Another Year of Strong Performance
Robust EPS Expansion
Guidance Achievement
NOVA LIMA, Brazil, March 14, 2024–(BUSINESS WIRE)–Afya Limited (Nasdaq: AFYA; B3: A2FY34) (“Afya” or the “Company”), the leading medical education group and digital health services provider in Brazil, reported today financial and operating results for the fourth quarter and full-year period ended December 31, 2023. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).
Fourth Quarter 2023 Highlights
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4Q23 Adjusted Net Revenue increased 22.6% YoY to R$729.5 million. Adjusted Net Revenue excluding acquisitions grew 12.5% to R$669.7 million.
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4Q23 Adjusted EBITDA increased 19.3% YoY, reaching R$288.9 million, with an Adjusted EBITDA Margin of 39.6%. Adjusted EBITDA excluding acquisitions grew 6.4% to R$257.7 million with an Adjusted EBITDA Margin of 38.5%.
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4Q23 Adjusted Net Income increased 27.7% YoY, reaching R$164.4 million, with an adjusted EPS growth of 29.6% in the same period.
Full-Year 2023 Highlights
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FY23 Adjusted Net Revenue increased 23.9% YoY to R$2,874.1 million. Adjusted Net Revenue excluding acquisitions grew 13.3% to R$2.626.9 million.
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FY23 Adjusted EBITDA increased 21.2% YoY reaching R$1,165.7 million, with an Adjusted EBITDA Margin of 40.6%. Adjusted EBITDA excluding acquisitions grew 9.5% to R$1,052.8 million with an Adjusted EBITDA Margin of 40.1%.
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FY23 Adjusted Net Income increased 10.5% YoY, reaching R$591.1 million, with an adjusted EPS growth of 11.5% in the same period.
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Cash conversion of 97.1% generating R$1,088.8 million of cash flow from operating activities that resulted in a cash position of R$553.0 million.
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Around 268 thousand monthly active physicians and medical students using Afya’s Digital Service, an increase of 2.8% over the same period last year.
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Table 1: Financial Highlights |
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For the three months period ended December 31, |
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For the twelve months period ended December 31, |
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(in thousand of R$) |
2023 |
2023 Ex Acquisitions* |
2022 |
% Chg |
% Chg Ex Acquisitions |
|
2023 |
2023 Ex Acquisitions* |
2022 |
% Chg |
% Chg Ex Acquisitions |
|
(a) Net Revenue |
729,866 |
670,071 |
584,002 |
25.0% |
14.7% |
2,875,913 |
2,628,723 |
2,329,057 |
23.5% |
12.9% |
|
|
(b) Adjusted Net Revenue (1) |
729,479 |
669,684 |
595,138 |
22.6% |
12.5% |
2,874,085 |
2,626,895 |
2,319,131 |
23.9% |
13.3% |
|
|
(c) Adjusted EBITDA (2) |
288,912 |
257,744 |
242,207 |
19.3% |
6.4% |
1,165,678 |
1,052,844 |
961,924 |
21.2% |
9.5% |
|
|
(d) = (c)/(b) Adjusted EBITDA Margin |
39.6% |
38.5% |
40.7% |
-110 bps |
-220 bps |
40.6% |
40.1% |
41.5% |
-90 bps |
-140 bps |
|
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*For the three months period ended December 31, 2023, “2023 Ex Acquisitions” excludes: UNIMA and FCM Jaboatão (October to December, 2023; Closing of UNIMA and FCM Jaboatão was in January 2023). |
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*For the fiscal year ended December 31, 2023, “2023 Ex Acquisitions” excludes: Alem da Medicina (January & February 2023; Closing of Alem da Medicina was in March, 2022), Cardiopapers (January to March 2023; Closing of Cardiopapers was in April, 2022), Glic (January to May, 2023; Closing of Glic was in May, 2022), and UNIMA and FCM Jaboatão (January to December, 2023; Closing of UNIMA and FCM Jaboatão was in January 2023). |
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(1) Includes mandatory settlements in tuition fees granted by state decrees and individual/collective legal proceedings and public civil proceedings due to COVID 19 on site classes restriction and excludes any recovery of these discounts that were invoiced based on the Supreme Court decision. |
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(2) See more information on “Non-GAAP Financial Measures” (Item 07). |
Message from Management
We are delighted to showcase another year of remarkable operational and financial achievements for Afya. Once more, we have demonstrated the robustness of our business, the effective implementation of our strategy, the dedication of our team members, and the reliability of our business model.
This year we disclosure notable rises in net revenue across our three segments, strong cash generation, and substantial growth in EPS, underscoring our ongoing business expansion. The convergence of these elements has empowered us to meet our 2023 targets, and we are now looking ahead to the objectives set for 2024.
For another year we are pleased to disclose that the most significant growth of the year, in terms of revenue, stemmed from our Continuing Education segment. Through a robust intake process, the establishment of three new campuses, and course maturation, we can see once more, our students, employees, and partners benefit from our constantly developing ecosystem.
Our second most noteworthy growth originated from our undergrad business — our core business remains as robust as ever, with Medicine courses increasing tickets higher than inflation, maturation of medical seats and the completion of UNIMA and Faculdade de Ciências Médicas Jaboatão integration process in November, less than one year after its acquisition, proving our commitment to extract synergies within the operation.
In our Digital Services Segment we are proud to see another year of organic growth, reaffirming the immense potential of the business. This surge can be attributed to the success of our B2B engagements, where we have secured new contracts with pharmaceutical industry leaders. Furthermore, the continuous growth in B2P subscribers reflects our unwavering dedication to expanding our reach.
Afya´s 2023 Net Revenues was almost four times higher than in 2019, the year of our IPO. Furthermore, there has been a notable increase in cash generation. We have witnessed the cash conversion rate consistently above 90%, demonstrating our ability to achieve substantial growth while enhancing profitability and cash generation. Lastly, our earnings per share (EPS) have more than doubled since 2019 and is still growing, underscoring our capability to blend organic and inorganic growth with disciplined capital allocation, resulting in significant returns to propel our growth.
Besides its results achievements, Afya also has been investing in building its sustainability strategy and ESG (Environmental, Social, and Governance) vision to enhance value generation and impact for its stakeholders, as well as to contribute to the longevity of the business with socio-environmental responsibility. Aware of the role we play, ESG-related aspects permeate our strategies and routines. We aim to contribute to the social and economic development of the communities in which we operate and enable physicians to experience the best aspects of their profession.
As an indication of our outstanding results and impactful initiatives that are being shown to the market, the announcement of our sponsored BDRs this year, marked the entrance of Afya in B3 and we proudly celebrate several awards recognitions this year, such as “Executivo de Valor” recognizing Virgilio Gibbon as the top CEO in the Education Sector, “Valor Econômico’s Best Education Company in Innovation”, and another prestigious recognition for being the best Company in the Education Sector in the “Valor 1000” award and “Great Place to Work”.
Strong performance, consistent growth, success in all segments, social responsibility and public recognition: this is how we are evolving and empowering our mission to provide an ecosystem that integrates education and digital solutions for the entire medical journey. We are very proud of our business and what we have achieved so far, and excited the future.
