Q3 2021 Afya Ltd Earnings Call
Speaker 1: related benefits and our expectations regarding the market, as well as the potential impact from COVID-19.
The related benefits and our expectations regarding the market as well as the potential impact from COVID-19.
Speaker 1: This race will include those more fully described in our silence with the security and exchange commission.
This week. We include those more fully described in our filings with the Securities and Exchange Commission.
Speaker 1: The forward-looking statement's presentations are based on the information available to us as of the date here.
The forward looking statements expression patients are based on information available to us as of the date Sheryl.
Speaker 1: You should not rely on them as predictions of future events and we display any obligation to update any forward-looking statements except as required by law.
You should not rely on them as predictions of future events.
And we disclaim any obligation to update any forward looking statements, except as required by law.
Speaker 1: In addition, management may reference non-IFRS financial measures of this scope. The non-IFRS financial measures are not intended to be considered in isolation or as a substitute of the results prepared in accordance with IFRS.
Nation management May reference non <unk> financial measures on this call.
Denying as far as financial measures are not agenda should be considered in these elation or as a substitute of their results prepared in accordance with <unk>.
Speaker 1: We have provided a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures in this presentation.
We have provided a reconciliation of these don't lie apprised financial measures to their most directly comparable <unk> financial measures in this presentation.
Speaker 1: Let me now turn the call over to the individual as you feel, starting with slide three.
Now I'll turn the call over to be hugely bubble I've said she'll be starting with slide three.
Speaker 2: Thank you, Ojenato, and thanks everyone for joining us. It's a great pleasure that I report once again a strong quarter for AFI. During this call, my presentation will run through four main topics. First, the highlights I trust financial and operating results to help grade and both medical undergrad students and digital services. Second, the last results on our successful execution of acquired and integrated medical school and digital data.
Thank you Hannah and thanks, everyone for joining us.
Great pleasure that I report once again drinkwater swaption.
So my presentation will run through four main topics.
The highlight <unk> financial and operating results.
Grades in both medical and they're grad students and diesel fuels.
Second the last results on our successful execution of acquiring and integrating medical school in digital format.
Speaker 2: showing how far ASEA has come on our product control.
Are we how far <unk> has come on all our products and services.
Speaker 2: Third, our deliveries and excite opportunities ahead on the undergrad program and on digital service, both driven by our main goal, a unique ecosystem for physicians in Brazil. And last but not least, the fourth topic, how our commitment to all we do is being well reflected through all awards and public recognition.
Third our delivery as an exciting opportunity ahead on the undergrads and on digital service growth driven by our main goal a unique ecosystem for physicians in Brazil.
And last but not least the fourth topic.
Our commitment to all we do is being well reflected tool awards and public refinish.
Speaker 2: Moving to slide number four, I will show our financial highlight.
Moving to slide number four we show our financial highlights.
Speaker 2: Our adjusted net revenue increased 48% year-over-year, reaching R$463 million, followed by an adjusted EBITDA growth of 28%, reaching R$191 million, with a margin of 41%.
Our adjusted net revenue increased 48% year over year.
For $163 million.
Close by and adjusted EBITDA growth of 28%, reaching 191 million with a margin of 41%.
Speaker 2: We also reported a cash position of R$1 billion and a record adjusted operating cash flow generation of R$557 million for the nine-month period, 72% higher than last year.
We also reported a cash position of one <unk> and a record adjusted operating cash flow generation of 557 million.
For the nine months period, 72% higher than last year.
Speaker 2: Moving now to the operational updates of the quarter. Our undergrad medical student reached 16,000, representing 67 growth compared to the same period last year. Operating seats grew by 56%, also in the same period.
Moving now to the operational updates of deepwater our undergrad magically students reached 60000, representing 6% to seven growth compared to the same period last year operating seats grew by 56% all say the same here.
On the digital services highlights our net revenue almost doubled year over year and our ecosystem reaches 247000 monthly active users, which represents more than 30% of the Brazilian market of physicians.
Speaker 2: Digital services in that fabric grew more than 96% years.
Digital services net revenue grew more than 96% jewelry.
Now moving to the next page, we will talk about our business strategy.
Speaker 2: Now moving to the next page, we'll talk about our business threat.
M&A continues to be.
Speaker 2: And then A continues to be a strong growth driver in our threat.
A strong growth driver in our strategy.
The left side of this slide we can see our whole integration roadmap since the IPO ever.
Everything there is in progress and every project that is planning for.
Speaker 2: For every one of them, we make a short and long term balance into the inputs that can be packed to make those flexibility engaged.
For every one of them will make a short and long term balance include the inputs that can be back both profitability and engagement.
On the basis of this presentation.
<unk> number 16, you can check the margin expansion of each acquisition separately reflect at our great track record of evolution and seniors distraction and integration process.
On the right side of slide five.
Speaker 2: On the right side of slide 5, you can check how integration cost-saving strategies of our platforms, like MedSanai, iClinic, MediPony, Whitebook, and MedCell, are being developed so we can consolidate our data base into a single data lake in order to provide the unique ecosystem we have talked before, surrounded by our six-pillar strategy in the digital business.
Check not only integration cross selling strategy of our platforms like mid Tonight I clinic merger for whites book in mid sale are being developed.
So we can consolidate our database into a single definitely in order to provide unique ecosystem, we have talked before surrounded by our six pillar strategy and the digital business.
