Q2 2023 Afya Limited Earnings Call

August 28, 2023

Speaker 1: Thank you for joining us for our second quarter 2023 conference call.

Thank you for joining us.

Whereas the second by the thousands we need pretty cool right.

Speaker 1: Today I'm here with Asit Tio, Vichy Dzibon, and Louis Van Raeblen for our CFO . During this presentation, our executive will make forward-looking statements.

Yeah.

Yes.

Hum.

Yeah.

Brendan Thank you.

I think that we will make forward looking.

Speaker 1: Foreign looking statements can be related to future events, future financial operating performance, no and no risk on circumstances, and other factors that may cause access actual results to defer material from those contemplated might be where they??? Qi?? booth, that the expilation platform, will be done in Group Holy foot language

Any statements related to future events.

Financial operating performance now.

I'll start.

Other factors that may cause.

Actual results could differ materially from those contemplated maybe forward looking statements.

Speaker 1: Our looking statements in this presentation include, but are not limited to, statements related to the business and financial performance, expectations and guidance for future periods or expectations regarding the company's strategic product initiative, its related benefits, and our expectations regarding the market, as well as the potential impact for COVID-19.

Looking statement.

In patient.

With that natural limit.

Statements related to the business and financial performance.

Such statements and guidance for future periods, our expectations regarding the company's strategic bradykinesia cheap it is.

Related benefit.

With.

Regarding the margin as well as the potential impact from COVID-19.

Speaker 1: These risks include those fully described in our filing with the Securities and Exchange Commission.

This week include those fully describe it in our filings with SEC.

And Exchange Commission.

Speaker 1: The forward-looking statements in this presentation are based on the information available to us as of the take-ah.

The forward looking statement presentation are based on information available to us as of the date hereof.

Speaker 1: You should not rely on them as predictions of future events. And we disclaim any obligation to update any foreign looking statement except as required by law. In addition, management may reference no IFRS financial measure results. These measures are not intended to be considered in isolation or a substitute of the results prepared in a poor district by IPR.

You should not rely on them as prediction of future events, and we disclaim any obligation to update any forward looking statement.

As required by law in addition.

Management May reference no right.

As a result.

These measures are not intended to be considered.

Isolation or a substitute.

The results prepared in accordance with IRS.

Speaker 1: presentation has reconciled in IFRS financial measures to the most directly comparable IFRS financial

Spread duration has reconciled the Ifr act by these measures to the most directly comparable.

Hi, Thanks, so much.

Speaker 1: Let me now turn the call over to the eligible at the field.

Let me now turn the call over to begin easy bolt asset yield.

Speaker 2: Thank you, Henaf and thanks everyone for joining us today for our second WATA in the first half conference call for 2022.

Thank you and thanks, everyone for joining us today for our second quarter in Britain, How conference call for 2022 results for us.

Speaker 2: For us in Asia, this quarter results reinforce that our strategy has been successful, marked by the consistent growth of our operational and financial resources.

While the results reinforce that our strategy has been successfully market by the consistent growth of our operational and financial results. Once again, we are proud to present, the strongest <unk> of our unique business model combining high growth in all three segments dropped.

Speaker 2: Once again, we are proud to present the strong execution of our unique business model, combining high growth in all three segments, profitability and strong cash generation proving its results.

Profitability and strong cash generation brewery gets written.

Speaker 2: During this presentation, I will first run through some main strategic topics, such as our performance highlights, the successful business execution within our three segments, 2023 guidance, recent awards recognition, the new brand strategy, and to penalize our future expecting.

During this presentation I'll bus route with some main strategic topics.

As our performance highlight the successful execution with our REIT segment 2023 guidance recent awards recognition, the new brand strategy and to penalize, our future expectations for the wrong with local will shed some color will go a financial and operational.

Speaker 2: Further on, Luis Blanco will share some color of our financial and operational review. So moving now to page number three. Let's start with our quarter highlights.

So moving now to page number three.

But we for our quarter highlights.

Speaker 2: I just have net revenue, increased 24% year-over-year, reaching 712 million reais, followed by an adjusted bidag rule of more than 22%. Reaching 268 million a year, with a margin of 38%.

Adjusted net revenue increased 24% year over year, reaching 712 below <unk>.

Followed by an adjusted EBITDA growth of more than 22%, reaching 268 million will react.

With a margin of 38%.

Speaker 2: We also reported a record cash flow from operate activity of 566 million reais, an increase of 26% year over year, boosted by the solid operational results of the company with a cash conversion of 99% and a solid cash position of 741 million reais at the end of the year.

We also reported a record cash flow pulp rate activity.

566 mean Iraq.

An increase of 96% year over year boosted by the solid operational results of the company with a cash conversion of 99% and a solid cash position of 741 <unk> at the end of the Watson.

Speaker 2: Adjustment net income was 132 million reais, a growth of 11% year over year. If an EPS of 142 reais represents a growth of 12%, even considering a higher net debt and interest rate period during this quarter over the last year.

Adjusted net income was 130, Jimmy the had a growth of 11% year over year.

EPS of one why did you hide representing a growth of 12%, even considering a higher net debt and interest rate period. During this quarter over last year.

Speaker 2: Moving to our operational updates of the quarter, we have reached 3,113 operating seats and increase of over 25% over second quarter last year. With the beginning of former SMETSKU's campuses, along with organic state expansion in tabuna and also the acquisition of UNIJ al-Arabur and Teej al-Bwa.

Moving to operational updates of the block we have reached 3100 <unk> operating fee an increase of over 25% over second quarter last year with the beginning almost matched wolfcamp with it along with organic chief expansion into Walnut and also the acquisition of <unk>.

Each of <unk> and.

Speaker 2: In addition, our number of undergrad medical students has reached almost 21,000. We present an 18% growth compared to the second quarter of this year.

In addition, our number of Undergrad Med school student has reached almost 21.

At present, the 918% growth compared to the second quarter of <unk>.

Speaker 2: Once again, we saw great results for continued education present a strong net revenue role of 50% of rates.

Once again, we saw great results will continue to gauge that the strong net revenue growth of 50% the Aubrey.

Speaker 2: Also, we are happy to say that after reported great results in the digital health service segment, which ended the quarter growing 28% in revenues year over year. These results materialize the great opportunity ahead in digital services, and it is explained by the stronger on path on B2B engaged.

Also we are happy to say that after we bought a great resort and the digital Health service segment, which ended the quarter growing 28% in revenues year over year.

These results materialize the great opportunities ahead in digital services and it is explained by the strong ramp up on beat to be engaged.

Speaker 2: reaching more than 100 contracts with pharmaceutical industry companies, and the continued ramp up on B2P contracts, business to keep.

Reaching more than 100 conscious as promised goetzke industry companies and the continued ramp up on B to B B.

Visits to physician.

Speaker 2: Our ecosystem reaches almost 282,000 active users, a group of 6% over the years. This represents around 34% of the Brazilian physicians and medical students mark.

Our ecosystem reached almost 282000 active users a growth of 6%. The agreed this represents around 34% of the Brazilian position of the medical students Mark.

Speaker 2: Moving on to slide number four, we'll talk about our solid business execution within our three business units.

Moving now to slide number four we will talk about our solid business execution within our three business units.

Speaker 2: In such as the undergrad segment, we saw an important movement throughout the quarter, such as higher ticks and meting force, with almost 9% increase in meting to each. The maturation of medical seeds, the consolidation of unique and fit supposition, and 64 additional seeds and percocodile in the city of Itabo.

We started the undergrad segment, we saw an important movement throughout the quarter, such as Hyatt and met imports with almost 9% increase in medicine to each the maturation of medical seats, the consolidation of you'll need the Pes acquisition and 64 additional seat and buckled out so that machine in the city of it up.

Sure.

Speaker 2: We are delighted to present that the most significant growth in terms of revenue came from the continuing education segment with 50% growth year-over-year. Due to the robust intake process, new campus and course metrics.

We are delighted to present, the most significant growth in terms of grabbing gained project continuing education segment with 50% grow year over year due to the Roberts thing take profits new capital this enforcement through H one.

Speaker 2: When our digital service segment, we ended the quarter with a revenue increase of 28% compared to last year. This results bring forth a opportunity ahead in digital service and it explained by the run-pop and B2B engaged with new contracts and pharmaceutical industry and the continuous run-pop and B2B.

When our diesel services segment, we ended the quarter with a revenue increase of 28% compared to last year. These results reinforce the progenitor hadn't diesel and.

And as explained by the ramp up and B to be engaged.

Entre that promises industry and the continued ramp up and it should be.

Speaker 2: And it's with great excitement that we present to you RX Insight, the new data intelligence platform that we allow pharmaceutical industry companies a real-time in-depth look at physician prescriptive behavior.

And it's a great excitement that it presents you are acting types. The new data intelligence platform that we allow pharmaceutical industry companies are real time in that low <unk> zetia prescriptive behavior.

Speaker 2: In the next line, we are reaffirming our guidance for 2023, which considers the successfully concluded acceptance of new medical students ensuring 100% of the cupancy in all of its individual and non funded

The next line.

We are reaffirming our guidance for 2023, which considers the successfully conclude that acceptance of new medical students, ensuring 100% occupancy in all of its medical schools.

Speaker 2: Considerable factors, the guidance for 2023 is defined as shown in the chart. Adjustment at rapid is expected to be between...

Consider that will affect the guidance for 2023 is defined as shown in the shops.

Adjusted net revenue is expected to be between.

Speaker 2: 250 million high and 250 million high. And I just a little bit that is expected to be between one billion, 100 million high, then one billion, 200 million high, excluding any acquisition that may be concluded after the actions of the guidance. And also considered the increase of FJPS contribution rates.

2 billion 750, <unk> and <unk> 800 gig the meter.

And adjusted EBITDA is expected to be between 1 billion 100 meter high that 1.200 billion.

Excluding any acquisitions that may be concluded after the issuance of the guidance and also consider the increase.

<unk> GPS contribution rates.

Speaker 2: Under the new TS program, Higher Education Finance Fund introduced in 2018, a retention is applied to the mouth paid by the program to cover the delinquents of the finance studio.

<unk> Braga Hyatt vacation time span introduced it in 2018, our retention is applied to the amount paid by the program to cover the delinquency of the finance students.

Unknown Executive: Thank you for joining us for our second quarter, 2023 conference call.

Unknown Executive: Thank you for joining us for our second quarter, 2023 conference call. Today I'm here with Afya Tio, Virgilio Gibbon and Luis Blanco, our CFO. During this presentation, our executive will make forward-looking statements. Forward-looking statements can be related to future events, future financial operating performance, no and no risk, uncertainties, and other factors that may cause Afya's actual results to differ materially from those contemplated might be forward-looking statements. Our looking statements in this presentation include what are not delivered to.

