Impressive Adjusted EBITDA Margin
Expansion
Robust EPS Expansion
Expressive Cash Generation
Afya Limited (Nasdaq: AFYA; B3: A2FY34) (“Afya” or the
“Company”), the leading medical education group and medical
practice solutions provider in Brazil, reported today financial and
operating results for the three and nine-month periods ended
September 30, 2024 (third quarter 2024). Financial results are
expressed in Brazilian Reais and are presented in accordance with
International Financial Reporting Standards (IFRS).
Third Quarter 2024 Highlights
- 3Q24 Net Revenue increased 16.3% YoY to R$841.2 million. Net
Revenue excluding acquisitions grew 11.8%, reaching R$808.8
million.
- 3Q24 Adjusted EBITDA increased 25.0% YoY reaching R$347.9
million, with an Adjusted EBITDA Margin of 41.4%. Adjusted EBITDA
Margin increased 290 bps YoY. Adjusted EBITDA excluding
acquisitions grew 18.2%, reaching R$328.9 million, with an Adjusted
EBITDA Margin of 40.7%.
- 3Q24 Net Income increased 26.4% YoY, reaching R$124.1 million,
and Adjusted Net Income increased 28.8% YoY, reaching R$165.4
million. Adjusted EPS growth was 29.9% in the same period.
Nine Months 2024 Highlights
- 9M24 Net Revenue increased 14.4% YoY to R$2,455.3 million. Net
Revenue excluding acquisitions grew 12.9%, reaching R$2,422.9
million.
- 9M24 Adjusted EBITDA increased 24.3% YoY reaching R$1,089.6
million, with an Adjusted EBITDA Margin of 44.4%. Adjusted EBITDA
Margin increased 350 bps YoY. Adjusted EBITDA excluding
acquisitions grew 22.1%, reaching R$1,070.6 million, with an
Adjusted EBITDA Margin of 44.2%.
- 9M24 Net Income increased 63.0% YoY, reaching R$494.6 million,
and Adjusted Net Income increased 46.9% YoY, reaching R$626.7
million. Adjusted EPS growth was 48.7% in the same period.
- Operating Cash Conversion ratio of 109.7%, with a solid cash
position of R$836.9 million.
- ~326 thousand users in Afya’s ecosystem.
Table 1: Financial Highlights
Three months period ended
September 30,
Nine months period ended
September 30,
(in thousand of R$)
2024
2024 Ex Acquisitions*
2023
% Chg % Chg Ex Acquisitions
2024
2024 Ex Acquisitions*
2023
% Chg % Chg Ex Acquisitions (a) Net Revenue
841,185
808,763
723,479
16.3%
11.8%
2,455,314
2,422,892
2,146,047
14.4%
12.9%
(b) Adjusted EBITDA 2
347,949
328,924
278,393
25.0%
18.2%
1,089,628
1,070,603
876,766
24.3%
22.1%
(c) = (b)/(a) Adjusted EBITDA Margin
41.4%
40.7%
38.5%
290 bps 220 bps
44.4%
44.2%
40.9%
350 bps 330 bps Net income
124,142
-
98,220
26.4%
-
494,641
-
303,530
63.0%
-
Adjusted Net income
165,372
-
128,393
28.8%
-
626,683
-
426,675
46.9%
-
*For the three months period ended September 30, 2024, "2024 Ex
Acquisitions" excludes: UNIDOM (July to September, 2024; Closing of
UNIDOM was in July 2024). *For the nine months period ended
September 30, 2024, "2024 Ex Acquisitions" excludes: UNIDOM (July
to September, 2024; Closing of UNIDOM was in July 2024). (2) See
more information on "Non-GAAP Financial Measures" (Item 08).
Message from Management
We are pleased to announce another quarter of solid results,
marked by strong cash generation, consistent margin expansion, and
progress in our strategic initiatives. This performance underscores
the differentials of Afya’s business model centered on the entire
physician career and the successful execution of our growth
strategy, as we continue advancing our mission to integrate
education and digital solutions for the medical journey, enhancing
training, updating, assertiveness, productivity, and physicians'
connections with the healthcare ecosystem.
Our EBITDA margin expansion was largely supported by the
integration of UNIMA and FCM Jaboatão delivered in 4Q23, the
ramp-up of the four Mais Médicos campuses launched in 3Q22,
restructuring efforts within the Continuing Education and Medical
Practice Solutions, and improved cost management in Selling,
General, and Administrative expenses.
This quarter, we completed the acquisition of Unidom adding 300
medical seats, strengthening our presence in Salvador, one of
Brazil’s largest cities. Through dedicated efforts, we achieved a
robust medical students’ intake at Unidom with more than 300
students enrolled in the 2nd half just one month after the
acquisition, reinforcing the impact of our ecosystem and brand
recognition throughout the country.
Additionally, we received authorization from Brazil’s Ministry
of Education (“MEC”), to increase 80 medical seats at UNIMA and the
reconsideration of 10 medical seats at Unigranrio in Rio de
Janeiro, bringing our total approved seats across all campuses to
3,593. These expansions are aligned with our commitment to
providing access to quality medical education and meeting the
demand for healthcare professionals.
During our Afya Day event in October, we also announced a
projected 5.1% increase in tuition fees for new students in 2025,
above inflation expectations for 2024, which reflect the continued
strength of our value proposition and the recognition of our
brand.
For the nine-month period, Net Revenue increased across all
three segments. For Medical Practice Solutions we have seen a
robust 15% increase in Net Revenue compared to the nine-month
period of the prior year. Reaffirming the immense potential of our
Solutions.
For our Undergrad segment, Net Revenue grew by 14% when compared
to the same period last year. Mainly supported by medical tickets
increasing above inflation, the maturation of the medical seats, in
addition to the acquisition of Unidom and increase of medical seats
approved. Afya has concluded a very successful intake process in
2024 with more than 6 candidates per seat considering all 32
campuses reflecting the strengthening of Afya’s brand recognition
and reputation among the medical community.
