Q3 2020 Afya Ltd Earnings Call

2020 earnings conference call at this time, all participants are in a listen only mode. Later, we will conduct the question and answer session and instructions will follow at that time as the.

A reminder, this call will be recorded I would now like the introduce your host for today's conference for not of total.

Yes.

You may begin.

Good morning, everyone. Thank him for.

Joining us for <unk>.

<unk> for the why didn't you why he called for Oh, well.

The on the call the today.

And she does your volume it will be the company like ours the capsule.

During todays presentation, our objective will make forward looking to take rates for.

Right, Okay take rents you never really true.

Right or future financing show operating for toward an evil no no no Rick I'm, sorry, <unk> and other factors that may cause <unk>.

Actual results to differ materially from goes Oh, the point is likely towards looking at the state right.

For take rates in the presentation in color what kind of Apple.

Good day.

Great for related to our business and financial first of all I can.

Thank you everybody for guidance for future periods or expectations regarding our strategic for us in each and.

And the related benefits of our expectations regarding the market as well.

Turning price so it could be the 19th.

That's right income adult for for quite some time in our filings with Securities and Exchange Commission debt.

Forward looking at state free interest spread there they share are based on the information available the chore.

Dr Day true.

You should not rely on debt as predictions about future price and we disclaim any obligation should work day and the forward what kind of straight line.

As required by law.

Yeah I'd be true.

Right right price no I am price financial measures on the call dinner I of Fries financial measures are not interest that's true because the two during the integration or of the subject joked for results prepared in accordance with I ask for.

We have provided agriculturally Chanel good for now why for I financial measures to the most directly comparable <unk> financial measures Indian for syndication.

Well I couldn't now I'll turn the call all parts of the sheepish about acting CEO and starting the that's his line for.

Thank you, we'll come out of debt and thanks, everyone for joining us today I hope that you know any other payments are all doing well.

She saw net earnings for the overall, he's actually violent lots of Mcewen of change all the people they are coming into the how often takes off the list you didn't say from the employees.

Although the haven't been some of these lump sum from COVID-19, our teams the border leveraged our own line the of veto technology couple of either and the jokes.

Often for all the students because lot of wants to generate solid results the twox.

He owns the game so our organic revenue growth contributions from confusion on the line modeling expansion and the cash flow generation.

Before we start the for financial and operational highlights line.

For all can share and we feel that we have just the we slashed our Blaine net.

Yes, the only company metric of patient, but for sure. We haven't state of the talk this career, providing solutions that net to veloce, what puts a lot of extremes.

Yeah, Colin I witnessed growth each day.

Our total debt so.

So you can sell the new will you have to extract how of DNA. If you will support the gladly average service and local brands.

The peak in two minutes to watch our brand money for us.

Moving to page five moved this growth telling me hi.

[noise] stopping for talk line sure GAAP adjustment that we had an increased 52% you every day.

Most of you do the maturation of our medical school students in consolidation of all acquired come from.

It's also for him to highlight the different styles like the bike he agreed and the keep up the seasons due to compete Nike onsite price because of its true actions did not the back this fluctuation and represents a ral wants to stand up on net interest the clock.

When do you believe that's the beauty continues to run at the.

The last year as we not only relative even the Katherine senior debt from acquisitions to leverage net to growth.

I could be down margin increased 304 of the big spot for every year and net income was up quite the example of <unk>.

The one meeting.

The handling of Washington.

Each of the approximately 1.1 billion in cash and cash of Cleveland, well north of balance sheet and the cash conversion for nine months 2021 day. These peaks of Christie.

Despite the short term challenges for use by could you maybe give me confidence in our strong cash flow and how far the shoots the many of the to the current surprises and beyond.

Well the stacked with many of our team continues to successfully execute the little from getting the rate and kills the new business. That's one of its Catherine senior piece, we are particularly pleased we follow the deficiency could you still have some of the suite, which you weekly sales.

Total GAAP recycling in Med school.

Hey, good same time, we continue to grow our medical feet I kind of two companies during the quarter and another one subsequent to the blocking the.

Because of the patients. We are now at 85 for example for I feel to you of timing of adding 1000 net proceeds.

On a separate topic I'm very pleased the share that we werent. The winners did the keys from Seth sector.

Lots of 360 for everybody.

Yes, The war, which has many health energy for 70 years, it's one of.

For the most significant in the communications industry.

For one of the top box and the leader.

