Q1 2025 Afya Ltd Earnings Call
<unk> almost 26000 students, representing almost 50% growth compared to the first quarter of 2024.
Furthermore, we increased the net average ticked off medical school by almost 4% year over year reached 9000 to 140 <unk>.
In addition, we continue to observe improving performance and the continuous Acacia and <unk> solutions segment we.
We continue application match revenue increased almost 90% year over year peer organically reached 71 million hatch and medical prep solution, we saw 14%.
Growth in net revenue compared to the first quarter of 2020 for reaching almost $42 million.
Lastly, our ecosystem I have 370000 active users exemplify substantial penetration among physicians and medical students in Brazil.
Moving to slide number four we will discuss our performance across our three business sectors.
Starting with the Undergrad segment, we observed an important movement throughout the quarter served as higher tickets and medicine course, with almost 4% increase over a year.
This growth was accompanied by gross margin expansion driven by the consolidation of <unk> acquired in July 2024, and the continuous ramp up of our formats metro campuses lots in the third quarter of 2022.
Also important to note that we concluded the unique acquisition, which will enhance our operation of six additional medical seats for the next semester.
The continuing education segment was market by an increase in in graduate journey students. In addition to our gross margin expansion driven by our ongoing operational restructuring, which continues to contribute to improved cost management cross selling general and administrative expenses.
In Mexico Paas solution segment growth is being driven by the ramp up of <unk> and the continued expansion of active players as well as b to B engagements and the addition of new contracts with pharma sales because they need the street partners.
Before moving to the next slide I am proud to share that in April we received two significant recognitions.
Moody's agents in Brazil upgraded our national scale credit rating from double a plus dot BR to AAA dot BR with a stable outlook, reflecting our strong growth cash generation and financial discipline.
I'm also pleased to highlight that we successfully achieved all of the IFC define targets for 2024, including the number of free medical consultations provided and the percentage of medical cost weighted with the highest quality scores.
Meeting these targets will trigger a 50 bps step down in our lower interest rate over the next 12 months reinforcing both our social impact and financial discipline. Additionally, we received our first ESG rating for MSCI.
Building with a solve the triple B score.
MSCI sector relative metabolic underscore that we outperformed significant portion of each year's Pasquale.
Particularly in areas like the data privacy and security we are a practice it was stronger than many in the industry. This further solidifies our commitment to sustainability.
On the next page, we would like to highlight that the latest <unk> and CPC results released by <unk> net showcase outstanding academic performance across <unk>. Good schools. These results reinforce our ongoing commitment to academic access innovative kitchen and the developer.
Of highly qualified professionals among the results we are proud to celebrate our achievements and congratulate on institutions that performed above expectation, which continues to strengthen <unk> position as a leader in Mexico location in Brazil.
Now I will turn the call over to Luis Blanco, our CFO to provide further insights into the financial and operational metrics. Thank you.
Luis Blanco: Thank you Rajiv and good evening, everyone, starting with slide number seven for a discussion of key operational metrics by business unit.
Starting with the Red programs.
Luis Blanco: Remember of medical students grew 15% over the first quarter 2034.
Luis Blanco: Reaching almost 26000 students and appropriate magical seats, increasing 12% yearly 2593.
Luis Blanco: Our medical school net average ticket increased by 4%, reaching 9240 <unk> in the first quarter of 2025.
Luis Blanco: In addition revenues for the underground segments saw over 17% increase achieving 827 million Reais EDC.
Luis Blanco: 86% of which are related to Maxine and 94 from half related courses.
Luis Blanco: On the next page our present, our continuing educational metrics.
Luis Blanco: We approach continuing educational through three main towards <unk>.
Luis Blanco: Starting with the residency journey, which encompassed products focus on breast density preparations.
Luis Blanco: We saw a 70% decrease reaching.
Luis Blanco: 12203 students by the end of the period.
Luis Blanco: In the graduate furnace focus on this personalization SaaS preparations and rapid courses and matching.
Luis Blanco: Students grew by 16%, reaching 8542 students.
Luis Blanco: Lastly, our <unk> offerings decreased by 3% over the same three month periods of the prior year.
