Impressive Adjusted EBITDA Margin Expansion
Robust EPS Expansion
Expressive Cash Generation
NOVA LIMA, Brazil–(BUSINESS WIRE)–Afya Limited (Nasdaq: AFYA; B3: A2FY34) (“Afya” or the “Company”), the leading medical education group and medical practice solutions provider in Brazil, reported today financial and operating results for the three and nine-month periods ended September 30, 2024 (third quarter 2024). Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).
Third Quarter 2024 Highlights
- 3Q24 Net Revenue increased 16.3% YoY to R$841.2 million. Net Revenue excluding acquisitions grew 11.8%, reaching R$808.8 million.
- 3Q24 Adjusted EBITDA increased 25.0% YoY reaching R$347.9 million, with an Adjusted EBITDA Margin of 41.4%. Adjusted EBITDA Margin increased 290 bps YoY. Adjusted EBITDA excluding acquisitions grew 18.2%, reaching R$328.9 million, with an Adjusted EBITDA Margin of 40.7%.
- 3Q24 Net Income increased 26.4% YoY, reaching R$124.1 million, and Adjusted Net Income increased 28.8% YoY, reaching R$165.4 million. Adjusted EPS growth was 29.9% in the same period.
Nine Months 2024 Highlights
- 9M24 Net Revenue increased 14.4% YoY to R$2,455.3 million. Net Revenue excluding acquisitions grew 12.9%, reaching R$2,422.9 million.
- 9M24 Adjusted EBITDA increased 24.3% YoY reaching R$1,089.6 million, with an Adjusted EBITDA Margin of 44.4%. Adjusted EBITDA Margin increased 350 bps YoY. Adjusted EBITDA excluding acquisitions grew 22.1%, reaching R$1,070.6 million, with an Adjusted EBITDA Margin of 44.2%.
- 9M24 Net Income increased 63.0% YoY, reaching R$494.6 million, and Adjusted Net Income increased 46.9% YoY, reaching R$626.7 million. Adjusted EPS growth was 48.7% in the same period.
- Operating Cash Conversion ratio of 109.7%, with a solid cash position of R$836.9 million.
- ~326 thousand users in Afya’s ecosystem.
Table 1: Financial Highlights | |||||||||||
Three months period ended September 30, | Nine months period ended September 30, | ||||||||||
(in thousand of R$) | 2024 | 2024 Ex Acquisitions* | 2023 | % Chg | % Chg Ex Acquisitions | 2024 | 2024 Ex Acquisitions* | 2023 | % Chg | % Chg Ex Acquisitions | |
(a) Net Revenue | 841,185 | 808,763 | 723,479 | 16.3% | 11.8% | 2,455,314 | 2,422,892 | 2,146,047 | 14.4% | 12.9% | |
(b) Adjusted EBITDA 2 | 347,949 | 328,924 | 278,393 | 25.0% | 18.2% | 1,089,628 | 1,070,603 | 876,766 | 24.3% | 22.1% | |
(c) = (b)/(a) Adjusted EBITDA Margin | 41.4% | 40.7% | 38.5% | 290 bps | 220 bps | 44.4% | 44.2% | 40.9% | 350 bps | 330 bps | |
Net income | 124,142 | – | 98,220 | 26.4% | – | 494,641 | – | 303,530 | 63.0% | – | |
Adjusted Net income | 165,372 | – | 128,393 | 28.8% | – | 626,683 | – | 426,675 | 46.9% | – | |
*For the three months period ended September 30, 2024, “2024 Ex Acquisitions” excludes: UNIDOM (July to September, 2024; Closing of UNIDOM was in July 2024). | |||||||||||
*For the nine months period ended September 30, 2024, “2024 Ex Acquisitions” excludes: UNIDOM (July to September, 2024; Closing of UNIDOM was in July 2024). | |||||||||||
(2) See more information on “Non-GAAP Financial Measures” (Item 08). |
Message from Management
We are pleased to announce another quarter of solid results, marked by strong cash generation, consistent margin expansion, and progress in our strategic initiatives. This performance underscores the differentials of Afya’s business model centered on the entire physician career and the successful execution of our growth strategy, as we continue advancing our mission to integrate education and digital solutions for the medical journey, enhancing training, updating, assertiveness, productivity, and physicians’ connections with the healthcare ecosystem.
