EX-99.1 2 ex99-1.htm EX-99.1

Afya Limited

 

 

 

Unaudited interim condensed

consolidated financial statements

 

March 31, 2025

 
 

Afya Limited

Unaudited interim condensed consolidated statements of financial position

As of March 31, 2025 and December 31, 2024

(In thousands of Brazilian reais)

 

  Notes March 31, 2025   December 31, 2024
Assets   (unaudited)    
Current assets        
Cash and cash equivalents 4 1,154,888   911,015
Trade receivables 5 636,906   595,898
Recoverable taxes   32,118   25,726
Other assets 7 57,304   57,145
Total current assets   1,881,216   1,589,784
         
Non-current assets        
Trade receivables 5 34,014   35,948
Deferred tax assets   7,146   -
Other assets 7 116,371   115,875
Investment in associate 8 53,129   54,442
Property and equipment 9 670,162   658,482
Right-of-use assets 11.2.2 845,698   842,219
Intangible assets 10 5,504,138   5,532,789
Total non-current assets   7,230,658   7,239,755
Total assets   9,111,874   8,829,539
         
Liabilities        
Current liabilities        
Trade payables   129,973   128,080
Loans and financing 11.2.1 373,275   363,554
Lease liabilities 11.2.2 47,762   45,580
Accounts payable to selling shareholders 11.2.3 191,698   185,318
Advances from customers   161,262   161,048
Dividends payable 14 130,798   -
Labor and social obligations   237,850   208,076
Taxes payable   35,695   33,456
Income taxes payable   9,517   4,247
Other liabilities   5,137   10,836
Total current liabilities   1,322,967   1,140,195
         
Non-current liabilities        
Loans and financing 11.2.1 1,839,399   1,831,607
Lease liabilities 11.2.2 941,422   932,756
Accounts payable to selling shareholders 11.2.3 274,643   345,454
Taxes payable   134,355   112,681
Provision for legal proceedings 20 115,599   113,521
Other liabilities   42,074   42,742
Total non-current liabilities   3,347,492   3,378,761
Total liabilities   4,670,459   4,518,956
         
Equity 14      
Share capital   17   17
Additional paid-in capital   2,343,939   2,344,521
Treasury shares   (271,751)   (273,955)
Share-based compensation reserve   194,460   187,497
Retained earnings   2,134,090   2,011,875
Equity attributable to equity holders of the parent   4,400,755   4,269,955
Non-controlling interests   40,660   40,628
Total equity   4,441,415   4,310,583
Total liabilities and equity   9,111,874   8,829,539

 

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

   
 F-4 
 

Afya Limited

Unaudited interim condensed consolidated statements of income and comprehensive income

For the three-month periods ended March 31, 2025 and 2024

(In thousands of Brazilian reais, except for earnings per share information)

 

  Notes March 31, 2025 March 31, 2024
    (unaudited) (unaudited)
       
Revenue 16 936,360 804,239
Cost of services 17 (282,639) (269,504)
Gross profit   653,721 534,735
       
Selling, general and administrative expenses 17 (281,500) (241,164)
Other income (expenses), net   306 (4,213)
       
Operating income   372,527 289,358
       
Finance income 18 43,481 25,530
Finance expenses 18 (138,475) (99,896)
Net finance result   (94,994) (74,366)
       
Share of income of associate 8 4,285 4,172
       
Income before income taxes   281,818 219,164
       
Income taxes expenses 19 (24,782) (10,865)
       
Net income   257,036 208,299
       
Other comprehensive income   - -
       
Total comprehensive income   257,036 208,299
       
Income attributable to:      
Equity holders of the parent   251,999 203,393
Non-controlling interests   5,037 4,906
    257,036 208,299
       
Basic earnings per common share 15 2.79 2.26
Diluted earnings per common share 15 2.76 2.22

 

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

   
 F-5 
 

Afya Limited

Unaudited interim condensed consolidated statements of changes in equity

For the three-month periods ended March 31, 2025 and 2024

(In thousands of Brazilian reais)

 

    Equity attributable to equity holders of the parent  
  Notes Share capital Additional paid-in capital Treasury shares Share-based compensation reserve Retained earnings Total Non-controlling interests Total equity
                   
Balances at January 1, 2024   17 2,365,200 (299,150) 155,073 1,380,365 3,601,505 41,507 3,643,012
Net income   - - - - 203,393 203,393 4,906 208,299
Total comprehensive income   - - - - 203,393 203,393 4,906 208,299
Share-based compensation 17 - - - 8,630 - 8,630 - 8,630
Treasury shares transferred to executives from exercise of stock options 13 - (839) 1,665 - - 826 - 826
Dividends declared 14 - - - - - - (3,712) (3,712)
Balances at March 31, 2024 (unaudited)   17 2,364,361 (297,485) 163,703 1,583,758 3,814,354 42,701 3,857,055
                   
Balances at January 1, 2025   17 2,344,521 (273,955) 187,497 2,011,875 4,269,955 40,628 4,310,583
Net income   - - - - 251,999 251,999 5,037 257,036
Total comprehensive income   - - - - 251,999 251,999 5,037 257,036
Share-based compensation 17 - - - 6,963 - 6,963 - 6,963
Treasury shares transferred to executives from exercise of stock options 13 - (582) 2,204 - - 1,622 - 1,622
Dividends declared 14 - - - - (129,784) (129,784) (5,005) (134,789)
Balances at March 31, 2025 (unaudited)   17 2,343,939 (271,751) 194,460 2,134,090 4,400,755 40,660 4,441,415
                   

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

   
 F-6 
 

Afya Limited

Unaudited interim condensed consolidated statements of cash flows

For the three-month periods ended March 31, 2025 and 2024

(In thousands of Brazilian reais)

 

  Notes March 31, 2025 March 31, 2024
    (unaudited) (unaudited)
Operating activities      
Income before income taxes   281,818 219,164
Adjustments to reconcile income before income taxes      
Depreciation and amortization expenses 17 91,755 79,269
Write-off of property and equipment 9 305 19
Allowance for expected credit losses 5, 17 16,558 15,264
Share-based compensation expense 17 6,963 8,630
Net foreign exchange differences   476 (190)
Accrued interest 18 76,939 51,745
Accrued interest on lease liabilities 11.2.2, 11.5, 18 29,563 26,744
Share of income of associate 8 (4,285) (4,172)
Provision (reversal) for legal proceedings   408 (1,851)
       
Changes in assets and liabilities      
Trade receivables   (55,632) (6,434)
Recoverable taxes   (6,392) (6,914)
Other assets   (6,131) 1,458
Trade payables   1,893 14,472
Taxes payable   10,787 5,439
Advances from customers   214 3,095
Labor and social obligations   29,774 23,528
Other liabilities   (4,777) (212)
    470,236 429,054
Income taxes paid   (6,386) (11,194)
Net cash flows from operating activities   463,850 417,860
       
Investing activities      
Acquisition of property and equipment 9 (38,477) (22,955)
Acquisition of intangibles assets 10 (17,735) (69,946)
Dividends received 8 5,598 3,900
Acquisition of subsidiaries, net of cash acquired 11.2.3 (65,162) (147,262)
Payments of interest from acquisition of subsidiaries and intangibles 11.2.3 (14,536) (24,735)
Net cash flows used in investing activities   (130,312) (260,998)
       
Financing activities      
Payments of principal of loans and financing 11.5 (769) (10,762)
Payments of interest of loans and financing 11.5 (44,980) (48,806)
Payments of principal of lease liabilities 11.2.2, 11.5 (11,904) (9,648)
Payments of interest of lease liabilities 11.2.2, 11.5 (29,167) (26,903)
Proceeds from exercise of stock options   1,622 826
Dividends paid to non-controlling shareholders 11.5, 14 (3,991) (3,712)
Net cash flows used in financing activities   (89,189) (99,005)
Net foreign exchange differences   (476) 190
Net increase in cash and cash equivalents   243,873 58,047
Cash and cash equivalents at the beginning of the period 4 911,015 553,030
Cash and cash equivalents at the end of the period 4 1,154,888 611,077

 

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

   
 F-7 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  
1Corporate information

 

Afya Limited (“Afya”), collectively with its subsidiaries referred to as the “Company”, is a holding company incorporated under the laws of the Cayman Islands on March 22, 2019. Afya completed its initial public offering (IPO) on July 19, 2019, and its shares are listed on the Nasdaq under the symbol “AFYA”. The Company’s ultimate parent company is Bertelsmann SE& Co. KGaA (“Bertelsmann”).

