Afya Limited

with AFIA's CEO, Vigido Gibon, 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. Further 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 Securities and Exchange Commission. The forward-looking statements in this presentation are based on the information available to us at the date hereof. You 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, Manager May references non-IFIS 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, AFS CEO.

Thank you, João, and welcome to our second quarter and first half conference call for 2025 results. Starting with the slide number three, we are pleased to report that AFIA continues to deliver strong operational and financial results. This performance highlights the high predictability of our business model and the successful execution of our strategy, which consistently combines robust growth, increased profitability, and solid cash generation. AFIA's three strategic pillars for long-term value creation. This quarter, once again, was marked by significant revenue growth and gross margin expansion in both our undergrad and continued education segments, reflecting the steady expansion of our business and our ongoing commitment to operational excellence. We are also pleased to reaffirm that AFIA remains on track to meet our full-year 2025 guidance, supported by disciplined execution and strong business fundamentals. Once again, we delivered strong performance closing the first half of 2025 with a notable growth of 15% in revenues, reaching R$1,856,000,000. Adjusted BIDA reached R$893,000,000, expanding 20% year-over-year with an impressive margin of 48.1%, an increase of 220 BIPs over last year. This margin expansion was primarily driven by the solid results of our undergrad and continued education segments, supported by cost initiatives and our shared service center, helping to boost efficiency and unlock operational synergy across selling, general, and administrative expenses. In addition, supported by the increase in adjusted EBITDA, our basic EPS climbed to 4.69 reais, representing a 17% increase over the previous year. Even after accounting for the effects of the new tax legislation aligned with the OECD Pillar 2 rules, we continue to deliver a higher value to our shareholders. Moving to our operational updates, we have 3,653 approved seats with the closing of Funic Acquisition, which contributed an additional 60 seats to our portfolio. Furthermore, our number of undergrad medical students has reached almost 26,000 students, representing nearly 14% growth compared to the first half of 2024. In addition, the medical school net average ticket, excluding the UNI-DOM acquisition, reached R$9,140, over 3% increase year-over-year. In continued education, Revenue increased almost 8% over last year, reaching 138 million reais, and in medical practice solutions, we saw over 9% growth in revenues compared to the first half of last year, reaching 84 million reais. Lastly, our ecosystem reached 302,000 active users, reflecting strong engagement and deep penetration among physicians and medical students across Brazil. Moving to slide number four, we will discuss the highlights across our three business sectors. Starting with the undergraduate segment, medicine courses continue to show strong performance with a student-based increase of 14%. This growth, in addition to integration of Unidom and the ramp-up of four Mais Médicos campuses, launched in the third quarter of 2022, contributed to a gross margin expansion for the segment. Additionally, as already mentioned, we completed the acquisition of Funic, which added 60 new medical seats to our portfolio. With operations starting the second semester of 2025, further strengthening our academic capacity and presence. 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 improving costs. In medical practice solution segment, growth was driven by clinical management payers, an increase of 10% year over year. B2B, business to physician revenues, for the first semester also saw a growth of almost 12%, compared to the same period of the prior year. On the next slide, I'd like to share AFIA's new Share Repurchase Program approved by the Board of Directors. We plan to repurchase up to 4 million Class A chairs by December 31st, 2026 through open market transactions or private negotiated yields. This initiative reflects our strong commitment of creating shareholder value and ensuring sustainable business performance. It also reaffirms the strength and the robustness of our balance sheet, while reflecting our discipline and forward-looking capital allocation strategy aligned with the current economic and political landscape. And now I will turn the call over to Luis Blanco, as the CFO, to provide further insight into the financial and operational 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 undergraduate programs. The number of medical students grew almost 14% year-over-year, reaching nearly 26,000 students, while the number of approved medical seats increased 14%, totaling 3,653 seats, considering the FUNIC acquisition. Our medical school net average tickets, excluding the only door positions, rose by over 3%, reaching R$9,140 in the end of the first semester. As a result, revenue for the undergraduate segment grew over 16%, totaling R$1,642 million. It's worth mentioning that 86% of this revenue comes from the medicine products and 94% from health-related courses, reinforcing our strategic focus and leadership in the sector. On the next page, I'll present our continuing