Our EBITDA margin expansion was largely supported by the integration of UNIMA and FCM Jaboatão delivered in 4Q23, the ramp-up of the four Mais Médicos campuses launched in 3Q22, restructuring efforts within the Continuing Education and Medical Practice Solutions, and improved cost management in Selling, General, and Administrative expenses.
This quarter, we completed the acquisition of Unidom adding 300 medical seats, strengthening our presence in Salvador, one of Brazil’s largest cities. Through dedicated efforts, we achieved a robust medical students’ intake at Unidom with more than 300 students enrolled in the 2nd half just one month after the acquisition, reinforcing the impact of our ecosystem and brand recognition throughout the country.
Additionally, we received authorization from Brazil’s Ministry of Education (“MEC”), to increase 80 medical seats at UNIMA and the reconsideration of 10 medical seats at Unigranrio in Rio de Janeiro, bringing our total approved seats across all campuses to 3,593. These expansions are aligned with our commitment to providing access to quality medical education and meeting the demand for healthcare professionals.
During our Afya Day event in October, we also announced a projected 5.1% increase in tuition fees for new students in 2025, above inflation expectations for 2024, which reflect the continued strength of our value proposition and the recognition of our brand.
For the nine-month period, Net Revenue increased across all three segments. For Medical Practice Solutions we have seen a robust 15% increase in Net Revenue compared to the nine-month period of the prior year. Reaffirming the immense potential of our Solutions.
For our Undergrad segment, Net Revenue grew by 14% when compared to the same period last year. Mainly supported by medical tickets increasing above inflation, the maturation of the medical seats, in addition to the acquisition of Unidom and increase of medical seats approved. Afya has concluded a very successful intake process in 2024 with more than 6 candidates per seat considering all 32 campuses reflecting the strengthening of Afya’s brand recognition and reputation among the medical community.
In our Continuing Education segment, we are also proud to see another year of organic growth. Net Revenue increased over 10% in the nine-month period. Through a robust intake process, with the establishment of four new campuses in 2024 alone, we can see once more, our students, employees, and partners benefit from our constantly developing ecosystem.
It is worth mentioning that our ecosystem has reached today 326 thousand active users, adopting at least one of Afya’s solutions. This achievement is complemented by a high level of satisfaction, reflecting the strong recognition and trust in Afya’s brand and its ecosystem
Our commitment to high-quality education and comprehensive support for healthcare professionals remains at the core of our mission. Afya’s focus on operational excellence, strategic expansions, and sustainable growth positions us for continued success. We remain steadfast in our vision to transform health together with those who have medicine as a vocation, leveraging our ecosystem to create long-lasting value for all stakeholders.
1. Key Events in the Quarter:
- On July 1, 2024, Afya Participações announced the closing of its acquisition of 100% of the total share capital of Unidom Participações S.A. (“Unidom”) which encompasses Unidompedro and Faculdade Dom Luiz, both located in the State of Bahia with operations in the cities of Salvador, Luis Eduardo Magalhães, Barreiras and Ribeira do Pombal.
The acquisition contributes 300 operational medical school seats to Afya in Salvador, one of Brazil’s largest cities. The authorization request for these 300 seats was made to MEC before the Mais Médicos´ Law was enacted and MEC concluded its analysis and issued Ordinance 630/2020 (“Ordinance”) in 2020 to partially authorize the operation considering 125 medical seats. In 2021, as a result of a judicial order, MEC reviewed the Ordinance to authorize the 300 seats initially requested by Unidompedro. Said decision was confirmed by a judgment in 2023. Currently, Unidompedro has 300 seats authorized, of which 125 are final and 175 are subject to a final conclusion of the aforementioned court proceedings.
The aggregate purchase price (enterprise value) was R$660.0 million, and the estimated Net Debt was deducted from the down payment.
The price and payment conditions are:
- R$347.8 million, deducted from the estimated Net Debt, was paid in cash at closing.
- R$312.2 million will be paid in up to 10 annual installments of R$31.2 million, adjusted by the CDI (Interbank Certificate of Deposit) rate.
