcare Plan Market” for more information.

In Peru, we do not currently face significant competition from government providers, such as EsSalud and SIS, as their services are widely considered deficient and over capacity despite their substantial financial resources.

Similar to Peru, in Colombia, we face competition from other privately-operated hospitals, clinics and healthcare networks for the provision of healthcare services. Clínica Las Américas’ main competitors based on installed capacity are Fundación Hospitalaria San Vicente de Paul, Hospital Pablo Tobón Uribe and Clínica El Rosario. Although they have smaller installed capacity, Clínica IPS Universitaria and Clínica Medellín, operated

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by Quirónsalud, are also competitors with strong brand awareness in Colombia. Moreover, unlike in Peru, the infrastructure gap between privately-owned and state-owned facilities is smaller in Colombia and we face competition from state-owned facilities as well.

In addition, the healthcare markets in Peru and Colombia have historically been fragmented and part of our competitive edge has been the reach of our networks. In recent years, new market entrants are seeking to consolidate their positions and increasingly compete with us. For example, in Peru, well-established global players such as UnitedHealth and Quirónsalud have strongly positioned themselves through the acquisitions of Clínica San Felipe and Clínica Ricardo Palma, respectively, while local groups such as Pacífico (through the Sanna network) and Rímac (through the Clínica Internacional network) have established horizontally integrated operations similar to ours in terms of coverage and structure. Similarly, in Colombia, the market has seen increasing consolidation in recent years as both global and local players vie to integrate horizontal platforms in a sector where many top institutions are still owned by foundations and non-profit entities.

Material Agreements

Surface Rights Agreement

On July 8, 2009, Medic Ser entered into an agreement (the “Surface Rights Agreement”) for the surface rights of a tract of land with the Peruvian Red Cross Society. Under the Surface Rights Agreement, Medic Ser has ownership of the buildings on the land and the right to use, enjoy and encumber the surface of the land. The sole and exclusive purpose of the Surface Rights Agreement is the construction of Clínica Delgado and its operation. The Surface Rights Agreement will terminate 40 years after the second anniversary of the registration of the surface rights in the property register by the Peruvian Red Cross Society, which took place on September 2, 2011. The rights are amortized during the forty-year lease period. Pursuant to the Surface Rights Agreement, we are obligated to make monthly payments of US$7,500 in favor of the Peruvian Red Cross Society until the twentieth month after the execution of the Surface Rights Agreement. From that date onwards, and for a 10-year and four month period and three 10-year periods, we are obligated to make monthly payments of (i) US$15,000; (ii) US$25,000; (iii) US$35,000; and (iv) US$45,000, respectively, and in each case, as adjusted by 1.5% annually.

On August 30, 2009, Medic Ser and the Peruvian Red Cross Society entered into an amendment to the Surface Rights Agreement primarily to amend the area of the land for construction of Clínica Delgado.

Torre Trecca Concession Agreement

On August 27, 2010, one of our subsidiaries, Consorcio Trecca S.A.C. (“Consorcio Trecca”), entered into a 20-year concession agreement (the “Torre Trecca Concession Agreement”) with EsSalud, the state agency tasked with overseeing the Peruvian public health insurance system. Under the Torre Trecca Concession Agreement, Consorcio Trecca will renovate, operate and maintain Torre Trecca, a high-rise outpatient facility in Lima, in exchange for monthly payments from EsSalud. Through this partnership, once operational Torre Trecca is expected to handle 1.5 million outpatient consultations per year, constituting about 15% of EsSalud’s outpatient volume.

On April 18, 2011, EsSalud and Consorcio Trecca entered into an amendment to the Torre Trecca Concession Agreement primarily to correct errors in the document and specify operational aspects in connection with the performance of obligations under the Torre Trecca Concession Agreement, such as aligning payment obligations with the progression of construction for the redevelopment portion of the agreement. On July 15, 2011, EsSalud and Consorcio Trecca agreed to pause investment in the project until January 2018. In November 2018, EsSalud and Consorcio Trecca agreed to updated terms, and in June 2019, agreed to begin investment in the project in the third quarter of 2021. As of the date of this prospectus, we are awaiting governmental approval of certain project milestones and certain amendments to the Torre Trecca Concession Agreement to be able to begin operations.

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Oncosalud San Borja Lease Agreement

On August 28, 2019, Oncocenter entered into a lease agreement with Promotora Asistencial S.A.C. Clínica Limatambo (the “Oncosalud San Borja Lease Agreement”) for our hospital, Oncosalud San Borja, located in Lima, Peru. The Oncosalud San Borja Lease Agreement has a 10-year term and includes a right of first refusal in favor of Oncocenter for any offer to purchase the property for the duration of the agreement. Pursuant to the Oncosalud San Borja Lease Agreement, monthly lease payments are US$120,000 (S/461,976) and increase by US$10,000 (S/38,498) every six months for the first three years of the agreement. For the remaining seven years of the term, monthly lease payments increase annually to reflect increases in Lima’s consumer price index.

Legal Proceedings

We are party to a number of legal and administrative proceedings arising in the ordinary course of our business, including medical malpractice and employment and labor lawsuits. We categorize our risk of loss in these proceedings as probable, possible and remote. We record provisions only for those proceedings that have a risk of loss deemed to be probable. As of December 31, 2020, we had provisions for outstanding claims in the amount of S/6.4 million (US$1.7 million), which cover all losses resulting from claims filed against us that have a risk of loss deemed to be probable. For more information see Note 18 and Note 32 to our audited consolidated financial statements included elsewhere in this prospectus.

Regulation of the Peruvian Healthcare Sector

The Peruvian Constitution of 1993 (the “Peruvian Constitution”) recognized a number of rights and guarantees for Peruvian citizens, including, among others, the right to healthcare. The Peruvian Constitution also guaranteed free access to healthcare services through public and private entities. Pursuant to the Peruvian Constitution, the government is also responsible for establishing the rules and regulations governing healthcare providers and for supervising the effective functioning of the healthcare system overall. MINSA is the main governmental entity responsible for such oversight.

MINSA primarily carries out such oversight through SUSALUD, a decentralized, technical entity that is a part of MINSA. SUSALUD is responsible for regulating and supervising the activities of all healthcare providers, whether public or private, including IPRESSs and IAFASs.

All IPRESSs and IAFASs must register with, and receive regulatory authorization to conduct their operations from, SUSALUD. All IPRESSs, including Auna’s facilities, must be registered with SUSALUD in the National Registry of IPRESSs. Registrations are valid for an indefinite term. Private IAFASs, such as Oncosalud, must obtain regulatory authorization from SUSALUD for purposes of their corporate organization, which is valid for two years. Once incorporated, private IAFASs must register with and obtain a second regulatory authorization from SUSALUD prior to commencing operations. Such regulatory authorizations are valid for an indefinite term, subject to the recipient’s compliance with the applicable regulations.

Each of the facilities in our Auna Peru and Oncosalud networks is registered as an IPRESS and Oncosalud, as a provider of prepaid oncology plans, is registered as an IAFAS.

SUSALUD’s principal activities in regulating and supervising IPRESSs and IAFASs include:

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Managing the National Registry of IPRESSs and the Registry of IAFASs;

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Providing authorization to IPRESSs and IAFASs to operate;

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Monitoring compliance by IPRESSs and IAFASs with applicable rules and regulations;

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Identifying unfair terms in the contracts and agreements between IAFASs and their plan members;

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Conducting administrative proceedings and issuing sanctions against any IPRESS or IAFAS that is not in compliance with applicable rules and regulations; and

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Instructs the prosecutor’s office to commence civil and/or criminal prosecution of any IPRESS in case of violations of the citizens’ health rights.

In addition to MINSA and SUSALUD, certain other Peruvian authorities have authority over healthcare providers if the activities of such providers fall within their jurisdiction, including regional and local governments in Peru, INDECOPI and the Office of the Ombudsman.

We are subject to extensive laws and regulations, including those related to: the quality and suitability of healthcare facilities and the services provided by healthcare providers; environmental protection and licensing matters; and the protection of personal data, among others, as enacted by various Peruvian authorities.

Quality of Services

IPRESSs. SUSALUD is charged with oversight of IPRESSs and their compliance with legally mandated standards of service and applicable service offering limitations in accordance with their corresponding classification. SUSALUD may also sanction any noncompliant IPRESS. Such sanctions may vary depending on the degree of the infraction and related fines may be up to 500 Unidades Impositiva Tributaria (“Tax Units”), a figure set annually by the Peruvian tax authorities that is used to measure, among other things, penalties. The applicable Tax Unit for fiscal year 2021 is S/4,400. In addition to imposing monetary penalties, SUSALUD may suspend or revoke a noncompliant facility’s registration and order its closure.

The Dirección General de Medicamentos, Insumos y Drogas—DIGEMID (Directorate General for Medicines, Supplies and Drugs) under MINSA is charged with oversight of IPRESSs offering pharmaceutical services and their compliance with legally mandated standards of service and obligations to carry certain generic medicines. Noncompliant IPRESSs may be sanctioned.

IAFASs. SUSALUD is charged with oversight of IAFASs and their compliance with legally mandated standards of service and obligations under applicable regulations. In addition, SUSALUD may impose sanctions, including fines of up to 500 Tax Units on, and suspend or revoke the regulatory authorization of, any noncompliant IAFAS. SUSALUD may also establish heightened monitoring regimes and recovery plans on noncompliant IAFASs in order to more closely monitor their liquidity levels and encourage the stable management of the funds.

Economic and Financial Related Regulations Applicable to IAFASs

Each IAFAS must comply with Regulations of Financial Solvency, Technical Obligations and Support Coverage for IAFASs, approved by Superintendence Resolution N° 020-2014-SUSALUD/S. This and other regulations establish various requirements, including minimum capital requirements, investment requirements and limitations on asset allocations and indebtedness, among others, in an effort to protect an IAFAS’s assets and financial equilibrium. Under these requirements, Oncosalud must maintain minimum capital reserves of 463 Tax Units. In addition, as of December 31, 2020 Oncosalud is limited from holding more than S/531.9 million (US$138.2 million) of debt. To monitor compliance with these obligations, SUSALUD requires IAFASs to provide certain relevant information relating thereto, including financial indicators, solvency margins and information on indebtedness, on a monthly, quarterly or annual basis, as applicable.

As of December 31, 2020, Oncosalud is in full compliance with all solvency, capital obligations and reporting requirements as provided by the applicable regulations.

Processing of Personal Data

The Peruvian Personal Data Protection Law, enacted by Law N° 29733, applies to personal data stored or intended to be stored in a public or private personal database processed in Peru.

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Under these regulations, health data is considered sensitive information and as such, there are a series of requirements that data controllers must comply with in processing, which includes any procedure that facilitates access to, or the comparison and interconnection of, personal health data. Among others, these requirements include:

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Obtaining the prior written express consent of the individual whose data is being processed;

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Registering their databases containing personal data and reporting cross-border transfers of such data to the Peruvian National Authority for Personal Data Protection. The creation of such databases must be justified by legitimate purposes;

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Adopting technical, organizational and legal measures to protect the security of the personal data they hold, which must be appropriate to the nature and purpose of the personal data involved; and

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Maintaining the confidentiality of the personal data.

Notwithstanding the foregoing, consent of the individual whose data is collected is not required when, under emergency circumstances, the data is processed within the healthcare network for the rendering of healthcare services to such individual, including prevention, diagnosis or appropriate treatment. In addition, such consent is not required when processing is needed for: compelling reasons in the public interest contemplated by law; treatment for public health reasons; or epidemiological or similar studies.

In addition, according to the General Health Law (Law N° 26842) and the Health Records Technical Norms (Ministry Resolution N° 214-2018/MINSA), data related to the provision of healthcare services, including printed or electronic health records, is protected and healthcare facilities and professionals may face administrative, civil or criminal liability for disclosing such information to third parties, subject to certain exceptions. In cases of unauthorized disclosure, the Peruvian National Authority for Personal Data Protection may impose fines against the breaching entity between 0.5 Tax Units and 100 Tax Units depending on the specific violation. In addition, the individual whose data was disclosed may file a claim for damages.

We are in full compliance with personal data protection requirements as provided by the applicable regulations.

Environmental Regulations

Environmental certification

The Law on the National System for Environmental Impact Assessment (Law N° 27446), approved by Supreme Decree N° 019-2009, provides that any public or private investment project that may generate negative environmental impacts is required to have an environmental certification from the corresponding governmental authority approving the Instrumentos de Gestión Ambiental (“IGAs”) used to mitigate the environmental impacts of such investment project. Healthcare facilities are one of the types of investment projects that must have an environmental certification. MINSA is the governmental authority in charge of evaluating and approving IGAs for investments in healthcare facilities. IGAs available to healthcare facilities are Estudio Impacto Ambiental semi detallado (“EIA-sd”) for operations with a considerable environmental impact, or Declaracion Impacto Ambiental (“DIA”) for operations with a minimum environmental impact. Under applicable Peruvian law, IGAs must be updated every five years after the start of the project.

Currently, we have DIAs in place for our investment projects subject to Law N° 27446.

Environmental administrative liability

Under Council Resolution Nº 006-2018-OEFA-CD, MINSA can impose sanctions for infractions including engaging in development activities without obtaining the approval of the corresponding IGA or that do not

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comply with a development project’s approved IGAs, among others. Sanctions vary from 10 to 30,000 Tax Units and will depend on the potential or real damage to the environment resulting from these infractions. In addition, MINSA can impose other administrative measures, including the suspension of the development, demolition of the project or requiring an update of the IGA.

Radioactive substances

Article 8 of the Regulations of the Law for the Use of Sources of Ionizing Radiation, approved by Supreme Decree N° 039-2008-EM, provides that IPRESSs that use X-ray equipment need to obtain prior regulatory authorization from the Oficina Técnica de la Autoridad Nacional. In addition, under applicable Peruvian law, each employee involved in operating X-ray equipment must have an operator license, radiological officer license and/or physicist license, as applicable, and must comply with the limits and conditions set forth in their licenses, including the applicable norms related to radiation safety, thereunder. As of the date hereof, we are in compliance with all applicable requirements for the operation of X-ray equipment.

Management of solid waste

Article 19 of the Solid Waste Management Law, approved by Legislative Decree N° 1278, establishes that La Dirección General de Salud Ambiental (“DIGESA”) under MINSA oversees the regulation, supervision and control of solid waste management by IPRESSs.

Solid waste generated in connection with the operations of IPRESSs can be classified according to its composition and characteristics as: (a) Class A—bio contaminated waste (waste generated as a result of medical treatment and scientific investigation); (b) Class B—special waste (waste with corrosive, flammable, toxic, explosive and/or radioactive characteristics); and (c) Class C—common waste (waste which has not been in contact with patients or with contaminated materials or substances). Under current conditions, food remains from patients with COVID-19 are considered biocontaminated waste.

According to the provisions of the Law on Integral Solid Waste Management, Legislative Decree No. 1278 and its regulation Supreme Decree No. 014-2017-MINAM and NTS No. 144-MINSA/2018/DIGESA, “Integral Management and Handling of Solid Waste from Health Facilities, Medical Support Services and Research Centers,” it is up to the solid waste operating company (EO-RS) contracted by the generator to provide external collection, transportation and final disposal service.

Under Peruvian law, IPRESSs are required to separate solid waste according to its characteristics and conditions. Additionally, healthcare facilities have to designate appropriate areas for the adequate storage of solid waste and ensure its treatment and final disposal adheres to applicable regulations, including the hiring of authorized waste disposal companies. Failure to comply with these obligations can lead to the imposition of fines, which can range from 1,000 to 1,500 Tax Units.

Each IPRESS also needs to establish a committee for the integrated management of solid waste and develop and document the following:

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Initial diagnostic assessment, including a study of the quantity, characteristics, composition, class and technical conditions of the IPRESS’s management of solid waste;

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Solid waste management plan, which is a part of the IGA and should include actions related to the minimization and management of solid waste;

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Annual declaration certifying the management of solid waste under its responsibility; and

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Hazardous solid waste manifest tracking hazardous waste from the point of generation to ultimate disposal.

Failure to provide these documents to DIGESA can be sanctioned with a fine of up to three Tax Units.

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We follow the applicable solid waste management procedures for the collection, transportation and final disposal of each type of solid waste established by DIGESA, including through the hiring of authorized waste disposal companies.

Criminal Liability Under Peruvian Law—Healthcare Service Providers

Under the provisions of Law N° 30424, legal entities can be found criminally liable for certain crimes involving public corruption, trafficking, money laundering and financing of terrorism if the crime in question is committed by an employee, administrator or agent of the legal entity acting in such capacity on behalf of the company.

In addition, under Peruvian law, if the individual responsible for the commission of certain other crimes has been sentenced by a criminal court, legal entities playing an instrumental role in such criminal activity can be subject to criminal proceedings if the relevant crime was committed as part of its business activities or if it was used in the furtherance or concealment of the relevant crime.

For example, Peruvian criminal law provides that an individual who deliberately spreads dangerous or contagious diseases may face a penalty of three to 10 years of imprisonment and if such act results in severe injury or death, the penalty is increased to 10 to 20 years of imprisonment. In addition, the deliberate violation of sanitary regulations established by law or by a public authority is punishable by six months to three years of imprisonment and a fine.

If found guilty during criminal proceedings related to crimes under the provision of Law N° 30424, legal entities may be subject to sanctions, including: temporary or permanent closure of the legal entity’s business establishments; dissolution and liquidation of the legal entity; suspension of the legal entity’s business activities for up to two years; a permanent ban from the business activity related to the applicable crime; and fines.

Construction Licenses

A construction license must be obtained from the applicable local municipal government to build any healthcare facilities. Regulations relating to infrastructure and equipment of healthcare facilities issued by MINSA and the provisions of Chapter A.050 of the National Regulations for Construction, approved by Supreme Decree N° 011-2012-VIVIENDA, as amended, will apply to such process. The applicable requirements vary depending on the type of healthcare facility being built. These requirements generally focus on the location of the proposed facility, including the related risk of natural disasters in the area, adequate architectural design and structure, access to utilities and adequate backup systems, protection systems against fires, floods and power outages, and other factors that may have a negative impact in the provision of healthcare services.

Regulation of the Colombian Healthcare Sector

Law 100 of 1993 established a mandatory healthcare insurance coverage system, the SGSSS, which is exclusively directed and controlled by SUPERSALUD and regulated by MinSalud. SUPERSALUD’s External Circular 47 of 2007 describes the framework through which SUPERSALUD oversees the SGSSS.

SUPERSALUD is also responsible for regulating and supervising the activities of all IPSs, whether public or private, including our facilities in Colombia. It primarily regulates IPSs through the issuance of resolutions and circulars. IPSs are also regulated through ordinances, municipal agreements, decrees, resolutions and circulars, as applicable, and supervised by local departments and municipalities.

In addition, the following governmental entities have the power to enact regulations applicable to IPSs:

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Congress through the enactment of laws;

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the President of the Republic through the issuance of regulatory decrees; and

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MinSalud through the issuance of regulatory decrees, resolutions and circulars.

All IPSs must obtain clearance (habilitación) by the departmental or municipal government in the jurisdiction in which they are located, in compliance with nationally defined standards, before commencing operations. MinSalud’s Resolution 3100 of 2019 (“Resolution 3100”) sets forth the national standards IPSs must comply with, overturning Resolutions 2003 of 2014, 5158 of 2015, 226 of 2015 and 1416 of 2016. Resolution 3100 includes new requirements for infrastructure of healthcare facilities, medical personnel, minimum solvency ratio and limits on overdue commercial debt and unpaid wages. These new national standards went into effect on May 29, 2020, providing IPSs with a 6-month transition period to be in compliance with Resolution 3100.

Once clearance is received, IPSs, including Auna’s facilities, must register with the Special Register of Health Service Providers, which is managed by MinSalud. Such registration acts as the operating license for each IPS and must be renewed every 4 years.

IPSs are classified based on geographic coverage and the degree of complexity in the healthcare services they provide. Based on geographic coverage, IPSs are classified as:

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Local: applicable to IPSs providing healthcare services at the municipal, district or metropolitan level;

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Sectional: applicable to IPSs providing healthcare services at the departmental level; or

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National: applicable to IPSs providing healthcare services in more than one department.

Based on the degree of complexity in the healthcare services they provide, IPSs are classified as:

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Low: applicable to IPSs providing low-complexity care by general, technical and auxiliary professional medical staff;

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Medium: applicable to IPSs providing medium-complexity care by specialized medical professionals; or

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High: applicable to IPSs providing high-complexity care by specialized and subspecialized medical professionals.

Our facilities in Colombia, as IPSs, are subject to extensive laws and regulations, including those related to: market entry; the quality and suitability of healthcare facilities and the services provided by IPSs; accounting and financial matters; public health matters; and business crisis resolution and market exit, among others.

Pricing and Quality of Services

Pricing. The majority of healthcare services in Colombia are not subject to price controls and IPSs are free to negotiate the prices paid for different services with payers. However, in some cases, such as traffic accidents, natural disasters, terrorist attacks and other catastrophic events, rates are mandated by regulation. Such rates serve as a point of reference for the pricing of healthcare services generally.

In addition, the sale of medicines is subject to price controls under Circular 3 of 2013 of the Comisión Nacion de Precios de Medicamentos y Dispositivos Médicos (National Commission for Prices of Medicines and Medical Devices) in Colombia.

Quality. The Colombian regulatory framework also provides incentives for IPS to implement voluntary mechanisms to monitor and supervise the quality of services that they provide, such as audits, an accreditation relating to compliance with scientific, financial and other technical requirements applicable to IPSs and participation in a public database used to provide disclosure about individual IPSs and the SGSSS as a whole.

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Although implementation of these measures is voluntary, IPSs are incentivized to incorporate them into their operations because applicable regulations provide that they in doing so they will be considered a preferred provider by EPSs when contracting for healthcare services.

Financial Matters and Competition

Financial matters. Any modifications to an IPS’s by-laws related to the decrease of capital or expansion of the corporate purpose to activities not related to the provision of health services must be approved by SUPERSALUD. SUPERSALUD also has the authority to force an insolvent IPS into liquidation and apply other measures through forced administrative intervention when such IPS materially fails to comply with the applicable SGSSS regulation or upon an institutional crisis amounting to severe financial or operational consequences threatening the continuity and quality of the healthcare services it provides.

Competition. Article 333 of the Colombian Constitution, Law 155 of 1959, Law 100 of 1993 and Law 1340 of 2009 regulates competition in the Colombian market. In addition to this framework, IPSs are also regulated by Decree 780 of 2016 (“Decree 780”), which regulates competition in the healthcare services market. Pursuant to these laws, IPSs are prohibited from entering into agreements or otherwise acting in a manner that has the purpose or effect of preventing, restricting or distorting free competition within the healthcare services market. In addition, IPSs are prohibited from abusing a dominant position in the market through predatory pricing, discrimination or bundling. An IPS which has the capacity to unilaterally determine, directly or indirectly, market conditions is deemed to have a dominant position.

Data Protection

IPSs are subject to various personal data protection laws and regulations in Colombia. Law 1581 of 2012 (“Law 1581”) includes obligations relating to the collection and processing of personal data. Under Law 1581, IPSs must obtain prior and informed consent from individuals whose data is collected and qualified consent for processing sensitive personal data. In addition, under Decree 1074 of 2015, IPSs with total assets above 100,000 Tax Value Units (“TVU”) must register their databases with the SIC, the national data protection authority in Colombia. The applicable TVU for fiscal year 2020 is COP35,607.0 (US$9.5) IPSs must also implement a privacy policy setting guidelines for data processing and ensure all data subjects have access to the policy, adopt internal controls for safekeeping personal data and follow certain guidelines for personal data transfers. IPSs are also required to report security breaches when personal information is involved.

Law 1266 of 2008 regulates the processing of credit and financial data. It requires data controllers to maintain such data pursuant to strict security measures and confidentiality standards, obtain consent prior to modifications and disclosure of the data and only use data for purposes identified in a privacy policy or notice.

Additionally, in their administration of medical record, IPSs have to comply with sector-specific rules for processing health data, including Law 1438 of 2011, Decree 780 and Resolution 1995 of 1999. These include rules related to minimum information requirements for medical records, such as the patient’s name and date of birth; limits on when and how such records may be accessed and by whom; and the length of time IPSs must maintain these records. In addition, in an effort to promote the authenticity, integrity, availability and preservation of the data, IPSs are obligated to use a unified electronic medical records system managed by the Colombian government for processing medical records.

Environmental Regulations

IPSs are subject to various international, national and local environmental regulations, including those related to the use of natural resources, radioactive substances, disposal of waste and medicines. Fines and other administrative measures may be imposed on noncompliant IPSs. Depending on the severity of the breach, sanctions may include daily fines of up to 5,000 times the Colombian minimum wage (approximately US$1.2

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million), temporary or permanent closure of the facility, revocation of the applicable environmental license, authorization, concession, permit or registration, seizure of property used for the environmental breach, community service and/or if applicable, demolition of construction sites.

Radioactive substances

The acquisition, storage, use and disposal of radioactive sources in medical and diagnostic procedures is subject to regulation enacted by the Ministry of Mines and Energy. This includes regulations related to the operation of X-ray equipment and the dosimetry of radioactive substances for medical treatment. As of the date hereof, we are in compliance with all applicable requirements for the operation of X-ray equipment and the dosimetry of radioactive substances for medical treatment.

Sanitation standards

As set forth in Law 9 of 1979, IPSs must comply with sanitation standards provided by the National Health Code. Additionally, Decree 780 sets forth regulations related to public health matters applicable to IPSs in their capacities as actors within the SGSSS, including regulations related to the sterilization of operating rooms and medical instruments.

Failure to comply with the National Health Code and Decree 780 may result in administrative sanctions, including fines and temporary or permanent closure of noncompliant IPSs’ facilities.

Management of hazardous waste

IPSs must comply with regulations establishing procedures for the management and disposal of hazardous waste generated by its activities. Such regulations include Law 430 of 1998, which includes provisions regulating the collection, storage, transport and final disposal of hazardous waste, Law 1252 of 2008, which provides prohibitive environmental regulations concerning hazardous waste and Decree 1076 of 2015, which further regulates the collection, generation, management and disposal of hazardous waste. Under Colombian law, IPSs may be held liable for environmental damages caused by their improper management and disposal of hazardous waste. IPSs, as producers of hazardous waste, must categorize waste using special laboratories authorized for this purpose by the Colombian government and communicate the category attributable to waste to those responsible for the storage, collection, transportation, treatment or final disposal of such waste. IPSs must also ensure that the third parties they contract to dispose of their hazardous waste are duly authorized to handle and manage the relevant types of waste.

Construction Licenses

A construction license must be obtained from the applicable local municipal government to build any healthcare facility. The construction of new healthcare facilities and expansion or major modification of existing healthcare facilities are subject to prior authorization by the applicable local Curaduría Urbana based on local urban plans and zoning regulation. The applicable requirements vary depending on the local jurisdiction but generally focus on the location of the proposed facility, including zoning restrictions on type of facilities, mandatory areas for public spaces and adequate architectural design and structure.

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MANAGEMENT

Board of Directors

Our business and affairs are managed by our board of directors in accordance with our articles of association, our by-laws and the Peruvian Corporations Law.

Upon consummation of this offering, our board of directors will consist of seven members. Directors are elected and removed in accordance with the provisions of our articles of association. See “Description of Our Share Capital—Voting Rights.”

The following table presents our board of directors.


Name	Age		Position	Initial Year of Appointment
Jesús Zamora León		59	Chairman of the Board	2008
Luis Felipe Pinillos Casabonne		44	Director	2009
Jorge Basadre Brazzini		52	Director	2008
Leonardo Bacherer Fastoni		45	Director	2018
Robert Oberrender		61	Director	2020
Andrew Soussloff		67	Director	2020
John Wilton		66	Director	2020

The following is a brief summary of the business experience of each of our directors. Unless otherwise indicated, the current business addresses for our directors is Avenida República de Panamá No. 3461, San Isidro, Lima, Peru.

Jesús Zamora León has been a member of our board of directors since 2008. Mr. Zamora is Co-Founder, Chief Executive Officer and Chairman of the board of directors of Enfoca, one of Latin America’s foremost investment firms founded in 2000, where he is responsible for the investment and management of Enfoca’s funds. He has more than 32 years of investment experience. Prior to founding Enfoca, he held various senior executive positions in banking and asset management, including Banco de Crédito del Perú from 1994 to 1999, BEA Associates from 1992 to 1993, and Salomon Brothers Inc. from 1988 to 1992. Mr. Zamora holds an MBA from Columbia Business School and a bachelor’s degree in Industrial Engineering from Universidad Nacional Autónoma de México.

Luis Felipe Pinillos Casabonne has been a member of our board of directors since 2009. Before being appointed by our board of directors as our CEO in 2020, he served in various senior roles at the Company since 2002, including as CEO from 2009 to 2015 and as executive director from 2015 to 2020. Mr. Pinillos Casabonne has been a member of the board of directors of Oncosalud since 2008 and Textil del Valle, a garment manufacturing company, since 2011. He holds a degree in Business Administration from Universidad de Lima and completed insurance courses at the MAPFRE Foundation in Spain.

Jorge Basadre Brazzini has been a member of our board of directors since 2008. Mr. Basadre is a Co-Founder and Partner of Enfoca, where he is responsible for the investment and management of Enfoca’s funds. He has more than 25 years of investment experience. Prior to founding Enfoca in 2000, he worked in management consulting at Booz & Co. from 1996 to 2000, and in banking at Banco de Crédito del Perú from 1991 to 1993. Mr. Basadre holds an MBA from Harvard Business School and a bachelor’s degree in Business Administration from Universidad del Pacífico in Lima.

Leonardo Bacherer Fastoni has been a member of our board of directors since 2018. Mr. Bacherer serves as Head of Investments at Enfoca, which he joined in 2015. Prior to joining Enfoca, he served as CEO of Maestro (formerly an Enfoca portfolio company) from 2010 to 2014, deputy CEO during 2009 and CFO from 2007 to 2008.

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He has more than 18 years of experience in the retail and banking industries. Prior to his role at Maestro, he held several executive positions at Ripley S.A. between 2005 and 2007 and Banco de Crédito del Perú between 2002 and 2005. Mr. Bacherer holds an MBA from the Rotterdam School of Management, a certification in advanced management from The Wharton School of the University of Pennsylvania and a bachelor’s degree in Industrial Engineering from the Military School of Engineering in La Paz, Bolivia.

Robert W. Oberrender has been a member of our board of directors since 2020. Mr. Oberrender has been an independent investor and advisor since September 2018. From 2002 until his retirement in 2018, he served at UnitedHealth Group, Incorporated for 16 years most recently as its Chief Investment Officer and Treasurer and the Chief Executive Officer of its Optum Bank unit from 2016-2017. Prior to that, he was Chief Administrative and Financial Officer at Canadian Imperial Bank of Commerce’s Amicus Financial unit, Vice President and Global Treasurer at Sara Lee Corporation and Chief Financial Officer at Metris Companies Inc. He began his career at JP Morgan in the Corporate Finance and Banking Group at the legacy Chemical Bank organization. Mr. Oberrender holds an MBA from the University of Chicago’s Booth School of Business and a bachelor’s degree in Economics from Hamilton College.

Andrew Soussloff has been a member of our board of directors since 2020. Mr. Soussloff has been a director, investment committee member and senior advisor of Enfoca Investments Ltd. since 2014. Prior to joining Enfoca, he practiced law as a partner of the international law firm Sullivan & Cromwell LLP for more than 30 years, where he focused on capital markets, mergers and acquisitions, financial regulation and corporate governance, and advised businesses and governments in the United States, Latin America, Europe, Canada and Asia. Mr. Soussloff holds a J.D. from the University of Pennsylvania Law School, and a bachelor’s degree in History and a master’s degree in History from the University of Pennsylvania.

John Wilton has been a member of our board of directors since 2020. He has been the Deputy President of Administration and Finance at the National University of Singapore since 2018. He has also been the CEO of Wilton Strategy Inc. since 2018. He was a senior advisor at McKinsey & Company from 2016 to 2018, Vice Chancellor of Administration and Finance at the University of California, Berkley from 2011 to 2016 and managing director and head of international research at Farallon Capital Management from 2006 to 2011. He was also a senior advisor to Hellman and Friedman from 2008 to 2011. Before his role at Farallon Capital Management, he served in several positions at The World Bank, in Washington DC, from 1983 to 2006, including as CFO and Vice President for Strategy, Finance and Risk from 2002 to 2006. Mr. Wilton has also been a director and investment committee member of Enfoca Investments Ltd. since 2014 and a member of the board of directors of Leblon Equities, in Brazil, since 2010. Mr. Wilton holds a bachelor’s degree in Economics from the University of Cambridge and a master’s degree in Economics and Statistics from the University of Sussex.

Executive Officers

Our executive officers are responsible for the management and representation of our company. We have a strong centralized management team led by Luis Felipe Pinillos Casabonne, our CEO, with broad experience in the healthcare industry as well as in strategy, operations, finance, sales and communications. Many of the members of our management team have worked together as a team for many years. Our executive officers were appointed by our board of directors for an indefinite term.

The following table lists our current executive officers:


Name	Age		Position	Initial year of Appointment
Luis Felipe Pinillos Casabonne		42	Chief Executive Officer	2020
Pedro Castillo		40	Chief Financial Officer	2015

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The following is a brief summary of the business experience of our executive officers. Unless otherwise indicated, the current business addresses for our executive officers is Avenida República de Panamá No. 3461, San Isidro, Lima, Peru.

Pedro Castillo has been our Chief Financial Officer since 2015. Mr. Castillo was previously the chief financial officer at Maestro from 2010 to 2014 and Grupo Zunino (Ecuador) from 2006 to 2010. He received a master’s degree in Business Administration from TEC Monterrey in 2008, a degree in industrial engineering from the Universidad de Lima in 2001 and completed an advanced management program at the ESAN Graduate School of Business in 2003.

Committees of the Board of Directors

Audit and Risk Committee

The audit and risk committee, which consists of Leonardo Bacherer Fastoni, Robert Oberrender and John Wilton, will assist the board of directors in overseeing our accounting and financial reporting processes and the audits of our financial statements. In addition, the audit and risk committee will be directly responsible for the appointment, compensation, retention and oversight of the work of our independent registered public accounting firm. The board of directors has determined that Robert Oberrender qualifies as an “audit committee financial expert,” as such term is defined in the rules of the SEC. Our board of directors has determined that Robert Oberrender and John Wilton satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the NYSE and Rule 10A-3 under the Exchange Act. SEC and NYSE rules with respect to the independence of our audit and risk committee require that all members of our audit and risk committee must meet the independence standard for audit and risk committee membership within one year of the effectiveness of the registration statement of which this prospectus forms a part. The audit and risk committee will consist entirely of independent directors within one year from the date of this offering. The audit and risk committee will be governed by a charter that complies with applicable NYSE rules, and such charter will be posted on our website prior to the listing of the ADSs on the NYSE.

Compensation and Talent Committee

The compensation and talent committee, which will consist of Jorge Basadre Brazzini, Leonardo Bacherer Fastoni and Jesús Zamora León, will assist the board of directors in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. The committee will review the total compensation package for our executive officers and directors recommend to the board of directors for determination the compensation of each of our directors and executive officers, and will periodically review and approve any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, and employee pension and benefits plans. As permitted by the listing requirements of the NYSE, we will opt out of compliance with Section 303A of the Corporate Governance Rules of the NYSE which requires that a compensation committee consist entirely of independent directors. The compensation and talent committee will be governed by a charter that will be posted on our website prior to the listing of the ADSs on the NYSE.

Executive Committee

The executive committee, which will consist of Jesús Zamora León, Leonardo Bacherer Fastoni, Jorge Basadre Brazzini and Luis Felipe Pinillos Casabonne, is vested with the authority to exercise certain functions of the board of directors when the board is not in session. The Executive Committee is also in charge of all general administrative affairs of the Company, subject to any limitations prescribed by the board of directors or by law.

Compensation of Directors and Officers

Director compensation must be approved by a majority of class B shareholders at our annual shareholders’ meeting. For the year ended December 31, 2020, the aggregate compensation accrued or paid to the members of

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our board of directors and our executive officers for services in all capacities was S/89.3 million, including compensation paid by our subsidiaries to directors that serve on our subsidiaries’ board of directors.

Although under Peruvian law there is no established maximum threshold regarding the aggregate annual compensation to be paid to the members of the board of directors (including those directors acting in an executive capacity) according to article 37(m) of the Peruvian Income Tax Law, any compensation paid to members of the board of directors with respect to a fiscal year in excess of 6% of the commercial profit for such year will not be deductible for income tax purposes.

During 2020, our performance-based compensation programs included cash bonuses based on the individual performance of our executive officers as approved by our board of directors.

Under Peruvian law, we are required to pay employees hired for an indefinite term (other than directors) that are dismissed without cause 1.5x annual salary for every year with the company up to an amount not to exceed 12 salaries (or 8 years). We are not required to make such payments in the event of voluntary termination by the employee or dismissal for justified cause. Although we have no ongoing obligation to do so, in the past we have provided, and in the future we may provide, such benefits to our executive officers upon their retirement. We have not set aside or reserved any amounts to provide for pension, retirement or other similar benefits.

Under Colombian law, we are required to pay employees hired under an employment agreement that are dismissed without cause severance calculated based on whether the employee was hired for a fixed-term or an indefinite term. For employees hired for a fixed-term, severance must be equal to the salary they would have earned from the time the employee is dismissed to the end of the fixed-term. Severance for employees hired for an indefinite term must be calculated pursuant to the following:


Length of Employment	Employee’s Salary	Severance Pay
One year or less	Below 10 minimum monthly legal salaries (“MMW”*)	30 days
One year or less	10 or more MMW	20 days

More than one year	Below 10 MMW	30 days plus 20 days for every year worked after the first year, prorated for the portion of the year that the employee was employed
More than one year	10 or more MMW	20 days plus 15 days for every year worked after the first year, prorated for the portion of the year that the employee was employed

*	Ten MMW for fiscal year 2020 is COP9,806,570.0 (approximately US$2,610.4).

We are not required to make severance payments in the event of voluntary termination by the employee or dismissal for justified cause.

Employment Agreements

We do not currently have any employment agreements with our executive officers. We intend to enter into employment agreements with all of our executive officers prior to the completion of this offering setting forth the terms of the compensation that our executive officers are entitled to receive, including with respect to any equity-based compensation.

2020 Equity Incentive Plan

In connection with this offering, we have adopted a new equity incentive plan (the “2020 Plan”) for the purpose of motivating and rewarding our employees, directors, consultants and advisors to perform at the highest

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level and to further the best interests of the Company and its shareholders. The 2020 Plan governs the issuance of equity incentive awards or share equivalents.

Equity incentive awards may be granted to our employees, directors, consultants or advisors, as well as to holders of equity compensation awards granted by a company that is acquired by us in the future. Awards under the 2020 Plan may be granted in the form of options, share appreciation rights, restricted shares, restricted share units, performance awards or other share-based awards, including awards that are settled in cash.

The vesting conditions for grants under the 2020 Plan are determined by the administrator and are set forth in the applicable award documentation. For options and share appreciation rights, the administrator determines the exercise price, the term (which may not exceed 10 years from the date of grant) and the time or times at which the option or a share appreciation right may be exercised in whole or in part. Performance awards are subject to performance conditions as specified by the administrator and are settled in cash, shares or any combination thereof, as determined by the administrator in its discretion, following the end of the relevant performance period.

The 2020 Plan is administered by the compensation and talent committee or such other committee as may be designated by the board of directors.

Indemnification of Directors and Officers

Our amended and restated by-laws provide that we will indemnify our directors and executive officers. We intend to establish directors’ and officers’ liability insurance that insures such persons against any liability or loss incurred by them arising out of their position at the company.

We intend to enter into indemnification agreements with each of our directors and executive officers. These agreements, among other things, will require us to indemnify each director and executive officer to the fullest extent permitted by law, including indemnification of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person’s services as a director or executive officer, except in any case where the act or failure to act giving rise to the claim to indemnification is determined by a court to have been contrary to applicable law or our by-laws or constituted willful misconduct, gross negligence or abuse of powers vested in the director or executive officer.

Shareholders Agreement

In connection with this offering, on September 8, 2020, Enfoca, our controlling shareholder, and Luis Felipe Pinillos Casabonne, our chief executive officer, entered into a shareholders agreement (the “Shareholders Agreement”). See “Related Party Transactions—Shareholders Agreement.”

Share Ownership by Directors and Officers

As of the date of this prospectus, the aggregate number of our class A shares and class B shares beneficially owned by our directors and executive officers was and shares, respectively. As of the date of this prospectus, none of our directors or executive officers beneficially owned 1% or more of our outstanding common shares, other than as disclosed under “Principal Shareholders” below. Beneficial ownership by a person, as of a particular date, assumes the exercise of all options and warrants held by such person that are currently exercisable or are exercisable within 60 days of such date.

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PRINCIPAL SHAREHOLDERS

As of the date of this prospectus, our authorized share capital is S/ , consisting of class A shares and 1,000 class B shares. Each class B share of our common stock is entitled to one vote on any matter submitted to a vote of the shareholders. Each class A share of our common stock is entitled to one vote on only certain matters submitted to a vote of the shareholders. See “Description of Our Share Capital.” The following table presents the beneficial ownership of our shares as of the date of this prospectus and our outstanding shares after this offering, by:

•

each person or entity known by us to beneficially own 5% or more of our issued and outstanding shares of common stock;

•

each of our directors, director nominees and executive officers individually; and

•

all of our directors, director nominees and executive officers as a group.

Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed to be a beneficial owner of such securities as to which such person has voting or investment power.

The following table sets forth the beneficial ownership of our common stock before the offering and after the offering, assuming no exercise of the underwriters’ option to purchase additional ADSs. Except as described in the footnotes below, to our knowledge, each of the persons named in the table below has sole voting and investment power with respect to the shares of common stock beneficially owned by such person, subject to community property laws where applicable.

Unless otherwise indicated below, the address for each beneficial owners is c/o Auna S.A.A., Avenida República de Panamá 3461, San Isidro, Lima, Perú.

Shares Owned Before the Offering

Shares Owned After the Offering

Class A Shares

Class B Shares

Class A Shares

Class B Shares

Shareholder

Number of
Shares

Percentage
Owned

Number of
Shares

Percentage
Owned

Number of
Shares

Percentage
Owned

Number of
Shares

Percentage
Owned

5% Shareholders

Entities affiliated with Enfoca (1)

Juan Rafael Servan Rocha

Directors and Officers

Jesús Zamora León (2)

Luis Felipe Pinillos Casabonne (3)

Jorge Basadre Brazzini

Leonardo Bacherer Fastoni

Robert Oberrender

Andrew Soussloff

John Wilton

Pedro Castillo

All directors and officers as a group (8 persons)

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*	Less than 1% ownership.

(1)

Includes: (i) class A shares collectively held by Enfoca Discovery 1 S.A.C. (“Enfoca Discovery 1”), Enfoca Discovery Parallel S.A.C. (“Enfoca Discovery Parallel”), Enfoca Discovery 2, L.P. (“Enfoca Discovery 2”), Enfoca Descubridor 1, Fondo de Inversión (“Enfoca Descubridor 1”) and Enfoca Descubridor 2, Fondo de Inversión (“Enfoca Descubridor 2”) and (ii) class B shares held in trust for the benefit of Enfoca under the Trust Agreement. Excludes class B shares held in trust for the benefit of Mr. Pinillos Casabonne and certain of our minority shareholders and as to which Enfoca disclaims beneficial ownership. Pursuant to the Trust Agreement, the trustee will vote all class B shares held in trust, which includes all class B shares held for the benefit of Enfoca, Mr. Pinillos Casabonne and certain of our minority shareholders, as directed by Enfoca irrespective of Enfoca’s aggregate ownership of our common stock at any given time. See “Description of Our Share Capital—Trust Agreement” and “Related Party Transactions—Shareholders Agreement.” Enfoca controls Enfoca Discovery 1, Enfoca Discovery 2 and Enfoca Discovery Parallel and is the general partner of Enfoca Descubridor 1 and Enfoca Descubridor 2 (collectively, and together with Enfoca Discovery 1, Enfoca Discovery Parallel and Enfoca, the “Enfoca Funds”). Enfoca may be deemed to beneficially own the common shares held by the Enfoca Funds, but disclaims beneficial ownership of such shares. Jesús Zamora León is the chief executive officer of Enfoca and may be deemed to have voting and dispositive power over the common shares held of record by the entities affiliated with Enfoca. The address of the Enfoca entities is Avenida Jorge Basadre 310 Piso 7, Lima 27, Perú.

(2)	Mr. Zamora León, a member of our board of directors, is the chief executive officer of Enfoca and may be deemed to have voting and dispositive power over the common shares held of record by the entities affiliated with Enfoca.

(3)

Includes class B shares held in trust for the benefit of Mr. Pinillos Casabonne and excludes class B shares held in trust for the benefit of Enfoca and certain of our minority shareholders and as to which Mr. Pinillos Casabonne disclaims beneficial ownership. Pursuant to the Trust Agreement, the trustee will vote all class B shares held in trust, which includes all class B shares held for the benefit of Enfoca and Mr. Pinillos Casabonne, as directed by Enfoca irrespective of Enfoca’s aggregate ownership of our common stock at any given time. See “Description of Our Share Capital—Trust Agreement.”

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RELATED PARTY TRANSACTIONS

In the ordinary course of business, we and our subsidiaries engage in a variety of transactions among ourselves and with certain of our affiliates and related parties. All material transactions between us or our subsidiaries and our other affiliates or related parties are evaluated by our senior management and our board in accordance with specific regulations and internal rules applicable to all related-party transactions. These transactions are subject to prevailing market conditions and transfer pricing regulations, as described below. The internal regulations of our board of directors establishes a review procedure for identifying, approving and accounting for related party transactions.

Peruvian Law Concerning Related Party Transactions

Peruvian law sets forth certain restrictions and limitations on transactions with related parties.

From a tax standpoint, the value of such related party transactions must be equal to the fair market value assessed under transfer pricing rules, i.e., the value agreed to by non-related parties under the same or similar circumstances. Similarly, companies with securities registered in the Securities Public Registry, such as us, are required to comply with the following rules:

•

the directors and executive offices of the company may not, without the prior authorization of the board of directors, (i) receive loans (in money or goods) from the company; or (ii) use, for their own benefit or for the benefit of related parties, the company’s assets, services or credits;

•

the directors and executive officers of the company may not disclose or use, inappropriately, for their own benefit, privileged information, and participate in any corporate decision that presents a conflict of interest with the company;

•

entering into agreements that involve at least 5% of the assets of the company with persons or entities related to directors, managers or shareholders that own, directly or indirectly, 10% of the share capital, requires the prior authorization of the board of directors (with no participation of the director involved in the transaction, if any); and

•

entering into agreements with a party controlled by the company’s controlling shareholder requires the prior authorization of the board of directors and an evaluation of the terms of the transaction by an external independent company (audit companies (other than the auditors of the company) or other entities to be determined by the SMV).

The external independent company that reviews the transaction should not be related to the parties involved therein, nor to directors, managers or shareholders that own at least 10% of the share capital of the company.

We do not enter into transactions with directors and executive officers on terms more favorable than what we would offer third parties. Any related party transaction we have entered into in the past has been in the ordinary course of business and on an arm’s length basis.

Management Services

We have reimbursed Enfoca, our controlling shareholder, for payroll expenses for certain management services they provide, which include an Enfoca employee serving as a full-time member of our management team, in the amount of S/1.9 million, S/2.1 million and S/1.9 million for each of 2018, 2019 and 2020, respectively. We have also reimbursed Enfoca for certain consultant fees and travel expenses they have incurred, in the amount of S/0.3 million, S/0.08 million and S/0.3 million for each of 2018, 2019 and 2020, respectively.

Loans and Other Arrangements

In 2014, Dr. Luis Pinillos Ashton, the father of Luis Felipe Pinillos Casabonne, our CEO, and a director of Oncosalud, provided a construction loan to one of our subsidiaries, Oncosalud S.A.C., in an amount of U.S.$1.1 million. The interest rate payable on the loan was 10.0%. We repaid this loan in full on June 22, 2018.

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In 2012, one of our subsidiaries, Oncocenter S.A.C., acquired all of the issued and outstanding share capital of Radioncología S.A.C. Dr. Pinillos was a shareholder of Radioncología S.A.C. as well as a director of Oncocenter S.A.C. at the time. The aggregate purchase price of Dr. Pinillos’ shares was U.S.$2.5 million. In connection with Oncocenter’s acquisition of Radioncología S.A.C, we agreed to defer the purchase price on Dr. Pinillos’ shares. The interest rate payable on the deferred purchase price was 8.0%. Oncocenter repaid the deferred purchase price in full on February 5, 2018.

Medical Services

Dr. Pinillos and Dr. Carlos Vallejos, the founders of Oncosalud in 1989 and current directors of Oncosalud, are both top physicians that have been providing medical services at our facilities for several years. For their services, they have received customary compensation and benefits commensurate with their expertise and clinical acumen in healthcare coverage and aligned with the compensation paid to other physicians and medical professionals of similar stature employed by us.

During the past three years, we have also reimbursed Dr. Vallejos for certain out-of-pocket expenses, including rent for office space used by Oncosalud for back-office operations and certain property taxes payable by him in connection thereto, as well as de minimis phone expenses, the purchase of inexpensive medical literature and minor travel expenses incurred in connection with his attendance at conferences on behalf of Oncosalud. These reimbursements amounted to S/0.4 million, S/0.4 million and S/0.3 million in 2018, 2019 and 2020, respectively.

Registration Rights Agreement

Effective upon consummation of this offering, we will enter into a registration rights agreement (the “Registration Rights Agreement”) with Enfoca, our controlling shareholder, and Luis Felipe Pinillos Casabonne, our chief executive officer.

At any time beginning 180 days following the closing of this offering, subject to several exceptions, including waiver of the lockup period, underwriter cutbacks and our right to postpone a demand registration under certain circumstances, Enfoca may require that we register for public resale under the Securities Act all common shares constituting registrable securities that they request be registered so long as the securities requested to be registered in each registration statement have an aggregate estimated market value of at least US$20 million or represent all of the remaining registrable securities held by Enfoca or that would be owned upon conversion of all of the class B shares held by Enfoca. We will not be required to effect more than two demand registrations in any 12-month period. If we become eligible to register the sale of our securities on Form F-3 under the Securities Act, which will not be until at least twelve months after the date of this prospectus, Enfoca has the right to require us to register the sale of the registrable securities held by them on Form F-3, subject to offering size and other restrictions.

If we propose to register any of our class A shares represented by ADSs under the Securities Act for our own account or the account of any other holder (excluding any registration related to an employee benefit plan, a corporate reorganization, other Rule 145 transactions, in connection with a dividend reinvestment plan or for the sole purpose of offering securities to another entity or its security holders in connection with the acquisition of assets or securities of such entity), Enfoca and Mr. Pinillos Casabonne, are entitled to notice of such registration and to request that we include their registrable securities for resale on such registration statement, and we are required, subject to certain exceptions, to include such registrable securities in such registration statement.

