AFYA - Earnings call transcript Q1 2021

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Renata Couto

[Call starts abruptly] for Afya's First Quarter 2021 Conference Call. With me on the call today is Afya's CEO, Virgilio Gibbon; and Luis Andre Blanco, our CFO.

During today's presentation, our executives will make forward-looking statements.

Forward-looking statements generally relate to future events or future financial or operating performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those contemplated by these forward-looking statements.

Forward-looking statements in this presentation include, but are not limited to, statements related to our business and financial performance, expectations and guidance for future periods or expectation regarding our strategic product initiatives, and the related benefits and our expectations regarding the market, as well as the potential impact from COVID-19. more Commission. in those Securities filings include Exchange and risks fully our described with These statements this date forward-looking to The in us information on as available the of the hereof. presentation are based

them You should we any as to obligation predictions except future any statements, by events, disclaim forward-looking as update required not and of on rely law.

results management The considered are for measures to be in non-IFRS in a may isolation prepared not non-IFRS as measures financial IFRS. reference addition, with financial In on call. or the this accordance intended substitute

comparable We non-IFRS have provided financial measures a financial reconciliation of to these the measures most IFRS presentation. this in directly

now turn me Gibbon, X. to Virgilio Afya's CEO Let call with Slide the starting over

Virgilio Gibbon

strong of for our the and you, everyone first us XXXX thanks, XXXX a Thank joining positive reflecting initiatives. results, of and continue execution I’m the successful very also trend today. Renata, quarter strategic pleased report to

But with our predictable and would continue have a strong [indiscernible], acquisition. detail present We and like generation. we combination for I to deliver our high profitability to highlights in before last world go the cash financial through

reach XXXX XX% embedded and from X,XXX of system. is our authorized of excited to reach seats X,XXX very milestone Janeiro. translating over years, acquired seats, released UNIGRANRIO, medical growth at the for student Afya. acquisition to our XXX XXX less and the be than students. guidance IGC represented a announce XXX [indiscernible] the This at UNIGRANRIO of brand important academic the In centers years, total science quality of continuing IPO. universities acquisition profit prestigious CAGR to quality After in graduate base. their continuous an deals business course highlight like students Afya's maturity will X Including Rio also concluding all students during X,XXX solid and XXXX. student students are health current We de into are expected today. Rio Health maturity of enter integrated more with students X.XX. base as great X,XXX a This to considering with of related institution. medical the Considering education well in X than will highest represent university a offering for the UNIGRANRIO, among X% I is UNIGRANRIO has we share to seats definitely of would Janeiro the de honored in related X,XXX state score delivering our from

embedded score migrated medical evaluation. talk to the is of next represents what offer with and synergies value acquisitions. our occupancy. assure health curriculum, in an XX% will of And the center. in the cross-sell and programs maximum Afya's about implemented XX lifetime fertile a shared X,XXX will past [Indiscernible] students has education we in also leveraging medical students centers UNIGRANRIO this and distance be quality medical our Moving a growth XXX% slide will This In ecosystem services learning medical has large medical to generating to to continuing it of student. already maturity. X,XXX also each proved synergies career transaction. digital learning services Today distance UNIGRANRIO expertise be opportunity at plan

of who are Afya's of students hybrid improve traditional and graded be footprints to courses process. All will these applied be campus capabilities margins undergrad on more ex-health learning

in which R$XXX in to with approval Relations a rate. is through The if follow. in million revenues, and the XX% At XXXX, revenue granted out X.Xx from year closing are get invite reach maturity course in paid XXXX, The of seat, UNIGRANRIO additional potential granted site. cash million is CDI cash XX the with more in approval. medical structured structure If accretive adjusted is it year in equal a purchase seat aggregate comes the in related R$XXX if acquisition, [Indiscernible] approved, Web expected I R$X.X maturation the net about million XX% after transaction. the of for and terms second the granted acquisition. approval R$XXX you R$X acquisition, for upon XX XXXX, to in of is year products. payable after course see an earn approval million, per follows. if the information related very also per pending payment To EV/EBITDA price There as these products. third consider health installments as in transactions seats remaining is acquisition. expected this medical reported in XX% health XX% is our net in and In million presentation will Investor R$XXX,XXX, first all result still XX% after

to Now next page, the discuss highlights moving this the we will for quarter.