Moving to slide number six we can.
Speaker 2: Moving to slide number six, we can see how Antia has great opportunities ahead with the number of sheets getting higher each quarter.
Can see how <unk> has great opportunities ahead with the number of seats getting higher each quarter.
Speaker 2: Our pipeline for acquisitions is fertile, and we plan to acquire at least 200 seeds per year starting 2022.
Our pipeline for acquisitions is through trial, and we plan to acquire at least 200 feet per year starting 2022.
Speaker 2: The expansion of our offering in the undergrad business continues to grow strong, with the closing of the acquisition of Unigram Rio in August 2021, and the acquisition of Guaranyuns Medical School this month in the state of Pernambuco.
The space of our offering and the underwear business continues to grow strong with the closing of the acquisition of <unk> in August 2021, and acquisition of unused Mexico. This month Depo Crinone.
Speaker 2: Both acquisitions provide 428 new authorized undergrad medical seats to applicants, with 2,731 seats so far.
Acquisitions provided 428, new wells horizon undergrad medical seats.
<unk> thousand 731 seats so far.
Speaker 2: This represents almost 20,000 students at maturity, with a CAGR of 10% for 2020 to 2023. Also, we expect five more medical units to start operating until the end of next year.
This represents almost mainly thousand students at maturity with a CAGR of 10% for 2020 to 2020.
Also we expect five more months magical units to start operating until the end of next year.
Speaker 2: The goals of our digital service are no lower. By the end of 2021, we expect to complete our digital ecosystem, fulfilling our portfolio with the most important services with this system.
The goals of our digital service and no lower by the end of 2021, we expect to complete our digital ecosystem fulfilling our portfolio with the most important services with physicians.
Speaker 2: Next year, we will boost our market penetration, consolidate our offerings to B2B clients, that we will allow to leverage our position at work and unlock new revenue streams.
Next year, we will boost our market penetration consolidate our offerings to be to be client.
We will allow us to leverage our physician network and unlock new revenue streams.
And now moving to my last slide of this presentation I want to show how our commitment is being reflected in our rated outside Boston.
Speaker 2: And now, moving to my last slide of this presentation, I want to show how our commitment is being reflected and rated outside us.
Speaker 2: As we have been presenting in each quarter, our ESG agenda is getting more and more robust. As we have embedded the team in all we do, assume public positions that review our goals and push new ones.
As we have been presenting in each quarter, our ESG agenda is gaining more and more Robert.
As we have embedded the deemed in la we do assume public positions that review, our goals and plus new ones.
Speaker 2: We imported this agenda along with the commitments we have already shown in this quarter. We also announced that Sustenalilic, a leading ESG and corporate governance research firm, has rated ACCA as a low-risk ESG risk rating company.
Reinforcing these agenda along with the commitment we have already shown in this quarter, we also announced that the sustained analytics.
A leading ESG and corporate governance research firm has rated asset as a low risk ESG risk rating company.
Speaker 2: placing it in the 10th percentile in the Sustainability Database of over 13.5 thousand organizations as of September 2021.
Placing it in the <unk>.
<unk> percentile in the sustain our latest database of over 13 5000 organizations as of September 2021.
Speaker 2: we were considered as a company at low risk of experiencing material financial impact from ESG factors.
We were considering as a company at low risk of experienced material financial impact from ESG factors due to a lower exposure and good policies and applied practice.
Speaker 2: due to our low exposure and good policies and applied practices. As a reflection of our great results and actions that are being shown to the market, I'm also glad to announce that we have won two important awards this quarter.
As a reflection of our great results and actions that are being shown to the market I am also glad to announce that we have two important award this quarter.
Speaker 2: First, the Valor 1000 Award as the best company in the education segment. And second, the Epoca Negócios 360 Award.
Yes.
One award as a basketball brand integration segment and second the <unk> 360 awards in two categories as the best company in the Education segment.
Sustainability and education segment in.
Speaker 2: In the overall ranking of 418 companies in Brazil, we are in 13th place.
In the overall ranking of 418 companies in Brazil, we are in 13th place.
Speaker 2: This proves that our mission remains strong to become the reference in medical and healthcare education services, empowering students and physicians to transform their ambitions into a rewarding lifelong experience.
This proves that our mission remains strong to become the reference in the medical and healthcare education and services.
Following students and physicians could transform gun decently through a rewarding lifelong big Steven please.
Speaker 2: This continues to guide our strategy, and I am proud of what we have achieved so far, as well as what we are planning to do in the future.
This continues to guide our strategy and I am proud of what we have achieved so far.
As well off what we are planning to do in the future.
Speaker 2: Now I'll turn the call over to Luiz Bloco, our CFO , to discuss the financial metrics. Please, Bloco, go ahead.
Now I will turn the call over to Luis <unk>, our CFO to discuss the financial metrics. Please go.
Go ahead.
Thank you appreciate it.
Speaker 3: Thank you, Virgílio. Moving to slide nine to discuss the financial highlights of the third quarter 2021.
Moving to slide nine to discuss the financial highlights of the third quarter 2021.
It is with the largest satisfaction that the present another strong quarter for <unk>.
Speaker 3: It is with a lot of satisfaction that I present another strong quarter for Rápia with consistent results. Since 2019, we've been seeing in all quarters a positive trend in our key metrics.
With consistent results.
2019, we've been scheme no quarters of positive trends.
