A. Reserved B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Summary of Risk Factors An investment in our Class A common shares is subject to several risks, including risks relating to our business and industry, risks relating to Brazil and risks relating to our Class A common shares. The following list summarizes some, but not all, of these risks. Please read the information in the section entitled “Risk Factors” for a more thorough description of these and other risks. Certain Risks Relating to Our Business and Industry · We face significant competition in each program we offer. If our competition increases or if we fail to compete efficiently, we may lose market share and our profitability may be adversely affected. We compete with various public and private post-secondary education institutions, including distance learning institutions and remote locations. If our competition increases due to lighter regulatory constraints or otherwise, or if we fail to compete effectively, our business, results of operations and financial condition could be materially affected. 4 Table of Contents · Changes to the rules or delays or suspension of tuition payments made through FIES may adversely affect our cash flows and our business. · If we lose the benefits of federal tax exemptions provided under the PROUNI program, our business, financial condition and results of operations may be materially adversely affected. We may be disqualified from the PROUNI program and lose our tax exemptions if we do not comply with certain requirements. · An increase in delays and/or defaults in the payment of tuition fees may adversely affect our income and cash flows. · We may face challenges in identifying and acquiring new medical higher education institutions, which could hinder our strategic and financial goals. Additionally, difficulties in effectively integrating and managing an increasing number of acquisitions may adversely affect our strategic objectives. We aim to expand our operations by acquiring medical higher education institutions and healthtech companies, including potentially significant and strategically relevant acquisitions. However, we cannot guarantee the identification or acquisition of suitable medical education institutions on favorable terms or at all. Additionally, integrating acquired companies may present challenges, such as managing a larger, geographically dispersed workforce, implementing uniform controls, procedures, and policies, and incurring high or unexpected integration costs. · We may require additional funds to continue our expansion strategy. If we are unable to obtain adequate financing on favorable terms to complete any potential acquisition and implement our expansion plans, our growth strategy may be materially and adversely affected. If adequate funds are unavailable or are not available on acceptable terms, we may be unable to fund our expansion, capitalize on acquisition opportunities, develop or enhance our product and service portfolio, or respond to competitive pressures, which could have a material adverse effect on our business, results of operations and financial condition. · Our revenues are highly concentrated in the tuition fees we charge for our medical courses and other health sciences programs. Any adverse economic, market or regulatory factors affecting such medical courses and health sciences programs could decrease demand, which could materially adversely affect us. Economic, market or regulatory factors affecting either the amount of tuition fees we are able to charge for the medical courses and health sciences programs we offer or the ability of our students to pay such tuition fees could result in significantly decreased demand for our services. Certain Risks Relating to Brazil · The Brazilian federal government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement as well as Brazil’s political and economic conditions could harm us and the price of our Class A common shares. The Brazilian government’s actions to control inflation and other policies and regulations have often involved increases or decreases in interest rates, changes in fiscal policies, wage and price controls, currency devaluations, capital controls, import and export restrictions, among others. Uncertainty over whether the Brazilian federal government will implement reforms or changes in policy or regulation affecting these or other factors in the future may affect economic performance and contribute to economic uncertainty in Brazil. · Economic uncertainty and political instability in Brazil may harm our business and the price of our Class A common shares. Political crises have affected and continue to affect the confidence of investors and the general public, which have historically resulted in economic deceleration and heightened volatility in the securities offered by companies with significant operations in Brazil. · Exchange rate instability may have adverse effects on the Brazilian economy, us and the price of our Class A common shares. The Brazilian government has implemented various economic plans and used various exchange rate policies, including sudden devaluations, periodic mini devaluations (during which the frequency of adjustments has ranged from daily to monthly), exchange controls, dual exchange rate markets and a floating exchange rate system. In addition, domestic and international reactions to restrictive economic policies could have a negative impact on the Brazilian economy. 5 Table of Contents · Infrastructure and workforce deficiency in Brazil may impact economic growth and have a material adverse effect on us. Growth is limited by inadequate infrastructure, including potential energy shortages and deficient transportation, logistics and telecommunication sectors, general strikes, the lack of a qualified labor force, and the lack of private and public investments in these areas, which limit productivity and efficiency. Certain Risks Relating to Our Class A Common Shares · An active trading market for our Class A common shares may not be sustainable. If an active trading market is not maintained, investors may not be able to resell their shares and our ability to raise capital in the future may be impaired. Although our Class A common shares are listed and being traded on the Nasdaq Global Select Market, an active trading market for our shares may not be maintained. The stock market in general has experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected. · The concentration of ownership and voting power in Bertelsmann, our controlling shareholder, limits your ability to influence corporate matters. Bertelsmann, our controlling shareholder, owns 77.8% of our outstanding Class B common shares as of the date of this annual report, which, together with its ownership of 57.0% of our outstanding Class A common shares, represent approximately 67.1% of our outstanding share capital and 75.8% of the voting power of our outstanding share capital, and, together with the Esteves Family, controls all matters requiring shareholder approval. This concentration of ownership and voting power limits your ability to influence corporate matters. The decisions of Bertelsmann and the Esteves Family on these matters may be contrary to your expectations or preferences, and they may take actions that could be contrary to your interests. So long as Bertelsmann and the Esteves Family continue to beneficially own a sufficient number of Class B common shares, even if they beneficially own significantly less than 50% of our outstanding share capital, acting together, they will be able to effectively control the outcome of all decisions at our shareholders’ meetings. · Class A common shares eligible for future sale may cause the market price of our Class A common shares to drop significantly. The market price of our Class A common shares may decline as a result of sales of a large number of our Class A common shares in the market (including Class A common shares issuable upon conversion of Class B common shares) or the perception that these sales may occur, including by our controlling shareholder. · There can be no assurance that we will not be a passive foreign investment company, or PFIC, for any taxable year, which could subject United States investors in our Class A common shares to significant adverse U.S. federal income tax consequences. Based on the composition of our income and assets and the value of our assets, including goodwill (the implied value of which we estimate based on the price of our Class A common shares), we believe that we were not a PFIC for the taxable year of 2024. However, because we hold a substantial amount of cash (relative to the assets shown on our balance sheet) and because our PFIC status for any taxable year will depend on the composition of our income and assets and the value of our assets from time to time (which may be determined, in part, by reference to the market price of our Class A common shares, which could be volatile), there can be no assurance that we will not be a PFIC for any taxable year. Certain Risks Relating to Our Business and Industry We face significant competition in each program we offer. If our competition increases or if we fail to compete efficiently, we may lose market share and our profitability may be adversely affected. We compete with various public and private post-secondary education institutions, including distance learning institutions and we expect existing competitors and new entrants to revise and improve their business models constantly in response to challenges from competing businesses, including ours. Our competitors may offer programs or courses similar to or better than those offered by us, have access to more funds, be more prestigious or well-regarded within the academic community, have more conveniently located campuses with better infrastructure, introduce new or improved delivery of online education and technology-enabled services that we cannot match or exceed in a timely or cost-effective manner, or charge lower tuition. In any of these cases, our ability to grow our revenue and achieve profitability could be compromised. 6 Table of Contents Particularly with our Continuing Education segment, we have recently experienced increasing competition from traditional education institutions that previously had been limited to providing undergraduate courses and have since begun to offer graduate programs. Increased competition in the graduate program landscape within our Continuing Education segment may result in pricing pressure for us in terms of the percentage of tuition and fees we are able to negotiate. The competitive landscape may also result in longer and more complex sales cycles with prospective students or a decrease in our market share, any of which could negatively affect our revenue and future operating results and our ability to grow our business. For undergraduate programs, the expansion of medicine courses in Brazil is subject to restrictive requirements, under the “Mais Médicos” program. Among the criteria that support the creation of medical schools seats, two relevant aspects are (i) the importance of these new openings in a specified region, and (ii) the sufficiency of the current medical infrastructure in both public regional hospitals and in the applicant medical institution in order to obtain government authorization. In connection with these requirements, and in order to evaluate the impacts of the opening of medical courses in Brazil, on April 5, 2018, MEC issued Ordinance No. 328/2018, pursuant to which, among other measures, MEC imposed a five-year suspension on the granting of authorizations for the creation of new medical education courses. This ordinance was revoked on April 5, 2023 by MEC through Ordinance No. 650/2023. However, following the enactment of Ordinance No. 328/2018, certain educational institutions began to judicially challenge these restrictions before Brazilian courts and sought to compel MEC to receive and review requests (i) for new medicine courses, not observing the public call requirements set forth in Article 3 of Law No. 12,871/2013, or the “Mais Médicos” Law, and (ii) for an increase in the number of medicine seats for existing undergraduate courses, in each case by alleging that these rules amounted to an undue restriction on freedom of competition. In response to those judicial claims, the Brazilian National Association of Private Universities (Associação Nacional das Universidades Particulares) filed the Declaratory Action of Constitutionality (Ação Declaratória de Constitucionalidade) No. 81 towards the Brazilian Federal Supreme Court (Supremo Tribunal Federal), or the Brazilian Supreme Court, to discuss the constitutionality of Article 3 of the “Mais Médicos” Law. Brazil’s Medicine Federal Council (Conselho Federal de Medicina, or CFM) manifested in the Declaratory Action of Constitutionality No. 81 against the judicial authorization of new medical courses or increase in the number of medicine seats. On August 8, 2023, the Brazilian Supreme Court issued a preliminary ruling affirming the constitutionality of Article 3, which requires new medical courses to adhere to the established public call process. To address numerous administrative proceedings before MEC arising from judicial decisions outside the Mais Médicos program, the Court limited the effects of its ruling, allowing these proceedings to continue under MEC’s review. Specifically, the Court directed MEC to assess cases that have progressed beyond the documentary review phase for compliance with decision-making standards set by the Department of Regulation and Supervision of Higher Education (SERES) under Ordinance No. 531/2023. However, there is a risk that these standards may be relaxed as a result of CNE rulings or future judicial decisions that set aside the applicability of Ordinance No. 531. As of May 9, 2024, the Attorney General’s Office (Advocacia-Geral da União, or AGU) reported that MEC had 206 requests for new courses or increase in the number of medicine seats under analysis, of which 11 proceedings were already suspended pursuant to court decisions, resulting in a total of 195 proceedings pending review. As a result of the foregoing, our revenues and profitability may decrease. We cannot assure you that we will be able to compete successfully against our current or future competitors. If we are unable to maintain our competitive position or otherwise respond to competitive pressures effectively, we may lose our market share, our profits may decrease and we may be adversely affected. For more information, see “Item 4. Information on the Company—Business Overview—Regulatory Overview.” We may not be able to update, improve or offer the content of our existing programs to our students on a cost-effective basis, which may materially and adversely affect our ability to attract and retain students. To differentiate ourselves and remain competitive, we must continually update our courses and develop new educational programs, including through the adoption of new technological tools. We may not be able to introduce new educational programs at the same pace as our competitors or at the pace required by the market. As such, we are subject to significant execution risk given the technological needs, the expectations of our customers and market standards change rapidly, especially with the increasing adoption of artificial intelligence (AI) technologies. Additionally, updates to our current courses and the development of new educational programs may not be readily accepted by our students or by the market. If we do not adequately modify our educational programs in response to market demand, whether due to financial restrictions, unusual technological changes or other factors, or if our students do not respond positively to our innovations, our ability to attract and retain students may be impaired and we may be materially and adversely affected. 7 Table of Contents If we are not able to attract and retain students, or are unable to do so without decreasing our tuition fees, our revenues may decline. The success of our business depends primarily on the number of students enrolled in our programs and the tuition fees that they pay. Our ability to attract and retain students depends mainly on the tuition fees we charge, the convenient locations of our facilities, the infrastructure of our campuses and the quality of our programs as perceived by our existing and potential students. These factors are affected by, among other things, our ability to (i) respond to increasing competitive pressures, (ii) develop our educational systems to address changing market trends and demands from post-secondary education institutions and students, (iii) develop new programs and enhance existing programs to respond to changes in market trends and student demands, (iv) adequately prepare our students for careers in their chosen professional occupations, (v) successfully implement our expansion strategy, (vi) manage our growth while maintaining our teaching quality and (vii) effectively market and sell our programs to a broader base of prospective students. If we are unable to continue to attract new students to enroll in our programs and to retain our current students without significantly decreasing tuition, for example as a result of changes in our students’ preferences due to economic uncertainty or volatility, our revenues and our business may decline and we may be adversely affected. If we fail to maintain the quality of our educational programs, our reputation, student enrollment, and financial performance may suffer. The perceived quality of our medical education programs, including residency preparation, specialization test preparation and graduate courses within our Continuing Education segment, is critical to attracting and retaining students. Any decline in academic standards, deficiencies in faculty expertise, ineffective curriculum design, inadequate infrastructure, or failure to adapt to evolving industry and regulatory requirements could diminish our competitive position. Additionally, as we expand our offerings and delivery methods—including digital and in-person content—ensuring consistency and effectiveness across platforms is essential. Negative student outcomes, such as lower test pass rates or dissatisfaction with career preparedness, could also harm our reputation and reduce demand for our Continuing Education programs. If we are unable to sustain high-quality educational services, student enrollment may decline, adversely impacting our revenues, growth prospects, and overall business. We may be adversely affected if the government changes its investment strategy in education. According to Brazilian Federal Law No. 9,394/1996, as amended, providing education is a duty of the government and of the family, and private education is permitted subject to the terms set forth by the Brazilian Constitution and applicable laws and regulations. Certain public institutions may have certain competitive advantages over us in the admissions process, as they do not charge tuition fees and may be perceived as more prestigious than private institutions. However, the highly limited number of available positions and the intensely competitive nature of the admission process to public institutions significantly restrict student access to these institutions. Nevertheless, the Brazilian government may implement policy changes that heighten the competition by (i) increasing public investment in primary and post-secondary education, expanding available positions and enhancing the quality of education provided by public institutions; and (ii) reallocating resources from centers of excellence and research to public post-secondary education institutions. Additionally, the introduction or expansion of affirmative action admission policies by federal and state institutions, based on socioeconomic status, race or ethnicity, could also further intensify competition in the industry. Any significant policy change that alters the level of public investment in education may adversely affect us. As of the date of this annual report, our management is not aware of any pending policy changes or proposed legislation that would impact public investment in Brazil’s education sector. Changes to the rules or delays or suspension of tuition payments made through FIES may adversely affect our cash flows and our business. Some of our students finance their tuition fees through the Higher Education Student Financing Fund (Fundo de Financiamento ao Estudante do Ensino Superior, or FIES) created by the Brazilian federal government, and operated through the National Fund for Educational Development (Fundo Nacional de Desenvolvimento da Educação, or FNDE), which offers financing to low-income students enrolled in undergraduate programs in private higher education institutions. As of the date of this annual report, we have adhered to FIES as most recently amended by the Brazilian federal government. As revised, FIES provides financial support for low-income students throughout Brazil, in particular in the North, Northeast and Midwest regions. As a result, we have exposure to risks associated with delays in the transfer of monthly tuition payments from the FIES program operated by the Brazilian federal government. 8 Table of Contents Should (i) the Brazilian federal government terminate or reduce the transfer of monthly payments to our institutions that participate in FIES, (ii) we fail to meet the requirements for participation in the programs, or our students benefiting from FIES fail to meet the requirements for enrollment in the programs, or (iii) the Brazilian federal government extends the term to make reimbursements under FIES or adversely change their rules, our results of operations and cash flow may be materially adversely affected. We may also experience a decline in revenues and a decline in the number of students at our campuses from the FIES program. Moreover, recent changes to the rules to renew FIES contracts, as well as the shutdown of the system to enter into new student financing agreements, may negatively affect the number of students enrolled in our courses, causing a reduction in our revenues. For more information regarding the changes to FIES contracts, see “Item 4. Information on the Company—Business Overview—Regulatory Overview.” The taxation system in Brazil may undergo significant changes, including as a result of the upcoming tax reform bill, potentially leading to material changes in taxation of our products and services that could adversely affect our results of operations and financial condition. Taxation in Brazil is complex, with a myriad of regulations, exemptions, and amendments, that make it challenging for businesses to navigate and anticipate their tax obligations. As part of a broad tax reform effort, Constitutional Amendment Proposal No. 45/2020 was approved and subsequently promulgated in Constitutional Amendment No. 132, on December 20, 2023, which proposes a new tax to substitute the Social Contribution Tax on Gross Revenue (Programa de Integração Social, or PIS), and the Social Security Financing Tax on Gross Revenue (Contribuição para o Financiamento da Seguridade Social, or COFINS), (and other state and municipal taxes). In an effort to implement Constitutional Amendment No. 132, the Brazilian government enacted Complementary Law No. 214/2025 on January 16, 2025, sanctioning Complementary Bill No. 68/2024. This law introduced the Goods and Services Tax (Imposto sobre Bens e Serviços, or IBS), the Social Contribution on Goods and Services (Contribuição Social sobre Bens e Serviços, or CBS), and the Selective Tax (Imposto Seletivo, or IS). The CBS replaces PIS and COFINS as part of a broader tax reform. Notably, the CBS maintains a zero rate for educational institutions participating in the PROUNI program, preserving the related tax benefits. Additionally, regarding the IBS, which replaces the current Service Tax (ISS), a 60% reduction in the applicable rate for the education sector has been granted. However, the final rate still depends on regulation by the States and Municipalities, with a reference percentage estimated at 17.7%. It is worth noting that the current average ISS rate is 3%, which could impact the institution’s overall tax burden. Any increase in tax rates could elevate the cost of our products and services, thereby reducing profitability if we could not timely pass these adjustments on to consumers. On the other hand, a decrease in tax rates might positively impact margins, but could also lead to intensified competition as other market players might adjust their own pricing strategies. The effects of these proposed tax reform and any other changes that result from enactment of additional tax reforms have not been, and cannot be, quantified. However, some of these measures, if enacted, may result in increases in our overall tax burden, which could negatively affect our overall financial performance. Moreover, on December 27, 2024, Law 15,079/2024 was enacted, establishing the implementation of the OECD Pillar Two global minimum tax in Brazil, effective as of January 1, 2025. Law 15,079/2024 aligns the Brazilian tax legislation to the OECD’s Global Anti-Base Erosion (GloBE) rules by introducing a minimum effective taxation of 15% through an additional Social Contribution tax on Net Profit (Contribuição Social sobre o Lucro Líquido, or “CSLL”). This regulation applies to multinational groups within the scope of the OECD’s GloBE rules, specifically those whose ultimate parent entity reported annual consolidated revenues of at least €750 million in at least two of the four fiscal years immediately preceding the year under review. 