Afya Limited

Recording in progress. Thank you for joining us for this conference call. I'm here today with our CEO, Eugenio Gibon, and our CFO, Luisa Greblon. 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, no and unknown risks, insurgencies, and other factors that may cause at-risk racial results to differ materially from those contemplated by these forward-looking statements. Forward-looking statements in this presentation include, but that 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 Final Inclusive Securities and Exchange Commission. The forward-looking statements in this presentation are based on the information available to us as the day starts off. You should not rely on data as predictions of future events, and we disclaim any obligation to update any forward-looking statements except as reported by law. In addition, management may reference no AFRS 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 IFRS financial measures to the most directly comparable IFRS financial measures. Now, let me turn the call over to Vigilio Gibon at the CEO.

Thank you, Renata, and welcome to our first conference call of 2026. It's with much satisfaction that AACI starts another year of great operational and financial performance. This quarterly result shows the high predictability of our business and successful execution of our strategy that once again combines growth with cash generation. AACI three pillars business model. In this presentation, I will cover key strategic topics, including our performance highlights, Successful 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 revenues increased by 8%, reaching R$ 1,013,000,000, accompanied by a growth in adjusted EBITDA of 4% year-over-year. reaching R511 million, with a margin of 50.5%. We also reported a free cash flow of R376 million, reflecting 3% increase compared to the previous year, boosted by the solid operational results of the company, with a cash conversion of 92.5% and a solid cash position of R1.3 billion at the end of the first quarter. With this consistent momentum, our net income reached R$ 262 million, marking a 2% growth year-over-year with an EPS of R$ 2.88, a 3% increase compared to the previous year. This growth reflects stronger operational performance partially offset by an approvision related to the OECD Pillar 2 Global Minimum Tax. Moving to our operational updates. We have now 3,768 operating medical school seats, with an increase of over 6% year-over-year. Additionally, our number of undergrad medical students has reached over 26,000 students, representing over 2% growth compared to the first quarter of 2025. Furthermore, we increased the net average ticket of medical school by almost 5% year-over-year, reaching 9,634 reais. In addition, we continue to observe improving performance in the continual education and medical practice solution sectors. In continual education, revenue increased 11% year-over-year, purely organically, reaching R$ 79 million. In medical practice solutions, we saw a 4% growth in revenue compared to the first quarter of 2025, reaching over R$ 43 million. Lastly, Our ecosystem has 304,000 active users, exemplifying substantial penetration among physicians and medical students in the country. Moving to slide number four, we will discuss our performance across our three business segments. To start with the undergrad segment, we observed important movements throughout the quarter, such as higher tickets in the medicine course with almost 5% increase year over year, above 2025 inflation. This growth was accompanied by a stable gross margin across the segment of 69%. In addition, we expanded our health science student base by 5,000 students compared to the first quarter of 2025. The continuing education segment delivered record on B2B revenue of $74 million in the first quarter of 2026. Supported by a record student base of 57,000 students and reflecting the continuous strength of our product offering and engagement across the segment. The medical practice solution segment delivered solid performance in the first quarter of 2026. Supported by an increase of 6,000 clinical management active payers, compared with the first quarter of 2025. And B2B revenue grew by 17%, reflecting the continued progress of our product offering and commercial initiatives across the sector. I will now turn the call over to Luis Blanco, ATS CFO, to provide further insight into the financial operational methods.

