AFYA - Earnings call transcript Q1 2022

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Renata Couto

Good evening, everyone. Thank you for joining us for Afya's First Quarter 2022 Conference Call. With me on the call today is our 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.

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

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

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

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

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

Virgilio Gibbon

Renata, Thank our and today conference on joining first XXXX us call. you, everyone, for thanks,

results, once and the and above Afya, along predictable and in for record great generation. I'm start another its finally cash ahead. to high pandemic We shows resilience can proud of present another our us this see expectation trend, success quarter the the For reaffirming with year the losing again business, growth and

run I four topics. main will call, through During this

and ESG took First, I which investor will remember presented Day, last some key last our month. points place at

Second, I of with expectations another round will our of growth. guidance reinforce XXXX disclosed

demonstrate of solid on our present I control. transaction, performance. active of least, last on our our the And but will the according not topic, talk quarter, an we'll financial highlights Third, fourth change

unique, for Investor Day both what Page building are our on ecosystem of the our BXC On we where health. education the future. are on our accomplishes our our ramp to and us expansion future, we and and discuss We of highlight, moving addressable segments now you number what implementation to first, having the services our we and X. makes and So expectations how digital ESG to with April our X. can topics, sustains and Inside presented last strategy, building market the after digital services digital ESG strategies, BXB these with up

free the resilience feel bringing XXXX guided to on we more. our to high and areas energy, please pricing achievement it social have to now out up vulnerable governance such available business all is our case missed Sustainability ESG this much our Report by and so our and barriers in embedded our education check addition of our adoption power This is evolution, as the of In successfully In out. it demands, of points third IR find Second, are And in which net you'll relevant report, company. Annual industry check is third, information out the of for entry. we the all page. event, and proud website you performed culture impact there, Also, far. ESG clean very

consistent we well and which our structure our academic their from achieved as report, stages proposal medicine the detail in inroads on operations. information in continue management results segment, also consolidated digital which training This position have We our practice. Journey. our ESG Professional strategy guides medical as all have of with along the the and business it, with unfolding in the gathered its leadership be In service is in partner our into physician to our

environment social produce the through to you encourage We our addition impacts we operations. to reading. In join

Slide Moving X. to number

year meds segment. successfully enabled of entire us business and for and to our with year XXX% X.XXX revenue XXXX. recovery that of between into the once education R$ and of model of resilience schools R$ students, our XXX our for acceptance predictability presented continued is expected billion insurance, the Take last of medical X.XXX new of also occupancy new account its on call, million As for introduce and results again, to conference high guidance adjusted the expected EBITDA be all R$ in be XXXX. is billion, of between to Net and XXXX the R$ X.XXX billion conclude

happened times figures that another showing important we represents relevant became operational of about partner exit the to a an In this this concluded than incredible from when and three of it slide, quarter. XXXX X the has Excluding of since will Class comment after transaction next ago. where This acquisitions of any results be Afya's in announced year the years more are ahead which a may issuance strong though operation, guidance. X growth acquired when public almost the compared shares XXXX closing Afya B even we million after been family. Esteves the talk Bertelsmann, we month, These

transaction, the XX.X% this of own will XX.X% respectively, of of approximately interest and XX.X% As and total result and voting a Afya. the beneficially and closing of XX% shares, the in

will leading As, to a the strategy this through to Also, to with participation long-term now slides highlights moving with stake. one its along of media Bertelsmann, financial Esteves significant after we in my world's and we benefit two first significant will shareholding delighted has footprint I from family increasing commitments session with are its their advanced in active companies the reinforce commitment first that of continue that education its sector takeaways. we our quarter, vision company. show the presentation, on for last our And the and of evaluation

