Afya (AFYA) Q4 2023 earnings summary

Executive summary

• FY23 revenue rose 23.5% YoY to R$2,875.9m; net income increased 3.2% to R$405.4m, with growth led by Undergrad and supported by DelRey and organic expansion.

• Revenue growth was 54.8% organic and 45.2% acquisition-driven; medical education remained the core, contributing 78.8% of historical undergraduate combined tuition fees.

Financial highlights

• Revenue R$2,875.9m, up 23.5% YoY; gross profit R$1,766.1m, up 20.2%; operating income R$767.1m, up 15.5%.

• Net income R$405.4m, up 3.2%; income before tax was nearly flat at R$429.6m, while net finance expense rose 40.0% to R$347.0m.

• Adjusted EBITDA increased 21.2% to R$1,165.7m; operating cash conversion was 97.1%, versus 94.4% in FY22.

• Operating cash flow rose 23.6% to R$1,043.6m; investing cash outflow was R$1,143.0m, including R$886.5m net cash used for acquisitions.

• Cash and equivalents were R$553.0m at year-end, down from R$1,093.1m; total assets reached R$7,584.5m and total equity R$3,643.0m.

Outlook and guidance

• Management expected existing cash and operating cash flows to cover ordinary working capital and capex for the next 12 months; FY24 capex budget was R$257.3m.

• One approved undergraduate medical campus was planned to begin operations in 2024; a January 2024 authorization for 40 additional seats at FIP Guanambi brought approved seats to 3,203.

• Medical-seat maturation and seven Mais Médicos campuses underpin estimated growth to 23,062 medical students by 2030, assuming full capacity and compliance with regulations.

• Strategy includes selective acquisitions, deeper cross-selling, expansion of residency and graduate enrollment, B2B distribution, and new digital and educational products.