Unknown Executive: Today I'm here with Afya Tio, Virgilio Gibbon and Luis Blanco, our CFO. During this presentation, our executive will make forward-looking statements. Forward-looking statements can be related to future events, future financial operating performance, no and no risk, uncertainties, and other factors that may cause Afya's actual results to differ materially from those contemplated might be forward-looking statements. Our looking statements in this presentation include what are not delivered to. The statements related to the business and financial performance, expectations and guidance for future periods or expectations regarding the company's strategic product initiative, its related benefits and our expectations, regard to the market as well as the potential impact for COVID-19.

Speaker 2: There was a transition rule that captains the retention at certain levels until 2000.

There was a transition rule that captured the retention at certain lab due 2022.

Unknown Executive: The statements related to the business and financial performance, expectations and guidance for future periods or expectations regarding the company's strategic product initiative, its related benefits and our expectations, regard to the market as well as the potential impact for COVID-19. This week include those fully described in our filing with securities and exchange commission. The forward-looking statements in this presentation are based on the information available to us as well as the data heroes.

Speaker 2: From 2023, the limit was lifted. And the retention was updated according to the delinquents for educational entity for those here as the students that enter on their mortization page. For Adjus, the expected impact on the increase of the FJPS in 2023 is around 24 million hands which was already considered when we issue the 2023 guys.

Throughout 2023, the limit was lifted and the retention was abated. According to the delinquent education entity for dose yet the students that answer on the amortization piece.

For <unk> the expected impact on the increase of the Etsy shape, yet in 2023 is around $24 million.

Which was already considered when we issued the 2023 guidance.

Speaker 2: In other words, after 2022 in natural heaven and adjusted with that, we'll be almost four times higher than in 2019, the year of our ideals. Furthermore, the cash conversion rate will continue to perform above 90%, showing our capacity to deliver strong growth, expanding our profitability and cash industry.

In other words.

<unk> 2023, net revenue and adjusted EBITDA will be almost four times higher than in 2019, the E of our IPO.

Are there more the cash conversion rate will continue to perform above 90% showing our capacity to deliver strong growth expanding our profitability and cash in which.

Unknown Executive: This week include those fully described in our filing with securities and exchange commission. The forward-looking statements in this presentation are based on the information available to us as well as the data heroes. You should not rely on them as predictions of future events and we just claim any obligation to update any forward-looking statements except as required by law. In addition, management may reference no IFRS financial measure is on its call. These measures are not intended to be considered in isolation or a substitute of the results prepared in accordance with IFRS. This presentation has reconciled these no IFRS financial measures to the most directly comparable IFRS financial measures.

Speaker 2: Once again, we are guiding another strong round ahead, aimed at the top of the year guidance, improving after resilience and ability to keep the living solid results with a high predictability. Now moving...

Once again, we are guiding another strong road ahead.

Aimed at the top of the guidance improving asset resilience and ability to keep delivering solid results with a high predictability.

Unknown Executive: You should not rely on them as predictions of future events and we just claim any obligation to update any forward-looking statements except as required by law. In addition, management may reference no IFRS financial measure is on its call. These measures are not intended to be considered in isolation or a substitute of the results prepared in accordance with IFRS.

Now moving to slide number six and really proud to announce that ACA is remarkable performance garnered three significant awards within the second part.

Speaker 2: I'm really proud to announce that ACES Remarkable Performance Garner 3 significant awards within the second.

Speaker 2: First one, Valor Económicos, best education copy in innovation.

First one.

<unk> vast application carpet innovation.

Speaker 2: Second one, another prestigious recognition for being the best-compiling education sector in the Valour 1000 award. And third, the Vikotubu Jivalour award that I was recognized in the education sector in June .

Second one on <unk>.

Other prestigious recognition for being the best company in the education sector in the bulk water 1000 award in there.

Third the <unk> award that.

Unknown Executive: This presentation has reconciled these no IFRS financial measures to the most directly comparable IFRS financial measures.

I was recognized in the education sector in June .

Speaker 2: We are very proud of all these achievements as they reflect the work and passion of our thousand of employees around the new unique vision to transform how together with those who have met me as a book.

We are very proud of all of these achievements as they reflect the work and passion of our thousands of employees around that unique vision to transform how together with those who have met as application.

Unknown Executive: Let me now turn the call over to the reasonable as it feels.

Henna: Thank you, Henna.

Afya Tio: Thank you, Henna.

Speaker 2: On the next slide, I'd like to talk about Artya Brand's presence in its new work day.

On the next slide I would like to talk about <unk> brand strategy and its new architecture.

Virgilio Gibbon: I think everyone for joining us today for a second water and first half conference call for 2022 results. For us in action, the squatter results reinforce that our strategy has been successful, marked by the consistent growth of our operational and financial results. Once again, we are proud to present the strong execution of our unique business model, combining high growth in all three segments, profitability and strong cash generation proving its resilience. During this presentation, I will first run through some many strategic topics such as our performance and highlights, the successful business execution within our three segments, 2023 guidance, recent awards recognition, the new brand strategy, and to finalize our future expectations.

Speaker 2: We recognize the importance of incorporating the value you create into our brand. And the importance of strengthening an integration that protects our sense of unity and mission.

We recognize the importance of incorporating the value we create for our brands and the importance of strengthening and integration that respect our sense of community and mission.

Speaker 2: We already are the leaders and pioneers of a solid and profitable business. Now is the time to be perceived as such.

You're already at the leaders and pioneers of a solid and profitable business now is the time to be perceived as such we have almost 282000 physicians and medical students using our digital solutions, but.

Speaker 2: We have almost 282,000 physicians and medical students using our digital solution, but only some of them know the brand.

Only some of that know the brand.

Speaker 2: This brings us a huge opportunity to become the reference in solution for men.

This brings us a huge opportunity to become the reference solution permit.

Speaker 2: To hook them up, improve the engagement, cross out and upsell along the journey. Therefore, one of our main objectives to make Asia have known and relevant to student position, healthcare, companies and society, become in the top of mind and most recurring brand by position through all their journey.

To hook them up.

Proof engagement cross sell and up sell along vigilant. Therefore, one of our main objectives is to make assia hub known and relevant to students' physician health care companies and society become at the top of mind and most recurrent brand by division throughout their journey.

Virgilio Gibbon: Further on, we will share some color over our financial and operational value. So moving now to page number three, let's start with our quarter highlights. I just have net revenue increased 24% year-over-year, reaching 712 million reais, followed by an adjusted deduct growth of more than 22%, reaching 268 million reais, with a margin of 38%. We also reported a record cash flow appropriate activity of 566 million reais, an increase of 26% year-over-year, boosted by the sole operational results of the company with a cash conversion of 99% and a solid cash position of 741 million reais at the end of the presentation.

Virgilio Gibbon: So moving now to page number three, let's start with our quarter highlights. I just have net revenue increased 24% year-over-year, reaching 712 million reais, followed by an adjusted deduct growth of more than 22%, reaching 268 million reais, with a margin of 38%. We also reported a record cash flow appropriate activity of 566 million reais, an increase of 26% year-over-year, boosted by the sole operational results of the company with a cash conversion of 99% and a solid cash position of 741 million reais at the end of the presentation.

Speaker 2: With this new logo, we review access brand architecture. No longer let the value of architecture be fragmented or diluted.

With this new logo will review asset brand architecture.

No longer let the value of asset be fragmented or diluted to.

Speaker 2: consolidate all this value under a single grant, simplifying the comprehension of our portfolio, avoiding grant conflict and working towards strengthening access to one stop shop.

To consolidate all of his value under a single brand simplifying the comprehension of our portfolio avoiding brand conflict and working toward strengthening ask as the one stop shop for business.

Total P&L I would like to talk about our future expectations.

Speaker 2: So to finalize, I would like to talk about our future 50.

Speaker 2: When we analyze our goals for 2020-08, six years ahead, and consider our three-dead effect, we have a very ambitious plan.

And analyze our goals for 2028.

Six years ahead.

Consider our three business segments, we have a very ambitious plan.

Virgilio Gibbon: Watson. Adjustment income was 132 million high, a growth of 11% year over year. We found an EPS of 142 high, representing a growth of 12% even considered a higher net depth and interest rate period during this quarter over less years. Moving to our operational updates of the quarter, we have reached 3,113 operating fee, an increase of over 25% over second quarter last year. With the beginning of former medical campuses, along with organic state expansion in Tabuna, and also the acquisition of UNI Chalabuas and Pichabotum.

Speaker 2: With undergrad, we have three evidence for growth. First, by maturing the existing seats. Second, to an organic growth of how of the requested seats that have been acted to the minister of education. And last.

With undergrad.

We have three avenues for growth.

First by materially the existing fleet.

Through organic grow of how of the requested seats that have been added to the ministry of education.

And last through acquisition.

Speaker 2: The fact that undergrad is our biggest cash in the race allows us to maintain our goal of constant growth with the plan to increase our available seats by 200 per year through a position.

The fact that undergrad is our biggest cash generation allows us to maintain our goal of constant grow with the plan to increase our available.

By 200 per year through acquisition.

Speaker 2: considered increases in organic and organic.

Consider the increase in inorganic and organic.

Speaker 2: We expect to reach a total capacity of more than 32,000 students and capture 15% of the market share in terms of private seats by 2020, which we present a group of over two times in top line.

We expect to reach a total capacity of more than 32000 students and captured 50% of the market share in terms of private seats by 2020.

Virgilio Gibbon: In addition, our number of undergrad medical students has reached almost 21,000, representing 18% growth compared to the second quarter of previous year. Once again, we saw great results for continued education, presented a strong that revenue growth of 50% over a year. Also, we are happy to say that after reported great results in the digital health service segment, which ended the quarter growing 28% in revenues year over year. These results materialized the greater opportunities ahead in digital services, and it is explained by the strong ramp up on B2B engage, which in more than 100 contracts with pharmaceutical industry companies, and the continue ramp up on B2B contracts, business to position. Our ecosystem, which is almost 282,000 active users, a growth of 6% over year, this represents around 34% of the Brazilian positions and medical students markets.

Which represents a growth of over two times in topline.

Speaker 2: It's worth remembering that I can manage the stool to extract the significant value from everywhere.

It's worth remembering that asset managers to extract significant value.

Every acquisition.

And continued education, which is the next natural step or those who study met.

Speaker 2: In continued education, which is the next natural step for those who study medicine. We have a product that has shown great potential and despite being significantly impacted by COVID-19 pandemic, it has experienced an expansion that has exceeded our expectations and still have a lot of room programs.

We have a product that has shown great potential and despite being significantly impacted by COVID-19 pandemic. It has experienced an expansion of that has exceeded our expectation and still have a lot of raw program.

Speaker 2: To strong top line growth, a pack of foreign new units, and additional 50 new courses, we expect to reach for 140 million reais of net revenue by 2020, four times higher than the figures seen in 2020.

Through strong top line growth hump back off of our new units and additional 50, new courses, we expect to reach 440 <unk> of net revenue by 2024 times higher than the figures seen in 2022.

Speaker 2: As a digital service is where we can expand the owner of this structure and reach a vast number of decisions with tools that offer productivity, assertiveness, and up to date in promise.

As additional services is where we can extend beyond our physical structure and reach a vast number of position with tools that offer productivity assertiveness and up to date information.

