Group 1 - Dundee Precious Metals (DPMLF) has seen a 46.2% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Eldorado Gold (EGO) has experienced a 13% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Afya (AFYA) has recorded an 8.8% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] Group 2 - Allison Transmission Holdings (ALSN) has seen a 6.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3] - Horace Mann Educators (HMN) has experienced a 5.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3]

Group 1 - Afya Limited (NASDAQ: AFYA) reported 1Q25 earnings that were approximately in line with expectations and seasonal trends [1] - The company experienced significant growth due to the integration of a large acquisition, Unidompedro, from the previous year [1] - The investment strategy focuses on operational aspects and long-term earnings potential rather than market-driven dynamics [1] Group 2 - The analysis emphasizes a long-only investment approach, suggesting that only a small fraction of companies should be considered for purchase at any given time [1] - Hold articles are intended to provide valuable information for future investors and introduce a healthy skepticism in a bullish market [1]

Company Overview - Afya is the largest hub of medical education and solutions for medical practice in Brazil[11] - The company's mission is to provide an ecosystem that integrates education and medical practice solutions for the entire medical journey[8] - As of May 2025, Afya has 3,653 medical seats after the last acquisition of Faculdade Única de Contagem[57] - Afya holds a 9% market share of private medical seats in Brazil, with a total of 3,653 seats out of 38,450 approved medical seats[59, 60] Financial Performance (1Q25) - Net revenue reached R$936 million[62] - Adjusted EBITDA was R$492 million, representing a 52.5% adjusted EBITDA margin[62] - Adjusted net income amounted to R$294 million[62] - Medical school net average ticket was R$9,240[63] Operational Metrics (1Q25) - The company has 37 undergraduate campuses and 20 medical graduate campuses[62] - Afya has 3,593 approved medical seats and 25,879 medical students[62, 70] - Continuing education enrolled students numbered 46,909[62] - Medical Practice Solutions has 244,518 monthly active users[62] Growth and Strategy - Undergraduate programs saw a 14.5% increase in net revenue[70] - Continuing Education experienced an 8.7% increase in net revenue[77] - Medical Practice Solutions reported a 13.7% increase in net revenue[83]

Financial Data and Key Metrics Changes - Net revenue increased by 16%, reaching R936 million, with adjusted EBITDA growing almost 24% year over year to R492 million, achieving a record margin of 52.5% [5][17][19] - Cash flow from operating activities rose by almost 10% to R470 million, reflecting a cash conversion rate of 96.8% [5][18] - Net income reached R257 million, marking a 23% growth year over year, with EPS of R2.79, also a 23% increase [5][19][20] Business Line Data and Key Metrics Changes - Undergrad segment net revenues increased over 17% to R827 million, with medical students growing 15% to almost 26,000 [12][16] - Continuing education segment net revenue rose almost 9% year over year to R71 million, with a notable 8% increase in B2B revenue [8][14] - Medical practice solutions segment saw a 14% growth in net revenue, reaching R42 million, driven by B2B contracts and active payers increasing to over 198,000 [8][15] Market Data and Key Metrics Changes - The ecosystem now includes over 370,000 active users, demonstrating substantial penetration among physicians and medical students in Brazil [8][16] - The company received a credit rating upgrade from Moody's from AAplus.br to AAA.br, reflecting strong growth and financial discipline [9][10] Company Strategy and Development Direction - The company focuses on expanding its educational systems and medical practice solutions, aiming to support students in becoming physicians and enhancing medical learning [21] - Strategic acquisitions, such as the Funiq acquisition, are expected to enhance operations and increase approved medical seats [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong start to 2025, maintaining guidance for the year despite strong margin performance [29][30] - The intake process for medical students was reported as healthy, with a strong brand recognition contributing to a favorable candidate-to-seat ratio [31][32] Other Important Information - The company achieved all IFC-defined targets for 2024, which will trigger a reduction in interest rates, reinforcing its commitment to social impact and financial discipline [10] - The company received its first ESG rating from MSCI, debuting with a solid BBB score, indicating strong performance in data privacy and security [10] Q&A Session Summary Question: What drove the strong EBITDA margin performance? - Management attributed the margin expansion to higher gross margins from undergrad and continuing education segments, along with operational efficiencies from restructuring [27][28] Question: Are there challenges in the intake process due to expanded medical course offerings? - Management reported a healthy intake process with strong brand recognition, noting around seven to eight candidates per seat [31][32] Question: Any significant changes in the competitive landscape affecting average ticket prices? - Management indicated that while the average ticket grew 4%, it was impacted by retention issues from last year, but they expect future increases to be higher [36][38] Question: What is the expectation for the medical practice solutions segment given the decrease in monthly active users? - Management noted a transitional decline due to the portal change but expects improvements as the new system stabilizes [40][42] Question: Clarification on the minimum tax under OECD Pillar Two rules? - Management explained that the new law introduces minimal taxation for multinational groups, and they are currently provisioning for this tax [49][50] Question: How is the company preparing for the SoftBank convertible debt deadline? - Management stated they are prepared with cash flow generation to handle potential early redemption of the debt [53][54]

Financial Data and Key Metrics Changes - Net revenue increased by 16%, reaching R936 million, with adjusted EBITDA growing almost 24% year over year to R492 million, achieving a record margin of 52.5% [5][17] - Cash flow from operating activities rose by almost 10% to R470 million, with a cash conversion rate of 96.8% and a solid cash position of nearly R1.2 billion at the end of Q1 [5][18] - Net income reached R257 million, reflecting a 23% growth year over year, with EPS of R2.79, also a 23% increase compared to the previous year [5][19] Business Line Data and Key Metrics Changes - The undergraduate segment saw net revenues increase by over 17%, achieving R827 million, with a 4% rise in net average ticket to R9,240 [12][16] - Continuing education net revenue rose to R71 million, reflecting a growth of almost 9% year over year, driven by an 8% increase in B2B revenue [7][14] - Medical practice solutions segment expanded by 14% in net revenue, reaching R42 million, with B2P contributing R37 million and B2B R4 million [15][16] Market Data and Key Metrics Changes - The ecosystem now includes over 370,000 active users, demonstrating substantial penetration among physicians and medical students in Brazil [16] - The number of approved medical seats increased to 3,653 following the Funiq acquisition, with undergraduate medical students reaching almost 26,000, a 50% growth compared to Q1 2024 [6][12] Company Strategy and Development Direction - The company emphasizes a three-pillar business model focusing on strong growth, higher profitability, and cash generation, with ongoing operational restructuring to improve cost management [4][6] - Recent acquisitions and expansions, such as the Funiq acquisition and the ramp-up of new campuses, are expected to enhance operational capabilities and market presence [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong start to 2025, maintaining guidance for the year despite the robust performance in Q1 [27][28] - The company is optimistic about future opportunities, particularly in expanding its educational systems and medical practice solutions [21][22] Other Important Information - Moody's upgraded the company's national scale credit rating from AAplus.br to AAA.br, reflecting strong growth and financial discipline [9] - The company received its first ESG rating from MSCI, debuting with a solid BBB score, indicating strong performance in data privacy and security [10] Q&A Session Summary Question: What drove the strong EBITDA margin performance? - Management indicated that higher gross margins from the undergraduate and continuing education segments, along with operational efficiencies from restructuring, contributed to the margin expansion [25][26] Question: Are there challenges in the intake process due to increased medical course offerings? - Management reported a healthy intake process with strong brand recognition, noting around seven to eight candidates per seat, indicating no significant challenges in filling seats [29][30] Question: Any significant changes in the competitive landscape affecting price hikes? - Management acknowledged that while the average ticket grew in line with inflation, there were impacts from retention policies affecting pricing strategies [36][37] Question: What is the expectation for the medical practice solutions segment given the decrease in monthly active users? - Management explained that the decrease was due to the transition from the PepMed portal to the Afya portal, but they expect improvements as the changes stabilize [39][41] Question: Clarification on the OECD Pillar Two tax implications? - Management detailed that the new tax law introduces minimal taxation for multinational groups, and they are currently provisioning for potential impacts while seeking legal clarification [48][50] Question: How is the company preparing for the SoftBank convertible debt? - Management stated they are prepared with cash flow generation to meet obligations if the debt is not converted into equity, with provisions already in place for potential early redemption [51][53]

