Afya Limited (AFYA) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Afya Day. I'm Virgilio Gibbon, CEO of Afya. And thank you all for joining us today here. Since the IPO, we have been providing regular financial and business updates through quarterly earnings conference call and investor meetings. Today, we will deep dive into Afya with a recap of our strong 2020 results and some recent events. Then we will discuss our expansion plans and layout our product portfolio strategy. Behind me, you can see some of the key data points about our business. We are obviously very pleased with our 2020 results, which are ahead of the guidance we provided to the market. Last year, was unprecedented on a global basis, and our strong performance and execution reinforce the resilience of our business along with the courage, dedication and commitment of our employees and students, that makes us extremely proud. This entire event was structured following the strictest COVID protocols, which includes keeping our distance from each other and being tested for COVID prior for being here this morning. Our presentation today will comprise of 4 models and will be followed by a Q&A session at the end. If you want to ask a question, please send it during the event using the link above the page. The first model will be a discussion of our consistent and predictable growth. Next, we will review our strategy and amplify what we had discussed during our IPO. Since then, in less than 2 years, we have almost doubled our medical education BU, reaching 85% of our stated goal of acquiring 1,000 medical seats within 3 years. Additionally, reflecting change brought by the pandemic, we have accelerated our strategic initiative to increase our digital presence. As you know, digital health is a central part of our strategy. And today, we are going to go deeper into our strategic pillars, and how they amplify value across the whole medical journey from med student to practicing physicians. In the third model, we will explore our vision of the future through expansion of all operations via organic growth and our M&A strategy. Our last model relates to ESG, a relevant topic that has proven to drive long-term value and business resilience across all industries. We will highlight our ESG initiatives and show that we have made a lot of progress. To get through this agenda, I will invite Luis Blanco, our CFO; Julio de Angeli, VP of Digital Service and Innovation; Felipe Lourenço, Head of iClinic; Bruno Lagoeiro, Head of PEBMED; and also Renata Couto, our Head of Investor Relations. Many of you have been with us for a while, and are quite familiar with our business. But this morning, we have also a lot of new folks who are participating who are new shareholders. So stepping back for a moment, I thought it was important to share with you our mission statement. It guides us and keep us disciplined around our strategy. Shown at the screen behind me, is our ambition statement, to become the reference partner of physicians in their medical journey, either by providing rewarding lifelong learning experience and digital tools that support their daily practice. We have been pursuing this with a laser focus and diligence. And we have been very successful as our results have shown. Our projections for future growth also test to this focus and make us a unique player. We are the largest operator of medical schools in Brazil. Graduating the largest number of new physicians annually. In addition to training them through all their professional journey, we continue now on a long relationship that increase their lifetime value to us, specifically by providing a wide range of digital tools and services. You all are here today. There are 2 areas that consistently feedback into an ecosystem of value generation. In 2020, we consolidated our position with almost 200,000 doctors in our ecosystem comprised of students and users. This accounts for more than 32% of the total doctors when you consider the number of active doctors added to the number of medical students in Brazil. It's important to emphasize, we have become a leading player due to our unwavering focus on growing our medical education business. We accomplished this partially through acquisition and organic expansion that total today, 2,300 medical seats and 24 campuses. We are the largest player in terms of medical seats. Despite this leading position, there is still significant room to grow as the industry is very fragmented. We are the largest player, and yet we only capture 6.1% of the market in relation to the total number of medical seats. Our share increased to 8.2% when you consider private medical schools. In other words, despite our absolute focus on organic growth and M&A, we still have a lot of room to grow and consolidate the sector. And as we will hear today, all of us are focused on this direction. We are a high growth company, delivering an impressive 90.2% revenue growth per year between 2018 and 2020. When asked about focus, I usually show this indicator. We are able to deliver this growth, combined a strong organic expansion with our disciplined M&A approach. Equally, if not more important, our profitability has also been healthy and sustainable growth during this period. EBITDA growth has been accelerating, showed 117% CAGR between 2018, 2020 and the latest EBITDA margin reached 46.6% in 2020. And last, our cash generation in the same period has marked an impressive 75.7%, confirming our tripod of strong growth with high profitability and cash generation. Summing up, we are the only player who serves the docs throughout his career. We generate a high-value to Brazilian doctors and a lifetime value for Afya. We are absolutely focused on this. And we cannot forget that all this good performance was maintained even during the worst health crisis in modern times. Our organic growth in undergrad medical student was 40.2% due to maturation of our student base. We had 52.9% growth year-over-year on combined tuition fees due to the maturation and also price increase. With respect to our BU2, we saw 18.1% growth with our residency prep course. Students jumping 21.2% organically. We achieved this growth in one of the most complex years in history. Residence tests were postponed. Postgraduate costs were limited by the restriction of practical classes; however, we did grow. We have a strong brand recognition and an attractive value proposition for our students, which enable us to deliver the strong results that we did it. Let's now talk about M&A growth. M&A is a key pillar of our growth strategy, and we are taking a disciplined approach to grow our portfolio. To date, we have acquired more than 851 medical seats, 6 new campuses, expanding our geographic presence, and maintaining our focus on being present in the most diverse regions of the country. Equally important is growing our presence, has been our success in efficiently integrating these new businesses, extracting synergies and driving margin expansion. And given that, our most recent announced acquisition has not yet been fully integrated. It's not unreasonable to expect further margin improvements. To date, we extract an average of 2,200 bps of EBITDA margin improvements from acquired companies. And we accelerated our plan to expand into digital health services market. With each new company we acquire, we reinforce our ecosystem and our perception as a strategic partner to follow the medical journey. As 2020 began, Medcel was the key service in our digital health ecosystem. And as the year progressed, we added PEBMED, which also include white book and nurse book solutions. Our strategy here is to combine quality medical education with intensive use of technology and PEBMED is a key component of this strategy. With this acquisition, we entered into the digital health service segment and brought to our ecosystem more than 160,000 physicians. We followed this with the acquisition of iClinic, a leading practice management software. iClinic, enhancing our participation in the digital health services. Adding a valuable portfolio of medical services to our platform. Next was MedPhone that increased our penetration on physician base. Then MEDICINAE, Medical Harbour and Cliquefarma that were announced this year. Moving next to a recap of the medical seats we have acquired since the IPO. The first acquisition was FACIMPA in August 2019, adding 120 seats. 5 months later, we bought UniRedentor, gained a 112 additional seats. Next was São Lucas in May 2020, adding 182 seats. In August of 2020, we acquired Faculdade de Ciências Médicas da Paraíba and FESAR, adding more 157 and 120 seats, respectively. To date, the last acquisition has been UNIFipMoc, adding another 160 seats in Montes Claros with a strong synergy with our current operation in the city. As a result, we have reached more than 85% of 1,000 seat acquisition target in about half the time of our initial plan. Now let's deal, how much value we extracted from these acquisition? As you can see clear in the charts, with all acquisitions to date, we have been successful in integrating the companies and extract that tremendous value. In general, the margin expansion has been over 2,200 bps in slightly less than 2-year period. It's important to reiterate that we have been able to extract the value in every company we acquire. Now let's go back to our third block. Although we have been focused on technology since our inception, our goal of being the best partner for the doctor to all his journey, has caused us to accelerate our efforts in this regard during the past few months. The pandemic was a contributing factor as well as providing that both individuals and health care professionals were [ willing ] and able to adapt to a more digital world. It's clear to us that the ability to be with the physician as they go above their daily work, provides both the capacity to increase the lifetime value and provides an additional and important revenue source to Afya. This is an important point. It represents both the expansion of potential gains we can derive from each medical student, but it also allows us to expand in a very organic way into another equally large market. But more than that, we have created an ecosystem that's effectively serving every moment of the doctor, and it is a significant advantage that creates a more difficult environment for new entrants. But why are we the best player to combine education and digital services? Let me say for this discussion in 2 parts: The first one highlights what we have been discussing. Since the IPO we are the only player focused on the entire journeys of the doctor. We are keenly dedicated to this. We have over 1,000 employees, including doctors and developers, totally committed to design and experience we offer across our platform as well as updating the content that we use in our digital course and services. Second, today, we already have the largest medco ecosystem in the country. We serve approximately 200,000 doctors, and we have more than 432 agreements with hospital and clinics. That's a huge network. This intense focus copying for our leading position clearly favor and will continue to favor high-value extraction and with a high lifetime value and high EBITDA margin in the years ahead. In our case, this is further augmented by our robust balance sheet and very high cash generation, which today we have used systematically and efficiently in M&A and investment in the digital innovation. In this first panel, I really wanted to recapture our main deliveries since the IPO. Now I invite you to stay with us as we dive deep into our strategy. Throughout this morning's presentation, we will take you along on our doctors' journeys to show how we integrate with them during their journey. And very important, is that in all points along the journey, we are seeking to further expand our products and service offerings. Here at the top: We have Persona that represent different moments of the doctor's career. This start as undergrad student to the student of the prep course to the one who offer to pursue medicine as a generalist, shut us in internal medicine and the many who we will continue to specialize throughout their care on a recurring basis. At the bottom of the journey, we have shown the total addressable market of the educational market with a value of BRL 22 billion. From our point of view, addressable market now also includes digital services and the supply of medical educational content in digital format. The total addressable market for this new business is equivalent to education and which is obvious, fed by doctors who will enroll in undergrad and specialization course. So our TAM now is over BRL 40 billion. This is our new competitive arena. And one that we have not spoken too much until now. We are well positioned to win in this market as we can meet the doctors with more aligned offers. This is furthered by our largest market share. But to make this idea clear, I invite everyone to follow us along the doctor's journey to the different personas and stage of the medical career. Let's meet Anne our medical undergrad student attending an Afya School. [Presentation]

