Volatile stock to watch: Afya Ltd (NASDAQ: AFYA)

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Afya Ltd (NASDAQ: AFYA) stock lost over 1.3% on 27th March, 2020 (as of 11:40 am GMT-4; Source: Google finance). For the first half of 2020, the company expects net revenues to be in the range of R$475 million & R$510 million and projects Adjusted EBITDA margin to be in the range of 45 & 46.5%

The company in the fourth quarter of FY 19 has reported the 107.9% increase in the net revenue year over year (YoY) to R$220.8 million, driven by Afya’s organic growth and Medcel, IPEMED, FASA and IPEC acquisitions in 2019. During the period, the adjusted EBITDA increased 127.0% YoY to R$87.4 million, and the adjusted EBITDA margin expanded by 330 basis points  to 39.6% from 36.3% in 4Q18. The company has reported 151.7% YoY rise in the Adjusted Net Income to R$71.8 million. At December 31, 2019 , the company’s cash and cash equivalents stood at $943.2 million, compared to $62.3 million at year end 2018, and is mainly due to the proceeds from the IPO. The company has generated an Adjusted Cash Flow from Operations of R$259.4 million in 2019 compared to $80.3 million in 2018.

Meanwhile, Afya had acquired the 100% of UniRedentor for R$225 million on January 31, 2020,. The acquisition contributed 112 medical school seats to Afya, and there is a potential 44 additional medical school seats after getting the approval by the Brazilian Ministry of Education. The company on February 11, 2020, had raised about US$86.6 million (after deducting underwriting discounts and commissions and before expenses) from a follow-on public offering. The company has also recently signed a purchase agreement to acquire Centro Universitário São Lucas, or UniSL, for R$341.6 million, that includes the net debt of R$140.1 million. After the completion of the acquisition will contribute 182 medical school seats to Afya, with 100 additional seats still pending approval which, if approved by the Ministry of Education, has the potential of additional payment of up to R$80 million. On March 18, 2020, AFYA had appointed Luis André Blanco as Chief Financial Officer effective from April 20, 2020.

Furthermore, the company has introduced an online tutoring and mentoring platform to increase the engagement and enhance the learning experience of the undergraduate, test prep and graduate students. The company has also signed an important partnership with the prestigious Brazilian Cancer Foundation for the enhancement and development of new content.

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