Afya Limited

Afya reported Q2 2026 revenue of BRL 972 million, up 6% year over year, and 1H 2026 revenue of BRL 1.985 billion, up 7%. Q2 adjusted EBITDA was BRL 470 million, up 1% YoY, and 1H adjusted EBITDA was BRL 918 million, up 3%, with margins of 41.8% in Q2 and 46.2% in 1H, down 190 bps versus last year in the half-year period. Q2 net income was BRL 201 million, up 14%, and 1H net income was BRL 463 million, up 7%; basic EPS was BRL 2.22 in Q2, up 17%, and BRL 5.10 in 1H, up 9%. Operating cash flow was BRL 806 million in 1H, free cash flow to equity was BRL 423 million, gross debt was BRL 2.4 billion, net debt was BRL 1,394 million, and net debt excluding IFRS 16 was 0.8x midpoint 2026 adjusted EBITDA guidance. Management left full-year adjusted EBITDA guidance at BRL 1.7 billion to BRL 1.8 billion and CapEx guidance at BRL 340 million to BRL 380 million.

Virgílio Gibbon framed the quarter as a solid first-half performance, emphasizing revenue growth, cash generation, and shareholder returns. He said the company is still seeing healthy intake in medicine and strong growth in health programs, while continuing to invest in product, AI features, and engagement across its ecosystem. His tone was confident and disciplined, repeatedly stressing that Afya will keep buying back stock or paying dividends when M&A does not meet return thresholds.

Luis Andre Blanco highlighted that the business remained resilient even as margins came under pressure from continued investment in growth initiatives and the current investment cycle in continued education and medical practice solutions. He cited 1H operating cash flow of BRL 806 million, cash conversion of 87.8%, gross debt of BRL 2.4 billion, average debt duration of 3.7 years, and average debt cost of 15.1% per year. He also said net debt remained roughly flat at BRL 1,394 million despite returning BRL 448 million to shareholders, and noted tax expense should be around 10% for 2026 after a BRL 20 million-ish positive effect from Pillar Two clarifications.

Analysts pressed on second-half pricing and intake, the softness in medical practice solutions, continuing education revenue pressure, the impact of the EnMed injunction, tax rates, and why CapEx should accelerate. Management said medicine pricing is not being cut and intake remains strong, while health programs are running more than 20% above last year at the same point; for medical practice solutions, they pointed to AI-driven competition pressuring Whitebook and said they are investing in features first, expecting revenue recovery later. On capital allocation, they reaffirmed a strict 20% minimum return threshold for M&A and said excess cash will keep being returned via dividends and buybacks if acquisitions do not qualify.