9 Table of Contents The rules are designed to ensure that the additional CSLL qualifies as a Qualified Domestic Minimum Top-up Tax (QDMTT) under the OECD Inclusive Framework, subjecting Brazilian entities to a minimum tax rate of 15%. Although these rules do not apply to the fiscal year ended December 31, 2024, we are currently assessing their potential effects on our consolidated financial statements. However, the implementation of the Pillar Two regulations could result in an increase in our overall tax burden and adversely affect our profitability. In turn, this additional cost may limit our ability to invest in growth initiatives, or require us to raise prices in order to maintain margins, which could affect our competitiveness relative to other market participants who are not subject to the same regulatory framework. As a result, our market position, business, and operating results could be affected. While the financial impact has not yet been quantified, we are taking steps to ensure compliance with the new tax requirements. On March 28, 2025, we filed a writ of mandamus with the Brazilian Federal Courts challenging the enforceability of the newly enacted additional CSLL. The action is grounded on constitutional and statutory arguments, and we are seeking a preliminary injunction in the Federal Court of Appeals of the Sixth Region (TRF6), to prevent the collection of the additional CSLL, which is scheduled to disburse in 2026 with respect to the 2025 fiscal year. If we lose the benefits of federal tax exemptions provided under the PROUNI program, our business, financial condition and results of operations may be materially adversely affected. Some of our students participate in the University for All Program (Programa Universidade para Todos, or PROUNI program). Through the PROUNI program, the Brazilian federal government grants a number of full and partial scholarships to low-income undergraduate students in private higher education institutions. As a result of our participation in the PROUNI program, we benefit from certain federal tax exemptions relating to undergraduate’s and associate’s degree programs, such as (i) income tax, (ii) PIS, (iii) COFINS, and (iv) CSLL, regarding our revenues from undergraduate and associate programs. We may be disqualified from the PROUNI program and lose our tax exemptions if we do not comply with certain requirements, such as providing total or partial scholarships for low-income students eligible for the program, and submitting to MEC semi-annual records of attendance, achievement and dropout of students receiving scholarships, among others. See “Item 4. Information on the Company—Business Overview—Regulatory Overview.” If we lose our tax exemptions or are unable to comply with other, more stringent requirements that may be introduced in the future, our business, financial condition and results of operations could be materially adversely affected. There is a risk that additional changes in tax laws may prohibit, interrupt or modify the use of existing tax exemptions, and we cannot assure you that we will fully maintain such tax and other benefits related to PROUNI in the event the tax laws are amended further. In connection with the broader tax reform in Brazil, Bill No. 3,887/2020, which proposed revoking PROUNI-related exemptions under the previous tax regime, is no longer applicable. However, future regulatory developments or additional legislative changes could still impact the tax benefits available to us under the PROUNI program. Any suspension, accelerated default, repayment or inability to renew our tax exemptions may have an adverse effect on our results of operations. If we lose our tax exemptions and incentives, if we are unable to comply with future requirements or if changes in the law limit our ability to maintain these tax benefits, our business, financial condition and results of operations may be significantly and adversely affected. Any change or review of the tax treatment of our activities, or the loss or reduction in tax benefits on the sale of books (including digital content) may materially adversely affect us. The Brazilian Federal Constitution, in Article 150, grants tax immunity for activities related to the production, sale, and resale of books. In this sense, this activity, previously carried out by Medcel, which was merged by Afya Brazil in 2024, is not taxed by the federal VAT (tax on industrial activity, or “IPI”), the state VAT (tax on sale or resale of products, or “ICMS”) and the municipal VAT (tax on services, or “ISS”). According to Brazilian federal law No. 10,865/2004, the Company also benefited from a zero-tax rate on Federal Social Contributions, PIS and COFINS, which are calculated on gross revenue. The tax reform ensured tax immunity for the taxes provided for in Article 150 of the Federal Constitution, applying exclusively to the IBS. However, no differentiated provisions were established regarding the CBS. Nevertheless, infra-constitutional legislation, particularly Complementary Law No. 214/2025, included the CBS within the scope of the immunity granted by Article 150 of the Federal Constitution, as stated in its Article 9. 10 Table of Contents If the Brazilian government or tax authority or the Brazilian superior courts decide to change or review the tax treatment for the production or sales of books (including digital books and e-readers), and we are unable to pass any cost increase onto our students, our results may be materially adversely affected. We may be held liable for extraordinary events that may occur at our campuses, which may have an adverse effect on our image and, consequently, our results of operations. We may be held liable for the actions or omissions of officers, directors, professors or other employees at our campuses, including allegations of non-compliance with MEC legislation and regulations. Accidents, injuries or other damages affecting students, professors, other employees, or third parties at our campuses could lead to claims of negligence, inadequate supervision, or other liability. Injuries could be caused by or arise from the actions or negligence of our students, employees, contractors or visitors on our premises, including due to failures in our in-access control and security systems or infrastructure issues. If any such event occurs, our facilities may be perceived as unsafe, potentially deterring students from enrolling or attending our schools. We may also face claims alleging that officers, directors, professors or other employees committed moral or sexual harassment or other unlawful acts, and we may be subject to legal proceedings by current and/or former employees alleging breaches of applicable labor laws. Even if unsuccessful, these claims may cause negative publicity, reduce enrollment numbers, increase student attrition rates, entail substantial expenses and divert the time and attention of our management, materially adversely affecting our results of operations and financial condition. Moreover, we operate clinics, outpatient facilities, and laboratories where physicians and students perform procedures. Non-compliance with health and safety standards, regulations, and laws can result in serious consequences, including death or physical injury to physicians, students, patients and other persons on our premises. We cannot assure you that we will be at all times able to comply with all such regulations or guarantee the safety of all persons on our premises, including patients. Additionally, infrastructure vulnerabilities can lead to adverse events with significant impacts on our reputation to the extent that they may expose students and faculty to physical injury. As of the date of this annual report, we have dozens of campuses spread across Brazil, and we cannot assure you that all of them will be adequately conserved and have safety practices that are appropriately observed. Structural problems in any such facilities may include faulty floors and ceilings, premises that are intermittently closed due to lack of safety or appropriate licenses, areas prone to flooding, exposed electrical wiring and other issues that may increase the risk of personal injury to our students, faculty and other persons on our premises. If any such events were to occur, our reputation would be materially and adversely affected, which could cause significant adverse effects on our results of operations and financial condition. Our insurance coverage may not cover certain indemnifications we may be required to pay, be insufficient to cover these types of claims, or may not cover certain acts or events. We may also not be able to renew our current insurance policies under the same terms. Such liability claims may affect our reputation and harm our financial results. See “Item 4. Information on the Company—Business Overview—Insurance.” We cannot guarantee that our suppliers will not engage in improper practices, including inappropriate labor practices. To meet the needs of our students and offer greater comfort and quality in all areas and aspects of our activities, we depend on service providers and suppliers for services such as cleaning, surveillance, telemarketing and security. In the event that our service providers engage in such improper business practices, our customers’ perception of our business may be adversely affected, which may adversely affect our business, results of operations and our reputation. For example, we may be adversely affected if these third-party service providers and suppliers do not meet their obligations under Brazilian labor laws and with the obligations and guidelines established in our Code of Ethics and Conduct and also in our services agreements for providers and suppliers, including with respect to supplying appropriate protective equipment or training to employees that are designated to work on our premises. According to Brazilian labor law, we may be liable to the employees of these service providers and suppliers for labor obligations of these service providers and suppliers to the extent such service providers and suppliers fail to indemnify such employees pursuant to court orders, and we may also be fined by the relevant authorities. This risk is particularly relevant if these suppliers are involved in sensitive labor issues, such as violations of human rights, discriminatory acts, child labor and direct or indirect use of forced labor or modern slavery and for which we may be held liable in civil, labor, criminal and administrative proceedings, including for damages and remediation costs. As a result, we may face difficulties in obtaining or maintaining operating licenses. Any such litigation could impact our customers’ perception of our business, and adverse decisions may compel us to disburse material amounts in connection therewith, which may adversely affect our business, results of operations and our reputation. 11 Table of Contents We are subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations. We operate in jurisdictions that have a high risk for corruption and we are subject to various anti-corruption, anti-bribery and anti-money laundering laws and regulations, including the Brazilian Federal Law No. 12,846/2013, also known as the Clean Company Act (and Decree No. 11,129/2022 that regulates the Clean Company Act), Brazilian Federal Law No. 9,613/1998, as amended by Brazilian Federal Law No. 12,683/2012, and Brazilian Federal Law No. 8,429/1992, as amended by Brazilian Federal Law No. 14,230/2022, in addition to the United States Foreign Corrupt Practices Act of 1977, as amended, or the FCPA. Both the Clean Company Act and the FCPA impose liability against companies who engage in bribery of government officials, either directly or through intermediaries. Anti-corruption laws are interpreted broadly and prohibit us and our collaborators from authorizing, offering, or directly or indirectly providing improper payments or benefits to recipients in the public or private sector. Although we strongly condemn the practice of corruption and bribery by promoting a culture of ethics and through our integrity program as provided for in our Code of Ethics and Conduct and Compliance, Anti-Corruption and Fraud Policy and in the whistleblowing channel, we or our collaborators may have direct and indirect interactions with government agencies and state-affiliated entities and universities in the course of our business. We use third-party collaborators, and strategic partners, law firms, and other representatives for regulatory compliance, patent registration, deregulation advocacy, field testing, and other purposes. We can be held liable for the corrupt or other illegal activities of these third-party collaborators, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. Anti-money laundering, anti-bribery, anti-corruption and sanctions laws and regulations to which we are subject require us, among other things, to conduct full customer due diligence (including sanctions and politically exposed person screening) and to keep our customer, account and transaction information up to date. We have implemented and are in the process of reviewing our policies and procedures detailing what is required from those responsible, but all such policies may not be completed or may not be fully in effect as of the date of this annual report (in particular, our policies relating to sanctions laws and regulations). In addition, we rely heavily on our employees to assist us by spotting such illegal and improper activities and reporting them, and our employees have varying degrees of experience in recognizing criminal tactics and understanding the level of sophistication of criminal organizations. In addition, we rely upon our relevant counterparties to a large degree to maintain and appropriately apply their own appropriate compliance measures, procedures and internal policies. Accordingly, there can be no assurance that all of our employees, representatives, contractors, partners, or agents will comply with these laws at all times. If we are unable to apply the necessary scrutiny and oversight of employees, third parties to whom we outsource certain tasks and processes or counterparties, we increase the risk of regulatory breach. Violations of — or even accusations of or associations with violations of — anti-corruption, anti-bribery and anti-money laundering laws and regulations could result in criminal liability, administrative and civil lawsuits, significant fines and penalties (including being added to “blacklists” that would prohibit certain parties from engaging in transactions with us), forfeiture of significant assets and reputational harm. Non-compliance with these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, injunctions, suspension and debarment from contracting with certain governments or other persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Enforcement actions and sanctions could further harm our reputation, business, results of operations, and financial condition. If any person in the Cayman Islands knows or suspects, or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or money laundering, or is involved with terrorism or terrorist financing and property, and the information for that knowledge or suspicion came to their attention in the course of business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) the Financial Reporting Authority (“FRA”) of the Cayman Islands, pursuant to the Proceeds of Crime Act (As Revised) of the Cayman Islands, if the disclosure relates to criminal conduct or money laundering, or (ii) a police officer of the rank of constable or higher, or the FRA, pursuant to the Terrorism Act (As Revised) of the Cayman Islands, if the disclosure relates to involvement with terrorism or terrorist financing and property. Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise. 12 Table of Contents We are subject to environmental laws and regulations, which may become more stringent in the future and increase our obligations and capital expenditures with respect to their compliance. We are subject to several environmental laws and regulations at the municipal, state and federal levels, and noncompliance may result in significant penalties and liabilities. Our operations are subject to extensive environmental laws and regulations enforced by governmental agencies and regulatory bodies, which have the authority to impose administrative, civil and criminal sanctions. Any violations of these laws and regulations could result in the imposition of criminal and administrative sanctions, as well as civil liability, seeking redress for alleged environmental damages and damages to third parties. Environmental infractions may lead to administrative sanctions, including, among other consequences, fines ranging from R$50 to R$50 million, the revocation of our licenses and authorizations, or the temporary or permanent suspension of our activities. There is no statutory limit to the amount courts may award to cover the costs of remediation in the case of civil liability or, if the environmental damage cannot be repaired, the payment of an indemnity. Additionally, claims for environmental damages are not subject to a statute of limitations. The enactment of more stringent laws and regulations or more stringent interpretations of existing laws and regulations may force us to increase our capital expenditures relating to environmental compliance, therefore diverting funds from previously planned investments. These changes could have a material adverse effect on us. Governmental agencies or other authorities may also significantly delay or deny the issuance of permits and authorizations required for our operations, preventing us from making constructions and improvements at our campuses. Additionally, we have environmental compliance obligations under the loan agreement executed with the International Finance Corporation (IFC) and under the debentures’ issuance. Any failure to comply with these obligations could trigger events of default, which may result in the acceleration of these financial agreements, requiring us to make immediate repayments that could materially impact our financial condition. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness.” In addition, the improper disposal of solid waste, as well as accidents during waste transportation could also result in administrative, civil and criminal penalties. Under the strict and joint environmental liability framework, we may be held responsible for environmental damages caused by third parties hired for waste collection, transportation and final disposal, even if we comply with contractual and regulatory obligations in outsourcing such services. Furthermore, Brazilian Federal Law No. 8,501, enacted on November 30, 1992, establishes regulations for the use of unclaimed cadavers for educational and scientific purposes by medical institutions. Institutions must comply with documentation and requirements established by the referred law. Noncompliance with these regulations may result in administrative, civil, criminal penalties, and reputational damage. We are subject to supervision by MEC and, consequently, may suffer sanctions as a result of non-compliance with any regulatory requirements. Brazilian Federal Law No. 10,861/2004, regulated by Decree No. 9,235/2017, implemented the activities of supervision of post-secondary education entities and courses in the Brazilian federal education system. MEC’s SERES is responsible for the regular and special supervision of the corresponding courses and programs. Regular supervision derives from complaints and allegations by students, parents and faculty members, as well as by public entities and the press. These complaints and allegations involve specific cases of entities with courses showing evidence of irregularities or deficiencies. We are subject to those complaints and representations. Special supervision, on the other hand, may be commenced by MEC itself, based on its post-secondary education regularity and quality standards, and involves more than one course or entity, grouped according to the criteria chosen for the special supervision. These criteria may include unsatisfactory results in the National Student Performance Exam (Exame Nacional de Desempenho de Estudantes, or ENADE) and the Difference Indicator between Expected and Actual Performance (Indicador de Diferença entre os Desempenhos Observado e Esperado), among other quality indicators, the history of course evaluations by INEP, as well as compliance with specific legal requirements as, for example, the minimum ratio between faculty members with master’s or doctorate degrees or certain mandatory digitization requirements with respect to academic documents for our students under MEC’s recent digital academic collection rules. Administrative irregularities can include, among others: (i) unlicensed or irregular post-secondary courses; (ii) any outsourcing of post-secondary education activities; (iii) the failure to file a re-accreditation or recognition or renewal request with respect to post-secondary education courses within the time periods enacted by MEC pursuant to Decree No. 9,235/2017; (iv) failure to comply with the rules and requirements for maximum occupancy of authorized vacancies approved by MEC; and (v) failure to comply with any penalties imposed by MEC. 13 Table of Contents If MEC concludes, as part of its supervisory activities, that an irregularity constitutes an imminent risk or threat to students or the public interest, it may impose the following measures on the relevant educational institution for a period to be determined by SERES: (i) suspend the admission of new students; (ii) suspend the offering of undergraduate or graduate lato sensu courses; (iii) suspend the institution’s discretionary ability to, among other things, create new post-secondary courses and establish course curricula, if applicable; (iv) suspend the license to establish new distance learning programs; (v) override any ongoing regulatory requests filed by the institution and prohibit new regulatory requests; (vi) suspend participation in FIES; (vii) suspend participation in PROUNI; and (viii) suspend or restrict participation in other federal education programs. The educational institution can contest MEC’s findings by filing motions with MEC or with Brazilian courts. Upon completion of the supervisory process and to the extent MEC concludes that there are administrative irregularities, SERES may apply the penalties provided for by Law No. 9,394/1996, namely (i) discontinue courses; (ii) directly intervene in the educational institution; (iii) temporarily suspend the institution’s discretionary ability to, among other things, create new post-secondary courses and establish course curricula, if applicable; (iv) disqualify the institution as an educational institution; (v) reduce the number of student vacancies; (vi) temporarily suspend new student enrollments; or (vii) temporarily suspend courses. Moreover, we and our subsidiaries face the risk of unintentionally surpassing MEC’s authorized medical or other enrollment limits due to court-mandated student enrollments, which do not count towards our allocated enrollment limit. Inaccurate assessment of these judicial demands, such as misinterpreting obligations like discounts as enrollments under litigation, may result in exceeding our authorized enrollment limits. This breach by us, or by any of the companies that we have acquired or may acquire, could lead to regulatory penalties, reputational harm, and strain our resources, compromising our educational quality. The post-secondary education sector is highly regulated, and our failure to comply with existing or future laws and regulations could significantly impact our business. We are subject to various federal laws and extensive government regulations by MEC, Conselho Nacional de Educação (National Education Council, or CNE), INEP, FIES and the National Post-secondary Education Assessment Commission (Comissão Nacional de Avaliação da Educação Superior, or CONAES), among others, including, but not limited to the “Mais Médicos” Law, which created the “Mais Médicos” program. Brazilian education regulations define three types of post-secondary education institutions: (i) colleges, (ii) university centers and (iii) universities. The three categories depend on previous accreditation by MEC to operate. Colleges differ from the other categories with respect to the programs offered, as colleges depend on previous authorization from MEC to implement new programs, while university centers and universities are not subject to such requirements, except for courses in law, medicine, psychology, nursing and dentistry, which require the prior approval of MEC. All accredited educational institutions require the prior approval of MEC to create campuses outside their headquarters. All post-secondary education programs must be recognized by MEC as a requirement, together with registration of the program, to validate the diplomas issued by them. However, pursuant to article 101 of Ordinance No. 23/2017 of MEC, issued diplomas may be valid even if the program is not formally recognized by MEC, so long as the educational institution has filed the request with MEC to certify the program, and the request is pending formal review and approval by MEC. As a result, any failure to comply with legal and regulatory requirements by post-secondary education entities may result in the imposition of sanctions by MEC, as well as damage to the program’s reputation. MEC must authorize our campuses located outside our headquarters before they can start their operations and programs. For further information, see “Item 4. Information on the Company—Business Overview—Regulatory Overview.” Distance learning programs, as well as on-campus learning, are also subject to strict accreditation requirements for their implementation and operation. We must comply with all such requirements in order to obtain and renew all authorizations. 