U.S. Markets closed
  • S&P 500

    4,136.48
    -43.28 (-1.04%)
     
  • Dow 30

    33,926.01
    -127.93 (-0.38%)
     
  • Nasdaq

    12,006.96
    -193.86 (-1.59%)
     
  • Russell 2000

    1,985.53
    -15.69 (-0.78%)
     
  • Crude Oil

    73.19
    -2.69 (-3.55%)
     
  • Gold

    1,878.50
    -52.30 (-2.71%)
     
  • Silver

    22.40
    -1.22 (-5.15%)
     
  • EUR/USD

    1.0797
    -0.0114 (-1.0473%)
     
  • 10-Yr Bond

    3.5320
    +0.1360 (+4.00%)
     
  • Vix

    18.33
    -0.40 (-2.14%)
     
  • GBP/USD

    1.2051
    -0.0178 (-1.4546%)
     
  • USD/JPY

    131.1870
    +2.5830 (+2.0085%)
     
  • BTC-USD

    23,341.54
    -339.40 (-1.43%)
     
  • CMC Crypto 200

    535.42
    -1.43 (-0.27%)
     
  • FTSE 100

    7,901.80
    +81.64 (+1.04%)
     
  • Nikkei 225

    27,509.46
    +107.41 (+0.39%)
     

Afya Limited Announces Third-Quarter and Nine Months 2022 Financial Results

Guidance On Track

Robust EPS Expansion

NOVA LIMA, Brazil, November 21, 2022--(BUSINESS WIRE)--Afya Limited (Nasdaq: AFYA) ("Afya" or the "Company"), the leading medical education group and digital health services provider in Brazil, reported today financial and operating results for the three and nine-month period ended September 30, 2022 (third quarter 2022). Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).

Third Quarter 2022 Highlights

  • 3Q22 Adjusted Net Revenue increased 25.2% YoY to R$580.2 million. Adjusted Net Revenue excluding acquisitions grew 17.1%, reaching R$542.4 million.

  • 3Q22 Adjusted EBITDA increased 19.5% YoY, reaching R$228.7 million, with an Adjusted EBITDA Margin of 39.4%. Adjusted EBITDA excluding acquisitions grew 10.2%, reaching R$211.0 million, with an Adjusted EBITDA Margin of 38.9%.

  • 3Q22 Adjusted Net Income increased 2.7% YoY, reaching R$120.1 million, with an EPS growth of 47.4% in the same period.

Nine Months 2022 Highlights

  • 9M22 Adjusted Net Revenue increased 38.2% YoY to R$1,724.0 million. Adjusted Net Revenue excluding acquisitions grew 15.6%, reaching R$1,441.5 million.

  • 9M22 Adjusted EBITDA increased 28.6% YoY reaching R$719.7 million, with an Adjusted EBITDA Margin of 41.7%. Adjusted EBITDA excluding acquisitions grew 5.3%, reaching R$589.2 million, with an Adjusted EBITDA Margin of 40.9%.

  • 9M22 Adjusted Net Income increased 18.8% YoY, reaching R$406.4 million, with an EPS growth of 77.5% in the same period.

  • Cash conversion of 104.6%, with a solid cash position of R$715.6 million.

  • ~286 thousand monthly active physicians and medical students using Afya’s Digital Services, an increase of 15.7% over the same period of last year.

Table 1: Financial Highlights

For the three months period ended September 30,

For the nine months period ended September 30,

(in thousand of R$)

2022

2022 Ex
Acquisitions*

2021

% Chg

% Chg Ex
Acquisitions

2022

2022 Ex
Acquisitions*

2021

% Chg

% Chg Ex
Acquisitions

(a) Net Revenue

580,575

542,810

454,387

27.8%

19.5%

1,745,055

1,462,585

1,221,112

42.9%

19.8%

(b) Adjusted Net Revenue (1)

580,198

542,433

463,278

25.2%

17.1%

1,723,993

1,441,523

1,247,321

38.2%

15.6%

(c) Adjusted EBITDA (2)

228,730

210,968

191,400

19.5%

10.2%

719,717

589,167

559,709

28.6%

5.3%

(e) = (c)/(b) Adjusted EBITDA Margin

39.4%

38.9%

41.3%

-190 bps

-240 bps

41.7%

40.9%

44.9%

-320 bps

-400 bps

*For the three months period ended September 30, 2022, "2022 Ex Acquisitions" excludes: UNIGRANRIO (only July, 2022; Closing of UNIGRANRIO was in August, 2021), RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic (all from July to September, 2022; Closing of RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic were after October, 2021).

*For the nine months period ended September 30, 2022, "2022 Ex Acquisitions" excludes: iClinic (only January, 2022; Closing of iClinic was in January, 2021), Medicinae (from January to March, 2022; Closing of Medicinae was in March, 2021), Cliquefarma (from January to April, 2022; Closing of Cliquefarma was in April, 2021), Medical Harbour (from January to April, 2022; Closing of Medical Harbour was in April, 2021), Shosp (from January to May, 2022; Closing of Shosp was in May, 2021), UNIFIPMoc and FIP Guanambi (from January to May, 2022; Closing of UNIFIPMoc and FIP Guanambi was in June, 2021), UNIGRANRIO (from January to July, 2022; Closing of UNIGRANRIO was in August, 2021), RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic (all from January to September, 2022; Closing of RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic were after October, 2021).

(1) Includes mandatory discounts 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 08).

1. Message from Management

As we approach the end of the year, we can gladly see Afya delivering strong results again. This quarter was marked by significant increases in net revenue in our three segments, positive EBITDA, cash generation and EPS growth, and a consistent business expansion. All these factors combined enable us to reassure our 2022 guidance, reinforcing our business strategy execution.

