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. Forward-looking 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 forward-looking statements in this presentation are based on the information available to us as the day tear off. We should not rely on them as prediction of future events, and we disclaim any obligation to update any forward-looking statements except as required by law. In addition, management may reference non-IFRS 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, AFI's CEO.

Thank you, João, and welcome to our first conference call of 2025. It is much satisfaction that AFI starts another year of great operational and financial performance. This 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, AFI'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 operational performance. Now turning to page number three. Let's begin by highlighting our performance achievements. Initially, our net revenue increased by 16%, reaching 936 million reais, accompanied by a growth in adjusted bidda of almost 24% the over year, reaching 492 million reais for record margin of 52.5%. We also reported a strong cash flow from operating activities again of 470 million reais, reflecting almost 10% increase compared to the previous year boosted by the solid operational results of the company with a cash conversion rate of .8% and solid cash position of almost 1.2 billion reais at the end of the first quarter. With consistent momentum, our net income reached 257 million reais, making over 23% growth year over year with an EPS of 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 to 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, which 9,240 has. 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 71 million reais. In medical practice solution, we saw 14% growth in net revenue compared to the first quarter of 2024, reaching almost 42 million reais. Lastly, our ecosystem has 317,000 active users exemplify substantial penetration among physician 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 gross margin expansion, driven by the consolidation of UNIDO, acquired in July, 2024, and the continuous ramp up of our four mathematical campuses launched in the third quarter of 2022. It's also important to note that we concluded the FUNIC acquisition, which will enhance our operation of six additional medical seats for the next semester. The continuing 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 B2P 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 agents in Brazil upgraded our national scale credit rating from AA plus.bio. 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-bips 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 for MSCI, debuting with a solid triple B score. MSCI's sector relative methodology underscored that we outperformed significant portion of its peers, particularly in areas like the 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 ENAP showcase outstanding academic performance across AFIAS 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 performs above expectation, which continues to strengthen AFIAS position as a leader in medical education in Brazil. And now I will turn the call over to Luis Blanco, AFIAS CFO to provide further insights into the financial operation metrics. Thank you.

Thank you, Virgilio, and good evening, everyone. Starting with slide number seven for discussions of key operational metrics by business units. Starting with the underbred 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 9,240 reais in the first quarter of 2025. In addition, net revenues for the undergrad segments saw over 17% increase, achieving 827 million reais, 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 encompass products focus on residence preparation. We saw a 70% decrease, reaching 12,203 students by the end of the period. In the graduate journeys, focus on the specializations, test preparations and graduate courses in medicine, students grew by 16% reaching 8,542 students. Lastly, our other course in B2B offerings decreased by 3% over the same three month period of the prior year. Continuing education net revenue rose to 71 million reais in the three month period of 2025, up from the 65 million reais in the three month period of 2024, reflecting growth 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 of radio operational metrics. The first graph shows our total active payers, which are the ones that generate revenues in the business to physicians B2B. Following a steady 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 accounts for 245,000, slightly lower than the 263,000 record last year. This reduction still reflects the transition from the PEP Med portal to the Avia 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 42 million reais. Of this total, 37 million reais was generated by B2P, showing an increase of 14%, while B2B contributed to 4 million reais, a 16% increase over the same quarter last year. In the next slide, we present our Avia ecosystem. We're pleased to highlight Avia'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 Avia. Net revenue for the first quarter of 2025 reaches 936 million reais, 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 maturation of medical school seats, the consolidations of UNIDO, and advancements of medical practice solutions and continuing educational segments. In the first quarter of 2025, adjusted EBITDA rose by 24%, reaching 492 million reais, with an adjusted EBITDA margin of 52.5%, a gain of 300 base points compared to the first quarter 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 hump-up of the four most medical campuses that started operations in the third quarter 2022, the operational restructuring efforts in continuing educational and medical practice solutions segments, the centralizations of academic processes and the expansions of services provided by our Shared Services 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 294 million reais, a 17% increase. This net income reflect not only our strong operational performance, but also the impact of the new tax legislations implementing the OECD Pillar 2 rules, which introduced 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 income grew robustly, underscoring the resilience and efficiency of our business model. Regarding EPS, we achieved 2.79 reais per share in the three-month period, representing a 23% increase -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 the account payables to selling shareholders. AFI's capital structure remains solid with a conservative leverage positions and a low cost of debt. AFI net stats, excluding IFRS 16, divided by the midpoint of the 2025 adjusted EBITDA, was 0.9 times. On the next page, we can look at it closely at our net debt variation. As of the first quarter of 2025, our net debt had reduced to 1,524 million reais when compared to the end of 2024, a reduction of 291 million reais, 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 system 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 opportunities that lie before us. I will now open the conference for the Q&A session. Thank you.

If you want to ask a question, please raise your hand. We're going to start the Q&A session with Flavio Oshira from Bank of America. Flavio, you may go ahead, please.