XX% with with net we increased XXX.X million Adjusted reached year-over-year, EBITDA R$ have of results. than XX% beginning revenue million adjusted followed said margin by an growth year-over-year, of above more I As the started XXXX of call, R$ XXX.X XX.X%. at expectation the reaching this a

market this buybacks per year. and and allocation and interest share, level result One per XX% more X.XX higher in R$ discipline is structure. this a our net quarter results, efficient on rate, growth Even operational the M&A than capital highlights above of capital of debt reaffirms the reaching share, earnings last consider great

confirm higher XXX.X We generation. adjusted year. cash than with last the operating of cash XX% another also reported growth, generation, great our and We strong ending flow tripod profitability million, quarter R$

now operational the of quarter. Moving to the update

this operation. after to a gradually to education integrate our student XX% seats than year. we expansion capacity more medical same can period XX% a growth last In also organic continued year-over-year. classes, pandemic in confirm X,XXX grew strategy Approved seats and presented to the recovery impacts the strong growth on growth reached same new acquire, represented These to practical students underground our revenue of that consolidate our XX% compared combines see Our results the period. quarter,

Digital the top the off Thank will we XXXX with expertise. we our of XX.X CFO, color call opportunity. R$ users, Health Blanco, timed our represents to and Blue service financial quarter reached round Brazilian highlights, of give of Ocean expecting on I the the upside you. XX% ended the than our another and a XX% ecosystem a On continued to more of with quarter more market education turn the This digital growth year-over-year. adverse Luis the million, active XXX,XXX macro now demand, operational scenario, XXXX, To After taking to guidance generation far so on resilient summarize, high I and margin next Services first are huge M&A all considered pricing high on of expansion slide, and over and the metrics. and already cash physicians. strong even and solid related Afya's power, results said predictable profitability continuous growth,

Luis Blanco

you, Virgilio, good and Thank everyone. evening,

XXX due and period and million, medical decision. strong million, was give Also the and the XX consolidations the Supreme XX% and of another quarter seats with average to further fees of public a R$ it EBITDA recovery, related was medical services. than results collective in R$ year-over-year December quarter generation adjusted to to same non-recurring ticket Slide the margin satisfaction points million, presented to net which color quarter improvements reflecting by XXX will cash million to Adjusted revenue the schools in ceased mainly decrease medical XXX% XXX% to tuition of of net Adjusted XXX of financial The the preparatory in I X.X COVID-XX, of to continue to increase legal million, and to resulted year. to adjustment X.X% discounts mainly the markets. to procedures first the R$ Afya. Court in flow year-over-year of was XXX same Adjusted for lot prior income margins ratio compensation in XXX education and digital EBITDA for between mainly Moving to quarter. than important more up to R$ individual, And cash granted discuss lower of in and that on in more the the XXXX. up decreased quarter of mostly for increase net I decreases period growth. highlights the of acquisitions the XX% XX% high It maturation XX.X%, while one, is related was for programs mention has conversion in higher residency the due to been basis XX% with consolidation quarter compared net a EBITDA in of net was of the income in sale, year-over-year R$ XX% the in expenses. of Adjusted GAAP expenses acquisitions adjusted the which share-based this shown competition quarter-after-quarter income this in and

unit. Starting metrics with for discussions XX to the by undergrad Slide Moving operational of programs. business key

the year-over-year, acquisitions, XX% more growth than was seats increased from The R$ grew students more organic students X,XXX Our achieve medical Considering XX% medical than at inorganic X,XXX to an have and XX,XXX the for and excluding number average medical XX,XXX maturity. year. additional upside proven R$ year, school compared net to X,XXX seats reaching to medical we seats. of approved students with ticket undergrad prior year-over-year X% expectations,

X% the Net of of saw pandemic. quarter, performance the repayments, from a health-related great better the XX%. R$ to quarter, despite of we've million our was due COVID-XX related about metrics. increase million, increased revenues which same In segment, and of from XX% are from of XXX the X% revenue education to the a the students fees In prior process, to reached of these of year, increasing medical of when period This in quarter-over-quarter mainly courses specialty of R$ continuing interruption this decrease year-over-year. students terms XXX represent prior school up reported recovery recovery strong mix, total effects the compared education year. intake Talking XX% XX% number the we by derivative an tuition continued from for

service number Moving I digital the metrics. to will XX. Slide discuss operation

ones On in the revenues you the total the payers in active the are generate which that BXP. slide, first graph see can

growth this So a a we far, XXX,XXX XX% number year-over-year. users, quarter, paying reached have of in

