Afya Limited

Thank you for joining us for AAPE School for School. I'm here today with AAPE CEO, Virginia Gibon, and our CFO, Luis André Blanc. 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 us as actual results to deform ultimately 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, its related benefits. These risks include those more fully described in our five links of the Securities and Exchange Commission. The forward-looking statements in this presentation are based on the information available to us as the date hereof. You should not rely on them as predictions of future events and we disclaim any obligation to update and forward look at the statements except as reported by law. In addition, management may reference no IFRS financial measures on this call. These measures are not intended to be considered in isolation or as 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 Virginia Gibon, FSU.

Thank you, Renata, and thanks, everyone, for joining us today for our third quarter and nine-month conference call. This quarter reflects more than financial performance. It demonstrates how our strategy continues to position AFIA for sustainable growth, transforming medical education across Brazil. We concluded our 13th semester after the IPO delivering strong growth, profitability, and cash generation, and keeping 100% of occupancy in all of our medical programs in Brazil. Our results highlight the strength of our ecosystem while advancing initiatives that will shape the future of medical education and medical practice. Today, I will cover key strategic developments and operational highlights that drove these results. Then, Luis Blanco will provide a detailed review of our operational and financial performance. Starting with slide number three. Let's begin with our main performance highlights and strategic priorities for the quarter. Our revenue for the nine-month period grew over 13% year-over-year, reaching R$ 2,784,000,000, followed by an adjusted EBITDA growth of almost 19% year-over-year, reaching R$ 1,292,000,000. Adjusted BIDA margin for the same period reached 46.4%, an increase of 200 BIPs over last year. We also reported a new record cash flow from operating activities, ended the nine-month period with R$1,292,000,000, 11% higher than last year, with a cash conversion of 101.5%. Net income followed the same positive trend as the last quarter and reached R$593 million, a growth of 20% year-over-year, with a basic EPS reaching R$6.40, 20% higher than last year, reflecting stronger operational performance. Turning to our operational updates, in this quarter, we maintain our leadership position in the medical education. supported by 3,653 approved medical seats, and 3,753 seats as of today after the approval of 100 medical seats in África Bragança. Our number of undergrad medical students has reached more than 25,000 students, representing 6% growth compared to the same period last year. Furthermore, our medical schools In the continued education segment, we continue to see solid results, presenting a revenue growth of 11% year-over-year, reaching R$208 million. For medical practice solution, we ended the quarter with an increase in revenue of over 9% year-over-year, reaching R$128 million in the nine-month period. Finally, our ecosystem reached 304,000 active users, reflecting strong engagement and broad adoption among physicians and medical students across Brazil. Moving on to slide number four, we will talk about our solid business execution within our three business units, starting with the undergrad segment. We saw important movements throughout the quarters, such as an impressive gross margin expansion and the successful beginning of unique operations. acquired in May of 2025. In addition, we are pleased to share that we received the authorization of expansion of 100 medical seats in África Bragança, bringing our total approved seats to 3,753 seats. The continued education segment was marked by an increase in graduate journey students, sustained by another round of organic expansion of our medical graduate campuses, with five new operating units in 2025 and a strong gross margin expansion. In this nine-month period, we saw a significant increase in B2B revenues with 65% over the last period. Lastly, in our medical practice solutions segment, once again, we ended the quarter with a growth in the clinical management active payers. In addition, we also saw an increase in B2B business to physician revenues, led by an 11% growth compared to the same period of the prior year. These results reinforce the opportunity ahead in medical practice solution, which continues to deliver increasing solutions for medical practice. In the next slide, I want to share how our ESG initiatives continue to create long-term value and strengthen others' commitment to sustainable growth. Over the nine-month period, we delivered 700,000 free healthcare consultations, including more than 500,000 of them medical consultations. These achievements exceeded the target set for 2025 and reflect our strong partnership with IFC through the sustainability-linked loan, as well as our public commitment to the United Nations Sustainable Development Goal No. 3. I also want to reinforce the creation of Instituto AFIA, which represents a new chapter in our journey. This initiative strengthens our focus on sustainability and social impact, with a clear commitment to advancing research, science and technology for the benefit of society, playing a strategic role in addressing non-communicable chronic conditions. Finally, AFIA's leadership in ESG was recognized by Valor Econômico through the Valor 1000 Award, which evaluates companies based on financial performance and ESG practices. AFIA was honored as the top performing education sector in Brazil for the fourth time in a row. And now, I'll be turning the call over to Luis Blanco, AFIA's CFO, to provide more insight into the financial and operational matters. Thank you. Thank you, Vigílio, and good evening, everyone. Starting with slide number 7 for discussions of key operational metrics by business unit. Starting with the under-graduated programs. Our number of medical students grew 6% year-over-year, reaching more than 25,000 students, while approved medical seats increased by almost 2% in the third quarter of 2025. Considering the expansions of 100 seats in África Bragança approved last week, the expansions in approved medical seats would be over 4% as of today. Our medical school net average ticket, excluding