14 Table of Contents We cannot assure you we will be able to comply with these regulations and maintain the validity of our authorizations, enrollments and accreditations in the future. If we fail to comply with these regulatory requirements, MEC could place limitations on our operations, including cancellation of programs, reduction in the number of positions we offer to students, termination of our ability to issue degrees and certificates and revocation of our accreditation, any of which could adversely affect our financial condition and results of operations. We cannot assure you that we will obtain accreditation or re-accreditation of our post-secondary education institutions, or that our courses will receive authorization or reauthorization as scheduled, or that they will have all of the accreditations, re-accreditations, authorizations and re-authorizations required by MEC. The absence of such accreditations and authorizations from MEC or any delays in obtaining them could adversely affect our financial condition and results of operations. In addition, we may also be adversely affected by any changes in the laws and regulations applicable to post-secondary education institutions, particularly by changes related to: (i) any revocation of accreditation of private educational institutions; (ii) the imposition of controls on monthly tuition payments or restrictions on the profitability of private educational institutions; (iii) faculty credentials; (iv) academic requirements for courses and curricula; (v) infrastructure requirements of campuses, such as libraries, laboratories and administrative support; (vi) the “Mais Médicos” program; and (vii) the promulgation by MEC of new rules and regulations affecting post-secondary education, in particular with respect to distance learning programs. We may be materially adversely affected if we are unable to obtain these authorizations, accreditations, course recognitions, or to comply with changes in the laws and regulations in a timely manner, if we cannot introduce new courses as quickly as our competitors, if we are not able to or do not comply with any new rules or regulations promulgated by MEC, or if laws and regulations are passed adverse to the business and operations of post-secondary education institutions. If we are not able to maintain our current MEC evaluation ratings and the evaluation ratings of our students, we may be adversely affected. We and our students are regularly evaluated and rated by MEC. If our campuses, programs or students receive lower scores from MEC than in previous years in any of its evaluations, including the IGC (Índice Geral de Cursos), and the Student Performance National Exam (Exame Nacional de Desempenho de Estudantes, or ENADE), we may experience a reduction in enrollments and be adversely affected by perceptions of decreased educational quality, which may negatively affect our reputation and, consequently, our results of operations and financial condition. The quality of our academic curricula is also a key element of the quality of the education we provide. In addition, we cannot assure you that we will be able to develop academic curricula for our new programs with the same levels of excellence as existing programs and meet the standards set forth by MEC. In the event that any of our programs receive unsatisfactory evaluations, the post-secondary education institution offering the programs may be required to enter into an agreement with MEC setting forth proposed measures and timetables to improve the program and remedy the unsatisfactory evaluation. Non-compliance with the terms of the agreement may result in additional penalties for the institution. These penalties could include, but are not limited to, suspending our ability to enroll students in our programs, denial of accreditation or re-accreditation of our institutions or prohibiting us from holding regular class sessions, all of which can adversely affect our results of operations and financial condition. We may face restrictions and penalties under the Brazilian Consumer Protection Code in the future. Brazil has a series of strict consumer protection laws, referred to as the Consumer Protection Code (Código de Defesa do Consumidor). These laws apply to all companies in Brazil that supply products or services to Brazilian consumers. They include protection against misleading and deceptive advertising, coercive or unfair business practices and issues in the formation and interpretation of contracts, usually in the form of civil liabilities and administrative penalties for violations. These penalties are often levied by the Brazilian Consumer Protection Agencies (Fundação de Proteção e Defesa do Consumidor, or PROCONs), which oversee consumer issues on a district-by-district basis. Companies operating across Brazil may face penalties from multiple PROCONs, as well as from the National Secretariat for Consumers (Secretaria Nacional do Consumidor, or SENACON). Companies may settle claims made by consumers via PROCONs by paying compensation for violations directly to consumers and through a conduct adjustment agreement (Termo de Ajustamento de Conduta, or TAC). 15 Table of Contents Brazilian public prosecutors may also commence investigations of alleged violations of consumer rights and require companies to enter into TACs. Companies that violate TACs face potential enforcement proceedings and other potential penalties such as fines, as set forth in the relevant TAC. Brazilian public prosecutors may also file public civil actions against companies who violate consumer rights or competition rules, seeking strict adherence to consumer protection laws and compensation for any damages to consumers. In certain cases, we may also face investigations and/or sanctions by the CADE, in the event our business practices are found to affect the competitiveness of the markets in which we operate or the consumers in such markets. We may also be subject to legal proceedings by current and/or former students alleging breaches of rights granted by the Brazilian Consumer Protection Code that, even if unsuccessful, may cause negative publicity, reduce enrollment numbers, increase student attrition rates, entail substantial expenses and divert the time and attention of our management, materially adversely affecting our results of operations and financial condition. Government agencies, MEC and third parties may conduct inspections, file administrative proceedings or initiate litigation against us. Because we operate in a highly regulated industry, government agencies, MEC or third parties may conduct inspections, file administrative proceedings or initiate litigation for non-compliance with regulations against us or the institutions we purchase. If the results of these proceedings or litigations are unfavorable to us, or if we are unable to successfully defend our cases, we may be required to pay monetary damages or be subject to fines, limitations, injunctions or other penalties. Even if we adequately address issues raised by an inspection conducted by an agency or successfully defend our case in an administrative proceeding or court action, we may have to set aside significant financial and management resources to settle issues raised by these proceedings or to those lawsuits or claims. Administrative proceedings or court actions brought against us may damage our reputation, even if such lawsuits or claims are without merit. Failure to obtain or maintain licenses and permits with respect to our real estate or construction projects in a timely manner may result in penalties, including closures of some of our campuses. The use of all our buildings, including operational and administrative facilities, is contingent upon the successful issuance of an occupancy permit (Habite-se) or an equivalent certificate issued by the municipality where the property is located, certifying that the building was constructed in compliance with applicable zoning and municipal regulations. Additionally, non-residential properties must obtain a use and operations license and/or permit from the relevant municipality, as well as a fire department inspection certificate, issued by the fire department, before regular use. We are currently in the process of obtaining and/or renewing these licenses for some of the real estate we use. The absence of such licenses may result in penalties ranging from fines to the forced demolition of non-compliant areas or, in the worst-case scenario, the temporary or permanent closure of the campus or branch lacking the licenses and permits. This could occur if the relevant penalties and fines are not paid, and the licenses and permits are not obtained following notifications from the relevant authorities. Any imposed penalties, particularly the forced closure of any of our campuses or branches, could have a material adverse effect on our business. Furthermore, in the event of any accident at our campuses or branches, the lack of such licenses could result in civil and criminal liability, and the cancellation of insurance policies, if any for the respective campus or branch and could damage our reputation. Additionally, we routinely undertake complex construction, expansion and renovation projects at our campuses, which require additional construction licenses and permits, including environmental licenses for such projects. Failure to obtain or maintain these licenses or permits during these projects may lead to delays to or additional costs (including fines or other penalties imposed by governmental authorities), as well as material adverse effects on our results of operations, financial condition, and reputation. Failure to provide a high-quality customer experience may adversely affect us. Customer experience is fundamental to the success of our institution. Meeting high-quality standards in both in-person and virtual learning is a constant challenge, as customers’ expectations continue to rise. Failure to deliver a valuable learning experience—whether in physical classrooms or online—can lead to student dissatisfaction, ultimately adversely affecting our reputation and our ability to attract and retain students. Factors such as the perceived quality of teaching, institutional credibility, and overall student support play crucial roles in fostering satisfaction and long-term engagement. 16 Table of Contents Delivering a consistently valuable experience requires overcoming several obstacles. In in-person programs, maintaining qualified faculty, ensuring well-equipped facilities, and providing satisfactory administrative support are key concerns. Students expect engaging, practical, and hands-on learning, particularly where clinical training and laboratory access are required. Any shortcomings in these areas can lead to frustration and impact the perceived value of our programs. In virtual programs, the challenges are different but equally significant. Students depend on user-friendly, reliable digital platforms to access course materials, attend live sessions, and engage with instructors. Technical failures, poor user experience, or insufficient student support can result in disengagement and lower retention rates. Additionally, delivering virtual learning programs with the same depth and effectiveness as face-to-face instruction requires continuous innovation in teaching methodologies. Brazil’s geographic and economic diversity adds another layer of complexity. While in some regions, students benefit from robust infrastructure and access to resources, others may struggle with unreliable internet connections, limited access to technology, or logistical barriers to attending in-person classes. These disparities make it difficult to provide a uniform student experience across different locations. Any of these factors could materially affect our business, financial condition, and results of operations. If we continue to grow, we may not be able to appropriately manage the expansion of our business and staff, the increased complexity of our software and platforms, or grow in our addressable market. Additionally, our ability to attract, recruit, retain and develop key personnel and qualified employees is critical to our success and growth. We are currently experiencing significant expansion and facing numerous related issues, such as the acquisition and retention of experienced and talented personnel, cash flow management, corporate culture and effectiveness of internal controls. These challenges, along with the significant time spent addressing them may divert our management’s attention from other business issues and opportunities. Additionally, our current and planned platform and systems, procedures and controls, personnel and third-party relationships may not be adequate to support our future operations. The strain on management and our operational and financial resources is expected to continue, and failure to manage growth effectively could seriously harm our business, results of operations and financial condition. We are also dependent upon the ability and experience of key personnel. Failure to retain or attract senior executives, board members (including those with M&A experience related to our industry), or key managers, could have a material adverse effect on our business, financial condition and results of operations. Our teaching faculty, including teachers and professors at our post-secondary education institutions, is essential for maintaining the quality of our programs and the strength of our brand and reputation. We promote training to ensure our faculty attains and maintains the qualifications we require and stays updated on trends and changes in their areas. Due to shortages in the supply of qualified professors, competition for hiring and retaining qualified professionals has increased substantially. We cannot assure you that we will succeed in retaining our current professors or recruiting or training new professors who meet our quality standards, particularly as we continue to expand our operations. Our corporate culture and values are critical to our success, and failure to preserve them could harm our ability to recruit, retain and develop personnel and implement our strategic plans effectively. We are advancing culture change through the implementation of diversity, equity and inclusion, or DEI initiatives. For example, in 2021, we undertook a public commitment by signing onto the United Nations Global Compact and committing to achieve gender equity by having women occupy half of our managerial positions by 2030. Failure to implement these initiatives successfully could adversely impact our ability to recruit, attract and retain talent, and perceived insufficient commitment to DEI or environmental, social, and governance initiatives, which may adversely affect our reputation and, consequently, our results of operations and financial condition. To successfully compete and grow, we must attract, recruit, retain and develop personnel with the necessary expertise. The competitive market for qualified personnel may hinder our ability to recruit additional personnel or replace key personnel who depart. Our efforts to retain and develop personnel may also result in significant additional expenses, adversely affecting our profitability. We cannot assure you that qualified employees will continue to be employed, that we will manage them successfully, or that, in the future, we will be able to attract qualified personnel with similar skills and expertise at an equivalent cost in the future. 17 Table of Contents To remain competitive, we must constantly update our software, enhance and improve our billing, transaction and other business systems, and add and train new software designers and engineers, as well as other personnel. This process is time-intensive and expensive and may lead to higher costs in the future. Furthermore, managing multiple commercial relationships with strategic partners, online service providers, and other third parties could lead to execution problems affecting current and future revenues and operating margins. We may face challenges in identifying and acquiring new medical higher education institutions, which could hinder our strategic and financial goals. Additionally, difficulties in effectively integrating and managing an increasing number of acquisitions may adversely affect our strategic objectives. We aim to expand our operations by acquiring medical higher education institutions and healthtech companies, including potentially significant and strategically relevant acquisitions. However, we cannot guarantee the identification or acquisition of suitable medical education institutions on favorable terms or at all. Additionally, our previous and any future acquisitions involve several risks and challenges that may have a material adverse effect on our business and results, including the following: · the acquisition may not align with our commercial strategy or institutional image; · future acquisitions may be subject to approval by Brazil’s Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica, or CADE) or other regulatory authorities, which may deny approval, or impose conditions or restrictions; · we may face contingent and/or successor liabilities (either currently known or unknown to us) related to judicial and administrative proceedings, financial, reputational and technical issues, including regulatory, tax, labor, social security, environmental, intellectual property, accounting practices, financial disclosures, internal controls, anti-corruption, anti-bribery or anti-money laundering issues, which may not be fully indemnifiable under the relevant acquisition agreement; · the acquisition process may require additional funds and/or may be time-consuming, diverting management’s attention from daily operations; · our investments in acquisitions may not yield expected returns, and we may mismanage administrative and financial resources during integration; · the business model of acquired institutions may differ from ours, and we may be unable to adapt them to our business model or do so efficiently; · we may not be able to integrate efficiently and successfully the operations of the institutions we acquire, including their personnel, financial systems, distribution or operating procedures; · certain acquisitions may impact our financial reporting obligations and delay the preparation of our consolidated financial statements; · the acquisitions may generate goodwill, the impairment of which could reduce our net income, negatively affecting our financial statements; · the transfer of management of the target institution due to a change of control or corporate restructuring must be notified to MEC within 60 days from the consummation of the acquisition, and MEC may impose additional restrictions on its reaccreditation; and · we may be unable to provide the necessary resources to support the acquired company’s operations and failure to meet any applicable reaccreditation requirements may result in additional restrictions or conditions on the reaccreditation imposed by MEC. 18 Table of Contents In addition, we may face significant challenges in the process of integrating the operations of any acquired company with our existing business, such as managing a larger, geographically dispersed workforce, and implementing efficient uniform controls, procedures and policies, along with incurring high or unexpected integration costs. As of the date of this annual report: (i) we have fully integrated the operations of 26 of our acquisitions; and (ii) we are in the process of integrating the operations of Shosp, Cliquefarma, Medical Harbour, Medicinae, iClinic, RX PRO Glic, IBES and SESSA with our existing business. The anticipated benefits of the acquisitions we may pursue will not be achieved unless we successfully and efficiently integrate the acquired companies into our operations and effectively manage, market and apply our business strategy to them. Additionally, we may be unable to integrate faculty and personnel with diverse professional experiences and corporate cultures, potentially impairing our relationship with current and new employees, including professors. Failure to prevent or detect a malicious cyber-attack on our systems and databases could result in a misappropriation of confidential information or access to highly sensitive information. Cyber-attacks are becoming more sophisticated and pervasive. Across our business, we hold large volumes of personally identifiable information, including that of employees, institutions, customers, students and parents, legal guardians, patients, physicians and clients (B2B and B2C). Individuals have tried and may continue to try to gain unauthorized access to our data in order to misappropriate such information for potentially fraudulent purposes, and our security measures may fail to prevent such unauthorized access. A breach of our systems could result in a devastating impact on our reputation, financial condition or student experience. In addition, if we were unable to prove that our systems are properly designed to detect an intrusion, we could be subject to severe penalties and loss of existing or future business. In particular, data protection and privacy laws are developing rapidly to take into account the changes in cultural and consumer attitudes towards the protection of personal data. In operating our business and selling our products and services to customers, we and our subsidiaries collect, use, store, transmit and otherwise process employee and customer data, including sensitive personal data. As a result, we and our subsidiaries are subject to a variety of laws and regulations in Brazil, as well as contractual obligations, regarding data privacy, security and protection. In many cases, these laws and regulations apply not only to third-party transactions, but also to transfers of information between or among us, our subsidiaries and other parties with which we have commercial relationships. Privacy, information security, and data protection are significant issues globally. The regulatory framework governing the collection, processing, storage, use and sharing of certain information, particularly financial and other personal data, is rapidly evolving and is likely to continue to be subject to uncertainty and varying interpretations. The occurrence of unanticipated events and the development of evolving technologies often rapidly drive the adoption of legislation or regulation affecting the use, collection or other processing of data and the manner in which we conduct our business. Any failure or perceived failure by us to comply with our privacy policies or any applicable privacy, security or data protection, information security or consumer protection-related laws, regulations, orders or industry standards in one or more jurisdictions could expose us to costly litigation, significant awards, fines or judgments, civil and criminal penalties or negative publicity, and could materially and adversely affect our business, financial condition and results of operations. Our success depends on our ability to monitor and adapt to technological changes in the education sector and maintain a technological infrastructure that works adequately and without interruption. Information technology is an essential factor for our growth. Our information technology systems and tools may become obsolete or insufficient, or we may have difficulties in following and adapting to technological changes in the education sector, particularly in the distance learning segment where the technological needs and expectations of our customers and market standards change rapidly, especially with the increasing adoption of AI technologies, and we must quickly adapt to new distance learning technology, practices and standards. Moreover, our competitors may introduce better products or service platforms. Our success depends on our ability to efficiently improve our current products while developing and introducing new products that are accepted in the marketplace. Additionally, a failure to upgrade our technology, features, content, security infrastructure, network infrastructure, or other infrastructure associated with our platform could harm our business. Adverse consequences could include unanticipated disruptions, slower response times, bugs, degradation in levels of customer support, impaired quality of users’ experiences of our educational platform and delays in reporting accurate financial information. 