Afya Limited's 2025 Q2 Earnings Call: Unpacking Contradictions in EBITDA, Education Revenue, and Capital Strategy

EBITDA margin performance and guidance, Continuing Education revenue trends, dividend policy and capital allocation, M&A pipeline and strategy, pricing strategy and competition are the key contradictions discussed in Afya Limited's latest 2025Q2 earnings call.



Strong Revenue Growth and EBITDA Expansion:
- Afya Limited reported revenue of BRL 1,856 million for the first half of 2025, marking a 15% increase compared to the same period last year.
- The growth was supported by a 16% increase in Undergraduate segment revenue, 8% growth in Continuing Education revenue, and a 9% increase in Medical Practice Solutions revenue.
- The expansion in EBITDA, reaching BRL 893 million with a margin of 48.1%, was driven by gross margin expansions within Undergraduate and Continuing Education segments, cost initiatives, and operational restructuring.

Enrollment and Seat Expansion in Undergraduate Segment:
- The number of medical students increased by 14% to nearly 26,000, with approved medical seats reaching 3,653.
- The growth was attributed to the acquisition of FUNIC, contributing an additional 60 seats, and the integration of UNIDOM.
- The medical school net average ticket, excluding UNIDOM, rose by over 3%, reaching BRL 9,140.

Operational Efficiency and Cost Management:
- Afya's operational cash conversion ratio was 88.8% in the second half of 2025, reflecting strong operational performance.
- Cost efficiency was achieved through centralizing services in shared service centers, operational restructuring in Continuing Education, and leveraging operational synergies, contributing to margin expansion.

Share Repurchase Program and Capital Allocation:
- Afya announced a new share repurchase program, authorizing the repurchase of up to 4 million Class A shares by December 31, 2026.
- This initiative reflects the company's commitment to creating shareholder value and aligns with its disciplined capital allocation strategy.

Impact of Tax Legislation on Financial Performance:
- Afya's effective tax rate for the second quarter was lower due to recognition of two tax-deferred assets, impacting the effective tax rate.
- The company is addressing the impact of new tax legislation with both legal challenges and administrative efforts to mitigate adverse effects on its tax structure.