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Afya (AFYA) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 13, 2026

Source: earnings call transcript

Executive summary

Afya Q2 FY26 — Solid H1 Performance Driven by Medical Education Growth and Shareholder Returns

Afya delivered solid first-half 2026 results, driven by strong medical education growth and a commitment to shareholder returns, with BRL 448 million returned to shareholders. While adjusted EBITDA margins faced pressure from strategic investments in continued education and medical practice solutions, the company maintained healthy profitability and strong cash generation, enabling both internal product enhancements and capital returns.

Highlights

5

  • Revenue grew 7% year-over-year to BRL 1.985 billion for H1 2026.

  • Net income increased 7% year-over-year to BRL 463 million for H1 2026.

  • Basic EPS climbed 9% year-over-year to BRL 5.10 for H1 2026.

  • BRL 448 million was returned to shareholders in H1 2026, representing 106% of free cash flow to equity.

  • Undergraduate medical student base grew 3% to over 26,000 students, with net average ticket up almost 4% to BRL 9,443.

Concerns

4

  • Adjusted EBITDA margin contracted 190 basis points year-over-year to 46.2% for H1 2026 due to lower gross profit from continued education and higher sales & marketing expenses.

  • Medical Practice Solutions B2B revenue declined 25% year-over-year in H1 2026.

  • Monthly active users in Medical Practice Solutions decreased 8% year-over-year to 212,000.

  • Competitive pressure from AI tools impacted active payers in Medical Practice Solutions, leading to reduced ticket prices.

Guidance & targets

CategoryTargetConfidence
Adjusted EBITDA
BRL 1.7 billion - BRL 1.8 billion
high materiality
High
Capital expenditure
BRL 340 million - BRL 380 million
medium materiality
High
Effective tax rate
around 10%
low materiality
Medium
Continued Education revenue growth
close to a high 1-digit growth
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Undergraduate
Revenue for the undergraduate segment in H1 2026. 85% of this revenue comes from medical programs and 93% from health-related courses. Health science courses delivered 13% growth.
Medical student base: >26,000 studentsMedical student base growth: 3% YoYOperating medical school seats: 3,768Operating medical school seats growth: >6% YoYMedical school net average ticket: BRL 9,443Medical school net average ticket growth: almost 4% YoYRevenue from medical programs: 85%Revenue from health-related courses: 93%Health science course growth: 13%
BRL 1,762 million>7%——
Continued Education
Revenue for the Continued Education segment in H1 2026. The segment experienced a lower revenue growth rhythm due to a different product mix with more lower-duration, lower-ticket programs, impacting Q2 which also faces seasonality. Management provided conflicting figures for H1 2026 B2B revenue growth, stating 8% YoY growth in prepared remarks by Virgilio Gibbon, and later a 25% YoY decline by Luis Blanco, tied to BRL 9 million in revenue.
Total student base growth: 23% (H1 2026)Residency journey students: 9,244Graduate journey students: 10,213Graduate journey students growth: 13%Other B2P and B2B students: 36,780Other B2P and B2B students growth: 35% YoYB2P revenue: BRL 135 million (H1 2026)B2P revenue growth: 8% YoYB2P revenue % of segment: 94%B2B revenue: BRL 9 million (H1 2026)B2B revenue growth: -25% YoY (H1 2026)
BRL 144 million5%——
Medical Practice Solutions
Revenue for the Medical Practice Solutions segment in H1 2026. The segment saw pushbacks in active payers due to competition from AI tools, leading to reduced ticket prices. Clinical management systems (iClinic) are growing faster, but not enough to offset declines in other areas like Whitebook.
Total active payers: ~201,000Clinical management active payers: >50,000Clinical management active payers growth: 20%Monthly active users: 212,000Monthly active users growth: -8% YoYB2B revenue growth (H1 2026): 5% YoYB2P growth (semester by semester): 1.1%
BRL 85 million2%——

Risks & headwinds

Adjusted EBITDA margin contraction due to investment cycle H1 2026

190 bps contraction in H1 2026 Adjusted EBITDA margin

Mitigation:Strategic investments in continued education and medical practice solutions to drive future growth and audience expansion.

Competitive pressure from AI tools in Medical Practice Solutions Current

8% YoY decrease in Monthly Active Users; B2B revenue declined 25% YoY in H1 2026; reduced ticket prices

Mitigation:Increasing functionalities, embedding AI features, and improving physician engagement in solutions like iClinic and Whitebook; focusing on audience growth first, then revenue recovery.

Seasonality and product mix impact on Continued Education revenue growth Q2 2026

Lower rhythm of revenue growth in Q2 2026 due to product mix with lower duration/ticket programs

Mitigation:Expects to maintain close to high single-digit growth for H2 2026 and meet full-year guidance.

What to watch in Q3 FY26

Continued Education revenue growth

H2 FY26
Current 5% YoY (H1 2026), lower rhythm in Q2 due to product mix
Target Close to high 1-digit growth for H2

Why it matters

Indicates whether strategic investments and product mix adjustments are stabilizing growth in this segment.

Having said that, we are seeing -- keeping at least close to a high 1-digit growth for the second half here.

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Q&A highlights

Asked about H2 intake, pricing capacity, and details on MPS revenue decline and expected return on investment.

Management expects 100% occupancy for H2 intake, no price changes for medicine programs, and strong health sector intake (20% above last year). MPS saw pushbacks due to AI competition, leading to reduced ticket prices but increased functionalities. Clinical management (iClinic) is growing faster, but not enough to offset Whitebook decline. Investments are ongoing to increase functionalities and audience.

“we are growing organically more than 18% in volume in health we're expecting to be above that for the second half.”

asked by Marcelo Santos · answered by Virgilio Deloy Gibbon

2 min read 5 chapters

Detailed narrative

Strategic Focus on Medical Education

Afya continues to solidify its leadership in medical education, with 85% of undergraduate revenue derived from medical programs and 93% from health-related courses. The company's health science course portfolio demonstrated robust growth of 13%, contributing to the diversification of its health-related undergraduate offerings and reinforcing its strategic market position.

Investment Cycle in Continued Education and MPS

The company is actively engaged in an investment cycle across its continued education and medical practice solutions segments. This involves increased sales and marketing expenses and a significant acceleration in intangible capital expenditures, aimed at enhancing product functionalities, integrating AI features, and improving physician engagement within its solutions. These investments are expected to drive future revenue recovery and audience growth.

Disciplined Capital Allocation Framework

Afya maintains a rigorous capital allocation framework, prioritizing shareholder returns when potential M&A opportunities do not meet its minimum 20% nominal unlevered internal rate of return (IRR) threshold. This disciplined approach resulted in returning BRL 448 million to shareholders in the first half of 2026, exceeding 100% of its free cash flow to equity, while maintaining a conservative net debt to EBITDA ratio of 0.8x.

Impact of EnMed Injunction

A recent injunction suspended previous EnMed restrictions, allowing institutions to fill previously prohibited medical seats. However, due to the advanced stage of the intake process and timing constraints, some of these additional seats will remain unfulfilled, resulting in no material positive or negative impact on H2 2026 results. The injunction specifically addresses results from the prior year, with new EnMed results expected in December 2026 to inform the 2027 intake cycle.

Taxation Clarifications and Outlook

New clarifications under Pillar Two regulations led to a positive impact of approximately BRL 20 million on tax provisions in H1 2026, reducing the amount disbursed for 2025 taxes. The company anticipates an effective tax rate of around 10% for the full year 2026, consistent with the prior year, reflecting the evolving regulatory landscape.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.