A. Operating Results Overview We are the leading medical education group in Brazil based on the number of medical school seats, as published by MEC as of December 31, 2024, delivering an end-to-end physician-centric ecosystem that serves and empowers students to be lifelong medical learners from the moment they join us as medical students through their medical residency preparation, graduation program, and CME. Our innovative methodological approach combines integrated content, interactive learning, and an adaptive experience for lifelong medical learners. Through our educational content and technology-enabled activities, we focus on effective, personalized learning that mirrors one-on-one tutoring. As of December 31, 2024, we had 76,988 enrolled students, compared to 66,034 enrolled students as of December 31, 2023, representing an increase of 16.6% for the period, and compared to 58,200 enrolled students as of December 31, 2022, representing an increase of 13.5% for the period. In 2018, we were also awarded seven new undergraduate campuses in connection with the “Mais Médicos II” program, the largest number awarded to any education group, with a total of 350 new medical school seats. The operation of such campuses is subject to the verification by MEC of the satisfactory implementation by us of all regulatory requirements. As of the date of this annual report, MEC already inspected six of these campuses and already issued the authorization to operate. Accordingly, we plan to expand our network, and expect to open an additional campus starting in 2025, taking our total to 37 campuses in 19 Brazilian states and 3,653 available medical school seats per year. Our Growth Our revenue growth and increased profitability have been driven by: · Maturation of current number of authorized medical school seats — Anticipated and contracted growth visibility until 2030 from new medical school seats awarded to our schools, that are in the process of maturing, and new seats from our awarded campuses in connection with the “Mais Médicos” program and which became operational in 2022; · Expansion of medical residency preparation and graduate programs enrollments — Increase in the number of students adopting our digital platform, as well as partners and students enrolling in our medical graduate courses; · Deepening of relationships across lifelong medical learners base — Cross-selling opportunities such as increasing the number of former undergraduate students subscribing to our medical residency preparation solutions and the number of former undergraduate and/or medical residency preparation students applying to our graduate and CME courses; · M&A — Acquisition or investment in businesses that complement our medical education services offering. In 2024, we acquired Unidom. In 2023, we acquired DelRey and an additional 15% of CCSI, consolidating our ownership of 75% of its total share capital. In 2022, we acquired or invested in three companies, Além da Medicina, CardioPapers, and Glic. In 2021, we acquired or invested in nine companies, UnifipMoc, Unigranrio and Garanhuns, medical schools which increased our medical school seats by more than 37% when compared to December 31, 2020, and iClinic, Medicinae, Medical Harbour, Cliquefarma, Shosp and RX PRO, digital health services companies that strengthened our digital business strategy; and · Synergies extraction — Successful implementation of several measures to improve the profitability of recent acquisitions, such as streamlining fee discounts and scholarship policies, integrating operations with our shared-services center; and aligning newly acquired faculty teams with our career plan. 88 Table of Contents Key Business Metrics We review the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions: Contribution of Medicine to total undergraduate programs revenue We believe the metric that best demonstrates our focus on medical education and its relevance to our products and services offering is undergraduate programs revenue from medicine as a percentage of our total undergraduate programs revenue. We have previously presented this metric based on our “historical undergraduate programs combined tuition fees,” which referred to the sum of the total tuition fees charged to undergraduate students, as recorded in the historical operating information of Afya Brazil and the acquired companies, since the consummation of their respective acquisition. Now that all revenue from our Undergrad segment is consolidated in our financial statements, we refer only to undergraduate programs revenue as presented in our financial statements. For the years ended December 31, 2024, 2023 and 2022, undergraduate programs revenue from medicine were 85.9%, 85.5% and 82.7%, respectively, of total undergraduate programs revenue. The following table sets forth the detailed information of