Brazil, higher in spread than this service net BXB XX% on before. within which now sale higher was our physicians Our of we in will prior same reached net due as period net from more decreased resident the break said medical X, by our Digital BXP you I graph. said this representing we expectations, quarter, XX% ecosystem Also of competition a digital as markets, Virgilio before. than quarter, have the XXX,XXX revenue the service of can caused active lower the see down XX% to students and all monthly users on, as to year and start disclosed in since revenue these last strategy performance

the BXP from the the service came is net XX from in strategy beginning. BXB XX the from million once million digital R$ of R$ X and million revenue, the the So still came R$ BXB

slide. next the to Moving

with share Speaking have to digital news today. strategy, of our you service we exciting

connecting Catopapers, we and Alidamitcina educations diabetes addition for health care combination, of to a third solutions another technology our free to In diabetes physicians improve management and Glic, proud users, patients daily use app that and and business are XXXX. announce practice devices to providers. care routine and

active further we and these relationship ecosystem. With XX,XXX ecosystem more strengthens strategy patient’s Afya's physicians will monitor combinations add represented These into patients. entry and our business our and acquisitions, physicians' X,XXX than in pillar

our our the through Our last now of quarter available to XX-month year. will at a repurchase positions, is can moving quarter the million XX% net million, Cash share to of information mainly business XXXX. R$ two Net due key. a combinations in payments compared X.X XXX first cost and partially was decrease slides. R$ related to be discuss acquisitions and to period totaling end the cash also cash giving executed billion compared debt R$ by free prior the and cash equivalents this same related net on our acquisitions flow website color and debt. I my IR debt debt This were of more generation. of this license in accessed And in and of XXX offset programs, increase now X with during the period to

breakdown our prepared the see and selling On main with our ends open the cost our now I shareholders. next slide, the debt lowers remarks. debts, debt you transactions, This gross section. consider accounts to Q&A in table of SoftBank finance average and conference of Thank for payables can will a you. our

Renata Couto

from go. now first from Cepeda Credit Suisse. you [Operator Instructions] question comes The may Cepeda,

Mauricio Cepeda

you have questions Thank some the for time. here. I

in The about see We very the is recovery was which first the a is healthy. continued that education. there tickets,

a small was in student decrease there the base. Although

least stabilizing student would considerably other see the that educational declining So base if if is businesses. The who are now we there these And my that similar in seeing at non-health the tickets? expect we groups have student courses going forward? the be that currently the that potential base. see second tickets XX%. we question about They is are are question the that something is Or now additional we

would double courses players down So effort sell case business? these my knowing the other the not to question stabilizing to of it's of Thank that are the kind be you. the some if

Luis Blanco

Thank speaking. you, Cepeda. It's take I'll first question. the Blanco

continued the only we our have Regarding major have operations we But education mind not have we medical segment the one. in to being. segment, it's that -- in the

their have offerings. have some operations in post We that courses graduate

of So we what happened other the institutions in increase the continue in decrease students to courses amount this quarter e-payment. and that in these

our we we the question in education. efforts of offer a it's our medical between So focused have more continuing brands, the growing students all the mix IPEMED that as because IPEMED on are flagship

decreasing question other just then a other ticket. increase than of offers, mix the more that it's IPEMED So in

Renata Couto

question, that the than the higher mention it's Before ticket Cepeda, net courses other Virgilio important second we gets to here is in have. that

institutions tickets. UniRedentor as have acquire said with such wet we different comes courses, as already and sometimes that So Luis they

of these ticket, why have of positions, X,XXX, their R$ other mostly physicians. these per R$ in-person institutions, to tickets you X,XXX And X,XXX we something to is income. month. per other that to attending it's R$ month. activities, value R$ related that, So mostly look activities around in in courses, for it's if IPEMED kind are right? So with close IPEMED remember lower different have X,XXX And And like of we a

day in the should just So in that be the model. should of the model we future, end one IPEMED we have

