Text commented by Claudio Santos - Executive Director of Galeazzi & Associados

We have observed a series of movements by Qualicorp in recent weeks, such as an 80.9% decrease in profit in the third quarter of 2023 compared to the previous year, the disinvestment in the startup Escale, a partnership that exists since 2021, and the layoff of around 600 employees.

I understand that decisions like these always shock and seem to reveal how sensitive a company's situation is. However, the restructuring process of a company in financial crisis is complex and requires clarity on the goals and the adopted strategy. In this sense, typically, the first decision to be made is the pursuit of cost reduction, whether through the elimination of departments, employee layoffs, or store closures.

But this process is being combined with an interesting business move, as, according to the company's president, although a significant number of people have been laid off, others have been hired to join the team, with the goal of focusing on expanding types of membership health insurance plans.

Yes, because we know that to ensure proper restructuring, cost reduction alone is not enough. Often, after identifying problems and non-profitable areas, restructuring leaders need to be ready to suggest the diversification of products or services, or even strategic expansion into new markets, in the name of operational efficiency and capital allocation optimization.

In the case of Qualicorp, all these strategies are being used, which could result in a cost reduction of R$120 million, according to estimates presented in the article. Notice how there are several possible paths when undergoing a restructuring process. Will this strategy succeed? We'll continue to monitor it.

(Source: Valor Econômico, 2023)

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