Afya Limited (AFYA) Earnings Call Transcript & Summary

Good morning, and welcome to Afya day 2023. I'm Virgilio Gibbon, CEO of Afya. And today, we will outline the evolution since the IPO, the consolidation of our strategy and present our future perspectives. Afya is the largest hub for education and digital service for physicians in Brazil. We are the sole company that interacts with physicians at every stage of their career, spanning from higher education to successive specialization and even in their day-to-day practice. Our comprehensive suite of digital tools enhance productivity, accuracy and ensures physicians stay updated on the latest protocols and treatments. Our first section today is called This is Afya. We will share a little more about who we are, our brand evolution and how it will help us to strengthen our growth and positioning. Our brand is only as strong as its results, and Afya has delivered strong results. We have displayed ambition by taking the lead in an innovative and rapidly growing market and demonstrated remarkable resilience during challenged times that affect the whole world. These are the results that will be covered in our second section, This is Today, where we will go over our growth figures and demonstrate the power of our business. And for our third section, This is our Future. We will discuss our projections for 2028 across the 3 business segments: undergrad, continued education and digital health services. And to illustrate how we tend to go from one point to the next, our fourth section, this is our plan. We'll provide the detail insights into our strategic road map outlining the measures we will undertake to ensure the achievement of our projected progress. In our segment title, this is what we stand for, we will emphasize our key ESG initiatives. And then we will proceed to our Q&A session. Before we continue, I'd like to take a moment to reflect on our journey and highlight our achievements until now. Our initial objective was to establish a strong presence throughout every stage of physicians' education journey and solidify our position as the foremost medical education provider in Brazil. Today, we are proudly stand as industry leaders with over 40 medical institutions nationwide, catering to both undergrad and graduate programs. In 2020, during the entire pandemic and disruption of the physician professional life, we started our journey with digital services, offering tools that enhance productivity, assertiveness and updates required by professionals in the medical field. And today, we are already the largest community of digital services for physicians in Brazil. In 2022, we expanded our operations into the B2B market, effectively bridging the gap between physicians and the pharmaceutical industry with more than 45 pharma companies already in our portfolio. Today, we have established ourselves as the primary connection between the health industry and physicians. I'm very proud of how much has been done and accomplished to date. Alongside the evolution of our strategy, we have continuously delivered consistent and solid results. And now more than ever, we are determined to reinforce our idea of a unique and integrated Afya that combines all the products offering the best value to those who have medicine as a vocation. While we are proud of the solid results, we are also committed to further consolidating and strengthening our brand. We are making a concerted effort to ensure that our culture is reflected in everything we undertake to share our vision and shed light on our efforts. I'm honored to invite Stella Brant, Vice President of Market sustainability to the stage.

Thank you, Virgilio. Good morning, everyone. I'm and it's my pleasure to discuss the brand strategy, its architecture and how we will present our value proposition to our stakeholders. We recognize the importance of incorporating the value we create into our brands and of strengthening an integration that reflects our sense of unit and mission. We already are the leaders and pioneers of a solid and profit business, now is the time to be perceived as such. We have almost 300,000 physicians and medical students using one of our solutions, but only some of them know us yet. This brings a huge opportunity to become the reference in solutions for medicine, to hook them up, improving the engagement, cross-sell and upsell along the journey. Therefore, one of our main objectives is making Afya Hub known and relevant to students, physicians, health care companies and society, becoming the top of mind and most recurrent brand by physicians throughout the journey. We have a monumental opportunity in front of us. Now I will explain how we will do it. As you know, we are guided by 3 major pillars: medicine, education and technology. And when we put these 3 universes to work together, we are creating a new category, MedTech, with physicians in the center of everything, a universe that combines education and solutions for the entire medical journey. My role, along with the marketing and sustainability team is to ensure that our strong results are maximized and connected by an equally strong brand strategy. Propelling this category, Afya will have a high level of relevance, credibility and growth potential. Now I would like to explain how we will integrate the brand strategy and boost Afya's operations hub. We work to alleviate pressure at every stage of the medical journey. As medicine is a demanding field that requires huge dedication and presents many challenges, and even though physicians love what they do, they face enormous challenges throughout their education and careers. We have made extensive studies on physicians in different regions and stages of their career, to dive into the motivations behind the career choices specialization and education trajectories. We dive into the career expectations versus frustrations and surprises, context, emotions and attitudes related to their profession. The key insights we have discovered is that they have a deep passion for being physicians and caring for others but they strongly dislike the impact it has on their lives. They endure immense pressure, lack of recognition, lack of mental health and work-life balance. This challenge persists throughout every stage of their career. The major strength of Afya Hub lies on its ability to significantly alleviate these pressures and enable the medical journey to be centered around its most potential essence: the practice of medicine and a heartfelt commitment to caring for others. Therefore, our role is to operate in each of these pillars serving as a trusted partner in the education continuous learning, assertiveness and productivity of health care professionals. That's why we aim to transform the daily practice of medicine to make it more powerful and enjoyable. We combine medical knowledge, technology and mentoring to engaging the education and training of medical professionals through a wide range of products, including undergraduate and postgraduate courses, specialization programs always relying on a state-of-art infrastructure, modern teaching methods and a focus on practical application. And two, providing solutions that support professionals in their daily journeys, digital tools for clinical decision support, clinical management tools and physician-patient relationships, easily accessible and practical content for continuous updates. You can imagine how important is for physicians to find a trusted partner that truly enables a more balanced, enjoyable and effective journey, allowing them to make a greater impact on the life of others and their own life. This holds great value, that's why our next step is to capitalize on this strength within a single brand elevating Afya to the next stage. With great pride and joy, I'm delighted to unveil this new chapter to you today. [Presentation]

A new logo for a new and promising moment. With this new logo, we reviewed Afya's brand architecture to no longer let the value of Afya be fragmented or diluted. To consolidate all this value under a single brand simplifying the comprehension of our portfolio, avoiding brand conflicts and working towards strengthening Afya as the one-stop shop for physicians. The undergrad units that only have health courses will be named as Afya Medical Sciences School. The other ones will keep the current name as by San Lucas unit. To better understand this, I invite you to watch our manifest of video. [Presentation]

To ensure that this new moment truly becomes a milestone in our history, in our results and bring about a real change in the lives of physicians, our launch plan is comprehensive and encompasses various initiatives. It includes institutional campaigns, participation in Congress fares as well as a value-driven activations and exclusive events. We will also have extensive media coverage positioning Afya as a trusted source for the matters related to medicine and physicians. Let's take a look on that. [Presentation]

Everything I have shown you, the mission, vision, brand and campaign has undergone through testing and has been met with great enthusiasm by physicians from all over Brazil at different stages of their careers. We conducted in deep researches with over 200 physicians. We are highly confident on its potential to build brand recall with credibility in a very distinctive way. The insight has the power to generate self-recognition and curiosity to ignite experimentation. We firmly believe that this movement is crucial in our journey. It's thanks to this and energy that we will continue to transform health together with those who have medicine as a vocation. Afya enables physicians to experience the best of what medicine has to offer. And as I mentioned earlier, a strong brand is only as strong as its results. To shed light on our journey so far and provide a detailed overview of our numbers, I would like to introduce Luis Blanco, CFO of Afya, who will lead the section titled, This is today.

