Auna S.A. (AUNA): Unlocking Potential in Latin American Healthcare
Leading high-complexity care and oncology in Spanish-Speaking Latin America (SSLA)
This deep dive into Auna is more comprehensive than my usual posts, delving into the complexities of its markets, financial strategy, and growth trajectory. While the analysis is detailed, it’s tailored for advanced investors who seek to understand not just the numbers but the strategic underpinnings that make Auna a compelling investment. If you're up for exploring the nuances of this high-growth healthcare company, read on—you may find insights to fuel your portfolio.
Investment Highlights (TLDR)
Dominant Position in Growing Markets: Auna operates in Mexico, Peru, and Colombia, regions with significant healthcare gaps and a projected 8.4% CAGR in healthcare spending through 2028. The company’s vertically integrated model uniquely positions it to capture growth in these underpenetrated markets.
Strategic Expansion in Mexico: Poised to become Auna’s primary growth engine, Mexico offers significant upside. The 2025 launch of OncoMexico, targeting both B2B and B2C markets, coupled with low bed utilization (42%) and lower working capital intensity, positions the country as a high-margin growth opportunity.
Strong Operational Execution in Peru: Auna’s most mature market delivers consistent double-digit growth, with Q3 2024 Adjusted EBITDA up 49% and capacity utilization at 83%. Its success in Peru serves as a scalable blueprint for regional expansion.
Strategic Focus in Colombia: While managing regulatory hurdles, Auna prioritizes cash flow stability and high-complexity services in Colombia. Demand remains robust, with 89% facility utilization despite policy challenges.
Deleveraging and Free Cash Flow Inflection: Auna’s steady reduction of net leverage to 3.7x and its inflection in free cash flow position the company for debt amortization in 2025. This could boost EPS significantly, adding 20%+ upside from lower interest costs alone.
Attractive Valuation with Significant Upside: Trading at just 8.4x 2025 EPS and backed by insider ownership and institutional investors like Grupo VAZOL, the stock has an analyst price target of $14.67—more than double the current price. Even conservative growth assumptions imply a compelling risk-reward profile.
My Take: I’ve accumulated a 1% position in my portfolio, with the stock offering clear potential to double within 1-2 years. While risks like FX volatility and lower liquidity warrant caution, Auna’s combination of growth, deleveraging, and strategic execution make it an asymmetric opportunity for long-term investors.
All figures are in USD unless otherwise specified.
Company Overview and Opportunity
Auna S.A. (NYSE: AUNA) is carving out a dominant position in Latin America’s healthcare sector, where rising demand for high-complexity care and modernization is reshaping the market. Operating across Mexico, Peru, and Colombia, Auna has built a vertically integrated healthcare platform that combines hospitals, outpatient facilities, and insurance plans into a seamless ecosystem. With its focus on underserved and fragmented markets, the company is well-positioned to capture a significant share of the region’s projected growth, as the Latin American healthcare market is expected to expand from $313 billion in 2023 to $469 billion by 2028 ( an 8.4% CAGR).
The Economist Intelligence Unit (EIU) expects the middle class of SSLA (Spanish-Speaking Latin America) to grow at a 7-13% CAGR rate through 2030 varying by country, defining middle-class as Latin Americans earning more than US $15,000 per year. Furthermore, hospital bed availability and private insurance penetration in the three target countries are each well below metrics in other Latin American countries such as Brazil.
Market Overview
Auna operates in Mexico, Peru, and Colombia, which together account for nearly half of healthcare spending and the population in Spanish-speaking Latin America (SSLA). These three countries represent over $140 billion in annual healthcare expenditure, supported by a combined GDP of $2 trillion and a population exceeding 213 million. Economic growth, rising per capita income, and a growing middle class in these regions are driving increased healthcare demand.
Despite this growth, SSLA’s healthcare systems face significant challenges:
Limited Access: Hospital bed availability per 1,000 inhabitants is well below the World Health Organization's recommended minimum of 3.0
Underfunded Public Systems: Infrastructure gaps and service quality issues persist due to inadequate funding.
High Costs in Private Healthcare: Many individuals cannot afford private healthcare due to limited insurance penetration.
Transparency Issues: Opaque pricing, high copayments, and unnecessary procedures erode patient trust.
Auna’s integrated model addresses these systemic challenges by combining hospitals, clinics, and healthcare plans to deliver affordable, transparent, and high-quality care. By focusing on underpenetrated markets and leveraging its scale, Auna is positioned to disrupt SSLA's fragmented healthcare landscape and capture value in these underserved areas.
