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 ...

Financial Performance - Revenue for the three-month period ended September 30, 2024, increased to BRL 841,185 thousand, up 16.3% from BRL 723,479 thousand in the same period of 2023[4] - Gross profit for the nine-month period ended September 30, 2024, reached BRL 1,546,885 thousand, representing a 16.6% increase compared to BRL 1,325,911 thousand in 2023[4] - Operating income for the three-month period ended September 30, 2024, was BRL 233,892 thousand, a 23.0% increase from BRL 190,286 thousand in the prior year[4] - Net income for the nine-month period ended September 30, 2024, was BRL 494,641 thousand, up 62.8% from BRL 303,530 thousand in 2023[4] - Basic earnings per share for the three-month period ended September 30, 2024, increased to BRL 1.33, compared to BRL 1.04 in the same period of 2023[4] - Total revenue for the nine-month period ended September 30, 2024, was R$2,455,314, an increase from R$2,146,047 in the same period of 2023, representing a growth of approximately 14.4%[40] - Gross profit for the nine-month period ended September 30, 2024, was R$1,546,885, compared to R$1,325,911 in 2023, reflecting a gross margin improvement[40] - Net income for the nine-month period ended September 30, 2024, was R$494,641, up from R$336,826 in 2023, indicating a year-over-year increase of approximately 47%[40][43] Assets and Liabilities - Total assets as of September 30, 2024, amounted to BRL 8,713,627 thousand, an increase of 14.9% from BRL 7,584,481 thousand at the end of 2023[2] - Total liabilities increased to BRL 4,561,984 thousand as of September 30, 2024, compared to BRL 3,941,469 thousand at the end of 2023, reflecting a 15.7% rise[2] - Non-current liabilities rose to BRL 3,636,799 thousand as of September 30, 2024, up 26.2% from BRL 2,882,902 thousand at the end of 2023[2] - Total equity attributable to equity holders of the parent reached BRL 4,110,446 thousand as of September 30, 2024, up 14.1% from BRL 3,601,505 thousand at the end of 2023[2] - Current liabilities as of September 30, 2024, were R$1,069,784, while non-current liabilities were R$2,882,902, indicating a stable financial position[40] - Total loans and financing increased to R$2,145,270 as of September 30, 2024, up from R$1,800,775 at the end of 2023, reflecting a growth of approximately 19.1%[85] Cash Flow and Financing - Cash and cash equivalents increased to BRL 836,876 thousand as of September 30, 2024, compared to BRL 553,030 thousand at the end of 2023, marking a 51.5% increase[2] - Net cash flows from operating activities increased to R$1,148,175 for the nine-month period ended September 30, 2024, compared to R$896,202 in 2023, reflecting a growth of 28%[8] - The Company generated net cash flows of R$88,676 from financing activities in the nine-month period ended September 30, 2024, compared to a net outflow of R$256,791 in 2023[8] - The company entered into a loan agreement with the International Finance Corporation for up to R$500,000 to support its expansion program, with repayments starting in April 2027[86] Acquisitions and Expansions - The acquisition of Unidom on July 1, 2024, involved a total purchase price of R$816,236, with R$575,000 paid in cash at closing[17] - Total approved medical school seats reached 3,593 as of September 30, 2024, including 300 seats from the acquisition of Unidom[14] - Unidom contributed R$32,421 in revenue and R$16,396 in income before income taxes to the company in 2024, with potential revenue increases if additional medical school seats are approved[60] - The Company has a focus on expanding its network of higher education institutions, particularly in the medical field, across 19 Brazilian states[10] Expenses and Costs - Total costs and expenses for the nine-month period ended September 30, 2024, were R$1,693,382,000, compared to R$1,559,944,000 in 2023, indicating an increase of 8.5%[131] - The company reported a finance income of R$79,659 and finance expenses of R$322,420 for the nine-month period ended September 30, 2024[40] - The company recognized a lease expense of R$5,450 for short-term leases and low-value assets for the nine-month period ended September 30, 2024, down from R$7,688 for the same period in 2023[88] Shareholder Information - The company reported a share-based compensation expense of R$14,572 for the nine-month period ended September 30, 2024, compared to R$13,522 for the same period in 2023[117] - Dividends paid in the nine-month period ended September 30, 2024, totaled R$58,236, an increase from R$53,291 in the same period of 2023[122] - The company's outstanding stock options as of September 30, 2024, were 1,543,479, down from 1,538,469 in the previous year[117] - The company has a share repurchase program approved for up to 2,000,000 Class A common shares, effective from March 24, 2023, until December 31, 2024[123] Tax and Legal Matters - The statutory income tax rate remained at 34%, resulting in income taxes at the statutory rate of R$177,150 for the nine-month period ended September 30, 2024, compared to R$114,521 in 2023[134] - The company recognized a fiscal incentive under PROUNI, resulting in a tax benefit of R$279,487 for the nine-month period ended September 30, 2024[134] - Total provisions related to legal proceedings as of September 30, 2024, amounted to R$115,042, a decrease from R$134,068 as of September 30, 2023[137] - The company added R$35,060 in provisions for legal proceedings during the nine-month period ended September 30, 2024[137] Goodwill and Intangible Assets - The net book value of intangible assets as of September 30, 2024, reached R$5,541,793, up from R$4,339,859 as of January 1, 2023, indicating an increase of about 27.6%[80] - Goodwill increased to R$1,521,071 as of September 30, 2024, from R$1,328,868 as of September 30, 2023, representing a growth of approximately 14.5%[80] - The total cost of licenses with indefinite useful life as of September 30, 2024, was R$3,362,420, an increase from R$2,776,078 as of September 30, 2023, reflecting a growth of approximately 21.1%[80] - The company reported a business combination resulting in an increase of R$653,550 in intangible assets during the nine-month period ended September 30, 2024[80]