acquisitions, increased by 3.4% for the 9 months, reaching R$ 9,141. We have also achieved R$ 2,459 million in revenue, up from R$ 2,156 million from the prior year, an increase of over 14% due to higher tickets in medicine courses, the maturations of medical school seats and acquisitions of clinic. Regarding the revenue mix, 86% was derived from medical school students and 94% from health-related courses. On the next page, we present our continuing education metrics. We approach continuing education through three main journeys, starting with the residency journey. We saw a 36% decrease, reaching 9,969 students by the end of the period. In the graduate journey, student numbers grew by 26%, reaching 9,180 students. Lastly, our other course and B2B offerings increased by 5% over the same nine-month periods of the prior year. Overall, R$ 208 million in the nine-month period of 2025, up from R$ 188 million, reflecting a growth of almost 11% over the same period of the prior year. This includes a 7% increase in P2P revenue and a staggering 65% increase in P2P revenue. Moving to slide number 9, I will discuss the NETCorpred Solutions operational metrics. The first graph shows our total active payers, which are the ones that generate revenues in the business acquisition. The number of paying users reached 195,000, a 2% decrease over the same period of last year. The second graph highlights our monthly active users, which accounts for 228,000, lower than the 249,000 records over the same periods of the prior year. Lastly, the third graph shows revenue from our medical practice solutions segments, which grew over 9% year-over-year, reaching 128 million reais. This growth was primarily driven by an expansion in active payers in clinical measurements and a more favorable product mix. Of this total, R$ 114 million was generated by B2P, representing an 11% increase, while B2B contributed for R$ 14 million, a 2.5% decrease in the 9-month period. On the next slide, we also present AFIA ecosystem. We are pleased to highlight that AFIA's substantial contributions to the healthcare community in Brazil. By the end of the third quarter of 2025, our ecosystem encompass 304,000 physicians and medical students using our service and products. Moving forward to slide number 11, I want to discuss our financial overview for the third quarter of 2025, starting with the next slide. With great satisfaction, I am pleased to present another strong quarterly performance for Amphia. Revenue for the third quarter of 2025 reached 929 million reais, representing a 10% increase compared to the same period of the last year. Revenue totaled R$ 2,784 million for the nine-month period of 13% year-over-year. For the third quarter of 2025, adjusted debita rose by 15%, reaching R$ 399 million, with an adjusted debita margin of 43% and expansions of 160 base points compared to the third quarter of 2024. For the nine-month period, adjusted EBITDA amounted to R$ 1,292 million, an increase of 19% over the prior year, with an adjusted EBITDA margin of 46.4%, representing a 200 base points increase over the same period. The increase in adjusted EBITDA margin was mainly driven by higher gross margins in the undergraduate and continuing educational segments, restricting the initiatives within continuing education and medical practice solutions, and improved efficiency in selling general and administrative expenses. Moving to slide 13. The year's cash flow from operating activities rose by 11%, reaching R$ 1,292 million, reflecting a strong operating performance. The operation cash conversions ratio was 101.5% in the nine-month period of 2025. Net income for the third part of 2025 came at R$ 159 million, marking an increase of 28% over the same period of 2024. For the nine-month period ending in September, net income totaled 593 million RBI, up 20% year-over-year. This growth reflects stronger operational performance, combined with the recognition of deferred tax assets, partially offset by the additional taxations provisions related to OCDE Pillar 2 Global Minimum Tax Effects. AFIA Basic EPS for this quarter reached R$1.71, a 29% increase compared to the same quarter of 2024, with R$6.40 per share for the nine-month period of 2025, representing a 20% growth. And now, moving to my last three slides, I will discuss our cash and net debt position. I also give you more color on our cost of debts. On the next slide, we will discuss our gross debt. This slide presents a table detailing our gross debt compositions at the end of the third quarter 2025 and the total cost of debt. covering our primary obligations, the SoftBank transactions, the ventures, other financial liabilities, the IFC financing, and account payables to selling shareholders. Moving on to slide 15, I'm pleased to announce that we have strengthened our financial positions through a liability management. In October, we issued commercial loans totaling 1.5 billion reais. The usual proceeds was the early redemptions of Acquia First's insurance of debentures and the repurchase of the 150,000 Series A preferred shares held by SoftBank. We present a comparison between our actual positions as of the end of the third quarter of 2025 and the pro forma gross debt after the liability management. We have extended the gross debt durations to 3.2 years, while maintaining a low cost of debt at 106% of the CDI, even after the record chase of the preferred shares held by SoftBank. These actions strengthen our financial flexibility to support long-term value creations for our shareholders. On my last slide, we can look closely at the net debt variation. As of the end of the third quarter of 2025, net debt stood at R$ 1,342 million, a reduction of R$ 473 million compared to the end of 2024. This reduction was achieved even considering the acquisitions of Funic and the return to the shareholders protected by dividends and shares repurchased. Acquia's net debt, excluding the effect of IFRS 16, divided by the midpoint of the 2025 adjusted DAH guidance, was only at 0.8 times. AFIA's capture structure remains solid with a conservative leverage position and a low cost of debt. This concludes our prepared remarks. We are proud of the strong performance we've delivered this quarter. Our focus on improving the medical journey through an integrated education system and medical practice solutions remain strong. helping students 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 for the entire ecosystem. I will now open the conference for the Q&A session.