19 Table of Contents The efficient operation of our business depends on our information technology systems, particularly our Continuing Education and Medical Practice Solutions segments. If our information technology systems fail to operate as anticipated and without interruptions or do not perform as specified, our services may be interrupted, patient care may be affected, and we may be subject to legal claims, regulatory compliance issues and our reputation may be harmed. Several problems regarding our information technology structure, such as viruses, hackers, system interruptions and technical difficulties regarding our satellite transmissions of data, sound and image, may have a material adverse effect on us and our business. Our information technology systems are also vulnerable to damage or interruption including from fires, floods and other natural disasters; terrorist attacks and attacks by computer viruses or hackers; power losses; and computer systems, or Internet, telecommunications or data network failures and our disaster recovery plans may not be effective. The failure of our information technology systems to perform as we anticipate or our failure to effectively implement new systems could disrupt our entire operation and could result in decreased sales, increased overhead costs, legal and regulatory liability and reputational harm, all of which could have a material adverse effect on our reputation, business, results of operations and financial condition. In addition, we face risks associated with unauthorized access to our systems, including by hackers and due to failures of our electronic security measures. These unauthorized entries into our systems can result in the theft of proprietary or sensitive information, including student information, intellectual property and sensitive data, cause interruptions in the operation of our systems, or hinder our ability to innovate. As a result, we may be forced to incur considerable expenses to protect our systems from electronic security breaches and to mitigate our exposure to technological problems and interruptions. The Internet Act (Law No. 12,965/2014) applies only to personal data collected through the internet, and establishes other principles and rules with respect to the privacy and protection of the personal and behavioral data of internet users. The Internet Act guarantees, among others, the privacy of internet and privately stored communications. Any data processing activity is subject to the data subject’s informed, free and express consent. Decree No. 8,771/2016, which regulates the Internet Act, requires internet app providers to maintain certain security measures in connection with the storage of personal data, including: (i) strict controls on access to personal data; (ii) authentication safeguards; (iii) detailed data inventories (e.g., date, time and duration of access to the data, identity of the employee that accessed the data and the actions taken), and (iv) use of IT solutions to ensure the data is protected (for example, data encryption or other equivalent protective measures). If we fail to comply with the provisions of the Internet Act, we may be subject to sanctions and penalties, including damages, which will be assessed based on the nature and degree of our non-compliance, among other factors. We rely upon a third-party data center service provider to host certain aspects of our platform and content and any disruption to, or interference with, our use of such services could impair our ability to deliver our platform, resulting in customer dissatisfaction, damaging our reputation, and harming our business. We utilize data center hosting facilities from a global third-party service provider to make certain content available on our platform. Our operations depend, in part, on our provider’s ability to protect its facilities against damage or interruption from natural disasters, power or telecommunications failures, criminal acts and similar events. The occurrence of spikes in user volume, traffic, natural disasters, acts of terrorism, vandalism or sabotage, or a decision to close a facility without adequate notice, or other unanticipated problems at our provider’s facilities could result in lengthy interruptions in the availability of our platform, which would adversely affect our business. Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities. Any problems at our data centers could result in lengthy interruptions in our service. In addition, our products and services are highly technical and complex and may contain errors or vulnerabilities, which could result in interruptions in our services or the failure of our systems. Failure to comply with data privacy regulations could result in reputational damage to our brands and adversely affect our business, financial condition and results of operations. Any perceived or actual unauthorized disclosure of personally identifiable information, whether through a breach of our network by an unauthorized party, employee theft, misuse or error or otherwise, could harm our reputation, impair our ability to attract and retain our customers, or subject us to claims or litigation arising from damages suffered by individuals. Failure to adequately protect personally identifiable information could potentially lead to penalties, significant remediation costs, reputational damage, the cancellation of existing contracts and difficulty in competing for future business. In addition, we could incur significant costs in complying with relevant laws and regulations regarding the unauthorized disclosure of personal information, which may be affected by any changes to data privacy legislation at both the federal and state levels. 20 Table of Contents In particular, on August 14, 2018, the President of Brazil approved the General Personal Data Protection Law (Lei Geral de Proteção de Dados Pessoais, “LGPD,”) which came completely into force on August 1, 2021. The LGPD is a comprehensive data protection law establishing general principles and obligations that apply across multiple economic sectors and contractual relationships. The LGPD applies to individuals or legal, private or government entities, who process personal data in Brazil or collect personal data in Brazil or, further, when the processing activities have the purpose of offering or supplying goods or services to data subjects located in Brazil. The LGPD establishes detailed rules for the collection, use, processing, storage and any operation carried out with personal data (including personal data of clients, suppliers, employees and patients of our medical schools), and affects all economic sectors, including the relationship between customers and suppliers of goods and services, employees and employers and other relationships in which personal data is collected, whether in a digital or physical environment. Specifically, the LGPD establishes, among other things, data subjects’ rights, the legal basis for personal data protection, requirements for obtaining consent from data owners, obligations and requirements related to security incidents, data leaks and international data transfers, as well as the creation of the National Data Protection Authority (Autoridade Nacional de Proteção de Dados, “ANPD”), for the purposes of monitoring, implementing and supervising compliance with the LGPD in Brazil. In the event of non-compliance with the LGPD, we may be subject to penalties, including (1) warnings, with the impositions of a deadline for the adoption of corrective measures; (2) a one-time fine for each violation of up to 2% (subject to an upper limit of R$50,000,000) of our revenue; (3) a daily fine (subject to an upper limit of R$50,000,000); (4) public disclosure of the violation after due investigation and confirmation of its occurrence; (5) the restriction of access to the personal data to which the violation relates, until corrective measures are implemented; (6) deletion of the personal data to which the violation relates; (7) partial suspension of the databases to which the violation relates for up to six months, which can be extended for an equal period until corrective measures are implemented; (8) suspension of the personal data processing activities to which the violation relates for up to 12 months; and (9) partial or full prohibition on personal data processing activities. In addition, the LGPD creates a private cause of action, which means we are subject to both class-based and individual claims for violations of the LGPD. The application of sanctions by the ANPD has been further regulated by the Regulations on the Application of Administrative Sanctions, dated February 27, 2023, as a result of which the ANPD will now be able to apply administrative sanctions based on clearer and more established guidelines and requirements. Data protection is an important issue for us. We consider the LGPD as an opportunity to further develop and continuously improve our data protection processes. Since 2021, we have been offering training on the LGPD on our e-learning platform to teach our employees the principles of data protection. This training is mandatory for all employees, including our management. As part of this development and improvement process, we have also introduced governance models and technical improvements to comply with legal requirements, reduce the risk of data breaches and guarantee the rights of stakeholders with regard to their data security and privacy. While we are in the process of putting in place systems and processes to comply with the LGPD, we cannot assure you that our LGPD compliance efforts will be deemed appropriate or sufficient by regulatory authorities, in particular ANPD, or by courts, such as the Brazilian Public Prosecution Office (Ministério Público). Moreover, as the LGPD requires further regulation from the ANPD regarding several aspects of the law, which are yet unknown, we may have difficulty adapting our systems and processes to the new legislation due to the legislation’s complexity. The changes have impacted, and could further adversely impact, our business by increasing our operational and compliance costs. Any additional privacy laws, rules or regulations enacted or approved in Brazil or in other jurisdictions in which we operate could cause us to incur costs to correct the breaches or failures, expose us to uninsured liability, increase our risk of regulatory scrutiny, subject us to lawsuits and administrative procedures, and result in the imposition of material penalties and fines under state and federal laws or regulations, which could seriously harm our business, financial condition or results of operations. Any failure, real or perceived, by us to comply with our privacy policies or with any regulatory requirements or orders or other local, state, federal or international privacy or consumer protection-related laws and regulations could cause customers to reduce their purchases of our products and services and could materially and adversely affect our business. 21 Table of Contents We face risks relating to our Medical Practice Solutions segment. We may face risks relating to the expansion, including through acquisitions, of our Medical Practice Solutions segment, which provides clinical decisions software, practice management tools and electronic medical records, doctor-patient relationship, telemedicine and digital prescriptions. We are subject to significant execution risk since we are providing new digital features and developing a new market, where the technological needs, the expectations of our customers and market standards change rapidly, especially with the increasing adoption of AI technologies. Our competitors may offer solutions that are similar to or better than those offered by us, have access to more funds, and be more prestigious or well-regarded within the medical community. As such, we may have to quickly modify our products and services to adapt to new digital education technologies, practices and standards. In addition, an error in the design, programming or validation of clinical decisions software could lead to inappropriate assignment or dosing of patients, which could give rise to patient safety issues and/or liability claims against us, amongst other things, any of which could have a material adverse effect on our financial condition, results of operations and reputation. See also “—Our success depends on our ability to monitor and adapt to technological changes in the education sector and maintain a technological infrastructure that works adequately and without interruption.” In addition, the success of our digital solutions depends on the general population having easy and affordable access to the internet, as well as on other technological factors that are outside of our control. If the internet becomes inaccessible or access costs increase to levels higher than current prices, we may be unable to successfully implement our digital solutions strategy, which would have an adverse effect on our growth strategy. Additionally, we may face regulatory risks related to the approval, certification, and compliance requirements applicable to our Medical Practice Solutions segment. Failure to comply with healthcare, medical device, or digital health regulations, including ANVISA (Brazilian Health Agency) requirements, could limit our ability to offer certain products, or result in sanctions, fines, or other penalties, any of which could adversely affect our operations and reputation. Finally, we also face operational risks relating to the integration of any acquired companies to build our ecosystem, including userbase and platform integration risks, among other risks. As a result, any acquisitions we may make in this segment involve several uncertainties, risks and challenges that may have a material adverse effect on our business and results of operations, and result in the risk of impairment. See also “—We may face challenges in identifying and acquiring new medical higher education institutions, which could hinder our strategic and financial goals. Additionally, difficulties in effectively integrating and managing an increasing number of acquisitions may adversely affect our strategic objectives.” Our business depends on the continued success of the brands of each of our institutions, as well as the “Afya” brand, and if we fail to maintain and enhance the recognition of our brands, we may face difficulty enrolling new students and selling educational content and medical practice solutions to new clients, and our reputation and operating results may be harmed. We believe that market awareness of our brands has contributed significantly to the success of our business. Maintaining and enhancing our brands is critical to our efforts to increase student enrollments and expand the selling of educational content and medical practice solutions for new clients. Failure to maintain and enhance our brand recognition could have a material and adverse effect on our business, operating results and financial condition. We have devoted significant resources to our brand promotion in recent years, but we cannot assure you that these efforts will be successful. If we are unable to further enhance our brand recognition, or if we incur excessive marketing and promotion expenses, or if our brand image is negatively impacted by any negative publicity, our business and results of operations may be materially and adversely affected. If we fail to maintain effective internal controls over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud. Disclosure controls and procedures over financial reporting are designed to provide reasonable assurance that information required to be disclosed by the Company is accumulated and communicated to management, and recorded, processed, summarized and reported in accordance with applicable rules. These disclosure controls and procedures have inherent limitations which include the possibility that judgments in decision-making can be faulty and that breakdowns occur because of errors or mistakes. Additionally, controls can be circumvented by any unauthorized management override of controls. Consequently, our businesses are exposed to risk from potential noncompliance with policies, employee misconduct or negligence and fraud, which could result in regulatory sanctions, civil claims and serious reputational or financial harm. It is not always possible to deter employee misconduct and the precautions we take to prevent and detect this activity may not always be effective. And, we may also not be able to adapt the disclosure and internal controls environment of companies that we acquire within the permitted one-year period. Accordingly, because of the inherent limitations in the internal control system, misstatements due to error or fraud may occur and not be detected. For details of the controls mentioned above, see the section of this annual report entitled “Item 15. Controls and Procedures—B. Management’s Annual Report on Internal Control Over Financial Reporting.” 22 Table of Contents We cannot assure that significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified in the future. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as the laws, regulations and policies standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. If we fail to maintain an effective internal control environment, we could suffer material misstatements in our financial statements, fail to meet our reporting obligations or fail to prevent fraud, which would likely cause investors to lose confidence in our reported financial information, the trading price of our Class A common shares could decline, and we could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities. Failure to remedy any future material weakness in our internal controls over financial reporting, or to implement or maintain other effective control systems required of public companies in the United States, could also restrict our future access to capital markets and reduce or eliminate the trading market for our Class A common shares. Any decrease in the number of customers in our education programs and medical practice solutions may adversely affect our results of operations. We believe that our attrition rates are primarily influenced by the personal motivation and financial circumstances of our current and prospective customers, as well as by socioeconomic conditions in Brazil. Significant changes in future attrition rates and/or failure to re-enroll or re-engage may affect our new customers numbers, particularly in the context of economic uncertainty or volatility, and may have a material adverse effect on our revenues and our results of operations. An increase in delays and/or defaults in the payment of tuition fees or license subscription fees of medical practice solutions may adversely affect our income and cash flows. We depend on the full and timely payment of (i) the tuition we charge our students, including tuition payments we receive through FIES; and (ii) the subscription fees we charge our clients. Adverse changes in the macroeconomic environment and the earnings capacity of our customers, may lead to an increase in payment delinquency or default and negatively impact our ability to collect our accounts receivable. An increase in payment delinquency or default by our customers may have a material adverse effect on our cash flows and our business, including our ability to meet our obligations. Our allowance for expected credit losses expenses as a percentage of our revenue was 1.8%, 2.6% and 1.8% for the years ended December 31, 2024, 2023 and 2022, respectively. There is no guarantee that our allowance for expected credit losses expenses will not increase in the following years. Our inability to collect our accounts receivable on a timely basis, if at all, could cause our allowance for expected credit losses expenses to increase in the future, and materially and adversely affect our financial condition, liquidity and results of operations. Unfavorable decisions in our legal, arbitration or administrative proceedings may adversely affect us. We are, and we, our controlling shareholder, directors or officers may be in the future, party to legal, arbitration and administrative investigations, inspections and proceedings arising from the ordinary course of our business or from nonrecurring corporate, tax, criminal or regulatory events, involving our suppliers, students, faculty members, as well as environmental, competition and tax authorities, especially with respect to civil, tax, criminal and labor claims. We cannot guarantee that the results of these proceedings will be favorable to us or that we have made sufficient provisions for liabilities that may arise as a result of these or other proceedings. Adverse decisions on material legal, arbitration or administrative proceedings may damage our reputation and may adversely affect our results of operations and the price of our Class A common shares. Difficulties in identifying, opening and efficiently managing new campuses or in obtaining regulatory authorizations and accreditations on a timely basis as part of our organic growth strategy may adversely affect our business. Our organic growth strategy includes expanding by opening new campuses and integrating them into our educational network. This growth plan presents significant challenges in terms of maintaining our teaching quality and culture due to the complexity and difficulty of effectively managing a greater number of campuses and programs. If we are unable to maintain our current quality standards, we may lose market share and be adversely affected. 