educational metrics. We approach continuing education through three main journeys, starting with the graduate journey, the most relevant within continuing education. It presented a 12% growth, reaching 9,055 students. And other courses and B2B offerings also saw a solid growth of 90% compared to the same period of last year. The residency journey, which includes projects focused on the magical residency preparation, ended the quarter with 9,224 students. a 29% decrease year-over-year. Revenue for continuing educational rose to R$138 million, up from R$128 million in the first semester of 2024, representing an 8% growth. This includes a 5% increase in B2B revenue and an impressive 42% increase in B2B. On the next slide, I'll discuss the medical practice solutions operational metrics. The first graph shows our total active payers, which generate revenues in business to physician. This semester, we maintained a solid of 196,000 paying users, in line with the same period of the prior year. The second chart highlights our monthly active users, which account for 230,000, a reduction of 9% in comparison to the same period of the prior year. Finally, the third chart presents the revenue for the segment, which grew over 9% year-over-year, reaching 84 million reais. Of these, 75 million reais come from B2B, up 12%, and 9 million from B2B, 8% down compared to the same periods of the prior year. On the next slide, we present AFIA ecosystem. We are proud of the meaningful impact of AFIA continues to make across Brazil healthcare ecosystem. By the end of the second quarter of 2025, 302,000 users were actively engaging with our service and products, reflecting our solid relevance and reach in medical educational and medical solutions. Moving forward to page 11, I want to discuss our financial overview for the second quarter and the first half of 2025, starting with the next slide. With great satisfaction, I present another strong quarterly performance for ASEAN. Revenue for the second quarter of 2025 reached 919 million reais. reflecting a 14% increase over the same quarter of the prior year. And for the six-month period, revenue was R$ 1,856 million, an increase of 15% over the same period of last year. This growth is mainly driven by a 3.2% increase in the net average ticket for medical courses, maturations of medical seats, and acquisitions of unidoms. In the second quarter of 2025, adjusted EBITDA increased 17% to 401 million reais, with an adjusted EBITDA margin of 43.6%, marking an increase of 110 base points compared to the second quarter of 2024. For the six-month period, adjusted EBITDA was 893 million reais, an increase over 20% in comparison to the same period of the prior year. with adjusted EBITDA margins of 48.1%, an increase of 220 base points in the same period. The adjusted EBITDA margin expansion is mainly due to gross margin expansions within undergraduate and continuing educational segments. Completion of unidom integration. the hump-up of the four-month medical campus that stopped operations in the third quarter of 2022, operation-restricted efforts in our continuing education and medical practice solution segments, and more efficiency in selling general and administrative expenses. On the next page, cash flow from operating activities grew 15%, totaling R$783 million, driven by our robust operational performance. The operational cash conversions ratio was 88.8% in the second half of 2025. Net income for the second quarter of 2025 amounted to R$177 million, a 9% increase for the same period of 2024. For the six-month period that ended in June 2025, we saw an increase in net income reaching R$434 million, representing an increase of 70% year-over-year. Our net income this quarter reflects not only our strong operational performance, but also the impact of the new tax legislation implementing to the OECD Peter 2 growth. Our basic EPS reached R$0.90, for the quarter, an 8% increase compared to the previous years, and R$4.69 per share in the first six months period, a growth of 17%. And now, moving to my two last slides, we'll discuss our cash and net debt positions, often given more power on our cost of tax. This slide presents a table detailing our gross debt compositions and total cost of debt, covering our primary obligations, the soft bank transactions, the debentures, other financial liabilities, the IFC financing, and account tables to selling shareholders. Asia capital structure remains solid, with a conservative leverage position and the low cost of debt. ASEAN net debt excluding IFRS 16 divided to the midpoint of the 2025 adjusted EBITDA was only 0.97 times. On the next page, we can look closely at our net debt variation. As of the second quarter of 2025, our net debt has reduced to $1,600. and R$ 21 million when compared to the end of 2024, a reduction of R$ 194 million, even considering the payment of dividends and acquisitions of UNIC, reflecting our strong operational performance and capital allocation discipline. This concludes our prepared remarks. We are proud of our strong performance with DeliverThis quarter. Our focus on improving the medical journey through an integrated educational system and medical practice solutions remain strong, helping students to become doctors, supporting ongoing medical learning, and making physicians more accurate and efficient. Looking ahead, we are excited about the opportunities in front of us and confident in our ability to keep creating value in the entire ecosystem. I will now open the conference for the Q&A session.