1. Key Event in the Quarter:
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On October 31st, Afya announced, through its wholly owned subsidiary Afya Participações S.A. (“Afya Brazil”), the acquisition of an additional 15% in Centro de Ciências em Saúde de Itajubá S.A. (“CCSI”;” FMIT”), consolidating our position of ownership to 75% of the total share capital. The aggregate purchase price for the additional 15% was R$21.0 million paid 100% in cash on the closing date.
2. Subsequent Event
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On January 24, 2024, the Ministry of Education (MEC) authorized the increase of 40 medical seats of Faculdades Integradas Padrão (FIP Guanambi), located in the city of Guanambi, State of Bahia, which will result in an additional payment of R$49.6 million. With the authorization, Afya reaches 100 medical seats on this campus, and 3,203 total approved seats.
3. Full Year 2023 Guidance Achievement
The Company’s financial results reaffirmed the resiliency and predictability of Afya’s business model.
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Guidance for 2023 |
Actual 2023 |
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Adjusted Net Revenue* |
R$ 2,750 mn ≤ ∆ ≤ R$ 2,850 mn |
2,874 mn |
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Adjusted EBITDA |
R$ 1,100 mn ≤ ∆ ≤ R$ 1,200 mn |
1,166 mn |
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*Includes UNIMA and Faculdade de Ciências Médicas Jaboatão’ acquisitions; |
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4. 2024 Guidance
The guidance for FY2024 is defined in the following table:
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Guidance for 2024 |
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Net Revenue1 |
R$ 3,150 mn ≤ ∆ ≤ R$ 3,250 mn |
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Adjusted EBITDA |
R$ 1,300 mn ≤ ∆ ≤ R$ 1,400 mn |
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CAPEX2 |
R$ 220 mn ≤ ∆ ≤ R$ 260 mn |
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(1) Excludes any acquisition that may be concluded after the issuance of the guidance. |
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(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). |
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5. 4Q23 and 2023 Overview
Operational Review
Afya is the only company offering educational and technological solutions to support physicians across every stage of the medical career, from undergraduate students in their medical school years through medical residency preparatory courses, medical specialization programs and continuing medical education. The Company also offers solutions to empower physicians in their daily routine including supporting clinic decisions through mobile app subscription, delivering practice management tools through a Software as a Service (SaaS) model, and assisting physicians in their relationship with their patients.
The Company reports results for three operating segments. The first, Undergrad – medical schools, other healthcare programs and ex-health degrees. Revenue is generated from the monthly tuition fees the Company charges students enrolled in the undergraduate programs. The second, Continuing Education – specialization programs and graduate courses for physicians. Revenue is also generated from the monthly tuition fees the Company charges students enrolled in the specialization and graduate courses. The third is Digital Services – digital services offered by the Company at every stage of the medical career. This operating segment is divided into Business to Physician (which encompasses Content & Technology for Medical Education, Clinical Decision Software, Practice Management Tools & Electronic Medical Records, Physician-Patient Relationship, Telemedicine, and Digital Prescription) and Business to Business (which provides access and demand for the healthcare players). Revenue is generated from printed books and e-books, which is recognized at the point in time when control is transferred to the customer, and subscription fees, which are recognized as the services are transferred over time.
Key Revenue Drivers – Undergraduate Courses
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Table 2: Key Revenue Drivers |
Twelve months period ended December 31, |
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2023 |
2022 |
% Chg |
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Undergrad Programs |
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MEDICAL SCHOOL |
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Approved Seats |
3,163 |
2,823 |
12.0% |
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Operating Seats (1) |
3,113 |
2,773 |
12.3% |
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Total Students (end of period) |
21,446 |
17,968 |
19.4% |
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Average Total Students |
21,154 |
17,761 |
19.1% |
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Average Total Students (ex-Acquisitions)* |
19,040 |
17,761 |
7.2% |
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Tuition Fees (Total – R$ ‘000) |
2,573,704 |
2,032,888 |
26.6% |
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Tuition Fees (ex- Acquisitions* – R$ ‘000) |
2,332,745 |
2,032,888 |
14.8% |
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Medical School Gross Avg. Ticket (ex- Acquisitions* – R$/month) |
10,210 |
9,538 |
7.0% |
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Medical School Net Avg. Ticket (ex- Acquisitions* – R$/month) |
8,548 |
7,898 |
8.2% |
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UNDERGRADUATE HEALTH SCIENCE |
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Total Students (end of period) |
21,117 |
17,967 |
17.5% |
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Average Total Students |
21,365 |
19,441 |
9.9% |
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Average Total Students (ex-Acquisitions)* |
19,690 |
19,441 |
1.3% |
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Tuition Fees (Total – R$ ‘000) |
388,799 |
336,238 |
15.6% |
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Tuition Fees (ex- Acquisitions* – R$ ‘000) |
359,647 |
336,238 |
7.0% |
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OTHER UNDERGRADUATE |
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Total Students (end of period) |
23,471 |
22,265 |
5.4% |
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Average Total Students |
24,336 |
23,376 |
4.1% |
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Average Total Students (ex-Acquisitions)* |
21,170 |
23,376 |
-9.4% |
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Tuition Fees (Total – R$ ‘000) |
304,276 |
266,306 |
14.3% |
|
Tuition Fees (ex- Acquisitions* – R$ ‘000) |
263,275 |
266,306 |
-1.1% |
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TOTAL TUITION FEES |
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Tuition Fees (Total – R$ ‘000) |
3,266,778 |
2,635,432 |
24.0% |
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Tuition Fees (ex- Acquisitions* – R$ ‘000) |
2,955,667 |
2,635,432 |
12.2% |
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*For the fiscal year ended December 31, 2023, “2023 Ex Acquisitions” excludes: UNIMA and FCM Jaboatão (January to December, 2023; Closing of UNIMA and FCM Jaboatão was in January 2023). |
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(1) The difference between approved and operating seats is ‘Cametá’. A campus for which we already have the license but haven’t started operations. |
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Key Revenue Drivers – Continuing Education and Digital Services
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Table 3: Key Revenue Drivers |
Twelve months period ended December 31, |
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2023 |
2022 |
% Chg |
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Continuing Education |
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Medical Specialization & Others |
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Total Students (end of period) |
4,976 |
4,280 |
16.3% |
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Average Total Students |
4,838 |
3,835 |
26.1% |
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Average Total Students (ex-Acquisitions) |
4,838 |
3,835 |
26.1% |
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Net Revenue from courses (Total – R$ ‘000) |
146,827 |
108,806 |
34.9% |
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Net Revenue from courses (ex- Acquisitions¹) |
146,827 |
108,806 |
34.9% |
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Digital Services |
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Content & Technology for Medical Education |
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Medcel Active Payers |
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Prep Courses & CME – B2P |
7,563 |
14,569 |
-48.1% |
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Prep Courses & CME – B2B |
5,649 |
5,887 |
-4.0% |
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Além da Medicina Active Payers |
7,557 |
6,081 |
24.3% |
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Cardiopapers Active Payers |
9,202 |
5,034 |
82.8% |
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Medical Harbour Active Payers |
12,133 |
7,668 |
58.2% |
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Clinical Decision Software |
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Whitebook Active Payers |
153,541 |
137,767 |
11.4% |
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Clinical Management Tools² |
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iClinic Active Payers |
26,293 |
22,764 |
15.5% |
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Shosp Active Payers |
3,768 |
2,915 |
29.3% |
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|
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Digital Services Total Active Payers (end of period) |
225,706 |
202,685 |
11.4% |
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Net Revenue from Services (Total – R$ ‘000) |
229,285 |
189,984 |
20.7% |
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Net Revenue – B2P |
190,838 |
166,515 |
14.6% |
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Net Revenue – B2B |
38,448 |
23,469 |
63.8% |
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Net Revenue From Services (ex-Acquisitions¹) |
222,196 |
189,984 |
17.0% |
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(1) Clinical management tools includes Telemedicine and Digital Prescription features. |
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(2) For the fiscal year ended December 31, 2023, “2023 Ex Acquisitions” excludes: Alem da Medicina (January & February 2023; Closing of Alem da Medicina was in March, 2022), Cardiopapers (January to March 2023; Closing of Cardiopapers was in April, 2022), Glic (January to May, 2023; Closing of Glic was in May, 2022). |
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Key Operational Drivers – Digital Services
Monthly Active Users (MaU) represents the number of unique individuals that consumed Digital Services content in each one of our products in the last 30 days of a specific period. Total monthly active users reached around 268 thousand.