Hello, everyone. It's a pleasure to be here sharing this moment with you. When we talk about Afya, 2 characteristics have always described the dynamics of this company very well. Our excellent execution and operational model allow us to maintain growth and profitability even in challenging times. And this strategy was put into test shortly after the launching of our IPO, even faced with a pandemic and a global economic crisis, with high inflation followed by an increase in interest rates. We continue to grow at high levels, maintaining our great level of profitability and generating cash flow. And looking at the guidance for this year, we can see that a stronger resilient growth and high profitability continued to be inseparable characters of our business. Our current guidance is to reach an adjusted net revenue between BRL 2.75 billion to BRL 2.85 billion and an adjusted EBITDA between BRL 1.1 billion to BRL 1.2 billion by the end of this year. Considering the first quarter results, we are very confident of achieving the 2023 guidance. This means that Afya has grown almost 4x in 4 years, consolidating as the leader in medical educational markets and digital service for physicians in Brazil. Such great results give us confidence in our vision and strategy, and there is a strong reason for this, our focus in medicine. We prioritize educational updating and daily support of the physicians. We operate in 3 distinct segments undergrad, continue educational and digital service. Let's deep dive into our undergrads, our major segments. Currently, we have 20,822 medical students across our different facilities. The strong revenue growth comes from the increasing of the number of students and the price adjustments averaging 2.5% above the inflation since 2018. Even considering the strong organic and inorganic growth, we were able to improve our gross margins. Medicine represents 78% of our total tuition fees. It's a market with higher average ticket prices and margins. 100% seats occupancy rates, lower students dropout rates, lower DSO. And our students profile consists of individuals with higher income. This is one of the key reasons why Afya delivery is strong cash generations, enabling us to finance our inorganic growth and CapEx. As you can see on the chart, Afya had an average operational cash flow ratio of over 90% in the past 4 years. This allows us to maintain a very solid capital structure. We have a conservative leverage position, and also a low cost of debt, 4.1% per year which represents roughly 89% of the CDI. Within this scenario, the cash we generate will allow us to reinvest in the business and continuing our strong growth pace, whether organically or inorganically. This is the market I want to talk about now. Going over our views for 2028. In the following section, This is our Future. When we analyze our goals for 2028 and considering our 3 business segments, we have a very interesting configuration. We have undergrad with the drive to continue growing organically and inorganically, continuing education with the mission to scale and digital, where we can transform the health care. Allow me to share the specific goals for each one of these 3 segments. With undergrads, we have 3 avenues for growth. First, by maturing the existing seats. Second, through organic growth of half of the requested seats that have been asked for Ministry of Educational, and less through acquisitions. The fact that undergrad is our biggest cash generator allows us to maintain a goal of constant growth with the plan to increase our available seats by 200 per year through acquisitions. Consider the increase in organic and inorganic seats, we will be able to reach a total capacity of 32,840 students and capturing 15% of the market shares in terms of private seats by 2028. It's worth remembering that Afya manages to extract significant value from its acquisitions. When a news school is acquired, it goes through a process that requires a streaming line of discounts and scholarships, review unknown health courses, analyze our costs and expenses, implementations of Afya career plan, shared service center integration, integration to Afya teaching model. These measures ensure that new acquisitions become highly profitable once they become part of Afya. This is the case of UNIGRANRIO already fully integrated. UNIGRANRIO is above what we projected and has an estimated IRR of 26.4% on invested capital. We have delivered the 2023 expected results in our original business plan in 2022, 1 year ahead than initially expected. Now let's talk about continued education, which is the next natural step for those with study medicine. It is a product that has shown a great potential and despite being significantly impacted by COVID, it has experienced an expansion that exceeded our expectations and is still has a lot of room for growth. Through strong top line growth on top of new units, plus 50 new courses we expect to reach BRL 440 million as net revenues by 2028, 4x higher than 2022. Afya digital health is where we can expand beyond the physical structure and reach a vast number of physicians with those that offer productivity, assertiveness and updated information. Our strength in this field lies is serving as a bridge between pharmaceutical industry, payers and providers and the vast community of physicians at various stages of their journey. Our goal for 2028 is to increase penetration and engagement in B2B, sector and consolidate our B2B offering, reaching a net revenue of BRL 1.2 billion in digital service. To summarize, we intend to grow more than 2x 2022 net revenue in undergrad in 2028, 4x in continued education and more than 6x in digital. This means that Afya will almost triple the net revenues between 2022 and 2028. Bold but achievable goals, supported by strong execution, focus on medicine and the passionate team. Now I would like to invite our CEO, Virgilio back to the stage to elaborate on our strategy for achieving these objectives.

As we have already mentioned, undergrad is the core of our group, providing the foundation and enabling Afya to invest and gain space in other sectors. In undergrad, our focus is on medicine, which accounts for over 78% of our underground tuition fees. This factor is what drives our strong growth and set us apart in terms of profitability. It position us to sustain our expansion and venture into new markets. Today, we are already present in 30 campuses, 19 states, and our current number of medical students is 20,822 with 3,163 seats. As you know, these numbers are even more significant when we look at their impact on our revenue, profitability and cash generation. We have shown a steady growth in our net revenue with our gross margin reaching 64.8% in the first quarter of 2023, and the net revenue almost achieved what we have delivered in the full year of 2019. If we only look at pure medicine, undergrad courses, this gross margin jumps to more than 70%. Another positive and distinguishing aspect of our business is that the demand for medical studies is highly sustainable and resilient to economic downturns. This can be attributed for 3 main reasons. The first reason is that pursuing a career as a physician is highly profitable in our country. Physician careers offer significant higher salaries compared to other occupations. In Brazil, to be part of the top 1% income bracket, you need to earn BRL 180,000 per year. A physician earns on average 2x this amount and significantly more than other careers. Add to this, an impressive employment rate of 97%. So even though there is a significant investment to study medicine at a private school, the payback is usually achieved within an average of 4 years after graduation. The appeal and recognition of the medical profession are also closely tied to the increase in demand for medical services. While Brazil is not poorly ranked in the terms of the physician to population ratio, there is still a disparity between Brazil and OECD countries. This disparity is even higher due to an uneven distribution of physician across regions in Brazil, leading to a shortage of doctors in many parts of the country. For example, in major cities of the Southeast region, the physician to population ratio is 2 to 3x higher than OECD average. However, in cities located in remote regions, approximately 90% of them have less than 1 doctor per 1,000 inhabitants. This disparity is even more clear when we consider these additional 2 factors. First one, the rapid aging of the population in Brazil, which consequently leads to a greater number of medical incidents. As you can see in the chart, Brazil is doubling the elderly population from 7% to 14% by 2033, faster than any other country in recent history. And second, the increasing population with access to private health insurance plans results in a higher demand for treatment and consistently more demand for health care professionals. On the other hand, despite the fact that the number of private medical seats has more than tripled since 2010, demand for undergrad medical education is still far from being met. The current federal law known as Mais Medicos, more doctors implemented in 2013 is quite and aim to address the issue of expanding medical education in regions with limited access to health care services for the population. In addition to this, -- there is a significant concern regarding the quality of the medical education. In both of these aspects, Afya stands out. As we have seen, we have a nationwide presence on our -- in our education programs meet the highest standards of excellence. This is what we will explore further now. What are the main differentials of Afya stitching model? The first major differential is a nationwide integration and standardization of the curriculum across all Afya's medical facilities. Let's take a deeper look at this. [Presentation]