Auna History
The predecessor to the Auna brand was founded in Peru in 1989 as Oncosalud, with the aim of addressing the unmet need for accessible, high-quality cancer treatment. During Peru’s economic crisis of the late 1980s, cancer patients often lacked access to specialized care, as insurance companies did not cover cancer treatment. Oncosalud offered prepaid oncology coverage plans for as low as $1 per month, providing unlimited access to treatments and surgeries by specialists.
In 1997, Oncosalud expanded by establishing its own network of facilities to integrate cancer treatment and, in 2011, Enfoca Group partnered with Oncosalud to launch Grupo Salud del Perú. This led to the creation of the Auna brand and the transformation of the company into a comprehensive healthcare provider. Auna expanded its footprint through strategic acquisitions and organic development, growing into one of the largest private healthcare networks in Spanish-speaking Latin America (SSLA).
Auna’s recent milestones include:
Expanding into Colombia in 2018 with the acquisition of Grupo Las Américas, a leading healthcare network.
Acquiring additional facilities in Montería, Medellín, and Barranquilla to enhance its oncology and general healthcare offerings.
Expanding into Mexico in 2022 by acquiring Grupo OCA, a private healthcare group located in Monterrey, Mexico operating three high-complexity hospitals.
Entering the insurance market in Mexico by acquiring Dentegra in 2023, aiming to leverage its insurance platform for launching mono-risk oncology plans.
Enfoca and the NYSE IPO
Auna today still counts its early and founding physicians as shareholders with material inside ownership. Luis Pinillos and Juan Servan alone own at least 9% of company shares. The largest shareholder, at ~43% interest, is Enfoca Group, one of Latin America’s top investment firms and holds majority voting power of the company. Enfoca formed its partnership with OncoSalud in 2008, and the firm counts large institutional firms - such as Farallon Capital and Canada Pension Plan Investments (CPP) - as investors.
There are some other interesting outside investors in the top shareholder count displayed directly above, and I explain them below next.
Grupo VAZOL
Grupo Angeles, which recently became Grupo VAZOL last year, operates a 27-hospital network in Mexico (among other ventures) and is building a Mexican conglomerate. VAZOL also has partnered with reputable hospital networks in the US such as Cleveland Clinic. I learned this week that VAZOL has quietly been purchasing shares in AUNA and as of 1/14/2025 it holds just under 10% of the stock.
Other Investors and Share Liquidity
RWC Asset Management (Redwheel) and Teacher Retirement System of Texas also own 2.0% and 2.5% of the shares, respectively. So, despite this being a less liquid stock on some days, there is definitely quality institutional interest here.
Average daily volume over the last 10 days has been 66,000 shares - or about $462,000. This is not much volume for institutional investors to accumulate significant positions. Nonetheless, they are doing so patiently in smaller blocks each day over the last couple of months. VAZOL, however, appears to have become a bit less patient this week, buying 2x the average daily volume on January 14th alone.
I didn’t know it at the time, but I was buying stock alongside Angeles/VAZOL in December and the first half of January.
The IPO
In March 2024, Auna S.A. (NYSE: AUNA) completed its initial public offering (IPO), raising $360 million to support its ambitious growth strategy across Latin America. The offering marked a significant milestone for the company. Unfortunately for investors, the IPO priced at $12 a share and has traded lower ever since, today at $7.36 a share. IPO proceeds were strategically allocated to enhance Auna's financial flexibility, including the repayment of sponsor financing and the expansion of its healthcare footprint.
Recent Financial Performance
The IPO prospectus offers vast details through 12/31/2023, however this includes acquisitions closed through January 2023, making for a lumpy analysis. The most recent YTD financials for Q3 2024 provide a clean organic comparison year-over-year. Metrics such as total bed capacity have been steady since Q1 2023.
Per the company’s Q3 2024 earnings release in November 2024, Auna’s growth continues to accelerate, supported by robust performance across its three key markets—Mexico, Peru, and Colombia. In the first nine months of 2024 (chart below), Auna achieved 12% FX-neutral (FXN) revenue growth, reflecting operational strength across all regions. FXN growth adjusts for the impact of exchange rate fluctuations between local operating currencies—such as the Mexican peso (MXN) and Colombian peso (COP)—and Auna’s reporting currency, the Peruvian sol (PEN).
