AFYA Q3 2025 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: BRL 2.784 billion for the nine-month period, a 13% year-over-year increase.

Adjusted EBITDA: BRL 1.292 billion, up 19% year-over-year, with an adjusted EBITDA margin of 46.4%, a 200 basis point improvement.

Net Income: BRL 593 million, reflecting a 20% increase year-over-year, with basic EPS of BRL 6.40.

Cash Flow: Record cash flow from operating activities at BRL 1.292 billion, an 11% increase, with a cash conversion rate of 101.5%.

Medical Students: Over 25,000 undergraduate medical students, a 6% growth year-over-year.

2Strategic Updates and Business Highlights

Occupancy: Maintained 100% occupancy in all medical programs.

Seat Approvals: Increased approved medical seats to 3,753, with the addition of 100 seats in Afya Bragança.

Continuing Education: Revenue grew by 11% year-over-year to BRL 208 million, with significant B2B revenue growth of 65%.

Medical Practice Solutions: Revenue increased by over 9% year-over-year to BRL 128 million.

ESG Initiatives: Delivered 700,000 free healthcare consultations, exceeding 2025 targets, and recognized for leadership in ESG practices.

3Forward Guidance and Outlook

Tax Rate: The effective tax rate increased to 9.7% due to provisions for OECD Pillar Two taxation, expected to converge to 15% from 2026 onwards.

Capital Allocation: Plans for potential M&A opportunities and shareholder remuneration strategies, including dividends and share buybacks, are under consideration.

2026 Tuition Growth: Expected tuition increases of approximately 5% to 5.2% over 2025.

4Challenges and Points of Concern

Decline in Residency Students: A 36% decrease in residency students was noted, attributed to a change in how programs are counted rather than a drop in demand.

Decreased Active Users: A decline in the number of active users in the medical practice solutions segment, with total active payers down 2% year-over-year.

Clinical Decision Software: Notable loss of subscribers for clinical decision software, prompting a review of pricing and feature offerings to regain market share.

5Notable Q&A Insights

Tax Strategy: Management is preparing for a higher effective tax rate due to new regulations and is evaluating strategies to mitigate impacts on foreign investors.

M&A and Shareholder Returns: The company is exploring M&A opportunities while also considering increasing dividends or share buybacks based on market conditions and cash availability.

Demand for Medical Careers: Demand remains stable with no significant changes in applicant interest compared to the previous year, despite competitive pressures.

Continuing Education Adjustments: The drop in residency students is a one-time effect due to program restructuring, expected to stabilize moving forward. Overall, Afya Limited demonstrated strong financial performance and strategic growth initiatives while acknowledging certain operational challenges and market dynamics.