BELO HORIZONTE, Brazil--(BUSINESS WIRE)--Afya Limited (Nasdaq: AFYA; B3: A2FY34) ("Afya†or the "Company†), the leading medical education group and provider of medical practice solutions in Brazil, today announced that the Secretary of Regulation and Supervision of Higher Education of the Ministry of Education ("MEC†) has authorized an increase of 63 medical seats for ITPAC – Instituto Tocantinense Presidente Antonio Carlos Porto S.A. ("Afya Abaetetuba†), located in the city of Abaetetuba, in t. ...

We recently compiled a list of the 9 High Growth Small Cap Stocks That Are Profitable. The next stock on our list of high growth stocks is Afya Limited. TheFly reported on January 16 that UBS downgraded AFYA from Buy to Neutral and lowered its price target to $16 from $18. The firm noted that higher investments amid naturally increased volatility during a political year could introduce uncertainties in AFYA’s investment outlook. Additionally, margin pressures may weigh on the shares in the near term, part ...

Core Viewpoint - Top Wall Street analysts have revised their outlook on several key stocks, indicating potential investment opportunities in the market [1] Company Analysis - Analysts are considering SNDK stock as a potential buy, reflecting a positive sentiment towards the company's future performance [1]

BOARD OF DIRECTORS Name Office Nicolau Carvalho Esteves Co-Chairman of the Board Kay Krafft Co- Chairman of the Board Benedikt Dalkmann Director Christina Krebs Director Renato Tavares Esteves Director João Paulo Seibel de Faria Independent Director Vanessa Claro Lopes Independent Director Miguel Filisbino Pereira de Paula Independent Director Marcelo Ken Suhara Independent Director ...

Core Thesis - Afya Limited is viewed as a compelling investment opportunity due to its strong market position in Brazil's medical education sector, despite recent volatility in its stock price [2][5] Company Overview - Afya Limited operates as a medical education group in Brazil, having evolved from a single family-run medical school in 1999 to a leading provider through acquisitions and organic growth [2][3] - The company went public on Nasdaq in 2019 and has since raised capital to support its expansion [2] Market Position - Afya is the leading medical education provider in Brazil, benefiting from a regulated seat-authorization system that protects incumbents from oversupply [3] - Major shareholders, including Bertelsmann, purchased shares at $26.90 in 2022 and are currently experiencing a value dislocation, indicating potential upside for new investors [3] Financial Performance - Revenue and profitability have increased significantly, supported by strong cash generation and modest leverage, despite challenges such as aggressive mergers and acquisitions and currency depreciation [4] - The company has maintained a stable share count while capitalizing on favorable long-term demand fundamentals, with Brazil expected to nearly double its physician base over the next decade [4] Management and Strategy - The management team, led by CEO Virgilio Gibbon since 2016, has shown consistent execution through the IPO process, acquisitions, and operational scaling [4] - Afya's operations are characterized by a mix of regulated scarcity and proven management, positioning it as an attractive candidate for further investment [5]

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Core Viewpoint - Afya reported quarterly earnings of $0.38 per share, exceeding the Zacks Consensus Estimate of $0.32 per share, marking an earnings surprise of +18.75% [1][2] Financial Performance - The company posted revenues of $170.44 million for the quarter ended September 2025, which was slightly below the Zacks Consensus Estimate by 0.16%, compared to $151.71 million in the same quarter last year [2] - Over the last four quarters, Afya has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Afya shares have declined approximately 9.1% since the beginning of the year, while the S&P 500 has gained 16.4% [3] - The current Zacks Rank for Afya is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $172.53 million, and for the current fiscal year, it is $1.71 on revenues of $687.12 million [7] - The trend of estimate revisions for Afya was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Schools industry, to which Afya belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Core Insights - Afya Limited reported strong financial results for Q3 and the first nine months of 2025, reaffirming its full-year guidance and demonstrating significant growth in revenue and adjusted EBITDA margins [1][4][10]. Financial Performance - Q3 2025 revenue increased by 10.4% year-over-year to R$928.5 million, while revenue excluding acquisitions rose by 10.1% to R$926.2 million [4][25]. - For the nine-month period, revenue reached R$2,784.3 million, reflecting a 13.4% increase year-over-year, with revenue excluding acquisitions growing by 9.8% to R$2,696.7 million [4][25]. - Adjusted EBITDA for Q3 2025 was R$398.9 million, up 14.6% year-over-year, with an adjusted EBITDA margin of 43.0%, an increase of 160 basis points [4][28]. - For the nine-month period, adjusted EBITDA increased by 18.5% to R$1,291.7 million, with a margin of 46.4%, up 200 basis points [4][28]. Net Income and Earnings - Q3 2025 net income rose by 28.4% to R$159.4 million, while adjusted net income increased by 16.5% to R$192.7 million [4][32]. - For the nine-month period, net income reached R$593.0 million, a 19.9% increase, and adjusted net income was R$696.0 million, up 11.1% [4][32]. Cash Flow and Debt Management - As of September 30, 2025, cash and cash equivalents totaled R$996.8 million, a 9.4% increase from the previous year, with net debt reduced to R$1,342.2 million [4][36]. - The operating cash conversion ratio was 101.5%, with cash flow from operating activities increasing by 10.6% year-over-year to R$1,291.5 million [4][37]. Strategic Initiatives - The company has made significant advancements in its integrated ecosystem, focusing on enhancing educational services and medical practice solutions [5][10]. - Afya has launched AI-enabled enhancements to its platforms, supporting clinical productivity and decision-making [8]. - The company issued R$1.5 billion in commercial notes to strengthen its capital structure and repurchased shares from SoftBank, demonstrating a disciplined approach to capital management [9][41]. Segment Performance - The Undergraduate segment saw a 14.6% increase in revenue, driven by higher ticket prices and increased student enrollment [4][15]. - Continuing Education experienced growth in B2B revenue, while Medical Practice Solutions reported an increase in active payers, reflecting the value of its offerings [7][19].