That's a huge differential. With the excellence of Afya's curriculum running nationwide we can guarantee the quality and the required preparation for physician from north to south in our country. What does this standardization mean? Integrated and modern curriculum, intense immersion in medical practice, incorporation of the most modern TICs, medical internship with exclusive model and integration between extension, research, teaching and innovation. And what is the result of all this? When we conducted the progress test to access the learning of students in the Afya curriculum compared to the other students following the original curriculum, it became clear that our students perform much better, particularly in the first and 8 semesters. When you look at the ninth and 12 semesters, where we still have more than 50% of our programs still maturing in the new curriculum or running the regional curriculum before the physician, the result is flat and even below the newer cohort of students that started in the beginning of Afya's curriculum, a strong improvement just 5 years after the first new curriculum was implemented. This academic excellence is shown on Afya's evaluation results. 90% of our medical programs have 4 or 5 as a score and the average jumping from 3.9% in 2019 to 4.2% in 2022. These excellent results make our universities an extraordinary place of learning and pride for our students. Even taking into account the significant growth of medical cost on offer, the differentials established by Afya have resulted 100% occupancy rate, with an increase in demand for our facilities and our higher ratio of candidates received. In 2023, we reached 7 candidates per seat, highest score since the beginning of Afya. As a result, our average ticket price, which already surpasses the national average remains resilient and continues to grow slightly above inflation. These 3 pillars give us the confidence that undergrad, our growth engine has the necessary power to achieve our projections to grow 2x by 2028. Now introducing our next section, Continued Education, the primary focus and concern from medical students on the following day after graduation. As mentioned earlier, upon graduating as a physician, you already joined the top 1% income bracket in Brazil. However, even after 6 years of higher education, medical professions are the ones who most need to pursue ongoing education and invest in continuous improvement to stay updated and head in the competitive market. And this becomes clear when we observed a 74.5% of physicians believe that their current remuneration is unfair, consider the time and dedication required. To bridge this gap, it's necessary to have a differential something that helps to bid value for their career. Working in a specialized field plays a fundamental role in this strategy. Specialist physician earns on average 39% more than generalist and has a more predictable daily routine. The significance of this becomes clear when observed at 96.5% of generalist physicians expressed a desire to specialize. Until recently, the traditional route to attain this differential was by pursuing a medical residency. The problem is data residency in Brazil is very difficult to be accepted. Currently, there are many more medical graduates than available resident positions, and this gap continues to widen. Every year, 1,000 of physicians are left without a resident position. As a result, by 2024, there will be more general physician than a specialist. After continued education programs, serve to address the shortage of residency programs in the country and also as an alternative path to the physician career, where they can combine their daily routine with their specialization. To practice a medical specialty, a physician does not necessarily need to complete a residency program. What they do need is the knowledge and practical skills required for that specific field. We provide knowledge through the supervision of highly skilled physicians who guide and share their experience with the students on a day-to-day basis, promoting the students integration in the job market. For example, Anna does a dermatologist specialization at Afya and after 2 years of post graduation, we'll have accumulated 237 hours of outpatient practice, dedicated 84 hours specifically to cosmetic dermatology and had the opportunity to attend to 192 [ Rio ] patients. This differential is evident to the recognition from our students as reflected in our NPS that has increased from minus 4% when we acquired the graduate platform to 70 in 3 years. Our referral program has experienced a significant jump from 5% to 45% in the same period. All these factors contribute to the growth of continued education. Currently, we have partnership with the most important medical societies and have 50 facilities spread across Brazil. We offer over 70 courses and provide over 3,000 free monthly health care services, enhancing the practice of our more than 4,000 physicians studying with us. The results we are achieving reinforce our vision that expanding of continued education is a wise and profitable move. You can see that our main specialization course contribute to our strong profitability and operate with the same level of contribution margin of our undergrad medical programs. In the first quarter of this year, we increased our gross margin by more than 10 percentage points after jumping almost 18 percentage points in 2022. Besides the margin improvement, we also experienced a jump on our top line after opening 10 new graduate campuses and launching 50 new graduate courses. With this extremely promising outlook, we're optimistic about achieving 4x our 2022 net revenue by 2028. Now is the time to talk about a business sector that has the potential to surpass linear growth. It has the capacity to transcend our physical limitations and scale for exponential growth. I'd like to invite Lelio Souza, our VP of Digital Services to the stage.

Thank you very much, Virgilio. We are all aware that the process of digitization represents an irreversible trajectory. It's a pathway that any company aspiring to be a pioneer must consistently traverse. However, [ merit ] digital existence is vastly different from being relevant. The digital realm -- there's a fierce competition for attention, handling any sector incredibly competitive. And at the Digital Services business unit, we are [ naive ] to digital, serving physicians in our ecosystem with best-in-class digital solution to support them along their professional journey, and they're highly committed to support our B2B customer in their own digitization process, to build a relationship and engagement with physicians being relevant to them throughout digital ecosystem. It's a privilege to work in this space, always pursuing value creation to physicians and positively impacting the wholly health value chain. To achieve this, we are constantly refining and delivering pressingly superior solutions. This movement engages more physicians to our ecosystem where they can consume an increasing amount of relevant medical content, use our bedside decision-making digital to and better management, they have practiced in patient consultation at their offices through our practice management platform, encompassing EMR, electronic medical record, telemedicine, e-prescription and financial handling. The combination of all these factors yields a highly valuable outcome in today's landscape an increased amount of medical practice data. Data and qualified and engaged audience of physicians in our solutions are crucial assets in the evolution of solutions for health care professionals, assisting them in staying updated, enhanced their skills and becoming more assertive and productive in their medical practices. More important, adopting a data-driven approach as we do, we are tirelessly looking for ways to value physician time, offering them content and solution when they need them and the way they want them. Moreover, these assets play a significant role in our relationship with the health care industry, where we are also expanding and solidifying our offerings. This promotes a meaningful and valuable relationship for physicians and a more efficient partnership for the industry. Reinforcing that we are always committed to foster relationship and engagement between health industry, meaning pharma, providers and payers and physicians that are relevant and create value to physicians, empowering them in this relationship and consequently being more efficient to the health industry. From the outset, our focus has been on identifying activities within the medical practice where digital solutions could contribute to physicians being more assertive and productive in their continuous improvement and patient care routines. Based on this large, we have defined it and have been building 6 areas of expertise in digital solutions, continuous medical education, clinical decision support, practice management tools, including telemedicine and digital prescription and physician and patient relationships, mainly in the chronic diseases treatment. For each of these areas in medical practice, we have developed or acquired digital solutions none of which are already integrated into the daily lives of millions of patients and thousands of physicians. One of our currently main goals is to integrate these solutions in a business-driven approach to create more value to physicians in each phase of their journey. Let's take a closer look at how these solutions effectively participate in the physician's daily routine. [Presentation]

