Afya (NASDAQ:AFYA) reported third-quarter revenue growth of 6% and a higher adjusted profit margin, as gains in its undergraduate medical education business helped offset pressure in its continuing education and medical practice solutions segments.
The Brazilian medical education company reported revenue of BRL 985 million for the third quarter of 2026, while adjusted EBITDA rose 9% from a year earlier to BRL 434 million. The adjusted EBITDA margin expanded by 100 basis points to 44%.
For the first nine months of 2026, revenue increased approximately 7% to BRL 2.97 billion, and adjusted EBITDA rose 5% to BRL 1.35 billion. Nine-month net income increased 7% to BRL 634 million, while basic earnings per share climbed 9% to BRL 6.98, which management attributed in part to share repurchases.
Undergraduate Growth Supports Margins
Afya had 3,785 operating medical seats, up more than 5% year over year, and more than 26,000 undergraduate medical students, an increase of 3%. CEO Virgílio Gibbon said the company maintained 100% occupancy across its medical programs in Brazil.
The medical school net average ticket rose 4% to BRL 9,466 in the first nine months. CFO Luis Blanco said undergraduate segment revenue grew more than 7% to BRL 2.64 billion over that period. Medical programs accounted for 85% of the segment’s revenue, while health-related courses represented 93%.
Gibbon said growth in health programs helped improve undergraduate gross margins by spreading fixed costs across more students, increasing students per class and allowing the company to combine some health-related disciplines across programs. He also said Afya had applied a 5.7% increase to gross tuition for next year, although it was too early to assess the first-semester 2027 intake.
The company received authorization on Sept. 18 for 17 additional medical seats at Afya Cruzeiro do Sul, Gibbon said.
Continuing Education Revenue Trails Student Growth
Continuing Education revenue rose 1% to BRL 209 million in the first nine months, while the segment’s total student base grew 10%. Gibbon said faster enrollment growth had not translated proportionally into revenue as more physicians chose shorter, lower-priced courses over longer programs.
Within the segment, the residency preparation student base fell 4% year over year to 9,595, although it increased 4% from the prior quarter. Graduate journey students rose 2% to 9,386, and students in other business-to-professional and business-to-business offerings increased 17% to 36,345, Blanco said.
Medical Practice Solutions revenue was broadly unchanged at BRL 128 million for the nine-month period. Active payers increased 2% to approximately 206,000, including a 20% rise in clinical management active payers to 52,000. Monthly active users reached 219,000, down 4% from a year earlier, although Gibbon said both paying users and monthly active users grew 3% from the previous quarter.
Blanco said the third-quarter margin improvement was driven primarily by higher undergraduate gross margins, partly offset by margin compression in the other two segments as Afya continued investing in them, as well as higher sales and marketing expenses.
Cash Flow and Spending Outlook
Cash flow from operating activities rose 3% to BRL 1.33 billion in the first nine months, with cash conversion of 99.5%. Free cash flow to equity was BRL 629 million, including BRL 206 million generated in the third quarter.
Afya returned BRL 459 million to shareholders through dividends and share repurchases during the nine-month period, Blanco said. Net debt stood at BRL 1.2 billion as of September, down BRL 170 million, while gross debt was BRL 2.5 billion. The company’s average debt duration increased to 3.7 years from 1.9 years a year earlier.
During the question-and-answer session, Blanco said receivables associated with FIES student financing had increased 64% from December, or roughly BRL 90 million. About 22% of medical students used FIES as of the third quarter, and Afya does not expect that proportion to increase, he said. Gibbon also cited a later schedule for contract amendments and renewals.
Blanco said capital spending was below the company’s expectations for the period, but management still expected to meet its full-year capital expenditure guidance of BRL 340 million to BRL 380 million. He said Afya would provide 2027 guidance when it releases full-year 2026 results in March.
Asked about the ENAMED medical exam, Gibbon said Afya had not received preliminary results from Brazil’s Ministry of Education. Its internal assessment indicated that its students’ simple average was 18 percentage points above the previous exam, but he cautioned that the estimate did not compare Afya students with the entire Brazilian student population. Results were expected in December.
About Afya (NASDAQ:AFYA)
Afya Limited is a Brazilian medical education and digital health company. Its education business offers undergraduate medical degree programs, medical residency preparation, postgraduate courses and continuing education for health professionals. The company also provides digital tools and services for medical students and practicing physicians, including clinical reference, practice-management and learning resources. These offerings support professionals at different stages of their medical careers.