I'll take the keeping the categories eco the financials for governments interest diabetes aegion in human resources before.

The fact that we also have won the gold was almost all the assets you've got fewer in the Philippines of other weighted by the back some volume and recognize the equity up the resurgent aspects of this complex stuff for the transactions innovation price in August and knocked out of the walk of goods due to the power for sexual IPO, we could sell the night.

Moving back to the discussion or at least some decent activations from page number of stick.

You can do any of these challenging times, we remain committed to delivering innovation to all the students faculty and other healthcare professionals.

Well, we did not flow document page the parts of fish species. In fact, we have accelerated how would you still the best.

We are expanding our Houston office and the began do you still journey, we've got conditional status.

Could you discuss some of the last quarter of cool and the reminder, that meant for Blackstone is important for health care professionals to the white, who conducted the assets.

Into the current pad Newport from.

Also the market can you get the pinnacle exclusion of software and has an excuse in the <unk>.

[laughter] rank in the top kind of revealing aspect consume expense.

M.P. assets for 85.

The business model of T cells, both paid subscription free called for by the additional sources of revenue for us.

We follow the yeah exactly the Shoprite bleed out of leading the Frac and maybe even softer for TV something rutile, which includes electronic medical records clinical management of fixed and telenet him in a complete.

Let's go next doctors and patients the schedule consultations.

We currently have close to 12000 lots of subscribers with non for the average, but you didnt flow I had the seven huh.

Due to the acquisition, we have strength of our completion of each of the Beast of Alstom segment compliment the ancillary offerings of the healthcare professions and providing I'm not the revenue source.

Subsequent to quarter end, we announced the acquisition of from Maxim The net.

Number two pads for accident rutile behind like the.

Okay, that's kind of cool.

That's the 175000 registered users and growth of 6000 monthly active users of 4.9 score at the store we want the in my book, one probably reviews.

The integration of my points coming for the secret sauce that Matt will generate synergies and then allow us to offer both for all of us feel the same class.

He bought them from the phones off of these acquired called for its we join the.

I mean, you get real block, the possibly de stocking driving all the growth in the house back sort of.

[noise] he has been key after the nation for us as the accelerates how much you still have efforts to improve the user experience and efficiency for the full self care of students and other healthcare professionals.

Yeah, approximately 500000 doctors and with you in close to half of them current using our these the product and services.

Our goal is to be true, even more penetration to support the largest majority of physicians in Brazil before do you still have sort of stuff.

Now on page number seven you discussed the <unk> overall strategic position.

As we look to the future we see deposits really to maintain the long term relationship the distributions from the time of the answer to our school has no. Good ratably through the rest of the spread it's seven patient study and then two of the entire from yours.

We believe me that some of you know our medical problems in new do you still health problems.

To provide growth from revenue pop from many of its level same from our relationship with medical students and all of the health care for sections.

All of you shrink the comes already paying off.

By opening new deposits night revenue opportunities for us.

We also continue to see the acquisition targets yeah as shown on the block truck on the right we have been adding net Christie.

860, once he just 15 months, while also increasing our geographic footprint.

The degree of the medical see.

Size of predictable revenue stream, the maximize cash flow predictability as well.

We are also won't get to flow to grow our digital assets of because they're not condition of the reasons compliments are true as.

As well the study broadened the speed.

In Washington on balance sheets, we mean, how we want to be the cash flow generation debt provide us with the we saw occupancy net to grow the business, both organic and through anyway.

So on the up and before kind of the call over to leave.

Of course, and that's true to tell from Sandy as the continued to not give the two women for CTP Brian.

The group from the strength in the <unk>.

Really well from a business model. The next section of war of our passionate team.

We are focused on creating shareholder value by the leaving our initial target investing in growth driving top line momentum anything at the outset Peach flavor.

I'll turn the call over to Luis well for the discussion of our financial results in South of 2014 net.

Thank you.

It could be true.

Good morning, everyone.

Moving from baseline.

Similar to last calls the Scotia warnings or force on the name and the most significant.

Sure and I'll write offs.

Very traditional coal in the earnings press harder to get the grants from cameras per true for two for.

For more information.

I agree that the LIBOR and I'm.

From all the current partner across all the metrics I mean front line of field.

The reticle sales.

And the students all figured in commodity price during the part of what.

For expressed and the number of medical it's free at that 290 for fees year over year for a total of 1560 seats.

I'm trying to think of.