what medical we undergraduate of to I call start that used in business other to First, three comprised in results reinforce courses, science, like and products. undergrad, BUX will would segregate quarter to units, our health this

Second, of graduate specialization continuing courses. education comprised in

our digital for a also and services. position practice end concluded Third, of is Decision company that our quarter, healthcare of Medicinae, two and we education, acquisitions that consolidates pleased based healthcare services, announced iClinic, medical strategy closed technology acquisition six This in pillar. management compose a pillars of the the practice Clinical prescription management end and digital. Digital digital in another Prescription. the At on to I'm specialized Practice At acquisition tool, software. of that that’s the the financial Management acquisition Physician-Patient we January, we telemedicine Software, services payments to Telemedicine Medical includes & which Content products Electronic Relationship, Tools enhance our all have Records, & Technology

of net first highlight results. COVID, position. investments time Brazilian lower consolidation consolidation line, grew maturation due our the dollars. U.S million was was consider our renegotiation Starting XX% was number U.S to in up of conversion the with top conversion at R$XXX acquired and in million, R$XXX offset seats. reaching on Moving revenue we year-over-year, was And of acquisitions, XXXX chart, from R$XXX acquisitions this even growth up synergies to partially lower an Adjusted adjusted three in to quarter our depreciation XX% medical maturation increase results exchange medical position above interest only cash due of paying percentage increased million users. reflecting It's R$XXX quarter financial Cash million. because our rate lower Real process first the more currencies. with XX% digital from due the March of in to XXXX, to due year-over-year, the recognize medical reaching slightly to acquisition. to Real the considering reached Without in the XX% results payments ratio That active of income XX%, will period. solid Total cash to EBITDA XXXX income adopted policy students a the period, of of last due Brazilian of and worth and the position with financing of U.S of CDI then by lower extracted Adjusted was and financial between companies, XXXX. duration the collection shareholders. XXX% between in expansion cash points by year's due same XXXX, the selling seats, XX same of exchange increase Brazilian from school services combined also and up of net reflecting the the flexible and and rates medical reasons. March the our lastly, The The financial XXXX deprecation dollars increased number December rate, from XXXX dollars student XX% loans December and the XX% than

discuss will first the the to half page, guidance Moving next issued XXXX. we of the for

between earnings XXXX. margin the be Net During our net between revenue results semester of million R$XXX and XX% is XX%. to full expected and for issued year on XXXX, EBITDA is last expected guidance and revenue R$XXX first and the margin EBITDA million for we to be

[indiscernible] may this that any guidance. Excluding acquisition of concluded be

instance, For on we is being considered, XXXX. this June mark to if expect operation when conclude not

our XX% net was the are guidance. first Reported revenue the the million, results. middle guidance quarter We achieve to track of achieving for with quarter R$XXX on

results of middle distribution EBITDA achieved of and who ecosystem now services I successful digital our will medical adjusted acquisitions. school financial Luis, guidance, concluded detail we to an EBITDA, strong our maturation, of seats of with for of average from combination will In XX% XX% This to over stem and terms margin the results. seat quarter. turn the call adjusted a the

Luis Andre Blanco

Thank Virgilio, good and you, morning, everyone.