Our key metrics.
Speaker 3: Adjusted net revenue for the quarter was up 48% year-over-year to R$463 million, reflecting acquisitions, expansion on digital services, and organic growth.
Adjusted net revenue for the quarter was 48% year over year to 463 million Reais.
Brooklyn, reflecting acquisitions expansion on digital service and organic growth.
Speaker 3: For the nine-month period, the increase was of 45%, totaling R$1.3 billion. It is important to mention that last week, the Brazilian Federal Court of Justice decided to consider unconstitutional any decision that apply linear discounts in monthly tuition fees for private universities with respect to the COVID-19 pandemic.
For the nine month periods, the increase was off 40.
<unk>, 45% totaling $1 2 billion Reais.
It is important to mention that last week, the Brazilian federal courts of Justice decided to consider.
<unk> any decision that apply linear discounts monthly tuition fees for private University with respect to the COVID-19 pandemic.
Speaker 3: Therefore, starting this December , we shall not apply discounts in any monthly tuition fees that are related to the effects of the pandemic, including those applied in SMPB.
Therefore, starting this December we shall not apply discount.
Any monthly tuition fees.
Related to the effects of the pandemic.
<unk>.
<unk> applied in F <unk>.
Speaker 3: Adjusted EBITDA for the quarter was 28% year-over-year to R$191 million. For the nine-month period, Adjusted EBITDA was R$560 million, an increase of 37%.
Adjusted EBITDA for the quarter was 28% year over year to 191, we didn't react.
For the nine months spirits adjust EBITDA was 560 meter rate is an increase of 37%.
Speaker 3: For both periods, adjusted EBITDA margin was slightly below the reported margin of last year, mainly due to
For both periods adjusted EBITDA margin was.
Slightly below the reported margin of last year, mainly due to.
Speaker 3: One, the consolidation of pediMediClinic, Medfone, Medicinae, Medcohab, Botflik Pharma, Shoshki, Unicipi Moc, Cipi Guaravi, and Unigraviu, that presented lower margins than the integrated companies. Two, lower performance from continuing education, of which I will give more details in the next slide.
One the consolidation loss by the hedge.
Cleaning <unk> mixed deny Mexico have both big pharma.
<unk> adds when you're going to view that presented lower margins than the integrated companies.
Lower performance from continuing medications after which I will.
It's more of the deals in the next slide.
Three regarding the quarter.
Speaker 3: 3. Regarding the quarter results, R$14 million of deferred revenue that possibly impacted the Q3 2020 results.
Our third results 14, Needham re ice after deferred.
Avenue that positively impacted the third quarter 2020 results.
Adjusted net income for the quarter was 117 million Reais.
Speaker 3: Adjusted net income for the quarter was R$117 million in line with the same period of the prior year, mainly due to the decrease in net financial results that was affected by higher debt positions and the increase in the average EDI in the period, partially offset by higher income from the financial investments.
In line with the same periods of the prior year, mainly due to the.
Decrease in net financial results.
Was affected by higher debt position and increase in the average CDI in the periods.
Offset by higher income from the financial investments.
Speaker 3: For the nine-month period, net income increase was in line with 2020, totaling R$342 million.
For the nine months' spirits net income increase was in line with 2020 totaling 342 billion to react.
Speaker 3: Cash flow generation was record in nine-month periods, increasing 72% year-over-year to 557 million reacts, which results in a cash conversion ratio of 114% compared to 86% in the same period of 2020.
Cash flow generation was record nine months spirits, increasing 72% year over year to 557 million Reais.
Which would result in a cash conversion ratio of 114%.
Bear to 80.
6% in the same period of 2020.
On the right side of the screen we can.
Speaker 3: On the right side of the screen, we can also see bullet points that summarize another financial highlight.
Also see bullet points that summarize on other financial highlights.
For the nine months spirits organic growth on net revenues for undergrads was 11% compared to the last year.
Speaker 3: We maintain the announced guidance for 2021 $1,722,000, $1,760,000 for net revenues and 42% to 45% for adjusted debit amounts.
We maintain the announced guidance for 2021.
<unk> 700 <unk> two.
764, net revenues and 42% to 45% for adjusted EBITDA margin.
Speaker 3: Which takes into account the successfully concluded acceptance of new medical students for the second half of 2021, and the consolidations of the digital companies and medical school acquisitions. Moving to slide 10 for a discussion about kinetics by patients unit.
Take into account that successfully concluded acceptance of new medical students for the second half of 2021, and the consolidations of the digital companies and medical school acquisitions moving to slide 10 for a discussion what's key metrics by business unit.
Starting with the undergrad programs.
Operating magical seats increased 56% year over year to 2361 operating states, reaching 16000 students, reflecting net Keith saturation and acquisitions.
Speaker 3: Operating medical seats increased 56% year-over-year to 2,361 operating seats, reaching 16,000 students, reflecting medical seat concentrations and acquisitions.
Speaker 3: In terms of total tuition fees for the nine-month period, we've raised R$1,400,000 up from R$883,000 from the prior year, an increase of 58 percent. Talking about revenue mix, 77 percent of these are derived from medical school students.
In terms of total tuition fees for the nine months view rich, we've created 1 billion and 400 <unk> up from 883 million from the prior year, an increase of 58% Duncan.
Talking about revenue mix, 77% of these are the rebates from medical school students.
