Fleury S A : Financial Statements - 4Q22

www.pwc.com.br

(A free translation of the original in Portuguese)

Fleury S.A.

Parent company and consolidated financial statements at December 31, 2022

and independent auditor's report

(A free translation of the original in Portuguese)

Independent auditor's report

To the Board of Directors and Shareholders

Fleury S.A.

Opinion

We have audited the accompanying parent company financial statements of Fleury S.A.

(the "Company"), which comprise the balance sheet as at December 31, 2022 and the statements of income, comprehensive income, changes in equity and cash flows for the year then ended, as well as the accompanying consolidated financial statements of Fleury S.A. and its subsidiaries ("Consolidated"), which comprise the consolidated balance sheet as at December 31, 2022 and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including significant accounting policies and other explanatory information.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Fleury S.A. and of Fleury S.A. and its subsidiaries as at December 31, 2022, and the financial performance and the cash flows for the year then ended, as well as the consolidated financial performance and the cash flows for the year then ended, in accordance with accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Basis for opinion

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Parent Company and Consolidated Financial Statements section of our report. We are independent of the Company and its subsidiaries in accordance with the ethical requirements established in the Code of Professional Ethics and Professional Standards issued by the Brazilian Federal Accounting Council, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Key Audit Matters

Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the parent company and consolidated financial statements

as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Matters

Why it is a

Key Audit

Matter

How the matter was addressed

PricewaterhouseCoopers Auditores Independentes Ltda., Avenida Brigadeiro Faria Lima, 3732, Edifício B32, 16oSão Paulo, SP, Brasil, 04538-132

T: [phone], www.pwc.com.br

Fleury S.A.

Why it is a Key Audit Matter	How the matter was addressed in the audit

Revenue Recognition (Note 27)

At December 31, 2022 ,the parent company and consolidated financial statements included revenue from services rendered. The Company's revenues arise from the rendering of services and are recognized based on the services performed up to the balance sheet date. For this purpose, it is necessary to determine the amount of revenue to be recognized, considering the services rendered and billed and services rendered but not billed, and to estimate the losses resulting from procedures performed but not approved by health plan operators (called "disallowances"). Considering the high number of locations where services are rendered, the procedures adopted by management must comprise strict controls and analyses to ensure that revenues from services rendered are recognized within the correct accrual period, as well as to ensure that the corresponding receivables are recognized at their realizable values.

.

Due to the materiality of the amounts in the process of recognizing revenue from services rendered, as well as the characteristics inherent in the measurement of the estimated losses from disallowances, which involves analysis of assumptions and measurement criteria, we understand that these matters are significant in our audit work.

Our audit procedures included, among others:

1. Understanding of the process and adequacy of the accounting policies adopted by the Company and its subsidiaries for the recognition of revenue, specifically those related to the billing of services rendered and the measurement of services rendered but not billed (revenues to be billed).
2. Analysis of the reconciliation of billing reports for the period from January to December 2022 with the accounting records for the revenue recognized in the financial statements.
3. Documentary tests, on a sample basis, on the existence of revenue from services billed and to be billed during the year, checking the timing of revenue recognition and the amounts recognized.
4. Analysis of the assumptions and measurement criteria used for the estimated losses from disallowances and their adherence to the Company's accounting policies, as well as the recalculation of the accruals for losses resulting from disallowances at December 31, 2022.
5. Reading of the disclosures in the parent company and consolidated financial statements.

As a result of the evidence obtained through the procedures summarized above, we believe that the criteria adopted by management for the recognition of revenue from services rendered and the accruals for the estimated losses from disallowances are reasonable.

Recoverable amount of goodwill (Note 12)

At December 31, 2022, the parent company and consolidated financial statements included goodwill from business combinations that recoverable amount of which is tested annually as required by CPC 01/IAS 36 - "Impairment of assets". For impairment testing, goodwill is

Our audit procedures included, among others:

1. Understanding of the preparation and review of the studies and analyses of the recoverable amounts provided by the Company.

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Fleury S.A.

Why it is a Key Audit Matter	How the matter was addressed in the audit

allocated to Cash Generating Units (CGUs), the values in use of which are based on estimated future cash flows, discounted to their net present values. This involves the determination of assumptions such as: business growth rates and discount rates.

Due to the uncertainties related to the assumptions used to estimate the values in use of the CGUs, which may result in a material adjustment to the carrying amounts, we consider this a significant matter in our audit work.

1. Analysis, with the assistance of our corporate finance specialists, of the assumptions used by the Company, especially those related to business growth rates, cash flow projections and the respective discount rates, and comparison of the assumptions used by the Company, when available, with data obtained from external sources, such as projected economic growth and discount rates.
2. Reading of the disclosures provided by the Company in the parent company and consolidated financial statements.

As a result of the evidence obtained through the procedures summarized above, we consider that the valuation methodologies and assumptions adopted by management are reasonable, and the disclosures are consistent with the information obtained.

Business combinations
As described in Note 3 to the parent company and	Our audit procedures included, among others:
consolidated financial statements, during the year
ended December 31, 2022, the Company acquired	(i)	Reading of the main documents related to
interests in other companies, obtaining their		the business combinations, analysis of the
control ("business combinations"). Estimates		important corporate acts and the main events
required for the recognition and measurement of		that led management to conclude on the
business combinations involve significant		dates when control was obtained.
assumptions in determining the fair value of	(ii)	Assessment of the competence and
assets acquired and of liabilities assumed, such as
discount rates, growth projections and others.		objectivity of external specialists hired by
	management to prepare the purchase price

Due to the uncertainties related to the	allocation reports for the business
combinations and, with the support of our
assumptions and estimates used for measuring
specialists, assessment of the reasonableness
assets acquired and liabilities assumed, which
of the methodology and discussions of the
may result in a material adjustment to the
main assumptions adopted for the
accounting balances, we consider this a
identification and measurement of the fair
significant matter in our audit work.
value of assets acquired and of liabilities
	assumed in the business combinations,
	comparing them with available historical
	information or with observable market
	and/or segment data.
	(iii) Comparison of the amounts determined in
	the allocation reports and of the price paid in
	the business combination with the respective
	accounting balances.
	(iv) Reading of the disclosures included in the
	parent company and consolidated financial
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Fleury S.A.

Why it is a Key Audit Matter	How the matter was addressed in the audit

statements considering the requirements of the corresponding accounting standards.

Our audit procedures allowed us to conclude that the methodology, judgments, and assumptions used are reasonable and that the disclosures are consistent with the data and information obtained.

Other matters

Statements of Value Added

The parent company and consolidated Statements of Value Added for the year ended

December 31, 2022, prepared under the responsibility of the Company's management and presented as supplementary information for IFRS purposes, were submitted to audit procedures performed in conjunction with the audit of the Company's financial statements. For the purposes of forming our opinion, we evaluated whether these statements are reconciled with the financial statements and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in Technical Pronouncement CPC 09 - "Statement of Value Added". In our opinion, these Statements of Value Added have been properly prepared in all material respects, in accordance with the criteria established in the Technical Pronouncement and are consistent with the parent company and consolidated financial statements taken as a whole.

Other information accompanying the parent company and consolidated financial statements and the auditor's report

The Company's management is responsible for the other information that comprises the Management Report.

Our opinion on the parent company and consolidated financial statements does not cover the Management Report, and we do not express any form of audit conclusion thereon.

In connection with the audit of the parent company and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement in the Management Report, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the parent company and consolidated financial statements

Management is responsible for the preparation and fair presentation of the parent company and consolidated financial statements in accordance with accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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