In our Continuing Education segment, we are also proud to see
another year of organic growth. Net Revenue increased over 10% in
the nine-month period. Through a robust intake process, with the
establishment of four new campuses in 2024 alone, we can see once
more, our students, employees, and partners benefit from our
constantly developing ecosystem.
It is worth mentioning that our ecosystem has reached today 326
thousand active users, adopting at least one of Afya’s solutions.
This achievement is complemented by a high level of satisfaction,
reflecting the strong recognition and trust in Afya’s brand and its
ecosystem
Our commitment to high-quality education and comprehensive
support for healthcare professionals remains at the core of our
mission. Afya’s focus on operational excellence, strategic
expansions, and sustainable growth positions us for continued
success. We remain steadfast in our vision to transform health
together with those who have medicine as a vocation, leveraging our
ecosystem to create long-lasting value for all stakeholders.
1. Key Events in the Quarter:
- On July 1, 2024, Afya Participações announced the closing of
its acquisition of 100% of the total share capital of Unidom
Participações S.A. (“Unidom”) which encompasses Unidompedro and
Faculdade Dom Luiz, both located in the State of Bahia with
operations in the cities of Salvador, Luis Eduardo Magalhães,
Barreiras and Ribeira do Pombal. The acquisition contributes 300
operational medical school seats to Afya in Salvador, one of
Brazil's largest cities. The authorization request for these 300
seats was made to MEC before the Mais Médicos´ Law was enacted and
MEC concluded its analysis and issued Ordinance 630/2020
("Ordinance") in 2020 to partially authorize the operation
considering 125 medical seats. In 2021, as a result of a judicial
order, MEC reviewed the Ordinance to authorize the 300 seats
initially requested by Unidompedro. Said decision was confirmed by
a judgment in 2023. Currently, Unidompedro has 300 seats
authorized, of which 125 are final and 175 are subject to a final
conclusion of the aforementioned court proceedings. The aggregate
purchase price (enterprise value) was R$660.0 million, and the
estimated Net Debt was deducted from the down payment. The price
and payment conditions are:
- R$347.8 million, deducted from the estimated Net Debt, was paid
in cash at closing.
- R$312.2 million will be paid in up to 10 annual installments of
R$31.2 million, adjusted by the CDI (Interbank Certificate of
Deposit) rate. Afya expects an EV/EBITDA of 4.2x at maturity and
post-synergies (2027).
- On July 12, 2024, the Secretary of Regulation and Supervision
of Higher Education of MEC authorized the increase of 80 medical
school seats of UNIMA, located in the city of Maceió, State of
Alagoas, which will result in an additional payment of R$1.25
million per increased medical school seat, updated by IPCA since
January 2, 2023 until the payment date to the selling shareholders
of DelRey. With this authorization, Afya reaches 220 medical school
seats on this campus.
- On August 30, 2024, has received the total disbursement of
R$500.0 million under the loan agreement with International Finance
Corporation ("IFC") to finance its expansion program, through
acquisitions. The financing is IFC’s first sustainability-linked
loan based on social targets in the education sector. The pricing
of IFC’s loan will be linked to Afya reaching performance target
levels in selected social key performance indicators encompassing
free medical consultations for the community and quality of
education according to Brazil’s Ministry of Education criteria
(“Sustainability KPIs”). According to the financing terms, the loan
shall be repaid in seven equal semi-annual installments starting in
April 2027. The interest rate is the Brazilian CDI rate plus 1.2%,
and it may be reduced by 15 bps if the Sustainability KPIs are
achieved.
- On September 6, 2024, Afya Participações announced that
following the conclusion of an administrative procedure, MEC has
granted the request for reconsideration submitted by Unigranrio.
Per the e-MEC portal, Unigranrio reestablished 10 medical seats in
the city of Rio de Janeiro, reaching 318 medical seats across both
Unigranrio campuses, contributing to Afya´s 3,593 total approved
medical seats.
2. 2024 Guidance
Afya reaffirms the Guidance FY2024, which was updated upward at
the end of 2Q24 to encompass the acquisition of Unidom, the
authorization of 80 seats in UNIMA, and the performance of the
first semester.
Guidance for 2024 Net Revenue 1 R$ 3,225 mn ≤ ∆ ≤ R$ 3,325
mn Adjusted EBITDA R$ 1,375 mn ≤ ∆ ≤ R$ 1,475 mn CAPEX 2 R$ 220 mn
≤ ∆ ≤ R$ 260 mn (1) Excludes any acquisition that may be concluded
after the issuance of the guidance, notably, the Unidom acquisition
was included in the guidance provided (2) The 2024 Capex guidance
does not encompass the earn-out payment in the amount of R$49.6
million related to the 40-seat increase at Faculdades Integradas
Padrão (FIP Guanambi), and also excludes the earn-out payment due
to UNIMA Alagoas for the 80-seat increase in July 2024.
3. 3Q24 Overview
Segment Information
The Company has three reportable segments as follows:
Undergrad, which provides educational services through
undergraduate courses related to medical school, undergraduate
health science and other ex-health undergraduate programs;
Continuing education, which provides medical education
(including residency preparation programs, specialization test
preparation and other medical capabilities), specialization and
graduate courses in medicine, delivered through digital and
in-person content; and
Medical Practice solutions, which provides clinical decision,
clinical management and doctor-patient relationships for physicians
and provide access, demand and efficiency for the healthcare
players.
