Solid Organic Growth
Impressive Adjusted EBITDA Margin
Expansion
Robust EPS Expansion
Afya Limited (Nasdaq: AFYA; B3: A2FY34) (“Afya” or the
“Company”), the leading medical education group and medical
practice solutions provider in Brazil, reported today financial and
operating results for the three-month period ended March 31, 2024
(first quarter 2024). Financial results are expressed in Brazilian
Reais and are presented in accordance with International Financial
Reporting Standards (IFRS).
First Quarter 2024 Highlights
- 1Q24 Net Revenue increased 13.3% YoY to R$804.2 million.
- 1Q24 Adjusted EBITDA increased 20.5% YoY reaching R$397.9
million, with an Adjusted EBITDA Margin of 49.5%. Adjusted EBITDA
Margin increased 300 bps YoY.
- 1Q24 Net Income increased 76.9% YoY, reaching R$208.3 million,
and Adjusted Net Income increased 50.8% YoY, reaching R$251.0
million. With an adjusted EPS growth of 54.4% in the same
period.
- Operating Cash Conversion ratio of 110.1%, with a solid cash
position of R$ 611.1 million.
- ~334 thousand physicians and medical students in Afya’s
ecosystem.
Table 1: Financial Highlights 1
For the three months period
ended March 31,
(in thousand of R$)
2024
2023
% Chg
(a) Net Revenue
804,239
709,961
13.3%
(b) Adjusted EBITDA 2
397,853
330,211
20.5%
(c) = (b)/(a) Adjusted EBITDA Margin
49.5%
46.5%
300 bps Net income
208,299
117,772
76.9%
Adjusted Net income
250,966
166,377
50.8%
(1) No acquisitions were made during the period under review,
therefore not affecting the comparable period. (2) See more
information on "Non-GAAP Financial Measures" (Item 08).
Message from Management
It is with much satisfaction that I can proudly present another
quarter of great operational and financial performance for Afya.
Once again, we have proven the resilience of our business, the
successful execution of our strategy, the commitment of our team
members, and the consistency of our business model. This quarter
was marked by Gross margin expansion within our three segments and
Adjusted EBITDA margin in our consolidated figures, combined with
solid cash generation, and robust EPS growth, showing our
consistent business expansion.
Great part of our margin expansion came from the complete
integration of UNIMA and Afya Jaboatão, alongside the ramp up of
the four Mais Médicos campuses that started operation in 3Q22 and
the operational restructuring efforts in Continuing Education and
Medical Practice Solutions segments. Our idea was to integrate all
the services related to the physician continuing education into one
structure, so we could extract more synergies and boost our
growth.
We are also excited to expand our offering in the Undergrad
business with the signing of the acquisition of Unidompedro and
Faculdade Dom Luiz, this acquisition will contribute with 300
operating medical seats to Afya, in Salvador capital of Bahia and
the fifth-largest city in Brazil in population size. Unidompedro
will be Afya´s 4th medical school in Bahia and will serve as an
strategic hub for all other medical campuses in the State, besides
all the synergies that we can extract from our Continuing Education
campus in Salvador.
With another round of high and sustainable growth, our mission
remains solid as ever: to provide an ecosystem that integrates
education and digital solutions for the entire medical journey,
enhancing the development, updating, assertiveness, and
productivity of health professionals. We are very proud of our
business and of what we have achieved so far, as well as excited
about what we are planning.
1. Key Events in the Quarter:
- On January 24, 2024 the Secretary of Regulation and Supervision
of Higher Education of the Ministry of Education (“MEC”) authorized
the increase of 40 medical seats of Faculdades Integradas Padrão
(FIP Guanambi), in the city of Guanambi, located in the state of
Bahia, which will result in an additional payment of R$49.6
million. With the authorization, Afya reaches 100 medical seats on
this campus, and 3,203 total approved seats.
- To enhance synergies between Afya’s Content and Technology for
Medical Education and Specialization Courses for Physicians, Afya
has restructured its structure so that all products and services
related to medical education, excluding medical undergraduate
courses, are now managed in the same segment. Effective from the
first quarter of 2024, entities previously accounted for as Content
and Technology for Medical Education (Medcel, Além da Medicina,
CardioPapers, and Medical Harbour) within Digital Services are now
accounted for in the Continuing Education Segment. Simultaneously,
the segment formerly known as Digital Services has been renamed
Medical Practice Solutions. Due to changes in operating segments,
the segment information as of December 31, 2023 and for the
three-month period ended March 31, 2023 have been retroactively
adjusted for comparison purposes.
