Afya Limited (AFYA) Earnings Call Transcript

Good morning and welcome to Afya Day. This is our six edition since our IPO. This is a very special edition, and we are very excited. I think it's going to be really cool that you're going to learn more about the moment we're going through. Let's start. So the theme of today's Afya Day is strengthening the core and expanding opportunity. The idea this is the first half days since our possible merger with do. And our agenda is really cool. Our first panel will be with Virgilio. We're going to talk a little bit about Afya's thesis. And more than that, we're going to talk about the possible merger, and how we are thinking about the integration. The second talk will be with Blanco, and how we're going to generate value to our shareholders, and how we can return our -- the value to our shareholders. And finally, Lelio will close with our digital services and the continuing education for doctors. When we finish these panels, we're going to have a Q&A session up here in the front. And later, we're going to have a Q&A moment add to your tables, during lunch, exclusive to investors. We are going to explain how we're going to run it, and then we're going to move on to our close up. So we're going to start now. We're going to show you our new IR website. We are launching it today. It's still -- it's already aired. It has changed a lot. So it's -- the experience is friendly, and it's better for you, especially if you want to get information from our financial history and further documents. But the coolest news is that it has an AI assistant. So you can seek information quite speedily in our website. So we will be waiting for your feedback and tell us if we can have any further improvement, but the idea is to facilitate how information reaches our investors and shareholders. So to start our Afya Day, I'm going to invite Virgilio Gibbon, our CEO.

Good morning, everyone. Welcome to our 2026 Afya Day. It's a great joy. It's a great pride from our side to talk about our history. And today, this is an even more special day because we managed to join our Afya Day, our chat with stakeholders with our news from 2026, we have executives from all over Brazil and from other parts of the world to talk about the transformation and the planning after the announcement of our intention to merge with Yduqs and our ecosystem challenges that is our great business. So you are very, very welcome, and it's a great joy to be here with you today. I'm going to do a brief recap of our last 6 years, especially when you started to follow up with us when we went public in 2019, but we are the only globally known ecosystem that is integrated for professionals in health and medical areas that generates values to medical education and everyday routines, connecting doctors to industry, leveraging income, bringing more patients and generating a ton of differentials, especially when we talk about our underground studies and our continuing education. So we have here a 3-minute footage to show how this ecosystem is becoming a greater purpose that connects almost 10,000 collaborators and several doctors. [Presentation]

How do we join this ecosystem with several solutions and services and captures the purpose that connects the almost 10,000 collaborators of the company today. There is no doubt that if we did not have this purpose within the 1,700 doctors, now 3,500 collaborators and 70,000 doctors doing continued education. If you pay attention to this number, we have more doctors doing some kind of specialization that the entire resident system in the country. So please watch our responsibility. We have 26,000 graduating students in medicine. Today, 307 spots. And this will lead us to form more doctors than many of the northern states in Brazil. So we are talking about 300,000 doctors as users, and we have a system that we reach directly over 1,500 doctors through our solutions and capillarity. If we multiply that by the number of patients that are directly or indirectly impacted, it will show you the impact that we have been causing inside our company and yet generating spectacular returns to our students, our doctors and our stakeholders. And we have built this strong foundation for this ecosystem, but with lots of performance and dedication and effort. I would like to show you some numbers. Since 2019, we have -- when we went public, we had an operation in 7 states in 2019, and we expanded to almost the entire domestic territory with operating in over 20 states. We had 1,200 spots in medicine, and we have reached 3,800 spots. Our revenue, it was BRL 670 million to something mix to BRL 3.8 billion. If we can multiply by 5 or 6, depending on the line of our balance in the past 5 or 6 years. When we talk about undergraduate revenue, we left from 0.6 to 3.4 in revenue. And today, we left our adjusted EBITDA from 0.3 to 1.7. We always said that Afya had a tripod on -- there was resilient and predictable with high growth with yields and handing over 40% margin, keeping our efficiency, having all our ecosystem that has and never seen resilience to our doctors. But none of that would have been possible if we had not this obsessive focus on working on differentials and quality. This is an example from 2026. We have reached academically 9 [indiscernible] are credited -- accreditations. And we are seeking this accreditation to all our institutions. It's just a matter of time. We need to have the entire accreditation method being carried out. We also -- this accreditation will have our students accepted all over the world. So this accreditation for [indiscernible] is key. We have invested in the past 12 months, over BRL 100 million in physical infrastructure. So we have rooms, we have labs, we have clinics. We have practical simulation in our units. When we talk about research, research environment today, Afya is the company that publishes more scientific papers in Brazil. We have 4,500 papers with over 90% in medical area. We have international papers with 333 articles within the A1 and A2 classification. This in 2025 comparing to 2023 when we have increased 6.4 our production. And so we try to work with this resilience, keeping our occupation and keeping our schools attractive and having 100% of our occupation. I know that throughout this year, we had some people taking part in our third Afya Summit when we show our chain of value, the value of how we connect industries, patients, students, doctors, our CVCs that generate value in our flying wheel of Afya, and Lelie will comment on that. But many of those with over 1,000 doctors and representatives of the industry being connected within our ecosystem. We have over 200 active contract, either schools or educational programs, providers, pharmaceuticals, hospitals. They are consuming Afya somehow, either by continuing education, access to doctors or more attractiveness to jobs or helping us with an education process within our medical schools. So we connect people, we increase our engagement. And today, over almost 600 partnerships with health care and government in reaching our practice in the graduate and in continued education. And we have a ton of impact in -- especially in needy communities. Recently, maybe in the last 18 months, we do write in, in our