Thank you. Thank you, Vigilio, and good evening, everyone. Starting with slide number 6 for discussions of key operational metrics by business unions. Starting with the undergraduate programs. Our medical student base grew by 2% compared with the first quarter of 2025, reaching 26,000 students. While operating medical school seats increased by over 6% year-over-year to 3,768. Our medical school net average ticket increased by 5%, reaching 9,634 reais in the first quarter of 2026. In addition, revenue for the undergraduate segment soared an 8% increase, achieving 892 million reais, 86% of which is related to medicine and 94% from health-related courses. On the next phase, I will present our continual educational metrics. We approach continual education through three main journeys, starting with the residency journey, which encompasses products focused on the residency preparation. We saw a 20% decrease, reaching 9,744 students by the end of the period. In the graduate journey, focused on specialization tests in medicine, students grew by 15%, reaching 9,855 students. Lastly, our order-crossed B2B offerings increased and increased 41% over the same three-month period of the prior year. Continued educational revenue rose to R$ 79 million in the three-month periods of 2026 up from R$71 million in the three-month period of 2035, reflecting a growth of 11%. This includes a 13% increase in B2B revenue and 14% decline in B2B. Moving to slide number eight, I'll discuss the Magical Prep Solutions operational metrics. The first graph shows our total active payers, which are the ones that generate revenues in the business competition. The number of active payers declined to 201,000, a 1% decline over the same quarter last year. The second graph highlights our most active users, which account for 221,000, a reduction of 10% compared to the same period of the prior year. Lastly, in our final graph represents a revenue of our medical practice solution segments, which has expanded by over 4% compared to the same quarter of the last year, reaching 43 million reais. Of this total, the 38 million reais was generated by D2P, showing an increase of 3%, while D2P contributed to 5 million reais. 70% increase over the same quarter last year. In the next slide, we presented 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 2026, our ecosystem encompassed 304,000 physicians and medical students using our service and products. Moving forward to page 10, I want to discuss our financial overview for the first quarter of 2026, starting with the next slide. With great satisfaction, I present another strong quarterly performance for Antia. Revenue for the first quarter of 2026 reached 1,013 million reais, representing an 8% increase compared to the same quarter of last year. The quarter revenue increase has many due to higher tickets in medicine courses, the increase in non-medical undergraduate students, the acquisition of UNIC, and advancement of the continuing educational staff. In the first quarter of 2026, adjusted debt rose by 4%, reaching 511 million reais, with an adjusted debt margin of 50.5%. a reduction of 200 base points compared to the first quarter of 2025. The reduction in adjusted down margin was primarily driven by higher costs and expenses in continuing educational and medical practice solution segments, making reflected a lower gross margin compared with the first quarter of 2025 and higher payroll sales and marketing expenses associated with the ongoing investment cycle in both segments. Moving to the next slide. The first quarter cash flow from operating activities rose by 0.6%, reaching 473 million reais. The operating cash flow conversions ratio was 92.5%. Net income for the first quarter of 2016 than in a 2% increase from the same period of 2015. This growth reflects stronger operation performance, partially offset by an additional taxation provisions related to OCDE Pillar 2 Global Minimum Taxation. Despite a lower adjusted EBITDA margin driven by higher expenses in continuing education and medical practice solutions, net income growth was sustained supported by the disciplined execution and the consistency of our business model. Regarding EPS, we achieved R$ 2.88 per share in the three-month period, representing a 3% increase year-over-year. And now, moving to my two last slides, I will discuss our cash and net deposition, also giving more color on our cost of tax. This slide presents a table detailing our gross debt compositions at the end of the first quarter of 2026 and the total cost of debt covering our primary obligations. ASEA capital structure remains solid with a conservative leverage position and a low cost of debt. ASEA net debt excluding IFRS 16 divided by the midpoints of the 2026 adjusted EBITDA guidance was 0.7 times. Our financial discipline was also independently recognized. On May 5th, Boots reaffirmed Asia credit rating at AAA with a stable outlook reflecting our consistent revenue growth above industry average margins, solid cash generation, and robust liquidity. while also recognizing our strong competitive position and disciplined approach to liability management and capital allocation. On the next page, we can look closely at the net debt variation. As of the end of the first quarter of 2036, our net debt has reduced to 151 million reais when compared to the end of 2025, a reduction of 218 million reais, even considering the repurchase of 70 million reais in treasury in the first quarter, reflecting our strong operational performance and capital allocation discipline. This concludes our prepared remarks. We are pleased with the progress achieved during of our executions across the business sector. Our commitment to advance it through the medical journey through an integrated ecosystem of education and medical practice solutions remains unchanged. Supporting students through their path to becoming physicians, promoting continual medical learning, and enhancing physician decision making and productivity. Looking ahead, we remain focused on executing our strategy with discipline and capturing the opportunities ahead. I will now open the conference for the Q&A session. Thank you.

So, if you would like to ask a question, we want you to confirm if your name is in your Zoom account correct. If not, please exit the call and enter again with the link that I sent on the chat. So the first question comes from Luca Marchesini from Itaú. Luca, you may now go.

Good evening, everyone. Thank you for taking our questions. Two questions from our side. So the first one will be, the release mentions that the intake cycle was successful and that you can implement a 4.6 price increase. So can you please comment on the competitive environment for this intake cycle and on whether it got any worse when compared to the other intake cycles in previous years? So that is the first question. And the second one, the release also mentions that one of the drivers for net revenue growth was the performance of non-medical undergraduate students. Can you please comment on the strategy on this side and on whether this has changed compared to to the last years as well, please. Thank you.