There are many differentiating factors in our programs on the path to graduation. All these investments in quality has helped us not only in attracting students, but we are also the perfect partner in the M&A process. The high-quality of Afya's medical degree make us proud. Of the 28,000 private medical seats in the country, we have 8% market share. We have a large advantage over the competitors, which are not solely focused on the medical education and the physician journey. Looking at the map of Brazil, our strong representation of medicines across the country is evident. There are 24 campuses spread over approximately 50% of the states. And even with all our large presence, as I have already highlighted, we only have 8% market share. Our successful capacity to acquire and integrate medical school highlights one of the key objectives of our executive team to continue growing market share and medical education. Now I'd like to highlight some of the key factors that have driven the successful execution of our medical education strategy. First, our course matrix is standardized in all units. Guaranteeing quality across all campuses and providing operational efficiencies. Second, throughout the cost work, students have access to practical classes in real and simulate environments, blended learning, using clinical decision support tools and telemedicine. Afya stands out for its use of practical activities and the use of digital solutions since the first semester for graduation. Third, students take a proficient test, each semester, which allows them to develop an individual learning path with a focus on measuring the acquisition of knowledge, skill and attitudes. Student results are compared across campuses. One of the key management goals is the academic performance across campuses and different programs. Fourth, access for fifth and sixth year students to access online prep course. Fifth, assistance to more than 420,000 patients per year. From municipal health departments and philanthropic institution, building the largest medco learning environment in Brazil. So looking at our growth, the high attractiveness of our business is evident. There are 2,300 medical seats that will generate 16,600 students in the maturation phase. Confirming the upside of 1,200 medical seats, we will be able to expand to more than 25,000 medical seats enrolled at the full maturation generating a CAGR ranging between 7% and 14%. And students volume between 2020, 2026. Excluding any acquisition that we will address later in this presentation. We take a great pride that we are able to deliver an important social impact by developing the next-generation of doctor, fostering such an important and in-demand career in our country. And at the same time, we do it with a very high-quality and return to our shareholders. To continue presenting this information about our performance, I would like to invite here our VP of Digital Services and Innovation, Julio de Angeli, to speak next.

Hello, everyone. It's a pleasure to be here today with you all. And first, I hope everyone is fine and healthy out there. Since the IPO we have accelerated our digital health initiatives through the launch of new technologies as well as through M&A. And now I want to take you through obvious universe of digital content and technologies. But first, let's meet, John. [Presentation]

So as you are aware, we already offer a lot of resources and solutions in digital content and technologies. But we are very focused on continuing to improve our products and expanding our offers. And why is that? As we can see in this graph, the number of graduate doctors has been growing year after year in a very consistent way and the trend will continue. The number of medical graduates has more than doubled in the past 10 years. And we also project a CAGR of 14% a year between 2020 and 2026. With Medcel, we are leaders in the segment of online test prep courses. And as many of you question as to what makes us leaders, we have summarized here what differentiates us based on recent research with our students and also with the competition. With our product offerings, we have all the features that are considered relevant by our customers. A special emphasis on our digital expertise, our live classes with interaction between students and teachers, our printed materials and differentiated support, our personalized study methodology and the scope of content in different formats and platforms. And finally, something that only we have, a technology that allows us to scale the service to each student personally and by professional from our team who is responsible for monitoring the student engagement, improving their proficiency and specific issues and also the increased interaction between students and teachers. Importantly, there has been a 15x increase in interactions between students and teachers since we launched this feature. Exactly. That is 15x growth, and it is still growing. And why do we offer this feature. Because we believe that online education should be, yes, humanized. Technology is here to help, but at the end, what we do is education. And engagement in the learning process means educational success. So with the new features launched, there was a strong growth in the engagement of our students. As we announced at the beginning of the pandemic, we opened our platform, free of charge, to more than 9,000 students from 32 different universities. It was a decision based on the social aspect and also on the fact that these medical students had their face-to-face classes interrupted. At a first glance, you might be saying to yourself that this was not a good decision. But this perception can be only be sustained until we compare the period between the months of September to March from 2019 to 2020 and from 2020 to 2021. We had a 70% increase in the number of paying students. In addition to that, we signed B2B contracts with 3 private institutions from the 32 we helped during the pandemic, and there are another 3 contracts in final discussions. The impact of that decision is being captured and reflected this year. And also, I call the attention to the significant increase in the engagement of paying students that has been taking place in Medcel, especially in the last year. We had 150% increase in content consumption for the same base of paying students. That is why we had a significant increase in the number of monthly active users and a consistent growth in the middle of the year in relation to 2019. And when we look at the number of logins, the number are also impressive. There is a 2.5x growth number due to higher engagement. And in the first quarter this year, we had almost twice as many logins as the full year of 2019. It is essential to highlight that these numbers reflect the evolution of the product. Evolution, which was totally guided by the analysis of habits and preferences of our students. Now I would like to show you the latest version of the platform, and you'll be able to see how it actually works. And you will understand why this increase in engagement. [Presentation]

Well, with this solid presence in test prep courses, it was natural to expand content to students during the initial years following medical graduation. This makes sense, both as a business but also as a way to get students from other medical institutions to get in touch with our brand and products from day 1 at medical school. We have dedicated ourselves to researching, prototyping and developing a product that will definitely revolutionize the market. It will be launched in the second half of this year. And today, I brought you a quick overview of the scope. [Presentation]

Well, in summary, this new product consists of Afya's first subscription-based educational product, containing a library of all the available content that can be organized into educational playlists and students organize them as they wish, very similar to Spotify. In addition, the product has a social media functionality, the first in the industry. Students and teachers will be able to interact as in any other social media app, lives and stories will be part of the educational experience impacting engagement in a very positive way. Finally, the platform will address content and topics related to students mental health and stress as we care about students burnout. We will also be offering mentoring on various topics, such as marketing and medical law, career advice, setting up and managing his own clinic. With a focus on expanding our operations in digital content and technologies, on April 8, we acquired Medical Harbour. A start-up focus on the development of 3D images for medical education at the cellular level, passing through tissue, organs and the body. The solution is being added to all of our courses, from undergrad through test prep courses and covering all specialization and continuing medical education. At the same time, it expands our B2B presence in University. We jumped from 8 to 48 contracts, representing 20% of private universities offering medical degrees in Brazil. And why is this addition of medical institution so important? We will now deliver content with impressive image quality without the need of any special device. This is highly scalable, and we will grow even more as we offer the radiology imaging product across the medical industry. Although the business is scalable, our goal is to migrate the existing platform to a mobile solution. In turn, expanding the B2B business model to B2C subscription-based model as well. So let's quickly check the technology. [Presentation]

In the B2B front, our digital content and technology verticals signed 8 contracts with hospitals and pharma industries. We are still scratching the surface on this front, but celebrating the results. To finalize the content and technology for medical education pillar, let me introduce you, Bruno Lagoeiro, Head of PEBMED, to join us here. He will introduce you to the PEBMED portal, the leading medical educational portal in Brazil, and he will talk about our clinical decision software pillar.

Hello, and good morning. I'm Bruno Lagoeiro, Head of PEBMED, physician and working with technology since 2012. Continuing our discussion on content and technology for medical education vertical, we have our medical update website, the PEBMED portal. We are the most significant Brazilian portal for medical news and updates aimed at health care professionals and medical students. We have amassed more than 9,000 publications in the last 6 years of history. Currently, there are about 200 pieces of content published monthly on the platform, including reviews of articles, guidelines, podcasts, coverage of congress and clinical cases. And we have more than 3 million visitors per month. From that, 70% of these are health care professionals. It is vital to highlight that also 70% of the monthly traffic of PEBMED portal comes from organic search, demonstrating our authority in SEO. We are among the primary resource for information of our health care professionals in Brazil. It is important to share that PEBMED portal distributes a weekly newsletter with the main published highlights reaching 300,000 registered users. without a doubt, the portal PEBMED is also an important channel for acquiring organic leads for the other Afya products. Like John, who you just saw in the video, nowadays, more and more doctors using the portal PEBMED as a source of consultation and update. Our monthly active users grew 9x in 2020 when compared with 2018. Now I will briefly present the platform. [Presentation]

Great, we finish our discussion of content and technology for medical education vertical. Now we are going to discuss our clinical decision software vertical. But before we start, let's meet Tom. He represents many of the doctors that are we helping throughout Brazil. [Presentation]

As you saw in Tom's video, in this vertical, we offer the Whitebook. The number one point-of-care mobile and web medical app in Brazil. Whitebook is the most popular decision platform in the local market. We have more than 105,000 subscribers and more than 160,000 monthly active users. In 2020, Whitebook had more than 54 million consultations, which means an estimated 30 million impacted patients, better decisions at transforming the health care system. Our leadership is unquestionably strong. Today, 1 in every 5 doctors and medical students in our country uses the Whitebook. The platform has more than 9,000 topics from 38 different specialties prepared and reviewed by a team of more than 40 medical specialists. Whitebook offers hundreds of tools such as calculators, clinical scores, checklists and medical codes. And during the coronavirus crisis, the Whitebook was accessed daily by more than 50,000 doctors helping to save lives. And Whitebook users are really satisfied. The NPS in 2020 was 84 points. Finally, in the last 5 years, Whitebook is one of the top 10 apps with the highest revenue generation in Brazil according to the mobile reports from App Annie. And besides our amazing market dominance, we have an excellent opportunity to expand our penetration with the younger users and more experienced doctors. We are working intensively with our undergrad and graduate students and other digital users to grow in these markets. Before navigating the platform, it is important to review some of our main metrics. The numbers speaks for themselves. NPS above 80 points and 2x subscribers base growth in the last 2 years. In addition, of course, the tremendous impact on the lives of millions of patients from all over Brazil. Now let's navigate through the platform. [Presentation]

Thank you very much. Now I leave you with Felipe Lourenço, Head of iClinic.