The medical school average tickets for the nine months Spirit was 8703 out of.
Speaker 3: The medical school average ticket for the nine-month period was R$8,700, a 7% growth compared to R$8,100 tickets from the prior year.
7% growth compare to 8000 and 103 ice tickets from the prior year.
Speaker 3: On the next page, I will present the continuum education metrics.
Over the next page I will present, the continual education metrics.
Speaker 3: We saw a 37% decrease in continual education net revenues from R$82 million to R$52 million.
We saw a 37% decrease in casino education net revenues from 80 to meet everybody is 250 <unk>.
Speaker 3: This decrease was mainly driven by a reduced reduction in the student base that has two main reasons.
This decrease was mainly driven by a reduced reduction in the student base. That's two main reasons.
Critical problems that are not being offered.
First semester of 2020, just the <unk>.
Dynamic ads physician's decision to postpone the missions to specialization courses due to the COVID-19 pandemic.
We expect a better performance next quarter due to october's intake process.
Speaker 3: We expect a better performance next quarter due to October's intake process.
Speaker 3: Moving to slide 12, I will discuss the digital service operation metrics.
Moving to slide 12, I will discuss the digital service operational metrics.
On the first graph in the slides you can see our ATB students for pillar.
Speaker 3: On the first graph in the slide, you can see our active paying students per pillar.
Speaker 3: Those are the active players that generate revenue.
Those are the active.
Our staff generate revenues.
Speaker 3: Combining all achieving paying users in the quarter, we've reached a number of 155,000 paying users.
Combining all our TV users.
Users in the quarter, we have reached a number of 155.
Paying users.
Speaker 3: Content and technology for medical education grew 52% year over year.
Content and technology for medical applications grew 52% year over year.
Speaker 3: Clinical management tools reported 16,000 payers, and clinical decision software base has almost 118,000 payers.
Clinical management tools reported 16000 players.
And clinical decision software base has almost 118000 players.
These results reflect the strong increase of 91% in digital service net revenue since last year.
Speaker 3: These results reflected a strong increase of 91% in digital service net revenue since last year.
Speaker 3: The last graph on the page shows the monthly active users also per pillar.
The last graph on the page shows the monthly active users also per feeler.
Speaker 3: Once again, combining all users, we've reached a number of almost 250,000 students and physicians all over Brazil.
Once again, combining all users.
Reach a number of almost 250000 students and physicians all over Brazil.
Speaker 3: This number represents more than 30% of all medical students and physicians in Brazil, as Vigilio said before.
These numbers represent more than 30% of all medical students and physicians in Brazil, as <unk> said before.
Now moving to my last slide I will discuss our cash and net debt position.
Speaker 3: And now, moving to my last slide, I will discuss our cash and net-debt position.
Speaker 3: cash and cash equivalents in the end of the quarter were 1 billion reais a position in line with 2001.
Cash and cash equivalents in the end of the quarter were 1 billion Reais a positions in line with 2001.
Speaker 3: at quarter and net debt totally 1.1 billion reais compared with a net debt of 167 million reais in the year end of 2020.
At quarter end net debt totally $1 1 billion reais compare with a net debt of 167 meter <unk>.
In the end of 2020.
Speaker 3: This increase was mainly due to the closing of M&A transactions partially offset by the free cash flow generation.
This increase was mainly due.
To the closing of M&A transactions, partially offset by the free cash flow generation.
Speaker 3: This ends our prepared remarks. I will now open the conference for the Q&A section. Thank you.
This ends our prepared remarks.
I will now open the conference for the Q&A section. Thank you.
Four questions. Please raise our homes.
Speaker 1: Our first question comes from Marcelo Santos from JP Morgan. Marcelo.
Our first question comes from Tom Hoops on go to market.
You may begin.
Speaker 4: Thank you. Thank you, Renata, and thanks for taking my question. I have two. The first, if you could please comment on the trend in candidates per seat.
Thank you. Thank you.
Thanks for taking my questions I have two the first.
If you could please comment on the term comp growth pursuits.
Speaker 4: And if you think that, let's suppose you gain more seats in the cities you already have because of the Mais magical expansion, do you think you could deploy those seats without the need to reduce tickets? And the second question is, what about your capacity to pass inflation to inflation to tickets in 2022?
If you think that's.
Let's suppose you gain more seats in the Cds you already have because of the multiple expansion do you think you could deploy.
Deploy those seats with ocwen to reduce tickets.
Second question.
What about your capacity to pass inflation to deflation to tickets in 2020. Thank.
Thank you.
Hi, Marcello.
Speaker 2: Hi, Marcelo. This is Virgilio. Thanks for your question. The first one, the candidates proceed.
This is virgilio.
Thanks for your question the first one the candidates proceeds.
Speaker 2: for this cycle that we concluded on the second half.
For this cycle that we concluded the second half.
Speaker 2: We keep the same average as we had before the COVID, so we saw a very high demand for candidates per seat. And even considering that we have some expansion on our medical campuses, we are very confident to have the same demand and good sustainable growth to mature all these additional seats on each campus.
We keep the same move.
Average as we had before to compete so we saw a very high demand for.
Candidates for seats and even considering that we have some expansion on the rmi as magical campuses.
We are very confident to how the same demand them.
A good sustainable growth to mature all these additional seats on each campus.
Speaker 5: uh in terms of inflation uh we are passing uh
In terms of inflation.