2. Subsequent Event
- On, May 2nd 2024, Afya announced that it has entered in a share
purchase agreement for the acquisition of 100% of the total share
capital of Unidom Participações S.A. (“Unidom”) which encompasses
Unidompedro and Faculdade Dom Luiz, both located in the State of
Bahia with operations in the cities of Salvador, Luis Eduardo
Magalhães, Barreiras and Ribeira do Pombal. The acquisition will
add 300 operational medical school seats to Afya in Salvador, one
of Brazil's largest cities. The aggregate purchase price
(enterprise value) is R$ 660.0 million, the Net Debt will be
deducted at the closing date and it will be paid as follows: R$
347.8 million will be paid in cash at the closing date and R$ 312.2
million will be paid in up to 10 annual installments of R$31.2
million, adjusted by the CDI (Interbank Certificate of Deposit)
rate. Afya expects an EV/EBITDA 4.2x at maturity and post synergies
(2027). With the acquisition, Afya will achieve 3,503 total
approved seats.
3. 2024 Guidance
The Company is reaffirming its guidance for 2024, which
considers the successfully concluded acceptances of new students
for the first semester of 2024. The guidance for 2024 is defined in
the following table:
Guidance for 2024
Net Revenue 1
R$ 3,150 mn ≤ ∆ ≤ R$ 3,250 mn
Adjusted EBITDA
R$ 1,300 mn ≤ ∆ ≤ R$ 1,400 mn
CAPEX 2
R$ 220 mn ≤ ∆ ≤ R$ 260 mn
(1) Excludes any acquisition that may be concluded after the
issuance of the guidance, notably, the Unidompedro acquisition was
not included in the guidance provided (2) The 2024 Capex guidance
does not encompass the earn-out payment in the amount of R$49.6
million related to the 40-seat increase at Faculdades Integradas
Padrão (FIPGuanambi).
4. 1Q24 Overview
Segment Information
The Company has three reportable segments as follows:
Undergrad, which provides educational services through
undergraduate courses related to medical school, undergraduate
health science and other ex-health undergraduate programs;
Continuing education, which provides medical education
(including residency preparation programs, specialization test
preparation and other medical capabilities), specialization and
graduate courses in medicine, delivered through digital and
in-person content, and
Medical Practice solutions which provides clinical decision,
clinical management and doctor-patient relationships for physicians
and provide access, demand and efficiency for the healthcare
players.
Key Revenue Drivers – Undergraduate Programs
Table 2: Key Revenue Drivers
Three months period ended
March 31,
2024
2023
% Chg
Undergrad Programs MEDICAL
SCHOOL Approved Seats
3,203
3,163
1.3%
Operating Seats 1
3,153
3,113
1.3%
Total Students (end of period)
22,609
20,822
8.6%
Average Total Students
22,609
20,822
8.6%
Net Revenue (Total - R$ '000)
610,721
528,830
15.5%
Medical School Net Avg. Ticket (R$/month)
9,004
8,466
6.4%
UNDERGRADUATE HEALTH SCIENCE Total
Students (end of period)
24,881
21,660
14.9%
Average Total Students
24,881
21,660
14.9%
Net Revenue (Total - R$ '000)
53,470
52,013
2.8%
OTHER EX- HEALTH UNDERGRADUATE
Total Students (end of period)
28,563
25,043
14.1%
Average Total Students
28,563
25,043
14.1%
Net Revenue (Total - R$ '000)
40,328
40,133
0.5%
Total Net Revenue Net Revenue (Total
- R$ '000)
704,519
620,976
13.5%
(1) The difference between approved and operating seats is
'Cametá'. A campus for which we already have the license but
haven't started operations.