Luis Blanco: Continuing education, that's revenue rose to 71 million Reais in the three months periods of 2025 up from the 65 million Reais in the three month period of 2024, reflecting growth almost 9%.
Luis Blanco: These include an 8% increase in B to B revenue and 16% increase in <unk>.
Luis Blanco: Moving to slide number nine I'll discuss the medical practice solutions, operator operational metrics.
Luis Blanco: The first graph shows our total active payers.
Luis Blanco: Which are the ones that generate revenues in the business to physicians <unk>.
Luis Blanco: Following the staff growth, France, the number of paying users increased to over.
Luis Blanco: 198, thousands a 4% increase over the same quarter last year.
Luis Blanco: The second graph highlights our monthly active users, which accounts for about 245000 and slightly lower than the 263000 record last year.
Luis Blanco: This reduction is to replace the traditional fall from the <unk> portal to the Onvia portal.
Luis Blanco: Lastly in our final graph represents the net revenue at our medical practice solutions segments.
Luis Blanco: Each has expanded by 14% compared to the same quarter of the last year Ritchie 42, we didn't react.
Luis Blanco: Of this total 37 million Reais was generated by <unk>.
Luis Blanco: Showing an increase of 14%.
Luis Blanco: While <unk> contributed to <unk>, a 16% increase over the same quarter last year.
Luis Blanco: And the next slide we present, our <unk> ecosystem.
Luis Blanco: We're pleased to highlight his substantial contributions to the Brazilian our care community.
Luis Blanco: By the end of the first quarter of 2035, our ecosystem and competitive over 370000 physicians and medical students using our service products.
Luis Blanco: Moving forward to page 11, I want to discuss our financial overview for the first quarter of 2025, starting with the next slide.
Luis Blanco: With great satisfaction I present, another strong quarterly performance for HOKA.
Luis Blanco: Net revenue for the first quarter of 2025 reaches 936 million Reais reps.
Luis Blanco: Representing a 16% increase compared to the same quarter last year.
Luis Blanco: The yearly revenue increase was mainly due to higher tickets and matching courses the maturation of medical school seats. The consolidations off when it's all and advancements of medical practice solutions and continuing educational segments.
Luis Blanco: In the first quarter of 2025, adjusted EBITDA rose by 24%, reaching 492 with Mes.
Luis Blanco: And adjusted EBITDA margins of 52, 5%.
Luis Blanco: Our 300 basis points compared to the first product 2034.
Luis Blanco: The expansion in adjusted EBITDA margin is largely attributed to.
Luis Blanco: The strong performance of the undergrad segment the <unk>.
Luis Blanco: Gross margin expansions in the undergrads and continue with the patient segments.
Luis Blanco: Hump up after four months medicals campuses that started operations in the third.
Luis Blanco: First part of 2022.
Luis Blanco: The operation operational restrictions efforts and continuous locational and medical practice solutions segments.
Luis Blanco: The centralization saw academic process and expansions offset as provided by our shared service center and also more efficiency in selling general and administrative expenses.
Luis Blanco: Moving to the next slides.
Luis Blanco: The first quarter cash flow from operating activities rose by almost 10%.
Luis Blanco: Reaching 470, <unk>, reflecting a strong operational performance.
Luis Blanco: Operating cash flow conversion ratio was 96, 8%.
Luis Blanco: Net income for the first quarter of 2035 totaling 257 million Reais, representing a 23% increase from the same periods in 2024.
Luis Blanco: Adjusted net income was 294 million Reais, a 17% increase.
Luis Blanco: This net income protect not only our strong operational performance, but also the impact of the new tax legislation implementing the OECD pillar two routes.
Luis Blanco: Which introduced and additional social contributions to ensure minimal effective tax rates for our international groups.
Luis Blanco: This result in an increase of 23 <unk> in our income tax expenses for the period ended in March 2025.
Luis Blanco: Despite this effect net income grew robustly underscoring the resilience and efficiency of our business model.
Luis Blanco: Regarding EPS we achieved.
Luis Blanco: <unk> and 79 per share in the three months periods, representing a 23% increase year over year.
Luis Blanco: And now moving to my last two slides I will discuss our cash and net debt positions also deepen giving more color on our cost of debt.