We are passing.
Speaker 5: Inflation to our price to 2022 and change a little bit overflation some of some campuses.
And placements of oil price in 2022.
Change a little bit of replacing some of.
Some campuses.
Speaker 5: and we are not seeing any disruption in terms of the trend and demand to guarantee 100 percent of occupancy. We just started our enrollment process for 2022 and we have seen very good results in terms of fulfilling the seats and the moderation of the new campuses that we still have on our operation.
And we are not seeing any.
Disruption in terms of the trend in demand to guarantee a 100% of occupancy.
We just started.
Our enrollment process for 2022, and we are seeing a very good result in terms of fulfilling the seats and the maturation of the new campuses.
On our operations.
Okay.
Speaker 4: Thank you, Virgilio. Just a quick follow up. So you think you can pass the IPCA at the level that it is now, it would be something feasible to see in the tickets.
Thank you.
Thank you, Virginia, just a quick follow up so we think you can pass through with ITC at the level that it is now it would be something feasible to see the tickets.
Thanks again.
Speaker 5: OK, Marcelo, just remember that during 2020, 2021, our decision, because we are in the middle of the peak of the pandemic situation, we decided to move something around 3% to 4% last year. But for 2022, we expect to pass inflation to our price on medical school for 2022.
Okay Marcel.
Please remember that during 2000, finding development and why our decision.
Yes.
Pete.
Damning situation, we decided to move something around three 4% less.
Last year, but for 2022, we expect to past inflation to a price on medical school for 2022.
Okay.
Thank you.
Great.
Speaker 1: Our next question comes from Vinícius Figueiredo from Itaú BBA. Vinícius, you may come.
Our next question comes from being able to get a duopoly itawamba down significantly.
Speaker 6: Good evening everyone. Thanks for taking my questions first regarding this decision by SPF on the discounts. Just to clarify the effective impact of this decision. It's just that from December or you stopped applying those discounts, right? Or will you be allowed to charge is retroactively?
Good evening, everyone. Thanks for taking my questions first.
Regarding the decision by FTF on the discounts just to clarify the effective impact of this decision is just that from December to all of our you stopped applying those discounts right or will you be allowed to charge its retro acuity.
Speaker 6: And another question would be on the integration of recently acquired assets. If you could comment on what the company has been able to deliver in terms of synergies and when should we expect those margins converting to the organic ones. Thank you.
And another question would be on the integration of recently acquired assets if.
If you could comment on the what the company has been able to deliver in terms of synergies and when should we expect those margins converting through the organic ones.
Okay.
Hi, Vinnie says, it's Luis speaking I'll start with your first questions regarding the <unk> decision.
Speaker 4: Hi, Vinicius. It's Luis speaking. I'll start with your first questions.
Speaker 4: Regarding the STF decision on last Thursday, the STF declared unconstitutional all the linear discounts that were applied by the judges in a linear way.
Last Thursday.
The staff asked yes, if they are unconstitutional.
All of the leaner discounts that were.
Bye bye.
The judges.
In a in a leaner away.
Speaker 4: uh uh watch the the the fact that we have our
What's the.
The fact that we have.
Just right now is that we have.
Speaker 4: Just right now, is that we will not apply the discounts that it was 25% on the tuitions on FCMPB. Regarding the past, all the discounts that we gave since the beginning of this...
We will not apply the discounts that it was 25% owned that we chose on F. Cynthia regarding the past all the discounts that we gave since the beginning of this.
Yes.
Speaker 4: the procedure. We are waiting for the final decisions of the STF.
As a procedure we are waiting for the final decisions off the STS to decided to charge if it's possible at the discount that was granted during 2021. So we are waiting for the final decisions all.
Speaker 4: to decide to charge, if it's possible, all the discount that was granted during 2021. So we are waiting for the final decisions, all the procedures to get these discounts being charged in 2021.
The procedures to <unk>.
These discounts are being charged.
Speaker 4: And so we expect to do that next year.
And so we expect to do that next year.
Having said that you don't think the last time on integration.
Speaker 5: Hi Vinicius, Brigida, I'll take the second question about integration. Our last two big acquisitions that was UNIFIP MOC in Monte Sclaro city and UNIGRAN Rio, both of them, we could start our integration process before starting the classes on the second half.
Our last two big acquisition that was when you keep walking want this cloud of Ctrip and when you go to Hugh.
Both of them.
Good.
Stocked our integration process before starting the classes.
On the second half.
Speaker 5: So we are operating both of them for very high contribution margin, above 40%, above our expectation, even considering that on the ground here, we just closed the operation at the beginning of August . So it's a very good result in terms of synergy coming in a very short period of time.
So we operate in both of them are very high contribution margin above 40% above our expectations, even considering that the legal view just close close operations beginning of August. So it's a very good results in terms of synergy coming in a very short period of time.
Okay.
Okay.
Okay, Thanks very clear.
Speaker 1: Our next question comes from Mauricio Cepeda from Credit Suisse. Mauricio, you may talk.
Our next question comes from August Sept, Banda from Cajun <unk> III.
<unk>.
Right.
Can you hear me now.
Speaker 7: Yeah, okay, yeah, a little bit of a confusion of mutinies here. Thank you. Thank you for the time. So, three questions from my side. The first about the margins. I understand that you are integrating new businesses and the new, the new colleges are have lower margins as well. But almost all those integrations they occur, and and we remain with the digital business that.