Recent progress and of the patients the total number of students in the third quarter sounds like watch myself and the price [laughter] sovereign debt.

Shipments an increase on the percentage over the Frank <unk>.

For our peers.

Adjusted net income for the quarter, which of course thing back book they the grades.

No.

Legal proceedings related to the common reason for it and to the income 19 onsite frackers restrictions what book.

And your percentage here for year 2013 meet him for you guys.

Personally been reaching for the current cooperation Bob revenue, that's kind of for current here on the year when the parental classes were unable to the thing for us.

It's important revenue of often channel.

14 point for me Jim in the.

For.

[laughter].

For sure not simple so Lucas aspect of Mad men of trying to come true.

16% year over year, Thanks true huh.

Peter react increased while thriving price.

Correct apparel, mainly in terms of the migration from medical school.

And the increase in the average thinking.

The strong top line.

[laughter] you know just from the completions watch for free.

Just a nice about the greater than 63% true [laughter].

I mean every day.

The margin expanding.

And for any sports I just on the can also benefit from the conclusion of the deferred right I just mentioned.

Its current information locked for any kind of.

The total badlands agenda.

Just the 992% of year over year true.

And when you want the meter area of margin increase.

I think from her 20 basis points to <unk> 0.4 per se.

I just didn't match the GAAP increased 47% from the parent parts about the line.

For the revenue contributions senior debt and margin expansion from the consolidation of operations.

Earnings per share increased 14 per spreads for all three of four cents in the third quarter 2009 feet true 80 cents in the third quarter GAAP or non question.

Moving on to.

To pay span for discussion of all key operating metrics like the concerning.

With the neighbor sort of growth across all of the constraints.

The growth.

The key operating metrics as shown on slide you speak for either by opening survive for crank broke annexations starting with Q1.

Our average monthly Mad completion.

The nice cost for 8050 pretty brioche, which.

Which was 17% for both the same current in 2019. This reflects the combination of all of your students for her wedding wait for higher recent range combined with the students graduating waste, but nowhere depletion.

As a reminder, <unk>, but not income and when you can handle and total focus.

As shown in the Middle chart, seven 8% off our book by high the recent the fees on the rebound for medical schools Oh for from 69% in the same appearance of the priority here.

The nature of off from the percentage increase.

And the number of standard and Sanofi percentage increase in the average it resulted from the mask hopefully some free of 41% when compared with the strength of your off the prior Archer.

We first pass to Q2, we have the husband converting from.

For heating sensors and acquired assets.

We can put other 95 topics for all kind of flat.

Excluding the Badlands for the mine from appeared we saw of 20% increase in average.

I feel free to meet the students we saw the lack of.

Increased 132% inside the nation.

Sure the completions off the for example.

Now turning the page 11 for a discussion of the from Tractions. We're on the engine for our he still assets.

Oh, it's Richard for you got acquired leases are also kind of question.

Other banks or ask.

Yes, well, that's the putting our current certainly the students and the conditions.

Of course, our exports over the last for your own book.

[laughter], the student experience, where the old once.

Wondering debt behavioral.

Sockets first of all by its approach to keep them engaged.

The when in fact accounts that we got from May enable us to a child and ensure that we're supporting our students as well and broader healthcare industry. We watch it so important to them.

The timing maybe accessed reported income.

Net coming from expense.

This is more critical now and that for and it's also a kid of that hurts for Oh man for the patients and redemption.

I show all of the Sharks open space, where you are seeing for games from our bookings for T cells from patients.

The third part combine it most of the I think the shows us across our accelerate the that's nice BLA for.

We are cross channel, how the an 80000 users.

All the shots on the right you can see the trends in the current the Consumptions.

Got it that's even stars are concerned I mean, the clothing podcast learning that's the most fields as well as from so from magical Webinars.

We're also seeing the Boston for extra pounds here with the line, we're spending increase when compared to the first quarter to talk on the plane went I mean again, our push into additional losses.

The higher performance in the second quarter is partially reflecting the fall for opening you know.

Our far east the losses for free at the start of off the for the bank to offer students and the healthcare professionals hamper or inflating the numbers all sorts of.

And so.

When she is looking for ways to what the price and contains our business units to other paid our preference offerings.

Yes, we can partner for deals already spoke of the capabilities, we have a strong from basins of.

For instance offerings for our long term growth for objectives going forward the position.

Moving occupancy per man and the spot revenue and maybe back on the slide flow.

