Afya Limited Q1 2023 Earnings Call
Operating cash flow ratio was 112% for the first quarter of 2023 compared to 113% in the first quarter 2022.
Adjusted net income for the first quarter of 2023 was 167 million Reais.
Lines with the same period from the previous year, meaning two to the higher financial expenses related to each and feeds acquisitions and higher interest rates.
Our adjusted EPS for the quarter Richard.
<unk> and 77.
The same when compared to the first quarter 2022.
Our EPS performance reflected the decrease in our net income that was compensated by capital location discipline and securities buyback programs.
Moving to slide number nine for a discussion of key operational metrics by business unit.
Our number of medical students grew 19% over first quarter 2023, reaching 28000 students.
With operating Med school seats, increasing 25%.
Due to the encompass of 632 medical seats related to <unk> in Japan Itabuna seats increase.
<unk> as a feedstock lockdown acquisitions as Brexit effects.
Therefore, we've reached its 3163 appropriate seats and expect to achieve almost 23000 undergrad medical students at maturity.
Our net average tickets excluding acquisitions increased by eight 3% over the same period last year.
<unk> 8570, <unk> in the first quarter 2023, compared to 7861 and first quarter of 2022.
The last graph shows a 24% growth in combined tuition fees, reaching 806 million reacts.
From 649 million Reais from the first quarter of 2022, 7%, 8% of which are related to medicine courses.
All of these efforts means one thing our medco locational basis remains and will continue to be.
The cornerstone of our business in the short to intermediate terms delivering tight predictable growth combined with solid profitability and cash generation.
The next space I will present, our continual educational metrics as said before we saw another year of great recovery in our continuing educational segments with an increase of more than 37% the number of students.
<unk> to the same quarter last year.
Reaching 4774 students.
In additions for the quarter net revenues grew 47% when compared to the first quarter 2000 and literature.
This recovery is mainly due to the robust intake process and of course month duration.
Moving to slide number 11, I will discuss the diesel service operational metrics on the first graph you can see our total active players which are the ones that generates revenues in business to physicians <unk>.
With a continuous growth trends we breaches.
218000 paying users.
24% growth compared to the same period last year.
As you can see in the second graph, our ecosystem grew 13, 6% compared to the three girls a year, achieving 295000 monthly active users representing almost 40% of all medical students and physicians in Brazil.
Finally on our last graph, we can see our additional service net revenues, which increased more than 90% when compare to the same quarter of the last year.
Reaching $56 8 million Reais.
With that breakdown, our digital service net revenue with the <unk> and <unk> segments, which accounted for more than 46 million reais coming from <unk> and more than 10 meter <unk> coming from B to B seems to be <unk> strategy is still.
Pumping up.
Representing a growth of 62% compared to the prior year.
And now moving to my last slide I will discuss our cash and net debt positions also give you more color on our cost effects.
Cash and cash equivalents at the end of the first quarter were 723 million a decrease of 8% over March 2022.
34% when compared to the fourth quarter of 2022.
<unk> to the new <unk> issuance during the fourth quarter that was used to fund the downpayments of units at a gross and feature Walk-down acquisitions in January .
On the next page, we can look closely to the nasdaq's variation.
In the first quarter 2023, net that's totally to beta and 29 million Reais and increase of 648 million reais when compared to the fourth quarter of 2022.
Meaning to the 825 million you would need to like wasn't feature walked on acquisitions.
Which was partially offset by a 177 million reais of free cash flow generation in the first quarter of 2023.
On the next slide you can see a table with the breakdown of our gross debts and the total cost of our debt considering our main source of debts.
The Softbank transactions, the vantreese accounts payables to selling shareholders and other financial obligations.
This ends our prepared remarks.
Strong performance consistent growth and success no segments. We are committed to provide an ecosystem that integrates educational and digital solutions for the entire medical Germany.
Enhancing the development of <unk>.
<unk>, a forgiveness and productivity up health professionals.