Key Revenue Drivers – Undergraduate Programs
Table 2: Key Revenue Drivers Nine months period ended
September 30
2024
2023
% Chg Undergrad Programs MEDICAL SCHOOL
Approved Seats
3,593
3,163
13.6%
Operating Seats 1
3,543
3,113
13.8%
Total Students (end of period)
24,234
21,556
12.4%
Average Total Students
23,168
21,056
10.0%
Average Total Students (ex-Acquisitions)*
22,782
21,056
8.2%
Net Revenue (Total - R$ '000)
1,852,742
1,607,217
15.3%
Net Revenue (ex- Acquisitions* - R$ '000)
1,822,157
1,607,217
13.4%
Medical School Net Avg. Ticket (ex- Acquisitions* -
R$/month)
8,887
8,481
4.8%
UNDERGRADUATE HEALTH SCIENCE Total Students (end of period)
25,950
21,564
20.3%
Average Total Students
25,028
21,447
16.7%
Average Total Students (ex-Acquisitions)*
24,810
21,447
15.7%
Net Revenue (Total - R$ '000)
170,520
151,833
12.3%
Net Revenue (ex- Acquisitions* - R$ '000)
169,733
151,833
11.8%
OTHER EX- HEALTH UNDERGRADUATE Total Students (end of
period)
27,855
24,286
14.7%
Average Total Students
27,745
24,625
12.7%
Average Total Students (ex-Acquisitions)*
27,302
24,625
10.9%
Net Revenue (Total - R$ '000)
132,633
124,038
6.9%
Net Revenue (ex- Acquisitions* - R$ '000)
131,583
124,038
6.1%
Total Net Revenue Net Revenue (Total - R$ '000)
2,155,895
1,883,089
14.5%
Net Revenue (ex- Acquisitions* - R$ '000)
2,123,473
1,883,089
12.8%
*For the nine months period ended September 30, 2024, "2024 Ex
Acquisitions" excludes: UNIDOM (July to September, 2024; Closing of
UNIDOM was in July 2024). (1) The difference between approved and
operating seats is 'Cametá'. A campus for which we already have the
license but haven't started operations.
Key Revenue Drivers – Continuing Education
Table 3: Key Revenue Drivers Nine months period ended
September 30
2024
2023
% Chg Continuing Education 1 Total Studends (end
of period) Residency Journey - Business to Physicians B2P 2
15,678
10,325
51.8%
Graduate Journey - Business to Physicians B2P
7,293
7,063
3.3%
Other Courses - B2P and Business to Business Offerings
29,780
24,385
22.1%
Total Students (end of period)
52,751
41,773
26.3%
Net Revenue (R$ '000) Business to Physicians - B2P
175,002
153,792
13.8%
Business to Business - B2B
12,730
16,216
-21.5%
Total Net Revenue
187,731
170,010
10.4%
(1) The figure above does not contemplate intercompany transactions
(2) 'Content & Technology for Medical Education' which had been
reported in 'Digital Services' table, has been reclassified to
'Continuing Education'
Key Revenue – Medical Practice Solutions
Table 4: Key Revenue Drivers Nine months period ended
September 30
2024
2023
% Chg Medical Practice Solutions 1 Active Payers
(end of period) Clinical Decision
166,780
150,796
10.6%
Clinical Management
33,503
29,281
14.4%
Total Active Payers (end of period)
200,283
180,077
11.2%
Monthly Active Users (MaU) Total Monthly Active Users
(MaU) - Digital Services 2
248,775
259,259
-4.0%
Net Revenue (R$ '000) Business to Physicians - B2P
99,707
88,485
12.7%
Business to Business - B2B
17,583
13,803
27.4%
Total Net Revenue
117,290
102,289
14.7%
(1) The figure above does not contemplate intercompany transactions
(2) 'Content & Technology for Medical Education' is now being
reported in Continuing Education table
Key Operational Drivers – Users Positively Impacted by
Afya
Users Positively Impacted by Afya represents the total number of
medical students from the Undergrad segment, students from the
Continuing Education and users from Medical Practice Solutions. For
the third quarter of 2024, Afya’s ecosystem reached 325,760 users,
in line with the same period of the prior year.
Table 5: Key Revenue Drivers Nine months period ended
September 30
2024
2023
% Chg Users Positively Impacted by Afya 1 Undergrad
(Total Medical School Students - End of Period)
24,234
21,556
12.4%
Continuing Education (Total Students - End of Period)
52,751
41,773
26.3%
Medical Practice Solutions (Monthly Active Users)
248,775
259,259
-4.0%
Ecosystem Outreach
325,760
322,588
1.0%
(1) Ecosystem outreach does not contemplate intercompany figures.
Note that there may be overlap in student numbers within the data.
Seasonality of Operations
Undergrad tuition revenues are related to the intake process,
and monthly tuition fees charged to students and do not
significantly fluctuate during each semester.
Continuing education revenues are mostly related to: (i) monthly
intakes and tuition fees on medical education, which do not have a
considerable concentration in any period; (ii) Residence journey
product revenues, derived from e-books transferred at a point of
time, which are concentrated at in the first and last quarter of
the year due to the enrollments.
Medical Practice Solutions are comprised mainly of Afya
Whitebook and Afya iClinic revenues, which do not significantly
fluctuate regarding seasonality.
Net Revenue
Net Revenue for the third quarter of 2024 was R$841.2 million,
an increase of 16.3% over the same period in the prior year.
Excluding acquisitions, Net Revenue in the third quarter increased
11.8% YoY to R$808.8 million. For the nine-month period ending
September 30, 2024, Net Revenue was R$2,455.3 million, reflecting a
14.4% increase over the same period of last year. Excluding
acquisitions, Net Revenue in the nine-month period increased 12.9%
YoY to R$2,422.9 million.
The revenue increase was mainly due to higher tickets in
Medicine courses, the maturation of medical seats, the 40-seat
expansion in the Guanambi campus, the Continuing Education intake
performance, and the execution of Medical Practice Solutions.
Specifically, in the third quarter, we also had the impact of 80
new seats at UNIMA and the reconsideration of 10 seats at
Unigranrio (Rio de Janeiro). Additionally, on July 1, 2024, Afya
acquired Unidom.
