Q2 2026 Afya Ltd Earnings Call Transcript
Key Points
- Afya Ltd (AFYA) delivered solid first-half 2026 results with revenue growth of 7% year-over-year to R$1,985 million and net income up 7% to R$463 million.
- The company maintained strong cash generation with an operating cash conversion of 87.8% and free cash flow to equity of R$423 million in the first half of 2026.
- Afya Ltd (AFYA) returned R$448 million to shareholders through dividends and share repurchases, representing 106% of free cash flow to equity, reflecting a disciplined capital allocation strategy.
- The undergraduate segment showed robust growth, with medical school net average ticket up 4% and health science courses growing 13% year-over-year, driven by strong student base momentum.
- The company successfully extended its debt maturity profile from 1.9 years to 3.7 years and reduced gross debt to R$2.4 billion, maintaining a conservative leverage of 0.8 times net debt to EBITDA.
- Afya Ltd (AFYA) benefited from a favorable legal injunction that lifted restrictions on medical seats, allowing the company to potentially fill additional authorized seats in the second half.
- The company saw strong growth in continuing education student base (up 23%) and clinical management active payers (up 20%), indicating expanding ecosystem penetration.
- Adjusted EBITDA margin contracted by 190 basis points year-over-year to 46.2% in the first half of 2026, reflecting higher sales and market expenses from investment cycles.
- The continuing education segment experienced a revenue growth slowdown to 5% year-over-year, impacted by a product mix shift toward lower-ticket, short-term programs and a 25% decline in B2B revenue.
- Medical Practice Solutions revenue growth was modest at 2% year-over-year, with total active payers remaining stable and monthly active users declining 8%, due to competitive pressures from AI tools.
- The company faced regulatory uncertainty with the NMED restrictions, which initially limited seat occupancy, and despite the recent injunction, some additional seats may remain unfulfilled due to timing.
- Capex execution was slower than expected in the first half, running at 30% of the full-year guidance, with an anticipated acceleration in the second half, which could pressure cash flow.
- The effective tax rate for 2026 is expected to be around 10%, but the company recognized a one-time positive tax effect of R$20 million from Pillar 2 clarifications, which may not recur.
- The company's investment cycle in continuing education and medical practice solutions has not yet translated into significant revenue growth, with B2B revenue in continuing education declining 25% year-over-year.
Thank you for joining us for RFS conference call. I'm here today with Afya CEO, Virgilio Gibbon, and our CFO, Luis Blanco.
During today's presentation, our executives will make forward-looked statements.
Forward-looking statements can be related to future events, future financial or operating performance, no and unknown risks, uncertainties, and other factors that may cause AFS rational results to differ materially from those contemplated by these forward-looking statements. Forward-looking statements in this presentation include, but are not limited to, statements related to the business and financial performance, expectations and guidance for future periods, or expectations regarding the company's strategic product initiatives, its related benefits.
These risks include those more fully described in our filings with the Securities and Exchange Commission.
The forward-looking statements in this presentation are based on the information available to us as the date hereof. You should not rely on them as
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