Virgilio Gibbon

tuition. transitional or content X graduate, lot Just new campuses add offering about type we the of that just and seats launched remembering a of this very high-value

the that type be So of more we'll this much program, trend concentrated value. on high is

quarters, So resuming continues the the science And also even last are be will programs. of mix terms higher in see we question health from to year, effect help and ticket. the to some growth we'll and in this remember different student second base that worth mention that important following offering Taking that other IPEMED. showing also are grow for other we the even consider about other programs. institution your saw It's we

that's our these operation. much in So for also, high-value ticket programs from an we we have of contribution, trend issue. student our a type are growth other onto of important Different resumed more And base, seeing for in saw last we mainly base acquisition good we some that years. on lot terms the most a science, new on organic this grad of product, them, had of on health the negative two on we

not our it's is shut doesn't we that offer generating to continue product our of not down continue sustainable type discipline So will make this our sense in to on also It value. operation. and

of together if have that in we or this it. programs regulation, different operate the the any the separate that university is a terms license market, in complicated, we because sell will do have center that course, on in type a we But Of and university. can remember campus we in of

lower XX% it's undergrad all on but of revenue, -- dilute total will So our than operation. programs undergrad we the to continue our

Mauricio Cepeda

you. Thank clear. very Okay,

Renata Couto

next our Tomita. So comes from question Victor

Victor Tomita

evening have good and questions our I questions. taking Hello, side. everyone for our thanks two from

we time, some relationship digital are Is and strategy an face-to-face new software. hospitals? in other be clinics at resuming further offering the clinical monthly physician into activity should active At portfolio software? in by consultations that we to pillar? first second for Afya's The should take more telemedicine general for your there monthly on on complement same and reduction one any would that people as Or we what patient users saw whether digital, we the And saw decision increase And being driven is for prescriptions. users also acquisitions and more in mostly seasonal question or factors active factors is that expect account?

Virgilio Gibbon

Virgilio good you start first hear will with It's from I here. question. speaking Victor. Maybe the to

just patient acquired relationship announced which the we it. in physician since we So on have

main Our for generate and supports the the demand treatment, mainly adhere treatment, easier is case the on make physicians to of and improve the relationship it on chronical treatment like to the goal treatments patients improve here for diabetes clinical more to treatment.

in our the is increase idea senior the the of to chronic in-charge treatment. cohorts So physician most disease the case, are penetration physicians those of --

BXB allow question. We also to improve planning offerings treatment, for in pharmaceutical example, a for and the are generation. those can more by operations generation enabling is increase to medications, we and the that we hospital, a and from intelligent have, access patients demand disease for are This tests physicians. the for any also and first demand We the to chronic --

On users, practice our both and the monthly suite. active telemedicine prescription management so of are part

get year-over-year. is an this So increase

more are our So practice we clinics too. using seeing management,

but the not are so maybe fast right, those. disclosing access steady, telemedicine growing we Although anymore, not you're so to

solutions is using And increasing. enabler this strategy. BXB our of number our overall are the an for important So physicians

Luis Blanco

tools, on first reduction quarter it's all exclude the now we physician in that that color give Blanco users are numbers, just the speaking, the this from they assistance XXXX on Tomita, a systems physicians more we but the management were not the clinical why itself. And why is have from you

they free. time as every for iClinic, hires for a systems So a their physician user put instance, well as

counting users. we number we exclude From this the a of assistance the from explaining first MoU note on So are the that. the put And we MoU. of XXXX, quarter table

users. this not to We're number. non-active on showing to XX,XXX that are users If almost we So this put we users. XX,XXX the going jump spreadsheets axis are iClinic