Table 6: Revenue & Revenue Mix (in thousands of R$)
Three months period ended September 30, Nine months
period ended September 30,
2024
2024 Ex Acquisitions*
2023
% Chg % Chg Ex Acquisitions
2024
2024 Ex Acquisitions*
2023
% Chg % Chg Ex Acquisitions Net Revenue Mix Undergrad
741,729
709,307
636,849
16.5%
11.4%
2,155,895
2,123,473
1,883,089
14.5%
12.8%
Continuing Education
60,225
60,225
56,335
6.9%
6.9%
187,731
187,731
170,010
10.4%
10.4%
Medical Practice Solutions
40,436
40,436
34,450
17.4%
17.4%
117,290
117,290
102,289
14.7%
14.7%
Inter-segment transactions
- 1,205
- 1,205
- 4,155
-71.0%
-71.0%
-5,602
-5,602
-9,341
-40.0%
-40.0%
Total Reported Net Revenue
841,185
808,763
723,479
16.3%
11.8%
2,455,314
2,422,892
2,146,047
14.4%
12.9%
*For the three months period ended September 30, 2024, "2024 Ex
Acquisitions" excludes: UNIDOM (July to September, 2024; Closing of
UNIDOM was in July 2024). *For the nine months period ended
September 30, 2024, "2024 Ex Acquisitions" excludes: UNIDOM (July
to September, 2024; Closing of UNIDOM was in July 2024).
Adjusted EBITDA
Adjusted EBITDA for the three-month period ended September 30,
2024, increased by 25.0% to R$347.9 million, up from R$278.4
million in the same period of the prior year, with the Adjusted
EBITDA Margin rising by 290 basis points to 41.4. For the
nine-month period ending September 30, 2024, Adjusted EBITDA was
R$1,089.6 million, an increase of 24.3% over the same period of the
prior year, accompanied by an Adjusted EBITDA Margin increase of
350 basis points in the same period.
The Adjusted EBITDA Margin expansion is primarily attributable
to: (a) gross margin expansion in the Undergrad Segment; (b)
completion of UNIMA and FCM Jaboatão integration process in
November 2023; (c) the ramp-up of the four Mais Médicos campuses
that started operation in 3Q22; (d) operational restructuring
efforts in Continuing Education and Medical Practice Solutions
segments; and (e) More efficiency in Selling, General and
Administrative expenses.
Table 7: Reconciliation between Adjusted EBITDA and Net
Income (in thousands of R$)
Three months period ended
September 30, Nine months period ended September 30,
2024
2023
% Chg
2024
2023
% Chg
Net income
124,142
98,220
26.4%
494,641
303,530
63.0%
Net financial result
99,844
80,535
24.0%
242,761
267,313
-9.2%
Income taxes expense
12,432
12,146
2.4%
26,388
33,296
-20.7%
Depreciation and amortization
85,828
73,908
16.1%
249,135
212,172
17.4%
Interest received 1
13,945
10,619
31.3%
34,979
25,760
35.8%
Income share associate
(2,526)
(615)
310.7%
(9,726)
(7,671)
26.8%
Share-based compensation
5,871
6,684
-12.2%
26,299
20,082
31.0%
Non-recurring expenses:
8,413
(3,104)
n.a.
25,151
22,284
12.9%
- Integration of new companies 2
6,444
7,769
-17.1%
17,722
19,951
-11.2%
- M&A advisory and due diligence 3
1,220
703
73.5%
2,803
12,377
-77.4%
- Expansion projects 4
198
2,007
-90.1%
2,568
2,536
1.3%
- Restructuring expenses 5
551
3,722
-85.2%
2,058
5,673
-63.7%
- Mandatory Discounts in Tuition Fees 6
-
(493)
n.a.
-
(1,441)
n.a.
- Gain on tax amnesty 7
-
(16,812)
n.a.
-
(16,812)
n.a.
Adjusted EBITDA
347,949
278,393
25.0%
1,089,628
876,766
24.3%
Adjusted EBITDA Margin
41.4%
38.5%
290 bps
44.4%
40.9%
350 bps
(1) Represents the interest received on late payments of monthly
tuition fees. (2) Consists of expenses related to the integration
of newly acquired companies. (3) Consists of expenses related to
professional and consultant fees in connection with due diligence
services for our M&A transactions. (4) Consists of expenses
related to professional and consultant fees in connection with the
opening of new campuses. (5) Consists of expenses related to the
employee redundancies in connection with the organizational
restructuring of our acquired companies. (6) Consists of mandatory
discounts in tuition fees granted by state decrees,
individual/collective legal proceedings and public civil
proceedings due to COVID 19 on site classes restriction and
excludes any recovery of these discounts that were invoiced based
on the Supreme Court decision. (7) On August 10, 2023, Unigranrio
entered into a tax amnesty program on interest and penalties to
settle a tax proceeding in respect to ISS (city tax on services)
with the municipality of Rio de Janeiro, which result in a payment
of R$14,819 to settle the claim. The selling shareholders of
Unigranrio agreed to pay R$5,438 regarding this matter. The Company
had a provision of R$53,302 and an indemnification asset from the
selling shareholders of R$20,000 (in light of the indemnification
clauses as defined at acquisition of Unigranrio), in respect to
such tax proceeding. The difference between the provision,
indemnification asset and the actual paid amount was recorded as
Other income (expenses), net on the consolidated statement of
income and comprehensive income.
Adjusted Net Income
Net Income for the three-month period ended September 30, 2024
was R$124.1 million, an increase of 26.4% over the same period of
the prior year. Adjusted Net Income was R$165.4 million, which
resulted in an increase of 28.8% over the same period from the
previous year. For the nine-month period, Afya achieved a Net
Income of R$494.6 million, 63.0% higher than the same period of
2023, and an Adjusted Net Income of R$626.7 million which was 46.9%
higher than the previous period. This performance was mainly due
to: (a) enhancement of operational results; (b) lower effective tax
rates than last year; and (c) lower interest rates.
Adjusted EPS reached R$6.81 per share for the nine-month period
ended September 30, 2024, an increase of 48.7% YoY, reflecting the
increase in Net Income and capital allocation discipline.