Monthly Active Unique Users (MUAU) represents the number of unique individuals, without overlap of users among products, in the last 30 days of a specific period.
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Table 4: Key Operational Drivers for Digital Services – Monthly Active Users (MaU) |
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4Q23 |
4Q22 |
% Chg YoY |
3Q23 |
2Q23 |
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Content & Technology for Medical Education |
20,215 |
16,539 |
22.2% |
26,012 |
24,973 |
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Clinical Decision Software |
219,420 |
221,762 |
-1.1% |
230,732 |
230,338 |
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Clinical Management Tools¹ |
26,703 |
20,936 |
27.5% |
26,944 |
24,880 |
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Physician-Patient Relationship |
1,579 |
1,473 |
7.2% |
1,583 |
1,782 |
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Total Monthly Active Users (MaU) – Digital Services |
267,917 |
260,710 |
2.8% |
285,271 |
281,973 |
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1) Clinical management tools includes Telemedicine and Digital Prescription features |
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Includes Shosp, Medicinae and Além da Medicina starting in 1Q22 and Cardiopapers and Glic starting in 2Q22 |
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Table 5: Key Operational Drivers for Digital Services – Monthly Unique Active Users (MuaU) |
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4Q23 |
4Q22 |
% Chg QoQ |
3Q23 |
2Q23 |
|
|
|
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Total Monthly Unique Active Users (MuaU) – Digital Services |
241,753 |
241,949 |
-0.1% |
254,894 |
251,487 |
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1) Total Monthly Unique Active Users excludes non-integrated companies: Medical Harbour, Medicinae, Shosp, Além da Medicina, Cardiopapers and Glic |
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Seasonality
Undergrad’s tuition revenues are related to the enrollment and re-enrollment process and monthly tuition fees charged to students over the period; thus, does not have significant fluctuations during the year. Continuing Education revenues are related to monthly intakes and tuition fees and do not have a considerable concentration in any period. Digital Services is comprised mainly of Medcel, Pebmed, and iClinic revenues. While Pebmed and iClinic do not have significant fluctuation regarding seasonality, Medcel’s revenue is concentrated in the first and last quarter of the year due to the enrollments. In addition, the majority of Medcel’s revenues are derived from printed books and e-books, which are recognized at the point in time when control is transferred to the customer. Consequently, the Digital Services segment generally has higher revenues and results of operations in the first and last quarters of the year than in the second and third quarters.
Revenue
Adjusted Net Revenue for the fourth quarter of 2023 was R$729.5 million, an increase of 22.6% over the same period of the prior year, mainly due to UNIMA and FCM Jaboatão acquisition, higher net tickets in Medicine courses, maturation of medical seats and the growth of Continuing Education and Digital Services segments.
Net Revenue of Continuing Education for the fourth quarter of 2023 was R$38.6 million, an increase of 16.0% YoY, boosted by the growth in the number of students.
Digital services increased 17.1% YoY, totaling R$65.2 million for this quarter. The organic growth is a combination of (a) an increase in the B2B engagements, increasing B2B Net Revenue by 63.8%, and (b) the expansion of the active payers in the B2P, mainly in Whitebook, Medical Harbour, Shosp, IClinic, Cardiopapers and Além da Medicina.
For the full year ended December 31, 2023, Adjusted Net Revenue was R$2,874.1 million, an increase of 23.9% over the same period of last year. Excluding acquisitions, Adjusted Net Revenue grew 13.3% over the same period.
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Table 6: Revenue & Revenue Mix |
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(in thousands of R$) |
For the three months period ended December 31, |
For the twelve months period ended December 31, |
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2023 |
2023 Ex Acquisitions* |
2022 |
% Chg |
% Chg Ex Acquisitions |
|
2023 |
2023 Ex Acquisitions* |
2022 |
% Chg |
% Chg Ex Acquisitions |
|
|
Net Revenue Mix |
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Undergrad |
627,929 |
568,135 |
499,852 |
25.6% |
13.7% |
2,511,018 |
2,270,917 |
2,037,889 |
23.2% |
11.4% |
|
|
Adjusted Undergrad¹ |
627,542 |
567,748 |
510,988 |
22.8% |
11.1% |
2,509,190 |
2,269,089 |
2,027,963 |
23.7% |
11.9% |
|
|
Continuing Education |
38,564 |
38,564 |
33,238 |
16.0% |
16.0% |
146,827 |
146,827 |
108,806 |
34.9% |
34.9% |
|
|
Digital Services |
65,249 |
65,249 |
55,741 |
17.1% |
17.1% |
229,285 |
222,196 |
189,984 |
20.7% |
17.0% |
|
|
Inter-segment transactions |
-1,876 |
-1,876 |
-4,829 |
-61.2% |
-61.2% |
-11,217 |
-11,217 |
-7,622 |
47.2% |
47.2% |
|
|
Total Reported Net Revenue |
729,866 |
670,071 |
584,002 |
25.0% |
14.7% |
2,875,913 |
2,628,723 |
2,329,057 |
23.5% |
12.9% |
|
|
Total Adjusted Net Revenue ¹ |
729,479 |
669,684 |
595,138 |
22.6% |
12.5% |
2,874,085 |
2,626,895 |
2,319,131 |
23.9% |
13.3% |
|
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*For the three months period ended December 31, 2023, “2023 Ex Acquisitions” excludes: UNIMA and FCM Jaboatão (July to December, 2023; Closing of UNIMA and FCM Jaboatão was in January 2023). |
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*For the fiscal year ended December 31, 2023, “2023 Ex Acquisitions” excludes: Alem da Medicina (January & February 2023; Closing of Alem da Medicina was in March, 2022), Cardiopapers (January to March 2023; Closing of Cardiopapers was in April, 2022), Glic (January to May, 2023; Closing of Glic was in May, 2022), and UNIMA and FCM Jaboatão (January to December, 2023; Closing of UNIMA and FCM Jaboatão was in January 2023). |
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(1) Includes mandatory settlements in tuition fees granted by state decrees and individual/collective legal proceedings and public civil proceedings due to COVID 19 on site classes restriction and excludes any recovery of these discounts that were invoiced based on the Supreme Court decision. |
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(2) See more information on “Non-GAAP Financial Measures” (Item 07). |
Adjusted EBITDA
Adjusted EBITDA for the three-month period ended December 31, 2023, increased 19.3% to R$288.9 million, up from R$242.2 million in the same period of the prior year, while the Adjusted EBITDA Margin decreased 110 basis points to 39.6%. For the full year ended December 31, 2023, Adjusted EBITDA was R$1.165.7 million, an increase of 21.2% over the same period of the prior year, with an Adjusted EBITDA Margin decrease of 90 basis points in the same period. The Adjusted EBITDA Margin reduction this year is due to: (a) Mix of Net Revenue, with higher participation of Continuing Education segment, and (b) the consolidation of 4 new Mais Médicos campuses (operation started on 3Q22).