That's true on this page we have provided the match revenue and adjusted operating income from our historical the acquired on top of the 19 the brand names.

The reported third quarter two of pick up in the plane.

For the nine month fear the 10th of net revenue increased 6.3% to a big standard and 60 meter react.

Excuse me you anything at all so because of that demand I just the.

The math right now.

The 5% from September true 750 meter react when the bulk of course are not my country share from current conditions and nice to meet or react from organic growth, which is comprised of.

For the maturation of our medical school seeks an increase in the average age.

Go ahead of so once the report the brand new.

Thank you for me to react in the nine month period, while so little bit squandered portion was from country maiden re I ask that Matt was close to seven the media reacts.

That's the there was also a for me no benefit from the adult cigarettes for Scotland, Brendan and hoping the magazine.

On the right side of the page we show nine of our top in plenty of adjusted EBITDA.

The the parent debt the they die in kind of the 77% year over year channel 400, and they need every day.

We have the pull the trigger for content and 90 basis points for expansion in the margins due impart to of credit to meet every ask on the Bushnell for when you kind of have both from Lucas and Batman and for a meter reask what proportion of off Melmar your interest costs threaten to cope in line.

Excluding the contribution of optimizations I sent them into.

The fast moving from 54% terms forgotten.

Makes me to react when 48. The main every day I, just wondered whether that perhaps the patients and 75 million or <unk> from organic growth that's.

Just a bit of hard assets.

Beads free company expanded without the and winning the imports.

Moving to the extra discussion a lot of cash flow on slide 13.

Cash and cash from free drugs or 1.1 bit of reacts and the key.

For ads were free per cent Hoggard van Buren.

And the second quarter in fact interest from cash generation, that's the cats in the quarter.

The majority of properties for and maybe better.

All right for us either re I mean of overnight its rights.

Total debt while the.

99 for Peter react at the quarter and sometimes line of crop.

Oh for current and Petrified meet every night at the end of second quarter 2020, and free not an things one liter me I've asked here and just the opposite 19 increased from kind of and the commission payable.

Cash generation for the ended strong in the <unk>.

Great and 39%.

For another 25 meter free out which resulted in the cash cumbersome up 86% compared to the 109% into think paradox the drop in the 19 and the.

Great and the cash from personal rate year over year is mainly due to the consolidation of off of that so that's our students for anything locations all over the <unk> monthly so I'm, hoping for 19 and we saw the increase in non visits from our students.

During the extra discussions about the pro for cash and that's all the slide 14.

All of this line, we have a pretty good our cash cash positions at the end.

Oh for.

The water to arrive at the performer level.

This range for non counts for the cash outflows for the five and also the completions since the second quarter assets.

Coupled with an increase in the bank that support our growth initiatives.

I'll walk you through the auctions have resulted in the performance of cash for the patients often content and pick the six meet every EPS comparison with the 1.1 billion react at the end of September.

By contrast, our pro forma growth that had been quite instead of one point free B. I realize from 599 of either at the end of September the.

The increase reflected increased pop the bad debt expense I, just mentioned to cope with the batch of the or somebody with the creation of Bob.

Can't sit back because.

During the Mets for discussion of the of guidance on Slide 15, we are reaffirming our second top 20 to 20 Brown for any guidance based on the solid performance for the third quarter organic is baked in the accounts and successfully 'cause book that good student intake.

For the second half of the top and bottom line.

As a reminder.

The work the secure in the meet all of them, but banning economics are smoking opening up assets our guidance takes into account the bass the formation of April at this point of time.

Sure the metrics for the second half the taught them for any guidance.

As for the second half of that revenue between 600 and 640 meter for yes.

The second half from talk on the plate adjusted EBITDA margin to range between 45.5% and 47%.

Our kind of from through its the patch pump the upshot, Oh I'm sorry of 16.

Tony and outdoor is starting from February 2020, So Lucas from May to the document warranty and bad math from the range.

And it's free would bother occupational debt be equal or the after the interest cost disguise.

But they certainly included in the rapid the all the Coke is.

The revenue recognition of the person so the practical glasses.

The could not be house during the first half and for pushing out the second half to probably the bloody of called the resumption of God.

These are all too for TV area.

Before opening the call for questions. Let me finish my screen baskets for please wait for our performance in the third quarter with the Opex pop it's true environments.

I want to the thanks, everyone line, our employees and property for the article hold true to its hard work and breakeven. During these are new from tax.