Table 8: Adjusted Net Income (in thousands of R$)
Three
months period ended September 30, Nine months period ended
September 30,
2024
2023
% Chg
2024
2023
% Chg
Net income
124,142
98,220
26.4%
494,641
303,530
63.0%
Amortization of customer relationships and trademark 1
26,946
26,593
1.3%
80,592
80,779
-0.2%
Share-based compensation
5,871
6,684
-12.2%
26,299
20,082
31.0%
Non-recurring expenses:
8,413
(3,104
)
n.a.
25,151
22,284
12.9%
- Integration of new companies 2
6,444
7,769
-17.1%
17,722
19,951
-11.2%
- M&A advisory and due diligence 3
1,220
703
73.5%
2,803
12,377
-77.4%
- Expansion projects 4
198
2,007
-90.1%
2,568
2,536
1.3%
- Restructuring expenses 5
551
3,722
-85.2%
2,058
5,673
-63.7%
- Mandatory Discounts in Tuition Fees 6
-
(493
)
n.a.
-
(1,441
)
n.a. - Gain on tax amnesty 7
-
(16,812
)
n.a.
-
(16,812
)
n.a.
Adjusted Net Income
165,372
128,393
28.8%
626,683
426,675
46.9%
Basic earnings per share - in R$ 8
1.33
1.04
27.9%
5.35
3.21
66.6%
Adjusted earnings per share - in R$ 9
1.79
1.38
29.9%
6.81
4.58
48.7%
(1) Consists of amortization of customer relationships and
trademark recorded under business combinations. (2) Consists of
expenses related to the integration of newly acquired companies.
(3) Consists of expenses related to professional and consultant
fees in connection with due diligence services for our M&A
transactions. (4) Consists of expenses related to professional and
consultant fees in connection with the opening of new campuses. (5)
Consists of expenses related to the employee redundancies in
connection with the organizational restructuring of our acquired
companies. (6) Consists of mandatory discounts in tuition fees
granted by state decrees, individual/collective legal proceedings
and public civil proceedings due to COVID 19 on site classes
restriction and excludes any recovery of these discounts that were
invoiced based on the Supreme Court decision. (7) On August 10,
2023, Unigranrio entered into a tax amnesty program on interest and
penalties to settle a tax proceeding in respect to ISS (city tax on
services) with the municipality of Rio de Janeiro, which result in
a payment of R$14,819 to settle the claim. The selling shareholders
of Unigranrio agreed to pay R$5,438 regarding this matter. The
Company had a provision of R$53,302 and an indemnification asset
from the selling shareholders of R$20,000 (in light of the
indemnification clauses as defined at acquisition of Unigranrio),
in respect to such tax proceeding. The difference between the
provision, indemnification asset and the actual paid amount was
recorded as Other income (expenses), net on the consolidated
statement of income and comprehensive income. (8) Basic earnings
per share: Net Income/Weighted average number of outstanding
shares. (9) Adjusted earnings per share: Adjusted Net Income
attributable to equity holders of the Parent/Weighted average
number of outstanding shares.
Cash and Debt Position
As of September 30, 2024, Afya's Cash and Cash Equivalents stood
at R$836.9 million, marking a 51.3% increase compared to December
31, 2023. Net Debt, excluding IFRS 16 impacts, reached R$1,894.4
million—an increase of R$106.6 million over the same period of the
previous year. Despite the R$660.0 million acquisition of Unidom
and the R$157.2 million earn-out payment regarding the additional
seats in Guanambi and UNIMA, Afya’s Net Debt (excluding IFRS 16)
increased by only 4.4%, thanks to strong Cash Flow from operating
activities.
For the nine-month period ended September 30, 2024, Afya
reported Cash Flow from Operating Activities of R$1,167.5 million,
up from R$933.8 million in the same period of the previous year, an
increase of 25.0% YoY, boosted by solid operational results.
Operating Cash Conversion Ratio achieved 109.7%.
Table 9: Operating Cash Conversion Ratio Reconciliation
Nine months period ended September 30, (in thousands of R$)
Considering the adoption of IFRS 16
2024
2023
% Chg (a) Net cash flows from operating activities
1,148,175
896,202
28.1%
(b) Income taxes paid
19,290
37,599
-48.7%
(c) = (a) + (b) Cash flow from operating activities
1,167,465
933,801
25.0%
(d) Adjusted EBITDA
1,089,628
876,766
24.3%
(e) Non-recurring expenses:
25,151
22,284
12.9%
- Integration of new companies 1
17,722
19,951
-11.2%
- M&A advisory and due diligence 2
2,803
12,377
-77.4%
- Expansion projects 3
2,568
2,536
1.3%
- Restructuring Expenses 4
2,058
5,673
-63.7%
- Mandatory Discounts in Tuition Fees 5
0
-1,441
n.a. - Gain on tax amnesty 6
-
-16,812
n.a.
(f) = (d) - (e) Adjusted EBITDA ex- non-recurring
expenses
1,064,477
854,482
24.6%
(g) = (c) / (f) Operating cash conversion ratio
109.7%
109.3%
40 bps (1) Consists of expenses related to the integration
of newly acquired companies. (2) Consists of expenses related to
professional and consultant fees in connection with due diligence
services for M&A transactions. (3) Consists of expenses related
to professional and consultant fees in connection with the opening
of new campuses. (4) Consists of expenses related to the employee
redundancies in connection with the organizational restructuring of
acquired companies. (5) Consists of mandatory discounts in tuition
fees granted by state decrees, individual/collective legal
proceedings and public civil proceedings due to COVID 19 on site
classes restriction and excludes any recovery of these discounts
that were invoiced based on the Supreme Court decision. (6) On
August 10, 2023, Unigranrio entered into a tax amnesty program on
interest and penalties to settle a tax proceeding in respect to ISS
(city tax on services) with the municipality of Rio de Janeiro,
which result in a payment of R$14,819 to settle the claim. The
selling shareholders of Unigranrio agreed to pay R$5,438 regarding
this matter. The Company had a provision of R$53,302 and an
indemnification asset from the selling shareholders of R$20,000 (in
light of the indemnification clauses as defined at acquisition of
Unigranrio), in respect to such tax proceeding. The difference
between the provision, indemnification asset and the actual paid
amount was recorded as Other income (expenses), net on the
consolidated statement of income and comprehensive income.