23 Table of Contents Establishing new campuses poses significant challenges and requires substantial investments in infrastructure, marketing, personnel and other pre-operational expenses, primarily in identifying new sites for lease or purchase. We prioritize identifying strategic sites, negotiating the purchase or lease of properties, building or refurbishing facilities (including libraries, laboratories and classrooms), obtaining local permits, hiring and training faculty and staff, and investing in administration and support. We cannot assure you that we will succeed in identifying facilities with adequate infrastructure for our new campuses, develop adequate infrastructure in properties we acquire, or have enough resources to continue expanding through acquisitions or development of new projects. We are also required to register our new campuses with MEC, before opening and operating them, as well as having our new programs accredited by MEC in order to issue official degrees and certificates to our students. If we do not succeed in identifying and establishing our campuses in a cost-effective manner or in obtaining such authorizations or accreditations on a timely basis, or if MEC imposes restrictions or conditions on our accreditation requests for new campuses, our business may be adversely affected. If we fail to develop adequate infrastructure for new programs that meets the requirements imposed by MEC or the standards set forth in our business plan, our ability to offer such programs and expand our business may be limited and our financial condition and results of operations may be adversely impacted. We may not be successful in meeting our environmental, social and corporate governance, or ESG, commitments, which may have a material adverse effect on our business, financial condition, reputation and results of operations. The market is increasingly concerned with how companies assess and manage ESG risks to protect themselves and create opportunities to generate value. As part of this trend, we have made certain ESG commitments, and we strive to maintain socially responsible business practices, including fostering social investments and structuring programs to generate a positive social impact in areas related to our business, such as access to medical care and improvement of health indicators in surrounding communities, employability, education and culture. Failure to meet our ESG commitments or to pursue these socially responsible business practices, partially or at all, may have a material adverse effect on our business, reputation, financial condition and results of operations. There has been an increase in ESG rules and regulations applicable to our business. Given the pace of legislative developments in this area, although we make efforts to follow the best practices, we may not be able to comply with the new regulations in their totality. We are also exposed to the risk that future ESG rules and regulations may adversely affect our ability to conduct our business by requiring us to reduce the value of our assets or reduce their useful life, face increased compliance costs or take other actions that may be adverse to us. Our activities may also impact the lives and socioeconomic dynamics of communities, especially those neighboring our campuses. These impacts may include truck, vehicle and pedestrian traffic, construction, noise and waste generation, and the effects of lower-quality, free services that we may provide to such communities. As a result, there may be stoppages in our operations due to demonstrations in surrounding communities, as well. If we do not establish effective communication channels with such communities, we may face challenges in the operation of educational institutions and project execution, which could jeopardize our reputation and impede the attainment of our strategic objectives. Our holding company structure makes us dependent on the operations of our subsidiaries. We depend on dividend distributions by our subsidiaries, and we may be adversely affected if the performance of our subsidiaries is not positive. We are a Cayman Islands exempted company with limited liability. Our material assets are our direct and indirect equity interests in our subsidiaries. We control a number of subsidiary companies that carry out the business activities of our corporate group. Our ability to comply with our financial obligations and to pay dividends to our shareholders depends on our ability to receive distributions from the companies we control, which in turn depends on the cash flow and profits of those companies. There is no guarantee that the cash flow and profits of our controlled companies will be sufficient for us to comply with our financial obligations and pay dividends to our shareholders. Furthermore, exchange rate fluctuation will affect the U.S. dollar value of any distributions our subsidiaries make with respect to our equity interests in those subsidiaries. 24 Table of Contents In addition, the Brazilian federal government recently stated that the income tax exemption on the distribution of dividends may be repealed, and income tax assessed on the distribution of dividends in the future, and that applicable taxes on the payment of interest on shareholders’ equity may be increased in the future. Any repeal of the income tax exemption on the distribution of dividends and any increase in applicable taxes on the payment of interest on shareholders’ equity may adversely affect us and our financial condition to distribute dividends. Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business and financial condition and results of operations. We rely and expect to continue to rely on a combination of trademark, copyright, patent and trade secret protection laws, as well as confidentiality and license agreements with our employees, consultants and third parties with whom we have relationships to protect our intellectual property and proprietary rights. From time to time, we expect to file patent, copyright and trademark applications in Brazil and abroad. Nevertheless, these applications may not be approved or otherwise provide the full protection we seek. Any dismissal of our “AFYA” trademark application may impact our business. Third parties may challenge any patents, copyrights, trademarks and other intellectual property and proprietary rights owned or held by us. Third parties may knowingly or unknowingly infringe, misappropriate or otherwise violate our patents, copyrights, trademarks and other proprietary rights, and we may not be able to prevent infringement, misappropriation or other violation without substantial expense to us. Furthermore, we cannot guarantee that: · our intellectual property and proprietary rights will provide competitive advantages to us; · our competitors or others will not design around our intellectual property or proprietary rights; · our ability to assert or enforce our intellectual property or proprietary rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; · our intellectual property and proprietary rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; · any of the patents, trademarks, copyrights, trade secrets or other intellectual property or proprietary rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned; or · we will not lose the ability to assert or enforce our intellectual property or proprietary rights against or to license our intellectual property or proprietary rights to others and collect royalties or other payments. If we pursue litigation to assert or enforce our intellectual property or proprietary rights, an adverse decision in any of these legal actions could limit our ability to assert our intellectual property or proprietary rights, limit the value of our intellectual property or proprietary rights or otherwise negatively impact our business, financial condition and results of operations. If the protection of our intellectual property and proprietary rights is inadequate to prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused in the marketplace and our ability to attract customers may be adversely affected. We may in the future be subject to intellectual property claims, which are costly to defend and, if we do not succeed in defending such claims, could harm our business, financial condition and operating results. From time to time, third parties may allege in the future that we or our business infringes, misappropriates or otherwise violates their intellectual property or proprietary rights, including with respect to our publications. Many companies, including various “non-practicing entities” or “patent trolls,” are devoting significant resources to developing or acquiring patents that could potentially affect many aspects of our business. We have not exhaustively searched patents related to our technology. In addition, the publishing industry has been, and we expect in the future will continue to be, the target of counterfeiting and piracy. We may implement measures in an effort to protect against these potential liabilities that could require us to spend substantial resources. Any costs incurred as a result of liability or asserted liability relating to sales of unauthorized or counterfeit educational materials could harm our business, reputation and financial condition. 25 Table of Contents Third parties may initiate litigation against us without warning. Others may send us letters or other communications that make allegations without initiating litigation. We have in the past and may in the future receive such communications, which we assess on a case-by-case basis. We may elect not to respond to the communication if we believe it is without merit or we may attempt to resolve disputes out of court by electing to pay royalties or other fees for licenses. If we are forced to defend ourselves against intellectual property claims, whether they are with or without merit or are determined in our favor, we may face costly litigation, diversion of technical and management personnel, inability to use our current website or inability to market our service or merchandise our products. As a result of a dispute, we may have to develop non-infringing technology, including partially or fully revising any publication that infringes intellectual property rights, enter into licensing agreements, adjust our merchandising or marketing activities or take other action to resolve the claims. These actions, if required, may be unavailable on terms acceptable to us or may be costly or unavailable. If we are unable to obtain sufficient rights or develop non-infringing intellectual property or otherwise alter our business practices, as appropriate, on a timely basis, our reputation or brand, our business and our competitive position may be affected adversely and we may be subject to an injunction or be required to pay or incur substantial damages and/or fees and/or royalties. Most of our services are provided using proprietary software and our software is mainly developed by our employees, who assign to us their copyrights over the software. In this regard, though applicable law establishes that employers shall have full title over rights relating to software developed by their employees, we could be subject to lawsuits by former employees claiming ownership of such software. As a result, we may be required to obtain licenses of such software, incurring costs relating to payments of royalties and/or damages and we may be forced to cease the use of such software. If we are unable to use certain of our proprietary software as a result of any of the foregoing or otherwise, this could have a material adverse effect on our business, financial condition and results of operations. In addition, we use open source software in connection with certain of our products and services. Companies that incorporate open source software into their products have, from time to time, faced claims challenging the ownership of open source software and/or compliance with open source license terms. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open source software or non-compliance with open source licensing terms. Some open source software licenses require users who distribute or use open source software as part of their software to publicly disclose all or part of the source code to such software and/or make available any derivative works of the open source code on unfavorable terms or at no cost. Any requirement to disclose our proprietary source code or pay damages for breach of contract could have a material adverse effect on our business, financial condition and results of operations. Some of the properties that we occupy are owned by companies controlled by one of our significant shareholders. Therefore, we are exposed to conflicts of interest, since the administration of such properties may conflict with our interests, those of such significant shareholder and those of our other shareholders. Some of the properties we occupy, including properties where some of our campuses are located, are owned and operated by companies controlled by one of our significant shareholders. Therefore, the interests of our significant shareholder in the administration of such property may conflict with our interests and those of our other shareholders. For further information, see “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” and note 7 to our audited consolidated financial statements. We could be adversely affected if we are unable to pass on increases in our costs and expenses to our students by adjusting our monthly tuition fees. Our primary source of income is the monthly tuition payments we charge to our students. Our payroll costs and expenses account for the majority of the costs of services and selling, general and administrative expenses, or 49.3%, 51.1%, and 53.1% of such costs and expenses for the years ended December 31, 2024, 2023 and 2022, respectively. Our faculty and administrative employees are represented by labor unions in the higher education sector and are covered by collective bargaining agreements or similar arrangements determining the number of working hours, minimum compensation, vacations and fringe benefits, among other terms. These agreements are subject to annual renegotiation and may be so modified. We could also be adversely affected if we fail to achieve and maintain cooperative relationships with our professors’ or administrative employees’ unions or face strikes, stoppages or other labor disruptions by our professors or employees, or if we are unable to pass on any increase in costs arising from the renegotiation of collective bargaining agreements to the monthly tuition fees paid by students, which may have a material adverse effect on our business. 26 Table of Contents In addition, our maintenance expenses and utilities expenses (comprised mainly of water, electricity and telephone expenses) represent 6.6%, 5.9% and 5.7% of our costs of services and selling, general and administrative expenses for the years ended December 31, 2024, 2023 and 2022, respectively. Personnel costs and expenses, lease values and the cost of electricity are adjusted regularly using indices that reflect changes in inflation levels. If we are not able to transfer any increases in our costs and expenses to students by increasing the amounts of their monthly tuition fees, for example as a result of ongoing political and economic instability in Brazil or globally, our operating results may be adversely affected. Climate change can create transition risks, physical risks and other risks that could adversely affect us. Climate risk is a transversal risk that can be an aggravating factor for the types of traditional risks that we manage in the ordinary course of business, including, without limitation, the risks described in this “Risk Factors” section. Based on the classifications used by the Taskforce on Climate-Related Financial Disclosures, we consider that there are two primary sources of climate change-related financial risks: physical and transition. Physical risks resulting from climate change can be event-driven (acute) or long-term shifts (chronic) in climate patterns: · Acute physical risks include increased severity of extreme weather events, such as drought, hurricanes, or floods; · Chronic physical risks include changes in precipitation patterns and extreme variability in weather patterns, rising mean temperatures, chronic heat waves or rising sea levels; The main physical risks that can impact us are acute physical risks that can disrupt our supply chain, or prevent our schools from operating normally. Transition risks refer to actions to address mitigation and adaptation requirements related to climate change, and they can fall into various categories such as market and technology changes: · Market risk may manifest through shifts in supply and demand for certain commodities, products, and services, as climate-related risks and opportunities are increasingly considered. · Technology risk arises from improvements or innovations to support the transition to a lower-carbon, energy-efficient economic system that can have a significant impact on companies to the extent that new technology displaces old systems and disrupts some parts of the existing economic system. One of our strategies to minimize our carbon footprint is to reduce the number of physical pages we print as part of our printed educational materials by making those educational materials available to students digitally on our online platform. Policy actions generally fall into two categories: those that attempt to constrain actions that contribute to the adverse effects of climate change and those that seek to promote adaptation to climate change. The risk associated with, and the financial impact of policy changes depends on the nature and timing of the policy change. Our campuses may be adversely affected by increased regulatory requirements going forward as a result of the increasing importance of environmental matters, which may indirectly affect our business. This and other changes in regulations in Brazil and international markets may expose us to increased compliance costs, limit our ability to pursue certain business opportunities and provide certain products and services, each of which could adversely affect our business, financial condition, and results of operations. 27 Table of Contents The interests of our management team may be focused on the short-term market price of our Class A common shares, which may not align with your interests. Additionally, our shareholders may experience dilution of their interests in our share capital and in the value of their investments due to the issuance of new shares for settlement of our share-based incentive plans. Our directors and officers, among others, own shares issued by us and are beneficiaries under our share-based incentive plans. Our current stock option plan for our managers and employees, approved in August 2019 (and amended in July 2020, July 2022 and July 2023), reserves up to 4% of our common shares at any time (excluding treasury shares) for issuance under this equity incentive plan. In addition, on July 8, 2022, we established a restricted stock units (RSUs) program, reserving up to 1.2% of our common shares at any time for issuance under this plan. Due to the issuance of stock options or RSUs, to members of our management team, a significant portion of their compensation is closely tied to our results of operations and, more specifically to the trading price of our Class A common shares. This may lead such individuals to direct our business and conduct our activities with an emphasis on short-term profit generation. Consequently, the interests of our management team may not align with the interests of our other shareholders that have longer-term investment objectives. Once options have been exercised by the participants and/or the common shares to be issued under the RSUs program have vested, our board of directors will determine whether our capital stock should be increased through the issuance of new shares to be subscribed by participants, or if they will be settled through shares held in treasury. If settlement occurs through the issuance of new shares, our shareholders will experience dilution, of their interests in our share capital and in the value of their investments, up to a maximum of 5.2% of our common shares at any time. Should new stock options or RSUs be granted, whether under existing plans or new plans, our shareholders will be subject to additional dilution. For additional information on our share-based incentive plans, see “Item 6. Directors, Senior Management and Employees—B. Compensation—Long-Term Incentive Plans.” We may not be able to maintain or renew our existing leases. We lease substantially all of the properties on our campuses. According to Brazilian lease laws, a lessee has the right to request judicial renewal of existing non-residential leases for subsequent terms equal to the original term of the lease. In order for a lessee to enforce this right, the following criteria must be met (i) the non-residential lease agreement must have a fixed term equal to or greater than five consecutive years, or, in the event there is more than one agreement or amendment thereto regarding the same real estate, the aggregate term in such agreement or amendment must be greater than five consecutive years (ii) the lessee must have been using the property for the same purpose for a minimum and continuous period of three years and (iii) the lessee must claim the right to judicial renewal at least one year and at most six months prior to the end of the term of the lease agreement. Lease agreements with terms lasting less than five years are not entitled to a right of compulsory renewal and, as a result, the lessor has the right to refuse renewal of the lease upon expiration of its term. Even for lease agreements with terms of five years or more, renewal is not automatic and depends on compliance with the legal requirements for judicial renewal. The lease agreements relating to our campuses generally have terms lasting from five to 30 years and are renewable in accordance with applicable Brazilian lease laws. If we are forced to close any of our campuses due to the termination of a lease agreement and our inability to renew the lease, our business and results of operations may be adversely affected. In addition, most of our lease agreements are not registered with the relevant real estate registries. Although we have a statutory right of first refusal under Brazilian lease laws, the absence of registration prevents us from enforcing this right against third parties. A subsequent purchaser who was not formally notified of our lease and consequent right of first refusal may require that we vacate the property. Our success depends on our ability to operate in strategically located property that is easily accessible by public transportation. We believe that urban mobility, inadequate public transportation systems and high transportation costs in many Brazilian cities make the location and accessibility of campuses a decisive factor for students choosing an educational institution. Therefore, a key component of the success of our business consists in finding, renting and/or buying strategically located property that meets the needs of our students. We cannot guarantee that we will be able to keep our current property or acquire new property that is strategically located in the future. In addition, acquisition costs, costs associated with improvements, construction, and repairs of existing properties, and rental values for the properties we use might increase in the future and could have a material adverse effect on our business. Finally, due to demographic and socioeconomic changes in the regions in which we operate, we cannot guarantee that the location of our campuses will continue to be attractive and convenient to students. 