Key Revenue Drivers – Continuing Education
Table 3: Key Revenue Drivers
Three months period ended
March 31,
2024
2023
% Chg
Continuing Education 1 Total
Studends (end of period) Residency
Journey - Business to Physicians B2P 2
14,693
9,061
62.2%
Graduate Journey - Business to Physicians B2P
13,275
11,857
12.0%
Other Courses - B2P and Business to Business Offerings
21,074
14,598
44.4%
Total Students (end of period)
49,042
35,516
38.1%
Net Revenue (R$ '000) Business to
Physicians - B2P
60,538
53,192
13.8%
Business to Business - B2B
4,877
5,019
-2.8%
Total Net Revenue
65,415
58,212
12.4%
(1) The figure above does not contemplate intercompany transactions
(2) 'Content & Technology for Medical Education' which had been
reported in 'Digital Services' table, has been reclassified to
'Continuing Education'
Key Revenue – Medical Practice Solutions
Table 4: Key Revenue Drivers
Three months period ended
March 31,
2024
2023
% Chg
Medical Practice Solutions 1 Active
Payers (end of period) Clinical Decision
159,183
143,832
10.7%
Clinical Management
31,806
26,621
19.5%
Total Active Payers (end of period)
190,989
170,453
12.0%
Monthly Active Users (MaU) Total
Monthly Active Users (MaU) - Digital Services 2
262,717
263,344
-0.2%
Net Revenue (R$ '000) Business to
Physicians - B2P
31,726
28,371
11.8%
Business to Business - B2B
4,847
5,168
-6.2%
Total Net Revenue
36,573
33,540
9.0%
(1) The figure above does not contemplate intercompany transactions
(2) 'Content & Technology for Medical Education' is now
being reported in Continuing Education table
Key Operational Drivers – Physicians and Medical Students
Ecosystem
Physicians and Medical Students Ecosystem represents the total
number of medical students and physicians in that are positively
impacted by Afya. For the first quarter of 2024, Afya’s ecosystem
reached 334,368 users, in line with the same period of the prior
year, accounting for around 41% of all medical students and
physicians in Brazil.
Table 5: Key Revenue Drivers
Three months period ended
March 31,
2024
2023
% Chg
Physicians and Medical Students positively impacted by Afya
1 Undergrad (Total Medical School Students
- End of Period)
22,609
20,822
8.6%
Continuing Education (Total Students - End of Period)
49,042
35,516
38.1%
Medical Practice Solutions (Monthly Active Users)
262,717
263,344
-0.2%
Ecosystem Outreach
334,368
319,682
4.6%
(1) Ecosystem outreach does not contemplate intercompany figures.
Note that there may be overlap in student numbers within the data.
Seasonality
Undergrad’s tuition revenues are related to the intake process
and monthly tuition fees charged to students over the period; thus,
does not have significant fluctuations during the period.
Continuing education revenues are mostly related to: (i) monthly
intakes and tuition fees on medical education, which do not have a
considerable concentration in any period; (ii) Medcel’s revenue,
derived from e-books transferred at a point of time, which are
concentrated at in the first and last quarter of the year due to
the enrollments; and (iii) Além da Medicina and Cardiopapers
revenues, which are sold in the last and first quarter of the year
due to the timeline of exams and recognized mainly over time.
Medical Practice Solutions are comprised mainly of Pebmed and
iClinic revenues, which do not have significant fluctuation
regarding seasonality.
Revenue
Net Revenue for the first quarter of 2024 was R$804.2 million,
an increase of 13.3% over the same period of the prior year, mainly
due to higher tickets in Medicine courses by 6.4%, maturation of
medical seats, the 40 seats expansion in Guanambi campus, the
Continuing Education intake performance and Medical Practice
Solutions execution.
Table 6: Revenue & Revenue Mix1 (in thousands of
R$)
For the three months period
ended March 31,
2024
2023
% Chg
Net Revenue Mix Undergrad
704,519
620,976
13.5%
Continuing Education
65,415
58,212
12.4%
Medical Practice Solutions
36,573
33,540
9.0%
Inter-segment transactions
-2,268
-2,767
-18.0%
Total Reported Net Revenue
804,239
709,961
13.3%
(1) No acquisitions were made during the period under review,
therefore not affecting the comparable period.
Adjusted EBITDA
Adjusted EBITDA for the three-month period ended March 31, 2024,
increased 20.5% to R$397.9 million, up from R$330.2 million in the
same period of the prior year, and the Adjusted EBITDA Margin
increased 300 basis points to 49.5%. The Adjusted EBITDA Margin
expansion is mainly due to the following: (a) gross margin
expansion within the three segments; (b) completion of UNIMA and
Afya Jaboatão integration process in November 2023; (c) the ramp up
of the four Mais Médicos campuses that started operation in 3Q22;
(d) operational restructuring efforts in Continuing Education and
Medical Practice Solutions segments; and (e) More efficiency in
Selling, General and Administrative expenses.
Table 7: Reconciliation between Adjusted EBITDA and Net
Income (in thousands of R$)
For the three months period
ended March 31,
2024
2023
% Chg
Net income
208,299
117,772
76.9%
Net financial result
74,366
96,552
-23.0%
Income taxes expense
10,865
19,060
-43.0%
Depreciation and amortization
79,269
65,971
20.2%
Interest received 1
12,415
10,299
20.5%
Income share associate
(4,172)
(3,845)
8.5%
Share-based compensation
8,630
6,495
32.9%
Non-recurring expenses:
8,181
17,907
-54.3%
- Integration of new companies 2
5,870
5,900
-0.5%
- M&A advisory and due diligence 3
248
11,039
-97.8%
- Expansion projects 4
605
151
300.7%
- Restructuring expenses 5
1,458
1,395
4.5%
- Mandatory Discounts in Tuition Fees 6
0
(578)
n.a.