Back in the third quarter of 2021, we were hoping to see the pandemic lose its strength. Now, in 2022, we can finally see our students, employees, and partners extracting the best from our ecosystem again. After the opening of six new Continuing Education campuses – a segment that was impacted during COVID-19 times -, we can see, for the third time this year, an incredible recovery compared to last year, with strong intake processes, new campuses and courses maturation, and our practical classes boosting again.

On the Undergrad side of the education segment, we can also see important movements. First, the successful opening of four Mais Médicos campuses – Abaetetuba, Bragança, Itacoatiara, and Manacapuru -, along with UniSL Ji-Parana campus, all of them combined totaling 228 new medical seats to our portfolio this quarter, allowing us to reach an impressive number of 2,709 medical operating seats, strengthening our consolidation as the medical undergrad leader in Brazil. Second, to further boost this leadership, on October 13rd, we announced the entering into a share purchase agreement for our largest acquisition so far, UNIT Alagoas and FITS Jaboatão dos Guararapes, adding 340 more medical seats to our base. With the conclusion of this acquisition, will increase our 2,759 approved seats to 3,099. And third, the completeness of Unigranrio’s integration process also in October, one year after its acquisition, proving our commitment to extracting synergies within the operation. All this effort means one thing: our medical education business remains, and will continue to be, the cornerstone of our business in the short and middle terms, delivering highly predicted growth combined with strong profitability and cash generation.

On our Digital Services segment, we are proud to see another quarter of strong inorganic and organic growth. Afya’s Digital Health Services is being able to help physicians’ during their medical journey and now, with our 6 pillars complete after the acquisition of Glic, we will further explore the development of our ecosystem, which is being built with multiple offerings, unlocking new interactions and revenue streams that go beyond the physicians, achieving pharma players, hospitals, labs and drugstores chains, scratching the surface of a total addressable market of R$28.4 billion. Since the beginning of the year, we have been disclosing our B2P and B2B figures, breaking down our Digital Service’s net revenue within these two for a better perspective.

As a reflection of our great results and actions that are being shown to the market, we are also glad to announce that, for the third time in a row, we’ve won the "Anuário Época Negócios 360º" award as the best Company in the Education segment. We are very proud of this achievement, as it is the recognition of the work and passion of our more than nine thousand employees around a unique vision: to transform health together with those who have medicine as a vocation.

With another round of high and sustainable growth, our mission remains solid as ever: to provide an ecosystem that integrates education and digital solutions for the entire medical journey, enhancing the development, updating, assertiveness, and productivity of health professionals. We are very proud of our business and of what we have achieved so far, as well as excited about what we are planning for the future.

2. Subsequent Events in the Quarter:

  • Afya announced on October 13th, 2022, that it has entered into a share purchase agreement for the acquisition of 100% of the total share capital of Sociedade Educacional e Cultural Sergipe DelRey Ltda., that encompasses the operations of Centro Universitário Tiradentes Alagoas ("UNIT Alagoas") and Faculdade Tiradentes Jaboatão dos Guararapes ("FITS Jaboatão dos Guararapes"). The acquisition will contribute 340 medical school seats to Afya, increasing Afya’s total medical school seats from 2,759 to 3,099. The aggregate purchase price (enterprise value) is R$825.0 million before the deduction of Net Debt that will be calculated at the closing date, and it will be paid as follows: R$575 million in cash on the transaction closing date and R$250 million in three annual installments, respectively, of R$150 million, R$50 million, and R$50 million, adjusted by the Brazilian interest rate (SELIC). We expected an EV/EBITDA of 5.8x at maturity and post synergies (2024). With the acquisition, Afya further consolidates its presence in the Brazilian Northeast, entering a new state in the region.

3. Full Year 2022 Guidance Reaffirmed

The Company is reaffirming its previously issued guidance for FY22 including the successfully concluded acceptances of new medical students for the second semester, ensuring 100% occupancy in all of its medical schools.

The guidance for FY2022 is defined in the following table:

Guidance for 2022

Important considerations

2022 Adjusted Net Revenue is expected to be between R$2,280.0 million – R$2,360.0 million

Includes four Mais Médicos units start operating in 2H22;
Includes Ji-Parana acquisition start operating in the 2H22;
Includes Além da Medicina acquisition;
Excludes any acquisition that may be concluded after the issuance of the guidance, such as Cardiopapers and Glic.

2022 Adjusted EBITDA is expected to be between R$935.0 million - R$1,015 million

4. 9M22 Overview

Operational Review

Afya is the only company offering educational and technological solutions to support physicians across every stage of their 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 distinct business units. 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 business unit 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, and 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

Nine months period ended September 30,

2022

2021

% Chg

Undergrad Programs

MEDICAL SCHOOL

Approved Seats

2,759

2,611

5.7

%

Operating Seats

2,709

2,361

14.7

%

Total Students (end of period)

17,997

15,977

12.6

%

Average Total Students

17,692

13,983

26.5

%

Average Total Students (ex-Acquisitions)*

15,237

13,983

9.0

%

Tuition Fees (Total - R$MM)

1,522,393

1,081,135

40.8

%

Tuition Fees (ex- Acquisitions* - R$MM)

1,282,263

1,081,135

18.6

%

Medical School Gross Avg. Ticket (ex- Acquisitions* - R$/month)

9,351

8,591

8.8

%

Medical School Net Avg. Ticket (ex- Acquisitions* - R$/month)

7,765

7,109

9.2

%

UNDERGRADUATE HEALTH SCIENCE

Total Students (end of period)

