AFYA Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: Increased by 8% year-over-year to BRL 1.013 billion.

Adjusted EBITDA: Grew by 4% to BRL 511 million, with a margin of 50.5%, down 200 basis points from the previous year.

Net Income: Reached BRL 262 million, a 2% increase year-over-year, with EPS of BRL 2.88 (up 3%).

Free Cash Flow: Increased by 3% to BRL 376 million, with a cash conversion rate of 92.5%.

Cash Position: BRL 1.3 billion at the end of Q1 2026.

Debt Metrics: Net debt reduced to BRL 1.151 billion, with a leverage ratio of 0.7x against adjusted EBITDA.

2Strategic Updates and Business Highlights

Operational Growth:

Operating medical school seats increased by over 6% to 3,768.

Undergrad medical students grew to over 26,000, a 2% increase.

Continued education revenue rose 11% year-over-year to BRL 79 million.

Medical practice solutions revenue grew by 4% to BRL 43 million.

Ecosystem Expansion: Active users reached 304,000, indicating strong penetration among physicians and medical students.

Investment in Education: Focused on enhancing the portfolio with additional health programs to complement medical education.

3Forward Guidance and Outlook

Management expressed confidence in maintaining operational momentum and executing strategic initiatives.

Continued focus on integrating educational and medical practice solutions into a cohesive ecosystem.

Anticipated improvements in student performance for the upcoming ENAMED exam, with ongoing initiatives to enhance engagement and curriculum alignment.

4Bad News, Challenges, or Points of Concern

Adjusted EBITDA Margin Decline: The margin decreased due to higher costs in continuing education and medical practice solutions, driven by increased payroll and marketing expenses.

Declining Metrics in Medical Practice Solutions: Active payers in the medical practice segment declined by 1%, and monthly active users fell by 10%, raising concerns about competitive pressures and market engagement.

Investment Timing: While investments in Medical Practice Solutions are expected to yield results, the timing of recovery remains uncertain, particularly for the WhiteBook platform.

5Notable Q&A Insights

Competitive Environment: Management noted a successful intake cycle with a 4.6% price increase, indicating strong brand recognition and a centralized enrollment process.

M&A Strategy: Afya remains disciplined in pursuing M&A opportunities, focusing on institutions with a significant share of revenue from medical programs. Challenges include valuation discrepancies and maintaining return on capital targets.

Sales and Marketing Expenses: Increased spending was attributed to anticipated intake volumes and strengthening sales processes, particularly for new health programs and integrated solutions. Overall, Afya demonstrated solid financial performance in Q1 2026, with strategic initiatives aimed at expanding its educational offerings and enhancing engagement within its ecosystem. However, challenges in the medical practice solutions segment and margin pressures warrant attention as the company navigates a competitive landscape.