Thank you, Bruno. Hello. Great to be here today. I'm Felipe Lourenço, I have a degree in Medical Informatics and more than 10 years' experience in the digital health industry. When I found iClinic. I will share with you a little bit of some of the other pillars on which we have been worked. We will talk about practice management tools, electronical medical records, telemedicine, digital prescription and doctor-patient's relationship. But first, I would like to introduce you, Peter. [Presentation]

Before we start talking about our work on these pillars, I refer you back to the data you saw earlier about the numbers of doctors and its growth rates. Here are some statistics that shows that the numbers of doctors in Brazil is booming. As you can see, in the last 10 years, the numbers of professionals in the country jumped from 350,000 to more than 520,000 physicians. It's an impressive growth of almost 60%. And the most interesting thing is that this rate continues to accelerate. Today, Brazil trains about 26,000 doctors every year. And the projection is that in 2024, there will be almost 32,000 doctors entering the market every year. This is a huge opportunity for us. It's certainly a growing market and in great demand where we are very well positioned with iClinic. iClinic was developed to help doctors in all the activities related to their practice. The modern doctor is tired of storing information inefficiently on paper or having to navigate between different platforms with different purposes. So this is where iClinic comes in. We created an end-to-end fully automated platform, which digitalized all the processes within the clinic. iClinic is the one-stop shop technology for doctors to manage their practices. Our 5 core products help doctors to complete important daily tasks such as attract more patients; focus on providing care and define treatment in the best way; engage with patients and increase treatment adherence for better results; and lastly, to manage administrative steps of the practice management to make it a profitable business. Let's look at these products in detail. With iClinic marketing, doctors can improve their digital presence. By creating a professional profile on our marketplace, AgendarConsulta.com, it's possible to increase their online visibility, reinforce their personal brands through the patient reviews and replying patients Q&A. So this way, they can attract more and more patients. Going forward, the iClinic electronical medical record is the core of our platform and allows doctors to focus on what matters most, taking care of their patients. Through an extremely friendly and intuitive interface, the doctor is able to record and retrieve the clinical information quickly and safely with iClinic electronic health record, time-consuming tasks such as drug prescription, lab test requests and sick notes can be done in a few seconds, bringing more productivity to the physician and more quality to the service. Now talking a little bit more about telemedicine. This has been one of the most frequently used products since the pandemic began. In iClinic's telemedicine, doctor and patient can connect via a simple link and schedule a time with no need to download or install any additional applications. Fully integrated with iClinic electronical medical record, our telemedicine solution allows the doctors to connect with patients directly from the medical record, while recording all the information without losing eye contact with the person that needs assistance. Everything in accordance with the rules that regulates the practice of telemedicine Brazil and LGPD. Moving next to our CRM. iClinic engage help the physicians to extend their relationship with patients far beyond the time of the consultation. Our CRM solution allows the creation of automated patient communication to send at the right time before an appointment or during the treatment. This allows the doctor to be close to the patient even at a distance, guiding, educating, increasing treatment adherence and achieving better results. And finally, with iClinic Finance, doctors can manage their clinic financial health without any hassle. It is possible to manage collections, manage receivables from health plan operators, record expenses, make cash flow analysis and anticipate receivable. Everything is done in an automated way, providing high quality and actionable business insights. We are the #1 player in Brazil. Let me give you some important stats. In March 2021, there were more than 13,000 paying doctors using iClinic. It's a nationwide penetration, spread across more than 1,300 cities across Brazil. We have 44 medical specialties served and 19 million registered patients in our medical records. 56 million medical consultations already happened on the platform. And finally, 4 million medical prescription in 2020. Our ecosystem currently has 170,000 visitors per month. This is 3.7x more visits than the second player in the industry. And more importantly, we are a trusted partner of the main medical associations in the country such as the Brazilian societies of cardiology, orthopedics and gynecology, and everything is supported by a really high customer satisfaction. With a fast and effective customer support, we have a 93% customer satisfaction rate. Our customer support average response time is less than 3 minutes. We had an NPS of 61.5 in March 2021, and it's constantly increasing. This results in a really high retention rate with only 1.3% logo churn, really small when compared to the industry. Talking about some of our numbers. Between 2018 and 2020, iClinic grew its base of medical subscribers more than 3x, jumping from 4,000 to more than 12,000 paying users at the end of 2020. And at the time of this presentation, that number is already greater than 14,000 physicians. We are the #1 SaaS practice management software for clinics and doctors' offices. Our high user adoption generates impressive numbers. Let's recap here some of the numbers that we have already seen but now put together. Today, there are more than 800,000 consultations happening digitally every month within the platform. We have already gathered data from more than 90 million patients, which is almost 1/5 of the population in Brazil. Last year alone, more than 4 million drug prescriptions were generated digitally. iClinic is at the core of the medical practice and is, therefore, a central part of our strategy. In addition to representing our digital products with possibly the greatest retention over time, generating a long lifetime, iClinic daily or weekly usage by doctors represents the way we participate into doctors' daily life. So let's see iClinic in action. [Presentation]

So to finish this part of our journey, we want to expand our presence in the doctor-patient relationship pillar. Today, we work with AgendarConsulta.com marketplace that allows patients to find the best doctor in a simple and quick way. But there are still many opportunities to be explored. What we want is to connect doctors and patients. Our vision is to offer content and tools that provide more education about disease, diagnosis, treatment and medications to the patient, all created and curated by Afya's medical team; two, a better experience for patients when searching for a doctor, allowing them to find the best professionals available online, at the same time, we are driving demand to our doctors. And three, better ways of communications between patients and doctors far beyond the physical visits; and finally, as a result of all of this better treatment engagement, generating better results. So wait for upcoming news soon on this exciting product. Now I will turn the stage back to our CEO, Virgilio Gibbon.

Thanks a lot, Felipe. I think our focus is becoming clearer to all of you about how we are looking to extract more value from each of you, our customers, which in turn, should enable us to deliver more value to shareholders. And to close the journey, I'd like to introduce Dr. Suzy. [Presentation]