Thank you.

If you'd like to ask a question, please raise your hand, and I will begin the Q&A session. Our first question comes from Luca from Italo BBR. Luca, please go ahead.

Good evening, everyone, and thank you for taking our question. Our question regards the main leverages here for profitability expansion in the quarter. So you mentioned that one of the levers was improved efficiency in sgna expenses if you could provide just more color on uh which of the segments uh these efficiencies are focused on and then going forward if you expect any further dilution in sgna expenses that would be very helpful thank you thank you luca bluntly speaking i will take your first questions uh we always chase the higher efficiency performance by our

our shared service. So during this period, we had some additional centralizations regarding some service that was still on the undergraduate units. We centralized this in our shared service. On top of that, remember that last year, on the continuing educational segment and the practical management, medical solution segments. We made huge transformations beginning on the first quarter, centralizing all the teams from different products, from different units in a single team. So all of that help us to have the expectations that we presented in our margins during 2024. And these initiatives are keeping providing results during this year. So it's a little bit what we are doing and we are keep doing capturing all the synergies that we can within the three segments. Hi, Lucas. Just to add here some points. Just remembering that, well, remember that we launched Formas Metricus Campus two years and a half ago, and they are still maturing, so it's leveraging, operational leverage, and we have a very efficient G&A cooperative structure. So as the top line goes up, you have all the synergies being captured to the bottom line. Also, Unidon. Unidon is still maturing. It's a huge operation in Salvador. So it's improving the gross margin from the campus size and also helping to leverage and push our bottom line EBITDA margin. And it's worth to mention here that, well, this first half, It's an all-time high first half EBITDA margin since we began public trading in 2019. So we are talking about efficiency. So that's the beautiful, all the models that we designed in the past, and now we have the full maturation of most of our campuses, our operation, and also, as Blanco mentioned, also capturing value and leverage from continued education and digital services.

Very clear, Blanco and Virgilio. Thank you.

Thank you, Luca. The next question will come from Flavio from Bank of America. Flavio, you may go ahead, please.

Hi. Good evening, Virgilio and Blanco. Thank you for the opportunity to ask questions. I have two on my side. The first one is on the guidance, more specifically on the EBITDA guidance and taking into consideration what you just mentioned about some more efficiency and more leverage. So, if we annualize the first half EBITDA, we reach to roughly 1.8 billion reais, right, for the year, which is slightly above the top of the guidance range. So, given that there wasn't any guidance revision here, should we expect the EBITDA for the second half to be slightly below the first half, or you guys just prefer to be a little bit more conservative here? And then my second question is on tax rates. So if we consider not only the second quarter, but also the first half figures, we see an effective tax rate close to 9%, which is below the 15% tax rate proposed under the global minimum tax of the OECD. So it'll be great if you guys could share some more color on what should we expect for the second half of this year. related to the tax rate here. Thanks.