 

The Company is formed by a network of higher education and post-graduate institutions, under the regulations of the Ministry of Education (“MEC”), focused on medical schools located in 19 Brazilian States forming the largest educational group by the number of medical school seats in Brazil. The Company also provides other educational services that comprise the development and sale of electronically distributed educational courses on medicine science and soft skills educational content. The Company also offers solutions to empower the physicians in their daily routine including supporting clinic decisions through mobile app subscription, delivering practice management tools through a SaaS (Software as a Service) model and supporting the patient-physician relationship.

 

On January 24, 2024, MEC authorized the increase of 40 medical school seats of Faculdades Integradas Padrão (“FIP Guanambi”) located in the city of Guanambi, State of Bahia, which resulted in an additional payment of R$49,600 to the former shareholders of FIP Guanambi. With this authorization, the Company reaches 100 medical school seats on this campus. The operation of these medical school seats started in the first quarter of 2024. Such additional seats were accounted for as licenses with indefinite useful life in intangible assets. See Note 10.

 

On July 12, 2024, MEC authorized the increase of 80 medical school seats of Centro Universitário Tiradentes Alagoas (“UNIMA”), a subsidiary of Sociedade Educacional e Cultural Sergipe DelRey Ltda. (“DelRey”), located in the city of Maceió, State of Alagoas, which resulted in an additional payment of R$107,627 to the former shareholders of DelRey. With this authorization, Afya reached 220 medical school seats on this campus. The operation of these medical school seats started in the third quarter of 2024. Such additional seats were accounted for as licenses with indefinite useful life in intangible assets.

 

Acquisition in 2024

 

On July 1, 2024, Afya Participações S.A. ("Afya Brazil”), a wholly-owned subsidiary of Afya, acquired Unidom Participações S.A. (“Unidom”). Unidom is a post-secondary education institution with governmental authorization to offer on-campus, undergraduate degrees and graduate programs in medicine and health, as well as other courses. It 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 of Unidom contributed with 300 operational medical school seats to the Undergraduate segment. The authorization request for these 300 medical school 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 authorize the operation considering 125 medical school seats. In 2021, as a result of a judicial order, MEC reviewed the Ordinance to authorize the 300 medical school seats initially requested by Unidom. Such decision was confirmed by a federal judge in the State of Bahia in 2023. Currently, Unidom has 300 medical school seats authorized, of which 125 are final and 175 are subject to a final conclusion of the aforementioned court proceedings.

 

The total consideration of R$620,762, net of Net Debt, is comprised of: (i) R$340,773 paid in cash on July 1, 2024; and (ii) R$279,989, considering purchase consideration adjustments, payable in up to ten annual installments, adjusted by the interbank deposit certificate ("CDI") rate, and it is conditioned upon the maintenance of the authorization of the 175 medical school seats in each of the prior year. The remaining payment balance is accelerated if a final and non-appealable conclusion of the aforementioned court proceedings, within the 10-year payment period, confirms the authorization for the 175 medical school seats. In turn, if, within the same 10-year payment period, a final and non-appealable conclusion of the aforementioned court proceedings does not confirm the authorization for such 175 medical school seats, the remaining payment balance will no longer be due. Based on the current status of aforementioned court proceedings, as well as other court decisions in relation to medical school seats approved by MEC under legal proceedings, Management has assessed that the likelihood of payment of such consideration is probable.

 

As of March 31, 2025, Afya had 3,593 operating medical school seats, including 175 medical school seats from the acquisition of Unidom which are subject to a final conclusion on the court proceedings.

   
 F-8 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

2Material accounting policies

 

2.1 Basis of preparation

 

The Company’s unaudited interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and in the basis that it will continue to operate as a going concern.

 

The unaudited interim condensed consolidated financial statements have been prepared on a historical cost basis, except for contingent consideration that have been measured at fair value.

 

The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company’s annual consolidated financial statements as of December 31, 2024.

 

The primary source of Afya’s revenue is from its interest on the operational companies in Brazil. As result, the Brazilian Real has been determined as the Company’s functional currency.

 

The unaudited interim condensed consolidated financial statements are presented in Brazilian reais (“R$”), which is the Company’s functional and presentation currency. All amounts are rounded to the nearest thousand.

 

These unaudited interim condensed consolidated financial statements were approved by the Board of Directors for issuance on May 8, 2025.

   
 F-9 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

2.2 Basis of consolidation

 

The table below presents a list of the Company’s subsidiaries and associate:

 

        Direct and indirect interest
Name Main activities Location Investment type March 31, 2025 (unaudited) December 31, 2024
Afya Participações S.A. (“Afya Brazil”) Holding Nova Lima - MG Subsidiary 100% 100%
Instituto Tocantinense Presidente Antônio Carlos Porto S.A. - (“ITPAC Porto”) Undergraduate degree programs Porto Nacional - TO Subsidiary 100% 100%
Instituto Tocantinense Presidente Antônio Carlos S.A. - (“ITPAC Araguaína”) Undergraduate degree programs Araguaína - TO Subsidiary 100% 100%
União Educacional do Vale do Aço S.A. - (“UNIVAÇO”) Medicine undergraduate degree program Ipatinga - MG Subsidiary 100% 100%
IPTAN - Instituto de Ensino Superior Presidente Tancredo de Almeida Neves S.A. (“IPTAN”) Undergraduate degree programs São João Del Rei - MG Subsidiary 100% 100%
Instituto de Educação Superior do Vale do Parnaíba S.A. (“IESVAP”) Undergraduate degree programs Parnaíba - PI Subsidiary 80% 80%
Centro de Ciências em Saúde de Itajubá S.A. (“CCSI”) Medicine undergraduate degree program Itajubá - MG Subsidiary 75% 75%
Instituto de Ensino Superior do Piauí S.A. (“IESP”) Undergraduate and graduate degree programs Teresina - PI Subsidiary 100% 100%
FADEP - Faculdade Educacional de Pato Branco Ltda. (“FADEP”) Undergraduate degree programs Pato Branco - PR Subsidiary 100% 100%
Instituto Educacional Santo Agostinho S.A. (“FASA”) Undergraduate degree programs Montes Claros - MG Subsidiary 100% 100%
Instituto Paraense de Educação e Cultura Ltda. (“IPEC”) Medicine degree programs Marabá - PA Subsidiary 100% 100%
Sociedade Universitária Redentor S.A. (“UniRedentor”) Undergraduate and graduate degree programs Itaperuna - RJ Subsidiary 100% 100%
Centro de Ensino São Lucas Ltda. (“UniSL”) Undergraduate degree programs Porto Velho - RO Subsidiary 100% 100%
Sociedade de Educação, Cultura e Tecnologia da Amazônia S.A. - (“FESAR”) Undergraduate degree programs Redenção - PA Subsidiary 100% 100%
Centro Superior de Ciências da Saúde Ltda. (“FCMPB”) Medicine degree programs João Pessoa - PB Subsidiary 100% 100%
iClinic Desenvolvimento de Software Ltda. (“iClinic”) Electronic Medical Record, Clinical Management System Ribeirão Preto - SP Subsidiary 100% 100%
Medicinae Solutions S.A. (“Medicinae”) Healthcare payments and financial services Rio de Janeiro - RJ Subsidiary 100% 100%
Medical Harbour Aparelhos Médico Hospitalares e Serviços em Tecnologia Ltda. (“Medical Harbour”) Educational health and medical imaging Florianópolis - SC Subsidiary 100% 100%
Cliquefarma Drogarias Online Ltda. (“Cliquefarma”) Online platform São Paulo - SP Subsidiary 100% 100%
Shosp Tecnologia da Informação Ltda. (“Shosp”) Electronic Medical Record, Clinical Management System Rio de Janeiro - RJ Subsidiary 100% 100%
Sociedade Padrão de Educação Superior Ltda. (“UnifipMoc”) Undergraduate degree programs Montes Claros - MG Subsidiary 100% 100%
Companhia Nilza Cordeiro Herdy de Educação e Cultura (“Unigranrio”) Undergraduate and graduate degree programs Duque de Caxias - RJ Subsidiary 100% 100%
RX PRO Soluções de Tecnologia Ltda. (“RX PRO”) Marketing for pharmaceutical industry São Paulo - SP Subsidiary 100% 100%
Quasar Telemedicina Desenvolvimento de Sistemas Computacionais Ltda. (“Glic”) Patient physician relationship Barueri - SP Subsidiary 100% 100%
Sociedade Educacional e Cultural Sergipe DelRey Ltda. (“DelRey”) Undergraduate degree programs Maceió - AL Subsidiary 100% 100%
Unidom Participações S.A. (“Unidom”) (i) Undergraduate degree programs Salvador - BA Subsidiary - 100%
Instituição Baiana de Ensino Superior Ltda. (“IBES”) (i) Undergraduate degree programs Salvador - BA Subsidiary 100% 100%
SESSA - Sociedade de Educação Superior do Semi-Árido Ltda. (“SESSA”) (i) Undergraduate degree programs Ribeira de Pombal - BA Subsidiary 100% 100%
União Educacional do Planalto Central S.A. (“UEPC”) Undergraduate degree programs Brasília - DF Associate 30% 30%