18,114

19,297

-6.1

%

Average Total Students

19,932

14,587

36.6

%

Average Total Students (ex-Acquisitions)*

14,401

14,587

-1.3

%

Tuition Fees (Total - R$MM)

254,613

163,270

55.9

%

Tuition Fees (ex- Acquisitions* - R$MM)

167,925

163,270

2.9

%

OTHER UNDERGRADUATE

Total Students (end of period)

23,085

26,953

-14.4

%

Average Total Students

23,746

18,533

28.1

%

Average Total Students (ex-Acquisitions)*

14,190

18,533

-23.4

%

Tuition Fees (Total - R$MM)

201,116

161,063

24.9

%

Tuition Fees (ex- Acquisitions* - R$MM)

135,500

161,063

-15.9

%

TOTAL TUITION FEES

Tuition Fees (Total - R$MM)

1,978,122

1,405,468

40.7

%

Tuition Fees (ex- Acquisitions* - R$MM)

1,585,688

1,405,468

12.8

%

*For the nine months period ended September 30, 2022, "2022 Ex Acquisitions" excludes: UNIFIPMoc and FIP Guanambi (from January to May, 2022; Closing of UNIFIPMoc and FIP Guanambi was in June, 2021), UNIGRANRIO (from January to July, 2022; Closing of UNIGRANRIO was in August, 2021), and Garanhuns (from January to September, 2022; Closing of Garanhuns was in November, 2021).

Key Revenue Drivers – Continuing Education and Digital Services

Table 3: Key Revenue Drivers

Nine months period ended September 30,

2022

2021

% Chg

Continuing Education

Medical Specialization & Others

Total Students (end of period)

4,036

2,835

42.4

%

Average Total Students

3,686

3,273

12.6

%

Average Total Students (ex-Acquisitions)

3,686

3,273

12.6

%

Net Revenue from courses (Total - R$MM)

75,568

51,481

46.8

%

Net Revenue from courses (ex- Acquisitions¹)

75,568

51,481

46.8

%

Digital Services

Content & Technology for Medical Education

Medcel Active Payers

Prep Courses & CME - B2P

12,886

16,878

-23.7

%

Prep Courses & CME - B2B

5,704

4,097

39.2

%

Além da Medicina Active Payers

5,696

-

n.a.

Cardio Papers Active Payers

5,090

-

n.a.

Medical Harbour Active Payers

5,080

306

1560.1

%

Clinical Decision Software

Whitebook Active Payers

133,926

117,826

13.7

%

Clinical Management Tools²

iClinic Active Payers

22,596

15,984

41.4

%

Shosp Active Payers

2,348

2,093

12.2

%

Digital Services Total Active Payers (end of period)

193,326

157,184

23.0

%

Net Revenue from Services (Total - R$MM)

134,243

109,613

22.5

%

Net Revenue - B2P

117,256

103,596

13.2

%

Net Revenue - B2B

16,987

6,017

182.3

%

Net Revenue From Services (ex-Acquisitions¹)

111,050

109,613

1.3

%

(1) For the nine months period ended September 30, 2022, "2022 Ex Acquisitions" excludes: iClinic (only January, 2022; Closing of iClinic was in January, 2021), Medicinae (from January to March, 2022; Closing of Medicinae was in March, 2021), Cliquefarma (from January to April, 2022; Closing of Cliquefarma was in April, 2021), Medical Harbour (from January to April, 2022; Closing of Medical Harbour was in April, 2021), Shosp (from January to May, 2022; Closing of Shosp was in May, 2021), RX PRO, Além da Medicina, Cardiopapers, and Glic (all from January to September, 2022; Closing of RX PRO, Além da Medicina, Cardiopapers, and Glic were after October, 2021).

(2) Clinical management tools includes Telemedicine and Digital Prescription features.

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 286 thousand, 15.7% higher over the same period in the last year.

Monthly Unique Active Users (MuaU) represents the number of unique individuals, without overlap of users among products, in the last 30 days of a specific period. Since this concept is being implemented this year, the historical metrics of MuaU could not be disclosed.

Table 4: Key Operational Drivers for Digital Services - Monthly Active Users (MaU)

3Q22

3Q21

% Chg YoY

2Q22

% Chg QoQ

Content & Technology for Medical Education

21,811

20,015

9.0

%

20,739

5.2

%

Clinical Decision Software

239,640

194,082

23.5

%

221,862

8.0

%

Clinical Management Tools¹

23,036

32,909

-30.0

%

21,151

8.9

%

Physician-Patient Relationship

1,397

-

n.a.

1,101

26.9

%

Total Monthly Active Users (MaU) - Digital Services

285,884

247,006

15.7

%

264,853

7.9

%

1) Clinical management tools includes Telemedicine and Digital Prescription features

2) Clinical management tools MAU excludes other users other than payors, starting in 1Q22

3) Shosp, Medicinae and Além da Medicina starting in 1Q22

4) Cardiopapers and Glic starting in 2Q22

Table 5: Key Operational Drivers for Digital Services - Monthly Unique Active Users (MuaU)

3Q22

Total Monthly Unique Active Users (MuaU) - Digital Services

263,587

1) Total Monthly Unique Active Users excludes non-integrated companies: Medical Harbour, Medicinae, Shosp, Além da Medicina, Cardiopapers and Glic

Seasonality

Undergrad’s and Continuing Education tuition revenues are related to the intake process and monthly tuition fees charged to students over the period thus the Company does not have significant fluctuations during the semester. Digital Services is comprised mostly by 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, as a result of the enrollments of Medcel’s clients period. 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 compared to the second and third quarters of the year.