The values in the graphic directly below are in Peruvian Soles. There is FX translation risk since this is valued in Soles, and we will address that later.
Adjusted EBITDA rose 21% year-over-year, with margins expanding to 22.1%, driven by operational efficiency and high-complexity care. Operating facility utilization remained strong, particularly in Peru (83%) and Colombia (89%), highlighting sustained demand for Auna’s integrated healthcare offerings.
Despite its achievements, Auna faces challenges familiar to emerging market investments, including FX volatility, regulatory hurdles, and rising borrowing costs. Yet, its proactive strategies—ranging from geographic diversification to operational efficiencies and a clear deleveraging roadmap—provide resilience and confidence for investors seeking exposure to the rapidly modernizing Latin American healthcare sector.
We’ll get to the challenges but first let’s discuss the proactive strategies and growth.
Growth Highlights by Country: Auna's Regional Performance
Auna’s robust growth trajectory is evident across Mexico, Peru, and Colombia, each contributing unique strengths to its regional portfolio. The company continues to deliver double-digit organic revenue growth while proactively expanding its operational capacity and high-complexity services, further solidifying its market leadership.
Mexico: Auna’s Emerging Growth Engine
Mexico is poised to become a key growth engine for Auna, offering significant opportunities to expand its integrated healthcare model. With the upcoming launch of OncoMexico in 2025, the company is tapping into a vast, underserved market for oncology-focused insurance, targeting both B2B and B2C segments. Unlike its two other regions, Auna benefits from:
Low bed utilization rates in Mexico, currently at 42%, enabling substantial growth in service volumes without requiring significant capital investment in new infrastructure.
Mexico’s Lower Cash Conversion Cycle (CCC), which drives much lower Net Working Capital Intensity compared to Colombia and Peru, enhancing cash flow margins and making it an attractive market for scalable, high-margin growth.
My article just below covers the important understanding of Net Working Capital Intensity and Cash Conversion Cycle in more detail:
Mexico already contributes 43% of Adjusted EBITDA for the company while only comprising 28% of revenue. Auna has yet to officially roll out its higher margin oncology insurance in 2025.
In Mexico, Auna reported a 16% year-over-year increase in revenue (local currency) in Q3 2024. This growth was driven by the successful implementation of the AunaWay initiative, which focuses on physician engagement, enhanced service mix, and patient-centered care. The OncoMexico pilot program (launched in July 2024) is already yielding promising results and is expected to scale further in 2025, targeting both B2B and B2C segments.
Aditum Consulting Group estimated the Total Addressable Market (TAM) for OncoMexico (as of March 2022) is 10-15 million subscribers, about 10x Auna’s subscriber base in Peru. Auna also now has a leading presence in Monterrey with 35% of beds and positioned in a tailwind for nearshoring.
Assuming OncoMexico captures just 1 million subscribers, at US $250 a year that’s $250 million of incremental revenue growth (25% of company-wide revenue today), plus much more dropping to the bottom line from operating leverage.
Peru: The Blueprint for Success
Peru remains Auna’s most developed market and serves as the blueprint for its operations in other countries. The founding physicians have operated in Peru since the 1980s.
Revenue grew by 13% year-over-year, with healthcare services up 11% and healthcare plans up 15%. Operating capacity utilization in Peru reached an impressive 83.4%, reflecting strong demand for high-complexity care and the success of Auna’s vertically integrated model. Adjusted EBITDA increased 49%, with a margin expansion of 5.3 percentage points, showcasing the efficiencies gained through scale and operational focus.
Like Mexico, the Peru region offers both:
Healthcare services through its hospitals and ambulatory service centers
Oncology insurance plans through its Oncosalud segment
Colombia: Cautious Growth Amid Regulatory Challenges
While Colombia contributed 11% year-over-year revenue growth in Q3 2024, Auna has respectfully taken a more cautious approach due to regulatory challenges with healthcare payers, including Nueva EPS. Despite these headwinds, Auna achieved 89% operating capacity utilization, driven by increasing demand for oncology services.
Auna is prioritizing cash flow and receivable collection above growth in Colombia currently. Adjusted EBITDA in Colombia was impacted by provisions for receivables impairments last quarter, though underlying demand and operational efficiencies continue to support growth. Management is proactively working with payers and the Colombian government and has seen good progress. This could be another article to explain but I am not too concerned about this. The precautionary write-down (not write-off) is about 0.60% of company revenue.