 

 

(i) Unidom was merged with Afya Brazil on January 1, 2025. As a result, from this date on, Afya Brazil directly controls the Unidom’s subsidiaries IBES and SESSA.

 

The financial information of the subsidiaries acquired is included in the Company’s unaudited interim condensed consolidated financial statements beginning on the respective acquisition dates.

 

The Company consolidates the financial information for all entities it controls. Control is achieved when the Company is exposed to, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

   
 F-10 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and it ceases when the Company loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the unaudited interim condensed consolidated financial statements from the date the Company gains control until the date the Company ceases to control the subsidiary.

 

When necessary, adjustments are made to the financial statements of subsidiaries in order to bring their accounting policies in line with the Company’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions are eliminated in full on consolidation.

 

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resulting gain or loss is recognized in the statement of income.

 

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statements of financial position, consolidated statements of income and comprehensive income and consolidated statements of changes in equity.

 

2.3 Changes in accounting policies and disclosures

 

New standards, interpretations and amendments issued and adopted by the Company

 

The accounting policies adopted in the preparation of the unaudited interim condensed financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2024. Certain amendments apply for the first time in 2025, but do not have significant impacts on the Company’s unaudited interim condensed consolidated financial statements. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

   
 F-11 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  
3Segment information

 

The Company has three reportable segments as follows:

 

• Undergraduate, previously denominated 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.

 

Segment information is presented consistently with the internal reports provided to the Company's Chief Executive Officer (CEO), which is the Chief Operating Decision Maker (CODM) and is responsible for allocating resources, assessing the performance of the Company's operating segments, and making the Company's strategic decisions.

 

No operating segments have been aggregated to form the reportable operating segments. There is only one geographic region, and the results are monitored and evaluated as a single business.

 

The tables below present assets and liabilities information for the Company’s operating segments as of March 31, 2025 and December 31, 2024:

 

As of March 31, 2025 (unaudited) Undergraduate Continuing education Medical practice solutions Total reportable segments Adjustments and eliminations Total
             
Total assets 8,671,358 265,128 179,187 9,115,673 (3,799) 9,111,874
Current assets 1,725,616 62,775 96,624 1,885,015 (3,799) 1,881,216
Non-current assets 6,945,742 202,353 82,563 7,230,658 - 7,230,658
             
Total liabilities and equity 8,671,358 265,128 179,187 9,115,673 (3,799) 9,111,874
Current liabilities 1,047,339 186,528 92,899 1,326,766 (3,799) 1,322,967
Non-current liabilities 3,247,944 76,404 23,144 3,347,492 - 3,347,492
Equity 4,376,075 2,196 63,144 4,441,415 - 4,441,415
             
Other disclosures            
Investments in associate (i) 53,129 - - 53,129 - 53,129
Capital expenditures (ii) 38,136 11,310 6,766 56,212 - 56,212

 

(i) Investment in UEPC is included in non-current assets in the statement of financial position.

(ii) Capital expenditures consider the acquisitions of property and equipment and intangible assets.

   
 F-12 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

As of December 31, 2024 Undergraduate Continuing education Medical practice solutions Total reportable segments Adjustments and eliminations Total
             
Total assets 8,393,185 274,318 170,624 8,838,127 (8,588) 8,829,539
Current assets 1,443,566 71,893 82,913 1,598,372 (8,588) 1,589,784
Non-current assets 6,949,619 202,425 87,711 7,239,755 - 7,239,755
             
Total liabilities and equity 8,393,185 274,318 170,624 8,838,127 (8,588) 8,829,539
Current liabilities 884,705 188,489 75,589 1,148,783 (8,588) 1,140,195
Non-current liabilities 3,279,846 75,619 23,296 3,378,761 - 3,378,761
Equity 4,228,634 10,210 71,739 4,310,583 - 4,310,583
             
Other disclosures            
Investments in associate (i) 54,442 - - 54,442 - 54,442
Capital expenditures (ii) 78,825 8,762 5,314 92,901 - 92,901

 

(i) Investment in UEPC is included in non-current assets in the statement of financial position.

(ii) Capital expenditures consider the acquisitions of property and equipment and intangible assets for the three-month period ended Marh 31, 2024.

 

The tables below present the statements of income for the Company’s operating segments for the three-month periods ended March 31, 2025 and 2024:

 

March 31, 2025 (unaudited) Undergraduate Continuing education Medical practice solutions Total reportable segments Elimination (inter-segment transactions) Total
             
External customer 827,372 69,855 39,133 936,360 - 936,360
Inter-segment - 1,248 2,551 3,799 (3,799) -
Revenue 827,372 71,103 41,684 940,159 (3,799) 936,360
Cost of services (250,498) (23,036) (12,904) (286,438) 3,799 (282,639)
Gross profit 576,874 48,067 28,780 653,721 - 653,721
SG&A expenses           (281,500)
Other expenses, net           306
Operating income           372,527
Finance income           43,481
Finance expenses           (138,475)
Share of income of associate           4,285
Income before income taxes           281,818
Income taxes expenses           (24,782)
Net income           257,036
   
 F-13 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

 

March 31, 2024 (unaudited) Undergraduate Continuing education Medical practice solutions Total reportable segments Elimination (inter-segment transactions) Total
             
External customer 704,519 63,999 35,721 804,239 - 804,239
Inter-segment - 1,416 852 2,268 (2,268) -
Revenue 704,519 65,415 36,573 806,507 (2,268) 804,239
Cost of services (237,653) (24,771) (9,348) (271,772) 2,268 (269,504)
Gross profit 466,866 40,644 27,225 534,735 - 534,735
SG&A expenses           (241,164)
Other income, net           (4,213)
Operating income           289,358
Finance income           25,530
Finance expenses           (99,896)
Share of income of associate           4,172
Income before income taxes           219,164
Income taxes expenses           (10,865)
Net income           208,299

 

Seasonality of operations

 

Undergraduate 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; and (ii) Medcel’s revenue, 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 have significant fluctuations regarding seasonality.

 

4Cash and cash equivalents

 

  March 31, 2025 December 31, 2024
  (unaudited)  
Cash and bank deposits 3,508 6,078
Cash equivalents 1,151,380 904,937
  1,154,888 911,015

 

Cash equivalents correspond to investment funds and Bank Certificates of Deposit (CDB) with highly rated financial institutions, available for immediate use and have an insignificant risk of changes in value.

 

As of March 31, 2025, the average interest on these investments is equivalent to 99.3% of the Brazilian interbank interest rates (“CDI”) (December 31, 2024: 99.1%). Cash equivalents denominated in U.S. dollars totaled R$9,078 as of March 31, 2025 (December 31, 2024: R$21,610).