Afya expects an EV/EBITDA of 4.2x at maturity and post-synergies (2027).
- On July 12, 2024, the Secretary of Regulation and Supervision of Higher Education of MEC authorized the increase of 80 medical school seats of UNIMA, located in the city of Maceió, State of Alagoas, which will result in an additional payment of R$1.25 million per increased medical school seat, updated by IPCA since January 2, 2023 until the payment date to the selling shareholders of DelRey. With this authorization, Afya reaches 220 medical school seats on this campus.
- On August 30, 2024, has received the total disbursement of R$500.0 million under the loan agreement with International Finance Corporation (“IFC”) to finance its expansion program, through acquisitions. The financing is IFC’s first sustainability-linked loan based on social targets in the education sector. The pricing of IFC’s loan will be linked to Afya reaching performance target levels in selected social key performance indicators encompassing free medical consultations for the community and quality of education according to Brazil’s Ministry of Education criteria (“Sustainability KPIs”). According to the financing terms, the loan shall be repaid in seven equal semi-annual installments starting in April 2027. The interest rate is the Brazilian CDI rate plus 1.2%, and it may be reduced by 15 bps if the Sustainability KPIs are achieved.
- On September 6, 2024, Afya Participações announced that following the conclusion of an administrative procedure, MEC has granted the request for reconsideration submitted by Unigranrio. Per the e-MEC portal, Unigranrio reestablished 10 medical seats in the city of Rio de Janeiro, reaching 318 medical seats across both Unigranrio campuses, contributing to Afya´s 3,593 total approved medical seats.
2. 2024 Guidance
Afya reaffirms the Guidance FY2024, which was updated upward at the end of 2Q24 to encompass the acquisition of Unidom, the authorization of 80 seats in UNIMA, and the performance of the first semester.
Guidance for 2024 | ||
Net Revenue 1 | R$ 3,225 mn ≤ ∆ ≤ R$ 3,325 mn | |
Adjusted EBITDA | R$ 1,375 mn ≤ ∆ ≤ R$ 1,475 mn | |
CAPEX 2 | R$ 220 mn ≤ ∆ ≤ R$ 260 mn | |
(1) Excludes any acquisition that may be concluded after the issuance of the guidance, notably, the Unidom acquisition was included in the guidance provided | ||
(2) The 2024 Capex guidance does not encompass the earn-out payment in the amount of R$49.6 million related to the 40-seat increase at Faculdades Integradas Padrão (FIP Guanambi), and also excludes the earn-out payment due to UNIMA Alagoas for the 80-seat increase in July 2024. |
3. 3Q24 Overview
Segment Information
The Company has three reportable segments as follows:
Undergrad, which provides educational services through undergraduate courses related to medical school, undergraduate health science and other ex-health undergraduate programs;
Continuing education, which provides medical education (including residency preparation programs, specialization test preparation and other medical capabilities), specialization and graduate courses in medicine, delivered through digital and in-person content; and
Medical Practice solutions, which provides clinical decision, clinical management and doctor-patient relationships for physicians and provide access, demand and efficiency for the healthcare players.