[Unaudited Interim Condensed Consolidated Financial Statements](index=2&type=section&id=Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents Afya's financial position, income, equity changes, and cash flows for the interim period [Unaudited Interim Condensed Consolidated Statements of Financial Position](index=2&type=section&id=Unaudited%20interim%20condensed%20consolidated%20statements%20of%20financial%20position) As of March 31, 2025, Afya's total assets increased to R$9.11 billion from R$8.83 billion at year-end 2024, driven by a rise in cash and cash equivalents. Total liabilities also grew to R$4.67 billion, primarily due to an increase in current liabilities, including loans and dividends payable. Consequently, total equity rose to R$4.44 billion Consolidated Statement of Financial Position (in thousands of BRL) | Account | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | 1,881,216 | 1,589,784 | | **Total Non-current Assets** | 7,230,658 | 7,239,755 | | **Total Assets** | **9,111,874** | **8,829,539** | | **Total Current Liabilities** | 1,322,967 | 1,140,195 | | **Total Non-current Liabilities** | 3,347,492 | 3,378,761 | | **Total Liabilities** | **4,670,459** | **4,518,956** | | **Total Equity** | **4,441,415** | **4,310,583** | | **Total Liabilities and Equity** | **9,111,874** | **8,829,539** | [Unaudited Interim Condensed Consolidated Statements of Income and Comprehensive Income](index=3&type=section&id=Unaudited%20interim%20condensed%20consolidated%20statements%20of%20income%20and%20comprehensive%20income) For the three months ended March 31, 2025, Afya reported a 16.4% year-over-year increase in revenue to R$936.4 million. Net income grew by 23.4% to R$257.0 million, resulting in a diluted earnings per share of R$2.76, up from R$2.22 in the same period of 2024 Consolidated Statement of Income (in thousands of BRL, except EPS) | Account | March 31, 2025 (unaudited) | March 31, 2024 (unaudited) | | :--- | :--- | :--- | | **Revenue** | 936,360 | 804,239 | | **Gross Profit** | 653,721 | 534,735 | | **Operating Income** | 372,527 | 289,358 | | **Net Income** | 257,036 | 208,299 | | **Basic EPS** | 2.79 | 2.26 | | **Diluted EPS** | 2.76 | 2.22 | [Unaudited Interim Condensed Consolidated Statements of Changes in Equity](index=4&type=section&id=Unaudited%20interim%20condensed%20consolidated%20statements%20of%20changes%20in%20equity) Total equity increased from R$4.31 billion at the start of 2025 to R$4.44 billion by March 31, 2025. The growth was primarily driven by a net income of R$257.0 million, partially offset by dividends declared amounting to R$134.8 million - Total equity increased by **R$130.8 million** in Q1 2025, reaching **R$4.44 billion**[6](index=6&type=chunk) - Key changes in equity for Q1 2025 include net income of **R$257.0 million**, share-based compensation of **R$7.0 million**, and dividends declared of **R$134.8 million**[6](index=6&type=chunk) [Unaudited Interim Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Unaudited%20interim%20condensed%20consolidated%20statements%20of%20cash%20flows) For the first quarter of 2025, the company generated R$463.9 million in net cash from operating activities, a significant increase from R$417.9 million in Q1 2024. Cash used in investing activities decreased to R$130.3 million, while cash used in financing activities was R$89.2 million. This resulted in a net increase in cash and cash equivalents of R$243.9 million, raising the ending balance to R$1.15 billion Consolidated Statement of Cash Flows (in thousands of BRL) | Activity | March 31, 2025 (unaudited) | March 31, 2024 (unaudited) | | :--- | :--- | :--- | | **Net cash flows from operating activities** | 463,850 | 417,860 | | **Net cash flows used in investing activities** | (130,312) | (260,998) | | **Net cash flows used in financing activities** | (89,189) | (99,005) | | **Net increase in cash and cash equivalents** | 243,873 | 58,047 | | **Cash and cash equivalents at end of period** | 1,154,888 | 611,077 | [Notes to the Unaudited Interim Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20unaudited%20interim%20condensed%20consolidated%20financial%20statements) This section provides detailed explanations and disclosures supporting the interim consolidated financial statements [Note 1: Corporate Information](index=6&type=section&id=1%20Corporate%20information) Afya Limited is a Cayman Islands-incorporated holding company listed on Nasdaq (AFYA), with Bertelsmann SE & Co. KGaA as its ultimate parent. It is the largest medical education group in Brazil by number of medical school seats. The company has been actively expanding its capacity, adding medical school seats through regulatory approvals and acquisitions, such as Unidom in 2024. As of March 31, 2025, Afya had 3,593 operating medical school seats - Afya is the largest educational group by number of medical school seats in Brazil, operating in **19 states**[11](index=11&type=chunk) - In Q1 2024, MEC authorized an increase of **40 medical school seats** for FIP Guanambi[12](index=12&type=chunk) - On July 1, 2024, Afya acquired Unidom, adding **300 operational medical school seats**, though **175** of these are subject to a final court decision[14](index=14&type=chunk)[15](index=15&type=chunk) - As of March 31, 2025, the company had **3,593 operating medical school seats**[17](index=17&type=chunk) [Note 2: Material Accounting Policies](index=7&type=section&id=2%20Material%20accounting%20policies) The unaudited interim financial statements are prepared in accordance with IAS 34 on a historical cost basis. The functional and presentation currency is the Brazilian real (R$). The statements consolidate all subsidiaries where Afya has control. Accounting policies are consistent with the 2024 annual financial statements, with no significant impact from new standards adopted in 2025 - The financial statements are prepared in accordance with **IAS 34 Interim Financial Reporting**[18](index=18&type=chunk) - The company's functional and presentation currency is the **Brazilian real (R$)**[19](index=19&type=chunk)[20](index=20&type=chunk) - The accounting policies are consistent with those from the annual financial statements for the year ended December 31, 2024[30](index=30&type=chunk) [Note 3: Segment Information](index=10&type=section&id=3%20Segment%20information) Afya operates in three reportable segments: Undergraduate, Continuing Education, and Medical Practice Solutions. The Undergraduate segment is the largest, contributing R$827.4 million in revenue for Q1 2025. The Continuing Education and Medical Practice Solutions segments generated R$69.9 million and R$39.1 million in external revenue, respectively. Seasonality primarily affects Continuing Education, with revenues concentrated in the first and last quarters - The company has three reportable segments: Undergraduate, Continuing education, and Medical practice solutions[32](index=32&type=chunk) Revenue by Segment (Q1 2025 vs Q1 2024, in thousands of BRL) | Segment | Q1 2025 External Revenue | Q1 2024 External Revenue | | :--- | :--- | :--- | | Undergraduate | 827,372 | 704,519 | | Continuing education | 69,855 | 63,999 | | Medical practice solutions | 39,133 | 35,721 | | **Total** | **936,360** | **804,239** | - Continuing education revenue from e-books is concentrated in the first and last quarters of the year[40](index=40&type=chunk) [Note 11: Financial Instruments and Risk Management](index=19&type=section&id=11%20Financial%20instruments%20and%20risk%20management) This note details the company's financial assets and liabilities, including loans, leases, and payables to selling shareholders. It also outlines the management of market risk (interest rate and foreign currency), credit risk, and liquidity risk. The company uses sensitivity analysis to monitor risks and maintains reserves to manage liquidity. The fair value of most financial instruments is determined using Level 2 inputs [Loans and Financing](index=20&type=section&id=11.2.1%20Loans%20and%20financing) As of March 31, 2025, total loans and financing stood at R$2.21 billion, a slight increase from R$2.20 billion at year-end 2024. Major credit lines include facilities from Softbank, IFC, and debentures, with interest rates primarily tied to the CDI rate Loans and Financing Breakdown (in thousands of BRL) | Financial Institution | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Banco Itaú Unibanco S.A. | 320,237 | 309,496 | | FINEP | 7,474 | 8,209 | | Softbank | 850,051 | 845,492 | | Debentures | 512,565 | 526,946 | | IFC | 522,347 | 505,018 | | **Total** | **2,212,674** | **2,195,161** | [Accounts Payable to Selling Shareholders](index=21&type=section&id=11.2.3%20Accounts%20payable%20to%20selling%20shareholders) Total accounts payable to selling shareholders decreased to R$466.3 million as of March 31, 2025, from R$530.8 million at year-end 2024. The reduction was mainly due to principal payments of R$65.2 million during the quarter. A significant portion relates to the Unidom acquisition, which is measured at fair value - The balance of accounts payable to selling shareholders decreased from **R$530.8 million** to **R$466.3 million** in Q1 2025, primarily due to principal payments of **R$65.2 million**[68](index=68&type=chunk)[69](index=69&type=chunk) - The company deems it probable that targets for contingent consideration payments, including those for Unidom's **175 medical school seats**, will be met[69](index=69&type=chunk) [Financial Instruments Risk Management](index=21&type=section&id=11.4%20Financial%20instruments%20risk%20management) The company is exposed to market risk (interest rate and currency), credit risk, and liquidity risk. Interest rate risk arises from floating-rate debt and cash equivalents. Foreign currency risk is minimal, related to small U.S. dollar cash holdings. Credit risk is managed through monitoring customer receivables and investing only with approved counterparties. Liquidity risk is managed by monitoring cash flows and maintaining credit facilities - The company is exposed to market risk (interest rate, foreign currency), credit risk, and liquidity risk[74](index=74&type=chunk) - A sensitivity analysis shows that a **150 basis point increase** in interest rates would decrease pre-tax profit by **R$10.0 million**[78](index=78&type=chunk) - Foreign currency risk is limited to U.S. dollar cash holdings of **R$9.1 million** as of March 31, 2025[79](index=79&type=chunk) [Note 12: Capital Management](index=25&type=section&id=12%20Capital%20management) The company's primary capital management objective is to maximize shareholder value while ensuring compliance with financial covenants on its loans, such as the net debt to adjusted EBITDA ratio. The company reported no breaches of these covenants during the period - The main objective of capital management is to maximize shareholder value and meet financial covenants[89](index=89&type=chunk) - There were no breaches of financial covenants for any loans and financing in the current period[90](index=90&type=chunk) [Note 14: Equity](index=26&type=section&id=14%20Equity) As of March 31, 2025, Afya's