Virgilio Gibbon: Moving out to slide number four, we talk about a solid business execution within our three business units. It starts with the undergraduate segment, we saw an important movement throughout the quarter, such as higher tick and mass imports, with almost 9% increase in mass intuition. The moderation of medical seats, the consolidation of unit and pizza position, and 64 additional seats in Pakudai Center Machine in the city of Itaboo. We are delighted to present that the most significant growth in terms of revenue came from the continuing education segment with 50% growth over a year, due to the robust intake process, new campuses and course maturation.

Speaker 2: our strength in this segment, lies in serving as a bridge between the pharmaceutical industry, failures and providers, and a vast community of positions at very stage of their journey.

Our strength in this segment license serving as a bridge between the promise this key industry payers and providers and the vast community of physician at various stages of their journey.

Speaker 2: Our goal for 2008 is to increase penetration and engagement in V2P business to physician sector and consolidate our B2B offerings reaching a natural average revenue of 1.2 billion in digital services by 2002.

Our goal for 2028.

Increased penetration and engagement in B to B business, the physician sector and consolidate our bids will be offerings, reaching and thats ramping up $1 2 billion in digital services by 2020.

Speaker 2: summarize, we intend to grow more than two times, 2022 net revenue on the grid by 2020, four times in continuous occasion, and over six times in the digital.

To summarize we intend to grow more than two times 2022, net revenue undergrad by 2028, four times and continuing education and over six times in the digital thing.

Virgilio Gibbon: On our digital services segment, we ended the quarter with a revenue increase of 28% compared to last year. This results bring forth the opportunity ahead in digital service, and it explained by the ramp up and B2B engagement with new contracts and pharmaceutical industry, and the continuous ramp up on B2B contracts. And it's a great excitement that we present to you our action sites, the new data intelligence platform that we allowed from a industry company, a real time in that look at the position of prescriptive behavior.

Speaker 2: This means that after we almost triple its natural revenue between 2022 and 2022. Despite the ambitious goals, they are achievable support by stronger execution, focus on the medical journey and are dedicated.

This means that after we almost tripled its net revenue between 2022 and 2028.

Despite the ambitious goals are achievable supported by strong execution focus on the medical journey and a dedicated team.

Speaker 2: I will now turn the call over to Luis Blanco, act as CFO to give more power on the financial operational matter. Thank you.

I will now turn the call over to Luis Blanco Act as CFO to give more color on the financial and operational metrics. Thank you.

Speaker 3: Thank you, Vigilio, and good evening everyone. Moving to slide number 10 to discuss the financial highlights of the second quarter.

Thank you this year too and good evening, everyone moving to slide number 10 to discuss the financial highlights of the second quarter.

Virgilio Gibbon: In the next line, we are reaffirming our guidance for 2023, which considers the successfully concluded acceptance of new medical students ensuring 100% of occupancy in all of its medical schools. Consider that well-affected. The guidance for 2023 is defined as shown in the chart. Adjustment at gravity is expected to be between Two billion, 750 million reais and two billion, 850 million reais, and adjusted the bidat is expected to be between 100 million reais and one billion, 200 million reais, excluding any acquisition that may be concluded after the actions of the guidance, and also considered the increase of FJPS contribution rates.

Speaker 3: It is with much satisfaction that I presented another strong quarter results for after.

As with much satisfaction that I presented another strong quarter results for <unk> yet.

Speaker 2: I just had met revenues for the quarter was of 24% year over year, two, 700 and 12 million reais, reflecting the moderation of magical seeds, higher tickets in medicine courses, the impressive growth from conchino education.

Adjusted net revenues for the quarter was up 24% year over year to 712 million Reais.

<unk> the maturation of medical seats higher tickets matching courses.

<unk> growth from continued litigation.

Speaker 2: consolidation of digital service and the integration of new acquisition.

Consolidations off diesel surface.

And the integration of new acquisition.

Speaker 2: For the six month period, I just a net revenue was a thousand four hundred and twenty two million reais and increase off twenty four percent over the same period of the last year.

For the six months period adjusted net revenue was 1000 422 million Reais and increase of 24% over the same period after last year.

Speaker 2: I just said they bid off for the quarter, increase it 22% to 268 million reais.

Virgilio Gibbon: Under the new FJPS program, Higher Education Finance Fund introduced it in 2018. A retention is applied to the amount paid by the program to cover the delinquents of the finance students. There was a transition rule that kept the retention at certain levels until 2020. From 2023, the limit was lifted and the retention was updated according to the delinquents' educational entity. For those here, the students that enter on their mortization page for actions, the expected impact on the increase of the FJPS in 2023 is around 24 million reais, which was already considered when we issued the 2023 guide.

Adjusted EBITDA for the quarter increased 22% to 268 million Reais.

Speaker 2: While there are just a dividend margin, the profit, 50 base points to 38%.

While adjusted EBITDA margin decreased 50 basis points to 38%.

Speaker 2: For the six month period, Agista de Vida was 500 in 98 meter reyes, an increase of 22% over the same period of the prior year.

For the six month period, adjusted EBITDA was 598 million Reais and increase of 22% over the same periods of the prior year.

Speaker 2: with an adjusted 8-dimension decrease of 80 base points in the same period.

With an adjusted EBITDA margin decrease of 80 basis points in the same period.

The adjusted EBITDA margin reduction is due to the mix of net revenues with higher participations of the diesel and continued application segments.

Speaker 2: The adjusted Avidama arcing reduction is due to the mix of net revenues with higher participation of the digital and continued education segments.

Speaker 2: and the consolidations of four new mais magical campuses that operations started on the third quarter of 2022. And we need to lagos and fit seawater guaratapis, which are performing better than expected, but it still present lower margins when compared to the integrated companies.

And the consolidations of four new mice merge those campuses that operation we started on the third quarter of 2022.

Virgilio Gibbon: In other words, after 2023 net revenue and adjusted the bidat will be almost four times higher than in 2019, the E of our ITO. Furthermore, the cash conversion rate will continue to perform above 90%, showing our capacity to deliver strong growth, expanding our profitability and cash generation. Once again, we are guiding another strong round ahead, aimed at the top of the year guidance, improving assets, resilience and ability to keep the living solid results with a high predictability.

And on each of our growth in feature welcome what other apps, which performed better than expected, but still present lower margins when compared to the integrated companies.

Moving to the next slides.

Speaker 2: Cash flow from operating activities for the semester was 26% higher year-over-year, totaling 566-minute re-ice, resulting in a strong cash conversion ratio of 99%.

Cash flow from operating activities for the semester was 26% higher year over year totaling 566 million reais, resulting in a strong cash conversion ratio of <unk>.

Virgilio Gibbon: Now moving to slide number six.

Unknown Executive: Now moving to slide number six.

Virgilio Gibbon: I'm really proud to announce that Actors' remarkable performance garnered three significant awards within the second part. First one, Valour Economic was best education company in innovation. Second one, another prestigious recognition for being the best company education sector in the Valour 1000 Award. And third, the Vikutubu's Valour Award that I was recognized in the education sector in June. We are very proud of all these achievements as they reflect the work and passion of our thousands of employees around the new unique vision to transform how together with those who have met as a vocation.

99%.

Speaker 2: I just had net income for the second quarter of 2023 was 132 million reais, an increase of almost 11% over the same period of the prior year.

Adjusted net income for the second quarter of 2023 was 132 million Reais and increase of almost 11% over the same periods of the prior year.

Speaker 2: even with the higher interest rate year over year. And an increased in dance with the acquisitions of UNITA al-Ago's in Pizce, Abaratone, Jujwara, and Abis, are adjusted APS, kept increasing due to operational leverage, reaching one-rear and 42 cents in the second quarter.

Even with the higher interest rate year over year, and an increase in that with the acquisitions of unique Alagoas a pizza.

In August our adjusted EPS kept increasing due to operational leverage reaching one re out and 42 cents in the second quarter.

Speaker 2: Moving to slide number 12 for discussions of key operational metrics by business units. Starting with the

Moving to slide number 12, where discussions of key operation operational metrics by business units.

Virgilio Gibbon: On the next slide, I'd like to talk about our project brand strategy and its new architecture. We recognize the importance of incorporating the value we create into our brand and the importance of strengthening an integration that protects our sense of unity and mission. We already are the leaders and pioneers of a solid and profitable business. Now is the time to be perceived as such. We have almost 282,000 physicians and medical students using our digital solutions, but only some of them know the brand act.

We started with the undergrad segment.

Our number of medical students grew 18% year over year, reaching almost 21 students.

Speaker 2: A number of medical students grew 18% year-old over year, reaching almost 21,000 students.

Speaker 2: with approved medical seats increasing nearly 15% year-over-year. 2,3,163 approved seats.

With a prove it medical seats, increasing nearly 15% year over year to 3163 appropriate seats.

Speaker 2: Considering additional organic and inorganical seats increase, we expect to achieve a capacity of more than 32,000 under GradMagico students in 2028.

Considering additional organic and inorganic growth.

Virgilio Gibbon: This brings us a huge opportunity to become the reference in solution for medicine. To hook them up, improve the engagement, cross out and upsell along the journey. Therefore, one of our main objectives is to make Asia hub known and relevant to student, physician, healthcare, companies and society. Become in the top of mind and most recurring brand by position through all their jobs. With this new logo, we review access brand architecture to no longer let the value of Afya be fragmented or diluted. To consolidate all this value under a single brand, simplifying the comprehension of our portfolio, avoiding brand conflict, and working towards strengthening access to one stop shop for physics.

Seats increase we expect to achieve a capacity of more than 32000 undergrad Med school students in 2028.

With our net average ticket, increasing almost 90% year over year for medical school.

Speaker 2: We follow NetEver tickets increasing, almost 9% EOV here for medical school.

Speaker 2: We've reached a 1600 and 16 million re-eyes of combined tuition fees, up from a 1300 and 10 million re-eyes from the prior year and increase of 23% for the six month period.

Reach it.

660 million reais of combining attrition fees.

Virgilio Gibbon: With this new logo, we review access brand architecture to no longer let the value of Afya be fragmented or diluted. To consolidate all this value under a single brand, simplifying the comprehension of our portfolio, avoiding brand conflict, and working towards strengthening access to one stop shop for physics.

From 1300, <unk> sand lead in Reais from the prior year, an increase of 23% for the six month periods.

Speaker 2: Regarding revenue makes 78% of these are the rivets from medical school students and 90% from health-related courses.

Regarding revenue mix, 78% of these other events from medical school students and 90 per stance.

<unk> related courses.

Speaker 2: On the next page, I will present our Continual Education Room Matrix.

Over the next space our presents our continue educational metrics.

Virgilio Gibbon: So to finalize, I would like to talk about our future expectations. When we analyze our goals for 2028, six years ahead, and consider our three business segments, we have a very ambitious plan ahead. With undergrad, we have three avenues for growth. First, by maturing the existing seats. Second, through organic growth of how of the requested seats that have been acted to the minister of education. And last, through our position. The fact that undergrad is our biggest cash in the race, allows us to maintain our goal of constant growth with the plan to increase our available seats by 200 per year through our position.