AI program. And we are launching this new curriculum called AI First. That is our students if they joined us through any entrance program. We know what kind of individual is studying with us. We do all assessments. We build this development plan according to their soft and hard skills gaps, and we follow up on with them, and we build their learning process, their knowledge with real situations. It's basically creating an avatar that will grow on with the student that interacts with our digital solutions and offers an educational experience even 5, 10 years after graduation. Let's say, they joined the iClinic, and then they have a patients spending in front of them, they are having an infarction, and then they will revisit the protocols based on the objects that are set in our articles in our AI. We don't do that only just to education and decision-making, but also to help educating our students by creating medical cases, all based on AI to do a better decision-making process. We have tons of benefit and efficiency that we always look at the Afya Play that is available for free with over 5,000 objects generated were created in the release daily for the set our students consuming their direct way, and we train over 10,000 physicians in AI courses, free courses or premium courses and some were paid for and increasing our ecosystem as well tools to support each field is not only GPT based, but tends to have the the way of talking and dealing after in a new curriculum, not only integrated with the best technologies, but creating an avatar, who is a physician or students and will follow the whole journey. And it's not only about quality or results. if we don't fulfill our social role, something that made me very glad work in 2023 that we are updating 2026 is the [ S ROID, ] R-O-I-D, the social return on the investments in 2023. We measure 20 of our units taking the municipal that we got control municipals to have a payback to society with a method launched by an independent consultant. For reducing hospitalizations in the public network, increase of vaccination for children and was quantified in reduction in expenses and benefits for social aspect. And to each investment of [ Afya, ] it is bringing benefits for [indiscernible]. And the new study we go from 20 medical schools up to 24, 3 municipalities covered being impacted by our units. These are the indicators, the metrics that help us to make tangible where Afya is present, has its footprint. We have 564,000 medium [indiscernible] municipalities. Almost 100 specialties in land, in the rural areas, is not only the lack of a consultation, but in specialties. And we have this in our unit. It's 15 different specialties. So in the rate is over 500,000 kilometers is an expertise that is saving lives and those [indiscernible], this is nothing by chance, it increases quality, reputation, social impact and brings a financial return. And due to this impact, we were able to have a finance from the World Bank with some social covenants that -- and we reach them and reducing over 15 bps for our costs at each measurement. High impact on acting us with the cities that we are present. So for the last 6 years, an amazing spectacular delivery always providing guidance to the market, always overcoming the target. We have done 21 acquisitions since our IPO and now what about the next 10 years, the market has changed. There are tons of differentiations, passionate team, always delivering and overcoming the guidance, how do we grow and deliver and add value for the next 10 years, the market has increased in competition, regulation uncertainties that we've seen for the last 2, 3 years. 7,000 to 8,000 seats in medical schools that we have tried to fight against. 100% of our occupation. We have reached maturity, delivering dividends and repurchases for the shareholders, but how do we provide growth. If in -- the educational sector is reading in the lowest figures that we know so far. And why, that's the question because it makes sense for us to assemble this platform, that's totally fully differentiated in our ecosystem. So we are gathering ecosystem, a full health ecosystem, also higher education within capillarity. There is no match in the country that prepares us for the next 3 years. But to unlock the growth for the next years of the combined company. So talking about the combined company, Afya, currently has BRL 3.8 billion in revenue. And we are about BRL 10 billion company, but more than that, the medical seats, we have this amount of seat, and we have 3.8000 sic [ 38,000 ] medical seats. So we have multiples that we have so accretive capital allocation. In terms of the acquisitions, Blanco will show in his presentation. We have an average of transactions since the IPO, multiples 4 to 6x. This is the average after all the synergy. This will overcome all records in terms of attractiveness of capital allocation for our investor, a company that will generate BRL 1.2 billion in cash that we have this commitment of distributing 50% of this amount to our shareholder and reaches 38,000 medical students, but more than a besides the synergies, it is how we lock growth within this new player that we are combined into a business that is still premium business. 50% of our revenue education -- medical education, the IPEMED that is a platform that I will mention later on, and over 66% of our operational results in cash -- in cash generation from a resilient predictable business with higher complementary. And the higher player in medical education, a ton of synergy in a way ahead of [indiscernible] less risky synergies. But what are these growth avenues, I will tackle for new points that weren't here. First, our health ecosystem. Afya was reaching over 95% of [indiscernible], so adding to Yquds have some opportunity to increase the frequency creating 10% to 15% more in volume. So it's almost base or will make it mature, and we'll make grow our medical base validation. Those that follow us are the two [indiscernible]. So you can see among these cohorts is the greatest organic leverage because during the pandemic, we grew a lot in medical education. But we saw that our medical course will reach [indiscernible]. It's a regulated market. We don't know what will place to more in terms of capital allocation will provide opportunities. So under Afya brand, all the full health portfolio. And this fits perfectly in our operations, a lot of strategic, meaning especially in the small, medium size cities, where Afya brand and the physician that region is part of and all other medical professions or health profession want to be part of this situation. So we are maturing the operations with the average ticket above any competitors in terms of on-site medical classes. This is when you check in to [indiscernible], this is a strong brand in good areas to work with this part opportunity and expand it the same way in lifelong learning. We are in 25 cities. Our supply in [indiscernible] and extending a continued education. This lifelong learning it takes place in the weekend, so we can expand with installed capacity, not only GMA optimization, but create more capillarity. And within the Yquds, in the second greatest player already has a big print, not only with medical schools, with partners, clinics