Afya Limited (NASDAQ:AFYA) Q2 2024 Earnings Conference Call August 14, 2024 5:00 PM ET Corporate Participants Renata Couto - Investor Relations Virgilio Gibbon - Chief Executive Officer Luis Andre Blanco - Chief Financial Officer Conference Call Participants Mirela Oliveira – Bank of America Lucca Marquezini - Itau Leandro Bastos - Citi Marcelo Santos - JPMorgan Mauricio Cepeda - Morgan Stanley Renata Couto Thank you for joining us for Afya's Conference Call. I'm here today with Afya's CEO, Virgilio Gibbon, ...

Afya Limited Unaudited interim condensed consolidated financial statements June 30, 2024 Afya Limited Unaudited interim condensed consolidated statements of financial position As of June 30, 2024 and December 31, 2023 (In thousands of Brazilian reais) | | Notes | June 30, 2024 | December 31, 2023 | | --- | --- | --- | --- | | | | (unaudited) | | | Assets | | | | | Current assets | | | | | Cash and cash equivalents | 4 | 723,408 | 553,030 | | Trade receivables | 5 | 595,134 | 546,438 | | Inventories | | 344 ...

Afya Limited (NASDAQ:AFYA) Q1 2024 Earnings Conference Call May 9, 2024 5:00 PM ET Company Participants Renata Couto - IR Virgilio Gibbon - CEO Luis Andre Blanco - CFO Conference Call Participants Lucca Marquezini - Itau Mirela Oliveira – Bank of America Marcelo Santos - JPMorgan Lucas Nagano - Morgan Stanley Leandro Bastos - Citi Renata Couto Good night, everyone. Thank you for joining us for Afya's First Quarter 2024 Conference Call. I'm here today with Afya's CEO, Virgilio Gibbon; and Luis Andre Blanco, ...

Afya Limited Unaudited interim condensed consolidated financial statements March 31, 2024 Afya Limited Unaudited interim condensed consolidated statements of financial position As of March 31, 2024 and December 31, 2023 | | Notes | March 31, 2024 | December 31, 2023 | | --- | --- | --- | --- | | | | (unaudited) | | | Assets | | | | | Current assets | | | | | Cash and cash equivalents | 4 | 611,077 | 553,030 | | Trade receivables | 5 | 536,175 | 546,438 | | Inventories | | 653 | 1,382 | | Recoverable taxes | ...