In connection with the transfer of their registrable securities, the parties to the Registration Rights Agreement may assign certain of their respective rights under the Registration Rights Agreement under certain circumstances. In connection with the registrations described above, we will indemnify any selling shareholders and we will bear all fees, costs and registration expenses (except underwriting discounts and spreads).

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Shareholders Agreement

In connection with this offering, on September 8, 2020, Enfoca, our controlling shareholder, and Luis Felipe Pinillos Casabonne, our chief executive officer, entered into the Shareholders Agreement. Among other things, the Shareholders Agreement provides that (i) so long as Mr. Pinillos Casabonne owns shares representing at least 2% of all of our issued and outstanding class A shares, he shall be nominated and elected as a member of our board of directors by Enfoca and as a member of the executive committee of the board of directors; (ii) so long as Mr. Pinillos Casabonne owns shares representing at least 4% of all of our issued and outstanding class A shares, he shall have the right to nominate two independent directors if our board of directors includes at least nine members or one independent director if our board of directors includes less than nine members, in each case subject to the consent of Enfoca; and (iii) so long as Mr. Pinillos Casabonne owns shares representing at least 3% of all of our issued and outstanding class A shares, he shall have the right to nominate one independent director if our board of directors includes at least nine members subject to the consent of Enfoca. Mr. Pinillos Casabonne will not have the right to nominate any independent director if our board of directors includes less than nine members.

Under the Shareholders Agreement, Enfoca and Mr. Pinillos Casabonne have agreed to transfer all of their class B shares to the trust and have agreed that the trustee will vote all of the class B shares at the direction of Enfoca.

In addition, the Shareholders Agreement provides that, if Enfoca intends to privately sell some or all of its shares of our common stock to non-affiliates, in certain cases, they must notify us and Mr. Pinillos Casabonne of the intended sale. In such cases, Mr. Pinillos Casabonne has tag-along rights to participate, on a pro rata basis, in such proposed sale at the same price per share and under the same terms and conditions.

Related Person Transaction Policy

Prior to the consummation of this offering, we intend to enter into a new related person transaction policy. Pursuant to such related person transaction policy, any related person transaction must be approved or ratified by our audit and risk committee or another designated committee of our board of directors. The related party transaction policy will set out a number of exemptions pursuant to which certain related person transactions will be deemed not to create or involve a material interest and thereby not subject to such approval or ratification requirements. In determining whether to approve or ratify a transaction with a related person, our audit and risk committee or another designated committee of our board of directors will consider all relevant facts and circumstances, including without limitation the commercial reasonableness of the terms of the transaction, the benefit and perceived benefit, or lack thereof, to us, opportunity costs of alternate transactions, the materiality and character of the related person’s direct or indirect interest and the actual or apparent conflict of interest of the related person. Our audit and risk committee or any other designated committee of our board of directors will not approve or ratify a related person transaction unless it has determined that, upon consideration of all relevant information, such transaction is in, or not inconsistent with, our best interests and the best interests of our shareholders.

Indemnification Agreements

We intend to enter into indemnification agreements with our directors and executive officers that will require us to indemnify our directors and executive officers to the fullest extent permitted by law. See “Management—Indemnification of Directors and Officers.”

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DESCRIPTION OF OUR SHARE CAPITAL

Set forth below is certain information relating to our share capital, including brief summaries of the material provisions of our by-laws, the Peruvian Corporations Law and certain related laws and regulations of Peru, all as in effect as of the date hereof.

General

We are an openly held corporation (sociedad anónima abierta) organized under the laws of Peru. Our by-laws provide that our principal corporate purpose is to invest and hold shares or other securities issued by companies in the healthcare industry or related to the healthcare industry, or that render medical services or provide or manage healthcare plans.

Our share capital is divided into class A shares of common stock and class B shares of common stock. Each share of our common stock represents the same economic interest, except that, as provided in our by-laws, the class A shares benefit from the right to receive a preferred dividend consisting of 100% of any dividends distributed until we have distributed US$1 billion (or its equivalent in soles) in the aggregate in cash dividends.

Each share of our common stock is entitled to one vote. Each class B share of our common stock is entitled to vote on any matter submitted to a vote of the shareholders. Each class A share of our common stock is entitled to vote (together with the class B shares) only on the following matters submitted to a vote of the shareholders: (i) approval corporate management and financial statements; (ii) approval of capital increases or reductions (other than as described below under “—Share Capital Increases and Reductions”); (iii) appointment, or delegation to the board of directors of the appointment, of our independent auditors; and (iv) application of profits payment of dividends. See “—Voting Rights.”

Prior to the offering, our share capital is S/ , and is represented by class A shares issued and outstanding with a par value of S/1.00 each and 1,000 class B shares issued and outstanding with a par value of S/1.00 each. The share capital is fully subscribed and fully paid. We intend to register our class A shares in the Securities Public Registry. Following the offering and assuming no exercise of the underwriters’ option to purchase additional ADSs, we will have class A shares issued and outstanding and 1,000 class B shares issued and outstanding.

Shareholders’ Liability

Under the Peruvian Corporations Law, holders of our common shares cannot vote on matters with respect to which they have a conflict of interest.

Under Article 133 of the Peruvian Corporations Law, a shareholder must abstain from voting if such shareholder has, directly or indirectly, a conflict of interest. In such case, the shares of the shareholders having a conflict of interest will be considered for quorum purposes but not for purposes of adopting the applicable resolutions.

Moreover, under article 51(c) of Legislative Decree N° 861 (the “Peruvian Capital Markets Law”), the execution of agreements that involve at least 5% of our assets to be carried out between us and persons or entities related to our directors, managers or shareholders that own, directly or indirectly, 10% of our share capital, requires the prior authorization of the board of directors (with no participation of the director involved in the transaction, if any). If our controlling shareholder is also the controlling shareholder of the entity with whom we are entering into the aforementioned transaction, in addition to the board of directors’ prior approval, the transaction terms shall be reviewed by an external independent company (audit companies (other than the auditors of the company) or other entity to be determined by the SMV). The external independent company that reviews the transaction should not be related to the parties involved therein, nor to directors, managers or shareholders that own at least 10% of our share capital.

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Redemption Rights

Under Article 200 of the Peruvian Corporations Law, holders of our common shares have redemption rights if they voted against or did not vote on any of the following decisions: (i) a change of our corporate purpose; (ii) a change of our domicile to a foreign country; (iii) the introduction of any restrictions on the transferability of our shares or the amendment of any existing restrictions; or (iv) any transformation, merger or significant spin-off occurs with respect to our company. Moreover, under Article 262 of the Peruvian Corporations Law, holders of our class A shares have the redemption rights set out in Article 200 if holders of our class A shares voted against or did not vote on the decision to delist our class A shares from the Securities Public Registry. The same redemption rights are available to holders of our common shares in the event of our conversion from an openly held corporation (sociedad anónima abierta) to a different form of corporation, as a consequence of the delisting of shares above mentioned. In such cases, redemption rights must be exercised within 10 days of the registration of the corporate transformation in the Public Corporations Registry and 10 days from the publication of the notice made by us in accordance with Article 200, respectively.

Preemptive and Accretion Rights

If we increase our share capital, holders of our class A shares have the right to subscribe for new class A shares while holders of our class B shares have the right to subscribe for new class B shares, in each case, on a pro rata basis. Shareholders who are in default of any payments relating to their share capital may not exercise their preemptive rights. Holders of common shares have preemptive rights in order to maintain their share interest in our share capital, unless the capital increase (i) results from a conversion of debt to common shares, (ii) when the company grants to certain shareholders or third parties the option to subscribe shares (in accordance with the Peruvian Corporations Law), (iii) is approved by shareholders representing at least 40% of the subscribed voting shares provided that the capital increase does not favor, directly or indirectly, certain shareholders to the detriment of others, and (iv) results from a corporate reorganization. However, in accordance with our by-laws, under section (iii) above, the agreement shall be adopted by shareholders representing at least 25% of the subscribed voting shares provided that the new shares created are subject to a public offering.

Preemptive rights are exercised in at least two rounds. During the first round, shareholders may subscribe for new shares of the relevant class on a pro rata basis. During the second round, shareholders who participated in the first round may subscribe for any remaining shares of the relevant class on a pro rata basis up to the amount of shares such shareholders subscribed for in the first round. The first round must remain open for at least 10 business days. The second round must remain open for at least three business days.

In September 2020, our shareholders delegated to our board of directors the authority to approve certain capital increases for a period of five (5) years. This approval also included an express advanced waiver of any preemptive rights that would apply in connection with any such capital increases. This delegation may only be revoked by a vote of the class B shares. See “—Voting Rights.”

Voting Rights

Each share of our common stock is entitled to one vote. Each class B share of our common stock is entitled to vote on any matter submitted to a vote of the shareholders.

Each class A share of our common stock is entitled to vote (together with the class B shares) only on the following matters submitted to a vote of the shareholders: (i) approval of corporate management and financial statements; (ii) approval of capital increases or reductions (other than as described below under “—Changes in Capital”); (iii) appointment, or delegation to the board of directors of the appointment, of our independent auditors; and (iv) application of profits. The class A shares will not have voting rights on any other matter subject to shareholders’ approval, including election and removal of directors and setting of directors’ compensation; our issuance of debt securities; amendments to our by-laws (other than in connection with capital increases or reductions); the sale, in a single transaction, of assets with a value exceeding 50% of our share capital; the merger, spin-off, division, reorganization, transformation or dissolution of the Company; and special investigations and audits.

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Directors are elected by cumulative voting, and as such, shareholders entitled to vote on the election of directors may pool votes in favor of one person or distribute them among various persons at their discretion. Those candidates for the board who receive the most votes are elected directors. Holders of common shares may attend and vote at shareholders’ meetings either in person or through a proxy.

Trust Agreement

Enfoca, Mr. Pinillos Casabonne and certain of our minority shareholders will enter into the Trust Agreement, pursuant to which they will transfer all of the class B shares owned by them into a trust. The class B shares transferred to the trust will constitute all or substantially all of our class B shares. Under the Trust Agreement, La Fiduciaria S.A., as trustee, will act as trust owner on behalf of the parties.

The Trust Agreement will contain certain covenants that, among other things, will prohibit the trustee from transferring or converting class B shares held in the trust, except in connection with a discretionary or compulsory withdrawal effected in accordance with the terms of the Trust Agreement or as otherwise required by applicable law. Pursuant to the Trust Agreement, the trustee will be the holder of record of the class B shares held in trust and vote all class B shares held in trust as directed by Enfoca.

The Trust Agreement will terminate upon the combined holdings of Enfoca and Mr. Pinillos Casabonne, directly or indirectly, falling in the aggregate below 10% of all class A shares issued and outstanding.

The terms of the Trust Agreement can be amended at any time and from time to time with the consent of each of Enfoca, Mr. Pinillos Casabonne, the minority shareholders holding class B shares and the trustee. We will not be a party to the Trust Agreement and as such, will not have a general consent right with respect to amendments thereto.

Dividends

Each share of our common stock represents the same economic interest, except that, as provided in our by-laws, the class A shares benefit from the right to receive a preferred dividend consisting of 100% of any dividends distributed until we have distributed US$1 billion (or its equivalent in soles) in the aggregate in cash dividends.

Changes in Capital

Our share capital may be increased by a decision of holders holding an absolute majority of our outstanding voting power. The foregoing notwithstanding, in September 2020, our shareholders delegated to our board of directors the authority to approve one or more capital increases of up to S/236,546,679, which delegation will remain in place for five (5) years thereafter and will allow our board of directors to determine the timing, amount, and conditions of each such capital increase, without requiring further shareholders’ approval. This delegation may only be revoked by a vote of the class B shares.

Capital reductions may be voluntary or mandatory and must be approved by holders holding an absolute majority of our outstanding voting power. Capital reductions are mandatory when accumulated losses exceed 50% of the capital and to the extent such accumulated losses are not offset by accumulated earnings and capital increases within the following fiscal year. Capital increases and reductions must be communicated to the SMV, the BVL and the SUNAT. Capital reductions must also be published in the official gazette El Peruano and in a widely circulated newspaper in the city in which we are located.

Conversion

Each class B share will convert automatically into one class A share upon any transfer, except for transfers of class B shares by Enfoca, Mr. Pinillos Casabonne and certain of our minority shareholders to a trust established pursuant to the Trust Agreement or in case of transfers of Class “B” shares, in favor of Enfoca or of.

Luis Felipe Pinillos Casabonne, as appropriate.

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For so long as either Enfoca and Luis Felipe Pinillos Casabonne hold, directly or indirectly, in the aggregate 10% or more of the outstanding amount of class A shares, we will have a dual class structure. However, if, on any given date, the class A shares held by Enfoca and Mr. Pinillos Casabonne represent in the aggregate less than 10% of the outstanding amount of class A shares on a combined basis, then on the date of the call for the next annual shareholders meeting following such event, all the class A shares and all the class B shares will automatically convert into one class of common shares with full and equal economic and political rights as provided under Peruvian law on a one-to-one basis.

Liquidation Rights

If we are liquidated, our shareholders only have the right to receive net assets resulting from the liquidation after we comply with our obligation to pay all our creditors and after discounting any existing dividend liabilities. For this reason, we cannot assure you that we will be able to reimburse 100% of the book value of our common shares, including the class A shares underlying the ADSs, in case of bankruptcy or liquidation.

Ordinary and Extraordinary Meetings

Pursuant to the Peruvian Corporations Law and our by-laws, our annual shareholders’ meeting must be held during the three-month period after the end of each fiscal year.

Additional shareholders’ meetings may be held during the year. If we do not hold the annual shareholders’ meeting during the three-month period after the end of each fiscal year or any other shareholders’ meeting required by our by-laws, a public notary or a competent judge shall call for such a meeting at the request of at least one shareholder of the common shares.

Other shareholders’ meetings may be convened by the board of directors when deemed convenient by the Company or when it is requested by the holders holding at least 5% of our outstanding voting power. If, at the request of holders holding 5% of our outstanding voting power, the shareholders’ meeting is not convened by the board of directors within 15 business days of the receipt of such request, or the board expressly or implicitly refuses to convene the shareholders’ meeting, a public notary or a competent judge will call pursuant to Law N° 29560 for such meeting at the request of holders holding at least 5% of our outstanding voting power. If a public notary or competent judge calls for a shareholders’ meeting, the place, time and hour of the meeting, the agenda and the person who will preside shall be indicated on the meeting notice. If the meeting called is other than the annual shareholders’ meeting or a shareholders’ meeting required by the Peruvian Corporations Law or the by-laws, the agenda will contain those matters requested by the shareholders who requested the meeting.

Notices of Meetings

Notice of shareholders’ meetings must be given by publication of a notice in the Peruvian official gazette, El Peruano, and in a widely circulated newspaper in the city in which we are located. For annual shareholders’ meetings and other shareholders’ meetings provided for in our by-laws, the publication shall occur at least 25 days prior to such shareholders’ meetings. The notice requirement may be waived at the shareholders’ meeting by agreement of the holders of 100% of the outstanding common shares.

Quorum and Voting Requirements

According to our by-laws and Article 126 of the Peruvian Corporations Law, shareholders’ meetings called for the purpose of considering a capital increase or decrease, the issuance of obligations, a change in the by-laws, the sale in a single act of assets with an accounting value that exceeds 50% of our share capital, a merger, division, reorganization, transformation or dissolution, are subject to a first, second and third quorum call, the second and third call to occur upon the failure of the preceding one. A quorum for the first call requires the presence of shareholders holding 50% of our outstanding shares eligible to vote. For the second call, the presence of shareholders holding at least 25% of our outstanding shares eligible to vote is adequate. For the third call, the

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presence of shareholders holding any number of our outstanding shares eligible to vote is adequate. These decisions require the approval of a majority of the issued shares eligible to vote. Shareholders’ meetings convened to consider all other matters are subject to a first call quorum of 50% of eligible voting shares and a second call quorum of any number of eligible voting shares represented at the shareholders’ meeting. In such cases, decisions require the approval of a simple majority of the eligible voting shares represented at the shareholders’ meeting.

In accordance with our by-laws and Article 256 of the Peruvian Corporations Law, only those holders of common shares whose names are registered in the company’s stock ledger not less than 10 days in advance of a meeting will be entitled to attend the shareholders’ meeting and to exercise their rights.

Limitations on the Rights of Nonresidents or Foreign Shareholders

There are no limitations under our by-laws or the Peruvian Corporations Law on the rights of nonresidents or foreign shareholders to own securities or exercise voting rights with respect to our securities.

Disclosure of Shareholdings and Tender Offer Regulations

Disclosure of shareholdings

There are no provisions in our by-laws governing the ownership threshold above which share ownership must be disclosed.

However, according to Article 10 of SMV Resolution N° 019-2015-SMV-01, as amended, we must inform the SMV of the members of our economic group and a list of holders of our common shares representing more than a 5% of our economic interest, as well as any change to such information.

Tender offer regulations

Peruvian securities regulations include mandatory takeover rules applicable to the acquisition of control of a listed company.

Subject to certain conditions, such regulations generally establish the obligation to make a tender offer when a person or group of persons acquires a relevant interest in a listed company. According to Peruvian law, a person acquires a relevant interest in a listed company when such person (a) holds or has the power to exercise directly or indirectly 25%, 50% or 60% of the voting rights in a listed company, or (b) has the power to appoint or remove the majority of the board members or to amend its by-laws.

In general, the tender offer must be launched prior to the acquisition of the relevant interest. The tender offer may be launched after the “relevant interest” is acquired if it is acquired (a) by means of an indirect transaction, (b) as a consequence of a public sale offer, or (c) in no more than four transactions within a three-year period.

This mandatory procedure has the effect of alerting other shareholders and the market that an individual or financial group has acquired a significant percentage of a company’s voting shares, and gives other shareholders the opportunity to sell their shares at the price offered by the purchaser. The purchaser is required to launch a tender offer unless the following circumstances, among others, exist: (a) shareholders representing 100% of the voting rights consent in writing, (b) voting shares are acquired by a depositary in order to subsequently issue ADSs, or (c) voting shares are acquired pursuant to the exercise of preemptive rights.

Anti-Takeover Provisions

Our by-laws do not contain any provision that would have the effect of delaying, deferring or preventing a change of control. However, acquisitions of shares of our capital stock that involve certain thresholds may be subject to Peruvian securities and exchange regulations (Ley de Mercado de Valores y Reglamento de Oferta Pública de Adquisición y de Compra de Valores por Exclusión) applicable to tender offers.

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Form and Transfer

Class A shares listed in the Securities Public Registry may be either physical share certificates in registered form or book-entry securities in the CAVALI S.A. ICLV book-entry settlement system, also in registered form.

Choice of Forum/Governing Law

The rights of holders of our common stock will be governed by the laws of Peru.

Our by-laws provide that the courts of Peru will be the exclusive forum for resolving all shareholder complaints other than shareholder complaints asserting a cause of action arising under federal or state securities laws of the United States, and that the United States District Court for the Southern District of New York will be the exclusive forum for resolving any shareholder complaint asserting a cause of action arising under federal or state securities laws of the United States, including applicable claims arising out of this offering. These choice of forum provisions may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such provision with respect to suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Additionally, our shareholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. See “Risk Factors—Risks Relating to the Offering and Our ADSs—Our by-laws provide that the courts of Peru will be the exclusive forum for the resolution of all shareholder complaints other than complaints asserting a cause of action arising under federal or state securities laws of the United States, and that the United States District Court for the Southern District of New York will be the exclusive forum for the resolution of any shareholder complaint asserting a cause of action arising under federal or state securities laws of the United States.”

Principal Differences between Peruvian and U.S. Corporate Law

We are incorporated under the laws of Peru. The following discussion summarizes material differences between the rights of holders of our class A shares of common stock and the rights of holders of the ordinary shares of a typical corporation incorporated under the laws of the state of Delaware which result from differences in governing documents and the laws of Peru and Delaware.

This discussion does not purport to be a complete statement of the rights of holders of our class A shares of common stock under applicable law in Peru and our articles of association or the rights of holders of the ordinary shares of a typical corporation under applicable Delaware law and a typical certificate of incorporation and by-laws.


Delaware		Peru
*Board of Directors*

The board of directors shall consist of one or more members. A typical certificate of incorporation and by-laws would provide that the number of directors on the board of directors will be fixed from time to time by a vote of the majority of the authorized directors. Under Delaware law, a board of directors can be divided into classes and cumulative voting in the election of directors is only permitted if expressly authorized in a corporation’s certificate of incorporation.		Under Article 155 of the Peruvian Corporations Law, the board of directors must be composed of at least three directors. The by-laws may provide for a fixed number or a variable number of directors to be approved from time to time by majority shareholder vote during the annual shareholders’ meeting. Under Peruvian law, directors are elected by cumulative voting.

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Delaware		Peru
*Limitation on Personal Liability of Directors*

A typical certificate of incorporation provides for the elimination of personal monetary liability of directors for breach of fiduciary duties as directors to the fullest extent permissible under the laws of Delaware, except for liability (i) for any breach of a director’s loyalty to the corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (“DGCL”) (relating to the liability of directors for unlawful payment of a dividend or an unlawful stock purchase or redemption) or (iv) for any transaction from which the director derived an improper personal benefit. A typical certificate of incorporation would also provide that if the DGCL is amended so as to allow further elimination of, or limitations on, director liability, then the liability of directors will be eliminated or limited to the fullest extent permitted by the DGCL as so amended.		Under Article 171 of the Peruvian Corporations Law, each director is required to act with the diligence of a “diligent businessman” and as a “loyal representative” of the corporation. Any act or failure to act by a director in breach of these duties could subject the director to liability for damages caused by such act or failure to act. Directors’ duties and the corresponding liability for breach of such duties cannot be modified by the by-laws of a corporation. In addition, under Article 177 of the Peruvian Corporations Law, directors are jointly and severally liable to the corporation, the shareholders and third parties for damages caused to the company as a result of any of the following actions on the part of any individual director: (i) contraventions of law or the corporation’s by-laws; (ii) willful misconduct; (iii) abuse of power by exceeding the limits set forth by the corporation on the powers of a director to act on its behalf; or (iv) gross negligence. According to Article 184 of the Peruvian Corporations Law, directors are liable for a period of two years from when the relevant agreement was adopted or the act that caused damage was performed.
*Interested Shareholders*

Section 203 of the DGCL generally prohibits a Delaware corporation from engaging in specified corporate transactions (such as mergers, stock and asset sales, and loans) with an “interested shareholder” for three years following the time that the shareholder becomes an interested shareholder. Subject to specified exceptions, an “interested shareholder” is a person or group that owns 15% or more of the corporation’s outstanding voting stock (including any rights to acquire stock pursuant to an option, warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights, and stock with respect to which the person has voting rights only), or is an affiliate or associate of the corporation and was the owner of 15% or more of the voting stock at any time within the previous three years. A Delaware corporation may elect to “opt out” of, and not be governed by, Section 203 through a provision in either its original certificate of incorporation, or an amendment to its original certificate or by-laws that was approved by majority shareholder vote. With a limited exception, this amendment would not become effective until 12 months following its adoption.		Article 133 of the Peruvian Corporations Law provides that shareholders must abstain from voting if they have a direct or indirect conflict of interest with the matter being voted on. In such case, the shares of the shareholder with a conflict of interest are considered for quorum purposes, but not for purposes of adopting the applicable resolutions.

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Delaware		Peru
*Removal of Directors*

A typical certificate of incorporation and by-laws provide that, subject to the rights of holders of any preferred shares, directors may be removed at any time by the affirmative vote of the holders of at least a majority, or in some instances a supermajority, of the voting power of all of the then outstanding shares entitled to vote generally in the election of directors, voting together as a single class. A certificate of incorporation could also provide that such a right is only exercisable when a director is being removed for cause (removal of a director only for cause is the default rule in the case of a classified board).		Under Article 154 of the Peruvian Corporations Law, directors may be removed at any time, with or without cause, by the affirmative vote of a majority of the votes validly cast at the relevant shareholders’ meeting.
*Filling Vacancies on the Board of Directors*

A typical certificate of incorporation and by-laws provide that, subject to the rights of the holders of any preferred shares, any vacancy, whether arising through death, resignation, retirement, disqualification, removal, an increase in the number of directors or any other reason, may be filled by a majority vote of the remaining directors, even if such directors remaining in office constitute less than a quorum, or by the sole remaining director. Any newly elected director usually holds office for the remainder of the full term expiring at the annual meeting of shareholders at which the term of the class of directors to which the newly elected director has been elected expires.		Under Article 157 of the Peruvian Corporations Law, vacancy of a seat on the board of directors results from a director’s death, resignation, removal or involvement in any of the causes of impediment stipulated by law or the corporation’s by-laws. Unless provided otherwise in the corporation’s by-laws and provided that there is no substitute director in place, any vacancy of a seat on the board of directors previously filled by a director approved by shareholders may be filled by the majority vote of the remaining directors under Peruvian law. If the remaining directors in office constitute less than a quorum, they must call a shareholders’ meeting for the appointment of a new board of directors. If no directors remain in office, the CEO may call the shareholders’ meeting.
*Amendment of Governing Documents*

Under the DGCL, amendments to a corporation’s certificate of incorporation require the approval of shareholders holding a majority of the outstanding shares entitled to vote on the amendment. If a class vote on the amendment is required by the DGCL, a majority of the outstanding stock of the class is required, unless a greater proportion is specified in the certificate of incorporation or by other provisions of the DGCL. Under the DGCL, the board of directors may amend by-laws if so authorized in the charter. The shareholders of a Delaware corporation also have the power to amend by-laws.		Article 198 of the Peruvian Corporations Law provides that amendments to a corporation’s by-laws require the approval of shareholders holding a majority of the outstanding shares. The call for the meeting must, clearly and accurately, indicate the matter of the amendment. The quorum for the first call requires the presence of a number of shareholders holding 50% of issued common shares. The quorum for the second call requires the presence of a number of shareholders holding 25% of issued common shares. The quorum for the third call requires the presence of shareholders holding any number of issued common shares. The by-laws may specify higher quorum or other requirements. If a quorum is met, shareholders may decide to delegate amendment of the by-laws to the board of directors or management of the corporation.

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Delaware		Peru
*Meetings of Shareholders*

Annual and Special Meetings		Annual and Special Meetings

Typical by-laws provide that annual meetings of shareholders are to be held on a date and at a time fixed by the board of directors. Under the DGCL, a special meeting of shareholders may be called by the board of directors or by any other person authorized to do so in the certificate of incorporation or the by-laws.		Under the Peruvian Corporations Law, annual shareholders’ meeting must be held during the three-month period after the end of each fiscal year. If the annual shareholders’ meeting or any other shareholders’ meeting required by law is not held, a public notary or competent judge may call for such meeting at the request of at least one shareholder of the corporation. A special meeting of shareholders may be called by the board of directors or by holders of at least 5% of outstanding common shares. If a special meeting of shareholders is not convened by the board of directors within 15 business days from when a request by holders of at least 5% of outstanding common shares is made or the board expressly or implicitly refuses to convene the shareholders’ meeting, a public notary or competent judge may call for such meeting at the request of holders of at least 5% of outstanding common shares. If a corporation has multiple classes of shares, any matters approved during a shareholders’ meeting affecting the rights of holders of a particular class of shares must be separately approved by such holders.

Quorum Requirements		Quorum Requirements

Under the DGCL, a corporation’s certificate of incorporation or by-laws can specify the number of shares which constitute the quorum required to conduct business at a meeting, provided that in no event shall a quorum consist of less than one-third of the shares entitled to vote at a meeting.		Under the Peruvian Corporations Law, shareholders’ meetings called for the purpose of considering a capital increase or decrease, the issuance of obligations, a change in the by-laws, the sale in a single transaction of assets with a value exceeding 50% of share capital or a merger, division, reorganization, transformation or dissolution are subject to a first, second and third quorum call, the second and third to occur upon the failure of the first. Quorum for such shareholders’ meeting on the first call requires the presence of a number of shareholders holding 50% of issued common shares; on the second call, the quorum consists of the number of shareholders holding 25% of issued common shares; and, on the third call, the quorum consists of the number of shareholders holding any number of issued common shares. Decisions must be approved by a majority of the issued common shares. Shareholders’ meetings called to consider all other matters are subject to a first call quorum of 50% of common shares, and a second call quorum of any number of shares represented at the shareholders’ meeting. In such cases, decisions require the approval of a simple majority of the common shares represented at the shareholders’ meeting.

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Delaware		Peru
*Indemnification of Officers, Directors and Employees*

Under the DGCL, subject to specified limitations in the case of derivative suits brought by a corporation’s shareholders in its name, a corporation may indemnify any person who is made a party to any third-party action, suit or proceeding on account of being a director, officer, employee or agent of the corporation (or was serving at the request of the corporation in such capacity for another corporation, partnership, joint venture, trust or other enterprise) against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding through, among other things, a majority vote of a quorum consisting of directors who were not parties to the suit or proceeding, if the person: • acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation or, in some circumstances, at least not opposed to its best interests; and • in a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. Delaware corporate law permits indemnification by a corporation under similar circumstances for expenses (including attorneys’ fees) actually and reasonably incurred by such persons in connection with the defense or settlement of a derivative action or suit, except that no indemnification may be made in respect of any claim, issue or matter as to which the person is adjudged to be liable to the corporation unless the Delaware Court of Chancery or the court in which the action or suit was brought determines upon application that the person is fairly and reasonably entitled to indemnity for the expenses which the court deems to be proper. To the extent a director, officer, employee or agent is successful in the defense of such an action, suit or proceeding, the corporation is required by Delaware corporate law to indemnify such person for reasonable expenses incurred thereby. Expenses (including attorneys’ fees) incurred by such persons in defending any action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of that person to repay the amount if it is ultimately determined that that person is not entitled to be so indemnified.		Under its articles of association and by-laws, or if agreed at a shareholders’ meeting, a corporation may indemnify its directors and officers against all costs, charges and expenses, including amounts paid to settle an action or satisfy a judgment, reasonably incurred by the director or officer in respect of any civil, criminal, administrative or other proceeding in which the director or officer is involved because of his association with the corporation except where the director or officer is found in a final unappealable decision to have acted in contravention of the law or the by-laws of the company, or to have acted acting willful misconduct, gross negligence or abuse of powers.

158


Delaware		Peru
*Shareholder Approval of Business Combinations*

Generally, under the DGCL, completion of a merger, consolidation, or the sale, lease or exchange of substantially all of a corporation’s assets or dissolution requires approval by the board of directors and by a majority (unless the certificate of incorporation requires a higher percentage) of outstanding stock of the corporation entitled to vote. The DGCL also requires a special vote of shareholders in connection with a business combination with an “interested shareholder” as defined in section 203 of the DGCL. See “—Interested Shareholders” above.		Under the Peruvian Corporations Law, completion of a sale in a single transaction of assets with a value exceeding 50% of a corporation’s share capital or a merger, division, reorganization, transformation or dissolution requires approval by a majority of the outstanding common shares.

*Shareholder Action Without A Meeting*

Under the DGCL, unless otherwise provided in a corporation’s certificate of incorporation, any action that may be taken at a meeting of shareholders may be taken without a meeting, without prior notice and without a vote if the holders of outstanding stock, having not less than the minimum number of votes that would be necessary to authorize such action, consent in writing. It is not uncommon for a corporation’s certificate of incorporation to prohibit such action.		Under the Peruvian Corporations Law, no action may be taken by shareholders other than at a meeting of shareholders. However, a shareholders’ meeting is deemed convened and validly constituted to take any action, without prior notice, if the holders of all outstanding voting shares are present and unanimously agree to convene the shareholders’ meeting and discuss a given agenda.
*Shareholder Suits*

Under the DGCL, a shareholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation. An individual also may commence a class action suit on behalf of himself or herself and other similarly situated shareholders where the requirements for maintaining a class action under the DGCL have been met. A person may institute and maintain such a suit only if such person was a shareholder at the time of the transaction which is the subject of the suit or his or her shares thereafter devolved upon him or her by operation of law. Additionally, under Delaware case law, the plaintiff generally must be a shareholder not only at the time of the transaction which is the subject of the suit, but also through the duration of the derivative suit. The DGCL also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the corporate claim before the suit may be prosecuted by the derivative plaintiff, unless such demand would be futile.		Under Article 181 of the Peruvian Corporations Law, shareholders may bring a liability claim against any director or officer on behalf of and in the name of the corporation if (i) the action is approved at a shareholders’ meeting or (ii) holders of one-third of the total outstanding common shares of a corporation bring the liability claim, in the case of clause (ii) as long as such shareholders had not previously voted during a shareholders’ meeting against bringing such claims. Any shareholder may also commence a liability suit against a director or officer in its own name. In addition, shareholders may challenge agreements approved during shareholders’ meetings if such agreements (i) are adopted in contravention of the Peruvian Corporations Law or the corporation’s articles of association and by-laws; (ii) may be considered null and void under applicable law; or (ii) damage the corporation’s interest in direct or indirect benefit of one or more shareholders. Shareholders may only challenge an agreement if they demonstrated their disagreement with the adoption of such agreement during the applicable shareholders’ meeting, were absent or illegitimately hindered from casting its vote.

159


Delaware		Peru
*Distributions and Dividends; Repurchases and Redemptions*

Under the DGCL, any corporation may purchase or redeem its own shares, except that generally it may not purchase or redeem these shares if the capital of the corporation is impaired at the time or would become impaired as a result of the redemption. A corporation may, however, purchase or redeem out of capital shares that are entitled upon any distribution of its assets to a preference over another class or series of its shares if the shares are to be retired and the capital reduced.		Article 104 of the Peruvian Corporations Law provides that a corporation may purchase its own shares when the purchase is made to avoid serious harm to the corporation, in which case the shares must be subsequently sold by the corporation within two years of such purchase, or when the shares being purchased are not above 10% of the total outstanding shares of the corporation and the purchase, along with a maximum holding term of two years, is previously approved by shareholders. Furthermore, a corporation may redeem its own shares when the applicable capital reduction is previously approved by the holders of a majority of outstanding common shares or the corporation grants the applicable shareholders valid title to receive a percentage of the distributable profits of the corporation for a determined period of time.
*Transactions with Officers or Directors*

Under the DGCL, some contracts or transactions in which one or more of a corporation’s directors has an interest are not void or voidable because of such interest provided that some conditions, such as obtaining the required approval and fulfilling the requirements of good faith and full disclosure, are met. Under the DGCL, either (a) the shareholders or the board of directors must approve in good faith any such contract or transaction after full disclosure of the material facts or (b) the contract or transaction must have been “fair” as to the corporation at the time it was approved. If board approval is sought, the contract or transaction must be approved in good faith by a majority of disinterested directors after full disclosure of material facts, even though less than a majority of a quorum.		Under the Peruvian Corporations Law, directors must fully disclose a direct or indirect conflict of interest with the corporation and must not participate in discussions and abstain from voting if they have a direct or indirect conflict of interest with the matter being discussed or voted on, as applicable. In addition, directors and officers of a corporation (and its related parties) may only enter into agreements with the corporation in the ordinary course of business and on an arm’s length basis. Directors and officers are prohibited from engaging, directly or indirectly, in activities that compete with the corporation, unless they receive approval of a majority of votes validly cast at the relevant shareholders’ meeting. Moreover, under article 51(c) of the Peruvian Capital Markets Law, the execution of agreements that involve at least 5% of a corporation’s assets and are between the corporation and parties related to directors, managers or shareholders owning, directly or indirectly, 10% of share capital require the prior authorization of the board of directors (with no participation of the director involved in the transaction, if any). If a controlling shareholder is also the controlling shareholder of the entity involved in such transaction, in addition to the board of directors’ prior approval, the terms of the transaction must be reviewed by an external independent entity (audit companies (other than the auditors of the company) or other entity to be determined by the SMV).

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Delaware		Peru
*Dissenters’ Rights*

Under the DGCL, a shareholder of a corporation participating in some types of major corporate transactions may, under varying circumstances, be entitled to appraisal rights pursuant to which the shareholder may receive cash in the amount of the fair market value of his or her shares in lieu of the consideration he or she would otherwise receive in the transaction.		Under Articles 200 and 262 of the Peruvian Corporations Law, a shareholder of a corporation may be entitled to separation rights pursuant to which the shareholder may receive cash in an amount to be agreed with the corporation if the shareholder opposed the relevant resolution or was absent when voting took place in the case of: (i) changes to the corporate purpose; (ii) change of the corporation’s legal domicile to a location out of the country; (iii) any transformation, merger or significant spinoff occurs with respect to the corporation; (iv) amendments to the limitations of transferability of shares or to preferential acquisition rights; (v) delisting of shares from the Securities Public Registry; or (vi) conversion from an openly held corporation (sociedad anónima abierta) to a different form of corporation. In the absence of an agreement between the corporation and the dissenter shareholder on the share price to be paid, the price shall be the average weighted price of such shares on the BVL for the last six months or, if such shares are not traded on the BVL, the applicable book value for the shares for the preceding month.
*Cumulative Voting*

Under the DGCL, a corporation may adopt in its by-laws that its directors shall be elected by cumulative voting. When directors are elected by cumulative voting, a shareholder has the number of votes equal to the number of shares held by such shareholder times the number of directors nominated for election. The shareholder may cast all of such votes for one director or among the directors in any proportion.		Under the Peruvian Corporations Law, directors of a corporation are elected by cumulative voting. When directors are elected by cumulative voting, a shareholder has the number of votes equal to the number of shares held by such shareholder times the number of directors nominated for election. The shareholder may cast all of such votes for one director or among the directors in any proportion. If there are various classes of shares entitled to appoint a specific number of directors, separate votes must be taken at special shareholders’ meetings. A corporation’s by-laws may establish a different voting system, provided that the minority’s representation is not less than that under cumulative voting.
*Anti-Takeover Measures*

Under the DGCL, the certificate of incorporation of a corporation may give the board the right to issue new classes of preferred shares with voting, conversion, dividend distribution, and other rights to be determined by the board at the time of issuance, which could prevent a takeover attempt and thereby preclude shareholders from realizing a potential premium over the market value of their shares.		Articles of association do not typically provide for and the Peruvian Corporations Law does not include provisions that have the effect of delaying, deferring or preventing a change of control.

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Delaware		Peru
In addition, Delaware law does not prohibit a corporation from adopting a shareholder rights plan, or “poison pill,” which could prevent a takeover attempt and also preclude shareholders from realizing a potential premium over the market value of their shares.

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DESCRIPTION OF AMERICAN DEPOSITARY SHARES

Citibank, N.A. has agreed to act as the depositary for the ADSs. The depositary’s offices are located at 388 Greenwich Street, New York, New York 10013. ADSs represent ownership interests in securities that are on deposit with the depositary. ADSs may be represented by certificates that are commonly known as “American Depositary Receipts” or “ADRs.” The depositary typically appoints a custodian to safekeep the securities on deposit. In this case, the custodian is Citibank del Perú S.A., located at Av. Canaval y Moreyra 480, 3rd Floor, San Isidro, L-27, Lima, Perú.

We have appointed the depositary pursuant to the deposit agreement. A copy of the deposit agreement is on file with the SEC under cover of a Registration Statement on Form F-6. You may obtain a copy of the deposit agreement from the SEC’s website (www.sec.gov).

We are providing you with a summary description of the material terms of the ADSs and of your material rights as an owner of ADSs. Please remember that summaries by their nature lack the precision of the information summarized and that the rights and obligations of an owner of ADSs will be determined by reference to the terms of the deposit agreement and not by this summary. We urge you to review the deposit agreement in its entirety. The portions of this summary description that are italicized describe matters that may be relevant to the ownership of ADSs but that may not be contained in the deposit agreement.

Each ADS represents the right to receive, and to exercise the beneficial ownership interests in, class A shares that are on deposit with the depositary and/or custodian. An ADS also represents the right to receive, and to exercise the beneficial interests in, any other property received by the depositary or the custodian on behalf of the owner of the ADS but that has not been distributed to the owners of ADSs because of legal restrictions or practical considerations. We and the depositary may agree to change the ADS-to-class A shares ratio by amending the deposit agreement. This amendment may give rise to, or change, the depositary fees payable by ADS owners. The custodian, the depositary and their respective nominees will hold all deposited property for the benefit of the holders and beneficial owners of ADSs. The deposited property does not constitute the proprietary assets of the depositary, the custodian or their nominees. Beneficial ownership in the deposited property will under the terms of the deposit agreement be vested in the beneficial owners of the ADSs. The depositary, the custodian and their respective nominees will be the record holders of the deposited property represented by the ADSs for the benefit of the holders and beneficial owners of the corresponding ADSs. A beneficial owner of ADSs may or may not be the holder of ADSs. Beneficial owners of ADSs will be able to receive, and to exercise beneficial ownership interests in, the deposited property only through the registered holders of the ADSs, the registered holders of the ADSs (on behalf of the applicable ADS owners) only through the depositary, and the depositary (on behalf of the owners of the corresponding ADSs) directly, or indirectly, through the custodian or their respective nominees, in each case upon the terms of the deposit agreement.

If you become an owner of ADSs, you will become a party to the deposit agreement and therefore will be bound to its terms and to the terms of any ADR that represents your ADSs. The deposit agreement and the ADR specify our rights and obligations as well as your rights and obligations as an owner of ADSs and those of the depositary. As an ADS holder you appoint the depositary to act on your behalf in certain circumstances. The deposit agreement and the ADRs are governed by New York law. However, our obligations to the holders of class A shares will continue to be governed by the laws of the Republic of Peru, which may be different from the laws in the United States.

In addition, applicable laws and regulations may require you to satisfy reporting requirements and obtain regulatory approvals in certain circumstances. You are solely responsible for complying with such reporting requirements and obtaining such approvals. Neither the depositary, the custodian, us or any of their or our respective agents or affiliates shall be required to take any actions whatsoever on your behalf to satisfy such reporting requirements or obtain such regulatory approvals under applicable laws and regulations.

As an owner of ADSs, we will not treat you as one of our shareholders and you will not have direct shareholder rights. The depositary will hold on your behalf the shareholder rights attached to the class A shares

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underlying your ADSs. As an owner of ADSs you will be able to exercise the shareholders’ rights for the class A shares represented by your ADSs through the depositary only to the extent contemplated in the deposit agreement. To exercise any shareholder rights not contemplated in the deposit agreement you will, as an ADS owner, need to arrange for the cancellation of your ADSs and become a direct shareholder.

The manner in which you own the ADSs (e.g., in a brokerage account vs. as registered holder, or as holder of certificated vs. uncertificated ADSs) may affect your rights and obligations, and the manner in which, and extent to which, the depositary’s services are made available to you. As an owner of ADSs, you may hold your ADSs either by means of an ADR registered in your name, through a brokerage or safekeeping account, or through an account established by the depositary in your name reflecting the registration of uncertificated ADSs directly on the books of the depositary (commonly referred to as the “direct registration system” or “DRS”). The direct registration system reflects the uncertificated (book-entry) registration of ownership of ADSs by the depositary. Under the direct registration system, ownership of ADSs is evidenced by periodic statements issued by the depositary to the holders of the ADSs. The direct registration system includes automated transfers between the depositary and The Depository Trust Company (“DTC”) the central book-entry clearing and settlement system for equity securities in the United States. If you decide to hold your ADSs through your brokerage or safekeeping account, you must rely on the procedures of your broker or bank to assert your rights as an ADS owner. Banks and brokers typically hold securities such as the ADSs through clearing and settlement systems such as DTC. The procedures of such clearing and settlement systems may limit your ability to exercise your rights as an owner of ADSs. Please consult with your broker or bank if you have any questions concerning these limitations and procedures. All ADSs held through DTC will be registered in the name of a nominee of DTC. This summary description assumes you have opted to own the ADSs directly by means of an ADS registered in your name and, as such, we will refer to you as the “holder.” When we refer to “you,” we assume the reader owns ADSs and will own ADSs at the relevant time.

The registration of the class A shares in the name of the depositary or the custodian shall, to the maximum extent permitted by applicable law, vest in the depositary or the custodian the record ownership in the applicable class A shares with the beneficial ownership rights and interests in such class A shares being at all times vested with the beneficial owners of the ADSs representing the class A shares. The depositary or the custodian shall at all times be entitled to exercise the beneficial ownership rights in all deposited property, in each case only on behalf of the holders and beneficial owners of the ADSs representing the deposited property.

Dividends and Distributions

As a holder of ADSs, you generally have the right to receive the distributions we make on the securities deposited with the custodian. Your receipt of these distributions may be limited, however, by practical considerations and legal limitations. Holders of ADSs will receive such distributions under the terms of the deposit agreement in proportion to the number of ADSs held as of the specified record date, after deduction of the applicable fees, taxes and expenses.

Distributions of Cash

Whenever we make a cash distribution for the securities on deposit with the custodian, we will deposit the funds with the custodian. Upon receipt of confirmation of the deposit of the requisite funds, the depositary will arrange for the funds received in a currency other than U.S. dollars to be converted into U.S. dollars and for the distribution of the U.S. dollars to the holders, subject to the laws and regulations of the Republic of Peru.

The conversion into U.S. dollars will take place only if practicable and if the U.S. dollars are transferable to the United States. The depositary will apply the same method for distributing the proceeds of the sale of any property (such as undistributed rights) held by the custodian in respect of securities on deposit.

The distribution of cash will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. The depositary will hold any cash amounts it is unable to

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distribute in a non-interest bearing account for the benefit of the applicable holders and beneficial owners of ADSs until the distribution can be effected or the funds that the depositary holds must be escheated as unclaimed property in accordance with the laws of the relevant states of the United States.

Distributions of Class A Shares

Whenever we make a free distribution of class A shares for the securities on deposit with the custodian, we will deposit the applicable number of class A shares with the custodian. Upon receipt of confirmation of such deposit, the depositary will either distribute to holders new ADSs representing the class A shares deposited or modify the ADS-to-class A shares ratio, in which case each ADS you hold will represent rights and interests in the additional class A shares so deposited. Only whole new ADSs will be distributed. Fractional entitlements will be sold and the proceeds of such sale will be distributed as in the case of a cash distribution.

The distribution of new ADSs or the modification of the ADS-to-class A shares ratio upon a distribution of class A shares will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. In order to pay such taxes or governmental charges, the depositary may sell all or a portion of the new class A shares so distributed.

No such distribution of new ADSs will be made if it would violate a law (e.g., the U.S. securities laws) or if it is not operationally practicable. If the depositary does not distribute new ADSs as described above, it may sell the class A shares received upon the terms described in the deposit agreement and will distribute the proceeds of the sale as in the case of a distribution of cash.

Distributions of Rights

Whenever we intend to distribute rights to subscribe for additional class A shares, we will give prior notice to the depositary and we will assist the depositary in determining whether it is lawful and reasonably practicable to distribute rights to subscribe for additional ADSs to holders.

The depositary will establish procedures to distribute rights to subscribe for additional ADSs to holders and to enable such holders to exercise such rights if it is lawful and reasonably practicable to make the rights available to holders of ADSs, and if we provide all of the documentation contemplated in the deposit agreement (such as opinions to address the lawfulness of the transaction). You may have to pay fees, expenses, taxes and other governmental charges to subscribe for the new ADSs upon the exercise of your rights. The depositary is not obligated to establish procedures to facilitate the distribution and exercise by holders of rights to subscribe for new class A shares other than in the form of ADSs.

The depositary will not distribute the rights to you if:

•

We do not timely request that the rights be distributed to you or we request that the rights not be distributed to you; or

•

We fail to deliver satisfactory documents to the depositary; or

•

It is not reasonably practicable to distribute the rights.

The depositary will sell the rights that are not exercised or not distributed if such sale is lawful and reasonably practicable. The proceeds of such sale will be distributed to holders as in the case of a cash distribution. If the depositary is unable to sell the rights, it will allow the rights to lapse.

Elective Distributions

Whenever we intend to distribute a dividend payable at the election of shareholders either in cash or in additional shares, we will give prior notice thereof to the depositary and will indicate whether we wish the elective distribution to be made available to you. In such case, we will assist the depositary in determining whether such distribution is lawful and reasonably practicable.

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The depositary will make the election available to you only if it is reasonably practicable and if we have provided all of the documentation contemplated in the deposit agreement. In such case, the depositary will establish procedures to enable you to elect to receive either cash or additional ADSs, in each case as described in the deposit agreement.

If the election is not made available to you, you will receive either cash or additional ADSs, depending on what a shareholder in Peru would receive upon failing to make an election, as more fully described in the deposit agreement.

Other Distributions

Whenever we intend to distribute property other than cash, class A shares or rights to subscribe for additional class A shares, we will notify the depositary in advance and will indicate whether we wish such distribution to be made to you. If so, we will assist the depositary in determining whether such distribution to holders is lawful and reasonably practicable.

If it is reasonably practicable to distribute such property to you and if we provide to the depositary all of the documentation contemplated in the deposit agreement, the depositary will distribute the property to the holders in a manner it deems practicable.

The distribution will be made net of fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. In order to pay such taxes and governmental charges, the depositary may sell all or a portion of the property received.

The depositary will not distribute the property to you and will sell the property if:

•

We do not request that the property be distributed to you or if we request that the property not be distributed to you; or

•

We do not deliver satisfactory documents to the depositary; or

•

The depositary determines that all or a portion of the distribution to you is not reasonably practicable.

The proceeds of such a sale will be distributed to holders as in the case of a cash distribution.

Redemption

Whenever we decide to redeem any of the securities on deposit with the custodian, we will notify the depositary in advance. If it is practicable and if we provide all of the documentation contemplated in the deposit agreement, the depositary will provide notice of the redemption to the holders.

The custodian will be instructed to surrender the shares being redeemed against payment of the applicable redemption price. The depositary will convert into U.S. dollars upon the terms of the deposit agreement the redemption funds received in a currency other than U.S. dollars and will establish procedures to enable holders to receive the net proceeds from the redemption upon surrender of their ADSs to the depositary. You may have to pay fees, expenses, taxes and other governmental charges upon the redemption of your ADSs. If less than all ADSs are being redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as the depositary may determine.

Changes Affecting Class A Shares

The class A shares held on deposit for your ADSs may change from time to time. For example, there may be a change in nominal or par value, split-up, cancellation, consolidation or any other reclassification of such class A shares or a recapitalization, reorganization, merger, consolidation or sale of assets of the Company.

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If any such change were to occur, your ADSs would, to the extent permitted by law and the deposit agreement, represent the right to receive the property received or exchanged in respect of the class A shares held on deposit. The depositary may in such circumstances deliver new ADSs to you, amend the deposit agreement, the ADRs and the applicable Registration Statement(s) on Form F-6, call for the exchange of your existing ADSs for new ADSs and take any other actions that are appropriate to reflect as to the ADSs the change affecting the Shares. If the depositary may not lawfully distribute such property to you, the depositary may sell such property and distribute the net proceeds to you as in the case of a cash distribution.