and hospitals and users that will be benefited by our digital solution Medical Practice Solution with more audience monetization channels and more added value to the industry. The second leverage is IPEMED. It's a fantastic brand in the Southeast region with the perfect acknowledgment of [indiscernible], but not so much explored in very needy regions, north, northeast, we are expanding to [indiscernible]. It's a capital city with a lot of opportunities to grow. So we will accelerate due to our northeast, southeast would bring and to gain agility, but we'll serve for the lifelong running, health managed, how to gather forces for [indiscernible] dedicated for management. Connecting to the third point. If we check the superior education platforms, [indiscernible] aspects compared to on-site education. Brazil has the greatest incentives in the planet to have a university or the level of education. And if we see the other countries in Latin America, and on the other hand, the greatest [ had ] in wages or salaries if compared to those that only have the secondary level education. So like I said, 24% versus 48% of ECD. So what's the dream [indiscernible] to have a post-grad diploma at IPEMED. So we have this structure for digital feature, and this makes sense to reinforce our muscles with this footprint that only could bring to us. And most of that is a lot the fourth line for the last 3, 4 years, we were very narrow looking, the assets that we were looking for medicine -- medical education 67% of the revenue at that institution. The place that could be a better capital allocation, we have more efficiency, but we did have the muscle or a platform that would help us to get this energy of this distant education with the diversity of courses. So in this combined company, we really become a play with a strong balance sheet, a strong currency and a very big footprint to extract value and to consolidate after the consolidation of this new company. As such, we have the synergies. Well, here it is. No. Apologies either me or you, one more slide, that it is. When we chose to make sense is kind of a transaction or trade or have the player before any discussion of price or trade, really a great learner with [indiscernible], but let's know not go into a commercial discussion. We don't see the size of synergies. And we see it in this merge. We have an international consultancy firm to help the consolidation team. We have one, taking all the relevant contracts at each side. We do the cost driver for each contract for the best benchmark, assess everything that can extract value from either company. So based in this study that took 3 months validated with the C level from each company, and we reached a synergy of expenses, costs and CapEx, that is [ 2 to 2.2B. ] We are talking about 20%, 25% of market cap and 80% of synergies that will be captured in 3 years. Well, okay. But we have the synergy and this is complex. That's why we looked into [ Yqdus. ] I start my C executive path at -- in education at Yqdus. I really admire all the work and the professionals. It may be a 5 of you that got to C level and to that also -- can you raise your hand? This was not the rehearsal, 1, 2, 3, 4 people at C level and 30 to 40 executives that were brought and worked at the other side, admire our house. So we know the platform, the architecture, the systems in a precondition. We have governance. We have the same controller. We have definitive leadership and a way to go ahead to deliver it's not to be easy. And then there it will be [indiscernible] that I want to introduce to you. It's with us since 2019 since the IPO, went through different departments with very present for corporate service and also a partner in the system of shared services and also the rollout [ partners ] to all the units and then came to take care of our shared system. And now he goes to accounting new education that he knows in depth and was my partner who [indiscernible] that help to deploy the system and the shared systems at Yqdus. So then he will be our leader integration. Tell us what you can, how you're doing, how you're planning this integration. So how you strike [ 2 or 2.2B? ]

Well, good morning, everyone. Please be very welcome to Rio. Today is a little sadder because it's raining. We were hoping to welcome you with a beautiful day. Rio besides being my home talent, since yesterday, it's also the headquarters of the clean team. The transaction is subject to preceding conditions. We have some government approval needed, and it has -- everything has to do with the planning of what we will be able to do after we get the approval. Well, I am Dennis, as Virgilio mentioned, I've been at Afya for 7 years. In these 7 years, 3.5 as service management and besides my people team, I would work with shared services from IT, corporate IT and I help to create the integration machine that Luis Blanco will also mention. We have reached a level of excellence in integration. And I had this role until the arrival of my partner, [ Merella. ] And with her arrival she took this management seat, and I started using with the BU of continuing education 3 plus 5 years. Later, I have -- I had the invitation to be integration officer and up to this moment, the BU for medical practice and continuing education has been subject to a debate of integration, and it will be under Lelio's leadership. He will talk about it later. So where are we in this transaction. Everybody will remember the proposal of matching the businesses that were approved by both councils at the end of September. And following up, we started mobilizing consultancies and legal teams. And that was end of September, beginning of October. And this transaction has some preceding conditions and maybe the most important one are two components. First is that this transaction is still -- it still depends on the approval by the Board of Directors of both companies. So by the beginning of October, we invited the assemblies, and it should take place by the end of November, beginning of December. Once it's been approved by both Board of Directors, we should have the [indiscernible] assessment. And it's important to mention that in such a transaction, we need to go through the due process with the antitrust assessment. And with that, we expect that it should last from 9 to 11 months. We are talking about June by 9 months and latest August. So from now to August, there are several restrictions to sharing sensible data. Both companies need to keep on operating as separate companies, independent companies and especially as competitors. They are still competitive throughout this period. What's the legislation that allows and this period is the setting a clean team. And this clean team given certain conditions of the antitrust protocol, this clean team can start working on the planning of this integration. So basically, what is the role of this clean team that we have set up since yesterday. So this team has been established, protocols have been signed. And this team has one role right now, to plan how we are going to organize the systems, the processes, the products of this combined company, and how they are going to work since the one between first day and day 100. And what can we do immediately in terms of capture of synergies. What