Afya Limited Announces First-Quarter 2024 Financial Results
NOVA LIMA, Brazil , May 09 /Businesswire/ - Afya Limited (Nasdaq: AFYA; B3: A2FY34) (“Afya” or the “Company”), the leading medical education group and medical practice solutions provider in Brazil, reported today financial and operating results for the three-month period ended March 31, 2024 (first quarter 2024). Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).
First Quarter 2024 Highlights
Table 1: Financial Highlights 1 | |||
For the three months period ended March 31, |
|||
(in thousand of R$) | 2024 |
2023 |
% Chg |
(a) Net Revenue | 804,239 |
709,961 |
13.3% |
(b) Adjusted EBITDA 2 | 397,853 |
330,211 |
20.5% |
(c) = (b)/(a) Adjusted EBITDA Margin | 49.5% |
46.5% |
300 bps |
Net income | 208,299 |
117,772 |
76.9% |
Adjusted Net income | 250,966 |
166,377 |
50.8% |
(1) No acquisitions were made during the period under review, therefore not affecting the comparable period. | |||
(2) See more information on "Non-GAAP Financial Measures" (Item 08). | |||
Message from Management
It is with much satisfaction that I can proudly present another quarter of great operational and financial performance for Afya. Once again, we have proven the resilience of our business, the successful execution of our strategy, the commitment of our team members, and the consistency of our business model. This quarter was marked by Gross margin expansion within our three segments and Adjusted EBITDA margin in our consolidated figures, combined with solid cash generation, and robust EPS growth, showing our consistent business expansion.
Great part of our margin expansion came from the complete integration of UNIMA and Afya Jaboatão, alongside the ramp up of the four Mais Médicos campuses that started operation in 3Q22 and the operational restructuring efforts in Continuing Education and Medical Practice Solutions segments. Our idea was to integrate all the services related to the physician continuing education into one structure, so we could extract more synergies and boost our growth.
We are also excited to expand our offering in the Undergrad business with the signing of the acquisition of Unidompedro and Faculdade Dom Luiz, this acquisition will contribute with 300 operating medical seats to Afya, in Salvador capital of Bahia and the fifth-largest city in Brazil in population size. Unidompedro will be Afya´s 4th medical school in Bahia and will serve as an strategic hub for all other medical campuses in the State, besides all the synergies that we can extract from our Continuing Education campus in Salvador.
With another round of high and sustainable growth, our mission remains solid as ever: to provide an ecosystem that integrates education and digital solutions for the entire medical journey, enhancing the development, updating, assertiveness, and productivity of health professionals. We are very proud of our business and of what we have achieved so far, as well as excited about what we are planning.
1. Key Events in the Quarter:
2. Subsequent Event
3. 2024 Guidance
The Company is reaffirming its guidance for 2024, which considers the successfully concluded acceptances of new students for the first semester of 2024. The guidance for 2024 is defined in the following table:
Guidance for 2024 |
||
Net Revenue 1 | R$ 3,150 mn ≤ ∆ ≤ R$ 3,250 mn |
|
Adjusted EBITDA | R$ 1,300 mn ≤ ∆ ≤ R$ 1,400 mn |
|
CAPEX 2 | R$ 220 mn ≤ ∆ ≤ R$ 260 mn |
|
(1) Excludes any acquisition that may be concluded after the issuance of the guidance, notably, the Unidompedro acquisition was not included in the guidance provided | ||
(2) The 2024 Capex guidance does not encompass the earn-out payment in the amount of R$49.6 million related to the 40-seat increase at Faculdades Integradas Padrão (FIPGuanambi). |
4. 1Q24 Overview
Segment Information
The Company has three reportable segments as follows:
Undergrad, which provides educational services through undergraduate courses related to medical school, undergraduate health science and other ex-health undergraduate programs;
Continuing education, which provides medical education (including residency preparation programs, specialization test preparation and other medical capabilities), specialization and graduate courses in medicine, delivered through digital and in-person content, and
Medical Practice solutions which provides clinical decision, clinical management and doctor-patient relationships for physicians and provide access, demand and efficiency for the healthcare players.
