Afya Limited Q2 2026 Earnings Call Summary

Moby Intelligence

Fri, August 14, 2026 at 3:30 PM GMT+3 3 min read

Afya Limited Q2 2026 Earnings Call Summary - Moby

Operational Performance and Strategic Drivers

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Revenue growth of 7% year-over-year was primarily driven by favorable pricing trends in medical courses and a 13% expansion in the health science student base.
Adjusted EBITDA margin contracted by 190 basis points to 46.2%, reflecting a planned investment cycle in sales and marketing for continued education and medical practice solutions.
The medical student base grew to over 26,000 students, supported by a 6% increase in operating seats and a 4% rise in net average tickets.
Continued education saw a 23% expansion in the student base, though revenue growth was moderated by a shift toward short-term programs with lower average tickets.
Medical practice solutions experienced a 20% increase in clinical management active payers, partially offset by competitive pressures from AI tools impacting the Whitebook user base.
Management emphasized a disciplined capital allocation strategy, returning 106% of free cash flow to equity through dividends and share repurchases in the first half of 2026.

Strategic Outlook and Guidance Assumptions

Management reaffirmed full-year 2026 adjusted EBITDA guidance of BRL 1.7 billion to BRL 1.8 billion, assuming continued execution across all three business segments.
Organic volume growth in health programs is expected to exceed 18% for the second half of the year based on strong early intake trends.
CapEx is projected to accelerate in the second half to meet the full-year guidance of BRL 340 million to BRL 380 million, focusing heavily on intangible assets and product features.
The effective tax rate for 2026 is anticipated to be approximately 10%, following clarifications on Pillar Two regulations that reduced previous provision requirements.
Strategic focus remains on embedding AI and clinical decision support features into the iClinic platform to drive long-term physician engagement and revenue recovery.

Regulatory and Structural Dynamics

A recent court injunction suspended EnMed restrictions, allowing the return of prohibited seats, though timing constraints in the intake cycle may limit immediate impact.
The company recognized a positive tax effect of approximately BRL 20 million due to lower-than-expected Pillar Two disbursements compared to initial 2025 provisions.
Average debt duration was successfully extended from 1.9 years to 3.7 years, maintaining a conservative leverage profile of 0.8x net debt to EBITDA.
M&A activity remains contingent on meeting a minimum nominal unleveraged IRR threshold of 20%, with capital returned to shareholders in the absence of qualifying targets.

Q&A Session Highlights

Competitive intake and pricing power for the second half

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Management aims for 100% occupancy in medical seats and noted that pricing for the second half remains stable without additional discounts.
Health sector programs are seeing strong organic volume growth, currently trending more than 20% above the prior year's period.

Impact of AI competition on medical practice solutions

Active payer pressure in the Whitebook product is attributed to competition from AI tools, prompting a strategy to bundle more functionalities and reduce individual tickets.
Growth in the iClinic management system is positive but currently insufficient to fully offset the decline in solo clinical decision users.

Capital allocation balance between M&A and dividends

Afya maintains a robust M&A pipeline but will prioritize share buybacks and dividends if potential acquisitions do not meet the 20% IRR threshold.
The company has 1.4 million shares remaining in its current buyback authorization to be performed by year-end.

Regulatory clarity regarding EnMed and seat fulfillment

While the injunction allows seat fulfillment, management noted that the late timing of the decision relative to the ProUni and FIES cycles means some seats will remain unfulfilled.
New EnMed results expected in December 2026 will dictate the regulatory framework for the 2027 intake cycle.