   
 F-14 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  
5Trade receivables

 

  March 31, 2025 December 31, 2024
  (unaudited)  
Tuition fees 482,645 488,962
Educational content (i) 63,815 62,194
FIES 126,905 79,712
Educational credits (ii) 33,199 26,893
Mobile app subscription (iii) 21,055 24,223
Other 20,552 21,339
  748,171 703,323
(-) Allowance for expected credit losses (77,251) (71,477)
  670,920 631,846
Current 636,906 595,898
Non-current 34,014 35,948

 

(i) Related to trade receivables from sales of e-books and medical courses through Continuing education’s platform.

(ii) Related to the financing programs offered by the Company’s subsidiaries to its students that existed prior to the acquisitions. The Company closed such programs to new enrollments and maintained only the agreements that were outstanding as of the acquisition date.

(iii) Related to trade receivables from mobile applications subscriptions for Medical practice solutions.

 

As of March 31, 2025 and December 31, 2024, the aging of trade receivables was as follows:

 

  March 31, 2025 December 31, 2024
  (unaudited)  
Neither past due nor impaired 361,780 327,052
Past due:    
1 to 30 days 140,730 97,390
31 to 90 days 133,485 126,623
91 to 180 days 55,547 91,411
More than 180 days 56,629 60,847
  748,171 703,323

 

The changes in the allowance for expected credit losses for the three-month periods ended March 31, 2025 and 2024, were as follows:

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Opening balance (71,477) (61,398)
Additions (16,558) (15,264)
Write-offs 10,784 7,666
Closing balance (77,251) (68,996)
   
 F-15 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  
6Related parties

 

The tables below summarize the balances and transactions with related parties:

 

  March 31, 2025 December 31, 2024
  (unaudited)  
Assets    
Trade receivables (i) 511 507
Other assets (ii) 83 597
  594 1,104
Current 499 1,010
Non-current 95 94

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Other income (expenses)    
UEPC (i) 221 465
EMIVE Patrulha 24 Horas Ltda. (iii) - (1)
  221 464
     
Leases payments (iv)    
RVL Esteves Gestão Imobiliária S.A. 6,914 6,385
UNIVAÇO Patrimonial Ltda. 921 899
IESVAP Patrimonial Ltda. 1,329 1,298
  9,164 8,582

 

(i) Refers to sales of educational content to UEPC.

(ii) Refers to expenses to be reimbursed by Bertelsmann.

(iii) Refers to amounts of expenses related to security services provided by a company of which one of Afya’s main shareholders has significant influence.

(iv) The carrying amounts of lease liabilities with related parties as of March 31, 2025 totaled R$245,830 (December 31, 2024: R$242,703).

 

Key management personnel compensation

 

Key management personnel compensation included in the Company’s unaudited interim condensed consolidated statement of income comprised the following:

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Short-term employee benefits 3,835 3,136
Share-based compensation plans 3,655 5,227
  7,490 8,363

 

Compensation of the Company’s key management includes short-term employee benefits comprised by salaries, labor and social obligations, and other ordinary short-term employee benefits. The amounts disclosed in the table above are the amounts recognized as an expense in selling, general and administrative expenses during the reporting period related to key management personnel. See Note 13 for additional information on the share-based compensation plans.

   
 F-16 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  
7Other assets

 

  March 31, 2025 December 31, 2024
  (unaudited)  
Indemnification assets 77,031 78,701
Advances 21,274 35,140
Judicial deposits - Note 20 17,437 16,938
Prepaid expenses 37,233 19,761
Other FIES credits 9,171 8,982
Dividends receivable - 1,628
Other assets 11,529 11,870
  173,675 173,020
Current 57,304 57,145
Non-current 116,371 115,875

 

8Investment in associate

 

The Company holds a 30% interest in UEPC, a medical school located in the Federal District that offers higher education and post-graduate courses, both in person and long-distance learning. The Company’s interest in UEPC is accounted for using the equity method. The tables below summarize the financial information of the Company’s investment in UEPC:

 

  March 31, 2025 December 31, 2024
  (unaudited)  
Current assets 23,461 38,122
Non-current assets 115,948 116,846
Current liabilities (19,387) (30,049)
Non-current liabilities (86,868) (87,388)
Equity 33,154 37,531
Company’s share in equity - 30% 9,946 11,259
Goodwill 43,183 43,183
Carrying amount of the investment 53,129 54,442

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Revenue 41,229 38,366
Cost of services (13,567) (12,183)
Selling, general and administrative expenses (12,452) (10,845)
Net finance results (197) (989)
Income before income taxes 15,013 14,349
Income taxes expenses (731) (443)
Net income 14,282 13,906
Company’s share of income 4,285 4,172
   
 F-17 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

The movements during the three-month periods ended March 31, 2025 and 2024 are shown below:

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Opening balance 54,442 51,834
Share of income 4,285 4,172
Dividends received (5,598) (3,900)
Closing balance 53,129 52,106

 

The Company tests the recoverability of the carrying amount of goodwill at least annually. As of March 31, 2025 and December 31, 2024, no impairment had to be recognized for this goodwill.

 

9Property and equipment

 

The Company assesses at each reporting date, whether there is an indication that a property and equipment asset may be impaired. If any indication exists, the Company estimates the asset’s recoverable amount. There were no impairment indicatives of property and equipment as of and for the three-month period ended March 31, 2025 and for the year ended December 31, 2024.

 

The following table shows the balances and movements in property and equipment during the three-month periods ended March 31, 2025 and 2024.

   
 F-18 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

  Building Machinery and equipment Lands Vehicles Furniture and fixtures IT equipment Library books Leasehold improvements Construction in progress Total
Cost                    
As of January 1, 2024 93,232 119,981 18,852 1,354 110,859 82,810 31,888 264,448 33,962 757,386
Additions 35 5,521 - 130 4,012 4,601 70 6 8,580 22,955
Write-off (i) - (70) - - (87) (59) - (21) - (237)
Transfer 661 - - 142 - - - 26,497 (27,158) 142
As of March 31, 2024 (unaudited) 93,928 125,432 18,852 1,626 114,784 87,352 31,958 290,930 15,384 780,246
                     
As of January 1, 2025 99,366 149,407 18,852 1,442 124,818 108,817 33,553 309,413 44,034 889,702
Additions 113 7,587 - - 7,131 4,765 380 1,159 17,342 38,477
Write-off (i) - (85) - (319) (285) (455) (80) - - (1,224)
Transfer 8,295 - - - - - - 36,528 (44,823) -
As of March 31, 2025 (unaudited) 107,774 156,909 18,852 1,123 131,664 113,127 33,853 347,100 16,553 926,955
                     
Depreciation                    
As of January 1, 2024 (9,679) (28,843) - 198 (20,377) (26,872) (18,652) (44,476) - (148,701)
Depreciation (1,036) (4,287) - (95) (3,208) (3,668) (770) (7,929) - (20,993)
Write-off (i) - 53 - - 87 57 - 21 - 218
Transfer - - - (142) - - - - - (142)
As of March 31, 2024 (unaudited) (10,715) (33,077) - (39) (23,498) (30,483) (19,422) (52,384) - (169,618)
                     
As of January 1, 2025 (13,962) (45,110) - (137) (28,080) (41,495) (21,710) (80,726) - (231,220)
Depreciation (1,161) (4,903) - (80) (3,621) (4,476) (772) (11,479) - (26,492)
Write-off (i) - 78 - 185 168 408 80 - - 919
As of March 31, 2025 (unaudited) (15,123) (49,935) - (32) (31,533) (45,563) (22,402) (92,205) - (256,793)
                     
Net book value                    
As of March 31, 2025 (unaudited) 92,651 106,974 18,852 1,091 100,131 67,564 11,451 254,895 16,553 670,162
As of December 31, 2024 85,404 104,297 18,852 1,305 96,738 67,322 11,843 228,687 44,034 658,482

 

(i) Refers to items written-off as result of lack of expectation of future use, in connection with the Company’s physical inventory procedures.

