Afya Q3 2026 Earnings Results & Report

Afya EPS Results

• Actual EPS: $0.36
• Consensus EPS: $0.3701
• Beat/Miss: Missed by -$0.0101
• One Year Ago EPS: N/A
• EPS Beat Rate: 5 of last 8 quarters

Afya Revenue Results

• Actual Revenue: $190.16 million
• Expected Revenue: $190.28 million
• Beat/Miss: Missed by -$111.43 thousand
• YoY Revenue Growth: N/A

Afya (NASDAQ:AFYA) is a Brazilian medical education and digital health company. Its education business offers undergraduate medical degree programs, medical residency preparation, postgraduate courses and continuing education for health professionals.

The company also provides digital tools and services for medical students and practicing physicians, including clinical reference, practice-management and learning resources. These offerings support professionals at different stages of their medical careers.

Afya traces its roots to 1999 and serves students and health professionals across Brazil through its educational institutions and digital platforms. Its focus is on medical education and professional development in the Brazilian healthcare market.

Afya Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Afya reported third-quarter revenue growth of 6% and adjusted EBITDA growth of 9%, with the adjusted EBITDA margin up 100 basis points to 44%. Nine-month net income rose 7%, and operating cash conversion was 99.5%.
• Positive Sentiment: The undergraduate medical business remained a growth driver, with medical students up 3%, operating seats up 5%, and average medical tuition up 4% year over year. Management said gross tuition for 2027 is set to increase 5.7%, while noting it is too early to assess next year’s intake.
• Negative Sentiment: Continuing Education revenue grew just 1% over nine months despite 10% student-base growth, as enrollment shifted toward shorter, lower-priced courses; Medical Practice Solutions revenue was broadly flat. Management said it expects Continuing Education revenue per student to improve over time, but does not expect that in 2026.
• Positive Sentiment: Afya generated BRL 629 million in free cash flow to equity and returned BRL 459 million to shareholders through dividends and buybacks in the first nine months, while reducing net debt by BRL 170 million. Net debt was BRL 1.2 billion, though gross debt rose to BRL 2.5 billion and its average cost was 15.2% annually.

Presentation

[Renata Costa Couto, Director of Investor Relations at Afya]

statements related to the business and financial performance, expectations and guidance for future periods, or expectations regarding the company's strategic product initiatives and 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 predictions of future events, and we disclaim any obligation to update any forward-looking statement except as required by law. In addition, management may reference non-IFRS measures on this call. These measures are not intended to be considered in isolation or as a substitute for the results prepared in accordance with IFRS. This presentation reconciles these non-IFRS financial measures to the most directly comparable IFRS financial measures. Now, let me turn the call over to Virgílio Gibbon, Afya's CEO.

[Virgílio Gibbon, CEO at Afya]

Thank you, Renata, and everyone for joining us today for our third quarter nine months conference call for 2026 results. This quarter reflects more than financial performance. It demonstrates how our strategy continues to position Afya for sustainable growth, transforming medical education across Brazil. As we continue to train physicians with recognized quality and important accreditations and recognitions, such as SAEME, DOCEEME, and MSCI rating, while maintaining 100% occupancy across all of our medical programs in Brazil. Today, I will cover key strategic developments and operational highlights that drove these results. Luis Blanco will provide a detailed review of our operational and financial performance. Let's begin with our main highlights and strategic priorities for the quarter. In the third quarter, revenue increased 6% year-over-year to BRL 985 million, while Adjusted EBITDA increased 9% to BRL 434 million.

[Virgílio Gibbon, CEO at Afya]

Adjusted EBITDA margin reached 44%, an expansion of 100 basis points compared to the same period of the prior year. For the first nine months of 2026, revenue grew almost 7% year-over-year, reaching BRL 2 billion 970 million, followed by an Adjusted EBITDA growth of almost 5%, reaching BRL 1.3 billion, with an Adjusted EBITDA margin of 45.5%. Net income reached BRL 634 million, a 7% increase year-over-year, and basic EPS climbed to BRL 6.98, representing a 9% increase, reflecting the impact of the company's share repurchase program.