This is what makes us believe in the growth potential of Afya Digital Solutions, creating value for engaging continuously growing community of physicians. We have already reached 295,000 active physicians in the last quarter with 218,000 of them being paying customers. And every day, our team works hard to engage more physicians delivering impactful value for them. Now let's take a deep dive on our B2B business-to-business strategy. As the largest and best network of solutions for physicians and medical students, we are also one of the main bridge that connects the medical community to the health care industry, facilitating a relationship that is relevant for physicians efficient for the industry and creates value and positive impact for the entire health care value chain. Our vision of how to generate value for this chain is focused in 3 key areas: Access, providing the health care industry with access to our ecosystem of physicians, empowering physicians in this relationship, always being relevant to them, respecting their time. Consequently, being more efficient for the industry in this access, facilitating relationship in the time and means physicians want it, instead of annoying or being a spun to physicians. Demand, solutions that facilitate patients' adherence to prescribed treatments and consequently contribute to the generation of efficient demand for the health care industry. And efficiency, digital solutions and data intelligence that facilitate the management of patient treatment for chronic disease, generating positive impact and efficient for the entire value chain, better quality of life for patients improve the monitoring for physicians, more efficient demand for consultations, medications and procedures and lower total health care costs. All of these areas have great growth potential. When combined, we have a total addressable market of BRL 24.4 billion. In 2022, we prioritized structuring solutions offerings to provide pharmaceutical industry access to physicians. This year, we are strengthening these solutions and building also data intelligence ones of interest to the health care industry, mainly pharmaceuticals. Our value propositions to the pharmaceutical industry is to assist them in investing in physician engagement always empowering physicians in this relationship and being relevant to them, thereby becoming more efficient for the industry. We act on this value proposition by offering solutions for 4 major stages in this journey. Medical education, we developed content for the education of physicians on new procedures, practice and treatments, focusing on tops of interest to the pharmaceutic industry. We ensure the quality and impartiality of the content, distributing it in a relevant manner to physicians who have an interest in this subject. Marketing, our high capacity of segmentation allows the pharma industry to deliver the right message on the right format at the right channels. E-detailing, physicians can easily opt in and subscribe to receive free samples of medications at their homes or medical office without any hassle. Insights, through extensive data analysis, we provided the pharmaceutic industry with valuable insights into prescription behavior and decision support research, enabling them to make better informative decisions. Always protecting physicians unit data. As a result, we currently have over 100 contracts with more than 50 pharmaceutical companies to demonstrate how we are contributing innovatively to the relationship between pharmaceutical industry and our ecosystem of physicians, I would like to invite an executive from a leading global company that has been driving innovation and setting trends in this segment. Mr. Eduardo [ Miyake ] from Pfizer. It's a great pleasure to have you here today to share your experience with us. Thank you for coming.

Thanks for considering me in this amazing, very interesting conversation, nice.

So could you share with us what are the advantages you see in Afya as a partner and how we are contributing to Pfizer's digitization process?

Great question, Lelio. I think that I'd like to start with some -- one experience that I had in the beginning of our relationship, where some executives from office shared some numbers that called my attention. The one -- the first one was related to the number of solutions -- digital solutions that Afya has. For example, 23 digital solutions are very important, very interesting. Another number that I call my attention was related to the number of doctors that has access to medical or to the solution from Afya. It is one in consider of [indiscernible] 4. So considering this, I think that this is the big picture that I have when we talk about excellence, when we talk about how we can deliver value to the doctor. So this is the first one. And additionally, I think that considering this scenario, when we started our relationship, something that called to my attention was more related to the partnership that we created in the beginning of -- between the 2 companies. So in this scenario, Afya started with us with one single contract, one single solution where we work it together. However, during this advances [indiscernible] in the beginning, I think that we had a lot of learnings and based on these learnings, something that changes our relationship was some chance that Afya and -- with us, we took in the beginning. That was a clear communication, first of all. The second one, a single goal that we can have focus together and the third one working together weekly by weekly and a week basis, having, for example, some interesting results. After this changing, I think that relationship and with the excellence that Afya has, we took a lot of great interesting results.

Thank you very much. Glad to hear that. Actually, Pfizer as one of our first customers was kind of patient in building this relationship. We learned a lot, and we keep learning with Pfizer and enhancing our services to provide you the best we have. The largest ecosystem is really one of our strengths. And building this relationship that brings value to the physician, it's what we are pursuing in a daily basis. Another interesting question to share here. So has Pfizer developed any sort of similar partnership with other companies? And if so, what are the differentiators you guys are seeing in the relationship we are building together?

Excellent, I think Lelio, this is the -- as I know, this is the first relationship that we established with one company that was very, very interesting and make the total difference between -- related to our results, but more than this related to the impact that we can generate to the doctors, for example, to the journey that the doctor has. Consider this, I think that this is the main point that we can establish that is after this initial relationship or this partnership, we saw evolution of one contract, as I mentioned before, up to more than 10 contracts. More than contracts, I think that relationship is more related to the business are the main goals. So we have 1 purpose from Pfizer. So we'd like to generate -- have innovations that can support our generate more color of life to the patients or to the people. So based on this, I think that Afya can generate this value in this excellence of this partnership, for example, having these learnings and failures, understand basing our retrospective, what we can do differently together. And also from our side, from Pfizer, for example, one can do internally in order to optimize our relationship more than this -- day by day activities, for example.

Perfect. It has been our strategy with Pfizer and other customers. We call it a land and expand, so building long relationships, we first have to prove our value to the industry, to Pfizer and others. And then we can grow -- generating value for both sides. Glad to hear that. And well, what are the opportunities of enhancements of improvements should us, Afya, working on to better services companies like Pfizer, okay?

I think that the point that I said before, later this partnership was interesting. However, during this journey, 1% per day, I think that we have evolved our relationship. So today, if you're asking me -- as you asked before, what is the things that we can enhance related to the partnership or what Afya can enhance, for example, I don't have 1 answer right now. However, I think that this mindset of 1% per day changed our relationship and the results and the impact that we are looking for. Probably something that I can share here. Afya is now -- today is a big company. I think it's a very interesting company with interesting position in the market. So however, I think that it's very important to -- don't forget the start-up mindset. So trying to do things as a startup. Even Afya has more than -- I don't know, 10 companies insights with different type of solutions. Having this type of mindset, let me try to understand the customer. Let me try to understand how can I deliver value to the customer, I think that this is the best thing.