   
 F-19 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  
10Intangible assets

 

  Goodwill Licenses with indefinite useful life Trademark Customer relationships Software Education content Developed technology Educational platform Software in progress Other Total
                       
Cost                      
As of January 1, 2024 1,334,699 2,776,077 182,060 578,267 71,150 84,201 128,477 74,892 12,134 1,055 5,243,012
Additions (i) - 49,600 - - 612 2,471 5,557 5,663 6,043 - 69,946
Write-off (ii) - - - - - - (35) - - - (35)
Transfer - - - - 13,874 1,041 - (97) (14,818) - -
As of March 31, 2024 (unaudited) 1,334,699 2,825,677 182,060 578,267 85,636 87,713 133,999 80,458 3,359 1,055 5,312,923
                       
As of January 1, 2025 1,526,733 3,360,786 182,060 612,827 95,953 108,269 102,523 134,820 27,473 1,055 6,152,499
Additions - - - - - 3,269 2,828 4,198 7,440 - 17,735
Transfer - - - - 27,456 - - - (27,456) - -
As of March 31, 2025 (unaudited) 1,526,733 3,360,786 182,060 612,827 123,409 111,538 105,351 139,018 7,457 1,055 6,170,234
                       
Amortization                      
As of January 1, 2024 - - (26,038) (301,947) (24,094) (42,230) (31,603) (20,900) - (184) (446,996)
Amortization - - (4,972) (18,542) (3,293) (4,710) (7,029) (2,968) - (26) (41,540)
Write-off (ii) - - - - - - 35 - - - 35
As of March 31, 2024 (unaudited) - - (31,010) (320,489) (27,387) (46,940) (38,597) (23,868) - (210) (488,501)
                       
As of January 1, 2025 - - (38,544) (384,684) (41,758) (60,700) (42,635) (51,099) - (290) (619,710)
Amortization - - (1,281) (20,084) (5,740) (5,322) (4,978) (8,955) - (26) (46,386)
As of March 31, 2025 (unaudited) - - (39,825) (404,768) (47,498) (66,022) (47,613) (60,054) - (316) (666,096)
                       
Net book value                      
As of March 31, 2025 (unaudited) 1,526,733 3,360,786 142,235 208,059 75,911 45,516 57,738 78,964 7,457 739 5,504,138
As of December 31, 2024 1,526,733 3,360,786 143,516 228,143 54,195 47.569 59,888 83,721 27,473 765 5,532,789

 

(i) On January 24, 2024, MEC authorized the increase of 40 medical school seats of FIP Guanambi, which resulted in an additional payment of R$49,600.

(ii) Refers to intangible assets written-off as result of lack of expectation of future use.

   
 F-20 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

Impairment testing of goodwill and intangible assets with indefinite lives

 

The Company performs its annual impairment test in December and when circumstances indicated that the carrying value may be impaired. The Company’s impairment test for goodwill and intangible assets with indefinite lives is based on value-in-use calculations. The key assumptions used to determine the recoverable amount for the different cash-generating units were disclosed in the annual consolidated financial statements for the year ended December 31, 2024. There were no impairment indicatives of goodwill and intangible assets with indefinite lives for the three-month period ended March 31, 2025.

 

Other intangible assets

 

Intangible assets, other than goodwill and licenses with indefinite useful lives, are valued separately for each acquisition and are amortized during each useful life. The useful lives and methods of amortization of other intangibles are reviewed at each financial year end and adjusted prospectively, if appropriate.

 

For the three-month period ended March 31, 2025 and for the year ended December 31, 2024 there were no indicatives that the Company’s intangible assets with finite useful lives might be impaired.

 

11Financial assets and liabilities

 

11.1Financial assets

 

  March 31, 2025 December 31, 2024
At amortized cost (unaudited)  
Trade receivables 670,920 631,846
Dividends receivable - ]1,628
  670,920 633,474
Current 636,906 597,526
Non-current 34,014 35,948

 

11.2Financial liabilities

 

  March 31, 2025 December 31, 2024
At amortized cost (unaudited)  
Trade payables 129,973 128,080
Loans and financing 2,212,674 2,195,161
Lease liabilities 989,184 978,336
Accounts payable to selling shareholders 157,754 215,819
Dividends payable 130,798 -
  3,620,383 3,517,396
Current 839,563 690,395
Non-current 2,780,820 2,827,001

 

  March 31, 2025 December 31, 2024
At fair value (unaudited)  
Accounts payable to selling shareholders (earn-outs) 20,067 20,067
Accounts payable to selling shareholders (Unidom) 288,520 294,886
  308,587 314,953
Current 33,943 32,137
Non-current 274,644 282,816
   
 F-21 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

11.2.1Loans and financing

 

Financial institution Currency Interest rate Maturity March 31, 2025 December 31, 2024
        (unaudited)  
Banco Itaú Unibanco S.A. Brazilian real CDI + 1.90% p.y. 2025 320,237 309,496
FINEP Brazilian real TJLP p.y. 2027 7,474 8,209
Softbank Brazilian real 6.5% p.y. 2026 850,051 845,492
Debentures Brazilian real CDI + 1.80% p.y. 2028 512,565 526,946
IFC Brazilian real CDI + 1.20% p.y. 2030 522,347 505,018
        2,212,674 2,195,161
Current       373,275 363,554
Non-current       1,839,399 1,831,607

 

11.2.2Leases

 

The Company has lease contracts for properties. The lease contracts generally have maturities in the lease terms between five and 30 years. There are no sublease or variable payments in-substance lease agreements in the period.

 

The carrying amounts of right-of-use assets and lease liabilities as of March 31, 2025 and December 31, 2024 and the movements during the three-month periods ended March 31, 2025 and 2024 are shown below:

 

  Right-of-use assets   Lease liabilities
  March 31, 2025 March 31, 2024   March 31, 2025 March 31, 2024
  (unaudited) (unaudited)   (unaudited) (unaudited)
Opening balance 842,219 767,609   978,336 874,569
Additions 5,593 411   5,593 411
Remeasurement 17,332 37,401   17,332 37,401
Depreciation expense (18,877) (16,736)     -
Interest expense - -   29,563 26,744
Payments of principal - -   (11,904) (9,648)
Payments of interest - -   (29,167) (26,903)
Write-off (i) (569) (28)   (569) (32)
Closing balance 845,698 788,657   989,184 902,542

 

Balances: March 31, 2025 December 31, 2024   March 31, 2025 December 31, 2024
  (unaudited)     (unaudited)  
Current - -   47,762 45,580
Non-current 845,698 842,219   941,422 932,756

 

(i) Refers to early termination of lease contracts.

 

The Company recognized lease expense from short-term leases and low-value assets of R$2,558 for the three-month period ended March 31, 2025 (R$1,331 for the three-month period ended March 31, 2024).

   
 F-22 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  
11.2.3Accounts payable to selling shareholders

 

  Interest rate March 31, 2025 December 31, 2024
    (unaudited)  
Accounts payable at amortized cost      
Unigranrio CDI 93,246 90,543
DelRey Selic 64,508 125,276
Accounts payable at fair value      
Shosp - 454 454
Além da Medicina - 9,600 9,600
CardioPapers - 10,013 10,013
Unidom (i) CDI 288,520 294,886
    466,341 530,772
Current   191,698 185,318
Non-current   274,643 345,454

 

(i) The account payable to the selling shareholders of Unidom is updated by CDI, as determined in the purchase agreement, and measured at fair value considering the maintenance of the authorization of the 175 operating medical school seats.

 

The movements during the three-month periods ended March 31, 2025 and 2024 are shown below:

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Opening balance 530,772 566,867
Payments of principal (65,162) (147,262)
Payments of interest (14,536) (24,735)
Interest 4,601 9,722
Remeasurement of contingent consideration 10,666 818
Closing balance 466,341 405,410

 

As of March 31, 2025, it is probable that the targets that trigger the contingent considerations payments recognized will be met, including those related to the maintenance of the authorization of the 175 medical school seats of Unidom, considering current stage and development of court proceedings regarding such medical school seats. The fair value of the contingent consideration determined at March 31, 2025 reflects the development, among other factors and the remeasurements charge have been recognized through profit or loss. The own non-performance risk at March 31, 2025 was assessed to be insignificant.