Revenue

As disclosed in our 2Q22 earnings release, the Company has been recovering amounts related to mandatory discounts in tuition fees previously granted by individual and collective legal proceedings and public civil proceedings related to COVID-19. For the nine months period ended September 30, 2022, this amount represents R$21.1 million, and, as Afya has excluded these mandatory discounts from Adjusted Net Revenue in 2020 and 2021, this recovery is not counted for Adjusted Net Revenue in 2022.

Adjusted Net Revenue for the third quarter of 2022 was R$580.2 million, an increase of 25.2% over the same period of the prior year. Excluding acquisitions, Adjusted Net Revenue in the third quarter increased 17.1% YoY to R$542.4 million, a strong increase, mainly due to the maturation of medical seats and the beginning of the 4 Mais Médicos operations during the third quarter, higher tickets in Medicine courses, and the Continuing Education recovery, which ended the third quarter with a 72.2% year over year increase in net revenue, mainly due to the strong student base expansion during 2022.

Once again, the Digital Services segment has also contributed to the Adjusted Net Revenues growth this quarter, increasing 59.4% year over year, and 30.4%, excluding acquisitions. This organic growth is a combination of (a) a great start of the B2B engagements, reaching 61 contracts – including pharma solutions and RX PRO contracts -, with 40 different pharmaceutical industry companies, and (b) the expansion of the active payers in the B2P, mainly in Whitebook and iClinic.

For the nine-month period ended September 30, 2022, Adjusted Net Revenue was R$1,724.0 million, an increase of 38.2% over the same period of last year. Excluding acquisitions, Adjusted Net Revenue in the nine-month period increased 15.6% YoY to R$1,441.5 million.

Table 6: Revenue & Revenue Mix

(in thousands of R$)

For the three months period ended September 30,

For the nine months period ended September 30,

2022

2022 Ex
Acquisitions*

2021

% Chg

% Chg Ex
Acquisitions

2022

2022 Ex
Acquisitions*

2021

% Chg

% Chg Ex
Acquisitions

Net Revenue Mix

Undergrad

509,097

479,424

410,059

24.2%

16.9%

1,538,037

1,278,760

1,060,345

45.1%

20.6%

Adjusted Undergrad¹

508,720

479,047

418,950

21.4%

14.3%

1,516,975

1,257,698

1,086,554

39.6%

15.8%

Continuing Education

27,906

27,906

16,209

72.2%

72.2%

75,568

75,568

51,481

46.8%

46.8%

Digital Services

44,548

36,456

27,948

59.4%

30.4%

134,243

111,050

109,613

22.5%

1.3%

Inter-segment transactions

-976

-976

171

n.a.

-670.8%

-2,793

-2,793

- 327

754.1%

754.1%

Total Reported Net Revenue

580,575

542,810

454,387

27.8%

19.5%

1,745,055

1,462,585

1,221,112

42.9%

19.8%

Total Adjusted Net Revenue ¹

580,198

542,433

463,278

25.2%

17.1%

1,723,993

1,441,523

1,247,321

38.2%

15.6%

*For the three months period ended September 30, 2022, "2022 Ex Acquisitions" excludes: UNIGRANRIO (only July, 2022; Closing of UNIGRANRIO was in August, 2021), RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic (all from July to September, 2022; Closing of RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic were after October, 2021).

*For the nine months period ended September 30, 2022, "2022 Ex Acquisitions" excludes: iClinic (only January, 2022; Closing of iClinic was in January, 2021), Medicinae (from January to March, 2022; Closing of Medicinae was in March, 2021), Cliquefarma (from January to April, 2022; Closing of Cliquefarma was in April, 2021), Medical Harbour (from January to April, 2022; Closing of Medical Harbour was in April, 2021), Shosp (from January to May, 2022; Closing of Shosp was in May, 2021), UNIFIPMoc and FIP Guanambi (from January to May, 2022; Closing of UNIFIPMoc and FIP Guanambi was in June, 2021), UNIGRANRIO (from January to July, 2022; Closing of UNIGRANRIO was in August, 2021), RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic (all from January to September, 2022; Closing of RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic were after October, 2021).

(1) Includes mandatory discounts 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 08).

Adjusted EBITDA

Adjusted EBITDA for the three-month period ended September 30, 2022 increased 19.5% to R$228.7 million, up from R$191.4 million in the same period of the prior year, while the Adjusted EBITDA Margin decreased 190 basis points to 39.4%. For the nine-month period ended September 30, 2022, Adjusted EBITDA was R$719.7 million, an increase of 28.6% over the same period of the prior year, with an Adjusted EBITDA Margin decrease of 320 basis points in the same period. The Adjusted EBITDA Margin reduction is due to (a) the Digital segment, mostly in the performance of Medcel in the residency preparatory market, (b) the expansion of the Continuing Education segment, which is still maturing the new campuses, and (c) the increase in corporate expenses in the period.

Excluding acquisitions, Adjusted EBITDA for the three-month period increased 10.2% YoY to R$211.0 million, while the Adjusted EBITDA Margin decreased 240 basis points to 38.9%. For the nine-month period, excluding acquisitions, Adjusted EBITDA increased 5.3% YoY to R$589.2 million, while the Adjusted EBITDA Margin decreased 400 basis points to 40.9%, mainly due to the same reasons previously explained.

