Afya Ltd (NASDAQ: AFYA) stock turns bullish on solid users rise

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Afya Ltd (NASDAQ: AFYA) stock rose over 4.8% on 29th May, 2020 (as of 10:15 am GMT-4; Source: Google finance) after the company posted mixed results for the first quarter of FY 20. The total monthly active users (MaU) rose at 17.5% increase from January to March, reaching 16,008 user at the end of March. MaU represents the number of unique individuals that consumed Afya’s digital content in the last 30 days. For Afya, MaU is a great number of learning assets that can be e-books, videos, podcasts and questions. In the last quarter, MaU’s average consumption of learning assets were 54, growing 26% the engagement of Afya’s digital users since January to March. Cash and cash equivalents, including restricted cash of R$16.0 million, at the end of March, 2020 were R$1,299.3 million, compared to R$960.1 million at December 31, 2019, and mainly reflects the proceeds from the 2019 IPO and 2020 Follow On offering.

AFYA in the first quarter of FY 20 has reported the adjusted earnings per share of $1.09, missing the analysts’ estimates for the adjusted earnings per share of $1.12, according to Refinitiv Ibes Data. The company had reported the adjusted revenue growth of 27.2 percent to R$272.3 Million in the first quarter of FY 20, beating the analysts’ estimates for revenue of Brl 271.4 Million. Excluding the acquisition of UniRedentor Net Revenue rose 77.8% in the quarter, on the back of a contribution of 75% from Medcel, IPEMED, FASA and IPEC acquisitions and 25% from organic growth, which is comprised of the maturation of medical school seats and average ticket. Adjusted EBITDA in three-months ended March 31, 2020 grew 88.2% to R$140.6 million, from R$74.7 million in the three-months ended March 31, 2019, Adjusted EBITDA margin of 51.6% was generally in line with the 51.7% reported in the three-months ended March 31, 2019, due to the consolidation of UniRedentor.

The Company has reaffirmed its previously issued guidance for the first half of 2020 including the successfully concluded admissions of new students for the first semester of 2020 and assuming a certain degree of potential impacts of COVID-19 into the business during 1H20. Afya expects to partially mitigate the potential impact over the academic calendar and to its business results in 1H20. This timing effect was already contemplated within the Net Revenue´s guidance range provided and it will not change the tuition payment schedule for the 1H20. For the first half of 2020, the company expects Net Revenues to be between R$475 million – R$510 million and Adjusted EBITDA margin is projected to be between 45-46.5%.

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