 

11.3Fair values

 

The table below compares the carrying amounts and fair values of the Company’s financial instruments, other than those carrying amounts that are reasonable approximation of fair values:

 

 

March 31, 2025 (unaudited)

December 31, 2024

  Carrying amount Fair value Carrying amount Fair value
Financial liabilities        
Loans and financing 2,212,674 2,195,503 2,195,161 2,196,152
  2,212,674 2,195,503 2,195,161 2,196,152

 

The Company assessed that the fair values of trade receivables, other assets, trade payables, accounts payable to selling shareholders and other liabilities approximate their carrying amounts.

 

The financial instruments for which the fair value are disclosed are based on Level 2 fair value measurement hierarchy. There has been no change in fair value hierarchy from December 31, 2024 to March 31, 2025.

 

The fair value of interest-bearing loans and financing are determined by using the discounted cash flow (DCF) method using a discount rate that reflects the issuer’s borrowing rate as of the end of the reporting period.

 

11.4Financial instruments risk management objectives and policies

 

The Company’s main financial liabilities comprise loans and financing, lease liabilities, accounts payable to selling shareholders and trade payables. The main purpose of these financial liabilities is to finance the Company’s

   
 F-23 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

operations and expansion. The Company’s main financial assets include trade receivables and cash and cash equivalents.

 

The Company is exposed to market risk, credit risk and liquidity risk. The Company monitors market, credit and liquidity risks in line with the objectives of capital management and counts on the support, monitoring and oversight of the Board of Directors in decisions related to capital management and its alignment with the objectives and risks. The Company’s policy is that no trading of derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees with policies for managing each of these risks, which are summarized below.

 

11.4.1Market risk

 

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company’s exposure to market risk is related to interest rate and foreign currency risk. The sensitivity analysis in the following sections relates to the position as of March 31, 2025.

 

a) Interest rate risk

 

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s cash equivalents, loans and financing and accounts payable to selling shareholders, with floating interest rates.

   
 F-24 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

Sensitivity analysis

 

The table below demonstrates the sensitivity to a reasonably possible change in interest on cash equivalents, loans and financing and accounts payable to selling shareholders. With all variables held constant, the Company’s income before income taxes is affected through the impact on floating interest rates, as follows:

 

  March 31, 2025 Index Base rate
  (unaudited)    
Cash equivalents 1,142,302 CDI 160,504
Loans and financing (1,355,149) CDI (213,332)
Loans and financing (7,474) TJLP (596)
Accounts payable to selling shareholders (381,766) CDI (54,020)
Accounts payable to selling shareholders (64,508) Selic (9,128)
Net exposure     (116,572)

 

  Increase in basis points
  +75 +150
Net effect on profit before tax (4,999) (9,999)

 

b) Foreign currency risk

 

Foreign currency risk is the risk that the fair value or future cash flows of exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates to cash and cash equivalents denominated in U.S. dollars in the amount of R$9,078 as of March 31, 2025 (December 31, 2024: R$21,610).

 

Sensitivity analysis

 

The table below demonstrates the sensitivity in the Company’s income before income taxes of a 10% change in the U.S. dollar exchange rate (R$5.7416 to U.S. dollar 1.00) as of March 31, 2025, with all other variables held constant.

 

  Exposure +10% -10%
Cash equivalents 9,078 908 (908)

 

11.4.2Credit risk

 

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including cash and cash equivalents.

 

Customer credit risk is managed by the Company based on the established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. See Note 5 for additional information on the Company’s trade receivables.

 

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within limits assigned to each counterparty.

 

The carrying amounts of its financial assets are the Company’s maximum exposure to credit risk for the components of the statements of financial position on March 31, 2025 and December 31, 2024.

 

11.4.3Liquidity risk

 

The Company’s Management has responsibility for monitoring liquidity risk. In order to achieve the Company’s objective, Management regularly reviews the risk and maintains appropriate reserves, including bank credit facilities with first tier financial institutions. Management also continuously monitors projected and actual cash flows and the combination of the maturity profiles of the financial assets and liabilities.

 

   
 F-25 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

The main requirements for financial resources used by the Company arise from the need to make payments for suppliers, operating expenses, labor and social obligations, loans and financing and accounts payable to selling shareholders.

 

The tables below summarize the maturity profile of the Company’s financial liabilities based on contractual undiscounted amounts:

 

As of March 31, 2025 (unaudited) Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Total
Trade payables 129,973 - - - 129,973
Loans and financing 548,174 1,744,766 359,893 76,180 2,729,013
Lease liabilities 162,211 309,399 297,714 1,343,118 2,112,442
Accounts payable to selling shareholders 218,354 96,058 120,033 359,789 794,234
  1,058,712 2,150,223 777,640 1,779,087 5,765,662

 

As of December 31, 2024 Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Total
Trade payables 128,080 - - - 128,080
Loans and financing 526,659 1,494,287 617,818 75,526 2,714,290
Lease liabilities 158,746 303,211 293,178 1,360,107 2,115,242
Accounts payable to selling shareholders 205,322 150,565 99,100 373,498 828,485
  1,018,807 1,948,063 1,010,096 1,809,131 5,786,097

 

11.5Changes in liabilities arising from financing activities

 

  January 1, 2025 Payments of principal Payments of interest Additions and remeasurements Interest Other March 31, 2025
              (unaudited)
Loans and financing 2,195,161 (769) (44,980) - 61,672 1,590 2,212,674
Lease liabilities 978,336 (11,904) (29,167) 22,925 29,563 (569) 989,184
Dividends payable - (3,991) - 134,789 - - 130,798
  3,173,497 (16,664) (74,147) 157,714 91,235 1,021 3,332,656

 

  January 1, 2024 Payments of principal Payments of interest Additions and remeasurements Interest Other March 31, 2024
              (unaudited)
Loans and financing 1,800,775 (10,762) (48,806) - 41,205 682 1,783,094
Lease liabilities 874,569 (9,648) (26,903) 37,812 26,744 (32) 902,542
Dividends payable - (3,712) - 3,712 - - -
  2,675,344 (24,122) (75,709) 41,524 67,949 650 2,685,636
   
 F-26 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

12Capital management

 

For the purposes of the Company’s capital management, capital considers total equity. The primary objective of the Company’s capital management is to maximize shareholder value.

 

In order to achieve its overall objective, the Company’s capital management, among other things, aims to ensure that it meets financial covenants under the debentures and other loans and financing, including net debt ratio to adjusted EBITDA. Breaches in meeting the financial covenants would permit the bank to immediately call loans and financing. There have been no breaches of the financial covenants of any loans and financing in the current period.

 

No changes were made in the objectives, policies or processes for managing capital during the three-month period ended March 31, 2025.

 

13Labor and social obligations

 

a) Variable compensation (bonuses)

 

The bonuses related to variable compensation of employees and management of R$12,872 and R$10,292 are recognized in cost of services and selling, general and administrative expenses in the statements of income for the three-month periods ended March 31, 2025 and 2024, respectively.

 

b) Afya Limited share-based compensation plans

 

b.1) Stock options plan

 

The stock options plan was approved on August 30, 2019 and granted to senior executives and other employees of the Company from that date, with subsequent changes in the exercise price, as approved, on July 29, 2020, July 8, 2022 and July 31, 2023. Such changes were assessed as modifications by the Company and were accounted in accordance with IFRS 2.

 

During the three-month periods ended March 31, 2025 and 2024 there were no stock options granted by the Company.

 

The table below presents the number and movements in stock options for the three-month periods ended March 31, 2025 and 2024:

 

 

Weighted average exercise price

(in Brazilian Reais)

Number of stock options

March 31, 2025 March 31, 2024
    (unaudited) (unaudited)
Outstanding at January 1 67.31 1,610,679 1,696,064
Exercised 62.12 (27,800) (13,745)
Forfeited - - (10,330)
Outstanding at March 31 64.08 1,582,879 1,671,989
Exercisable 63.34 399,402 228,490

 

The share-based compensation expense recognized in selling, general and administrative expenses in the statements of income for the three-month periods ended March 31, 2025 and 2024 was R$3,644 and R$3,916, respectively.