Table 7: Adjusted EBITDA

(in thousands of R$)

For the three months period ended September 30,

For the nine months period ended September 30,

2022

2022 Ex
Acquisitions*

2021

% Chg

% Chg Ex
Acquisitions

2022

2022 Ex
Acquisitions*

2021

% Chg

% Chg Ex
Acquisitions

Adjusted EBITDA

228,730

210,968

191,400

19.5%

10.2%

719,717

589,167

559,709

28.6%

5.3%

% Margin

39.4%

38.9%

41.3%

-190 bps

-240 bps

41.7%

40.9%

44.9%

-320 bps

-400 bps

*For the three months period ended September 30, 2022, "2022 Ex Acquisitions" excludes: UNIGRANRIO (only July, 2022; Closing of UNIGRANRIO was in August, 2021), RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic (all from July to September, 2022; Closing of RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic were after October, 2021).

*For the nine months period ended September 30, 2022, "2022 Ex Acquisitions" excludes: iClinic (only January, 2022; Closing of iClinic was in January, 2021), Medicinae (from January to March, 2022; Closing of Medicinae was in March, 2021), Cliquefarma (from January to April, 2022; Closing of Cliquefarma was in April, 2021), Medical Harbour (from January to April, 2022; Closing of Medical Harbour was in April, 2021), Shosp (from January to May, 2022; Closing of Shosp was in May, 2021), UNIFIPMoc and FIP Guanambi (from January to May, 2022; Closing of UNIFIPMoc and FIP Guanambi was in June, 2021), UNIGRANRIO (from January to July, 2022; Closing of UNIGRANRIO was in August, 2021), RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic (all from January to September, 2022; Closing of RX PRO, Garanhuns, Além da Medicina, Cardiopapers, and Glic were after October, 2021).

Adjusted Net Income

Net Income for the third quarter of 2022 was R$80.4 million, an increase of 38.7% over the same period of the prior year. For the nine-month period ended September 30, 2022, Net Income increased 66.3%, from R$193.3 million to R$321.4 million, mainly due to: (a) the increase in operational results, as previously described, (b) the recovery of a portion of the prior granted discounts in tuition fees related to COVID-19, (c) the reduction of financial expenses related to the fx rate difference regarding the Softbank transaction that affected 2Q21, and (d) the reduction on the non-recurring M&A expenses.

Adjusted Net Income for the third quarter of 2022 was R$120.1 million, an increase of 2.7% over the same period of the prior year. Adjusted Net Income for the nine-month period of 2022 was R$406.4 million, an increase of 18.8% year over year.

Our EPS reached R$3.39 per share for the nine-month period ended September 30, 2022, an increase of 77.5% year over year, reflecting the increase in our Net Income, and capital allocation discipline executing our business combination and three buyback programs in a row.

Table 8: Adjusted Net Income

(in thousands of R$)

For the three months period ended September 30,

For the nine months period ended September 30,

2022

2021

% Chg

2022

2021

% Chg

Net income

80,410

57,989

38.7%

321,425

193,282

66.3%

Amortization of customer relationships and trademark (1)

18,952

18,031

5.1%

55,959

46,015

21.6%

Share-based compensation

8,833

8,847

-0.2%

20,414

33,949

-39.9%

Non-recurring expenses:

11,861

32,008

-62.9%

8,586

68,726

-87.5%

- Integration of new companies (2)

7,063

5,192

36.0%

17,015

12,728

33.7%

- M&A advisory and due diligence (3)

1,388

8,442

-83.6%

3,194

11,998

-73.4%

- Expansion projects (4)

1,079

3,069

-64.8%

2,358

6,459

-63.5%

- Restructuring expenses (5)

2,708

6,414

-57.8%

7,081

11,332

-37.5%

- Mandatory Discounts in Tuition Fees (6)

- 377

8,891

n.a.

- 21,062

8,891

n.a.

Adjusted Net Income

120,056

116,875

2.7%

406,384

341,972

18.8%

Basic earnings per share - in R$ (7)

0.84

0.57

47.4%

3.39

1.91

77.5%

Adjusted earnings per share - in R$ (8)

1.28

1.20

6.7%

4.33

3.50

23.7%

(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) 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 our acquired companies.

(6) 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 classes restriction, and excludes any recovery of these discounts that were invoiced based on the Supreme Court decision.

(7) Basic earnings per share: Net Income/Weighted average number of outstanding shares.

(8) Adjusted earnings per share: Adjusted Net Income attributable to equity holders of the Parent/Weighted average number of outstanding shares.

Cash and Debt Position

Cash and cash equivalents on September 30, 2022, was R$715.6 million, a decrease of 31.1% over the same period in 2021.

For the nine-month period ended September 30, 2022, Afya reported Adjusted Cash Flow from Operations of R$743.8 million, up from R$557.2 million in the same period of the previous year, an increase of 33.5% YoY, boosted by the solid operational results.

Operating Cash Conversion Ratio was strong once again, achieving 104.6% for the nine-month period ended September 30, 2022, compared to 113.5% in the same period of the previous year. This decrease was mainly related to (a) an increase in the trade receivables, partially caused by the recovery of the mandatory discounts in tuition fees related to COVID-19 that were invoiced but not yet received, and (b) the fact that last year’s cash performance was positively impacted by the recover of the special payment conditions related to the COVID-19 given to our students during 2020.

On September 30, 2022, net debt, excluding the effect of IFRS 16, totaled R$1,348.2 million, compared with net debt of R$1,108.6 million in the same period in 2021, mainly due to payments related to (a) 6 business combinations and license acquisitions executed in the last 12 months, totaling R$263.7 million; (b) shares repurchase program of R$267.5 million, executed in the last 12 months, (c) investments activities in properties, equipment and intangibles (excluding license acquisitions and goodwill) totaling R$228.1 million in the last 12 months, and (d) net financial results from the last 12 months, which totaled R$235.8 million, all partially offset by the R$818.1 million cash generation from September 30, 2021 through September 30, 2022. The following table shows more information regarding the cost of debt for the third quarter, considering loans and financing, and accounts payable to selling shareholders. It is important to mention that our capital structure remains solid with a conservative leveraging position and a low cost of debt.