share capital was R$17, represented by 93.7 million shares. During the quarter, the Board of Directors approved the company's first dividend distribution of R$129.8 million. The company also holds 3.4 million treasury shares - On March 12, 2025, the Board approved a dividend distribution of **R$129,784 thousand**, representing **20%** of the 2024 consolidated net income[101](index=101&type=chunk) - As of March 31, 2025, the company held **3,427,738 treasury shares**[102](index=102&type=chunk) [Note 15: Earnings Per Share (EPS)](index=27&type=section&id=15%20Earnings%20per%20share%20%28EPS%29) For Q1 2025, basic EPS was R$2.79 and diluted EPS was R$2.76. The calculation for diluted EPS includes the potential dilutive effects of stock options, RSUs, and Softbank's convertible preferred shares EPS Calculation (Q1 2025 vs Q1 2024) | Metric | March 31, 2025 (unaudited) | March 31, 2024 (unaudited) | | :--- | :--- | :--- | | **Basic EPS (R$)** | 2.79 | 2.26 | | **Diluted EPS (R$)** | 2.76 | 2.22 | [Note 16: Revenue](index=28&type=section&id=16%20Revenue) Total revenue for Q1 2025 was R$936.4 million, up from R$804.2 million in Q1 2024. The majority of revenue (R$914.4 million) is recognized over time, primarily from tuition, digital content, and app subscriptions. The Undergraduate segment remains the primary revenue driver Revenue Breakdown (in thousands of BRL) | Category | March 31, 2025 (unaudited) | March 31, 2024 (unaudited) | | :--- | :--- | :--- | | Tuition fees | 1,165,751 | 980,975 | | Deductions (Discounts, Taxes, etc.) | (233,682) | (176,736) | | Other | 81,483 | 72,679 | | **Total Revenue** | **936,360** | **804,239** | - Revenue recognized over time (tuition, subscriptions) was **R$914.4 million**, while revenue recognized at a point in time was **R$22.0 million** in Q1 2025[106](index=106&type=chunk) [Note 19: Income Taxes](index=30&type=section&id=19%20Income%20taxes) The company's income tax expense for Q1 2025 was R$24.8 million, resulting in an effective tax rate of 8.8%. This rate is influenced by tax incentives from the PROUNI program. A new law implementing the OECD's Pillar Two global minimum tax became effective in 2025, resulting in an additional tax expense of R$23.2 million for the quarter. The company is legally challenging the enforceability of this new tax - A new law implementing the OECD's Pillar Two global minimum tax in Brazil became effective January 1, 2025, introducing a minimum effective taxation of **15%**[112](index=112&type=chunk)[113](index=113&type=chunk) - The additional income tax expense from the Pillar Two rule was **R$23.2 million** for Q1 2025[116](index=116&type=chunk) - The company filed a writ of mandamus on March 28, 2025, to challenge the enforceability of the new additional CSLL (Pillar Two tax)[115](index=115&type=chunk) - The effective tax rate for Q1 2025 was **8.8%**, compared to **5.0%** in Q1 2024[119](index=119&type=chunk) [Note 20: Legal Proceedings and Contingencies](index=31&type=section&id=20%20Legal%20proceedings%20and%20contingencies) As of March 31, 2025, the company had provisions for probable losses from legal proceedings totaling R$115.6 million, primarily related to labor, civil, and tax claims. An additional R$112.7 million in claims were assessed as having a possible risk of loss. The company holds an indemnification asset of R$77.0 million to cover liabilities from pre-acquisition events of its subsidiaries Provision for Legal Proceedings (Probable Loss, in thousands of BRL) | Type | March 31, 2025 | January 1, 2025 | | :--- | :--- | :--- | | Labor | 34,515 | 31,455 | | Civil | 24,958 | 25,140 | | Taxes | 56,126 | 56,926 | | **Total** | **115,599** | **113,521** | - Contingencies with a possible risk of loss amounted to **R$112.7 million** as of March 31, 2025[125](index=125&type=chunk) - The company has a corresponding indemnification asset of **R$77.0 million** related to contingent liabilities from acquired subsidiaries, for which the selling shareholders are responsible[127](index=127&type=chunk) [Note 22: Subsequent Event](index=33&type=section&id=22%20Subsequent%20event) On May 7, 2025, after the reporting period, Afya acquired 100% of Faculdade Masterclass Ltda. (FUNIC) for an aggregate purchase price of R$100 million. This acquisition adds 60 medical school seats in Contagem, Minas Gerais, with operations expected to start in the second half of 2025. The deal also includes a contingent payment for up to 60 additional seats if approved by MEC - On May 7, 2025, Afya acquired FUNIC, a pre-operational medical school, for **R$100 million**[130](index=130&type=chunk)[131](index=131&type=chunk) - The acquisition adds **60 medical school seats**, with operations expected to begin in H2 2025[130](index=130&type=chunk) - The agreement includes a contingent consideration for up to **60 additional medical school seats** if approved by MEC within **36 months**[132](index=132&type=chunk)

PART I [ITEM 1. Identity of Directors, Senior Management and Advisers](index=9&type=section&id=ITEM%201.%20IDENTITY%20OF%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20ADVISERS) Information regarding the identity of directors, senior management, and advisers is not applicable for this report - Information regarding the identity of directors, senior management, and advisers is not applicable for this report[41](index=41&type=chunk) [ITEM 2. Offer Statistics and Expected Timetable](index=9&type=section&id=ITEM%202.%20OFFER%20STATISTICS%20AND%20EXPECTED%20TIMETABLE) Information on offer statistics and expected timetable is not applicable - Information on offer statistics and expected timetable is not applicable[42](index=42&type=chunk) [ITEM 3. Key Information](index=9&type=section&id=ITEM%203.%20KEY%20INFORMATION) Provides critical information about the company, including capitalization, indebtedness, offer reasons, use of proceeds, and a comprehensive overview of risk factors [A. Reserved](index=9&type=section&id=A.%20Reserved) This subsection is reserved and contains no specific information - This subsection is reserved and contains no specific information[43](index=43&type=chunk) [B. Capitalization and Indebtedness](index=9&type=section&id=B.%20Capitalization%20and%20Indebtedness) Information on capitalization and indebtedness is not applicable in this section - Information on capitalization and indebtedness is not applicable in this section[43](index=43&type=chunk) [C. Reasons for the Offer and Use of Proceeds](index=9&type=section&id=C.%20Reasons%20for%20the%20Offer%20and%20Use%20of%20Proceeds) Information on reasons for the offer and use of proceeds is not applicable in this section - Information on reasons for the offer and use of proceeds is not applicable in this section[44](index=44&type=chunk) [D. Risk Factors](index=9&type=section&id=D.%20Risk%20Factors) The company faces significant risks from intense competition, regulatory changes, growth management, cybersecurity threats, and its concentrated ownership structure within a volatile Brazilian economic environment - The company faces significant competition in its programs, which could lead to market share loss and reduced profitability if it fails to compete effectively[46](index=46&type=chunk)[53](index=53&type=chunk) - Changes in government regulations and legislation, particularly concerning education programs like FIES and PROUNI, or tax reforms, could adversely affect cash flows and financial condition[38](index=38&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - The company's revenues are highly concentrated in medical courses and other health sciences programs (**87.1%** of undergraduate revenue in 2024), making it vulnerable to adverse economic, market, or regulatory factors affecting these programs[198](index=198&type=chunk) - Difficulties in identifying, acquiring, and effectively integrating new medical higher education institutions and healthtech companies could hinder strategic and financial goals[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - Failure to prevent or detect cyber-attacks on systems and databases could result in misappropriation of confidential information, reputational damage, and significant financial impact[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - The concentration of ownership and voting power in Bertelsmann (**75.8%** of voting power) limits the ability of other shareholders to influence corporate matters[55](index=55&type=chunk)[239](index=239&type=chunk) - The Brazilian federal government's significant influence over the economy, including political instability, inflation, and exchange rate volatility, could harm the company's business and stock price[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - New artificial intelligence (AI) regulations in Brazil, approved by the Senate in December 2024 and under House consideration, may impose additional compliance costs and operational challenges, impacting the development and deployment of AI-based tools[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk) [ITEM 4. Information on the Company](index=50&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) Details Afya's history, business overview, organizational structure, and assets, highlighting its evolution as a leading medical education group and its strategic growth [A. History and Development of the Company](index=50&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Afya Limited was incorporated in March 2019 in the Cayman Islands and listed on Nasdaq in July 2019, growing through strategic acquisitions and becoming controlled by Bertelsmann in 2022 - Afya Limited was incorporated on March **22**, **2019**, in the Cayman Islands and completed its initial public offering on Nasdaq in July **2019**[283](index=283&type=chunk)[313](index=313&type=chunk) - The company's origins trace back to **1999** with the founding of its first medical school, Centro Universitário ITPAC, by the Esteves Family, focusing on medical and related health courses[291](index=291&type=chunk) - Key acquisitions include Medcel (**2004**) for online medical preparatory courses and IPEMED (**2006**) for medical graduate and specialization, both later merged into Afya Brazil[289](index=289&type=chunk)[292](index=292&type=chunk)[301](index=301&type=chunk) - Bertelsmann became the controlling shareholder on May **4**, **2022**, acquiring a **57.5%** voting interest, aiming to further expand medical education and digital health services[320](index=320&type=chunk) - As of December **31**, **2024**, **22,867** physicians had graduated from the company's predecessor institutions[291](index=291&type=chunk) [B. Business Overview](index=54&type=section&id=B.