We are very proud of our business and what we have achieved so far.
And excited about what we planned for the future.
I will now open the conference for Q&A session. Thank you.
So if you want to ask a question please raise your hands.
The first question comes from lithium I can't Dini, well Italo made that move.
You made Tom.
Good evening, everyone and thank you for taking our question regarding mid cell we've seen a decrease in the number of active payers for the best quarters. So can you. Please provide more color on the competitive landscape and comment if you had seen any sign of recovery here, especially considering the initiatives implemented in the.
End of last year, so that will be helpful. Please thank you.
Hi, Luca this is rodrigo.
I can start here, and then Blanco and give more details upturn.
So just about the dynamic on mid sale, we are combining the mid cell offering on pillar one pillar one together with Qunar impact of papers. So we have seen a very good take enrollments coming on Ali that mid teen in Caddo paper also shifting demand.
Between these offerings in the pillar one so I'm itself as we saw.
The last quarter Lake she on the Boardwalk with Johan.
Lower.
Volume Gummy <unk> and the <unk>.
<unk> analysis right now in the first quarter sold the Max cycled the big size of the stock in September . So we will still have a decent master a lower number of coming from itself. When you compare to last year. So the landscape.
Competition landscape you still have the same so we still have a lot of competitors on this on this matter. That's the reason why we change not only the product, but also change the offering combining ali that'd be tuning Petro papers.
Offering much more relate that also pushed facility. So its much more online continuing medical education, but only rather than spread cost as it should.
Used to be mid sale in the past back in 2019 2018.
Just to give more figures.
That's the <unk> Blanco that can color a little bit about the numbers.
Thanks, Thanks behavior.
Luca as the <unk>, where we asked at the first quarter.
They can take up the collections of 2023.
So all the collection of 'twenty to 'twenty two is disconnected.
This quarter and now the new intake.
Take place.
Place in the fourth quarter.
Med Sal as we made some is not.
A cornerstone.
For a four hour.
Business to business.
Our strategy.
And we.
Still feel comfortable that.
With this combined offer that we are doing.
We have the breadth as Ahmed say are within.
Our casualty Bruce and Alice.
<unk> seen a call that.
We've gone out with Ghana.
Stop this these this.
This following off Ahmed sale and then we can.
Perhaps some kind of recovery during the next intake cycle for the 'twenty 'twenty four collections that will garner stock on September .
Thank you Neil you landmark moment, yeah, just to add a point here so moving forward for the following quarters on the digital.
And the next question will be consolidated snow more it will be.
Fully organic.
Combined comp here.
The previous year, so pillar, one should be moving around 10% to 50% above last year and the other.
Competence of our additional services should be growing above 30%. So the combination of them will be around 15% to 20% for the rest of the year.
At least for the for.
For the rest of the first house, because we still have the big <unk> that would be stronger on the second half okay.
That's very clear thank you continuing lease.
Thank you.
Okay. So our next question comes from my guess is that data that we're going through.
Thank you Rachel.
Hi, Rajeev Blanca cannot put thank you thanks for the space here.
So a little bit on margins, so I understand that.
You are in fact reconfiguring the mix of business. There. So we see that the margins being a little bit slower but for a very positive reason right. You are ramping up a lot of concern as indication youre opening lots of medical seats. So my first question would be.
How would you expect this to go on for <unk> in terms of these apparent margin pressures, which are in effect.
<unk> of the business and thinking a little bit more preferred or if you see.
Well when you see basically.
Convergence to let's say a new margin.
Evil.
Given that you are going.
You're integrating new operations on top of the dimension that effect. Thank you.
Oh, yeah that H block with speaking regarding the expectations in the year. We are we are fully committed or Watson eaten up guidance guidance for that the markets in.
In the first.
With the disclosure of the results up to above if any to the margins and bad debt.
Got the guidance is between 40% to 42%.
From the bottom to the top line of the guidance we are.
We're committed with that remember that the first quarter.
