Instituto Hermes Pardini : Material Fact - Upstream Merger

INSTITUTO HERMES PARDINI S/A CNPJ/MF nº 19.378.769/0001-76 NIRE nº 3130009880-0 MATERIAL FACT

Belo Horizonte, September 14, 2017 -Instituto Hermes Pardini S.A. (B3: PARD3) ("Company" or "Hermes Pardini"), in compliance with the Brazilian Securities and Exchange Commission ("CVM") Ruling nº 358, dated January 3rd, 2002, announces to its shareholders that the Company's board of directors approved, as of the date hereof, the upstream merger of its wholly-owned subsidiaries IHP Digimagem Medicina Diagnóstica S.A. ("Digimagem"), Laboratórios Pro- Abordagem Genômica Diagnóstica S.A ("Progenética"), HP Importação, Comércio e Locação de Produtos, Máquinas e Equipamentos para Diagnósticos S.A. ("HP Importação"), Centro de Medicina Nuclear da Guanabara Ltda. ("CMNG") and Diagnósticos Serviços Médicos Auxiliares Ltda. ("DIAG" and, collectively with Digimagem, Progenética, HP Importação and CMNG, "Merged Subsidiaries"), aiming the simplification of their organizational and corporate structures, thereby reducing its administrative and operating costs ("Upstream Merger").

The Company is the sole holder of the shares or quotas, as the case may be, issued by the Merged Subsidiaries, and shall merge them entirely into the Company.

The Merged Subsidiaries were appraised pursuant to section 227 of Law n.º 6,404, dated December 15, 1976, as amended ("Brazilian Corporate Law"), pursuant to their book value as of July 31, 2017. The valuation reports were prepared by Soltz, Mattoso & Mendes Auditores, a simple incorporated business entity headquartered in the City of Belo Horizonte, State of Minas Gerais, at Avenida Afonso Pena, nº 732, 9º andar, Bairro Centro, ZIP 30.130-003, enrolled before the federal taxpayer's registry under n.º 18.692.848/0001-94 and before the state accounting council (CRC/MG) under n.º 002684/0-o ("Valuation Reports" and "Appraiser", respectively). The net worths of the Merged Subsidiaries are as follows

(i) R$29,876,595.97 (twenty-nine million, eight hundred and seventy-six thousand, five hundred and ninety-five Brazilian reais and ninety-seven cents) for Digimagem; (ii) R$3,889,193.22 (three million, eight hundred and eighty-nine thousand, one hundred and ninety-three Brazilian reais and twenty-two cents) for Progenética; (iii) R$1,050,308.30 (one million, fifty thousand, three hundred and eight Brazilian reais and thirty cents) for HP Importação; (iv) R$22,532,703.97 (twenty-two million, five hundred and thirty-two thousand, seven hundred and three Brazilian reais and ninety-seven cents) for CMNG; and (v) R$6,491,788.93 (six million, four hundred and ninety-one thousand, seven hundred and eighty-eight Brazilian reais and ninety-three cents) for DIAG.

The Appraiser is not in any situation of conflict of interests or known common interests with the shareholders of the Company, with the Merged Subsidiaries or with shareholders of the Merged Subsidiaries.

All Merged Subsidiaries perform activities in the diagnostic medicine, such as the Company. Progenética has expertise in personalized medicine focused in Genomics and Oncogenetics, with activities in entire Brazilian territory. Digimagem has five operating units in the city of São Paulo, under the brand "Hermes Pardini". HP Importação's corporate purpose is rendering services in the areas of medicine, dentistry, lab research, clinical analysis and other analysis to complement diagnosis and therapy, and may also hold equity in other companies. CMNG and DIAG collectively have ten operating units in the State of Rio de Janeiro, using mainly the brand "Centro de Medicina Nuclear da Guanabara".

The Upstream Merger will not result in a capital increase in the Company or in the issuance of new shares thereby and, accordingly, there will be no substitution of shares held by any minority shareholders of the Merged Subsidiaries for Company's shares, as Hermes Pardini is currently the owner of all the issued and outstanding equity of the Merged Subsidiaries. Accordingly, pursuant to recent decisions issued by the CVM in formal inquiries for similar transactions and pursuant to CVM's Deliberation n.º 559, dated November 18, 2008, there is no basis for any calculation of an exchange ratio based on the company's valuation pursuant to market value, nor to the preparation of an exchange ration report for purposes of the comparison set forth by section 264 of the Brazilian Corporate Law, nor to the preparation of financial statements pursuant to sections 6 and 7 of CVM Ruling n.º 565, dated June 15, 2015.

The Extraordinary Shareholders' Meeting that shall deliberate the terms of the Upstream Merger ("AGE") shall take place on a timely basis, and the board of directors already approved its calling on the meeting held today.

The Upstream Merger shall not entitle any shareholders to withdraw from the Company. Also, there shall be no dissent or withdrawal rights to the shareholders of the Merged Subsidiaries, as Hermes Pardini is their sole shareholder.

The corporate acts of the Upstream Merger will be analyzed by the relevant state board of commerce where the Company and each of the Merged Subsidiaries are incorporated, and no prior approval from any Brazilian or foreign authority is required for its conclusion.

The estimated cost of the Upstream Merger is of approximately R$200,000.00 (two hundred thousand reais), including costs with valuation reports, legal assistance, other advisors, publishing and other related expenses.

The Company intends to simplify its organizational and corporate structure and, thus, promoting a reduction in its administrative and operating costs, in addition to the benefits of business integration and synergies.

Hermes Pardini does not foresee any significant risks caused by the implementation of the Upstream Merger. The success of the transaction will rely mainly in the Company's abilities to materialize growth and cost saving opportunities resulting from this business combination. If such goals are not met successfully, the expected benefits from the Upstream Merger may not partially or fully occur, or may take longer than expected to materialize.

The documents related to the Upstream Merger, including the Merger Protocol and the Valuation Reports are available to the shareholders in the Company's headquarters, located in the City of Belo Horizonte, State of Minas Gerais, at Rua Aimorés, n.º 66, 9th floor, ZIP 30140-070 (investor relations department), in the Company's website

(www.hermespardini.com.br/ri), in the CVM's website (www.cvm.gov.br) and in the website of B3 S.A. - Brasil, Bolsa, Balcão (www.bmfbovespa.com.br). The documents will also be available in the management proposal for the AGE to be disclosed on proper timing.

For more information, please refer to the Company's Investor Relations Department through the following telephone number: [phone].

Camilo de Lelis Maciel Silva

Chief Financial and Investor Relations Officer

Instituto Hermes Pardini Telephone: [phone] [e-mail]

http://www.hermespardini.com.br/ri