Speaker 2: And said before, we saw another impressive growth from our continuous educational segments.

As said before we saw another impressive growth from our continued application of segments.

Speaker 2: which reported a strong inter-intake process, increasing the number of students by 31% year-over-year.

Which reported strong in <unk>.

<unk> process.

<unk> the number of students by 31% year over year.

Speaker 2: In the quarter, Matt Revener's grew almost 50% when compared to the same periods of the prior year.

In the quarter net revenues grew almost 50% when compared to the same periods of the prior year.

Speaker 2: And for the six month period, we saw an increase of 48% reaching a net revenue of 71 meter in REI.

And for the six month period, we saw an increase of 48%, reaching a net revenue of 71 meter in reais.

Speaker 2: This recovery is due to the better performance of AFTI education in Mexico, mainly related to the robust intake process and course moderation.

This recovery is due to the better performance of <unk>, mainly related to the robust intake process and of course maturation.

Virgilio Gibbon: Considered increase in organic and organic seats, we expect to reach a total capacity of more than 32,000 students and captured 15% of the market share in terms of our private seats by 2020, which represents a growth of over two times in top line. It's worth remembering that after managed to extract significant value from every position. In continuous education, which is the next natural step for those who study medicine, we have a product that has shown great potential and despite being significantly impacted by COVID-19 pandemic, it has experienced an expansion that has exceeded our expectations and still has a lot of room for growth.

Moving to slide number 14, I will discuss the diesel savvis operational metrics.

Speaker 2: Moving to slide number 14, I will discuss the digital service operational metrics.

On the first graph you can see our total active players which are the ones that generates revenues in <unk>.

Speaker 2: With a continuous growth friend, so far in this quarter, we have reached 270,000 paying users an increase of 8% to the same period of 2022.

With a continuous growth trends so far in this quarter. We have reached 270000 paying users an increase of 8% to the same periods of 2022.

As you can see in the second graph our ecosystem reach its almost 282000 monthly active users representing around 34% of all medical students and physicians in Brazil.

Virgilio Gibbon: Through strong top line growth, a pack of our new unit and additional 50 new courses, we expect to reach 440 million high of net revenue by 2028, four times higher than the figures seen in 2020. As a digital service is where we can expand the owner of this structure and reach a vast number of positions with tools that offer productivity, assertiveness and up-to-date information. Our strength in this segment lies in serving as a bridge between the pharmaceutical industry, payers and providers and a vast community of positions at very stage of their journey.

As we said before.

And finally, our two less graft.

We can see our digital service net revenues we.

For the quarter increased over 28%, reaching 54 million Reais.

Speaker 2: And regarding the six month period, increase it by almost 24% year over year.

And regarding the six month period increased by almost 24% year over year.

The organic growth is a combination of the stock of <unk> segments with pharmaceutical companies and the expansion of the active players in <unk>.

Speaker 2: The organic growth is a combination of the stock of BQB segments with pharmaceutical companies and the expansion of the active players in BQP.

Virgilio Gibbon: Our goal for 2028 is to increase penetration and engagement in B2P business to position sector and consolidate our B2B offerings reaching a natural revenue of 1.2 billion in digital services by 2020. To summarize, we intend to grow more than two times 2022 net revenue in undergrad by 2028, four times in continuous education and over six times in the digital space. This means that after we almost triple its net revenue between 2022 and 2028, despite the ambitious goals they are achievable support by stronger education, focus on the medical journey and a dedicated team.

Speaker 2: In addition, since 2022, we've started to break down our digital service net revenue within B2B and B2B sector.

In addition, six 2022, we've started to break down our digital service net revenue within B to B and <unk> segments.

Virgilio Gibbon: To summarize, we intend to grow more than two times 2022 net revenue in undergrad by 2028, four times in continuous education and over six times in the digital space. This means that after we almost triple its net revenue between 2022 and 2028, despite the ambitious goals they are achievable support by stronger education, focus on the medical journey and a dedicated team.

Speaker 2: So from the 111 meter rise of these two service nets revenue in the first half of 2023, more than 91 meter of the B2B. And almost 20 meter of the B2B.

So from the 111 million Reais of digital service net revenue in the first half of 2023 more than 91 meter in reais gain from B to B and almost 20 meter reais came from the <unk>.

Speaker 2: B2B strategy holds a huge potential and is still helping now.

<unk> strategy holds a huge potential and is Q humping up.

Luis Blanco: I will now turn the call over to Luis Blanco, ACFO to give more color on the financial operational metric.

Luis Blanco: I will now turn the call over to Luis Blanco, ACFO to give more color on the financial operational metric. Thank you. Thank you Virgilio, and good evening everyone. Moving to slide number 10 to discuss the financial highlights of the second quarter.

And now moving to my three last slides I will discuss our cash and net debt positions also giving more color on our cost of debt.

Speaker 2: And now moving to my 3 last slides, I will discuss our cache and that that positions. Also giving more color on our cost of that.

Luis Blanco: Thank you.

Speaker 2: Cash and cash equivalence at the end of this quarter were 741 million reais.

Cash and cash equivalents at the end of this quarter were 741 million Reais.

Luis Blanco: Thank you Virgilio, and good evening everyone. Moving to slide number 10 to discuss the financial highlights of the second quarter. It is with much satisfaction that I presented another strong quarter results for Afya. Higher tickets in medicine courses, the impressive growth from continuing education, consolidation of digital service, and the integration of new acquisition. For the six month period, I just met revenue was a thousand four hundred and twenty two million reais and increase of twenty four percent over the same period of the last year.

Luis Blanco: It is with much satisfaction that I presented another strong quarter results for Afya. Higher tickets in medicine courses, the impressive growth from continuing education, consolidation of digital service, and the integration of new acquisition. For the six month period, I just met revenue was a thousand four hundred and twenty two million reais and increase of twenty four percent over the same period of the last year. I just a day for the quarter increase at twenty two percent to two hundred and sixty eight million reais.

Speaker 2: an increase of 20% over second part of 2022 and an increase of 2.6% over the first part of 2023.

An increase of 20% over second quarter 2022 and <unk>.

Increase of two 6% over the first quarter 2023.

Speaker 2: In this quarter, next step, totally, two billions and four million reais.

In this quarter net debt totaled <unk> 2.004 billion Reais.

Speaker 2: a decrease of 1.3% compared to the first quarter of 2023.

The decrease of one 3% compared to the first quarter 2023.

The increase of 623 million Reais when compared with the fourth quarter 2022 was mainly due to the eight.

Speaker 2: The increase of 623 million reais when compared with the fourth quarter of 2022 was mainly due to the 825 million unit lagos in Pizceboa town acquisition flows in January 2023.

825 million units Alagoas in feature walk down acquisition close in January 2023.

Luis Blanco: I just a day for the quarter increase at twenty two percent to two hundred and sixty eight million reais. While there are just a day of damage and the crisis fifty base points to thirty eight percent. For the six month period, I just a day was five hundred and ninety eight million reais and increase of twenty two percent over the same period of the prior year. With an adjusted eight damage and decrease of eighty base points in the same period.

Speaker 2: which was partially offset by the free cash flow generations in the first half of 2023 as we can look closely on the next page.

Which was partially offset by the free cash flow generations in the first half of 2023 as we can look closely on the next page.

Luis Blanco: While there are just a day of damage and the crisis fifty base points to thirty eight percent. For the six month period, I just a day was five hundred and ninety eight million reais and increase of twenty two percent over the same period of the prior year. With an adjusted eight damage and decrease of eighty base points in the same period. The adjusted eight damage in reduction is due to the mix of net revenues with higher participation of the digital and continue education segments. And the consolidations of four new, mais magical campuses that operations started on the third quarter of 2022. And when each of our goals and fits our bottom, what are apps which are performing better than expected.

Speaker 2: In this slide, I presented the NetDats with Concealations for 2023.

In this slide I presented the net debt reconciliation for 2023.

The cash flow from operation activities was allocated to income tax and lease payments.

Speaker 2: The cash flow from Operation Activity was allocated to Income Tax and Leads Payment

Speaker 2: Capac's activities and for the service of the financial debt.

Opex activities and for the service of the financial debt.

Speaker 2: Even considering that we had executed part of our share buyback in this quarter, we were able to generate 200 and 2 million reais as free cash and reduce our net debt in the semif.

Even considering that we had executed part of our share buyback in this quarter, we were able to generate 202 billion reais as free cash and reduce our net debt in the semester.

Luis Blanco: The adjusted eight damage in reduction is due to the mix of net revenues with higher participation of the digital and continue education segments. And the consolidations of four new, mais magical campuses that operations started on the third quarter of 2022. And when each of our goals and fits our bottom, what are apps which are performing better than expected. But it still present lower margins when compare to the integrated companies. Moving to the next slide.

Speaker 2: On the next slide, you can see a table with the breakdown of our gruff stats and our average cost of stats.

On the next slide you can see a table.

The breakdown of our gross debts and our average cost of debt.

Speaker 2: Considering our main bets, the soft bank transactions, other low ones and financing, the account payables to sell insurance holders.

Considering our main bets the softbank transactions further low once and financing.

Luis Blanco: But it still present lower margins when compare to the integrated companies. Moving to the next slide. Cash flow from operating activities for the semester was twenty six percent higher year over year totaling five hundred and sixty six million reais resulting in a strong cash conversions ratio of ninety nine percent. I just a net income for the second quarter of twenty twenty three was a hundred and thirty two million reais and increase of almost eleven percent over the same period of the prior year. Even with the higher interest rate year over year and an increase in dance with the acquisitions of units at all ago is a pizza.

Payables to selling shareholders.

Luis Blanco: Cash flow from operating activities for the semester was twenty six percent higher year over year totaling five hundred and sixty six million reais resulting in a strong cash conversions ratio of ninety nine percent. I just a net income for the second quarter of twenty twenty three was a hundred and thirty two million reais and increase of almost eleven percent over the same period of the prior year. Even with the higher interest rate year over year and an increase in dance with the acquisitions of units at all ago is a pizza. What I don't know is what I like this. Our adjusted APS kept increasing due to operational leverage reaching one real and forty two cents in the second quarter.

Speaker 2: Our capture structure remains solid with a conservative leverage positions and the low cost of that.

Our capital structure remains solid with a conservative leverage position and the low cost of debt.

This ends our prepared remarks.

Speaker 2: This ends our prepare remarks. I will now open the conference for the Q&A section. Thank you.

Now open the conference for the Q&A section. Thank you.

Speaker 4: So if you want to ask a question, please just raise your hand. Our first question is from lookamakezini from Etou. Luca, you may go.

Now if you ask a question. Please just raise your hand.

Our first question from Luca <unk> from Cowen.

Luca you May Hill.

Good evening, everyone and thank you for taking a quiet fashion. So we saw the adjusted EBITA margin.

Speaker 5: was impacted by revenue leaks and the conflagration of new campuses and acquisitions. So if you could please just provide us more color on the integration process of unique and also comment on the profitability performance of mid-cell specifically, that will be very helpful. Thank you.