Luis Blanco: This is slide presents a table detailing our gross debt compositions and total cost of debt cooperating our primarily obligations the softbank transactions debentures other financial liabilities.
Luis Blanco: <unk> financials and accounts payables through selling shareholders.
Luis Blanco: Yes.
Luis Blanco: Capital structure remains solid with a conservative leverage positions and the low cost of debt.
Luis Blanco: <unk> net debt, excluding <unk> 16 divided by the midpoint of the 2025 adjusted EBITDA was nine months.
Luis Blanco: On the next page, we can look at it closely at our net debt variation.
Luis Blanco: As of the first quarter 2025, our net debt has reduced it to <unk>.
Luis Blanco: 524 million Reais when compare to the end of 2024, a reduction of 291 lead in <unk>, reflecting our strong operational performance and capital allocation discipline.
Luis Blanco: This concludes our prepared remarks, we are proud of our accomplishments and robust performance across all areas.
Luis Blanco: Our commitment to advancing the magical journey through an integrated educational systems and medical practice solutions remained strong.
Luis Blanco: <unk> students in becoming physicians.
Luis Blanco: Promoting continuous magical learnings and enhancing physicians accuracy and productivity.
Luis Blanco: As we look ahead, we are enthusiastic about the opportunity that lies before us.
Luis Blanco: I will now open the conference for the Q&A session. Thank you.
Luis Blanco: If you want to ask a question. Please raise your hand.
Speaker Change: We're going to start the Q&A session with Flavio <unk> from Bank of America.
Luis Blanco: You May go ahead please.
Speaker Change: Hi, good evening.
Luis Blanco: Everyone.
Luis Blanco: So I have two questions on my side.
Luis Blanco: The first one is on the EBITDA margin. So we noticed a very.
Luis Blanco: Very strong Greens on the quarter. So I would like you to share some details on what drove this performance.
Luis Blanco: Was it related to the ramp up of new units to greater efficiency or maybe contribution for other businesses and also given the strong free and on the quarter.
Luis Blanco: If you see room for an upward revision on the guidance for for this year and then my second question is on the intake process.
Luis Blanco: So are you guys seeing.
Luis Blanco: A greater challenge on the intake process given.
Luis Blanco: D seats offering expansion from medical courses over the past year.
Speaker Change: Are you guys.
Speaker Change: Fueling that is getting our two fuel all the seats.
Speaker Change: Comment on the intake process.
Speaker Change: We like.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Hi fly in to thank you for your question, it's blank with speaking I will take the first one and <unk>.
Speaker Change: <unk> got the second one regarding the <unk>.
Speaker Change: So regarding the margin expansion that we have.
Speaker Change: Compared to the figures of the prior year the main draw.
Speaker Change: <unk>.
Speaker Change: The higher gross margins that we got from the margin expansion that we got from the undergrad and the continued education segments.
Speaker Change: The continuing ramp up of the four a nice niche scarfaces.
Speaker Change: <unk> launch in the first quarter.
Speaker Change: Southern <unk>.
Speaker Change: They continually are initiative stats.
Speaker Change: We got.
Speaker Change: We have higher efficiency coming from the continuing education segments and Metro breakfast solutions remember that we've made.
Speaker Change: A huge transformation in the first quarter of 2034 moving some.
Speaker Change: Formalities between the sediment zahn.
Speaker Change: Restructuring these segments internally and we've got lots of efficiencies of this movement. So.
Speaker Change: It's like the full.
Speaker Change: Yeah.
Speaker Change: These changes.
Speaker Change: Uh huh.
Speaker Change: <unk> cost and the pieces he SG&A a CEO that regards from the applications of the zero budget project that we've used.
Speaker Change: We started in 2023.
Speaker Change: And on top of that we came with fall when it all Pedro aware regards.
Speaker Change: Almost 100%, but what you'll see with that fans with four very very.
Speaker Change: This move are acquisitions that will make that form this month of may.
Speaker Change: We have one.
Speaker Change: Airports.
Speaker Change: It won't be a green our short status. So we're very happy with this result that we achieved in the first quarter regarding the the year.