we must do over the first 100 days. And that's referring to integration of systems, change of systems, and this may take a little longer for our capture. So at the end of the day, the greatest role of the clean team is planning to set up a plan so that on day 1, everybody needs -- knows what they need to do. So Virgilio here mentioned briefly, and it's quite clear to us, both for the team as the management team and my partners and so on, it is quite clear that there is a certain skepticism from the market about the publishing of synergies. We have had some recent history of processes that failed in capturing published synergies. And besides governance, as mentioned, maybe for me, what is the main point, quite differently from those transactions we've seen here, we have a very clear governance. We have a great controller. We have a controlling group that involves the current Afya controllers plus reference Yqdus shareholders. We have a solid shareholder agreement. It is clear that the company will be led by Virgilio as when the process is over. So Virgilio will be the CEO. The role of the Yqdus CEO in the new company has also been set. So the issue on how much we have evolved in government keeps our team at peace while planning the execution for the future. But not only that, also the companies have decided to separate the time of very senior executives. So the teams the teams that were set for focal points and for the clean team, we're talking about 95% of executive reporting directly to C-level executives. So we have people with great talent and history in the company. And the third point, just as important, the decision of the company to do that the team dedicated to clean team have exclusive dedication to the planning. We are talking about 12 people, 13 counting me that are far from there every set aside from their everyday operations to work 100% in planning this integration. And how are we organizing this team? For each of those pillars that you see here, this is the structure of the exclusive clean team. We always have a pair, one executive from [indiscernible], one from Afya. Once again, executives that have left their previous positions and are here to roll out the plan. So on the side, we have a team responsible for master plan. So this is the planning of all activities that need to take place, to day 1 -- from the day 1 to day 100 and so on. The second group that is value capture that is responsible, let's say, to operate the business plan. So we have a designed business plan with synergies that have been mapped. The idea here is to detail the synergies, but we also need to inserts input all those actions into the master plan. Then we have two structures here that are more dedicated to people and talent. The first one more focused on organization. So how the company is going to work, how the organization is going to be from day 1 and issues related to compensation and benefits and union relations. This is on pillar #3. Pillar #4, maybe we're going to have the most strategic asset. Here, we are working heavily on culture, change management, but mainly on talent management. We are going to ensure that our greatest talent are mapped on both sides and in the new organization, we have room for our best talents in their best roles. And we closed with two pillars that I call market architecture. So here, we have anticipated how the academic architecture is going to be. So we have two different ways of working medicine, and these teams in a clean team regime with exclusive dedication, they are going to work with the academic architecture ahead with health, remote learning medicine courses. And the last module, we are talking about IT architecture. So what systems remain in each area and what we need to have in our master plan to get there. Well, guys, at the end of the day, Virgilio talked a lot about the credits of this transaction. It is quite clear what needs to be captured, but the difference between us winning or losing this game depends on discipline. In this first stage, discipline on the organization on planning, designing and architecture, and then after [ deal ] 1 discipline on executing this master plan. And here, I have no question in my mind that we have the greatest team set up. We are talking about -- I'm speaking on behalf of the team of 12 that are with me and the other teams, that are the focal point, and I am sure that we are going to do this incredible integration case. These were my comments. We talked a lot about integration and to keep on working with our agenda, I would like to invite my partner, CFO from Afya, Luis Andre Blanco to talk about M&A and capital.

Thank you, Dennis. Welcome, everyone, for our very dear 6 half year day. I'm also from Rio. We have three key office that have been on the stage, and it's great that it takes place here in Rio. It's great to share with you a little bit of our consistency and discipline. So to start talking about our consistency, just looking at the past, how we have behaved on delivering results. So to the left, we have our history starting in 2021, up to 2026, our EBITDA and revenue history we have a 21% in revenue and 22% EBITDA was quite a solid delivery. And as Virgilio mentioned, and we have always delivered over 6 or 7 years since our IPO, all the guidances that we promised the market. On this consistency, in revenue and EBITDA also translates into an FCFE consistency. Here, we have set in our history, and we calculated the simplest way possible from the variation from liquid debt associated to all shareholders' returns in M&As that were taken -- that took place over the period. So we have this history, and we talk about this free cash flow and equity allocation that I want to go over with you. Where do we allocate this free cash flow equity. We like to think about this allocation as something here that we look at basically will this picture of 2021 until the 2Q 2026. As I mentioned before, we had [ BRL 3.1 billion, ] and we returned to our shareholders [ BRL 1.1 billion ] between repurchase and dividends, same bar, and we have had acquisitions that have less to BRL 3.2 billion. I'm going to comment on that in the next slide. And to conclude, we have had 1.2 liquid debt, and we closed the second quarter of 0.8x. So this is a very low leverage and very low cost. So thinking of this allocation that we have, we can divide those basically in the boxes. Our shareholder returns, dividends and buybacks. It's second one, our inorganic M&A growth and also what we have done with our expansion CapEx. So these three boxes are the main goals of my slides here. And to convey to you how we think and how each of these items, and how we allocate the cash generation bringing results to the company. Starting with shareholder returns. If we look at our history, also from 2021 to 2026, after has returned to you, shareholders, 36% of our free cash flow equity over the period. Depending on the period, we had more dividends and -- or a little less dividends. And then also depending on the period, we have a great participation in buybacks, then dividends? And how do we think about it? The return to shareholders is done from the moment. We feel comfortable with our leverage. And when we have a greater return to generate cash to the company. So