[Virgílio Gibbon, CEO at Afya]

We also reported a strong operational cash conversion of 99.5%, with BRL 629 million of free cash flow to equity in the nine months of 2026, of which BRL 206 million were generated in third quarter 2026. These results reflect the strength of our cash generation, disciplined execution, and our continued commitment to creating long-term shareholder value. Moving on to our operational updates.

[Virgílio Gibbon, CEO at Afya]

In this quarter, we maintain our leadership position in medical education, supported by 3,785 operating medical seats, reflect an increase of over 5% year-over-year. Furthermore, the number of undergrad medical students reached more than 26,000 students, representing 3% growth compared to the same period of the prior year. Additionally, we increased the net average tickets of medical school by 4% year-over-year, reaching BRL 9,466.

[Virgílio Gibbon, CEO at Afya]

In Continuing Education, revenue increased 1% over last year, reaching BRL 209 million, and in Medical Practice Solutions, revenue was in line with the same period of the prior year, reaching over BRL 128 million. This lower growth is part of the investment strategy we previously announced, aimed to increase the user base in these two segments. In this quarter, we are already seeing 10% growth in Continuing Education students compared to the same quarter of the prior year.

[Virgílio Gibbon, CEO at Afya]

In Medical Practice Solutions, we see a 3% growth in both paying users and MaU compared to the previous quarter. Our ecosystem now counts 300,000 users, reflecting continuing meaningful penetration among physicians and medical students across the country. Now, moving to slide number four, we will discuss the highlights of our three business segments and our corporate achievements. Starting with the undergrad segment in medicine course, we saw medical school net average tickets rising by 4% year-over-year.

[Virgílio Gibbon, CEO at Afya]

We also continue to deliver strong student base growth momentum in health science course. Compared to the previous year, average health science students increased by 18%, reflecting the diversification of our health-related undergrad portfolio. In addition, we secured authorization of 17 medical additional seats in Afya Cruzeiro do Sul on September 18th. This approval reinforce our organic growth runway and supports our ability to expand with predictability.

[Virgílio Gibbon, CEO at Afya]

The Continuing Education segment was once again marked by strong growth in our total student base, which expanded 10% in the nine months of 2026. B2P revenue for the segment grew 4% compared to the same period last year. In Medical Practice Solutions segment, delivered 20% increase in clinical management active payers in nine months. In addition, B2B revenue grew 4% year-over-year. Lastly, shareholder returns remained a key priority. Our disciplined capital allocation framework continues to create sustainable value for shareholders.

[Virgílio Gibbon, CEO at Afya]

At the corporate level, supported by strong cash generation, we returned BRL 459 million to shareholders through dividends and share repurchases in the nine months of 2026. To conclude corporate context, we are glad to announce that we achieved an AA MSCI ESG Rating, becoming the highest-rated company in the education sector in Latin America, while also has achieved a ESG leader status within the diversified consumer servicing industry.

[Virgílio Gibbon, CEO at Afya]

This result shows the strength of our business model and our ecosystem, while creating the foundations we need to keep growing and unlock the next chapter in the company's history. I will now turn the call over to Luis Blanco, Afya's CFO, to provide further insight into the financial operation metrics. Thank you.

[Luis Blanco, CFO at Afya]

Thank you, Virgílio, and good evening, everyone. Starting with the next slide for discussions of key operational metrics by business unit. Starting with the undergraduate programs, our medical student base grew by 3% compared to the first nine months of 2025, reaching over 26,000 students, while operating medical school seats increased 5% year-over-year to 3,785. Our medical school net average ticket increased by 4%, reaching BRL 9,466 in the nine months of 2026.