We remain confident that hours per patient investment for our establish that's the solid foundation, creating further differentiation and positioning of assets from continued strong financial results that for the prime for home term shareholder value creation.

The advance our prepared remarks, we're now ready to take care of questions. Operator, Please open the lines for questions.

Thank you as a reminder, does good question, you'll need to press star one on your telephone to withdraw your question press the pound key please stand by for the compound the June a roster.

Our first question comes from Marcelo Santos with JP Morgan You May proceed with your question.

Hi, good morning, Thanks for taking my questions I have two the first is you.

If you could provide some of the data on the take for the medical units and 2021.

For being able to fuel the seats and.

Kind of the ticket outlook you could to discuss the second is about the integration and cross sell initiative. The few quick providers.

On the update on how the was going in for ready.

About to launch some some of these should the perhaps put together a mid sales of course is bad or anything that sense would be very helpful.

Hi myself the thank you for your question I'll take the first question here then through the real help me of the second second that's right.

So the take for a medical seats for 2021, a very good trends we.

We are not expecting.

In the kind of surprised and keeping the same trend to have 100% couple of coupons of all seats included the maturation and that used the tuitions acquired 2020, so will be no surprise on the day side and also review for the following semester.

On that Matt the.

Creation and cross selling opportunities value.

Hey, myself Hum.

Hello, everyone I hope everyone is LTM find the here.

In regards to debt net we started the lobby the grading the couple of yet by the seller, but so we started out with all the activities in terms of the offering that product to the different audiences. So that's always been promoting.

Bad debt and the other way of ground. The small so we just finalized the especially now.

GAAP for Black Friday period of which is the which is reported in terms of a subset.

Subscriptions for the both basins in enrollments.

So we don't have the EPS completed but sort of we've been doing integrated activities commercial activities. At this point, so far I mean that med ER is now it is very very different level I mean, it's been growing it's above 100000.

The 100000 subscribers at the sports.

And that's always been are doing quite solid so in the tape where we started in September.

So it's been growing above market levels of so, but so far that's for your questions.

As we are doing more of the promotional activities at this point, we have a couple of projects to be launched I, especially.

With the initiatives, where we've done I had the education of components for the offer and we are battled Texas. That's for the to watch a specific marketplace, where students will be able to have been the losses from the print services and a this is yet to come.

Perfect. Thank you very much.

Thank you. Our next question comes from Susanne ancillary with I E. U you May proceed with your question.

Hi, guys. Good morning, Thank the beacon for taking care of question Oh, we have to first it is related to the the Mets corn and and the wife book of I'm going to one thing both right or you plan to.

In the fire and have the I knew I knew combined products that took the hours first question.

And the second question is the latest of the med sale to the base, which we didn't the evolve.

Comparing to the P. the choir watch sales expects go you for work and a few are see a scenario that different from the lots you had the our business plan for much. So that's.

That's for the guys. Thank you.

Hey, Syngenta average over here. So in regards to go to the first question.

So far so that's on I mean, we are still want to keep.

The application work and running and are at this point of we are trying actually to convert the users from EPS phone to wipe the subscribers. So that's what the are doing the now a in terms of a of the future of what's the plan is actually still moving to keep.

Oh.

Well basically the kitchen up and running the.

End of but the focus is to grow why sports.

ER ER visit the.

Oh, the other won about net so.

And again the answer you. That's me a question the student or the student day is actually quite a bit but it's the mostly because of the or how big is the bad debt cost is that we all the data from damage.

Well the you think as I mentioned on the previous answer to myself well they take which is the most important for Q4 and for next year is doing well again above.

The market growth level.

Oh thanks.

Thank you as you know just on the follow up on the much sales to the base of the cross any color the for the students.

Oh, so that the last years students and the students that the before the last two years to them is this happening or you're just the majority of the sales of happening just for the students at the time that.

But the graduating.

Yeah, well the majority of the students are they are actually Uh huh.

Let me explain how it works and so that they they actually believe this period of the year September to December.

December most of them the majority of them are still.

In the schools. So there's still graduating so they're finishing 50 year for the six year and the you think.

The new debt with doctors actually that are already physicians that are already graduated its higher yeah. After January.

Generally to the March April so so far now it's more on the students that are the this hasn't changed a lot of.

But what we've seen is that you know the market is the only other we're growing in the same on the same page of the more at this moment.

Moments of they think it's more of the of the students there's still lots of graduated.