all last a the to and we Turning saw to track highlights organic I'm Since to year-over-year X strong metrics. the was financial net of XX% to records key high XXXX, able discuss years. up R$XXX achieve growth acquisitions the were growth. trend for we revenues million, reflecting year in Adjusted the next to in XXXX. slide that present quarter first the the pleased

grew Such of acquisitions, and was driven maturation the school medical reaching increase Excluding primarily ticket. R$XXX year-over-year, net XX% in increase revenue million. seats by the average by

by we companies adjusted integrated reasons Adjusted XX% income result EBITDA, lower million, that year, recently our terms last by quarter In R$XXX almost offset flat was reaching years, were mentioned the of of net offset margins of X the growth EBITDA comparing partially Virgilio. R$XXX by remain companies. EBITDA year-over-year, representing reflecting year-over-year. of to margin higher margins XX% reaching up in tripled acquired first just million,

resulted increasing XXX% flow an period in million, the same increase XX% cash compared to XX% the had strong of EPS Cash ratio period, remained of per share. months X%, R$XXX generation R$X.XX reaching in Our which conversion of a X to XXXX. in

seats. reaching Moving metrics students, of X,XXX XX% business operation base medical XX%, with acquisitions. by seats, and unit, a Medical seats year-over-year a of on maturations starting key page next were almost medical students up increased XX,XXX to Operating reflecting discussion for to Undergrad.

in medical a reaching X% tuition our with same with X,XXX XXXX, a up students about tuition up rate. school, rate acquisitions. combined to compared from are excluding quarter lower fees This combined graduating medical new a of revenue of higher the XX% monthly average the from year. reflects tuition prior XX% of Our with tuition were period the mix, enrolling first derived Talking combination students fees

reached R$XXX In XX% tuition million, R$XXX fees, an terms up from total million, of increase of we year-over-year.

in XX% continuing and the specialization We to a of saw represent revenue reduction practical an driven intake a page, represents next that the revenues postpone due problems not by R$X.X the decision courses impact paid offered in August On net physicians' to COVID-XX pandemic. in metrics. due since net primarily in million XXXX, and being decrease to students, are education

specialization we six Although with that reached started X,XXX have XXXX, intake April the expanding campuses second IPEMED’s quarter, strong the in process of in XXXX. a opening and in of new combination the portfolio, students

of digital Going revenues. management more active Medcel than to metrics. paying are slide, the base our I graphic software than you their of Clinical year-over-year. pillar. XXX,XXX will and active that grew users. per can users students active paying From the generates more reported see clinical-decision XX,XXX Those service users discuss subscribers next first a active tools subscribers XX%

We in accounts have distribute a of monthly graph a approximately last great in reach over increase ecosystem. and active Brazil. net and revenue. that the this reflected products These digital students Brazil. service market all opportunity of our results The here the in doctors XXX,XXX that the in shows medical on users page to physicians XX% This XX% for students

details, next are companies. to Moving the will of of XX% growth. We in XX% year-over-year, coming more revenue which the net and increase acquired the I a saw net page, revenue EBITDA from discuss consolidations in

the right of page, for quarter the the the EBITDA we first XXXX. bridge show On of side adjusted

XX% career presented EBITDA from R$XXX from the in During we and XX% usage and year-over-year into of is to other integrated the this also integrated XXX% synergies from increase of million increased period, is increased occupations years. and coming implementations the acquisitions acquired as XX% curriculum. and coming our to companies high with the past plan have medical adjusted of the we centers that extracted [indiscernible] our margin

forma end Moving not -- Cash at total debt the reflecting Considering quarter. of for to and end and in UNIFIPMOC than up would R$XXX open XXXX, the Q&A net the session. million were quarter R$X.X signed of off XXXX, discuss Softbank equivalents closed The companies. debt subsequent operation, first million will Thank you. closed in R$XXX next quarter closed, which not quarter digital cash lower in were but already X% acquisitions reach debt million UNIGRANRIO R$XXX was acquisitions net batch consider This XXXX. the the the position pro were from net billion. now our payment cash to was cash that position. this the conference does acquired closing and I and

Renata Couto

Our Martinez JPMorgan. first question from is from Gabriel

Gabriel Martinez

everyone. well? me? you you Hi, hear Do Hello, me can hear

Renata Couto

Yes, we can.