[Luis Blanco, CFO at Afya]

In addition to our health science and other undergraduate programs, revenue for the undergraduate segments grew by over 7%, totaling BRL 2,642 million. Notably, 85% of this revenue comes from the medical program and 93% from health-related courses, reinforcing our strategic focus and leadership in the sector. On the next page, I will present our Continuing Education metrics. We approach Continuing Education through three main journeys.

[Luis Blanco, CFO at Afya]

Starting with the residency journey, which encompasses products focused on the residency preparations. The student base dropped 4% year-over-year to 9,595 students at the end of the period, but increased 4% quarter-over-quarter, reflecting the seasonality of this product. In the graduate journey, which focus on specialization test preparations and graduate medical education, total students increased 2% to 9,386, supported by continued demand for advanced medical training programs.

[Luis Blanco, CFO at Afya]

Lastly, other B2P and B2B offerings continued to grow, with a total students up 17% year-over-year to 36,345. Continuing Education revenue increased to BRL 209 million in the nine-month period of 2026, compared to BRL 208 million in the same period of 2025, representing a growth of 1%. This performance was primarily driven by B2P revenue, which increased over 4% year-over-year to BRL 195 million, representing 93% of the Continuing Education revenue.

[Luis Blanco, CFO at Afya]

Meanwhile, B2B revenue totaled BRL 14 million. Moving to the next slide, I will discuss the Medical Practice Solutions operational metrics. Total active payers increased by 2% year-over-year to approximately 206,000, with clinical management active payers growing 20% to 52,000, reflecting continued penetrations of Afya iClinic. Monthly active users reached 219,000 during the period, down 4% year-over-year. Medical Practice Solutions revenue reached BRL 128 million in the nine months of 2026, broadly in line with the same period of the prior year.

[Luis Blanco, CFO at Afya]

On the next slide, we present Afya ecosystem. We are proud of the meaningful impact Afya continues to make across Brazil healthcare ecosystem. By the end of the third quarter of 2026, over 300,000 users were actively engaging with our service and products, reflecting our solid relevance and reach in medical educational and medical solutions.

[Luis Blanco, CFO at Afya]

Moving forward, I want to discuss our financial overview for the third quarter and the nine months of 2026. I am pleased to present another solid set of results for Afya, reflecting the resilience of our business model and our continued focus on sustainable growth and operational efficiency. Revenue for the third quarter of 2026 reached BRL 985 million, a 6% increase from the same period from the prior year. For the nine months of 2026, revenue totaled BRL 2,970 million, up 7% year-over-year. Adjusted EBITDA reached BRL 434 million in the third quarter of 2026, up 9% from the prior year. For the nine-month period, Adjusted EBITDA totaled BRL 1,352 million, up 5% year-over-year. Adjusted EBITDA margin reached 44% in the quarter and 45.5% in the nine-month period.

[Luis Blanco, CFO at Afya]

The margin expansions in the quarter was primarily driven by higher gross margins in the undergraduate segments and partially offset by gross margins compression in the Continuing Education and Medical Practice Solutions segments, associated with the ongoing investment cycle in both segments, and higher sales and marketing expenses. On the next page, cash flow from operating activities reached BRL 1,333 million in the nine-month period of 2026, compared to BRL 1,291 million in the same period of the prior year, representing a growth of 3%. Cash conversion remained strong at 99.5%, broadly in line with the prior year. Net income for the third quarter of 2026 totaled BRL 171 million, up 7% from the same period of the prior year. For the nine months of 2026, net income reached BRL 634 million, up 7% year-over-year.

[Luis Blanco, CFO at Afya]

Earnings per share increased BRL 1.88 in the third quarter of 2026, up 10% from the BRL 1.71 in the prior year period, higher than the net income increase, reflecting the executions of our buyback program. For the nine-month period, earnings per share reached BRL 6.98, up 9% from the BRL 6.40 in the nine-month period of 2025. Overall, these results reflect Afya's abilities to continue generating solid cash flow while delivering consistent growth in profitability and shareholder returns. Now, moving to my last two slides, I will cover our gross debt composition and our cost of debt, and our net debt reconciliation. These slides detail the compositions of our gross debt position as of September 2026, covering its maturity profile and average cost of debt.