And it's just following the same patterns as ER other years.

That's it thank you for the next year.

Thank you. Our next question comes from Fred Mendez with Bradesco. You May proceed with your question.

Hello, Good one every one of things for the call I have two questions of well the first one rig.

Regarding dinner the discounts that do you recall much of this quarter just wondering if there's something that you already.

Recall that the minute started the discounts price, it's something that's already weak with the nice every day or we should expect to see more of these discounts as move forward. This would be my first question and then all of the second question I know is the root cause a stake of the total revenue is not as much but we saw a a significant decrease in the number of students not related to help.

The of course, so just wondering what can you expect from these for the speech it doesn't move forward. Thank you.

Hi, Fred it's Louis speaking regarding the the mandatory discount that we had oh the the third quarter is it's all that regardless of the third quarter of paid or is it.

The it's related to its stake a decrease of that of requires the student to give the discount that the spirit and reflect the discount that's the.

The first piece the east since the judge has has a rule was to get this discount. So the we have these 3.9 need everybody eyes off the discounts on the third quarter moving forward or we have some state laws that are still in place. So we will.

So.

See at the poor water.

Some discounts I think these this number should be around 1% to 2% off of our net revenue. Okay. This is the is the dismal.

Hi, Fred or just the way the points used the bridge for your so that will not booth and the it's got the guidance. We got very goal for for each of the guidance for the second semester on your second question about the non medical program.

We are building many of them. That's one of the main reasons of the leverage our operation or May know the Braga for distribution of acquired.

The game Weve low margins of negative operational results. So we are closing this frogs and also we see the the back from compete for the traditional on campus Oh.

Undergrad program. So that's a combination of the shoe we are closing we I'd be very disciplined in closing broadening of that it's not systemic the long term we are not the.

Moving to challenge of but the the the competition always the distance learning and lowering our price. So we are just keep you know in the on track or the Braga that the sustainable and make the different the reason that the we have the operation. So we are expecting to dilute non medical problems from our penetration.

Last year, if I'm not draw the summer of 18% and this years around 14%. So also the this can see the on our expectation for the for the entire year.

First of its very clear thank you for shouldn't think loose.

Thank you. Our next question comes from Maria Shields for Peter with Credit Suisse. You May proceed with your question.

Oh Hello, guys. Thank you for the price of the questions I have two questions. The kind of specific we noticed that the the receivable for the quarter, our or the rock burst of what you're like.

Like the only this is the there's the new level for <unk>.

From that is who are going through to cool the only.

And also we saw the the cash flow this quarter, the specifically was moving a bit lower the west fears.

Oh, So you could you go a little bit of more quality people fighting the as we saw the the something related to the techs payable was in the defense. The real quick the list, but if you could give the hum.

The more let's say a rationale for sort of what is happening.

Good.

I notice it's fluid speaking about the.

The the receivable days that we got from the third quarter, yet the it was a little bit higher than the the the days that we had on the third quarter last year, but it's lower than the the one that we have for them the on the second quarter, what's the difference.

Between between the the the the year. So obviously, it's a walk through we got there are the three main reasons. The first one is the is that the advanced that we got from other students and if we compare the is he is with the the the 2019 the the the number off the advanced that we got.

From from the the students were lower okay. So its.

It's called on bad the the shoes isn't the speed the payment of the the semester to who gets a a little bit off of funding for discount from that a the second one of these the the the settlements that we the definition of what that we provide the to our students are doing these these funds amick we.

Hubs Fabulous a a the support a true.

Of the elements to them instead of giving them discounts. So we we were expecting a little bit off increase off of the receivable his receivable days and that sort of core, but it's already moving down as we reduce our of our.

Receivable days from the third quarter through corporate the for the second quarter 2000 for one and the third a reasons a if you compare with the of the just the other than 90 EBIT was itself itself was incorporates the refinery during the second quarter last year.

The year and the Mets sell a business is the is is the one day to you recognize the revenue first on ER and then you've got the the receivables. So last year, we had recognized the the revenue before itself was incorporated into October.

And we have come to you know to get these cash Oh, the second part of that that's quarter left the year. So these these are the.

The the three major factors, even more color is about the.

It does change on the receivables okay.

Very clear thank you.

Thank you and as a reminder to ask the question you'll need to press star one on your telephone. Our next question comes from the stands with Goldman Sachs. You May proceed with your question.