Margin was impacted by revenue mix and the consolidation of new campuses and acquisitions. So if you could please just provide us more color on the integration process of unique and also comment on the profitability performance of mid sell specifically that would be very helpful. Thank you.

Luis Blanco: What I don't know is what I like this. Our adjusted APS kept increasing due to operational leverage reaching one real and forty two cents in the second quarter. Moving to slide number 12 for discussions of key operational metrics by business units. It started with the undergrad segments. Our number of medical students grew eighteen percent year over year reaching almost twenty one thousand students, with approved medical seats increasing nearly 15% year-over-year, 2,3,163 approved seats.

Luis Blanco: Moving to slide number 12 for discussions of key operational metrics by business units. It started with the undergrad segments. Our number of medical students grew eighteen percent year over year reaching almost twenty one thousand students, with approved medical seats increasing nearly 15% year-over-year, 2,3,163 approved seats.

Speaker 2: I'll take this one Luca, I think for your questions regarding units.

I'll take this one luca thank for your question regarding units.

Speaker 2: We have the expectations to do the migrations to our shared service during the fourth quarter. So the integration's gonna happen this year, less than when the year after the business combination itself.

We have expectations to do the migrations to our shared service during the fourth quarter. So the integration of the guar that happen this year.

Less than when you're off the business combination itself and regarding met Sal.

Speaker 2: And regarding Matt Cell, I tell the second quarter, the second is the third quarter, the ones that are not relevant for the business itself. The revenues are more concentrated on the first and the fourth quarter. So Matt Cell, it's out during the second quarter is the second quarter relevant for.

<unk> the second quarter, the second at the third quarter.

Luis Blanco: Considering additional organic and inorganical seats increase, we expect to achieve a capacity of more than 32,000 undergraduate medical students in 2028. We offer net-ever tickets increasing almost 90% year-over-year for medical school. We've reached a 1,660 million reais of combined tuition fees, up from 1,310 million reais from the prior year, an increase of 23% for the six month period. Regarding revenue mix, 78% of these are the rivets from medical school students and 90% from health-related courses.

Once that are not relevant for the business itself. The revenues are more concentrated on the first and the fourth quarter. So met sell a cell where in the second of the second quarter is relevant for.

Speaker 6: for for for for for for for the results. Yeah, give them more color look important to say that if you look to our growth margin of digital services and continue education, we increase the margins of both segments.

Four of poor results for part of the results that you give a little more color Luca and important to say that if you look through our gross margin of DS services that'll continue indication, we increase margins of both segments.

Speaker 4: and out in the second quarter. And also, if you look for the execution results that you're presenting the first table of their injury, you also can see that you need to have a margin that's below what we can see in now of our other results.

In the second quarter and also if you look for the aspects Nissan results that we're presenting the first on <unk>.

Cable up there easily you also can see that you need to have a margin that's below our what we can see now off our other results now and the end of the day I believe that everything is going as predicted and we are still seeing our operational leverage.

Luis Blanco: On the next page, I will present our continuous educational metrics. As said before, we saw another impressive growth from our continuous educational segments, which reported a strong infant take process, increasing the number of students by 31% year-over-year. In the quarter, net revenues grew almost 50% when compared to the same periods of the prior year. And for the six month periods, we saw an increase of 48%, reaching a net revenue of 71 million reais. This recovered is due to the better performance of after-education magic, making it related to the robust intake process and course moderation.

Speaker 4: So in the end of the day, as we said, everything's going as predicted. And we are still seeing operational leverage in your final.

Yeah.

Okay.

Very helpful. Thank you guys.

Speaker 4: Okay, of course. So the next question will come from Lucas Agano from Oregon, Stully. Luca, you may.

Okay of course.

So the next question will come from Lukas <unk> from Morgan Stanley Luca you May talk.

Speaker 7: I, uh, good evening, everyone. Thanks for taking our questions. Uh, we have two questions.

Hi, good evening, everyone and thanks for taking our questions have two questions. The first one is related to the regulation in medical seats now.

Speaker 7: The first one is related to the regulation and medical seats. Now that we have some more visibility on the Supreme Court's decision, do you have an expectation for the 170 approximately requests that were made outside of my medical that will still be analyzed by Mac?

Now that we have some marvelous ability on the Supreme Court's decision.

Do you have an expectation for the 270 approximately a request that we made outside of <unk> that will still be analyzed by Mac and in parallel do you have any guess on the on the format of the new <unk> three program like in terms of size regions.

Luis Blanco: This recovered is due to the better performance of after-education magic, making it related to the robust intake process and course moderation. Moving to slide number 14, I will discuss the digital service operational metrics. On the first graph, you can see our total active payers, which are the ones that generate revenues in B2P, with a continuous growth friend. So far, in this quarter, we have reached 270,000 paying users, an increase of 8% to the same period of 2022.

Speaker 7: And in parallel, do you have any guess on the format of the new Mythmagicals 3 program, like in terms of size, region?

Luis Blanco: Moving to slide number 14, I will discuss the digital service operational metrics. On the first graph, you can see our total active payers, which are the ones that generate revenues in B2P, with a continuous growth friend. So far, in this quarter, we have reached 270,000 paying users, an increase of 8% to the same period of 2022. As you can see in the second graph, our acquisition reaches almost 282,000 monthly active users, representing around 34% of all magical students and physicians in Brazil as we did just said before.

Speaker 7: That was my first question. The second question is related to F2PS.

My first question. The second question is related to <unk>.

Speaker 7: You mentioned that the expected impact for the year is 24 million highs. And I wanted to ask you how much of these worlds are either reflected in this first half. Can we assume it's 12 million?

You mentioned that the expected impacts for the year is 24 million highs.

I wanted to ask you how much of this growth already reflected in this first half.

I assume it's $12 million.

Speaker 7: And was this effect concentrated in the second quarter or spread between the first quarter and the second quarter? Thank you.

And what this effect are concentrated in the second quarter or spread between the first quarter in the second quarter. Thank you.

Okay Lucas.

Speaker 8: Can you look at from Rexistingio after I first question the here of the FJFDA , Za blank

I'll take the first question here Bob.

Luis Blanco: As you can see in the second graph, our acquisition reaches almost 282,000 monthly active users, representing around 34% of all magical students and physicians in Brazil as we did just said before. And finally, our two last graph, we can see our digital service net revenues, which for the quarter, increased over 28% reaching 54 million reais. And regarding the six month period, increased by almost 24% year-over-year. The organic growth is a combination of the stack of B2B segments with pharmaceutical companies and the expansion of the active payers in B2P.

If yes.

Block will help me out.

Speaker 6: About the effort new seats out of the my magicals practice, I think it's too soon. We end the mirror

Above the asking for new seats out of the <unk> process.

I think it's still too we ended a mirror of the judgments we have the second judge just releasing peaceful detached journal.

Speaker 6: of the judgment we have the second judge just releasing he's full deceptional. But now he was completely opposed against the continuity.

Luis Blanco: And finally, our two last graph, we can see our digital service net revenues, which for the quarter, increased over 28% reaching 54 million reais. And regarding the six month period, increased by almost 24% year-over-year. The organic growth is a combination of the stack of B2B segments with pharmaceutical companies and the expansion of the active payers in B2P. In addition, since 2022, we've started to break down our digital service net revenue within the QB and BQB segments. So, from the 111 meter rise of digital service net revenue in the first half of 2023, more than 91 meter rise came from BQB and almost 20 meter rise came from the BQB.

Now he was completely oppose it against.

The continuum.

Speaker 6: of the process that was already within the MAC, and the Minnesota education staff, but it's still soon in the process to check how would be the impact of all these issues, that issue process that is out of the current might magic.

Of the process that was already.

We being the Mac.

The minutes of application.

Step.

But it's too soon in the process check how would be the impact.

All of these issues the issue process vessels out of the current <unk> managed those losses above that the best metric was three.

Speaker 3: About the might match with three, about the city. I think you still have to wait for one or two weeks to have the public bid in the market and analyze which will be the city that will be the pureization for the might match.

Luis Blanco: In addition, since 2022, we've started to break down our digital service net revenue within the QB and BQB segments. So, from the 111 meter rise of digital service net revenue in the first half of 2023, more than 91 meter rise came from BQB and almost 20 meter rise came from the BQB.

While the CD.

I think we still have to wait for one or two weeks.

<unk>.

The be the public bid.

And the market, then finalize which will be decided that would be the prioritization.

For device medical stream.

Speaker 2: I look as long as I'm talking about the FJPS.

Hi, Lucas block width and talk about that shift yes.

Speaker 2: when we saw the increase in the

When we saw the increases in the in the in the rotation speed saw private jets, yes, that's what's in.

Speaker 2: In the rotation speed of 5 GPS, that was in the...

Luis Blanco: BQB strategy holds a huge potential and is still helping up.

Luis Blanco: BQB strategy holds a huge potential and is still helping up. And now, moving to my three last slides, I will discuss our cash and net debt positions, also giving more color on our cost of debt. Cash and cash equivalence at the end of this quarter were 741 million reais and increased of 20% over second quarter 2022 and increased of 2.6% over the first quarter of 2023. In this quarter, net debt totally 2 billion and 4 million reais, a decrease of 1.3% compared to the first quarter of 2023.

Speaker 2: the beginning of March. We foresee that and we did this expectations of 24 million reaising. We put it under our guidance. So since the inception of the the guidance of 2023, it's it's it's

At the beginning of March.

Yes.

We foresee that and we did this expectations of 24 million <unk>, we put.

Luis Blanco: And now, moving to my three last slides, I will discuss our cash and net debt positions, also giving more color on our cost of debt. Cash and cash equivalence at the end of this quarter were 741 million reais and increased of 20% over second quarter 2022 and increased of 2.6% over the first quarter of 2023. In this quarter, net debt totally 2 billion and 4 million reais, a decrease of 1.3% compared to the first quarter of 2023.

It's under our guidance so since the exceptional off the guidance of 2023.

It's.

Speaker 2: It's reflected on our guidance of 2020 and 23. So we don't expect any kind of changes in our guidance and our expectations of these impact in terms of net revenues for the year would be 24 million. Yeah, and we don't see a lot of things on our way to be between the quadders for us to see a lot of concentration and more quadriloid.

It's great to reflect it.

Our guidance on 2023 so.

We don't expect any kind of changes into our guidance and our expectations of these impact in terms of net revenues for the year would be 20 pardon me to react.

We don't see a lot of seasonality between the quarters.

D a.

A lot of concentration in one quarter alone either okay Luca.

Luis Blanco: The increase of 623 million reais when compared with the fourth quarter 2022 was mainly due to the 825 million unitalagose in Pichabotan acquisition flows in January 2023, which was partially offset by the free cash flow generations in the first half of 2023 as we can look closely on the net space. In this slide, I presented the net debt reconciliation for 2023. The cash flow from operation activities was allocated to income tax and lease payments, capital activities, and for the service of the financial debt.