Virgilio Gibbon

Yes.

Gabriel Martinez

you very Okay. much call. Thank for the

We have regarding two here questions UNIGRANRIO.

like robust the business as of And distance extract we in your expertise? learning can question amount are the are of is very first nowadays? distance you. to on you're and question. So the our learning be synergies thinking this operations would you're is potential one see UNIGRANRIO. increase their perhaps would related based what's health operation, increase first on UNIGRANRIO the were pointing units How regarding you plan how the terms out. no on new which their that and This at ticket see And levels tickets only you for So do is the these which And creating second in questions. medicine? also level Thank if campus to which regarding your on

Virgilio Gibbon

Thanks your learning. one, first your for Virgilio. About is This regard question. Gabriel. distance Hi.

this Afya's UNIGRANRIO all are to to on from We going distance campus or programs platform. platform on to coming leverage as campus expertise migrate our learning use the and apply all ex-health

for and margins that can the will medical us integration acquisition us comes be new opportunities huge come also [indiscernible] helping with great operation acquisitions these and are faster the acquisitions these for to and recent programs additional health for give leverage school a a programs. also after following So in for that

On tuition maturation have still on UNIGRANRIO today enrollments average programs. R$X,XXX on the on medical also the is tuition. They for around and ticket,

of around first next so maturate the to to the have cohort we opportunity years. through X the R$XX,XXX, tuition year higher The is X tuitions the students these

ticket the main About cohort [indiscernible] still have the for considering one have location, campuses opportunities two -- the one. improvements in main campuses So is we campuses, three largest maturation.

third the in medical of have -- where school in still maturing. is [indiscernible] second new we XXX% that with The one operation maturation the health still is and [indiscernible]

programs it's go-to-market We another the of campuses, now opportunity close to a sides, small -- are [indiscernible] making an north analyzing have all campuses still platform. we learning in of the the campus distance and that operation there's and all this a campuses on state because very to maybe

doing. we it's yes, too So campuses. are opportunity an analyze to those what But the of early manage to it's location

Gabriel Martinez

Very Thank Virgilio. clear. you,

Renata Couto

Thank you, Gabriel.

is question from our So Morgan next Stanley. Caio from

Caio Moscardini

everyone. morning, me? Good hear Can you guys Hi.

Renata Couto

Yes. Perfect.

Caio Moscardini

great. so Yes,

Is I So margins, question the players? expansion? XX%. Rio margin maturity, was the -- in that to around this my it that a big which is very strong market, competitive So regarding de very really to are very wondering, have drivers at the like those Janeiro at feasible expected especially should would lead be arrive margin what

Luis Andre Blanco

for approximately we profile, we Janeiro, to though on a If R$XX,XXX can margins. this achieve competitive of from just kind Rio we market, of on new this And maturations. can Luis portions as come dollars we've business XX% we make profile speaking. health for the most the Medicinae of of are ticket When around that we of that's from maturations confident on students. with we Its for like these Hi. the that Caio. portfolio very our even projections that And see we ticket same coming revenues settled the have coming XX%. revenues total that we kind reached have other institutions de the have the Medicinae that programs. compare these the

pretty now synergies reach we the we margins. of implementing that confident can place that XXXX, in have that So we on kind these playbook are of

Virgilio Gibbon

we them add operating if of a operate of margin. this have very and margin contribution XX%, the mature above much than in may Yes, I higher here, our above schools some Caio, contribution more margin medical XX XX% for schools

benchmark education, in for internal an from more you compare XX% make of programs. So coming coming maturation medical from and health when the XX% portfolio than

a of very can in [indiscernible]. view have we good We reach where terms

confident reach highest tuition in new UNIGRANRIO we one R$XX,XXX the for in are in to XX% have are margin contribution Janeiro of with very like the almost Rio that consider Afya's, in enrolling this first students X city So tuition, years. as de a we the that

Caio Moscardini

guys. it. you Thank right. All Appreciate

Renata Couto

Okay.

from Next comes Goldman from question Vitor Tomita Sachs.