Adjusted EBITDA
397,853
330,211
20.5%
Adjusted EBITDA Margin
49.5%
46.5%
300 bps
(1) Represents the interest received on late payments of monthly
tuition fees. (2) Consists of expenses related to the integration
of newly acquired companies. (3) Consists of expenses related to
professional and consultant fees in connection with due diligence
services for our M&A transactions. (4) Consists of expenses
related to professional and consultant fees in connection with the
opening of new campuses. (5) Consists of expenses related to the
employee redundancies in connection with the organizational
restructuring of our acquired companies. (6) Consists of mandatory
discounts in tuition fees granted by state decrees,
individual/collective legal proceedings and public civil
proceedings due to COVID 19 on site classes restriction and
excludes any recovery of these discounts that were invoiced based
on the Supreme Court decision.
Adjusted Net Income
Net Income for the first quarter of 2024 was R$208.3 million, an
increase of 76.9% over the same period of the prior year. Adjusted
Net Income for the first quarter of 2024 was R$251.0 million, an
increase of 50.8% over the same period from the previous year,
mainly due to: (a) enhancement of operational results (details
above); (b) reduction in finance expenses due to a decrease in Net
Debt (excluding IFRS 16) in R$ 237.2 million and lower interest
rates; and (c) lower effective tax rates than last year.
Adjusted EPS reached R$2.26 per share for the first quarter of
2024, an increase of 54.4% YoY, reflecting the increase in Net
Income and capital allocation discipline.
Table 8: Adjusted Net Income (in thousands of R$)
For the three months period
ended March 31,
2024
2023
% Chg
Net income
208,299
117,772
76.9%
Amortization of customer relationships and trademark 1
25,856
24,203
6.8%
Share-based compensation
8,630
6,495
32.9%
Non-recurring expenses:
8,181
17,907
-54.3%
- Integration of new companies 2
5,870
5,900
-0.5%
- M&A advisory and due diligence 3
248
11,039
-97.8%
- Expansion projects 4
605
151
300.7%
- Restructuring expenses 5
1,458
1,395
4.5%
- Mandatory Discounts in Tuition Fees 6
-
-578
n.a.
Adjusted Net Income
250,966
166,377
50.8%
Basic earnings per share - in R$ 7
2.26
1.24
83.0%
Adjusted earnings per share - in R$ 8
2.74
1.77
54.4%
(1) Consists of amortization of customer relationships and
trademark recorded under business combinations. (2) Consists of
expenses related to the integration of newly acquired companies.
(3) Consists of expenses related to
professional and consultant fees in connection with due diligence
services for our M&A transactions. (4) Consists of expenses
related to professional and consultant fees in connection with the
opening of new campuses. (5) Consists of expenses related to the
employee redundancies in connection with the organizational
restructuring of our acquired companies. (6) Consists of mandatory
discounts in tuition fees granted by state decrees,
individual/collective legal proceedings and public civil
proceedings due to COVID 19 on site classes restriction and
excludes any recovery of these discounts that were invoiced based
on the Supreme Court decision. (7) Basic earnings per
share: Net Income/Weighted average number of outstanding shares.
(8) Adjusted earnings per share: Adjusted Net
Income attributable to equity holders of the Parent/Weighted
average number of outstanding shares.
Cash and Debt Position
On March 31, 2024, Cash and Cash Equivalents were R$611.1
million, an increase of 10.5% over December 31, 2023. The Net Debt,
excluding the effect of IFRS 16, totaled R$1,577.4 million compared
to December 31, 2023, Afya reduced its Net Debt by R$237.2 million
due to solid Operating Cashflow generation.
For the three-month period ended March 31, 2024, Afya reported
Cash Flow from Operating Activities of R$429.1 million, up from
R$349.4 million in the same period of the previous year, an
increase of 22.8% YoY, boosted by the solid operational results.
Operating Cash Conversion Ratio achieved 110.1%, slightly down from
111.9% in the three-month period that ended on March 31, 2023.