The following table shows more information regarding the cost of
debt for 9M24, considering loans and financing and accounts payable
to selling shareholders. Afya’s capital structure remains solid,
with a conservative leveraging position and a low cost of debt.
Considering the updated mid guidance, Afya’s Net Debt (excluding
the effect of IFRS16) divided by the Adjusted EBITDA is 1.33x.
Table 10: Gross Debt and Average Cost of Debt (in millions
of R$)
For the closing of the nine months period ended in
September 30, Cost of Debt Gross Debt Duration
(Years) Per year %CDI²
2024
2023
2024
2023
2024
2023
2024
2023
Loans and financing: Softbank
828
826
1.6
2.6
6.5%
6.5%
51%
50%
Loans and financing: Debentures
511
512
2.8
3.9
12.1%
15.5%
112%
114%
Loans and financing: Others
309
570
1.0
1.4
12.8%
15.4%
119%
114%
Loans and financing: IFC
497
-
4.1
-
11.8%
-
110%
-
Accounts payable to selling shareholders
586
702
3.3
0.9
10.7%
12.8%
100%
96%
Total¹| Average
2,731
2,610
2.6
2.2
9.4%
11.8%
88%
88%
(1) Total ammount refers only to the "Gross Debt" columns (2) Based
on the annualized Interbank Certificates of Deposit ("CDI") rate
for the period as a reference: 9M24: ~10.65% p.y. and for 9M23:
~12.65% p.y.
Table 11: Cash and Debt Position (in thousands
of R$)
3Q24
FY2023
% Chg
3Q23
% Chg
(+) Cash and Cash Equivalents
836,876
553,030
51.3%
822,008
1.8%
Cash and Bank Deposits
5,594
11,746
-52.4%
11,107
-49.6%
Cash Equivalents
831,282
541,284
53.6%
810,901
2.5%
(-) Loans and Financing
2,145,270
1,800,775
19.1%
1,908,299
12.4%
Current
30,051
179,252
-83.2%
186,903
-83.9%
Non-Current
2,115,219
1,621,523
30.4%
1,721,396
22.9%
(-) Accounts Payable to Selling Shareholders
586,042
566,867
3.4%
651,068
-10.0%
Current
247,192
353,998
-30.2%
382,500
-35.4%
Non-Current
338,850
212,869
59.2%
268,568
26.2%
(-) Other Short and Long Term Obligations n.a.
50,469
-100.0%
(=) Net Debt (Cash) excluding IFRS 16
1,894,436
1,814,612
4.4%
1,787,828
6.0%
(-) Lease Liabilities
974,780
874,569
11.5%
869,729
12.1%
Current
45,133
36,898
22.3%
36,705
23.0%
Non-Current
929,647
837,671
11.0%
833,024
11.6%
Net Debt (Cash) with IFRS 16
2,869,216
2,689,181
6.7%
2,657,557
8.0%
CAPEX
Capital expenditures consist of the purchase of property and
equipment and intangible assets, including expenditures mainly
related to the expansion and maintenance of Afya’s campuses and
headquarters, leasehold improvements, and the development of new
solutions in the Medical Practice Solutions segment.
For the nine-month period ending September 30, 2024, CAPEX was
R$316.8 million. Excluding the one-off effect in the first quarter
of R$49.6 million regarding the earn-out of Guanambi, due to the
expansion of 40 seats as disclosed to the market in January 2024,
and the earn-out of UNIMA in the amount of R$107.6 million, due to
the expansion of 80 seats as disclosed to the market in July 2024
the CAPEX/Net Revenue ratio would be 6.5%.
Table 12: CAPEX (in thousands of R$)
For the nine months
period ended September 30,
2024
2023
% Chg
CAPEX
316,766
155,127
104.2%
Property and equipment
93,367
88,014
6.1%
Intanglibe assets
223,399
67,113
232.9%
- Licenses
157,227
0
n.a. - Others
66,172
67,113
-1.4%
ESG Metrics
ESG commitment is an important part of Afya’s strategy and
permeates the Company’s core values. Afya has been advancing year
after year on its core pillars and, since 2021, ESG metrics have
been disclosed in the Company’s quarterly financial results in
three key metrics, Governance and Employee Management,
Environmental and Social.
The 2023 Sustainability Report can be found at:
https://ir.afya.com.br/annual-report/
Table 13: ESG Metrics 1, 2 & 3
3Q24
3Q23
2023
#
GRI Governance and Employee Management
1
405-1
Number of employees
10,155
9,868
9,680
2
405-1
Percentage of female employees
59%
58%
58%
3
405-1
Percentage of female employees in the board of directors
30%
36%
36%
4
102-24
Percentage of independent member in the board of directors
40%
36%
36%
Environmental
5
Total renewable energy generated by own photovoltaic plants (MWh)
1,471,476
1,151,649
4,510,637
6
302-1
Total energy consumed (MWh)
5,644,403
6,078,952
24,036,608
7
302-1
% of renewable energy consumed from own generation
22.5%
16.4%
16.0%
8
302-1
% of energy consumed from the power grid
37.6%
56.7%
60.3%
9
302-1
% of energy consumed from the free market
39.9%
26.9%
23.7%
Social
10
413-1
Number of free clinical consultations offered by Afya
221,230
146,294
586,611
11
Number of physicians graduated in Afya's campuses
21,266
18,965
20,197
12
201-4
Number of students with financing and scholarship programs (FIES
and PROUNI)
11,636
10,628
10,584
13
% students with scholarships over total undergraduate students
14.9%
15.8%
16.0%
14
413-1
Hospital, clinics and city halls partnerships
567
664
649
(1) Some factors can influence in the adequate proportionality
analysis of data over the years, such as: climate changes, COVID-19
pandemic effects, seasonalities, number of employees, number of
students, number of active units, among others. (2) Starting in
2Q22, previously disclosed social data were updated to consider:
(a) the number of graduated physicians considering all units after
its closing, and (b) partnerships related only to medical schools.