You go can on Vitor.

Vitor Tomita

Thank for our questions. you taking you. all Thank

Afya's UNIGRANRIO believe So And rolling to operation challenges acquisition could our on solutions. second near-term UNIGRANRIO? more the if to curriculum And this at now out question on overall of as would whether more such in large the likely any question could in first focus and be you you you asset a Thank the into is related targets M&A or you. potential strategy, do what main smaller UNIGRANRIO. if change are digital be integrating our least also anticipate namely, focus

Virgilio Gibbon

for Thanks question. Vitor. your Hi,

M&A, be our have And of terms all, to to terms expect first integration, of is the it most that the months. be the complex closing sure, for now integration will In few UNIGRANRIO in will the community. XX between to from months next all curriculum of we acquisition full at sale XX after deal,

that into can terms help year. a the there's services X we in the plug the that of for of terms think digital curriculum during technology, I all there of first implement to process in learning enhancement lot our of we

lot a of there's medical the that's So of programs. win-win in curriculum for terms plug-ins, a

I that. So kind of on there think some will don't be resistance

On de the operation. can something with Dentistry in areas that join other some our the our curriculum doctor They will have Janeiro. health leverage terms very Also our Rio that in programs. health is there's program traditional expertise in doctors of here. programs, mastering in [indiscernible] lot we and of I health programs a professor think masters we in portfolio in also

integration, careful So be long-term. a it will very very

base. the we all also for medical the curriculum that be integrating first and can sure, will enhancements the On for our plug-in entire wave, student

services One leveraging area, to of digital focus dedicated we medical opportunities, all the on opportunity. one school and terms In analyze completely almost are organized digital in on the opportunities, two other avenues. our is M&A the

guarantees are in we So parallel.

here So reducing to speeds of costs it's operation in companies tech not our to new opportunity our attracting keep or terms hurting strategy our here.

Luis Andre Blanco

that? [indiscernible]

Virgilio Gibbon

Yes, yes.

Luis Andre Blanco

adding color that goals achieved that all, you of -- the we of to and Vitor in just said, what Thank that more Virgilio. very surpassed the to IPO. for all what Virgilio as we you, of we've provide questions are the market glad to proceeds use -- your first Thank you, give

about portfolio. on opportunities So now the X% maturation. acquiring that accretive with that keep for we the have, institution for has medicine a going within very is us accretive we're we see market to on Having that, our growing undergrads for it's keep we are over that a -- said the X,XXX seats going that portfolio

on So much that. we value see

digital the We of from all year. fulfill for to on market guidance, power undergrads. place. service, adding our pipeline strategy career. keep these want the we in more to the seats have about fertile have them that his to a provide with XXX per than physicians And of XXXX going the we're in with We very six service pillars And the

So we best aggregate these our in are entrepreneurs, providers the talking what with portfolio. keeping health to best to tax service see the

So digital -- strategy. said of being we are any in companies kind what can of our the all aligned not physicians. change adding the for do the service being kind side in and UNIGRANRIO size keeping, in we profile We of acquisitions at of point keep of and

Vitor Tomita

Thank both. clear, you Very

Renata Couto

Okay.

can comes next CS. So from now. our question Cepeda from Cepeda, go you

Mauricio Cepeda

Can hear me? you

Renata Couto

Yes.