We have the best medical specialization in Brazil with a unique balance between practical, theoretical and online workload. Now let's go through some numbers. Julio brought to you the evolution of the number of medical students in recent years and also the number of graduates. More and more doctors enter the market every year, and Felipe showed you the accumulated number of doctors in total. And the more doctors we add to this universe, demand for specialization formation increase and as life expectancy for these doctors expands, more years they continue to work, generating more demand for subspecialities. That doctor is already in the 45, 50 years old age group, who continues to consume quality courses and information to keep up to date throughout his work life. The growth in new doctors, as already discussed, present a CAGR of 14% per year until 2026. But how we are responding in relation to all this potential? Right after the IPO, we outlined our growth plan based on expanding our geographical reach and our portfolio. Of the 500,000 doctors work in the country, more than 50% of them are located in 14 cities. Until 2019, we provided medical education in 5 of them and throughout 2021, we expanded our capacity to 6 additional cities, totally 11 campuses, solely dedicated to continued education. And we are not stopping there. We are evaluating 2 new graduate centers for the second half of 2021. Recall that the choice of cities not only considers the number of doctors already practicing in them, but also that in the immediate surroundings, and we have also expanded our portfolio considerably. From a single set, of course, with an average ticket for BRL 100,000, we created 5 new courses to reach and support doctors at different points in their careers and focused on different specializations. A common feature of all of them is the provision for practical lessens. As already mentioned, we have more than 500 hospitals and clinics affiliated with Afya, in addition to our own outpatient clinics, which are able to utilize for practical course work. And this is a very important differentiator. The offer of online content, especially for theoretical portion for the course work also became part of the entire portfolio. The first of these products is improvements. Of course that is scalable through the blend of remote and face-to-face possibilities, with shorter duration and possible conversion to some of post-graduated courses. It's the gateway to our area of expertise. Another new product is in our portfolio is Post-360. It's a family that has more flexible products with more competitive price tickets and different durations. With an average duration of 1 year, it's ideal for those who need to update quickly. The content can be offered in person, online or a hybrid model. The ideal course for young doctors who are more digital friendly. Now I'd like to highlight the Gold Standard Graduation. We have just seen that the volume of graduating students from medical schools has increased a lot in recent years, and that the same does not happen with medical residency seats. This post-grad is aligned with the requirements of the Minister of Education and Health and follows the residence program model. The workload is always demanding for every medical specialty, consistent of thousands of practical hours and theoretical portions online, and generalist physicians still have days off so they can also work. Here, we are offering courses that delve deeper into the subject matter. As the name implies, we are providing more specialized information aimed at professionals who have already obtained their title specialist. Here, we are focused on the doctor at a more advanced stage of his training. Fellowship programs are fully guided by practical immersion in hospital settings, and they are a great opportunity for an extremely practical update. And last, we will expand our stricto sensu courses, investing even more in research and professors differentiation for our medical schools. The masters and doctoral programs help us to round out our medical post graduate portfolio. Another very important initiative was the formalization of strategic partnerships with medical societies, associations, hospital and health groups or reference throughout the country. We are certainly the player of the most alliance of this type, which has a direct impact on the evaluation of the choice of a course by doctors. Finally, still focus on growth. We recently moved to a more modular course program, allowing enrollment throughout the year rather than only 2 specific times each year. All this focus on the practical components enable us to attend to free of charge more than 20,000 citizens in our outpatient clinics. This is a number that we intend to keep growing reflecting the change we are implementing, further impacting even more lives and our capacity to leverage our practice specialization. Now let's go back to the main points we saw in each part of the journey. We have more than 11,000 students such as Anne on 24 campuses in 14 states in Brazil, and more than 1,000 medical professors. We have a standardized curriculum on all campuses, which guarantees strict quality control and operational efficiencies. And our students have a very intense practical workload. This allow us to serve 420,000 patients per year from municipal health departments and philanthropical institutions. Despite being the biggest player, our market share is only 8%. And our student growth CAGR until 2026 is projected to reach 14%, including our alternatives to expand the number of authorized seats per year, which would drive a revenue growth of high teens in this period, excluding any additional and possible acquisition. With respect to educational content and technologies. At Medcel, we are present in all states with 14,700 students such as Dr. John, with an engagement in 2020 compared to 2019, growing more than 250% within the platform, and the NPS greater than 48 points. We are launching in the second half of this year, our first SaaS educational product for students from the first to the fourth year of medical undergrad for any university. This will be marketed both as B2B and B2C product. We also have 48 universities using our content, 5 of which are outside Brazil, and we intend to expand our presence into these new potential markets. On the PEBMED Portal, we have more than 3 million visitors per month that represents more than 70% of the country's health professionals, a strong positioning within the medical community. Assisting with decisions made at the bedside, we are well positioned with the Whitebook. We have more than 160,000 active users per month such as Tom. 1 in each 5 doctors and medical students in Brazil are users of this solution. And we have ranked among the 10 top apps with the highest revenue generation in Brazil over the last 5 years, as reported by app Annie. Management services, telemedicine, digital prescription, patient medical relationship we also have a very impressive data to share. As Felipe showed us, more than 13,100 doctors, as Dr. Peter, used our platform in March of this year from more than 1,300 cities across Brazil, impacting 90 million patients and 4 million drugs prescription throughout 2020. And all of these figures are growing exponentially over last year. Finally, in specialization phase, where we saw Dr. Suzy, we have more than 4,000 students. We have significantly expanded our geographic presence, more than doubling our graduate centers and tripling our portfolio offer. There have been many significant accomplishments since our IPO, and I'm grateful to all of our more than 6,000 employees for remaining inspired and engaged in our proposal of being the best partner the doctor can have. Now I will call again our VP of Digital Services and Innovation, Julio De Angeli. He will discuss what we call Afya's unique value creation ecosystem.

Thank you, Virgilio. Afya started focusing on the medical education journey. But it is very clear that new technologies are now part of the physician daily routines. With this new scenario, we have decided to accelerate our digital strategy to become also the partner of choice on medical digital services. Following our IPO, we started a series of studies to define what areas in which we should invest and make ourselves present through the medical journey. What makes Afya unique is the capability we have to understand the needs of a new generation of doctors and the way they interact and they use technology. And with that in mind, we've looked into medical routines and created our 6-pillar strategy based on our discovery methodology that we use on a daily basis to understand what's coming next for all of our students and clients. We just showed you videos and discussed technologies we've been investing on, and these investments are based on our guiding pillars. And we saw them here today embedded into the doctor's journey. But now I wanted you to see them from a very different perspective, from the perspective of our unique value creation ecosystem. So these are the pillars that guide us towards becoming the physician partner of choice throughout his journey. They were chosen both considering the size of the potential market as well as based on our ability to operate in each one of them and their undoubtful interrelationship and interdependence. Please note that in this image, we have Anne, John, Tom, Peter and Suzy in addition to several other doctors. They represent the Afya medical community with all students and users of our services. And around that community, we have the pillars. Our first pillar is our core pillar, and it's where we started our investment in technology. We produce and distribute medical educational content through a variety of formats and platforms. But imagine the doctor routine with a patient. During a consultation, he will focus on a diagnosis and then define a treatment based on a series of protocols. And that's the clinical decision process that has changed over the past few years. And I can tell you why. For example, 70% of physicians who graduated in 2020 in Brazil are current paid subscribers of Whitebook. So during that consultation, the doctor will add the information to the electronic medical record software. He will also charge the health care plan or directly the patient and later on, plan and control his finances. And that's our practice management tool and electronic medical record pillar. The consultation can actually happen face-to-face or now through telemedicine. The doctor not only can access the patient but also refer to a second opinion, if necessary, using telemedicine. And that's our next pillar. Following that, the doctor will probably prescribe a medicine or request an exam to the patient. And that's our fifth pillar, the digital prescription one. And to make this flow easier, the drug prescription should be connected to pharmacies, and it should be easy to find the best price of that drug prescribed and shipped from the closest pharmacy quickly so the patient can start treatment right away. And to finalize this journey, the doctor wants the patient to follow that treatment, engaging in that treatment is an important step on the consultation journey. And that's where lies the success of that patient case. Not only that, patient engagement and treatment avoids additional costs and returns to clinics and hospitals. This is where we get to a different market opportunity with patients. And now it circles back to where we started our pillars in a center of this image. We have our schools and for each pillar, we will define the best way to grow that business, either through M&A or internal development. As you can see now, on the content and technology for medical education pillar, it is where we place Medcel, then the PEBMED Portal and Medical Harbour. In the clinical decision software pillar, we have Whitebook, MedPhone and Nursebook. In practice management tools and electronic medical records, we have iClinic and Medicinae. In telemedicine, in addition to existing iClinic's telemedicine solution, we are evaluating solutions in the market or if it makes sense for us to proceed with internal development. And the same rationale is true for electronic prescription, where we already have click pharma but working on the prescription software solution where we operate today through a partnership. In the last pillar, the physician-patient relationship one, we offer AgendarConsulta.com as an appointment and scheduling tool for patients, and we are also reviewing solutions for patient engagement. Our M&A strategy and CapEx deployment is focused on reinforcing these pillars to become the leader in each one of them, integrating them into a unique set of digital solutions. You should now look at this image and think about the countless synergies between these companies and the pillars, and the significant effect of that community in the center and imagine the amount of critical data that we are generating. The potential for extracting value is incredibly high. And we believe that all of this data can be used, firstly, in a very, very important way, and it is to enhance our current educational products, with real-time data coming from our ecosystem. With the pandemic, we saw medicine protocols changing in a very fast and critical way. And with our strategy, we consequently position ourselves in a way that we will be able to prepare even better our students, fulfilling our educational system with the most accurate and updated content and information directly from the point of care. And also, we will be able to produce products to partner with the main players in the health care industry. So let's add this new layer here. Think about all the stakeholders that ordered this ecosystem: the pharmaceutical companies, laboratories, pharmacy chains, other educational institutions, health insurance companies and other health care companies, in general, as Virgilio pointed out in his explanation with our digital services strategy. We have basically doubled our addressable market. Out of their BRL 21.4 billion digital services addressable market, more than half refers to B2B opportunity. When we see this image, there is much more than a typical educational company here. Afya generates margin and cash, especially through our undergrad medical business. And this cash funds the company's future, creating a unique position with no other comparable in the market. Unique also, because Afya's core business is focused on the physician. We prepare the labor to the market, and Afya is the best player preparing the future generation of physicians. As I have already mentioned, there are pillars on which we are more advanced than others. Therefore, our goal in 2021 is to finalize the construction of the ecosystem. Reinforcing once again that this does not distract us from our focus to continue acquiring more medical seats and expanding our leadership position in undergrad medical students. Now I wanted to give you some background on our road map on building this ecosystem, and these are the key activities in which we will focus in the near term. So number one, keep adding new products and services organically or through M&A to fulfill the 6-pillar strategy; second, scaling stand-alone digital products through coordinated commercial efforts; third, starting customer database consolidated into a single data lake; fourth, launch first product integrations MVPs between Medcel, Whitebook and iClinic; fifth, test MVP solutions with the pharma industry; sixth, initiating Afya digital brand awareness strategy. So next year, our main goal is to increase our market penetration with the following steps listed here. So one, start building a single sign-on between platforms; two, launch a unified CRM and product life cycle strategy; three, increased marketing investment in product unified offers; four, the rollout of pharmaceutical industry solutions; five, launch MVPs on telemedicine services both for B2B and B2C businesses; six, significantly increase investments in the community feature; seven, ramp up our marketplace, AgendarConsulta.com; and eight, increase product personalization and intelligence with AI tests on Afya's products. Going to 2023, our goal is to leverage our physician network and unlock new revenue streams. And for that, these are the key activities: scale revenues on the B2B side, monetizing from all health care players; two, data intelligence to enhance educational strategies and provide feedback directly from the daily practice; three, consolidate Afya's unique and updated health care real-time data knowledge database. So this is a pretty exciting road map, and this is only the first paragraph of a long journey ahead of us. In this context, I wanted also to mention 2 very new initiatives we are launching this year. The first one is Afya [ Laps ], a unique free of charge program to train tech developers and at the end of a 5-week program, we will select participants to work with us. And the second one is Afya Adventures, an acceleration program focused on Afya's ecosystems where students, professors and all of our staff will receive support from their entrepreneurial initiatives. It is not a simple challenge. But as a company, ahead of time, leading the market, this is what helps us to engage and attract talented people who will build not only the future of this company, but also the future of the health care industry. Now I want to invite our CFO, Luis Blanco to the floor. Thank you.