Table 9: Operating Cash Conversion Ratio Reconciliation
For the three months period
ended March 31,
(in thousands of R$)
Considering the adoption of
IFRS 16
2024
2023
% Chg
(a) Net cash flows from operating activities
417,860
331,554
26.0%
(b) Income taxes paid
11,194
17,819
-37.2%
(c) = (a) + (b) Cash flow from operating activities
429,054
349,373
22.8%
(d) Adjusted EBITDA
397,853
330,211
20.5%
(e) Non-recurring expenses:
8,181
17,907
-54.3%
- Integration of new companies 1
5,870
5,900
-0.5%
- M&A advisory and due diligence 2
248
11,039
-97.8%
- Expansion projects 3
605
151
300.7%
- Restructuring Expenses 4
1,458
1,395
4.5%
- Mandatory Discounts in Tuition Fees 5
0
-578
-100.0%
(f) = (d) - (e) Adjusted EBITDA ex- non-recurring
expenses
389,672
312,304
24.8%
(g) = (c) / (f) Operating cash conversion ratio
110.1%
111.9%
-180 bps (1) Consists of expenses related to the integration
of newly acquired companies. (2) Consists of expenses related
to professional and consultant fees in connection with due
diligence services for M&A transactions. (3) Consists of
expenses related to professional and consultant fees in connection
with the opening of new campuses. (4) Consists of expenses related
to the employee redundancies in connection with the organizational
restructuring of acquired companies. (5) Consists of mandatory
discounts in tuition fees granted by state decrees,
individual/collective legal proceedings and public civil
proceedings due to COVID 19 on site classes restriction and
excludes any recovery of these discounts that were invoiced based
on the Supreme Court decision.
The following table shows more information regarding the cost of
debt for 1Q24, considering loans and financing, capital market and
accounts payable to selling shareholders. Afya’s capital structure
remains solid with a conservative leveraging position and a low
cost of debt, Afya’s Net Debt (excluding the effect of IFRS16)
divided by Adjusted EBITDA mid guidance for 2024 would be 1.2x.
Table 10: Gross Debt and Average Cost of Debt
(in millions of R$)
For the three months period
ended March 31,
Cost of Debt
Gross Debt
Duration (Years)
Per year
%CDI²
2024
2023
2024
2023
2024
2023
2024
2023
Loans and financing: Softbank
826
825
2.1
3.1
6.5%
6.5%
57%
48%
Loans and financing: Debentures
510
519
3.3
4.4
12.7%
15.7%
117%
114%
Loans and financing: Others
446
580
1.3
1.9
12.7%
15.7%
116%
114%
Accounts payable to selling shareholders
405
828
0.9
1.2
10.8%
13.3%
100%
97%
Total¹| Average
2,189
2,751
2.1
2.6
9.8%
12.1%
91%
89%
(1) Total ammount refers only to the "Gross Debt" columns (2)
Based on the annualized Interbank Certificates of Deposit ("CDI")
rate for the period as a reference: 1Q24: ~10,65% p.y. and for
1Q23: ~13.65% p.y.
Table 11: Cash and Debt Position
(in
thousands of R$)
1Q24
FY2023
% Chg
1Q23
% Chg
(+) Cash and Cash Equivalents
611,077
553,030
10.5%
722,691
-15.4%
Cash and Bank Deposits
5,573
11,746
-52.6%
28,375
-80.4%
Cash Equivalents
605,504
541,284
11.9%
694,316
-12.8%
(-) Loans and Financing
1,783,094
1,800,775
-1.0%
1,923,737
-7.3%
Current
161,675
179,252
-9.8%
193,214
-16.3%
Non-Current
1,621,419
1,621,523
0.0%
1,730,523
-6.3%
(-) Accounts Payable to Selling Shareholders
405,410
566,867
-28.5%
769,274
-47.3%
Current
244,865
353,998
-30.8%
417,398
-41.3%
Non-Current
160,545
212,869
-24.6%
351,876
-54.4%
(-) Other Short and Long Term Obligations
-
-
n.a.
58,702
-100.0%
(=) Net Debt (Cash) excluding IFRS 16
1,577,427
1,814,612
-13.1%
2,029,022
-22.3%
(-) Lease Liabilities
902,542
874,569
3.2%
864,983
4.3%
Current
40,030
36,898
8.5%
38,026
5.3%
Non-Current
862,512
837,671
3.0%
826,957
4.3%
Net Debt (Cash) with IFRS 16
2,479,969
2,689,181
-7.8%
2,894,005
-14.3%
CAPEX
Capital expenditures consist of the purchase of property and
equipment and intangible assets, including expenditures mainly
related to the expansion and maintenance of Afya’s campuses and
headquarters, leasehold improvements, and the development of new
solutions in the Medical Practice Solutions segment, among
others.