%20Business%20Overview) Afya is Brazil's leading medical education group, offering an end-to-end physician-centric ecosystem through undergraduate, continuing education, and medical practice solutions segments, leveraging innovative methodologies and strategic growth - Afya is the leading medical education group in Brazil based on the number of private medical school seats, delivering an end-to-end physician-centric ecosystem[321](index=321&type=chunk) Key Operational Metrics (2022-2024) | Metric | 2024 | 2023 | 2022 | | :----------------------------------- | :------- | :------- | :------- | | Total Enrolled Students | 76,988 | 66,034 | 58,200 | | Medical School Operating Seats | 3,543 | 3,113 | 2,773 | | Medical School Approved Seats | 3,593 | 3,163 | 2,823 | | Medical School Occupancy Rate | ~100.0% | ~100.0% | ~100.0% | | Third-party schools adopting Medcel content | 17 | 17 | - | Financial Highlights (2022-2024, R$ millions) | Metric | 2024 | 2023 | 2022 | | :----------------------------------- | :--------- | :--------- | :--------- | | Total Revenue | 3,304.3 | 2,875.9 | 2,329.1 | | Net Income | 648.9 | 405.4 | 392.7 | | Adjusted EBITDA | 1,455.6 | 1,165.7 | 961.9 | | Net Cash Flows from Operating Activities | 1,433 | 1,044 | 844 | | Operating Cash Conversion Ratio | 102.2% | 97.1% | 94.4% | - The company's business model is characterized by high revenue visibility (**90%** from monthly tuition fees) and operating leverage, with a compound annual growth rate (CAGR) of **19.1%** for revenue and **28.5%** for net income since 2022[338](index=338&type=chunk)[340](index=340&type=chunk) - Afya's growth strategies include the maturation of current authorized medical school seats, opening new campuses under the 'Mais Médicos II' program, expanding medical residency preparation and graduate program enrollments, cross-selling across its student base, expanding B2B capabilities, and selectively pursuing M&A opportunities[362](index=362&type=chunk)[363](index=363&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk)[366](index=366&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk)[369](index=369&type=chunk)[370](index=370&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk) - The company's end-to-end physician-centric ecosystem is supported by an innovative, data-oriented methodology (standardized curricula, active learning, blended learning, adaptive learning), a cutting-edge digital platform (web portal, assessment tools, tutoring/mentoring, digital health services), and a state-of-the-art operating environment (modern facilities, specialization centers, practical learning network with over **614** partner hospitals)[453](index=453&type=chunk)[457](index=457&type=chunk)[458](index=458&type=chunk)[459](index=459&type=chunk)[460](index=460&type=chunk) [C. Organizational Structure](index=92&type=section&id=C.%20Organizational%20Structure) Afya Limited operates as a holding company with all subsidiaries in Brazil, streamlining operations through mergers of several entities into Afya Brazil in 2024 or 2025 - All of Afya's subsidiaries are incorporated in Brazil[563](index=563&type=chunk) - Medcel, IPEMED, PEBMED, Cardiopapers, and Além da Medicina were merged into Afya Brazil in 2024, and UNIDOM in 2025, simplifying the corporate structure[565](index=565&type=chunk) [D. Property, Plant and Equipment](index=92&type=section&id=D.%20Property%2C%20Plant%20and%20Equipment) The company's corporate headquarters and branches are leased, with nearly all operational facilities leased as of December 31, 2024, and facility needs regularly assessed - Corporate headquarters are in Nova Lima, Minas Gerais, with branches in Belo Horizonte, São Paulo, and Rio de Janeiro, all under lease agreements[566](index=566&type=chunk) - As of December **31**, **2024**, almost all operational, sales, and administrative facilities are leased[567](index=567&type=chunk) - The company periodically reviews its facility requirements and may acquire new space or dispose of facilities as needed[567](index=567&type=chunk) [ITEM 4A. Unresolved Staff Comments](index=92&type=section&id=ITEM%204A.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments to report - There are no unresolved staff comments[568](index=568&type=chunk) [ITEM 5. Operating and Financial Review and Prospects](index=93&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) Provides a detailed analysis of the company's operating results, liquidity, capital resources, R&D, market trends, and critical accounting estimates, highlighting significant revenue and net income growth [A. Operating Results](index=93&type=section&id=A.%20Operating%20Results) Afya reported strong operating results for 2024, with significant revenue and net income increases driven by medical school seat maturation, strategic acquisitions, and segment restructuring for synergy - Afya is the leading medical education group in Brazil, with **76,988** enrolled students as of December **31**, **2024**, an increase of **16.6%** from 2023[569](index=569&type=chunk)[571](index=571&type=chunk) - The company's growth is driven by the maturation of medical school seats, expansion of medical residency and graduate programs, cross-selling, M&A (Unidom in 2024, DelRey in 2023), and synergy extraction from acquisitions[573](index=573&type=chunk) Consolidated Income Statement Data (R$ millions) | Metric | 2024 | 2023 | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | | Revenue | 3,304.3 | 2,875.9 | 14.9% | | Cost of services | (1,215.6) | (1,109.8) | 9.5% | | Gross profit | 2,088.7 | 1,766.1 | 18.3% | | Selling, general and administrative expenses | (1,069.3) | (1,014.7) | 5.4% | | Operating income | 1,012.1 | 767.1 | 31.9% | | Net income | 648.9 | 405.4 | 60.1% | Revenue by Segment (R$ millions) | Segment | 2024 | 2023 | % Change | | :-------------------- | :------- | :------- | :--------- | | Undergrad | 2,895.7 | 2,511.0 | 15.3% | | Continuing Education | 255.4 | 235.8 | 8.3% | | Medical Practice Solutions | 161.8 | 140.3 | 15.3% | | Total | 3,304.3 | 2,875.9 | 14.9% | - The company's reporting segments were restructured in 2024, moving all medical education products and services (excluding undergraduate courses) from Medical Practice Solutions to the Continuing Education segment to integrate capabilities and explore synergies[603](index=603&type=chunk)[635](index=635&type=chunk) Medical School Key Metrics | Metric | 2024 | 2023 | 2022 | | :----------------------------------- | :------- | :------- | :------- | | Approved Seats | 3,593 | 3,163 | 2,823 | | Operating Seats | 3,543 | 3,113 | 2,773 | | Total Students (end of period) | 24,255 | 21,446 | 17,968 | | Medical School Net Avg. Ticket (R$/month) | 8,849 | 8,460 | 7,973 | - The Brazilian government's implementation of the OECD Pillar Two global minimum tax, effective January **1**, **2025**, introduces a minimum effective taxation of **15%** through an additional Social Contribution tax on Net Profit (CSLL), which is expected to impact the company's effective tax rate and results of operations[626](index=626&type=chunk)[627](index=627&type=chunk)[628](index=628&type=chunk)[629](index=629&type=chunk) [B. Liquidity and Capital Resources](index=111&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) Afya's liquidity and capital resources are strong, with **R$911.0 million** in cash and cash equivalents as of December 31, 2024, and significantly increased operating cash flows, while managing debt and capital expenditures Cash Flow Data (R$ millions) | Metric | 2024 | 2023 | 2022 | | :----------------------------------- | :--------- | :--------- | :--------- | | Net cash flows from operating activities | 1,432.7 | 1,043.6 | 843.9 | | Net cash flows used in investing activities | (1,091.6) | (1,143.0) | (591.5) | | Net cash flows (used in) from financing activities | 24.0 | (439.9) | 92.9 | - As of December **31**, **2024**, cash and cash equivalents totaled **R$911.0 million**, a **64.7%** increase from **R$553.0 million** in 2023[674](index=674&type=chunk)[681](index=681&type=chunk) - Net cash flows from operating activities increased by **R$389.1 million** (**37.3%**) in 2024, primarily due to the Unidom acquisition and improved operating results[676](index=676&type=chunk) Loans and Financings (R$ thousands) | Financial institution | 2024 | 2023 | | :-------------------- | :--------- | :--------- | | Banco Itaú Unibanco S.A. | 309,496 | 412,880 | | FINEP | 8,209 | 11,193 | | Softbank (Series A Preferred Shares) | 845,492 | 825,957 | | Debentures | 526,946 | 529,340 | | IFC | 505,018 | - | | Total Loans and Financing | 2,195,161 | 1,800,775 | - In August **2024**, Afya Brazil secured a **R$500.0 million** sustainability-linked loan from the International Finance Corporation (IFC), with interest rate reductions tied to social performance targets (free medical consultations and academic quality)[686](index=686&type=chunk) - The company maintains compliance with financial covenants for its loans and debentures, including an Adjusted Net Debt to EBITDA ratio not exceeding **3.0x**[683](index=683&type=chunk)[688](index=688&type=chunk)[690](index=690&type=chunk)[1366](index=1366&type=chunk) - Capital expenditures for 2024 were **R$392.6 million**, mainly for medical school seat expansion (Guanambi and UNIMA), campus maintenance, and digital solution development. A budget of **R$267.9 million** is set for 2025[698](index=698&type=chunk)[699](index=699&type=chunk) [C. Research and Development, Patents and Licenses](index=115&type=section&id=C.%20Research%20and%20Development%2C%20Patents%20and%20Licenses) Afya protects its products and services through intellectual property rights, holding **285** trademark registrations in Brazil and **5** abroad, with **119** pending applications, and **364** registered domain names - As of December **31**, **2024**, Afya owned **285** trademark registrations in Brazil and **5** abroad, with **119** pending applications in Brazil and **9** international applications[700](index=700&type=chunk)[703](index=703&type=chunk) - The company also owns **364** registered domain names in Brazil and **53** internationally, and has registered three software programs in Brazil[703](index=703&type=chunk) - A patent application is pending in Brazil, and trademark applications are pending in the United States (Afya, BioAtlas) and Mexico (Whitebook)[700](index=700&type=chunk)[701](index=701&type=chunk) [D. Trend Information](index=115&type=section&id=D.%20Trend%20Information) No other material adverse trends, uncertainties, demands, commitments, or events for 2024 are identified beyond those disclosed in the report - No other material adverse trends, uncertainties, demands, commitments, or events for 2024 are identified beyond those disclosed in the report[704](index=704&type=chunk) [E. Critical Accounting Estimates](index=115&type=section&id=E.