28 Table of Contents Our operations and projects are exposed to occupational health and safety and accident risks. We are subject to laws and regulations governing health and safety matters, protecting both members of the public and their employees and contractors. Some of the tasks undertaken by our employees and contractors, including our maintenance employees, can be inherently dangerous and have the potential to result in serious injury or death. Moreover, in the ordinary course of our business, we undertake complex construction, expansion and renovation projects that may subject our employees or contractors to the risk of harm. Any breach of these obligations, or serious accidents involving our employees, contractors or members of the public could expose us to adverse regulatory consequences, including the forfeit or suspension of operating licenses, potential litigation, claims for material financial compensation, reputational damage, fines or other legislative sanction, all of which have the potential to impact the results of our operating entities and our ability to make distributions. In addition, any insurance coverage that we may have obtained with respect to such obligations may not cover certain indemnifications we may be required to pay, be insufficient to cover these types of claims, or may not cover certain acts or events. We may require additional funds to continue our expansion strategy. If we are unable to obtain adequate financing on favorable terms to complete any potential acquisition and implement our expansion plans, our growth strategy may be materially and adversely affected. In the future, we may need to raise additional capital to fund our expansion (organically or through strategic acquisitions), obtain new licenses, develop or enhance products and services, or respond to competitive pressures. Our ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond our control. For example, financial markets have been negatively impacted by current macroeconomic trends, including high interest rates and rising inflation. Adequate funding may not be available on favorable terms to us or at all, particularly under these conditions. If adequate funds are unavailable or are not available on acceptable terms, we may be unable to fund our expansion, capitalize on acquisition opportunities, develop or enhance our product and service portfolio, or respond to competitive pressures, which could have a material adverse effect on our business, results of operations and financial condition. Raising additional funds through the issuance of equity or convertible debt securities may dilute our shareholders’ interests, and the issued securities may have rights, preferences and privileges senior to those of our shares. Additionally, debt financing may impose restrictive covenants that limit our operational and financial flexibility, including by imposing restrictions on our ability to incur additional indebtedness, create liens, make acquisitions, dispose of assets and make restricted payments, among others. Such indebtedness may also require us to maintain certain financial ratios, potentially limiting our ability to secure future financing, withstand future economic downturns, or conduct necessary corporate activities. A breach of any such covenant would likely result in a default, leading to acceleration of the outstanding indebtedness if not waived. For more information, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness.” Our revenues are highly concentrated in the tuition fees we charge for our medical courses and other health sciences programs. Any adverse economic, market or regulatory factors affecting such medical courses and health sciences programs could decrease demand, which could materially adversely affect us. A significant portion of our revenue relating to undergraduate programs is currently concentrated in the tuition fees we charge for our medical courses and other health sciences programs across our network. For the years ended December 31, 2024, 2023 and 2022, 87.1%, 86.7% and 86.9%, respectively, of total undergraduate programs’ revenue were derived from tuition fees we or our subsidiaries charged for medical courses and other health sciences programs. Therefore, economic, market or regulatory factors affecting either the amount of tuition fees we are able to charge for the medical courses and health sciences programs we offer or the ability of our students to pay such tuition fees could result in significantly decreased demand for our services, which could materially adversely affect us. 29 Table of Contents We may not be able to successfully expand our presence and performance in the distance learning business. We may face difficulties in successfully operating and expanding our distance learning program, as well as in implementing and investing in the necessary technologies. The technological needs, the customer expectations and market standards in this sector change rapidly. We must quickly modify our products and services to adapt to new distance learning technologies, practices and standards. Our competitive position may be adversely affected if current or future competitors introduce superior products or service platforms, or if our resources are insufficient to develop and adapt our technological capabilities swiftly enough to maintain our competitive position. Additionally, the success of our distance learning programs depends on the general population having easy and affordable access to the internet, as well as on other technological factors that are beyond our control. If internet access becomes unavailable, access costs increase to levels significantly higher than current prices, or if the number of students interested in distance learning educational methods does not increase, we may be unable to successfully implement our distance learning strategy, which would adversely affect our growth strategy. Acquisitions of educational institutions, in certain circumstances, must be approved by the Administrative Council for Economic Defense. Brazilian legislation provides that acquisitions of educational institutions meeting certain requirements must be approved by Brazil’s Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica, or CADE) prior to the completion of the acquisition if one of the companies or group of companies involved has gross annual revenues in Brazil of at least R$750.0 million in the year immediately prior to the acquisition and any other party or group of companies involved has gross income of at least R$75.0 million in that same period. As part of this process, CADE analyzes whether the transaction may substantially lessen competition in the relevant market, create or strengthen a dominant position, or result in the elimination of a significant portion of competition. If CADE determines that the transaction raises competitive concerns, it may impose structural or behavioral remedies, such as requiring the divestiture of assets, imposing restrictions on certain commercial practices, or setting conditions for market access. Failure to obtain approval for future acquisitions or to comply with any remedies imposed as a condition for approval may result in fines or the annulment of the transaction which could adversely affect our results of operations and financial condition. As a result of our growth strategy through acquisitions of new entities, we may need additional funds to implement our strategy. Therefore, if we cannot obtain adequate financing to conclude any potential acquisition and implement our expansion plans, our growth strategy will be affected. See “—We may require additional funds to continue our expansion strategy. If we are unable to obtain adequate financing on favorable terms to complete any potential acquisition and implement our expansion plans, our growth strategy may be materially and adversely affected.” Our Continuing Education segment is subject to seasonal fluctuations, which may cause our operating results to fluctuate from quarter-to-quarter and adversely impact our working capital and liquidity throughout the year, adversely affecting our business, financial condition and results of operations. Continuing Education revenues are mostly related to: (i) monthly intakes and tuition fees on medical education, which generally do not experience significant fluctuations resulting from seasonality and (ii) Medcel’s revenue, derived from the sales of e-books which are recognized at the point in time when control is transferred to the customer, which is generally concentrated in the first and last quarter of the year due to the period of enrollments. Accordingly, we expect quarterly fluctuations in our revenues and operating results to continue. These fluctuations could result in volatility and adversely affect our liquidity and cash flows. As our business grows, these seasonal fluctuations may become more pronounced. As a result, we believe that sequential quarterly comparisons of our financial results may not provide an accurate assessment of our financial position. Additionally, in recent years, the overall macroeconomic environment in Brazil has undergone significant volatility as a result of adverse political and economic pressures. Adverse macroeconomic conditions have led to a contraction in the disposable income of both existing and potential clientele within our Continuing Education segment, prompting a deferral of their intentions to pursue residency and graduate endeavors. Consequently, this resulted in diminished demand for our residency preparatory courses and medical graduate courses during that timeframe and may result in the risk of impairment of goodwill recorded from the acquired companies in our Continuing Education segment. 30 Table of Contents Recent developments in artificial intelligence regulation in Brazil may impose additional compliance costs and operational challenges that could adversely affect our business. In December 2024, the Brazilian Senate approved the regulatory framework for artificial intelligence (AI), known as the “Marco Regulatório da Inteligência Artificial,” which is currently under consideration by the Brazilian House of Representatives. This proposed legislation aims to establish comprehensive rules for the development and use of AI systems across various sectors, including education and healthcare. If enacted, the new regulations may require us to implement additional compliance measures, such as conducting AI impact assessments, enhancing data security and privacy protocols, and strengthening corporate risk management frameworks in accordance with regulatory guidelines. Given our reliance on technology-driven solutions for medical education and digital healthcare services, increased regulatory scrutiny on AI applications could impact our ability to develop, deploy, or improve AI-based tools. Compliance with evolving AI regulations may lead to higher operational costs, delays in innovation, and potential restrictions on certain AI-driven functionalities, which could adversely affect our business, financial condition, and results of operations. Disruption or volatility in global financial and credit markets could adversely affect the financial and economic environment in Brazil, which could materially and adversely affect our business, financial condition and results of operations. Our operations are closely tied to the performance of the Brazilian economy. Volatility in global financial and credit markets, driven by geopolitical conflicts, inflationary pressures, rising interest rates, and protectionist trade policies, can affect investor confidence, capital flows, commodity prices, and exchange rates. These dynamics influence Brazil’s economic stability and, in turn, the financial condition of our customers and counterparties. Geopolitical instability, including the ongoing conflict between Russia and Ukraine and escalating hostilities in the Middle East, particularly in Israel and surrounding areas, has led to increased volatility in global financial and commodity markets. These conflicts have contributed to higher energy and food prices, increased maritime shipping costs, and disrupted global supply chains. Such developments place inflationary pressure on the Brazilian economy, raise import costs, and may compel monetary authorities to adopt tighter policies, which could slow economic growth. In addition, the resulting macroeconomic uncertainty may reduce investor appetite for emerging markets, leading to currency depreciation, lower levels of foreign direct investment, and diminished access to international capital markets for Brazilian companies, including us. Further contributing to global economic uncertainty, in April 2025, the United States announced new trade measures imposing a 10% base tariff on most imports effective April 5, 2025, with higher reciprocal tariffs of up to 50% applying to imports from nearly 60 countries as of April 9, 2025. On April 9, 2025, President Trump announced a pause to individualized higher tariff rates on most countries for 90 days. These and similar measures may result in retaliatory trade policies, lower global trade volumes, and supply chain realignments, which could increase the cost of goods in Brazil and reduce demand for Brazilian exports. A decline in export revenues or an increase in import costs could reduce Brazil’s trade surplus, exert downward pressure on the Brazilian real, and negatively impact domestic investment, inflation, and overall economic activity. These external pressures may reduce liquidity and increase the cost of funding for Brazilian issuers and borrowers, including us. A deterioration in economic conditions could also impair the financial capacity of our students and adversely affect demand for our programs, products and services. Reduced access to capital may limit our ability to pursue growth initiatives or respond effectively to changing market conditions, which could negatively affect our results of operations. Public health outbreaks, epidemics or pandemics have adversely affected and may continue to adversely affect our business. Public health outbreaks, epidemics or pandemics could materially adversely impact our business. Such public health crises may negatively impact the global economy, disrupt supply chains, and create significant volatility in global financial markets. They could also lead to interruptions of our on-campus activities to varying degrees, especially affecting our practical educational activities. The ultimate extent of any such epidemics, pandemics, outbreaks or other public health crises on our business, financial condition and results of operations would depend on future developments, which are highly uncertain and cannot be predicted with any certainty. Such developments could therefore have a material adverse effect on our business, financial condition and results of operations, and it may also have the effect of heightening many of the other risks described in this “Risk Factors” section. 31 Table of Contents Our business continuity and disaster recovery plans may not adequately protect us from a serious disaster. Failure to maintain effective business continuity and disaster recovery plans could materially disrupt our operations and negatively impact our financial performance, reputation, and stakeholder relationships. Our ability to deliver high-quality educational and medical services across our core segments—Undergrad, Continuing Education, and Medical Practice Services—relies on uninterrupted operations. Unexpected events, such as natural disasters, wildfires, public health crises, cyberattacks, technology failures, power outages, or other emergencies, could impair our ability to offer courses, delay student progression and graduation, and lead to financial losses. The continuity of our Undergraduate and Continuing Education programs is critical to preserving student trust and academic partnerships, while any disruption to our Medical Practice Services could directly affect patient care, physician engagement, and relationships with B2B clients, including pharmaceutical companies. If we fail to effectively mitigate or recover from such disruptions, we could face legal liabilities, financial setbacks, and reputational harm that adversely impact our business and growth prospects. Certain Risks Relating to Brazil The Brazilian federal government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement as well as Brazil’s political and economic conditions could harm us and the price of our Class A common shares. The Brazilian federal government frequently exercises significant influence over the Brazilian economy and occasionally makes significant changes in policy and regulations. The Brazilian government’s actions to control inflation and other policies and regulations have often involved, among other measures, increases or decreases in interest rates, changes in fiscal policies, wage and price controls, foreign exchange rate controls, blocking access to bank accounts, currency devaluations, capital controls and import and export restrictions. We have no control over and cannot predict what measures or policies the Brazilian government may take in the future. We and the market price of our securities may be harmed by changes in Brazilian government policies, as well as general economic factors, including, without limitation: · growth or downturn of the Brazilian economy; · interest rates and monetary policies; · exchange rates and currency fluctuations; · inflation; · liquidity of the domestic capital and lending markets; · import and export controls; · exchange controls and restrictions on remittances abroad and payments of dividends; · modifications to laws and regulations according to political, social and economic interests; · fiscal policy and changes in tax laws; · economic, political and social instability, including general strikes and mass demonstrations; · the regulatory framework governing the educational industry; · labor and social security regulations; 32 Table of Contents · energy and water shortages and rationing; · commodity prices; · changes in demographics, in particular declining birth rates, which will result in a decrease in the number of enrolled students in education in the future; and · other political, diplomatic, social and economic developments in or affecting Brazil. Uncertainty over whether the Brazilian federal government will implement reforms or changes in policy or regulation affecting these or other factors in the future may affect economic performance and contribute to economic uncertainty in Brazil, which may have an adverse effect on our activities and consequently our operating results, and may also adversely affect the trading price of our Class A common shares. Recent economic and political instability has led to a negative perception of the Brazilian economy and higher volatility in the Brazilian securities markets, which also may adversely affect us and our Class A common shares. See “Item 5. Operating and Financial Review and Prospects—Significant Factors Affecting Our Results of Operations—Brazilian Macroeconomic Environment.” Economic uncertainty and political instability in Brazil may harm our business and the price of our Class A common shares. Brazil’s political environment has historically influenced, and continues to influence, the performance of the country’s economy. Political crises have affected and continue to affect the confidence of investors and the general public, which have historically resulted in economic deceleration and heightened volatility in the securities offered by companies with significant operations in Brazil. The recent economic instability in Brazil has contributed to a decline in market confidence in the Brazilian economy as well as to a deteriorating political environment. Historically, expenditures by the Brazilian federal government have resulted in fiscal deficits, with consecutive deficits recorded from 2014 to 2020. However, in 2022, the federal government achieved a budget surplus, driven in part by rising commodity prices and higher inflation. In 2023, as commodity prices stabilized, inflation eased, and economic activity slowed, government revenues declined while expenditures continued to rise, leading to a budget deficit. In 2024, despite a 9.62% increase in total federal fiscal revenues compared to 2023 (in inflation-adjusted terms), supported by ad hoc measures enacted at the end of 2023, public expenditures grew at a faster pace, resulting in another budget deficit. The Brazilian government continues to navigate a challenging fiscal environment, even after the approval of a new fiscal framework in 2023. Likewise, Brazil’s state governments are facing fiscal pressures due to high debt burdens, declining revenues, rigid expenditures, and extensive federal economic relief programs, alongside additional aid efforts in response to floods in early 2024 in the State of Rio Grande do Sul. In addition, uncertainties relating to the implementation by the new Brazilian government under President Luis Inácio Lula da Silva of changes to monetary, fiscal and social security policy and related legislation (including as a result of the 2024 municipal elections, the relationship between the executive, legislative and judiciary branches and the relationships among the leading political parties) may contribute to economic instability. Specifically, although the tax reform on duties levied on consumption was approved by the Brazilian Congress in 2023, it continues to require the approval of additional legislation by lawmakers in 2025 to be fully implemented by the Brazilian government. On October 3, 2024, the Brazilian government issued Provisional Measure No. 1,262, establishing the implementation of the OECD Pillar Two global minimum tax in Brazil. On December 27, 2024, Law No. 15,079/2024 was enacted, formalizing these requirements and making them definitive for the implementation of the new tax regime in the country. A new round of tax reforms is also expected to be presented to the Brazilian Congress by the Brazilian government in 2025, including the revocation of the income tax exemption on the payment of dividends, which, if enacted, would increase the taxes associated with any dividend or distribution by Brazilian companies and could impact our capacity to receive future dividends or distributions net of taxes from our subsidiaries. The incumbent administration has stated that this proposed reform is among their priorities, along with other economic reforms. Any such new policies or changes to current policies may have a material adverse effect on us. These uncertainties and new measures may increase the volatility of the Brazilian capital markets. A failure by the Brazilian government to implement necessary reforms may result in diminished confidence in the Brazilian government’s budgetary condition and fiscal stance, which could result in downgrades of Brazil’s sovereign foreign credit rating by credit rating agencies, negatively impact Brazil’s economy, and lead to further depreciation of the real and an increase in inflation and interest rates, which could adversely affect our business, financial condition and results of operations. Any of the above factors may harm the Brazilian economy and, consequently, our business and the price of our Class A common shares. 