Issuance of ADSs upon Deposit of Class A Shares

Upon completion of the offering and the registration of the resulting capital increase with the Securities Public Registry, the class A shares being offered pursuant to the prospectus will be deposited by us with the custodian. Upon receipt of confirmation of such deposit, the depositary will issue ADSs to the underwriters named in the prospectus.

After the closing of the offering, the depositary may create ADSs on your behalf if you or your broker deposit class A shares with the custodian. The depositary will deliver these ADSs to the person you indicate only after you pay any applicable issuance fees and any charges and taxes payable for the transfer of the class A shares to the custodian. Your ability to deposit class A shares and receive ADSs may be limited by U.S. and Peruvian legal and tax considerations applicable at the time of deposit.

The issuance of ADSs may be delayed until the depositary or the custodian receives confirmation that all required approvals have been given and that the class A shares have been duly transferred to the custodian. The depositary will only issue ADSs in whole numbers.

When you make a deposit of class A shares, you will be responsible for transferring good and valid title to the depositary. As such, you will be deemed to represent and warrant that:

•

The class A shares are duly authorized, validly issued, fully paid, non-assessable and legally obtained.

•

All preemptive (and similar) rights, if any, with respect to such class A shares have been validly waived or exercised.

•

You are duly authorized to deposit the class A shares.

•

The class A shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim, and are not, and the ADSs issuable upon such deposit will not be, “restricted securities” (as defined in the deposit agreement).

•

The class A shares presented for deposit have not been stripped of any rights or entitlements.

If any of the representations or warranties are incorrect in any way, we and the depositary may, at your cost and expense, take any and all actions necessary to correct the consequences of the misrepresentations.

Transfer, Combination and Split Up of ADRs

As an ADR holder, you will be entitled to transfer, combine or split up your ADRs and the ADSs evidenced thereby. For transfers of ADRs, you will have to surrender the ADRs to be transferred to the depositary and also must:

•

ensure that the surrendered ADR is properly endorsed or otherwise in proper form for transfer;

•

provide such proof of identity and genuineness of signatures as the depositary deems appropriate;

•

provide any transfer stamps required by the State of New York or the United States; and

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•

pay all applicable fees, charges, expenses, taxes and other government charges payable by ADR holders pursuant to the terms of the deposit agreement and Peruvian law, upon the transfer of ADRs.

To have your ADRs either combined or split up, you must surrender the ADRs in question to the depositary with your request to have them combined or split up, and you must pay all applicable fees, charges and expenses payable by ADR holders, pursuant to the terms of the deposit agreement, upon a combination or split up of ADRs.

Withdrawal of Class A Shares Upon Cancellation of ADSs

As a holder, you will be entitled to present your ADSs to the depositary for cancellation and then receive the corresponding number of underlying class A shares at the custodian’s offices. Your ability to withdraw the class A shares held in respect of the ADSs may be limited by U.S. and Peruvian law and tax considerations applicable at the time of withdrawal. In order to withdraw the class A shares represented by your ADSs, you will be required to pay to the depositary the fees for cancellation of ADSs and any charges and taxes payable upon the transfer of the class A shares. You assume the risk for delivery of all funds and securities upon withdrawal. Once canceled, the ADSs will not have any rights under the deposit agreement.

If you hold ADSs registered in your name, the depositary may ask you to provide proof of identity and genuineness of any signature and such other documents as the depositary may deem appropriate before it will cancel your ADSs. The withdrawal of the class A shares represented by your ADSs may be delayed until the depositary receives satisfactory evidence of compliance with all applicable laws and regulations. Please keep in mind that the depositary will only accept ADSs for cancellation that represent a whole number of securities on deposit.

You will have the right to withdraw the securities represented by your ADSs at any time except for:

•

Temporary delays that may arise because (i) the transfer books for the class A shares or ADSs are closed, or (ii) class A shares are immobilized on account of a shareholders’ meeting or a payment of dividends;

•

Obligations to pay fees, taxes and similar charges; and

•

Restrictions imposed because of laws or regulations applicable to ADSs or the withdrawal of securities on deposit.

The deposit agreement may not be modified to impair your right to withdraw the securities represented by your ADSs except to comply with mandatory provisions of law.

Voting Rights

As a holder, you generally have the right under the deposit agreement to instruct the depositary to exercise the voting rights for the class A shares represented by your ADSs. The voting rights of holders of class A shares are described in “Description of Our Share Capital.”

At our request, the depositary will distribute to you any notice of shareholders’ meeting received from us together with information explaining how to instruct the depositary to exercise the voting rights of the securities represented by ADSs. In lieu of distributing such materials, the depositary may distribute to holders of ADSs instructions on how to retrieve such materials upon request. If the depositary timely receives voting instructions from a holder of ADSs, it will endeavor to vote the securities (in person or by proxy) represented by the holder’s ADSs in accordance with such voting instructions.

Securities for which no voting instructions have been received will not be voted (except as otherwise contemplated in the deposit agreement). Please note that the ability of the depositary to carry out voting

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instructions may be limited by practical and legal limitations and the terms of the securities on deposit. We cannot assure you that you will receive voting materials in time to enable you to return voting instructions to the depositary in a timely manner.

Fees and Charges

As an ADS holder, you will be required to pay the following fees under the terms of the deposit agreement:


Service		Fees
Issuance of ADSs (e.g., an issuance of ADS upon a deposit of class A shares, upon a change in the ADS(s)-to class A shares ratio, or for any other reason), excluding ADS issuances as a result of distributions of class A shares		Up to US$0.05 per ADS issued

Cancellation of ADSs (e.g., a cancellation of ADSs for delivery of deposited property, upon a change in the ADS(s)-to-class A shares ratio, or for any other reason)		Up to US$0.05 per ADS cancelled

Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other entitlements)		Up to US$0.05 per ADS held

Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs		Up to US$0.05 per ADS held

Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., upon a spin-off)		Up to US$0.05 per ADS held

ADS Services		Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary

Registration of ADS transfers (e.g., upon a registration of the transfer of registered ownership of ADSs, upon a transfer of ADSs into DTC and vice versa, or for any other reason)		Up to US$0.05 per ADS (or fraction thereof) transferred

Conversion of ADSs of one series for ADSs of another series (e.g., upon conversion of Partial Entitlement ADSs for Full Entitlement ADSs, or upon conversion of Restricted ADSs (each as defined in the deposit agreement) into freely transferable ADSs, and vice versa).		Up to US$0.05 per ADS (or fraction thereof) converted

As an ADS holder you will also be responsible to pay certain charges such as:

•

taxes (including applicable interest and penalties) and other governmental charges;

•

the registration fees as may from time to time be in effect for the registration of class A shares on the share register and applicable to transfers of class A shares to or from the name of the custodian, the depositary or any nominees upon the making of deposits and withdrawals, respectively;

•

certain cable, telex and facsimile transmission and delivery expenses;

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•

the fees, expenses, spreads, taxes and other charges of the depositary and/or service providers (which may be a division, branch or affiliate of the depositary) in the conversion of foreign currency;

•

the reasonable and customary out-of-pocket expenses incurred by the depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to class A shares, ADSs and ADRs; and

•

the fees, charges, costs and expenses incurred by the depositary, the custodian, or any nominee in connection with the ADR program.

ADS fees and charges for (i) the issuance of ADSs, and (ii) the cancellation of ADSs are charged to the person for whom the ADSs are issued (in the case of ADS issuances) and to the person for whom ADSs are cancelled (in the case of ADS cancellations). In the case of ADSs issued by the depositary into DTC, the ADS issuance and cancellation fees and charges may be deducted from distributions made through DTC, and may be charged to the DTC participant(s) receiving the ADSs being issued or the DTC participant(s) holding the ADSs being cancelled, as the case may be, on behalf of the beneficial owner(s) and will be charged by the DTC participant(s) to the account of the applicable beneficial owner(s) in accordance with the procedures and practices of the DTC participants as in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are charged to the holders as of the applicable ADS record date. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds being distributed. In the case of (i) distributions other than cash and (ii) the ADS service fee, holders as of the ADS record date will be invoiced for the amount of the ADS fees and charges and such ADS fees and charges may be deducted from distributions made to holders of ADSs. For ADSs held through DTC, the ADS fees and charges for distributions other than cash and the ADS service fee may be deducted from distributions made through DTC, and may be charged to the DTC participants in accordance with the procedures and practices prescribed by DTC and the DTC participants in turn charge the amount of such ADS fees and charges to the beneficial owners for whom they hold ADSs. In the case of (i) registration of ADS transfers, the ADS transfer fee will be payable by the ADS Holder whose ADSs are being transferred or by the person to whom the ADSs are transferred, and (ii) conversion of ADSs of one series for ADSs of another series, the ADS conversion fee will be payable by the Holder whose ADSs are converted or by the person to whom the converted ADSs are delivered.

In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder. Certain depositary fees and charges (such as the ADS services fee) may become payable shortly after the closing of the ADS offering. Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. You will receive prior notice of such changes. The depositary may reimburse us for certain expenses incurred by us in respect of the ADR program, by making available a portion of the ADS fees charged in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary agree from time to time.

Amendments and Termination

We may agree with the depositary to modify the deposit agreement at any time without your consent. We undertake to give holders 30 days’ prior notice of any modifications that would materially prejudice any of their substantial rights under the deposit agreement. We will not consider to be materially prejudicial to your substantial rights any modifications or supplements that are reasonably necessary for the ADSs to be registered under the Securities Act or to be eligible for book-entry settlement, in each case without imposing or increasing the fees and charges you are required to pay. In addition, we may not be able to provide you with prior notice of any modifications or supplements that are required to accommodate compliance with applicable provisions of law.

You will be bound by the modifications to the deposit agreement if you continue to hold your ADSs after the modifications to the deposit agreement become effective. The deposit agreement cannot be amended to prevent you from withdrawing the class A shares represented by your ADSs (except as permitted by law).

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We have the right to direct the depositary to terminate the deposit agreement. Similarly, the depositary may in certain circumstances on its own initiative terminate the deposit agreement. In either case, the depositary must give notice to the holders at least 30 days before termination. Until termination, your rights under the deposit agreement will be unaffected.

After termination, the depositary will continue to collect distributions received (but will not distribute any such property until you request the cancellation of your ADSs) and may sell the securities held on deposit. After the sale, the depositary will hold the proceeds from such sale and any other funds then held for the holders of ADSs in a non-interest bearing account. At that point, the depositary will have no further obligations to holders other than to account for the funds then held for the holders of ADSs still outstanding (after deduction of applicable fees, taxes and expenses).

Books of Depositary

The depositary will maintain ADS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the ADSs and the deposit agreement.

The depositary will maintain in New York facilities to record and process the issuance, cancellation, combination, split-up and transfer of ADSs. These facilities may be closed from time to time, to the extent not prohibited by law.

Limitations on Obligations and Liabilities

The deposit agreement limits our obligations and the depositary’s obligations to you. Please note the following:

•

We and the depositary are obligated only to take the actions specifically stated in the deposit agreement without negligence or bad faith.

•

The depositary disclaims any liability for any failure to carry out voting instructions, for any manner in which a vote is cast or for the effect of any vote, provided it acts in good faith and in accordance with the terms of the deposit agreement.

•

The depositary disclaims any liability for any failure to determine the lawfulness or practicality of any action, for the content of any document forwarded to you on our behalf or for the accuracy of any translation of such a document, for the investment risks associated with investing in class A shares, for the validity or worth of the class A shares, for any tax consequences that result from the ownership of ADSs, for the credit-worthiness of any third party, for allowing any rights to lapse under the terms of the deposit agreement, for the timeliness of any of our notices or for our failure to give notice.

•

We and the depositary will not be obligated to perform any act that is inconsistent with the terms of the deposit agreement.

•

We and the depositary disclaim any liability if we or the depositary are prevented or forbidden from or subject to any civil or criminal penalty or restraint on account of, or delayed in, doing or performing any act or thing required by the terms of the deposit agreement, by reason of any provision, present or future of any law or regulation, or by reason of present or future provision of any provision of our by-laws, or any provision of or governing the securities on deposit, or by reason of any act of God or war or other circumstances beyond our control.

•

We and the depositary disclaim any liability by reason of any exercise of, or failure to exercise, any discretion provided for in the deposit agreement or in our by-laws or in any provisions of or governing the securities on deposit.

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•

We and the depositary further disclaim any liability for any action or inaction in reliance on the advice or information received from legal counsel, accountants, any person presenting class A shares for deposit, any holder of ADSs or authorized representatives thereof, or any other person believed by either of us in good faith to be competent to give such advice or information.

•

We and the depositary also disclaim liability for the inability by a holder to benefit from any distribution, offering, right or other benefit that is made available to holders of class A shares but is not, under the terms of the deposit agreement, made available to you.

•

We and the depositary may rely without any liability upon any written notice, request or other document believed to be genuine and to have been signed or presented by the proper parties.

•

We and the depositary also disclaim liability for any consequential or punitive damages for any breach of the terms of the deposit agreement.

•

No disclaimer of any Securities Act liability is intended by any provision of the deposit agreement.

•

Nothing in the deposit agreement gives rise to a partnership or joint venture, or establishes a fiduciary relationship, among us, the depositary and you as ADS holder.

•

Nothing in the deposit agreement precludes Citibank, N.A. (or its affiliates) from engaging in transactions in which parties adverse to us or the ADS owners have interests, and nothing in the deposit agreement obligates Citibank, N.A. to disclose those transactions, or any information obtained in the course of those transactions, to us or to the ADS owners, or to account for any payment received as part of those transactions.

Taxes

You will be responsible for the taxes and other governmental charges payable on the ADSs and the securities represented by the ADSs. We, the depositary and the custodian may deduct from any distribution the taxes and governmental charges payable by holders and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders. You will be liable for any deficiency if the sale proceeds do not cover the taxes that are due.

The depositary may refuse to issue ADSs, to deliver, transfer, split and combine ADRs or to release securities on deposit until all taxes and charges are paid by the applicable holder. The depositary and the custodian may take reasonable administrative actions to obtain tax refunds and reduced tax withholding for any distributions on your behalf. However, you may be required to provide to the depositary and to the custodian proof of taxpayer status and residence and such other information as the depositary and the custodian may require to fulfill legal obligations. You are required to indemnify us, the depositary and the custodian for any claims with respect to taxes based on any tax benefit obtained for you.

Foreign Currency Conversion

The depositary will arrange for the conversion of all foreign currency received into U.S. dollars if such conversion is practical, and it will distribute the U.S. dollars in accordance with the terms of the deposit agreement. You may have to pay fees and expenses incurred in converting foreign currency, such as fees and expenses incurred in complying with currency exchange controls and other governmental requirements.

If the conversion of foreign currency is not practical or lawful, or if any required approvals are denied or not obtainable at a reasonable cost or within a reasonable period, the depositary may take the following actions in its discretion:

•

Convert the foreign currency to the extent practical and lawful and distribute the U.S. dollars to the holders for whom the conversion and distribution is lawful and practical.

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•

Distribute the foreign currency to holders for whom the distribution is lawful and practical.

•

Hold the foreign currency (without liability for interest) for the applicable holders.

Governing Law/Waiver of Jury Trial

The deposit agreement, the ADRs and the ADSs will be interpreted in accordance with the laws of the State of New York. The rights of holders of class A shares (including class A shares represented by ADSs) are governed by the laws of the Republic of Peru.

The deposit agreement governing our ADSs provides that, to the extent permitted by law, holders of ADSs, including purchasers in secondary transactions and holders of ADSs that withdraw their class A shares, waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our class A shares, the ADSs or the deposit agreement, including any claim under U.S. federal securities laws. If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable in the facts and circumstances of that case in accordance with applicable case law. However, you will not be deemed, by agreeing to the terms of the deposit agreement, to have waived our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder.

AS A PARTY TO THE DEPOSIT AGREEMENT, YOU IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, YOUR RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF THE DEPOSIT AGREEMENT OR THE ADRs AGAINST US AND/OR THE DEPOSITARY BANK.

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TAXATION

Peruvian Tax Considerations

In the opinion of our Peruvian counsel, Rodrigo, Elias & Medrano Abogados and subject to the qualifications, assumptions and limitations stated herein, the principal consequences of ownership of ADSs by non-Peruvian domiciled individuals and entities (“Non-Peruvian Holders”) as of the date hereof are mentioned in this section. Any changes in the legislation or in the interpretation thereof by judicial or tax authorities could affect the tax consequences of Non-Peruvian Holders of ADSs and could alter or modify this opinion. This summary is not intended to be a comprehensive description of all tax considerations that may be relevant to a decision to make an investment in ADSs and does not describe any tax consequences arising under the laws of any other jurisdiction other than Peru, or applicable to a taxpayer domiciled in Peru or to a non-domiciled entity having a permanent establishment in Peru for tax purposes.

Peruvian tax legislation provides that:

•

individuals are considered domiciled in Peru if they are Peruvian nationals who have established their principal place of residence in Peru or if they are foreign nationals with a physical presence in Peru for more than 183 days within any 12-month period (the status of Peruvian domiciled taxpayer is effective as of January 1 of the year following when the applicable conditions have been met); and

•

legal entities are considered domiciled in Peru if they are incorporated in Peru (non-Peruvian entities permanent established in Peru are also considered domiciled with respect to Peruvian source income).

Peruvian domiciled individuals or entities are subject to Peruvian income tax on all of their income, while Non-Peruvian Holders, whether individuals or entities, are subject to Peruvian income tax on their Peruvian source income only (as defined in the Peruvian income tax legislation).

Dividends and other Distributions

Cash dividends paid in respect of class A shares to Non-Peruvian Holders (including those class A shares held in the name of the depositary with respect to ADSs) are currently subject to income tax withholding in Peru at the rate of 5% of any dividend paid. As a general rule, the distribution of additional class A shares in lieu of cash dividends, as well as the distribution of pre-emptive subscription rights in respect of class A shares are not currently subject to Peruvian tax or tax withholding.

Capital Gains

Peruvian income tax legislation provides that capital gains derived from the disposal of securities issued by Peruvian entities are considered Peruvian source income and are therefore subject to income tax in Peru. Any capital gains resulting from the disposal of ADRs (which in the opinion of Rodrigo, Elias & Medrano Abogados also applies in respect of ADSs that represent shares issued by a Peruvian entity) are considered Peruvian source income and therefore also subject to taxation in Peru. Peruvian source income resulting from the disposal of securities (e.g., ADRs or ADSs) is equivalent to the difference between the sale price of the securities at market value and the tax basis as certified by Peruvian tax authorities.

Notwithstanding the foregoing, capital gains resulting from the disposal of beneficial interests in ADSs that represent shares issued by a Peruvian entity will not be considered Peruvian source income, provided that the ADSs issued by the depositary are held in the name of a nominee and such ADSs are not transferred to a third party as a result of the disposal of the corresponding beneficial interest.

The conversion of ADSs into class A shares or class A shares into ADSs would not be subject to taxation in Peru provided that the instruments issued as a result of such conversion are issued to the registered holder of the ADSs.

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In the event ADSs were exchanged into class A shares and (i) such Class A shares were to be issued directly to the holder of the beneficial interest in the ADSs (i.e., rather than to the registered holder), or (ii) such class A shares were disposed of, capital gains resulting therefrom are considered Peruvian source income and are therefore subject to income tax in Peru at a rate of up to 30%.

Thus, Peruvian source income resulting from the disposal of the ADSs (or the class A shares resulting from any exchange of ADSs) would be equivalent to the difference between the sale price of the ADSs (or the class A shares), at market value and the tax basis as certified by Peruvian tax authorities in advance of any price payment. Note that the tax basis certificate is issued in Peruvian soles, considering the applicable exchange rate on the acquisition date.

If the class A shares are registered with the Superintendency of the Securities Market—SMV and such transfer is performed through trading sessions (Rueda de Bolsa) at the Lima Stock Exchange, capital gains resulting therefrom may be subject to a lower income tax rate in Peru. In such scenario the tax basis does not need to be certified by Peruvian tax authorities, but instead must be timely informed to CAVALI (the Peruvian clearing house). Non-Peruvian Holders who convert their ADS into class A shares may have the following tax basis: (i) if the ADS was not previously transferred, the tax basis of each class A share would equal the amount that results from dividing the ADS subscription cost (which includes the acquisition cost plus other disbursements performed by the holder in order to issue the ADS) over the number of class A shares received; whereas, (ii) if the ADS was previously transferred, the tax basis of each Class A share would equal the amount that results from dividing the ADS’s acquisition cost over the number of class A shares received.

A further tax exemption may apply to capital gains resulting from the disposal of class A shares provided (i) such shares are registered with the SMV; (ii) such transfer is performed through trading sessions (Rueda de Bolsa) of the Lima Stock Exchange, (iii) such shares have a stock market presence as of the transfer date (ensuring share liquidity and continuous price quotations); and (iv) the transferor and its related parties have not transferred 10% or more of the aggregate class A shares in any 12-month period. This tax exemption is set to expire in its entirety on December 31, 2022.

United States Federal Income Tax Considerations

In the opinion of Davis Polk & Wardwell LLP, the following is a description of the material U.S. federal income tax consequences to the U.S. Holders described below of owning and disposing of our ADSs or class A shares, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a particular person’s decision to acquire, own, or dispose of ADSs or class A shares.

This discussion applies only to a U.S. Holder that holds the ADSs or underlying class A shares as capital assets for U.S. federal income tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including any alternative minimum or Medicare contribution tax consequences, U.S. federal gift or estate tax consequences, or any tax consequences applicable to U.S. Holders subject to special rules, such as:

•

certain financial institutions;

•

insurance companies;

•

regulated investment companies;

•

dealers or traders in securities that use a mark-to-market method of tax accounting;

•

persons holding ADSs or class A shares as part of a straddle, conversion transaction, integrated transaction or similar transaction;

•

persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

•

entities classified as partnerships for U.S. federal income tax purposes;

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•

tax-exempt entities, “individual retirement accounts” or “Roth IRAs”;

•

persons that own or are deemed to own 10% or more of our stock by vote or value; or

•

persons holding ADSs or class A shares in connection with a trade or business outside the United States.

If an entity that is classified as a partnership for U.S. federal income tax purposes owns ADSs or class A shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships owning ADSs or class A shares and partners in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of owning and disposing of ADSs or class A shares.

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all as of the date hereof, any of which is subject to change, possibly with retroactive effect.

As used herein, a “U.S. Holder” is a person that is for U.S. federal income tax purposes a beneficial owner of our ADSs or class A shares and:

•

a citizen or individual resident of the United States;

•

a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or

•

an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

In general, a U.S. Holder who owns ADSs will be treated as the owner of the underlying class A shares represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if a U.S. Holder exchanges ADSs for the underlying class A shares represented by those ADSs.

U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of ADSs or class A shares in their particular circumstances.

This discussion assumes that the Company is not, and will not become, a passive foreign investment company, as described below.

Taxation of Distributions

Except as described below under “—Passive Foreign Investment Company Rules,” the gross amount of distributions paid on our ADSs or class A shares (including any amount withheld in respect of Peruvian taxes), other than certain pro rata distributions of ADSs or class A shares, will be treated as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. Dividends will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code. Subject to applicable limitations (including a minimum holding period requirement), dividends paid to certain non-corporate U.S. Holders that constitute “qualified dividend income” are taxable at rates applicable to long-term capital gains. Dividends paid on our ADSs will generally be eligible for taxation as “qualified dividend income,” provided the ADSs are traded on the NYSE or are readily tradable on another established securities market in the United States. It is unclear whether these reduced rates will apply to dividends paid with respect to our class A shares that are not represented by ADSs. U.S. Holders should consult their tax advisers regarding the availability of the reduced tax rate on dividends in their particular circumstances.

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Dividends will be included in a U.S. Holder’s income on the date of the U.S. Holder’s, or in the case of ADSs, the depositary’s, receipt. The amount of any dividend income paid in soles will be the U.S. dollar value of the soles calculated by reference to the spot rate of exchange in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars on such date. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect of the amount received. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt, and such gain or loss generally will be treated as ordinary income or loss from sources within the United States.

Dividends generally will be treated as “passive category” foreign-source income for foreign tax credit purposes. As described in “—Peruvian Tax Considerations—Dividends and Other Distributions,” dividends paid by us are currently subject to Peruvian withholding tax. For U.S. federal income tax purposes, the amount of the dividend income will include any amounts withheld in respect of Peruvian withholding tax. Subject to applicable limitations, which vary depending upon the U.S. Holder’s circumstances, Peruvian taxes withheld from dividend payments generally will be creditable against a U.S. Holder’s U.S. federal income tax liability. The rules governing foreign tax credits are complex, and U.S. Holders should consult their tax advisers regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming a credit, a U.S. Holder may elect to deduct any such Peruvian taxes in computing its taxable income, subject to applicable limitations. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year.

U.S. Holders that receive distributions of additional ADSs or class A shares or rights to subscribe for ADSs or class A shares as part of a pro rata distribution to all our shareholders generally will not be subject to U.S. federal income tax in respect of the distributions, unless the U.S. Holder has the right to receive cash or property, in which case the U.S. Holder will be treated as if it received cash equal to the fair market value of the distribution.

Sale or Other Taxable Disposition of ADSs or Class A Shares

Subject to the discussion below under “—Passive Foreign Investment Company Rules,” a U.S. Holder will generally recognize capital gain or loss on a sale, exchange or other taxable disposition of ADSs or class A shares in an amount equal to the difference between the amount realized on the sale or disposition and the U.S. Holder’s adjusted tax basis in the ADSs or class A shares disposed of, in each case as determined in U.S. dollars. The gain or loss will be long-term capital gain or loss if, at the time of the sale or disposition, the U.S. Holder has owned the ADSs or class A shares for more than one year. Long-term capital gains recognized by non-corporate U.S. Holders may be subject to a tax rate that is lower than the rate applicable to ordinary income. The deductibility of capital losses is subject to limitations.

If Peruvian tax is imposed on gain from the sale or other disposition of ADSs or class A shares (see “—Peruvian Tax Considerations—Capital Gains” for a description of when a disposition may be subject to Peruvian tax), a U.S. Holder’s amount realized will include the gross amount of the proceeds of the sale or disposition before deduction of the Peruvian tax. A U.S. Holder is entitled to use foreign tax credits to offset only the portion of its U.S. federal income tax liability that is attributable to foreign-source income. Because under the Code capital gains of U.S. persons are generally treated as U.S.-source income, this limitation may preclude a U.S. Holder from claiming a credit for all or a portion of any Peruvian taxes imposed on any such gains. U.S. Holders should consult their tax advisers regarding the creditability of any Peruvian tax on disposition gains in their particular circumstances.

Passive Foreign Investment Company Rules

In general, a non-U.S. corporation is a passive foreign investment company (a “PFIC”) for any taxable year in which (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the value of its

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assets (generally determined on a quarterly average basis) consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, rents, royalties and certain gains. Based on the nature of our business, our financial statements, our expectations about the nature and amount of our income, assets and activities and the expected price of our ADSs in this offering, we do not believe we were a PFIC in 2020 and we do not expect to be a PFIC for our current taxable year. However, because (i) a determination of whether a company is a PFIC must be made annually after the end of each taxable year and will depend on the composition of our income and assets and the market value of our assets from time to time and (ii) we will hold a substantial amount of cash following this offering, we cannot assure you that we will not be a PFIC for the current or any future taxable year. We will not provide an annual determination of our PFIC status for any taxable year.

Under attribution rules, if we were a PFIC for any taxable year and any subsidiary or other entity in which we held a direct or indirect equity interest is also a PFIC (a “Lower-tier PFIC”), U.S. Holders would be deemed to own their proportionate share of any such Lower-tier PFIC and would be subject to U.S. federal income tax according to the rules described in the following paragraph on (i) certain distributions by the Lower-tier PFIC and (ii) a disposition of equity interests of the Lower-tier PFIC, in each case as if the U.S. Holder held such interests directly, even though the U.S. Holder did not receive the proceeds of those distributions or dispositions directly.

Generally, if we were a PFIC for any taxable year during which a U.S. Holder held our ADSs or class A shares, gain recognized by the U.S. Holder upon a sale or other disposition (including, under certain circumstances, a pledge) of our ADSs or class A shares would be allocated ratably over the U.S. Holder’s holding period for such ADSs or class A shares. The amounts allocated to the taxable year of the disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the tax attributable to each allocated amount. Further, to the extent that any distributions received by a U.S. Holder on the ADSs or class A shares exceeded 125% of the average of the annual distributions on such ADSs or class A shares received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, such distributions would be subject to taxation in the same manner. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the ADSs or class A shares. U.S. Holders should consult their tax advisers to determine whether any of these elections would be available and, if so, what the consequences of the alternative treatments would be in their particular circumstances. If we were a PFIC for any taxable year during which a U.S. Holder owned our ADSs or class A shares, we would generally continue to be treated as a PFIC with respect to such U.S. Holder for all succeeding years during which the U.S. Holder owns the ADSs or class A shares, even if we ceased to meet the threshold requirements for PFIC status.

If a U.S. Holder owns our ADSs or class A shares during any year in which we are a PFIC, the U.S. Holder generally will be required to file an IRS Form 8621 annually with respect to the Company, generally with the U.S. Holder’s U.S. federal income tax return for that year unless specified exceptions apply. A failure to file this form as required may toll the running of the statute of limitations in respect of each of the U.S. Holder’s taxable years for which such form is required to be filed. As a result, the taxable years with respect to which the U.S. Holder fails to file the form may remain open to assessment by the IRS indefinitely, until the form is filed.

In addition, if we were treated as a PFIC for a taxable year in which we paid a dividend, or for the prior taxable year, the favorable tax rates described above with respect to dividends paid to certain non-corporate U.S. Holders that constitute “qualified dividend income” would not apply.

U.S. Holders should consult their tax advisers regarding the determination of whether we are a PFIC for any taxable year and the potential application of the PFIC rules to their ownership of ADSs or class A shares.

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Information Reporting and Backup Withholding

In general, payments of dividends and proceeds from the sale or other disposition of ADSs or class A shares that are made within the United States or through certain U.S.-related financial intermediaries may be subject to information reporting and backup withholding, unless (i) the U.S. Holder is a corporation or other “exempt recipient” or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against its U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the IRS.

Certain U.S. Holders who are individuals (or certain specified entities) may be required to report information relating to their ownership of ADSs or class A shares, or non-U.S. accounts through which ADSs or class A shares are held. U.S. Holders should consult their tax advisers regarding their reporting obligations with respect to ADSs and class A shares.

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UNDERWRITING

Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC is acting as representative, have severally agreed to purchase, and we have agreed to sell to them, the number of class A shares in the form of ADSs indicated below:


Name		Number of class A shares (in the form of ADSs)
Morgan Stanley & Co. LLC
Total:

The underwriters and the representative are collectively referred to as the “underwriters” and the “representative,” respectively. The underwriters are offering the ADSs subject to their acceptance of the ADSs from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the ADSs by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the ADSs offered by this prospectus if any such ADSs are taken. However, the underwriters are not required to take or pay for the ADSs covered by the underwriters’ option to purchase additional ADSs described below.

The underwriters initially propose to offer part of the ADSs directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of US$ per ADS under the public offering price. After the initial offering of the ADSs, the offering price and other selling terms may from time to time be varied by the representative. The offering of the ADSs by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

We have granted the underwriters an option for a period of 30 days from the date of this prospectus, to purchase up to additional ADSs at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional ADSs as the number listed next to the underwriter’s name in the preceding table bears to the total number of ADSs listed next to the names of all underwriters in the preceding table.

The following table shows the per ADS and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional ADSs.

Total

Per ADSs

No Exercise

Full Exercise

Public offering price

US$

��

Underwriting discounts and commissions to be paid by us:

Proceeds, before expenses, to us

US$

The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately US$ . We have agreed to reimburse the underwriters for expense relating to clearance of this offering with the Financial Industry Regulatory Authority up to US$ .

The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of ADSs offered by them.

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We intend to apply to have the ADSs listed on the NYSE under the trading symbol “AUNA” and we intend to apply to have our class A shares listed on the BVL under the trading symbol “ ”.

We and all directors and officers and our existing shareholders have agreed that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, we and they will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of this prospectus (the “restricted period”):

•

offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any of our ADSs, shares of common stock or any securities convertible into or exercisable or exchangeable for ADSs or shares of common stock;

•

file any registration statement with the Securities and Exchange Commission relating to the offering of any ADSs or shares of common stock, or any securities convertible into or exercisable or exchangeable for common stock or ADSs; or

•

enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our ADSs or common stock;

whether any such transaction described above is to be settled by delivery of ADSs, common stock or such other securities, in cash or otherwise. In addition, we and each such person agrees that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, we or such other person will not, during the restricted period, make any demand for, or exercise any right with respect to, the registration of any ADSs, shares of common stock or any security convertible into or exercisable or exchangeable for common stock or ADSs.

The restrictions described in the immediately preceding paragraph to do not apply to:

•

the sale of ADSs to the underwriters;

•

the issuance by the Company of shares of common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus of which the underwriters have been advised in writing;

•

transactions by any person other than us relating to shares of common stock or other securities acquired in open market transactions after the completion of the offering of the shares; provided that no filing under Section 16(a) of the Exchange Act, is required or voluntarily made in connection with subsequent sales of the common stock or other securities acquired in such open market transactions; or

•

facilitating the establishment of a trading plan on behalf of a shareholder, officer or director of the Company pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of common stock, provided that (i) such plan does not provide for the transfer of common stock during the restricted period and (ii) to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by the Company regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of common stock may be made under such plan during the restricted period.

Morgan Stanley & Co. LLC, in its sole discretion, may release the ADSs, common stock and other securities subject to the lock-up agreements described above in whole or in part at any time.

In order to facilitate the offering of the ADSs, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the ADSs. Specifically, the underwriters may sell more ADSs than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of ADSs available for purchase by the underwriters under the option to purchase additional ADSs. The underwriters can close out a covered short sale by exercising the option

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to purchase additional ADSs or purchasing ADSs in the open market. In determining the source of ADSs to close out a covered short sale, the underwriters will consider, among other things, the open market price of ADSs compared to the price available under the option to purchase additional ADSs. The underwriters may also sell ADSs in excess of the option to purchase additional ADSs, creating a naked short position. The underwriters must close out any naked short position by purchasing ADSs in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, ADSs in the open market to stabilize the price of the ADSs. These activities may raise or maintain the market price of the ADSs above independent market levels or prevent or retard a decline in the market price of the ADSs. The underwriters are not required to engage in these activities and may end any of these activities at any time.

We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representative may agree to allocate a number of ADSs to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representative to underwriters that may make Internet distributions on the same basis as other allocations.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.

In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.

Pricing of the Offering

Prior to this offering, there has been no public market for our common stock or the ADSs. The initial public offering price was determined by negotiations between us and the representative. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.

Selling Restrictions

Notice to Prospective Investors in Peru

This offering and the ADSs have not been and will not be registered in the Republic of Peru and therefore are not and will not be subject to Peruvian laws applicable to public offerings in Peru. The information contained

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in this prospectus has not been and will not be approved or disapproved by the SMV or the BVL. The ADSs cannot, and will not, be offered or sold in Peru except in compliance with the securities laws in Peru.

Notice to Colombian Investors

The ADSs have not been and will not be offered in Colombia through a public offering of securities pursuant to Colombian laws and regulations, nor will they be registered in the Colombian National Registry of Securities and Issuers (Registro Nacional de Valores y Emisores) or listed on a regulated securities trading system such as the Colombian Stock Exchange (Bolsa de Valores de Colombia S.A.).

Argentina

This prospectus has not been registered with the Comisión Nacional de Valores and may not be offered publicly in Argentina. The prospectus may not be publicly distributed in Argentina. Neither we nor the underwriters will solicit the public in Argentina in connection with this prospectus.

Australia

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the “Corporations Act”), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the ADSs may only be made to persons (the “Exempt Investors”) who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the ADSs without disclosure to investors under Chapter 6D of the Corporations Act.

The ADSs applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring ADSs must observe such Australian on-sale restrictions.

This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances.

Brazil

The offer of ADSs described in this prospectus will not be carried out by means that would constitute a public offering in Brazil under Law No. 6,385, of December 7, 1976, as amended, under the CVM Rule (Instrução) No. 400, of December 29, 2003. The offer and sale of the ADSs have not been and will not be registered with the Comissão de Valores Móbilearios in Brazil. The ADSs have not been offered or sold, and will not be offered or sold in Brazil, except in circumstances that do not constitute a public offering or distribution under Brazilian laws and regulations.

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Canada

The ADSs may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the ADSs must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Chile

The ADSs are not and will not be registered under the Securities Market Law No. 18,045, as amended, of Chile. The ADSs have not been and will not be registered with the Chilean Financial Markets Commission (Comisión para el Mercado Financiero), together with all predecessor agencies and commissions, including, without limitation, the Chilean Securities and Insurance Commission (Superintendencia de Valores y Seguros), and, accordingly, may not be offered or sold to persons in Chile except in circumstances that do not constitute a public offering under Chilean law.

European Economic Area

In relation to each Member State of the European Economic Area (each, a “Member State”), no offer of ADSs may be made to the public in that Member State other than:

(a)

to any legal entity which is a qualified investor as defined in the Prospectus Regulation;

(b)

to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), subject to obtaining the prior consent of the representatives; or

(c)

in any other circumstances falling within Article 1(4) of the Prospectus Regulation, provided that no such offer of ADSs shall require us or any of our representatives to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation and each person who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with each of the representatives and us that it is a “qualified investor” as defined in the Prospectus Regulation.

In the case of any ADSs being offered to a financial intermediary as that term is used in Article 5 of the Prospectus Regulation, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the ADSs acquired by it in the offer have not been acquired on a nondiscretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any ADSs to the public other than their offer or resale in a Member State to qualified investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.

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For the purposes of this provision, the expression an “offer of ADSs to the public” in relation to any ADSs in any Member State means the communication in any form and by means of sufficient information on the terms of the offer and the ADSs to be offered so as to enable an investor to decide to purchase ADSs, the expression “Prospectus Regulation” means Regulation (EU) 2017/1129 (as amended).

Hong Kong

The ADSs have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the ADSs has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to ADSs which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Japan

No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) (the “FIEL”) has been made or will be made with respect to the solicitation of the application for the acquisition of the ADSs.

Accordingly, the ADSs have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan.

For Qualified Institutional Investors (“QII”)

Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the ADSs constitutes either a “QII only private placement” or a “QII only secondary distribution” (each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the ADSs. The ADSs may only be transferred to QIIs.

For Non-QII Investors

Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the ADSs constitutes either a “small number private placement” or a “small number private secondary distribution” (each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the ADSs. The ADSs may only be transferred en bloc without subdivision to a single investor.

Mexico

The ADSs have not been registered with the National Securities’ Registry (Registro Nacional de Valores) maintained by the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores), and

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are not being, and may not be, offered, sold or traded in Mexico pursuant to a public offering in accordance with the Mexican Securities Market Law (Ley del Mercado de Valores or “LMV”), except pursuant to a private placement exemption under Article 8 of the LMV or other exemptions set forth in the LMV.

Panama

The ADSs have not been, and will not be, registered for public offering in Panama with the Panamanian Superintendence of the Securities Market (Superintendencia del Mercado de Valores, previously the National Securities Commission of Panama) under Decree-Law 1 of July 8, 1999, as reformed by Law 67 of 2011 (the “Panamanian Securities Act”). Accordingly, the ADSs may not be offered or sold in Panama or to persons domiciled in Panama, except in certain limited transactions exempted from the registration requirements of the Panamanian Securities Act. The ADSs do not benefit from tax incentives accorded by the Panamanian Securities Act, and are not subject to regulation or supervision by the Panamanian Superintendence of the Securities Market as long as the ADSs are privately offered to no more than 25 persons domiciled in Panama and result in the sale to no more than 10 of such persons.

Singapore

This prospectus has not been and will not be registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”). Accordingly, each underwriter has not offered or sold any ADSs or caused such ADSs to be made the subject of an invitation for subscription or purchase and will not offer or sell such ADSs or cause such ADSs to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such ADSs, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the ADSs are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the ADSs pursuant to an offer made under Section 275 of the SFA, except: (i) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), or to any person arising from an offer referred to in Section 275(1A), or Section 276(4)(i)(B) of the SFA; (ii) where no consideration is or will be given for the transfer; (iii) where the transfer is by operation of law; (iv) as specified in Section 276(7) of the SFA; or (v) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

Singapore Securities and Futures Act Product Classification—Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the SFA, we have determined, and hereby notify all relevant persons (as defined in Section 309A of the SFA) that the ADSs are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

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Switzerland

The ADSs will not be publicly offered or distributed in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27ff of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. The ADSs may be offered in Switzerland privately only to a select circle of investors without the use of any public means of information or advertisement.

This prospectus does not constitute an offer prospectus within the meaning of Art. 652a of the Swiss Code of Obligations. It has not been filed with or approved by any Swiss regulatory authority or stock exchange.

United Kingdom

Each underwriter has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (“FSMA”)) received by it in connection with the issue or sale of the ADSs in circumstances in which Section 21(1) of the FSMA does not apply to us; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the ADSs in, from or otherwise involving the United Kingdom.

United Arab Emirates

The ADSs have not been, and will not be, publicly offered, sold, promoted or advertised in the United Arab Emirates (including Dubai International Financial Center) other than in compliance with the laws of the United Arab Emirates (and the Dubai International Finance Center) governing the issue, offering and sale of securities. Further, this prospectus does not constitute a public offer of securities in the United Arab Emirates (including Dubai International Financial Center) and is not intended to be a public offer. This prospectus has not been approved by or filed with the Central Bank of the United Arab Emirates, the Securities and Commodities Authority or the Dubai Financial Services Authority.

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EXPENSES OF THE OFFERING

We estimate that our expenses in connection with this offering, other than underwriting discounts and commissions, will be as follows:


Expenses		Amount
U.S. Securities and Exchange Commission registration fee		US$
listing fee
FINRA filing fee
Printing and engraving expenses
Legal fees and expenses
Accounting fees and expenses
Miscellaneous costs
Total

All amounts in the table are estimates except the SEC registration fee, the NYSE listing fee and the FINRA filing fee.

The depositary has agreed to pay some of these expenses on our behalf, subject to the closing of the offering.

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LEGAL MATTERS

The validity of the ADSs will be passed upon for us by Davis Polk & Wardwell LLP, New York, New York and for the underwriters by Cleary Gottlieb Steen & Hamilton LLP. The validity of the class A shares and other matters governed by Peruvian law will be passed upon for us by Rodrigo, Elias & Medrano Abogados and for the underwriters by J&A Garrigues Perú S. Civil de R.L. Certain matters governed by Colombian law will be passed upon for us by Posse Herrera Ruiz.

EXPERTS

The consolidated financial statements of Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) as of December 31, 2020, 2019 and 2018, and for each of the years in the three-year period ended December 31, 2020, have been included herein in reliance upon the report of Caipo y Asociados Sociedad Civil de Responsabilidad Limitada, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

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WHERE YOU CAN FIND MORE INFORMATION

We have filed with the U.S. Securities and Exchange Commission a registration statement (including amendments and exhibits to the registration statement) on Form F-1 under the Securities Act. This prospectus, which is part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. For further information, we refer you to the registration statement and the exhibits and schedules filed as part of the registration statement. If a document has been filed as an exhibit to the registration statement, we refer you to the copy of the document that has been filed.

Upon completion of this offering, we will become subject to the informational requirements of the Exchange Act. Accordingly, we will be required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements and other information we have filed electronically with the SEC.

As a foreign private issuer, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act. For example, we are not required to prepare and issue quarterly reports. However, we intend to furnish our shareholders with annual reports containing consolidated financial statements audited by our independent auditors and to make available to our shareholders quarterly reports containing unaudited financial data for the first three quarters of each fiscal year. In addition, as a foreign issuer, we are not subject to the proxy rules under Section 14 of the Exchange Act and our officers and directors will not be subject to Section 16 of the Exchange Act relating to insider short-swing profit disclosure and recovery regime.

We will send the depositary a copy of all notices that we give relating to meetings of our shareholders or to distributions to shareholders or the offering of rights and a copy of any other report or communication that we make generally available to our shareholders. The depositary will make all these notices, reports and communications that it receives from us available for inspection by registered holders of ADSs at its office. The depositary will mail copies of those notices, reports and communications to you if we ask the depositary to do so and furnish sufficient copies of materials for that purpose.

We will file financial statements and other periodic reports with the SMV in Peru. Issuers of securities registered with the SMV are required to disclose relevant facts (hechos de importancia), which are material information in connection with the issuer of registered securities, its activities or securities issued or secured by such issuer which may influence the liquidity, price, offering or negotiation of such securities and all the information that may be relevant for investors to be able to make investment decision. Accordingly, issuers must file with the SMV financial information, including unaudited condensed consolidated interim financial statements on a quarterly basis (which are not required to be subject to limited review), and audited annual individual and consolidated financial statements on an annual basis.

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ENFORCEMENT OF JUDGMENTS

Auna is an openly held corporation (sociedad anónima abierta) organized and existing under the laws of Peru. The majority of our directors and all of our officers reside in Peru or elsewhere outside the United States, and a significant portion of the assets of such persons may be, and substantially all of our assets are, located in Peru and Colombia or elsewhere outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon us or upon our directors or officers, or to enforce against them, or us, in U.S. federal or state courts judgments predicated upon the provisions of civil liabilities of U.S. federal securities laws.

We have been advised by our Peruvian counsel, Rodrigo, Elias & Medrano Abogados, that there is uncertainty as to the enforceability, in original actions in Peruvian courts, of liabilities predicated upon the provisions of civil liability of the U.S. federal securities laws. In addition, we have been advised by Rodrigo, Elias & Medrano Abogados that any final and conclusive judgment for a fixed and definitive sum obtained against us in any foreign court having jurisdiction in respect of any suit, action or proceeding against us for the enforcement of any of our obligations under the class A shares that are governed by New York law will, upon request, be deemed valid and enforceable in Peru through an exequatur judiciary proceeding (which does not involve the reopening of the case), provided that: (i) there is a treaty in effect between the country where said foreign court sits and Peru regarding the recognition and enforcement of foreign judgments; or (ii) in the absence of such a treaty, the original judgment is ratified by the Peruvian Courts (Cortes de la República del Perú), under such exequatur proceeding, subject to the provisions of the Peruvian Civil Code and the Peruvian Civil Procedure Code provided that the following conditions and requirements are met:

•

the foreign judgment does not resolve matters under the exclusive jurisdiction of Peruvian courts (and the matters contemplated in respect of this prospectus or the class A shares are not matters under the exclusive jurisdiction of Peruvian courts);

•

such foreign court had jurisdiction under its own private international conflicts of law rules and under general principles of international procedural jurisdiction;

•

Auna received service of process in accordance with the laws of the place where the proceeding took place, was granted a reasonable opportunity to appear before such foreign court, and was guaranteed due process rights;

•

the judgment has the status of res judicata as defined in the jurisdiction of the court rendering such judgment;

•

no pending litigation in Peru between the same parties for the same dispute was initiated before the commencement of the proceeding that concluded with the foreign judgment;

•

the foreign judgment is not incompatible with another judgment that fulfills the requirements of recognition and enforceability established by Peruvian law, unless such foreign judgment was rendered first;

•

the foreign judgment is not contrary to Peruvian public policy (orden público) or good morals (buenas costumbres);

•

it is not proven that such foreign court denies enforcement of Peruvian judgments or engages in a review of the merits thereof; and

•

such judgment has been (i) duly apostilled by the competent authority of the jurisdiction of the issuing court, in case of jurisdictions that are party to the Hague Apostille Convention, or certified by Peruvian consular authorities, in the case of jurisdictions that are not parties to the Hague Apostille Convention, and is accompanied by a certified and officially translated copy of such judgment into Spanish; and (ii) the applicable court taxes or fees have been paid.

Our properties and subsidiaries have no immunity from a court’s jurisdiction, except, to the extent applicable, immunities set forth in Article 616 of the Peruvian Code of Civil Procedure (Código Procesal Civil) for attachments on assets dedicated to the rendering of public services.

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INDEX TO FINANCIAL STATEMENTS


Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Statement of Financial Position as of December 31, 2020, 2019 and 2018			F-3
Consolidated Statement of Income and Other Comprehensive Income for the fiscal years ended December 31, 2020, 2019 and 2018			F-4
Consolidated Statement of Changes in Equity for the fiscal years ended December 31, 2020, 2019 and 2018			F-5
Consolidated Statement of Cash Flows for the fiscal years ended December 31, 2020, 2019 and 2018			F-6
Notes to the Consolidated Financial Statements for the fiscal years ended December 31, 2020, 2019 and 2018			F-7

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Auna S.A.A. (formerly known as Auna S.A. and formerly known as

Grupo Salud del Perú S.A.C.)

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and subsidiaries (the “Company”) as of December 31, 2020, 2019 and 2018, and the related consolidated statements of income and other comprehensive income, changes in equity and cash flows for the years ended December 31, 2020, 2019 and 2018, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with International Financial Reporting Standards IFRS as issued by the International Accounting Standards Board.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Caipo y Asociados S. Civil de R.L.

We have served as the Company’s auditor since 2016.

Lima, Peru

August 24, 2021

F-2

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Consolidated Statement of Financial Position

As of December 31, 2020, 2019 and 2018


In thousands of soles	*Note*		2020			2019			2018
Assets
Current assets
Cash and cash equivalents		5		343,454			36,084			110,871
Trade accounts receivable		6		370,643			285,601			238,116
Other assets		7		69,517			81,380			63,481
Inventories		8		52,568			37,057			31,830
Derivative financial instruments		9		—			448			510
Assets held for sale				—			1,378			1,971

Total current assets				836,182			441,948			446,779

Non-current assets
Trade accounts receivable		6		367			—			—
Other assets		7		15,951			8,626			9,392
Investments in associates and joint venture		10		12,097			9,907			9,214
Property, furniture, and equipment		11		1,062,222			715,800			794,645
Intangible assets		12		490,892			431,594			431,578
Right-of-use assets		13		141,274			240,909			—
Investment properties				1,601			1,456			567
Derivative financial instruments		9		11,707			8,321			12,598
Deferred tax assets		14		78,778			32,736			35,398

Total non-current assets				1,814,889			1,449,349			1,293,392

Total assets				2,651,071			1,891,297			1,740,171

Liabilities
Current liabilities
Loans and borrowings		15		18,444			172,992			108,931
Lease liabilities		13		18,649			27,799			—
Trade accounts payable		16		351,247			254,199			242,856
Other accounts payable		17		109,784			64,744			62,196
Provisions		18		7,932			8,020			7,055
Unearned premiums reserve		19		60,245			58,210			54,478
Deferred income				446			—			—
Derivative financial instruments		9		—			3,952			56

Total current liabilities				566,747			589,916			475,572

Non-current liabilities
Loans and borrowings		15		1,190,225			464,751			616,458
Lease liabilities		13		127,519			151,285			—
Trade accounts payable		16		4,782			—			—
Other accounts payable		17		24,214			12,876			24,023
Derivative financial instruments		9		33,594			11,526			959
Deferred tax liabilities		14		51,154			82,125			89,824
Deferred income				765			—			—

Total non-current liabilities				1,432,253			722,563			731,264

Total liabilities				1,999,000			1,312,479			1,206,836

Equity		20
Share capital				236,547			236,547			236,546
Share premium				386,045			386,045			386,045
Reserves				(9,038	)		(77,556	)		(66,813	)
Retained earnings (losses)				(12,623	)		17,244			(38,170	)

Equity attributable to the owner of the Company				600,931			562,280			517,608

Non-controlling interest				51,140			16,538			15,727

Total equity				652,071			578,818			533,335

Total liabilities and equity				2,651,071			1,891,297			1,740,171

The accompanying notes on pages 5 to 114 are an integral part of these consolidated financial statements.