Hi, Luca. This is Virgilio. So the first half intake was a very strong intake when we compare to last year. We saw the same level of candidates proceed. On our side here, we are seeing that the recognition of our brand, and also the internal process that now we are having an intake and enrollment process fully centralized that we are calling the national intake process. So that is also helping us to keep us 100% of equipment. So it was a very healthy intake cycle. And besides that, we also already started our second half intake, very beginning in the number of leads, it's also better than the same period last year. In terms of the share of our undergrad revenues, we are seeing a very good trend on other health programs because of AFA's brand is very well connected to the health sector. The last two years, we're also opening some health programs, completing the portfolio for all of our campuses, So we are seeing a very strong intake when we compare year over year and almost a 20% growth, organically growth, coming from other programs, undergrad programs on the health sector. So this is a strategy for Apia. We are not only offering medicine on our program, but also increasing the health undergrad programs as a portfolio and strategic portfolio for our ecosystem here. And why is that? When we have a... a campus in a small city, just the physician, just the undergrad, just the program for medicine does not solve the issue in the region. And also offering other health programs attached to ATA's brand, connected to our medicine infrastructure on that campus makes a lot of sense. It's a very low additional capex. strong brand recognition and very strong intake that we are seeing in good momentum. Okay.

Thank you. Thank you.

Of course. The second question comes from Eduardo Rezende from UBS.

Good evening, everyone. So, thanks for taking my question, and two on my side as well. So, first, could provide an update on the ENA-MED talks. So, if you could provide an update on the impacts that are expected and the initiatives you are executing to foster student performance in the upcoming exam. It would be very helpful. And the second question is regarding the M&A environment in medical schools. So if you could please provide some color on the marketing environment for new deals in medical school. I mean, what in your view has been the main constraint for new deals? Is it still on valuation or maybe some asymmetries involving in a med as well? So anything you can share with us in this front would be very helpful. Thank you.

Hi, Eduardo. I'll take the Anamed here question and Blanco will help on the M&A side. So, regarding our action plan toward Anamed, We are doing a very strong initiative here. First of all, it's how to increase engagement of all students that will be applying for NMED now in September in the second half this year. We are also conducting almost 30 mock-up tests of all students that will be applying for NMED. and doing actual plans for every two weeks we have measuring the results based on the new model, because the Enamed is completely new model when you compare for the previous one based on the old Enad. So, having said that, we are seeing that our student is much more engaged, fully committed to have a much better result. And also, we are adapting our curriculum also to fulfill the type of question, the type of evaluation that is being considered in the Anamed. So, our expectation that it will be a much better result for our students now in September. So regards the M&A, I'll pass here to Blanco.

Just to add a point on the ANAMED question, if I may, a reminder that all the results, the impacting results on the second semester is already considered in the guidance that we provided in the beginning of the year, and it's minimum. It's not material. So Blanco.

Hi, Eduardo. It's Blanco speaking. Regarding the M&A environment, first, it's very important to highlight that we keep our capital allocation of discipline, just focus on M&A that are concentrated in medicine, and that generates a good return on capital. Just as a reminder, we have as a target institutions that has more than 60% of the revenue coming for the medicine programs. And we look for targets for deals that generates an IRR above 20% on leverage, nominal kind of internal rate of returns. Having said that, we still keeping our 200 seats per year growth, and we look deals that have these profile that I just mentioned. Sometimes we don't get the right profile, sometimes we didn't, reach a price that make the return on the capital that we seek, then we do not purse a deal just for the growth itself. So, we produce deals that have the exact profile and the exact type of return and we keep a very discipline on this.

Eduardo, is it clear? I think that you're on mute. Okay, so moving to the next question. Mirela from Bank of America, Maryland.

Good evening, Blanco, Virgilia, Renata, and the IR team. I have a question on medical practice solutions in the investments on this front. So you mentioned in the previous quarter that you plan to invest more heavily on this line, and we see that this quarter the number of total payers continue to decline, especially on the white book front. I understand here that there's a timing component to see the results of these investments, so I was just wondering if you guys could give us more color on the expected timing to see some recovery on these lines, and also if you could provide more color on the initiatives that you see as a solution, especially on the white book front.