Key Revenue Drivers – Undergraduate Programs
Table 2: Key Revenue Drivers | Nine months period ended September 30 | ||
2024 | 2023 | % Chg | |
Undergrad Programs | |||
MEDICAL SCHOOL | |||
Approved Seats | 3,593 | 3,163 | 13.6% |
Operating Seats 1 | 3,543 | 3,113 | 13.8% |
Total Students (end of period) | 24,234 | 21,556 | 12.4% |
Average Total Students | 23,168 | 21,056 | 10.0% |
Average Total Students (ex-Acquisitions)* | 22,782 | 21,056 | 8.2% |
Net Revenue (Total – R$ ‘000) | 1,852,742 | 1,607,217 | 15.3% |
Net Revenue (ex- Acquisitions* – R$ ‘000) | 1,822,157 | 1,607,217 | 13.4% |
Medical School Net Avg. Ticket (ex- Acquisitions* – R$/month) | 8,887 | 8,481 | 4.8% |
UNDERGRADUATE HEALTH SCIENCE | |||
Total Students (end of period) | 25,950 | 21,564 | 20.3% |
Average Total Students | 25,028 | 21,447 | 16.7% |
Average Total Students (ex-Acquisitions)* | 24,810 | 21,447 | 15.7% |
Net Revenue (Total – R$ ‘000) | 170,520 | 151,833 | 12.3% |
Net Revenue (ex- Acquisitions* – R$ ‘000) | 169,733 | 151,833 | 11.8% |
OTHER EX- HEALTH UNDERGRADUATE | |||
Total Students (end of period) | 27,855 | 24,286 | 14.7% |
Average Total Students | 27,745 | 24,625 | 12.7% |
Average Total Students (ex-Acquisitions)* | 27,302 | 24,625 | 10.9% |
Net Revenue (Total – R$ ‘000) | 132,633 | 124,038 | 6.9% |
Net Revenue (ex- Acquisitions* – R$ ‘000) | 131,583 | 124,038 | 6.1% |
Total Net Revenue | |||
Net Revenue (Total – R$ ‘000) | 2,155,895 | 1,883,089 | 14.5% |
Net Revenue (ex- Acquisitions* – R$ ‘000) | 2,123,473 | 1,883,089 | 12.8% |
*For the nine months period ended September 30, 2024, “2024 Ex Acquisitions” excludes: UNIDOM (July to September, 2024; Closing of UNIDOM was in July 2024). | |||
(1) The difference between approved and operating seats is ‘Cametá’. A campus for which we already have the license but haven’t started operations. |
Key Revenue Drivers – Continuing Education
Table 3: Key Revenue Drivers | Nine months period ended September 30 | ||
2024 | 2023 | % Chg | |
Continuing Education 1 | |||
Total Studends (end of period) | |||
Residency Journey – Business to Physicians B2P 2 | 15,678 | 10,325 | 51.8% |
Graduate Journey – Business to Physicians B2P | 7,293 | 7,063 | 3.3% |
Other Courses – B2P and Business to Business Offerings | 29,780 | 24,385 | 22.1% |
Total Students (end of period) | 52,751 | 41,773 | 26.3% |
Net Revenue (R$ ‘000) | |||
Business to Physicians – B2P | 175,002 | 153,792 | 13.8% |
Business to Business – B2B | 12,730 | 16,216 | -21.5% |
Total Net Revenue | 187,731 | 170,010 | 10.4% |
(1) The figure above does not contemplate intercompany transactions | |||
(2) ‘Content & Technology for Medical Education’ which had been reported in ‘Digital Services’ table, has been reclassified to ‘Continuing Education’ |
Key Revenue – Medical Practice Solutions
Table 4: Key Revenue Drivers | Nine months period ended September 30 | ||
2024 | 2023 | % Chg | |
Medical Practice Solutions 1 | |||
Active Payers (end of period) | |||
Clinical Decision | 166,780 | 150,796 | 10.6% |
Clinical Management | 33,503 | 29,281 | 14.4% |
Total Active Payers (end of period) | 200,283 | 180,077 | 11.2% |
Monthly Active Users (MaU) | |||
Total Monthly Active Users (MaU) – Digital Services 2 | 248,775 | 259,259 | -4.0% |
Net Revenue (R$ ‘000) | |||
Business to Physicians – B2P | 99,707 | 88,485 | 12.7% |
Business to Business – B2B | 17,583 | 13,803 | 27.4% |
Total Net Revenue | 117,290 | 102,289 | 14.7% |
(1) The figure above does not contemplate intercompany transactions | |||
(2) ‘Content & Technology for Medical Education’ is now being reported in Continuing Education table |
Key Operational Drivers – Users Positively Impacted by Afya
Users Positively Impacted by Afya represents the total number of medical students from the Undergrad segment, students from the Continuing Education and users from Medical Practice Solutions. For the third quarter of 2024, Afya’s ecosystem reached 325,760 users, in line with the same period of the prior year.