Speaker 3: Yeah, but the PS counter they are based by semesters. So you can consider that most of them, 50% of them have been the first and the second half, but consider that we have maturation. We still have more students enroll in the second half. So we'll just a bit higher in the second half when compared to the first half because of the maturation.

The PFS <unk> by semesters. So you can consider that.

Most of them.

60% of them are in the first and the second half, but considered that we have maturation.

We still have more students enrolling in the second half a little bit high.

Higher in the second half when compared to the first half because of the maturation.

Very clear thank you guys.

Of course.

Speaker 4: So just reminder, if you wanna ask a question, just raise your head. The next question is from Jessica from Jacob Morgan. Jessica, you may now go.

Just a reminder, if you want to ask a question just raise your head.

The next question please.

Council Jessica from Jpmorgan.

You may algo.

Speaker 9: Hi, good evening. Thank you for taking my question. It's a follow up question on FGFES. So if you could give a little bit more color on the outlook for this contribution on 2024. And do you think it should remain stable as a percentage of medical revenues assuming no changes in regulations? Thank you.

Hi, Good evening. Thank you for taking my question. It's a follow up question on <unk>, yes.

You could give a little bit more color on the outlook for this contribution of 2024 and do you think it should remain stable as a percentage of medical revenue assuming no changes in regulations.

Luis Blanco: Even considering that we had executed part of our share buyback in this quarter, we were able to generate 202 million reais as free cash and reduce our net debt in the semester. On the next slide, you can see a table with the breakdown of our gross debt and our average cost of debt, considering our main debt, the soft bank transactions, other low ones, and financing, the account payables to selling shareholders. Our capital structure remains solid with a conservative leverage positions and the low cost of debt.

Speaker 2: Thank you, Jessica. I'll take this look and let's recap about these FJPI regulations. As we see, I'll talk in his part of presentations. The presentations started when it was ended the year in the beginning of the six years.

Thank you Jessica.

Take this one.

Let's.

Recap about these the sector <unk> regulations as you lose talk of all <unk> is a part of the presentations. The rotations started when it was.

And the fifth year in the begin after six years.

Speaker 2: So these kind of retention scop plates, but by the governance fair, educational entity pair, each one of the end.

All these kind of pretentious calculate by the governance Behr educational entity bear each one of the Andes what's happened here in this first year.

Luis Blanco: Our capital structure remains solid with a conservative leverage positions and the low cost of debt.

Speaker 2: What's happened here in these first years that the entity that has no medical education were affected?

That's the entity that has no medical applications were affected.

Luis Blanco: These ends our prepare remarks.

Unknown Executive: These ends our prepare remarks. I will now open the conference for the Q&A section. Thank you.

Unknown Executive: I will now open the conference for the Q&A section. Thank you.

Speaker 2: because the dollar could license going under the lump 10 rare

Costs are there.

Welcome to calculate the delinquency rates.

Speaker 2: regarding the program, but put it on the revenues that are related to that financial entity. So the entities that have

Unknown Executive: So if you want to ask a question, please just raise your hand.

Regarding regarding the Bravo.

Lucca Marquezini: Our first question is from Luca Macadini from Etau. Luca, you may go. Thank you. Good evening, everyone, and thank you for taking our cloud. Fashion. So, we saw that adjusted a bit on more original was impacted by revenue meeks and the conflagration of new campuses and acquisitions. So, if you could please just provide us more color on the integration process of units and also comment on the profitability performance of mid-cell specifically, that will be very helpful.

But I.

Put it all the revenues that are.

Ah <unk> revenues that are related to that finish line to do so.

The entity that has more known medical institutions were more affected in terms of person base.

Speaker 2: more non-magical institutions were more affected in terms of percentage.

Speaker 2: the magical entities were not affected because we didn't have any kind of graduations of the magical entities.

Virgilio Gibbon: So, if you could please just provide us more color on the integration process of units and also comment on the profitability performance of mid-cell specifically, that will be very helpful. Thank you. I'll take this one, Luca, thank you for your questions regarding units. We have the expectations to do the migrations to our shared service during the fourth quarter. So, the integration has got to happen this year. Less than when you are off the business combination itself.

The magical.

<unk>, we're not affected the cost.

We didn't have any cutoff graduations.

The med schools during the big enough the six years the magical Bravo.

Speaker 2: during the beginning of the six years, the magical problem, the graduations will occur at the end of the six years. So we are in this year in a traditional beard, okay? So regarding the impact in 2024, it's...

Lucca Marquezini: Thank you. I'll take this one, Luca, thank you for your questions regarding units. We have the expectations to do the migrations to our shared service during the fourth quarter. So, the integration has got to happen this year. Less than when you are off the business combination itself. And regarding mid-cell itself, the second quarter, the second is the third quarter, the ones that are not relevant for the business itself. The revenues are more concentrated on the first and the fourth quarter.

The calculations will encore at the end of the six year. So we are this year in our prediction beards, okay. So regarding the impact in 2024.

Speaker 2: It's hard to foresee an impact on that, but what definitely I could share with you, the views that the entities that have met in other courses, the kind of...

It's hard to.

Do you foresee an impact on that but what's it definitely I could share with you that the views that the entities that have passed medicine and other courses the kind of.

Virgilio Gibbon: And regarding mid-cell itself, the second quarter, the second is the third quarter, the ones that are not relevant for the business itself. The revenues are more concentrated on the first and the fourth quarter. So, mid-cell itself during the second quarter is relevant for for for for for for for the results. Yeah, just give a more color. Look, important to say that if you look to our growth margin of digital services and continue education, we increase the margins of both segments and out in the second quarter.

Speaker 2: or the rotation that we have will decrease.

Rotation that we have.

Lucca Marquezini: So, mid-cell itself during the second quarter is relevant for for for for for for for the results. Yeah, just give a more color. Look, important to say that if you look to our growth margin of digital services and continue education, we increase the margins of both segments and out in the second quarter. And also, if you look for the expectation results that are presenting the first table of the ring release, you also can see that you need has a margin that below what we can see in now of our other results. So, in the end of the day, as we said, everything is going as predicted. And we are still seeing operational leverage. We all say. Very helpful. Thank you, guys. Okay, of course.

Grief.

Speaker 2: Because right now we just have the reasons of the no medical parts affecting all the revenues of these entities. So I would say that we can expect the reduction on that because we will start to reflect the legacy of the magical problems. And regarding the magical, the pure blood, the pro player medicine.

Because right now we just have the delinquent softer.

The nonmedical parks.

Yeah.

Affecting all of the revenues of this entity. So I would say that we can expect the adoption of that is because we are.

Stop.

To reflect the delinquency of the medical problems and regarding the met coal.

Virgilio Gibbon: And also, if you look for the expectation results that are presenting the first table of the ring release, you also can see that you need has a margin that below what we can see in now of our other results. So, in the end of the day, as we said, everything is going as predicted. And we are still seeing operational leverage. We all say. Very helpful. Thank you, guys. Okay, of course.

Plus the pure play a magazine.

Speaker 2: It's right now that we have something about 13% of the retention. It could go up or down because the the limpathy rates on this kind of entity. It's very very low for non-PS.

Yes.

Right now that would have something about 13% of the redemptions is good.

Go up or down because the delinquency rates on these kind of.

NTT.

It's very very low <unk>. So it's kind of parks to say right now what will be the behavior of these orientations. When these calculations. These updated in 2024, but having these two different groups.

Speaker 2: So it's kind of hard to say right now what will be the behavior of these rentations when these calculations is updated in 2024. But having these two different groups, I could say that even we could even get a reduction on that. But it's kind of expectations right now, Jeff.

Lucas Nagano: So, the next question will come from Lucas Agano from Oregon, Stanley.

Lucas Nagano: So, the next question will come from Lucas Agano from Oregon, Stanley. Luca, you may talk. Hi, good evening, everyone. Thanks for taking our questions. We have two questions. The first one is related to the regulation and medical seeds. Now that we have some more visibility on the Supreme Court's decision, do you have any expectations for the 170, approximately requests that were made outside of my magicals that will still be analyzed by Mac? And in parallel, do you have any guess on the format of the new my magicals three program, like in terms of size regions?

Lucas Nagano: Luca, you may talk.

Lucas Nagano: Hi, good evening, everyone. Thanks for taking our questions. We have two questions. The first one is related to the regulation and medical seeds. Now that we have some more visibility on the Supreme Court's decision, do you have any expectations for the 170, approximately requests that were made outside of my magicals that will still be analyzed by Mac? And in parallel, do you have any guess on the format of the new my magicals three program, like in terms of size regions? That was my first question.

Spear I could say that even we could even get a reduction on that but it's standup expectations right now Jessica.

Luis Blanco: That was my first question. The second question is related to SGPS. You mentioned that the expected impact for the year is 24 million highs. And I wanted to ask you how much of these worlds are already reflected in this first half? Can we assume it's 12 million? And what does effect concentrated in the second quarter or spread between the first quarter and the second quarter?

Speaker 9: Yeah, I saw it was a mute. Thank you very much. Of course.

Is it okay.

Sorry, I was on mute. Thank you very clear of course.

Speaker 4: So the next question comes from Maris to debate the front page is three. Maris, you may not.

So the next question comes from anticipated from Maggie Madden you May now Tom.

Speaker 10: Hi, I'm Jiro Blanco, Henata. Thank you for the opportunity. I also have some questions around FGFES and it's kind of a controversial topic. It was kind of the hot topic in the results from the other companies as well.

Hi version two blank Wuhan answer thank you for the opportunity.

Lucas Nagano: The second question is related to SGPS. You mentioned that the expected impact for the year is 24 million highs. And I wanted to ask you how much of these worlds are already reflected in this first half? Can we assume it's 12 million? And what does effect concentrated in the second quarter or spread between the first quarter and the second quarter?

I also have some questions are how around a few yes.

Unknown Executive: Thank you.

So kind of a controversial topic it was kind of the hot topic in the results from the other companies as well.

Speaker 10: So it seemed that the size of the contribution was kind of took the companies off guard, the magnitude of it was kind of unexpected. So my question would be, what you as a company or as a sex or how are you working?

So it seemed that the.

Does the size of the contribution.

What's kind of kind of took the company's off guard the magnitude of it was was kind of an expected.

Virgilio Gibbon: Okay, Lucas, Virgilio, I'll take the first question here about the FGPS. Blanc will help me out. About the F for new seeds out of the my magicals process. I think it's too soon. We are in the middle of the judgment. We have the second judge just releasing his full exceptional. But now he was completely opposed against the continuity of the process that was already within the Mac and the Minister of Education staff.

Luis Blanco: Thank you. Okay, Lucas, Virgilio, I'll take the first question here about the FGPS. Blanc will help me out. About the F for new seeds out of the my magicals process. I think it's too soon. We are in the middle of the judgment. We have the second judge just releasing his full exceptional. But now he was completely opposed against the continuity of the process that was already within the Mac and the Minister of Education staff.

So my question would be.

What you as a company or as a sex or how are we working.

Speaker 10: to mitigate these effects for the future. What are you proposing that could mitigate the effects from the de-deinquency? And a clarification as well following what Blanco was answering.