Angela, your voice buzzed a bit. Can you please repeat your question?

Hi, can you hear me well now? Now we can. Okay. So my question is on the medical practice solutions and the investments on this line of business. You mentioned in the previous quarter that you plan to invest more heavily on the medical practice solutions, and we see that in this quarter the number of payers continue to decline. I understand here that there is a timing component to see some recovery there, especially on the white book. So I just wanted more color on the timing that you expect to see recovery on these lines, especially on the white book. And also if you could give us more color on the initiatives. they are being done on the white book to face the competition from AI and, you know, the more competitive market on the segment.

Hi, Mirela. Now was very clear your question. So, regard the investments, we are already investing more on the NPS here for our products. not only individually product by product, but also integrating them and creating like a network effect, having our physician not only more engagement, but also generating more insights and information inside within our platform. So we still see a reduction on payers on Whitebook. On the other hand, we are growing and growing faster on iClinic. that is more engaged physician to our base and also generating much more data on a daily routine on our bases. We are also tracking the physicians that are leaving our base. They are more Young physicians that are not using the platform on a daily routine, we are seeing much more using on the daily routine for more mature and senior physicians that are adopting iClinic, also leveraging the number of prescriptions that is being made into our platform. We just reached more than 2 million prescription level per month. That's also very important. Most of them coming through iClinic. That's why it's so important to leverage the number of clinics and physicians adopting eye clinics. In terms of investment, what we are doing, first of all, our AI technology. It's one of the issues and also an opportunity here. We are launching a lot of features, new features, AI-based, so the solution is becoming AI-first in terms of Whitebook and also considering the social network effect because we are embedding prescription within Whitebook. We are also integrating Whitebook with our updates and continued medical education solutions, and also within iClinic. So all of this in a very middle term is to have what we are calling here AFIA One platform, where a physician, it doesn't make sense if they are signing for one solution and another. he is like a membership of the entire platform. So this is what we are building here. So in terms of cost and investments that we are doing this first semester, one is CapEx related to all of this innovation, integration, creating this beautiful platform. And second is improving our sales team, most for B2B, that we are now already seeing an important growth year over year, and that's what we believe that's the greatest opportunity in the middle and long term for the MPI segment.

And Mirela Blanco speaking, just adding two more things in what Vigilio just mentioned. Regarding the investment itself, if you notice, our capex is most concentrated on this quarter intangible assets rather than property and equipment. You can see this change of mix if you compare year over year. And another point regarding specifically capital specific about Whitebook, what we are pursuing this year regarding all these investments is to increase the audience within Whitebook. Whitebook, when you compare with the public's LLMs, Most of them are provided for free. So we are focused this year on the White Book on what we call the audience side. So the impact on active payers and then on the revenues, you won't see a big impact on White Book this year, but from 2027 ahead. So this year, these investments were focused on audience on the White Book.

Perfect. That's super clear. Thank you. Thank you. So just a reminder, if you want to ask a question, please raise your hand and just confirm that your name is correct in the Zoom tool. We can see that we have two questions here. One, we can see the correct name, and the other one, it doesn't have the correct name. So please, if it's yours, just leave and click in the link that we sent on the chat. So the next question comes from Victoria from JP Morgan. Victoria, you may now go.

Good evening. Thank you for taking my question. I have one on my side. Just on the sales and marketing expenses in this quarter, so we saw a year-over-year increase, and I just want to touch base to see why we saw this increase. And if you could please give more color on this line going forward.

Thank you.

Hi, Victoria. So, it's two main reasons here. First of all, we anticipate the volume of intakes for the first half because of the NMED. So, we stand a little bit more on the undergrad and also on health programs. We saw the results. We also have a very strong intake as we also have a bigger offer portfolio in the first half when you compare to last year. And second, also for the SPM, where we are improving our sales process, sales team here, we are also putting more market effort on SPM and also Educom to strengthen our position on that. This is not a recurring base, but one time, based on this first semester, most of them from the undergrad, and also for this launching phase. of this new approach of many solutions that is being more integrated and how we are offering this new dynamic and products to our physician ecosystem, okay?

And, Vitória, it's very important that this increase in sales and marketing expenses are under this program and is embedded on our guidance for the year, okay?

Perfect. Thank you so much. So since we don't have any more questions, we are going to end the call. If you still have a question, please contact the Investor Relations team. We'll be happy to help you. Have a good evening.