%20Critical%20Accounting%20Estimates) The preparation of Afya's consolidated financial statements requires significant judgments and estimates, particularly for business combinations, impairment of non-financial assets, share-based compensation, and lease liabilities - Critical accounting estimates include the identification and fair-value measurement of assets and liabilities acquired in business combinations, especially contingent consideration[1234](index=1234&type=chunk) - Impairment testing of non-financial assets, particularly goodwill and indefinite-lived intangible assets, relies on significant assumptions about future cash flows, growth rates, and discount rates[1235](index=1235&type=chunk)[1236](index=1236&type=chunk) - Estimating the fair value for share-based payment transactions (stock options, RSUs) requires appropriate valuation models and inputs like expected life, volatility, and dividend yield[1237](index=1237&type=chunk) - The company uses its incremental borrowing rate (IBR) to measure lease liabilities, which requires estimation when observable rates are unavailable or need adjustment[1238](index=1238&type=chunk)[1239](index=1239&type=chunk) [ITEM 6. Directors, Senior Management and Employees](index=115&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) Outlines the composition and practices of Afya's board of directors and executive officers, their compensation, employee numbers, share ownership, and corporate governance structure [A. Directors and Senior Management](index=115&type=section&id=A.%20Directors%20and%20Senior%20Management) Afya's board consists of **10** members, with Bertelsmann and the Esteves Family appointing directors, and key executive officers including Virgilio Deloy Capobianco Gibbon (CEO), Luis André Blanco (CFO), and Lélio de Souza Junior (VP of Medical Practice Solutions) - The board of directors is composed of **10** members, with Bertelsmann entitled to appoint up to seven directors and the Esteves Family up to two, reflecting their ownership and voting power[707](index=707&type=chunk)[709](index=709&type=chunk) - Key executive officers are Virgilio Deloy Capobianco Gibbon (CEO), Luis André Blanco (CFO), and Lélio de Souza Junior (VP of Medical Practice Solutions), all with extensive experience in education and technology[721](index=721&type=chunk)[722](index=722&type=chunk)[723](index=723&type=chunk)[724](index=724&type=chunk)[725](index=725&type=chunk)[726](index=726&type=chunk) - A public civil proceeding against co-chairman Nicolau Carvalho Esteves, alleging irregular administrative acts, was concluded in his favor with a final unappealable judgment on March **10**, **2025**[728](index=728&type=chunk) [B. Compensation](index=119&type=section&id=B.%20Compensation) Key management personnel receive fixed and variable compensation, totaling **R$41.1 million** in 2024, with stock option and RSU programs incentivizing employees Key Management Personnel Compensation (R$ millions) | Compensation Type | 2024 | 2023 | 2022 | | :------------------------ | :----- | :----- | :----- | | Short-term employee benefits | 21.2 | 17.0 | 13.6 | | Share-based compensation plans | 19.9 | 21.4 | 13.1 | | Total compensation | 41.1 | 38.4 | 26.7 | - The company operates a stock option plan (approved August **2019**, amended) and a Restricted Stock Units (RSU) program (approved July **2022**) to incentivize executives and employees[732](index=732&type=chunk)[733](index=733&type=chunk)[735](index=735&type=chunk)[736](index=736&type=chunk) - As of December **31**, **2024**, **1,610,679** stock options and **656,634** restricted shares (RSUs) were outstanding under these plans[735](index=735&type=chunk)[737](index=737&type=chunk) - In July **2023**, a modification allowed stock option holders to exchange options for RSUs, with strike prices now adjusted by the IPCA rate instead of the CDI rate[734](index=734&type=chunk) [C. Board Practices](index=120&type=section&id=C.%20Board%20Practices) Afya's board practices are governed by Cayman Islands law, outlining directors' fiduciary duties and integrated risk management, leveraging Nasdaq exemptions as a controlled company - Directors owe fiduciary duties to the company, including acting in good faith, exercising powers for proper purposes, and avoiding conflicts of interest, as per Cayman Islands law and the Articles of Association[737](index=737&type=chunk)[738](index=738&type=chunk)[739](index=739&type=chunk) - Afya's integrated Risk Management is aligned with Bertelsmann's policy, employing a three-lines-of-defense model (risk owners, risk management/internal controls, internal audit) and overseen by the Board and Audit, Risks and Ethics Committee[740](index=740&type=chunk)[741](index=741&type=chunk)[742](index=742&type=chunk) - The Audit, Risks and Ethics Committee, composed of independent directors, oversees financial reporting, audit processes, and risk management, including cybersecurity[744](index=744&type=chunk)[745](index=745&type=chunk) - The People and ESG Committee reviews and approves compensation, oversees succession planning, and advises on sustainability and social responsibility matters[748](index=748&type=chunk)[749](index=749&type=chunk) - As a 'controlled company' due to Bertelsmann's majority voting interest, Afya utilizes exemptions from certain Nasdaq corporate governance standards, such as having a majority of independent directors or independent committees for nominations and compensation[751](index=751&type=chunk)[754](index=754&type=chunk) [D. Employees](index=124&type=section&id=D.%20Employees) As of December 31, 2024, Afya had **9,717** full-time employees, with **92%** located outside Nova Lima, maintaining constructive relationships with labor unions - As of December **31**, **2024**, Afya had **9,717** full-time employees, with **92%** located outside its Nova Lima offices[756](index=756&type=chunk) Full-time Personnel by Function (2024) | Function | Number of Employees | % of Total | | :----------------------------------- | :------------------ | :--------- | | Management | 62 | 0.6% | | Shared Services Center and IT, Sales and Marketing | 1,056 | 10.9% | | Faculties | 3,941 | 40.6% | | General and Administrative | 4,658 | 47.9% | | Total | 9,717 | 100.0% | - The company reports a constructive relationship with labor unions, having experienced no strikes, work stoppages, or disputes leading to downtime[756](index=756&type=chunk) [E. Share Ownership](index=124&type=section&id=E.%20Share%20Ownership) Information on share ownership of directors and senior management, and stock options/RSUs, is referenced to other sections of the report - Information on share ownership of directors and senior management, and stock options/RSUs, is referenced to other sections of the report[757](index=757&type=chunk) [F. Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation](index=125&type=section&id=F.%20Disclosure%20of%20a%20Registrant%27s%20Action%20to%20Recover%20Erroneously%20Awarded%20Compensation) Afya adopted a compensation recoupment policy on November 30, 2023, with no accounting restatement or recovery of awarded compensation required under it during or after the last fiscal year - Afya adopted a compensation recoupment policy on November **30**, **2023**[758](index=758&type=chunk) - No accounting restatement or recovery of awarded compensation has been required under the policy during or after the last completed fiscal year[758](index=758&type=chunk) [ITEM 7. Major Shareholders and Related Party Transactions](index=125&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) Details beneficial ownership, highlighting significant control by Bertelsmann and the Esteves Family through a dual-class share structure, and outlines material related party transactions, primarily lease agreements [A. Major Shareholders](index=125&type=section&id=A.%20Major%20Shareholders) Bertelsmann and the Esteves Family collectively control Afya, with Bertelsmann holding **75.8%** of the total voting power through a dual-class share structure where Class B common shares carry **10** votes per share Beneficial Ownership of Shares (as of report date) | Shareholder | Class A Shares (%) | Class B Shares (%) | Series A Preferred Shares (%) | % of Total Voting Power | | :----------------------------------- | :----------------- | :----------------- | :---------------------------- | :------------------------ | | Bertelsmann SE & Co. KGaA | 57.0% | 77.8% | — | 75.8% | | Nicolau Carvalho Esteves | 0.2% | 22.2% | — | 20.1% | | Rosângela de Oliveira Tavares Esteves | 0.2% | 22.2% | — | 20.1% | | Renato Tavares Esteves | 3.3% | — | — | 0.3% | | Vanessa Tavares Esteves | 3.1% | — | — | 0.3% | | Lílian Tavares Esteves de Carvalho | 3.3% | — | — | 0.3% | | Ronald Baron | 5.1% | — | — | 0.5% | | SoftBank Group Corp. | 5.2% | — | 100% | 0.5% | | FMR LLC | 5.6% | — | — | 0.5% | - Bertelsmann and the Esteves Family, through their Class B common shares (**10** votes per share), collectively control a majority of the voting power, limiting the influence of other shareholders[764](index=764&type=chunk)[774](index=774&type=chunk) - As of the report date, there are **46,586,054** outstanding Class A common shares, **43,802,763** Class B common shares, and **150,000** Series A perpetual convertible preferred shares[763](index=763&type=chunk) - A Shareholders' Agreement between certain Esteves family members and Bertelsmann ensures cooperation and includes a non-compete obligation for the Esteves family[776](index=776&type=chunk)[777](index=777&type=chunk) [B. Related Party Transactions](index=127&type=section&id=B.%20Related%20Party%20Transactions) Afya engages in material related party transactions, primarily lease agreements with entities controlled by significant shareholders, with total lease payments amounting to **R$34.6 million** in 2024, approved under a specific policy - Afya has lease agreements with RVL Esteves Gestão Imobiliária S.A., UNIVAÇO Patrimonial Ltda., and IESVAP Patrimonial Ltda., all controlled by significant shareholders[779](index=779&type=chunk)[788](index=788&type=chunk)[789](index=789&type=chunk) Lease Payments to Related Parties (R$ millions) | Related Party | 2024 | 2023 | 2022 | | :----------------------------------- | :----- | :----- | :----- | | RVL Esteves Gestão Imobiliária S.A. | 25.7 | 23.4 | 20.4 | | UNIVAÇO Patrimonial Ltda. | 3.6 | 3.6 | 3.4 | | IESVAP Patrimonial Ltda. | 5.2 | 5.2 | 4.9 | | Total Lease Payments | 34.6 | 32.2 | 28.7 | - The company's related person transaction policy requires approval or ratification by executive officers and the board of directors, considering commercial reasonableness and benefit to the company and shareholders[791](index=791&type=chunk)[792](index=792&type=chunk)[793](index=793&type=chunk) [C. Interests of Experts and Counsel](index=129&type=section&id=C.