For the three-months period ending March 31, 2024, CAPEX was
R$92.9 million, representing 11.6% of Afya’s Net Revenue. However,
there is a one-off effect of R$ 49.6 million regarding the Earnout
of FIP Guanambi, due to the expansion of 40 seats as disclosed to
the market in January 2024. By disregarding this impact, the
CAPEX/Net Revenue ratio would be 5.4%.
Table 12: CAPEX (in thousands of R$)
For the three months period
ended March 31,
2024
2023
% Chg
CAPEX
92,901
46,429
100.1%
Property and equipment
22,955
27,299
-15.9%
Intanglibe assets
69,946
19,130
265.6%
- Licenses
49,600
0
n.a. - Others
20,346
19,130
6.4%
Trademarks
-
-
n.a. Customer relationships
-
-
n.a. Software
612
-
n.a. Education content
2,471
-
n.a. Developed technology
5,557
-
n.a. Educational platform
5,663
-
n.a. Software in progress
6,043
-
n.a.
ESG Metrics
ESG commitment is an important part of Afya’s strategy and
permeates the Company’s core values. Afya has been advancing year
after year on its core pillars and, since 2021, ESG metrics have
been disclosed in the Company’s quarterly financial results.
The 2022 Sustainability Report can be found at:
https://ir.afya.com.br/corporate-governance/sustainability/
Table 13: ESG Metrics
1Q24
1Q23
2023
#
GRI Governance and Employee Management
1
405-1
Number of employees
9,914
9,567
9,680
2
405-1
Percentage of female employees
58%
57%
58%
3
405-1
Percentage of female employees in the board of directors
36%
40%
36%
4
102-24
Percentage of independent member in the board of directors
36%
30%
36%
Environmental
5
Total renewable energy generated by own photovoltaic plants (MWh)
1,794,215
732,767
4,510,637
6
302-1
Total energy consumed (MWh)
5,831,206
5,468,733
24,036,608
7
302-1
% of renewable energy consumed from own generation
26.8%
13.0%
16.0%
8
302-1
% of energy consumed from the power grid
30.8%
79.0%
60.3%
9
302-1
% of energy consumed from the free market
42.3%
8.0%
23.7%
Social
10
413-1
Number of free clinical consultations offered by Afya
147,757
116,979
586,611
11
Number of physicians graduated in Afya's campuses
20,220
18,126
20,197
12
201-4
Number of students with financing and scholarship programs (FIES
and PROUNI)
10,815
9,619
10,584
13
% students with scholarships over total undergraduate students
14.2%
14.2%
16.0%
14
413-1
Hospital, clinics and city halls partnerships
518
718
649
(1) Some factors can influence in the adequate proportionality
analysis of data over the years, such as: climate changes, COVID-19
pandemic effects, seasonalities, number of employees, number of
students, number of active units, among others. (2) Starting in
2Q22, previously disclosed social data were updated to consider:
(a) the number of graduated physicians considering all units after
its closing, and (b) partnerships related only to medical schools.
(3) The number of students with financing and scholarship programs
(FIES and PROUNI) in 2023 does not include any student from Unima
and FCM Jaboatão Acquisition
5. Conference Call and Webcast Information
When:
May 09, 2024 at 5:00 p.m. EST.
Who:
Mr. Virgilio Gibbon, Chief Executive
Officer
Mr. Luis André Blanco, Chief Financial
Officer
Ms. Renata Costa Couto, IR Director
Webcast:
https://afya.zoom.us/j/96479347633
OR
Dial-in:
Brazil: +55 11 4680 6788 or +55 11 4700 9668 or +55 21 3958 7888
or +55 11 4632 2236 or +55 11 4632 2237
United States: +1 719 359 4580 or +1 929 205 6099 or +1 253 205
0468 or +1 253 215 8782 or +1 301 715 8592 or +1 305 224 1968 or +1
309 205 3325 or +1 312 626 6799 or +1 346 248 7799 or +1 360 209
5623 or +1 386 347 5053 or +1 507 473 4847 or +1 564 217 2000 or +1
646 931 3860 or +1 669 444 9171 or +1 669 900 6833 or +1 689 278
1000
Webinar ID: 964 7934 7633
Other Numbers: https://afya.zoom.us/u/aON6T6YtJ
6. About Afya Limited (Nasdaq: AFYA; B3: A2FY34)
Afya is a leading medical education group in Brazil based on the
number of medical school seats, delivering an end-to-end
physician-centric ecosystem that serves and empowers students and
physicians to transform their ambitions into rewarding lifelong
experiences from the moment they join us as medical students
through their medical residency preparation, graduation program,
continuing medical education activities and offering digital
products to help doctors enhance their healthcare services through
their whole career. For more information, please visit
www.afya.com.br.
