Afya Limited

and our CFO, Luis André Blanco. During today's presentation, our executives will make forward-looking statements. Forward-looking statements can be related to future events, future financial or operating performance, known and unknown risks, uncertainties, and other factors that may cause AFIA's actual results to differ materially from those contemplated by these forward-looking statements. Part of the look at the statements in this presentation include, but are not limited to, statements related to the business and financial performance, expectations and guidance for future periods, or expectations regarding the company's strategic product initiatives and its related benefits. These risks include those more fully described in our filings with the Security and Exchange Commission. The for the look and the statements in this presentation are based on the information available to us as the data. You should not rely on them as prediction of future events. And we disclaim any obligation to update any for the look and statements, except as required by law. In addition management, you referenced known financial measures on this call. These measures are not intended to be considered in isolation or a substitute of the results prepared in accordance with IFRS. This presentation has reconciled these non-IFRS financial measures to the most directly comparable IFRS financial measures. Now, let me turn the call over to Virgilio Gibon, AFIA's CEO.

Thank you, João, and welcome to our first conference call of 2025. It is with much satisfaction that AFIA starts another year of great operational and financial performance. These quarterly results show the high predictability of our business and successful execution of our strategy that once again combines strong growth with higher profitability and cash generation, AFIA's three pillars business model. This quarter was marked by gross margin expansion within our undergrad and continuing education segments, combined with solid cash generation and robust EPS growth, showing our consistent business expansion. In this presentation, I will cover key strategic topics, including our performance and highlights, the success of business execution across our three segments, and finally, Luis Blanco will provide an in-depth look at our financial and operational performance. Now turning to page number three. Let's begin by highlighting our performance achievements. Initially, our net revenue increased by 16%, reaching R$ 936 million, accompanied by a growth in adjusted EBITDA of almost 24% year-over-year, reaching R$ 492 million, with a record margin of 52.5%. We also reported a strong cash flow from operating activities again, of R$ 470 million, reflecting almost 10% increase compared to the previous year, boosted by the solid operational results of the company with a cash conversion rate of 96.8% and solid cash position of almost R$ 1.2 billion at the end of the first quarter. With consistent momentum, our net income reached R$ 257 million, making over 23% growth year-over-year with an EPS of R$ 2.79, a remarkable 23% increase compared to the previous year. This underscores our discipline, capital allocation, and an efficient capital structure. Moving to our operational updates. We have 3,593 approved seats, but with the closing of the Funic Acquisition, which will contribute with additional 60 seats, our total number of approved medical seats will increase to 3,653 seats. Additionally, our number of undergrad medical students has reached almost 26,000 students, representing almost 50% growth compared to the first quarter of 2024. Furthermore, we increased the net average ticket of medical school by almost 4% year-over-year, reaching R$ 9,240. In addition, we continue to observe improving performance in the continuing education and medical practice solution segments. In continuing education, net revenue increased almost 90% year-over-year, pure organically, reaching R$ 71 million. In medical practice solution, we saw 14% growth in net revenue compared to the first quarter of 2024, reaching almost R$ 42 million. Lastly, our ecosystem has 317,000 active users, exemplifying substantial penetration among physicians and medical students in Brazil. Moving to slide number four, we will discuss our performance across our three business segments. Starting with the undergrad segment, we observed important movements throughout the quarter, such as higher tickets in the medicine course, with almost 4% increase over a year. This growth was accompanied by a gross margin expansion, driven by the consolidation of UNIDON, acquired in July 2024, and the continuous ramp-up of our four mais magical campuses, launched in the third quarter of 2022. It's 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 continued education segment was marked by an increase in graduate journey students, in addition to a gross margin expansion driven by our ongoing operational restructuring, which continues to contribute to improve cost management, cross-selling, general and administrative expenses. In medical press solution segment, Growth is being driven by the ramp-up of B2B contracts and the continued expansion of active payers as well as B2B engagements and the addition of new contracts with pharmaceuticals and industry partners. Before moving to the next slide, I'm proud to share that in April, we received two significant recognitions. Moody's Agency in Brazil upgraded our national scale credit rating from AAplus.br to AAA.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 the IFC defined targets for 2024, including the number of free medical consultations provided and the percentage of medical costs rated with the highest quality scores. Meeting these targets will trigger a 15 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 from MSCI, debuting with a solid BBB score. MSCI's sector-relative methodology underscores that we outperformed a significant portion of its peers. particularly in areas like data privacy and security, where our practices were 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 ENAGE and CPC results released by INEP showcase outstanding academic performance across AFIA's medical schools. These results reinforce our ongoing commitment to academic excellence, innovative teaching, and the development of highly qualified professionals. Among the results, we are proud to celebrate our achievements and congratulate our institutions that performed above expectations, which continues to strengthen AFIA's position as a leader in medical education in Brazil. And now, I will turn the call over to Luis Blanco, AFIA's CFO, to provide further insights into the financial and operational metrics. Thank you.