To mitigate these effects for the future what are you proposing that could.

Virgilio Gibbon: But it's still soon in the process to check how would be the impact of all these issues, the issue process that is out of the current my magicals, of the city. I think you still have to wait for one or two weeks to have the public bid in the market and to analyze which will be the city that will be the purization for the increase in the in the in the rotation speed.

Luis Blanco: But it's still soon in the process to check how would be the impact of all these issues, the issue process that is out of the current my magicals, of the city. I think you still have to wait for one or two weeks to have the public bid in the market and to analyze which will be the city that will be the purization for the increase in the in the in the rotation speed.

Mitigate the effects from the delinquency and in a clarification as well following what Blanca was answering.

You said the delinquency of the medical entities are higher or lower than the no medical ones and this is just a clarification.

Speaker 10: You said that the liquidity of the medical entities are higher or lower than the no medical ones. This is just a clarification. And the second question would be on prep courses. I know that this is not exactly the cycle for revenues, but you have mentioned in other opportunities that you have been repositioning, right? Repositioning the courses in a...

And the second question would be on prep courses I know that this is not exactly the cycle for revenues, but you have mentioned and other opportunities that you have been up.

Repositioning right now repositioning the courses in a in a in a.

Speaker 10: in a different static commercial static. So if you could update us on how this reposition is going, it would be great. Thank you.

In a different static commercial tactics. So if you could update us on how does reposition is going it would be great. Thank you.

Speaker 3: Team Valizio, I get from the first, your second question about the linguist in the medical, it's much lower than other programs. Our PDA levels is around one and a half percent for a pure player, pure campus that's just running a medicine program here. And about the size of this retention, of course, that we do not think that we despair considering that all this retention is over.

<unk> depth on the first the second question about the delinquency medical it's much lower than on their programs.

Our TBA levels around one to one 5% that we're a pure play pure campus. That's just running our mezzanine program here.

About the size of these retention.

We do not.

NW the sphere.

Considering that all of this redemption is silver.

Virgilio Gibbon: So all five GPS that was in the the beginning of March. We we foresee that and we did this expectations of 20 form in a reising. We put it under our guidance. So since the section of the the guidance of 2023, it's it's it's it's reflected on our guidance of 2020 and 23. So it's we don't expect any kind of changes in our guidance and our expectations of these impact in terms of net revenues for the year would be 24 million.

Luis Blanco: So all five GPS that was in the the beginning of March. We we foresee that and we did this expectations of 20 form in a reising. We put it under our guidance. So since the section of the the guidance of 2023, it's it's it's it's reflected on our guidance of 2020 and 23. So it's we don't expect any kind of changes in our guidance and our expectations of these impact in terms of net revenues for the year would be 24 million. Yeah, and we don't see a lot of season already between the quarters for us to see a lot of concentration in one quarter or order.

Speaker 3: the linguistic calculated over the students that is getting into the amortization.

The delinquency calculated.

The students that is getting into the amortization fees. This is students. They are non medical students because if the problem that happened the new <unk> started back in 2018. We are just considering your students X X medicine are all they are proud of them Madison that they graduated a anthony.

Speaker 2: These students, they are no medical students because if the program that has the new FJFIA started back in 2018, we are just considering students X, X medicine or other program than medicine that they graduated in antendermortization phase. And they're the links and it's much higher than any other medical program that we have enough.

Amortization faith and there the leaks and it's much higher than any other medical problems that we have in <unk>.

Speaker 2: So, considering that when they are using this as a proxy to calculate

So considering that when they are using this as a proxy to calculate.

Speaker 2: which will be the retention rate over the entire institution, over the entire entity. They are applying this for overall revenues. That's why the entire sector do not agree and is trying to convince everyone that this is not fair and we are trying. And we are seeing like a Medida provisoid, an amendsment.

Which will be the retention rate over the entire institution over the entire entity. They are buying these for overall revenues that why.

Virgilio Gibbon: Yeah, and we don't see a lot of season already between the quarters for us to see a lot of concentration in one quarter or order. Okay, look. Yeah, but the P.S, counter the base by semester. So you can consider that most of them 50% of them will be in the first and the second half, but consider that we have maturation. We still have more students in rolling on the second half. So it's a bit a bit higher in the second half when compared to the first half because of the maturation.

Entire sector do not agree.

Unknown Executive: Very clear.

Luis Blanco: Okay, look. Yeah, but the P.S, counter the base by semester. So you can consider that most of them 50% of them will be in the first and the second half, but consider that we have maturation. We still have more students in rolling on the second half.

Is trying to do.

Unknown Executive: Thank you guys. Of course.

Convenience everyone that this is not built into our prime and we are seeing like a.

Luis Blanco: So it's a bit a bit higher in the second half when compared to the first half because of the maturation. Very clear.

Immediate appropriate vida on amendments.

Speaker 2: being discussed and under the Congress to limit it. This retention rate in the future, otherwise, yes, would lose the attraction. And SES is an important flag for the current government. We should see some changes in the future.

Being discussed and under the Congress to limited.

These retention rates in the future otherwise, yes, we do lose their traction in SCS.

An important player for the current government, we should see some changes in the in the future semesters.

Unknown Executive: Thank you guys. Of course.

Unknown Executive: So just reminder, if you want to ask a question, just raise your head.

Speaker 2: So this is about the GERD, the FGPS. And your third question about the pillar one.

So this is all about.

About the that they get the FHA, if yes, and your third question about the pillar one.

Jessica Mehler: The next question is coming from Jessica from Jacob Morgan.

Jessica Mehler: The next question is coming from Jessica from Jacob Morgan. Jessica, you may know. Hi, good evening. Thank you for taking my question. It's a follow-up question on FGPS. So if you could give a little bit more color on the outlook for this contribution on 2024, and do you think it should remain stable as a percentage of medical revenues, assuming no changes in regulations? Thank you. Okay, thank you, Jessica.

Jessica Mehler: Jessica, you may know. Hi, good evening. Thank you for taking my question. It's a follow-up question on FGPS. So if you could give a little bit more color on the outlook for this contribution on 2024, and do you think it should remain stable as a percentage of medical revenues, assuming no changes in regulations? Thank you. Okay, thank you, Jessica. I'll take this look and let's recap about these FGPS regulations. That's what you look at talking in these part of presentations.

Speaker 3: The second third quarter is a very low personality on our revenue here.

The second and third quarters are very low.

Seasonality on our revenues here otherwise.

Speaker 3: Otherwise, we are combining not only the residence prep course coming from Medisov, but all other other, all other continuum medical education programs that prepare.

We are combining not only the residence graft loss coming from med sub of all all there rather than all other continuing medical education programs that prepare.

Speaker 2: Physician, for titles and so forth. So the operation coming from a land-and-mits unit also card your papers. They are getting, they are increasing a lot the number of students. So we expect for the second half.

Zeeshan for titles and so forth so the operations coming from Orlando mid CNA also cargo papers.

Gary.

Luis Blanco: I'll take this look and let's recap about these FGPS regulations. That's what you look at talking in these part of presentations. The retations started when it was ended the fifth year in the beginning of the six years. So these kind of retains the scope list by the governance pair, educational entity pair, each one of the entities. What's happened here is this first year that the entity that has no magical educationals were affected because the governance couple is the delinquency rate regarding the program, but put it on the revenues that are the FGPS revenues, that are related to that financial entity.

David are you increasing the number of students. So we expect for.

For the second half starting their revenues on the fourth quarter.

Speaker 2: Starting the rivals on the fourth quarter, better, so the turnover when you compare to the last year.

Luis Blanco: So the entities that has more known magical institutions were more affected in terms of percentage. The magical entities were not affected because we didn't have any kind of graduations of the magicals during the beginning of the six years. The magical problem, the graduations, will occur at the end of the six years. So we are in this year in a position period. Okay, so regarding the impact in 2024, it's hard to foresee an impact on that, but what's definitely I could share with you the views that the entities that have have met in another courses, the kind of rotation that we have will decrease, because right now we just have the limits of the non-medical parts affecting all the revenues of these entities.

Battery so.

The turnover when you compare to the last year. So we are now combining all their products into a big portfolio not only met zero rather than spread cost, but all in terms of title crab and also soft skill province, combining each of the pillar one.

Jessica Mehler: The retations started when it was ended the fifth year in the beginning of the six years. So these kind of retains the scope list by the governance pair, educational entity pair, each one of the entities. What's happened here is this first year that the entity that has no magical educationals were affected because the governance couple is the delinquency rate regarding the program, but put it on the revenues that are the FGPS revenues, that are related to that financial entity.

Speaker 2: So we are now combining all the products into a big portfolio, not only med-tear residence prep course, but all in terms of title prep and also soft skill programs, combining into the pillar one that's our digital continuous med-tec education offering.

That's our digital continuing medical education offerings, Okay, Yes, Amit.

Speaker 1: Yeah, just for me to add some color of notice under the FCS.

Some color on <unk>.

Andre Basket PL.

Speaker 1: So today we have a rotation rate of something around 27% that used to be 30.

So today, we have Amit from rain does come from around <unk> seven per Sac that piece of the Turkey breast lung and what are the factors.

Speaker 1: And what the sector is firing is to limit to 25.

At 225%.

Speaker 1: so that that could be a change that we can see in the formal.

So that that could be a change that we can find a farmer that the next month and other points I think Barton.

Jessica Mehler: So the entities that has more known magical institutions were more affected in terms of percentage. The magical entities were not affected because we didn't have any kind of graduations of the magicals during the beginning of the six years. The magical problem, the graduations, will occur at the end of the six years. So we are in this year in a position period. Okay, so regarding the impact in 2024, it's hard to foresee an impact on that, but what's definitely I could share with you the views that the entities that have have met in another courses, the kind of rotation that we have will decrease, because right now we just have the limits of the non-medical parts affecting all the revenues of these entities.

Speaker 1: And other point that's important on to mention here is that we haven't seen any change on a pure player of medicine in the rotation rate. So if it was 13.5% it is still 13.5%.

And here is that we haven't seen.

Any change on appeal.

A year of magazine and the retention rate. So that you can do or 13, 5% is still taking 5% okay.

Speaker 6: Yeah, just just to put the color on that, what's happened that these calculations is done by entity. Okay, so if the entity just have met in courses as none of the medical students have graduated during the sixth year, because they were going to read it in the second, the seventh year, the rotation rate didn't change.

Yeah, just to put a color on that.

What's happened that these calculations is done by entity okay.

So.

If the ante to just have met some courses.

As non of the magical students have graduated during the six year because they were going to wrap it in the effect of the seven year the rotation rates didn't change.

Speaker 11: what haven't changed is the entity they had met in another course.

What's happened to change is the entity the hats medicine, and other cost that SB fudo maintenance.

Speaker 11: that as visual mentions, the delinquency was calculated just for no school and will apply to the whole problem. That's why that we have some entities that has higher retations because they calculated the delinquency of no medical and apply for the whole entity itself.

Delinquency was calculated just final scope and apply to the whole problem. That's why we have some entities that have a higher rate.

<unk>.

