Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net revenue increased by almost 14%, reaching BRL810 million.
- Adjusted EBITDA grew by 28% year-over-year, reaching BRL344 million with a margin of 42.5%.
- Adjusted net income saw a 59% growth, reaching BRL210 million.
- Robust cash flow from operating activities totaled BRL610 million, a 21% year-over-year increase.
- Medical seats increased to 3,583 approved seats, with a 9% growth in the number of medical students.
Negative Points
- B2B revenue in continuing education saw a 13% decrease.
- The competitive environment for prep courses remains challenging, with significant sales only expected in the fourth quarter.
- Integration of new acquisitions like Unidom is still in progress, with synergies yet to be fully realized.
- The restructuring of digital and continuing education segments is ongoing, which may cause short-term disruptions.
- Net debt remains high at BRL1,459 million, despite a reduction from the previous year.
Q & A Highlights
Q: In terms of cost of debt, what should we think about that considering the recent IFC mission and the debt maturity of some of your debt that it's cheaper? And second, on the triggers to reach the top of the guidance on margins.
A: Hi, Mirela. It's Luis speaking. We expect our cost of debt to remain below the Brazilian 100% CDI until at least 2026 due to the soft bank transactions. Regarding the guidance on margins, we are aiming to reach the range we have released. The medical practice solution segment is delivering a positive EBITDA, growing close to 20% with a positive EBITDA margin around 20%. Both the undergrad and continuing med education segments are also performing better than expected.
Q: The release mentions that one of the reasons for the upward revision in guidance was the performance in the first semester. Can you please comment on which of the segments delivered the results that were above expectations? And can you provide more color on the acceleration in revenue growth for the medical practice solution segment?
A: Hi Lucca, I'll take the questions. The better performance in the first semester came from the integration of UNIMA and FCM JaboatĂŁo, better performance margins from Mais MĂ©dicos 2 operations, and effective SG&A management. The medical practice solution segment saw accelerated growth mainly from B2B services, particularly marketing campaigns for the pharmaceutical industry.
Q: We had kind of the approval, the decision actually by the Supreme Court for the injunctions. Are you seeing any changes in competition given those approvals? And how many injunctions might be approved?
A: The approval process is running as expected, with no significant changes in competition. The Ministry of Education's capacity to approve and analyze will determine the speed of approvals. The Mais MĂ©dicos III program is expected to add around 9,000 to 10,000 additional seats.
Q: Has the recent approval of injunctions changed your strategy for the Mais MĂ©dicos III auction?
A: We are not competing in regions where we already have injunctions. Our strategy remains focused on regions that make sense for us.
Q: Could you please comment on the competitive environment in the prep course business? And why is B2B revenue in continuing education contracting?
A: The competitive environment for prep courses is not relevant in the second and third quarters due to seasonality. The B2B revenue contraction in continuing education is not core and was leveraged during the pandemic. We are not guiding growth in this segment but will continue to offer it to our clients.
Q: What do you expect in terms of consolidated margins after the integration of Unidom? And is there a different strategy or positioning in the medical practice solutions segment?
A: We expect synergies from Unidom in top-line growth, cost management, and back-office centralization. The restructuring in the medical practice solutions segment was more about internal efficiency rather than a redesign of the offering.
Q: Can you provide more details on the sources of synergy and the timeframe for the integration of Unidom?
A: The synergies will come from top-line growth, cost management, and back-office centralization. We are still working on the integration plan and expect to achieve the synergies in the next couple of months.
Q: Are you narrowing down the services offered in the medical practice solutions segment?
A: No, the restructuring was about internal efficiency, not narrowing down the services. We have streamlined our product and tech teams to gain efficiency in costs and expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
