Afya Ltd (NASDAQ: AFYA), Brazil-based medical education group, stock surged over 5.8% on 28th August, 2020 (as of 9:46 am GMT-4; Source: Gogole finance) after the company in the second quarter of FY 20 has reported 53.6% ear on year rise in the net revenues to R$274.2 million, excluding R$14.4 million of net revenue, that was deferred due to the interruption of practical activities on campus. Net Revenue excluding UniRedentor and UniSL rose 22.6%, reaching R$218.8 million. The company for the second quarter of FY 20 has reported 163.1% growth in the Adjusted Net Income to R$82.6 million. There has been an increase of 76% in the EBIDTA R$118.2 million for the second quarter with Adjusted EBITDA margin of 43.1%, expanding 560 basis points (bps).
Meanwhile, the company has recently signed a purchase agreement for the acquisition, through its wholly-owned subsidiary Afya Participações S.A., of 100% of the total share capital of Faculdade Ciências Médicas da Paraíba, or FCMPB. FCMPB is a post-secondary education institution with government authorization to offer on-campus, undergraduate courses in medicine in the State of Paraíba and medical course that formed 99% of its 2019’s Net Revenue. The estimated Net Revenue for FCMPB in 2024, when the institution will reach maturation, is R$107.0 million, which reflects an estimated post synergies EV/EBITDA of 6.3x all derived from its medical school. The total purchase price for this acquisition is R$380.0 million, of which 50% is payable in cash on the transaction closing date, and 50% is payable in cash in four equal installments through 2024, adjusted by the CDI rate. The acquisition is projected to contribute 157 medical school seats to Afya, increasing Afya’s total medical school seats to 2,023.
Further, the company has also signed a purchase agreement for the acquisition, through its wholly-owned subsidiary Afya Participações S.A., of 100% of the total share capital of Faculdade de Ensino Superior da Amazônia Reunida, or FESAR. The total purchase price is R$260.0 million, that includes including the real state of the operation estimated at R$ 21.0 million, of which 100% is payable in cash on the transaction closing date. The 2024 estimated Net Revenue for FESAR is R$ 88.6 million at full maturity, with medical courses forming 94% of this amount, an EV/EBITDA of 4.7x adjusted by the real state, at maturity and post synergies.
For the second half of fiscal 2020, the company expects net revenue to be in the range of R$600 million – R$640 million and Adjusted EBITDA margin to be in the range of 45.5-47.0%