Afya (1AY) Q2 2026 Earnings Report

The call presented a predominately positive operational and financial picture: revenue, net income, EPS, cash flow and several unit-growth metrics (medical seats, students, clinical management payers) all improved year-over-year. However, near-term margin pressure driven by an investment cycle, a mix-driven slowdown in continued education revenue despite strong student growth, engagement softness in some product lines (Whitebook monthly users) and a relatively high cost of debt introduce tangible execution and timing risks. On balance the company shows resilient cash generation, conservative leverage and active capital returns while investing for future growth.

Management maintained full‑year adjusted EBITDA guidance of BRL 1.7–1.8 billion (H1 adjusted EBITDA BRL 918m; Q2 BRL 470m), with H1 revenue BRL 1.985 billion (up 7% YoY) and Q2 revenue BRL 972m (up 6%); CapEx guidance remains BRL 340–380m (H1 spent ~30% of guidance, with acceleration expected in H2); they expect an effective tax rate around 10% for 2026 after a ~BRL 20m Pillar Two benefit. Balance‑sheet and cash metrics supporting the guidance include net debt BRL 1,394m (net debt/EBITDA ex‑IFRS16 0.8x), gross debt BRL 2.4bn with average cost 15.1% and duration 3.7 years, operating cash flow BRL 806m (up 3% YoY) and H1 free cash flow to equity BRL 423m; capital returned to shareholders totaled BRL 448m in H1 (106% of FCFE), including BRL 307m in Q2 dividends (40% of 2025 net income) and 2.6m shares repurchased of a 4m program (1.4m remaining). Management reiterated targeted outcomes for continuing education (high single‑digit growth in H2), a disciplined M&A threshold (minimum ~20% unlevered IRR), and the aim to maintain conservative leverage while executing product and investment initiatives.