%20Interests%20of%20Experts%20and%20Counsel) Information on the interests of experts and counsel is not applicable - Information on the interests of experts and counsel is not applicable[796](index=796&type=chunk) [ITEM 8. Financial Information](index=130&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) Provides an overview of Afya's consolidated financial statements, legal and administrative proceedings, and dividend policy, detailing provisions for legal claims and the first-ever dividend distribution [A. Consolidated Statements and Other Financial Information](index=130&type=section&id=A.%20Consolidated%20Statements%20and%20Other%20Financial%20Information) Afya's consolidated financial statements are included in the exhibits, with **R$113.5 million** in provisions for legal proceedings as of December 31, 2024, and the board approved the first-ever dividend distribution of **R$129.8 million** in March 2025 - As of December **31**, **2024**, Afya had **R$113.5 million** in provisions for legal proceedings (civil, labor, tax) with a probable likelihood of loss, and **R$16.9 million** in judicial deposits[801](index=801&type=chunk) - Selling shareholders of acquired subsidiaries are responsible for pre-acquisition liabilities, with **R$78.7 million** recorded as indemnification assets for such contingent liabilities[802](index=802&type=chunk) - On March **12**, **2025**, the board approved the first-ever dividend distribution of **R$129.8 million** (**R$1.348923** per share), paid on April **4**, **2025**[820](index=820&type=chunk) - Future dividend payments are subject to board declaration, capital availability, market conditions, and distributions from Brazilian subsidiaries[821](index=821&type=chunk)[823](index=823&type=chunk) - Brazilian subsidiaries are required to distribute a mandatory minimum dividend to shareholders each year, typically **25%** or **50%** of net income, unless suspended[825](index=825&type=chunk)[827](index=827&type=chunk) [B. Significant Changes](index=134&type=section&id=B.%20Significant%20Changes) No significant changes have occurred since the date of the audited consolidated financial statements, other than those disclosed elsewhere in the annual report - No significant changes have occurred since the date of the audited consolidated financial statements, other than those disclosed elsewhere in the annual report[828](index=828&type=chunk) [ITEM 9. The Offer and Listing](index=134&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) Details Afya's initial public offering and follow-on offering, its listing on the Nasdaq Global Select Market, and states that other related information is not applicable for this report - Afya completed its initial public offering on July **19**, **2019**, and a follow-on offering on February **7**, **2020**[829](index=829&type=chunk) - The company's common shares have been listed and traded on the Nasdaq Global Select Market under the symbol 'AFYA' since July **19**, **2019**[829](index=829&type=chunk) - Information regarding the plan of distribution, markets, selling shareholders, dilution, and expenses of the issue is not applicable for this report[830](index=830&type=chunk)[831](index=831&type=chunk)[832](index=832&type=chunk)[833](index=833&type=chunk)[834](index=834&type=chunk) [ITEM 10. Additional Information](index=135&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) Provides additional details on Afya's share capital, memorandum and articles of association, material contracts, exchange controls, and taxation, including its dual-class share structure and U.S. federal income tax considerations [A. Share Capital](index=135&type=section&id=A.%20Share%20Capital) Information on share capital is not applicable in this section, as it is detailed in the Memorandum and Articles of Association - Information on share capital is not applicable in this section, as it is detailed in the Memorandum and Articles of Association[835](index=835&type=chunk) [B. Memorandum and Articles of Association](index=135&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) Afya's Articles of Association establish a dual-class share structure, concentrating voting power with Bertelsmann and the Esteves Family, and include anti-takeover provisions, share repurchase programs, and director duties under Cayman Islands law - Afya has a dual-class share structure: Class A common shares (one vote per share) and Class B common shares (**ten** votes per share), concentrating voting control with Bertelsmann and the Esteves Family[840](index=840&type=chunk)[849](index=849&type=chunk)[915](index=915&type=chunk) - As of December **31**, **2024**, the total authorized share capital was **US$50,000**, divided into **1,000,000,000** shares, with **49,920,068** Class A, **43,802,763** Class B, and **150,000** Series A perpetual convertible preferred shares issued and outstanding[838](index=838&type=chunk)[840](index=840&type=chunk) - Class B common shares have preemptive rights to maintain proportional ownership and generally convert to Class A upon transfer, except for specific permitted transfers[844](index=844&type=chunk)[853](index=853&type=chunk)[854](index=854&type=chunk) - The Articles of Association include anti-takeover provisions, such as the dual-class structure and the board's power to issue preferred shares, which may discourage changes in control[914](index=914&type=chunk)[915](index=915&type=chunk)[917](index=917&type=chunk) - Afya has implemented four share repurchase programs, with the fourth program approved in March **2023** to repurchase up to **2,000,000** Class A common shares by December **31**, **2024**, for stock option programs, acquisitions, and general corporate purposes[881](index=881&type=chunk)[882](index=882&type=chunk)[884](index=884&type=chunk)[885](index=885&type=chunk)[887](index=887&type=chunk) - Directors owe fiduciary duties to the company under Cayman Islands law, including acting in good faith and avoiding conflicts of interest, with specific provisions in the Articles of Association for disclosure and voting on interested matters[937](index=937&type=chunk)[941](index=941&type=chunk) - Key decisions, such as changing the number of directors, amending organizational documents, or issuing new shares, require prior written consent from Bertelsmann and the Esteves Family as long as they hold Class B common shares above a certain threshold[873](index=873&type=chunk)[900](index=900&type=chunk) [C. Material Contracts](index=152&type=section&id=C.%20Material%20Contracts) Information on material contracts is provided in other parts of the annual report, with no other material contracts outside the ordinary course of business entered into - Information on material contracts is provided in 'Item **5**. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources' and 'Item **4**. Information on the Company—B. Business Overview—Our Recent Acquisitions'[958](index=958&type=chunk) - No other material contracts outside the ordinary course of business have been entered into[958](index=958&type=chunk) [D. Exchange Controls](index=152&type=section&id=D.%20Exchange%20Controls) The Cayman Islands currently has no exchange control restrictions - The Cayman Islands currently has no exchange control restrictions[959](index=959&type=chunk) [E. Taxation](index=152&type=section&id=E.%20Taxation) Covers tax considerations for Afya in the Cayman Islands and for U.S. federal income tax purposes, including its **20**-year tax concession and potential Passive Foreign Investment Company (PFIC) classification - The Cayman Islands currently levies no taxes on profits, income, gains, or appreciation for Afya, which has a **20**-year tax concession[960](index=960&type=chunk)[961](index=961&type=chunk) - Payments of dividends and capital, and gains from disposal of Class A common shares, are not subject to taxation in the Cayman Islands[962](index=962&type=chunk) - For U.S. federal income tax purposes, distributions are generally treated as dividends, and gain on the sale or disposition of Class A common shares as capital gain[970](index=970&type=chunk)[973](index=973&type=chunk) - The company believes it was not a Passive Foreign Investment Company (PFIC) for 2024, but its PFIC status is subject to change based on income, assets, and market price volatility, which could lead to adverse U.S. federal income tax consequences for U.S. investors[975](index=975&type=chunk) [F. Dividends and Paying Agents](index=156&type=section&id=F.%20Dividends%20and%20Paying%20Agents) Information regarding dividends and paying agents is not applicable - Information regarding dividends and paying agents is not applicable[987](index=987&type=chunk) [G. Statement by Experts](index=156&type=section&id=G.%20Statement%20by%20Experts) Information regarding statements by experts is not applicable - Information regarding statements by experts is not applicable[988](index=988&type=chunk) [H. Documents on Display](index=156&type=section&id=H.%20Documents%20on%20Display) Afya is subject to SEC informational requirements as a foreign private issuer, filing annual reports on Form **20**-F and reports on Form **6**-K, which are available on the SEC's website - Afya is subject to SEC informational requirements as a foreign private issuer, filing annual reports on Form **20**-F and reports on Form **6**-K[989](index=989&type=chunk) - SEC filings are accessible on the SEC's website (www.sec.gov)[989](index=989&type=chunk) [I. Subsidiary Information](index=156&type=section&id=I.%20Subsidiary%20Information) A description of the company's subsidiaries is provided in note **2.2** to the audited consolidated financial statements - A description of the company's subsidiaries is provided in note **2.2** to the audited consolidated financial statements[990](index=990&type=chunk) [J. Annual Report to Security Holders](index=156&type=section&id=J.