 

b.2) Restricted Stock Units (RSU) Program

 

On July 8, 2022, the Company approved the Restricted Stock Units (RSU) program for its employees. The participant's right to effectively receive ownership of the restricted stock units will be conditioned on the participant's continuance as an employee or director in the business group from the grant date until vesting. The executives will be entitled to these shares in a proportion of 10%, 20%, 30%, 40% each year.

 

The Company accounts for the RSU plan as an equity-settled plan, except for the portion of labor and social securities obligations.

   
 F-27 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

During the three-month periods ended March 31, 2025 and 2024 there were no movements of RSUs.

The outstanding amount of restricted stock units as of March 31, 2025 and December 31, 2024 was 656,634.

 

Total RSU expenses recognized in selling, general and administrative expenses in the consolidated statement of income for the three-month periods ended March 31, 2025 and 2024 were R$3,319 and R$4,714, respectively. Labor and social obligations expenses were R$1,008 and R$1,035 for the three-month periods ended March 31, 2025 and 2024, respectively.

 

14Equity

 

Share capital

 

As of March 31, 2025 and December 31, 2024, the Company’s share capital was R$17 represented by 93,722,831 shares comprised by 49,920,068 class A common shares and 43,802,763 class B common shares. As of March 31, 2025 and December 31, 2024, the Company’s authorized capital was US$50 thousand.

 

Dividends

 

In the three-month period ended March 31, 2025, CCSI and IESVAP approved the payment of dividends of R$22,205, which R$17,200 was distributed to the Company and R$5,005 to non-controlling shareholders, of which R$1,014 are registered as dividends payable as of March 31, 2025 (March 31, 2024: R$15,409, which R$11,697 was distributed to the Company and R$3,712 to non-controlling shareholders).

 

On March 12, 2025, the Company’s Board of Directors approved the first dividend distribution in the amount of R$129,784, representing 20% of the Company’s consolidated net income for the year ended December 31, 2024 and a dividend per share of R$1.348923, to the shareholders on record as of the close of business on March 26, 2025, paid in U.S. dollars on April 4, 2025, at the exchange rate (PTAX) published by the Brazilian Central Bank on March 13, 2025.

   
 F-28 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

Treasury shares

 

The following table illustrates the number and movements in treasury shares during the three-month periods ended March 31, 2025 and 2024:

 

  Number of treasury shares

Average price

(in Brazilian Reais)

Outstanding at January 1, 2024 3,773,478 79.28
Delivered under the share-based compensation plans (13,745) 79.28
Outstanding at March 31, 2024 (unaudited) 3,759,733 79.28
     
Outstanding at January 1, 2025 3,455,538 79.28
Delivered under the share-based compensation plans (27,800) 79.28
Outstanding at March 31, 2025 (unaudited) 3,427,738 79.28

 

15Earnings per share (“EPS”)

 

Basic EPS is calculated by dividing net income attributable to the equity holders of the Company by the weighted average number of common shares outstanding during the period.

 

Diluted EPS is calculated by dividing net income attributable to the equity holders of the parent by the weighted average number of common shares outstanding during the period plus the weighted average number of shares that would be issued on conversion of all potential shares with dilutive effects.

 

Diluted earnings per share are computed including stock options granted to key management using the treasury shares method when the effect is dilutive. The Company has the stock options and RSU plans in the category of potentially dilutive shares.

 

In the three-month periods ended March 31, 2025 and 2024, Softbank’s series A perpetual convertible preferred shares are dilutive and included on the diluted earnings per share.

 

The table below presents the basic and diluted earnings per share calculations:

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Numerator    
Net income attributable to equity holders of the parent 251,999 203,393
Interest on convertible preference shares 16,666 12,415
Profit attributable to equity holders adjusted for the effect of the dilution 268,665 215,808
Denominator    
Weighted average number of outstanding shares 90,278,384 89,969,430
Effects of dilution from stock options and restricted share units 1,057,400 1,401,628
Effects of dilution from convertible shares 5,917,888 5,917,888
Weighted average number of outstanding shares adjusted for the effect of dilution 97,253,672 97,288,946
     
Basic earnings per share (R$) 2.79 2.26
Diluted earnings per share (R$) 2.76 2.22
   
 F-29 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

16Revenue

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Tuition fees 1,165,751 980,975
Other 81,483 72,679
Deductions    
Discount and scholarships (104,703) (75,637)
Early payment discounts (55,759) (48,224)
Returns (5,797) (8,234)
Taxes (48,829) (38,697)
PROUNI (95,786) (78,623)
  936,360 804,239
Timing of revenue recognition    
Tuition, digital content and app subscription fees - Transferred over time 914,399 790,149
Other - Transferred at a point in time 21,961 14,090

 

The Company’s revenue from contracts with customers are all in Brazil. The Company is not subject to the payment of the contributions Social Integration Program (Programa de Integração Social, or PIS) and the Social Contribution on Revenue (Contribuição para o Financiamento da Seguridade Social, or COFINS) on the revenue from under graduation degrees under the PROUNI program.

 

The tables below present the statements of income for the Company’s operating segments for the three-month periods ended March 31, 2025 and 2024.

 

  Undergraduate Continuing education Medical practice solutions Elimination (inter-segment transactions) March 31, 2025 (unaudited)
           
Types of services or goods 827,372 71,103 41,684 (3,799) 936,360
Tuition fees 823,828 45,898 - - 869,726
Other 3,544 25,205 41,684 (3,799) 66,634
           
Timing of revenue recognition 827,372 71,103 41,684 (3,799) 936,360
Transferred over time 823,828 53,787 40,583 (3,799) 914,399
Transferred at a point in time 3,544 17,316 1,101 - 21,961

 

  Undergraduate Continuing education Medical practice solutions Elimination (inter-segment transactions) March 31, 2024 (unaudited)
           
Types of services or goods 704,519 65,415 36,573 (2,268) 804,239
Tuition fees 700,875 39,744 - - 740,619
Other 3,644 25,671 36,573 (2,268) 63,620
           
Timing of revenue recognition 704,519 65,415 36,573 (2,268) 804,239
Transferred over time 700,875 56,395 35,147 (2,268) 790,149
Transferred at a point in time 3,644 9,020 1,426 - 14,090
   
 F-30 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

17Costs and expenses by nature

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Payroll (275,876) (260,547)
Hospital and medical agreements (18,636) (23,919)
Depreciation and amortization (91,755) (79,269)
Lease expenses (2,558) (1,331)
Utilities (5,410) (4,146)
Maintenance (31,700) (27,842)
Share-based compensation (6,963) (8,630)
Tax expenses (3,244) (2,558)
Pedagogical services (i) (33,557) (16,611)
Sales and marketing (20,827) (16,278)
Allowance for expected credit losses (16,558) (15,264)
Travel expenses (4,824) (2,606)
Consulting fees (6,333) (10,020)
Other (45,898) (41,647)
  (564,139) (510,668)
Cost of services (282,639) (269,504)
Selling, general and administrative expenses (281,500) (241,164)

 

(i) For the three-month period ended March 31, 2025 the costs related to the practicing physician who provides practical training and supervision to medical students (preceptors) are recognized as Pedagogical services, considering the terms of the contracts.

 

18Finance result

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Income from financial investments 27,551 11,827
Interest received 14,532 12,415
Other 1,398 1,288
Finance income 43,481 25,530
     
Interest expense (76,939) (51,745)
Interest expense on lease liabilities (29,563) (26,744)
Financial discounts (12,536) (7,779)
Bank fees (1,127) (1,530)
Other (18,310) (12,098)
Finance expenses (138,475) (99,896)
     
Net finance result (94,994) (74,366)
   
 F-31 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

 

19Income taxes

 

Income taxes are comprised of taxation over operations in Brazil, related to Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL). According to Brazilian tax legislation, income taxes and social contribution are assessed and paid by legal entity and not on a consolidated basis, except by the requirements of the Pillar Two global minimum tax.