Speaker Change: We would have a view that we have a very strong start off the year, but we keep our guidance that we provide are provided the march for the year we.
Speaker Change: We are ahead in terms of margins, but.
Speaker Change: Uh huh.
Speaker Change: Right now we keep the guidance that we provide.
Speaker Change: Both in terms of revenues and the beach.
Speaker Change: For the year.
Speaker Change: Hatch.
Speaker Change: Yeah.
Speaker Change: Second.
Speaker Change: Same answer intake we Mike.
Speaker Change: Yeah.
Speaker Change: Mike review, it but right now we keep our view for the year Okay.
Speaker Change: Thank you <unk>, so just to add on back of a very.
Speaker Change: Strong start for 2025 Flavio.
Speaker Change: And just remembering we just closed yesterday 60 additional seats and contingency closer to <unk> on to where we are right now.
Speaker Change: And any update that we may have or not.
Speaker Change: On our.
Speaker Change: <unk> for 2025.
Speaker Change: Would only happen.
Speaker Change: On the offer the second semester I think so.
Speaker Change: So depending on.
Speaker Change: All the process to be completed.
Speaker Change: And regarding the intake process that we had on the first message was a very healthy intake process.
Speaker Change: Around 7% to eight candidates.
Speaker Change: Every seat that we have in Brazil.
Speaker Change: We saw a very strong recognition of our brand.
Speaker Change: The <unk> project.
Speaker Change: 2023.
Speaker Change: Thank you.
Speaker Change: Paying out.
Speaker Change: And I think this is a good news for all campuses Thats using now <unk> brand around the country. So not only on the medical you take with our health process.
Speaker Change: But as you may see.
Speaker Change: On the table to have a very strong intake and renew for also how often known health programs that also happened to grow organically all of these students base.
Speaker Change: In 2025. This is ahead of our expectations, you'll have a very strong intake and a better renewal rate that was result of a very good.
Speaker Change: Review of process that we started back in November last year.
Speaker Change: Maybe a very strong student base for 2025.
Speaker Change: That's it.
Speaker Change: Alright, thank you.
Speaker Change: Thank you Robert Thank you Flavio.
Sure.
Tuition on our average to reach and so we're moving ahead.
Brian: Brian that we pass it was a little bit above that.
Brian: So as soon as we have saying compare same store comparison.
Brian: Distributions that had an impact I think that it can be even a little bit better than that for the next spot, but close to 4% to 5%.
Brian: We are not.
Brian: We are not.
Brian: Expecting any.
Brian: Difficult here to change close to inflation of our campuses. So it's just more than the same what we are doing I ever see mass every year.
Brian: When we started the <unk> process for the following year.
Brian: Based on the active users, but we will we will add something here.
Speaker Change: Look I think for <unk>. The most accurate view was is on the medical brake solutions, we still see kind of a push.
Brian: Pushback.
Brian: The movements that we changed the pet met ortho to the Acapulco.
Brian: <unk>.
Brian: You remember when we make these changes we've put the.
Brian: Lots of discount that stance.
Brian: Yes.
Brian: Related to the contract of the forecast regarding <unk>.
Brian: Luggage.
Brian: Inflammation, so these kind of movements.
Brian: We've had some pushback on the owned.
Brian: On the monthly active users using all of our websites, but as these.
Brian: Keep going we see these.
Brian: Yes.
Brian: Yes.
Brian: Pushback.
Brian: It would be smaller so the changes.
Brian: Franck happening in April last year so.
Brian: Most of our properties changes has already happened there was snow.
Brian: <unk> is on the kind of profile all classics.
Brian: Right now.
Brian: And look at just where the points here.
Brian: <unk> behind it.
Brian: We changed the portal back in April of 2024, and the reason of that debt, which then we decided to be more strict to have.
Brian: User sign our portfolio. So it's more difficult to have back if you will that we are getting more information. The reason of that while we have more information we'll have more behavior and also we can leverage the relationship with the industry, which will be contract having more data more data about.
Brian: This use of those logging into our ecosystem on the other side, but there is improving in a healthy way that was a decision.
Brian: That it took to be much restricted.
Brian: But it's.
Brian: This is running as expected.
Brian: Yes.
Speaker Change: Thank you to Blink when it was very clear.