Thank you very much for this clear feedback. It's really a challenge that we have insights to attend all the industry expectations. It's a good problem to have, but we need to evolve fast to catch up with the industry expectations. And well, considering that customer centricity, it's a hot topic in most of C-level agenda in global companies and probably in Pfizer as well. How does Pfizer see the intimacy Afya has with physicians, with the final customers as a contributor to this kind of strategy.

We -- as Pfizer as we started to create a different type of advisory board where we started even more than share our experience or our thoughts the doctors. We try to listen to doctors, understand what is the best way that they consume content, for example, materials or -- they preferred digital media or they prefer, for example, something more physical. So we try to understand this opportunity with the doctor, for example. Inside our journey, inside Pfizer with the doctor, I think that Afya enter here in order to provide mature excellence with content more than this different type of solution during the journey that the doctor has during the life -- in their profession, for example.

It makes a lot of sense. Glad to hear that. So it's really our commitment to protect to be meaningful, to be relevant to physicians. And I think one of the key success factors of this relationship is that Pfizer trusted us since the beginning as the mean to communicate with physicians in a meaningful way to physicians empowering them in this process. So very interesting. And finally, how could us -- how can us keep growing this partnership and participating as an important partner of Pfizer in the market investments to connect with physicians.

Good question, Lelio. I think that the best thing is to -- as I mentioned before, and I think that concluding this conversation is to maintain this relationship as we are doing right now, for example. So having this start-up mindset, trying to looking for the evolution of our business and understand our strategy and try to connect the solutions or the things that are good, very good for Afya to the strategy that we have here in Pfizer. So connecting these 2 dots, for example, we will have a very, very interesting journey with us.

Great to hear that. Thank you very much for giving us the opportunity to work with you and count on us, so we want to build a long relationship with Pfizer and succeed together. Thank you very much for coming and sharing your valuable ideas with us.

Thanks for this opportunity, Lelio.

This type of testimony leaves us very proud and confident in the path we are trading. Thanks to all our pharma customers for the trust and the partnership in delivering this innovative way to access physicians committed in creating value and empowering them in this process. As a result, we present an expectation of continuous revenue growth for the fifth consecutive year in our digital services business unit. To have a better perspective for the coming years in the digital field, it's important to have more consolidated markets as [ severances ]. When we look at the current results of the Japanese company, [ ME3 ] founded in 2000 and the American company, Doximity, founded in 2010, it becomes clear that we are only at the beginning of this journey. We are already very pleased with our performance in the digital realm, but I'm confident that by pursuing our plan, we will have incredible news to share with you in our upcoming meetings. Now it's the time to talk about our ESG efforts and results. I'd like to invite Renata Couto our IR Director today stage.

Good morning, everyone. Thank you for joining us today at Afya Day 2023. My name is Renata Couto, and I'm here to talk about ESG. A crucial issue for Afya and the future of our planet. Education, health and technology are ingrained in our DNA, making it natural for Afya to approach its ESG journey with absolute series. Since its inception Afya has contributed to social and economic development. Two initiatives that stimulate progress and improve quality of life for site. Our activities have had a genuine impact. Proof of this can be seen to the numerous awards we have won, such as Great Place to Work. Bloomberg Gender Equality Index 2022, Top 100 Open Corps 2022 and Women Onboard Certification 2021. This commitment is reflected by impressive numbers. And today, I can review firsthand some highlights from our 2022 annual sustainability report. You can download the full version through the QR code displayed on our screen. On the environment front, we have reduced Scope 2 emissions by 63%. We have increased our use of solar energy, an impact approximately 5,440 people with our environmental education and awareness initiatives. On the social front, we have collected and donated over 3 tons of food. We have implemented social responsibility initiatives that have positive impact nearly 8,000 people, and we take pride in having a significant number of female employees and a high percentage of women in leadership positions within our company. As for governance, we have a diversified board that is well advised by our Audit Committee and our people and ESG Committee. And consistent with our vision of transforming health together with those who have medicine as a vocation, we have brought close to our management doctors who are referenced in their activities they carry out. At the end of 2002, we launched our physician advisory committee formed by 4 renowned professionals in the medical field and led by the company's CEO, this forum sets out to face an enormous challenge, thinking about the medicine of the future. And in the health care front, which holds significant social impact and is deeply ingrained in our DNA, we have made more than 470,000 free medical consultations and made a positive impact on the lives of more than 14,000 people through our health and disease prevention initiatives in 2022. And since our inception, we have graduated more than 18,000 physicians. These numbers bring us immense joy and in alignment with our company's purpose. They generally embody our core values. But in addition to celebrating our results, I would like to show you how this works in practice and the scope of the impact we promote. One of these ways is through technology. [Presentation]

You have just witnessed the potential of our digital solutions, which provide assertiveness and productivity to medical students and physicians, making a positive impact on people means being present for physicians, precisely when and how they require our support. And with the power of our digital solutions, we will expand our reach even further. But technology is far from replacing medical history in the doctor-patient relationship. At Afya's educational facilities across the country our medical students, professors and physicians actively engage with local communities. In 2022 alone, we provided nearly 0.5 million free health care services. And today, we are excited to provide you with an insight into the services. With vertical emphasis on a segment of society that is often an overlooked indigenous communities. [Presentation]

Isn't it an incredible. That's right. Between the second semester of 2022 in March of this year, Afya provided more than 45,000, free health care services, specifically for indigenous communities. Many thanks to everyone who took part in this action. I now kindly invite you to start our Q&A session.

Before we start, I would like to mention that our presentation is already available in our Investor Relations website. We are going to start our Q&A session. If you want to ask a question, just click on the option, ask a question. We will start with our sell-side analysts. Lucas Nagano from Morgan Stanley is the first question.

Can you hear me?

Yes.

Great. So good morning. Thanks for the opportunity here and congratulations on the presentation. So we have 2 questions. The first one is related to the Medicine regulatory framework. The Ministry of Education should announce a new round of Mais Medicos in the next month or so. And do you have any expectations on the potential format? Or what has been mostly discussed between the sector and the regulators? And could you also share some thoughts on the outlook on the resolution of the Supreme Court debate? And my second question is related to the B2B. We know that there is a large addressable market, and you are pretty advanced in terms of product development. But you mentioned that there's some work to do in terms of monetization and pricing. So what are the initiatives taking place in order to accelerate and unlock this potential revenue?

First question, Virgilio?

Lucas, thank you for your question. I will take the first one here, and Lelio can help me with the second. So regarding the Mais Medicos new rule that was released like 4 months ago, we expect to have the final version by beginning of August. And what we expect is that, they will follow at least the same procedure, the same process that was in the Mais Medicos I and Mais Medicos II. In terms of size, we expect that can be something between both of them between the Mais Medicos I that was around 4 to 5 additional seats. And the second one was 1,400 seats, 1,400 seats. So this is at least our expectation here about the Mais Medicos III what can comes up in the beginning of August. About the Supreme Court, they are in a recess in the month of July. And we expect -- so everything that we are seeing from the [indiscernible] all the interaction that we are having is that they are very concerned and keep the dynamic that we still need to open more seats or to open new additional medical schools in the region that we have scarcity and lack of health services. So this is one thing. Another thing that can be is how will be the regulation, the process to keep asking for additional seats in the console. But this is too early. I'll have to wait what's going to come up on the beginning of August, okay? On the B2B, Lelio?

