Afya (AFYA) Q1 2025 earnings summary

Executive summary

• Net revenue for 1Q25 grew 16.4% year-over-year to R$936.4 million, with adjusted EBITDA up 23.7% to R$492 million and a record margin of 52.5%.

• Net income reached R$257 million, a 23.4% increase year-over-year; adjusted net income was R$294 million, up 17.1% year-over-year; EPS rose 23.3% to R$2.79, and adjusted EPS was R$3.20.

• Strong cash flow from operations at R$470 million, with a 96.8% cash conversion rate and a cash position of R$1,155 million.

• The business model demonstrated high predictability, strong growth, higher profitability, and robust cash generation, serving over 317,000 users.

• Afya holds a 9% market share in Brazil's private medical education sector, with 3,653 approved medical seats.

Financial highlights

• Adjusted EBITDA margin expanded by 300 basis points year-over-year to 52.5%, driven by undergrad and continuing education segments.

• Net debt/adjusted EBITDA improved to 0.9x as of 1Q25, with net debt reduced by R$291 million to R$1,524 million.

• Moody's upgraded national scale credit rating to AAA.br with a stable outlook; MSCI ESG rating debut at BBB.

• Cash and equivalents stood at R$1,155 million as of 1Q25.

• Gross margin expanded, supported by higher ticket prices in medicine courses and operational efficiency.

Outlook and guidance

• 2025 net revenue guidance is R$3,670–3,770 million, with adjusted EBITDA guidance of R$1,455.7–1,720 million; guidance excludes impact from the FUNIC acquisition.

• Management expects continued margin expansion, robust cash generation, and healthy intake and renewal rates for both medical and non-medical programs.

• Expectation for continuing education revenue growth to remain close to 10% for the year.

• Full-year 2025 guidance reaffirmed, reflecting confidence in continued growth and profitability.