F-3

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the years ended December 31, 2020, 2019 and 2018


In thousands of soles	*Note*		2020			2019			2018
Revenue
Premiums earned		21		566,358			522,337			467,616
Healthcare services revenue		21		703,726			658,881			229,572
Sales of medicines		21		173,698			201,348			164,039

Total revenue from contracts with customers				1,443,782			1,382,566			861,227

Cost of sales and services		22		(914,354	)		(844,519	)		(497,789	)

Gross profit				529,428			538,047			363,438

Selling expenses		22		(133,056	)		(132,544	)		(120,738	)
Administrative expenses		22		(273,361	)		(236,464	)		(154,442	)
Loss for impairment of trade receivables		6		(16,358	)		(5,987	)		(2,826	)
Other expenses		24		(321	)		(1,446	)		—
Other income		23		12,089			5,528			5,333

Operating profit				118,421			167,134			90,765

Finance income		25		3,773			1,532			630
Finance costs		25		(136,736	)		(56,053	)		(38,176	)

Net finance cost				(132,963	)		(54,521	)		(37,546	)

Share of profit of equity-accounted investees		10		1,320			2,438			960

(Loss) profit before tax				(13,222	)		115,051			54,179
Income tax expense		28		7,844			(41,178	)		(17,538	)

(Loss) profit for the year				(5,378	)		73,873			36,641

Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Cash flow hedges				(28,406	)		(19,160	)		(1,014	)
Foreign operations – Foreign currency translation differences				75,976			(8,338	)		(2,555	)
Income tax				7,987			6,044			303

Other comprehensive profit (loss) for the year, net of tax				55,557			(21,454	)		(3,266	)

Total comprehensive income for the year				50,179			52,419			33,375

(Loss) profit attributable to:
Owner of the Company				(7,104	)		72,685			36,184
Non-controlling interest		20.I		1,726			1,188			457

				(5,378	)		73,873			36,641

Total comprehensive income attributable to:
Owner of the Company				43,119			51,608			32,918
Non-controlling interest		20.I		7,060			811			457

				50,179			52,419			33,375

Earnings per share
Basic and diluted earnings per share		26		(0.03	)		0.31			0.18

The accompanying notes on pages 5 to 114 are an integral part of these consolidated financial statements.

F-4

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Consolidated Statement of Changes in Equity

For the years ended December 31, 2020, 2019 and 2018


	Equity attributable to the owner of the Company
In thousands of soles	Share capital (note 20.A)		Share premium (note 20.B)		Other capital reserve (note 20.C)		Translation reserve (note 20.D)			Cost of hedging reserve (note 20.E)			Hedging reserve (note 20.F)			Merger reserve (note 20.G)			Retained earnings (losses) (note 20.H)			Total			Non- controlling interest			Total equity
Balances as of January 1, 2018		204,362		176,115		15,868		—			—			—			(85,804	)		(58,473	)		252,068			1,361			253,429
Profit for the year		—		—		—		—			—			—			—			36,184			36,184			457			36,641
Other comprehensive income for the year		—		—		—		(2,555	)		—			(711	)		—			—			(3,266	)		—			(3,266	)

Total comprehensive income for the year		—		—		—		(2,555	)		—			(711	)		—			36,184			32,918			457			33,375

Capital contribution		32,184		209,930		—		—			—			—			—			—			242,114			—			242,114
Transfer to legal reserve		—		—		5,881		—			—			—			—			(5,881	)		—			—			—
Acquisition of subsidiary with NCI		—		—		—		—			—			—			—			—			—			15,193			15,193
Contributions from non-controlling shareholder		—		—		—		—			—			—			—			—			—			170			170
Acquisition of non-controlling interest		—		—		—		—			—			—			508			—			508			(1,454	)		(946	)
Dividend distribution		—		—		—		—			—			—			—			(10,000	)		(10,000	)		—			(10,000	)

Total transactions with the owners of the Company		32,184		209,930		5,881		—			—			—			508			(15,881	)		232,622			13,909			246,531

Balances as of December 31, 2018		236,546		386,045		21,749		(2,555	)		—			(711	)		(85,296	)		(38,170	)		517,608			15,727			533,335

Adjustment on initial application of IFRS 16, net of tax		—		—		—		—			—			—			—			3,063			3,063			—			3,063

Balances as of January 1, 2019		236,546		386,045		21,749		(2,555	)		—			(711	)		(85,296	)		(35,107	)		520,671			15,727			536,398
Profit for the year		—		—		—		—			—			—			—			72,685			72,685			1,188			73,873
Other comprehensive income for the year		—		—		—		(7,961	)		—			(13,116	)		—			—			(21,077	)		(377	)		(21,454	)

Total comprehensive income for the year		—		—		—		(7,961	)		—			(13,116	)		—			72,685			51,608			811			52,419

Capital contribution		1		—		—		—			—			—			—			—			1			—			1
Transfer to legal reserve		—		—		10,334		—			—			—			—			(10,334	)		—			—			—
Dividend distribution		—		—		—		—			—			—			—			(10,000	)		(10,000	)		—			(10,000	)

Total transactions with the owners of the Company		1		—		10,334		—			—			—			—			(20,334	)		(9,999	)		—			(9,999	)

Balances as of December 31, 2019		236,547		386,045		32,083		(10,516	)		—			(13,827	)		(85,296	)		17,244			562,280			16,538			578,818

Balances as of January 1, 2020		236,547		386,045		32,083		(10,516	)		—			(13,827	)		(85,296	)		17,244			562,280			16,538			578,818
Loss for the year		—		—		—		—			—			—			—			(7,104	)		(7,104	)		1,726			(5,378	)
Other comprehensive income for the year		—		—		—		70,642			(18,932	)		(1,487	)		—			—			50,223			5,334			55,557

Total comprehensive income for the year		—		—		—		70,642			(18,932	)		(1,487	)		—			(7,104	)		43,119			7,060			50,179

Transfer to legal reserve		—		—		12,763		—			—			—			—			(12,763	)		—			—			—
Acquisition of non-controlling interest		—		—		—		—			—			—			2,366			—			2,366			(14,037	)		(11,671	)
Acquisition of subsidiary with NCI		—		—		—		—			—			—			—			—			—			35,755			35,755
Contributions from non-controlling shareholder		—		—		—		—			—			—			3,120			—			3,120			5,831			8,951
Shareholder´s downstream merger		—		—		—		—			—			—			46			—			46			—			46
Dividend distribution		—		—		—		—			—			—			—			(10,000	)		(10,000	)		(7	)		(10,007	)

Total transactions with the owners of the Company		—		—		12,763		—			—			—			5,532			(22,763	)		(4,468	)		27,542			23,074

Balances as of December 31, 2020		236,547		386,045		44,846		60,126			(18,932	)		(15,314	)		(79,764	)		(12,623	)		600,931			51,140			652,071

The accompanying notes on pages 5 to 114 are an integral part of these consolidated financial statements.

F-5

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Consolidated Statement of Cash Flows

For the years ended December 31, 2020, 2019 and 2018


In thousands of soles	*Note*	2020			2019			2018
Cash flows from operating activities
(Loss) profit for the year			(5,378	)		73,873			36,641
Adjustments for:
Depreciation	11		30,986			30,512			28,950
Depreciation of right-of-use assets	13		26,435			19,937			—
Amortization	12		7,278			6,299			3,086
Change in fair value of assets held for sale			—			527			—
Change in fair value of investment property			(57	)		(75	)		—
Impairment of inventories			419			377			318
Gain on a bargain purchase	1.C		(4,495	)		—			—
Loss on sale of Investments in associates	24		—			919			—
(Gain) loss on disposal of property, furniture, and equipment	11		(6	)		1,849			171
Loss on disposal of right-of-use assets	13		321			97			—
Loss on disposal of intangibles	12		20			21			3
Loss on disposal of assets held for sale			45			—			—
Loss for impairment of trade receivables	6		16,358			5,987			2,826
Share of profit of equity-accounted investees	10		(1,320	)		(2,438	)		(960	)
Technical provisions and other provisions	18		2,614			4,497			2,608
Finance income	25		(3,773	)		(1,532	)		(630	)
Finance costs	25		136,736			56,053			38,176
Tax expense	28		(7,844	)		41,178			17,538
Net changes in assets and liabilities
Trade accounts receivable and other assets			(6,650	)		(38,606	)		(16,724	)
Inventories			(14,166	)		(6,038	)		(527	)
Trade accounts payable and other accounts payable			25,381			(19,402	)		19,509
Provisions	18		(4,259	)		(3,448	)		(1,630	)
Unearned premium reserves			2,035			3,732			3,692

Cash generated from operating activities			200,680			174,319			133,047
Income tax paid			(47,083	)		(23,451	)		(24,380	)
Interest received			2,699			1,530			630

Net cash from operating activities			156,296			152,398			109,297

Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired	1-C		259			—			(533,679	)
Purchase of properties, furniture, and equipment	11		(90,743	)		(104,570	)		(39,010	)
Purchase of intangibles	12		(38,174	)		(21,204	)		(7,336	)
Dividends from equity-accounted investees	10		303			330			—
Proceeds from sale of assets held for sale			1,333			—			—
Proceeds from sale of property, furniture, and equipment			1,094			—			—
Proceeds from sale of investments in associates			—			328			—
Advance payment for purchase of shares of associates			—			(792	)		—

Net cash used in investing activities			(125,928	)		(125,908	)		(580,025	)

Cash flows from financing activities
Capital contribution			—			1			242,114
Proceeds from loans and borrowings	15		1,481,639			215,901			650,276
Advance payment for purchase of non-controlling interest	7		—			(12,756	)		—
Payment for loans and borrowings	15		(1,072,048	)		(200,899	)		(273,170	)
Payment for lease liabilities	15		(90,089	)		(39,328	)		(25,571	)
Penalty paid for debt prepayment	15		(3,400	)		—			—
Payment for accounts payables to third parties	15		(1,908	)		(3,928	)		(10,382	)
Payment for call spread premiums	15		(4,302	)		(5,907	)		—
Payment for settlement of derivatives	15		(5,296	)		(1,566	)		—
Payment of commissions for derivatives			—			(2,474	)		—
Interest paid	15		(37,276	)		(37,831	)		(21,482	)
Dividends paid	20		(10,007	)		(10,000	)		(10,000	)
Trust funds	7 (c)		6,438			(687	)		1,606
Contributions from non-controlling shareholders	15 & 20		8,951			—			170
Acquisition of non-controlling interest			—			—			(946	)

Net cash from (used in) financing activities			272,702			(99,474	)		552,615

Net increase (decrease) in cash and cash equivalents			303,070			(72,984	)		81,887
Cash and cash equivalents at January 1			36,084			110,871			32,498
Effect of movements in exchange rates on cash held			4,300			(1,803	)		(3,514	)

Cash and cash equivalents at December 31			343,454			36,084			110,871

Transactions not representing cash flows
Assets acquired through finance lease and other financing	13		42,853			83,883			2,360
Assets acquired from suppliers in installments	11		6,133			579			5,165
Capitalised borrowing costs	11		1,235			—			—
Liability for call spread premiums financing			—			—			21,134
Outstanding payment to former shareholders	1-C		—			—			7,274

The accompanying notes on pages 5 to 114 are an integral part of these consolidated financial statements.

F-6

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

1.	Economic Activity

A.	Business activity

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) (hereinafter the “Company” or “Auna”) is a subsidiary of Enfoca Group (ultimate controlling party), which holds a share capital of 69.46% acquired through different mechanisms. The Company is the controlling parent of a group of operating and pre-operating companies focused on the healthcare sector. It was incorporated in Peru in 2008 through the contribution of all the shares of the former shareholders of Oncosalud S.A.C. to the Company.

On December 30, 2019, the Company changed its legal name to Auna S.A. The Company’s registered office is at Av. República de Panamá N° 3461, San Isidro, Lima, Perú. The Company and its subsidiaries together are also referred to in these consolidated financial statements as the “Group”. The Group is a healthcare service provider primarily focused on services that provide cancer treatment through its subsidiary Oncosalud S.A.C., inpatient hospitals, outpatient care centers and specialized medical centers in Peru and, since the end of 2018, through Promotora Médica Las Américas S.A. (hereinafter “PMLA”), likewise since September 1, 2020 through Clínica Portoazul, both in Colombia. The structure of the Group is detailed in note 29.

On September 14, 2020, the General Shareholder’s Meeting approved the change of legal name from Auna S.A. to Auna S.A.A. an openly held corporation.

B.	Approval of the consolidated financial statements

The consolidated financial statements as of December 31, 2020, 2019 and 2018 were approved for issuance by the Board of Directors on August 24, 2021.

C.	Acquisition of Colombian subsidiaries

i.	*Clínica Portoazul S.A.*

On August 14, 2020, Auna Colombia S.A.S. signed a capitalization agreement with the shareholders of Clínica Portoazul S.A. for the acquisition of 2,239 newly issued shares of Clínica Portoazul S.A., obtaining an interest of 66.55%, diluting the existing shareholders up to that date and obtaining control. The closing date of the transaction was on September 1, 2020.

Clínica Portoazul S.A. operations are regulated by the Superintendencia Nacional de Salud - Supersalud (Colombian Board of Health). It is engaged in the direct provision of healthcare services, sale of medicines, and other healthcare-related services. Clinica Portoazul’s registered office is at Municipio de Puerto Colombia - Atlántico, Barranquilla, Colombia. The acquisition is expected to provide the Group with an increased share of the healthcare services market in Colombia.

For the shares acquired, the Group, through its Colombian subsidiary Auna Colombia S.A.S. made a capital contribution in cash on September 1, 2020 amounting to S/ 66,640 thousand. This contribution was funded with two loans received from local financial entities, amounting to S/ 53,100 thousand and with its own capital for S/ 13,540 thousand.

This acquisition was recorded using the purchase method of accounting, as established in IFRS 3 Business Combinations. Under this method, most assets and liabilities were recorded at their estimated fair values at the date of purchase, including identifiable intangibles not recorded in the statement of financial position of the

F-7

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

acquired entity. The transaction costs associated with the acquisition incurred in 2020 amounting to S/ 2,137 thousand were recorded as an expense and presented under ‘administrative expenses’ in the consolidated statement of income and other comprehensive income. The fair values of the acquired net assets are presented below:

Identifiable assets acquired and liabilities assumed


In thousands of soles	*Note*
Cash and cash equivalents (include the capital contribution)			66,899
Trade accounts receivable and other accounts assets			46,412
Inventories			567
Intangible assets		12	5,350
Property, furniture and equipment			133,946
Deferred tax assets			5,688
Trade accounts payable and other accounts payable			(47,910	)
Loans and borrowings			(102,837	)
Contingent liabilities			(1,225	)

Total identifiable net assets acquired			106,890

The trade accounts receivable and other accounts receivable comprise gross contractual amounts due of S/ 48,002 thousand and S/ 1,815 thousand, respectively. At the date of acquisition, S/ 3,405 thousand were expected to be uncollectable.

This acquisition resulted in a gain, which has been determined as follows:


In thousands of soles
Fair value of identifiable net assets	106,890
Less
Consideration transferred	(66,640	)
Non-controlling interest	(35,755	)

Gain from purchase	4,495

The Group, through its Colombian subsidiary, Auna Colombia S.A.S. has recorded the gain on the acquisition of Clínica Portoazul S.A. for S/ 4,495 thousand in ‘other income’ in the consolidated statement of income and other comprehensive income.

The gain from the bargain purchase is the result of various factors, one of them relates to the current financial situation of the acquired business, which was highly leveraged. At the acquisition date, the financial obligations of the acquired business amounted to S/ 103,955 thousand, representing 184% of equity and bearing interests that have been reducing the profits over the years. Thus, an increase of capital shares was needed in the short term in order to improve this financial situation. In this respect, it should be noted that after the entrance of the Company, the acquired business repaid a substantial amount of financial obligations reducing it to S/ 56,851 thousand.

Other factors explaining the transaction are related to the business model of the acquired business. Indeed, Clinica Portoazul was also searching for a partner with expertise in the health industry, and other areas of specialization. Based on that, the Group offered its expertise and its current medical offer, including the oncological expertise, to supplement the current offer and provide synergies in benefit of the existing shareholders.

F-8

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The purchase accounting as of the date of these financial statements is complete.

According with the accounting policy choice used by Management for non-controlling interest measurement, Auna Colombia S.A.S. recognizes the non-controlling interests in the acquiree based on the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. The shared held by Non controlling interests has the same rights as the shared held by Auna.

For the year ended December 31, 2020, Clínica Portoazul S.A. contributed revenues of S/ 50,441 thousand and profit before tax of S/ 3,583 thousand to the Group’s results.

If the acquisition had been made as of January 1, 2020, revenues would have amounted to S/ 120,447 thousand and loss before tax for the year ended December 31, 2020 would have amounted to S/ 1,645 thousand in the consolidated statement of income and other comprehensive income.

The net cash flows incurred as a result of the acquisition is presented below:


In thousands of soles
Consideration transferred	66,640
Cash and cash equivalents from acquired company Clínica Portoazul	(66,899	)

	(259	)

Measurement of fair values

The valuation techniques used for measuring the fair value of material assets acquired were as follows:


Assets acquired		Valuation technique
Property, furniture and equipment		Market comparison technique and cost technique: The valuation model considers market prices quoted for similar items when they are available, and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration, as well as functional and economic obsolescence.

Trademarks		Clínica Portoazul is the trademark of the acquired company as a health service provider. This brand has a local presence and offers a broad portfolio of health services to its patients. Of the three main approaches of value (income, market and cost) and the methods that comprise these approaches, the Company considered the Relief from royalty (RFR) method within the income approach as the most appropriate to assess the value of the Clínica Portoazul brand. The basic principle of the RFR method is that without ownership of the intangible in question, the user of that intangible would have to make a stream of payments to the asset owner in exchange for the rights to use that asset. By acquiring the intangible, the user avoids these payments.

F-9

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


Assets acquired		Valuation technique
		Based on the projections of the purchase model, the projected income and cash flow of Clínica Portoazul was estimated for the years 2020-2025 and in perpetuity. A long-term growth rate corresponding to 3% was applied. The Company conducted a comparative study of the royalty rate in the market within the health sector. The aforementioned royalty rate was adjusted taking into account the following attributes: Market Share and Longevity. Thus, based on the market analysis, the Company applied a royalty rate of 0.3% of revenue.

Loans and borrowings		Portoazul loans and borrowings are private debt. Due to this, management has used a valuation technique that maximizes the use of relevant observable inputs and has considered the contractual cashflows of the remaining debt discounted at the rate that best represents Portoazul’s credit risk at the acquisition date.

ii.

Promotora Médica Las Américas S.A. and Subsidiaries

In September 2018, the Group signed a share purchase agreement through Auna Colombia for the acquisition of 97.32% of the shares of PMLA. On December 5, 2018, the Superintendencia Nacional de Salud de la República de Colombia (Colombian Board of Health) approved the acquisition. Finally, on December 27, 2018, the Group acquired 97.32% of the shares and voting interests in PMLA.

Its operations are regulated by the Colombian Board of Health. It is engaged in the direct provision of healthcare services, creation of healthcare promoting enterprises, sale of medicines, and other healthcare-related services. PMLA’s registered office is at Avenida Diagonal 75 B N° 2 A 80/140, Medellín, Colombia. The acquisition is expected to provide the Group with an increased share of the healthcare services market in South America through access to PMLA’s customer base. The Group also expects to reduce costs through economies of scale.

For the shares acquired, Auna Colombia paid on December 27, 2018 the amount of S/ 551,633 thousand, which includes a capital increase to PMLA of S/ 41,876 thousand, to acquire the non-controlling interest of the subsidiaries of Instituto de Cancerología S.A., Patología Las Américas S.A.S. and Salud Oral Especializada S.A., with PMLA being the owner of 100% of the aforementioned subsidiaries.

Auna Colombia signed a syndicated loan agreement with Banco Nacional de México S.A. and Banco Santander S.A. for a total amount of S/ 368,611 thousand which, together with the capital contribution received from Enfoca Group amounting to S/ 242,114 thousand (notes 20.A and B), were used to pay for the acquisition of PMLA.

F-10

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The group of companies that make up PMLA and their respective economic activities are listed below:


Company		Business activity
Laboratorio Médico Las Américas Ltda.		Provision of medical laboratory services and provision of scientific advice on issues related to the corporate purpose. Its main office is in Medellín.

Instituto de Cancerología S.A.		Provision of medical-surgical and hospital services in the field of radiotherapy and oncology. Its main office is in Medellín.

Patología Las Américas S.A.S.		Activities related to pathology laboratory services and provision of scientific advice on issues related to the corporate purpose. Its main office is in Medellín.

Salud Oral Especializada S.A.		Integral oral healthcare services provision. Its main office is in Medellín.

Clínica del Sur S.A.S.		Medical and surgical services provision specializing in orthopedics and traumatology. Its main office is in the Municipality of Envigado, Medellín.

Las Américas Farma Store S.A.S.		Wholesale and retail marketing of all types of medicines, surgical medical equipment, beauty products, and all types of products aimed at human healthcare. Its main office is in Medellín.

This acquisition was recorded using the purchase method of accounting, as established in IFRS 3 Business Combinations. Under this method, most assets and liabilities were recorded at their estimated fair values at the date of purchase, including identifiable intangibles not recorded in the statement of financial position of each acquired entity. The transaction costs associated with the acquisition amounting to S/ 6,948 thousand were recorded as an expense and presented under administrative expenses’ as of December 27, 2018, in the consolidated statement of income and other comprehensive income. The fair values of the acquired net assets are presented below:

Identifiable assets acquired and liabilities assumed


In thousands of soles	*Note*
Cash and cash equivalents			10,680
Trade accounts receivable and other accounts assets			168,503
Inventories			13,708
Investments in associates			5,818
Investment property			567
Account receivable from former shareholders			1,618
Intangible assets		12	206,554
Property, furniture and equipment			326,036
Assets held for sale			1,971
Trade accounts payable and other accounts payable			(129,842	)
Loans and borrowings			(118,421	)
Deferred tax liabilities			(89,898	)
Contingent liabilities			(3,269	)

Total identifiable net assets acquired			394,025

F-11

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The trade accounts receivable and other accounts receivable comprise gross contractual amounts due of S/ 165,065 thousand and S/ 15,149 thousand, respectively. At the date of acquisition, S/ 11,711 thousand were expected to be uncollectable.

Goodwill arising from the acquisition has been recognized as follows:


In thousands of soles
Consideration transferred	551,633
Non-controlling interest	15,193
Fair value of identifiable net assets	(394,025	)

Goodwill	172,801

The Group has elected to measure the non-controlling interests in the acquiree at fair value.

The fair value of the non-controlling interest in PMLA, has been estimated by applying a discounted free cash flow valuation technique. The fair value measurements are based on significant inputs that are not observable in the market. The fair value estimate is based on:

•

Projected cash flows based on Management’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) projections for a period of seven years.

•

An assumed discount rate of 9.9%.

•

A terminal value, calculated based on long-term sustainable growth rates of 3%, which has been used to determine income for the future years.

The goodwill represents future synergies expected to be achieved from the combination of operations, distribution channels, workforce, and other efficiencies not included in the intangibles of the current value of the business. None of the goodwill recognized is expected to be deductible for tax purposes. In the case of identified intangible assets measured at fair value, those are expected to be recovered through sale or use.

For the year ended December 31, 2018, Promotora Médica Las Américas S.A. and Subsidiaries contributed revenues of S/ 4,768 thousand and profit before tax of S/ 380 thousand to the Group’s results.

If the acquisition had been made as of January 1, 2018, revenues would have amounted to S/ 1,231,554 thousand and profit before tax for the year ended December 31, 2018 would have amounted to S/ 53,371 thousand in the consolidated statement of income and other comprehensive income.

The net cash flows incurred as a result of the acquisition is presented below:


In thousands of soles	*Note*
Consideration transferred			551,633
Outstanding payment to former shareholders		17(c)	(7,274	)
Cash and cash equivalents from acquired company PMLA			(10,680	)

			533,679

F-12

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Measurement of fair values

The valuation techniques used for measuring the fair value of material assets acquired were as follows:


Assets acquired		Valuation technique
Property, furniture and equipment		Market comparison technique and cost technique: The valuation model considers market prices quoted for similar items when they are available, and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration, as well as functional and economic obsolescence.

Customer relationship		Contracts agreed with insurers for cardiology services, in which number of services are contracted to an established population. It is considered that they meet the criteria established for the recognition of said intangible asset. The multi-period excess earnings method (“MPEEM”) within the income approach is the most appropriate to value this asset. The MPEEM determines the value of an intangible as the present value of the incremental after-tax cash flows attributable only to the subject intangible after deducting the Contributory Asset Charges (CAC). The concept behind the CAC is that an intangible ‘rents’ or ‘leases’ from a hypothetical third party all the assets it requires to produce the cash flows resulting from its development, that each project leases only those assets it needs (including trading elements) and not those it does not need, and that each project pays to the owner of the assets a fair return (where appropriate) on the value of the leased assets.

Trade names, trademarks and domain names		Las Américas is the main brand of PMLA as a health service provider group of companies. This brand has a local presence and offers a broad portfolio of health services to its patients, sheltering the different entities under which PMLA operates. Of the three main approaches of value (income, market and cost) and the methods that comprise these approaches, the Company used the relief-royalty-saving method within the income approach as the most appropriate to assess the Las Américas brand. The relief-from-royalty method under the income approach is considered to be the most appropriate method for measuring the “Las Américas” trademark. The basic principle of the relief-from-royalty method is that without ownership of the intangible in question, the user of that intangible would have to make a stream of payments to the asset owner in exchange for the rights to use that asset. By acquiring the intangible, the user avoids these payments. Based on the projections of the purchase model, the income and cash flow of PMLA was determined for the years 2019-2028 and in perpetuity. For the valuation of the brand’s assets 100% of the estimated revenues for PMLA consolidated were considered. A long-term growth rate corresponding to 3% was applied. The Company conducted a comparative study of the royalty rate in the market within the health sector. The aforementioned royalty rate was adjusted taking into account the following attributes: Market Share and Longevity. Thus, based on the market analysis, the Company applied a royalty rate of 2.5% of revenue.

F-13

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


Assets acquired		Valuation technique
Software		The replacement cost method under the cost approach is the most appropriate to value the in-house developed software. The concept behind the cost approach is that a prudent investor will pay no more for an asset than the replacement or reproduction cost. The cost of replacing the asset would include the cost of constructing a similar asset of equivalent use at the prices applicable at the time of valuation analysis. This estimate can then be adjusted due to impairment losses attributable to obsolescence (physical, functional and/or economic).

Investment in associates		Income and market approaches: The market approach measures value based on the amounts paid by other purchasers in the market for commercial interest or assets that are considered reasonably similar. The income approach focuses on income-generating capacity of the identifiable asset or business.

D.	Regulatory agency for private healthcare services

Oncosalud S.A.C. is an indirect subsidiary of the Company. It is supervised by the Superintendencia Nacional de Salud - SUSALUD (Peruvian Board of Health). SUSALUD authorizes, regulates and supervises the operations of entities that provide healthcare services.

In the case of PMLA and Clínica Portoazul, this is regulated by the Superintendencia Nacional de Salud - Supersalud (Colombian Board of Health), an agency that authorizes, regulates and supervises the operation of entities providing healthcare services.

2.	Basis for the Preparation of Consolidated Financial Statements

A.	Basis of accounting

These consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (hereinafter, “IFRS”), issued by the International Accounting Standards Board (hereinafter, “IASB”).

Details of the Group´s accounting policies are included in note 4.

B.	Basis of measurement

The consolidated financial statements have been prepared on the historical cost principle, based on the accounting records maintained by the Group, except for the derivative financial instruments and investment properties which have been measured at fair value.

C.	Functional and presentation currency

These consolidated financial statements are presented in Soles (S/), which is the Company´s functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. The functional currency of the Subsidiaries domiciled in Colombia is COP (Colombian Pesos).

F-14

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

D.	Use of judgments and estimates

In preparing these consolidated financial statements, management has made judgments and estimates that affect the application of the Group´s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.

i.	*Judgments*

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is included in the following notes:

•

leases: whether an arrangement contains a lease (note 4.J); and

•

lease term: whether the Group is reasonably certain to exercise extension options (note 4.J).

•

reverse factoring: presentation of amounts related to supplier finance arrangements in the statement of financial position and in the statement of cash flow.

ii.

Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties at December 31, 2020 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes:

•

Revenue recognition: estimate of unbilled amounts (note 6);

•

Impairment test of intangible assets and goodwill: key assumptions underlying recoverable amounts (note 12);

•

Recognition of deferred tax asset: availability of future taxable profit against which deductible temporary differences and tax losses carried forward can be utilized (note 14);

•

Recognition and measurement of provisions: key assumptions about the likelihood and magnitude of an outflow of resources (note 18);

•

Measurement of ECL allowance for trade receivables: key assumptions in determining the weighted-average loss rate (note 6); and

•

Acquisition of subsidiary: fair value of the consideration transferred and fair value of the assets acquired and liabilities (note 1.C).

3.	Changes in Significant Accounting Policies

The Group has early adopted the COVID-19 Related Rent Concessions - Amendment to IFRS 16 issued on May 28, 2020. The amendment presents an optional practical solution for leases where the Group is a lessee, for leases for which the Group applies the practical solution, the Group should not assess whether the eligible rent concessions that are a direct consequence of the COVID-19 pandemic are lease modifications. The Group has applied the amendment retrospectively. The modification has no impact on retained earnings as of January 1, 2020.

F-15

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

For annual periods beginning on January 1, 2019

A.	IFRIC Interpretation 23: Uncertainty over income tax treatment

IFRIC 23 clarifies how the recognition and measurement requirements of IAS 12 Income taxes are applied when there is uncertainty over income taxes. It does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments.

Under IFRIC 23, uncertain tax liabilities or assets are recognized applying the definition of liabilities or assets for current or deferred taxes according to IAS 12. Therefore, those tax balances are presented as current or deferred tax assets or liabilities.

If there is uncertainty about an income tax treatment, then the Group considers whether it is probable that a tax authority will accept the Group tax treatment included or planned to be included in their tax filing. The underlying assumption in the assessment is that a tax authority will examine all amounts reported and will have full knowledge of all relevant information.

The accounting of interest and penalties are not specified under IAS 12 or IFRIC 23. The Group determines if interest or a penalty itself meets the definition of income tax to apply IAS 12, and if not it is accounted under IAS 37.

The Group has assessed the impact of IFRIC 23 at January 1, 2019 and the impact on the Group’s consolidated financial statements is not significant.

B.	IFRS 16: Leases

IFRS 16 introduced a single, on-balance sheet accounting model for lessees. As a result, the Group, as a lessee, has recognized right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments. Lessor accounting remains similar to previous accounting policies.

The Group has applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings at January 1, 2019. Accordingly, the comparative information presented for 2018 has not been restated – i.e., it is presented, as previously reported, under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below.

a.	*Definition of a lease*

Previously, the Group determined at contract inception whether an arrangement was or contained a lease under IFRIC 4 Determining whether an Arrangement contains a Lease. The Group now assesses whether a contract is or contains a lease based on the new definition of a lease. Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts entered into or changed on or after January 1, 2019.

F-16

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices. However, for leases of properties in which it is a lessee, the Group has elected not to separate non-lease components and will instead account for the lease and non-lease components as a single lease component.

b.	*As a lessee*

The Group leases many assets, including properties, medical equipment and IT equipment.

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16, the Group recognizes right-of-use assets and lease liabilities for most leases – i.e., these leases are on-balance sheet.

However, the Group has elected not to recognize right-of-use assets and lease liabilities for some leases of low-value assets (e.g., IT equipment and furniture), for which the Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Significant accounting policies

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

The Group has applied judgment to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognized.

i.	*Transition*

Previously, the Group classified property leases as operating leases under IAS 17. These include administrative, commercial offices and health centers. The leases typically run for a period of 10 years except for the one that remains with the Red Cross, which is for a period of 40 years. Some leases include an option to renew the lease for an additional five years after the end of the non-cancellable period. Some leases provide for additional rent payments that are based on changes in local price indices.

F-17

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

At transition, for leases classified as operating leases under IAS 17, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Group applied this approach to all other leases.

The Group used the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17.

•

Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term and leases of low-value items.

•

Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

The Group leases a number of items of medical equipment. These leases were classified as finance leases under IAS 17. For these finance leases, the carrying amount of the right-of-use asset and the lease liability at January 1, 2019 were determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date.

c.	*Impacts on consolidated financial statements*

i.	*Impacts on transition*

On transition to IFRS 16, the Group recognized right-of-use assets and lease liabilities. The impact on transition is summarized below:


In thousands of soles	January 1, 2019
Right-of-use assets		33,475
Lease liabilities		33,475

The change in accounting policy affected the following items in the consolidated statement of financial position on January 1, 2019:


In thousands of soles
Right-of-use assets – recognition on initial application of IFRS 16	33,475
Right-of-use assets reclassified from property, furniture and equipment	183,102
Right-of-use assets reclassified from intangible assets	3,126

Total right-of-use assets as of January 1, 2019	219,703
Lease liabilities – recognition on initial application of IFRS 16	33,475
Lease liabilities reclassified from loans and borrowings	92,828

Total lease liabilities as of January 1, 2019	126,303
Other accounts payable	(4,345	)
Deferred tax assets	1,282
Retained earnings (losses)	3,063

F-18

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted- average rate applied is 7% except for the Red Cross contract for which the rate applied is 5.5%.


In thousands of soles	January 1, 2019
Operating lease commitments as at December 31, 2018 (undiscounted)		67,954
Exclude
Recognition exemption for leases of low-value assets		(4,182	)
Recognition exemption for leases of short term		(1,746	)
Include
Finance leases liabilities		92,828
Effect of discounting		(28,551	)

Discounted recognized lease liabilities at January 1, 2019		126,303

For annual periods beginning on January 1, 2018

A.	IFRS 9: Financial instruments

IFRS 9 sets out requirements for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial Instruments: Recognition and Measurement.

As a result of the adoption of IFRS 9, the Group has adopted consequential amendments to IAS 1 Presentation of Financial Statements, which require impairment of financial assets to be presented in a separate line item in the statement of profit or loss and other comprehensive income. Previously, the Group’s approach was to include the impairment of trade receivables in selling expenses. Consequently, the Group reclassified the impairment of trade receivables amounting to S/ 11,816 thousand, recognized under IAS 39, from ‘selling expenses’ to ‘loss for impairment of trade receivables’ in the statement of profit or loss and OCI (Other Comprehensive Income) for the year ended December 31, 2017. Impairment losses on other financial assets are presented under ‘finance costs,’ similar to the presentation under IAS 39, and not presented separately in the statement of profit or loss and OCI due to materiality considerations.

i.	*Classification and measurement of financial assets and financial liabilities*

IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, Fair Value through Other Comprehensive Income (FVOCI) and Fair Value Through Profit or Loss (FVTPL). The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and on its contractual cash flow characteristics. The standard eliminates IAS 39 categories of held to maturity, loans and receivables and available for sale. Under IFRS 9, derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for classification.

IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities.

F-19

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The adoption of IFRS 9 has not had a significant effect on the Group’s accounting policies related to financial liabilities and derivative financial instruments.

For an explanation of how the Group classifies and measures financial instruments and accounts for related gains and losses under IFRS 9, see note 4.B.

The adoption of IFRS 9 has not had a significant effect on the classification of the Company’s financial assets and liabilities, except for the change in the name of the categories.

The following table shows the classification and original measurement of financial instruments under IAS 39 and the new classification and subsequent measurement under IFRS 9 for each class of the Group’s financial assets and financial liabilities as of January 1, 2018:

In thousands of soles

Original classification
under IAS 39

New
classification
under IFRS 9

Original
carrying amount
under IAS 39

New
carrying amount
under IFRS 9

Financial assets

Cash and cash equivalents

Loans
and
accounts
receivable

Amortized
cost

32,498

Trade accounts receivable

Loans
and
accounts
receivable

Amortized
cost

69,977

Other assets

Loans
and
accounts
receivable

Amortized
cost

39,415

Total financial assets

141,890

Financial liabilities

Loans and borrowings

Other
financial
liabilities

244,714

Trade accounts payable

Other
financial
liabilities

100,411

Other accounts payable

Other
financial
liabilities

42,396

Total financial liabilities

387,521

ii.

Impairment of financial assets

IFRS 9 replaces the “incurred loss” model in IAS 39 with an ECL model. The new impairment model applies to the financial assets measured at amortized cost, contract assets, and debt investments at FVOCI, but not to the investments in equity instruments. Under IFRS 9, credit losses are recognized earlier than under IAS 39.

F-20

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The application of IFRS 9’s impairment requirements at January 1, 2018 resulted in no significant impact. This impact amounting to S/ 10 thousand was recognized in the consolidated statement of income and other comprehensive income.

Transition

The Company applied the exception for retrospective application, that includes restatement of comparative information about Classification and Measurement, including Impairment.

The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application.

•

The determination of the business model within which a financial asset is held.

•

The designation and revocation of previous designations of certain financial assets and financial liabilities as measured at FVTPL.

B.	IFRS 15: Revenue from contracts with customers

The Group has adopted IFRS 15 using the cumulative effect method, with first-time application as of January 1, 2018. As a result, the Group opted for not applying the requirements required by the standard for the comparative period presented.

Revenue is measured based on the consideration specified in a contract with a customer. The Group recognizes revenue when it transfers control over medicine or service to a customer.

The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms, and the related revenue recognition policies:

Type of service

Nature and timing of
satisfaction of performance
obligations, including
significant payment terms

Revenue recognition under IFRS 15
(applicable from January 1, 2018)

Revenue recognition under IAS 18
(applicable before January 1, 2018)

Healthcare services

The patient acquires control of the use of the healthcare service with the provision of the service, because the patient receives and consumes the benefits granted by the Group as it provides the service. Invoices are generated at that point in time, as services are rendered, with the exception of patients who have medical insurance, which are issued according to the contractual terms agreed with the insurance companies. Uninvoiced amounts are presented as revenue and trade receivables.

Revenue is recognized when services are rendered. Revenue is recognized over time.

Healthcare services revenue is recognized on the date the patient receives treatment and includes amounts related to certain services, products and supplies utilized in providing such treatment. The selling price is determined based upon the company’s standard rates or at rates determined under reimbursement arrangements. These arrangements are generally with third parties such as commercial insurers.

Revenue was recognized when services were provided. There was no significant change from IFRS 15.

Advances received were included in trade payable.

F-21

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

As the revenues associated with oncologic healthcare plans are within the scope of IFRS 4 Insurance Contracts, IFRS 15 is not applied to these contracts for any period presented. For the details of accounting policies under IFRS 4, see note 4.M.

At January 1, 2018, the Group has not identified any significant impact on the consolidated financial statements arising from the application of IFRS 15.

4.	Significant Accounting Policies

The Group has consistently applied the following accounting policies to all periods presented in these consolidated financial statements, except if mentioned otherwise (see also note 3).

F-22

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

A.	Basis of consolidation

i.	*Business combinations*

The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Transactions costs are expensed as incurred.

ii.

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

Also, in preparing the consolidated financial statements of the Company, the effects of all transactions between subsidiaries were eliminated.

iii.

Non-controlling interest

For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets as of the date of acquisition.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

iv.

Common control transactions

The Company presents common control transactions at the date the transaction occurs without re-presenting comparative information as if the transaction had occurred before the start of the earliest period presented.

v.	*Associates*

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.

Interests in associates and the joint venture are accounted for using the equity method. They are initially recognized at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and OCI of equity-accounted investees, until the date on which significant influence or joint control ceases.

vi.

Joint arrangements

Under IFRS 11, investments in joint arrangements are classified as joint operations or as joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined that they are joint ventures.

F-23

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Joint ventures are accounted for using the equity method. Under the equity method, equity in joint ventures is initially recognized at cost and subsequently adjusted to recognize the Group’s share in profits or losses and other post-acquisition movements in other comprehensive income. When the Group’s share in the losses of a joint venture is equivalent to or exceeds its share in such joint venture (including any long-term share that is substantially part of the Group’s net investment in the joint venture), the Group does not recognize additional losses, unless it has assumed obligations or made payments on behalf of the joint ventures.

Unrealized gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s share in such joint ventures. Unrealized losses are also eliminated, unless the transaction provides evidence of an impairment of the transferred asset.

The profit resulting from the equity method is included in the consolidated statement of income and other comprehensive income.

vii.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with companies whose investment is recognized using the equity method are eliminated from the investment in proportion to the Group’s interest in the investment. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

B.	Financial instruments

i.	*Recognition and initial measurement*

Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is an account receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not measured at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Classification and subsequent measurement

•

Financial assets

Policy applicable from January 1, 2018

On initial recognition, a financial asset is classified as measured at amortized cost or at fair value through profit and loss.

Financial assets are not reclassified subsequent to their initial recognition, unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

F-24

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

A financial asset is measured at amortized cost if it meets both of the following conditions and is not measured at FVTPL:

•

It is held within a business model whose objective is to hold assets to collect contractual cash flows; and

•

Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets that are not cash flow hedge. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Business model assessment: Policy applicable from January 1, 2018

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to Management. The information considered includes:

•

The stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

•

How the performance of the portfolio is assessed and reported to the key personnel of the group’s management;

•

The risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

•

How managers of the business are compensated – e.g., whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

•

The frequency, value, and timing of sales in prior periods, the reasons for such sales and expectations about future sales.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is assessed on a fair value basis are measured at FVTPL.

Assessment whether contractual cash flows are solely payments of principal and interest

Policy applicable from January 1, 2018

For the purposes of this assessment, “principal” is defined as the fair value of the financial asset on initial recognition. “Interest” is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g., liquidity risk and administrative costs), as well as a profit margin.

F-25

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows so that it would not meet this condition. In making this assessment, the Group considers:

•

Contingent events that would change the amount or timing of cash flows;

•

Terms that may adjust the contractual coupon rate, including variable-rate features;

•

Prepayment and extension features; and

•

Terms that limit the Group’s claim to cash flows from specified assets (e.g., non-recourse features).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents the amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

Subsequent measurement and gains and losses: Policy applicable from January 1, 2018


Financial assets at FVTPL		These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss. However, see note 4.B.v for derivatives designated as hedging instruments.

Financial assets at amortized cost		These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses, and impairment are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

The Group classified its financial assets at FVTPL, and, within this category, as held for trading.

Subsequent measurement and gains and losses: Policy applicable before January 1, 2018


Financial assets at FVTPL		Measured at fair value and changes therein, including any interest or dividend income, were recognized in profit or loss.

Loans and receivables		Measured at amortized cost using the effective interest method.

•

Financial liabilities

Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, if it is a derivative or if it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense,

F-26

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

ii.

Derecognition

Financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset.

The Group enters into transactions whereby it transfers assets recognized in its consolidated statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

Financial liabilities

The Group derecognizes a financial liability when its contractual obligations are discharged or canceled or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

iii.

Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

iv.

Derivative financial instruments

Derivative financial instruments and hedge accounting – Policy applicable from January 1, 2018

The Group holds derivative financial instruments to hedge some of its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivative financial instruments are measured at fair value, and changes therein are generally recognized in profit or loss.

The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates.

F-27

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

At inception of designated hedging relationships, the Group documents the risk management objective and strategy for undertaking the hedge. The Group also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.

Cash flow hedges

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in OCI and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is recognized in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss.

For the Call spread option agreements with deferred premium and Swap agreements the Group has decided not to apply the cost of hedging model in IFRS 9; as a consequence, the forward points are not taken to OCI and accumulated in a separate component of equity. The Group designates only the change in the value of the spot element as the hedging instrument, the changes in fair value due to the forward points are immediately recognized as a profit or loss in the period.

The Group designates only the change in fair value of the spot element of forward exchange contracts as the hedging instrument in cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts (forward points) is separately accounted for as a cost of hedging and recognized in a costs of hedging reserve within equity.

The Group designates only the intrinsic value of purchased collar contracts as the hedging instrument in cash flow hedging relationships. The change in fair value of the time value of purchased collar contract is separately accounted for as a cost of hedging and recognized in a costs of hedging reserve within equity.

In a cash flow hedge of the forward foreign currency risk of a payable or receivable, the amount accumulated in the hedging reserve and the cost of hedging reserve shall be reclassified from the separate component of the equity to profit or loss over the period the payable or receivable affects profit or loss, because changes in exchange rates will affect the amount of cash required to settle the item (as measured by reference to the entity’s functional currency).

If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in the hedging reserve remains in equity until, for a hedge of a transaction resulting in the recognition of a non-financial item, it is included in the non-financial item’s cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss.

If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve are immediately reclassified to profit or loss.

F-28

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

C.	Impairment

i.	*Non-derivative financial assets*

Policy applicable from January 1, 2018

Financial instruments

The Group recognizes loss allowances for expected credit losses (ECLs) on financial assets measured at amortized cost.

Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment, loss of the value of money over time and individual analysis of the clients (considering their geographical location).

The Group considers a financial asset to be in default when the client is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realizing security (if any is held).

Credit-impaired financial assets

At each reporting date, the Group assesses whether financial assets carried at amortized cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:

•

Significant financial difficulty of the debtor or issuer;

•

A breach of contract such as a default or being more than 90 and 180 days past due;

•

It is probable that the debtor will enter bankruptcy or other financial reorganization; or

•

The disappearance of an active market for a security because of financial difficulties.

Presentation of allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

Write-off

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers and for corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

F-29

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Policy applicable before January 1, 2018

Financial assets measured at amortized cost

The Group considered evidence of impairment for these assets at both an individual asset and a collective level. All individually significant assets were individually assessed for impairment. Those found not to be impaired were then collectively assessed for any impairment that had been incurred but not yet individually identified. Assets that were not individually significant were collectively assessed for impairment. Collective assessment was carried out by grouping together assets with similar risk characteristics.

In assessing collective impairment, the Group used historical information on the timing of recoveries and the amount of loss incurred and made an adjustment if current economic and credit conditions were such that the actual losses were likely to be greater or lesser than suggested by historical trends.

An impairment loss was calculated as the difference between an asset’s carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses were recognized in profit or loss and reflected in an allowance account. When the Group considered that there were no realistic prospects of recovery of the asset, the relevant amounts were written off. If the amount of impairment loss subsequently decreased and the decrease was related objectively to an event occurring after the impairment was recognized, then the previously recognized impairment loss was reversed through profit or loss.

ii.

Non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than investment property, inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets with an indefinite useful life are tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using an after-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

F-30

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

D.	Cash and cash equivalents

Cash and cash equivalents presented in the consolidated statement of financial position comprise cash on hand, demand deposits at banks and other highly marketable debt investments with maturity of three months or less that are not subject to significant risk of changes in value.

E.	Inventories

Inventories are measured at the lower of cost and net realizable value. The net realizable value is the estimated selling price of the inventories in the ordinary course of business, less discounts and other costs and expenses incurred to put the inventories to sale. Cost is determined using the weighted average method.

Provisions for obsolescence and net realizable value are estimated based on a specific analysis made at each reporting date of the consolidated financial statements. The reduction of the carrying amount of inventories to their net realizable value is recorded under ‘provision for impairment of inventories’ with a charge to profit or loss in the period in which it is estimated that such reductions will occur.

F.	Intangibles

Goodwill

Goodwill arises from the acquisition of subsidiaries and represents the excess between the cost of an acquisition and the fair value of the Group’s interest in the net identifiable assets at the date of the acquisition.

Goodwill arising from a business combination is allocated to each CGU or group of CGUs that are expected to benefit from the synergies of the combination. Each CGU or group of GCUs to which goodwill is allocated represents the lowest level of cash-flow generating assets within the entity at which goodwill is monitored by Management.

The identification of the CGU requires a critical judgment of Management. The Group has defined its CGUs as each of the companies acquired because they are the smallest identifiable groups of assets that generate cash flows and that are largely independent of the cash inflows of other assets or groups of assets.

Goodwill is tested for impairment at least annually and recorded at cost less accumulated impairment losses. The carrying amount of goodwill is compared to the recoverable amount, which is the greater of value in use and fair value less costs to sell. Any impairment is recognized immediately as an expense and cannot be reversed.

Acquired trademark

The trademark are “Clínica Portoazul” and “Las Américas,” which was identified in the acquisitions (note 1.C). It is a trademark with presence in Colombia and offers a broad portfolio of healthcare services to its patients through the different entities under which Clínica Portoazul and PMLA operates. The estimated market value was determined using the relief-from-royalty method. Management evaluated its recognition and growth in the Colombian market, and assessed that it has an indefinite useful life.

Customers relationship

It includes the estimated market value of the contracts with insures for cardiology services identified as a result of the acquisition of Promotora Médica Las Américas S.A. (note 1.C) and was determined under the multi-period excess earnings method (“MPEEM”) within the income approach, which is the most appropriate to value this asset. The estimated useful life is 10 years.

F-31

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Other intangibles assets

Intangibles other than goodwill are acquired separately, and are measured at cost less subsequent amortization and impairment losses.

Surface right agreement

Corresponds to surface rights agreement signed between Medicser and the Peruvian Red Cross Society, owner of the land, and acquired on 2011.

Amortization is charged to the consolidated statement of income and other comprehensive income on a straight-line basis as follows:


	Years
Software		2 to 10
Customer relationships		10
Surface rights agreement		40

Assets that are subject to amortization are reviewed for impairment when events or circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized in the consolidated statement of income and other comprehensive income to reduce the carrying amount to recoverable amount.

G.	Property, furniture and equipment

i.	*Recognition and measurement*

Land, buildings and facilities, medical equipment, and furniture are measured at cost, less accumulated depreciation and any accumulated impairment losses. Borrowing costs related to the acquisition or construction of qualifying assets are capitalized as part of the cost of that asset.