Yes. Thank you for the question, Lucas. So as you said, we are growing fast in the B2B side, mainly in the pharmaceutical right now where we put focus since last year. And on the pricing side, we see an opportunity here to set the correct pricing approach based on the value we are delivering. So we are working right now, if a global specialized consulting company supporting us in defining this pricing approach. We have good global [indiscernible], that's the global pharmaceuticals that are used to work with as well. So we had a good reference here, and we welcome this and develop new products based on what we have been learning this first year of operation and on the data that we are building on the B2B business to physician side.

And Lelio, if I may add something on that, that Nagano, all the monetizations that we got from the B2B is based by campaigns to pharmaceutical industry. And right now, we just launched a new product that is [ RX Insights ] that will be the first product that will be recurrent revenues for us. We are very excited to that to transform that campaigns that we are monetizing within the pharmaceutical industry and right now established the first recurrent product for the pharmaceutical industry that we are very excited to start that -- this relationship with all the industries.

Very nice. Just to put some more color on this new subscription product that we are delivering right now to the pharmaceutical industry. It's a statistical analysis, real time of prescription behavior. So it means a lot to the pharmaceutical, so they can follow in real-time based what is happening in the market regarding prescription behavior and tie this with their iteratives of engaging physicians. So now we have all the content and marketing distribution from pharmaceutical to physicians in a meaningful way to physicians. And the result of this is the prescription behavior. And we are bringing this in a real-time report to the pharmaceutical. And it means a lot to them. It's one of our major pricing driver to connect to a physician being relevant to physicians. So that one is a unique driver value creation and a driver for our pricing model.

So for our next question, we have Mauricio Cepeda from Crédit Suisse.

I have 2 questions from our side here. The first one is about the preparatory courses. I understand this is a significant part of the economics of the digital BU. So my question would be, if with all this replanning of a new strategy and rebranding, if you weigh in to position yourself differently in this kind of activity, given all the competitive pressures that we -- this part of the business have been suffering or if you want to prioritize other digital business instead of it? And my second question is a little bit about the future of the career of [ Medcel ]. You mentioned this a little bit during the presentation. So now that we know that the active physician base in Brazil is growing significantly and faster than it grew in the past. If it's -- in your view, it would compromise in a certain point, the economic return of the profession, and if all these regional imbalances that we see currently in the medical profession rather than being solved by position in schools in remote regions if you see that there will be any kind of government incentive to economically incentivize the doctors to shift the geographies instead of establishing the colleges in place. These would be my 2 questions.

First question, Lelio?

Mauricio, thank you for your questions. So the first question regarding the preparatory -- residence preparatory offering. We combine it with the other 2 acquisitions we made last year, Além da Medicina with mentoring for residents preparation and CardioPapers. So as you mentioned, so the residence preparation, we have a very competitive market, but we are doing good in our restructuring. So 49% of our student could achieve a position in a residence in Brazil. So we are improving our value delivered to our students with a blended combination of mentoring from Além da Medicina and the preparation -- the residence preparation for Medcel. And in the specialization side, we combined also what we had in Medcel with CardioPapers. So just to give you some numbers, 60% of our proven physicians in the endocrinology, which is a new community that we built. So they were our students in endocrinology papers. So we are extending the experience of cardiology to another 5 specializations capturing the space we have in this market, not so competitive as the preparation -- the residence preparation is. So we see opportunities here. We are putting focus here and combining the acquisitions we made to better deliver value to our students in the market.

Mauricio, taking the second part of your question about incentives, how we can drive more physicians to the remote areas. I think the answer is no. The incentives today is already in place. Physicians, they have strong incentives in terms of salary to go to remote areas to suburb areas, not in terms of salary if they are work in the public sector but even in the private sector, we have this experience, our physicians, they make much more money on this region. This is small cities. On the other hand, if they do not have the right infrastructure, if they don't have support by a specialist in the region, they will not stay in there. They do not want to lose lives. So we need to have -- besides of the -- all the incentives that's been building the right infrastructure. We have to have good hospital beds, good primary care for the [indiscernible] otherwise, you can put any kind of incentives, but the guy will not go to the bar alone. So we need specialists, we need infrastructure, we need money. So Mais Medicos, I think, helps to get all the efforts, not only in terms of infrastructure, but also driving more specialists to these regions in order to support not only the [ internalization ] but also to help these guys to keep improving and specializing on the remote areas.

Yes. If I may add, Virgilio. I think it's an important point here on Cepeda is that the -- to have economic incentives for these professionals to go to the countryside in the interior of Brazil, it is important for a short-term solution. But for a long term, you need education. You need nice hospitals with the right infrastructure. Otherwise, for the longer term, the problem is not going to be solved. So it's something that can be a mixed up, right? And a solution that can bring not only a better distribution of physicians, but better health for society.

And about the physician base that is expanding faster, if it interferes in the economics of the profession?

Yes. Well, we show the dynamic on my part of the presentation here. We are seeing that, well, not only the health care treatment demand, any person, many people entering more health insurance plans and also having more events for health treatment during the year. So demand for physicians is going exponentially. So still seeing a very positive dynamic in the middle in the long term without any disruption in terms of demand and supply. So this year, we just have the highest score in terms of candidates per seat, [indiscernible] candidates. So it's the biggest in our last 5 years here in our operations. So we are not seeing any disruption in terms of demand and the supply for the next few years.

If I can add some figure here. So giving you a spoiler, Mauricio. So as we are seeing high demand from providers in all of the country, we are building a new solution right now, which is a physician recruitment. So providing both sides value, delivering value from both sides, hospitals and providers who need to hire physicians and physicians in our ecosystem that are looking for new job opportunities. So it's somehow reinforce there is demand for physicians. It's not so easy to find the right physicians, providers want.

Thank you, Cepeda. So before we jump for the next question, I have a question from [ Carolina ] from MFS. Could you comment on the integration of the acquisitions? When are you going to see the synergies on the company results. Blanco, can you take this one?

