Afya Ltd

Afya Limited operates in the medical education and technology sector in Brazil, focusing on supporting physicians throughout their professional lifecycle, from medical school enrollment through residency preparation, graduate and specialization programs, continuing medical education, and clinical practice ¹. The company is the largest medical education group in Brazil based on MEC-approved medical school seats ². The Brazilian education environment is increasingly open to private capital, with approximately 87.6% of higher education institutions being privately operated as of the 2024 census ³. The medical education market in Brazil is characterized by high demand for medical courses, low and uneven medical density compared to the OECD average, Brazil's fast-aging population, and compelling financial rewards for a medical career ⁴.

The company's core business model revolves around providing educational services and digital solutions across three segments: Undergraduate, Continuing Education, and Medical Practice Solutions ⁵. Revenue is primarily generated from monthly tuition fees for educational programs and subscription fees for digital products and services ⁶. The business model is characterized by high revenue visibility and operating leverage, with 95.7% of revenue for the year ended December 31, 2025, generated by the Undergraduate and Continuing Education segments ⁷. The average monthly net ticket for medical school tuition fees was R$9,060 for the year ended December 31, 2025 ⁸.

The Undergraduate segment provides educational services through undergraduate courses related to medical school, undergraduate health science, and other ex-health undergraduate programs, delivered through a network of higher education institutions across Brazil ⁹. As of December 31, 2025, this segment had 86,025 enrolled students, of which 52,101 were health-related and 33,924 were non-health-related ¹⁰. Revenue from Medicine courses constituted 85.7% of the total Undergraduate segment revenue for the year ended December 31, 2025 ¹¹. The company's network includes 37 undergraduate operating units, with 32 offering a medical course ¹².

The Continuing Education segment provides medical education, including residency preparation programs, specialization test preparation, and graduate courses in medicine, delivered through digital and in-person content ¹³. As of December 31, 2025, this segment had 55,039 students ¹⁴, including 12,990 enrolled in medical residency preparatory courses ¹⁵, 10,234 in medical graduate courses ¹⁶, and 31,815 in other B2B and B2P offerings ¹⁷. The segment also offers supplemental instructional content to third-party medical schools, with 14 schools adopting this content as of December 31, 2025 ¹⁸.

The Medical Practice Solutions segment provides clinical decision, clinical management, and doctor-patient relationship tools for physicians, and offers access, demand, and efficiency solutions for healthcare players ¹⁹. This portfolio includes Clinical Decision Support Platforms, Medical Practice Management Software, Healthcare Financial Services, and Digital Healthcare Ecosystem Solutions ²⁰. As of December 31, 2025, this segment had approximately 195,504 active paying users, with 156,598 in Clinical Decision and 38,906 in Clinical Management ²¹.

For the fiscal year ended December 31, 2025, total revenue was R$3,697.3 million ²², up from R$3,304.3 million in 2024 ²³ and R$2,875.9 million in 2023 ²⁴. Net income for 2025 was R$768.4 million ²⁵, compared to R$648.9 million in 2024 ²⁶ and R$405.4 million in 2023 ²⁷. Diluted EPS is not explicitly stated in the provided text. Operating cash conversion ratio was 93.7% in 2025 ²⁸, 102.2% in 2024 ²⁹, and 97.1% in 2023 ³⁰. Net cash flows from operating activities were R$1,531.6 million in 2025 ³¹, R$1,432.7 million in 2024 ³², and R$1,043.6 million in 2023 ³³. The company's cash and equivalents are not explicitly stated. Total debt and net debt figures are not explicitly stated in the provided text.

Revenue (ex-Acquisitions) for 2025 was R$3,607.5 million ³⁴, indicating that R$89.7 million of revenue was generated from acquired companies after their acquisition date in 2025 ³⁵. The company's total enrolled students increased by 11.7% in 2025 to 86,025 ³⁶, following a 16.6% increase in 2024 ³⁷. The medical school occupancy rate remained at approximately 100.0% for 2025, 2024, and 2023 ³⁸. In 2025, the company acquired FUNIC, adding 60 medical school seats ³⁹. In 2024, Unidom was acquired, adding 300 authorized medical school seats, of which 125 are final and 175 are subject to court proceedings ⁴⁰. In 2023, DelRey was acquired, encompassing UNIMA and FCM Jaboatão, and an additional 15% of CCSI was acquired, consolidating 75% ownership ⁴¹.

The company aims to continue its growth both organically and through acquisitions, with a focus on generating greater shareholder value through several strategic initiatives. A key growth driver is the maturation of its current number of authorized medical school seats, which provides contracted growth visibility until 2031. This is based on the six-year maturation cycle of medical school seats, where a medical school becomes operational with a first-year class that progresses through the required six years until it reaches full capacity. As of the date of this annual report, assuming full compliance with regulations and expected maturation, the company estimates reaching a total medical student base of 27,130 students by 2031 ⁴².