33 Table of Contents Inflation and certain measures by the Brazilian government to curb inflation have historically harmed the Brazilian economy and Brazilian capital markets, and high levels of inflation in the future would harm our business and the price of our Class A common shares. In the past, Brazil has experienced extremely high rates of inflation. Inflation and some of the measures taken by the Brazilian government in an attempt to curb inflation have had significant negative effects on the Brazilian economy generally. Inflation, policies adopted to curb inflationary pressures and uncertainties regarding possible future governmental intervention have contributed to economic uncertainty and heightened volatility in the Brazilian capital markets. According to the National Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo, or IPCA), which is published by the Brazilian Institute for Geography and Statistics (Instituto Brasileiro de Geografia e Estatística, or IBGE), Brazilian inflation rates were 4.8%, 4.6% and 5.8% as of December 31, 2024, 2023 and 2022, respectively. Brazil may experience high levels of inflation in the future and inflationary pressures may lead to the Brazilian government intervening in the economy and introducing policies that could harm our business and the trading price of our Class A common shares. In the past, the Brazilian government’s interventions included the maintenance of a restrictive monetary policy with high interest rates that restricted credit availability and reduced economic growth, causing volatility in interest rates. For example, the Monetary Policy Committee (Comitê de Política Monetária do Banco Central do Brasil), or COPOM, started raising the official base interest rate (Sistema Especial de Liquidação e Custódia) or the SELIC rate, in mid-March 2021, ultimately reaching 9.25% by the end of 2021. This cycle continued into 2022, with the SELIC rate peaking at 13.75% in August 2022, at which point COPOM opted to maintain that level. The SELIC rate stayed at 13.75% for nearly a year, as inflation hovered near the upper limit of COPOM’s target range pursuant to applicable law (3.25% for 2023 and 3.0% thereafter). In August 2023, as inflationary pressures eased, COPOM began reducing the SELIC rate, which fell to 10.50% by May 2024. Nevertheless, renewed inflationary pressures—driven in part by fiscal concerns stemming from persistent budget deficits and increased government spending—prompted COPOM to reverse course and resume hiking rates in September 2024, with the SELIC rate reaching 12.25% by December 2024. As of the date of this annual report, the SELIC rate stands at 14.25% per annum, reflecting the challenges of controlling inflation amid a strong economy, historically low unemployment levels, and fiscal imbalances requiring tighter monetary policy to maintain economic stability. Exchange rate instability may have adverse effects on the Brazilian economy, us and the price of our Class A common shares. The Brazilian currency has been historically volatile and has been devalued frequently over the past three decades. Throughout this period, the Brazilian government has implemented various economic plans and used various exchange rate policies, including sudden devaluations, periodic mini devaluations (during which the frequency of adjustments has ranged from daily to monthly), exchange controls, dual exchange rate markets and a floating exchange rate system. Although long-term depreciation of the real is generally linked to the rate of inflation in Brazil, depreciation of the real occurring over shorter periods of time has resulted in significant variations in the exchange rate between the real, the U.S. dollar and other currencies. The real/U.S. dollar exchange rate reported by the Central Bank was R$5.580 per US$1.00 on December 31, 2021, which reflected a 7.3% depreciation in the real against the U.S. dollar during 2021. On December 31, 2022, the exchange rate of the U.S. dollar as reported by the Central Bank was R$5.218 per US$1.00, which reflected a 6.5% appreciation in the real against the U.S. dollar since December 31, 2021. The real/U.S. dollar exchange rate reported by the Central Bank was R$4.841 per US$1.00 on December 31, 2023, which reflected a 7.2% appreciation in the real against the U.S. dollar during 2023. The real/U.S. dollar exchange rate reported by the Central Bank was R$6.192 per US$1.00 on December 31, 2024, which reflected a 27.9% depreciation in the real against the U.S. dollar during 2024. As of April 24, 2025, the exchange rate for the sale of U.S. dollars as reported by the Central Bank was R$5.6738 per US$1.00, which reflected an appreciation of 8.4% in the real against the U.S. dollar since December 31, 2024. There can be no assurance that the real will not again depreciate or appreciate against the U.S. dollar or other currencies in the future. 34 Table of Contents A devaluation of the real relative to the U.S. dollar could create inflationary pressures in Brazil and cause the Brazilian government to, among other measures, increase interest rates. Any depreciation of the real may generally restrict access to the international capital markets. It would also reduce the U.S. dollar value of our results of operations. Restrictive macroeconomic policies could reduce the stability of the Brazilian economy and harm our results of operations and profitability. In addition, domestic and international reactions to restrictive economic policies could have a negative impact on the Brazilian economy. These policies and any reactions to them may harm us by curtailing access to foreign financial markets and prompting further government intervention. A devaluation of the real relative to the U.S. dollar may also, as in the context of the current economic slowdown, decrease consumer spending, increase deflationary pressures and reduce economic growth. On the other hand, an appreciation of the real relative to the U.S. dollar and other foreign currencies may deteriorate the Brazilian foreign exchange current accounts. Depending on the circumstances, either devaluation or appreciation of the real relative to the U.S. dollar and other foreign currencies could restrict the growth of the Brazilian economy, as well as our business, results of operations and profitability. Infrastructure and workforce deficiency in Brazil may impact economic growth and have a material adverse effect on us. Our performance depends on the overall health and growth of the Brazilian economy. Brazilian GDP growth has fluctuated over the past few years, notwithstanding a growth of 3.0% in 2022, a growth of 2.9% in 2023, and a growth of 3.4% in 2024. Growth is limited by inadequate infrastructure, including potential energy shortages and deficient transportation, logistics and telecommunication sectors, general strikes, the lack of a qualified labor force, and the lack of private and public investments in these areas, which limit productivity and efficiency. Any of these factors could lead to labor market volatility and generally impact income, purchasing power and consumption levels, which could limit growth and ultimately have a material adverse effect on us. Developments and the perceptions of risks in other countries, including other emerging markets, the United States and Europe, may harm the Brazilian economy and the price of our Class A common shares. The market for securities offered by companies with significant operations in Brazil is influenced by economic and market conditions in Brazil and, to varying degrees, market conditions in other Latin American and emerging markets, as well as the United States, Europe and other countries. There have been concerns over conflicts, unrest and terrorist threats in the Middle East, Europe and Africa, which have resulted in volatility in oil and other markets. Furthermore, after taking office, the U.S. president raised the possibility of imposing tariffs on key trade partners of the United States, such as Mexico and Canada, and also imposed a series of significant economic tariffs on a wide array of goods imported into the United States, including certain imports from China as well as on imports of steel and aluminum from around the world. Brazil, as an exporter of steel and aluminum to the United States, will be adversely affected by these tariffs. There is no guarantee that the United States will not impose additional tariffs on Brazilian exports, whether directly on Brazilian goods more broadly or indirectly through tariffs on other products that incorporate Brazilian inputs. To the extent the conditions of the global markets or economy deteriorate, the business of companies with significant operations in Brazil may be harmed. The weakness in the global economy has been marked by, among other adverse factors, lower levels of consumer and corporate confidence, decreased business investment and consumer spending, increased unemployment, reduced income and asset values in many areas, reduction of China’s growth rate, currency volatility and limited availability of credit and access to capital. Developments or economic conditions in other emerging market countries have at times significantly affected the availability of credit to companies with significant operations in Brazil and resulted in considerable outflows of funds from Brazil, decreasing the amount of foreign investments in Brazil. These developments, as well as potential crises and forms of political instability arising therefrom or any other as of yet unforeseen development, may harm our business and the price of our Class A common shares. Any further downgrading of Brazil’s credit rating could reduce the trading price of our Class A common shares. We and the trading price of our Class A common shares may be harmed by investors’ perceptions of risks related to Brazil’s sovereign debt credit rating. Rating agencies regularly evaluate Brazil and its sovereign credit ratings, which are based on a number of factors, including macroeconomic trends, fiscal and budgetary conditions, indebtedness metrics and the perspective of changes in any of these factors. 35 Table of Contents The rating agencies began to review Brazil’s sovereign credit rating in September 2015. Subsequently, the three major rating agencies downgraded Brazil’s investment-grade status: · In 2015, Standard & Poor’s initially downgraded Brazil’s credit rating from BBB-negative to BB-positive and subsequently downgraded it again from BB-positive to BB, maintaining its negative outlook. On January 11, 2018, Standard & Poor’s further downgraded Brazil’s credit rating from BB to BB-negative, and on December 11, 2019, the agency affirmed the rating at BB- and revised the outlook on Brazil to positive. On April 7, 2020, the rating was reaffirmed as BB- with a stable outlook. On November 30, 2021 and June 15, 2022, Standard & Poor’s further reaffirmed Brazil’s rating at BB- with a stable outlook. On December 19, 2023, the rating was upgraded to BB with a stable outlook, reflecting the rating agency’s expectation that Brazil will make slow progress in addressing fiscal imbalances and that its still weak economic prospects, balanced by a strong external position and monetary policy is helping to re-anchor inflation expectations. · In 2015, Moody’s downgraded Brazil’s Baa3’s issue and bond ratings to below investment grade, at Ba2 with a negative outlook. On April 9, 2018, Moody’s revised the outlook to stable, reaffirming the Ba2 rating. In September 2020, Moody’s maintained Brazil’s credit rating at Ba2 with a stable outlook. In May 2020, Moody’s confirmed Brazil’s long-term foreign currency sovereign credit rating at Ba2 maintaining a stable outlook. On May 25, 2021, April 12, 2022 and October 20, 2023, Moody’s further reaffirmed Brazil’s rating at Ba2 with a stable outlook. On October 1, 2024, Moody’s upgraded Brazil’s credit rating to Ba1 with a positive outlook. · In 2015, Fitch downgraded Brazil’s sovereign credit rating to BB-positive with a negative outlook, citing the rapid expansion of the country’s budget deficit and the worse-than-expected recession. In February 2018, Fitch downgraded Brazil’s sovereign credit rating again to BB-negative. In November 2020, Fitch Ratings affirmed Brazil’s long-term foreign currency sovereign credit rating at BB- with a negative outlook. On December 14, 2021, Fitch further reaffirmed Brazil’s credit rating at BB-negative with a negative outlook. On July 14, 2022, while reaffirming Brazil’s credit rating at BB-negative, Fitch changed its outlook on Brazil’s credit rating to a positive outlook. On July 26, 2023, Fitch upgraded Brazil’s credit rating at BB and changed its outlook on Brazil’s credit rating to a stable outlook. On December 15, 2023 and June 27, 2024, Fitch further reaffirmed Brazil’s rating at BB with a stable outlook. Brazil’s sovereign credit rating is currently rated below investment grade by the three main credit rating agencies. Consequently, the prices of securities offered by companies with significant operations in Brazil have been negatively affected. A prolongation or worsening of the challenging economic conditions currently facing Brazil, along with continued political uncertainty, among other factors, could lead to further ratings downgrades. Any further downgrade of Brazil’s sovereign foreign credit ratings could heighten investors’ perception of risk and, as a result, cause the trading price of our Class A common shares to decline. Certain Risks Relating to Our Class A Common Shares An active trading market for our Class A common shares may not be sustainable. If an active trading market is not maintained, investors may not be able to resell their shares and our ability to raise capital in the future may be impaired. Although our Class A common shares are listed and being traded on the Nasdaq Global Select Market, an active trading market for our shares may not be maintained. The existence of our dual-class share structure could also result in less liquidity for our Class A common shares than if there were only one class of our common shares. If an active market for our Class A common shares is not maintained, it may be difficult for you to sell shares without depressing the market price for the shares or at all. An inactive trading market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration. In addition to the risks described above, the market price of our Class A common shares may be influenced by many factors, some of which are beyond our control, including: · announcements by us or our competitors of significant contracts or acquisitions; · technological innovations by us or competitors; 36 Table of Contents · the failure of financial analysts to cover our Class A common shares or changes in financial estimates by analysts; · actual or anticipated variations in our operating results; · changes in financial estimates by financial analysts, or any failure by us to meet or exceed any of these estimates, or changes in the recommendations of any financial analysts that elect to follow our Class A common shares or the shares of our competitors; · future sales of our shares; and · investor perceptions of us and the industries in which we operate. In addition, the stock market in general has experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected. These broad market and industry factors may materially harm the market price of our Class A common shares, regardless of our operating performance. In the past, following periods of volatility in the market price of certain companies’ securities, securities class action litigation has been instituted against these companies. This litigation, if instituted against us, could adversely affect our financial condition or results of operations. If a market is not maintained, the liquidity and price of our Class A common shares could be seriously harmed. The concentration of ownership and voting power in Bertelsmann, our controlling shareholder, limits your ability to influence corporate matters. Bertelsmann, our controlling shareholder, as of the date of this annual report, owns 77.8% of our outstanding Class B common shares, which, together with its ownership of 57.0% of our outstanding Class A common shares, represent approximately 67.1% of our outstanding share capital and 75.8% of the voting power of our outstanding share capital, and, together with the Esteves Family, controls all matters requiring shareholder approval. Our Class B common shares are entitled to 10 votes per share and our Class A common shares, which are the common shares trading on NASDAQ, are entitled to one vote per share. Our Class B common shares are convertible into an equivalent number of Class A common shares and generally convert into Class A common shares upon transfer subject to limited exceptions. As a result, Bertelsmann and the Esteves Family will control the outcome of all of our decisions at our shareholders’ meetings, and Bertelsmann alone is able to elect a majority of the members of our board of directors. The decisions of Bertelsmann and the Esteves Family on these matters may be contrary to your expectations or preferences, and they may take actions that could be contrary to your interests. They are able to prevent any other shareholders, including you, from blocking these actions. For further information regarding shareholdings in our company, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.” So long as Bertelsmann and the Esteves Family continue to beneficially own a sufficient number of Class B common shares, even if they beneficially own significantly less than 50% of our outstanding share capital, acting together, they will be able to effectively control the outcome of all decisions at our shareholders’ meetings. For example, if our Class B common shares amounted to 15% of our outstanding common shares, beneficial owners of our Class B common shares (consisting of the Esteves Family and Bertelsmann), would collectively control 63.8% of the voting power of our outstanding common shares. If Bertelsmann sells or transfers any of its Class B common shares, they will generally convert automatically into Class A common shares, subject to limited exceptions, such as transfers to affiliates, to trustees for the holder or its affiliates and certain transfers to U.S. tax exempt organizations. The fact that any Class B common shares convert into Class A common shares if Bertelsmann sells or transfers them means that Bertelsmann will in many situations continue to control a majority of the combined voting power of our outstanding share capital, due to the voting rights of any Class B common shares that it will retain. However, if our Class B common shares at any time represent less than 10% of the total number of shares in the capital of the Company outstanding, the Class B common shares then outstanding will automatically convert into Class A common shares. For a description of our dual class equity structure, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Description of Share Capital.” 37 Table of Contents Class A common shares eligible for future sale may cause the market price of our Class A common shares to drop significantly. The market price of our Class A common shares may decline as a result of sales of a large number of our Class A common shares in the market (including Class A common shares issuable upon conversion of Class B common shares) or the perception that these sales may occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As of December 31, 2024, we have 49,920,068 Class A common shares and 43,802,763 Class B common shares outstanding, which, except as set forth below, are freely tradable without restriction or further registration under the Securities Act by persons other than our affiliates within the meaning of Rule 144 of the Securities Act. Our shareholders or entities controlled by them or their permitted transferees will be able to sell their shares in the public market from time to time without registering them, subject to certain limitations on the timing, amount and method of those sales imposed by regulations promulgated by the SEC. If any of our shareholders, the affiliated entities controlled by them or their respective permitted transferees were to sell a large number of their shares, including common shares issuable upon conversion of the Series A perpetual convertible preferred shares, the market price of our Class A common shares may decline significantly. In addition, the perception in the public markets that sales by them might occur may also adversely affect the market price of our Class A common shares. Our Articles of Association contain anti-takeover provisions that may discourage a third party from acquiring us and adversely affect the rights of holders of our Class A common shares. Our Articles of Association contain certain provisions that could limit the ability of others to acquire our control, including a provision that grants authority to our board of directors to establish and issue from time to time one or more series of preferred shares without action by our shareholders and to determine, with respect to any series of preferred shares, the terms and rights of that series. These provisions could have the effect of depriving our shareholders of the opportunity to sell their shares at a premium over the prevailing market price by discouraging third parties from seeking to obtain our control in a tender offer or similar transactions. If securities or industry analysts publish inaccurate or unfavorable research, about our business, the price of our Class A common shares and our trading volume could decline. The trading market for our Class A common shares will depend in part on the research and reports that securities or industry analysts publish about us, our business, our market or our competitors. In the event one or more of the analysts who cover us downgrades us or releases negative publicity about our Class A common shares, our share price would likely decline. Further, as we are not required to publish quarterly financial information, if we cease to publish that information, any analysts covering us may not have enough information to compare us to our peers on a regular basis and may choose to cease coverage. If one or more of these analysts ceases to cover us or fails to regularly publish reports on us, interest in our Class A common shares may decrease, which may cause our share price or trading volume to decline. There can be no assurance that we will continue to declare dividends. On March 12, 2025, our board of directors approved the distribution of our first-ever dividends. The payment of any dividends in the future is subject to continued capital availability, market conditions, applicable laws and agreements, and our board of directors continuing to determine that the declaration of dividends are in the best interests of our shareholders. The declaration and payment of any dividend may be discontinued or reduced at any time, and there can be no assurance that we will declare dividends in the future in any particular amounts, or at all. 38 Table of Contents Our Series A perpetual convertible preferred shares have rights, preferences and privileges that are not held by, and are preferential to, the rights of our common shares, which could adversely affect our liquidity and financial condition, and may result in the interests of the holders of our Series A perpetual convertible preferred shares differing from those of our common shareholders. The Series A perpetual convertible preferred shares rank senior to our common shares with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of our affairs. The holders of Series A perpetual convertible preferred shares have the right to receive a liquidation preference entitling them to be paid out of our assets available for distribution to stockholders before any payment may be made to holders of any other class or series of our share capital, an amount equal to the greater of (a) the sum of the original liquidation preference plus all accrued but unpaid dividends or (b) the amount that such holder would have been entitled to receive upon our liquidation, dissolution and winding up if all outstanding shares of such series of Series A perpetual convertible preferred shares had been converted into common shares immediately prior to such liquidation, dissolution or winding up. In addition, the holders of the Series A perpetual convertible preferred