%20Annual%20Report%20to%20Security%20Holders) If required, the annual report to security holders will be submitted electronically via the EDGAR Filer Manual - If required, the annual report to security holders will be submitted electronically via the EDGAR Filer Manual[991](index=991&type=chunk) [ITEM 11. Quantitative and Qualitative Disclosures About Market Risk](index=156&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Afya is exposed to market risks, including interest rate and foreign currency fluctuations, which are monitored by management, with credit risk managed through established policies - Afya is exposed to market risks from interest rate changes and foreign currency fluctuations, as well as credit and liquidity risks[992](index=992&type=chunk)[1349](index=1349&type=chunk)[1350](index=1350&type=chunk) Interest Rate Sensitivity Analysis (R$ thousands, 2024) | Index | Base Rate | +75 bps Effect on Profit Before Tax | +150 bps Effect on Profit Before Tax | | :----------------------------------- | :---------- | :---------------------------------- | :----------------------------------- | | CDI (Cash equivalents, Loans, Accounts Payable) | (140,652) | (7,324) | (14,648) | | TJLP (Loans) | (610) | - | - | - Foreign currency risk primarily relates to **R$21.6 million** in U.S. dollar-denominated cash and cash equivalents as of December **31**, **2024**. A **10%** change in the U.S. dollar exchange rate would result in a **R$2.161 million** effect on profit before tax[996](index=996&type=chunk)[1354](index=1354&type=chunk)[1355](index=1355&type=chunk)[1356](index=1356&type=chunk) - Credit risk from trade receivables is managed through established policies and regular monitoring. Credit risk from bank balances is managed by the treasury department with approved counterparties and limits[997](index=997&type=chunk)[998](index=998&type=chunk)[1358](index=1358&type=chunk)[1359](index=1359&type=chunk) Maturity Profile of Financial Liabilities (R$ thousands, 2024) | Liability Type | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | Total | | :----------------------------------- | :--------------- | :----------- | :----------- | :---------------- | :---------- | | Trade payables | 128,080 | - | - | - | 128,080 | | Loans and financing | 526,659 | 1,494,287 | 617,818 | 75,526 | 2,714,290 | | Lease liabilities | 158,746 | 303,211 | 293,178 | 1,360,107 | 2,115,242 | | Accounts payable to selling shareholders | 205,322 | 150,565 | 99,100 | 373,498 | 828,485 | | Total | 1,018,807 | 1,948,063 | 1,010,096 | 1,809,131 | 5,786,097 | [ITEM 12. Description of Securities Other Than Equity Securities](index=158&type=section&id=ITEM%2012.%20DESCRIPTION%20OF%20SECURITIES%20OTHER%20THAN%20EQUITY%20SECURITIES) Information regarding debt securities, warrants and rights, other securities, and American Depositary Shares is not applicable for this report - Information on debt securities, warrants and rights, other securities, and American Depositary Shares is not applicable[1002](index=1002&type=chunk)[1003](index=1003&type=chunk)[1004](index=1004&type=chunk) PART II [ITEM 13. Defaults, Dividend Arrearages and Delinquencies](index=159&type=section&id=ITEM%2013.%20DEFAULTS%2C%20DIVIDEND%20ARREARAGES%20AND%20DELINQUENCIES) No defaults, dividend arrearages, or delinquencies to report - No defaults, dividend arrearages, or delinquencies to report[1006](index=1006&type=chunk)[1007](index=1007&type=chunk) [ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds](index=159&type=section&id=ITEM%2014.%20MATERIAL%20MODIFICATIONS%20TO%20THE%20RIGHTS%20OF%20SECURITY%20HOLDERS%20AND%20USE%20OF%20PROCEEDS) No material modifications to instruments or rights of security holders, nor any withdrawal or substitution of assets, change in trustees or paying agents, or use of proceeds to report - No material modifications to instruments or rights of security holders, withdrawal/substitution of assets, change in trustees/paying agents, or use of proceeds to report[1008](index=1008&type=chunk)[1009](index=1009&type=chunk)[1010](index=1010&type=chunk)[1011](index=1011&type=chunk)[1012](index=1012&type=chunk) [ITEM 15. Controls and Procedures](index=159&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management assessed disclosure controls and internal control over financial reporting as effective, excluding Unidom's controls, with no significant changes identified during 2024 - Afya's disclosure controls and procedures were effective as of December **31**, **2024**, providing reasonable assurance for timely and accurate information disclosure[1013](index=1013&type=chunk) - Management concluded that internal control over financial reporting was effective as of December **31**, **2024**, based on the COSO **2013** framework[1017](index=1017&type=chunk) - The assessment of internal control over financial reporting excluded Unidom, acquired in July **2024**, which represented (**0.1%**) of consolidated total equity and **0.9%** of consolidated total assets[1016](index=1016&type=chunk) - Ernst & Young Auditores Independentes S/S Ltda. (EY) issued an unqualified attestation report on the effectiveness of internal controls over financial reporting[1018](index=1018&type=chunk) - No significant changes in internal control over financial reporting occurred during 2024 that materially affected or are reasonably likely to materially affect it[1019](index=1019&type=chunk) [ITEM 16. Reserved](index=160&type=section&id=ITEM%2016.%20RESERVED) This section is reserved and contains no specific information - This section is reserved and contains no specific information[1020](index=1020&type=chunk) [ITEM 16A. Audit Committee Financial Expert](index=160&type=section&id=ITEM%2016A.%20AUDIT%20COMMITTEE%20FINANCIAL%20EXPERT) Afya's Audit, Risks and Ethics Committee consists of four financially literate members, with Marcelo Ken Suhara qualifying as an "audit committee financial expert" and all members satisfying independence requirements - The Audit, Risks and Ethics Committee has four members: Vanessa Claro Lopes, João Paulo Seibel de Faria, Miguel Filisbino Pereira de Paula, and Marcelo Ken Suhara[1020](index=1020&type=chunk) - Marcelo Ken Suhara qualifies as an "audit committee financial expert" as defined by the SEC[1020](index=1020&type=chunk) - All committee members are financially literate and satisfy the independence requirements of Rule **10A-3** under the Exchange Act[1020](index=1020&type=chunk) [ITEM 16B. Code of Ethics](index=160&type=section&id=ITEM%2016B.%20CODE%20OF%20ETHICS) Afya maintains a code of ethics applicable to all members and relevant third parties, outlining conduct standards, safeguarding financial records, managing conflicts of interest, and ensuring legal compliance, with whistleblowing procedures in place - Afya's code of ethics applies to all members (directors, officers, managers, teachers, staff) and relevant third parties (suppliers, consultants, service providers)[1021](index=1021&type=chunk) - The code sets forth conduct standards for interactions with stakeholders, safeguarding financial records, conflict of interest, confidential information, and legal compliance[1021](index=1021&type=chunk) - A whistleblowing channel is provided for reporting illicit conduct, with reports assessed by internal compliance bodies and the Internal Ethics and Conduct Commission[1021](index=1021&type=chunk) [ITEM 16C. Principal Accountant Fees and Services](index=161&type=section&id=ITEM%2016C.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Details the fees paid to Ernst & Young Auditores Independentes S/S Ltda. (EY) for audit and non-audit services in 2024 and 2023, all pre-approved by the audit committee Principal Accountant Fees (R$ millions) | Fee Type | 2024 | 2023 | | :-------------------- | :----- | :----- | | Audit fees | 8.7 | 7.7 | | Tax fees | 0.4 | 0.2 | | All other fees | — | — | | Total fees | 9.1 | 7.9 | - Audit fees include services for annual consolidated financial statements, internal control effectiveness, statutory financial statements of subsidiaries, interim financial statements, and acquired businesses[1023](index=1023&type=chunk) - Tax fees cover services related to the review of Brazilian tax reporting (ECF)[1024](index=1024&type=chunk) - All audit and non-audit services provided by EY are pre-approved by the audit committee[1025](index=1025&type=chunk) [ITEM 16D. Exemptions from the Listing Standards for Audit Committees](index=161&type=section&id=ITEM%2016D.%20EXEMPTIONS%20FROM%20THE%20LISTING%20STANDARDS%20FOR%20AUDIT%20COMMITTEES) Afya does not rely on any exemptions from the listing standards for audit committees, adhering to all applicable requirements - Afya does not rely on any exemptions from the listing standards for audit committees[1026](index=1026&type=chunk) [ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=161&type=section&id=ITEM%2016E.%20PURCHASES%20OF%20EQUITY%20SECURITIES%20BY%20THE%20ISSUER%20AND%20AFFILIATED%20PURCHASERS) Afya did not repurchase Class A common shares in 2024, but Bertelsmann, an affiliated purchaser, continued its trading plan, purchasing **5,049,411** Class A common shares for approximately **R$111.51** per share, extending the plan until May 31, 2026 - Afya did not repurchase any Class A common shares during the year ended December **31**, **2024**[1027](index=1027&type=chunk) Shares Purchased by Bertelsmann (2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share (R$) | | :----------------------------------- | :------------------------------- | :-------------------------------- | | January 1 to December 31, 2024 | 5,049,411 | 111.51 | - Bertelsmann, an affiliated purchaser, continued its Rule **10b5-1** trading plan, purchasing **5,049,411** Class A common shares in 2024[1029](index=1029&type=chunk)[1030](index=1030&type=chunk) - Bertelsmann's trading plan was amended and extended until May **31**, **2026**[1030](index=1030&type=chunk) [ITEM 16F. Change in Registrant's Certifying Accountant](index=162&type=section&id=ITEM%2016F.%20CHANGE%20IN%20REGISTRANT%27S%20CERTIFYING%20ACCOUNTANT) There has been no change in the registrant's certifying accountant - There has been no change in the registrant's certifying accountant[1031](index=1031&type=chunk) [ITEM 16G. Corporate Governance](index=163&type=section&id=ITEM%2016G.%20CORPORATE%20GOVERNANCE) Afya's corporate governance is influenced by Cayman Islands law and its status as a foreign private issuer and controlled company, leveraging exemptions from certain Nasdaq rules while defining directors' duties and managing conflicts of interest - Afya, as a foreign private issuer, relies on exemptions from certain Nasdaq corporate governance rules, including those requiring a majority of independent directors and independent nominations/compensation committees[1035](index=1035&type=chunk)[1037](index=1037&type=chunk) - Cayman Islands law imposes fiduciary duties on directors, and the Articles of Association allow interested directors to vote on transactions after disclosing their interest[1033](index=1033&type=chunk) [ITEM 16H. Mine Safety Disclosure](index=163&type=section&id=ITEM%2016H.%20MINE%20SAFETY%20DISCLOSURE) Mine safety disclosure is not applicable - Mine safety disclosure is not applicable[1036](index=1036&type=chunk) [ITEM 16I. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=163&type=section&id=ITEM%2016I.