every time we find this [indiscernible] of adequate leverage along with the opportunity to allocate in investments, organic or inorganic, we return it to the shareholder. But then you asked how do you debate between -- how do you decide between dividends and buyback. We decide from the price of dividends and buybacks, we have our overview, and we allocate by buyback or dividend according to the share price to avoid buybacks. I would like to highlight also on the slide that in the past 6 months, of our first semester, we returned to our shareholders 106%. And we also ended the period with 0.8 leverage of debt over EBITDA. Following up on that, our greatest decision here on capital allocation was M&A. And M&A, if I look at the picture since the IPO, we have executed 22 M&As over the time and 11 were in the graduation system and also SPM, in graduation, these 11 deals represented [ BRL 4.1 billion. ] We always said that our M&A after synergy, they were between 4 to 4.6 EBITDA, but the average was evaluated 4.6 million at the total of almost 22,000 seats purchased over the period. And all these M&As were run as Dennis mentioned, with a consistency and -- with great consistency and discipline. We are very consistent in our evaluations. We do not do the math, just a simple math is so much per seat. It's always cash flow and thinking on the tier and the nominal tier must be unleveraged. So when we take a picture of this -- of these deals in this year, we took a picture of the last 3, which is -- when you don't [indiscernible], we had this hurdle over 20%. And that we sought in terms of leverage. In these 3 specific deals, we generated and added value on our EBITDA of 12.7% in the year of the transaction. So this is quite a positive result of this capital allocation. But just not only that, we also invested in 11 deals of digital or tax, continuing education, so on allocating BRL 0.5 billion with a 4.1x EV over sales. There were 8 acquisitions and 3 on education mergers. And why am I highlighting this point here? Because these acquisitions, they created a new segment. We had two segments until 2021 and from 2021 with the arrival of PEBMED and iClinic, which is a segment led by Lelio, which is a medical practice, and we build a ton of reputation along with the doctors. We serve more than 1/3 of the doctors in the country. We provide support to thousands of appointments of prescriptions every day. And this builds credibility along with the medical community that this is not just marketing -- no marketing expense will set this off. We're expanding every day, increasing the assertiveness of medical decisions, increasing their productivity and making them make more money because the doctor trusts our solutions either through the clinical side or productive and [indiscernible] they will exercise their profession, and this is priceless. And this builds credibility to the Afya brand. And when compared to the entire sector, we have the lowest marketing expense, but the most effective marketing expense. So we always mention when the people look for this, we are helping this professionals all the time. So besides unlocking a segment in a long work as an continue learning, we'll generate 15 so for the 1x from the acquisition regarding the revenue is almost BRL 500 million and organic growth in this sector. So moving on, well, the best of M&A. What about Yduqs, we see Yduqs doing 10 years in [ 1. ] After the IPO, up to now, we did 11 transactions with 2,000 seats here. With Yduqs, we have 2,100 seats in 10 years in 1 transaction, but the multiplier of 2.1, and if we -- 1.1 EBITDA. If we compare this module is 2.7, 3.8 AV EBIT to 2.7, if this transaction is approve, there is a price after synergies that we will obtain 2.7x after the synergies, a more accretive to now leverage 1.6x combined company before dividends we get to 1.2x net debt to EBITDA with the generation of cash point for equity of BRL 1.2 billion, and we have this -- you have this split. It's the volume, extremely meaningful and valuation very attractive for us. But is that why you did this transaction? No, I will show now why there were other advantages. But before that, I would like to tackle what's on the screen, the dividends that will be paid that we are committed that generated doubts from the investor. But this is clear how this behaves. So then the transaction agreed that Yduqs pay will BRL 750 million, like the free cash flow to equity, the greatest promo. And from -- Afya we'll do it if Yduqs does not reach free cash pool to equities up to BRL 730 million. There will be a top 69 to 31. I can provide examples. Let's say that Yduqs will generate [ BRL 7,500 million, ] that is a midpoint from the guidance for 2026. This will generate a gap of BRL 180 million as of Afya in this moment, the lockbox date up to the closing date, how much Afya would have to pay for dividends, would be free cash flow that in this example, I inserted 12 last months that were [ 7,500 ] plus the top-up, that is what 100 native times the relation of 2.2, that would be BRL 400 million, Afya would have the right between the [ 30 June '36 ] this amount or do the dividends are rebuy. So it's important to highlight. The relationship is just 69 to 31 is unchangeable. And no matter the economical execution from us, either us or them, this is locked, but the amount of shares that the shareholders from Afya will receive that -- as we have announced, will be updated according to the [ buys ] or the new buys. What Yqdus brings to us, increases our acquisition pipeline. We were very dedicating 60% of medical sources in the long term, that would get to 89 companies with 12,000 [indiscernible] seats. With Yduqs, we expand our [indiscernible] of M&A target to 135 covenants with 21,000 medical seats. But not only that, Yduqs brings more liquidity. A critic that we see from the [indiscernible] low liquidity rate BRL 7 million in liquidity that we had daily in the market, adding to the Yduqs liquidity. Keeping turn over, our [ BRL 43 million, ] we got to BRL 70 million, which is very interesting, make us be [indiscernible] probably of a different [ AMS ] and maintenance at the [indiscernible] on the market capital, trade cap. So we bring all this new opportunity of Yduqs. So to close, I bring this this slide, which is the third way to allocate capital, went over the return to buybacks. I would like to present our next slide on CapEx. That brings new opportunities for revenue, different from other companies in the industry with a CapEx linked to property and that we also have. We have invested in the last 18 months, BRL 205 million in infrastructure, labs, equipment, books and -- but we invested more still in intangibles in content. Because Afya is much more than under-grad. It's a full ecosystem for physicians. I would like to highlight in these 18 months, we accelerated a lot of investments in technology, not only for medical practice, but for continued education with [ BRL 178 million ] in [indiscernible] [ BRL 140,000 million ] content to accelerate our growth. And therefore, from now on to say what will be the result of this acceleration of intangibles that we are investing. So I'll pass the floor to Lelio to show how we'll you get all the payback or the return on these investments?