(3) The number of students with financing and scholarship programs
(FIES and PROUNI) in 2023 excludes students from the Unima and FCM
Jaboatão acquisition, and for 3Q24, also excludes those from the
UNIDOM acquisition.
4. Conference Call and Webcast Information
When:
November 13, 2024 at 5:00 p.m. EST.
Who:
Mr. Virgilio Gibbon, Chief Executive
Officer
Mr. Luis André Blanco, Chief Financial
Officer
Ms. Renata Costa Couto, IR Director
Webcast:
https://afya.zoom.us/j/94887462478
OR
Dial-in:
Brazil: +55 11 4680 6788 or +55 11 4700 9668 or +55 21 3958 7888
or +55 11 4632 2236 or +55 11 4632 2237
United States: +1 301 715 8592 or +1 305 224 1968 or +1 309 205
3325 or +1 312 626 6799 or +1 346 248 7799 or +1 360 209 5623 or +1
386 347 5053 or +1 507 473 4847 or +1 564 217 2000 or +1 646 931
3860 or +1 669 444 9171 or +1 669 900 6833 or +1 689 278 1000 or +1
719 359 4580 or +1 929 205 6099 or +1 253 205 0468 or +1 253 215
8782
Webinar ID: 948 8746 2478
Other Numbers: https://afya.zoom.us/u/aAPTjXWSq
5. About Afya Limited (Nasdaq: AFYA; B3: A2FY34)
Afya is a leading medical education group in Brazil based on the
number of medical school seats, delivering an end-to-end
physician-centric ecosystem that serves and empowers students and
physicians to transform their ambitions into rewarding lifelong
experiences from the moment they join us as medical students
through their medical residency preparation, graduation program,
continuing medical education activities and offering medical
practice solutions to help doctors enhance their healthcare
services through their whole career. For more information, please
visit www.afya.com.br.
6. Forward – Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, which statements involve substantial risks and uncertainties.
All statements other than statements of historical fact could be
deemed forward looking, and include risks and uncertainties related
to statements about our competition; our ability to attract, upsell
and retain students; our ability to increase tuition prices and
prep course fees; our ability to anticipate and meet the evolving
needs of students and professors; our ability to source and
successfully integrate acquisitions; general market, political,
economic, and business conditions; and our financial targets such
as revenue, share count and IFRS and non-IFRS financial measures
including gross margin, operating margin, net income (loss) per
diluted share, and free cash flow. Forward-looking statements by
their nature address matters that are, to different degrees,
uncertain, such as statements about the potential impacts of the
COVID-19 pandemic on our business operations, financial results and
financial position and the Brazilian economy.
The Company undertakes no obligation to update any
forward-looking statements made in this press release to reflect
events or circumstances after the date of this press release or to
reflect new information or the occurrence of unanticipated events,
except as required by law. The achievement or success of the
matters covered by such forward-looking statements involves known
and unknown risks, uncertainties and assumptions. If any such risks
or uncertainties materialize or if any of the assumptions prove
incorrect, our results could differ materially from the results
expressed or implied by the forward-looking statements we make.
Readers should not rely upon forward-looking statements as
predictions of future events. Forward-looking statements represent
management’s beliefs and assumptions only as of the date such
statements are made. Further information on these and other factors
that could affect the Company’s financial results are included in
the filings made with the United States Securities and Exchange
Commission (SEC) from time to time, including the section titled
“Risk Factors” in the most recent Rule 434(b) prospectus. These
documents are available on the SEC Filings section of the investor
relations section of our website at: https://ir.afya.com.br/.
7. Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements,
which are prepared and presented in accordance with International
Financial Reporting Standards as issued by the International
Accounting Standards Board—IASB, Afya presents Adjusted EBITDA,
Operating Cash Conversion Ratio, Adjusted Net Income and Adjusted
EPS, which are non-GAAP financial measures, for the convenience of
investors. A non-GAAP financial measure is generally defined as one
that intends to measure financial performance but excludes or
includes amounts that would not be equally adjusted in the most
comparable GAAP measure.
Afya calculates Adjusted EBITDA as net income plus/minus net
financial result, plus income taxes expense, plus depreciation and
amortization, plus interest received on late payments of monthly
tuition fees, plus share-based compensation, plus/minus income
share associate, plus/minus non-recurring expenses/income.
Operating Cash Conversion Ratio is calculated as the Cash flow from
Operating Activities plus income taxes paid, minus/plus
non-recurring expenses/income divided by Adjusted EBITDA. The
calculation of Adjusted Net Income is the Net Income plus
amortization of customer relationships and trademark, plus
share-based compensation, plus/minus non-recurring expenses/income.
The calculation of Adjusted EPS is the Adjusted Net Income minus
the non-controlling interests divided by the Weighted average
number of outstanding shares.
The non-GAAP supplemental financial measures are provided with
the intend to help investors in assessing the overall performance
of Afya’s business regarding its core operations, cash generation
and profitability. The non-GAAP financial measures described in
this prospectus are not substitutes for the IFRS measures. In
addition, the calculations of Adjusted EBITDA, Operating Cash
Conversion Ratio, Adjusted Net Income and Adjusted EPS are not
standardized financial measures and may differ from the
calculations used by other companies, including competitors in the
education services industry, and therefore, Afya’s measures may not
be comparable to those of other companies.
