Afya Limited Announces Fourth Quarter and Full-Year 2023 Financial Results
Afya reported strong financial and operating results for the fourth quarter and full-year period ended December 31, 2023. Highlights include a 22.6% increase in 4Q23 Adjusted Net Revenue to R$729.5 million, 19.3% growth in Adjusted EBITDA to R$288.9 million, and a 27.7% rise in Adjusted Net Income to R$164.4 million. For FY23, Adjusted Net Revenue increased by 23.9% to R$2,874.1 million, and Adjusted EBITDA grew by 21.2% to R$1,165.7 million. Cash conversion was at 97.1%, generating R$1,088.8 million in cash flow from operating activities. Afya's Digital Service saw an increase of 2.8% in monthly active physicians and medical students. The company also achieved its 2023 guidance and set new targets for 2024.
Positive
Strong financial and operating results for Afya in Q4 and FY23.
22.6% increase in 4Q23 Adjusted Net Revenue to R$729.5 million.
19.3% growth in 4Q23 Adjusted EBITDA to R$288.9 million.
27.7% rise in 4Q23 Adjusted Net Income to R$164.4 million.
23.9% increase in FY23 Adjusted Net Revenue to R$2,874.1 million.
21.2% growth in FY23 Adjusted EBITDA to R$1,165.7 million.
Cash conversion of 97.1% generating R$1,088.8 million in cash flow from operating activities.
2.8% increase in monthly active physicians and medical students using Afya's Digital Service.
Afya achieved its 2023 guidance and set new targets for 2024.
The reported financial results from Afya Limited indicate a strong performance with significant year-over-year growth in key financial metrics such as Adjusted Net Revenue, EBITDA and Net Income. This growth is largely attributed to strategic acquisitions and organic expansion within the company's various segments. The robust cash conversion rate above 90% suggests efficient management of cash flows, reinforcing the company's financial stability. Investors may view this positive cash flow as a sign of a healthy, growing company capable of sustaining investment and returning value to shareholders.
Furthermore, the consistent growth in EPS reflects a company that is not only increasing its profitability but also efficiently managing its equity, which can be an attractive point for investors seeking companies with strong earnings potential. This is particularly noteworthy considering the EPS has more than doubled since the company's IPO in 2019. The management's confidence in meeting the targets for 2024, as indicated by the guidance provided, could also signal continued growth expectations, potentially influencing investor sentiment positively.
Afya's performance within the Brazilian medical education and digital health services sector showcases a strategic emphasis on both organic growth and expansion through acquisitions. The company's success in the Continuing Education segment, which experienced the most significant revenue growth, indicates a rising demand for specialized medical education in Brazil. This could suggest a larger trend within the country's healthcare sector, where there is an increasing need for continuous medical education and specialization.
Additionally, the growth in the Digital Services segment, particularly the B2B contracts with pharmaceutical industry leaders, demonstrates Afya's ability to diversify its revenue streams. The increase in active payers across various digital services suggests a growing acceptance and reliance on digital health solutions among medical professionals. For businesses operating in the digital health and education sectors, Afya's performance may serve as a benchmark for the potential growth and profitability within these markets.
The economic implications of Afya's reported financial results extend beyond the company's individual performance. The expansion of medical seats and the growth in student numbers reflect a broader investment in the healthcare education infrastructure, which can have long-term positive effects on the country's healthcare system. By increasing the number of trained medical professionals, Afya is contributing to the potential improvement of healthcare services in Brazil.
The company's focus on sustainability and ESG initiatives aligns with global economic shifts towards responsible business practices. Investors and consumers alike are increasingly valuing companies that prioritize environmental, social and governance aspects, which can lead to a stronger corporate reputation and potentially higher market valuation over time. Afya's emphasis on ESG may also attract socially responsible investments, catering to a growing segment of the investment community.
03/14/2024 - 07:20 PM
Another Year of Strong Performance
Robust EPS Expansion
Guidance Achievement
NOVA LIMA , Brazil --(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
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 .
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% .
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
FY23 Adjusted Net Revenue increased 23.9% YoY to R$2,874.1 million . Adjusted Net Revenue excluding acquisitions grew 13.3% to R$2.62 6.9 million .
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% .
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.
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$553.0 million .
Around 268 thousand monthly active physicians and medical students using Afya’s Digital Service, an increase of 2.8% over the same period last year.
Table 1: Financial Highlights
For the three months period ended December 31,
For the twelve months period ended December 31,
(in thousand of R$)
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
*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).