Other disbursements for service and repair are charged to the consolidated statement of income and other comprehensive income in the period when incurred. In case significant spare parts of an item of property, furniture and equipment have different useful lives, then they are accounted for as separate items (major components) of property, furniture and equipment.

Any gain or loss on disposal of an item of land, buildings and facilities, medical equipment, and furniture is recognized in profit or loss.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of the asset. The Group defines qualifying assets as construction projects or other assets for which a minimum period of twelve months is needed to get ready for its intended use or sale (note 11).

ii.

Subsequent expenditure

Subsequent expenditures are included in the carrying amount of the asset or they are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits will flow to the Group and the cost of these assets can be measured reliably.

F-32

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

iii.

Depreciation

Depreciation is calculated to write off the cost of items of property, furniture and equipment less their estimated residual values using the straight-line method over their estimated useful lives and is generally recognized in profit or loss.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:


	Years
Buildings and premises		10 to 94
Medical equipment		4 to 12
Vehicles		5
Furniture, fixtures and various equipment		8 to 15
IT equipment		4 to 8

During 2018, the Group reviewed the useful life of medical equipment and surgical instruments, which resulted in changes in the expected useful life of certain surgical instruments. The useful life of some of them decreased mainly due to a higher level of use. As a result, the effect of these changes on actual depreciation expense was included in “cost of sales.”

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

H.	Public service concession arrangements

Public Service Concession Arrangements are defined in the International Financial Reporting Interpretations IFRIC 12 Service Concession Arrangements and are accounted regarding the consideration received for the infrastructure.

In 2010, Consorcio Trecca S.A.C. (hereinafter, “Consorcio Trecca”), a subsidiary of the Group, entered into a 20-year concession agreement with the Peruvian Social Health Insurance (hereinafter, “EsSALUD”), a decentralized public agency attached to the Ministry of Labor and Employment Promotion, focused on granting prevention, promotion, economic benefits and social benefits that correspond to the Social Security contributory system. The concession was given to Consorcio Trecca, as operator of the concession, with the obligation to renovate, operate and maintain the Torre Trecca, located in the city of Lima. The Group holds a 99.99% interest in Consorcio Trecca.

On July 15, 2011, Consorcio Trecca and EsSALUD agreed to suspend the obligations prior to the start date of the investment period. This suspension was extended until January 2018.

In November 2018, Consorcio Trecca and EsSALUD were able to make the direct deals associated with the agreements to update the investment amounts and the contractual rates, which will be in effect at the beginning of the operation period.

Since June 26, 2019, both agreed to start again with the coordination of the preparation of the engineering study and update of the schedule of the project development plan.

The Group recognizes a financial asset to the extent that it has an unconditional contractual right to receive cash or another financial asset from, or at the direction of, the grantor for the construction services. This right arises

F-33

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

where the grantor has little or no discretion to avoid payment, usually because the agreement is enforceable by law. In the event that the fair value of the construction services provided exceeds the fair value of the recognized financial asset, the difference will be recognized as an intangible asset (note 7.k).

The Group recognizes an intangible asset arising from a service concession arrangement when it has a right to charge for use of the concession infrastructure. An intangible asset received as consideration for providing construction or upgrade services in a service concession arrangement is measured at fair value on initial recognition with reference to the fair value of the services provided (note 12).

I.	Assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for sale or held for distribution to owners if it is highly probable that they will be recovered primarily through sale rather than through continuing use.

Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis. Impairment losses on initial classification as held-for-sale or held-for-distribution and subsequent gains and losses on remeasurement are recognized in profit or loss.

Once classified as held-for-sale, the property, furniture and equipment are no longer depreciated.

J.	Leases

The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17 and IFRIC 4. The details of accounting policies under IAS 17 and IFRIC 4 are disclosed separately.

Amendment applicable from June 1, 2020

In May 2020 the IASB published an amendment to IFRS 16 “Covid related rent concessions”. The amendment permits lessees, as a practical expedient, not to assess whether particular rent concessions occurring as a direct consequence of the COVID-19 are lease modifications and instead to account for those rent concessions as if they are not lease modifications. The amendment does not affect lessors.

A lessee applies the amendment for annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted, including in financial statements not yet authorised for issue at 28 May 2020.

The Group has applied the practical expedient for the first time in these financial statements for all rent concessions (mainly waiver and fee reductions of lease payments – note 13) related to real estate leases that meet the conditions stated in the amendment. The rent concessions are accounted for as a variable lease payment and are recognized in profit and loss in the period.

The effect of recognition of the amendment from June to December 2020 was a lower expense in finance cost amounting to S/ 82 thousand.

F-34

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Policy applicable from January 1, 2019

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16.

This policy is applied to contracts entered into on or after January 1, 2019.

i.	*As a leasee*

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, for the leases of property the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

•

Fixed payments, including in-substance fixed payments;

•

Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

•

Amounts expected to be payable under a residual value guarantee; and

•

The exercise price under a purchase option that the group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

F-35

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Short-term leases and leases of low-value assets.

The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets (IT equipment) and short-term leases. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Policy applicable before January 1, 2019

For contracts entered into before January 1, 2019, the Group determined whether the arrangement was or contained a lease based on the assessment of whether:

•

Fulfillment of the arrangement was dependent on the use of a specific asset or assets; and

•

The arrangement had conveyed a right to use the asset. An arrangement conveyed the right to use the asset if one of the following was met:

•

The purchaser had the ability or right to operate the asset while obtaining or controlling more than an insignificant amount of the output;

•

The purchaser had the ability or right to control physical access to the asset while obtaining or controlling more than an insignificant amount of the output; or

•

Facts and circumstances indicated that it was remote that other parties would take more than an insignificant amount of the output, and the price per unit was neither fixed per unit of output nor equal to the current market price per unit of output.

i.	*As a leasee*

In the comparative period, as a lessee the Group classified leases that transferred substantially all of the risks and rewards of ownership as finance leases. When this was the case, the leased assets were measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Minimum lease payments were the payments over the lease term that the lessee was required to make, excluding any contingent rent. Subsequent to initial recognition, the assets were accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases were classified as operating leases and were not recognized in the Group’s statement of financial position. Payments made under operating leases were recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received were recognized as an integral part of the total lease expense, over the term of the lease.

K.	Trade accounts payable

Trade accounts payable are obligations to pay for medicines or services acquired from suppliers in the ordinary course of business. Accounts payable are classified as ‘current liabilities’ if payment is to be made in a year or less; otherwise, they are presented as ‘non-current liabilities.’

F-36

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Accounts payable are initially recognized at fair value, and subsequently they are measured at amortized cost using the effective interest method.

When the Group has an arrangement in which the bank agrees to pay amounts to a participating supplier in respect of invoices owed by the Group and receives settlement from the Group at a later, the account payable under factoring are included within operating cash flows because they continue to be part of the normal operating cycle of the Group and the payments to a supplier by the bank are considered non-cash transactions.

L.	Employee benefits

Profit sharing

For the Company and its Peruvian subsidiaries, the employees’ profit sharing is calculated in accordance with current legal regulations (Legislative Decree 892) on the same net taxable base used to calculate the income tax. In the case of the Peruvian Subsidiaries, the rate of profit sharing is 5%, on the net taxable base of the current year. According to the Peruvian law, there is a limit in profit sharing that an employee can receive, equivalent to 18 monthly salaries.

In Colombian subsidiaries, employees’ profit sharing is not applicable. It is replaced by a legal bonus composed of an additional month’s salary that is paid two times during the year in June and December, respectively. This bonus is mandatory even if the company does not obtain earnings. Additionally, the Board is able to approve voluntary bonuses for certain employees with high performance during a profitable year.

Legal bonuses

The Group recognizes the expense for legal bonuses and their related liabilities under laws and regulations currently in force in Peru. The legal bonuses comprise an additional month’s salary that is paid in July and December, respectively.

Termination benefits

Termination benefits are recognized in accordance with Peruvian and Colombian legislation in profit or loss when paid, i.e., when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits.

Severance payment (CTS for its Spanish acronym)

In Peru, severance payment of personnel from the Group’s companies (CTS for its Spanish acronym) includes employees’ indemnities calculated according to current legislation, which shall be deposited in May and November annually in bank accounts designated by employees. Severance payment is equivalent to 50% of a current remuneration as of the date of deposit. The Group has no obligation to make any additional payments once it has made the annual deposits of funds to which the employee is entitled.

In Colombia, severance payment of personnel from the Group’s companies includes employees’ indemnities calculated according to current legislation, which shall be transferred in the fund selected by the employee at the end of the year or when the work contract finished. Severance payment is equivalent to one current remuneration.

F-37

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Vacations

Personnel’s annual vacations are recognized on an accrual basis. The provision for estimated annual vacation obligations is recognized at each date of preparation of the consolidated statement of financial position.

M.	Insurance contracts

The oncologic healthcare plans and general health plans are contracts that result in the transfer of a significant insurance risk and are accounted in accordance with IFRS 4 Insurance Contracts.

IFRS 4 allows entities to continue using their existing accounting policies for their insurance contracts provided that those policies meet certain minimum criteria such as that the amount of insurance obligation is subject to a liability adequacy test. This test considers current estimates of all contractual and related cash flows. If the liability adequacy test identifies that the insurance obligation is inadequate, the total deficit will be recognized in the consolidated statement of comprehensive income.

The Group defines an Insurance contract as the commitment that it assumes with its policyholders to provide coverage of oncologic services, exclusively, for cancer treatment services, in accordance with the particular limits and conditions indicated in each contract. It also defines as an insured event the occurrence of an uncertain future event that is covered by an insurance contract which, in this case, is the confirmatory diagnosis of the insured’s oncological disease, as long as it has not occurred within the waiting period. It also defines as an insured event the occurrence of an uncertain future event that is covered by an insurance contract which, in this case, is the confirmatory diagnosis of the insured’s oncological disease, as long as it has not occurred within the waiting period (the period during which a policyholder must participate in the plan in order to receive the benefits under the insurance contract).

The insurance contracts of the Company have the following characteristics:

(i)	All insurance policies are signed with a twelve (12) months period limit.

(ii)

All of the Company’s insurance policies contain a provision providing for the automatic increase in premiums upon renewal, with the increase in the premium determined based on the expected claims of the program under which the policy is issued and based on the age profile of the policyholder population, which allows the Company to adjust the insurance premium at the end of the contracted period. The insurance policies are automatically renewed unless the policyholder states that he or she will not renew the contract, or is not in agreement with the modified the contractual terms by means of a written notice sent thirty (30) calendar days in advance of the scheduled renewal.

(iii)

If the policyholder does not make the corresponding premium payment for at least 30 days, the Company has the legal right to suspend the policyholder’ rights of the contracted coverage. After 120 days of non-payment, the Company can terminate the contract automatically by sending a formal written communication to the policyholder at the address stated in the contract.

In accordance with such characteristics and considering the current market practice in the non-life insurance market in Peru, the recognition and measurement of the Company’s insurance liabilities are based on short-term duration insurance contracts.

F-38

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

i.	*Technical reserves for healthcare insurance contracts*

Technical reserves are provisions set aside by healthcare service providers to meet, as of the date of the consolidated statement of financial position, the obligations that may arise from healthcare services provided to plan policyholders that have not been reported (IBNR) and the unearned premium reserve (portion of insurance contracts for which the risk has not yet expired as of the date of the consolidated statements). The amounts of these reserves or provisions are determined as follows:

•

IBNR

At the date of the consolidated financial statements, the reserve for events incurred but not reported (IBNR) is determined based on the total expense amounts to be claimed estimated by the Company’s experts and reflected in the pre-authorization of service letters issued by Oncosalud S.A.C., our insurance subsidiary. The estimated total expense amounts to be claimed consist only of expenses rendered/provided by third parties to the Company. Services provided by our healthcare services subsidiaries are not considered in this estimate as the claim expense activity is recorded as it is incurred or accrued by our healthcare services subsidiaries at each reporting date and there is therefore no gap between the event incurred and the recording of the related expenses, which reduces the Group’s IBNR insurance reserve liability due to the integrated business model. See note 30.A.

In addition, in order to determine the best estimate of IBNR, the Company performs a liability adequacy test under an analysis of matricial triangles through the Chain Ladder methodology, which considers the historical development of oncological medical attention reported in the last 6 years at December 31, 2020 (10 years at December 31,2019), related to occurrences prior to the base date, aiming to establish a future projection of the claims incurred but not reported with third parties as of the date of the consolidated financial statements instead of a calculation considering the entire future projected treatment protocol, which is not performed due to the short-term nature of our contracts. The corresponding result of the liability adequacy test is compared with the amounts recorded as an obligation in the consolidated financial statements performed under the above paragraph.

As of December 31, 2020, the amount of the reserve for incurred but not reported healthcare claims is recorded as part of the ‘Provisions’ in the current liabilities in the consolidated statement of financial position (note 18).

•

Provision for outstanding claims

The provision for outstanding claims is calculated based on the notifications sent by the legal department, which represents a legal obligation to refund the medical cost assumed by the policyholder recognized in “provisions” in the consolidated statement of financial position (note 18).

•

Unearned premiums reserve

Corresponds to the portion of payment received on oncological healthcare contracts that relates to risks that have not yet expired as of the date of the consolidated statement of financial position and is presented as a deferred revenue in the consolidated statement of financial position. The deferred revenue is calculated plan by plan considering proportionally the months not yet elapsed according to the coverage of the healthcare plan (note 19).

ii.

Liability adequacy test

The Group assesses at the date of report whether its recognized insurance liabilities are adequate, using current estimates of future cash flows under its insurance contracts and liability adequacy tests (minus the deferred

F-39

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

acquisition cost). If the evidence shows that the liability is inadequate, the total amount of the difference will be recognized in the consolidated statement of income and other comprehensive income. The liability adequacy test, based on the best estimates made, shows that the technical reserves established by the Group are adequate and sufficient to meet the estimated value of future commitments of insurance contracts.

iii.

Deferred acquisition costs (DAC)

Commissions are related to the underwriting of new contracts which are capitalized and to renewals of existing contracts and are presented as assets under ‘other assets’ in the consolidated statement of financial position (note 7). All other costs are recognized as expenses when incurred. DAC are subsequently amortized during the policy life.

DAC is reviewed at the end of each reporting period and are written off when they are no longer considered to be recoverable.

N.	Provisions

Provisions are recognized when the Group has a present obligation, either legal or constructive, as a result of past events, and when it is probable that an outflow of resources will be required to settle the obligation, and it is possible to reliably estimate its amount.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period.

O.	Government grants

The Group applied for the first time in these annual financial statements IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance”.

Government grants are assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to the operating activities of the entity. Such government grants may be given to an entity to help finance a particular asset or other expenditure.

Government grants should not be recognised until there is reasonable assurance that the entity will comply with the conditions attaching to it and that the grant will be received.

The Group recognises an unconditional government grant in the income statement on a systematic basis over the periods in which the related costs towards which they are intended to compensate are recognised as expenses.

The loans are recognized and measured in accordance with IFRS 9 at its fair value, discounted using a market rate for a similar loan. The benefit of the below-market rate of interest, measured as the difference between the initial carrying value of the loan according to IFRS 9 and the proceeds received, is accounted for as a grant in accordance with IAS 20. The grant initially recognized as deferred income is recognized in profit or loss (compensating the finance cost) over the period of the loan covered.

P.	Income tax

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or

F-40

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

Deferred tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:

•

Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

•

Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

•

Taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognize a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date, and reflects uncertainty related to income taxes, if any.

Deferred tax assets and liabilities are offset only if certain criteria are met.

Uncertain tax treatment

The Group determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments and uses the approach that better predicts the resolution of the uncertainty.

Q.	Share capital and share premium

Common shares are classified as equity and are determined using the par value of the shares that have been issued.

The share premium is the amount by which the fair value of the contribution exceeds the par value of the shares issued.

F-41

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

R.	Dividend distribution

In 2018, the Group approved the Dividends Policy, which establishes the distribution of the available profits, up to S/ 10,000 thousand per year. The General Shareholders Meeting will determine the distribution of dividends and the respective payment schedule.

Dividend distribution is recognized as a liability in the consolidated financial statements in the period in which dividends are approved by the Group’s shareholders.

S.	Contingent liabilities and assets

Contingent liabilities are not recognized in the consolidated financial statements. They are only disclosed in the notes to the financial statements, unless the possibility of an outflow of economic resources is remote. Contingent assets are not recognized in the consolidated financial statements and are only disclosed when an inflow of economic resources is probable.

T.	Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. The Group recognizes revenue when it identifies a contract with a customer, the performance obligations in the contract, determines the transaction price, and allocates the transaction price to the performance obligations in the contract as each performance obligation is met.

i.	*Revenue recognition from oncologic healthcare plans*

Revenues arising from oncologic healthcare plans include payments from individuals and corporate clients. The Group has ten oncologic healthcare plans. Revenue is recognized over time in which the related plan participants are entitled to healthcare services. All oncologic healthcare plans have a one-year duration and are automatically renewed, unless terminated by either party. The portion of the payment received that relates to unexpired risks at the base date are recognized in the “unearned premiums reserve” in the consolidated statement of financial position. The obligation of the Company is to provide health coverage from the moment the client is diagnosed with cancer, and in turn, the client has the right to receive the treatment according to the conditions and duration of the contract.

ii.

Revenue recognition from general healthcare services plan

Revenues arising from general healthcare services plan include payments from individual clients. The Group has one general healthcare plan called “Auna Salud”. Revenue is recognized over time in which the related plan participants are entitled to the general healthcare services. This plan have a one-year duration with recurring monthly charges. The obligation of the Group is to provide general healthcare coverage from the moment the client requests health services, and in turn, the client has the right to receive the treatment according to the conditions of the plan.

iii.

Healthcare services

Revenue from healthcare services is recognized when services are rendered. Healthcare services revenue is recognized on the date the patient receives treatment and includes amounts related to certain services, products and supplies used in providing such treatment. Hospitalist revenue is recognized at the time services are provided.

F-42

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Contracts related to healthcare services include a variable consideration for which the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods and services to the insurance payers. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved. The variable consideration is only related to price concession provided to insurance payers after healthcare services have been provided. The Group uses the expected value method to estimate the variable consideration given the large number of insurance payers that have similar characteristics and based on statistics of historical percentages of the issued credit notes (price concession). The Group then applies the requirements on constraining estimates of variable consideration in order to determine the amount of variable consideration that can be included in the transaction price and recognized as revenue. For the year ended December 31, 2020, the variable consideration recorded by our healthcare services subsidiaries amounted to S/ 3,897 thousand (S/ 6,471 thousand as of December 31, 2019) and is recorded in the Healthcare services revenue line item in the consolidated statement of income and other comprehensive income.

iv.

Sales of medicines

The sales of medicines are recognized when the medicines are delivered and have been accepted by customers. Revenue from the sale of medicines delivered during hospitalization is recognized at the time the medicine is used by the patient. The amount of revenue is recognized at the fair value of the medicines.

Type of service

Nature and timing of satisfaction of
performance obligations, including significant
payment terms

Revenue recognition under IFRS 15

Healthcare services

Advances are primarily received from patients who do not have medical insurance for healthcare services such as hospitalization. These advances are recognized in revenue as services are rendered over time.

Revenue is recognized when services are rendered. Revenue is recognized over time based on the cost of the services, products and supplies utilized in providing such treatment.

The variable consideration is determined using the expected value with statistics of historical percentages for the last 3 years and is updated at the end of each month.

Advances received were included in trade payable.

F-43

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


Type of service	Nature and timing of satisfaction of performance obligations, including significant payment terms	Revenue recognition under IFRS 15
	Generally, invoices are payable within 120 to 150 days for insurance companies and third parties are charged within 30 to 60 days.	under reimbursement arrangements. These arrangements are generally with third parties such as commercial insurers. Revenue from contracts with third-party payers is recognized to the extent that it is highly probable that a significant reversal in the amount of accrued revenue will not occur. Therefore, the amount of the recognized income is adjusted by the expected claims that are estimated based on the historical data of the issued credit notes. Some contracts permit the insurancers to get discounts for prompt pay, Management works with statistics which are estimated based on historical percentages and this are recognized as a lower value of revenue.

Sale of medicines	Customers acquire control of the medicines, when they are delivered and have been accepted, either as part of the hospitalization or as part of the pharmacy sale. Invoices are generated at the time the customers receive the medicines and in the case of hospitalization at the time of the medicine is delivered. In general, invoices are payable at the time of issuance and after invoicing, in the case of hospitalized patients.	Revenue is recognized when medicines are delivered and have been accepted by customers at their premises. Revenue from the sale of medicines delivered during hospitalization is recognized at the estimated net realization amount at the time the medicine is received by the patient.

U.	Cost and expense recognition

The cost of medical services is primarily made up of costs incurred in providing healthcare services, including the cost of medicines, personnel expenses for medical staff, medical consultation fees, surgery fees, depreciation of medical equipment, amortization of software, cost of services provided by third parties, primarily lease payments to third parties for certain of our facilities, service and repair costs at our facilities, custodial and cleaning services and utilities, cost of room services for inpatients, cost of clinical laboratories and technical reserves for healthcare services.

The cost of services provided to insured who are outside the Group’s Clinic Network is recognized as it is incurred. The cost for events incurred but not reported (IBNR) is determined over the total of the pre-authorization of the service letters issued and in force as of December 2020 and 2019 (note 4.M).

F-44

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Other costs and expenses are recognized on an accrual basis regardless of when they are paid and, if any, in the same period in which the related income is recognized.

V.	Finance income and finance costs

The Group’s finance income and finance costs include:

•

Interest income;

•

Interest expense;

•

The net gain or loss on financial assets at fvtpl;

•

The foreign currency gain or loss on financial assets and financial liabilities; and

•

The reclassification of net gains and losses previously recognized in oci on cash flow hedges of interest rate risk and foreign currency risk for borrowings.

W.	Foreign currency transactions and balances

Transactions in foreign currency are those transactions carried out in a currency other than the functional currency. Transactions in foreign currency are translated into functional currency at the exchange rates at the dates of the transactions.

The foreign currency gains or losses, resulting from the payment of such transactions and from the translation of monetary assets and liabilities stated in foreign currency at exchange rates ruling at period-end closing, are recognized in the consolidated statement of income and other comprehensive income.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into soles at the exchange rates at the reporting date. The income and expenses related to foreign operations are translated into soles at the average exchange rate for each month of the year. Foreign currency differences are recognized in OCI and presented in the ‘translation reserve,’ except to the extent that the translation difference is allocated to non-controlling interest.

X.	Standards issued but not yet effective

A number of new standards are effective for annual periods beginning after January 1, 2020 and earlier application is permitted; however, the Group has not early adopted the new or amended standards in preparing these consolidated financial statements.

This table lists new currently effective standards that are required to be adopted in annual periods beginning on January 1, 2020 and forthcoming requirements that are required to be applied for annual periods beginning after January 1, 2021 and that are available for early adoption in annual periods beginning on January 1, 2020.

New currently effective requirements and forthcoming requirements


Effective date		New standards or amendments
January 1, 2023		• IFRS 17: Insurance contracts.

January 1, 2022		• IAS 37: Provisions, contingent liabilities and contingent assets.

January 1, 2022		• IAS 16: Property, plant and equipment.

January 1, 2023		• IAS 1: Presentation of financial statements.

F-45

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

IFRS 17: Insurance contracts

In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, IFRS 17 will replace IFRS 4 Insurance Contracts (IFRS 4) issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e., life, non-life, direct insurance and reinsurance), regardless of the type of entities that issue them, as well as to certain guaranties and financial instruments with discretionary participation features.

A few scope exceptions will apply. The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in IFRS 4, which is largely based on grandfathering previous local accounting policies, IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of IFRS 17 is the general model supplemented by:

•

A specific adaptation for contracts with direct participation features (the variable fee approach); and

•

A simplified approach (the premium allocation approach) mainly for short-duration contracts.

IFRS 17 is effective for reporting periods beginning on or after January 1, 2023. Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or before the date it first applies IFRS 17. This standard is applied retrospectively unless impracticable.

The Group is currently assessing the impacts of the future adoption of this standard.

Onerous Contracts - Contract Performance Costs (Amendments to IAS 37)

In order to clarify the types of costs that a company includes as contract performance costs when evaluating whether a contract is onerous, the International Standards Board (Board) issued in May 2020 the amendment to IAS 37 Provisions, contingent liabilities and contingent assets. As a consequence of this modification, the entities that currently apply the “incremental costs” approach will find it necessary to recognize larger provisions and a greater number of onerous contracts.

The amendment clarifies that the costs of fulfilling a contract include:

•

Incremental costs, for example: direct labor and materials;

•

An allocation of other direct costs, for example: the allocation of a depreciation expense of an item of installation, furniture and equipment used for the performance of a contract.

At the date of initial application, the accumulated effect of the application of this amendment to the Standard is recognized in the initial balances as an adjustment to retained earnings or any other item in equity, as appropriate. The Group is currently assessing the impacts of the future adoption of this standard.

Property, Plant and Equipment - Proceeds before intended use (Amendments to IAS 16)

In order to provide guidance in accounting for sales and costs that entities can generate in the process of making an item of Property, Plant and Equipment is available for use, the International Accounting Standards Board (the Board) issued in May 2020 the amendment to IAS 16.

F-46

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

In accordance with these amendments, the proceeds from the sale of the assets obtained in the process that An item of Property, Plant and Equipment is available for use, it must be recognized in the income statement together with the costs of producing such goods. IAS 2 Inventories should be applied in the identification and measurement of these assets.

The Group will need to differentiate between:

•

The costs associated with the production and sale of goods and services before the Installation, Furniture and Equipment item is in use;

•

The costs associated with the commissioning of the Installation, Furniture and Equipment item for its intended use.

The Group is currently assessing the impacts of the future adoption of this standard.

5.	Cash and Cash Equivalents

As of December 31, this caption comprises the following:


In thousands of soles	2020		2019		2018
Checking accounts (a)		142,553		21,475		100,549
Term deposits(b)		200,352		14,109		9,939
Cash funds		549		500		383

		343,454		36,084		110,871

(a)

As of December 31, 2020, checking accounts are held at local and foreign banks in local and foreign currency amounting to S/ 47,861 thousand and an equivalent of S/ 94,692 thousand respectively (S/ 12,646 thousand and an equivalent of S/ 8,829 thousand as of December 31, 2019 and S/ 37,255 thousand and an equivalent of S/ 63,294 thousand as of December 31, 2018).

(b)

As of December 31, 2020, it comprises overnight term deposits in local and foreign currency for S/ 192,478 thousand and COP 7,393,560 thousand (equivalent to S/ 7,874 thousand). These deposits were held in local and foreign financial entities, earned interest at market rates, and matured at the beginning of February 2021 (S/ 11,964 thousand and COP 2,129,343 thousand – equivalent to S/ 2,145 thousand – as of December 31,2019, with maturity at the beginning of January 2020 and S/ 6,000 thousand and COP 3,791,485 thousand – equivalent to S/ 3,939 thousand – as of December 31, 2018, with maturity at the beginning of January 2019).

The quality of the financial institutions where the Group deposits its cash has been rated as follows:

•

In accordance with the information provided by Apoyo y Asociados Internacionales S.A.C., an international rating agency (applicable to Peruvian financial entities):

In thousands of soles

2020

2019

2018

Bank deposits and accounts

A+

235,129

22,150

38,606

5,210

2,462

6,000

240,339

24,612

44,606

F-47

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

•

In accordance with the information provided by an international rating agency (applicable to Colombian financial entities):


In thousands of soles	2020		2019		2018
Bank deposits and accounts
AAA		99,692		10,831		64,665
AA		—		33		13
AA+		35		—		—
AA-		979		108		1,195
A		—		—		9
BBB-		1,860		—		—

	��	102,566		10,972		65,882

6.	Trade Accounts Receivable

As of December 31, this caption comprises the following:


In thousands of soles	*Note*		2020			2019			2018
Trade accounts receivable				409,088			307,322			254,882
Trade accounts receivable from related parties		33		462			607			266

				409,550			307,929			255,148
Less: Loss for impairment of trade receivables				(38,540	)		(22,328	)		(17,032	)

				371,010			285,601			238,116

Current				370,643			285,601			238,116

Non-current				367			—			—

The trade accounts receivable have current maturity, do not bear interest and do not have specific guarantees. The trade accounts receivable included the unbilled amount for S/ 32,889 thousand (S/ 28,319 thousand as December 31, 2019 and S/ 24,888 thousand as of December 31, 2018). These amounts will become billable within the first quarter of the next annual period.

As of December 31, 2020 the non-current portion corresponds to receivables agreements with individual customers related to healthcare services, mainly with maturities between 24 and 36 months, and does not have specific guarantees.

The impairment estimate of trade accounts receivable is included in the “Loss for impairment of trade receivables” item in the consolidated statement of income and other comprehensive income. Amounts charged to results of the impairment period are generally written off when there is no expectation of cash recovery.

Disaggregation of trade accounts receivable

This caption comprises the following:


In thousands of soles	2020		2019		2018
Premium earned		10,120		10,293		9,494
Healthcare services		360,890		275,308		228,622

		371,010		285,601		238,116

F-48

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

By primary geographical markets

2020


In thousands of soles	Peru		Colombia		Total
Premium earned		10,120		—		10,120
Healthcare services		133,429		227,461		360,890

		143,549		227,461		371,010

2019


In thousands of soles	Peru		Colombia		Total
Premium earned		10,293		—		10,293
Healthcare services		96,541		178,767		275,308

		106,834		178,767		285,601

2018


In thousands of soles	Peru		Colombia		Total
Premium earned		9,494		—		9,494
Healthcare services		75,267		153,355		228,622

		84,761		153,355		238,116

Expected credit loss assessment for customers (ECL)

The Group uses an allowance matrix to measure the ECLs of trade receivables. Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to write-off. Roll rates are calculated separately for exposures in different segments based on the following common credit risk characteristics: geographic region, age of customer relationship and type of product purchased.

The Group’s exposure to credit risk is mainly influenced by the characteristics of corporate and individual clients. The Group has established a credit policy under which the client is analyzed by group if it is individual or corporate to determine its solvency before payment and the terms and conditions of the service are offered. The Group’s evaluation includes external qualifications, information from credit agencies, and considers that the main corporate clients are insurers that are supervised by the banking and insurance regulator.

The Group limits its exposure to the credit risk of trade accounts receivable by establishing a maximum payment period of one and three months for individual and corporate clients.

F-49

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The composition of accounts receivable by geographic region as of December 31, 2020, 2019 and 2018 is as follows:

2020


In thousands of soles	Peru		Colombia		Total
Current (not past due)		95,053		154,125		249,178
1 - 90 days past due		47,141		31,598		78,739
91 - 180 days past due		8,487		22,236		30,723
181 - 360 days past due		5,216		19,477		24,693
More than 360 days past due		17,498		8,719		26,217

		173,395		236,155		409,550

2019


In thousands of soles	Peru		Colombia		Total
Current (not past due)		76,971		73,410		150,381
1 - 90 days past due		29,384		46,848		76,232
91 - 180 days past due		2,474		31,030		33,504
181 - 360 days past due		2,118		21,771		23,889
More than 360 days past due		15,047		8,876		23,923

		125,994		181,935		307,929

2018


In thousands of soles	Peru		Colombia		Total
Current (not past due)		61,391		71,727		133,118
1 - 90 days past due		22,747		30,623		53,370
91 - 180 days past due		2,296		19,980		22,276
181 - 360 days past due		2,565		20,917		23,482
More than 360 days past due		12,513		10,389		22,902

		101,512		153,636		255,148

The following table provides information about the exposure to credit risk and ECLs for trade receivables from corporate customers as of December 31, 2020, 2019 and 2018:

2020


In thousands of soles	Weighted- average loss rate			Gross carrying amount		Loss allowance
Current (not past due)		0.45	%		246,372		1,102
1 - 90 days past due		1.43	%		73,517		1,052
91 - 180 days past due		0.97	%		28,215		275
181 - 360 days past due		18.59	%		21,863		4,065
More than 360 days past due		89.21	%		20,918		18,661

					390,885		25,155

F-50

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

2019


In thousands of soles	Weighted- average loss rate			Gross carrying amount		Loss allowance
Current (not past due)		0.21	%		149,885		313
1 - 90 days past due		0.38	%		75,519		290
91 - 180 days past due		3.43	%		32,593		1,117
181 - 360 days past due		3.93	%		22,202		873
More than 360 days past due		73.39	%		20,301		14,899

					300,500		17,492

2018


In thousands of soles	Weighted- average loss rate			Gross carrying amount		Loss allowance
Current (not past due)		0.20	%		131,936		259
1 - 90 days past due		0.26	%		52,241		138
91 - 180 days past due		2.79	%		20,992		585
181 - 360 days past due		2.53	%		21,356		541
More than 360 days past due		52.92	%		21,599		11,430

					248,124		12,953

The following table provides information about the exposure to credit risk and ECLs for trade receivables from individual customers as of December 31, 2020, 2019 and 2018:

2020


In thousands of soles	Weighted- average loss rate			Gross carrying amount		Loss allowance
Current (not past due)		7.23	%		2,806		203
1 - 90 days past due		72.79	%		5,222		3,801
91 - 180 days past due		93.18	%		2,508		2,337
181 - 360 days past due		70.81	%		2,830		2,004
More than 360 days past due		95.11	%		5,299		5,040

					18,665		13,385

2019


In thousands of soles	Weighted- average loss rate			Gross carrying amount		Loss allowance
Current (not past due)		4.14	%		495		21
1 - 90 days past due		49.28	%		713		351
91 - 180 days past due		70.14	%		912		639
181 - 360 days past due		70.25	%		1,687		1,185
More than 360 days past due		72.87	%		3,622		2,640

					7,429		4,836

F-51

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

2018


In thousands of soles	Weighted- average loss rate			Gross carrying amount		Loss allowance
Current (not past due)		3.31	%		1,182		39
1 - 90 days past due		51.80	%		1,129		585
91 - 180 days past due		72.96	%		1,285		937
181 - 360 days past due		73.62	%		2,126		1,566
More than 360 days past due		73.11	%		1,302		952

					7,024		4,079

The annual movement of loss for impairment of trade accounts receivables is the following:


In thousands of soles	2020			2019			2018
Initial balance		22,328			17,032			14,631
Additions		17,333			10,808			2,826
Recovery		(975	)		(4,821	)		—
Write-off		(543	)		(624	)		(425	)
Exchange difference		397			(67	)		—

Final balance		38,540			22,328			17,032

7.	Other Assets

As of December 31, this caption comprises the following:


In thousands of soles	*Note*		2020		2019		2018
Tax credit from sales tax (VAT) (a)				36,639		32,232		22,205
Costs of anticipated equity transactions				5,615		—		—
Advance payment for purchase of shares (b)				1,148		13,548		—
Deferred acquisition costs (DAC) (l)		4.M(iii)		5,359		7,702		6,184
Trust fund (c)				—		6,438		5,751
Prepaid expenses (d)				7,717		4,302		3,653
Payments in advance of income tax (e)				2,820		5,232		10,340
Accounts receivables from credit cards				4,608		4,229		4,800
Claims to third parties (f)				1,879		2,020		2,376
Account receivable from former shareholders (g)				1,659		1,568		1,618
Guarantees furnished (h)				2,250		1,420		1,505
Taxes receivable				1,465		1,313		1,633
Loans to personnel				1,345		972		792
Prepayments				1,221		1,381		774
Accounts receivable from a trust company (i)				—		—		2,167
Account receivables due from fixed assets sold (j)				—		—		4,912
Others (k)				11,743		7,649		4,163

				85,468		90,006		72,873

Current				69,517		81,380		63,481

Non-current				15,951		8,626		9,392

F-52

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

(a)	As of December 31, 2020, 2019 and 2018, it includes the tax credit (net) of value added tax (VAT).

(b)

As of December 31, 2019, it corresponds to payments in advance for the acquisition of shares in the associate Ciclotron Peru for S/ 792 thousand which represents a 9% addition of the participation and the payment in advance for the acquisition of shares of the minority interest shareholders of the PMLA of S/ 12,756 thousand to acquire 484 shares owned by the non-controlling interest in PMLA, which represent 2.45 % of this group’s share capital.

On January 3, 2020, the Group completed the acquisition of additional 2.45% interest, equivalent to S/ 11,671 thousand, of Promotora Médica Las Américas S.A., increasing its ownership from 97.32% to 99.77%. Four shareholders refused to sell their interest, as a result, the difference of S/ 1,148 thousand it is managed by BTG Pactual Fiduciary and it is included in ‘other assets’ and include S/ 63 thousand of exchange difference. Management expect to collect this amount in 2021.

(c)

The fund is administered by La Fiduciaria S.A. and was established on June 30, 2016 (with the participation of Scotiabank Perú S.A.A.) by virtue of the contractual obligations of the loan granted by Scotiabank Perú S.A.A. (note 15). The purpose of the funds managed by trust is to consolidate the collection rights of insured and cash flows and guarantee debt payment in the event of default.

On December 26, 2018, an addendum to the original loan agreement was signed establishing that the funds that make up the trust fund come from the following accounts held at Scotiabank Perú S.A.A.: (i) escrow account, which holds the collection from insured members and (ii) reserve account, which holds, as a guarantee, the amount equivalent to the interest of one installment to become due.

As of December 31, 2019, the Group instructed La Fiduciaria S.A., in accordance with the terms of the trust agreement, to open a 91-day term deposit at an effective rate of 2.90% (an effective rate of 3.20% as of December 31, 2018). At maturity, such deposit was renewed for 91 more days. On November 2020, the Group precancelled the loans guaranted and recovered the trust fund in cash (note 15).

(d)	It corresponds to insurance paid in advance, annual licenses of software and additionally includes incremental cost of obtaining a contract with a supplier for selling oncological healthcare plans.

(e)	It corresponds to payments in advance of income tax, which will be offset with future income tax in the 2021 fiscal year.

(f)	It includes a receivable for salaries of employees on leave that is to be refunded by the government for S/ 1,015 thousand for December 31, 2020 (S/ 1,313 thousand and S/ 1,354 thousand for December 31, 2019 and 2018, respectively).

(g)	It corresponds to account receivables from former shareholders for medical liabilities contingencies that were determined in the acquisition of PMLA.

(h)	It corresponds to funds under restriction in financial institutions for the compliance with debts and guarantees for real estate rentals.

(i)	It corresponds to accounts receivable from BTG Pactual Sociedad Fiduciaria S.A. for taxes assumed by PMLA. In January 2019, such amount was fully collected.

(j)	It relates to fixed assets (land) sold in Colombia that was collected during 2019.

(k)

It includes accounts receivable from Consorcio Trecca for S/ 9,224 thousand for December 31, 2020 (S/ 4,708 thousand and S/ 2,047 thousand for December 31, 2019 and 2018, respectively) which corresponds to preoperative activities defined in the concession arrangement, that represents a contractual right to receive cash and the accounts receivable is accumulating when they are incurred.

F-53

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

(l)	The annual movement of deferred acquisition costs is the following:


In thousands of soles	*Note*		2020			2019			2018
Balances as of January 1				7,702			6,184			7,917
Additions				9,152			14,105			12,360
Amortization		22.b.i		(11,495	)		(12,507	)		(14,130	)
Other				—			(80	)		37

Balances as of December 31				5,359			7,702			6,184

8.	Inventories

As of December 31, this caption comprises the following:


In thousands of soles	2020		2019		2018
Medicines		25,236		23,315		21,825
Medical supplies		21,949		9,805		7,298
Supplies and packaging		5,383		3,937		2,707

		52,568		37,057		31,830

In 2020, 2019 and 2018, inventories of S/ 383 millions, S/ 354 millions and S/ 197 millions, respectively, were recognised as an expense during these years and included in cost of sales and services.

As of December 31, 2020 the increase compared to December 31,2019 and 2018 is due mainly to the purchase of medical materials and personal protective equipment as managment´s plan to has enough inventory and avoid the risk of shortage during the healthcare emergency stage

As of December 31, 2020, 2019 and 2018, the Group recognized an impairment of inventories for S/ 419 thousand, S/ 377 thousand and S/ 318 thousand, respectively, that presented net in cost of sales and services.

9.	Derivative Financial Instruments

A.	Derivatives Foreign exchange operation agreements with deferred premium

On November 17, 2020, the Group signed a foreign exchange operation derivatives which included purchased collar and long forward agreement with Goldman Sachs Bank for S/ 1,092,750 thousand (US$ 300,000 thousand). It covered 100% of the senior notes. The Group signed novation contracts with Citibank N.A. and with the Banco Santander S.A., banks of the above derivatives, for the novation to Goldman Sachs Bank. These new instruments cover the exchange fluctuations ranging from S/ 3.424 to S/ 3.85 per US$ 1, as shown below:

As of December 31, 2020, this caption comprises the following:


In thousands of soles	Reference value		Maturity date		2020		2019
Derivative assets mandatorily measured at FVOCI
Fx operation Agreements – Long forward	US$	300,000		2023		11,707		—

						11,707		—

Current						—		—

Non-current						11,707		—

F-54

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	Reference value		Maturity date		2020			2019
Derivative liabilities mandatorily measured at FVOCI
Fx operation Agreements – Purchased Collar (Long Put)	US$	300,000		2023		(12,603	)		—
Fx operation Agreements – Purchased Collar (Short Call)	US$	300,000		2023		46,197			—

						33,594			—

Current						—			—

Non-current						33,594			—

Fx: Foreign exchange

These derivatives instruments are classified as non-current under the same structure as the hedged item (senior notes) due the entire principal value will be paid when the maturity date will be met.

As of December 31, 2020, there are outstanding premiums and other accounts payable to Goldman Sachs of S/ 14,185 thousand and S/ 21,660 thousand, which were included in Other Accounts Payable (note 17.e). The liabilities payable were incurred in connection with purchased collar and long forward agreements.

The effect of fair value of these derivative financial instrument, net of tax recognized in the consolidated other comprehensive income for the year ended December 31, 2020, was loss for S/ 25,391 thousand. Also, the effect reclassified from other comprehensive income to profit or loss as lower exchange difference was S/ 14,100 thousand and from other comprehensive income to profit or loss as finance cost was S/ 1,540 thousand (note 25), and both not include S/ 3,705 thousand of tax.

B.	Call spread option agreements with deferred premium

In December 2018, the Group signed two call spread agreements with Banco Citibank N.A. for S/ 181,980 thousand each (US$ 54,000 thousand each). It covered 98% of the syndicated loan with Banco Nacional de México S.A. and Banco Santander S.A. related to the acquisition of PMLA (note 1.C). These instruments cover the exchange fluctuations ranging from S/ 3.383 to S/ 3.733 per US$ 1, as shown below:

In thousands of soles

Reference
value

Maturity
date

2018

Negotiation

Call Spread Agreements – Tranch 1

US$

54,000

2023

6,554

Call Spread Agreements – Tranch 2

US$

54,000

2023

6,554

13,108

Current

510

Non-current

12,598

For the year ended December 31, 2018, the effect of fair value of the derivative financial instrument of the call spread agreements, recognized in ‘finance costs’ in the consolidated statement of income and other comprehensive income for year 2018, was S/ 8,026 thousand (note 25).

F-55

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

On January 3, 2019, the Group changed the conditions of the initial derivative related to notional amount, fixing dates, strike prices and the exchange fluctuations ranging, resulting in new derivatives, which were designated as cash flow hedging instruments to cover the exchange fluctuations ranging from S/ 3.374 to S/ 3.724 per US$ 1 signing an amendment to two call spread agreements with Citibank N.A. with a new notional for US$ 55,000 thousand each. It covered 100% of future capital contributions to the subsidiary Auna Colombia S.A.S. in order to pay the debt resulting from the acquisition of PMLA (note 1.C).

As a result of change, the Group recorded a derivative financial asset measured at FVOCI and call spread premiums payable by S/ 13,830 thousand and S/ 21,537 thousand, respectively, and derecognized the old asset derivative financial measured at FVTPL and call spread premiums payable by S/ 13,108 thousand and S/ 21,134 thousand, respectively. The net effect recognized in ‘finance costs’ (note 25) in the consolidated statement of income and other comprehensive income for the year 2019 was S/ 319 thousand.

In thousands of soles

Reference
value

Maturity
date

2019

Derivative assets mandatorily measured at FVOCI

Call Spread Agreements – Tranch 1

US$

55,000

2023

4,385

Call Spread Agreements – Tranch 2

US$

55,000

2023

4,384

8,769

Current

448

Non-current

8,321

The effect of fair value of the derivative financial instrument of the call spread agreements, net of tax recognized in the consolidated other comprehensive income for the year ended December 31, 2019, was loss for S/ 3,750 thousand.

During 2020, derivative financial instruments as a consequence of the increase in the exchange rate generated gains in settlements for S/ 1,670 thousand recognized in the caption “financial income” (note 25) in the consolidated statement of comprehensive income. Also, the effect reclassified from other comprehensive income to profit or loss as finance cost was S/ 906 thousand and not include S/ 267 thousand of tax.

On November 30, 2020, the Group signed an agreement with Citibank N.A. for the transfer by novation of the derivative financial instrument to Goldman Sachs Bank, with which the Group released its respective rights and obligations of the derivative financial instrument including the financed premiums (note 17). The net effect of derecognizing the derivative financial instrument amounts to S/ 3,166 thousand and is recorded in the hedge reserve item of the consolidated statement of changes in equity, corresponding to S/ 4,491 thousand recognized in the financial cost as a lower value and S/ 1,325 thousand recognized in the caption of “income taxes” of the consolidated statement of comprehensive income.

At the date of transfer and novation of this derivative agreements, the existing call spread agreement had a fair value of S/ 16,798 thousand and remaining premiums payable of S/ 13,408 thousand. The net asset position of S/ 3,390 thousand had the effect of lowering the account payable liability to Goldman Sachs and is part of the remaining liability payable included in Other Accounts Payable (note 17.e).

F-56

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

C.	Swap agreements

In December 2018, the Group signed an interest rate swap agreement with Banco Santander S.A. to cover the interest rate fluctuation related to the debt of Auna Colombia S.A.S. with the same bank. The amount covered was US$ 55,000 thousand and such instrument fixed an interest rate of 5.637%, which is shown below.

On January 2019, the Group signed a new interest rate swap agreement with Citibank N.A. to cover the interest rate fluctuation related to the debt of Auna Colombia S.A.S. with the same bank. The amount covered was US$ 55,000 thousand and such instrument fixed an interest rate of 4.22% the two first years and then 5.08% the last three years.

In June 2019, the Banco Santander S.A. transferred 13.63% of its participation to Citibank N.A., becoming creditor of 50% to 36.37% of the debt of Auna Colombia. Consequently, Auna Colombia signed an interest rate swap agreement with Citibank N.A. for US$ 15,000 thousand.


In thousands of soles	Reference value		Maturity date		Fair value
In thousands of soles	Reference value		Maturity date		2020		2019
Cash flow hedges
Interest rate swap agreement	US$	55,000		2023		—		8,482
Interest rate swap agreement	US$	35,000		2023		—		3,740
Interest rate swap agreement	US$	15,000		2023		—		3,256

						—		15,478

Current						—		3,952

Non-current						—		11,526

The effect of fair value of the derivative financial instrument, net of tax, recognized in ‘other comprehensive income’ for the year 2019, was S/ 9,983 thousand (S/ 711 thousand for the year 2018) (note 20.E).

During 2020, derivative financial instruments generated settlements for S/ 5,296 thousand recognized in the caption “finance cost” (note 25) in the consolidated statement of comprehensive income.

On November 23, 2020, the Group signed an agreement with Banco Santander S.A. for the transfer by novation of the derivative financial instrument to Goldman Sachs Bank, with which the Group released its respective rights and obligations of the derivative financial instrument. The net effect of derecognizing the derivative financial instrument was of S/ 17,946 thousand and reclassified from hedge reserve in the statement of changes in equity, to income statement in ‘finance cost’ for S/ 26,008 thousand. The tax impact was S/ 8,062 thousand and it was included as income taxes.

At the date of transfer and novation of this derivative agreements, the existing swap agreement had a fair value of S/ 25,039 thousand. This liability position is part of the accounts payable included in Other Accounts Payable (note 17.e).

F-57

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

10.

Investments in Associates and Joint Venture

As of December 31, this caption comprises the following:


In thousands of soles	Percentage ownership interest		2020		2019		2018
Associates
Ciclotrón Colombia S.A.S. (a)		32.50		6,604		5,507		4,571
Ciclotrón Perú S.A.		49.00		2,854		1,882		1,426
Hospital en Casa S.A.		—		—		—		1,247
Joint Venture
Pet CT Perú S.A. (b)		50.00		2,639		2,518		1,970

				12,097		9,907		9,214

(a)	It is dedicated to the production and commercialization of radiopharmaceuticals used for diagnostic images of PET (positron emission tomography) and scintigraphy and its fiscal address is Calle 30 N 46 – 25 Medellín – Colombia.

(b)	It is dedicated to providing medical diagnostic imaging services and cancer treatment, using PET / CT molecular imaging technology.

The Group has recognized the following amounts in the consolidated statement of income and other comprehensive income:


In thousands of soles	2020		2019		2018
Associate
Ciclotrón Colombia S.A.S.		1,020		1,434		—
Ciclotrón Perú S.A.		180		456		315
Joint Venture
Pet CT Perú S.A.		120		548		645

		1,320		2,438		960

The interest of the Group in the profit or loss, assets, and liabilities of its associate and joint venture is the following:


In thousands of soles	Assets		Liabilities		Income		Expenses		Interest (%)
As of December 31, 2020
Ciclotrón Perú S.A.		8,927		3,853		5,086		4,719		49.0
Pet CT Perú S.A.		10,288		5,008		13,875		13,634		50.0
Ciclotrón Colombia S.A.S.		20,814		5,962		14,771		11,633		32.5
As of December 31, 2019
Ciclotrón Perú S.A.		7,216		2,510		5,156		4,014		40.0
Pet CT Perú S.A.		9,534		4,498		15,279		14,183		50.0
Ciclotrón Colombia S.A.S.		19,691		7,918		16,444		12,032		32.5
As of December 31, 2018
Ciclotrón Perú S.A.		4,412		848		4,336		3,544		40.0
Pet CT Perú S.A.		6,705		2,764		12,773		11,483		50.0
Ciclotrón Colombia S.A.S.		18,366		9,536		10,831		7,161		32.5

F-58

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The annual movement of investments in the associate and joint venture during the year comprises:


In thousands of soles	*Note*			2020			2019			2018
As of January, 1					9,907			9,214			2,436
Group’s share in profit or loss					1,320			2,438			960
Balance after the acquisition of subsidiary		1.C	��		—			—			5,818
Purchase of participation (i)					792			—			—
Collection of dividends					(303	)		(330	)		—
Sale of investments in associates (ii)					—			(1,247	)		—
Exchange difference					381			(168	)		—

As of December, 31					12,097			9,907			9,214

(i)	On January 2, 2020, the Group completed the acquisition of the shares of Ciclotron Perú S.A. which represent 9% of their share capital, increased its percentage ownership interest to 49%. The Company paid in December 2019 for the acquisition of these shares S/ 792 thousand.