[Luis Blanco, CFO at Afya]

Afya continues to maintain a solid capital structure and a conservative leverage profile. As of September 30 of 2026, gross debt totaled BRL 2.5 billion, compared to the BRL 2.3 billion as of September 2025. At the same time, the average debt durations increased from 1.9 years to 3.7 years, extending our maturity profile in the period. The average cost of debt in 2026 is 15.2% per year, representing approximately 106% of the CDI for the period. On the next page, we can look closely at the net debt variation. Our net debt positions continue to benefit from a solid cash flow from operating activities, which totaled BRL 1,333 million during the period, and largely offsets tax, investments, leases, and interest expenses. As of September 2026, our net debt totaled BRL 1.2 billion.

[Luis Blanco, CFO at Afya]

Our free cash flow to equity reached BRL 629 million in the first nine months of 2026, including BRL 206 million generated in the third quarter. It is worth mentioning that Afya disbursed Pillar Two taxations for the first time at the end of July 2026. This strong cash flow generation allowed us to return BRL 459 million to shareholders through dividends and share repurchase during the nine-month period, while reducing our net debt by BRL 170 million. Afya's net debt, excluding IFRS 16, divided by the midpoint of the 2026 Adjusted EBITDA guidance, is 0.7x. This concluded our prepared remarks. The nine-month periods of 2026 reinforce what we have consistently demonstrated over time: a resilient business, a focused team, and a strategy that is working.

[Luis Blanco, CFO at Afya]

We remain deeply committed to advancing the physician journey through our integrated ecosystem and confident in our ability to deliver sustainable long-term value for our shareholders, students, and healthcare professionals across Brazil. The strengths of our ecosystems and the resilience of our business model enable us to continue growth and reinforce our ability to achieve our objectives. I will now open the conference for the Q&A session. Thank you.

[Renata Costa Couto, Director of Investor Relations at Afya]

If you want to ask a question, please raise your hand. The first question comes from Livia from JPMorgan.

[Analyst at JPMorgan]

Hi, Virgílio, Blanco, Renata. Thank you for the opportunity for making questions. I want to have two questions here. The first one is on the medical segment. Could you give us an update on the competitive environment, especially for the first half of next year intake? I know it's a little bit early at this point, but if you could give us some color, would be great. If you could also comment a little bit on how you see the dynamics for tickets next year. The second one, we would like to better understand the elements behind the expansion of gross margin in the undergrad segment. Thank you.

[Virgílio Gibbon, CEO at Afya]

Hi, Livia. It's Virgílio. Thanks for your question. As you said, it's very early in the process to give a call or how will be the intake for 2027 first semester. Regarding ticket, we passed 5.7% over our gross tuition to next year. We are in very beginning, so kind of optimistic based on what we did on the second semester of 2026. This is as regard the competition and the trend for 2027. About the gross margin on undergrad, we saw in this quarter very good results coming from undergrad. We are 100 basis points over the same quarter last year, and basically comes also from undergrad. The gross margin expanded.

[Virgílio Gibbon, CEO at Afya]

Most of them are very good results also on medical, but also on health programs that we continue to have very high growth on other health programs on our campuses, diluting fixed costs and also improving the number of students per class, also combining more health-related disciplines between programs, what help us to minimize the faculty cost. I think this is the overall reason coming from a better gross margin on this third quarter.

[Analyst at JPMorgan]

Perfect. Very clear. Thank you.

[Renata Costa Couto, Director of Investor Relations at Afya]

Next question comes from Flavio from Bank of America.

[Analyst at Bank of America]

Good evening, everyone. Thanks for taking my questions. I have two on my side. The first one is on ENAMED. I was wondering if you have already had access to any preliminary results or insights from this year's exam. Based on what you have seen so far, if you guys anticipate having to increase investments or costs to better prepare your students for the ENAMED exams in the upcoming years. My second question is on Continuing Education. We have been informing that the student base growth is not translating into a proportional revenue growth. I think you guys already mentioned that there is a mix shift towards short duration and lower ticket courses. My question here is on when should we expect the monetization of this growing student base evolve, or when should we expect revenues per student to stabilize?