7. Forward – Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, which statements involve substantial risks and uncertainties.
All statements other than statements of historical fact could be
deemed forward looking, and include risks and uncertainties related
to statements about our competition; our ability to attract, upsell
and retain students; our ability to increase tuition prices and
prep course fees; our ability to anticipate and meet the evolving
needs of students and professors; our ability to source and
successfully integrate acquisitions; general market, political,
economic, and business conditions; and our financial targets such
as revenue, share count and IFRS and non-IFRS financial measures
including gross margin, operating margin, net income (loss) per
diluted share, and free cash flow. Forward-looking statements by
their nature address matters that are, to different degrees,
uncertain, such as statements about the potential impacts of the
COVID-19 pandemic on our business operations, financial results and
financial position and the Brazilian economy.
The Company undertakes no obligation to update any
forward-looking statements made in this press release to reflect
events or circumstances after the date of this press release or to
reflect new information or the occurrence of unanticipated events,
except as required by law. The achievement or success of the
matters covered by such forward-looking statements involves known
and unknown risks, uncertainties and assumptions. If any such risks
or uncertainties materialize or if any of the assumptions prove
incorrect, our results could differ materially from the results
expressed or implied by the forward-looking statements we make.
Readers should not rely upon forward-looking statements as
predictions of future events. Forward-looking statements represent
management’s beliefs and assumptions only as of the date such
statements are made. Further information on these and other factors
that could affect the Company’s financial results are included in
the filings made with the United States Securities and Exchange
Commission (SEC) from time to time, including the section titled
“Risk Factors” in the most recent Rule 434(b) prospectus. These
documents are available on the SEC Filings section of the investor
relations section of our website at: https://ir.afya.com.br/.
8. Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements,
which are prepared and presented in accordance with International
Financial Reporting Standards as issued by the International
Accounting Standards Board—IASB, Afya presents Adjusted EBITDA,
Operating Cash Conversion Ratio, Adjusted Net Income and Adjusted
EPS, which are non-GAAP financial measures, for the convenience of
investors. A non-GAAP financial measure is generally defined as one
that intends to measure financial performance but excludes or
includes amounts that would not be equally adjusted in the most
comparable GAAP measure.
Afya calculates Adjusted EBITDA as net income plus/minus net
financial result, plus income taxes expense, plus depreciation and
amortization, plus interest received on late payments of monthly
tuition fees, plus share-based compensation, plus/minus income
share associate, plus/minus non-recurring expenses/income.
Operating Cash Conversion Ratio is calculated as the Cash flow from
Operating Activities plus income taxes paid, minus/plus
non-recurring expenses/income divided by Adjusted EBITDA. The
calculation of Adjusted Net Income is the Net Income plus
amortization of customer relationships and trademark, plus
share-based compensation, plus/minus non-recurring expenses/income.
The calculation of Adjusted EPS is the Adjusted Net Income minus
the non-controlling interests divided by the Weighted average
number of outstanding shares.
The non-GAAP supplemental financial measures are provided with
the intend to help investors in assessing the overall performance
of Afya’s business regarding its core operations, cash generation
and profitability. The non-GAAP financial measures described in
this prospectus are not substitutes for the IFRS measures. In
addition, the calculations of Adjusted EBITDA, Operating Cash
Conversion Ratio, Adjusted Net Income and Adjusted EPS are not
standardized financial measures and may differ from the
calculations used by other companies, including competitors in the
education services industry, and therefore, Afya’s measures may not
be comparable to those of other companies.