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) Disclosure regarding foreign jurisdictions that prevent inspections is not applicable - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[1036](index=1036&type=chunk) [ITEM 16J. Insider Trading Policies](index=164&type=section&id=ITEM%2016J.%20INSIDER%20TRADING%20POLICIES) Afya maintains insider trading policies and procedures for directors, officers, employees, and the company, designed to ensure compliance with insider trading laws and Nasdaq listing standards - Afya maintains insider trading policies and procedures for directors, officers, employees, and the company[1038](index=1038&type=chunk) - These policies are designed to promote compliance with insider trading laws and Nasdaq listing standards[1038](index=1038&type=chunk) [ITEM 16K. Cybersecurity](index=164&type=section&id=ITEM%2016K.%20CYBERSECURITY) Afya integrates cybersecurity risk management into its enterprise risk management (ERM) framework, overseen by its Chief Information Security Office (CISO), ensuring compliance with data privacy regulations and continuous adoption of technological solutions - Afya integrates cybersecurity risk management into its enterprise risk management (ERM) framework, with oversight from the Chief Information Security Office (CISO)[1039](index=1039&type=chunk)[1041](index=1041&type=chunk) - The CISO is responsible for defining action plans, ensuring compliance with data security and privacy protocols (LGPD, GDPR, NIST), and managing threat detection and incident response[1040](index=1040&type=chunk)[1045](index=1045&type=chunk)[1049](index=1049&type=chunk) - The company utilizes a three-lines-of-defense model for risk governance, involving risk owners, compliance/internal controls, and internal audit, with the Audit, Risk, and Ethics Committee overseeing cyber risks[1043](index=1043&type=chunk)[1046](index=1046&type=chunk) - Afya continuously adopts technological solutions for monitoring, detection, recovery, and protection, and maintains a comprehensive disaster recovery and business continuity plan[1047](index=1047&type=chunk)[1048](index=1048&type=chunk) - As of December **31**, **2024**, no material cybersecurity incidents affecting business strategy or financial condition were identified, though minor incidents were treated per protocols[1050](index=1050&type=chunk) PART III [ITEM 17. Financial Statements](index=166&type=section&id=ITEM%2017.%20FINANCIAL%20STATEMENTS) The company has responded to Item **18** in lieu of this item, presenting financial statements under Item **18** - The company has responded to Item **18** in lieu of this item, presenting financial statements under Item **18**[1053](index=1053&type=chunk) [ITEM 18. Financial Statements](index=166&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) Contains Afya Limited's audited consolidated financial statements for 2024, 2023, and 2022, prepared in conformity with IFRS Accounting Standards, including statements of financial position, income, comprehensive income, changes in equity, and cash flows, along with detailed notes - The audited consolidated financial statements for Afya Limited are presented for the years ended December **31**, **2024**, **2023**, and **2022**, prepared in accordance with IFRS Accounting Standards[1065](index=1065&type=chunk)[1077](index=1077&type=chunk)[1079](index=1079&type=chunk)[1107](index=1107&type=chunk) - The financial statements include consolidated statements of financial position, income and comprehensive income, changes in equity, and cash flows, along with comprehensive notes[1063](index=1063&type=chunk) - Ernst & Young Auditores Independentes S/S Ltda. issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting[1065](index=1065&type=chunk)[1066](index=1066&type=chunk)[1077](index=1077&type=chunk)[1079](index=1079&type=chunk) - A critical audit matter identified was the accounting for business combinations, specifically the significant estimation uncertainty in measuring contingent consideration liability and the fair value of acquired intangible assets (licenses and customer relationships) for the Unidom acquisition in 2024[1069](index=1069&type=chunk)[1070](index=1070&type=chunk)[1071](index=1071&type=chunk) Consolidated Statements of Financial Position (R$ thousands) | Metric | 2024 | 2023 | | :----------------------------------- | :--------- | :--------- | | Total assets | 8,829,539 | 7,584,481 | | Total liabilities | 4,518,956 | 3,941,469 | | Total equity | 4,310,583 | 3,643,012 | Consolidated Statements of Income and Comprehensive Income (R$ thousands) | Metric | 2024 | 2023 | 2022 | | :----------------------------------- | :--------- | :--------- | :--------- | | Revenue | 3,304,329 | 2,875,913 | 2,329,057 | | Gross profit | 2,088,726 | 1,766,100 | 1,469,505 | | Operating income | 1,012,113 | 767,061 | 664,100 | | Net income | 648,920 | 405,416 | 392,756 | | Basic earnings per common share (R$) | 7.01 | 4.30 | 4.14 | | Diluted earnings per common share (R$) | 6.93 | 4.27 | 4.12 | Consolidated Statements of Cash Flows (R$ thousands) | Metric | 2024 | 2023 | 2022 | | :----------------------------------- | :--------- | :--------- | :--------- | | Net cash flows from operating activities | 1,432,659 | 1,043,623 | 843,899 | | Net cash flows used in investing activities | (1,091,613) | (1,143,051) | (591,469) | | Net cash flows generated (used) in financing activities | 23,966 | (439,943) | 92,942 | | Cash and cash equivalents at end of year | 911,015 | 553,030 | 1,093,082 | [ITEM 19. Exhibits](index=166&type=section&id=ITEM%2019.%20EXHIBITS) Lists all exhibits filed as part of the annual report on Form **20**-F, including organizational documents, descriptions of securities, financial statements, certifications, and corporate policies - The section lists all exhibits filed with the annual report, including Amended and Restated Memorandum and Articles of Association, Description of Securities, List of Subsidiaries, Code of Ethics, Insider Trading Policy, and various certifications[1055](index=1055&type=chunk)

Company Performance - Afya reported quarterly earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of $0.34 per share, with an earnings surprise of 5.88% [1] - The company posted revenues of $145.28 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.38%, although this represents a decline from year-ago revenues of $147.35 million [2] - Over the last four quarters, Afya has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.46 on revenues of $152.88 million, and for the current fiscal year, it is $1.55 on revenues of $624.24 million [7] - The estimate revisions trend for Afya is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell), indicating expected underperformance in the near future [6] - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] Industry Context - The Schools industry, to which Afya belongs, is currently ranked in the top 17% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% of industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Net revenue increased by 14.9%, reaching BRL 3,000,304,300 [6][24] - Adjusted EBITDA grew by 25% year over year, amounting to BRL 1,000,455,600, with a margin of 44.1% [6][24] - Cash flow from operating activities rose by 34%, totaling BRL 1,453 million, with a cash conversion rate of 102% [6][25] - Net income for 2024 reached BRL 649 million, marking a 60.1% increase year over year [6][26] - EPS for the year was BRL 7.01, a 63% increase compared to the previous year [6][26] Business Line Data and Key Metrics Changes - The number of medical students grew by 13%, exceeding 24,000 students [18] - Approved medical seats increased by 13% year over year [18] - Continuing education segment net revenue increased by 8%, reaching BRL 255 million [20] - Medical Practice Solutions segment revenue grew by 15%, reaching BRL 162 million [22] Market Data and Key Metrics Changes - The ecosystem now includes 313,000 active users, comprising physicians and medical students [8][22] - The average ticket for medical school increased by 4.6%, reaching BRL 849 [19] Company Strategy and Development Direction - The company aims to maintain a disciplined capital allocation strategy, focusing on both organic and inorganic growth opportunities [33][39] - Plans to distribute dividends equivalent to 20% of consolidated net income for 2024, indicating a commitment to shareholder value while pursuing growth [13][33] - The company is targeting the acquisition of 200 seats per year to support growth [33][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2025 guidance, citing operational efficiency and growth in key segments [34][55] - The company is optimistic about the continuing education segment, expecting further expansion in 2025 [48] - Management noted a healthy intake process for new students, with strong demand across various regions [70] Other Important Information - The company reported a significant social impact, with a calculated social return on investment of 3.58 times the investment made [11] - The company is committed to enhancing healthcare access and generating economic returns in the communities it serves [11] Q&A Session Summary Question: Sustainability of Dividend Levels - Management indicated that while no formal policy is established for future dividends, the capital allocation strategy remains focused on growth opportunities [33] Question: Top Line Guidance Drivers - Management highlighted confidence in achieving guidance, emphasizing operational efficiency and growth in key segments [34] Question: M&A Pipeline and Dividend Distribution - Management confirmed that M&A opportunities remain a priority, with a selective approach to acquisitions [39][41] Question: Tuition Fee Increases - Management stated that they are successfully passing tuition increases in line with inflation, supported by strong brand recognition [40][41] Question: Continuing Education Segment Outlook - Management expects continued expansion in the continuing education segment, driven by a large cohort of graduating students [48] Question: Profitability and Margin Expansion Drivers - Management attributed expected margin expansion to operational leverage and efficiency improvements across segments [55][58] Question: Regulatory Comments and Proficiency Exam Proposal - Management expressed support for higher quality standards in the sector, viewing regulatory changes as an opportunity for differentiation [72][73]

Afya Limited Consolidated financial statements as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Afya Limited Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial position of Afya Limited (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income and comprehensive income, chang ...