*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).
(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.
(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:
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
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$49.6 million . With the authorization, Afya reaches 100 medical seats on this campus, and 3,203 total approved seats.
3. Full Year 2023 Guidance Achievement
The Company’s financial results reaffirmed the resiliency and predictability of Afya’s business model.
Guidance for 2023
Actual 2023
Adjusted Net Revenue*
R$ 2,750 m n ≤ ∆ ≤ R$ 2,850 m n
2,874 mn
Adjusted EBITDA
R$ 1,100 m n ≤ ∆ ≤ R$ 1,200 m n
1,166 mn
*Includes UNIMA and Faculdade de Ciências Médicas Jaboatão' acquisitions; Includes the increase of 64 medical seats of Faculdade Santo Agostinho, in the city of Itabuna; Excludes any acquisition that may be concluded after the issuance of the guidance.
4. 2024 Guidance
The guidance for FY2024 is defined in the following table:
Guidance for 2024
Net Revenue1
R$ 3,150 m n ≤ ∆ ≤ R$ 3,250 m n
Adjusted EBITDA
R$ 1,300 m n ≤ ∆ ≤ R$ 1,400 m n
CAPEX2
R$ 220 m n ≤ ∆ ≤ R$ 260 m n
(1) Excludes any acquisition that may be concluded after the issuance of the guidance.
(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).
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
Table 2: Key Revenue Drivers
Twelve months period ended December 31,
2023
2022
% Chg
Undergrad Programs
MEDICAL SCHOOL
Approved Seats
3,163
2,823
12.0%
Operating Seats (1)
3,113
2,773
12.3%
Total Students (end of period)
21,446
17,968
19.4%
Average Total Students
21,154
17,761
19.1%
Average Total Students (ex-Acquisitions)*
19,040
17,761
7.2%
Tuition Fees (Total - R$ '000)
2,573,704
2,032,888
26.6%
Tuition Fees (ex- Acquisitions* - R$ '000)
2,332,745
2,032,888
14.8%
Medical School Gross Avg. Ticket (ex- Acquisitions* - R$/month)
10,210
9,538
7.0%
Medical School Net Avg. Ticket (ex- Acquisitions* - R$/month)
8,548
7,898
8.2%
UNDERGRADUATE HEALTH SCIENCE
Total Students (end of period)
21,117
17,967
17.5%
Average Total Students
21,365
19,441
9.9%
Average Total Students (ex-Acquisitions)*
19,690
19,441
1.3%
Tuition Fees (Total - R$ '000)
388,799
336,238
15.6%
Tuition Fees (ex- Acquisitions* - R$ '000)
359,647
336,238
7.0%
OTHER UNDERGRADUATE
Total Students (end of period)
23,471
22,265
5.4%
Average Total Students
24,336
23,376
4.1%
Average Total Students (ex-Acquisitions)*
21,170
23,376
-9.4%
Tuition Fees (Total - R$ '000)
304,276
266,306
14.3%
Tuition Fees (ex- Acquisitions* - R$ '000)
263,275
266,306
-1.1%
TOTAL TUITION FEES
Tuition Fees (Total - R$ '000)
3,266,778
2,635,432
24.0%
Tuition Fees (ex- Acquisitions* - R$ '000)
2,955,667
2,635,432
12.2%
*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).
(1) The difference between approved and operating seats is 'Cametá'. A campus for which we already have the license but haven't started operations.
Key Revenue Drivers – Continuing Education and Digital Services
Table 3: Key Revenue Drivers
Twelve months period ended December 31,
2023
2022
% Chg
Continuing Education
Medical Specialization & Others
Total Students (end of period)
4,976
4,280
16.3%
Average Total Students
4,838
3,835
26.1%
Average Total Students (ex-Acquisitions)
4,838
3,835
26.1%
Net Revenue from courses (Total - R$ '000)
146,827
108,806
34.9%
Net Revenue from courses (ex- Acquisitions¹)
146,827
108,806
34.9%
Digital Services
Content & Technology for Medical Education
Medcel Active Payers
Prep Courses & CME - B2P
7,563
14,569
-48.1%
Prep Courses & CME - B2B
5,649
5,887
-4.0%
Além da Medicina Active Payers
7,557
6,081
24.3%
Cardiopapers Active Payers
9,202
5,034
82.8%
Medical Harbour Active Payers
12,133
7,668
58.2%
Clinical Decision Software
Whitebook Active Payers
153,541
137,767
11.4%
Clinical Management Tools²
iClinic Active Payers
26,293
22,764
15.5%
Shosp Active Payers
3,768
2,915
29.3%
Digital Services Total Active Payers (end of period)
225,706
202,685
11.4%
Net Revenue from Services (Total - R$ '000)
229,285
189,984
20.7%
Net Revenue - B2P
190,838
166,515
14.6%
Net Revenue - B2B
38,448
23,469
63.8%
Net Revenue From Services (ex-Acquisitions¹)
222,196
189,984
17.0%
(1) Clinical management tools includes Telemedicine and Digital Prescription features.