Table 5: Key Revenue Drivers | Nine months period ended September 30 | ||
2024 | 2023 | % Chg | |
Users Positively Impacted by Afya 1 | |||
Undergrad (Total Medical School Students – End of Period) | 24,234 | 21,556 | 12.4% |
Continuing Education (Total Students – End of Period) | 52,751 | 41,773 | 26.3% |
Medical Practice Solutions (Monthly Active Users) | 248,775 | 259,259 | -4.0% |
Ecosystem Outreach | 325,760 | 322,588 | 1.0% |
(1) Ecosystem outreach does not contemplate intercompany figures. Note that there may be overlap in student numbers within the data. |
Seasonality of Operations
Undergrad tuition revenues are related to the intake process, and monthly tuition fees charged to students and do not significantly fluctuate during each semester.
Continuing education revenues are mostly related to: (i) monthly intakes and tuition fees on medical education, which do not have a considerable concentration in any period; (ii) Residence journey product revenues, derived from e-books transferred at a point of time, which are concentrated at in the first and last quarter of the year due to the enrollments.
Medical Practice Solutions are comprised mainly of Afya Whitebook and Afya iClinic revenues, which do not significantly fluctuate regarding seasonality.
Net Revenue
Net Revenue for the third quarter of 2024 was R$841.2 million, an increase of 16.3% over the same period in the prior year. Excluding acquisitions, Net Revenue in the third quarter increased 11.8% YoY to R$808.8 million. For the nine-month period ending September 30, 2024, Net Revenue was R$2,455.3 million, reflecting a 14.4% increase over the same period of last year. Excluding acquisitions, Net Revenue in the nine-month period increased 12.9% YoY to R$2,422.9 million.
The revenue increase was mainly due to higher tickets in Medicine courses, the maturation of medical seats, the 40-seat expansion in the Guanambi campus, the Continuing Education intake performance, and the execution of Medical Practice Solutions. Specifically, in the third quarter, we also had the impact of 80 new seats at UNIMA and the reconsideration of 10 seats at Unigranrio (Rio de Janeiro). Additionally, on July 1, 2024, Afya acquired Unidom.
Table 6: Revenue & Revenue Mix | ||||||||||||
(in thousands of R$) | Three months period ended September 30, | Nine months period ended September 30, | ||||||||||
2024 | 2024 Ex Acquisitions* | 2023 | % Chg | % Chg Ex Acquisitions | 2024 | 2024 Ex Acquisitions* | 2023 | % Chg | % Chg Ex Acquisitions | |||
Net Revenue Mix | ||||||||||||
Undergrad | 741,729 | 709,307 | 636,849 | 16.5% | 11.4% | 2,155,895 | 2,123,473 | 1,883,089 | 14.5% | 12.8% | ||
Continuing Education | 60,225 | 60,225 | 56,335 | 6.9% | 6.9% | 187,731 | 187,731 | 170,010 | 10.4% | 10.4% | ||
Medical Practice Solutions | 40,436 | 40,436 | 34,450 | 17.4% | 17.4% | 117,290 | 117,290 | 102,289 | 14.7% | 14.7% | ||
Inter-segment transactions | – 1,205 | – 1,205 | – 4,155 | -71.0% | -71.0% | -5,602 | -5,602 | -9,341 | -40.0% | -40.0% | ||
Total Reported Net Revenue | 841,185 | 808,763 | 723,479 | 16.3% | 11.8% | 2,455,314 | 2,422,892 | 2,146,047 | 14.4% | 12.9% | ||
*For the three months period ended September 30, 2024, “2024 Ex Acquisitions” excludes: UNIDOM (July to September, 2024; Closing of UNIDOM was in July 2024). | ||||||||||||
*For the nine months period ended September 30, 2024, “2024 Ex Acquisitions” excludes: UNIDOM (July to September, 2024; Closing of UNIDOM was in July 2024). |
Adjusted EBITDA
Adjusted EBITDA for the three-month period ended September 30, 2024, increased by 25.0% to R$347.9 million, up from R$278.4 million in the same period of the prior year, with the Adjusted EBITDA Margin rising by 290 basis points to 41.4. For the nine-month period ending September 30, 2024, Adjusted EBITDA was R$1,089.6 million, an increase of 24.3% over the same period of the prior year, accompanied by an Adjusted EBITDA Margin increase of 350 basis points in the same period.