Good morning. It's a great pleasure to be here with you again sharing what we'll be doing with invest or have been doing. Thank you, Virgilio and Blanco, it's a great pleasure to work with you. And also, it's a privilege in fact, to work in a company with this capacity of investments to accelerate the delivery of our ecosystem. Now ecosystem reaches 80% oppositions in Brazil. They are registered as having news or using [ 508,000 ] registered and more than half of users are active [indiscernible] of our solutions, almost 300,000 use our solutions, at least once. So our intention is to intensify our relationship with this space. So a great part of being investment for this year is to accelerate the delivery of experiencing this ecosystem. Our virtue cycle or our fly wheel. It's based on these three assets, qualified audience that is part of this investment to grow and keep the audience that through the use of our solutions generate data not only the digital behavior, content, courses, consultant solutions as well the data from the medical practice, prescription the electronic [indiscernible], enables to improve the experience of these physicians with the ecosystem and make us able to create new avenues for monetize especially B2B, pharma industry providers much more those that want to have relations with this medical audience. A lot of this experience done manually and the investments in an ecosystem is to create capabilities that enables the systemization and scale up this. So we have been creating component of technical foundation when we combine [ 11.5 tax, ] I have at least 11 registrations, registers of physicians, or solutions for logging. [indiscernible] uses more than one solution in a systemic wise, it is more than one user. This I cannot relate with him as an individual. We do it [indiscernible] through campaigns and much more. But this doesn't scale up. So part of the investment, it seems simple, but those that work with technology, nothing so safely. So unify medical registers and solutions for logging. It was started, but with [indiscernible] is into the clean team, we accelerate the unification of these business units to capturing operational synergies and the relationship with this persona, which is the physician. We are serving the same physician, one whereby clinics use is in a [indiscernible] for graduation. So in the second semester, we are unifying the business units. In the audience, our primary focus for our investment, this year, we have to improve this perspective. Volume, very important to us, to grow our base with -- although we have 80% of decisions registered, I have more of the -- we have with recurrent use measured [indiscernible], and we want to increase the frequency. I want this physician using it every day, our solutions are want to be [indiscernible], and that I want to have more surface of relationship. This physician using more solutions from a ecosystem, generating more [indiscernible] exposure with products and more data that enable more thesis, more capacity and to improve and grow our audience in these three perspectives in scalable and systemic way. How do I create this audience? These are flags, white book, our main progress for clinical decision, by [indiscernible] those that are the emergency rules any of this room 60% to 80% optimization to have our solution on their hands, more than 400,000 physicians [indiscernible]. We have an AI with over 100,000 physicians using it. Whitebook, I have 32 million consults annually or search queries, which is valuable. I will bring an example to generate clinical intelligence. iClinic is one of the major solution for e-report with over of 50,000 active subscribers, over 3 million patient consultations permit that enables clinical research that we're still not doing yet. We started conversations this year how to apply this as [indiscernible] in clinical research activities, our continued education of ladder from over 10,000 issued and over 56,000 users. [indiscernible] digital platforms in our courses over 1 million of hours of educational content, consumer -- this is valuing the individualization with this physician in our greenfield target in the last 12 months. We have reached 20 million prescriptions in our platform. We have 46,000 prescribing physicians. This is an asset that is interesting, the pharma industry. Just recently Brazil release the issuing of prescription that are yellow and blue through digital means. This is very important to us that makes the growth of monetization. The volume of e-prescriptions will grow, therefore, the increase of monetization with this asset. Showing some innovation for Whitebook, we embedded AI with a conversational interface for the user with this extreme responsibility that the content that feeds as LLM, we didn't create -- we use the market -- available in the market, we created content that feeds the LLM to ensure assertivity. We have this over 100,000 users in high levels satisfaction, 3 million searches and those are using daily. So we believe that the growth will take place. The Whitebook, as I said, many users 32 million searches of clinical decision annually. This is an insight that we work to generate value. I will call the stage Dr. Dianna, which is positioned from our research [indiscernible] share with you use case update of the searches and data through the Whitebook, which would have you tell us what you're doing with.

Well, let's first of all, I'd like to say it's a huge pleasure and delight to be here. We'll talk line of research that is part of my line of education, have the privilege to present last month in China in the conference of the OMS of world WHO department that we are doing. And what's our major aspect Lelio mentioned how much our data can generate clinical intelligence, and I bring to you a practical example of how this is taking place. So first, we look into the Whitebook data, which has a high-level engagement about 170,000 physicians that use Whitebook to resort clinical cases. They are within the emergency room. They are doing the prescriptions and think about diagnosis. So we capture the data that it is being researched and second stage, we assess this detection. That means look at the historical curves of access of our users. And when we see historically, we were not expecting that increase we should see that there is something different, and we check the signal in a more special way we apply algorithms of machine learning to do the analysis that and generate insights that regional, we look into a state or a specific region. So these insights our map and our clinical team validates it. So we gather with [ stock ] with our physicians in to check if the increase associated to an epidemiology in that venue. If we understand that this movement, in fact, has some possibility of being ported. Clinically speaking, we provide a communication to the physician that is by the [indiscernible] in that location and the updated content based on evidence. Here, we have our great advantage, which is the engagement of our physicians that goes beyond the individual interaction. And with that, we can generate source of data for the health system. And we are going to bring a practical case that we have recently experienced. We are seeing the measles issues and cases, and we noticed that our users, they were researching quite deeply the theme on measles within our app. So as we see in the graph, we see here a base curve on measles research, and we see a peak here, and we identified that there was a different movement going on in Sao Paulo. Based on that, we sat down together, understood, and we actually had the confirmation of measle cases in Sao Paulo, and we had anticipated our ideas, and we contacted our doctors, and we send a notification to over 70,000 doctors within the pediatricians, GPs and infectious disease specialist experts, and we also sent an updated news letter that if they had a suspicious case that they should have the best content for their systems. And this potential goes beyond a single case. We brought the practical example here, but our researchers, they are quite wide. We have been studying very much. We have two public articles on important magazines. The first one, we took several diseases in several regions, and we realized that when we deliver to our AI model. The data of Whitebook, the model is better adjusted. They understand better the disease behavior pattern. It was -- this article was published in the BMC Health. And the second article was when we looked specifically inside into [indiscernible] and we analyzed 27 regions, and we created a model for measuring where we do a forecast we do a prediction analyst analysis for cases in 8 weeks into the future. And we understand that when we work in scenarios [indiscernible] to what we have today in Brazil, there is a scenario that has a delay notification. If we deliver this pattern into our Whitebook, we have a better performance of the model because we have real-time data, and we can see the access of our users. So we also talked -- but the great finding of our studies was in a real-world scenario, our data has contributed to the performance of