Hello, everyone. It's a pleasure to be here with you. Let's begin with what you can expect from us going forward, starting with our projections. And speaking of projections, I want to take the opportunity to communicate that now that we have shared the details of our strategy, we will adjust the way we present our segments in our financial results. This change in the presentation is to enable the investment community to follow our performance more clearly on our works. To date, we have published our financial results in 2 segments: the first segments, we call BU1, undergraduates; and the second, we call BU2, which consists of preparatory courses, specializations and digital health service. Going forward, we are evolving to the following: undergrads, continuing education and specializations. And Afya digital, which will comprise all the digital service for the physicians and medical students. Back to the discussion of the guidance. For 2021, we continue to expect a high rate of growth. Our business model is characterized by high predictability and profitability. We are projecting growth of up to 43% year-over-year in net revenue and up to 45% year-over-year in adjusted EBITDA. In terms of adjusted EBITDA margin, we expect to deliver between 46% to 48% versus 47.4% delivered in the first half 2020. This high-margin level is due to our capacity to deliver high growth while extracting value through the execution of our integration playbook. Moving on to discussions of how we see our near-term growth evolving. We see this growth coming from 3 areas: the first is organic growth, the second is M&A strategy and the integrations of our acquired company, and the third is to make our position stronger in digital health service. Now let's go deeper into each one of them, starting with organic growth. When we look at our organic growth at undergraduate, we have 3 growth drivers: maturations of current units, 7% CAGR, 2020 to 2026 number of medical students; ticket maturations, 4.5% CAGR, 2020 to 2026; upside seats, 478 already requested seats for MEC and 700 seats to be requested from MAIS MEDICOS program to totally 1,200 seats that we have a potential to increase our medical students CAGR up to 14%. When we look at continuing educations, we highlight the following growth drivers: new campuses, 6 new graduate campus; new partnerships; market growth; 15% CAGR, 2020 to 2026. It's worth mentioning that we have just closed the first half graduate intake, reaching 1,200 new students, representing a growth of more than 90% over the same period of last year. When we look at digital, we are just in the beginning of this journey, scratching the surface of a total addressable market of BRL 21.4 billion, representing a huge opportunity for reaching exponential growth in this area. Moving next to M&A. Now a look at what you expect from our acquisitions. When we dive into our M&A and integration strategy, we have a strong focus in continuing growth in undergraduate business in the following ways. Our goal is at least 200 seats per year starting in 2022. We will always be guided in clear permits that have been successful for us in the past. More than 60% in the net revenues must come from medical courses at maturity. And our acquisitions aim to generate an internal rate of return around 20%. With respect to strengthening our position in digital health service, as Julio has already detailed, we will continue making acquisitions and investing in CapEx with focus in fulfilling the 6 pillars, as already discussed. We talk a lot about M&A in our earnings calls, Investors meeting and as of today. Since the IPO, acquisitions have been a key component to the company growth strategy. We have been successful in our integrations efforts and clearly see an unquestionable impact in our results. Despite the successful track records, we consistently get asked why we are so confident that we will continue to make good acquisitions. Why, after all, will Afya win this game? Founders and owners prefer to partnership with us. We are an executive team totally focused on medicine, well recognized by the sector. We offer our digital platform to more than 30 institutions to help them in their academic model. We have physicians in our boards and management positions. We have the best medical learning process built to guarantee the best possible academic performance. We have a great integration capacity and a successful track record doing it. We have proven our ability to extract value in medical schools and digital assets. Building an ecosystem that creates a high lifetime value. And last but not least, we have a solid balance sheet and a high cash flow generation to finance our future acquisitions. And to share with you our fourth and final panel, I invite you again, Virgilio Gibbon.

Thank you, Luis, for showing our impressive financial figures. Today, we have talked a lot about we have accomplished since the IPO and where we are going. The data points, the growth rates that we have shared have all been impressive. But we are also very proud that these figures are followed by a great sets of responsible actions in relation to the environment, society, along with incooperating the highest governance standards. [Presentation]

On the social front, we have been extremely busy this year. During the beginning of the pandemic, we gave access to Medcel platform to more than 9,000 students from different universities. And we did it because we understood that it was the right thing to do and help them with the learning process during the current time. In-person classes had been interrupted across the country, and access to our 1,000 of online content was a way of contributing so that the training of these young doctors was not totally interrupted. We offer the program how to prepare for the COVID-19 pandemic at no cost to hospitals, medical associations, medical schools, trained doctors and students. More than 23,000 professions benefited from the course that brought clear protocols and best practices for the care of patients with the virus. Due to the pandemic, most of the doctors were needed to work outside their call specialties. This was because the demand was much higher than usual, both in the care of patients with COVID and in relation to patients who had other disease. Doctors were confronted with the care of disease outside their specialty, and many had to do this using telemedicine for the first time. We offer telemedicine tools for patient care. And given this environment, we launched a new course named Therapeutic Update in the Era of Telemedicine. We also provide this free to medical professionals. We connected with doctors from all over the world, to exchange experience and to share in a comprehensive way, measures about the pandemic in different parts of the world. During a 1-week period, cyber experience were change between almost 6,000 doctors from all over Brazil. Julio de Angeli was one of the moderators from Afya. This event was also free. In addition to offering content and training, we also made strong progress with hospital and government agencies. We donate masks, gloves and other safety equipment to help the patients in and hospitals in 13 cities where Afya's medical campuses are located. More recently, we transformed our campuses into vaccination sites. We are working hard to ensure that medical students and teachers receive vaccination. We have several of our leaders actively participating in COVID municipal and regional crisis committees. In promoting health, we expanded the pediatric ICU beds at the Hospital Geral de Palmas. And they created outpatient clinics in the FASA and FESAR campuses and reproposed the campuses in Palmas to enable the practical components for our students as well as serve the local population. We developed a patient safety policy and also create a health simulation center in a pilot project in Palmas. We almost doubled our free consultation with the population around our campuses. There were 427,000 consultations in 2020, up from 270,000 in 2019. And we multiply by 7 our numbers of partnership with hospitals and clinics reaching more than 430 partners. In the corporate governance area, we are immensely proud to have 55% of women in our overall workforce, and also 55% of executive leadership positions are held by women, and 2 women on our Board of Directors. We are aware that's only the beginning and that much remains to be done in the search for diversity in our operation. We have already in place strong policies, social and environmental responsibility, code of ethics, related party transactions and conflicts of interests, bribery and corruption policy, confidential information, and we have complied with SOX in 2020. Moving next, we have also expanded our operation and initiatives in the relation to the environment. In most of our campuses, we have solar panels and are self-sufficient in relation to the consumption of electricity. We neutralized 140 tons of carbon in the atmosphere by reforestation and planting trees. These are 2 projects that we are very proud, and we will continue to be expanding in 2021. In new campuses at Mais Medicos, we started to collect rainwater for use in the air conditioner systems. We also have been engaged in recognized collective initiatives that reinforce our commitment and engagement with ESG. We are signatories to the UN Global Pact. We are launching our second annual sustainability report, developed using the Global Reporting Initiative, GRI. It's one of the ways we are formally becoming accountable to our shareholders, suppliers, customers, employees, students and government. Now I'd like to introduce our executive team. Luis Blanco and Julio de Angeli you have already met today with Bruno Lagoeiro and Felipe Lourenco. This is basically the same team since the IPO with more than 10 years of experience in health, education or technology. The only change was the arrival of Luis Blanco as CFO in March of 2020, who brings a strong background in the health sector. Therefore, everyone is very aligned with our long-term business plan and responsible for the successful execution. I would like to point out that our management team is evaluated and rewarded based on the metrics related to the value creation, which includes the following key components: revenue growth, EBITDA margin, cash generation, NPS, employee satisfaction and ESG KPIs. They are also aligned with our long-term business plan with a 5-year stock option program. It's essential to highlight that currently, we have more than 50 professionals taking part in the company's stock option plan and represents an important tool of cultural alignment and talent retention in Afya. At the Board level, we have the valuable mix between the founder family, brings the medical education expertise together with Crescera Investments with a strong track record in education and tech space in Brazil. It's important to mention that we did have change to the Board since the IPO, adding more digital know how, governance and people manage expertise to the company. There are 11 members, 4 independent and 22 (sic) [ 2 ] are women. The Board also had 3 permanent advisory committees: compensation committee, audit risk and ethics and business expansion. More recently, we had the honor to receive Paulo Passoni from SoftBank, leverage our digital and financial capabilities at the Board level. Paulo Passoni from SoftBank and Daniel Borghi from Crescera sent a message for us today.