Yeah, Okay yeah.
Bit of a confusion of mutant M used here.
Thank you thank.
Thank you for the time, so three questions from my side.
The first about the margins I understand that you are integrating the businesses and the new the new colleges are have lower margins as well, but almost all of those integrations they occur and we remain with the digital business that.
Speaker 7: They are growing a lot, congratulations on that. But before all those digital businesses, should we expect a new normal in terms of margins going forward because of the digital, not because of the integrations?
They are growing a lot congratulations on that but before.
Before oldest digital businesses.
Should we expect a new normal in terms of margins going forward because of the digital not because of the integrations anthem my.
Speaker 7: My second question is about the health courses. We see that the health courses are a significant part of the business. And
And my second question. This is above the house courses, we received at the house courses are a significant part of the business and.
Speaker 7: and the growth, it's lagging behind us as in other courses here in Brazil. How do we expect this to get back to a normal growth situation? And the third one is about the undergrads that are nor METC nor the health courses. If you, how are you planning to tackle it?
The growth is.
It's lagging behind us.
The other courses here in Brazil.
How how how do you expect this to try to get back to a normal growth situation and the third one is about the undergrads that are nor matzzie, nor the health courses. If you how you were planning to attack, which.
Speaker 7: or if you see any opportunities to divest the business or make any kind of partnership on this. Thank you.
Or if you see any opportunities to.
Divest the business or make any kind of partnership on this.
Yeah.
Hi, Maudie Sue.
Speaker 4: Hi, Mauricio. The first question about the margins is we are seeing that we are.
The first question about the margins.
It is.
We are seeing that our new.
Speaker 5: leverage our traditional medical education business after acquisition at the same level that our legacy in one.
Leverage our traditional med fabrication business after the acquisition at the same.
Level that our legacy.
In one to three years, but as we are ramping up our diesel subs in a very fast way in terms of revenues, we believe that digital services on the long term care reform around 30, and 40% so depending on how fast we can lever.
Speaker 5: But as we are ramping up digital services in a very fast way in terms of revenues, we believe that digital services on the long term can perform around 30 and 40 percent.
Speaker 5: So depending on how fast we can leverage our contribution margin from digital service, that's today.
<unk> our contribution microphone additional services that today.
Speaker 5: excluding Med-Cell, it's a very low margins, they are ramping up both of health tax, all of this health tax, we expecting to have on the end game around 30 to 40 percent in contribution margin, consider all the six pillars combined.
Excluding they'd sell it.
It's a very low margins the RMP App mobile health bets all of this Halifax.
We expect them to have on beyond game morale.
30% to 40% contribution much considering all the six pillars combined.
Speaker 5: About the second question on the undergraduate health science, we saw a decrease of 4% of the student base. This decrease is related all the impact that we saw in COVID on the on-campus traditional programs and we'll see a better intake levels on the second half.
About the second question on the undergraduate how science we.
We saw a decrease of 4% of the student base.
This decrease is related all the back that we signing Colby on the on campus traditional programs.
And we will see a banner intake levels on the second half.
Speaker 5: So we are showing resuming growth on the student based on health, on the second half. And other undergraduate, we will keep the same, other undergraduate programs, we will keep the same discipline here.
So we a saw any resuming growth on the Sydney basal Hal on the second half an order under graduate we will keep the same although under Gregory Robbins will keep the same discipline here that we'll ever see mass or we are going to close to shut.
Speaker 5: that will every semester we are going to close to shut.
Speaker 5: some problems that is not sustainable, and if you analyze, we are concentrating much more our mixing on health and medical education on the undergrad business. Today it's around 89%, 88% our total.
Some problems that is not sustainable.
On health and medical education on the undergrad business today is around 89% at 8% of our total revenues coming from medical and health problems.
Speaker 8: revenues coming from medical and health programs, considering the undergrad business.
During the undergrad business.
Very clear Virgilio. Thank you.
Well.
Okay.
A couple of questions.
The next question.
From this evening.
Yes.
Hi, everyone can you hear me.
Yes.
Speaker 9: Okay, just two questions on our side. The first one.
Okay, just two questions on our side.
The first one.
Speaker 9: is if you could give us more color on the M&A pipeline. So how is the appetite for further inorganic moves? And if should AFIA continue focusing M&A pipeline at tech digital opportunities?
If you could give us more color on the M&A pipeline. So how is the appetite for further.
Inorganic moves and if shoot off your continued focus in M&A pipeline.
Tack digital digital opportunities.
Speaker 9: And the second one is if you could comment on organic results. We know that organic adjusted EBITDA decreased year over year, and I just wanted to understand what affected results, if there is anything aside from the continuing education affecting organic numbers.
And the second one is if you could comment on organic results. We note that organic adjusted EBITDA decrease year over year and I just wanted to understand what affected results.
If there is anything aside from the continuing education of spectrum organic numbers. So just wondering if you could give us a little bit more color on that too okay. That's it. Thanks.
Speaker 9: Just wondering if you could give us a little bit more color on that too, okay? That's it. Thanks a lot.
Speaker 4: Hi, it's Luis speaking. I'll take these two questions. First one regarding M&A.
Hi, Ian it's Louis speaking I'll take these two questions first one regarding M&A.
We didn't change our views on M&A on the undergrads we.