Hi, good evening, everyone. So I have two questions on my side. The first one is on the EBITDA margin. So we noticed a very strong print on the quarter. So I would like you to share some details on what drove this performance. Was it related to the ramp-up of new units, to greater efficiency, or maybe contribution for other businesses? And also, given the strong print on the quarter, if you see room for an upward revision on the guidance for this year. And then my second question is on the intake process. So are you guys seeing a greater challenge on the intake process, given the seats offering expansion from medical courses over the past year? Are you guys feeling that it's getting hard to fill all the seats? If you could comment on the intake process, we would like a lot. Thank you.

Hi, Flavio. Thank you for your question. It's Blanco speaking. I will take the first one, and Dijiro will get the second one regarding the intake. So regarding the margin expansions that we had compared to the same period of the prior year, the main drive-ins was the higher gross margins that we got from the margin expansions that we got from the undergrad and the continuing education segments. The continuing ramp-up of the four MICE medical campuses that we've launched in the third quarter of 2022. The continuing initiatives that we got with higher efficiency coming from the continuing education segments and medical practice solutions. Remember that we've made huge transformations in the first quarter of 2034, moving some functionalities between the segments and restructuring these segments internally. And we've got a lot of efficiencies on these movements. So it's like the full year of these changes. And the improved cost and efficiency in SG&A still that we got from the applications of the zero budget project that we've started in 2023. And on top of that, we came with Unidom Pedro, where we got almost 100% occupancy with that and with a very, very smooth acquisitions that we'll make that on this month of May, we're going to put Unidom Pedro in our short service. So we are very happy with these results that we achieved in the first quarter. Regarding the year, we have a view that we have a very strong start of the year, but we keep our guidance that we provided in March for the year. We are ahead in terms of margins, but right now we keep the guidance that we provide, both in terms of revenues and the budget for the year. If we had a second semester intake, we might review it, but right now we keep our review for the year. Thank you, Blanco.

So just to add in on that, a very strong start for 2025, Flavio. And just remembering, we just closed yesterday six additional seats in Contagio and City, close to Belo Horizonte, where we are right now, and any update that we may have or not on our guidance for 2025, that would only happen after the second semester intake. So also depending on all the process to be completed. And regarding the intake process that we had on the first semester, it was a very healthy intake process. Around seven to eight candidates brought every seat that we have in Brazil. We saw a very strong recognition of our brand, the brand project that was kicked off in 2023. I think it's paying out, and I think this is good news for all campuses that are using now Afia's brand around the country. So not only on the medical intake was a health process, but if you may see on the table two, we have a very strong intake and renewal for also health and non-health programs that also happen to grow organically all the student base in 2025. This is ahead of our expectation. We have a very strong intake and a better renewal rate that was a result of a very good renewal process that we started back in November last year, making a very strong student base for 2025. So that's it. All right. Thank you.

Thank you, Flavio. The next question comes from Luca Marchesini from Itaú.

Hi. Good evening, everyone. Taking our questions, a couple of questions from our side. The first one would be regarding the undergrad medical school average ticket. It grew 4% -over-year, which is pretty much in line with inflation. So my question would be whether the company has seen any significant change in the competitive landscape that maybe brought some challenges in implementing price hikes. So that's the first question. And then the second question would be regarding the medical practice solution segment. We saw a decrease in the number of monthly active users. So we were just wondering if there was a change also in the competitive landscape in what is the expectation for the rest of the year for this segment. Thank you.

Luca, thank you. So the undergrad ticket, it's around 4%. We expect a little bit higher than that. But we have an impact on the increase of FIES percentage that started impacting our campuses last year. So last year we had around 10 campuses that was impacted by the .5% retention on the FIES. And that has impacted a little bit the increase that we had on our tuition, on our average tuition. So moving ahead, the price that we passed was a little bit above that. So as soon as we have same stores comparison with institutions that had this impact, I think that it can be even a little bit further than that for the next quarter, but close to 4% to 5%. We are not expecting any difficulty here to change close to inflation to our campuses. So it's just more than the same what we are doing every semester, every year, when we start the intake process for the following year. Based on the active users, Blanco will add something here. Hi Luca, thank

you for your questions regarding the monthly active users on the medical practice solutions. We still see a kind of pushback in the movements that we changed the PEP Med portal to the AFIA portal. And as you remember, when we make these changes, we put a lot of this content that's related to the content of the portal regarding with a log-in information. So these kind of movements, we had some pushbacks on the monthly active users using our website. But as these keep going, we see this pushback being smaller. So the changes, if I'm not wrong, happening in April last year. So that most part of these changes has already happened. There is no changes on the kind of profile of ASSEC that we are seeing right now.

And Luca, just to add a point here, just the rational behind it. We changed the portal back in April 2024. And the reason of that, that we decided to be more strict to have the user sign our portal here. So it's more difficult to have the active user. We are getting more information. The reason of that is that we have more information, we have more behavior, and also can leverage the relationship with the industry, with the B2B contracts, having more details, more data about these users that is logging into our ecosystem. On the other side, the payers keep improving in a healthy way. That was a decision that we took to be more restrictive. But it's running as expected.