Thank you.

For those who wish to ask a question, please use the raised hand feature and we will call on participation. The first question comes from Luca Mattezzini from Italy.

Good evening, everyone, and thank you for taking our questions. The first question is regarding the effective tax rate. So, can you please provide more color on the company's current understanding on the tax rate discussion and also what do you believe to be an adequate assumption for this line going forward? And then the second one will be regarding capital allocation. So, Considering this was another quarter of solid cash generation, what should we expect for the company's capital allocation strategy going forward? Should we expect a higher dividend payment or even a greater M&A activity in upcoming years? That's our questions. Thank you.

Luca, it's Blanco speaking. I'll take the two questions. First, regarding taxation. We ended up the nine-month period with effective tax rates of 9.7. That was greater than the 5.1% that we got from last year. The main reason for this increase is the provision that we are making for the Pivot True taxations. that was implemented in Brazil during 2025. And this provision, these taxations, will be dispersed in July of 2026. So, we are provisioning with these taxations during 2025. The effect of these minimal taxations was a little bit reduced by the provision of deferred tax assets that we've recognized during the year. Moving ahead for 2026 ahead, we would expect that the effective tax rates should be converse to the minimal taxation of 15%, that's the taxation of the Pillar 2. So, if we do not gain the Pillar 2 taxations nor by the injections that we are discussing, or to a change in the current legislations regarding the Pillar 2, we would expect that from 2026 on, I would say that effective tax rates would converse to 15%. To your second question regarding capital allocations, What we did during this October, we did a big liability management, raising a new debt regarding the commercial notes that were issued to the market. And with the use of proceeds of it, we did the repayment of the debentures, and we repurchased the preferred shares from SoftBank that would be early redemption on April 2026. So, with that, we increase our durations and keep the cash in place to do the capital allocation itself. So, we have in our hands the possibility of doing an M&A or even increasing the buyback or even to pay dividends. All the alternatives that we have on our hands, we will have the best choice to evaluate the scenario in the next couple of months to take the better decisions to increase value to our shareholders.

One point that I would like to highlight is that when we anticipated the payment of SoftBank's transaction, we had a financial gain. We negotiated with them to have a financial gain that will be proportionally to the difference of the rate, the interest rate that we would have between this period and the due date of the contract.

That's very clear. Thank you.

So our next question comes from Eduardo Rezegi from UBS.

