Afya Limited Announces Entering Into a Share Purchase Agreement for the Acquisition of Faculdade Única de Contagem

Rhea-AI Summary

Afya (Nasdaq: AFYA; B3: A2FY34) has entered into a share purchase agreement to acquire 100% of Faculdade Única de Contagem (FUNIC) through its subsidiary Afya Participações S.A. The acquisition adds 60 medical school seats in Contagem, Minas Gerais, marking Afya's fifth medical school in the state. The total purchase price is R$ 100 million, with R$ 60 million paid in cash at closing and R$ 40 million in three annual CDI-adjusted installments.

The deal includes potential for 60 additional seats if approved by MEC within 36 months, with R$ 1 million payment per granted seat. At full maturity in 2030, Afya expects an EV/EBITDA of 3.3x with projected Net Revenues of R$ 52.4 million from Medicine operations.

Positive

• Acquisition adds 60 medical school seats in strategic location
• Potential for 60 additional seats with MEC approval
• Expected Net Revenues of R$ 52.4 million at full maturity
• Attractive EV/EBITDA multiple of 3.3x post synergies
• Strategic expansion in Minas Gerais market

Negative

• Significant initial cash outlay of R$ 60 million required
• Additional debt burden with R$ 40 million in installments
• Pre-operational status indicates delayed revenue generation
• Contingent payment of up to R$ 60 million for additional seats

Insights

Financial Analyst

This acquisition represents a strategic expansion of Afya's medical education footprint in Brazil. The R$100 million purchase with structured payment terms (R$60 million upfront, R$40 million in installments) demonstrates prudent capital allocation. The deal's 3.3x EV/EBITDA multiple at maturity is notably attractive compared to industry standards, suggesting strong value creation potential. The projected R$52.4 million in Net Revenues by 2030 from medical education indicates a healthy ~52% ROI. The potential for 60 additional seats at R$1 million per seat represents significant upside optionality worth up to R$60 million. Think of this as buying a premium location with built-in expansion rights - you pay for current capacity but get first dibs on future growth. The deal's structure, combining immediate operational assets with growth options, effectively balances current value with future potential. The location in Contagem, part of Belo Horizonte's metropolitan area, targets a wealthy demographic hub, promising strong student demand and pricing power.

Education Market Analyst

The acquisition of FUNIC strengthens Afya's dominance in Brazil's medical education market, particularly in the strategic Minas Gerais region. The pre-operational status of the facility, while requiring initial setup investment, allows Afya to implement its proven operational model from day one without having to overcome established practices. The immediate addition of 60 medical seats in a metropolitan area is particularly valuable given Brazil's strict regulations on new medical school approvals. The potential for 60 additional seats represents a rare growth opportunity in a supply-constrained market. The facility's positioning as an academic hub for other medical campuses creates operational synergies and knowledge-sharing opportunities across Afya's network. For context, medical seats in Brazil are like golden tickets - they're strictly regulated and highly profitable, with consistent demand due to the country's chronic shortage of doctors. This acquisition essentially secures a new pipeline of medical professionals in a key economic region.

NOVA LIMA, Brazil--(BUSINESS WIRE)-- Afya Limited (Nasdaq: AFYA; B3: A2FY34) (“Afya” or the “Company”), the leading medical education group and medical practice solutions provider in Brazil, announced today that it has entered into a share purchase agreement for the acquisition, through its wholly-owned subsidiary Afya Participações S.A., of 100% of the total share capital of Faculdade Masterclass Ltda. (“Faculdade Única de Contagem” or “FUNIC”), present in Contagem (MG).

The acquisition will add 60 medical school seats to Afya in Contagem, a city in the metropolitan area of Belo Horizonte, the capital of Minas Gerais. FUNIC is pre-operational, with leased real estate prepared for the start of the medical school operation. It will be Afya’s fifth medical school in Minas Gerais and will serve as an academic hub for the other medical campuses in the state. Afya will confirm the expected timing of the first intake, contingent on the completion date of the closing process.

The aggregate purchase price is R$ 100 million, and the Net Debt will be deducted at closing. The price and payment conditions are R$ 60 million will be paid in cash at the closing date, and R$ 40 million will be paid in three annual installments adjusted by the Brazilian interbank interest rates (“CDI”).

Furthermore, there is a potential for 60 additional seats. If approved by the Ministry of Education (“MEC”) within 36 months from the closing date, it will result in an additional payment of R$ 1 million per granted seat, limited to 60 seats.

Afya expects an EV/EBITDA of 3.3x at full maturity and post synergies in 2030 with expected Net Revenues of R$ 52.4 million, of which 100% will come from Medicine.

The transaction's closing is subject to customary and usual conditions, including approval from antitrust regulators.

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 Brazil based on the number of medical school seats, delivering an end-to-end physician-centric ecosystem that serves and empowers students and physicians to transform their ambitions into rewarding lifelong experiences from the moment they join us as medical students through their medical residency preparation, graduation program, continuing medical education activities and offering medical practice solutions to help doctors enhance their healthcare services through their whole career.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241219793673/en/

Investor Relations Contact:

Afya Limited

ir@afya.com.br

Source: Afya Limited

FAQ

What is the total acquisition cost for AFYA's purchase of Faculdade Única de Contagem?

The total acquisition cost is R$ 100 million, with R$ 60 million paid in cash at closing and R$ 40 million in three annual CDI-adjusted installments.

How many medical seats will AFYA gain from the FUNIC acquisition?

AFYA will initially gain 60 medical school seats, with potential for 60 additional seats subject to Ministry of Education approval within 36 months.

What are the expected financial returns from AFYA's FUNIC acquisition?

At full maturity in 2030, AFYA expects an EV/EBITDA of 3.3x post synergies with projected Net Revenues of R$ 52.4 million.

How will AFYA pay for the FUNIC acquisition?

AFYA will pay R$ 60 million in cash at closing and R$ 40 million in three annual installments adjusted by CDI rates.

What is the additional payment structure for extra seats in the FUNIC acquisition?

AFYA will pay R$ 1 million per additional seat granted by MEC within 36 months, to 60 seats, potentially totaling R$ 60 million.