Thank you, Virgílio, and good evening, everyone. Starting with slide number seven for discussions of key operational metrics by business units. Starting with the undergrad programs, our number of medical students grew 15% over the first quarter of 2024, reaching almost 26,000 students, and approved medical seats increased 12% yearly to 3,593. Our medical school net average ticket increased by 4%, reaching R$ 9,240 in the first quarter of 2025. In addition, net revenues for the undergrad segments saw over 17% increase, achieving R$ 827 million. 86% of which are related to medicine, and 94% from health-related courses. On the next page, I will present our continuing educational metrics. We approach continuing education through three main journeys, starting with the residency journey, which encompasses products focused on residence preparation. We saw a 70% decrease reaching 12,203 students by the end of the period. In the graduate journeys focused on the specializations test preparations and graduate courses in medicine, students grew by 16%, reaching 8,542 students. Lastly, our other courses and B2B offerings decreased by 3% over the same three-month period of the prior year. Continuing education net revenue rose to R$ 71 million in the three-month period of 2025, up from the R$ 65 million in the three-month period of 2024, reflecting growth of almost 9%. This includes an 8% increase in B2B revenue and 16% increase in B2B. Moving to slide number nine, I'll discuss the medical practice solutions operational metrics. The first graph shows our total active payers, which are the ones that generate revenues in the business to physicians, B2B. Following the stat growth trends, the number of paying users increased to over 198,000, a 4% increase over the same quarter last year. The second graph highlights our monthly active users, which account for 245,000, slightly lower than the 263,000 record last year. This reduction still reflects the transition from the PapMed portal to the Amphia portal. Lastly, in our final graph, we present the net revenue of our medical practice solution segments. which has expanded by 14% compared to the same quarter of the last year, reaching R$42 million. Of this total, R$37 million was generated by B2B, showing an increase of 14%, while B2B contributed to R$4 million, a 16% increase over the same quarter last year. In the next slide, we present our AFIA ecosystem. We are pleased to highlight AFIA's substantial contributions to the Brazilian healthcare community. By the end of the first quarter of 2025, our ecosystem encompassed over 370,000 physicians and medical students using our service and products. Moving forward to page 11, I want to discuss our financial overview for the first quarter of 2025, starting with the next slide. With great satisfaction, I present another strong quarterly performance for AFIA. Net revenue for the first quarter of 2025 reached R$ 936 million, representing a 16% increase compared to the same quarter last year. The yearly revenue increase was mainly due to higher tickets in medicine courses, the maturations of medical school seats, the consolidations of UNIDOL, and advancements of medical practice solutions and continuing educational segments. In the first quarter of 2025, adjusted EBITDA rose by 24%, reaching R$ 492 million, with an adjusted EBITDA margin of 52.5%, a gain of 300 base points compared to the first quarter of 2024. The expansion in adjusted EBITDA margin is largely attributed to a strong performance of the undergrad segment, the gross margin expansions in the undergrad and continuing educational segments, the ramp-up of the four Miles Medical campuses that started operations in the third quarter of 2022, The operational restructuring efforts in continual educational and medical practice solutions segments. The centralizations of academic process and the expansions of service provided by our shared service center. And also, more efficiency in selling general and administrative expenses. Moving to the next slide. The first quarter cash flow from operating activities rose by almost 10%. reaching 470 million reais, reflecting a strong operational performance. Operating cash flow conversion ratio was 96.8%. Net income for the first quarter of 2025, totally 257 million reais, representing a 23% increase from the same period in 2024. Adjusted net income was R$ 294 million, a 17% increase. This net income reflects not only our strong operational performance, but also the impact of the new tax legislations implementing the OECD Pillar 2 rules. which introduce an additional social contributions to ensure a minimal effective tax rates for multinational groups. This result in an increase of 23 million reais in our income tax expenses for the period ended in March, 2025. Despite this effect, NET's income grew robustly, underscoring the resilience and efficiency of our business model. Regarding EPS, we achieved R$ 2.79 per share in the three-month period, representing a 23% increase year-over-year. And now, moving to my last two slides, I will discuss our cash and net debt positions, also giving more color on our cost of debts. This slide presents a table detailing our gross debt compositions and total cost of debt covering our primarily obligations, the SoftBank transactions, the mentors, other financial liabilities, the IFC financials, and account payables to selling shareholders. AFIA's capital structure remains solid with conservative leverage positions and the low cost of debt. AFIA net debt excluding IFRS 16 divided by the midpoint of the 2025 adjusted EBITDA was 0.9 times. On the next page, we can look closely at our net debt variation. As of the first quarter of 2025, our net debt had reduced to R$ 1,524 million. when compared to the end of 2024, a reduction of R$ 291 million, reflecting our strong operational performance and capital allocations discipline. This concludes our prepared remarks. We are proud of our accomplishments and robust performance across all areas. Our commitment to advancing the medical journey through an integrated educational systems and medical practice solutions remains strong, supporting students in becoming physicians, promoting continuous medical learnings, and enhancing physicians' accuracy and productivity. As we look ahead, we are enthusiastic about the opportunity that lies before us. I will now open the conference for the Q&A session. Thank you.