8. Investor Relations Contact
E-mail: ir@afya.com.br
9. Financial Tables
Unaudited interim condensed
consolidated statements of income and comprehensive income
For the three and nine-month periods
ended September 30, 2024 and 2023
(In thousands of Brazilian reais,
except earnings per share information)
Three-month period
ended
Nine-month period
ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenue
841,185
723,479
2,455,314
2,146,047
Cost of services
(324,083)
(288,234)
(908,429)
(820,136)
Gross profit
517,102
435,245
1,546,885
1,325,911
Selling, general and administrative
expenses
(280,027)
(257,002)
(784,953)
(739,808)
Other income (expenses), net
(3,183)
12,043
(7,868)
10,365
Operating income
233,892
190,286
754,064
596,468
Finance income
30,396
34,771
79,659
86,259
Finance expenses
(130,240)
(115,306)
(322,420)
(353,572)
Net finance result
(99,844)
(80,535)
(242,761)
(267,313)
Share of income of associate
2,526
615
9,726
7,671
Income before income taxes
136,574
110,366
521,029
336,826
Income taxes expenses
(12,432)
(12,146)
(26,388)
(33,296)
Net income
124,142
98,220
494,641
303,530
Other comprehensive income
-
-
-
-
Total comprehensive income
124,142
98,220
494,641
303,530
Income attributable to:
Equity holders of the parent
119,979
93,347
481,583
288,263
Non-controlling interests
4,163
4,873
13,058
15,267
124,142
98,220
494,641
303,530
Basic earnings per common share
1.33
1.04
5.35
3.21
Diluted earnings per common share
1.31
1.03
5.28
3.18
Unaudited interim condensed
consolidated statements of financial position
As of September 30, 2024 and December
31, 2023
(In thousands of Brazilian
reais)
September 30, 2024
December 31, 2023
(unaudited)
Assets
Current assets
Cash and cash equivalents
836,876
553,030
Trade receivables
552,381
546,438
Inventories
235
1,382
Recoverable taxes
41,424
43,751
Other assets
45,304
58,905
Total current assets
1,476,220
1,203,506
Non-current assets
Trade receivables
36,940
39,485
Other assets
117,789
117,346
Investment in associate
55,365
51,834
Property and equipment
639,187
608,685
Right-of-use assets
846,333
767,609
Intangible assets
5,541,793
4,796,016
Total non-current assets
7,237,407
6,380,975
Total assets
8,713,627
7,584,481
Liabilities
Current liabilities
Trade payables
129,920
108,222
Loans and financing
30,051
179,252
Lease liabilities
45,133
36,898
Accounts payable to selling
shareholders
247,192
353,998
Advances from customers
154,759
153,485
Labor and social obligations
269,381
192,294
Taxes payable
32,470
27,765
Income taxes payable
12,066
3,880
Other liabilities
4,213
2,773
Total current liabilities
925,185
1,058,567
Non-current liabilities
Loans and financing
2,115,219
1,621,523
Lease liabilities
929,647
837,671
Accounts payable to selling
shareholders
338,850
212,869
Taxes payable
86,016
88,198
Provision for legal proceedings
115,042
104,361
Other liabilities
52,025
18,280
Total non-current liabilities
3,636,799
2,882,902
Total liabilities
4,561,984
3,941,469
Equity
Share capital
17
17
Additional paid-in capital
2,344,053
2,365,200
Treasury shares
(276,944)
(299,150)
Share-based compensation reserve
181,372
155,073
Retained earnings
1,861,948
1,380,365
Equity attributable to equity holders
of the parent
4,110,446
3,601,505
Non-controlling interests
41,197
41,507
Total equity
4,151,643
3,643,012
Total liabilities and equity
8,713,627
7,584,481
Unaudited interim condensed
consolidated statements of cash flows
For the nine-month periods ended
September 30, 2024 and 2023
(In thousands of Brazilian
reais)
September 30, 2024
September 30, 2023
(unaudited)
(unaudited)
Operating activities
Income before income taxes
521,029
336,826
Adjustments to reconcile income before
income taxes
Depreciation and amortization
249,135
212,172
Write-off of property and equipment
2,108
1,209
Write-off of intangible assets
243
288
Allowance for expected credit losses
41,589
57,160
Share-based compensation
26,299
20,082
Net foreign exchange differences
7,462
448
Accrued interest
166,343
224,349
Accrued interest on lease liabilities
82,803
74,867
Share of income of associate
(9,726)
(7,671)
Provision (reversal) for legal
proceedings
4,619
(27,119)
Changes in assets and
liabilities
Trade receivables
(35,619)
(52,169)
Inventories
1,147
7,828
Recoverable taxes
2,409
(34,921)
Other assets
20,107
35,960
Trade payables
19,966
1,920
Taxes payable
(6,625)
25,321
Advances from customers
40
(27,883)
Labor and social obligations
69,719
94,465
Other liabilities
4,417
(9,331)
1,167,465
933,801
Income taxes paid
(19,290)
(37,599)
Net cash flows from operating
activities
1,148,175
896,202
Investing activities
Acquisition of property and equipment
(93,367)
(88,014)
Acquisition of intangibles assets
(223,399)
(67,113)
Dividends received
6,195
8,294
Acquisition of subsidiaries, net of cash
acquired
(579,074)
(726,530)
Payments of interest from acquisition of
subsidiaries and intangibles
(55,898)
(36,674)
Net cash flows used in investing
activities
(945,543)
(910,037)
Financing activities
Payments of principal of loans and
financing
(126,666)
(12,216)
Payments of interest of loans and
financing
(156,897)
(124,468)
Proceeds from loans and financing
492,351
5,288
Payments of principal of lease
liabilities
(30,218)
(22,657)
Payments of interest of lease
liabilities
(82,567)
(78,001)
Treasury shares
-
(12,369)
Proceeds from exercise of stock
options
6,041
3,546
Dividends paid to non-controlling
shareholders
(13,368)
(15,914)
Net cash flows generated (used) in
financing activities
88,676
(256,791)
Net foreign exchange differences
(7,462)
(448)
Net increase (decrease) in cash and
cash equivalents
283,846
(271,074)
Cash and cash equivalents at the beginning
of the period
553,030
1,093,082
Cash and cash equivalents at the end of
the period
836,876
822,008
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241113502172/en/
ir@afya.com.br
Afya (NASDAQ:AFYA)
Historical Stock Chart
From Oct 2024 to Nov 2024
Afya (NASDAQ:AFYA)
Historical Stock Chart
From Nov 2023 to Nov 2024