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Table 7: Adjusted EBITDA |
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(in thousands of R$) |
For the three months period ended December 31, |
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For the twelve months period ended December 31, |
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|
2023 |
2023 Ex Acquisitions* |
2022 |
% Chg |
% Chg Ex Acquisitions |
|
2023 |
2023 Ex Acquisitions* |
2022 |
% Chg |
% Chg Ex Acquisitions |
|
|
Adjusted EBITDA |
288,912 |
257,744 |
242,207 |
19.3 |
6.4% |
1,165,678 |
1,052,844 |
961,924 |
21.2% |
9.5% |
|
|
% Margin |
39.6% |
38.5% |
40.7% |
-110 bps |
-220 bps |
40.6% |
40.1% |
41.5% |
-90 bps |
-140 bps |
|
|
*For the three months period ended December 31, 2023, “2023 Ex Acquisitions” excludes: UNIMA and FCM Jaboatão (October to December, 2023; Closing of UNIMA and FCM Jaboatão was in January 2023). |
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*For the fiscal year ended December 31, 2023, “2023 Ex Acquisitions” excludes: Alem da Medicina (January & February 2023; Closing of Alem da Medicina was in March, 2022), Cardiopapers (January to March 2023; Closing of Cardiopapers was in April, 2022), Glic (January to May, 2023; Closing of Glic was in May, 2022), and UNIMA and FCM Jaboatão (January to December, 2023; Closing of UNIMA and FCM Jaboatão was in January 2023). |
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Adjusted Net Income
Net Income for the fourth quarter of 2023 was R$101.9 million, an increase of 42.8% over the same period of the prior year, mainly due to the increase in operational results and the recognition of income tax credit. Adjusted Net Income for the fourth quarter of 2023 was R$164.4 million, an increase of 27.7% over the same period of the prior year, mainly due to the reasons previously mentioned and lower non-recurring expenses in the quarter when compared to the same period of the prior year.
For the twelve-month period ended December 31, 2023, Net Income increased 3.2%, from R$392.8 million to R$405.4 million. Adjusted Net Income for the twelve-month period of 2023 was R$591.1 million, an increase of 10.5% year over year. Adjusted EPS reached R$6.37 per share for the full year of 2023 ended December 31, an increase of 11.5% year over year, reflecting the increase in our Net Income and capital allocation discipline executing our business combination.
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Table 8: Adjusted Net Income |
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(in thousands of R$) |
For the three months period ended December 31, |
|
For the twelve months period ended December 31, |
||||
|
2023 |
2022 |
% Chg |
|
2023 |
2022 |
% Chg |
|
|
Net income |
101,886 |
71,331 |
42.8% |
405,416 |
392,756 |
3.2% |
|
|
Amortization of customer relationships and trademark (1) |
29,273 |
22,015 |
33.0% |
110,052 |
77,974 |
41.1% |
|
|
Share-based compensation |
11,453 |
10,860 |
5.5% |
31,535 |
31,274 |
0.8% |
|
|
Non-recurring (income) expenses: |
21,837 |
24,547 |
-11.0% |
44,121 |
33,133 |
33.2% |
|
|
– Integration of new companies (2) |
8,169 |
7,748 |
5.4% |
28,120 |
24,763 |
13.6% |
|
|
– M&A advisory and due diligence (3) |
239 |
(697) |
n.a. |
12,616 |
2,497 |
405.3% |
|
|
– Gain on tax amnesty (4) |
– |
– |
n.a. |
(16,812) |
– |
n.a. |
|
|
– Expansion projects (5) |
1,873 |
1,053 |
77.9% |
4,409 |
3,411 |
29.3% |
|
|
– Restructuring expenses (6) |
6,291 |
5,307 |
18.5% |
11,964 |
12,388 |
-3.4% |
|
|
– Mandatory Discounts in Tuition Fees (7) |
5,265 |
11,136 |
-52.7% |
3,824 |
(9,926) |
n.a. |
|
|
Adjusted Net Income |
164,449 |
128,753 |
27.7% |
591,124 |
535,137 |
10.5% |
|
|
Basic earnings per share – in R$ (8) |
1.09 |
0.74 |
47.2% |
4.30 |
4.14 |
4.0% |
|
|
Adjusted earnings per share – in R$ (9) |
1.79 |
1.38 |
29.6% |
6.37 |
5.71 |
11.5% |
|
|
(1) Consists of amortization of customer relationships and trademark recorded under business combinations. |
|
(2) Consists of expenses related to the integration of newly acquired companies. |
|
(3) Consists of expenses related to professional and consultant fees in connection with due diligence services for our M&A transactions. |
|
(4) On August 10, 2023, Unigranrio entered into a tax amnesty program on interest and penalties to settle a tax proceeding in respect to ISS (city tax on services) with the municipality of Rio de Janeiro, which result in a payment of R$14,819 to settle the claim. The selling shareholders of Unigranrio agreed to pay R$5,438 regarding this matter. The Company had a provision of R$53,302 and an indemnification asset from the selling shareholders of R$20,000 (in light of the indemnification clauses as defined at acquisition of Unigranrio), in respect to such tax proceeding. The difference between the provision, indemnification asset and the actual paid amount was recorded as Other income (expenses), net on the consolidated statement of income and comprehensive income. |
|
(5) Consists of expenses related to professional and consultant fees in connection with the opening of new campuses. |
|
(6) Consists of expenses related to the employee redundancies in connection with the organizational restructuring of our acquired companies. |
|
(7) Consists of mandatory settlements in tuition fees granted by state decrees, individual/collective legal proceedings and public civil proceedings due to COVID 19 on site classes restriction and excludes any recovery of these discounts that were invoiced based on the Supreme Court decision. |
|
(8) Basic earnings per share: Net Income/Weighted average number of outstanding shares. |
|
(9) Adjusted earnings per share: Adjusted Net Income attributable to equity holders of the Parent/Weighted average number of outstanding shares. |
Cash and Debt Position
On December 31, 2023, Cash and Cash Equivalents were R$553.0 million, a decrease of 49.4% over December 31, 2022, due to UNIMA and FCM Jaboatão dos Guararapes business combinations.
For the full year ended December 31, 2023, Afya reported cash flow from operating activities of R$1,088.8 million, up from R$877.0 million in the same period of the previous year, an increase of 24.1% YoY, boosted by the solid operational results. Operating Cash Conversion Ratio was strong once again, achieving 97.1% for the full year of 2023 ended December 31, 2023, compared to 94.4% in the same period of the previous year.