(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).
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.
Table 4: Key Operational Drivers for Digital Services - Monthly Active Users (MaU)
4Q23
4Q22
% Chg YoY
3Q23
2Q23
Content & Technology for Medical Education
20,215
16,539
22.2%
26,012
24,973
Clinical Decision Software
219,420
221,762
-1.1%
230,732
230,338
Clinical Management Tools¹
26,703
20,936
27.5%
26,944
24,880
Physician-Patient Relationship
1,579
1,473
7.2%
1,583
1,782
Total Monthly Active Users (MaU) - Digital Services
267,917
260,710
2.8%
285,271
281,973
1) Clinical management tools includes Telemedicine and Digital Prescription features
Includes Shosp, Medicinae and Além da Medicina starting in 1Q22 and Cardiopapers and Glic starting in 2Q22
Table 5: Key Operational Drivers for Digital Services - Monthly Unique Active Users (MuaU)
4Q23
4Q22
% Chg QoQ
3Q23
2Q23
Total Monthly Unique Active Users (MuaU) - Digital Services
241,753
241,949
-0.1%
254,894
251,487
1) Total Monthly Unique Active Users excludes non-integrated companies: Medical Harbour, Medicinae, Shosp, Além da Medicina, Cardiopapers and Glic
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$2,874.1 million , an increase of 23.9% over the same period of last year. Excluding acquisitions, Adjusted Net Revenue grew 13.3% over the same period.
Table 6: Revenue & Revenue Mix
(in thousands of R$)
For the three months period ended December 31,
For the twelve months period ended December 31,
2023
2023 Ex Acquisitions*
2022
% Chg
% Chg Ex Acquisitions
2023
2023 Ex Acquisitions*
2022
% Chg
% Chg Ex Acquisitions
Net Revenue Mix
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%
*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).
*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).
(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.
(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$1.16 5.7 million , an increase of 21.2% over the same period of the prior year, with an Adjusted EBITDA Margin decrease of 90 basis points in the same period. The Adjusted EBITDA Margin reduction this year is due to: (a) Mix of Net Revenue, with higher participation of Continuing Education segment, and (b) the consolidation of 4 new Mais Médicos campuses (operation started on 3Q22).
Table 7: Adjusted EBITDA
(in thousands of R$)
For the three months period ended December 31,
For the twelve months period ended December 31,
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).
*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).
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$6.37 per share for the full year of 2023 ended December 31, an increase of 11.5% year over year, reflecting the increase in our Net Income and capital allocation discipline executing our business combination.
Table 8: Adjusted Net Income
(in thousands of R$)
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:
https://afya.zoom.us/j/92627115284
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/
Investor Contact: ir@afya.com.br
IR Website: ir.afya.com.br
Media Contact:
Cíntia Moraes Marin
cintia.marin@afya.com.br
Source: Afya Limited
What was the percentage increase in 4Q23 Adjusted Net Revenue for Afya ?
4Q23 Adjusted Net Revenue for Afya increased by 22.6% to R$729.5 million.
How much was the growth in Adjusted EBITDA in the fourth quarter of 2023 for Afya ?
Adjusted EBITDA for Afya grew by 19.3% in the fourth quarter of 2023, reaching R$288.9 million.
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Adjusted Net Income for Afya increased by 27.7% in 4Q23, reaching R$164.4 million.
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Adjusted Net Revenue for Afya grew by 23.9% in FY23, reaching R$2,874.1 million.
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Adjusted EBITDA for Afya increased by 21.2% in FY23, reaching R$1,165.7 million.
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Afya had a cash conversion rate of 97.1%, generating R$1,088.8 million in cash flow from operating activities.
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Around 268 thousand monthly active physicians and medical students were using Afya's Digital Service, representing an increase of 2.8%.
Did Afya achieve its 2023 guidance?
Yes, Afya achieved its 2023 guidance and set new targets for 2024.