Afya(US:AFYA)2025-11-12 23:00Financial Data and Key Metrics Changes - Revenue for the nine-month period grew over 13% year over year, reaching BRL 2,784 million, with adjusted EBITDA growth of almost 19% year over year, reaching BRL 1,292 million [5][19] - Adjusted EBITDA margin for the same period reached 46.4%, an increase of 200 basis points over last year [5][19] - Net income reached BRL 593 million, a growth of 20% year over year, with basic EPS reaching BRL 6.40, also a 20% increase [6][21] - Cash flow from operating activities rose by 11%, ending the nine-month period at BRL 1,292 million, with a cash conversion of 101.5% [5][20] Business Line Data and Key Metrics Changes - The undergraduate segment saw a 6% growth in the number of medical students, reaching over 25,000, while approved medical seats increased by almost 2% [6][13] - Continuing Education segment revenue grew by 11% year over year, reaching BRL 208 million [7][15] - Medical Practice Solutions revenue increased over 9% year over year, reaching BRL 128 million [7][16] - The ecosystem reached 304,000 active users, indicating strong engagement among physicians and medical students [7][17] Market Data and Key Metrics Changes - The number of paying users in Medical Practice Solutions reached 195,000, a 2% decrease year over year, while monthly active users accounted for 228,000, down from 249,000 [16] - Continuing education saw a 36% decrease in residency journey students, while graduate journey students grew by 26% [15][66] Company Strategy and Development Direction - The company aims to maintain leadership in medical education and expand its ecosystem, focusing on sustainable growth and social impact through initiatives like Instituto AFIA [10][11] - The company is exploring M&A opportunities and evaluating capital allocation strategies, including potential increases in dividends and share buybacks [31][38] Management's Comments on Operating Environment and Future Outlook - Management expects effective tax rates to converge to 15% from 2026 onwards due to new tax regulations [30] - The company remains optimistic about future growth opportunities and is confident in its ability to create value for shareholders [25][40] Other Important Information - The company has been recognized for its ESG initiatives, receiving the Valor 1,000 award for its performance in the education sector [11] - The company has strengthened its financial position through liability management, including the issuance of commercial notes [22][23] Q&A Session Summary Question: Effective tax rate and capital allocation strategy - The effective tax rate for the nine-month period was 9.7%, up from 5.1% last year, primarily due to provisions for new tax regulations [29] - The company is evaluating various capital allocation strategies, including M&A, buybacks, and dividends [32] Question: Capital allocation strategies and 2026 intake cycle - The company is analyzing M&A opportunities and plans to maintain around 200 approved medical seats per year [38] - Tuition for 2026 is expected to increase by around 5% to 5.2% over 2025 [40] Question: Ticket readjustment and demand for medical careers - The average ticket is expected to grow around 5%, with demand for medical careers remaining stable compared to last year [44][45] Question: Gross margins in Medical Practice Solutions and subscriber trends - Gross margins in Medical Practice Solutions increased due to cost management initiatives [50] - The company is reviewing its pricing strategy for clinical decision software to regain subscriber growth [52] Question: Recently acquired units and EBITDA margin expansion - The ramp-up for recently acquired units is expected to take time, with margins improving as student numbers increase [61] - The company has achieved significant margin expansion and continues to seek efficiencies across its segments [66] Question: Continuing education segment trends - The drop in residency journey students is a one-time effect due to a change in product offerings [67]