[Analyst at Bank of America]

Also, if you still want to continue education, if you could explain what is going on on the B2B revenues that has been increasing at 30% year-over-year. Thank you.

[Virgílio Gibbon, CEO at Afya]

Hi, Flavio. Actually, it's four questions here that at least that I took the note here. First is the preliminary ENAMED results. We don't have any clue from the Ministry of Education yet. Everything that we have is based on our internal assessment because we got back the answers from our students and we make the correction and all the estimative, how is the average of our student compare to the previous ENAMED exam, and we were almost 20 percentage points above. It was a very good result. Actually, it was 18 percentage points on a simple average. Also, doing the normalization, considering our distribution, our student base, we are also having a much better proficiency rates on every campuses. But it's still a preliminary. We are not comparing our student to the entire student base in Brazil. We cannot take this as a consideration.

[Virgílio Gibbon, CEO at Afya]

Second, regard the costs. As you saw, we increased our margins and improve our gross margins, so we didn't have any additional cost from ENAMED. We are doing 100% internally. We have all the features now that we have the information. We run at least 11 mocks for every campuses, and we did a lot of homework for this new step of this new ENAMED, but the result is at least expected to be released in December. Your third question is about the Continuing Education that we are seeing and growth on student, but revenue, it's not coming at the same proportion. Yes, we are growing faster the student base. We are seeing a more critical in terms of conversion, price-sensitive physician to enroll in a long duration programs.

[Virgílio Gibbon, CEO at Afya]

The mix effect here is that we have much more student applying for short duration programs, more related to procedure, new technicals for some specialties. The consequence direction of that is that the revenue does not come because the tuition is much lower. So that's the reason on Continuing Education. When we will see a same-store sales in some, maybe not in 2026, but in 2028, we are aiming to go north in one single digit. It's what we are aiming on Continuing Education 2027. On the B2B revenues, we have a mix effect here. We are seeing a strong growth on the traditional pharma-related contract, but a reduction on the other side, on the other types of B2B contracts related also for providers and other type of institution.

[Virgílio Gibbon, CEO at Afya]

We are seeing that we are a bit more flat this year in 2026, but the sales volume is getting a little bit higher, so expecting better results for 2027. Fourth quarter will be actually the same trend that we are seeing for the entire year. Okay? I think I capture all the four question, not two.

[Denis Del Bianco, VP of Continuing Education at Afya]

Just if I may add something here, Virgílio, to Flávio, in the B2B side from Educon, where we see the decrease year-over-year, it's more related to the test prep market that has changed a lot during the year, Flávio, because of the ENAMED. This dynamic changed a lot of these years, and we think that's opportunity for the next years to recover it with this market, with this new ENAMED phase that we're going to have, the three phases test, one for the second year, the fourth year, and the last test in the sixth year. I think it's opportunity to recover these B2B signs from the Educon.

[Renata Costa Couto, Director of Investor Relations at Afya]

Yeah. Regarding the B2B of SPM, is the one that we are seeing the sales increasing.

[Analyst at Bank of America]

Okay. All right. Thank you a lot.

[Renata Costa Couto, Director of Investor Relations at Afya]

Of course. Next question comes from Felipe Amancio from Itaú BBA.

[Felipe Amancio, Analyst at Itaú BBA]

Hi. Good evening, everyone. Two questions from my side. The first one is on profitability. We noticed a margin increase in the quarter, mostly driven by the undergraduates. You already commented about this in your last answer, but if you could comment a bit better, if this changes your expectations for profitability gains for next year, and also what are the main levers that you envision in this segment? My second question is also on profitability. We notice here a greater net revenue decrease on Continuing Education and Medical Practice Solutions. I would like to understand how much of this profitability increase that we observed this quarter could be explained by this revenue mix. Thank you.