This is Paulo Passoni from SoftBank. We couldn't be more excited to join Virgilio and the entire Afya team in building a super awesome ecosystem for doctors, leveraging on technology. We're going to do lots of M&A. We hope so. And this is just the beginning for us. We are here for the long term, and we got to know Afya quite well. It was a long diligence process but now we are ready to start contributing day in, day out. Our team of 25 investment professionals for Latin America plus 15 operating partners are going to dedicate themselves to help the Brazilian team. We're going to help on recruiting. We're going to help on M&A. We're going to help on technology aspects and making sure that we build the most successful company possible with our new partners who are now part of the SoftBank family. Thank you.

Hello, Afya shareholders. I hope by now you understand a little bit more about our company, our culture and our values. You probably know more about everything that we are planning to do in terms of content, education and digital services. We've achieved a lot so far, but we don't want to stop here. We want to keep moving. Hopefully, now with our friends from SoftBank, we'll be able to deliver even more growth and good perspectives for our shareholders. I hope you all well. Take care. Bye-bye.

We are coming to the end of our presentation. And I would like to highlight the most important message from today. Our leadership position in creating the largest medical community in Brazil, both in education and in digital services. Our high profitability and predictability of results, with an even faster growth projections in revenue and EBITDA, best point in our guidance. Our commitment to maintain the strategy of medical seat expansion, both organic and through acquisition and our quest to consistently increase the lifetime value of students and doctors in our ecosystem, offering education and digital service throughout the physician's journey. For all of us in Afya, it has been a great joy to help train new doctors and equip many others to better carry out their chosen profession and deliver better health care services. And today, was an incredible important day for us. A day on which we were able to present in detail our strategy and point to where we are heading. A day in which we present to everyone in a structured way, the reason for the last acquisition of health tech companies and how they play on the strategy we have outlined. I beg to reinforce the significant expansion of the markets in which we are operating and the potential that this new addressable market brings to Afya, a day to reflect on Afya's resilience given the above expectation results delivered since the IPO, even considering the challenge due to the current pandemic. And at the same time, a day that we are setting new goals to grow even faster. We are very optimistic about the future and hope you can appreciate it as well. Thank you again for being with us today, and now we can go to the Q&A session.

Thank you for joining us for Afya's Investors and ESG Day. We are now going to start our Q&A session. To ask a question, please send to us using a link at the top right of the page. So the first question is from Marcelo Santos from JPMorgan and, Virgilio, could you please describe in detail the extra medical seats that Afya might secure to reach its full potential of 25,000 medical students.

Yes. Marcelo, thanks for the question. We have today 1,200 potential additional seats that is under approval in the Ministry of Education. So if we consider that we have a successful authorization of all these 1,200 and also the full maturity of these additional seats, we will reach 25,000 students enrolled on total maturation. But it's more reasonable that we can have success something between 40%, 60% of this total amount of additional seats, and we can complete through a position to reach by 2025, 2026, 15% of market share of private seats, that would mean between 400 -- 4,200 seats and 400 -- 4,500 seats by then.

Great. Luis, would you like to complement, say a little bit about the M&A strategy?

Yes. Thank you for your question, Marcelo. About M&A, it's important to highlight that we expect to reach -- to surpass this year the guidance that we provided on the IPO, we're going to surpass the 1,000 seats goals on 2021. And from 2022 going on, we have the expectation to buy more than 200 seats per year. So the M&A strategy will continue to play a very important role in our growth. So this potential growth that Virgilio just said might be added with these M&A targets that we just provided.

Yes. Great. And Marcelo, great to mention here that our target is to achieve something around 15% of market share. So this 200 will go with the additional seats until we achieve something around it. So the next question is for Julio. It's from Vinicius Ribeiro from UBS. Could you elaborate a little on what -- your [ 10 ] estimate. How should we break down based on the strategic pillars? Also, we see some of this as somewhat of a crowded space, for example, telemedicine. On which pillars do you see active competitive advantages as more relevant?

Okay. Thank you, Renata. Thank you, Vinicius. Thank you, everyone, for being here with us. It's a good question. I mean the way that we see the TAM is basically we split it between B2B and B2C. So roughly 70% of that TAM is B2B. The rest of that is B2C. And as we try to explain here today, Afya has a very unique position. So we're partnering with a doctor in a very unique way. I mean we are a company that we don't have any relationship with the industry operating in the industry. So we are an educational company and we used to say here that we are very agnostic in a way. So partnering with these doctors, and this market is booming. This is just scratching the surface. So we truly believe that this is going to give us a lot of potential to explore. Since now we have these 200,000 doctors in our ecosystem and as you've seen, I mean, one of the key points of strategy here is to increase this market share. So we will be able to explore more of these services. And thinking about the way that we'll monetize this, we will explore the B2B revenues through different services. I mean we have benchmarks of companies like M3 in Japan where they have educational services, media services. So giving access to the industries, for example, to partner with the doctors or provide content to the doctor. So we can explore on that front. And recruiting services, for example, is another way. So there's different ways of extracting revenues. We're doing this now. We're starting to do this and integrating all of these services will be very important and very unique for us. Not sure if you guys want to add something, Felipe or Bruno, if you want to add to the point.

Yes. Yes. I'd like to add the point here. As Julio mentioned, looking into M3 example. So they have more [ added control ], more than 80% of market share of doctors in Japan. Same thing in U.K. where they have 80% penetration on the doctors market on the digital space. So our endgame here is to conquer and to dominate the market share of doctors on the digital space. So by doing that, we believe that we'll be the main channel for the whole industry to reach the doctor, which is a really relevant person and relevant agent for the whole healthcare chain.

Yes, great. And to summarize it, that's why for 2021 and 2022, we may hear to acquire market share and to have a longer and higher market share in this business. The second question, it is also from Vinicius. It is for Luis. After the SoftBank Investment, Afya had a solid capital structure, yet the maintenance of aggressive med debt, M&A goes to 2022. Afya ventures to further expansion of digital capabilities should entail significant investments. As stock liquidity has been a factor, should we expect you to seek the market for funding again?

Thank you, Vinicius, for your questions. After SoftBank operations, we have cash to support our aggressive business plan that we have inside. So we do not see, at least till now, any additional needs for our primary operations to fund our capital. So we have this opportunity with SoftBank. We have this cash. And if we want, we can even further leverage our balance sheet. So until now, we do not expect any additional primary operations right now.

Okay, great. Thank you. So the next question is from Pedro Mariani from BofA. And it's for Virgilio. Could you please provide more details regarding the [ map ] initiatives and the strategies to boost the growth and cross-sell between the recently acquired health tech with students in B1, Medcel and IPEMED.

Okay. So everything that we plug into our ecosystem is synergic. We start with our campuses. This campus has around many hospitals and clinics, and we start now leverage our portfolio with digital services. When you acquire a new company and add new services into this ecosystem, everything is synergic. Imagine that, when we start offering like clinic features and we go to a new institution that we just acquire, like an undergrad medical school, we can use all the physicians, the health professionals, the clinics in the hospital around each institution to offer the service. So everything is nurtured with a long-term value that we can capture on this value chain. I think it's very important here to understand how we have -- how we are optimizing the cross-selling opportunities within all these digital services. And I think, Felipe, you can add some of the short-term initiatives that we are scaling at Afya right now?

Sure, Virgilio. So looking on the product side, what we are doing now is starting to integrate some products. So to give you an example, what we're doing now is to bring all the Whitebook's expertise on clinical decision inside iClinic EMR to support the doctor at the point of care. So this is one initiative that's still happening, going on. And also on the commercial front, we have our sales force trying to offer other products such as Whitebooks. So Whitebook relies on basically on a self-service model. But as iClinic has a really scalable sales machine, what we are doing now is using the time we are talking to new doctors first to conquer and acquire new customers that we both don't have and also to offer and search for product and ticket expansion by doing upgrades and upsells. So Bruno, would you like to add something?

Yes. We have been working, as Felipe said, with Whitebook and iClinic. And also, we are working with Medcel and Whitebook. The most important thing here, people is -- talk about we are creating the best products for the doctors. So we are totally focused to create the right product for the right point of the journey and not give the wrong products for them. So we are looking for synergy of products, synergy of sales and create the best thing to attract all the doctors to our ecosystem.