This is the best quarter that we always have due to the seasonality of all of our business. We have these.
A little bit brasher.
In these in these margins caused by a meta perform us the <unk> for the beginning of our Q needs that is coming with.
<unk> is that were initially better than expected in the original business plan, but still.
Still behind.
The margins of the company if we exclude these activations.
For 2023.
The decrease in margins is just 50 bps, yeah, five zero beta cell.
We are committed to that.
Delivered margins of 40% to 42%.
And as Youll Nations as continue educational Ah.
Will we grow adds additional settlements will grow.
With higher rate.
<unk> then the undergrad.
We're going to have some kind of ships pro forma earnings but for this year.
The guidance is between.
Between 40 to 42.
Fortunately did not give guidance for longer term.
But there is no reason for margins at all.
Statements in Queens in the following years.
<unk> compliments.
Just.
As we are growing very fast and continuing medical educational need them at.
We launched six new campuses, we are preparing to launch a mother.
Two or three Kansas still this year, so as any other on ground operation or application.
We will ramp ramp up the number of students for campuses.
<unk> gross margin will increase and also the EBITDA margin will increase along the year. So we expect to have Barra contribution market coming from continued medication for the following semester.
And not only for the legacy.
Operational but also for mainly for the view the deal counts that we launch.
Last year and also this year okay.
That's very clear thank you.
And so in Hanger clinic will ask a question just raise your hand.
Next question will come from Lukas <unk> from Morgan Stanley .
You may now Tara.
Hey, good evening, thanks for taking my questions.
As to the.
The first one is related to Europe .
Your med schools the situation seems very comfortable you increased prices 8% filled.
100% of fleet, but have you noticed any underlying change in the demand for example, Uh huh.
It evolved in the southeast versus system mice magic with schools.
In terms of our candidate proceed or pricing for example.
And the second question is related to <unk>.
It seems to be.
Performing well.
Tell us a little.
Which part of the product development process and the commercialization process you are in and also if you could comment a little if you are developing.
Solutions for companies that are not in the pharma industry.
Yes Lucas.
The first one here bunk will help me on the second one so above the <unk> adjustment that was the average across the board.
<unk> take level this year.
This year was when you compare to the last four years was the candidates pursuits ratio higher than the highest condensate ratio candidate proceed that we have.
For the last four years.
Around eight and debates proceeds of cordis on a national average, but as we have like a very big greatest process. We can manage to have a 100% of our Cooper synergy.
All of our units and of course that we have different.
Differentiation between one of our campuses.
<unk> capsules.
Capsules, a large series last when are you going to view in the Rio de Janeiro.
We have more than 2025 candidates receipts and for some institutional have around four and five candidates proceed, but it's pretty feasible and easy to keep.
Rolling out 100% of the seats every semester. So even consider that we are betsy deletion, a little bit above inflation semester.
I think we are strengthening our commercial process, our enrollment process and our capacity to convert.
Students to our college campuses.
Okay.
And here I, just want to mention that we do have different prices and different regions.
That's mainly because of the region.
It does not mean that we have different margins in different regions.
Are the cost of expenses related to different regions are also different so what I'm trying to think going to end up the day not to catch problem is made up of coal.
Comparing to I don't know anywhere he leaves different but in the end of the day, we can see similar market what changed them hiking lateral is mostly how much concentrated at Kuwait from Hudson <unk>.
What changed the game.
And frankly, it may take the second question.
Lucas. Thank you. Thank you for our questions just give you more color on the <unk> or just give us step back.
More borrowing our strategy. So are these though.
Sure.
Our strategy is focused on penetrating within the physicians.
We have.
The best solutions to increase their productivity to increase their answer deepness and.
And to increase their updating.
From topics.
And we've been these channels to connect these.
These physicians to the health care players so we divided the destocking.
These two parks, okay, so regarding that the churn.
The confidence that we will provide this service for the physicians, we are increasing the lots the use the users.
Monthly active users and we are increasing the payors as well.