On December 31, 2023, Net Debt, excluding the effects of IFRS 16, totaled R$1,814.6 million. When compared to December 31, 2022, Net Debt added to R$825 million related to UNIMA and FCM Jaboatão dos Guararapes business combinations closed on January 2, 2023, the Net Debt reduced R$ 391.0 million due to the strong Cash flow from operating activities.
|
Table 9: Operating Cash Conversion Ratio Reconciliation |
For the twelve months period ended in December 31, |
||
|
(in thousands of R$) |
Considering the adoption of IFRS 16 |
||
|
2023 |
2022 |
% Chg |
|
|
(a) Net cash flows from operating activities |
1,043,623 |
843,899 |
23.7% |
|
(b) Income taxes paid |
45,144 |
33,089 |
36.4% |
|
(c) = (a) + (b) Cash flow from operating activities |
1,088,767 |
876,988 |
24.1% |
|
|
|||
|
(d) Adjusted EBITDA |
1,165,678 |
961,924 |
21.2% |
|
(e) Non-recurring (income) expenses: |
44,121 |
33,133 |
33.2% |
|
– Integration of new companies (1) |
28,120 |
24,763 |
13.6% |
|
– M&A advisory and due diligence (2) |
12,616 |
2,497 |
405.3% |
|
– Gain on tax amnesty (3) |
(16,812) |
– |
n.a. |
|
– Expansion projects (4) |
4,409 |
3,411 |
29.3% |
|
– Restructuring Expenses (5) |
11,964 |
12,388 |
-3.4% |
|
– Mandatory Discounts in Tuition Fees (6) |
3,824 |
-9,926 |
n.a. |
|
(f) = (d) – (e) Adjusted EBITDA ex- non-recurring expenses |
1,121,557 |
928,791 |
20.8% |
|
(g) = (c) / (f) Operating cash conversion ratio |
97.1% |
94.4% |
270 bps |
|
(1) Consists of expenses related to the integration of newly acquired companies. |
|||
|
(2) Consists of expenses related to professional and consultant fees in connection with due diligence services for M&A transactions. |
|||
|
(3) On August 10, 2023, Unigranrio entered into a tax amnesty program on interest and penalties to settle a tax proceeding in respect to ISS (city tax on services) with the municipality of Rio de Janeiro, which result in a payment of R$14,819 to settle the claim. The selling shareholders of Unigranrio agreed to pay R$5,438 regarding this matter. The Company had a provision of R$53,302 and an indemnification asset from the selling shareholders of R$20,000 (in light of the indemnification clauses as defined at acquisition of Unigranrio), in respect to such tax proceeding. The difference between the provision, indemnification asset and the actual paid amount was recorded as Other income (expenses), net on the consolidated statement of income and comprehensive income. |
|||
|
(4) Consists of expenses related to professional and consultant fees in connection with the opening of new campuses. |
|||
|
(5) Consists of expenses related to the employee redundancies in connection with the organizational restructuring of acquired companies. |
|||
|
(6) Consists of mandatory settlements in tuition fees granted by state decrees, individual/collective legal proceedings and public civil proceedings due to COVID 19 on site classes restriction and excludes any recovery of these discounts that were invoiced based on the Supreme Court decision. |
The following table shows more information regarding the cost of debt for 2023, considering loans and financing, capital market and accounts payable to selling shareholders. Afya’s capital structure remains solid with a conservative leveraging position and a low cost of debt, Afya’s Net Debt (excluding the effect of IFRS16) divided by Adjusted EBITDA of 2023 is 1.6x.
|
Table 10: Gross Debt and Average Cost of Debt |
||||||||
|
(in millions of R$) |
For the closing of the twelve months period ended in December 31, |
|||||||
|
|
|
|
|
Cost of Debt |
||||
|
Gross Debt |
Duration (Years) |
Per year |
%CDI² |
|||||
|
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
|
|
Loans and financing: Softbank |
826 |
824 |
2.4 |
3.4 |
6.5% |
6.5% |
50% |
53% |
|
Loans and financing: Debentures |
529 |
500 |
3.6 |
4.6 |
15.0% |
15.7% |
114% |
114% |
|
Loans and financing: Others |
445 |
621 |
1.3 |
2.1 |
15.0% |
14.1% |
114% |
113% |
|
Accounts payable to selling shareholders |
567 |
529 |
0.8 |
1.2 |
13.1% |
11.6% |
100% |
94% |
|
Total¹| Average |
2,368 |
2,474 |
2.1 |
2.9 |
11.8% |
10.2% |
89% |
83% |
|
(1) Total ammount refers only to the “Gross Debt” columns |
|
(2) Based on the annualized Interbank Certificates of Deposit (“CDI”) rate for the period as a reference: 2023 full year: ~11.65% p.y. and for 2022 full year: ~12.39% p.y. |
|
Table 11: Cash and Debt Position |
|||
|
(in thousands of R$) |
|||
|
FY2023 |
FY2022 |
% Chg |
|
|
(+) Cash and Cash Equivalents |
553,030 |
1,093,082 |
-49.4% |
|
Cash and Bank Deposits |
11,746 |
57,509 |
-79.6% |
|
Cash Equivalents |
541,284 |
1,035,573 |
-47.7% |
|
(-) Loans and Financing |
1,800,775 |
1,882,901 |
-4.4% |
|
Current |
179,252 |
145,202 |
23.5% |
|
Non-Current |
1,621,523 |
1,737,699 |
-6.7% |
|
(-) Accounts Payable to Selling Shareholders |
566,867 |
528,678 |
7.2% |
|
Current |
353,998 |
261,711 |
35.3% |
|
Non-Current |
212,869 |
266,967 |
-20.3% |
|
(-) Other Short and Long Term Obligations |
– |
62,176 |
-100.0% |
|
(=) Net Debt (Cash) excluding IFRS 16 |
1,814,612 |
1,380,673 |
31.4% |
|
(-) Lease Liabilities |
874,569 |
769,525 |
13.7% |
|
Current |
36,898 |
32,459 |
13.7% |
|
Non-Current |
837,671 |
737,066 |
13.6% |
|
Net Debt (Cash) with IFRS 16 |
2,689,181 |
2,150,198 |
25.1% |
CAPEX
Capital expenditures consists of the purchase of property and equipment and intangible assets, including expenditures mainly related to the expansion and maintenance of our campuses and headquarters including leasehold improvements, and the development of new solutions in the digital segment, among others.
For the full year of 2023 ended December 31, CAPEX went from R$318.2 million to R$218.4 million, a decrease of 31.3% over the same period of the prior year. As of December 31, 2023, the Capex to Revenue, excluding licenses acquisition and goodwill remeasurement, was 7.6% a decrease from 10.9% in the same period of the previous year, reflecting the discipline on capital allocation.
|
Table 12: CAPEX |
|||
|
(in thousands of R$) |
For the twelve months period ended in December 31, |
||
|
2023 |
2022 |
% Chg |
|
|
CAPEX |
218,428 |
318,155 |
-31.3% |
|
Property and equipment |
118,435 |
168,132 |
-29.6% |
|
Intanglibe assets |
99,993 |
150,023 |
-33.3% |
|
– Licenses |
– |
24,408 |
n.a. |
|
– Goodwill |
– |
39,100 |
n.a. |
|
– Others |
99,993 |
86,515 |
15.6% |
ESG Metrics
ESG commitment is an important part of Afya’s strategy and permeates the Company’s core values. Afya has been advancing year after year on its core pillars and, since 2021, ESG metrics have been disclosed in the Company’s quarterly financial results.