So the the in That of number the users of be growth about in is something XX%. the line the with payers. would iClinic number

on to better that's decided this just users We first this So question activity ahead. monthly quarter the number show XXXX metric. to a the from exclude

Victor Tomito

Very And clear. Sorry. you. Thank

Renata Couto

no No, problem.

we well same products. right using the And we to lake understand work was remember have bet a data we a made to that that that And been the one data. the the have when to of day. that to great Just were investors assistance. said our we how what have company what and fair after this first have didn't better quality of is We who doing to we now. about physicians to not want during see understand view with many a the also -- our that's only we And acquired that we data using is the understood at

a way guys. be to just more it's So clear for you

Victor Tomito

Very clear. much. Thank all you very

Renata Couto

Of course.

comes Next Muka go. now question may you from [ph], [indiscernible].

Unidentified Analyst

Thank question. Hi, for you everyone. taking our

be detail And of competitive comment you could please the for when So the on integration year? on end, process please dynamics we if would what you helpful? recent very Thank give rest expect for landscape top of the you. developments the on And for us this the can line could then secondly, Medcel? further the

Virgilio Gibbon

I here with can Medcel competition start landscape.

used more still X we XXXX, benchmark have was in usually and So the course. the is And med X market. players with somehow group physical in it to -- to we

new advance Internet a pandemic influencer, During arised. all lot the of of and competitors digital time, the in

XX of competitors to So we to XX -- most offerings. market, simpler nowadays new XX them in with have the XX

are offerings market. the the I -- more say, more, their options sophisticated So are would in solicited

to residence example, much there competitiveness lot of a like, question of And are of now. to the high-quality market specific offering That for or in content. competitors competitive right very So content, we the on the are more repackage a market. in a a for working simulations a this residency specific be it for specific scenario good more program new market content part is in content the our share program

We the in are testing. some also residence delay seeing

market students may these a little they lot bit that seems of of decision have a the program the or pandemic. higher years all most the in So The also struggle are of the in more take or open some debt to it delay a families there physicians as to and salaries residence preferring position be with along are students the bit. little for

we're the company demand So on on demand more a competition side the side. maybe and seeing more steady

Luis Blanco

Luca, I'll about get comments the know if later have or don't I additional second question any here. you explanation. question

Unidentified Analyst

clear. very That was

process, So -- comment no you if you great, on please integration just can? that’d if be

Luis Blanco

Okay.

of are to place roll the integration, the and in academic for So our the second price we in in students very we enroll anticipated new that in us for we tuition provider the the in beginning half move new year, place. help already process fresh will of this XXXX. It's that of

XXX% of top we Also medicine a intake have implemented. programs than for all guarantee programs. successful ex health and programs, and undergraduate So other different also line occupancy was record the already

half. we us on to are as we up internal. of quarters, expecting services coming other and to close have helping our the that close to the the operation, and XX%, the we a front process, What us shared contribution this when close in XX% have from gene for year, contribution integration next of margin to Remember second by we're full results on was units. So the our October ramp margin rollouts

round the that of another also you in program medical can help scaling will extract of synergy and even margin us to terms and go have contribution. maturing further we'll So

here. just So a summary

of we fully XXXX. terms October the of to in in be by expect our than calendar integrated integration expect and here, better are we So

Renata Couto

Jessica [Operator from [ph] from Instructions] Next question JPMorgan. comes

Jessica. go, now may You

Unidentified Analyst

taking been how within you you've And candidate have Afya to behave? set question. my units? the rates for Thank How are medicine behaving expected tickets

Virgilio Gibbon

in on intake X.X Brazil. half per seat, average first this all closed we seats so around Jessica, candidates

we average have higher the ratio per some but that regions X.X%. seat, course, was we national Of that have candidates

kind flat in this year-over-year it's terms ratio. So of of

forward, over highest this largest year-over-year. for counted to we The changed average tuition the terms In on count that the tuition was acquisition was in moving have we not price the quarter. we on our price because that a consider little and was on average new X% first changing of acquisition bit the exclude -- also the

everything we would year considering we So of keep this the programs. together, terms XX% X% around move by and of medical in end

