Afya Limited’s Earnings Call Highlights Robust Growth

Afya Limited Class A ((AFYA)) has held its Q3 earnings call. Read on for the main highlights of the call.

Afya Limited’s recent earnings call painted a picture of optimism, with the company showcasing significant growth in revenue and profitability. Despite facing some challenges in user retention within specific segments, the overall sentiment was positive, driven by strong financial performance and strategic achievements that overshadowed these hurdles.

Strong Revenue and EBITDA Growth

Afya Limited reported impressive financial results, with revenue for the nine-month period increasing by over 13% year-over-year, reaching BRL 2.784 billion. The company’s adjusted EBITDA also saw a substantial rise of nearly 19%, amounting to BRL 1.292 billion. This growth was accompanied by an increase in the adjusted EBITDA margin by 200 basis points to 46.4%, highlighting the company’s robust financial health.

Record Cash Flow and Income

The company achieved a record cash flow from operating activities, which increased by 11% to BRL 1.292 billion, demonstrating a cash conversion of 101.5%. Additionally, Afya’s net income grew by 20% year-over-year to BRL 593 million, with a basic EPS increase of 20% to BRL 6.40, reflecting the company’s strong profitability.

Leadership in Medical Education

Afya maintained its leadership position in medical education, achieving 100% occupancy in all its medical programs. The number of approved medical seats grew to 3,753, and the undergraduate medical student population increased by 6%, underscoring the company’s dominance in this sector.

Significant ESG Achievements

The company made notable strides in its ESG initiatives, delivering 700,000 free healthcare consultations. Afya was also recognized by Valor Econômico as the top-performing company in the Brazilian education sector for the fourth consecutive year, highlighting its commitment to social responsibility.

Successful Financial Strategy

Afya strengthened its financial position through effective liability management, issuing commercial notes totaling BRL 1.5 billion. The company maintained a low cost of debt at 106% of the CDI, showcasing its strategic financial acumen.

Decrease in Medical Practice Solutions Users

Despite the positive financial outcomes, Afya faced a 2% decrease in the number of paying users in its medical practice solutions, dropping to 195,000. Additionally, monthly active users decreased from 249,000 to 228,000, indicating a challenge in user retention.

Drop in Residency Journey Students

The residency journey in the continuing education segment experienced a significant 36% decrease in students, reaching 9,969 by the end of the period. This decline poses a challenge for the company’s continuing education initiatives.

Clinical Decision Software User Loss

Afya experienced a sequential loss in subscribers for its clinical decision software due to price changes. However, this resulted in positive revenue outcomes, demonstrating the company’s ability to adapt and capitalize on pricing strategies.

Forward-Looking Guidance

Afya Limited provided robust guidance for the third quarter and the nine-month period of fiscal year 2025. The company expects continued growth with a 13% year-over-year revenue increase and an adjusted EBITDA growth of nearly 19%. The company also anticipates maintaining its strong cash flow and profitability, supported by its strategic initiatives and leadership in medical education and ESG practices.

In conclusion, Afya Limited’s earnings call highlighted a positive outlook, driven by strong financial performance and strategic achievements. While challenges in user retention were noted, the company’s leadership in medical education and commitment to ESG initiatives underscore its potential for sustained growth and success.