Okay, Flavio, thank you for your question. I will take the first one and Blanco will help me with the tax rate. So, regarding the guidance, we prefer to keep on the conservative side here, mostly because we have like a seasonality on continuing education. The warm-up of the new cohort of the new season, it's after September, so we are in the very beginning here. So, we still have some uncertainty ahead, even considering that we have a successful intake on the undergrads segment, that's the most important business. So, our side here, we are confident with our guidance, and we prefer to keep the same range as we released in the first semester. And Flavio, regarding the tax rates, you are completely right. The minimal tax rate is 15%, but on the first quarter and here in the second quarter, we could recognize two tax deferred assets in our balance sheet. And with these recognitions, we could reduce the effective tax rates in this semester. But Karina has, we don't, the impact of the Pillar 2 is 15 in the long run. There is adoption effect that is growing, but at the end of the day, keeping each, the effective tax rates change to converge to 15%.

All right. That's very clear. Thank you.

Thank you, Flavio. Our next question will come from Marcelo Santos from JP Morgan. Marcelo, you may go ahead, please.

Hi. Good evening. Virgílio Blanco of the AFIA team. Thanks for the opportunity. My two questions are about the medical business. The first is, could you please comment a bit on the competitive outlook for the second half intake? How did that go? How did you see competition, whatever you could add there? And the second question would be a bit about medical tickets. So could you discuss a bit? I mean, it grew 3.3%, if I'm not mistaken, and it's a bit below inflation. What are the effects that drive this, maybe mix, maybe ramp up? So just want to hear from you guys. Thank you.

I'm sorry, so we were on mute here, so just repeating here what was mentioned, Marcelo. So regarding the medical competitions, as everybody know here, we had a lot of new approvals on medical seats and all institutions during the first half, and then we didn't have a new cohort of new or fresh students coming from the high schools for the competition. on the second half to fulfill the seats was higher. We reduced the candidate ratio from seven last year to around five this year. But we have a good trend on enrollment. We are ready to start our classes. So it's something that we keep our 100% of occupancy. For that, we just launched our first half to 2026 intake. for next year is very beginning. We are very confident on that because now we don't have so much new seats coming as unexpected, but we have a new and fresh cohort of students coming, graduating from the high school. So the candidate ratio was reduced from seven to five. It was a little bit more competition in some of the cities that we operate. About medical tickets, although we passed our gross tuition a little bit above inflation, as we are having more discount coming from FIES, the net effect was a little bit below inflation, but we continue to pass around inflation, our strategy moving ahead. So the main effect here was the 27% discount coming from FIES. Depending on the campuses, we have around 10% to 15% of our student base enrolled on medical programs on that campus level.

Perfect. Just following up on this, I mean, regarding the bit more competitive second half, did this entail discounts or you were able to through your normal pricing policy despite this bit more intense competition.

Zero discount. The same, the same policy.

Thank you very much.

Okay. Thank you, Marcelo. The next question will come from Samuel from .

Hi, Virgilio Blanco. Good evening, everyone. Just one question on our end about this new taxation. that you guys were commenting before. Imagine the company seeking to challenge the tax charge here through legal or like administrative means. My question is if you guys could like elaborate on that opportunity, if you guys feel like a more likelihood or a more likely scenario through administrative efforts or through legal process. Thank you.

Hi, Samuel. Blackwood speaking. I'll take this question. It's very good to have this question to make clear for you guys how we see this. We have two fronts that we are working right now regarding the new taxations. define it in the justice level. We enter a protection, asking for protections regarding these new taxations, questioning some points about how it was defined and implemented. We don't have any concrete outcome from this questioning for this challenging yet. but we are questioning on the justice level. And in parallel of that, we are presenting to the executive and the lower house representatives that these taxations, at the end of the day, how it was implemented, takes all the benefits from the program. At the end of the day, as ProUni is not qualified as a qualified credit under this pillar, all the effects of the ProUni is withdraw from the pillar calculations. And because of major because of it, we have these higher taxation. So we are showing that that problem is being directly affected. We have more than 10,000 students in medicine, other health, and other courses being supported by ProUni, and we don't want to reveal it, our policy regarding ProUni. We want to keep it because a very important problem for the population itself. And with these Pillar 2 taxations, these make pro-unit risk for the company that are affected by Pillar 2. So we have these two fronts. It's very hard right now to define a probability regarding which one become take these two success, but we are working these two fronts.

