Afya Limited's Q1 2025 Earnings Call: Unpacking Contradictions in M&A Strategy, Tuition Fees, and User Engagement

M&A pipeline and strategy, tuition fee increases, dividend payout ratio and distribution strategy, monthly active users and transition impact, and M&A environment and strategy are the key contradictions discussed in Afya Limited's latest 2025Q1 earnings call.



Strong Financial Performance:
- Afya reported net revenue of BRL 936 million, up 16% year-over-year.
- Adjusted EBITDA reached BRL 492 million, with a record margin of 52.5%, reflecting a 24% year-over-year increase.
- Net income rose to BRL 257 million, marking a 23% year-over-year growth.
- EPS increased to BRL 2.79, a 23% year-over-year increase.
- The growth was driven by higher ticket prices in medicine courses, the maturation of medical school seats, the consolidation of acquisitions, and the advancement of medical practice solutions and continuing educational segments.

Growth in Medical School Enrollment and Ecosystem:
- Afya's number of undergrad medical students reached almost 26,000, representing almost 50% growth compared to Q1 2024.
- The number of approved medical seats increased to 3,653, with an additional 60 seats from the Funic acquisition.
- Afya's ecosystem had over 37,000 active users, exemplifying substantial penetration among physicians and medical students in Brazil.
- This growth is attributed to increased brand recognition and effective intake processes across medical and non-medical programs.

Expansion in Continuing Education and Medical Practice Solutions:
- Continuing Education net revenue increased by almost 9% year-over-year to BRL 71 million, driven by organic growth in graduate journey students and operational restructuring.
- The Medical Practice Solutions segment reported a 14% rise in net revenue, reaching BRL 42 million, driven by the ramp-up of B2B contracts and the expansion of active payers.
- Growth in these segments is supported by strategic product initiatives, operational efficiency gains, and increased cross-selling and general and administrative expense management.

Financial Discipline and ESG Recognition:
- Afya achieved a cash flow from operating activities of BRL 470 million, an almost 10% increase year-over-year, reflecting a cash conversion rate of 96.8%.
- The company's social impact and financial discipline were recognized by a 50 bps step down in IFC lower interest rates, and a solid BBB ESG rating from MSCI, reflecting strong data privacy and security practices.
- These accolades are attributed to consistent operational performance and a commitment to sustainability and responsible business practices.