Good evening, Virgílio, Blanco, Renata. Thanks for taking my question. I have two on my side. So, first, a double-click on the capital allocation. You highlighted your initiatives for shareholder remuneration, but looking at the effect of the new tax reform and impact for foreign players and investors, I just would like to understand if possible other strategies are being evaluated on this front. So this is the first question. And second, if you could provide any color on 2026 intake cycle with overall trends observed in the latest entrance exam that you applied in the end of this semester, any color on this front would be very helpful. Thank you. Hi, Eduardo Vigilio here.

So about capital allocation, as Blanco mentioned on the previous question here, so we are analyzing, so still on the M&A front, good opportunities on medical assets, medical school assets in some regions. So still aiming to have around 200 seats per year as our guides in terms of capital allocation. So in regard to distributing that to shareholders, so we'll keep combining the best option between buyback programs as the one that we just launched, that is the biggest one that we launched on our recent history here, and also paying dividends, even considering the 10% additional cost. So we'll be combining two of them. taking the best consideration of the market price of our shares and all the availability of cash that we have on AFIA. Regarding intake for 2026, it's still very early. We are collecting all the candidates. The only thing that we can anticipate is that, well, the tuition that we are aiming to 2026 is around 5% to 5.2% over 2025. So that's the only information from that.

Perfect, thank you.

Of course, next question comes from Lucas Daniel from Morgan Stanley. Lucas, you may now roll.

Hi, good evening. Thanks for the space here. We have two questions. The first is a follow-up on the ticket readjustment you mentioned, which is if we should see any mixed effect next year. or if every circuit should converge to the 5% growth you just mentioned. Because this year I think there was possibly some effects related to FIAS. That's the first question. And the second question is a more conceptual one. In the last AFIA Day, we discussed a lot about the supply side, about competition and AFIA's strategy to offset those pressures. And the question is, from the demand side, are you seeing any change, even if it's marginal, in how the applicants perceive the attractiveness of the medical career? If it should be affected both for the sector as a whole or for the worst players? Thank you.

Hi, Luca. So the first question about tickets. So the five, between five and 5.2 across the board is in terms of gross tuition. So it's too early in the process to check how it will be the effect. considering the FIES, but what we are aiming here is to keep stable around 17-18% the penetration of FIES on our medical student base. So, it's too early to check how will be the portfolio and the combination of them compared to 2025. But now we just can say that it will be around 5%, okay? Regarding competition, so the number of candidates that we are seeing in terms of demand is very close to what we are having to last year. So we are not seeing any substantial difference from city to city. So in terms of average, we are very close to the same figures that we had last year at the same time, okay? Just in terms of candidates.

Perfect. That's very clear.

Thank you. Next question comes from Marcelo Santos from JP Morgan.

Hi, good evening. Thanks for taking my question. I have two as well. The first question is about the gross margins on medical practice solutions. There was a nice sequential increase, so I just wanted to get your comments there. And the second question is, on the clinical decision software, this is the second quarter of sequential loss of subscribers. I just wanted to also get some color on these trends.

Thank you very much.

Hi, Marcelo. The first is the increase of 2% in terms of maintenance in the segments. That was related to the cost management that we do within the products. Nothing specific to highlight on that. It's an ongoing initiative that we have here. Yeah, just remember, just adding on the first question here, Marcelo, remember that we launched many new campuses and new sites that we are offering continued education. So we are getting to the second and the third intake process. So it's a kind of dilution. of the fixed cost and gain more synergy, the campus that we launched over the last 18 months, okay? On the second one, I think just to clarify, your question was about the cleanup decision solution, the reduction of users that we have in the second semester in a row. Is that right? Yeah, that's correct, Rogério. Yeah. So the clinical decision, the white book solution, we changed our prices at the end of last year strongly. So the decision on that was in terms of elasticity study at that moment. And we didn't change the combination about premium users and also premium users with a much higher price. So the result of that was positive in terms of revenues, but we lost three new users at that moment in the beginning of their career or last year of medical programs. So what we are doing right now to resume growth on the audience is reviewing the combination of features that we are offering through the premium version and also premium version. So this is something that we want to resume the penetration on that not only benefit in the short term, the revenues on Whitebook. I think the most important in terms of penetration, iClinic on the other side is the most important data for all monetization on B2B. It's accelerating and having much more penetration than also we were expecting. because we have also to compete other medical records. And to substitute clinic by clinic is something that, well, it's not in a short and an easy way. So on our two most important digital solutions, one, we need to resume penetration. There is a white book. We announced a lot of features, as you may have seen, on our after day using adopting AI to change this and also embedding this on our premium version. On the other side, iClinic also embedding with AI features. We are ramping up and accelerating penetration over clinics in the country, okay?