Speaker 4: we didn't change our views on M&A. On the undergrads, we should expect something about 200 seats per year from 2022.
We should expect that's something about 200 seats Perry.
Barry here.
From 2022.
Speaker 4: And in the digital service ecosystem, we can expect some movements, some inorganic movements to complete all the six pillars strategy.
But in the digital service ecosystem, we can expect some movement some inorganic movements to complete all the six pillars of strategy.
Speaker 4: So we haven't changed the focus continues to keep growing on undergrads in assets that has the medicine profile over 6% on the maturation and in the digital service we want to complete the six-year strategy.
So we haven't changed the focus continues to keep growing on other grads are nascent staff has the medicine profile over 6% on the on the maturation.
And on in the digital service, we once you complete the sixth floor of strategy.
Regarding the second the second question's, the our organic margins were.
Speaker 4: Regarding the second question, our organic margins were affected by the under-reported
Affected by the <unk>.
The undergrads.
Speaker 10: uh sorry the the graduation uh uh performance
Sorry.
Does the graduation.
Performa stats.
Speaker 4: as you told us, was below than last year.
As you told us.
What was the low band than last year, but Ah Besides that it's important to remember that the third quarter last year.
Speaker 4: But besides that, it's important to remember that the third quarter last year, we got the 14 million reais revenues that were postponed from the second quarter because the delays on the practical classes.
We got the.
14th.
Mean Henri ice.
Revenue step where fulfillment from the second quarter because of the delays on the practical classes.
Speaker 4: Just remember, as we are under IFRS, we recognize the revenue when the service is rendered.
Just remember as we are on the Ifr Ias and we recognize.
The revenue when the service is rendered.
Speaker 4: uh from the second quarter last year to the third quarter uh uh last year we we got some some postponement of the recognition of this this revenue this affected us uh uh last year in 14 million reais.
From the second quarter last year to the third quarter last.
Last year, we got some some postponements of the recognition of these these revenue. These are factors us a less seer 14, nobody is easy.
Speaker 4: In this year, as we move on the pandemic, the postponement of revenues was just 1.7 million reais. So we have this almost 13 million reais affected on the third quarter itself.
E. This year are the <unk>.
As we move on on the pandemic the postponement for far off revenues was just 1.7 immuno reais. So we have this almost 13 re ice effected a one the third quarter <unk>.
<unk>.
Ah that sees behind if we compare our third quarter 2021 in third quarter of 2020.
The phone points.
Speaker 5: Just one point to add here about the continuing education, to remember that during the COVID times, we almost didn't deliver any classes. And we have a
West here.
Well the continued litigation can remember that during the complete not things are we almost didn't deliver any glasses them we.
We have a.
Our province to enroll new students because all the practices classes with specialization in graduates problems was completely blocked the weekend, we couldn't deliver the services.
Speaker 5: problem to enroll new students because all the practice classes for specialization in graduate programs was completely blocked. We couldn't deliver the service.
And we resume all onsite classes for the graduate programs on October and we also conclude our record intake.
This yeah.
This spirit right now that's perfect Classism October and are resuming growth on the top line year over year on the fourth Walker. So instead of we have three quarters in a row that we were reducing and decreasing our evidence on consumer education year over year, but as expect on the floor Walker, we have you will see.
Speaker 5: So instead of, we have three quarters in a row that we were reducing and decreasing our revenues on continuing education year over year, but as expected on the fourth quarter we have, you will see a growth coming on this after all the COVID impact.
Our growth Kabi on this after the order could be the back and just add another point on M&A here, we concluded 588 seats.
Speaker 5: And just to add another point on the M&A here, we concluded 588
Speaker 5: through additional seats through acquisition in 2021.
Throughout the additional.
Seats through acquisition in 2021, there were three.
Speaker 5: There were three positions, UNICEF in Morocco, UNICEF in Rio, and Galeanos, the most recent one that we just announced.
Our position when if you can walk through and you're going to view and guidance. The most recent one that we've just announced that in the pipeline keeps for time, we are not changing our strategy year and also focus to complete our ecosystem. The six pillars and also to increase the penetration in some of them. So.
Speaker 8: And the pipeline keeps for time. We are not changing our strategy here and also focus to complete our ecosystem, the six pillars, and also to increase the penetration in some of them. So you keep seeing some movements the next quarters.
So you keep seeing some movements are.
The next blockers.
Okay.
Yes.
Oh.
It is Scott.
Perfect. Thank you guys.
Well.
Speaker 1: Well, so our next question comes from Vinicius Beto. So, yes, Vinicius, you may talk. And remember, if you want to ask a question, please raise your hand.
So our next question comes from <unk> <unk>.
Ecumene talk remember, it's an ask a question please raise your hands.
Hi, everyone. Good afternoon. Thanks for taking our question. So two here two questions here first of all the inflation dynamic so we understand your pricing power on the topline.
Speaker 9: Hi, everyone. Good afternoon. Thanks for taking our question. So two here's two questions here. First, about the inflation dynamics. So we understand your price and power on the top line.
Speaker 11: to just provide us some color on the cost side of things. So how are wage negotiations with professors going on? And what's your view regarding further increases in margin for 2022, considering the organic operations, not necessarily the ramp-up of M&As? And the second, a little follow-up on the continued education.
Just provide us some color on the cost the cost side of things so how our wage negotiations with professors going on and what's your view regarding further increasing margin for 2022, considering the organic operations not necessarily the wrap up of on X and the second a little follow up on the continue education. So.