Colombia provides only healthcare services and represents 33% of Auna revenue and contributes 20% to its Adjusted EBITDA (14% margin).
Proven Track Record of Growth
Tying up the growth highlights section, Auna has doubled its hospital count over the last 13 years and increased its Adjusted EBITDA Margin at a 3-year CAGR of 70%, primarily through acquisitions. Proceeds from the IPO were used to pay down the majority of Sponsor Financing pre-IPO which was used to finance Auna’s acquisitions. Management has been with the company for many years. Founding physicians own material amounts of stock and work at the company. The CEO is not an original founder but has been with Auna (through Enfoca) since 2008.
Decreasing Leverage: Opportunity and Inflection Point
Auna’s commitment to deleveraging has been a cornerstone of its financial strategy after large acquisitions as a private company in 2021 and 2022. This commitment resulted in a steady reduction in its net leverage ratio for eight consecutive quarters. By the end of Q3 2024, the ratio had improved to 3.7x, down from 4.1x in the prior quarter and 4.5x in Q3 2023. This progress reflects a disciplined approach to debt management, underpinned by strong adjusted EBITDA growth and effective cash flow management.
Key factors contributing to this deleveraging include:
Revenue Growth: Double-digit organic growth across all markets has bolstered EBITDA, providing a solid foundation for reducing leverage.
Operational Efficiencies: Scaling high-margin offerings like oncology insurance, have enhanced profitability.
Auna’s goal is to bring its net leverage ratio below 3.0x within the next 12 months, further enhancing its financial flexibility and capacity to reinvest in growth initiatives. This disciplined approach, coupled with robust organic growth, underscores the company’s resilience and appeal as a long-term investment opportunity. At a modest 10% EBITDA growth in 2025, a reduced net leverage ratio to 3.0x implies a 20% boost to EPS from lower interest expense due to debt amortization.
Free Cash Flow Inflection
Auna reduced its net leverage ratio the last several quarters primarily from EBITDA growth. Now, the company has reached an inflection in free cash flow where it can also begin to amortize the debt.
The CFO, Gisele Remy Ferrero, expressed the above sentiment in the last quarterly earnings call expecting an inflection point in free cash flow happening now (back half of 2024). In fact, FCF looks pretty healthy already; I believe they are just playing it conservative and waiting a bit to begin paying down debt. Here is a FCF chart I put together going back to Q1 2023.
The FCF likely includes some one-time outflows of interest expense in 2023. The blue bars reflect additional incremental investment of working capital to support growth. You can see how FCF is inflecting more positively.
Risk Factors on Leverage
Finally, regarding leverage, there are some risk considerations for balance:
About 40% of Auna’s debt is USD-denominated while it operates predominantly with COP (Colombia), MXN (Mexico) and PEN (Peru) currency. However, management hedges 90% of its US debt to PEN, its primary currency.
Weighted-average interest rate is ~9.5%
The other 60% of its debt is denominated in local currency with MXN being the largest source.
Weighted-average interest rate is ~12-13%
The Mexican debt is floating and currently accrues at 14.25%. The company can pay this down due to the strong 37% EBITDA margins in Mexico - and this would be quite accretive to EPS.
Financial Metrics
Auna has a $544 million market cap. Six analysts offer some form of coverage on the stock, all of whom hold Buy or Strong Buy ratings, and an average 2025 EPS of $0.87 per share, implying an 8.4x P/E - or 61% growth YoY. The average price target is $14.67 or 2x the current price.
So what gives? Why isn’t the stock rising more substantially? It may relate to the FX translation and regulatory risks.
FX and Financial Risks
Auna’s operations across Mexico, Peru, and Colombia expose the company to foreign exchange (FX) and financial risks, particularly for USD-based investors. Revenue is primarily generated in local currencies—the Peruvian sol (PEN), Colombian peso (COP), and Mexican peso (MXN)—making Auna’s financial performance sensitive to currency fluctuations. These risks manifest in two key areas:
FX Exposure for USD Investors:
Translation Adjustments: Auna’s financial results are consolidated in PEN but reported to international investors in FX Neutral (FXN) USD. This creates a potential mismatch between strong local-currency performance and USD-denominated results due to FX volatility.
Impact on Other Comprehensive Income (OCI): FX translation adjustments flow through OCI, impacting equity valuations for USD-based investors, even if operational performance remains robust.