Great. Thank you, guys. The next question also for Virgilio from Pedro Mariani. What are your expectations for the creation, resumption of federal programs that could allow the opening of new greenfields for undergrad medicine courses. Does any potential new program sound interesting for us as growth strategy?

Yes. We still have 5 Mais Medicos campuses under approval process of municipal application. So we're expecting to have 2 of them having the final authorization by the end of this first semester and the other 3 by the end of the year or beginning of 2022. We are seeing the municipal application more vocal to release this final authorization and also to move forward on some additional seats process that's been back in log on their process for -- since 2, 3 years since they authorized the first Mais Medicos. And after all of this has been already done, we expect to have another wave of capacity. The Mais Medicos 3, I think it's expecting to have providing by next year, by the end of 2021. And we have a very good condition to be successful on this process as we did in the last one where we won 25% of the capacity, 7 sites over 28 process that were licensed at that moment.

Great. Thank you. Our next question is from Guy from Baring Capital. We need SaaS products for students. What else is added on top of current offerings for undergrad students? Will this be upsold to all medical students, so that B2B should not own institutions or B2C to the entire market? How monetize it?

Okay. Thank you, Guy. Well, this new product, first, it's going to be a subscription-based product, where we're going to offer this product to our own students. This is going to be for free for them. So what we want here is to make our undergrad product much better. We will be selling this product also to other students in the market, definitely through a B2C typical strategy. And on the B2B front, also, these contracts that we already have with other medical institutions that are using our test prep product, we're going to be able to add to that as well because now we are actually fulfilling the journey since day one in the undergrad school until the 6 years. So this is a complete solution that we'll be able also to offer on the B2B front. So this is pretty much how it's going to be.

One important point to add here. When I remind back in 2017, when we released our Afya's curriculum, you had the capacity to change prices at that moment and still have that recurring effect of tuition maturation for the following 6 years. As we are plugging these new features into our operation through our ecosystem and also embedding our curriculum, it's a huge differential that will keep us and allow us to differentiate our product in the long-term and also can increase in a sustainable way our price over time. So this is a very important price differentiation strategy moving forward.

Great. Great point, Virgilio. So our next question is from Luca [indiscernible] from Bradesco BBI. And I think that's also for you, Virgilio. How do you see the potential competition from other education players that are now also talking about expanding to the medicine lifelong learning market.

Yes. So competition in this market, I think, is present since we are in this market. So we still have a huge differential because we are 100% concentrated on this lifelong journey. We have today 160,000 physicians using our platform. And as we also are licensing our product for more than 4 institutions using as a feature to help them during the learning process, we are very close to these entrepreneurs that have their medical institution. And this is a huge differential for us in terms of negotiating and getting close for these deals. In terms of pricing and competition, we also can extract much more value. You can see that the potential of this ecosystem that we are creating in this relationship is not a 6-year or any potential graduate specialization that I can take. We have a lot of service that as a recurring basis, we can help them through the journey. There's a lot of value, and it's [ jumping ]. It's plugging into -- plugging this into our system can generate much more value as the time is moving. We have 40, 50 years of relationship with this profession. So I think this is a huge differential for us in terms of competition.

Yes. Great. Next question from Diego Aragao, Goldman Sachs. And going to be for you, Julio. My question is related to the integration of your digital ecosystem content and different solutions. What is the reason for you to keep products separately with different go-to-market strategies instead of bundling it in a couple of plans that could create a better scalability for the portfolio.

Okay. Thank you for the question, Diego. Today, these companies that we've been acquiring, they operate, as we showed here during the presentation, during different times of their journey, right? So this is the first reason that we're not really integrating everything into one single app, let's say. What we will do, we are going to integrate the back end of that because the most important thing that we're going to do is to create a life cycle strategy with all of this information that we get from these users and clients that we have today. So this is the most important thing. So we -- as I mentioned in the road map, for example, we're going to do -- create single sign-ons. So you can use one service and the other one you can sign on through a very smooth way. The back end also for billing, for example, could be -- it will be a single one. So the back end will definitely integrate because having that big part of data that we're going to collect, we will be able to offer these solutions to the professionals at the right time of their career. And also these companies like PEBMED and Whitebook and iClinic, they have strong reputations. So we should not think about disconnecting or creating something very different from them. So we want to grow this business. They've been growing, as you've seen. So now it's much more on the commercial front now and then expanding all of the activities that we can do, especially with the other companies that we've been acquiring now as well that are going to be integrated into this ecosystem. So this is this is the main focus.

Great. Our next question is from Mauricio Cepeda from Crédit Suisse. And it's for you, Bruno. If you could please detail the buildup and sizing of the addressable market for new services and digital content? What are the major value pools to monetize from? I think you can mention the 5 pillars that we make.

Okay. Thank you for your question. We are looking for the digital services on the 6 pillars, as you see in Julio's presentation, and we are totally focused on it right now. We really believe that to create the best products for them on each pillar is going to give for us an advantage to bring those doctors to the Afya's digital services background. So we can explore on the B2B principle, as Julio said before also. We think when we talk about content, specifically, we can get the journey of the doctor after the undergrad and the postgrad to give them the continuous medical education. We are working now with the grads. We are working now with this part of the journey, but we really believe to get what's going on the practice, to get what the doctor is doing at the bedside and bring that to the continuous medical education, giving them more information and preparing a unique experience for personalization on how to get more information for better decisions is going to be a big differential for us right now.

And could you give us more detail about the revenue streams on the digital side of the business?

We are working about, as Julio said before, also with the B2B looking for the pharmacy industry like low-hanging fruit, inspired by M3, as I said before, for education, advertisement, job hiring for doctors. We are working also with research with data. We are thinking about this. And also, we are thinking about, of course, how we can explore other types of B2B models and the revenue streams like telemedicine, work with the corporative, with hospitals, and we are trying to prepare a suite of products that we can sell on it. We aspire for Athena Health, for example. When we put together the EMR of iClinic, the Whitebook, the prescription, the telemedicine and put it all in a suite of products to offer to the hospitals and to the health care operations on the daily practice for the doctors.

Great. So the next question is from Javier from Morgan Stanley and for you, Julio. It is clear that there is a transformational opportunity in the medical digital services, and you are well positioned to capture the opportunity. Investing on products, platforms and M&A strategy in that segment is straightforward. Does it also make sense to try to get and block key distribution channels with doctors as doctors' associations, large medical insurance companies, public medical universities, research, reference and so on. Do you have any initiatives on those roads?

Yes. Thank you, Javier. Well, definitely, I mean, you get the point. I mean, this ecosystem is pretty much that. I mean, we didn't put all the players, but it's -- let's say, with -- talking about the medical associations, for example. I mean we've been working with them on partnering with them to create better products. So we want to bring these people that are doctors that are actually leading the relationship at the market to work with us. So they see we're -- again, this is the very beginning. And I think that we are capturing the opportunity in the right way, but talking about channels, the channel is the doctor, right? So I mean, this is the focus. It's to have the market share. So we want to have at the end, we want to have 100% of the doctors and medical students in Brazil using one of our services. And that's the big channel because -- and again, reputational services like Whitebook, like a iClinic, it's the other services that we've been acquiring. This is what we'll bring to the next level in terms of building this true relationship. And I want to just reinforce, and Virgilio always mentioned that 430 relationships with hospitals that we have today. This is a lot. This is something that we'll explore offering all of this suite of products. So again, the market share is very important for us. We want the most number of doctors using our services, and that's what's going to make us really, really different from any other company.

Okay. Great. Next question is for Luis. You expect to keep consolidating medical education for the following years. Do you have any market share goal and expect to maintain the same level of returns in the long term?

Thank you for the questions. Yes, we have this around 15% of market share. That is around 4,500 seats. So this is our expectation to consolidate this market of the seats. And about the returns of the M&A, we're going to keep disciplined that we've been doing until now. We're going to keep the 60% revenue must come from the medicine business on the maturation when the institutions mature. And we're going to see this IRR aiming the 20%. So we're going to be disciplined on that. If these institutions have this kind of profile, we're going to make propositions and be able to continue these consolidations of this market.

And what about pricing?

Yes. Pricing, we're going to see -- we do not expect the prices to increase more than the levels that we have right now. We're going to see the EV per EBITDA doing in the long run around 5 -- 2 to 5x. We do not expect them to increase at least in our view of our count.

Great. Thank you. So we're receiving here a lot of questions. If you want to ask a question, just go on the top of your page, and you have the link there. Okay. Next question is for Virgilio. You mentioned 700 seats to be requested from MEC. What is the process for those seats? Are the requests already open, pending? Or is this in the intention to request?

Yes. We have 700 potential seats to Mais Medicos. Two of them are under preparation for the first asking. These are the 2 campuses that we opened last year. And the others, we still have to start the operation, and we will have 100 seats for each campus to ask after 1 year we start the operation. So it's a process that's underway and expect to have at least part of the seats approved between 1 to 2 years.