Thank you, Virgilio Blanco. That was very clear.

Thank you, Luca. The next question comes from Mauricio Cepeda from Morgan Stanley.

Hi, Virgilio Blanco. Thank you for the opportunity to hear. I have two questions. One, if you could clarify all this kind of minimum tax according to the pillar two of OCDE. A little bit on why were you classified as a multinational company? What are your perspectives in terms of, let's say, this kind of tax behaving? I understand that you were provisioning, not necessarily paying, if I understood correctly, from the tax. What are your expectations here? And the second about the soft bank convertible debt, right? Do we have this, we are getting closer to the deadline? And how are you preparing in terms of cash if that is not converted into equity? Thank you.

Hi, Cepeda. It's Blanco speaking. I'll take the two questions here. Regarding the pillar two, it was a law that was enacted in December 27 and being effective in January 2025. This law aligns the Brazilian tax list with the OCDE globe rules and introduce a minimal taxation. It's a complex calculations, very, very different from the Brazilian calculations of Lucro Real that we are used to have here. So this was approved in the last minute of 2024 and effective for this quarter. This applies to multinational groups that have entities in the country. The multinational group has more than 750 million euros in the last years, in the last fiscal year. So in our understanding, we are under the perimeter of this law. So what we did, we make this provisioning. The payment of fees is due to July 2026. That's when we should pay it. And right now, we started at the end of March. We started to questioning to do our injections, going to justice to question these effects. The constitutionality and some points about this, because how it is implemented has some, is reducing the impacts of the problem. So it's a complex case. We had a conservative approach of provisioning that until we are discussing that in the justice. OK, so it's a provision. It's not a cash disbursement right now. Regarding the SoftBank transactions, we had this early redemption, the right of early redemption from SoftBank in May 2026. Right now, we don't have any official positions on that. But as we are getting closer, what we did in 2034, we started to provision the premium from this law that is due this premium if they exercise this early, early, early, early redemption. That we started to talk with SoftBank regarding their views on that. We don't have any official positions regarding regarding the extension or not of these operations. But what we did, we started to get in 2004, the provision of this this premium of five percent. But we are prepared with our cash for generations to to to pay to pay these instruments if it's required, if SoftBank exercise the early redemption on May 2026.

That's clear. Thank you, Blanco.

Thank you, Cepeda. As a reminder, if you want to ask a question, please raise your hand. Our next question comes from Marcela Santos from JP Morgan.

Hello. Good evening. Thanks for taking the questions. I have two as well. The first I want to touch on continued education. So we saw the revenue trends starting to improve, but still single digits. What could what could you provide an update on what's going on on the segment and what's the expectation for this year? And the second question is about the B2B business within medical practice solutions. I remember last year that there was kind of the revenue that was supposed to take place in the first quarter happened in the second. Looks like this year something like is this a seasonality? How is the B2B business going on the medical practice solutions? Thank you very much.

Hey, Marcelo. I've got the first one and Blanco helped me with the second one here. So on continued education, we had a very good intake process and also the end of year process coming from graduate. All the specialization, the long term and higher ticket. Brazil facing some competition on the residency and small programs of the lower ticket. So that was the combination. We accelerate our growth when you compare to the speed that we were on the third and the fourth quarter last year. A little bit higher, expecting to be even a little bit better for the following quarters. But yes, we are growing on graduates, the speed that we would like to grow, but still facing strong competition on residency prep programs. So that's the main reason why we are close to 10 percent on continued medical education this first quarter. And also, I think it could be something close to that for the rest of the year. Regarding the

B2B, Contras Blanco, would you like to? Yeah, thank you, Marcelo, for your questions. As you remember, we had some postponements of recognition of revenues in 2024, moving from the first to the second semester. That made at that time, if you compare 2024 with 2023, we had even a decrease on that. What happened, and you clearly see that in the B2B, that we had some kind of seasonality on how the pharmaceutical industry makes the contracts with the adversements products that we have. The fourth quarter, it's always more active in terms of contracts if you compare it to the first quarter. So you can see in the B2B side that the first quarter always will be a little bit below what we had to find in the fourth quarter. Just to see if we got the growth of 2024 as a whole of the year, the B2B contracts grew last year almost 30 percent in terms of revenues. Right now, we started with a lower, with 16, compared to a minor 6.2 in the same period of last year. So it's kind of a little bit of seasonalizing the pharmaceutical industry, but we are very confident regarding the B2B business, mostly supported by the pharmaceutical players.

Perfect. Thank you very much for the answers.

Thank you, Marcela. Since we don't have any further questions, I would like to thank your participation here today. We from the investor relations teams are available if you have any follow-up questions. See you again in our next conference call. Thank you.