shares are entitled to a cumulative dividend at the rate of 6.5% per annum. The holders of the Series A perpetual convertible preferred shares are also entitled to participate in dividends declared or paid on our common shares on an as-converted basis. The holders of our Series A perpetual convertible preferred shares also have the right, subject to certain exceptions, to require us to repurchase all or any portion of the Series A perpetual convertible preferred shares upon certain change of control events at the repurchase price set forth in the applicable certificate of designations. These dividend and share repurchase obligations could impact our liquidity and reduce the amount of cash flows available for general corporate purposes. Our obligations to the holders of the Series A perpetual convertible preferred shares could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition. These preferential rights could also result in divergent interests between the holders of Series A perpetual convertible preferred shares and holders of our common shares. The issuance of Series A perpetual convertible preferred shares reduces the relative voting power of holders of our common stock, and the conversion and sale of those shares would dilute the ownership of holders of common shares and may adversely affect the market price of our common shares. As of December 31, 2024, 150,000 Series A perpetual convertible preferred shares were outstanding, representing approximately 6.6 % of our outstanding common shares, excluding treasury shares and including the Series A perpetual convertible preferred shares on an as-converted basis. Holders of Series A perpetual convertible preferred shares are entitled to a cumulative dividend at the rate of 6.5% per annum. Because holders of our Series A perpetual convertible preferred shares are entitled to vote on certain matters described in “—SoftBank and any other holders of our Series A perpetual convertible preferred shares may exercise influence over us,” the issuance of the Series A perpetual convertible preferred shares, and the subsequent issuance of additional Series A perpetual convertible preferred shares, effectively reduce the relative voting power of the holders of our common shares. In addition, the conversion of the Series A perpetual convertible preferred shares into common shares would dilute the ownership interest of existing holders of our common shares. Furthermore, any sales in the public market of the common shares issuable upon conversion of the Series A perpetual convertible preferred shares would increase the number of our common shares available for public trading and could adversely affect prevailing market prices of our common shares. Sales of a substantial number of our common shares in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common shares. SoftBank and any other holders of our Series A perpetual convertible preferred shares may exercise influence over us. As of December 31, 2024, outstanding Series A perpetual convertible preferred shares represented approximately 6.6% of our outstanding common shares, excluding treasury shares and including the Series A perpetual convertible preferred shares on an as-converted basis. The terms of the Series A perpetual convertible preferred shares require the approval of a majority of our Series A perpetual convertible preferred shares by a separate class vote for us to take the following decisions, among others described in the respective certificate of designations: 39 Table of Contents · amend our organizational documents in a manner that would have an adverse effect on the Series A perpetual convertible preferred shares; or · issue securities that are senior to, or equal in priority with, the Series A perpetual convertible preferred shares. Circumstances may occur in which the interests of SoftBank and its affiliates could diverge from, or even conflict with, the interests of our other shareholders. For example, the existence of SoftBank as a significant shareholder may have the effect of delaying or preventing changes in control or management or limiting the ability of our other shareholders to approve transactions that they may deem to be in our best interests. SoftBank and its affiliates may seek to cause us to take courses of action that, in their judgment, could enhance its investment in us but which might involve risks to our other shareholders or adversely affect us or our other shareholders. Our dual class equity structure means our shares will not be included in certain indices. We cannot predict the impact this may have on our share price. In 2017, FTSE Russell, S&P Dow Jones and MSCI announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices to exclude companies with multiple classes of shares of common stock from being added to such indices. FTSE Russell announced plans to require new constituents of its indices to have at least five percent of their voting rights in the hands of public stockholders, whereas S&P Dow Jones announced that companies with multiple share classes, such as ours, will not be eligible for inclusion in the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. MSCI also opened public consultations on their treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from its ACWI Investable Market Index and U.S. Investable Market 2500 Index; however, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. We cannot assure you that other stock indices will not take a similar approach to FTSE Russell, S&P Dow Jones and MSCI in the future. Under the announced policies, our dual class equity structure would make us ineligible for inclusion in any of these indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not invest in our stock. It continues to be somewhat unclear what effect, if any, these policies will have on the valuations of publicly traded companies excluded from the indices, but in certain situations they may depress these valuations compared to those of other similar companies that are included. Exclusion from indices could make our Class A common shares less attractive to investors and, as a result, the market price of our Class A common shares could be adversely affected. The dual class equity structure of our common stock has the effect of concentrating voting control with Bertelsmann; this will limit or preclude your ability to influence corporate matters. Each Class A common share entitles its holder to one vote per share, and each Class B common share entitles its holder to 10 votes per share. Due to the 10-to-one voting ratio between our Class B and Class A common shares, the beneficial owners of our Class B common shares (composed of the Esteves Family and Bertelsmann) collectively will continue to control a majority of the combined voting power of our common shares and therefore be able to control all matters submitted to our shareholders so long as the total number of the issued and outstanding Class B common shares is at least 16.67% of the total number of shares outstanding. However, if our Class B common shares at any time represent less than 10% of the total number of shares in the capital of the Company outstanding, the Class B common shares then outstanding will automatically convert into Class A common shares. In addition, our Articles of Association provide that at any time when there are Class A common shares in issue, additional Class B common shares may only be issued pursuant to (1) a share split, subdivision of shares or similar transaction or where a dividend or other distribution is paid by the issue of shares or rights to acquire shares or following capitalization of profits, (2) a merger, consolidation, or other business combination involving the issuance of Class B common shares as full or partial consideration, or (3) an issuance of Class A common shares, whereby holders of the Class B common shares are entitled to purchase a number of Class B common shares that would allow them to maintain their proportional ownership interests in Afya (following an offer by us to each holder of Class B common shares to issue to such holder, upon the same economic terms and at the same price, such number of Class B common shares as would ensure such holder may maintain a proportional ownership interest in Afya pursuant to our Articles of Association). 40 Table of Contents Future transfers by holders of Class B common shares will generally result in those shares converting to Class A common shares, subject to limited exceptions, such as certain transfers effected to permitted transferees or for estate planning or charitable purposes. The conversion of Class B common shares to Class A common shares will have the effect, over time, of increasing the relative voting power of those holders of Class B common shares who retain their shares in the long term. In light of the above provisions relating to the issuance of additional Class B common shares, the fact that future transfers by holders of Class B common shares will generally result in those shares converting to Class A common shares, subject to limited exceptions as provided in the Articles of Association; as well as the 10-to-one voting ratio of our Class B common shares and Class A common shares, holders of our Class B common shares will in many situations continue to maintain control of all matters requiring shareholder approval. This concentrated control will limit or preclude your ability to influence corporate matters for the foreseeable future. For a description of our dual class equity structure, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Description of Share Capital—Voting Rights.” We are a Cayman Islands exempted company with limited liability. The rights of our shareholders, including with respect to fiduciary duties and corporate opportunities, may be different from the rights of shareholders governed by the laws of U.S. jurisdictions. We are a Cayman Islands exempted company with limited liability. Our corporate affairs are governed by our Articles of Association and by the laws of the Cayman Islands. The rights of shareholders and the responsibilities of members of our board of directors may be different from the rights of shareholders and responsibilities of directors in companies governed by the laws of U.S. jurisdictions. In particular, as a matter of Cayman Islands law, directors of a Cayman Islands company owe fiduciary duties to the company and separately a duty of care, diligence and skill to the company. Under Cayman Islands law, directors and officers owe the following fiduciary duties: (i) duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole; (ii) duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; (iii) directors should not improperly fetter the exercise of future discretion; (iv) duty to exercise powers fairly as between different sections of shareholders; (v) duty to exercise independent judgment; and (vi) duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests. Our Articles of Association have varied this last obligation by providing that a director must disclose the nature and extent of his or her interest in any contract or arrangement, and following such disclosure and subject to any separate requirement under applicable law or the listing rules of the Nasdaq, and unless disqualified by the chairman of the relevant meeting, such director may vote in respect of any transaction or arrangement in which he or she is interested and may be counted in the quorum at the meeting. Conversely, under Delaware corporate law, a director has a fiduciary duty to the corporation and its stockholders (made up of two components) and the director’s duties prohibit self-dealing by a director and mandate that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Description of Share Capital—Principal Differences between Cayman Islands and U.S. Corporate Law.” We may need to raise additional capital in the future by issuing securities, use our Class A common shares as acquisition consideration or enter into corporate transactions with an effect similar to a merger, which may dilute your interest in our share capital and affect the trading price of our Class A common shares. We may need to raise additional funds to grow our business and implement our growth strategy going forward through public or private issuances of common shares or securities convertible into, or exchangeable for, our common shares, which may dilute your interest in our share capital or result in a decrease in the market price of our common shares. In addition, we may also use our Class A common shares as acquisition consideration or enter into mergers or other similar transactions in the future, which may dilute your interest in our share capital or result in a decrease in the market price of our Class A common shares. Any fundraising through the issuance of shares or securities convertible into or exchangeable for shares, the use of our Class A common shares as acquisition consideration, or the participation in corporate transactions with an effect similar to a merger, may dilute your interest in our capital stock or result in a decrease in the market price of our Class A common shares. 41 Table of Contents As a foreign private issuer, we have different disclosure and other requirements than U.S. domestic registrants. As a foreign private issuer, we are subject to different disclosure and other requirements than domestic U.S. registrants. For example, as a foreign private issuer, in the United States, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act, including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short-swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. In addition, we rely on exemptions from certain U.S. rules which permit us to follow Cayman Islands legal requirements rather than certain of the requirements that are applicable to U.S. domestic registrants. We follow Cayman Islands laws and regulations that are applicable to Cayman Islands companies. However, Cayman Islands laws and regulations applicable to Cayman Islands companies do not contain any provisions comparable to the U.S. proxy rules, the U.S. rules relating to the filing of reports on Form 10-Q or 8-K or the U.S. rules relating to liability for insiders who profit from trades made in a short period of time, as referred to above. Furthermore, foreign private issuers are required to file their annual report on Form 20-F within 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information, although we will be subject to Cayman Islands laws and regulations having substantially the same effect as Regulation Fair Disclosure. As a result of the above, even though we are required to file reports on Form 6-K disclosing the limited information which we have made or are required to make public pursuant to Cayman Islands law, or are required to distribute to shareholders generally, and that is material to us, you may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. company. As a foreign private issuer, we rely on permitted exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, including the requirement that a majority of an issuer’s directors consist of independent directors. This may afford less protection to holders of our Class A common shares. Section 5605 of the Nasdaq equity rules requires listed companies to have, among other things, a majority of their board members be independent, and to have independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign private issuer, however, we are permitted to, and we have, and will continue to, follow home country practice in lieu of the above requirements. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Description of Share Capital—Principal Differences between Cayman Islands and U.S. Corporate Law.” We may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses. In order to maintain our current status as a foreign private issuer, either (a) more than 50% of our Class A common shares must be either directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our executive officers or directors may not be U.S. citizens or residents, (ii) more than 50% of our assets cannot be located in the United States and (iii) our business must be administered principally outside the United States. If we lose this status, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the costs we will incur as a foreign private issuer. Our shareholders may face difficulties in protecting their interests because we are a Cayman Islands exempted company. Our corporate affairs are governed by our Articles of Association, by the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as that from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less exhaustive body of securities laws than the United States. In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law. 42 Table of Contents As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholder than they would as shareholders of a corporation incorporated in a jurisdiction in the United States. While Cayman Islands law allows a dissenting shareholder to express the shareholder’s view that a court-sanctioned reorganization by way of a scheme of arrangement of a Cayman Islands company would not provide fair value for the shareholder’s shares, Cayman Islands statutory law does not specifically provide for shareholder appraisal rights in connection with a court sanctioned reorganization by way of a scheme of arrangement. This may make it more difficult for you to assess the value of any consideration you may receive in a merger or consolidation by way of a scheme of arrangement or to require that the acquirer gives you additional consideration if you believe the consideration offered is insufficient. However, Cayman Islands statutory law provides a mechanism for a dissenting shareholder in a statutory merger or consolidation to apply to the Grand Court of the Cayman Islands for a determination of the fair value of the dissenter’s shares if it is not possible for the company and the dissenter to agree on a fair price within the time limits prescribed. Shareholders of Cayman Islands exempted companies (such as us) have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders. Our directors have discretion under our Articles of Association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest. United States civil liabilities and certain judgments obtained against us by our shareholders may not be enforceable. We are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. In addition, the majority of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside of the United States. As a result, it may be difficult to effect service of process within the United States upon these persons. It may also be difficult to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors who are not resident in the United States and the substantial majority of whose assets are located outside of the United States. Further, it is unclear if original actions predicated on civil liabilities based solely upon U.S. federal securities laws are enforceable in courts outside the United States, including in the Cayman Islands and Brazil. The courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state ; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. 43 Table of Contents Judgments of Brazilian courts to enforce our obligations with respect to our Class A common shares may be payable only in reais. Most of our assets are located in Brazil. If proceedings are brought in the courts of Brazil seeking to enforce our obligations in respect of our Class A common shares, we may not be required to discharge our obligations in a currency other than the real. Under Brazilian exchange control laws, an obligation in Brazil to pay amounts denominated in a currency other than the real may only be satisfied in Brazilian currency at the exchange rate, as determined by the Central Bank, in effect on the date the judgment is obtained, and such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then-prevailing exchange rate may not afford non-Brazilian investors with full compensation for any claim arising out of or related to our obligations under the Class A common shares. Our Class A common shares may not be a suitable investment for all investors, as an investment in our Class A common shares presents risks and the possibility of financial losses. The investment in our Class A common shares is subject to risks. Investors who wish to invest in our Class A common shares are thus subject to asset losses, including loss of the entire value of their investment, as well as other risks, including those related to our Class A common shares, us, the sector in which we operate, our shareholders and the general macroeconomic environment in Brazil, among other risks. Each potential investor in our Class A common shares must therefore determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: · have sufficient knowledge and experience to make a meaningful evaluation of our Class A common shares, the merits and risks of investing in our Class A common shares and the information contained in this annual report; · have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in our Class A common shares and the impact our Class A common shares will have on its overall investment portfolio; · have sufficient financial resources and liquidity to bear all of the risks of an investment in our Class A common shares; · understand thoroughly the terms of our Class A common shares and be familiar with the behavior of any relevant indices and financial markets; and · be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks. There can be no assurance that we will not be a passive foreign investment company, or PFIC, for any taxable year, which could subject United States investors in our Class A common shares to significant adverse U.S. federal income tax consequences. Under the Internal Revenue Code of 1986, as amended (the “Code”), we will be a PFIC for any taxable year in which, after the application of certain look-through rules with respect to subsidiaries, either (i) 75% or more of our gross income consists of “passive income,” or (ii) 50% or more of the average quarterly value of our assets consists of assets that produce, or are held for the production of, “passive income.” Passive income generally includes dividends, interest, certain non-active rents and royalties, and capital gains. Cash is generally a passive asset for these purposes. Goodwill is an active asset to the extent attributable to activities that produce active income. Based on the composition of our income and assets and the value of our assets, including goodwill (the implied value of which we estimate based on the price of our Class A common shares), we believe that we were not a PFIC for the taxable year of 2024. However, because we hold a substantial amount of cash (relative to the assets shown on our balance sheet) and because our PFIC status for any taxable year will depend on the composition of our income and assets and the value of our assets from time to time (which may be determined, in part, by reference to the market price of our Class A common shares, which could be volatile), there can be no assurance that we will not be a PFIC for any taxable year. If our Class A common share price declines while we continue to hold a substantial amount of cash for any taxable year, our risk of being or becoming a PFIC will increase. In addition, as we continue to expand our business through acquisitions and organically, our risk of becoming a PFIC will increase if we engage in activities that generate substantial passive income. Moreover, the extent to which our goodwill will be treated as an active asset is not entirely clear. If we are a PFIC for any taxable year during which a U.S. investor holds Class A common shares, we generally will continue to be treated as a PFIC with respect to that U.S. investor for all succeeding years during which the U.S. investor holds Class A common shares, even if we ceased to meet the threshold requirement for PFIC status. Such a U.S. investor may be subject to certain adverse U.S. federal income tax consequences. See “Item 10. Additional Information—10.E. Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules.” 44 Table of Contents