the models. We have worked on the validation of our radar when we understand the best triggers to arrive to get to a cool accuracy, to understand other diseases in other regions and to understand the clinical outcomes and to work on the impact on information reaching clinical decisions. And we understand that our data can generate value, both for our users, but in Afya, and now we understand also for our health system. Congratulations, Dianne. I'm very proud to be part of this project. This is extremely innovative for the market. We are used to when we do the analysis to look back into the past. But today, we have a tech innovation that allows us to work proactively in real time and with a prediction feature, even if it's a short interval for important events and health. And this creates a differential in the doctor's experience into this ecosystem, where we can take extremely valuable and contextualize information, either by a determined health event or a region that will make the practice easier, but also for health managers. This is a proxy to the demand of appointments of beds and medications all in real time. So we stopped looking into the past, and we have a solution that allows me to monitor that in real time. It's extremely innovative. And I believe that this can be one of the thesis on monetization to B2B. The eye clinic also, we have onboarded with generative AI with assistant practice. The doctor can invest 100% of their time with the patient, listening to -- the patient transcribing into a report and having a much richer quality of data. And we are now bringing an engine for the clinical decision into the report in our Whitebook so it can support hypotheses during the consultation also in the doctor's practice. What we do today in our emergency rules, we can do that in their own practice to give a better support to the doctors. Today, we have 50,000 payers for iClinic. We have 36,000 active users and 3 million consultations per month. The potential of use of this platform here, for example, for clinical research. Brazil is in a better position for interesting in clinical trials and research as far as legislation goes. And we can be players working in partnership with the industry in this realm. Our prescription in field, it's an extremely important asset in our ecosystem. Today, we distribute it naturally through iClinic in our practice solution, but also in Whitebook, while we see a 2-digit monthly growth. And in our medical update portal. With Whitebook, you can prescribe for free with no limit, medication, lab tests and vaccines all in one place, with more greater safety and prescription in under time. You share instantly with your patients without the risk of losing a prescription, all backed up by the clinical decision support of Whitebook. Whitebook a new way to prescribe for changing world [indiscernible], download Whitebook for free and try it now. So today, our prescription is available in our free Whitebook. We are one of the main players on digital prescription, and this is a growing market, by increasing the number of prescriptions and having the law on our side, there is no doubt that this market is going to grow, and this market is where we are going to operate. Our continuing education platform, as I mentioned, throughout the year, we have done 46,000 consultations in our health care facilities. We have about 6,000 active students, and 10,000 have been in our undergraduate programs. We have also invested in a new platform with medical updates, medical update is one of the components that give us frequency in our solutions. This is an access that you -- an asset that you can access every day, and every day, we distribute medical updates through the app or through external channels, mainly YouTube and Spotify. So this is a key asset in our ecosystem. Besides the digital platform, we have always worked in transforming our 25 units in a hub for doctors. Today, where units have intense activity during class times Thursday, Friday, Saturday. And we are using this room to bring events and engage the medical communities. So we have over 160 events carried out this year. It also makes our platform quite interesting to the medical segment, especially for the B2B market, 18 of these events were partners with pharma. And the idea is to scale that. The idea is to use our health facilities that are idle between Monday and Thursday to offer to this new doctor quite accessible option with a high-quality practice, and this will be also another way to engage doctors. We have a pilot program in [indiscernible] with a high level of satisfaction. So we are very -- we trust the engagement of this audience through a high-quality space that we have in 25 units spread all over Brazil. All that enriches our audience, which is our extremely valuable asset. We have 500,000 registered physicians. We have 1 million subscribers to our YouTube channels, which is increasing the frequency on our medical update channels. We have 87 hour -- 27,000 hours, Spotify. In January, we're going to launch our new experience in our new portal, and there is no doubt it's going to launch app. And what we are doing all this investment is to deliver, in fact, an ecosystem and experience in an ecosystem. And this is our great value. I have solutions for the entire journey of this professional. From the moment they are graduating from the undergraduate program, they start using our solutions up until after they retire, even after they retire this doctor can keep on consuming medical updates contents. We have an even more fragmented solutions. This is a leap, we are taking this year, which is to make viable as a system, an experience that is more integrated into our ecosystem. It is key that this new medical update platform because it is a chance a cross-cutting environment, reaching the new doctor and the retiring doctor consolidating this experience. So this is my main point of contact throughout the journey. And if I can, through this platform, offer this doctor the ecosystem experience, I optimize and make my relationship with these doctors more intelligent. A great share of clinical's investment is being used to build the capabilities that lead our execution to involvement. So today, I have a solution for medical updates that we're going to launch in Q1. We have these communities. We have over 87,000 users using communities in WhatsApp. The idea is to control better this audience and the use of data. I have a leading solution to supporting decision-making that is the top of the funnel to other solutions. Where is the doctor that is going to consume a grad program on our Whitebook. Where is the doctor that is going open a practice. They are on Whitebook using one of our continued education programs. How do I relate to the stock to today? Still manually. We generated this intelligence and manually, the capabilities we are building will allow us to create a system and scale this relationship in a smarter way. Well, the podcast was great, but let's get to work. [Presentation]

[Audio gap] To have a more fluid integration among our solutions. And this allows us to scale even more our monetization thesis. So in B2C, a doctor paying for the use of our solutions by subscription participating, taking part in events or by continuing education or special solutions package. But we believe that B2B is where we're going to unlock the greatest value, either through pharmaceutical industry where we have our primary focus and where we are reaching a meaningful growth. This year, we're going to grow 40% a year-on-year. It's still not relevant in our total revenue, but it is by far the one that grows the most. We act on promoting engagement with the industry with the audience of doctors, either by continuing education or promotional content. I'm going to show you an example, but it goes beyond the pharmaceutical industry. And B2B that wants to engage with medical audience an intelligent way to the industry and the practical way to the doctors. We have the best ecosystem for this engagement. Besides this pharmaceutical industry, we start working with marketplace concept to attract other industries from other segments to our ecosystem. I'm going to give you one example here of an offer that we are working with pharmaceutical industry that is generated value by prescriptions. So we have 20 million prescriptions in the last 12 months, 46,000 doctors prescribing, and we have the promotion of a medication at the prescription moment. So while I'm prospecting, I highlighted this product, of course, the doctor can choose to use the medication or not. And this has grown 109% year-on-year. The more I increase the level -- the number of prescriptions, the more increase the interaction, the more increase the offers. So we have solutions for B2B. This year, intentionally, we focused more in the pharmaceutical industry. So if I focus on the pharma industry, the growth here is 40% to 50% year-on-year. So there is great value to unlock here still. I would like to conclude my participation. Thank you for your attention. I hope we have the opportunity to exchange ideas here, but invite Renata Couto to the stage.