The 2022 Sustainability Report can be found at: https://ir.afya.com.br/corporate-governance/sustainability/
|
Table 13: ESG Metrics |
4Q23 |
4Q22 |
2022 |
2021 |
2020 |
2019 |
||
|
# |
GRI |
Governance and Employee Management |
|
|
|
|
|
|
|
1 |
405-1 |
Number of employees |
9,680 |
8,708 |
8,708 |
8,079 |
6,100 |
3,369 |
|
2 |
405-1 |
Percentage of female employees |
58% |
57% |
57% |
55% |
55% |
57% |
|
3 |
405-1 |
Percentage of female employees in the board of directors |
36% |
40% |
40% |
18% |
18% |
22% |
|
4 |
102-24 |
Percentage of independent member in the board of directors |
36% |
30% |
30% |
36% |
36% |
22% |
|
|
|
Environmental |
||||||
|
4 |
302-1 |
Total energy consumption (kWh) |
6,845,599 |
5,379,440 |
17,011,842 |
12,176,966 |
8,035,845 |
5,928,450 |
|
4.1 |
302-1 |
Consumption per campus |
148,817 |
122,260 |
412,747 |
385,573 |
321,434 |
395,230 |
|
5 |
302-1 |
% supplied by distribution companies |
50.2% |
72.5% |
72.4% |
91.3% |
83.4% |
96.2% |
|
6 |
302-1 |
% supplied by other sources |
49.8% |
27.5% |
27.6% |
8.7% |
16.6% |
3.8% |
|
|
|
Social |
||||||
|
8 |
413-1 |
Number of free clinical consultations offered by Afya |
154,976 |
141,962 |
494,635 |
341,286 |
427,184 |
270,000 |
|
9 |
|
Number of physicians graduated in Afya’s campuses |
20,197 |
18,104 |
18,104 |
16,772 |
12,691 |
8,306 |
|
10 |
201-4 |
Number of students with financing and scholarship programs (FIES and PROUNI) |
10,584 |
10,965 |
10,965 |
7,881 |
4,999 |
2,808 |
|
11 |
|
% students with scholarships over total undergraduate students |
16.0% |
18.8% |
18.8% |
12.9% |
13.7% |
11.7% |
|
12 |
413-1 |
Hospital, clinics and city halls partnerships |
649 |
662 |
662 |
447 |
432 |
60 |
|
(1) Some factors can influence in the adequate proportionality analysis of data over the years, such as: climate changes, COVID-19 pandemic effects, seasonalities, number of employees, number of students, number of active units, among others. |
|
(2) “Other sources” refers to: (a) Derived from renewable sources, such as solar panels installed in the units; and (b) Derived from the search for alternative energy options in the market. |
|
(3) Starting in 2Q22, previously disclosed environmental data were updated to consider: (a) GHG Protocol guidelines improvements, and (b) additional data-collection criteria refinements. |
|
(4) Starting in 2Q22, previously disclosed social data were updated to consider: (a) the number of graduated physicians considering all units after its closing, and (b) partnerships related only to medical schools. |
|
(5) The number of students with financing and scholarship programs (FIES and PROUNI) does not include any student from the acquisitions of 2023 |
6. Conference Call and Webcast Information
|
When: |
March 14, 2024, at 5:00 p.m. EST. |
|
|
|
|
Who: |
Mr. Virgilio Gibbon, Chief Executive Officer |
|
|
Mr. Luis André Blanco, Chief Financial Officer |
|
|
Ms. Renata Costa Couto, IR Director |
|
|
|
|
Dial-in: |
Brazil: +55 11 4632 2237 or +55 11 4680 6788 or +55 11 4700 9668 or +55 21 3958 7888 or +55 11 4632 2236. |
|
|
|
|
|
United States: +1 669 900 6833 or +1 689 278 1000 or +1 719 359 4580 or +1 929 205 6099 or +1 253 205 0468 or +1 253 215 8782 or +1 301 715 8592 or +1 305 224 1968 or +1 309 205 3325 or +1 312 626 6799 or +1 346 248 7799 or +1 360 209 5623 or +1 386 347 5053 or +1 507 473 4847 or +1 564 217 2000 or +1 646 931 3860 or +1 669 444 9171. |
|
|
|
|
|
Webinar ID: 926 2711 5284 |
|
|
|
|
|
Other Numbers: https://afya.zoom.us/u/acjXgMhUw6 |
|
|
|
|
OR |
|
|
|
|
|
Webcast: |
7. About Afya Limited (Nasdaq: AFYA)
Afya is the leading medical education group in Brazil based on number of medical school seats. It delivers an end-to-end physician-centric ecosystem that serves and empowers students to be lifelong medical learners, from the moment they enroll as medical students, through their medical residency preparation, graduate program, and continuing medical education activities. Afya also offers content and clinical decision applications for healthcare professionals through its products WhiteBook, Nursebook and Portal PEBMED. For more information, please visit www.afya.com.br.
8. Forward – Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements other than statements of historical fact could be deemed forward looking, and include risks and uncertainties related to statements about our competition; our ability to attract, upsell and retain students; our ability to increase tuition prices and prep course fees; our ability to anticipate and meet the evolving needs of students and professors; our ability to source and successfully integrate acquisitions; general market, political, economic, and business conditions; and our financial targets such as revenue, share count and IFRS and non-IFRS financial measures including gross margin, operating margin, net income (loss) per diluted share, and free cash flow. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the potential impacts of the COVID-19 pandemic on our business operations, financial results and financial position and the Brazilian economy.
The Company undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. Readers should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent management’s beliefs and assumptions only as of the date such statements are made. Further information on these and other factors that could affect the Company’s financial results are included in the filings made with the United States Securities and Exchange Commission (SEC) from time to time, including the section titled “Risk Factors” in the most recent Rule 434(b) prospectus. These documents are available on the SEC Filings section of the investor relations section of our website at: https://ir.afya.com.br/.
9. Non-GAAP Financial Measures
To supplement the Company’s consolidated financial statements, which are prepared and presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board—IASB, Afya uses Adjusted EBITDA and Operating Cash Conversion Ratio information, which are non-GAAP financial measures, for the convenience of investors. A non-GAAP financial measure is generally defined as one that intends to measure financial performance but excludes or includes amounts that would not be equally adjusted in the most comparable GAAP measure.
Afya calculates Adjusted EBITDA as net income plus/minus net financial result plus income taxes expense plus depreciation and amortization plus interest received on late payments of monthly tuition fees, plus share-based compensation plus/minus share of income of associate plus/minus non-recurring expenses. The calculation of Adjusted Net Income is net income plus amortization of customer relationships and trademark, plus share-based compensation. We calculate Operating Cash Conversion Ratio as the Cash flow from operating activities, adjusted with income taxes paid divided by Adjusted EBITDA plus/minus non-recurring expenses. The calculation of Adjusted EPS is our Adjusted Net Income, minus the Minority Net Income divided by the Weighted average number of outstanding shares.