Key Revenue Drivers – Undergraduate Programs
Table 2: Key Revenue Drivers | Three months period ended March 31, |
||
2024 |
2023 |
% Chg |
|
Undergrad Programs | |||
MEDICAL SCHOOL | |||
Approved Seats | 3,203 |
3,163 |
1.3% |
Operating Seats 1 | 3,153 |
3,113 |
1.3% |
Total Students (end of period) | 22,609 |
20,822 |
8.6% |
Average Total Students | 22,609 |
20,822 |
8.6% |
Net Revenue (Total - R$ '000) | 610,721 |
528,830 |
15.5% |
Medical School Net Avg. Ticket (R$/month) | 9,004 |
8,466 |
6.4% |
UNDERGRADUATE HEALTH SCIENCE | |||
Total Students (end of period) | 24,881 |
21,660 |
14.9% |
Average Total Students | 24,881 |
21,660 |
14.9% |
Net Revenue (Total - R$ '000) | 53,470 |
52,013 |
2.8% |
OTHER EX- HEALTH UNDERGRADUATE | |||
Total Students (end of period) | 28,563 |
25,043 |
14.1% |
Average Total Students | 28,563 |
25,043 |
14.1% |
Net Revenue (Total - R$ '000) | 40,328 |
40,133 |
0.5% |
Total Net Revenue | |||
Net Revenue (Total - R$ '000) | 704,519 |
620,976 |
13.5% |
(1) The difference between approved and operating seats is 'Cametá'. A campus for which we already have the license but haven't started operations. | |||
Key Revenue Drivers – Continuing Education
Table 3: Key Revenue Drivers | Three months period ended March 31, |
||
2024 |
2023 |
% Chg |
|
Continuing Education 1 | |||
Total Studends (end of period) | |||
Residency Journey - Business to Physicians B2P 2 | 14,693 |
9,061 |
62.2% |
Graduate Journey - Business to Physicians B2P | 13,275 |
11,857 |
12.0% |
Other Courses - B2P and Business to Business Offerings | 21,074 |
14,598 |
44.4% |
Total Students (end of period) | 49,042 |
35,516 |
38.1% |
Net Revenue (R$ '000) | |||
Business to Physicians - B2P | 60,538 |
53,192 |
13.8% |
Business to Business - B2B | 4,877 |
5,019 |
-2.8% |
Total Net Revenue | 65,415 |
58,212 |
12.4% |
(1) The figure above does not contemplate intercompany transactions | |||
(2) 'Content & Technology for Medical Education' which had been reported in 'Digital Services' table, has been reclassified to 'Continuing Education' | |||
Key Revenue – Medical Practice Solutions
Table 4: Key Revenue Drivers | Three months period ended March 31, |
||
2024 |
2023 |
% Chg |
|
Medical Practice Solutions 1 | |||
Active Payers (end of period) | |||
Clinical Decision | 159,183 |
143,832 |
10.7% |
Clinical Management | 31,806 |
26,621 |
19.5% |
Total Active Payers (end of period) | 190,989 |
170,453 |
12.0% |
Monthly Active Users (MaU) | |||
Total Monthly Active Users (MaU) - Digital Services 2 | 262,717 |
263,344 |
-0.2% |
Net Revenue (R$ '000) | |||
Business to Physicians - B2P | 31,726 |
28,371 |
11.8% |
Business to Business - B2B | 4,847 |
5,168 |
-6.2% |
Total Net Revenue | 36,573 |
33,540 |
9.0% |
(1) The figure above does not contemplate intercompany transactions | |||
(2) 'Content & Technology for Medical Education' is now being reported in Continuing Education table | |||
Key Operational Drivers – Physicians and Medical Students Ecosystem
Physicians and Medical Students Ecosystem represents the total number of medical students and physicians in that are positively impacted by Afya. For the first quarter of 2024, Afya’s ecosystem reached 334,368 users, in line with the same period of the prior year, accounting for around 41% of all medical students and physicians in Brazil.
Table 5: Key Revenue Drivers | Three months period ended March 31, |
||
2024 |
2023 |
% Chg |
|
Physicians and Medical Students positively impacted by Afya 1 | |||
Undergrad (Total Medical School Students - End of Period) | 22,609 |
20,822 |
8.6% |
Continuing Education (Total Students - End of Period) | 49,042 |
35,516 |
38.1% |
Medical Practice Solutions (Monthly Active Users) | 262,717 |
263,344 |
-0.2% |
Ecosystem Outreach | 334,368 |
319,682 |
4.6% |
(1) Ecosystem outreach does not contemplate intercompany figures. Note that there may be overlap in student numbers within the data. | |||
Seasonality
Undergrad’s tuition revenues are related to the intake process and monthly tuition fees charged to students over the period; thus, does not have significant fluctuations during the period.
Continuing education revenues are mostly related to: (i) monthly intakes and tuition fees on medical education, which do not have a considerable concentration in any period; (ii) Medcel’s revenue, derived from e-books transferred at a point of time, which are concentrated at in the first and last quarter of the year due to the enrollments; and (iii) Além da Medicina and Cardiopapers revenues, which are sold in the last and first quarter of the year due to the timeline of exams and recognized mainly over time.
Medical Practice Solutions are comprised mainly of Pebmed and iClinic revenues, which do not have significant fluctuation regarding seasonality.
Revenue
Net Revenue for the first quarter of 2024 was R$804.2 million, an increase of 13.3% over the same period of the prior year, mainly due to higher tickets in Medicine courses by 6.4%, maturation of medical seats, the 40 seats expansion in Guanambi campus, the Continuing Education intake performance and Medical Practice Solutions execution.
Table 6: Revenue & Revenue Mix1 | ||||
(in thousands of R$) | For the three months period ended March 31, |
|||
2024 |
2023 |
% Chg |
||
Net Revenue Mix | ||||
Undergrad | 704,519 |
620,976 |
13.5% |
|
Continuing Education | 65,415 |
58,212 |
12.4% |
|
Medical Practice Solutions | 36,573 |
33,540 |
9.0% |
|
Inter-segment transactions | -2,268 |
-2,767 |
-18.0% |
|
Total Reported Net Revenue | 804,239 |
709,961 |
13.3% |
|
(1) No acquisitions were made during the period under review, therefore not affecting the comparable period. | ||||
Adjusted EBITDA
Adjusted EBITDA for the three-month period ended March 31, 2024, increased 20.5% to R$397.9 million, up from R$330.2 million in the same period of the prior year, and the Adjusted EBITDA Margin increased 300 basis points to 49.5%. The Adjusted EBITDA Margin expansion is mainly due to the following: (a) gross margin expansion within the three segments; (b) completion of UNIMA and Afya Jaboatão integration process in November 2023; (c) the ramp up of the four Mais Médicos campuses that started operation in 3Q22; (d) operational restructuring efforts in Continuing Education and Medical Practice Solutions segments; and (e) More efficiency in Selling, General and Administrative expenses.
Table 7: Reconciliation between Adjusted EBITDA and Net Income | |||
(in thousands of R$) | For the three months period ended March 31, |
||
2024 |
2023 |
% Chg |
|
Net income | 208,299 |
117,772 |
76.9% |
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