Speaker 11: So are there any changing plans for 2022? Should we expect new launches, new discounts, or something like that? Or do you guys see that the backlog of position decisions to take these courses, as you just mentioned, should be enough to maintain or resume the double-digit growth prospects there? Thanks.
Are there any changes planned for 2030 June should we expect new launches new discount or something like that or do you guys see that backlog off position decisions to take these courses as Richard just mentioned should it be enough to maintain and our resume the double digit growth.
Prospect.
Alright.
Hum nuisance Osaka and the last question.
Speaker 5: Hi Vinicius, I'll start with the last question about the continued education. We are expecting a two-digit growth on the top line in 2022. We saw this record intake
Human season.
We are expecting a two digits grow on the top line in 2002, we saw this record D J.
Speaker 5: We enrolled more than twice new students when compared to 2020 and also 2019, so it's a very good volume of intakes. Just remember that we launched many new programs and also new campuses.
We wrote more than twice, our new student when compared to 2020 and also 2019. So it's a very good volume often takes Ah just remember that we launched many new programs and also new campuses.
Speaker 5: to run the graduate programs in the most important cities of 12 states in Brazil. So we are seeing a very good trend, considering that we will be allowed to deliver all the on-campus and the practical classes for the specialization and graduate programs.
Through run.
The graduate problem in the most important series of 12 states in Brazil. So we are seeing a very good tran consider that we will be allowed to deliver all of the on campus and the practical classes for dismiss elevation and graduates.
Speaker 5: On the inflation side, I think it's important to mention here that after took a decision during the pandemic.
On the inflation side I think it's important to mention here that.
August took a decision during the pandemic.
Speaker 5: to keep all the commitment with our professors, our teachers, keeping the same amount of hours. We didn't change any commitment that we have with our professors and delivering the entire content for our students. That was the reason that back in 2020, we have to postpone some classes, practical classes, and we have this.
So keep all the commitment we follow professors our features keep it the same amount of hours, we didn't change any commitment that we have we follow up of vessels and delivering the entire continent for hours to that was the reason that back in 2000 plenty we have to postpone some glasses practical classes anyway.
This.
Speaker 5: proportional postponing on our net revenues last year. On the other hand, we have very good negotiations with the unions on 2021. So our internal inflation was much lower than considered by the National Inflation Index.
Proportionable Spani on our net revenues last year.
On the order hand, we have a very good negotiations with the unions are on 2021, so our internal inflation was much lower.
<unk> been considered by.
By the end of the National <unk>, Inc.
Relational index. So this is very important and also take into consideration that price adjustment isn't the beginning of the year. So we saw the inflation coming up during the year, we couldn't change the price. So we are adjusting price for the following semester. So now we'll gan.
Speaker 5: So this is very important and also take the consideration that price adjustment is in the beginning of the year. So we saw the inflation coming up during the year. We couldn't change the price. So we are adjusting price for the following semester.
Speaker 5: So now we can pass inflation to our price and also adjust.
Bassi placements of our ryzen also adjust.
Speaker 5: a little bit ahead in some new camp, some new programs that we are implementing all these digital features that we are plugging into our ecosystem.
A little bit I have them.
And some are.
New campus from new programs that.
That we are implementing all these digital features that we are plugging into our ecosystem.
Yes.
Thanks, Rishi that's Brooklyn.
Speaker 1: You're welcome, Denise. So our next question comes from Cepeda, from Edith Smith. Cepeda, you may go.
Neuro companies.
Our next question comes from Seth Weber from Credit Suisse.
Zone.
Hey, guys. Its me again I just I just asked for before sorry, if there was a confusion into the line.
Speaker 7: Hey guys, it's me again. I just, I just asked before. Sorry, I think there was a confusion in the line.
No problem.
Speaker 7: No problem! Always happy to see you. Double, double personality here. Thank you.
[laughter] double double personality here. Thank you.
Okay, I think that we don't have any more questions.
Speaker 5: Okay I think that we don't have any more questions. Any final remarks? So thank you all once again for being here. It was another great quarter. I think we are
In our remarks.
So thank you all once again for the year was another brief Walker.
Yeah.
Speaker 2: beginning to have our normal life here, at least in terms of operations, assuming you're on campus, operation, keeping in some areas to have some protocols that we have to follow and take the care that we still
Beginning to have our normal lives at least in terms of our corporation with Xiaomi are countless.
Operational kidney.
Aaron just to have some protocols that we have Paul.
So you have to do it but we are very confident are keeping the same fran on our medical education continuing education.
Speaker 5: have to do it, but we are very confident keeping the same trend on our medical education, continuing education. We saw the fourth quarter coming in a very good trend, not more decreasing revenues as now we can deliver our classes.
We saw the fourth quadrant gummy.
In a very good trend Mark Moore, the crazy revenues as Maui can deliver our classes and for 2022.
Speaker 5: And for 2022, very confident that we'll see some results coming on the digital services regarding to B2B operations. That is our short-term goal in terms of not only complete our pillars, our offering, and also go-to-market strategy for the B2B. So thank you all. Hope to see you on the B2B.
Very common that we will see some results coming on the diesel services regarded to be to be operations that is our short term goal.
In terms of not only complete our pillars, our offering and also go to market strategy for the B to B. So thank you all hope to see on the next block.