AFYA Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: BRL 1.985 billion for the first half of 2026, a 7% year-over-year increase. Q2 revenue reached BRL 972 million, up 6% from the prior year.

Adjusted EBITDA: BRL 918 million for the first half, a 3% increase; Q2 adjusted EBITDA was BRL 470 million, growing 1% year-over-year. Adjusted EBITDA margin was 46.2% for the first half and 41.8% for Q2, reflecting a contraction of 190 basis points year-over-year.

Net Income: BRL 463 million for the first half, a 7% increase; Q2 net income was BRL 201 million, up 14% year-over-year. Basic EPS increased to BRL 5.10 for the first half and BRL 2.22 for Q2, reflecting a 9% and 17% increase, respectively.

Free Cash Flow: BRL 423 million for the first half, with a strong cash conversion rate of 87.8%.

2Strategic Updates and Business Highlights

Operational Metrics:

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

Undergrad medical student enrollment grew by 3% to over 26,000.

Continued education revenue reached BRL 144 million, up nearly 5% year-over-year.

Medical practice solutions revenue grew by 2% to BRL 85 million.

Shareholder Returns: Returned BRL 448 million to shareholders through dividends and share repurchases, exceeding free cash flow to equity by 106%.

Investment Focus: Continued investment in product enhancements, particularly in AI features and clinical management solutions, to drive future growth.

3Forward Guidance and Outlook

Management maintained EBITDA guidance for 2026 between BRL 1.7 billion and BRL 1.8 billion, indicating a conservative approach to the second half of the year.

Anticipated continued growth in student enrollment and revenue across all segments, with expectations for high single-digit growth in continued education for the second half.

4Bad News, Challenges, or Points of Concern

Margin Compression: Adjusted EBITDA margins have contracted due to increased sales and marketing expenses associated with growth investments.

Competitive Pressures: The medical practice solutions segment faced challenges due to competition from AI tools, impacting the number of active payers and revenue growth.

Revenue Mix: A shift in the revenue mix towards lower-ticket, shorter-duration courses in continued education has affected revenue growth rates, particularly in Q2.

5Notable Q&A Insights

Competitive Intake: Management expects to fill all authorized medical seats but noted that the ProUni enrollment cycle is delayed, potentially impacting overall intake.

Medical Practice Solutions: The decline in revenue was attributed to competitive pressures and a strategic decision to enhance functionalities rather than increase prices.

Capital Allocation: Afya remains committed to disciplined capital allocation, focusing on high-return investments and returning excess capital to shareholders when suitable M&A opportunities are not available.

Taxation: A lower effective tax rate in Q2 was due to clarifications on new regulations, with expectations to maintain similar rates for the remainder of the year. Overall, Afya demonstrated solid financial performance in Q2 2026, with growth in key metrics, though facing challenges in margin compression and competitive pressures in specific segments. The company remains focused on strategic investments and shareholder returns while navigating a complex market environment.