Yes. Thank you, Carolina. Let me address that in 2 different segments. Regarding the undergrad, we have a proven playbook. As I showed in my presentations, every time we acquire a new school, a new medical school. We pass it to a playbook that access the right leverage to increase the results. We access the scholarships, the discounts and streamline them. We revised all non-health courses. We've revised all costs and expenses. We integrate the institutions to our shared service. We put our national curriculum to the new intake of the students. And this is a proven playbook. We can increase the results of the institutions of it. So we can increase revenues and increase costs and expenses even further, as I showed it in my part of the presentation, as I showed the case of UNIGRANRIO, one of our latest and largest acquisition. So this is the part of the undergrad. Regarding the digital, it's a different playbook that we are building to it. We had to build our digital segment. We had 11 business combinations, in a window that was more or less of 2 years from the first one that was PEBMED to the last one that was Glic. And the playbook, it's a different one. It's a business that we are building a complete ecosystem, a new hub for the physicians. And we put the integrations through each one of the values through each one of the pillars that we have on our -- under the 6 pillar strategy. So giving an example under the Pillar 3, we integrated Medicinae within iClinic. Under the Pillar 1, we integrated as Lelio mentioned Medcel with the CardioPapers and Além da Medicina's team. So we're doing that by pillar. And then right now, we are moving ahead. And right now, we're connecting every these pillars, each with a single ecosystem that we can provide for the physicians. So it's different playbooks, and we are pretty confident that we'll have the success that we had on the undergrad on this digital strategy.

If I may add here. So we are always adopting value creation to physician approach. So when we combine the products in Pillar 1 [indiscernible] is to better assess our physician in Pillar 3 in iClinic. Now we have a content channel. We call it [indiscernible], which is portal PEBMED content delivered through iClinic so it has value to physicians and having physicians more engaged, a qualified audience is a lever for us in the B2B side. So it has been done since the acquisitions starting to work with us, very driven by business sense.

Yes. And to give some more color, Carolina, in terms of the undergrad, it's important to mention that mostly of its value, we can capture in 1 year after the acquisition. So you're going to hear that we acquired in 2021, it's already integrated and new needs that we acquired in January probably integrated until January next year, and you can see the improving margins.

Until November.

November. Okay, good news. Okay. I hope that's clear. So our next question will come from Yan Cesquim from BTG.

Two questions on our side here. The first one is regarding the inorganic pipeline of medicine courses. You shared with us that you have a guideline of pursuing around 200 seats per year. And you just consolidated UNIT and FITS. So I just wonder how are the ongoing negotiations, if you believe there are any other moves happening in the short term. What is your thermometer for this inorganic expansion pipeline, right? And the second question is also a follow-up is, if you consider a capital raise to help financing all the organic and inorganic expansion plans you shared with us in all the business units. That's it guys.

Okay. Thank you. Luis, can you help us?

Yes, of course. Thank you for your question. The first one regarding the pipeline, we have a fertile pipeline for that. We are pretty confident that we can deliver the guidance of 200 seats per year in organic growth, it's not a linear one. You know that these kind of negotiations always took time. We go 2 steps ahead, 1 step back. But we are pretty clear that we're going to achieve this one. We started -- when we give this guidance, it was from 2022 ahead. We had already 340. If we took in a linear term, we -- right now, we are ahead of this guidance, and we are pretty confident that we're going to achieve that. And the good news that we're going to -- we're seeing that even the amount invested in each one of these business combinations is decreasing right now. We see that it's more a market that we have pricing power right now for new transactions that, of course, will increase the returns that we expect in each one of these future's business combinations, this take the first part of your question. Regarding how we can founded, we don't expect any kind of capital raise. We want to do that within our own leverage. As you -- as I mentioned in my part of the presentation, we have more than 90% cash flow conversion through our EBITDA to our operational cash flow and taking the CapEx, taking the interest payments of this, that's the free cash flow resulting for that, gives us confidence that we can do these new business combinations within our own capital structures right now and do that with our leverage to the market.

Yes. Before going to the next question, I think that's important to mention -- this is not mentioned earlier that the prices -- considering inflation is even lower than we ought we saw in some years ago, right?

Yes. And this is the case even the case of UNIT, if we compare the 2 latest acquisitions that -- business combinations as we made that was UNIGRANRIO that was closed in August 2021 and UNIT that was closed here in January 2023, if we put the one metric that we don't like a lot that's 80 per seat. But if we do that, the adjustment by the inflation of the period, you're going to see that pretty much the same value. We always look at the [ EBITDA ] for each one. And as I mentioned, in the UNIGRANRIO case, we are pretty satisfied with the return that we are extracting for each one of these business combinations.

Okay. Great. So our next question will come from Fred Mendes from Bank of America.

Can you hear me now?

We are hearing, but not seeing you.

Okay. So I'm going to go ahead. I mean, I think the camera is on. I'm going to go ahead and ask the question if that's okay. Good morning, everyone. I have two here on my end. The first one is also on the B2B for the pharma -- on the pharma front, just on which stage of this partnership are we? A partnership of this is -- are we already in a stage where we should see some scale and then some margin expansion on this front -- now I think the camera is on. And also as a second point on the digital service. If 2023 is a year where we're going to see a breakeven on this front? Or should be another year to focus on growth that is actually going to have margins under pressure...

Perfect. Thank you, Fred. So first question on the B2B side, we are already seeing a very interesting growth. So -- just remember that we are adopting a land-and-expand strategy of proving the value and kind of educating the marketing in the offering, we are working on. Just to give you some numbers here, 5 of our main customers now have contracts over BRL 1 million. So that's one of the KPIs we are following and some of them more than 10 contracts -- contract. So we are expanding inside those companies in new marketing areas, new products. That's what we are working on and expecting. So as we grow, we will see more contracts inside each of those customers and more customers with more content. Right now, we have more than 100 contracts in different -- 50 different pharmaceuticals, right? So we will see this path of growth ahead as we are delivering more products as the one I just mentioned. So [ RX Insights ] we have another data intelligence products, so Whitebook Insights, which are providing sites real-time and subscription reports. So it's a way to raise the revenue, delivering more value and a way to have more contracts inside those companies, right? Second question, we keep very focused in growth -- so both market share, which is an important KPI for us, physicians, right, number of physicians and top line, both -- the more mature solutions we have are growing more than 40% a year, right? So -- but we are also doing some homework here to capture the efficiency opportunities we have inside in a way to pursue a better bottom line results as well.

First, if I can summarize that the amount of value that we are generating per physician is growing and growing very fast. I think it's the first time that we release the value that we are generating per physician in our ecosystem. And as we are plugging more B2B contracts, higher value, longer contracts, we are going to multiply this amount per physician in a quarterly basis. So this is growing. And on the side of synergies, as we are plugging this platform, we also are seeing good opportunities in terms of cost reduction, cost efficiency on the digital side, so reaching the breakeven and improving margin moving forward. So that's a kind of summary from that, okay?

And Fred, if I may add something here. A point that I mentioned before, but it's very, very important to highlight here that this year is the year for the pharmaceutical industry that we are moving from contract campaign-based revenue stream. We are implementing new products that we can have subscription products. So that will be -- turn us to have a more stable and predictable streamline of revenues that come from the pharmaceutical industries. Lelio mentioned these 2 products that are amazing RX Pro, [ RX Insights ] and Whitebook Insights that will transform how we have this revenue relationship with the industry turns to be a contract that it's recurrent -- generating recurring revenue for us. And about one point regarding the economic results of the digital segments. One point that's important for us that brings with this new logo, with these new positions that in the future that we expected to reduce our CAC, our customer acquisition cost with that because we were going to position as a unique rep from that. And with this position, one of the expenses that we have most that's marketing on the digital side, we can reduce that because we will reduce -- we expect to reduce our customer acquisition costs regarding that.