Management presents Adjusted EBITDA, because it believes these measures provide investors with a supplemental measure of financial performance of the core operations that facilitates period-to-period comparisons on a consistent basis. Afya also presents Operating Cash Conversion Ratio because it believes this measure provides investors with a measure of how efficiently the Company converts EBITDA into cash. The non-GAAP financial measures described in this prospectus are not a substitute for the IFRS measures of earnings. Additionally, calculations of Adjusted EBITDA and Operating Cash Conversion Ratio may be different from the calculations used by other companies, including competitors in the education services industry, and therefore, Afya’s measures may not be comparable to those of other companies.
10. Investor Relations Contact
E-mail: ir@afya.com.br
11. Financial Tables
|
Consolidated statements of income and comprehensive income |
|||
|
For the years ended December 31, 2023, 2022 and 2021 |
|||
|
(In thousands of Brazilian reais, except earnings per share) |
|||
|
|
|||
|
|
2023 |
2022 |
2021 |
|
|
|
|
|
|
Revenue |
2,875,913 |
2,329,057 |
1,719,371 |
|
Cost of services |
(1,109,813) |
(859,552) |
(652,300) |
|
Gross profit |
1,766,100 |
1,469,505 |
1,067,071 |
|
|
|
|
|
|
Selling, general and administrative expenses |
(1,014,684) |
(798,153) |
(622,615) |
|
Other income (expenses), net |
15,645 |
(7,252) |
(3,561) |
|
|
|
|
|
|
Operating income |
767,061 |
664,100 |
440,895 |
|
|
|
|
|
|
Finance income |
110,642 |
102,042 |
64,566 |
|
Finance expenses |
(457,616) |
(349,893) |
(243,796) |
|
Finance result |
(346,974) |
(247,851) |
(179,230) |
|
|
|
|
|
|
Share of income of associate |
9,495 |
12,184 |
11,797 |
|
|
|
|
|
|
Income before income taxes |
429,582 |
428,433 |
273,462 |
|
|
|
|
|
|
Income taxes expenses |
(24,166) |
(35,677) |
(31,179) |
|
|
|
|
|
|
Net income |
405,416 |
392,756 |
242,283 |
|
|
|
|
|
|
Other comprehensive income |
– |
– |
– |
|
Total comprehensive income |
405,416 |
392,756 |
242,283 |
|
|
|
|
|
|
Income attributable to |
|
|
|
|
Equity holders of the parent |
386,324 |
373,569 |
223,326 |
|
Non-controlling interests |
19,092 |
19,187 |
18,957 |
|
|
405,416 |
392,756 |
242,283 |
|
Basic earnings per share |
|
|
|
|
Per common share |
4.30 |
4.14 |
2.39 |
|
Diluted earnings per share |
|
|
|
|
Per common share |
4.27 |
4.12 |
2.37 |
|
Consolidated statements of financial position As of December 31, 2023 and 2022 (In thousands of Brazilian reais) |
|||
|
|
|||
|
|
|||
|
2023 |
2022 |
||
|
Assets |
|||
|
Current assets |
|||
|
Cash and cash equivalents |
553,030 |
1,093,082 |
|
|
Trade receivables |
546,438 |
452,831 |
|
|
Inventories |
1,382 |
12,190 |
|
|
Recoverable taxes |
43,751 |
27,809 |
|
|
Other assets |
58,905 |
|
51,745 |
|
Total current assets |
1,203,506 |
|
1,637,657 |
|
|
|||
|
Non-current assets |
|
||
|
Trade receivables |
39,485 |
|
42,568 |
|
Other assets |
117,346 |
191,756 |
|
|
Investment in associate |
51,834 |
53,907 |
|
|
Property and equipment |
608,685 |
542,087 |
|
|
Right-of-use assets |
767,609 |
690,073 |
|
|
Intangible assets |
4,796,016 |
4,041,491 |
|
|
Total non-current assets |
6,380,975 |
5,561,882 |
|
|
|
|||
|
Total assets |
7,584,481 |
7,199,539 |
|
|
|
|||
|
Liabilities |
|
||
|
Current liabilities |
|
||
|
Trade payables |
108,222 |
71,482 |
|
|
Loans and financing |
179,252 |
145,202 |
|
|
Lease liabilities |
36,898 |
32,459 |
|
|
Accounts payable to selling shareholders |
353,998 |
261,711 |
|
|
Notes payable |
– |
62,176 |
|
|
Advances from customers |
153,485 |
133,050 |
|
|
Labor and social obligations |
192,294 |
154,518 |
|
|
Taxes payable |
27,765 |
26,221 |
|
|
Income taxes payable |
3,880 |
16,151 |
|
|
Other liabilities |
2,773 |
2,719 |
|
|
Total current liabilities |
1,058,567 |
905,689 |
|
|
|
|||
|
Non-current liabilities |
|
||
|
Loans and financing |
1,621,523 |
1,737,699 |
|
|
Lease liabilities |
837,671 |
737,066 |
|
|
Accounts payable to selling shareholders |
212,869 |
266,967 |
|
|
Taxes payable |
88,198 |
92,888 |
|
|
Provision for legal proceedings |
104,361 |
195,854 |
|
|
Other liabilities |
18,280 |
13,218 |
|
|
Total non-current liabilities |
2,882,902 |
3,043,692 |
|
|
Total liabilities |
3,941,469 |
3,949,381 |
|
|
|
|||
|
Equity |
|
||
|
Share capital |
17 |
17 |
|
|
Additional paid-in capital |
2,365,200 |
2,375,344 |
|
|
Treasury shares |
(299,150) |
|
(304,947) |
|
Share-based compensation reserve |
155,073 |
123,538 |
|
|
Retained earnings |
1,380,365 |
1,004,886 |
|
|
Equity attributable to equity holders of the parent |
3,601,505 |
3,198,838 |
|
|
Non-controlling interests |
41,507 |
51,320 |
|
|
Total equity |
3,643,012 |
3,250,158 |
|
|
|
|||
|
Total liabilities and equity |
7,584,481 |
7,199,539 |
|
|
Consolidated statements of cash flows |
|||
|
For the years ended December 31, 2023, 2022 and 2021 |
|||
|
(In thousands of Brazilian reais) |
|||
|
|
|||
|
|
2023 |
2022 |
2021 |
|
Operating activities |
|
||
|
Income before income taxes |
429,582 |
428,433 |
273,462 |
|
Adjustments to reconcile income before income taxes |
|
|
|
|
Depreciation and amortization |
289,511 |
206,220 |
154,220 |
|
Write-off of property and equipment |
1,910 |
1,697 |
1,604 |
|
Write-off of intangible assets |
413 |
25 |
2,374 |
|
Allowance for expected credit losses |
74,552 |
42,708 |
47,819 |
|
Share-based compensation expense |
31,535 |
31,274 |
43,377 |
|
Net foreign exchange differences |
681 |
852 |
17,973 |
|
Accrued interest |
285,447 |
200,081 |
108,437 |
|
Accrued lease interest |
100,849 |
88,571 |
67,212 |
|
Share of income of associate |
(9,495) |
(12,184) |
(11,797) |
|
Provision (reversal) for legal proceedings |
(56,825) |
(766) |
10,664 |
|
|
|
|
|
|
Changes in assets and liabilities |
|
|
|
|
Trade receivables |
(131,336) |
(129,165) |
(79,665) |
|
Inventories |
10,947 |
(363) |
(3,720) |
|