Thank you, Blanco.

Thank you, Samuel. Our next question will come from Mauricio Cepeda from Morgan Stanley. Please go ahead.

Hi, Vigilio Blanco. Thanks for the opportunity. We have two questions. The first one about the M&A environment. Are we seeing that because we have seen some transactions that are being performed in Brazil by your competitors that seem to be cheaper than what we saw in the past. So are you seeing the sellers being pressured somehow? Can you take advantage of this new environment? And how did this wave that you did of, or how this wave of new seeds has changed the environment during the diligence process? And the second question is about a little bit this buyback program. We understand that 4 million shares is a significant portion of your free-for-all and several times your daily traded volume. So how are you considering this trade-off between the return to shareholder versus the stock liquidity? Thanks.

Thank you, Cepeda. I'll take the questions, and Vigi, please jump in if you want. Regarding the M&A environments, we always chasing the right opportunity, the right profile, and the right price. Good brand, good reputations, and good location, good municipality. are becoming even more relevant for defining the price from the transactions. So with these new entities coming to the markets with all these judicializations crop, I would say that comes to the markets. Of course, we have offers and we stake together with good locations, with good reputations that we can take apart and get the right pricing for it. So location, reputation is very, very important in this scenario. Regarding the buyback itself, as you mentioned, that's relevant. It's something about 4% of our our numbers of shares and have an impact in terms of liquidity, but we see that as an opportunity in capital allocation. In all the shareholder remunerations we discussed in the last past month, we decided that the combination between dividends And buybacks would make sense to return to shareholders, to increase the shareholders' remunerations. So with the buyback, we can take opportunity about the price. So we can take a price-to-action strategy on that. And for the shareholders for the long term, we increase EPS. in a very constant manner. Of course, we are going to follow up liquidity to see if it's a pressure. In the short term, when we implemented the buyback itself, it could increase the trading volume. But in the long run, we'll increase value for our shareholders because we are increasing the EPS.

Thank you.

Thank you. Just a quick reminder, if you'd like to ask questions, please raise your hand. Our next question will come from from Citibank.

Hi, guys. Thank you for the space. Just a very quick question here. I think the colleagues, over on my points but uh it caught my attention that the residence journey uh dropped significantly year over year and i just want to know if there is a like any meaningful trend on the market or this is just a a puntuality on this quarter and lastly you you guys comments on the release about the ena match exams so just wanted to hear your thoughts regarding this this new exams i mean Is there any additional capex that you envisage to put out here to benefit from this new standards? Or, I don't know, just want to hear your thoughts on this new exam. Thank you.

Okay, Renan, this is Gilio here. So regarding the residence journey, we had a very low cycle on end of 2024 that reduced a lot the intake over 2023. So as the highest seasonality is on the end of third and fourth quarter, So we are just in the beginning. So we changed a lot our approach and our product on end of the first half. In July and August, we are seeing a very good trend, but it's a very small intake when compared to the entire year. So we'll have an increase of all volume coming on September. So it's too soon. I think the main point here is that we have seen that, well, residency is a very high competitive landscape. In 2024, we didn't have a successful intake. Since then, we are reducing the overall revenues. But on the other side, the NMS, as you mentioned, I think it's very important. opportunity on continuing education besides the graduate business that is continuing to grow and pushing our revenues as the most important product on continuing education. But in AMET, the capex required is marginal because we have all of the assets in place as also we can leverage what we are using on residence prep and all the learning objectives that we already have on our learning and our curriculum here in África. So it's marginal, it's just a good opportunity, not only on B2C, but also on B2B, leverage the relationship that we had with some institutions, not only for Enag, but also now for Enameg, okay?

Great. Thank you.

Thank you, Renan. As there are no further questions at this time, I would like to thank everyone for joining us today. On behalf of the Investor Relations team, we remain available for any follow-up questions. We look forward to talking with you again during our next conference call. Thank you.