9. Investor Relations Contact
E-mail: ir@afya.com.br
10. Financial Tables
Consolidated statements of financial
position (In thousands of Brazilian reais)
March 31, 2024
December 31, 2023
(unaudited)
Assets
Current assets
Cash and cash equivalents
611,077
553,030
Trade receivables
536,175
546,438
Inventories
653
1,382
Recoverable taxes
50,665
43,751
Other assets
61,715
58,905
Total current assets
1,260,285
1,203,506
Non-current assets
Trade receivables
40,918
39,485
Other assets
113,807
117,346
Investment in associate
52,106
51,834
Property and equipment
610,628
608,685
Right-of-use assets
788,657
767,609
Intangible assets
4,824,422
4,796,016
Total non-current assets
6,430,538
6,380,975
Total assets
7,690,823
7,584,481
Liabilities
Current liabilities
Trade payables
122,694
108,222
Loans and financing
161,675
179,252
Lease liabilities
40,030
36,898
Accounts payable to selling
shareholders
244,865
353,998
Advances from customers
156,580
153,485
Labor and social obligations
215,822
192,294
Taxes payable
28,746
27,765
Income taxes payable
9,248
3,880
Other liabilities
2,258
2,773
Total current liabilities
981,918
1,058,567
Non-current liabilities
Loans and financing
1,621,419
1,621,523
Lease liabilities
862,512
837,671
Accounts payable to selling
shareholders
160,545
212,869
Taxes payable
86,959
88,198
Provision for legal proceedings
102,510
104,361
Other liabilities
17,905
18,280
Total non-current liabilities
2,851,850
2,882,902
Total liabilities
3,833,768
3,941,469
Equity
Share capital
17
17
Additional paid-in capital
2,364,361
2,365,200
Treasury shares
(297,485)
(299,150)
Share-based compensation reserve
163,703
155,073
Retained earnings
1,583,758
1,380,365
Equity attributable to equity holders
of the parent
3,814,354
3,601,505
Non-controlling interests
42,701
41,507
Total equity
3,857,055
3,643,012
Total liabilities and equity
7,690,823
7,584,481
Consolidated statements of income and
comprehensive income (In thousands of Brazilian reais, except for
earnings per share information)
March 31, 2024
March 31, 2023
(unaudited)
(unaudited)
Revenue
804,239
709,961
Cost of services
(269,504)
(247,607)
Gross profit
534,735
462,354
Selling, general and administrative
expenses
(241,164)
(233,220)
Other income (expenses), net
(4,213)
405
Operating income
289,358
229,539
Finance income
25,530
27,688
Finance expenses
(99,896)
(124,240)
Net finance result
(74,366)
(96,552)
Share of income of associate
4,172
3,845
Income before income taxes
219,164
136,832
Income taxes expenses
(10,865)
(19,060)
Net income
208,299
117,772
Other comprehensive income
-
-
Total comprehensive income
208,299
117,772
Income attributable to:
Equity holders of the parent
203,393
112,124
Non-controlling interests
4,906
5,648
208,299
117,772
Basic earnings per share
Per common share
2.26
1.25
Diluted earnings per share
Per common share
2.22
1.24
Consolidated statements of cash flows
(In thousands of Brazilian reais)
March 31, 2024
March 31, 2023
(unaudited)
(unaudited)
Operating activities
Income before income taxes
219,164
136,832
Adjustments to reconcile income before
income taxes
Depreciation and amortization
79,269
65,971
Write-off of property and equipment
19
88
Write-off of intangible assets
-
246
Allowance for expected credit losses
15,264
17,694
Share-based compensation
8,630
6,495
Net foreign exchange differences
(190)
161
Accrued interest
51,745
77,530
Accrued interest on lease liabilities
26,744
25,524
Share of income of associate
(4,172)
(3,845)
Provision (reversal) for legal
proceedings
(1,851)
3,154
Changes in assets and
liabilities
Trade receivables
(6,434)
(10,232)
Inventories
729
2,404
Recoverable taxes
(6,914)
(8,460)
Other assets
729
6,005
Trade payables
14,472
(11,507)
Taxes payable
5,439
8,480
Advances from customers
3,095
147
Labor and social obligations
23,528
28,158
Other liabilities
(212)
4,528
429,054
349,373
Income taxes paid
(11,194)
(17,819)
Net cash flows from operating
activities
417,860
331,554
Investing activities
Acquisition of property and equipment
(22,955)
(27,299)
Acquisition of intangibles assets
(69,946)
(19,130)
Dividends received
3,900
3,600
Acquisition of subsidiaries, net of cash
acquired
(147,262)
(600,270)
Payments of interest from acquisition of
subsidiaries and intangibles
(24,735)
(7,876)
Net cash flows used in investing
activities
(260,998)
(650,975)
Financing activities
Payments of principal of loans and
financing
(10,762)
(459)
Payments of interest of loans and
financing
(48,806)
(15,286)
Proceeds from loans and financing
-
3,663
Payments of principal of lease
liabilities
(9,648)
(7,976)
Payments of interest of lease
liabilities
(26,903)
(24,621)
Proceeds from exercise of stock
options
826
-
Dividends paid to non-controlling
shareholders
(3,712)
(6,130)
Net cash flows generated (used) in
financing activities
(99,005)
(50,809)
Net foreign exchange differences
190
(161)
Net increase (decrease) in cash and
cash equivalents
58,047
(370,391)
Cash and cash equivalents at the beginning
of the period
553,030
1,093,082
Cash and cash equivalents at the end of
the period
611,077
722,691
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240509167398/en/
Investor Contact: ir@afya.com.br IR Website:
ir.afya.com.br
Media Contact: Cíntia Moraes Marin
cintia.marin@afya.com.br
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