This acquisition has not represented change in the accounting treatment due to the fact that the Company still does not have control over Ciclotron Perú S.A., because it is not exposed and it does has not have the ability to affect its power or control over the investee.

(ii)	In December 2019, the Group sold the total participation held in Hospital en Casa S.A. for S/ 328 thousand and recognized in ‘other expenses’ a loss on sale for S/ 919 thousand in the consolidated statement of income and other comprehensive income (note 24).

11.

Property, Furniture and Equipment

The movement of property, furniture and equipment and the respective accumulated depreciation for the years ended December 31, 2020, 2019 and 2018 is as follows:


In thousands of soles	*Note*		Land			Buildings and facilities (a)			Medical equipment And others (a)			Vehicles		Furniture and fixture			Works in progress (b)			Total
Cost
Balances as of January 1, 2018				81,365			319,747			151,354			1,161		9,461			—			563,088
Additions				20,071			12,319			10,431			—		387			3,327			46,535
Business combination balances		1.C		98,730			165,021			37,051			40		2,449			22,745			326,036
Transfers				—			—			(16	)		—		16			—			—
Reclassifications				—			—			(5	)		—		—			—			(5	)
Disposals				—			(127	)		(2,920	)		—		(204	)		—			(3,251	)

Balances as of December 31, 2018				200,166			496,960			195,895			1,201		12,109			26,072			932,403

Balances as of January 1, 2019				200,166			496,960			195,895			1,201		12,109			26,072			932,403
Reclassification of assets acquired on finance to right-of-use assets		3.C		(47,922	)		(72,873	)		(83,871	)		—		(616	)		—			(205,282	)

Balances as of January 1, 2019				152,244			424,087			112,024			1,201		11,493			26,072			727,121
Additions				22,103			7,569			13,810			—		2,083			59,584			105,149
Transfers				—			3,051			—			—		—			(3,051	)		—
Reclassifications from right-of-use asset (c)				32,099			9,766			75			—		3			—			41,943
Reclassifications to investment properties				(859	)		—			—			—		—			—			(859	)

F-59

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	*Note*		Land			Buildings and facilities (a)			Medical equipment And others (a)			Vehicles			Furniture and fixture			Works in progress (b)			Total
Write-off				(10	)		(708	)		(1,466	)		—			(26	)		—			(2,210	)
Disposals				—			—			—			(159	)		—			—			(159	)
Exchange difference				(2,527	)		(3,212	)		(686	)		(1	)		(79	)		(958	)		(7,463	)

Balances as of December 31, 2019				203,050			440,553			123,757			1,041			13,474			81,647			863,522

Balances as of January 1, 2020				203,050			440,553			123,757			1,041			13,474			81,647			863,522
Additions				52			6,523			11,215			—			2,197			78,124			98,111
Business combination balances		1.C		12,620			106,242			14,607			4			473			—			133,946
Reclassifications to intangible assets				—			—			—			—			—			(622	)		(622	)
Reclassifications from right-of-use asset (c)				15,336			64,314			72,832			—			380			—			152,862
Transfers				—			32,142			124			—			44			(32,310	)		—
Write-off				—			(991	)		(1,290	)		(19	)		(105	)		—			(2,405	)
Disposals				—			(2,443	)		—			—			—			—			(2,443	)
Exchange difference				6,843			22,371			4,995			2			333			4,183			38,727

Balances as of December 31, 2020				237,901			668,711			226,240			1,028			16,796			131,022			1,281,698


In thousands of soles	*Note*		Land		Buildings and facilities			Medical equipment and others			Vehicles			Furniture and fixture			Works in progress		Total
Accumulated depreciation
Balances as of January 1, 2018				—		(50,034	)		(56,866	)		(1,066	)		(3,925	)		—		(111,891	)
Additions (d)				—		(11,824	)		(16,118	)		(17	)		(991	)		—		(28,950	)
Transfers				—		—			3			—			(3	)		—		—
Reclassifications				—		—			3			—			—			—		3
Disposals				—		57			2,835			—			188			—		3,080

Balances as of December 31, 2018				—		(61,801	)		(70,143	)		(1,083	)		(4,731	)		—		(137,758	)

Reclassification of assets acquired on finance leases to right-of-use assets		3.C		—		2,266			19,796			—			118			—		22,180
Balances as of January 1, 2019				—		(59,535	)		(50,347	)		(1,083	)		(4,613	)		—		(115,578	)
Additions (d)						(14,365	)		(14,909	)		(21	)		(1,217	)		—		(30,512	)
Reclassifications from right-of-use asset (c)				—		(2,215	)		—			—			—			—		(2,215	)
Write-off				—		—			355			—			6			—		361
Disposals						—			—			159			—			—		159
Exchange difference				—		19			40			1			3			—		63

Balances as of December 31, 2019				—		(76,096	)		(64,861	)		(944	)		(5,821	)		—		(147,722	)

Balances as of January 1, 2020				—		(76,096	)		(64,861	)		(944	)		(5,821	)		—		(147,722	)
Additions (d)				—		(14,979	)		(14,562	)		(12	)		(1,433	)		—		(30,986	)
Reclassifications from right-of-use asset (c)				—		(4,227	)		(37,997	)		—			(121	)		—		(42,345	)
Write-off				—		991			1,128			19			99			—		2,237
Disposals				—		1,523			—			—			—			—		1,523
Exchange difference				—		(406	)		(1,733	)		(1	)		(43	)		—		(2,183	)

Balances as of December 31, 2020				—		(93,194	)		(118,025	)		(938	)		(7,319	)		—		(219,476	)

Net carrying amount

Balances as of December 31, 2018				200,166		435,159			125,752			118			7,378			26,072		794,645

Balances as of December 31, 2019				203,050		364,457			58,896			97			7,653			81,647		715,800

Balances as of December 31, 2020				237,901		575,517			108,213			90			9,479			131,022		1,062,222

F-60

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

(a)

In 2020, the Group acquired medical equipment for S/ 11,215 thousand (S/ 13,810 thousand and S/ 10,431 thousand in 2019 and 2018, respectively) to expand the clinical services and improve and remodel the infrastructure of facilities for S/ 6,523 thousand (S/ 3,063 thousand and S/ 4,463 thousand in 2019 and 2018, respectively).

In 2020, the Group acquired two mall stand located in Chiclayo for S/ 52 thousand (six properties located in Lima, Arequipa and Chiclayo for S/ 26,609 thousand in 2019 and two properties for S/ 27,927 thousand in 2018, respectively) as part of the expansion strategy of the Group.

(b)

As of December 31, 2020, 2019 and 2018, the constructions in progress in Peru correspond to real estate projects related to the expansion of Clínica Delgado and Clínica Oncosalud (Oncocenter), Clinica Vallesur as the construction of a new clinic in the city of Chiclayo (include capitalised borrowing costs for S/ 1,235 thousand, calculated using a capitalisation rate of 6.77%) and improvements in facilities for new administrative offices, in addition to the construction of real estate projects to build a new clinic through the subsidiary Clínica del Sur in Colombia. The Management estimates that the construction of these clinic will be completed in 2021.

(c)	Corresponds to transfers from right-of-use as a consequence of the termination of the lease agreement with option to purchase.

(d)	The depreciation recognized in the consolidated statement of income and other comprehensive income comprises:


In thousands of soles	*Note*		2020		2019		2018
Cost of sales and services		22		24,944		25,130		24,766
Administrative expenses		22		6,042		5,382		4,184

				30,986		30,512		28,950

As of December 31, 2019 and 2018, the subsidiary PMLA has a property called Torre 3, where Clínica Las Américas operates in, amounting to COP 78,112,859 thousand (equivalent to S/ 81,159 thousand) used as guarantee for 63.29% of its value and subject to two trust agreements signed with Fiduciaria de Occidente to guarantee the payment of bank loans from Bancolombia, Bancoomeva, Banco Popular, Banco de Bogotá and Banco Occidente (note 32). In December 2020, the subsidiary PMLA pre-canceled the loans, releasing the guarantees of these properties as of December 31, 2020.

12.

Intangibles Assets

The movement of intangibles and the corresponding accumulated amortization for the years ended December 31, 2020, 2019 and 2018, is as follows:


In thousands of soles	*Note*		Goodwill			Trademark			Customer relationships			Software			Public service concessions		Surface rights agreement			Total
Cost
Balances as of January 1, 2018				20,586			—			—			29,266			4,065		3,794			57,711
Additions				—			—			—			5,193			2,143		—			7,336
Business combination balances		1C		172,801			186,189			13,923			6,442			—		—			379,355
Write-off				—			—			—			(5	)		—		—			(5	)
Reclassifications				—			—			—			5			—		—			5

Balances as of December 31, 2018				193,387			186,189			13,923			40,901			6,208		3,794			444,402

Reclassification to right-of-use assets				—			—			—			—			—		(3,794	)		(3,794	)

Balances as of January 1, 2019				193,387			186,189			13,923			40,901			6,208					440,608
Additions				—			—			—			15,481			5,723		—			21,204
Write-off				—			—			—			(21	)		—		—			(21	)
Exchange difference				(5,321	)		(5,735	)		(429	)		(252	)		—		—			(11,737	)

Balances as of December 31, 2019				188,066			180,454			13,494			56,109			11,931		—			450,054

F-61

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	*Note*		Goodwill		Trademark		Customer relationships			Software			Public service concessions		Surface rights agreement			Total
Balances as of January 1, 2020				188,066		180,454		13,494			56,109			11,931		—			450,054
Additions				—		—		—			33,565			4,609		—			38,174
Business combination balances		1C		—		3,834		—			1,516			—		—			5,350
Reclassifications from property, furniture and equipment				—		—		—			—			622		—			622
Write-off				—		—		—			(20	)		—		—			(20	)
Exchange difference				9,646		10,813		777			1,732			—		—			22,968

Balances as of December 31, 2020				197,712		195,101		14,271			92,902			17,162		—			517,148

Accumulated amortization
Balances as of January 1, 2018				—		—		—			(9,160	)		—		(577	)		(9,737	)
Annual amortization				—		—		—			(2,995	)		—		(91	)		(3,086	)
Disposals				—		—		—			2			—		—			2
Reclassifications				—		—		—			(3	)		—		—			(3	)

Balances as of December 31, 2018				—		—		—			(12,156	)		—		(668	)		(12,824	)

Reclassification to right-of-use assets				—		—		—			—			—		668			668

Balances as of January 1, 2019				—		—		—			(12,156	)		—		—			(12,156	)
Annual amortization				—		—		(1,311	)		(4,988	)		—		—			(6,299	)
Exchange difference				—		—		(3	)		(2	)		—		—			(5	)

Balances as of December 31, 2019				—		—		(1,314	)		(17,146	)		—		—			(18,460	)

Balances as of January 1, 2020				—		—		(1,314	)		(17,146	)		—		—			(18,460	)
Annual amortization				—		—		(1,284	)		(5,994	)		—		—			(7,278	)
Exchange difference				—		—		(219	)		(299	)		—		—			(518	)

Balances as of December 31, 2020				—		—		(2,817	)		(23,439	)		—		—			(26,256	)

Carrying amount

Balances as of December 31, 2018				193,387		186,189		13,923			28,745			6,208		3,126			431,578

Balances as of December 31, 2019				188,066		180,454		12,180			38,963			11,931		—			431,594

Balances as of December 31, 2020				197,712		195,101		11,454			69,463			17,162		—			490,892

Amortization

The amortization recognized in the consolidated statement of income and other comprehensive income comprises:


In thousands of soles	*Note*		2020		2019		2018
Cost of sales and services		22		1,625		1,333		905
Administrative expenses		22		5,653		4,966		2,181

				7,278		6,299		3,086

Software and other intangibles

As of December 31, 2020, 2019 and 2018, it includes the costs related to the installation of software (SAP), Hospital Information System (HIS), a specialized system used at our network of facilities that, among other features, registers our patients’ contact information; manages administrative services, such as hospital admissions and billing; and houses our EMR system and Matrix system (registers our patients).

Also, during 2020 it includes S/ 6,133 thousand related to the retail digital pharmacy with last-mile delivery, Farmauna, and the telehealth platform, Clinica 360, which provides for clinical intervention with patients through remote access to physicians and other clinicians and telemedicine solutions.

F-62

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Surface rights agreement

Corresponds to surface rights agreement signed between Medicser and the Peruvian Red Cross Society, owner of the land, and acquired in 2011. The amortization period is 40 years, according to the term of the lease agreement. As of January 1, 2019, as a result of the application of IFRS 16, the amount was reclassificated to right-of-use asset.

Impairment testing

For the purposes of impairment testing, goodwill has been allocated to the Group’s CGUs as follows:


In thousands of soles	2020		2019		2018
Radioncologia S.A.C. (Radioncologia)		10,237		10,237		10,237
Laboratorio Cantella S.A.C.(Cantella)		4,585		4,585		4,585
R&R Patólogos Asociados S.A.C.(R&R)		23		23		23
Servimédicos S.A.C. (Servimédicos)		3,522		3,522		3,522
Clínica Bellavista S.A.C. (Bellavista)		2,219		2,219		2,219
Promotora Médica Las Américas S.A.		61,122		57,793		59,630
Instituto de Cancerología S.A.		60,404		57,115		58,930
Laboratorio Médico Las Américas Ltda.		55,600		52,572		54,241

Total goodwill		197,712		188,066		193,387

The key assumptions used in the estimation of value in use were as follows:

For companies located in Peru:


In percent	2020			2019			2018
Terminal value growth rate		2.5	%		2.50	%		2.50	%
Discount rate		8.2	%		8.0	%		8.53	%

For companies located in Colombia:


In percent	2020			2019			2018
Terminal value growth rate		3.0	%		3.0	%		—
Discount rate		8.7	%		8.06	%		—

•

Terminal value growth rate of 2.5% and 3%. The terminal growth rate represents Management’s estimate of the long-term growth of each CGU, taking into account past and future growth and external sources of information.

•

Projected cash flows are based on Management’s operating EBITDA profit projections for a period of five years.

F-63

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The ranges of projected EBITDA as a percentage of revenue by CGUs over the projected period are as follows:


	EBITDA as a percentage of revenue
Radioncologia S.A.C. (Radioncologia)		26.9	% - 37.4%
Laboratorio Cantella S.A.C. (Cantella)		10.0	% - 15.6%
R&R Patólogos Asociados S.A.C. (R&R)		10.3	% - 15.9%
Servimédicos S.A.C. (Servimédicos)		9.0	% - 15.7%
Clínica Bellavista S.A.C. (Bellavista)		7.6	% - 13.6%

•

Projected cash flows include disbursements for capital investments.

•

The discount rates used to calculate the value in use for each Group’s CGU are an estimate that involves a market assessment of the time value of money and the risks inherent in each CGU where cash flows after-tax are generated taking into consideration the Group’s business plans. The nominal after-tax discount rate used for the impairment assessment was 8.2% (post-tax) for the companies located in Peru, according to each Group’s CGU assessed as of December 31, 2020 (8.0% post-tax as of 2019). For our companies located in Colombia (Promotora Médica Las Américas, Instituto de Cancerología and Laboratorio Médico Las Américas), the nominal after-tax discount rate was 8.7% (8.06% as of 2019).

•

Projected cash flows include estimates of the revenue increase of each of the healthcare services at each CGU´s (Radioncología, Bellavista, Servimédicos, Cantella, Promotora Médica Las Américas, Instituto de Cancerología and Laboratorio Médico Las Américas), rates and gross margins.

•

The trademark has been allocated to the Group’s CGUs as follows:


In thousands of soles	2020		2019
Promotora Médica Las Américas S.A.		116,709		110,353
Instituto de Cancerología S.A.		66,519		62,897
Laboratorio Médico Las Américas Ltda.		7,619		7,204
Clínica Portoazul S.A.		4,254		—

Total trademarks		195,101		180,454

•

The customer relationship has been allocated to the Group’s CGUs net of amortization as follows:


In thousands of soles	2020		2019
Promotora Médica Las Américas S.A.		11,454		12,180

Total customer relationship		11,454		12,180

With regard to the assessment of value in use of the CGUs, management performed a sensitivity analysis and considered that no reasonably possible change in any of the above key assumptions would cause the carrying value of the entities to materially exceed its recoverable amount evaluated at the end of each financial reporting year.

F-64

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The following table shows the amount by which these two assumptions would need to change individually for the estimated recoverable amount to be equal to the carrying amount:


	Discount rate						Terminal value growth rate
	2020		2019		2018		2020			2019			2018
Radioncologia S.A.C.		7.34		2.79		2.84		(14.84	)		(4.32	)		(4.03	)
Laboratorio Cantella S.A.C.		34.07		29.02		19.95		Indet.			Indet.			(68.53	)
R&R Patólogos Asociados S.A.C.		Indet.		Indet.		47.29		Indet.			Indet.			Indet.
Servimédicos S.A.C.		1.48		0.85		3.29		(2.07	)		(1.15	)		(4.52	)
Clínica Bellavista S.A.C.		32.34		0.41		4.76		Indet.			(0.52	)		(6.94	)
Promotora Médica Las Américas S.A.		0.58		0.03		—		(0.90	)		(0.04	)		—
Instituto de Cancerología S.A.		4.95		0.03		—		(10.84	)		(0.04	)		—
Laboratorio Médico Las Américas Ltda.		12.39		0.03		—		(192.94	)		(0.04	)		—

As of December 31, 2020, 2019 and 2018, no provision for impairment of goodwill has been recorded in the consolidated financial statements.

13.

Leases

Set out below are the carrying amounts of right-of-use assets recognized and the movements during the fiscal year ended December 31, 2020 and 2019:


	Right-of-use assets
In thousands of soles	Lands			Buildings and facilities			Medical equipment and other			Vehicles			Furniture and fixture			Total
Reclassification from property, furniture and equipment on initial application of IFRS 16		47,922			70,607			64,075			—			498			183,102
Reclassification from intangible assets on initial application of IFRS 16		3,126			—			—			—			—			3,126
Recognition of right-of-use assets on initial application of IFRS 16		15,751			17,724			—			—			—			33,475

		66,799			88,331			64,075			—			498			219,703

Additions of right-of-use assets		—			65,738			17,864			281			—			83,883
Transfers to property, furniture and equipment		(32,099	)		(7,551	)		(75	)		—			(3	)		(39,728	)
Annual depreciation		(546	)		(7,806	)		(11,539	)		(21	)		(25	)		(19,937	)
Write-off		—			—			(97	)		—			—			(97	)
Exchange difference		(487	)		(1,965	)		(451	)		(2	)		(10	)		(2,915	)

Balance at December 31, 2019		33,667			136,747			69,777			258			460			240,909

Balance at January 1, 2020		33,667			136,747			69,777			258			460			240,909
Additions of right-of-use assets (a)		—			1,454			40,544			827			28			42,853
Transfers to property, furniture and equipment		(15,336	)		(60,087	)		(34,835	)		—			(259	)		(110,517	)
Annual depreciation (c)		(91	)		(11,944	)		(14,209	)		(123	)		(68	)		(26,435	)
Write-off (b)		—			(6,792	)		(15	)		—			—			(6,807	)
Exchange difference		—			46			1,220			5			—			1,271

Balance at December 31, 2020		18,240			59,424			62,482			967			161			141,274

F-65

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

(a)	In 2020, the additions of the Group mainly corresponds to new lease agreements for use of commercial offices, health centers and equipment for medical use. The Group recognised S/ 42,853 thousand (S/ 83,883 thousand in 2019) of right-of-use asset and lease liability.

(b)	On August 2020, the Group decided to terminate the lease agreement of one administrative office in Lima

(c)	The depreciation recognized in the consolidated statement of income and other comprehensive income comprises:


In thousands of soles	*Note*		2020		2019
Cost of sales and services		22		21,124		15,663
Selling expenses		22		29		74
Administrative expenses		22		5,282		4,200

				26,435		19,937

i. Lease liabilities

Set out below are the carrying amounts of lease liabilities and the corresponding movements during the fiscal year ended December 31, 2020 and 2019:


In thousands of soles	2020			2019
Reclassification from finance leases (2018: included in loans and borrowings)		—			92,828
Recognition of lease liabilities on initial application of IFRS 16		—			33,475

Balance at January 1		179,084			126,303
Additions		44,956			83,883
Interest expense		12,107			11,706
Leases prepayment penalty		140			—
Payments		(90,089	)		(39,328	)
Penalty paid for leases prepayment		(140	)		—
Lease contracts cancelled		(6,486	)		—
Exchange difference		6,596			(3,480	)

Balance at December 31		146,168			179,084

Current		18,649			27,799
Non-current		127,519			151,285

14. Deferred Income Tax

As of December 31, this caption comprises the following:


In thousands of soles	Balances as of January 1		Recorded in the profit or loss for the year		Exchange difference		Business combination		Recorded in other comprehensive income		Balances as of December 31		Deferred tax assets		Deferred tax liabilities
2020
Tax loss		53,845		61,565		5,657		11,434		—		132,501		81,090		51,411
Loss for impairment of trade receivables		6,957		4,264		349		329		—		11,899		7,084		4,815
Provision for unpaid vacations and annual performance bonuses		2,369		687		—		—		—		3,056		2,930		126

F-66

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	Balances as of January 1			Recorded in the profit or loss for the year			Exchange difference			Business combination			Recorded in other comprehensive income		Balances as of December 31			Deferred tax assets			Deferred tax liabilities
Trade accounts payable		298			(298	)		—			—			—		—			—			—
Derivative financial instruments		6,263			(3,680	)		79			—			7,987		10,649			10,649			—
Provisions		60			768			—			—			—		828			579			249
Intangibles		(58,493	)		622			(4,154	)		—			—		(62,025	)		—			(62,025	)
Investments in associates and others		(3,034	)		(3,219	)		77			—			—		(6,176	)		—			(6,176	)
Loans and borrowings		(642	)		(4,711	)		(240	)		(167	)		—		(5,760	)		( 2,977	)		(2,783	)
Property, furniture, and equipment		(57,666	)		4,246			(2,688	)		(5,170	)		—		(61,278	)		(21,399	)		(39,879	)
Others		654			3,786			228			(738	)		—		3,930			822			3,108

Net tax		(49,389	)		64,030			(692	)		5,688			7,987		27,624			78,778			(51,154	)


In thousands of soles	Balances as of January 1			Adjustment on initial application of IFRS 16			Recorded in the profit or loss for the year			Exchange difference			Recorded in other comprehensive income		Balances as of December 31			Deferred tax assets			Deferred tax liabilities
2019
Tax loss		52,858			—			1,427			(440	)		—		53,845			36,113			17,732
Loss for impairment of trade receivables		6,834			—			217			(94	)		—		6,957			2,584			4,373
Provision for unpaid vacations and annual performance bonuses		2,501			—			(154	)		22			—		2,369			1,771			598
Trade accounts payable		1,772			(1,282	)		(271	)		79			—		298			298			—
Derivative financial instruments		2,670			—			(2,367	)		(84	)		6,044		6,263			1,311			4,952
Provisions		91			—			(31	)		—			—		60			170			(110	)
Intangibles		(60,993	)		—			594			1,906			—		(58,493	)		—			(58,493	)
Investments in associates and others		(2,210	)		—			(853	)		29			—		(3,034	)		—			(3,034	)
Loans and borrowings		(1,072	)		—			423			7			—		(642	)		(478	)		(164	)
Property, furniture, and equipment		(56,402	)		—			(2,598	)		1,334			—		(57,666	)		(9,190	)		(48,476	)
Others		(475	)		—			1,046			83			—		654			157			497

Net tax		(54,426	)		(1,282	)		(2,567	)		2,842			6,044		(49,389	)		32,736			(82,125	)

F-67

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	Balances as of January 1			Recorded in the profit or loss for the year			Recorded in other comprehensive income		Acquired in business combinations			Balances as of December 31			Deferred tax assets			Deferred tax liabilities
2018
Tax loss		37,523			1,279			—		14,056			52,858			39,056			13,802
Trade accounts receivable		1,083			689			—		—			1,772			1,482			290
Provision for unpaid vacations and annual performance bonuses		2,382			119			—		—			2,501			1,996			505
Loss for impairment of trade receivables		4,444			(1,184	)		—		3,574			6,834			3,025			3,809
Derivative financial instruments		—			2,367			303		—			2,670			2,367			303
Provisions		212			(121	)		—		—			91			403			(312	)
Intangibles		—			—			—		(60,993	)		(60,993	)		—			(60,993	)
Investments in associates and others		—			—			—		(2,210	)		(2,210	)		—			(2,210	)
Loans and borrowings		—			(1,050	)		—		(22	)		(1,072	)		(1,050	)		(22	)
Property, furniture, and equipment		(12,035	)		(344	)		—		(44,023	)		(56,402	)		(9,920	)		(46,482	)
Others		(475	)		280			—		(280	)		(475	)		(1,961	)		1,486

Net tax		33,134			2,035			303		(89,898	)		(54,426	)		35,398			(89,824	)

15. Loans and Borrowings

As of December 31, 2020, 2019 and 2018, the terms and conditions of outstanding obligations are the following:


										Outstanding balances
										2020				2019				2018
In thousands of soles	Type of obligation		Maturity		Interest rate			Currency		Face value		Carrying amount		Face value		Carrying amount		Face value		Carrying amount
Entity
Banco Davivienda		Bank loan		2019		DTF + 2.5	%		COP		—		—		—		—		228		226
				2019		IBR + 4.40	%				—		—		—		—		256		242

				2020		DTF + 1,8	%				—		—		627		607		650		630
						DTF + 2.25	%				—		—		1,036		1,008		1,075		1,040
						IBR + 4.30	%				—		—		64		64		349		328

				2021		DTF + 2.90	%				—		—		1,025		959		1,726		1,556
						DTF + 3.00	%				—		—		1,244		1,160		2,025		1,821
						7.69	%				—		—		596		559		964		958
						DTF + 2,96	%				—		—		160		151		285		260
						IBR + 3.30	%				—		—		370		336		—		—
						IBR + 4.67	%				—		—		1,330		1,219		2,161		1,887
						IBR + 4.65	%				—		—		886		812		1,432		1,250
						IBR + 2.90	%				3,879		3,834		—		—		—		—
						27.27	%				1		1		—		—		—		—

		Government guaranted loan		2025		IBR + 1.50	%				14,966		12,861		—		—		—		—
		Government guaranted loan		2025		IBR + 1.50	%				4,780		4,147		—		—		—		—

		Bank loan		2025		IBR + 3.50	%				11,694		10,327		—		—		—		—

F-68

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


									Outstanding balances
									2020				2019				2018
In thousands of soles	Type of obligation	Maturity		Interest rate			Currency		Face value		Carrying amount		Face value		Carrying amount		Face value		Carrying amount
Banco de Bogotá	Bank loan		2019		IBR + 5.90	%		COP		—		—		10,346		6,936		12,258		7,915
					DTF + 3	%				—		—		—		—		48		48
					DTF + 2.23	%				—		—		—		—		65		64
					12.24	%				—		—		—		—		623		621

			2021		IBR+2.68	%				—		—		1,042		1,015		—		—
					IBR+2.8	%				—		—		1,045		1,011		—		—
					DTF + 2.22	%				—		—		64		64		—		—
					26,16	%				24		24		21		21		—		—
					IBR + 4.00	%				2,366		2,340		—		—		—		—

Banco de Occidente	Bank loan		2019		IBR + 3.00	%		COP		—		—		—		—		6		64
					IBR + 4.00	%				—		—		—		—		997		939
					IBR +2.50	%				—		—		—		—		1,057		1,040
					IBR + 4.50	%				—		—		—		—		233		228

			2021		IBR + 2.25	%				—		—		64		63		—		—
					DTF+2.29	%				—		—		1,528		1,512		—		—
					26.61	%				2		2		24		24		—		—

			2021		IBR + 4.00	%				—		—		1,142		1,092		—		—

			2029		IBR + 5.90	%				—		—		5,363		3,626		6,335		4,119

Banco Interamericano de Finanzas	Bank loan		2018		3.75	%		S/		—		—		—		—		—		—

Banco Popular	Bank loan		2023		IBR + 5.90	%		COP		—		—		1,507		1,286		2,055		1,681

			2029		IBR + 5.00	%				—		—		7,359		4,967		8,727		5,651

Bancolombia	Bank loan		2019		DTF + 2.95	%		COP		—		—		—		—		535		520

					DTF + 4.97	%				—		—		—		—		709		708

					DTF + 2.80	%				—		—		—		—		2,530		2,500
					DTF + 2.42	%				—		—		—		—		241		239

			2021		IBR + 3.92	%				—		—		202		201		—		—
					DTF + 2.85	%				—		—		252		250		—		—
					26.08	%				1		1		2		2		—		—
					26.08	%				1		1		7		7		—		—

			2021		DTF + 4.97	%				—		—		475		442		718		716

			2023		IBR + 4.60	%				—		—		1,890		1,631		2,635		2,168
			2023		IBR + 4.60	%				—		—		619		535		866		712

			2029		IBR + 5.00	%				—		—		17,253		11,944		20,248		13,515

Bancoomeva	Bank loan		2019		DTF + 6.00	%		COP		—		—		—		—		1,076		1,043

			2024		DTF + 5.00	%				—		—		207		172		—		—

			2029		IBR + 5.25	%				—		—		15,534		10,700		18,386		12,183
			2029		IBR + 5.25	%				—		—		2,392		1,647		2,829		1,875

Itaú Corpbanca Colombia SA	Bank loan		2021		27,41% E.A.			COP		18		18		—		—		—		—

			2035		IBR + 2,98	%				81,237		56,676		—		—		—		—

F-69

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


								Outstanding balances
								2020				2019				2018
In thousands of soles	Type of obligation	Maturity		Interest rate			Currency	Face value		Carrying amount		Face value		Carrying amount		Face value		Carrying amount
Banco BBVA	Bank loan		2018		3.55	%	S/		—		—		—		—		—		—
			2019		3.73	%	COP		—		—		—		—		9,331		9,005
			2020		DTF + 4.00	%			—		—		283		278		—		—
					DTF + 4.29	%			—		—		95		94		—		—
					2.85	%			—		—		15,145		15,008		—		—
					2.85	%			—		—		15,145		15,008		—		—
			2021		DTF + 3.20	%			—		—		569		545		1,166		1,014

Banco de Crédito del Perú	Bank loan		2020		2.94	%	S/		—		—		2,005		2,001		—		—
					2.94	%			—		—		3,015		3,002		—		—
					2.94	%			—		—		3,007		3,002		—		—

BD Capital Sociedad Administradora de Fondos de Inversión S.A.C.	Bank loan		2023		8.00	%	S/		—		—		37,265		30,150		43,156		33,536

Scotiabank Perú S.A.A.	Bank loan (b)		2019		3.89	%	S/		—		—		—		—		4,780		4,601
			2020		2.90	%			—		—		7,135		7,025		—		—
					2.90	%			—		—		8,156		8,029		—		—
					2.80	%			—		—		8,150		8,005		—		—
					2.75	%			—		—		20,367		20,023		—		—
					2.80	%			—				7,099		7,004		—		—
					2.80	%			—		—		6,028		6,015		—		—
			2023		8.00	%			—		—		168,282		133,939		195,165		148,578
	Other financing		2027		6.30	%			45,552		36,330		—		—		—		—

Banco Nacional de México S.A.	Syndicated loan (a)		2020		LIBOR 3M + 1.30	%	US$		—		—
Banco Nacional de México S.A.	Syndicated loan (a)		2023		LIBOR 3M + 1.40	%	US$		—		—		227,076		206,168		210,959		183,518

Banco Santander S.A.	Syndicated loan (a)		2023		LIBOR 3M + 2.90	%	US$		—		—		133,910		116,424		222,133		183,562

Secured bonds issues	Senior notes		2025		6.50	%	US$		1,147,844		1,082,107		—		—		—		—

Banco Financiero	Finance lease		2022		8.50	%	S/		—		—		—		—		4,084		3,529

Banco Interamericano de Finanzas	Finance lease		2019		8.25	%	S/		—		—		—		—		5,102		4,904

			2020		7.75	%			—		—		—		—		4,391		4,079
			2020		7.50	%			—		—		—		—		8,653		8,056

			2021		8.35	%			—		—		—		—		3,991		3,575
			2021		7.15	%			—		—		—		—		4,233		3,855

			2022		7.15	%			—		—		—		—		1,571		3,587

			2022		8.35	%			—		—		—		—		4,023		1,314

Banco Santander S.A.	Finance lease		2022		8.15	%	S/		—		—		—		—		2,791		2,425

F-70

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


								Outstanding balances
								2020				2019				2018
In thousands of soles	Type of obligation	Maturity		Interest rate			Currency	Face value		Carrying amount		Face value		Carrying amount		Face value		Carrying amount
Banco BBVA Colombia	Finance lease		2019		6.24	%	COP		—		—		—		—		12		12

			2020		3.75	%			—		—		—		—		205		197
					3.75	%			—		—		—		—		168		161
					3.75	%			—		—		—		—		114		111
					3.75	%			—		—		—		—		167		161

			2021		4.95	%			—		—		—		—		293		273
					4.95	%			—		—		—		—		73		68
					4.46	%			—		—		—		—		445		415

			2022		4.48	%			—		—		—		—		507		471
					4.60	%			—		—		—		—		619		571
					5.22	%			—		—		—		—		711		642
					5.00	%			—		—		—		—		45		41
					5.02	%			—		—		—		—		261		236
					4.35	%			—		—		—		—		170		158

Banco de Bogotá	Finance lease		2029		6.00	%	COP		—		—		—		—		16,414		11,612

Banco de Occidente	Finance lease		2020		7.96	%	COP		—		—		—		—		485		448
							COP
			2029		6.00	%			—		—		—		—		21,155		14,960

Bancolombia	Finance lease		2019		12.70	%	COP		—		—		—		—		3		3
			2019		10.43	%			—		—		—		—		7		7

			2020		DTF + 3.70	%			—		—		—		—		36		34

			2021		9.32	%			—		—		—		—		388		327
			2021		3.70	%			—		—		—		—		55		52

			2022		4.17	%			—		—		—		—		87		80

					4.17	%			—		—		—		—		247		228

					4.17	%			—		—		—		—		331		306
					9.55	%			—		—		—		—		258		210

			2023		4.00	%			—		—		—		—		60		55
			2023		4.84	%			—		—		—		—		801		718

			2029		5.50	%			—		—		—		—		11,336		8,207
					3.50	%			—		—		—		—		677		549
					3.80	%			—		—		—		—		192		153
					4.00	%			—		—		—		—		108		86
					4.50	%			—		—		—		—		241		186
					4.50	%			—		—		—		—		177		137
					3.95	%			—		—		—		—		585		465
					3.95	%			—		—		—		—		251		200
					4.20	%			—		—		—		—		211		166
					3.90	%			—		—		—		—		1,438		1,147
					4.30	%			—		—		—		—		259		203
					3.70	%			—		—		—		—		687		554
					3.70	%			—		—		—		—		155		125
					3.70	%			—		—		—		—		1,891		1,525
					3.70	%			—		—		—		—		357		288
					5.95	%			—		—		—		—		351		249
					5.85	%			—		—		—		—		1,362		959
					5.85	%			—		—		—		—		2,011		1,417

Banco Davivienda	Finance lease		2022		10.43	%	COP		—		—		—		—		115		114

F-71

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


			��							Outstanding balances
										2020				2019				2018
In thousands of soles	Type of obligation		Maturity		Interest rate			Currency		Face value		Carrying amount		Face value		Carrying amount		Face value		Carrying amount
Leasing Perú		Finance lease		2018		7.00	%		US$		—		—		—		—		—		—

Roca		Other financing		2018		6.00	%		US$		—		—		—		—		—		—

Scotiabank Perú S.A.A.		Finance lease		2022		6.79	%		S/		—		—		—		—		3,893		3,355
						6.79	%				—		—		—		—		1,314		1,133
						5.75	%				—		—		—		—		1,455		1,373
						6.79	%				—		—		—		—		2,734		2,356

Total											1,312,365		1,208,669		738,408		637,743		895,774		725,389

Current													18,444				172,992				108,931

Non-current													1,190,225				464,751				616,458

DTF: Term deposit rate

IBR: Bank reference indicator

(a)	Bank loans for the acquisition of PMLA

Banco Nacional de México and Banco Santander

On December 26, 2018, the Group signed a syndicated loan agreement with Banco Nacional de México S.A. (hereinafter, “Citibanamex”) and Banco Santander S.A. (hereinafter, “Santander”) through the subsidiary Auna Colombia for an amount of US$ 110,000 thousand. Each entity granted US$ 55,000 thousand. Such a loan matures in December 2023, comprises quarterly payments from March 2019, and bears interest for the trench of CitiBanamex at a Libor rate of 3 months + 1.30% (first two years) and a Libor rate of 3 months + 1.40% (last three years). For the trench of Santander, it bears interest at a Libor rate of 3 months + 2.90% (first five years).

The loan was used to acquire the shares of PMLA through the subsidiary Auna Colombia S.A.S. (note 1.C). The transaction costs incurred in relation to the loan amounted to US$ 1,346 thousand (equivalent to S/ 4,595 thousand) and are presented net of debt and amortized using the effective interest rate method.

On November 20, 2020, the syndicated loan with Banco Nacional de México and Banco Santander amounting to US $ 90 million and maturing in 2023 was pre-paid by the Group with the resources obtained from senior notes issued. Upon termination of the debt agreement, Management wrote off the remaining debt issuance costs of S/ 3,003 thousand. The expense is presented in ‘finance costs’ in the consolidated statement of income and other comprehensive income (note 25).

Commitments related to the loans for the acquisition of PMLA (note 31)

•

The Group and its shareholders have pledged 51% of the shares of Oncosalud S.A.C. and 99% of the shares of Medicser S.A.C.

•

The Group and its shareholders have pledged the shares of Auna Colombia S.A.S. for a value of US$ 232,657 thousand.

•

The Group mortgaged 16 properties of the subsidiaries for the value of US$ 135,106 thousand.

•

Joint guarantee by Auna Colombia S.A.S, Medicser S.A.C. and Oncocenter Perú S.A.C. for US$ 67,000 thousand.

F-72

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Upon termination of the associated debt agreement, Management released the aforementioned commitments as of December 31, 2020.

(b)	Other bank loans with covenants

Scotiabank Perú S.A.A.

On December 26, 2018, the Group signed a new credit agreement with Scotiabank for S/ 185 million, where the terms of the agreement were substantially different from those included in the original credit agreement. Therefore, the first loan and the respective transaction costs as of that date had to be paid and the difference between the carrying amount of the original liability and the consideration paid were recognized in the consolidated statement of income and other comprehensive income. These costs amounting to S/ 2,526 thousand were recognized in ‘Finance Costs’ (note 25). The new debt, which was initially measured at fair value, comprises quarterly payments from March 2019 and bears interest at an annual rate of 8.00%. The transaction costs related to the new loan amounted to S/ 3,093 thousand and are presented net of debt and amortization using the effective interest rate method.

On December 28, 2018, Scotiabank partially assigned the debt to BD Capital Sociedad Administradora de Fondos de Inversión S.A.C. for an amount of S/ 33,500 thousand, under the same terms of the debt renegotiation.

As of December 31, 2019 and 2018, the loan granted by Scotiabank Perú S.A.A. has qualitative and quantitative covenants calculated based on the consolidated financial statements of Auna S.A. and Subsidiaries. As of December 31, 2019 and 2018, the Group complies with the qualitative and quantitative terms of the following covenants:

•

EBITDA / financial expenses + amortizations: equal to or higher than 1.20

•

net financial debt / EBITDA: equal to or below 4.75 during the first two years, 4.5 during the third, 3.5 during the fourth year and 2.5 during the last year

As of December 31, 2019 and 2018, the Group is in compliance with the covenants above indicated. As of December 31, 2020, the financial covenants does not applicable due these credit agreements was pre-paid by the Group.

On November 20, 2020, the loan with BD Capital Sociedad Administradora de Fondos de Inversión S.A.C. and Scotiabank Perú S.A.A. amounting to S/ 153 million and maturing in 2023 was pre-paid by the Group with the resources obtained from the senior notes issued. As a result of prepayment, the Group recorded penalties for early termination for S/ 2,971 thousand and wrote-off the remaining debt issuance costs of S/ 1,675 thousand. These expenses are presented in ‘finance costs’ in the consolidated statement of income and other comprehensive income (note 25).

Bancolombia

As of December 31, 2019 and 2018, the balance payable to Bancolombia includes short- and medium-term loans granted to PMLA and subsidiaries mainly for working capital and new investments amounting to S/ 3,959 thousand and S/ 17,014 thousand (equivalent to COP 3,810,614 thousand and COP 16,375,795 thousand), respectively. These loans accrued interest at fixed rates, ranging from 7.46% to 9.46%, and at variable rates, ranging from DTF + 2.42% to DTF + 2.80% and IBR + 5.00%. Likewise, medium-term loans have maturities between 2023 and 2029. In December 2020, these loans were prepaid and not generated penalties for early termination.

F-73

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Bancoomeva

As of December 31, 2019 and 2018, the balance payable to Bancoomeva includes short- and medium-term loans granted to PMLA for working capital and new investments amounting to S/ 1,039 thousand and S/ 13,962 thousand (equivalent to COP 1,000,000 thousand and COP 13,437,499 thousand), respectively. These loans accrued interest at variable rates such as DTF + 6.00% and IBR + 5.25%. Likewise, medium-term loans have maturities until 2029. In December 2020, these loans were prepaid and not generated penalties for early termination.

Banco Davivienda

As of December 31, 2019 and 2018, the balance payable to Banco Davivienda includes short- and medium-term loans granted to PMLA and Subsidiaries for working capital and new investments amounting to S/ 1,890 thousand and S/ 8,262 thousand (equivalent to COP 1,819,020 thousand and COP 7,952,027 thousand), respectively. These loans accrued interest at fixed rates, ranging from 6.31% to 7.60%, and at variable rates, ranging from DTF + 2.50% to DTF + 3.00% and IBR + 4.30% to IBR + 4.67%. Likewise, medium-term loans have maturities from 2020 to 2021. In December 2020, these loans were prepaid and did not generate penalties for early termination.

During 2020, Colombian subsidiaries obtained two medium-term loans for S/ 14,161 thousand equivalent to COP 13,296,497 thousand. These loans accrue interests at variable rates, ranging from IBR + 2.90% to IBR + 3.50% with maturities from 2021 to 2025.

On June and July 2020, Colombian subsidiaries, PMLA and Instituto de Cancerología, received government guaranted loans for S/ 12,861 thousand and S/ 4,147 thousand respectively, with annual interest rates of IBR + 1.50%. These loans were recognized at fair values with market interest annual rate for IBR + 4.56% and IBR + 4.0% respectively The government guaranted loans received were recorded in accordance with IAS 20, Accounting for Government Grants and Disclosure of Government Assistance. The commitments related to the government guaranted loans are subject to the funds being used for working capital. As of December 31, 2020, the Group is in compliance with the commitments above indicated.

Banco de Bogotá

As of December 31, 2019 and 2018, the balance payable to Banco de Bogotá includes short- and medium-term loans granted to PMLA and Subsidiaries for working capital and new investments amounting to S/ 113 thousand and S/ 8,478 thousand (equivalent to COP 108,297 thousand and COP 8,159,306 thousand), respectively. These loans accrued interest at fixed rates, ranging from 7.77% to 9.35%, and at variable rates such as DTF + 2.22% and IBR + 5.90%. Likewise, medium-term loans have maturities until 2029.

Banco de Occidente

As of December 31, 2019 and 2018, the balance payable to Banco de Occidente includes short- and medium-term loans granted to PMLA and Subsidiaries for working capital and new investments for amounts equivalent to S/ 4,317 thousand and S/ 2,038 thousand (equivalent to COP 1,961,857 thousand and COP 4,154,751 thousand), respectively. These loans accrued interest at a fixed rate of 8.64%, and at variable rates, ranging from IBR + 2.50% to IBR + 5.90%. Likewise, medium-term loans have maturities until 2029. In December 2020, these loans were prepaid and did not generate penalties for early termination.

F-74

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

As of December 31, 2019 and 2018, loans with Bancolombia, Bancoomeva, Banco Davivienda, Banco de Bogotá and Banco de Occidente (Colombian banks), require compliance with quantitative and qualitative covenants that are calculated based on PMLA’s separate financial statements, which are in compliance with the quantitative and qualitative terms.

As of December 31, 2019 and 2018, the Group complies with the quantitative and qualitative terms of the following covenants:

•

EBITDA margin: maximum 12.5%

•

Financial liabilities / EBITDA: maximum 13.5

•

EBITDA / financial expense: minimum 1.5

•

Free cash flow / long-term debt service: minimum 1.1

•

Capex investments: maximum COP 9,133 million

•

EBITDA / debt service: minimum 1.1

The main guarantees granted in favor of these Colombian banks are described in note 32.B.

Senior Notes

On November 20, 2020, Auna S.A.A successfully issued US$ 300 millions in senior notes in the international market, under Rule 144A and Regulation S of the United States Securities Act of 1933, for a maturity of 5 years with an interest annual rate of 6.50 percent.

The amount collected from senior notes issue was used to pay the existing financial debt, re-profile the current and non-current liabilities and finance future investments in fixed assets.

As of December 31, 2020, the senior notes has qualitative and quantitative covenants calculated based on the consolidated financial statements of Auna S.A. and Subsidiaries. As of December 31, 2020, the Group complies with the qualitative and quantitative terms of the following covenants:

•

The Net Leverage Ratio for the Issuer and its Restricted Subsidiaries on a consolidated basis is less than (i) 5:00 to 1:00, if such Incurrence of Indebtedness occurs before the first anniversary of the Issue Date; (ii) 4:50 to 1:00, if such Incurrence of Indebtedness occurs on or after the first anniversary of the Issue Date but before the second anniversary of the Issue Date; (iii) 4:25 to 1:00, if such Incurrence of Indebtedness occurs on or after the second anniversary of the Issue Date but before the third anniversary of the Issue Date and (iv) 3.75 to 1.00, if such Incurrence of Indebtedness occurs on or after the third anniversary of the Issue Date; and

•

The Interest Coverage Ratio for the Issuer and its Restricted Subsidiaries on a consolidated basis is at least 2.25 to 1.00.

Other financing with Scotiabank Perú S.A.A

Correspond to a financing agreement with Scotiabank for a credit line of S/ 70 million maturing in February 2027, and which is used for the construction of the ongoing project “Clinica Chiclayo”. As of December 31, 2020, the credit line used net of the transaction cost amounted to S/ 36,330 thousand. In the month of November 2020, the modifications of compliance with the agreements were approved as indicated below:

•

Maintain a debt service ratio equal to or greater than 1.2x.

F-75

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

•

Maintain a consolidated leverage ratio, defined as the ratio of our net debt / EBITDA, less than or equal to 5.00x between December 1, 2020 and December 1, 2021, 4.5x between December 1, 2021 and on December 1, 2022, 3.5x during 2022, 4.25x between December 1, 2022 and December 1, 2023 and 3.75x between December 1, 2023 onwards.

•

Maintain an interest coverage ratio equal to or greater than 2.25x from December 1, 2020 onwards.

As of December 31, 2020, the Group is in compliance with the covenants above indicated.

(c)	Other bank loans with no covenants

Banco BBVA Peru

As of December 31, 2019, the balance payable to Banco BBVA Peru comprises a short-term loan that accrued interest at an annual variable rate of DTF+3.20%, which will be paid in 2021 (3.75% as of December 31, 2017, which was repaid in January 2018). In December 2020, these loans were prepaid and did not generate penalties for early termination.