Luca: Thank you Luca. The next question comes from OTC to data from Morgan Stanley.
Speaker Change: Hi, good uncle. Thank you. Thank you for Newport, Tennessee here I have two questions one.
Speaker Change: <unk> clarify all this kind of minimum tax according to the <unk>.
Speaker Change: Pillar two of.
Speaker Change: OCD.
Speaker Change: How.
Speaker Change: A little bit on.
Speaker Change: Why were you classify those in what's natural company what are your perspectives in terms of.
Speaker Change: Let's say this kind of effects behaving.
Speaker Change: I understand that you're provisioning not necessarily pain.
Speaker Change: Just correctly from the tax.
Speaker Change: Our expectations here.
Speaker Change: And the second about the.
Speaker Change: The Softbank convertible that's right do you have these.
Speaker Change: We are getting closer to the.
Speaker Change: To the.
Speaker Change: Deadline, and how are you preparing in terms of cash.
Speaker Change: This study is not converted into equity.
Speaker Change: I said.
Speaker Change: Roughly speaking I will take the two questions.
Speaker Change: Regardless the pillar two.
Speaker Change: It was a law that was.
Speaker Change: We next.
Luis Blanco: The <unk> of December.
Luis Blanco: And being effective in January 2025.
Luis Blanco: This law.
Luis Blanco: All lines.
Luis Blanco: <unk> this is <unk>.
Luis Blanco: With that.
Speaker Change: The OLED.
Luis Blanco: Low.
Luis Blanco: Roofs, and introduce a minimal taxation.
Luis Blanco: <unk>.
Luis Blanco: Population is very very different from the Brazilian.
Luis Blanco: Calculations off.
Speaker Change: Local Hal data.
Speaker Change: Use it to half year. So this was.
Speaker Change: Prove it.
Speaker Change: Less minutes off 2024 and effectively.
Luis Blanco: And for this quarter.
Luis Blanco: This applies to boot.
Luis Blanco: International groups.
Luis Blanco: Desktop.
Luis Blanco: ADT in the.
Luis Blanco: Concrete.
Luis Blanco: <unk>.
Luis Blanco: That's the multinational group has more than 750 euros in the last.
Luis Blanco: The last few years than the last.
Luis Blanco: So in our understanding.
We are.
Luis Blanco: The perimeter of this law so what we did.
Luis Blanco: We make this provisioning.
Luis Blanco: The same in soft seeds.
Luis Blanco: Yes.
Luis Blanco: Due to July 2026.
Luis Blanco: When we should face and right now we started that.
Luis Blanco: As of March.
We start with your questioning.
Luis Blanco: Our injections.
Luis Blanco: Going to justice to that question. These these effects.
Luis Blanco: Posted formality ads.
Luis Blanco: Some points about about these costs.
Luis Blanco: We'd see.
Luis Blanco: <unk>.
Luis Blanco: Have some.
Luis Blanco: Each reducing date backs off the phone.
Luis Blanco: Space, we have Keith.
Luis Blanco: Keith.
Luis Blanco: Our approach.
Luis Blanco: Our provisioning that.
Luis Blanco: Until we are discussing that.
Luis Blanco: Okay.
Luis Blanco: So it's a provision it's not the cash disbursements technology.
Luis Blanco: Regarding the stock bank transactions.
Luis Blanco: These early redemption, the right awkwardly redemption from Softbank in May 2000, and when you see.
Luis Blanco: Yes.
Luis Blanco: Right now we don't have any opposition.
Luis Blanco: Positions on that but as we're getting closer what we did in 2034, we started to provision the premium.
Luis Blanco: From these that these loan.
Luis Blanco: That is due is <unk>.
Luis Blanco: The exercise.
Luis Blanco: Early early early early redemption.
Luis Blanco: Thanks.
Luis Blanco: We started to talk with Softbank.
Luis Blanco: Guarding our views on that we don't have any.
Luis Blanco: Official positions.
Luis Blanco: Regarding regarding that.
Luis Blanco: The extension of our nonstop.
Luis Blanco: These.
Luis Blanco: Our operations.
Luis Blanco: But.