Mauricio Cepeda

for Okay. for Thank questions. the the you. Thank Thank time, you you.

do -- tech specifically, concentrate so going or of question. in short-term, We the do the question go one are more you Thank see the very for business UNIGRANRIO acquisition undergrad in for in history. acquisitions the your little before My capital was, acquisitions, large and the showing more business? pro consolidate more bit is acquisition, of accelerate milestone of you about a a you a you forma distinctive schools? to intend net that Just debt. course, for willing to you. the Medicinae And can thank Or

Luis Andre Blanco

of these would successful, in a it's that our quarter. it's Cepeda, have, the cash XXX% very, learning that first And all, we of have the to the on adjusted COVID we cash difficult strategy, implemented that -- of I About policy that in in remember strong was flow for these generation very generate The questions. cash was even here. times. strong. capital these proved flow due what generation over to say providers flow we -- cash, Thank important first lot Hi, your Luis you

achieved we're remember and these is point R$XXX operations going The reflect that number as to cash net of position. this with The that the debt flows net not May. we've to debt with operations that debt Softbank than perceive [ph] in more do million second in

just important these have a a base XX with have percentage the going we in pro very a in to cash forma of the to a we've -- paid we negotiate sellers the this seller's we're of new XX% offer, next strong the strong and positions because operations, cash highlight the year's finance finance. close, moment UNIGRANRIO that remaining pay through flows, we So that

we coming the in [indiscernible] are targets So okay. segments, keep

Mauricio Cepeda

Thank you. Very clear.

Renata Couto

raise So comes remember, ask want hand. Bradesco. you The last Lucca just question to your from question, to if Brendim a from just

You can now go, Luca.

Lucca Brendim

hear Can me? Okay. you

Renata Couto

Yes.

Lucca Brendim

Okay.

regarding was saw is the question postpone that it physicians' quarter the in my We first decision continuing by education. So to impacted enrollments.

positive see from this we So we pent magnitude should to forward question what's start my impact? the going segment? a up you. see the if in And is, should effect of so, Thank And demand when this?

Virgilio Gibbon

That's have On practical an delivering you, Thank XXXX, graduate Luca. important students. impact programs we the a for point.

we closed have So more same half very during very, year. had twice classes year period. that other at Day. low. the the the quarter. we last also revenues And first intake this students April for second around We on on hand, R$X to was last this strong the of compare the rhythm very, [indiscernible] practical enroll impact that the volume net on of the Afya intake when we But we the end That this the you year. just same announced million than And of resume period as impact very an recognition was and

So result half. the start the the in seeing passed now inflection and base point, second this student we'll

line we it this we just eight growth the year, We we'll You units. some a the five. aggressive growth for But and expect only second on following be semesters. very half, still to Last see reduction the have quarter. see under second launched on

have centers. XX all have terms had with in programs, half we being the than more through we are of we Also operating Now now programs, in second distributing graduate these centers year XX programs. offered last XX and and XX we our

good rate. a it's very leverage and to growth a opportunity this have huge operation So

I when growing care think XX% very [Indiscernible] we expecting of But number quarter, organic pure the other and to the Medcel but Medcel a in it's digital platform. for we the mention because acquisition, as doctors seeing on MRR fast. this year-over-year. health the last would worth we I'm are companies, services results because only this are we been that have just showing not organic, XX% of second [ph] half enroll start that our of IPEMED -- joining second sorry, year the half in above

So digital this future on is very the important for forecasts the services.

Lucca Brendim

Okay, very clear. Thank you.

Renata Couto

Okay.

here So our and XXXX. that's it So following business of each units? guidance in chat. year for quarter question We fourth guidance guidance we release breakdown provide actually And for EBITDA an quarter have an received semestered. you second quite a between is you the a have the the semester. Could EBITDA

it For revenue R$XXX million this is from semester, of first net R$XXX million XX%. margin to to and EBITDA XX%

more okay? any if that doubts. not still today. free follow-up I questions. a you can of give margin and understanding you us if nice to But send we thank I the relations.afya.com.br, a on it. not all you please any better we business mail to just please a we And contact for investor Have Regarding you did us think participating want feel for have disclosed that have segment, with want EBITDA day. do me

Afya Limited (AFYA) 28 May 212021 Q1 Earnings call transcript