Recoverable taxes |
(15,353) |
(2,230) |
(2,327) |
|
Other assets |
77,480 |
(1,048) |
(19,425) |
|
Trade payables |
24,500 |
9,975 |
14,479 |
|
Taxes payable |
3,278 |
(3,915) |
(14,902) |
|
Advances from customers |
(17,892) |
8,387 |
36,009 |
|
Labor and social obligations |
31,525 |
21,247 |
23,449 |
|
Other liabilities |
(42,542) |
(12,811) |
(2,693) |
|
|
1,088,767 |
876,988 |
666,550 |
|
Income taxes paid |
(45,144) |
(33,089) |
(35,683) |
|
Net cash flows from operating activities |
1,043,623 |
843,899 |
630,867 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Acquisition of property and equipment |
(118,435) |
(168,132) |
(125,869) |
|
Acquisition of intangibles assets |
(126,993) |
(128,892) |
(150,931) |
|
Dividends received |
9,900 |
6,754 |
11,770 |
|
Acquisition of non-controlling interest |
(21,000) |
– |
– |
|
Acquisition of subsidiaries, net of cash acquired |
(815,005) |
(277,649) |
(1,005,017) |
|
Payments of interest from acquisition of subsidiaries and intangibles |
(71,518) |
(23,550) |
(12,108) |
|
Restricted cash |
– |
– |
8,103 |
|
Net cash flows used in investing activities |
(1,143,051) |
(591,469) |
(1,274,052) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Payments of principal of loans and financing |
(112,630) |
(1,791) |
(107,766) |
|
Payments of interest of loans and financing |
(175,889) |
(116,587) |
(50,310) |
|
Proceeds from loans and financing |
5,288 |
496,885 |
809,539 |
|
Payments of lease liabilities |
(31,473) |
(28,511) |
(20,075) |
|
Payments of interest of lease liabilities |
(103,911) |
(85,001) |
(67,676) |
|
Treasury shares buy back |
(12,369) |
(152,317) |
(213,722) |
|
Proceeds from exercise of stock options |
9,791 |
– |
33,336 |
|
Dividends paid to non-controlling shareholders |
(18,750) |
(19,736) |
(18,648) |
|
Net cash flows generated (used) in financing activities |
(439,943) |
92,942 |
364,678 |
|
Net foreign exchange differences |
(681) |
(852) |
(17,973) |
|
Net increase (decrease) in cash and cash equivalents |
(540,052) |
344,520 |
(296,480) |
|
Cash and cash equivalents at the beginning of the year |
1,093,082 |
748,562 |
1,045,042 |
|
Cash and cash equivalents at the end of the year |
553,030 |
1,093,082 |
748,562 |
Reconciliation between Net Income and Adjusted EBITDA
|
Reconciliation between Adjusted EBITDA and Net Income |
|||||||
|
|
|||||||
|
(in thousands of R$) |
For the three months period December 31, |
For the twelve months period ended December 31, |
|||||
|
2023 |
2022 |
% Chg |
2023 |
2022 |
% Chg |
||
|
Net income |
101,886 |
71,331 |
42.8% |
405,416 |
392,756 |
3.2% |
|
|
Net financial result |
79,661 |
67,596 |
17.8% |
346,974 |
247,851 |
40.0% |
|
|
Income taxes expense |
(9,130) |
10,065 |
n.a. |
24,166 |
35,677 |
-32.3% |
|
|
Depreciation and amortization |
77,339 |
54,514 |
41.9% |
289,511 |
206,220 |
40.4% |
|
|
Interest received (1) |
7,690 |
5,218 |
47.4% |
33,450 |
27,197 |
23.0% |
|
|
Income share associate |
(1,824) |
(1,924) |
-5.2% |
(9,495) |
(12,184) |
-22.1% |
|
|
Share-based compensation |
11,453 |
10,860 |
5.5% |
31,535 |
31,274 |
0.8% |
|
|
Non-recurring (income) expenses: |
21,837 |
24,547 |
-11.0% |
44,121 |
33,133 |
33.2% |
|
|
– Integration of new companies (2) |
8,169 |
7,748 |
5.4% |
28,120 |
24,763 |
13.6% |
|
|
– M&A advisory and due diligence (3) |
239 |
(697) |
n.a. |
12,616 |
2,497 |
405.3% |
|
|
– Gain on tax amnesty (4) |
0 |
– |
n.a. |
(16,812) |
– |
n.a. |
|
|
– Expansion projects (5) |
1,873 |
1,053 |
77.9% |
4,409 |
3,411 |
29.3% |
|
|
– Restructuring expenses (6) |
6,291 |
5,307 |
18.5% |
11,964 |
12,388 |
-3.4% |
|
|
– Mandatory Discounts in Tuition Fees (7) |
5,265 |
11,136 |
-52.7% |
3,824 |
(9,926) |
n.a. |
|
|
Adjusted EBITDA |
288,912 |
242,207 |
19.3% |
1,165,678 |
961,924 |
21.2% |
|
|
Adjusted EBITDA Margin |
39.6% |
40.7% |
-110 bps |
40.6% |
41.5% |
-90 bps |
|
|
(1) Represents the interest received on late payments of monthly tuition fees. |
|
(2) Consists of expenses related to the integration of recently acquired companies, such as expenses with personnel and third party consulting firms. |
|
(3) Consists of expenses related to professional and consultant fees in connection with due diligence services for our M&A transactions. |
|
(4) On August 10, 2023, Unigranrio entered into a tax amnesty program on interest and penalties to settle a tax proceeding in respect to ISS (city tax on services) with the municipality of Rio de Janeiro, which result in a payment of R$14,819 to settle the claim. The selling shareholders of Unigranrio agreed to pay R$5,438 regarding this matter. The Company had a provision of R$53,302 and an indemnification asset from the selling shareholders of R$20,000 (in light of the indemnification clauses as defined at acquisition of Unigranrio), in respect to such tax proceeding. The difference between the provision, indemnification asset and the actual paid amount was recorded as Other income (expenses), net on the consolidated statement of income and comprehensive income. |
|
(5) Consists of expenses related to professional and consultant fees in connection with the opening of new campuses. |
|
(6) Severance cost related to the termination of employment relationship with the organizational restructuring of the acquired business and Digital Segment restructuring. |
|
(7) Consists of mandatory discounts in tuition fees granted by state decrees and individual/collective legal proceedings and public civil proceedings due to COVID 19 on-site class restriction, and excludes any recovery of these discounts that were invoiced based on the decision by the Brazilian Federal Supreme Court (Supremo Tribunal Federal), or the Brazilian Supreme Court, with respect to this matter. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240314233307/en/
Contacts
Investor Contact: ir@afya.com.br
IR Website: ir.afya.com.br
Media Contact:
Cíntia Moraes Marin
cintia.marin@afya.com.br