The Adjusted EBITDA Margin expansion is primarily attributable to: (a) gross margin expansion in the Undergrad Segment; (b) completion of UNIMA and FCM Jaboatão integration process in November 2023; (c) the ramp-up of the four Mais Médicos campuses that started operation in 3Q22; (d) operational restructuring efforts in Continuing Education and Medical Practice Solutions segments; and (e) More efficiency in Selling, General and Administrative expenses.
Table 7: Reconciliation between Adjusted EBITDA and Net Income | ||||||||
(in thousands of R$) | Three months period ended September 30, | Nine months period ended September 30, | ||||||
2024 | 2023 | % Chg | 2024 | 2023 | % Chg | |||
Net income | 124,142 | 98,220 | 26.4% | 494,641 | 303,530 | 63.0% | ||
Net financial result | 99,844 | 80,535 | 24.0% | 242,761 | 267,313 | -9.2% | ||
Income taxes expense | 12,432 | 12,146 | 2.4% | 26,388 | 33,296 | -20.7% | ||
Depreciation and amortization | 85,828 | 73,908 | 16.1% | 249,135 | 212,172 | 17.4% | ||
Interest received 1 | 13,945 | 10,619 | 31.3% | 34,979 | 25,760 | 35.8% | ||
Income share associate | (2,526) | (615) | 310.7% | (9,726) | (7,671) | 26.8% | ||
Share-based compensation | 5,871 | 6,684 | -12.2% | 26,299 | 20,082 | 31.0% | ||
Non-recurring expenses: | 8,413 | (3,104) | n.a. | 25,151 | 22,284 | 12.9% | ||
– Integration of new companies 2 | 6,444 | 7,769 | -17.1% | 17,722 | 19,951 | -11.2% | ||
– M&A advisory and due diligence 3 | 1,220 | 703 | 73.5% | 2,803 | 12,377 | -77.4% | ||
– Expansion projects 4 | 198 | 2,007 | -90.1% | 2,568 | 2,536 | 1.3% | ||
– Restructuring expenses 5 | 551 | 3,722 | -85.2% | 2,058 | 5,673 | -63.7% | ||
– Mandatory Discounts in Tuition Fees 6 | – | (493) | n.a. | – | (1,441) | n.a. | ||
– Gain on tax amnesty 7 | – | (16,812) | n.a. | – | (16,812) | n.a. | ||
Adjusted EBITDA | 347,949 | 278,393 | 25.0% | 1,089,628 | 876,766 | 24.3% | ||
Adjusted EBITDA Margin | 41.4% | 38.5% | 290 bps | 44.4% | 40.9% | 350 bps | ||
(1) Represents the interest received on late payments of monthly tuition fees. | ||||||||
(2) Consists of expenses related to the integration of newly acquired companies. | ||||||||
(3) Consists of expenses related to professional and consultant fees in connection with due diligence services for our M&A transactions. | ||||||||
(4) Consists of expenses related to professional and consultant fees in connection with the opening of new campuses. | ||||||||
(5) Consists of expenses related to the employee redundancies in connection with the organizational restructuring of our acquired companies. | ||||||||
(6) Consists of mandatory discounts in tuition fees granted by state decrees, individual/collective legal proceedings and public civil proceedings due to COVID 19 on site classes restriction and excludes any recovery of these discounts that were invoiced based on the Supreme Court decision. | ||||||||
(7) On August 10, 2023, Unigranrio entered into a tax amnesty program on interest and penalties to settle a tax proceeding in respect to ISS (city tax on services) with the municipality of Rio de Janeiro, which result in a payment of R$14,819 to settle the claim. The selling shareholders of Unigranrio agreed to pay R$5,438 regarding this matter. The Company had a provision of R$53,302 and an indemnification asset from the selling shareholders of R$20,000 (in light of the indemnification clauses as defined at acquisition of Unigranrio), in respect to such tax proceeding. The difference between the provision, indemnification asset and the actual paid amount was recorded as Other income (expenses), net on the consolidated statement of income and comprehensive income. |
Adjusted Net Income
Net Income for the three-month period ended September 30, 2024 was R$124.1 million, an increase of 26.4% over the same period of the prior year. Adjusted Net Income was R$165.4 million, which resulted in an increase of 28.8% over the same period from the previous year. For the nine-month period, Afya achieved a Net Income of R$494.6 million, 63.0% higher than the same period of 2023, and an Adjusted Net Income of R$626.7 million which was 46.9% higher than the previous period. This performance was mainly due to: (a) enhancement of operational results; (b) lower effective tax rates than last year; and (c) lower interest rates.