Perfect. Just on the first question, I was asking about the marked increase of medical practice solution, not the continued education. And what I'm saying is that it went from 66% in the second quarter to 73%. So it's a sequential increase. of seven points, which was more on this one. I think you gave me the answer on the continued education, if I'm not mistaken.

Yes. But, Marcelo, I would say that, yes, we are increasing these almost seven points regarding the second quarter of 2035, but if you compare With the third quarter of 2024, it's 2% below the 2% that I mentioned. So, I would say that we have a kind of seasonality on that. And these... this down of this 2% that was mentioned in the 12-month comparison, it's nothing to highlight on that. Regarding the second quarter, it's something about seasonality, okay? All right. Thanks a lot.

Thank you, Marcel. Next question comes from Mirela Oliveira from Reca from Africa.

Good evening, Blanco Virgilia Renata. Thank you for taking my question. I have two questions here. The first one is on the recently acquired units. If you guys could comment a bit on the expected timeframe for the ramp-up of Funic and how long do you expect margins to be at companies' run rate? And the second one is on the consolidated EBITDA margins. So the company has delivered a significant margin expansion in the past nine months, paving the way for reaching the top of the guidance. So just wondering here if you could comment a bit on if you see room for further margin expansion ahead and what would be the main levers for it. That would be it from my side.

I'll take the two questions. First of all, Funic is our first year operating over there. So it's just 60 seats. So it's just in the beginning of the maturations. We just implemented launch the first class starting on August. So the first year you have low margins because of all the implementations of the faculty, and just the fact that we have just one class over there. So, what we see that, for NIC, it's based in Contagem, Contagem is in the great Belo Horizonte area, and then we're going to As the maturation comes, we're going to reflect the increase of margins according to the increases of the maturation, the increases of the number of students. So, it's according to our business plan, the acquisitions. It's a question of timing, of getting operational leverage regarding FUNIC. Just to add one point here, Mirela, is that just so based on our track record managing all the Greenfield, the new Mais Médicos 2 campuses, we can reach a very high margin after two to three years with this campus's maturation. And considering that, well, we didn't start the internship phase in the fifth and the sixth year. So in terms of margin, we can scale rapidly. The margin goes to 50, 60% of the contribution margin. But remembering that on the fifth and the sixth year, that will converge to overall margin because we start the internship. Yeah. And regarding the VITLA margin increase, I would say that we're not doing that in this year, but in the last two years we have been increasing significantly the margins of it. So, it was a question of working with the three segments, to gain efficiencies in the undergrads. Remember that in the beginning of 2024, we made the changes in the digital and the continued educations. We moved all the educational digital assets from the formerly digital segments to the continued educational. And the continued educations, we started to offer a hybrid offer on that. And on top of that, we've implemented in the end of 2023, our zero-cost budgeting that helps a lot in SG&A expenses. So for the last, I would say for the last two years, we've been capturing a lot of these margin expansion.

That's super clear. Thank you. Thank you. Next question comes from Lina Prata from Spain.

Sorry, I was on mute. Thank you. Thank you for taking my question. Super brief here. I just wanted to try to get a sense on the continuing education segment, the numbers of students on the residence journey, I think it dropped over 30%. So I'm just trying to understand if this is a puntual effect or is something that we should expect to continue going forward. Thank you.

Yes, it's a one-time effect here because we decided to join the offer of Mentoria and also the Residence Prep program. So, last year we used to count twice. So, the student that was applying for Mentoria and also applying for Residence Prep, they were subscribed for both products. counts twice. Now the offer we are combining Mentoria into Residence Prep, so it's a joint product here, and most of them now are buying this program together. So the effect on the number of users, the number of subscribers is lower, but the effect on revenues is not on the same level. So it's a one-time effect. And just adding on that, because of this change, we are seeing a much more higher growth on the intake cycle. That's now we are in the top seasonality of the residency because of this new combination that we started last year. Okay.

Super clear. Thank you.

So we don't have any other questions. If you still have a question or want anything cleared, you can contact the Investor Relations team, and we'll be happy to help you. So thank you for having us this night, and see you next time.