Because they calculated the deliberate itself no medco and apply for.

The whole length of D T cell.

Speaker 6: And with this cap of 25% that's being displayed on Congress, that will reduce the impacts of these increasing invitations for it.

With these cap of 25% that's being discussed in Congress that we would reduce the impact of these increases the invitations for all for us.

Jessica Mehler: So I would say that we can expect the reduction on that because we will start to reflect the legacy of the magical problems. And regarding the magical, the pure blood, the pure player medicine, it's right now that we have something about 13% of the retention, it could go up or down because the legacy rates on this kind of entity, it's very, very low for non-PS. So it's kind of hard to say right now what will be the behavior of these rentations when these calculations is updated in 2024 but having these two different groups spear, I could say that even we could even get a reduction on that but it's kind of expectations right now Jessica. Jessica, is it okay? Yeah, sorry, I wasn't mute. Thank you very clear. Of course.

Luis Blanco: So I would say that we can expect the reduction on that because we will start to reflect the legacy of the magical problems. And regarding the magical, the pure blood, the pure player medicine, it's right now that we have something about 13% of the retention, it could go up or down because the legacy rates on this kind of entity, it's very, very low for non-PS. So it's kind of hard to say right now what will be the behavior of these rentations when these calculations is updated in 2024 but having these two different groups spear, I could say that even we could even get a reduction on that but it's kind of expectations right now Jessica. Jessica, is it okay? Yeah, sorry, I wasn't mute. Thank you very clear. Of course.

Speaker 2: Just to finalize Maurice, the most reasonable thing is to consider that retention rate is there applying for the entire entity should be applied program by program.

Just as a safe and alive Morris, who did the most reasonable thing is to consider that the redemption rate et cetera blind for the entire entity should be up by province by province, So it would consider the delinquency over each problem not our overall institutional base of thumb.

Speaker 2: So it would consider the delinquency over each problem, not...

Speaker 2: for overall institution based of some sample of the sooner that does not represent the total arrival of that entity. So that is the...

Sample of the sooner that does not represent the total revenue of that entity. So that is the I think.

Marie Cepeda: So the next question comes from Marie Cepeda from Regisui.

Speaker 2: the pledge of the entire sector with the Minister of the Environment.

The pledge of the entire factor.

The municipal location.

Speaker 10: So very clear, very clear. Thank you. Thank you.

So very clear very clear. Thank you. Thank you.

Speaker 1: So our next question. Oh, so I think that we do not have any more questions. If you have any other doubts that you could ask here, I'll be available in our email of the IR department and what's a pleasure to have you all today. Thank you for the participation. Have a nice evening. Thank you.

So our next question.

So I think that we do not have any more questions.

If you have any other Don Thank you for the next year I will be available.

Our E mail, the IR Department and a pleasure to have you. All today. Thank you for your participation have a nice evening.

Goodbye.

Marie Cepeda: Marie, you may now talk. Hi Virgilio Blanco, Renata, thank you for the opportunity. I also have some questions around FGPS and it's kind of a controversial topic. It was kind of the hot topic in the results from the other companies as well. So it seemed that the size of the contribution was kind of took the companies off guard, the magnitude of it was kind of unexpected. So my question would be what you as a company or as a sector, how are you working to mitigate these effects for the future, what are you proposing that could mitigate the effects from the adequacy and clarification as well following what Blanco was answering. You said that the liquidity of the medical entities are higher or lower than the no medical ones. This is just a clarification.

Mauricio Cepeda: So the next question comes from Marie Cepeda from Regisui. Marie, you may now talk. Hi Virgilio Blanco, Renata, thank you for the opportunity. I also have some questions around FGPS and it's kind of a controversial topic. It was kind of the hot topic in the results from the other companies as well. So it seemed that the size of the contribution was kind of took the companies off guard, the magnitude of it was kind of unexpected.

Luis Blanco: So my question would be what you as a company or as a sector, how are you working to mitigate these effects for the future, what are you proposing that could mitigate the effects from the adequacy and clarification as well following what Blanco was answering. You said that the liquidity of the medical entities are higher or lower than the no medical ones. This is just a clarification.

Marie Cepeda: And the second question would be on prep courses. I know that this is not exactly the cycle for revenues but you have mentioned in other opportunities that you have been repositioning. Repositioning the courses in a different tactic commercial tactics. So if you could update us on how this reposition is going, it would be great.

Luis Blanco: And the second question would be on prep courses. I know that this is not exactly the cycle for revenues but you have mentioned in other opportunities that you have been repositioning. Repositioning the courses in a different tactic commercial tactics. So if you could update us on how this reposition is going, it would be great. Thank you. Female issue. I get from the first, your second question about the linguist and on medical, it's much lower than other programs.

Virgilio Gibbon: Thank you. Female issue. I get from the first, your second question about the linguist and on medical, it's much lower than other programs. Our PDA levels is around one and a half percent for a pure player, pure campus that's just running a medicine program here. And about the size of this retention, of course, that we do not think that this is fair considering that all this retention is over the linguistic calculated over the students that is getting into the modernization.

Luis Blanco: Our PDA levels is around one and a half percent for a pure player, pure campus that's just running a medicine program here. And about the size of this retention, of course, that we do not think that this is fair considering that all this retention is over the linguistic calculated over the students that is getting into the modernization. These students, they are non-medical students because if the program that has the new FDA started back in 2018, we are just considering students X, the X medicine or other program than medicine that they graduated and enter their motivation phase and they're the leaks and it's much higher than any other medical program that we have in Africa.

Virgilio Gibbon: These students, they are non-medical students because if the program that has the new FDA started back in 2018, we are just considering students X, the X medicine or other program than medicine that they graduated and enter their motivation phase and they're the leaks and it's much higher than any other medical program that we have in Africa. So, considering that, when they are using this as a proxy to calculate which will be the retention rate over the entire institution, over the entire entity, they are applying this for overall revenues, that's why the entire sector do not agree and is trying to convince everyone that this is not fair and we're trying and we are seeing like Mediza Provisoira and Amesment being discussed and under the Congress to limit it, this retention rate in the future otherwise yes would lose the attraction and FES is an important flag for the current government, we should see some changes in the future semesters.

Luis Blanco: So, considering that, when they are using this as a proxy to calculate which will be the retention rate over the entire institution, over the entire entity, they are applying this for overall revenues, that's why the entire sector do not agree and is trying to convince everyone that this is not fair and we're trying and we are seeing like Mediza Provisoira and Amesment being discussed and under the Congress to limit it, this retention rate in the future otherwise yes would lose the attraction and FES is an important flag for the current government, we should see some changes in the future semesters. So, this is about the GERD, the FJFES and the third question about the pillar one, the second third quarter is a very low functionality on our revenue here, otherwise we are combining not only the residence prep course coming from Mediza but all the other continued medical education programs that prepare physician for titles and so forth.

Virgilio Gibbon: So, this is about the GERD, the FJFES and the third question about the pillar one, the second third quarter is a very low functionality on our revenue here, otherwise we are combining not only the residence prep course coming from Mediza but all the other continued medical education programs that prepare physician for titles and so forth. So, the operation coming from Alenda Medzini also card your papers, they are getting, they are increasing a lot the number of students so we expect for the second half starting the revenues on the fourth quarter better so the turnover when you compare to the last year.

Luis Blanco: So, the operation coming from Alenda Medzini also card your papers, they are getting, they are increasing a lot the number of students so we expect for the second half starting the revenues on the fourth quarter better so the turnover when you compare to the last year. So, we are now combining all the products into a big portfolio not only Mediza residence prep course but all in terms of title prep and also soft skill programs combining into the pillar one that's our digital continuum education offerings, okay?

Virgilio Gibbon: So, we are now combining all the products into a big portfolio not only Mediza residence prep course but all in terms of title prep and also soft skill programs combining into the pillar one that's our digital continuum education offerings, okay? Yeah, just for me to add some color of notice under the FJFES. So, today we have a rotation rate of something around 27% that you should be 13% and what the sector is fighting is to limit to 25%.

Luis Blanco: Yeah, just for me to add some color of notice under the FJFES. So, today we have a rotation rate of something around 27% that you should be 13% and what the sector is fighting is to limit to 25%. So, that could be a change that we can see in the next month. In other point that's important and to mention here is that we haven't seen any change on a pure player of medicine in the rotation rate.

Virgilio Gibbon: So, that could be a change that we can see in the next month. In other point that's important and to mention here is that we haven't seen any change on a pure player of medicine in the rotation rate. So, if it was 13.5%, it is still 13.5%. Okay? Yeah, just to put the color on that, what's happened that these calculations is done by entity, okay? So, if the entity just has medicine courses as none of the medical students has graduated during the sixth year because they were going to graduate in the seventh year, that the rotation rate didn't change.

Luis Blanco: So, if it was 13.5%, it is still 13.5%. Okay? Yeah, just to put the color on that, what's happened that these calculations is done by entity, okay? So, if the entity just has medicine courses as none of the medical students has graduated during the sixth year because they were going to graduate in the seventh year, that the rotation rate didn't change. What haven't changed is the entity that has met in other courses.

Virgilio Gibbon: What haven't changed is the entity that has met in other courses. That is Virgil Mendes. The delinquency was calculated just for known people and will apply to the whole program. That's why that we have some entities that has a higher expectations because they calculated the delinquency of no medical and apply for the whole entity itself. And with this cap of 25% that's being displayed on Congress that will reduce the impacts of these increasing invitations for us.

Luis Blanco: That is Virgil Mendes. The delinquency was calculated just for known people and will apply to the whole program. That's why that we have some entities that has a higher expectations because they calculated the delinquency of no medical and apply for the whole entity itself. And with this cap of 25% that's being displayed on Congress that will reduce the impacts of these increasing invitations for us. Just to just to finalize Mauricio, the most reasonable thing is to consider that retention rate instead of applying for the entire entity should be applied problem by problem.

Virgilio Gibbon: Just to just to finalize Mauricio, the most reasonable thing is to consider that retention rate instead of applying for the entire entity should be applied problem by problem. So it would consider the delinquency over each problem, not for overall institution based of some sample of this unit that does not represent the total revenue of that entity. So that is the I think the pledge of the entire sector with the Minnesota location. It's a very clear, very clear.

Unknown Executive: Thank you.

Luis Blanco: So it would consider the delinquency over each problem, not for overall institution based of some sample of this unit that does not represent the total revenue of that entity. So that is the I think the pledge of the entire sector with the Minnesota location. It's a very clear, very clear. Thank you.

Unknown Executive: So our next question.

Unknown Executive: So our next question. So I think that we do not have any more questions. If you have any other doubts that you put in that here, I'll be available in our email of the IR department. And what's the pleasure to have you all today. Thank you for the participation. Have a nice evening. Goodbye.

Unknown Executive: So I think that we do not have any more questions. If you have any other doubts that you put in that here, I'll be available in our email of the IR department. And what's the pleasure to have you all today. Thank you for the participation. Have a nice evening.

Unknown Executive: Goodbye.

Q2 2023 Afya Limited Earnings Call

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