our revenue derived from the different programs within our Undergrad segment: 2024 2024 2023 2022 (in US$ millions (1)) (in R$ millions) (except percentages) Medical school programs 401.6 2,487.1 2,147.4 1,699.2 Other undergraduate health sciences programs 37.2 230.4 200.6 209.7 Other undergraduate programs(2) 28.8 178.1 163.0 129.0 Undergrad segment revenue 467.6 2,895.7 2,511.0 2,037.9 % Medicine(3) 85.9% 85.9% 85.5% 83.4% (1) For convenience purposes only, amounts in reais for the year ended December 31, 2024 have been translated to U.S. dollars using an exchange rate of R$6.1923 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 2024, as reported by the Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. (2) Represents all non-health sciences undergraduate programs. (3) Calculated as medical school programs divided by the undergraduate programs revenue. Medical School Regulatory Capacity and Capacity at Maturation Medical school regulatory capacity and capacity at maturation are operating metrics that provide visibility into our medical school enrollments contracted growth given the supply and demand imbalance in the medical school market and the fact that our medical schools have historically operated very close to their regulatory capacity. Accordingly, the gradual increase in our capacity helps explain the increase in our medical school enrollments, which in turn helps explain our medical school enrollments contracted growth. Contracted growth refers only to schools that are in the initial six years of operation. In addition, since the maximum number of medical seats per medical school is set by applicable regulations, the only way to grow our medical school seats, and therefore our number of enrollments, is through acquisitions or starting new medical schools. Medical school regulatory capacity is defined by the number of medical school seats available per year awarded by MEC plus the additional seats associated with PROUNI and FIES, multiplied by the number of years of operations since the seats were awarded, up to the sixth year of operations (maturation). Capacity at maturation represents the maximum number of approved seats at a medical school six years after becoming operational. Our medical schools have a six-year maturation cycle because medical school programs in Brazil are for a duration of six years. A maturation cycle represents the period starting when a medical school commences its operations with a first year medical school class of students which progresses through the required six years as the next classes begin behind it, and ends when the medical school has six school years of medical students and has therefore reached capacity at maturation (i.e., the maximum number of approved seats). 89 Table of Contents For illustration, a medical school that is awarded 100 seats from MEC has the opportunity to add up to 20 additional seats: · 10 more seats by adhering to PROUNI (one seat for every 10.7 seats awarded by MEC); and · 10 more seats by adhering to FIES (10% of the seats awarded by MEC). Illustrative evolution of regulatory capacity per medical school Our medical school regulatory capacity by seats was 3,593, 3,163 and 2,823 seats and our capacity at maturation was 25,870, 22,774 and 20,325, as of December 31, 2024, 2023 and 2022, respectively. Assuming our medical schools continue to operate at full capacity, we estimate reaching a total medical student base of 25,870 students by 2031. Medical School Occupancy Rate The occupancy rate of our medical schools is the ratio of the number of students effectively enrolled divided by the regulatory capacity in a given period. While we believe retention rates are an important measure of quality and customer satisfaction, we believe that occupancy rate is a more meaningful metric as it captures not only our ability to retain students but also to find new students to compensate for eventual dropouts. Our management does not separately measure retention rates to make decisions about our business. The following table sets forth our medical seats occupancy rate as of the dates indicated. As of December 31, 2024 2023 2022 Occupancy rate ~100.0% ~100.0% ~100.0% Non-GAAP Financial Measures This annual report presents our Revenue (ex-Acquisitions), Adjusted EBITDA and Operating Cash Conversion Ratio information for the convenience of investors, which are non-GAAP financial measures. A non-GAAP financial measure is generally defined as one that purports to measure financial performance but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure. Although Revenue (ex-Acquisitions), Adjusted EBITDA and Operating Cash Conversion Ratio are used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for the IFRS measures of earnings. Additionally, our calculations of Revenue (ex-Acquisitions), Adjusted EBITDA and Operating Cash Conversion