Good morning. We are ready to go. Start over -- oh no, left side of the room. Before doing your question, introduce yourself, please.

Samuel Campos Alves, BTG Pactual Bank. I have two doubts. First, if you could talk more about the need of the investment due to concentration to approval of the antitrust counsel in terms -- because of -- and for leverage that Virgilio and Blanco in the expansion of scope for inorganic assets. What kind of asset, the two new ecosystems can complement even more examples. More footprint in Sao Paulo, or the residential [indiscernible] business or any geography or combination of costs. Can you explore it?

Thank you, Samuel. Great questions. I will talk about CADE, the antitrust council, all of you can help me as well. We have an overlap base the relevant market within the high education market in relation to CADE, understanding. We have been three imported overlap in some cities. Here, [indiscernible]. It's a first case, discussing higher education in mortgages as an attention point for the medical course. It's still early to say to have in the investments. We know that is different dynamics in the market for high-scale courses, a radius of attendance that is very different. We have 2/3 of our students come drawn other places. It's different when a physician, travel, [indiscernible] has started about 3 or 4 years housing for those students that are from outside the state. Two turns of them. It's a student that has income and availability and flexibility to travel. So we consider in our synergies, 2.2 can capture something in terms of the synergy. In terms of capital allocation that unlocks in the H&M market. Now it's different from 2019, 2020. If you check a good medical institutions in regions that make sense with good brands or used to be very expensive, wouldn't make sense if it wasn't like that or low-level attractiveness because it won't make sense. On the other hand, there are great assets in some regions with great assets like Sao Paulo [indiscernible] and as a small presence, but -- makes sense, but will be a hybrid player concentration of medical aspects below 50%, maybe 30% or 40%, and we'll extract synergies, not only medicine, but also in the digital platform with the footprints from other courses. So we start to check public and private players that were not under Afya radar, we have a strong currency and a balance sheet that will help us and opening the options. And in the end of the day, health is something that we'll be able to extract more synergy than in other fields. I'd like to add some here. It's super important to highlight that new opportunities. This new range that will be opened after we close the transaction and our capturing synergies. We have very strong discipline, like say, in capturing synergies and then to open to new opportunities that they do exist.

Flavio, Bank of America. It's always good to talk to you. I would like to know about pricing for the medicine business with integration that I would like to know how you see in regions with integration. We'd like to help the pricing due to the competition that is increasing in other business in the semi presential with more aggressiveness. What do you think to keep this behavior or change or either if there is any opportunity for the investment and add a pure brand horse in the equation.

Well, I'll start by the end, there is in our strategy any the investment pitch. This new platform makes sense, generates that is diversified the proper way. We have the appropriate muscle to continue as a key player in higher education. The scale is always important and is instead of running more to the side, now seeing a more diversified way we can attract more investments with capital allocation that makes more sense to bring return to our investment. Therefore, we have to have the amount of robustness necessary. Having said so, no company can deal with a bad capital allocation either management, digital tools. It will analyze it. But strategically speaking, it's not in our road map. Regarding the medical field, we have a lot of complementarity we have [ 3Cs. ] We don't know exactly how it will be hit. But there is this example that is necessary. The student already gives the options in terms of the universities. So we don't see opportunity for pricing, but resilience to keep differentiated frequency of seats, we put this in Yduqs that has this opportunity of occupation, but we have the opportunity to improve [indiscernible] reduce the funding part of financing and to keep the sustainable price taking into account [indiscernible] long-term. Rising of companies so isolated or part, the competition exists, each one with its own commercial policies, but planning and executing [ 171, ] it's the unified exam took place the last weekend, we contributed with everything pricing and everything that is being presented for the final approval of the transaction. We are in the intake of [ 27 1 ] when we have published for our future students, the pricing for January with an increase of 25%. When we check the projections of [ EPCA ] for 2027, the pricing is above to the projection of the focus valeting for IPCA, the metrics for inflation.

Lucas Nagano from Morgan Stanley. In terms of demand with all the changes in the labor market in the medical field time for study and payback. How are you observing the changes in the mindset of those that will be taking the exam. There is average that must be reached in terms of grade. So this will end in effect. In the average of 2026, what have you prepared ourselves, and there are schools that weren't assessed before what are you doing about all of this.