Afya Limited Announces Closing of the Acquisition of Unidompedro and Faculdade Dom Luiz
Afya has completed the acquisition of Unidompedro and Faculdade Dom Luiz, expanding its presence in Salvador, Brazil. The acquisition brings 300 operational medical school seats, with 125 fully authorized and 175 pending final judicial approval. Afya paid R$ 347.8 million upfront and will pay R$ 312.2 million over ten years, contingent on authorization maintenance. The purchase price could be adjusted based on legal outcomes. Projected Net Revenue for 2024 is R$ 110.5 million, growing to R$ 267 million by 2027. The estimated EV/EBITDA at maturity is 4.2x post synergies.
- Acquisition of 300 medical school seats expands Afya's educational capacity.
- Potential revenue growth from R$ 110.5 million in 2024 to R$ 267 million in 2027.
- Projected EV/EBITDA of 4.2x at maturity post synergies.
- Strategic expansion in Salvador, one of Brazil's largest cities.
- R$ 312.2 million acquisition payment contingent on seat authorization, introducing uncertainty.
- 175 seats pending final judicial approval, posing a risk to full operational capacity.
The acquisition of Unidompedro and Faculdade Dom Luiz by Afya Limited offers solid insights into the company's financial health and future potential.
Afya's acquisition of 300 operational medical school seats in Salvador is a strategic move that can significantly boost its revenue stream and market position in Brazil's educational landscape. The aggregate purchase price of
Afya's projected EV/EBITDA of 4.2x at maturity post-synergies is noteworthy. This metric suggests that the acquisition price is reasonable, especially considering the expected revenue growth. The projected Net Revenue for 2024 stands at
Investors should recognize that while the long-term revenue outlook is promising, the payment structure includes conditions based on the outcome of pending court proceedings. If the authorization of the remaining 175 seats is not confirmed, it could affect the total payable amount and the anticipated revenue growth. Therefore, the legal proceedings surrounding these seats should be closely monitored.
The acquisition is also significant from a market positioning perspective. Salvador, being one of Brazil's largest cities, provides a lucrative market for Afya, enhancing its geographic footprint. The strategic expansion into multiple key locations within the state of Bahia, including Salvador, Luis Eduardo Magalhães, Barreiras and Ribeira do Pombal, aligns with Afya's objective to fortify its presence in Brazil's medical education market.
With the acquisition, Afya gains access to 300 seats, bolstering its total capacity and reinforcing its stance as a leading player in the sector. The growth in student enrollment will directly contribute to increased tuition revenues, which is important in the highly competitive medical education market. Afya's expectation that the majority of revenue will come from Medicine by 2027 reflects a targeted approach to capitalize on high-demand courses.
Additionally, the potential for winning bids in the Mais Médicos 3 Program could provide further revenue opportunities, offering R$250 thousand per granted seat. This underscores the strategic foresight in aligning with government initiatives to enhance medical education.
However, the status of the 175 conditionally authorized seats remains critical. These seats' final authorization will impact the future revenue and payment structure, making it essential for investors to stay informed about legal updates regarding this matter.
The legal intricacies surrounding this acquisition are both an opportunity and a risk factor for Afya. The initial authorization and subsequent judicial review for 300 seats demonstrate the regulatory complexities in Brazil's educational sector. The final and non-appealable conclusion of the court proceedings for the authorization of 175 seats is pivotal. Should the court confirm this authorization, Afya will benefit from the accelerated payment structure, potentially improving financial predictability and reducing long-term liabilities.
However, if the court's decision is unfavorable, the remaining payment balance will no longer be due, which might impact Afya's expansion plans and revenue projections. Investors should consider the potential legal costs and delays associated with court proceedings. Understanding the MEC's regulatory framework and the implications of the Mais Médicos' Law will also be important in ascertaining the potential risks and rewards of this acquisition.
Moreover, the structured payments adjusted by the CDI rate introduce a degree of uncertainty concerning future financial obligations, dependent on Brazil's interbank certificate rates, which can fluctuate based on broader economic conditions.
NOVA
The acquisition contributes 300 operational medical school seats to Afya in
The aggregate purchase price was
-
R , deducted from the estimated Net Debt, was paid in cash on the date hereof; and$ 347.8 million -
R will be paid in up to 10 annual installments of$ 312.2 million R , adjusted by the CDI (Interbank Certificate of Deposit) rate, and it is conditioned upon the maintenance of the authorization of the 175 seats in each of the prior year. The remaining payment balance is accelerated if a final and non-appealable conclusion of the aforementioned court proceedings, within the 10-year payment period, confirms the authorization for the 175 seats. In turn, if, within the same 10-year payment period, a final conclusion of the aforementioned court proceedings does not confirm the authorization for such 175 seats, the remaining payment balance will no longer be due.$31.2 million
Afya expects an EV/EBITDA of 4.2x at maturity and post synergies. 2024 projected Net Revenue for Unidom Participações S.A. is
Additionally, if Unidompedro or Faculdade Dom Luiz wins the bid processes in the Mais Médicos 3 Program, an additional payment of
For more information, please visit https://ir.afya.com.br/news-events/presentations/
About Afya Limited (Nasdaq: AFYA, B3: A2FY34)
Afya is a leading medical education group in
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Investor Contact: ir@afya.com.br
IR Website: ir.afya.com.br
Media Contact:
Cíntia Moraes Marin
cintia.marin@afya.com.br
Source: Afya Limited
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