Regarding the B to B.
What we've had in place until right now.
The connections that we've made.
And then my immuno products with other education companies to provide solutions such as our prep course mid sale and our.
Our mezzanine image.
Solutions that these medical horrible.
And most part of this digital revenues are coming from the pharmaceutical industry, we have more than 100 corporate established you know.
More than 40.
Industry pharmaceutical industry players are right now.
International and National Nationals.
Our players on that so are the bto b revenues are coming for these two parts what do we have launches.
Right now we started the connections for the Satcom theater of the industry that is relevant for our <unk>.
<unk> strategy that is the providers so.
<unk> getting up a team to do disconnections and starting to to offer that out of our connections with the physicians.
The providers.
In the pharmaceutical industry and what we are providing right now it's what the industry call. It EBIT, that's it's marketing and commercial airports a.
To connect the physicians with the industry players to get there at the.
Latest drugs the latest.
Regiments.
For the physician and for providers.
We are going to offer a recruitment service.
And offering the best leads that Tam.
Income from our ecosystem leads for them to get their treatment buying some assets and doing their treatments are doing that.
So that's the strategy Lukas.
Very clear vision to Brooklyn to thank you very much.
Of course.
So just a reminder, if you want to ask a question. Please raise your hand. The next question comes somebody has to come from getting to market.
So you have to pay them, we know them.
Yeah.
Thank you for taking my questions I have two so first half we'll have maybe seen ticket to expect it to behave going forward I mean, do you expect to increase prices above inflation.
And do you have any updates just a second question do you have any updates regarding the new mice <unk> program.
Thank you.
Hi, Jessica it's block with speaking I will take the first one in BCD will then I'll take the second one.
The first one regarding the first one what we.
I have already discussed it in the last call is the pricing for the is dispersed.
This first this first semester.
We have disclosed.
Disclosures that we've made.
The adjustments for the mezzanine students that were seven 5% for all these years and within that <unk> Maturations, we're going to get something around 1% above that so what we delivered for the first quarter is eight 3% increase in terms of.
Next next tickets, excluding excluding acquisitions.
Acquisitions, and just remember about our <unk> dynamic we established peak hour.
Our price increase annually, we usually do that.
In the month of September and the beginning of October and we established the price for the Inflations.
We expect for the year.
We take the year.
When we did that fall in 2021 for 2022, we did the same seven 5%.
We were behind off with inflation of 2021 because of inflation.
Speed up at the end of the year.
And this year.
2022.
The opposite has happened.
We established the same seven five birthday inflation started to decrease at the end of the year. So.
Sure.
That's how we do that so when the next September .
We're going to see.
These inflation perspective for the year, we established a new pricing for 2024 and above this price readjustments, we have these.
G gets maturation effects that will come around.
To round off these 1%.
Yes, so just the weather at that point.
On this question about ticket.
When you take a look on the table too we also have.
Very high incremental tuition when you consider also other health programs.
Even excluding acquisition the tuition fees as jumpy.
More than 60% so does.
In effect, not only about price adjustment and the effect of mix much more concentrated in the high value programs.
We had in the past.
Good dynamic also for the year on other programs besides the.
The medical programs for 2023, so about them is magical.
So we are just following.
After the noma to rule that the.
<unk> said that we should have to take out a loan of 120 days to release, but it will be the new the new rules for the <unk> three or <unk>.
A new wave of capacity so as just 60 days after that.
<unk> believes that information so we expect them to have something by the end of July beginning of August .
They are working they have like they're commission getting together asking the sector, maybe professionals many areas participating how it should be and advocacy.
The new conditions for the new wave capacity, but it's still early in the process I don't have any information okay.
Thank you very clear.
So we do not have other questions. Thank you so much for participating with US today, you can have any follow up questions or if you want to schedule a cap. The caller, yes contact me and I will be pleased to help you guys.
Have a good night.
Great and.
Thank you.
Thank you all bye bye.
The recording has stopped.