Another significant growth area is the expansion of medical residency preparation and graduate program enrollments. The company expects competition for medical residencies to increase as the number of graduating physicians grows while available residency seats remain static. It plans to leverage the academic outcome, scalability, and learning experience of its digital platform to grow its medical residency exam preparation student enrollments. Furthermore, due to the shortage of medical residency seats and the growing demand for medical undergraduate courses, the company believes it can expand its current offering in the Undergraduate segment and intends to continue developing its business-to-business strategy by increasing the number of partners and student enrollments through enhanced marketing and sales efforts.

The company also plans to deepen relationships across its lifelong medical learner base by capitalizing on cross-selling opportunities. This includes increasing the number of former undergraduate students subscribing to medical residency preparation solutions and the number of former undergraduate and/or medical residency students applying to graduate and other continuing medical education offerings, such as hard and soft skills courses. Expanding B2B capabilities is also a priority, as B2B contracts serve as effective customer entry points, familiarizing students with the company's platforms, increasing brand equity, and attracting more physicians to enroll in preparatory courses, graduate programs, and skills courses.

The company intends to continuously expand its distribution channels by increasing its presence in direct and third-party channels, launching graduate courses or CME for third-party continuing medical education hubs (including hospitals, clinics, and other medical schools) to grow its graduate medical footprint through partnerships. Leveraging infrastructure and extracting synergies from acquisitions is a key operational outlook. The company plans to implement measures to improve profitability of recent acquisitions, such as streamlining fee discounts and scholarship policies, integrating operations with its shared-services center, and aligning newly acquired faculty teams with its career plan.

The company will continue to selectively pursue M&A opportunities, primarily focused on expanding its medical school footprint by adding new institutions to its existing portfolio. It also plans to acquire businesses that complement its current medical education services offering and/or enhance its product portfolio, such as digital content platforms, continuing medical education institutions, and other medical certification companies. In 2025, the company acquired FUNIC, adding 60 medical school seats ⁴³, and in 2024, it acquired Unidom, adding 300 authorized medical school seats ⁴⁴. The company is currently evaluating possible acquisition opportunities and submits non-binding proposals from time to time.

The company also plans to enter new markets, believing its end-to-end physician-centric ecosystem is equipped to serve medical students in complementary segments where its innovative, methodological, data-driven approach can disrupt traditional vendors and legacy business models. Opportunities are identified in new sectors and regions of Brazil, with a future focus on expanding further into continuing medical education. International expansion into markets with similar fundamentals may also be selectively pursued. Finally, the company plans to develop new products, with a pipeline including new medical web-series seasons, corporate medical training, new extension health programs, a tutoring suite, a peer-to-peer suite, and a virtual reality product.