Ratio may be different from the calculations used by other companies, including our competitors in the education services industry, and therefore, our measures may not be comparable to those of other companies. We present Revenue (ex-Acquisitions) because we believe this measure provides investors with a supplemental measure of the financial performance of our operations without the impact of the acquisition occurred in the last financial year, which facilitates comparisons with the previous periods presented considering the organizational structure as of the beginning of the year ended December 31, 2024. We calculate our Revenue (ex-Acquisitions) as revenue less the revenue received by our acquired companies after the date of their acquisition, i.e. for a period of less than 12 months. The comparability of our Revenue (ex-Acquisitions) between periods was impacted by the acquisition of Unidom in 2024 described under “Item 4B Business Overview—Our Recent Acquisitions” above. 90 Table of Contents We present Adjusted EBITDA because we believe this measure provides investors with a supplemental measure of the financial performance of our core operations that facilitates period-to-period comparisons on a consistent basis. We calculate our Adjusted EBITDA as net income plus/minus finance result plus income taxes expense plus depreciation and amortization plus interest received on late payments of monthly tuition fees, minus income share associate, plus share-based compensation expense plus/minus non-recurring expenses. We also present Operating Cash Conversion Ratio because we believe this measure provides investors with a measure of how efficiently we convert our EBITDA into cash. We calculate our Operating Cash Conversion Ratio as the cash flows from operations plus/minus income taxes paid divided by Adjusted EBITDA plus/minus non-recurring expenses. The following tables set forth the Adjusted EBITDA reconciliation to our net income and the Operating Cash Conversion Ratio reconciliation to our cash flow from operations for the years ended December 31, 2024, 2023 and 2022, in each case, our most recent directly comparable financial measures calculated and presented in accordance with IFRS. Reconciliation between Revenue and Revenue (ex-Acquisition) For the Year Ended December 31, 2024 2024 2023 2022 (in US$ millions (1)) (in R$ millions) Revenue 533.6 3,304.3 2,875.9 2,329.1 Acquired companies’ revenue after acquisition 10.3 63.6 - - Revenue (ex-Acquisition)(2) 523.3 3,240.7 2,875.9 2,329.1 (1) For convenience purposes only, amounts in reais for the year ended December 31, 2024 have been translated to U.S. dollars using an exchange rate of R$6.1923 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 2024, as reported by the Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates. (2) “Ex-Acquisitions” figures account for revenue recorded by our acquired companies in the last financial period presented (i.e., December 31, 2024) after the date of their acquisitions. For the year ended December 31, 2024, “ex-Acquisitions” excludes revenues from Unidom, (July to December 2024) which was acquired on July 1, 2024. For more information See “—Non-GAAP Financial Measures.” 91 Table of Contents Reconciliation between Net Income and Adjusted EBITDA For the Year Ended December 31, 2024 2024 2023 2022 (in US$ millions (1)) (in R$ millions) Net income 104.8 648.9 405.4 392.8 Finance result 56.1 347.5 347.0 247.9 Income taxes expense 4.4 27.5 24.2 35.7 Depreciation and amortization 53.8 333.3 289.5 206.2 Interest received(2) 7.0 43.4 33.5 27.2 Share of income of associate (1.9) (11.7) (9.5) (12.2) Share-based compensation expense 5.2 32.4 31.5 31.3 Non-recurring expenses(3): 5.5 34.4 44.1 33.1 Integration of new companies(4) 4.1 25.7 28.1 24.8 M&A advisory and due diligence(5) 0.6 3.6 12.6 2.5 Gain on tax amnesty(6) — — (16.8) — Expansion projects(7) 0.5 3.0 4.4 3.4 Restructuring expenses(8) 0.3 2.1 12.0 12.4 Mandatory discounts in tuition fees(9) — — 3.8 (9.9) Adjusted EBITDA 235.1 1,455.6 1,165.7 961.9 (1) For convenience purposes only, amounts in reais for the year ended December 31, 2024 have been translated to U.S. dollars using an exchange rate of R$6.1923 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 2024, as reported by the Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates. (2) Consists of interest received on late payments of monthly tuition fees. (3) We believe these adjustments are appropriate to provide additional information to investors about certain material non-cash or non-recurring items, not directly associated with our core business, that we do not expect to continue at the same level in the future. (4) Consists of expenses related to the integration of recently acquired companies, such as expenses with personnel and third-party consulting firms. (5) Consists of expenses related