Table 9: Gross Debt and Cost of Debt

(in R$ MM)

For the nine months period ended September 30,

Cost of Debt

Gross Debt

Duration (Years)

per year

%CDI*

Loans and financing: Softbank

824

3.6

6.5%

55%

Loans and financing: Others

575

0.8

13.7%

114%

Accounts payable to selling shareholders
plus other financial obligations

664

1.3

11.6%

97%

Total

2.063

2.2

10.0%

84.0%

*Based on the annualized Interbank Certificates of Deposit ("CDI") rate for the period as a reference.

9M22: ~11.97% p.y.

Table 10: Operating Cash Conversion Ratio Reconciliation

For the nine months period ended September 30,

(in thousands of R$)

Considering the adoption of IFRS 16

2022

2021

% Chg

(a) Cash flow from operations

715,881

528,698

35.4%

(b) Income taxes paid

27,940

28,495

-1.9%

(c) = (a) + (b) Adjusted cash flow from operations

743,821

557,193

33.5%

(d) Adjusted EBITDA

719,717

559,709

28.6%

(e) Non-recurring expenses:

8,586

68,726

-87.5%

- Integration of new companies (1)

17,015

12,728

33.7%

- M&A advisory and due diligence (2)

3,194

11,998

-73.4%

- Expansion projects (3)

2,358

6,459

-63.5%

- Restructuring Expenses (4)

7,081

11,332

-37.5%

- Mandatory Discounts in Tuition Fees (5)

-21,062

26,209

n.a.

(f) = (d) - (e) Adjusted EBITDA ex- non-recurring expenses

711,131

490,983

44.8%

(g) = (c) / (f) Operating cash conversion ratio

104.6%

113.5%

-890 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) Consists of expenses related to professional and consultant fees in connection with the opening of new campuses.

(4) Consists of expenses related to the employee redundancies in connection with the organizational restructuring of acquired companies.

(5) 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 classes restriction, and excludes any recovery of these discounts that were invoiced based on the Supreme Court decision.

Table 11: Cash and Debt Position

(in thousands of R$)

3Q22

FY2021

% Chg

3Q21

% Chg

(+) Cash and Cash Equivalents

715,644

748,562

-4.4%

1,038,934

-31.1%

Cash and Bank Deposits

27,161

88,487

-69.3%

75,635

-64.1%

Cash Equivalents

688,483

660,075

4.3%

963,299

-28.5%

(-) Loans and Financing

1,399,724

1,374,876

1.8%

1,377,810

1.6%

Current

259,638

128,720

101.7%

14,780

1656.7%

Non-Current

1,140,086

1,246,156

-8.5%

1,363,030

-16.4%

(-) Accounts Payable to Selling Shareholders

598,367

679,826

-12.0%

696,521

-14.1%

Current

241,560

239,849

0.7%

247,819

-2.5%

Non-Current

356,807

439,977

-18.9%

448,702

-20.5%

(-) Other Short and Long Term Obligations

65,748

72,726

-9.6%

73,212

-10.2%

(=) Net Debt (Cash) excluding IFRS 16

1,348,195

1,378,866

-2.2%

1,108,609

21.6%

(-) Lease Liabilities

782,224

714,085

9.5%

675,895

15.7%

Current

28,685

24,955

14.9%

24,169

18.7%

Non-Current

753,539

689,130

9.3%

651,726

15.6%

Net Debt (Cash) with IFRS 16

2,130,419

2,092,951

1.8%

1,784,504

19.4%

CAPEX

Capital expenditures is consisting 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 nine-month period ending September 30, 2022, CAPEX went from R$140.7 million to R$238.4 million, an increase of 69.4% over the same period of the prior year, due to higher expenditures related to intangible assets, mainly explained by the R$24.4 million earn-out related to the 28 additional seats of Centro Universitário São Lucas, in Ji-Parana, approved in March, 2022, and R$39.1 million remeasurement of Unigranrio's business combination goodwill.

Table 12: CAPEX

(in thousands of R$)

For the nine months period ended September 30,

2022

2021

% Chg

CAPEX

238,369

140,725

69.4%

Property and equipment

116,641

97,435

19.7%

Intanglibe assets

121,728

43,290

181.2%

- Licenses

24,408

-

n.a.

- Goodwill

39,100

-

n.a.

- Others

58,220

43,290

34.5%

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.

In August 2021, Afya assumed a voluntary commitment to have at least 50% women in its management positions by 2030. In addition, Afya announced that it was certificated by Women on Board, an independent initiative whose purpose is to acknowledge, value and promote corporate environments in which women are part of the board of directors. The company voluntarily committed to continuing to have at least two women as board members.

On January 2022, Afya announced that it is one of 418 companies across 45 countries and regions to join the 2022 Bloomberg Gender-Equality Index (GEI), a modified market capitalization-weighted index that aims to track the performance of public companies committed to transparency in gender-data reporting. This reference index measures gender equality across five pillars: female leadership & talent pipeline, equal pay & gender pay parity, inclusive culture, anti-sexual harassment policies, and pro-women brand. Afya was included on this year’s index for scoring above a global threshold established by Bloomberg to reflect disclosure and the achievement or adoption of best-in-class statistics and policies.

The 2021 Sustainability Report can be found at: https://ir.afya.com.br/ >> Corporate Governance >> Sustainability.