The company faces significant competition in its educational services, particularly in the Continuing Education segment from traditional institutions expanding into graduate programs, and in the Undergraduate segment due to restrictive requirements under the Mais Médicos program and the emergence of municipal institutions operating outside federal oversight, which could lead to competitive disadvantages and affect market share and profitability ⁴⁵. Changes to FIES rules, judicial interpretations, administrative decisions, or delays in tuition payments may adversely affect cash flows and business, especially if the FG-FIES fund becomes insufficiently funded, leading to increased retention of tuition receivables, reduced FIES availability, or delayed guarantee payments ⁴⁶. The loss of federal tax exemptions under the PROUNI program, due to non-compliance or future legislative changes, could materially adversely affect financial condition and results of operations, particularly if PROUNI-related tax benefits are not treated as qualified refundable tax credits under the OECD Pillar Two global minimum tax regime, potentially subjecting the company to additional Social Contribution on Net Income Tax ⁴⁷. The Brazilian tax system is undergoing significant changes, including the introduction of the Goods and Services Tax (IBS) and Social Contribution on Goods and Services (CBS), which could increase the overall tax burden and create competitive disparities with institutions not subject to Pillar Two rules ⁴⁸. Furthermore, the approval of withholding income tax on dividends distributed by Brazilian companies, effective January 1, 2026, may reduce net returns from Brazilian subsidiaries ⁴⁹. The company is exposed to liability for extraordinary events at its campuses, including accidents, injuries, or unlawful acts by employees, and infrastructure vulnerabilities, which could lead to negative publicity, reduced enrollment, substantial expenses, and diversion of management attention ⁵⁰. Non-compliance with environmental laws and regulations, including those related to waste disposal and the use of cadavers for educational purposes, could result in significant penalties, liabilities, and increased capital expenditures ⁵¹. The company is subject to MEC supervision, and unsatisfactory evaluation ratings (e.g., IGC, ENADE, ENAMED) could lead to regulatory sanctions such as restrictions on enrollment capacity, limitations on new courses, suspension of FIES/PROUNI participation, and reputational harm ⁵². The recent cancellation of the Mais Médicos III program's public call may limit near-term organic expansion opportunities and intensify M&A competition ⁵³. The post-secondary education sector is highly regulated, and failure to comply with existing or future laws and regulations, including those related to the Mais Médicos program and new MEC guidance on admissions management, could limit the ability to operate medical programs, obtain new authorizations, or maintain regulatory approvals, materially impacting the business ⁵⁴. The company faces restrictions and penalties under the Brazilian Consumer Protection Code, and legal proceedings from students or CADE could result in financial losses, reputational harm, or operational restrictions ⁵⁵. Difficulties in identifying, opening, and efficiently managing new campuses, or obtaining timely regulatory authorizations, may adversely affect organic growth ⁵⁶. Failure to meet ESG commitments could harm business, reputation, and financial results, and new ESG regulations may increase compliance costs ⁵⁷. The holding company structure makes the company dependent on dividend distributions from subsidiaries, which could be adversely affected by their performance or additional taxation on dividends ⁵⁸. Failure to protect intellectual property rights, including patents, copyrights, trademarks, and trade secrets, or being subject to intellectual property claims, could harm the business and financial condition ⁵⁹. Conflicts of interest may arise from properties owned by companies controlled by a significant shareholder ⁶⁰. Inability to pass on increases in costs and expenses (e.g., payroll, maintenance, utilities) to students, users, and customers through tuition or pricing adjustments could adversely affect operating results ⁶¹. Climate change presents physical and transition risks that could disrupt operations, increase regulatory requirements, and impact financial performance ⁶². The interests of management, tied to share-based incentive plans, may focus on short-term market price, potentially misaligning with long-term shareholder interests and leading to dilution from new share issuances ⁶³. Inability to maintain or renew existing leases, particularly for strategically located properties, could adversely affect the business ⁶⁴. Occupational health and safety risks in operations and construction projects could lead to adverse regulatory consequences, litigation, and reputational damage ⁶⁵. The need for additional funds for expansion, if not available on favorable terms, could materially and adversely affect growth strategy and financial condition, potentially leading to dilution or restrictive debt covenants ⁶⁶. The high concentration of revenue in medical course tuition fees makes the company vulnerable to adverse economic, market, or regulatory factors affecting these courses ⁶⁷. Challenges in expanding the distance learning business, including technological adaptation, internet access, and competition, could adversely affect growth ⁶⁸. Acquisitions of educational institutions may require CADE approval, and failure to obtain it or comply with remedies could result in fines or transaction annulment ⁶⁹. Seasonal fluctuations in the Continuing Education segment, particularly from e-book sales, may cause quarterly volatility in operating results, liquidity, and cash flows ⁷⁰. Recent developments in AI regulation in Brazil may impose additional compliance costs and operational challenges, impacting the development and deployment of AI-based tools ⁷¹. Disruption or volatility in global financial and credit markets, driven by geopolitical conflicts, inflation, and rising interest rates, could adversely affect the Brazilian economy and the company's business ⁷². Public health outbreaks, epidemics, or pandemics could materially adversely impact business continuity, especially practical educational activities ⁷³. Ineffective business continuity and disaster recovery plans could disrupt operations and negatively impact financial performance and reputation ⁷⁴.

Management emphasizes a continuous focus on disrupting traditional medical education, leveraging an in-depth understanding of the sector and a proprietary methodological approach that integrates individualization and technology in both digital and physical formats. The company highlights its position as the largest medical education group in Brazil on a per-seat basis, according to MEC, and its end-to-end physician-centric ecosystem, which includes 62 undergraduate and graduate medical school campuses and 300,646 users ⁷⁵. A key strategic priority is the maturation of current authorized medical school seats, with an estimated total medical student base of 27,130 students by 2031 ⁷⁶, assuming full compliance with regulations and expected maturation. Management also prioritizes the expansion of medical residency preparation and graduate program enrollments, aiming to leverage its digital platform and address the increasing competition for medical residencies. Furthermore, the company plans to deepen relationships across its lifelong medical learner base through cross-selling opportunities, expand its B2B capabilities, and continuously expand its distribution channels. Operationally, management is focused on leveraging infrastructure and extracting synergies from acquisitions, such as streamlining fee discounts and scholarship policies, and integrating operations with its shared-services center. The company will continue to selectively pursue M&A opportunities, primarily to expand its medical school footprint and complement its existing services, as evidenced by the acquisition of FUNIC in 2025, adding 60 medical school seats ⁷⁷, and Unidom in 2024, adding 300 authorized medical school seats ⁷⁸. Finally, management intends to enter new markets and develop new products, with a planned pipeline of new medical web-series seasons, corporate medical training, new extension health programs, a tutoring suite, a peer-to-peer suite, and a virtual reality product.