to professional and consultant fees in connection with due diligence services for our M&A transactions. (6) On August 10, 2023, Unigranrio entered into a tax amnesty program on interest and penalties to settle a tax proceeding with respect to ISS (tax on services) with the municipality of Rio de Janeiro, which resulted in a payment of R$14.9 million to settle the claim. The selling shareholders of Unigranrio agreed to pay R$5.4 million regarding this matter. We had a provision of R$53.3 million and an indemnification asset from the selling shareholders of R$20.0 million (in light of the indemnification clauses as defined at the acquisition of Unigranrio), with respect to such tax proceeding. The difference between the provision, indemnification asset and the actual paid amount was recorded in Other income (expenses), net on the consolidated statement of income and comprehensive income. (7) Consists of expenses related to professional and consultant fees in connection with the opening of new campuses. (8) Consists of expenses related to employee redundancies in connection with the organizational restructuring of our acquired companies. (9) Consists of mandatory discounts in tuition fees granted by state decrees and individual/collective legal proceedings and public civil proceedings due to COVID-19 on-site class restriction, and excludes any recovery of these discounts that were invoiced based on a decision by the Brazilian Supreme Court with respect to this matter that deemed such discounts to be unconstitutional. 92 Table of Contents Reconciliation between Cash Flow from Operations and Operating Cash Conversion Ratio For the Year Ended December 31, 2024 2024 2023 2022 (in US$ millions (1)) (in R$ millions) (except percentages) Net cash flows from operating activities 231.4 1,432.7 1,043.6 843.9 Income taxes paid 3.3 20.5 45.1 33.1 Net cash flows from operating activities, before income taxes paid 234.7 1,453.2 1,088.8 877.0 Adjusted EBITDA 235.1 1,455.6 1,165.7 961.9 Integration of new companies(2) 4.1 25.7 28.1 24.8 M&A advisory and due diligence(3) 0.6 3.6 12.6 2.5 Gain on tax amnesty(4) — — (16.8) — Expansion projects(5) 0.5 3.0 4.4 3.4 Restructuring expenses(6) 0.3 2.1 12.0 12.4 Mandatory discounts in tuition fees(7) — — 3.8 (9.9) Adjusted EBITDA ex. non-recurring expenses 229.5 1,421.3 1,121.6 928.8 Operating Cash Conversion Ratio 102.2% 102.2% 97.1% 94.4% (1) For convenience purposes only, amounts in reais for the year ended December 31, 2024 have been translated to U.S. dollars using an exchange rate of R$6.1923 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 2024, as reported by the Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates. (2) Consists of expenses related to the integration of recently acquired companies, such as expenses with personnel and third-party consulting firms. (3) Consists of expenses related to professional and consultant fees in connection with due diligence services for our M&A transactions. (4) On August 10, 2023, Unigranrio entered into a tax amnesty program on interest and penalties to settle a tax proceeding with respect to ISS (tax on services) with the municipality of Rio de Janeiro, which resulted in a payment of R$14.9 million to settle the claim. The selling shareholders of Unigranrio agreed to pay R$5.4 million regarding this matter. We had a provision of R$53.3 million and an indemnification asset from the selling shareholders of R$20.0 million (in light of the indemnification clauses as defined at the acquisition of Unigranrio), with respect to such tax proceeding. The difference between the provision, indemnification asset and the actual paid amount was recorded in Other income (expenses), net on the consolidated statement of income and comprehensive income. (5) Consists of expenses related to professional and consultant fees in connection with the opening of new campuses. (6) Consists of expenses related to employee redundancies in connection with the organizational restructuring of our acquired companies. (7) Consists of mandatory discounts in tuition fees granted by state decrees and individual/collective legal proceedings and public civil proceedings due to COVID-19 on-site class restriction, and excludes any recovery of these discounts that were invoiced based on a decision by the Brazilian Supreme Court with respect to this matter that deemed such discounts to be unconstitutional. 