(d)

Reconciliation of movement in liabilities to cash flows arising from financing activities:


In thousands of soles	Financial loan			Deferred Income		Lease liabilities (*)			Call spread premiums payable			Derivatives premiums payable		Interest rate swap contracts used for hedging liabilities			Account payables to third parties			Trust funds			Share capital/ premium		Retained earnings (losses)			Merge reserve			Advance payments			Non- controlling interest			Total
Balances as of December 31, 2019		637,743			—		179,084			15,927			—		15,478			4,342			(6,438	)		622,592		17,244			(85,296	)		(12,756	)		16,538			1,404,458
Recognition of lease liabilities on initial application of IFRS 16		—			—		—			—			—		—			—			—			—		—			—			—			—			—

Balance as of January 1, 2020		637,743			—		179,084			15,927			—		15,478			4,342			(6,438	)		622,592		17,244			(85,296	)		(12,756	)		16,538			1,404,458
Changes in cash flows from financing
Proceeds from loans and borrowings		1,481,639			—		—			—			—		—			—			—			—		—			—			—			—			1,481,639
Payment for borrowings from financial obligations		(1,072,048	)		—		—			—			—		—			—			—			—		—			—			—			—			(1,072,048	)
Payment of lease liabilities		—			—		(90,089	)		—			—		—			—			—			—		—			—			—			—			(90,089	)
Dividends paid		—			—		—			—			—		—			—			—			—		(10,000	)		—			—			(7	)		(10,007	)
Interest paid		(36,995	)		—		—			—			—		—			(281	)		—			—		—			—			—			—			(37,276	)
Penalty paid for debt prepayment		(3,260	)		—		(140	)					—		—			—			—			—		—			—			—			—			(3,400	)
Trust funds		—			—		—			—			—		—			—			6,438			—		—			—			—			—			6,438
Payment for other financing of third party		—			—		—			—			—		—			(1,908	)		—			—		—			—			—			—			(1,908	)
Payment for call spread premiums		—			—		—			(4,302	)		—		—			—			—			—		—			—			—			—			(4,302	)
Payment for settlement of derivatives		—			—		—			—			—		(5,296	)		—			—			—		—			—			—			—			(5,296	)
Contributions from non-controlling shareholder		—			—		—			—			—		—			—			—			—		—			3,120						5,831			8,951

Total changes from financing cash flows		369,336			—		(90,229	)		(4,302	)		—		(5,296	)		(2,189	)		6,438			—		(10,000	)		3,120			—			5,824			272,702

Effect of changes in foreign exchange rates		47,317			—		6,595			1,345			—		(720	)		(27	)		—			—		—			—			(63	)		—			54,448

Refinancing of commercial debt to financial debt		4,239			—		—			—			—		—			—			—			—		—			—			—			—			4,239

Changes arising from obtaining control of subsidiary Portoazul		102,837			—		—			—			—		—			—			—			—		—			—			—			35,755			138,592

Changes in fair value		(5,608	)		5,608		—			—			—		10,281			—			—			—		—			—			—			—			10,281
Total equity-related other changes		—					—	��		—			—		—			—			—			—		(19,867	)		—			—			7,060			(12,807	)

F-76

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles		Financial loan		Deferred Income			Lease liabilities (*)			Call spread premiums payable			Derivatives premiums payable		Interest rate swap contracts used for hedging liabilities			Account payables to third parties		Trust funds		Share capital/ premium		Retained earnings (losses)			Merge reserve			Advance payments			Non- controlling interest			Total
Other changes
Assets acquired through new leases			—		—			44, 956			—			—		—			—		—		—		—			—			—			—			44,956
Cash flow hedges settlement			—		—			—			—			—		5,296			—		—		—		—			—			—			—			5,296
Acquisition of derivative with premiums financing			—		—			—			—			14,054		—			—		—		—		—			—			—			—			14,054
Acquisition of non-controlling interest			—		—			—			—			—		—			—		—		—		—			2,366			11,671			(14,037	)		—
Lease contracts cancelled			—		—			(6,486	)		—			—		—			—		—		—		—			—			—			—			(6,486	)
Interest expense			48,310		(4,397	)		12,107			438			142		—			281		—		—		—			—			—			—			56,881
Capitalised borrowing costs	��		1,235		—			—			—			—		—			—		—		—		—			—			—			—			1,235
Financial debt prepayment penalty			3,260		—			140			—			—					—		—		—		—			—			—			—			3,400
Unwind of derivative financial instruments net of premiums payable			—		—			—			(13,408	)		21,649		(25,039	)		—		—		—		—			—			—			—			(16,798	)
Others			—		—			—			—			—		—			—		—		—		—			46			—			—			46

Balance as of December 31, 2020			1,208,669		1,211			146,168			—			35,845		—			2,407		—		622,592		(12,623	)		(79,764	)		(1,148	)		51,140			1,974,497


In thousands of soles	Financial loan			Lease liabilities (*)			Call spread premiums payable			Interest rate swap contracts used for hedging liabilities			Commissions for derivatives			Account payables to third parties			Trust funds			Share capital/ premium		Retained earnings (losses)			Merge reserve			Advance payments		Non-controlling interest		Total
Balances as of December 31, 2018		632,561			92,828			21,134			1,015			—			8,494			(5,751	)		622,591		(38,170	)		(85,296	)		—		15,727		1,265,133
Recognition of lease liabilities on initial application of IFRS 16		—			33,475			—			—			—			—			—			—		3,063			—			—				36,538

Balance as of January 1, 2019		632,561			126,303			21,134			1,015			—			8,494			(5,751	)		622,591		(35,107	)		(85,296	)		—		15,727		1,301,671
Changes in cash flows from financing
Proceeds from capital contribution		—			—			—			—			—			—			—			1		—			—			—		—		1
Proceeds from loans and borrowings		215,901			—			—			—			—			—			—			—		—			—			—		—		215,901
Contribution from non-controlling shareholders		—			—			—			—			—			—			—			—		—			—			—		—		—
Payment for borrowings from financial obligations		(200,899	)		—			—			—			—			—			—			—		—			—			—		—		(200,899	)
Payment of lease liabilities		—			(39,328	)		—			—			—			—			—			—		—			—			—		—		(39,328	)
Dividends paid		—			—			—			—			—			—			—			—		(10,000	)		—			—		—		(10,000	)
Interest paid		(37,359	)		—			—			—			—			(472	)		—			—		—			—			—		—		(37,831	)
Trust funds		—			—			—			—			—			—			(687	)		—		—			—			—		—		(687	)
Payment of commissions for derivatives		—			—			—			—			(2,474	)		—			—			—		—			—			—		—		(2,474	)
Payment for other financing of third party		—			—			—			—			—			(3,928	)		—			—		—			—			—		—		(3,928	)
Payment for call spread premiums		—			—			(5,907	)		—			—			—			—			—		—			—			—		—		(5,907	)
Payment for settlement of derivatives		—			—			—			(1,566	)		—			—			—			—		—			—			—		—		(1,566	)

F-77

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	Financial loan			Lease liabilities (*)			Call spread premiums payable			Interest rate swap contracts used for hedging liabilities			Commissions for derivatives			Account payables to third parties			Trust funds			Share capital/ premium		Retained earnings (losses)			Merge reserve			Advance payments			Non-controlling interest		Total
Advance payment for purchase of non-controlling interest		—			—			—			—			—			—			—			—		—			—			(12,756	)		—		(12,756	)

Total changes from financing cash flows		(22,357	)		(39,328	)		(5,907	)		(1,566	)		(2,474	)		(4,400	)		(687	)		1		(10,000	)		—			(12,756	)		—		(99,474	)

Effect of changes in foreign exchange rates		(10,156	)		(3,480	)		(347	)		(261	)		—			(224	)		—			—		—			—			—			—		(14,468	)

Changes in fair value		—			—			1,047			14,724			—			—			—			—		—			—			—			—		15,771
Total equity-related other changes		—			—			—			—			—			—			—			—		62,351			—			—			811		63,162

Other changes
Assets acquired through new leases		—			83,883			—			—			—			—			—			—		—			—			—			—		83,883
Cash flow hedges settlement		—			—			—			1,566			—			—			—			—		—			—			—			—		1,566
Commissions for derivatives		—			—			—			—			2,474			—			—			—		—			—			—			—		2,474
Interest expense		37,695			11,706			—			—			—			472			—			—		—			—			—			—		49,873

Balance as of December 31, 2019		637,743			179,084			15,927			15,478			—			4,342			(6,438	)		622,592		17,244			(85,296	)		(12,756	)		16,538		1,404,458


In thousands of soles	Financial loan		Finance lease		Other financing		Call spread premiums payable		Interest rate swap contracts used for hedging liabilities		Account payables to third parties		Trust funds			Share capital / premium		Merge reserve			Retained earnings			Non- controlling interest		Total
Balance as of January 1, 2018		179,871		64,808		35		—		—		10,382		(7,357	)		380,477		(85,804	)		(58,473	)		1,361		485,300
Changes in cash flows from financing
Proceeds from capital contribution		—		—		—		—		—		—		—			242,114		—			—			—		242,114
Proceeds from loans and borrowings		650,276		—		—		—		—		—		—			—		—			—			—		650,276

F-78

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	Financial loan			Finance lease			Other financing			Call spread premiums payable		Interest rate swap contracts used for hedging liabilities		Account payables to third parties			Trust funds			Share capital / premium		Merge reserve			Retained earnings			Non- controlling interest			Total
Contribution from non-controlling shareholders		—			—			—			—		—		—			—			—		—			—			170			170
Payment for borrowings from financial obligations		(273,135	)		(25,571	)		(35	)		—		—		—			—			—		—			—			—			(298,741	)
Dividends paid		—			—			—			—		—		—			—			—		—			(10,000	)		—			(10,000	)
Interest paid		(17,004	)		(4,300	)		—			—		—		(178	)		—			—		—			—			—			(21,482	)
Trust funds		—			—			—			—		—		—			1,606			—		—			—			—			1,606
Payment for other financing of third party		—			—			—			—		—		(10,382	)		—			—		—			—			—			(10,382	)
Acquisition of non-controlling interest		—			—			—			—		—		—			—			—		508			—			(1,454	)		(946	)

Total changes from financing cash flows		360,137			(29,871	)		(35	)		—		—		(10,560	)		1,606			242,114		508			(10,000	)		(1,284	)		552,615

Changes arising from obtaining control of subsidiary PMLA		69,135			49,286			—			—		—		8,494			—			—		—			—			15,193			142,108

Changes in fair value		—			—			—			—		1,015		—			—			—		—			—			—			1,015

Total equity-related other changes		—			—			—			—		—		—			—			—		—			30,303			457			30,760

Other changes
Assets acquired through finance lease and other financing		—			2,360			—			—		—		—			—			—		—			—			—			2,360
Refinancing of commercial debt to financial debt		—			1,945			—			—		—		—			—			—		—			—			—			1,945
Acquisition of derivative call spread with premiums financing		—			—			—			21,134		—		—			—			—		—			—			—			21,134
Interest expense		17,117			4,300			—			—		—		178			—			—		—			—			—			21,595
Effect of changes in exchange rates		6,301			—			—			—		—		—			—			—		—			—			—			6,301

Balance as of December 31, 2018		632,561			92,828			—			21,134		1,015		8,494			(5,751	)		622,591		(85,296	)		(38,170	)		15,727			1,265,133

16.

Trade Accounts Payable

As of December 31, the trade accounts payable of the Group are stated in the following currencies:


In thousands of soles	2020		2019		2018
Soles		175,970		133,837		118,833
US dollars		24,901		12,659		13,765
COP		155,158		107,703		110,258

		356,029		254,199		242,856

Current		351,247		254,199		242,856

Non-current		4,782		—		—

F-79

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The trade accounts payable are mainly related to the acquisition of supplies, materials and services for the Group’s performance. These accounts payable have current maturity and do not bear interest. As of December 31, 2020, 2019 and 2018, they include: i) medical fees payable by the Peruvian and Colombian subsidiaries amounting to S/ 23,336 thousand, S/ 18,368 thousand and S/ 12,226 thousand, respectively, and ii) contract liabilities related to the advance consideration received from patients for healthcare services, for which revenue is recognised over time amounting to S/ 13,647 thousand, S/ 5,526 thousand and S/ 5,858 thousand, respectively. They are stated in soles and COP and have current maturity.

Likewise, the Group participates in a supply chain finance programme under which its suppliers may elect to receive early payment of their invoice from a bank by factoring their receivable from the Group. Under the arrangement, a bank agrees to pay amounts to a participating supplier in respect of invoices owed by the Group and receives settlement from the Group at a later date. The principal purpose of this programme is to facilitate efficient payment processing and enable the willing suppliers to sell their receivables due from the Group to a bank before their due date. The Group has not derecognised the original liabilities to which the arrangement applies because neither a legal release was obtained nor the original liability was substantially modified on entering into the arrangement. From the Group’s perspective, the arrangement does not significantly extend payment terms beyond the normal terms agreed with other suppliers that are not participating. As of December 31, 2020, the amount related to supplier factoring facility is S/ 37,215 thousand. The payments to a supplier by the bank are considered non-cash transactions and amount to S/ 45,201 thousand in 2020.

As of December 31, 2020 the non-current portion corresponds to payments agreements with suppliers of the Colombian subsidiaries with maturities between 24 and 36 months.

17.

Other Accounts Payable

As of December 31, this caption comprises the following:


In thousands of soles	2020		2019		2018
Current
Compensation and other benefits payable to personnel		51,593		34,320		28,797
Taxes payable		21,061		8,597		11,098
Call spread premiums payable (a)		—		5,215		5,778
Derivatives Fx premiums and accounts payable for “unwind” (e)		11,631		—		—
Constructions in progress and medical equipment payable		11,614		5,481		5,105
Deposits in guarantee		2,404		263		60
Commissions payable (b)		5,584		5,774		3,847
Account payables to third parties (c)		2,407		2,276		4,191
Other accounts payable		3,490		2,818		3,320

		109,784		64,744		62,196

Non-current
Call spread premiums payable (a)		—		10,712		15,356
Derivatives Fx premiums and accounts payable for “unwind” (e)		24,214		—		—
Account payables to third parties (c)		—		2,066		4,303
Other accounts payable (d)		—		98		4,364

		24,214		12,876		24,023

F-80

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

(a)	Call spread premiums financing.

As of December 31, 2019 and 2018, the balance corresponds to the liabilities payable of the premiums of the “call spread” agreements (note 9).


In thousands of soles	Maturity		Currency of origin	Annual nominal interest rate			Current portion		Non-current portion		December 31, 2019
Citibank N.A.		2023	US$		1.90	%		2,212		4,545		6,757
Citibank N.A.		2023	US$		1.40	%		3,003		6,167		9,170

								5,215		10,712		15,927


In thousands of soles	Maturity		Currency of origin	Annual nominal interest rate			Current portion		Non-current portion		December 31, 2018
Citibank N.A.		2023	US$		1.90	%		3,326		8,842		12,168
Citibank N.A.		2023	US$		1.40	%		2,452		6,514		8,966

								5,778		15,356		21,134

(b)	Corresponds to the sales commissions payable for the sales of corporate and individual oncologic healthcare plans.

(c)	As of December 31, 2020, corresponds mainly to accounts payable to third parties for outstanding payment for the purchase of shares of PMLA’s subsidiaries for S/ 2,407 thousand, (S/ 4,342 thousand and S/ 7,274 thousand as of December 2019 and 2018, respectively).

(d)

As of December 31, 2018, non-current portion corresponds to a provision of S/ 4,345 thousand, for lease agreement payable by virtue of the surface right agreement signed between the Group and Peruvian Red Cross Society due to the variable lease payment with annual increases of 1.5% as from the twenty month.

(e)	Derivatives premiums financing

As of December 31, 2020, the balance corresponds to the liabilities payable of the premiums of the “purchase collar and long forward” agreements with semi-annual equal payments (note 9).

In thousands of soles

Maturity

Currency
of origin

Annual nominal
interest rate

Current
portion

Non-current
portion

December 31,
2020

Goldman Sachs Bank

2023

3.52

4,603

9,582

14,185

4,603

9,582

14,185

Accounts payable for novation of the old derivatives.

As of December 31, 2020, the outstanding balance corresponds to the liabilities payable to Goldman Sachs Bank as a consequence of the transfer for novation of the old derivatives call spread and swaps agreements with semi-annual equal payments (note 9).

In thousands of soles

Maturity

Currency
of origin

Annual nominal
interest rate

Current
portion

Non-current
portion

December 31,
2020

Goldman Sachs Bank

2023

3.52

7,028

14,632

21,660

7,028

14,632

21,660

F-81

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

18.

Provisions

As of December 31, this caption comprises the following:


In thousands of soles	IBNR (i)			Outstanding claims reserve (i)			Other provisions			Total
As of January 1, 2018		984			1,119			705			2,808
Annual provision		2,118			3			487			2,608
Paid during the year		(1,205	)		—			(425	)		(1,630	)
Business combination balances		—			—			3,269			3,269

As of December 31, 2018		1,897			1,122			4,036			7,055

As of January 1, 2019		1,897			1,122			4,036			7,055
Annual provision		2,028			33			2,436			4,497
Paid during the year		(2,039	)		—			(1,409	)		(3,448	)
Exchange difference		—			—			(84	)		(84	)

As of December 31, 2019		1,886			1,155			4,979			8,020

As of January 1, 2020		1,886			1,155			4,979			8,020
Annual provision		1,514			—			1,100			2,614
Paid during the year		(1,886	)		(1,014	)		(1,359	)		(4,259	)
Business combination balances		—			—			1,225			1,225
Exchange difference		—			—			332			332

As of December 31, 2020		1,514			141			6,277			7,932

(i)	IBNR and outstanding claims reserve are related to insurance contract liabilities and only represent our outstanding third party obligations and do not include amounts related to our customers that are part of the insurance premium program. See note 4.M.

•	*Insurance provisions and expenses*

Incurred but not reported (IBNR)

These provisions include the reserve for events incurred but not reported (IBNR) to the consolidated financial statement date (note 4.M.i). As of December 31, 2020, 2019 and 2018, reserves were determined using the Chain Ladder methodology, whereby the key assumptions include the weighted average past claims’ development, which are projected into the future, amounting to S/ 1,163 thousand, S/ 1,518 thousand and S/ 1,835 thousand, respectively.

Outstanding claims reserve

These provisions include unsettled events based on the notices of claims received up to the consolidated financial statement date.

Insurance expenses

The insurance expenses incurred by Oncosalud S.A.C., the Company’s insurance subsidiary and presented in its separate financial statements for the years ended December 31, 2020, 2019 and 2018 were considered to perform the liability adequacy test in accordance with IFRS 4 “Insurance Contracts” (note 4.M.ii).

F-82

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The insurance expenses incurred by Oncosalud S.A.C. follow:


In thousands of soles	Cost of sales and services (i)
In thousands of soles	2020		2019		2018
Medicines		142,532		130,620		121,859
Room service for inpatiens		16,015		24,019		33,183
Medical consultation fees		20,502		23,236		21,485
Auxiliary services and clinical laboratory		50,763		72,881		51,055
Surgery fees		11,227		14,806		10,904
Technical reserves for healthcare services		1,514		2,029		1,911

		242,553		267,591		240,397

(i)

These expenses are included in the cost of sales and services in our consolidated statement of income and other comprehensive income after deducting the margin mark-up. For the years ended December 31, 2020, 2019 and 2018, the margin applied was calculated using the same basis as what we charge third parties for these services and the overall average margin applied in each period was 11%, 24% and 19%, respectively.

The lower margin in 2020 vs 2019, corresponds mainly to patients who had postponed their oncology treatment due the pandemic situation of COVID-19, this reduces the revenues of the clinics, however, their fixed costs were flat and also the increase use of personal protective equipments (PPE) generate cost overruns in the clinics.

Due to the vertical integration of the Group’s companies, these insurance expenses incurred by Oncosalud S.A.C. and the corresponding trade and other accounts payable are eliminated with the transactions performed with Oncocenter Perú S.A.C. and the Company’s healthcare services subsidiaries. See note 27.b.i.

The insurance technical reserves presented in Oncosalud S.A.C.’s separate financial statements and also presented in the Group’s consolidated financial statements as of December 31, 2020, 2019 and 2018 such as unearned premium reserve (see note 19), IBNR and outstanding claims reserve have been adequate and sufficient to meet the estimated value of future commitments of insurance contracts.

Other provisions

As of December 31, 2020, comprise mainly the estimate of provision for present obligation amounting to S/ 5,150 thousand of Colombian subsidiaries provisions from civil and labor and S/ 1,127 thousand from Peruvian subsidiaries. As of December 31, 2019 , comprised mainly the estimate of provision for present obligation amounting to S/ 3,761 thousand, of PMLA’s provisions from civil and labor and S/ 1,595 thousand, from Peruvian subsidiaries. As of December 31, 2018 , comprised mainly the estimate of provision for present obligation amounting to S/ 3,269 thousand, of PMLA’s provisions from civil and labor and S/ 1,144 thousand, from Peruvian subsidiaries.

19.

Unearned Premiums Reserve

As of December 31, 2020, the Company maintain a portion of payment received that relates to risks that have not yet expired as of the date of the consolidated statement of financial position for S/ 60,245 thousand (S/ 58,210 thousand and S/ 54,478 thousand at December 31, 2019 and 2018).

F-83

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

20.

Equity

A.	Share capital

As of December 31, 2020 and 2019, the share capital is represented by 236,545,679 class “A” and 1,000 class “B” ordinary shares with a par value of S/ 1.00 each (236,545,679 ordinary shares as of December 31, 2018).

On December 20, 2019, the General Shareholder’s Meeting approved: i) convert the ordinary shares into class “A” (236,545,679 ordinary shares) ii) issue a new class of share denominated class “B” and iii) increase in the capital by S/ 1 thousand equivalent to 1,000 ordinary shares class “B” through cash contributions received from Enfoca and Ventura with a par value of S/ 1.00 per share. On December 20, 2018, through cash contributions received from Enfoca Group of S/ 32,184 thousand, share capital was increased to S/ 236,546 thousand. This amount has been paid and is registered during 2019.

Each share of our common stock represents the same economic interest, except that, as provided in our by-laws, each year that dividends are distributed, the class A shares benefit from the right to receive a preferred dividend consisting of 100% of any dividends distributed until we have distributed US$ 1 billion in the aggregate in dividends. The excess dividends that the general shareholders’ meeting decides to distribute will be distributed proportionally to the equity interest held by shareholders in both class “A” and class “B” shares.

On February 24, 2020, the General Shareholder´s Meeting approved the downstream merger between the Company, and its shareholder Ventura Salud S.A.C. and Enfoca Salud S.A.C. The Company has recognized this merger as common control transactions according with IFRS 3 and it was recognized at historical cost. This transaction represents only an exchange of equivalent shares between the Company and its aforementioned shareholders, the effect of this transaction was S/ 46 thousand recognized in equity in merger reserve as a result of the difference between the consideration paid (shares issued) and the capital of the legally disappearing companies.

As a result of this merger the former shareholders Ventura Salud S.A.C. and Enfoca Salud S.A.C. ceases to exist and the shareholders of these companies received shares in the Company.

As a result of the aforementioned reorganization process as of December 31, 2020, the new share capital structure is as follows:


Range of shareholding percentage	Number of shareholders		Participation Percentage
From 0.01 to 0.85		5		3.22
From 0.86 to 2.37		4		9.48
From 2.38 to 9.83		5		37.49
From 9.84 to 49.81		1		49.81

		15		100.00

F-84

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

As of December 31, 2019 and 2018, the share capital structure is as follows:


Individual shareholding percentage	Number of shareholders		Participation Percentage
From 0.01 to 0.74		1		0.74
From 0.75 to 3.01		1		3.01
From 3.02 to 8.60		3		19.06
From 8.61 to 41.84		2		77.19

		7		100.00

B.	Share premium

On December 20, 2018, the General Shareholder’s Meeting approved an increase in the capital by S/ 242,114 thousand through cash contributions received from Enfoca Group distributed as follows: i) S/ 32,184 thousand to share capital and ii) S/ 209,930 thousand to share premium.

C.	Other capital reserves

According to the Companies Act, the Company is required to allocate at least 10% of its annual net income to a legal reserve after deducting accumulated losses. This allocation is required until the reserve equals 20% of paid-in capital. The legal reserve can be used to compensate losses in the absence of nondistributed earnings or nonrestricted reserves and must be restored with future earnings. This reserve may also be capitalized, but it shall be subsequently restored.

As of December 31, 2020, the Group allocated S/ 12,763 thousand to a legal reserve (S/ 10,334 thousand and S/ 5,881 thousand at December 31, 2019 and 2018).

D.	Translation reserve

Translation reserve includes all exchange differences resulting from the translation of the financial statements of foreign operations. As of December 31, 2020, 2019 and 2018, the Group recognizes the translation differences of the consolidated financial statements of the subsidiary Auna Colombia in translation reserve of the consolidated statement of income and other comprehensive income.

E.	Cost of hedging reserve

The cost of hedging reserve reflects gain or loss on the portion excluded from the designated hedging instrument that relates to the forward element of forward contract and as well as the time value of purchased collar contract. It is initially recognised in OCI and accounted for similarly to gains or losses in the hedging reserve.

F.	Hedging reserve

Hedging reserve includes the effective portion of the accumulated net change in the fair value of the hedging instruments used in cash flow hedges with subsequent recognition in profit or loss. This reserve is recognized net of deferred income tax.

F-85

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

G.	Merger reserve

Merger reserve represents the difference between the nominal value of the 89,599,965 shares issued with a par value of S/ 1.00 each in exchange for the nominal value of 4,590,656 shares of the subsidiary Oncosalud S.A.C. acquired under common control with a par value of S/ 1.00 each. Also, the merge reserve include the difference between the carrying amount of NCI acquired and the consideration paid to NCI.

During 2020, the difference between the carrying amount of NCI acquired of the subsidiary PMLA and the consideration paid to NCI was S/ 2,366 thousand (note 20.I). Also in October 2020, the non-controlling shareholders of the subsidiary Clínica Portoazul S.A. acquired 306 ordinary shares of this entity, as consequence the difference between the carrying amount of NCI acquired and the cash contribution was S/ 3,120 thousand.

H.	Dividends

The dividends distributed to the shareholders other than entities domiciled in Peru are subject to an income tax of 5.0% in 2020 and 2019 to be paid by the shareholders. Such a tax is withheld and liquidated by the Group.

The Annual General Shareholders’ Meeting, held on June 30, 2020, approved the distribution of dividends for S/ 10,000 thousand (S/ 1 thousand per common share). In addition, the Annual General Shareholders’ Meeting of PMLA held on March 1, 2020 approved the distribution of dividends for S/ 7 thousand to non-controlling shareholders.

The Annual General Shareholders’ Meeting, held on April 30, 2019, approved the distribution of dividends for S/ 10,000 thousand (S/ 1 per common share).

The Annual General Shareholders’ Meeting, held on April 30, 2018, approved the distribution of dividends for S/ 7,256 thousand (S/ 1 per common share).

The Annual General Shareholders’ Meeting, held on May 25, 2018, approved the payment of dividends for S/ 2,744 thousand (S/ 1 per common share).

I.	Non-controlling interests

The following table summarizes the information related to each of the Group´s subsidiaries that has material NCI, before any intra-group eliminations.


In thousands of soles December 31, 2020	Clínica Vallesur			Clínica Miraflores			PMLA			Clinica Portoazul			Total
NCI percentage		11.77	%		5.83	%		0.23	%		39.00	%

Net assets		2,234			(86	)		686,957			126,415			815,520

Net assets attributable to NCI		263			(5	)		1,580			49,302			51,140

Profit (loss)		(5,333	)		(1,816	)		16,670			6,210			15,731
Other Comprehensive Income (OCI)		—			—			17,422			13,574			30,996

Total comprehensive income		(5,333	)		(1,816	)		34,092			19,784			46,727

Profit allocated to NCI		(628	)		(106	)		38			2,422			1,726
OCI allocated to NCI		—			—			40			5,294			5,334

Total comprehensive income allocated to NCI		(628	)		(106	)		78			7,716			7,060

F-86

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles December 31, 2019	Clínica Vallesur			Clínica Miraflores			PMLA			Total
NCI percentage		11.77	%		5.83	%		2.68	%

Net assets		7,579			1,750			579,995			589,324

Net assets attributable to NCI		892			102			15,544			16,538

Profit (loss)		4,468			(999	)		26,858			30,327
OCI		—			—			(14,072	)		(14,072	)

Total comprehensive income		4,468			(999	)		12,786			16,255

Profit allocated to NCI		526			(58	)		720			1,188
OCI allocated to NCI		—			—			(377	)		(377	)

Total comprehensive income allocated to NCI		526			(58	)		343			811


In thousands of soles December 31, 2018	Clínica Vallesur			Clínica Miraflores			PMLA			Total
NCI percentage		11.77	%		5.83	%		2.68	%

Net assets		3,107			2,745			566,888			572,740

Net assets attributable to NCI		366			160			15,201			15,727
Profit (loss)		4,363			(1,123	)		304			3,544

Total comprehensive income		4,363			(1,123	)		304			3,544

Profit (loss) allocated to NCI		514			(65	)		8			457
		��

In December 2017, the Group acquired an additional 10.49% interest in Clínica Miraflores S.A., increasing its ownership from 83.68% to 94.17%. A cash consideration of S/ 2,041 thousand was paid to the non-controlling shareholders. The carrying amount of non controlling interest adquired on the date of the acquisition was S/ 1,246 thousand.

In June and July 2018, the Group acquired an additional 6.9% interest in Clínica Vallesur S.A.C., increasing its ownership from 81.33% to 88.23%. A cash consideration of S/ 946 thousand was paid to the non-controlling shareholders. The carrying amount of non controlling interest adquired on the date of the acquisition was S/ 1,454 thousand.

In March 2018, the non-controlling shareholders of Clínica Vallesur S.A.C. acquired 2,209 ordinary shares of this entity for a cash consideration of S/ 170 thousand.

As of December 31, 2019, the Group paid in advance the amount S/ 12,756 thousand equivalent to 2.68% of shares of the non-controlling interest in 2019. On January 3, 2020, the Group completed the acquisition of additional 2.45% interest, equivalent to S/ 11,671 thousand, of Promotora Médica Las Américas S.A., increasing its ownership from 97.32% to 99.77%. The carrying amount of non controlling interest adquired on the date of the acquisition was S/ 14,037 thousand. Four shareholders refused to sell their interest, as a result, the difference of S/ 1,148 thousand, that include S/ 63 thousand of exchange difference, it is managed by BTG Pactual Fiduciary and it is included in ‘other assets’. Management expect to collect this amount in 2021.

F-87

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

In October 2020, the non-controlling shareholders of Clínica Portoazul S.A. acquired 306 ordinary shares of this entity for a cash consideration of S/ 8,951 thousand, equivalent to additional 5.55% interest, increasing its ownership from 33.45% to 39.00%.

21.

Revenue

A.	Revenue streams

The Group generates revenue primarily from the sale of oncologic healthcare plans and healthcare services to its customers.

This caption comprises the following:

In thousands of soles

2020

2019

2018

Revenue from contracts with customers

Healthcare services (i)

703,544

658,699

229,368

Sale of medicines

173,698

201,348

164,039

Loyalty program

182

204

Total revenue from contracts with customers

877,424

860,229

393,611

Premiums earned

566,358

522,337

467,616

Total revenue

1,443,782

1,382,566

861,227

Premiums earned comprises the following:

In thousands of soles

2020

2019

2018

Oncology plans

560,086

521,142

467,616

General healthcare services plans

6,272

1,195

—

Total premiums earned

566,358

522,337

467,616

In thousands of soles

2020

2019

2018

Timing of revenue recognition

Products transferred at a point in time

173,698

201,359

164,039

Products and services transferred over time

703,726

658,870

229,572

Total revenue from contracts with customers

877,424

860,229

393,611

(i)	The amounts reported in Healthcare services revenue line item do not include revenue recognized for customers that are part of the Company’s insurance premium program.

F-88

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

B.	Disaggregation of revenue from contracts with customers

This caption comprises the following:


	Reportable segments				Total
In thousands of soles	Oncosalud Peru		Healthcare services		Total
For the year ended December 31, 2020
Primary geographical markets
Peru		640,480		383,922		1,024,402
Colombia		—		419,380		419,380

For the year ended December 31, 2019
Primary geographical markets
Peru		578,167		394,961		973,128
Colombia		—		409,438		409,438

For the year ended December 31, 2018
Primary geographical markets
Peru		517,470		338,989		856,459
Colombia		—		4,768		4,768

C.	Contract balances

The following table provides information about receivables from contracts with customers.


In thousands of soles	Note		2020			2019			2018
Receivables, which are included in “trade accounts receivable”		6		371,010			285,601			238,116
Contract liabilities, which are included in “trade accounts payable”		16		(14,124	)		(5,526	)		(5,858	)

The contract assets primarily relate to the Group’s rights to consideration for service completed but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the Group issues an invoice to the customer. As of December 31, 2020 included the trade accounts receivable from Clínica Portoazul and for December 31, 2019 and 2018, included the trade accounts receivable from PMLA (note 1.C).

The contract liabilities primarily relate to the advance consideration received from patients for healthcare services, for which revenue is recognized over time. This will be recognized as revenue over the next 12 months.

F-89

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

22.

Cost of Sales and Services, Selling Expenses and Administrative Expenses

This caption comprises the following:


In thousands of soles	*Note*		Cost of sales and services						Selling expenses						Administrative expenses						Total
In thousands of soles	*Note*		2020		2019		2018		2020		2019		2018		2020		2019		2018		2020		2019		2018
Medicines				383,106		354,248		197,318		—		—		—		—		—		—		383,106		354,248		197,318
Auxiliary services and clinical laboratory				17,821		16,379		15,071		—		—		—		—		—		—		17,821		16,379		15,071
Room service for inpatients				17,108		19,316		18,958		—		—		—		—		—		—		17,108		19,316		18,958
Surgery fees				57,609		60,521		37,847		—		—		—		—		—		—		57,609		60,521		37,847
Medical consultation fees				39,366		73,615		52,962		—		—		—		—		—		—		39,366		73,615		52,962
Technical reserves for healthcare services				1,514		2,028		1,911		—		—		—		—		—		—		1,514		2,028		1,911
Personnel expenses (a)				292,962		238,343		123,490		46,596		46,698		39,714		142,412		115,257		70,608		481,970		400,298		233,812
Services provided by third parties (b)				49,668		32,034		22,304		82,196		79,790		76,682		84,945		85,831		65,927		216,809		197,655		164,913
Depreciation		11 & 13		46,068		40,793		24,766		29		74		—		11,324		9,582		4,184		57,421		50,449		28,950
Amortization		12		1,625		1,333		905		—		—		—		5,653		4,966		2,181		7,278		6,299		3,086
Other management charges				7,354		5,535		1,187		4,200		5,950		4,331		16,335		16,143		8,000		27,889		27,628		13,518
Tax expenses				153		374		1,070		35		32		11		12,692		4,685		3,542		12,880		5,091		4,623

				914,354		844,519		497,789		133,056		132,544		120,738		273,361		236,464		154,442		1,320,771		1,213,527		772,969

F-90

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

(a)	Personnel expenses comprise the following:


In thousands of soles	2020		2019		2018
Remunerations		304,140		253,589		145,002
Legal bonuses		39,165		32,426		23,740
Health insurance for employees		49,871		40,615		20,510
Bonuses		14,762		10,970		6,697
Severance payment		26,673		22,231		14,155
Vacations		22,700		19,936		12,083
Employees’ profit sharing		8,086		4,724		3,413
Board of Directors’ remuneration		2,770		3,185		1,498
Compensation to personnel		2,338		1,896		1,640
Training		436		1,735		1,077
Other benefits		11,029		8,991		3,997

		481,970		400,298		233,812

(b)	Services provided by third parties include the following:


In thousands of soles	2020		2019		2018
Sales commission (i)		51,334		51,205		48,204
Advisory and consulting fees		34,173		31,110		32,901
Leases		14,479		12,659		12,496
Credit card commission		16,548		15,782		13,581
Service and repair		27,783		25,609		11,575
Custodial and cleaning services		20,621		12,522		9,587
Advertisement		13,642		12,111		9,447
Utilities		15,893		14,095		8,733
Hosting		5,265		4,739		4,959
Collection expenses		1,247		1,317		1,029
Travel and entertainment expenses		626		1,765		651
Others		15,198		14,741		11,750

		216,809		197,655		164,913

(i)

For the years ended December 31, 2020, 2019 and 2018, Sales commission, recognized in Selling Expenses, include amortization of deferred acquisitions costs for S/ 11,495 thousand, S/ 12,507 thousand and S/ 14,130 thousand, respectively (note 7.l)

F-91

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

23.

Other Income

This caption comprises the following:


In thousands of soles	*Note*		2020		2019		2018
Gain on bargain purchase of subsidiary		1.C		4,495		—		—
Income for parking (a)				1,589		2,381		2,749
Indemnization for claims				629		—		690
Investment property rentals				1,045		1,330		—
Increase in fair value of investment property				—		75		—
Tax recoveries				205		107		549
Gain on sale of property, furniture and equipment				174		—		—
Debt Forgiveness and donations received				1,992		—		—
Others				1,960		1,635		1,345

				12,089		5,528		5,333

(a)	Corresponds to the administration, parking, and valet parking services provided by the clinics. Income for parking is recognized once the service has been rendered.

24.

Other Expenses


In thousands of soles	2020		2019
Change in fair value of assets held for sale		—		527
Loss on sale of investments in associates		—		919
Loss on disposal of right-of-use assets net of leases		321		—

		321		1,446

25.

Finance Costs

This caption comprises the following:


In thousands of soles	*Note*		2020		2019			2018
Finance income
Cash flow hedges settlement – call spread				1,670		—			—
Interest income under the effective interest				1,074		—			79
Interest on term deposits				1,014		1,532			551
Others				15		—			—

				3,773		1,532			630

Finance cost
Financial liabilities measured at amortized cost – interest expense				44,774		38,167			17,117
Interest from leases liabilities (2018: Interest from finance liabilities)				12,107		11,706			4,300
Financial assets at FVTPL – net change in fair value: Derivative assets mandatorily measured at FVTPL		9, 17.a		—		(319	)		8,026
Commissions for derivatives				—		2,474			—

F-92

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	*Note*		2020		2019		2018
Exchange difference (a)				45,545		772		7,260
Cash flow hedges – reclassified from OCI for costs of hedging reserve				1,540		—		—
Cash flow hedges – reclassified from OCI for hedging reserve				906		617		—
Cash flow hedges settlement – interest rate swaps		9		5,296		1,566		—
Unwind of derivative financial instruments measured at FVOCI				21,517		—		—
Financial debt prepayment penalty				3,400		—		—
Others				1,651		1,070		1,473

				136,736		56,053		38,176

(a)

The exchange difference was generated mainly from the loans in US dollars related to the acquisition of PMLA, due the high increase in average in the exchange rate for 18% in Colombia. These loans were pre-paid by the Group in November 2020 (note 15). Also, its include an effect for S/ 14,100 thousand for the cash flow hedges reclassified from OCI (note 9.a).

26.

Earnings per Share

The net earnings per ordinary share were determined based on the net income attributable to shareholders of the Group and weighted-average number of class A shares outstanding as follows:


In thousands of soles	2020			2019		2018
Net (loss) profit for the year attributable to owners of the Company		(7,104	)		72,685		36,184
Number of shares (class A)		236,545,679			236,545,679		236,545,679
Weighted average number of ordinary shares at December 31		236,545,679			236,545,709		205,331,550

Basic and diluted earnings per share		(0.03	)		0.31		0.18

The earnings per share calculated include only class “A” shares because the net profit for the year ended December 31, 2020 and 2019, does not excess the limited of US$ 1 billion to distribute dividends to class “B” shares (note 20.A).

The Group has no dilutive potential ordinary shares as of December 31, 2020, 2019 and 2018.

There have been no other transactions involving common shares and investment shares between the reporting date and the date of the authorization of these consolidated financial statements.

27.

Operating Segments

A.	Basis for segmentation

The Group has determined three reportable segments. These operating segments are components of a company about which separate financial information is available that is regularly evaluated by the Board of Directors (Chief operating decision maker) in deciding how to allocate resources and assess performance.

F-93

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The following summary describes the operations of each reportable segment.


Reportable segments		Operations

Oncosalud Peru		Including our prepaid oncologic healthcare plans and healthcare services related to the treatment of cancer.

Healthcare services in Peru		Corresponds to medical services within the network of clinics and health centers in Peru.

Healthcare services in Colombia		Corresponds to medical services within the network of clinics and health centers in Colombia.

B.	Information about reportable segments

Information related to each reportable segment is set out below. Segment profit (loss) before tax is used to measure performance because the chief operating decision maker believes that this information is the most relevant for the Group.


In thousands of soles	Reportable segments												Holding and eliminations			Total
In thousands of soles	Oncosalud Peru			Healthcare services in Peru			Healthcare services in Colombia			Total reportable segments			Holding and eliminations			Total
2020
External revenues		640,480			383,922			419,380			1,443,782			—			1,443,782
Inter-segment revenue (i)		18,617			92,481			203			111,301			(111,301	)		—

Segment revenue		659,097			476,403			419,583			1,555,083			(111,301	)		1,443,782

External cost of service		(219,941	)		(375,204	)		(317,538	)		(912,683	)		(1,671	)		(914,354	)
Inter-segment cost of service (i)		(92,253	)		(17,709	)		—			(109,962	)		109,962			—

Segment cost of service		(312,194	)		(392,913	)		(317,538	)		(1,022,645	)		108,291			(914,354	)

Gross profit		346,903			83,490			102,045			532,438			(3,010	)		529,428

External selling expenses		(120,149	)		(7,136	)		(2,815	)		(130,100	)		(2,956	)		(133,056	)

Segment selling expenses		(120,149	)		(7,136	)		(2,815	)		(130,100	)		(2,956	)		(133,056	)

External administrative expenses		(45,547	)		(48,180	)		(75,837	)		(169,564	)		14,993			(154,571	)
Inter-segment administrative expenses		(4,944	)		(2,651	)		—			(7,595	)		7,595			—
Corporate expenses		(68,890	)		(45,808	)		(3,219	)		(117,917	)		(873	)		(118,790	)

Segment administrative expenses		(119,381	)		(96,639	)		(79,056	)		(295,076	)		21,715			(273,361	)

Impairment losses on trade receivables		(2,843	)		(8,095	)		(5,420	)		(16,358	)		—			(16,358	)

Other expenses		40			7			—			47			(368	)		(321	)

Other income		2,951			12,588			9,447			24,986			(12,897	)		12,089
Inter-segment other income		1,507			389			—			1,896			(1,896	)		—

Other income		4,458			12,977			9,447			26,882			(14,793	)		12,089

Segment operating profit (loss)		109,028			(15,396	)		24,201			117,833			588			118,421

F-94

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	Reportable segments												Holding and eliminations			Total
In thousands of soles	Oncosalud Peru			Healthcare services in Peru			Healthcare services in Colombia			Total reportable segments			Holding and eliminations			Total
Share of profit of equity accounted investees, net of taxes		300			—			1,020			1,320			—			1,320

Exchange difference, net		(7,097	)		(1,042	)		(28,379	)		(36,518	)		(9,027	)		(45,545	)
Interest expense, net		(15,183	)		(10,611	)		(53,742	)		(79,536	)		(7,882	)		(87,418	)

Segment profit (loss) before tax		87,048			(27,049	)		(56,900	)		3,099			(16,321	)		(13,222	)

Other disclosures
Depreciation and amortization		(18,674	)		(23,322	)		(14,102	)		(56,098	)		(8,601	)		(64,699	)
Capital expenditure		(64,977	)		(42,576	)		(52,513	)		(160,066	)		(19,072	)		(179,138	)

Segment assets		2,517,989			626,962			1,322,190			4,467,141			(1,816,070	)		2,651,071

Segment liabilities		1,406,476			346,705			504,126			2,257,307			(258,307	)		1,999,000


In thousands of soles	Reportable segments												Holding and eliminations			Total
In thousands of soles	Oncosalud Peru			Healthcare services in Peru			Healthcare services in Colombia			Total reportable segments			Holding and eliminations			Total
2019
External revenues		578,167			394,961			409,438			1,382,566			—			1,382,566
Inter-segment revenue (i)		13,755			74,910			—			88,665			(88,665	)		—

Segment revenue		591,922			469,871			409,438			1,471,231			(88,665	)		1,382,566

External cost of service		(199,112	)		(344,701	)		(297,963	)		(841,776	)		(2,743	)		(844,519	)
Inter-segment cost of service (i)		(75,167	)		(13,248	)		—			(88,415	)		88,415			—

Segment cost of service		(274,279	)		(357,949	)		(297,963	)		(930,191	)		85,672			(844,519	)

Gross profit		317,643			111,922			111,475			541,040			(2,993	)		538,047

External selling expenses		(119,067	)		(8,678	)		(3,270	)		(131,015	)		(1,529	)		(132,544	)

Segment selling expenses		(119,067	)		(8,678	)		(3,270	)		(131,015	)		(1,529	)		(132,544	)

External administrative expenses		(48,086	)		(45,310	)		(63,521	)		(156,917	)		559			(156,358	)
Inter-segment administrative expenses		(408	)		(1,216	)		—			(1,624	)		1,624			—
Corporate expenses		(43,695	)		(35,684	)		—			(79,379	)		(727	)		(80,106	)

Segment administrative expenses		(92,189	)		(82,210	)		(63,521	)		(237,920	)		1,456			(236,464	)

Impairment losses on trade receivables		(930	)		(1,999	)		(2,956	)		(5,885	)		(102	)		(5,987	)

Other expenses		—			—			(1,446	)		(1,446	)		—			(1,446	)

Other income		405			2,627			2,169			5,201			327			5,528
Inter-segment other income		924			682			—			1,606			(1,606	)		—

Other income		1,329			3,309			2,169			6,807			(1,279	)		5,528

Segment operating profit (loss)		106,786			22,344			42,451			171,581			(4,447	)		167,134

F-95

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	Reportable segments												Holding and eliminations			Total
In thousands of soles	Oncosalud Peru			Healthcare services in Peru			Healthcare services in Colombia			Total reportable segments			Holding and eliminations			Total
Share of profit of equity accounted investees, net of taxes		1,004			—			1,434			2,438			—			2,438

Exchange difference, net		1,670			214			(2,813	)		(929	)		157			(772	)
Interest expense, net		(12,425	)		(7,499	)		(29,627	)		(49,551	)		(4,198	)		(53,749	)

Segment profit (loss) before tax		97,035			15,059			11,445			123,539			(8,488	)		115,051

Other disclosures																	—
Depreciation and amortization		(13,733	)		(21,516	)		(14,480	)		(49,729	)		(7,019	)		(56,748	)
Capital expenditure		(109,712	)		(38,934	)		(32,047	)		(180,693	)		(29,543	)		(210,236	)

Segment assets		1,119,818			547,834			940,381			2,608,033			(716,736	)		1,891,297

Segment liabilities		548,803			235,236			653,032			1,437,071			(124,592	)		1,312,479


In thousands of soles	Reportable segments												Holding and eliminations			Total
In thousands of soles	Oncosalud Peru			Healthcare services in Peru			Healthcare services in Colombia			Total reportable segments			Holding and eliminations			Total
2018
External revenues		517,470			338,989			4,768			861,227			—			861,227
Inter-segment revenue (i)		13,117			66,283			—			79,400			(79,400	)		—

Segment revenue		530,587			405,272			4,768			940,627			(79,400	)		861,227

External cost of service		(192,361	)		(296,679	)		(3,507	)		(492,547	)		(5,242	)		(497,789	)
Inter-segment cost of service (i)		(66,270	)		(16,841	)		—			(83,111	)		83,111			—

Segment cost of service		(258,631	)		(313,520	)		(3,507	)		(575,658	)		77,869			(497,789	)

Gross profit		271,956			91,752			1,261			364,969			(1,531	)		363,438

External selling expenses		(113,908	)		(8,509	)		(33	)		(122,450	)		1,712			(120,738	)

Segment selling expenses		(113,908	)		(8,509	)		(33	)		(122,450	)		1,712			(120,738	)

External administrative expenses		(45,155	)		(41,851	)		(1,954	)		(88,960	)		785			(88,175	)
Inter-segment administrative expenses		(360	)		(1,018	)		—			(1,378	)		1,378			—
Corporate expenses		(39,614	)		(26,231	)		—			(65,845	)		(422	)		(66,267	)

Segment administrative expenses		(85,129	)		(69,100	)		(1,954	)		(156,183	)		1,741			(154,442	)

Impairment losses on trade receivables		(585	)		(1,960	)		(281	)		(2,826	)		—			(2,826	)

Other income		1,080			3,820			406			5,306			27			5,333
Inter-segment other Income		4,968			379			—			5,347			(5,347	)		—

Other income		6,048			4,199			406			10,653			(5,320	)		5,333

Segment operating profit (loss)		78,382			16,382			(601	)		94,163			(3,398	)		90,765

F-96

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles	Reportable segments												Holding and eliminations			Total
In thousands of soles	Oncosalud Peru			Healthcare services in Peru			Healthcare services in Colombia			Total reportable segments			Holding and eliminations			Total
Share of profit of equity accounted investees, net of taxes		960			—			—			960			—			960

Exchange difference, net		(167	)		(628	)		(6,387	)		(7,182	)		(80	)		(7,262	)
Interest expense, net		(18,947	)		(3,821	)		(385	)		(23,153	)		(7,131	)		(30,284	)

Segment profit (loss) before tax		60,228			11,933			(7,373	)		64,788			(10,609	)		54,179

Other disclosures
Depreciation and amortization		(11,643	)		(15,518	)		(139	)		(27,300	)		(4,736	)		(32,036	)
Capital expenditure		25,028			23,884			—			48,912			4,959			53,871

Segment assets		955,425			377,640			965,006			2,298,071			(557,900	)		1,740,171

Segment liabilities		437,687			154,288			715,871			1,307,846			(101,010	)		1,206,836

(i)

Inter-segment cost of service (claims expense) from the Oncosalud Peru segment and intersegment revenue from our Healthcare Services in Peru segment are presented on a gross basis by adding the corresponding profit margin markup by our Healthcare Services in Peru segment and vice versa. Likewise, our Oncosalud Peru segment consolidates Oncocenter Perú S.A.C., a subsidiary providing healthcare services related to the exclusive treatment of cancer. In the separate financial statements of Oncocenter Perú S.A.C., the revenue mainly consists of the insurance claims expense recorded as cost of sales in the separate financial statements of Oncosalud S.A.C., our insurance subsidiary that is also consolidated in Oncosalud Peru segment. In the segment consolidation process the related revenues from such healthcare services are eliminated with the corresponding claims expense of our insurance subsidiary Oncosalud S.A.C., while the external cost (third parties) of services incurred by Oncocenter Perú S.A.C. remains.

C.	Geographic information

The geographic information analyses the Group’s revenue and non-current assets by the company’s country of domicile and other countries. In presenting the geographic information, segment revenue has been based on the geographic location of customers and segment assets were based on the geographic location of the assets.

In thousands of soles

2020

2019

2018

Revenue

Peru

1,024,402

973,128

856,459

Colombia

419,380

409,438

4,768

1,443,782

1,382,566

861,227

In thousands of soles

2020

2019

2018

Non-current assets (*)

Peru

775,880

698,189

526,394

Colombia

948,524

710,103

719,002

1,724,404

1,408,292

1,245,396

(*)

Non-current assets exclude deferred tax assets and derivatives.

F-97

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

D.	Major customer

None of the revenue derives from transactions carried out with a single customer or counterparty which is equal to or greater than 10 percent or more of the total revenue of the Group at December 31, 2020, 2019 and 2018.

28.

Tax Matters

Tax regime applicable to income tax

A.	Income tax is determined on a separate basis; it is not consolidated. According to Peruvian and Colombian current legal legislation, the income tax is paid based on the statutory financial statements and tax losses, additions, and deductions established.

Tax rates

B.	The Group is subject to Peruvian and Colombian Tax Regime as of December 31, 2020, 2019 and 2018.

The current income tax rates are 29.5% in Peru and 32% in Colombia, calculated based on the taxable income. The income tax rate applicable to Colombian legal entities will be 31% for year 2021, and 30% for year 2022 onwards. As a consequence, deferred tax assets and liabilities on temporary differences that are expected to reverse during those years have been measured at such corresponding rates.

For years 2020, 2019 and 2018, the income tax rate for distribution of dividends and any other form of profit distribution applicable to Peruvian nondomiciled legal entities and individuals is 5%.

On 28 December 2018, Colombia enacted tax reform (Law 1943—Tax Reform). The Tax Reform increased from January 1, 2019 the dividend tax on distributions to foreign nonresident entities and individuals from 5% to 7.5%. In addition, the Tax Reform establishes a 7.5% dividend tax on distributions between Colombian companies. The tax will be charged only on the first distribution of dividends between Colombian entities and may be credited against the dividend tax due once the ultimate Colombian company makes a distribution to its shareholders (nonresident shareholders (entities or individuals) or to Colombian individual residents). The dividend tax on local distributions does not apply if the Colombian companies are part of a registered economic group, or the distribution is to a Colombian entity qualifying for the new Colombian holding company (CHC) regime.

Dividend distribution or any other type of dividend distribution corresponds to retained earnings or other concepts generating taxable dividends.

Income tax determination

C.	The Group computed its taxable income for the years ended December 31, 2020, 2019 and 2018, and determined current income tax for S/ 56,186 thousand, S/ 38,611 thousand and S/ 19,573 thousand, respectively.