Table 12: ESG Metrics¹³⁴

3Q22

3Q21

2021

2020

2019

#

GRI

Governance and Employee Management

1

405-1

Number of employees

9,039

8,177

8,079

6,100

3,369

2

405-1

Percentage of female employees

57%

55%

55%

55%

57%

3

405-1

Percentage of female members in the board of directors

27%

18%

18%

18%

22%

4

102-24

Percentage of independent member in the board of directors

36%

36%

36%

36%

22%

Environmental

4

302-1

Total energy consumption (kWh)

4,355,340

3,172,655

12,176,966

8,035,845

5,928,450

4.1

302-1

Consumption per campus

98,985

99,145

385,573

321,434

395,230

5

302-1

% supplied by distribution companies

71.6%

89.8%

91.3%

83.4%

96.2%

6

302-1

% supplied by other sources²

28.4%

10.2%

8.7%

16.6%

3.8%

Social

8

413-1

Number of free clinical consultations offered by Afya

128,686

144,832

341,286

427,184

270,000

9

Number of physicians graduated in Afya's campuses

17,176

12,359

16,772

12,691

8,306

10

201-4

Number of students with financing and scholarship programs (FIES and PROUNI)

10,329

7,940

7,881

4,999

2,808

11

% students with scholarships over total undergraduate students

17.4%

13.0%

12.9%

13.7%

11.7%

12

413-1

Hospital, clinics and city halls partnerships

481

432

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. Conference Call and Webcast Information

When:

November 21, 2022 at 5:00 p.m. ET.

Who:

Mr. Virgilio Gibbon, Chief Executive Officer

Mr. Luis André Blanco, Chief Financial Officer

Webcast: https://afya.zoom.us/j/92548247907

OR

Dial-in: Brazil: +55 11 4700 9668 or +55 21 3958 7888 or +55 11 4632 2236 or +55 11 4632 2237 or +55 11 4680 6788

United States: +1 646 931 3860 or +1 929 205 6099 or +1 301 715 8592 or +1 309 205 3325 or +1 312 626 6799 or +1 669 444 9171 or +1 669 900 6833 or +1 719 359 4580 or +1 253 215 8782 or +1 346 248 7799 or +1 386 347 5053 or +1 564 217 2000

Webinar ID: 925 4824 7907

Other Numbers: https://afya.zoom.us/u/abwfMV1H7z

6. About Afya Limited (Nasdaq: AFYA)

Afya is a leading medical education group in Brazil based on the number of medical school seats, delivering an end-to-end physician-centric ecosystem that serves and empowers students and physicians to transform their ambitions into rewarding lifelong experiences from the moment they join us as medical students through their medical residency preparation, graduation program, continuing medical education activities and offering digital products to help doctors enhance their healthcare services through their whole career. For more information, please visit www.afya.com.br.

7. 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/.

8. 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 operations, adjusted with income taxes paid divided by Adjusted EBITDA plus/minus non-recurring expenses.

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.

9. Investor Relations Contact

E-mail: ir@afya.com.br

10. Financial Tables

Unaudited interim condensed consolidated statements of financial position

As of September 30, 2022, and December 31, 2021

(In thousands of Brazilian reais)

September 30, 2022

December 31, 2021

Assets

(unaudited)

Current assets

Cash and cash equivalents

715,644

748,562

Trade receivables

405,450

378,351

Inventories

12,488

11,827

Recoverable taxes

42,510

25,579

Other assets

37,874

42,533

Total current assets

1,213,966

1,206,852

Non-current assets

Trade receivables

34,218

27,442

Other assets

198,700

180,306

Investment in associate

55,900

48,477

Property and equipment

503,626

419,808

Right-of-use assets

712,068

663,686

Intangible assets

4,042,545

3,900,835

Total non-current assets

5,547,057

5,240,554

Total assets

6,761,023

6,447,406

Liabilities

Current liabilities

Trade payables

62,905

59,098

Loans and financing

259,638

128,720

Lease liabilities

28,685

24,955

Accounts payable to selling shareholders

241,560

239,849

Notes payable

17,333

14,478

Advances from customers

108,588

114,585

Labor and social obligations

202,040

131,294

Taxes payable

24,170

26,715

Income taxes payable

27,353

11,649

Other liabilities

4,532

15,163

Total current liabilities

976,804

766,506

Non-current liabilities

Loans and financing

1,140,086

1,246,156

Lease liabilities

753,539

689,130

Accounts payable to selling shareholders

356,807

439,977

Notes payable

48,415

58,248

Taxes payable

93,445

96,598

Provision for legal proceedings

205,151

148,287

Other liabilities

12,962

2,486

Total non-current liabilities

2,610,405

2,680,882

Total liabilities

3,587,209

3,447,388

Equity

Share capital

17

17

Additional paid-in capital

2,375,344

2,375,344

Share-based compensation reserve

114,515

94,101

Treasury stock

(304,947)

(152,630)

Retained earnings

938,192

631,317

Equity attributable to equity holders of the parent

3,123,121

2,948,149

Non-controlling interests

50,693

51,869

Total equity

3,173,814

3,000,018

Total liabilities and equity

6,761,023

6,447,406

Unaudited interim condensed consolidated statements of income and comprehensive income

For the three and nine-month periods ended September 30, 2022 and 2021

(In thousands of Brazilian reais, except earnings per share)

Three-month period ended

Nine-month period ended

September 30,
2022

September 30,
2021

September 30,
2022

September 30,
2021

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Net revenue

580,575

454,387

1,745,055

1,221,112

Cost of services

(216,691)

(180,042)

(622,663)