Great. Next question from Caio Moscardini from Morgan Stanley, and it's going to be for Julio. It was very impressive to see a strong acceleration on the customer base of every single company, Medcel, PEBMED and iClinic during 2020, all that with strong NPS and low churn. Do you believe physicians are already perceiving the strong ecosystem you are building and, therefore, are signing the products or it is a different reason?

Thank you for the question, a very important one. The brands that we have today, they are very strong, and we need to keep these brands in the ecosystem. They need to keep -- we need to keep growing these companies. So the doctor today, they see each one of the business, but the answer is no. So they don't perceive yet the way that this ecosystem works. But going to the point, this is a market of, let's say, it's almost 700,000 doctors and medical students in the country. Again, this is all about referral. So as Bruno mentioned, very clear, reputation is very important. This market works with referrals. So what we truly believe and I showed in the presentation, next year, we'll start putting more focus on adding the Afya brand together to these products, iClinic powered by Afya, Whitebook powered by Afya. We've been doing this already actually. But we're going to be more communicating better this in the future. So again, this play here, again, it's a small addition, right? 700,000 people. The most important thing is that they have good products, as Bruno mentioned very well. This is the most important thing is reputation, medical education, medical service, it's about that. And when one of these doctors, they like, they refer, they mention to other people that they like this service. So that's why we're very selective also on the acquisitions that we have in a pipeline. And these companies, they are very strong. The entrepreneurs that are here that we're bringing to the company, they have the same mindset. So this is the focus. So they don't perceive yet. But at some point, this will happen.

Can I add something here? As a doctor and an entrepreneur, the thing that is the most brightest for me to decide to come here to Afya, to work with this team, is because Afya is the only company that is thinking of the full journey of the doctor from the first day of the university until retirement. We will always say that. And we don't need to give things, the wrong things to the doctor, need to give the right things, the right products. And those products most need these investments to understand the needs of the doctors, the pain of them doing their work so we can get the job to be done for them. And if we do this right, as we are doing right now, in the future, this ecosystem will not just bring all the doctors from Brazil, but will help to make the health care system better here in Brazil. So we are totally focused on this. That's why we don't want to pass anything and put anything wrong for the doctors. We are looking for their journey, their needs and how you're going to help them to make better decisions.

Great. Thank you. Next question is for Luis. When do you expect digital to be a significant part of the financial results? What should we expect in the long-term in terms of net revenue and EBITDA for this business? And this is going to impact your cash flow generation?

Yes. This is a very good question. What we see about this digital -- digital services initiatives that we are building right now, we see that it has the potential to reach the size of Afya's net revenues as of today to be reached on 2020 -- 2028. So in 7 years, we expect just the digital business, digital part of the business to have Afya's size as of today, in terms of net revenues. We have this total addressable market of [ BRL 21 billion ]. So we are saying more or less to reach 5% of it on 7 years.

Great. Thank you. Next question, it is for Julio. I was wondering if Julio and [ Tim ] can elaborate on active strategy to sign up partners on the outer orbit of the digital strategies, namely pharmaceutical companies, health insurers, hospitals, et cetera. There are obviously many synergies and strategic uses of the data and intelligence that iClinic and PEBMED are currently generating that could be highly valuable to these potential partners.

Yes. Thank you for the question. Amazing to hear that. That's the beauty of it. The data point is the center of that. It's the community and the data around that. So imagine Whitebook last year, there was 54 million diagnoses or access to content on a diagnosis and treatment on a clinical decision case. We estimate that 30 million people were impacted last year only, 30 million people out of -- in this country. And we know where they were, what type of diagnosis, what -- probably what type of treatment that was given at that point. We can anticipate, for example, small outbreaks that happen in regions. This is just a simple example of the power of this. But what I like about this is that, and I mentioned during my presentation, and Bruno said, we want to prepare better doctors. How do you prepare better doctors. So we can fulfill all of this information through our educational assistance. So imagine one of our students in Patu Branco or in Teresina, for example, having one of these classes, and talking about a clinical case and understanding what is the reality of that clinical case in the country. So that type of information we're going to bring to our curriculum. And last year, for example, we can say that medicine was one of the things that has changed mostly all across the world. Protocols, they have changed. They have been changing and to prepare these doctors for the future, the critical information, what's going on at a point-of-care is what we're going to bring to the educational solutions that we have today. So partnering with, for example, with the pharmaceutical industry, and I can give you an example here. These companies for example, clinical trials is one thing. They've been asking us too because we have the access to these doctors. These doctors, they opt in, if they want to participate in studies, for example. And so we're going to connect these dots with pharmaceutical industry, and this is not bad, right? Because we teach in our schools how the doctor -- how they prescribe, what type of drug they prescribe, what type of -- how much they need to take of that drug, et cetera. And we can definitely partner with an industry to talk about the evolution of these drugs. And they want to have that access to them. So this is an educational process that it's good for everyone. So at the end, we want -- with the information, we want to prepare the doctor better and with the tools that we're giving them, we're going to let them to have more time to focus on the patient. And this is the pretty thing about this company. It's the content, updated content. On the other side, tools, technology, to make that relationship with the patient better. And then that's going to help us to, as Bruno well said, reduce costs on the system. We -- patients, there will be cases that will be better solved so it's good for everyone.

Okay, great. Thank you. I think that one point here that is being still a doubt for investors is about internationalization, if we're going to expand abroad, especially in the digital part of the business. So do you want to comment about it?

Yes. With Medical Harbour, for example, Medical Harbour is already selling the solution to institutions all across the world, so we're already going internationally in a way. We've been thinking about that very carefully, of course. This is not simple. I mean we don't want to lose the focus that we have today. We need to be smart on that front. This is a different game if you go to other geographies. But definitely, what we've been doing, we've been talking to several companies across the world to understand different services, to understand the reality in different countries. And we're trying to see where there's a fit for some of our products. So let's say, Whitebook, for example, it's very clear. I mean, although Whitebook is a solution for Brazilians, there are people assessing Whitebook in different other geographies. If you see I mean, translating the content and understanding the protocols, for example, for the countries, our neighbors here, for example, it's something that we can do. The platform is there. It's -- I wouldn't say that it's simple, but it's something that we can do, and it's sort of in our road map, not for now, but we are -- we have that in the road map. But we need to be very careful, I'm sure. Virgilio, if you want to add to that, it's important.

Sure, I still have a lot of room to conquer here in Brazil, digital services and medical education. And we have scale, and we can roll out the solution. I think in an easy way when you have the right opportunity. So it's a question of opportunity costs. We have to be concentrated on leverage and penetrate in this market in Brazil. But for sure, it's on our road map in the short -- in the middle term, we will have more presence among international operations.

Great, great point. And Felipe, one question. Can you comment a little bit, give more color about the Medicinae integration in iClinic solution?

Yes, for sure. So one trend that we see on the whole digital market, it's the content of embedded finance, right? So by bringing Medicinae into iClinic, so we believe it's just the first step to start offering these kind of products to our user base. So we'll start by offering them tools to process payments and also to anticipate their receivables. But the long -- the long-term goal of these acquisitions it's to start to offer other embedded finance products for iClinic customers and the whole Afya's digital ecosystem.

Okay, great. And for the last question, I'm sorry, guys, we received a lot of questions here. I will make sure that the Investor Relations team with the team here, we will answer you. But for the last question, I would like to mention ESG initiatives. And it is a relevant topic, and it's the first time that you as a company come here to present to the investors. We did last year with our first financial and sustainability report. This year is the second addition and we would like, Virgilio, for you to comment on what is driving for the next years the sustainability strategy? How important is it for you? And what do you plan for the following strategy?

That's one thing very important when we think about Afya. This is embedded in our DNA. All the social impact that we have in our units have in mind that we operate in North and Northeast region in Brazil with the primary care services in very low quality for the local population. We are almost delivering 0.5 million consultations for free for this local population. So this is a huge impact where we have operation, not only in the medicine area, but also other health treatments that can help the population. All the ESG that we are putting together, this is information, this is KPIs. It's something amazing how this information is impacting our team, although the proud that we have when you saw the impact where you have the operation. In terms of social, we have 55% of our team, executive team of women, that's talent here beside me here on this stage here. And many other does make a lot of great career inside assets and also in the environment side, we have solar plants in almost of our campuses. We are being 100% fulfilled by our own generation by 2023. And we also can capture carbon. That is something that's also very important for our students to differentiate our campuses from the others, and that's putting all the ESG initiatives together. That's very important and also this should be as a goal for the entire management team. So this will be something that we have to follow year-over-year and get even more importance in our strategy going forward.

Yes. Thank you. So to finish here, I'd like to thank you all for participating on today's presentation. I think you guys had a great time. If you still have any question that you couldn't ask here, please send an e-mail to [email protected]. And to finish, I'll pass the floor to Virgilio for final remarks.

Thank you, Renata. We have been preparing this event in the last days, and we are really proud on what we have accomplished here. I hope you all enjoyed and understood the reason why everyone in Afya is fully dedicated to create the best lifelong journey for physicians, enabled to deliver and keep delivering a strong and predictable value to our stakeholders. Thank you again for joining us today, and we look forward to meeting you when all these unusual times are over. Keep safe. Thank you.