Before I move on, I think that's important, sorry, Virgilio, but it's important for -- to explain to you guys that all the strategy behind the brand that does not mean an integrated product, right? It means an integrated brand.

Yes, it's about build an integrated brands that became -- will become to be the top of mind of everything related to physicians and to medicine. With this, we believe that we will build a much more higher LTV, reducing our CAC and facilitating the cross-selling and upselling between products. So each physician has the specific need in each part of the career, and when we show that we are a reference to solve or to be the partner of every needs they have along the journey, we'll be able to mix the products and mix the solution regarding the needs specifically they have. So we believe with this strategy, we will be much more relevant and much more easy to understand, and they really count on us as a great partner, great ally in the journey.

Thank you. So the next question will come from Marcelo Santos from JPMorgan.

Congratulations for the event. My first question is regarding continued education. If you could please comment in contrast this segment to the undergrad, this is one segment where you don't have so many regulatory constraints. How confident you are that you'll be able to keep solid margins you have and that competition won't erode away the profitability in this business? That's the first question. The second question is, I wanted you to comment on the candidates per seat that you mentioned. I think it was 7 candidates per seat, a record high for Afya. Is there a mix effect now that maybe you have a unit in Rio de Janeiro? Or is this something like more broad-based, we're seeing a broad-based increase in the numbers of candidates per seat?

Marcelo, thanks for your question. I'll start for the last one here. This increase is across the board. We saw a better demand and a higher ratio in all units. Of course, that in some regions, like in Rio de Janeiro, have a much higher candidate per seat. And as we work together with an integrated brand, it's much easier for us to guarantee 100% of occupancy moving the candidates for 1 seat to another or to -- from campus to another and guarantee 100% of our seats fulfill every semester. And the first question about the continuing education. First, we are seeing that the dynamics, the demand dynamics looking for specialization is booming. So the volume of new physicians being graduated every year is growing and it's growing exponentially. Because remember that we had around 10,000 seats back in 2012. Now it's more than 40,000. So -- but it's still maturing and the number of physicians being graduated every year is much higher and keeping the same number of volume at least in terms of attractive resident seats for the entire market. So they are looking at alternative paths. So the first choice will be, well, I need my continued education. I need to look for some specialization and get the skill to improve my income and keep working in the market. So we are seeing a very good trend. That's the reason why we use the pandemic times to triple the number of campus offering graduate programs. Remember that we only had 5 campuses back in 2020. Now we are offering our programs in 15 located in the capitals in the most important cities in Brazil and also analyzing more alternatives to keep opening and have the first move on this market and get -- keep growing with higher margins, a very attractive market for us here in Afya, okay?

So does that mean that at the continued education brand, IPEMED will no longer exist?

We will do the transition from IPEMED to Afya Medical School in English, [indiscernible] in Portuguese. And with -- under this brand, we will aggregate all the brands that -- or the services and the products that built the continued education. So not only IPEMED, but also Além da Medicina, Papers is part of this tool. And with this, we believe that we'll be also a single point of contact in education from hard skills to soft skills from post-graduation to marketing or finance skills. So becoming a real partner also in the continued education part and also in the authorization because we will upgrade the [indiscernible] that we have today to become the largest authorization place that in each part of the career, you can customize your profile there, and then you can have all the information you want for the specific subject that you have. So with this, we will migrate from IPEMED to Afya Medical School, then we embrace everything.

There's a huge opportunity here for us to reduce the CAC. Imagine that Whitebook has around 300,000 physicians. Most of them are potential candidates to keep study and use a continued education solution, continuing education program in Afya. So Whitebook is becoming -- Afya Whitebook now everyone knows that it's part of the same group. This is -- will be much easier in reducing the CAC, the capacity to attract new students for all products in our ecosystem.

Yes. And in this cross that we bring from brands like Whitebook for Afya and the opposite also, it became very credible because we don't start Afya to the physicians from zero. When we say that Whitebook is Afya, iClinic is Afya, CardioPapers is Afya, 30 units of undergrad is Afya. It brings a lot of credibility, so a lot of physicians don't know yet Afya exist, but they know very well this product. So we will start like not from zero, but far from this when we put the brands together.

So our next question will come from Lucca Marquezini from Itaú.

So our question is regarding the Digital Services segment. So the company has added several services through the -- through acquisitions in the last years. So looking forward, is there any type of services that the company believes that still needs to be added to the portfolio? And then what should be the timeline of this expansion?

Thank you for the question. So right now, we see our portfolio of 6 pillar solutions completed. We are always aware of what is happening in the marketing and looking for opportunities, but we don't have any target or any need right now to pursue it. So we are also working partnerships. We already brought one creators -- content creators to our ecosystem as a partner. So we believe also in bringing partners to our ecosystems a way to enrich what we are offering to physicians. So right now, we are working on a leverage to lever what we already acquired and combine those acquisitions in a very business sense approach.

If I can add something on that, Lelio. The point is that under P2P, we have all the pillars completed by at least one solution. So we -- the gaps that we see on those services, we do business plans and do business development under that. The largest case on that is the prescription that we've developed internally and is generating new flows on that. So we have it the 6 pillars mostly covered, and we do this business development in sites if we need some -- we see a gap that will increase the number of physicians or increase the engagement of this physicians to our sites. Under the B2B side, we are the first movers in these markets in Brazil. So there is not much -- even in small startups service that connecting the physicians to these pharmaceutical industry, the payers and the providers. So under that, it's -- right now, it's a pure development that we are doing our MVPs. We did that in the first -- in 2022 with the pharmaceutical industry. And then we started campaigns and develop the recurrent products right now. And for 2023, we're doing that for -- as Lelio mentioned, for the providers with these recruitment solutions that is under MVP right now in the second semester.

If we see any opportunity to fasten the pace of increasing the market share of the data volume, we may consider. But we are -- right now, we are not targeting any new assets to complete the portfolio.

Okay. So thank you for all the questions. I will now pass the floor to Virgilio, our CEO for the final remarks.

So we are approaching to the end of this Afya day, and I would like to add 5 important messages. First, Afya today became a single and integrated hub of education digital service for the physician journey with a unique national brand that creates strong differentials to our products and services. Second, after 4 years of our IPO and considering the positive trend of the year, we are confident to deliver the 2023 guidance, but represents a growth of approximately 4x since our IPO, and we continue to pay a highly predictable business model with a strong growth, high profitability and cash generation. Third, given the execution plan of each segment, we expect another round of strong growth ahead. By 2028, we expect to approximately triple Afya's 2022 results across our lines. Fourth, digital services will have an important growth role by 2028, with B2B contracts improving exponentially, the value generated by each physician on our ecosystem. And last but not least, on the -- what we stand for section, we understand why our strong social impact and purpose empowers Afya's team to keep up with the strong execution and to boost our new brand launch. I sincerely appreciate your participation, and I'm thrilled about what is coming. Thank you all.