[Luis Blanco, CFO at Afya]

Hi, Felipe. It's Blanco here. I will take the questions. The first regarding the profitability for these years, we will deliver the guidance that we provided to the market in the beginning of the year. We had a decrease in the first two quarters. We have these 100 basis points above this third quarter, but all of it, we are going to perform the year delivering the guidance that we provided at the beginning of the year. Regarding the margins from 2027 ahead, we will deliver the guidance for 2027 when we release the 2026 results in March. Regarding the mix of segments affecting the profitability in general, what we have is that undergrads represents roughly 86% of our net revenue. If we get more profitability coming from the segments, it will cover the participation from Educon and SPM that we have, the decrease in the period.

[Luis Blanco, CFO at Afya]

That is why these major participations from the undergrad more than covers the margins that were down in Educon and SPM.

[Felipe Amancio, Analyst at Itaú BBA]

Perfect. Thank you for the answers.

[Renata Costa Couto, Director of Investor Relations at Afya]

Thank you. The next question comes from Lucas Nagano from Morgan Stanley.

[Lucas Nagano, Analyst at Morgan Stanley]

Hi. Hi, Renata. Hi, Virgílio Blanco. Thanks. We have two questions. The first is related to working capital. There is an upward trend in receivable days. Is this explained by higher share of Fies and private funding? If yes, should we expect this trend to continue into next year? The second is related to CapEx. There is a reasonable gap between year-to-date CapEx and the lower end of the guidance. The question is if this guidance is realistic, or if not, is it a matter of postponing investments, or should investments be indeed lower? Thank you.

[Luis Blanco, CFO at Afya]

Hi, Nagano. It is Blanco. I am going to take your questions. Regarding the working capital, what is pushing our working capital is the trade receivables, and inside of trade receivables, we are having increase in the Fies. So we have an increase of 64% of the Fies if you compare to December. This is roughly BRL 90 million in the periods that these push our receivables up in the periods. Talking ahead about Fies, we do not have the expectations to increase the positions of Fies.

[Luis Blanco, CFO at Afya]

We are around 22% of the medical students using Fies as of the third quarter. We do not expect to increase these positions going ahead. Regarding CapEx, you are right. We are a little bit lower than our expected CapEx for the period, but our expectations that we are going to achieve the guidance that we provided that is between BRL 340 million-BRL 380 million in the year.

[Virgílio Gibbon, CEO at Afya]

Just to add a point here, Lucas, regarding the Fies. Now, when you compare the schedule of Fies on the second semester of 2026 with the first semester or the previous year, we are in a much later trend. All the amendments are still working, being due by the end of this month. So the growth, the increase on the working capital coming from Fies, I think it is a trend for the entire sector, given the late schedule for the amendments and the renewal of all the contracts coming from Fies. That is also another. For next year, we are expecting to be flat or a little bit lower in terms of Fies for 2028.

[Luis Blanco, CFO at Afya]

But-

[Lucas Nagano, Analyst at Morgan Stanley]

Okay

[Luis Blanco, CFO at Afya]

All of that, Nagano, just important just to highlight that even with this increase in receivables, if we compare our cash flow from operating activities with our adjusted EBITDA, our cash conversions is 100%.

[Luis Blanco, CFO at Afya]

In the first nine months, of course.

[Lucas Nagano, Analyst at Morgan Stanley]

Okay. Thank you.

[Renata Costa Couto, Director of Investor Relations at Afya]

Okay. Since we do not have any more questions, I thank you all for participating. Thank you and have a good night.

Participants

Executives

• Renata Costa Couto, Director of Investor Relations
• Virgílio Gibbon, CEO
• Luis Blanco, CFO
• Denis Del Bianco, VP of Continuing Education

Analysts

• Analyst at JPMorgan
• Analyst at Bank of America
• Felipe Amancio, Analyst at Itaú BBA
• Lucas Nagano, Analyst at Morgan Stanley