Yes, I think the thank you for taking my question when and then one question for taking a quick follow up question. Your earlier remarks for very helpful and from what I understand from all the on system the.

Few quick sort of comfortable the may say, so and in terms of how the underlying dynamics are shaking out and all things considered in terms of dropouts anything that you you feel sort of additional that I'm. The one the it's worth mentioning here and how you expect the to to the both from here and.

And the ability to early dropouts to the to reposition the speaking to 100% occupancy so I assume that sort of baked into the but anything additional that you feel worth mentioning would be helpful. And then just the if you look I'm sort of beyond beyond the into the near term and into the medium term just sort of from a from an income.

The day perspective to the extent that you can speak to it.

The sort of what the incremental that you're looking for incrementally new characteristics. The from a regional perspective, both from the quality of perspective, the or any other aspects of variables that you take into consideration as you look sort of at the at the incremental so the last bit of M&A targets and the <unk>.

So the question is just a quick update on the approval process for the for the remaining nice made because the two campuses. Some any update day you can provide thank you.

Hi, I'm, a the judo I bought deal for some of the third question on the both med schools.

About the drop out of.

Before reviewing all the students for the second semester, we are expecting to see a higher dropouts, but when we finish the reenrollment, we didnt see that the renewal rates was the same pattern that we had previous year.

And we will start from when you on January because you'll have a a.

Very long effect on the mass of because of the Cobi Uh huh.

The we are not expecting as we are in any problem in the review and keeping the the the other for simple for Cubans of disease to the.

The mentioned that the man keeping the very high level. So the candidates for the very healthy and we are seeing the beginning of the process.

But I think we will be no surprise comes off to the the from as the student Oh of course, how far off the top of mind, one on all of the problem as a bad thing or what's the.

It'll be tough Oh, yeah, the dropouts of lower Hey, the core.

The the show the running the doesn't make any sense for us. So we you keep very disciplined closing problems. The does that make the most is gonna be the cooperation.

ER and groovy, our penetration a closing the.

Getting close to 90 per cent up all of the one revenues come from medical problem. Okay. ER on the my medical side, you already had the for the for the Oh, something they love the less like the both the rise of and we expect the not yeah, we shot the maybe Uh huh.

The week will.

We'll have the second approval for Oh, the situation on the off a region.

For the authors the steel how fight to get the final authorization and the expected to by the end of the for 2001 line and the other three by the end of less next year.

I Uh Huh, it's Luis I'm going take the the question the regarding them and they.

I'm talking about the day M&A opportunities that we have owned Oh on the B one for US we are very close to reach the the the 1000 seats goals that we have established on the IPO a we have of varies for tie or a five line or we would have.

From deals that are now are hot pipe line. So weeks the weekend, we can get reach the the these 1000 seats goes in the <unk> in the short time of moving forward. The on on you one I think where we are going to be more strategic.

On our movements. We are we are keeping the our disciplines on just fulfils. The the units that has more than 6% up there of revenues on the operations outcomes the growth from the Madsen business of from the Mets and met some parts of the business assets.

We established the hour of meaningful I, our arts goes the condition. So we continue to just due to true to see opportunities that we were going to keep.

Our disciplined the some bad regarding the two we we first of all the support the true remembered that we arent between signing and closing off by clinic, we supposed to get the the the the eye clinic close the <unk> the very very beginning of January.

And we we are discussing with the Boone off bed net and we do it with the the opportunities that we have to do to keep go bowling Oh, the the the Healthtech businesses, where we have the view that we have two weeks the two to two we powered the the physicians we want that the.

For the physicians have a of the the access to the two to two to the bass dues for for them to get the best outcome due to give them. The the best efficiency to increase their up for the diabetes and we want them to two to two true true.

Provide the tools that give them flexibility mobility owned yard the day by day by day basis for Beacon focus on patients.

We have met but the the the market. The on these these helped to act on these <unk> functionalities and we are working together to seed the next movements.

To plug them in the future value environment, that's where our ability to to provide these power of the physicians.

So we're very excited for the weapons that we we have the the M&A The book book business unit.

Very helpful. Thank you.

Thank you I'm not showing any further questions at this time I would now like the turn the call back over to really go for any closing remarks.

Thank you all for joining US today, we remain very confident that the of a strategic that some of the establish of solid the foundation of our company.

How about very good friend and a 2020 as expected in our guidance released so I hope to see you all on the on the water or new Skoal are safe and sound. So have a nice day for everyone Bye bye.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.

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