Adjusted EPS reached R$6.81 per share for the nine-month period ended September 30, 2024, an increase of 48.7% YoY, reflecting the increase in Net Income and capital allocation discipline.
Table 8: Adjusted Net Income | |||||||||
(in thousands of R$) | Three months period ended September 30, | Nine months period ended September 30, | |||||||
2024 | 2023 |
| % Chg |
| 2024 | 2023 |
| % Chg | |
Net income | 124,142 | 98,220 |
| 26.4% | 494,641 | 303,530 |
| 63.0% | |
Amortization of customer relationships and trademark 1 | 26,946 | 26,593 |
| 1.3% | 80,592 | 80,779 |
| -0.2% | |
Share-based compensation | 5,871 | 6,684 |
| -12.2% | 26,299 | 20,082 |
| 31.0% | |
Non-recurring expenses: | 8,413 | (3,104 | ) | n.a. | 25,151 | 22,284 |
| 12.9% | |
– Integration of new companies 2 | 6,444 | 7,769 |
| -17.1% | 17,722 | 19,951 |
| -11.2% | |
– M&A advisory and due diligence 3 | 1,220 | 703 |
| 73.5% | 2,803 | 12,377 |
| -77.4% | |
– Expansion projects 4 | 198 | 2,007 |
| -90.1% | 2,568 | 2,536 |
| 1.3% | |
– Restructuring expenses 5 | 551 | 3,722 |
| -85.2% | 2,058 | 5,673 |
| -63.7% | |
– Mandatory Discounts in Tuition Fees 6 | – | (493 | ) | n.a. | – | (1,441 | ) | n.a. | |
– Gain on tax amnesty 7 | – | (16,812 | ) | n.a. | – | (16,812 | ) | n.a. | |
Adjusted Net Income | 165,372 | 128,393 |
| 28.8% | 626,683 | 426,675 |
| 46.9% | |
Basic earnings per share – in R$ 8 | 1.33 | 1.04 |
| 27.9% | 5.35 | 3.21 |
| 66.6% | |
Adjusted earnings per share – in R$ 9 | 1.79 | 1.38 |
| 29.9% | 6.81 | 4.58 |
| 48.7% | |
(1) Consists of amortization of customer relationships and trademark recorded under business combinations. | |||||||||
(2) Consists of expenses related to the integration of newly acquired companies. | |||||||||
(3) Consists of expenses related to professional and consultant fees in connection with due diligence services for our M&A transactions. | |||||||||
(4) Consists of expenses related to professional and consultant fees in connection with the opening of new campuses. | |||||||||
(5) Consists of expenses related to the employee redundancies in connection with the organizational restructuring of our acquired companies. | |||||||||
(6) Consists of mandatory discounts in tuition fees granted by state decrees, individual/collective legal proceedings and public civil proceedings due to COVID 19 on site classes restriction and excludes any recovery of these discounts that were invoiced based on the Supreme Court decision. | |||||||||
(7) On August 10, 2023, Unigranrio entered into a tax amnesty program on interest and penalties to settle a tax proceeding in respect to ISS (city tax on services) with the municipality of Rio de Janeiro, which result in a payment of R$14,819 to settle the claim. The selling shareholders of Unigranrio agreed to pay R$5,438 regarding this matter. The Company had a provision of R$53,302 and an indemnification asset from the selling shareholders of R$20,000 (in light of the indemnification clauses as defined at acquisition of Unigranrio), in respect to such tax proceeding. The difference between the provision, indemnification asset and the actual paid amount was recorded as Other income (expenses), net on the consolidated statement of income and comprehensive income. | |||||||||
(8) Basic earnings per share: Net Income/Weighted average number of outstanding shares. | |||||||||
(9) Adjusted earnings per share: Adjusted Net Income attributable to equity holders of the Parent/Weighted average number of outstanding shares. |
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