(450,993)

Gross profit

363,884

274,345

1,122,392

770,119

General and administrative expenses

(210,692)

(178,811)

(596,621)

(444,399)

Other (expenses) income, net

(7,173)

(135)

(8,739)

1,163

Operating income

146,019

95,399

517,032

326,883

Finance income

29,202

29,161

76,618

45,144

Finance expenses

(91,933)

(64,558)

(256,873)

(168,825)

Finance result

(62,731)

(35,397)

(180,255)

(123,681)

Share of income of associate

3,819

3,004

10,260

8,626

Income before income taxes

87,107

63,006

347,037

211,828

Income taxes expenses

(6,697)

(5,017)

(25,612)

(18,546)

Net income

80,410

57,989

321,425

193,282

Other comprehensive income

-

-

-

-

Total comprehensive income

80,410

57,989

321,425

193,282

Income attributable to

Equity holders of the parent

75,760

53,030

306,875

178,357

Non-controlling interests

4,650

4,959

14,550

14,925

80,410

57,989

321,425

193,282

Basic earnings per share

Per common share

0.84

0.57

3.39

1.91

Diluted earnings per share

Per common share

0.84

0.56

3.38

1.89

Unaudited interim condensed consolidated statements of cash flows

For the nine-month periods ended September 30, 2022 and 2021

(In thousands of Brazilian reais)

September 30, 2022

September 30, 2021

Operating activities

(unaudited)

(unaudited)

Income before income taxes

347,037

211,828

Adjustments to reconcile income before income taxes

Depreciation and amortization

151,706

112,204

Write-off of property and equipment

683

1,936

Write-off of intangible assets

6

1,049

Allowance for doubtful accounts

29,441

34,005

Share-based compensation expense

20,414

33,949

Net foreign exchange differences

293

18,376

Accrued interest

147,839

66,851

Accrued lease interest

63,458

47,738

Share of income of associate

(10,260)

(8,626)

Provision for legal proceedings

8,531

9,286

Changes in assets and liabilities

Trade receivables

(60,167)

(18,593)

Inventories

(661)

(1,232)

Recoverable taxes

(16,931)

(8,228)

Other assets

5,858

(11,264)

Trade payables

1,398

3,461

Taxes payables

10,709

(1,247)

Advances from customers

(16,075)

9,419

Labor and social obligations

70,608

54,005

Other liabilities

(10,066)

2,276

743,821

557,193

Income taxes paid

(27,940)

(28,495)

Net cash flows from operating activities

715,881

528,698

Investing activities

Acquisition of property and equipment

(116,641)

(97,435)

Acquisition of intangibles assets

(70,423)

(43,290)

Dividends received

2,837

5,770

Acquisition of subsidiaries, net of cash acquired

(242,752)

(925,279)

Restricted cash

-

8,103

Net cash flows used in investing activities

(426,979)

(1,052,131)

Financing activities

Payments of loans and financing

(68,975)

(130,446)

Issuance of loans and financing

-

809,539

Payments of lease liabilities

(84,509)

(61,909)

Treasury shares

(152,317)

(98,541)

Proceeds from exercise of stock options

-

32,721

Dividends paid to non-controlling interests

(15,726)

(15,663)

Net cash flows from (used in) financing activities

(321,527)

535,701

Net foreign exchange differences

(293)

(18,376)

Net increase in cash and cash equivalents

(32,918)

(6,108)

Cash and cash equivalents at the beginning of the period

748,562

1,045,042

Cash and cash equivalents at the end of the period

715,644

1,038,934

Reconciliation between Net Income and Adjusted EBITDA

Reconciliation between Adjusted EBITDA and Net Income

(in thousands of R$)

For the three months period ended September 30,

For the nine months period ended September 30,

2022

2021

% Chg

2022

2021

% Chg

Net income

80,410

57,989

38.7%

321,425

193,282

66.3%

Net financial result

62,731

35,397

77.2%

180,255

123,681

45.7%

Income taxes expense

6,697

5,017

33.5%

25,612

18,546

38.1%

Depreciation and amortization

52,617

45,289

16.2%

151,706

112,204

35.2%

Interest received (1)

9,400

9,857

-4.6%

21,979

17,947

22.5%

Income share associate

(3,819)

(3,004)

27.1%

(10,260)

(8,626)

18.9%

Share-based compensation

8,833

8,847

-0.2%

20,414

33,949

-39.9%

Non-recurring expenses:

11,861

32,008

-62.9%

8,586

68,726

-87.5%

- Integration of new companies (2)

7,063

5,192

36.0%

17,015

12,728

33.7%

- M&A advisory and due diligence (3)

1,388

8,442

-83.6%

3,194

11,998

-73.4%

- Expansion projects (4)

1,079

3,069

-64.8%

2,358

6,459

-63.5%

- Restructuring expenses (5)

2,708

6,414

-57.8%

7,081

11,332

-37.5%

- Mandatory Discounts in Tuition Fees (6)

(377)

8,891

n.a.

(21,062)

26,209

n.a.

Adjusted EBITDA

228,730

191,400

19.5%

719,717

559,709

28.6%

Adjusted EBITDA Margin

39.4%

41.3%

-190 bps

41.7%

44.9%

-320 bps

(1) Represents the interest received on late payments of monthly tuition fees.

(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) 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 our acquired companies.

(6) 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 classes restriction, and excludes any recovery of these discounts that were invoiced based on the Supreme Court decision.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221121005859/en/

Contacts

Investor Relations Contact:
Afya Limited
ir@afya.com.br

Media Contact:
Cíntia Moraes Marin
cintia.marin@afya.com.br