Income tax expense comprises:


In thousands of soles	*Note*		2020			2019		2018
Current				56,186			38,611		19,573
Deferred		14		(64,030	)		2,567		(2,035	)

Income tax				(7,844	)		41,178		17,538

F-98

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Reconciliation of the income tax effective rate to the tax rate is presented as follows:


In thousands of soles	2020					2019					2018
(Loss) profit before income tax		(13,222	)	100.00	%		115,051		100.00	%		54,179		100.00	%

Calculated theorical tax (a)		(3,900	)	29.50	%		33,940		29.50	%		15,982		29.50	%

Effect of tax rates of a subsidiary abroad		(2,418	)	18.29	%		285		0.25	%		(282	)	(0.52	%)
Non deductible expenses		2,204		(16.67	%)		7,108		6.18	%		1,686		3.11	%
Tax losses for which deferred tax asset was not recognized		3,847		(29.10	%)		577		0.50	%		170		0.32	%
Recognition of previously unrecognized tax losses		(3,881	)	29.35	%		(3,319	)	(2.88	%)		—		—
Changes in estimates related to prior years		(3,696	)	27.95	%		2,587		2.25	%		(18	)	(0.04	%)

Income tax		(7,844	)	59.33	%		41,178		35.80	%		17,538		32.37	%

Tax losses carried forward

D.	The Group has recognized a deferred income tax asset related to the tax-loss carryforward of those companies where it is more likely than not that the tax-loss carryforward can be used to compensate future taxable net income.

As of December 31, 2020, the Group recognized deferred tax assets net for S/ 132,501 thousand (S/ 53,845 thousand and S/ 52,858 thousand as of December 31, 2019 and 2018, respectively) related to tax losses carried forward of the Group.

Deferred tax assets recognized for tax losses expire as follows:


In thousands of soles	2020		Expiry date		2019		Expiry date		2018		Expiry date
Expire		46,228		2021-2032		2,045		2020-2022		3,218		2019-2022
Never expire		86,273		—		51,800		—		49,640		—

Income tax		132,501		—		53,845		—		52,858		—

According to the Income Tax Act, as amended, the entities established in Peru can choose one of the following two methods to carry forward their tax losses:

(i)

The tax loss may be offset with future income until it is extinguished, applying said loss up to 50 percent of the taxable income per year, or

(ii)

The tax loss may be used until four years after it has been generated.

According to the Income Tax Act, as amended, the entities established in Colombia can choose one of the following two methods to carry forward their tax losses:

(i)

According to the Income Tax act, as amended, Colombian tax losses established until 2016 does not expire, while tax losses generated as of 2017 can be carry forward for 11 years.

F-99

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Unrecognized deferred tax assets

E.	Deferred tax assets have not been recognized in respect of the following item, because it is not probable that future taxable profit will be available against which the Group can use the benefits therefrom. These tax losses never expire.

2020

2019

2018

In thousands of soles

Gross
amount

Tax
effect

Gross
amount

Tax
effect

Gross
amount

Tax
effect

Tax losses

13,041

3,847

15,775

4,654

13,819

4,077

13,041

3,847

15,775

4,654

13,819

4,077

Temporary tax on net assets

The Group is subject to the Temporary Tax on Net Assets (ITAN, from its Spanish acronym). The taxable base is the prior period adjusted net asset value less depreciation and amortization, admitted by the Income Tax Law. The ITAN rate is 0.4% for 2020 and 2019 applied to the amount of net assets that exceed S/ 1,000,000. It may be paid in cash or in nine consecutive monthly installments. The amount paid may be used as a credit against payments of the general income tax regime for taxable periods from March to December of the fiscal period for which the tax was paid until maturity. As of December 31, 2020 the Group recognized S/ 2,820 thousand in Other assets (S/ 1,997 thousand as of December 31, 2019). See note 7.

Transfer pricing

For the purpose of determining the Income Tax, the transfer prices of transactions with related parties and with companies domiciled in countries or territories that are noncooperating or low or zero tax countries or territories, or with entities or permanent establishments whose income, revenues or gains from said contracts are subject to a preferential tax regime, must be supported by documented information on the valuation methods used and the criteria considered for their determination. On the basis of the analysis of the operations of the Group’s Subsidiaries, Management and its internal legal advisors believe that, as a consequence of the application of these standards, contingencies of the Subsidiaries domiciled in Peru and Colombia will not arise as of December 31, 2020, 2019 and 2018.

Review of tax administration

The Peruvian and Colombian Tax Authorities are entitled to audit and, if applicable, to correct the income tax calculated by the Group within the four years following the year of the tax return filing. The Group’s income and sales tax returns for the years 2016 through 2020 are open for review by the Peruvian and Colombian tax authority.

Value Added Tax (VAT)

I.	For Peruvian and Colombian companies, the value added tax (VAT) is 18% and 19% respectively.

Uncertainty over income tax treatments

J.	The Group believes that its accrual for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience.

F-100

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

29.

Group Structure

The following table shows the companies that are part of the Group as of December 31, 2020, 2019 and 2018. All subsidiaries have been included in the consolidation:


In thousands of soles	Percentage of common shares held by the head office (%)		Percentage of common shares held by the Group (%)						Percentage of common shares held by the non-controlling interest
In thousands of soles	Percentage of common shares held by the head office (%)		2020		2019		2018		2020		2019		2018
Operating companies
Oncosalud S.A.C. (a)		—		99.99		99.99		99.99		—		—		0.01
Oncocenter Perú S.A.C. (b)		—		99.99		99.99		99.99		—		—		0.01
Servimédicos S.A.C. (b)		—		99.99		99.99		99.99		—		—		0.01
Clínica Bellavista S.A.C. (b)		—		99.99		99.99		99.99		—		—		0.01
Laboratorio Clínica Inmunológico Cantella S.A.C. (b)		—		99.99		99.99		99.99		—		—		0.01
Clínica Miraflores S.A. (b)		—		94.17		94.17		94.17		5.83		5.83		5.83
R&R Patólogos Asociados S.A.C. (b)		—		99.80		99.80		99.80		0.20		0.20		0.20
Clínica Vallesur S.A. (b)		—		88.23		88.23		88.23		11.77		11.77		11.77
GSP Trujillo S.A.C. (Clínica Camino Real) (b)		—		99.99		99.99		99.99		0.01		0.01		0.01
Medicser S.A.C. (Clínica Delgado) (b)		—		99.99		99.99		99.99		0.01		0.01		0.01
Operating companies abroad
Clínica Portoazul S.A. (b)		—		61.00		—		—		39.00		—		—
Promotora Médica Las Américas S.A. (b)		—		99.77		97.32		97.32		0.23		2.68		2.68

Laboratorio Médico Las Américas Ltda. (b).		—		100.00		100.00		100.00		—		—		—
Instituto de Cancerología S.A. (a)		—		100.00		100.00		100.00		—		—		—
Patología Las Américas S.A.S. (f)		—		—		100.00		100.00		—		—		—
Salud Oral Especializada S.A. (f)		—		—		100.00		100.00		—		—		—
Clínica del Sur S.A.S. (b)		—		100.00		100.00		100.00		—		—		—
Las Américas Farma Store S.A.S. (e)		—		100.00		100.00		100.00		—		—		—
Pre-operating companies
Consorcio Trecca S.A.C. (b)		89.40		99.99		99.99		99.99		0.01		0.01		0.01

Non-operating companies
Inversiones Mercurio S.A.C. (b)		—		94.15		94.15		94.15		5.83		5.83		5.83
Holdings
Auna Colombia S.A.S. (c)		—		100.00		100.00		100.00		—		—		—
Auna Salud S.A.C. (c)		99.99		99.99		99.99		99.99		0.01		0.01		0.01
GSP Inversiones S.A.C. (c)		—		99.99		99.99		99.99		0.01		0.01		0.01
Operador Estratégico S.A.C. (c)		99.99		99.99		99.99		99.99		0.01		0.01		0.01
Other subsidiaries
GSP Servicios Generales S.A.C. (d)		—		99.99		99.99		99.99		0.01		0.01		0.01
GSP Servicios Comerciales S.A.C. (d)		—		99.99		99.99		99.99		0.01		0.01		0.01

(a)	Mainly dedicated to providing oncologic healthcare services.

(b)	Mainly dedicated to providing services through health centers (inpatients and outpatients).

(c)	Holding of the Group. Auna Colombia is a holding located in the Republic of Colombia.

(d)	Mainly dedicated to providing the Group with internal administrative, commercial and management services.

F-101

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

(e)	Sale of medicines and medical supplies.

(f)	During 2020, Salud Oral Especializada S.A.S. and Patología Las Américas S.A.S. and the health services provided by these companies were absorbed by Promotora Médica Las Américas S.A. and Laboratorio Médico Las Américas S.A.S. respectively.

As of December 31, 2020, the total non-controlling interest amounts to S/ 51,140 thousand (S/ 16,538 thousand and S/ 15,727 thousand as of December 31, 2019 and 2018, respectively).

30.

Financial Risk and Insurance Management

Due to its business line, the Group assumes the risks inherent to its activities related to the insurance business, market, credit, liquidity and foreign currency.

Management is responsible for monitoring these risks, based on various measurement, analysis and control techniques to minimize potential effects, although the use of these mechanisms does not completely eliminate the inherent risk factors to which the Group is exposed.

Management is exposed to risks as a result of: i) the use of financial instruments and ii) the risks associated with the healthcare business. These risks have been categorized taking into consideration their nature and scope, as well as management, which are described below.

A.	Insurance risk

Insurance activities expose the Group mainly to incidence risk (level of occurrence of the insured event), frequency risk (level of prevalence of the event once it has occurred), and control risk of the healthcare benefit cost.

The table below shows the actual amount of the cost of service in the Oncosalud Peru segment in 2020, 2019 and 2018. It also shows a sensitivity analysis for the most relevant variables affecting this cost: the frequency (number of patients / number of plan members) and the average cost per patient.


In thousands of soles			Frequency			Frequency			Average cost per patient			Average cost per patient			Combined			Combined
2020
Change %				+5	%		+10	%		+5	%		+10	%		+5	%		+10	%
Cost of segment Oncosalud Peru	312,194			327,804			343,413			327,804			343,413			344,194			377,755
Frequency	1.88	%		1.98	%		2.07	%		1.88	%		1.88	%		1.98	%		2.07	%
Average cost per patient	19.95			19.95			19.95			20.94			21.94			20.94			21.94
#plan members	830,643			830,643			830,643			830,643			830,643			830,643			830,643

F-102

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


In thousands of soles			Frequency			Frequency			Average cost per patient			Average cost per patient			Combined			Combined
2019
Change %				+5	%		+10	%		+5	%		+10	%		+5	%		+10	%
Cost of segment Oncosalud Peru	274,279			287,993			301,707			287,993			301,707			302,393			331,878
Frequency	1.35	%		1.42	%		1.48	%		1.35	%		1.35	%		1.42	%		1.48	%
Average cost per patient	21.71			21.71			21.71			22.80			23.89			22.80			23.89
#plan members	936,335			936,335			936,335			936,335			936,335			936,335			936,335


In thousands of soles			Frequency			Frequency			Average cost per patient			Average cost per patient			Combined			Combined
2018
Change %				+5	%		+10	%		+5	%		+10	%		+5	%		+10	%
Cost of segment Oncosalud Peru	258,631			271,563			284,494			271,563			284,494			285,141			312,944
Frequency	1.35	%		1.42	%		1.48	%		1.35	%		1.35	%		1.42	%		1.48	%
Average cost per patient	21.40			21.40			21.40			22.47			23.54			22.47			23.54
#plan members	896,838			896,838			896,838			896,838			896,838			896,838			896,838

As of December 31, 2020, 2019 and 2018, a reasonably possible changes in the most relevant variable in 5% and 10% could affect profit or loss by amounts shown below:


In thousands of soles	Fluctuations in variables (%)		2020			2019			2018
In thousands of soles	Fluctuations in variables (%)		Profit for the year			Profit for the year			Profit for the year
Frequency		5		(15,610	)		(13,714	)		(12,932	)
Frequency		10		(31,219	)		(27,428	)		(25,863	)
Average cost per patient		5		(15,610	)		(13,714	)		(12,932	)
Average cost per patient		10		(31,219	)		(27,428	)		(25,863	)
Combined		5		(32,000	)		(28,114	)		(26,510	)
Combined		10		(65,561	)		(57,599	)		(54,313	)

The Group adopts various mechanisms with the main objective of minimizing insurance risk as severity. Such mechanisms include the control of (i) price adequacy and (ii) control of healthcare benefit expenditures, in addition to selecting medical service providers based on various factors, such as specialization, experience, location, quality, and cost of services.

The adequacy of prices relies on past actuarial analyses and more recent service levels, combined with future projections of more recently observed trends. Price risk affects only future cash flows since new rates will impact premium levels earned once cancer health contracts are renewed.

F-103

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Within the Group, the type of product is an oncologic healthcare insurance contract, renewable annually. This enables the Group to review fees that respond fairly and quickly to the changes in service experience. The new fees are automatically applied at each renewal date; however, the client could not accept the increase, which would lead to the contract cancelation. This is a factor that significantly mitigates price risk. The Group does not enter into fixed premium contracts for a period longer than 12 months from the original date or the renewal date of the respective contracts.

Control risk of the cost of providing benefits (treatment and preventive care) is monitored through i) pre-authorization of the service; ii) use of a certain network of clinics and “agreed-upon” fees; and iii) monitoring adhesion to medical practice guides.

In general, the Group’s healthcare contracts contain terms and conditions establishing that only medical services are provided (the contracts benefit do not include refund or compensation amounts). Subject to specific circumstances, they provide reimbursement for medical expenses incurred in treatments related to chronic medical conditions.

In addition, when necessary, the Group negotiates its contracts with healthcare providers to obtain more favorable and competitive prices, to the extent possible. The Group also has a highly trained medical audit team who continually review invoices received from their service providers.

One of the Group’s key procedures is to use strict criteria to accept the risk of new clients for corporate and individual cancer health plans. This process involves the analysis of the policyholder’s risk profile and pre-existing conditions, and is subject to certain approvals and other factors, under the rules and regulations issued by the local regulator in Peru (note 18).

Technical reserves risk

It is the risk that the technical reserves for healthcare insurance contracts may be insufficient to cover the obligations under the contracts. The reserve risk is not significant for the Group due to the short-term nature of the contracts which allows the company to adjust fees as needed, together with the effectiveness of the model used to analyze and develop the assumptions underlying the pricing of the products.

The short-term nature of the Group’s contracts means that the variability of the assumptions used in determining final claims is not generally significant and can be adjusted as required. Claim development patterns are reviewed on an ongoing basis and used to update the amount of the provisions if required, therefore reducing the variability of the provision recognized in the consolidated financial statements.

The amount of the provision to cover claims incurred but not yet reported at the end of the year is not material due to the business integrated model, which means that the claims are recorded as they arise.

B.	Market risk

i.	*Exchange risk*

The Group and its Subsidiaries invoice the rendering of local services in the currency of the country in which it operates, which enables them to meet their obligations in their functional currency. Exchange rate risk arises mainly from loans and other liabilities held in US dollars. To mitigate this risk, as of December 31, 2020, 2019 and 2018, the Group used derivative financial instruments to hedge the exposure to the exchange rate risk, for more than 90% of its financial obligations.

F-104

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

In November 2020, the Group established a fx operation derivatives with include collar and forward agreement with Goldman Sachs Bank for a total amount of US$ 300,000 thousand (note 9) in order to hedge exchange rate variations. These instruments cover exchange rate variations from S/ 3.424 to the limit of S/ 3.85 per US$ 1. The fair value effect of these financial instrument are recognized initially in other comprehensive income.

In December 2018, the Group established two call spreads with Banco Citibank N.A. for a total amount of US$ 108,000 thousand (note 9) in order to hedge exchange rate variations. These instruments cover exchange rate variations from S/ 3.383 to the limit of S/ 3.733 per US$ 1. The fair value effect of the financial instrument arising from the call spread is recognized in ‘finance costs’ in the consolidated statement of income and other comprehensive income. In November 2020, the Group transferred by novation these call spread agreements to Goldman Sachs Bank, with which the Group released its respective rights and obligations of these financial instruments.

The fair value effect for year 2019 was an income of S/ 319 thousand (2018: loss of S/ 8,026 thousand) note 25.

As of December 31, the Group has the following assets and liabilities stated in U.S. dollars and COP:


	2020						2019						2018

In thousands of	US$			COP			US$			COP			US$			COP
Assets
Cash and cash equivalents		59,777			74,974,299			168			10,968,821			1,555			57,091,405
Trade accounts receivable		1,789			213,677,770			1,705			177,524,144			151			218,966,427
Other assets		573			20,049,685			1,508			23,633,356			521			9,090,975
Derivative financial instruments		3,236			—			2,644			—			3,890			—

		65,375			308,701,754			6,025			212,126,321			6,117			285,148,807

Liabilities
Loans and borrowings		(305,762	)		(181,268,539	)		(97,761	)		(56,571,179	)		(108,654	)		(113,878,134	)
Lease liabilities		(23,322	)		(12,531,994	)		(919	)		(47,765,312	)		—			—
Trade accounts payable		(6,879	)		(145,688,408	)		(3,741	)		(106,280,500	)		(4,375	)		(105,242,375	)
Other accounts payable		(612	)		(45,199,536	)		(4,734	)		(20,207,429	)		(6,441	)		(8,652,733	)
Derivative financial instruments		(9,270	)		—			(4,690	)		—			(301	)		—

	(345,845)			(384,688,477)			(111,845)			(230,824,420)			(119,771)			(227,773,242)

Liability position, net		(280,470	)		(75,986,723	)		(105,820	)		(18,698,099	)		(113,654	)		57,375,565

As of December 31, the exchange rate, used by the Group to translate the balances of assets and liabilities into foreign currency, has been published by the Peruvian Banking, Insurance and Pension Plan Agency (SBS), as follows:


In soles	2020		2019		2018
US$ 1—Exchange rate—Buy (assets)		3.618		3.311		3.369
US$ 1—Exchange rate—Sale (liabilities)		3.624		3.317		3.379
COP 1—Exchange rate		0.001065		0.001007		0.001039

The Group recorded losses for exchange difference, net amounting to S/ 45,545 thousand, S/ 772 thousand and S/ 7,260 thousand, respectively, in 2020, 2019 and 2018.

F-105

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

As of December 31, 2020, 2019 and 2018, a reasonably possible strengthening (weakening) of the U.S. dollar against the Peruvian Sol and COP at December 31 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by amounts shown below:


	Fluctuations in exchange rates (%)		2020						2019						2018
In thousands of soles	Fluctuations in exchange rates (%)		Profit or loss for the fiscal year			Other comprehensive income			Profit or loss for the fiscal year			Other comprehensive income			Profit or loss for the fiscal year			Other comprehensive income
Weakening		5		49,161			1,677			16,774			778			19,154			51
Weakening		10		98,322			3,354			33,548			1,556			38,308			102
Strengthening		5		(49,161	)		(1,677	)		(16,774	)		(778	)		(19,154	)		(51	)
Strengthening		10		(98,322	)		(3,354	)		(33,548	)		(1,556	)		(38,308	)		(102	)

ii.

Interest rate risk

The Group adopts a policy of ensuring that between 80% and 90% of its interest rate risk exposure is at a fixed rate. This is achieved partly by entering into fixed-rate instruments and partly by borrowing at a floating rate and using interest rate swaps as hedges of the variability in cash flows attributable to movements in interest rates. As of December 31, 2020, the Group does not have any borrowing at a floating rate.

The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the reference interest rates, tenors, repricing dates and maturities and the notional or par amounts. The Group assesses whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method. As of December 31,2020, the Group does not have any financial derivative instrument in order to cover interest rate.

C.	Credit risk

The Group’s financial assets are exposed to credit risk concentrations mainly comprising bank deposits and trade accounts receivable. Regarding bank deposits, the Group reduces the likelihood of credit risk concentrations because it keeps its deposits and places its cash investments at first-class financial entities (according to Apoyo & Asociados, a partner of Fitch Ratings) and limits the amount of exposure to credit risk in any of such financial entities.

Regarding trade accounts receivable, the significant credit risk concentrations, individual or group, are mitigated since the Group’s policy is to monitor the payment behavior of customers and their financial position to comply with the respective payments on a regular basis (note 6).

As of December 31, the exposure to credit risk of trade accounts receivable was the following:


In thousands of soles	2020		2019		2018
Peru		173,395		125,994		101,512
Colombia		236,155		181,935		153,636

		409,550		307,929		255,148

F-106

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

D.	Liquidity risk

The prudent liquidity risk management involves maintaining enough cash and cash equivalents and the possibility of finding and/or having found funding through an adequate quantity of credit sources.

The Group has adequate levels of cash and cash equivalents considering:

•

Auna S.A.A. can finance its current assets (accounts receivable, inventories and others) with current liabilities (accounts payable, deferred revenue and others).

•

Not considering growth capex (new hospitals, acquisitions, etc.), Auna has enough cash flow from operations to finance its maintenance capex, current debt service (interest and principal), dividends and a portion of growth capex.

•

Growth capex is financed mainly by long-term debt and cash flow from operations. In some cases, by capital contribution (for example: acquisition of PMLA).

•

In addition, Auna has revolving credit lines of S/ 388,144 thousand to use in case of cash flow needs. As of December 31, 2020, we had S/ 58,396 thousand drawn and S/ 329,749 thousand of availability under the revolving credit facility. As of December 31, 2019, we had S/ 100,142 thousand drawn and S/ 188,950 thousand of availability under the revolving credit facility.

•

These credit lines are renewed every year. The interest rate applicable is a fixed rate that is agreed upon with the bank before the reception of the cash in Auna accounts and depends on the credit terms (from 30 to 180 days). The credit lines available for Auna are with the following banks in Perú: Scotiabank: S/ 64,000 thousand; Banbif: S/ 28,992 thousand; BBVA: S/ 36,240 thousand; BCP: S/ 21,744 thousand; Interbank: S/ 14,496 thousand, Citibank: S/ 90,564 thousand; Santander S/ 36,240 thousand and Pichincha S/ 19,932 thousand. The available credit lines in Colombia are around S/ 75,937 thousand.

In addition, the Group monitors its liquidity risk based on the plans and guidelines established by the Management.

In December 2018, the Group signed an addendum with Banco Scotiabank by virtue of which it renegotiated the balance of the original debt amounting to S/ 185,000 thousand, extended the maturity term up to 2023, and reduced the interest rate from 9.50% to 8.00% (note 15).

Furthermore, the accumulated interest corresponding to the loan with Scotiabank Perú S.A.A. is paid on a quarterly basis, as well as the principal when installments are due. In addition, the Group monitors its liquidity risk based on the plans and guidelines established by the Management.

F-107

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

The following table analyzes the Group’s financial liabilities classified per maturity based on the remaining contractual period as of the date of the consolidated statement of financial position. The amounts disclosed are contractual cash flows.


In thousands of soles	Carrying amount		Contractual cash flows		Less than 1 year		From 1 to 2 years		From 3 to 5 years		More than 5 years
2020
Trade accounts payable		356,029		356,029		351,247		4,782		—		—
Other accounts payable (*)		61,344		63,573		38,286		12,644		12,643		—
Loans and borrowings (**)		1,208,669		1,599,042		87,256		86,641		1,353,747		71,398
Lease liabilities (**)		146,168		200,983		26,088		22,786		69,787		82,322
Derivative financial instruments		33,594		33,594		—		—		33,594		—

		1,805,804		2,253,221		502,877		126,853		1,469,771		153,720

2019
Trade accounts payable		254,199		254,199		254,199		—		—		—
Other accounts payable (*)		34,703		35,138		21,873		6,637		6,628		—
Loans and borrowings (**)		637,743		745,122		206,842		97,240		417,160		23,880
Lease liabilities (**)		179,084		245,804		37,618		30,103		70,835		107,248
Derivative financial instruments		15,478		15,478		3,952		4,796		6,730		—

		1,121,207		1,295,741		524,484		138,776		501,353		131,128

2018
Trade accounts payable		242,856		242,856		242,856		—		—		—
Other accounts payable (*)		46,324		47,378		22,301		9,557		11,175		4,345
Loans and borrowings (**)		725,389		894,695		151,065		128,895		231,890		382,845
Derivative financial instruments		1,015		—		—		—		—		—

		1,015,584		1,184,929		416,222		138,452		243,065		387,190

(*)

They do not include taxes payable, remunerations and other benefits payables.

(**)

They include contractual interest.

Management monitors the risk related to the liabilities included in the above-mentioned categories, and considers to be obtaining enough credit lines and having working capital to comply with the plans established by the Management.

The Group administers the excess cash flow investing in investments short term. In addition, at the end of fiscal year 2020, 2019 and 2018, the Group has credit lines for working capital that have not been used or used partiallity, enough to comply with short- and medium-term obligations.

E.	Capital risk management

The Group’s objectives in managing capital is to safeguard its capacity to continue as a going concern generating return to its shareholders and benefits to other stakeholders. The Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce its debt to maintain or adjust the capital structure.

F-108

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

During the year ended December 31, 2020, 2019 and 2018, the Group’s strategy was to maintain a leverage ratio not higher than one. Based on this strategy, the Group maintains a leverage ratio of 0.57 in 2020 (0.51 and 0.54 in 2019 and 2018, respectively) as shown below:

In thousands of soles

2020

2019

2018

Total loans and borrowings

1,208,669

637,743

725,389

Less: Cash and cash equivalents

(343,454

)

(36,084

)

(110,871

)

Net debt (A)

865,215

601,659

614,518

Plus: Total equity

652,071

578,818

533,335

Total adjusted equity (B)

1,517,286

1,180,477

1,147,853

Leverage ratio (A)/(B)

0.57

0.51

0.54

F.	Accounting classification and fair value

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.


	Carrying amount								Fair value
In thousands of soles	Fair value hedging instruments		Financial assets at amortized cost		Other financial liabilities		Total		Level 2		Total
As of December 31, 2020
Financial assets measured at fair value
Derivative financial instruments		11,707		—		—		11,707		11,707		11,707

		11,707		—		—		11,707		11,707		11,707

Financial assets not measured at fair value
Cash and cash equivalents		—		343,454		—		343,454		—		—
Trade accounts receivable		—		371,010		—		371,010		—		—
Other assets (*)		—		24,632		—		24,632		—		—

		—		739,096		—		739,096		—		—

Financial liabilities measured at fair value
Derivative financial instruments		33,594		—		—		33,594		33,594		33,594

		33,594		—		—		33,594		33,594		33,594

Financial liabilities not measured at fair value
Loans and borrowings		—		—		1,208,669		1,208,669		1,270,557		1,270,557
Lease liabilities		—		—		146,168		146,168		146,168		146,168
Trade accounts payable		—		—		356,029		356,029		—		—
Other accounts payable (**)		—		—		61,344		61,344		—		—

		—		—		1,772,210		1,772,210		1,416,725		1,416,725

F-109

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

(*)

They do not include taxes receivable, prepayments.

(**)

They do not include taxes payable, prepayments, labor liabilities.


	Carrying amount								Fair value
In thousands of soles	Fair value hedging instruments		Financial assets at amortized cost		Other financial liabilities		Total		Level 2		Total
As of December 31, 2019
Financial assets measured at fair value
Derivative financial instruments		8,769		—		—		8,769		8,769		8,769

		8,769		—		—		8,769		8,769		8,769

Financial assets not measured at fair value
Cash and cash equivalents		—		36,084		—		36,084		—		—
Trade accounts receivable		—		285,601		—		285,601		—		—
Other assets (*)		—		31,406		—		31,406		—		—

		—		353,091		—		353,091		—		—

Financial liabilities measured at fair value
Derivative financial instruments		15,478		—		—		15,478		15,478		15,478

		15,478		—		—		15,478		15,478		15,478

Financial liabilities not measured at fair value
Loans and borrowings		—		—		637,743		637,743		638,857		638,857
Lease liabilities		—		—		179,084		179,084		179,084		179,084
Trade accounts payable		—		—		254,199		254,199		—		—
Other accounts payable (**)		—		—		34,703		34,703		—		—

		—		—		1,105,729		1,105,729		817,941		817,941

(*)

They do not include taxes receivable, prepayments.

(**)

They do not include taxes payable, prepayments, labor liabilities.

Carrying amount

Fair value

In thousands of soles

Mandatorily
at FVTPL-
Others

Fair value
hedging
instruments

Financial
assets at
amortized
cost

Other
financial
liabilities

Total

Level 2

Total

As of December 31, 2018

Financial assets measured at fair value

Derivative financial instruments

13,108

—

13,108

13,108

—

13,108

F-110

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


	Carrying amount										Fair value
In thousands of soles	Mandatorily at FVTPL- Others		Fair value hedging instruments		Financial assets at amortized cost		Other financial liabilities		Total		Level 2		Total
Financial assets not measured at fair value
Cash and cash equivalents		—		—		110,871		—		110,871		—		—
Trade accounts receivable		—		—		238,116		—		238,116		—		—
Other assets (*)		—		—		22,333		—		22,333		—		—

		—		—		371,320		—		371,320		—		—

Financial liabilities measured at fair value
Derivative financial instruments		—		1,015		—		—		1,015		1,015		1,015

		—		1,015		—		—		1,015		1,015		1,015

Financial liabilities not measured at fair value
Loans and borrowings		—		—		—		725,389		725,389		729,372		729,372
Trade accounts payable		—		—		—		242,856		242,856		—		—
Other accounts payable (**)		—		—		—		46,324		46,324		—		—

		—		—		—		1,014,569		1,014,569		729,372		729,372

i.	*Valuation techniques and significant unobservable inputs*

The following tables show the valuation techniques used in measuring Level 2 fair values at December 31, 2020, 2019 and 2018 for financial instruments measured at fair value in the statement of financial position, as well as the significant unobservable inputs used. Related valuation processes are described in note 4.

Financial instruments measured at fair value

Type

Valuation technique

Significant
unobservable
inputs

Inter-relationship
between significant
unobservable
inputs and fair
value

Purchased collar and long forward (note 9)

For the purchased collar

Garman–Kohlhagen: The fair value is determined using this model that treats foreign currencies as if they are equity securities that provide a known dividend yield, which uses the following inputs: Spot rate at the valuation date, strike price, implicit volatility, and risk free rate in both currencies.

For the long forward

Interest rate parity: It consists of estimating the present value of the future profit (loss) generated by the forward contract. The gain or loss is calculated as the difference between the forward exchange rate estimated according to the market and the strike.

Not applicable

F-111

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018


Type	Valuation technique	Significant unobservable inputs		Inter-relationship between significant unobservable inputs and fair value
Call spread (note 9)	Garman–Kohlhagen: The fair value is determined using this model that treats foreign currencies as if they are equity securities that provide a known dividend yield, which uses the following inputs: Spot rate at the valuation date, strike price, implicit volatility, and risk free rate in both currencies.		Not applicable		Not applicable

Interest rate swaps (note 9)	Swap models: The fair value is calculated as the present value of the estimated future cash flows. Estimates of future floating-rate cash flows are based on quoted swap rates, futures prices and interbank borrowing rates. Estimated cash flows are discounted using a yield curve constructed from similar sources and which reflects the relevant benchmark interbank rate used by market participants for this purpose when pricing interest rate swaps. The fair value estimate is subject to a credit risk adjustment that reflects the credit risk of the Group and of the counterparty; this is calculated based on credit spreads derived from current credit default swap or bond prices.		Not applicable		Not applicable

31.

COVID-19

In light of the increased spread of the COVID-19 pandemic, a mandatory lockdown comprised of compulsory social isolation measures (a “quarantine period” or “quarantine”) was established in Peru and Colombia on March 16, 2020 and March 25, 2020, respectively, until September 30, 2020 (note 34). The quarantine period effectively restricted nearly all economic activity in both countries and established a schedule to open the economy gradually. This significantly impacting both the financial and operating performance of our segments. In order to accelerate the recovery of our operations, the main strategy was the implementation of outpatient consultations on-line and delivery services of medicines and laboratory procedures. In terms of costs, the Company is working in an efficiency plan to reduce fixed costs and operating expenses.

As for Healthcare Services in the Peru segment, all non-essential services in our hospitals and clinics were ordered to close (elective surgeries, non-emergency procedures and outpatient consultations), allowing patients only to attend Emergency Care when the quarantine started in March. From June to September, as restrictions started to decrease, the number of patients visits began to recover slowly. In the last quarter of the year, the hospitals in the segment had already recover the level of operations they had before COVID-19. Despite the negative effect that COVID had during the second and third quarter of the year, the Healthcare Services in the Peru segment had a 1.4% Year-over-Year (“YoY”) increase in revenue during 2020. The operating costs registered a significant increase due to the purchase and use of personal protective equipment (PPE) for all medical and administrative staff who are in direct patient care. In addition, the Company granted special bonuses to the medical staff directly caring for patients with COVID-19. As such, gross profit in 2020 decreased by 25.4%, versus 2019.

F-112

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

Likewise, Healthcare Services in the Colombia segment experienced similar conditions as did the Healthcare Services in the Peru segment, been forced to restrict is activities only allowing Emergency Care to open. Despite the situation in the first three quarters of 2020, the hospitals in the segment recovered the level of activity during the last quarter, situation that led to 2.4% Year-over-Year (“YoY��) increase in revenue during 2020. Costs also registered a significant increase due to the purchase and use of personal protective equipment. As a result, the gross profit in 2020 decreased by 8.6%, compared to 2019.

During 2020, the Group secured a total of S/ 63,410 thousand of government-backed loans to counter the major economic recession and providing liquidity to the healthcare sector caused by the COVID-19 pandemic (note 15).Also, in November 2020,the Group pre-paid S/ 47,500 thousand corresponding to Peruvian government guaranted loans. The government guaranted loans received were recorded in accordance with IAS 20, Accounting for Government Grants and Disclosure of Government Assistance. The commitments related to the government guaranted loans are subject to the funds being used for working capital. As of December 31, 2020, the difference is recognized as deferred income for S/ 1,211 thousand.

As for the Oncosalud Peru segment, it registered a decline in sales in our prepaid oncology plans due to limitations in our sales force from working from home, coupled with the shutdown of the other sales channels due to the quarantine and the economic recession. This disruption led to a spike in the number of affiliates canceling their oncologic plans. This situation led to a decrease in our number of plan members of 10.0%, from 922,945 in 2019 to 830,643 in 2020. Despite these negative trends, revenue for the Oncosalud Peru segment during 2020 increased by 11.3%, compared to 2019, due to automatic increase in premiums upon renewal, with the increase in the premium determined based on the expected claims of the program under which the policy is issued and based on the age profile of the policyholder population. In addition, the restriction of services in our hospitals and clinics reduced the number of patients attending the segment, as well as reducing the number of outpatient consultation and preventive check-ups for plan members. These effects led to an overall decrease in the costs of sales of the segment and the increase in the gross profit in 2020 of 9.2%, compared to 2019.

The subsidiaries domiciliated in Peru received a grant for S/ 293 thousand and the subsidiaries domiciliated in Colombian received a grant for S/ 2,142 thousand. The government grant was awarded for the purpose of giving immediate financial support in order to preserve the employment during the period of quarantine to the Group.

According to the most up-to-date estimations that the Management has, the effects of COVID-19 will not cause significant variations for the Group’s operations in the medium and long term, because health services are basic needs and most of its patients have insurance coverage or can access credit lines to finance their treatments. The evaluation of indicators as of December 31, 2020 has not identified additional CGUs in order to being evaluated for impairment and the discounted flow projections to determine the use values of those CGUs for which the evaluation is mandatory, do not show significant variations after the year 2021 according to the projected flows at the end of 2021. Regarding the discount rate for the calculation of the use value, Management estimates that it will not have significant variations to the ones that were used in previous years.

Because of COVID-19, multiple Group companies began renegotiating contracts for the leasing of offices and service premises, the use level and occupancy of which had been affected by the confinement measures and the reduced attendance of clients. In cases in which an agreement has already been reached, the Group applied the amendment to IFRS 16 issued by the IASB in May 2020 due to the pandemic, making adjustments to results for the period due to the consequences of the renegotiation (waivers and fee reductions), just as if they were variable lease components. According to the contracts that are still under renegotiation with the lessors, Management will apply the same treatment, estimating that its effect will not be significant.

F-113

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

There was an increase in the number of days of our cash collection cycle due to payments processes in our clients because of the restrictions of lock down. This caused an increase in the loss for impairment of trade receivables of corporate customers of S/ 3.6 millions. In addition, there was an increase due to a provision of S/ 3.0 million from patients with COVID-19 that could not pay for the service received.

32.

Commitments, Guarantees, and Contingencies

A.	Commitments

As of December 31, 2020, 2019 and 2018, no commitments to be reported have been identified.

B.	Guarantees

As of December 31, 2020, December 31, 2019 and December 31, 2018 the Group has the following guarantees:

◾	Guarantee letters in financial institutions for S/ 12,379 thousand in favor of third parties in order to ensure compliance with providing healthcare services (2019: S/ 12,816 thousand and 2018: S/ 9,576 thousand);

◾	Guarantee of shares on Auna Colombia for S/ 843,149 thousand in favor of Scotiabank Perú S.A.A. (2019: S/ 771,723 thousand and 2018: S/ 783,821 thousand).

◾

Guarantee to cover a financial loan for S/ 337,240 thousand in favor of Scotiabank Perú S.A.A., S/ 40,774 thousand in favor of Banco Interamericano de Finanzas and one dollar in favor of Banco Pichincha (2019: S/ 250,000 thousand for Scotiabank S.A.A. and S/ 833 thousand for Banco Interamericano de Finanzas and 2018: S/ 343,511 thousand for Scotiabank S.A.A. and S/ 846 thousand for Banco Interamericano de Finanzas);

◾

The Group maintains properties in mortgage in favor of Scotiabank Perú S.A.A. for S/ 460,335 thousand related to loans received (S/ 394,105 thousand as of December 31, 2019 and S/ 455,172 thousand as of December 31, 2018) and Colombia maintains guarantee trust for S/ 143,010 thousand to guarantee compliance with the proceeds of their sale (2019: S/ 45,378 thousand and 2018 S/ 51,365 thousand).

C.	Contingencies liabilities

As of December 31, 2020, 2019 and 2018, the Group maintains various judicial processes (labor, regulatory, civil), that management evaluated as possible. If the defense against those action is unsuccessful, then fines and legal cost could amount to S/ 27,573 thousand, S/ 18,128 thousand and S/ 8,884 thousand, respectively.

As part of the acquisition of PMLA, the Group recognized a contingent liability of S/ 3,269 thousand in respect of claim for contractual penalties made by PMLA customers (note 1.C).

During 2019, a former non controlling shareholder of the Laboratorio Médico las Américas Ltda. filed a lawsuit against the Company and Promotora Médica las Americas S.A claiming for the recognition of the labor relationship during the years he worked for PMLA, prior to the acquisition. The management and legal advisor have evaluated this case as possible. This process was assigned to the Ninth Labor Court in Medellin. The amounts held in escrow cover what we believe is our potential exposure pursuant to these ongoing proceedings. The escrow fund is managed by the BTG Pactual Fiduciary, established on December 21, 2018, by virtue of the agreements established in the share purchase agreement signed in September 2018, for the acquisition of PMLA (note 1.C).

F-114

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

33.

Related Parties

As of December 31, this caption comprises the following:


	*Note*		Transaction value						Outstanding balances
In thousands of soles	*Note*		2020		2019		2018		2020		2019		2018
Sales of oncologic healthcare services
Joint ventures				117		498		49		42		588		39
Associates				—		—		—		—		17		—
Others				—		—		—		12		2		227

				117		498		49		54		607		266

Cost of sales of oncologic healthcare services
Joint ventures				5,916		6,402		5,450		1,863		883		790
Associates				3,565		3,675		—		691		678		1,161
Others				—		—		—		24		254		191

				9,481		10,077		5,450		2,578		1,815		2,142

Administrative expenses
Services provided by related parties (iv)				2,433		2,163		2,219		251		173		427

				2,433		2,163		2,219		251		173		427

Selling expenses
Services provided by related parties (v)				697		—		—		—		—		—

				697		—		—		—		—		—

Loans		17.C
Others				—		—		178		—		—		—

				—		—		178		—		—		—

All outstanding balances with these related parties are priced on arm´s-length basis. None of the balances is secured. No expense has been recognized in the current year or prior year of loss for impairment of trade receivables in respect of amounts owned by related parties. No guarantees have been given or received.

(i)	Compensation to key personnel

As of December 31, 2020, 2019 and 2018, the compensation paid to the key management of the companies located in Peru amounts to S/ 77,272 thousand, S/ 59,852 thousand and S/ 48,193 thousand, respectively, in Colombian companies the amount is S/ 9,269 thousand at December 31, 2020 (S/ 5,983 thousand as of December 31, 2019 and S/ 4 thousand as of December 31, 2018). The Group does not grant long-term benefits to its key management personnel.

(ii)	Compensation to directors

As of December 31, 2020, 2019 and 2018, the compensation paid to the board of directors of the companies located in Peru amounts to S/ 2,770 thousand, S/ 3,185 thousand and S/ 1,498 thousand, respectively.

F-115

Auna S.A.A. (formerly known as Auna S.A. and formerly known as Grupo Salud del Perú S.A.C.) and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2020, 2019 and 2018

(iii)

Medical services

As of December 31, 2020, 2019 and 2018, certain directors provided medical services in the Group. For their medical services, they have received customary compensation and benefits commensurate with their level of responsibility within the Company, aligned with the compensation paid to other physicians and medical professionals of similar stature employed by the Group.

In addition, the Group reimbursed certain expenses incurred in connection with providing these services as at rent for office space, phone expenses, certain taxes, purchase of medical books and travel expenses related to his attendance at conferences on behalf of the Group.

(iv)	Management expenses

As of December 31, 2020, 2019 and 2018, corresponded to administrative expenses provided by Enfoca to the Group mainly to management services for S/ 2,259 thousand, S/ 2,081 thousand and S/ 1,909 thousand, respectively; and reimbursements related to consultant fees and travel expenses for S/ 174 thousand, S/ 82 thousand and S/ 310 thousand, respectively.

(v)	Selling expenses

As of December 31, 2020 corresponded to selling expenses provided to the Group by companies related with shareholders mainly to sales commission for S/ 697 thousand.

34.

Subsequent Events

On January 26, 2021, the Peruvian Government through Decreto Supremo No. 008-2021-PCM announced new measures within the framework of the State of National Emergency due to the second wave of COVID-19, which will be in force from January 31 for an initial period of 15 days, which was later extended until February 28, 2021 by Supreme Decree No. 023-2021-PCM. After that date, the measures were later extended until August 31, 2021 by Decreto Supremo No. 131-2021-PCM. These measures must be adopted according to the classification by the levels with which each department of Peru has been assigned: high, very high and extreme. Among the measures are: targeted immobilization, limitation of activities that imply displacement, suspension of interprovincial land trips and curfew by schedules. The Group’s activities are mainly carried out in the department of Lima, Peru whose classification was Extreme and was later classified as High. On February 19, 2021, Decreto Supremo No. 009-2021-SA was published in the Diario Oficial El Peruano, through which the State of Sanitary Emergency was extended until September 2, 2021. After that date, in August 2021, the Peruvian Government announced an extension of the State of Sanitary Emergency until March 1, 2022, by Decreto Supremo No. 025-2021-SA.

On February 2021, the Peruvian Government announced that in the provinces with an extreme risk level there will only be mandatory and strict social immobilization at specific times and on Sundays as of March 1, 2021 and for 14 days.

Based on the foregoing, the Group does not anticipate that these measures will have a significant impact on its operations.

Between January 1, 2021 and until the date of issuance of this report (August 24, 2021), no additional events or events of importance have occurred in addition to those indicated in the previous paragraphs that require adjustments or disclosures to the consolidated financial statements as of December 31, 2020.

F-116

American Depositary Shares

Representing Class A Shares

LOGO

Auna S.A.A.

PRELIMINARY

PROSPECTUS


Morgan Stanley

, 2021

Through and including , 2021 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 6.

Indemnification of Directors and Officers

According to the Registrant’s by-laws, the directors and executive officers of the company shall be indemnified by the company for any reasonable expenses incurred and for any loss or damage suffered in connection with any action, lawsuit or proceeding to which they have been a party as a result of their position as director or executive officer, to the extent such action, lawsuit or proceeding is not attributable to them. We maintain liability insurance which insure our directors and officers against liability which he or she may incur in his or her capacity as such.

Item 7.

Recent Sales of Unregistered Securities

None.

Item 8.

Exhibits

(a) The following documents are filed as part of this registration statement:


1.1*		Form of Underwriting Agreement.

3.1**		English translation of By-laws of the Registrant.

4.1*		Registrant’s Form of American Depositary Receipt (included in Exhibit 4.2).

4.2*		Form of Deposit Agreement among the Registrant, Citibank, N.A., as depositary, and the holders from time to time of American depositary shares issued thereunder.

5.1*		Opinion of Rodrigo, Elias & Medrano Abogados, Peruvian counsel to the Registrant, as to the validity of the class A shares.

8.1**		Opinion of Davis Polk & Wardwell LLP, U.S. counsel to the Registrant, regarding certain U.S. tax matters.

8.2*		Opinion of Rodrigo, Elias & Medrano Abogados regarding certain Peruvian tax matters.

10.1**†		English translation of Surface Rights Agreement dated as of July 9, 2009 among Medic Ser S.A.C. and the Peruvian Red Cross Society.

10.2**		English translation of the Public Deed of the First Amendment dated as of January 26, 2010 to the Surface Rights Agreement.

10.3**		English translation of Torre Trecca Concession Agreement dated as of August 27, 2010 among Consorcio Trecca S.A.C. and the Social Health Insurance of Peru.

10.4**		English translation of the First Addendum dated as of April 19, 2011 to the Torre Trecca Concession Agreement.

10.5**†		English translation of Lease Agreement dated as of June 27, 2019 among Oncocenter Perú S.A.C. and Promotora Asistencial S.A.C. Clínica Limatambo.

10.6**		English translation of Financing Agreement dated as of January 29, 2010 among Promotora Médica Las Américas, as borrower, Fiduciaria de Occidente S.A., as administrative agent and the lenders party thereto.

II-1


10.7**		English translation of First Amendment dated as of October 13, 2010 to the Financing Agreement among Promotora Médica Las Américas, as borrower, Fiduciaria de Occidente S.A., as administrative agent and the lenders party thereto.

10.8**		English translation of Second Amendment dated as of May 25, 2017 to the Financing Agreement among Promotora Médica Las Américas, as borrower, Fiduciaria de Occidente S.A., as administrative agent and the lenders party thereto.

10.9**		English translation of Third Amendment dated as of July 17, 2017 to the Financing Agreement among Promotora Médica Las Américas, as borrower, Fiduciaria de Occidente S.A., as administrative agent and the lenders party thereto.

10.10**		English translation of Fourth Amendment dated as of February 20, 2018 to the Financing Agreement among Promotora Médica Las Américas, as borrower, Fiduciaria de Occidente S.A., as administrative agent and the lenders party thereto.

10.11**		Intercreditor and Collateral Agency Agreement dated as of December 26, 2018 among Auna Colombia S.A.S., as USD borrower, Oncosalud S.A.C., as PEN borrower, Citibank del Peru, S.A., as USD administrative agent, Scotiabank Perú S.A.A., as PEN administrative agent and collateral agent, and the guarantors party thereto.

10.12**		Form of Indemnification Agreement with directors and officers.

10.13*		Form of Registration Rights Agreement among the Registrant and certain shareholders of the Registrant.

10.14		English translation of Lease Agreement dated as of February 3, 2020 among Oncosalud S.A.C. and Scotiabank Perú S.A.A. (referred to herein as the Chiclayo Hospital Financing Agreement).

10.15		English translation of Amendment dated as of July 21, 2020 to Lease Agreement among Oncosalud S.A.C. and Scotiabank Perú S.A.A. (referred to herein as the Chiclayo Hospital Financing Agreement).

10.16		Indenture dated as of November 20, 2020 among the Registrant, as issuer, the guarantors party thereto and Citibank N.A., as trustee, paying agent, registrar and transfer agent.

14.1*		English translation of the Code of Ethics of the Registrant.

21.1**		List of subsidiaries.

23.1		Consent of Caipo y Asociados Sociedad Civil de Responsabilidad Limitada.

23.2*		Consent of Rodrigo, Elias & Medrano Abogados, Peruvian counsel of the Registrant (included in Exhibit 5.1).

23.3**		Consent of Davis Polk & Wardwell LLP, U.S. counsel of the Registrant (included in Exhibit 8.1).

24.1**		Powers of attorney (included on signature page to the registration statement).

*	To be filed by amendment.

**	Previously filed.

†	Portions of this exhibit (indicated by asterisks) have been omitted as the registrant has determined that (i) the omitted information is not material and (ii) the omitted information would likely cause competitive harm to the registrant if publicly disclosed.

(b) Financial Statement Schedules:

None.

II-2

Item 9.

Undertakings

The undersigned hereby undertakes:

(a) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(b) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Lima, Perú on August 25, 2021.


Auna S.A.A.

By:	/s/ Luis Felipe Pinillos Casabonne
	Name:	Luis Felipe Pinillos Casabonne
	Title:	Chief Executive Officer

By:	/s/ Pedro Castillo
	Name:	Pedro Castillo
	Title:	Chief Financial Officer

II-4

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons on August 25, 2021 in the capacities indicated:


Name		Title

* Luis Felipe Pinillos Casabonne		Chief Executive Officer (principal executive officer) / Director

/s/ Pedro Castillo Pedro Castillo		Chief Financial Officer (principal financial officer and principal accounting officer)

* Mauricio Balbi		General Counsel (principal legal officer)

* Jesús Zamora León		Director

* Jorge Basadre Brazzini		Director

* Leonardo Bacherer Fastoni		Director

* Robert Oberrender		Director

* Andrew Soussloff		Director

* John Wilton		Director

* Colleen A. De Vries		Senior Vice-President on behalf of Cogency Global Inc. Authorized Representative in the United States


By:		/s/ Pedro Castillo
		Pedro Castillo
		Attorney-in-Fact

II-5

Type of service

Nature and timing of
satisfaction of performance
obligations, including
significant payment terms

Revenue recognition under IFRS 15
(applicable from January 1, 2018)

Revenue recognition under IAS 18
(applicable before January 1, 2018)

Advances are primarily received from patients who do not have medical insurance for healthcare services such as hospitalization. These advances are recognized in revenue as services are rendered over time.

Generally, invoices are payable within 120 to 150 days for insurance companies and third parties are charged within 30 to 60 days.

Advances received are included in contract liabilities.

Sale of medicines

Customers acquire control of the medicines, when they are delivered and have been accepted, either as part of the hospitalization or as part of the pharmacy sale.

Invoices are generated at the time the customers receive the medicines and in the case of hospitalization at the time the medicine is delivered. In general, invoices are payable at the time of issuance and after invoicing, in the case of hospitalized patients.

Revenue is recognized when medicines are delivered and have been accepted by customers at their premises.

Revenue from the sale of medicines delivered during hospitalization is recognized at the estimated net realization amount at the time the medicine is received by the patient.

Revenue from the sale of medicines was recognized in accordance with the transfer of risks and benefits of the goods delivered.

Because the transaction for the sale of medicines, for the most part, is immediate, no major impacts were identified.