Financial Data and Key Metrics Changes - Revenue for the nine-month period grew over 13% year over year, reaching BRL 2,784 million, with adjusted EBITDA growth of almost 19% year over year, reaching BRL 1,292 million [5][19] - Adjusted EBITDA margin for the same period reached 46.4%, an increase of 200 basis points over last year [5][19] - Net income reached BRL 593 million, a growth of 20% year over year, with basic EPS reaching BRL 6.40, also a 20% increase [6][21] - Cash flow from operating activities rose by 11%, ending the nine-month period at BRL 1,292 million, with a cash conversion of 101.5% [5][20] Business Line Data and Key Metrics Changes - The undergraduate segment saw a 6% growth in the number of medical students, reaching over 25,000, while approved medical seats increased by almost 2% [6][13] - Continuing Education segment revenue grew by 11% year over year, reaching BRL 208 million [7][15] - Medical Practice Solutions revenue increased over 9% year over year, reaching BRL 128 million [7][16] - The ecosystem reached 304,000 active users, indicating strong engagement among physicians and medical students [7][17] Market Data and Key Metrics Changes - The number of paying users in Medical Practice Solutions reached 195,000, a 2% decrease year over year, while monthly active users accounted for 228,000, down from 249,000 [16] - Continuing education saw a 36% decrease in residency journey students, while graduate journey students grew by 26% [15][66] Company Strategy and Development Direction - The company aims to maintain leadership in medical education and expand its ecosystem, focusing on sustainable growth and social impact through initiatives like Instituto AFIA [10][11] - The company is exploring M&A opportunities and evaluating capital allocation strategies, including potential increases in dividends and share buybacks [31][38] Management's Comments on Operating Environment and Future Outlook - Management expects effective tax rates to converge to 15% from 2026 onwards due to new tax regulations [30] - The company remains optimistic about future growth opportunities and is confident in its ability to create value for shareholders [25][40] Other Important Information - The company has been recognized for its ESG initiatives, receiving the Valor 1,000 award for its performance in the education sector [11] - The company has strengthened its financial position through liability management, including the issuance of commercial notes [22][23] Q&A Session Summary Question: Effective tax rate and capital allocation strategy - The effective tax rate for the nine-month period was 9.7%, up from 5.1% last year, primarily due to provisions for new tax regulations [29] - The company is evaluating various capital allocation strategies, including M&A, buybacks, and dividends [32] Question: Capital allocation strategies and 2026 intake cycle - The company is analyzing M&A opportunities and plans to maintain around 200 approved medical seats per year [38] - Tuition for 2026 is expected to increase by around 5% to 5.2% over 2025 [40] Question: Ticket readjustment and demand for medical careers - The average ticket is expected to grow around 5%, with demand for medical careers remaining stable compared to last year [44][45] Question: Gross margins in Medical Practice Solutions and subscriber trends - Gross margins in Medical Practice Solutions increased due to cost management initiatives [50] - The company is reviewing its pricing strategy for clinical decision software to regain subscriber growth [52] Question: Recently acquired units and EBITDA margin expansion - The ramp-up for recently acquired units is expected to take time, with margins improving as student numbers increase [61] - The company has achieved significant margin expansion and continues to seek efficiencies across its segments [66] Question: Continuing education segment trends - The drop in residency journey students is a one-time effect due to a change in product offerings [67]

Financial Performance - Revenue reached R$2,784.3 million, a 13.4% year-over-year increase for the nine-month period[7] - Adjusted EBITDA was R$1,291.7 million, up 18.5% year-over-year, with an adjusted EBITDA margin of 46.4%, a 200 bps increase[7] - Net income increased by 19.9% year-over-year to R$593.0 million, with earnings per share at R$6.40, a 19.7% increase[7] - Cash flow from operating activities increased by 10.6% year-over-year to R$1,291.5 million, with an operating cash conversion ratio of 101.5%[7] Operational Metrics - Medical school students totaled 25,706 at the end of the period[7] - Approved medical school seats reached 3,653[7] - Continuing education revenue increased by 10.6% year-over-year to R$207.6 million[7] - Medical practice solutions revenue increased by 9.3% year-over-year to R$128.2 million[7] Debt and Liabilities - New debenture issuance of R$1.5 billion to fund repurchase of preferred shares and prepay first debenture issuance[36, 37] - Total gross debt was R$2,339 million[38] ESG Initiatives - Delivered 700,000 free healthcare consultations, including over 500,000 medical consultations[10]