Renata Couto

that And complementing to Jessica. gaining Remember Yes. our vision. this are value correct question, student’s we more

our So we Medcel integrated have now whitebook students. to is something that did. we already

into initiative. now a X.X. have We That's new

So they all have are can of this value we are shouldn't and more when in they perceive doing so age.

the in can prices the of to in day, can receiving the the why student perceive they future end reasons a offer. want premium So and we we are have that increase

Virgilio Gibbon

Having propositions digital it highlight digital first that the offering the added and students, that, mostly station that's well the our put and that the students, for to we value Medical our it's Harbor as Medcel way fourth said as launched important well the the for to offer, for to to ongoing students we've year.

it's the other institutions tested This going offer provide office for the all interesting as So very it after very, getting feedback to we're these to and well. students students every in. offer these and through solutions is to being

Renata Couto

from next our comes Ribeiro question UBS. Vinicius So from

Vinicius Ribeiro

clarify I necessarily -- tie first that granting everyone rules, just medicals the me. Hope kind a Two forward? prospects gaining your it's we And about is going but and changes that of the process. side. on a new your the of change to on seat and operations our wanted in to seats not also you results, something bit second they guys little if saw questions listening question, regulate

being venture sort the the and public addition markets, We with the on some are that, interest in rates higher repercussions have seeing, forward. pressure all which also work capital might is equity of to be going

guys opportunities on going valuation there wanted better change guys get would on your change you to color already strategy be just that deployment if forward, some helpful? Just if that's does are extent, should capital if seeing such if you how to some so your provide sense some

Virgilio Gibbon

Vinicius, then here, I'll capital me will get your question with Blanco help question. first allocation the

institution seats that management procedure of the additional Mais under in was the was released how programs. for at kind and rule under So week because last in ask the the can Medicos

was And this the that normative main idea role in morning, normative week. today we the have for this So rule last behind cancel.

they you to the for campuses Mais before was normative Medicos. we Mais the can Medicos for So Medicos ask increase from return rule any a released seats last was what only Mais week. That once

change expected no was was keep new that for clarification But process. idea to was rule give So the and to released. the the rule trying more before this that same

Luis Blanco

Vinicius, the Blanco mentioned you of understand when you our you VCs digital the I completeness -- question, ecosystem. about second that your speaking, to pressures, -- the about want talk

today, all our the pillars acquisitions the Within view. we announced that in was just completed

with these to to the this using completed what in want offering have solutions we So most ecosystem our physicians. increase within usage physicians Then students for the medical we that. increase and country with penetration XXX,XXX physicians active

acquisitions completed this terms complete whole. the or in and about can on, relationship, combinations. we for talk grow as are we let's satisfied color, guided So undergraduate going But if forward can that disciplines as expect we see can physician’s as the per we a on seats move these in we our We ecosystem talk these Giving we as XXX the We keep now about acquisition year we more that market. you we are move well. still the business on What to completeness offers. with we now forward. volumes add are offer, it, the where of patient of if

we this capital. the well. are capital of had keep in allocating of discipline we the with increase to in that interest just know that. the have the buyback third of that as risk our and we on in our And allocating program. And buyback we rate, increase working course, May, capital, capital cost concluded We of So mention we increase that the --

beginning and possibility third disclosed program, completed completed, May. of market in evaluating today, as we we to keep the evaluating -- to XXX% the place we the XXX% that are But opportunities, buyback of we buyback. in keep in have So our put another

Vinicius Ribeiro

Got it. Thanks, Virgilio Blanco. and

Renata Couto

would we available disclosure reminder And for as our make any anything to if that just you participating the more else a thank I don't all we just myself questions, today. you I Investor Relations. need have report. today So like from sustainability

Okay, you much, a good night. guys. Thank have so and

Afya Limited (AFYA) 24 May 222022 Q1 Earnings call transcript