Mitigation Strategies:
Geographic diversification across three markets helps balance FX exposure.
Operational efficiencies and a focus on cash flow management further mitigate FX-related disruptions.
Financial Risks:
Leverage Management: While Auna has successfully reduced its leverage ratio to 3.7x (from 4.5x in Q2 2024), the recent refinancing of 6.5% notes with 10% senior secured notes increases interest expenses, creating potential pressure on net income. This refi was very small, however, only about 5% of total debt.
Working Capital Intensity: Mexico’s lower working capital intensity contributes to higher cash flow margins, offsetting some financial pressures from debt servicing. However, higher working capital needs in Colombia remain a challenge.
Regulatory Risk in Colombia
Colombia presents unique challenges due to its evolving regulatory landscape and government involvement in healthcare:
Insurance Payer Challenges: Auna has faced issues with government-regulated insurers, such as Nueva EPS, leading to provisions for receivables impairments in Q3 2024. Delays in payments and regulatory uncertainty continue to affect cash flows, however actual write-downs have been minimal historically and management is confident in working with the government.
Policy Changes: Regulatory interventions in Colombia’s healthcare system have created an unpredictable environment for private providers. Potential changes to reimbursement models or payor structures could further disrupt profitability.
Strategic Response:
Auna has adopted a cautious growth strategy in Colombia, prioritizing cash flow stability over aggressive expansion for now.
Operational focus has shifted toward high-complexity services like oncology, where demand remains resilient despite regulatory challenges.
Investment Considerations
Auna presents a compelling investment opportunity for those seeking exposure to the rapidly modernizing healthcare sector in Latin America. With a dominant position in underpenetrated markets like Mexico, Peru, and Colombia, the company is well-positioned to capitalize on growing healthcare demand driven by aging demographics, middle-class expansion, and increasing healthcare expenditures.
Bullish Factors
Strong Growth Trajectory: Double-digit FX-neutral revenue growth and expanding EBITDA margins reflect Auna’s ability to scale its integrated healthcare model effectively.
Strategic Expansion in Mexico: The upcoming launch of OncoMexico in 2025 and low bed capacity utilization (42%) provide significant growth potential without requiring heavy capital investments.
Operational and Financial Resilience: Auna’s focus on reducing leverage, improving cash flow margins, and mitigating FX risks supports its financial stability and long-term scalability.
Risks to Consider
FX and Financial Risks: Currency volatility and rising interest expenses from higher-cost debt refinancing may weigh on USD-denominated results and investor returns.
Regulatory Environment in Colombia: Challenges with government-regulated insurers and evolving healthcare policies pose risks to cash flow and profitability in a key market.
Execution of Growth Strategy: Scaling operations in underpenetrated markets while maintaining operational efficiency and quality of care requires careful execution.
Your Take
I’ve accumulated a position that’s about 1% of my portfolio. I am quite bullish on the stock and believe it can easily double in the next year or two - at the least. I only need a napkin or a few cells in Excel to understand the great price appreciation potential of this company assuming the USD does not drastically appreciate against MXN and PEN.
Take the following Excel napkin which assumes 15% EBITDA growth in 2025 and some other crude assumptions. that’s a 68% growth rate YoY with deleveraging to 3.0x EBITDA. Even multiple contraction to a 7x PE makes this a $10 stock in a year on a TTM basis.
However, the EM specific risks keep me from allocating much more to my position.
A material depreciation in the Mexican Peso (MXN) can erode a lot of equity appreciation for USD investors. Wildcards include the new US administration and how they approach trade relations with Mexico. The peso has settled back into its old range beginning in 2015 - around 20 MXN per USD. If it remains and does not break higher, USD investors could benefit from some impressive price appreciation going forward.
It’s taken several trading sessions to accumulate the shares I own at good prices. Until I see more liquidity I do consider how easily I could liquidate my position when desired. I do expect liquidity to increase over time though.
Auna offers a unique combination of growth, financial discipline, and scalability in a region with significant healthcare gaps. While the risks—particularly related to FX and regulatory factors—require monitoring, the company’s strategic initiatives and market leadership provide a strong foundation for long-term value creation.
Thanks for being part of the Safe Harbor community! Follow me for more insights: LinkedIn | X (formerly Twitter) | Instagram
Disclosure: This information is provided for informational purposes only and should not be considered a solicitation or recommendation to buy or sell any securities. The author or entity providing this information may hold positions in the securities discussed. This is not investment advice.