Acquisition Strategy - The company plans to continue acquiring medical higher education institutions and healthtech companies as part of its expansion strategy, which may involve material acquisitions[28]. - The company faces risks in identifying suitable acquisition opportunities and integrating acquired institutions, which could adversely affect its strategic objectives[28]. - The company may face challenges related to regulatory approvals for acquisitions, which could impose conditions or restrictions[28]. - The company’s growth strategy may be materially affected if it cannot obtain adequate financing on favorable terms for acquisitions and expansion plans[31]. - Acquisitions contributed approximately 45.2% of total revenue growth in 2023[162]. - The company has a strong acquisition track record, having increased medical school seats by over 27.4% in 2021 and over 36% in 2020 through various acquisitions[193]. - The company intends to selectively pursue M&A opportunities to enhance its medical education services and product portfolio[193]. Financial Risks and Performance - The concentration of revenues in tuition fees for medical courses and health sciences programs poses a risk, as economic or regulatory factors could decrease demand[21]. - The company may require additional funds to support its expansion strategy, and failure to secure financing could materially affect growth plans[21]. - High inflation and economic uncertainty in Brazil could harm the company's financial condition and market performance[23]. - The company may face significant challenges in raising additional capital due to current macroeconomic trends, including high interest rates and rising inflation[31]. - The company reported payroll administrative expenses of 51.1%, 53.1%, and 53.1% for the years ended December 31, 2023, 2022, and 2021, respectively, indicating a significant portion of costs related to labor unions in the higher education sector[74]. - The company generated R$376.1 million in revenue from residency preparatory courses and continuing medical education in 2023[164]. - The company's revenue for the year ended December 31, 2023, was R$2,875.9 million, representing a CAGR of 29.3% since 2021[164]. - Net income for 2023 was R$405.4 million, reflecting a CAGR of 29.4% since 2021[164]. - Adjusted EBITDA for 2023 totaled R$1,165.7 million, with a CAGR of 24.3% since 2021[164]. Regulatory and Compliance Challenges - The company may face liability for incidents at campuses, which could harm its reputation and financial results[50]. - Non-compliance with MEC regulations could lead to sanctions, including suspension of new student admissions and potential penalties affecting operational capabilities[53]. - The company is subject to regular evaluations by MEC, and lower scores could result in decreased enrollments and perceptions of reduced educational quality[52]. - The company may face challenges in maintaining compliance with evolving regulations, which could impact its ability to operate and affect financial performance[56]. - The company is subject to the LGPD, which imposes penalties for non-compliance, including fines of up to 2% of revenue, capped at R$50,000,000[1]. - The company faces potential increased operational and compliance costs due to the complexity of adapting to the LGPD and other privacy regulations[1]. - The company is at risk of regulatory scrutiny and potential sanctions due to its reliance on third-party collaborators for compliance and regulatory activities[1]. Market and Economic Conditions - The Brazilian government's influence on the economy, including interest rate changes and fiscal policies, could impact the company's operations and share price[23]. - Delays in tuition payments from the FIES program may adversely affect cash flows and overall business performance[22]. - Changes to the FIES program may adversely affect cash flows and the number of students enrolled, impacting revenues[34]. - The Brazilian economy experienced a GDP contraction of 4.1% in 2020, followed by growth of 4.6% in 2021, 3.0% in 2022, and 2.9% in 2023[108]. - Brazilian inflation rates were reported at 10.1%, 5.8%, and 4.6% as of December 31 for the years 2021, 2022, and 2023 respectively[106]. - The SELIC rate was increased from 2.75% in March 2021 to 13.75% by August 2022, before being reduced to 10.75% by April 2024[106]. - Political instability in Brazil, including ongoing investigations into corruption, has negatively impacted investor confidence and market perception[105]. Operational Challenges - The company is experiencing significant expansion-related issues, including cash flow management and corporate culture preservation, which may divert management's attention from other business opportunities[47]. - The ability to attract and retain key personnel is critical for the company's success, with a competitive market for qualified employees posing a risk to operational continuity[48]. - The company faces significant competition in distance learning, which may impact its market share and profitability if it fails to adapt[43]. - The company’s ability to maintain quality standards while expanding new campuses is critical to avoid losing market share[42]. - The company faces challenges in updating and developing educational programs to remain competitive, which may adversely affect student attraction and retention[47]. Student Enrollment and Satisfaction - As of December 31, 2023, Afya Brazil had 66,034 undergraduate students, with 42,563 in health-related fields and 23,471 in non-health-related fields[147]. - The company achieved a Net Promoter Score (NPS) of 40 for medical students graduating less than two years ago, indicating high satisfaction levels[177]. - Increased student attrition rates may negatively impact enrollment numbers and revenue, particularly during economic uncertainty[50]. - The average payback period for medical graduates in Brazil is five years, with nearly 100% employability[216]. Strategic Initiatives and Future Plans - The company aims to maintain its status as a foreign private issuer, which could significantly reduce regulatory and compliance costs compared to U.S. domestic issuers[137]. - The company plans to open seven new medical school campuses under the "Mais Médicos" program, contributing an additional 350 medical school seats per year[150]. - The company aims to expand its network of medical school seats to approximately 3,113 operating seats by the end of 2023, up from 2,773 in 2022[157]. - The company plans to expand its distribution channels by launching graduate courses or CME for third-party continuing medical education hubs[192]. - The company aims to develop new products, including new medical webseries seasons and a virtual reality product, to meet growing student demands[196]. Intellectual Property and Brand Management - The company has 375 trademark registrations in Brazil and 169 pending trademark applications, indicating a focus on protecting intellectual property[57]. - The company has no issued patents as of the report date, which may limit its competitive advantages in the market[57]. - The company is exposed to potential intellectual property claims that could be costly to defend and harm its financial condition if not resolved favorably[60]. - Maintaining brand recognition is critical for the company, as failure to enhance brand awareness could lead to reduced student enrollments and negatively impact financial results[52]. Environmental and Social Governance (ESG) - The company acknowledges climate change as a risk factor that could impact its supply chain and operational stability due to extreme weather events[1]. - The company is committed to reducing its carbon footprint by transitioning to digital educational materials, minimizing physical printing[1]. - Failure to meet ESG commitments could materially impact the company's reputation and financial condition[1]. - The company may face increased compliance costs and regulatory requirements related to environmental matters, which could affect its business opportunities[1].