Luis Blanco: What we did we started to get in 2000 and report the appropriate northeast.
Luis Blanco: <unk>.
Luis Blanco: 5%.
Luis Blanco: We are prepared we empower.
Luis Blanco: Cash flow generations to.
Luis Blanco: <unk> to pay to <unk>.
Luis Blanco: Eastern moments.
Luis Blanco: Required softbank exercise.
Luis Blanco: Early redemption.
Luis Blanco: On wages and benefits.
Speaker Change: That's clear thank you Michael.
Speaker Change: And can step it up as a REIT.
Speaker Change: <unk> do you want to ask a question. Please raise your hand.
Marcellus Santos: Our next question comes from Marcellus Santos from JP Morgan.
Marcellus Santos: Hello, Good evening.
Marcellus Santos: Thanks for taking the questions I have two as well first I want to touch on continued indications, but we saw the revenue trend starting to improve but still.
Luis Blanco: What could what could you provide an update on what's going on on the segment and whats the expectation for this year.
Luis Blanco: And the second question is about the <unk> business within medical practice solutions I remember last year.
Luis Blanco: It was kind of a.
Luis Blanco: But the revenue that was supposed to take place in the first quarter happened in the equity looks like this year.
Luis Blanco: Let's see how is the b to B business going more the medical breakfast solutions. Thank you very much.
Marcello: Hey, Marcello.
Speaker Change: The first one on local help me with the second one year don't continue indication.
Luis Blanco: We have a very good intake process and also the end of the year process coming from graduates.
Speaker Change: Although specialization that long term and higher ticket.
Luis Blanco: It's still facing some.
Luis Blanco: Competition on the residency in the small programs are the lower ticket. So that was the combination we accelerate our growth when compared to the speed that we were on the third and the fourth quarter last year, a little bit higher I expect it to be a little bit better for the following quarters, but yes.
Luis Blanco: We are growing on graduates.
Luis Blanco: The speed that we would likely to grow but still facing strong competition on the residency programs. So that's the main reason why we are so close to 10%.
Luis Blanco: Continuum add co location is for swap and also I think it would be something close to that for the rest of the unions.
Luis Blanco: Regarding the PCB causes local I'd like to thank.
Luis Blanco: I think from a setup for a crash.
Luis Blanco: Excellent.
Luis Blanco: As you.
Speaker Change: Remember that we had some fulfillment of recognition of revenues in 2034.
Luis Blanco: Moving from the first to the second semester that made at that time compared to 2024.
Luis Blanco: 2023, without even a decrease on that.
Luis Blanco: What's happened.
Luis Blanco: You see that in the <unk>.
Luis Blanco: He definitely has some kind of a sub analysis on how the format quickly the street.
Luis Blanco: Make the complex with.
Luis Blanco: Yes.
The adverse events.
Luis Blanco: Our products that we have.
Luis Blanco: The fourth quarter, it's always more active in terms of complex issue compared to the first the first quarter. So.
Luis Blanco: Can see the btu besides that.
Luis Blanco: The first quarter, it always will be a little bit.
Luis Blanco: Below what we had.
Luis Blanco: <unk>.
Luis Blanco: Quarter.
Luis Blanco: Just district.
Luis Blanco: You see we've got the growth off 2000 and.
Luis Blanco: For the whole of the year, which will be our contracts.
Speaker Change: Drew I'll SCR, almost 30% in terms of revenues.
Luis Blanco: Right now.
Luis Blanco: We stop it.
Luis Blanco: With the lower with 16.
Luis Blanco: For virtual or minor was $6 two in the same period.
Luis Blanco: Kind of a.
Luis Blanco: Little bit oxides of nitrogen in the pharmaceutical industry, but we are very comfortable both dense regarding the PCB business.
Luis Blanco: Mostly.
Luis Blanco: <unk> by the promise of.
Luis Blanco: The pharmaceutical players.
Speaker Change: Perfect. Thank you very much for the answers.
Marcelo: Thank you Marcelo.
Speaker Change: Since we don't have any further questions I would like to thank your participation here today, we're probably investor relations team are available. If you have any follow up question <unk>.
Luis Blanco: See you again in our next conference call.
Luis Blanco: Thank you.