 

Additional social contribution from Organization for Economic Co-operation and Development (“OECD”) Pillar Two global minimum tax

 

On December 27, 2024, Law 15,079/2024 was enacted, establishing the implementation of the OECD’s Pillar Two global minimum tax in Brazil, effective as of January 1, 2025.

 

Law 15,079/2024 aligns the Brazilian tax legislation to the OECD’s Global Anti-Base Erosion (GloBE) rules by introducing a minimum effective taxation of 15% through an additional Social Contribution on Net Profit (“CSLL”). This regulation applies to multinational groups within the scope of the OECD’s GloBE rules, specifically those whose ultimate parent entity reported annual consolidated revenues of at least €750 million in at least two of the four fiscal years immediately preceding the year under review.

 

The rules are designed to ensure that the additional CSLL qualifies as a Qualified Domestic Minimum Top-up Tax (QDMTT) under the OECD Inclusive Framework, subjecting Brazilian entities to a minimum tax rate of 15%.

 

On March 28, 2025, the Company filed a writ of mandamus with the Brazilian Federal Court challenging the enforceability of the newly enacted additional CSLL. The legal proceeding is grounded on constitutional and statutory arguments, and is waiting for court decision to prevent the collection of the additional CSLL, which is scheduled to be required in 2026 with respect to the 2025 fiscal year.

 

The additional income tax expense as a result of Law 15,079/2024 for the three-month period ended March 31, 2025 was R$23,212. The Company has applied the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.

 

Income tax expense

 

The Company calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings, including the effects of the OECD’s Pillar Two global minimum tax, which is applicable for the fiscal year ending December 31, 2025.

   
 F-32 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

The table below presents the reconciliation of income tax expense for the three-month periods ended March 31, 2025 and 2024:

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Income before income taxes 281,818 219,164
Statutory income taxes rate 34% 34%
Income taxes at statutory rate (95,818) (74,516)
Reconciliation adjustments:    
Tax effect on loss from entities not subject to taxation (8,795) (7,961)
PROUNI - Fiscal incentive (i) 131,430 104,113
Unrecognized deferred taxes (38,907) (32,399)
Recognized deferred taxes 7,146 (656)
Presumed profit income tax regime effect (ii) (189) 25
Permanent adjustments (808) (1,499)
Pillar Two - Additional social contribution (23,212) -
Other 4,371 2,028
Income taxes expense (24,782) (10,865)
Current (31,928) (10,865)
Deferred 7,146 -
Effective rate 8.8% 5.0%

 

(i) The Company adhered to PROUNI, established by Law 11,096/2005, which is a federal program that exempts companies of paying income taxes and social contribution upon compliance with certain requirements required by this Law.

(ii) Brazilian tax law establishes that companies that generate gross revenues of up to R$78,000 in the prior fiscal year may calculate income taxes as a percentage of gross revenue, using the presumed profit tax regime. The effect of the presumed profit of certain subsidiaries represents the difference between the taxation based on this method and the amount that would be due based on the statutory rate applied to the taxable profit of the subsidiaries.

 

Deferred income taxes

 

As of March 31, 2025, the Company had accumulated unrecognized deferred income tax assets on temporary differences and tax losses in the amount of R$1,372,592 of tax-basis (December 31, 2024: R$1,432,444) which does not have expectations that could support the recognition of these temporary differences as deferred tax assets. Accordingly, the Company did not recognize deferred tax assets over these amounts.

 

20Legal proceedings and contingencies

 

The provisions related to labor, civil and taxes proceedings whose likelihood of loss is assessed as probable are as follows:

 

  Labor Civil Taxes Total
         
Balances as of January 1, 2024 22,721 21,300 60,340 104,361
Additions 3,324 2,253 12,474 18,051
Reversals (i) (4,996) (336) (14,570) (19,902)
Balances as of March 31, 2024 (unaudited) 21,049 23,217 58,244 102,510
         
Balances as of January 1, 2025 31,455 25,140 56,926 113,521
Additions 5,018 2,393 2,035 9,446
Reversals (i) (1,958) (2,575) (2,835) (7,368)
Balances as of March 31, 2025 (unaudited) 34,515 24,958 56,126 115,599

 

(i) Includes the reversals of provision for legal proceedings with corresponding indemnification asset.

 

The major labor proceedings to which the Company is a party were filed by former employees or outsourced service providers seeking enforcement of labor rights allegedly not provided by the Company. The judicial proceedings relate to employment bonds (judicial proceedings filed by former service providers), overtime, premiums for hazardous workplace conditions, statutory severance, fines for severance payment delays, and compensation for workplace-related accidents.

 

The civil claims to which the Company is a party generally relate to consumer claims, including those related to student complaints.

 

   
 F-33 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  

The tax claims to which the Company is party are mostly tax foreclosures filed by the Brazilian federal and municipal tax authorities.

 

There are other civil, labor and taxes proceedings assessed by Management and its legal counsels as possible risk of loss, for which no provisions are recognized, as follows:

 

  March 31, 2025 December 31, 2024
  (unaudited)  
Labor 36,325 38,097
Civil 50,909 50,667
Taxes 25,495 17,498
  112,729 106,262

 

The Company has judicial deposits, related to taxes, civil and labor proceedings, recorded in other non-current assets in the amount of R$17,437 as of March 31, 2025 (December 31, 2024: R$16,938), presented in Other assets in the statement of financial position.

 

Under the terms of the Share Purchase and Sale Agreements ("Agreements") between the Company and the selling shareholders of the subsidiaries acquired, the Company assesses that the selling shareholders are exclusively responsible for any provisions (including labor, tax and civil), which are or will be the subject of a claim by any third party, arising from the act or fact occurred, by action or omission, prior to or on the closing dates of the acquisitions.

 

Considering that the provisions for legal proceedings recorded by the Company that result from causes arising from events occurring prior to the closing dates of the acquisitions, any liability for the amounts to be disbursed, in case of their effective materialization in loss, belongs exclusively to the selling shareholders. In this context, the Agreements state that the Company and its subsidiaries are indemnified and therefore exempt from any liability related to said contingent liabilities and, therefore, the provision amounts related to such contingencies are presented in the non-current liabilities and the correspondent amount of R$77,031 (December 31, 2024: R$78,701) is presented in non-current other assets.

   
 F-34 
 

Afya Limited

Notes to the unaudited interim condensed consolidated financial statements

Expressed in thousands of Brazilian reais, unless otherwise stated

  
21Non-cash transactions

 

During the three-month periods ended March 31, 2025 and 2024, the Company carried out non-cash transactions which are not reflected in the statements of cash flows. The main non-cash transactions are as follows:

 

  March 31, 2025 March 31, 2024
  (unaudited) (unaudited)
Additions and remeasurements of right-of-use assets and lease liabilities 22,925 37,812
Additions (reversals) of provision for legal proceedings with corresponding indemnification asset, net (1,670) (4,689)
Dividends payable 130,798 -

 

22Subsequent event

 

Acquisition of FUNIC

 

On May 7, 2025, Afya Brazil acquired 100% of the total share capital of Faculdade Masterclass Ltda. (“FUNIC”), located in the city of Contagem, a city in the metropolitan area of Belo Horizonte, the capital of the State of Minas Gerais. The acquisition contributes 60 medical school seats to Afya. FUNIC is pre-operational, with leased real estate prepared for a medical school operation, which is expected to start in the second semester of 2025.

 

The aggregate purchase price is R$100,000, net of the estimated Net Debt deducted from the down payment. The price and payment conditions are: (i) R$60,000, net of the estimated Net Debt, paid in cash on May 7, 2025; and (ii) R$40,000 will be paid in three annual installments adjusted by CDI.

 

Additionally, the acquisition includes a contingent consideration for up to 60 additional medical school seats. If approved by MEC within 36 months from the closing date, it will result in an additional payment of R$1,000 per approved seat.

 

FUNIC is pre-operational and the transaction will result in acquisition of intangible assets of licenses with indefinite useful life, as it does not constitute as a business.

 

 

*****

   
 F-35