93 Table of Contents Operating Data Key Revenue Drivers - Undergrad Segment As of and For the Year Ended December 31, 2024 2023 2022 UNDERGRAD SEGMENT Medical School Approved Seats 3,593 3,163 2,823 Operating Seats 3,543 3,113 2,773 Total Students (end of period) 24,255 21,446 17,968 Average Total Students 23,440 21,154 17,761 Average Total Students (ex-Acquisitions)(1) 22,863 21,154 17,761 Revenue (Total) (in R$ thousands) 2,487,103 2,147,448 1,699,202 Revenue (ex-Acquisitions) (in R$ thousands)(1) 2,427,630 2,147,448 1,699,202 Medical School Net Avg. Ticket (ex-Acquisitions) (R$/month)(1)(2) 8,849 8,460 7,973 Undergraduate Health Science Total Students (end of period) 25,570 21,117 17,967 Average Total Students 25,154 21,365 19,441 Average Total Students (ex-Acquisitions)(1) 24,830 21,365 19,441 Revenue (Total) (in R$ thousands) 230,449 200,613 209,690 Revenue (ex-Acquisitions) (in R$ thousands)(1) 228,879 200,613 209,690 Other Undergraduate Total Students (end of period) 27,163 23,471 22,265 Average Total Students 27,542 24,336 23,376 Average Total Students (ex-Acquisitions)(1) 26,878 24,336 23,376 Revenue (Total)(in R$ thousands) 178,140 162,957 129,008 Revenue (ex-Acquisitions) (in R$ thousands)(1) 175,540 162,957 129,008 Revenue Revenue (Total) (in R$ thousands) 2,895,692 2,511,018 2,037,889 Revenue (ex-Acquisitions) (in R$ thousands)(1) 2,832,049 2,511,018 2,037,889 (1) “Ex-Acquisitions” figures account for revenue recorded by our acquired companies in the last financial period presented (i.e., December 31, 2024) after the date of their acquisitions. For the year ended December 31, 2024, “ex-Acquisitions” excludes revenues from Unidom, (July to December 2024) which was acquired on July 1, 2024. For more information See “—Non-GAAP Financial Measures.” (2) Medical School Net Average Ticket (ex-Acquisitions) is calculated as Revenue (ex-Acquisitions) divided by the Average Total Students (ex-Acquisitions), divided by the number of months in a given period. Key Revenue Drivers — Continuing Education Segment As of and For the Year Ended December 31, 2024 2023 2022 CONTINUING EDUCATION SEGMENT Total Students (end of period) Residency Journey - Business to Physicians B2P (1) 16,381 12,170 19,986 Graduate Journey - Business to Physicians B2P 8,527 7,722 6,058 Other Courses - B2P and Business to Business Offerings 25,613 27,188 17,475 Total Students 50,521 47,080 43,519 Revenue Business to Physician - B2P (in R$ thousands) 237,379 215,504 170,887 Business to Business - B2B (in R$ thousands) 18,060 20,325 12,457 Revenue (Total) (in R$ thousands) 255,438 235,830 183,344 (1) “Content & Technology for Medical Education” which was previously reported in 2023 and 2022 in the Medical Practice Solutions, has been transferred to the Continuing Education segment under “Residency Journey - Business to Physicians B2P.” 94 Table of Contents Key Revenue Drivers — Medical Practice Solutions As of and For the Year Ended December 31, 2024 2023 2022 MEDICAL PRACTICE SOLUTIONS SEGMENT(1) Active Paying Users (end of period) Clinical Decision 161,283 153,541 137,767 Clinical Management 33,735 30,061 25,679 Total Active Paying Users (end of period) 195,018 183,602 163,446 Monthly Active Users (MAU) Total Monthly Active Users (MaU) - Medical Practice Solutions (1)(2) 238,343 247,702 167,286 Revenue (Total) (in R$ thousands) 161,787 140,282 115,446 Revenue - B2P (in R$ thousands) 135,278 119,847 98,244 Revenue - B2B (in R$ thousands) 26,509 20,435 17,202 (1) “Content & Technology for Medical Education” was transferred to the Continuing Education segment. (2) “Monthly Active Users (MaU)” represents the number of unique individuals that consumed digital services content in each one of our products in the last 30 days of a specific period Revenue For the Year Ended December 31, 2024 2024 Ex Acquisitions(1) 2023 % Change % Change Ex Acquisitions(1) (in R$ millions) Revenue (2) Undergrad 2,895.7 2,832.0 2,511.0 15.3% 12.8% Continuing Education 255.4 255.4 235.8 8.3% 8.3% Medical Practice Solutions 161.8 161.8 140.3 15.3% 15.3% Inter-segment eliminations (8.6) (8.6) (11.2) (23.4%) (23.4%) Total 3,304.3 3,240.7 2,875.9 14.9% 12.7% (1) For the year ended December 31, 2024, “ex-Acquisitions” excludes revenues from Unidom, (July to December 2024) which was acquired on July 1, 2024. For more information See “—Non-GAAP Financial Measures.” (2) In 2024, we restructured our reporting segments so that all products and services related to medical education, excluding medical undergraduate courses, are now managed and reported under the Continuing Education segment. Certain entities previously accounted for and reported under “Content and Technology for Medical Education” (Medcel, Além da Medicina, CardioPapers, and Medical Harbour) within the Medical Practice Solutions segment are now accounted for and reported under the Continuing Education segment. Accordingly, the information relating to the year ended December 31, 2023, has been retroactively adjusted for comparison purposes. The comparability of our revenues between periods was impacted by the acquisitions of DelRey in 2023 and Unidom in 2024 described under “Item 4B Business Overview—Our Recent Acquisitions.” 95 Table of Contents Exchange Rates The Brazilian foreign exchange system allows the purchase and sale of foreign currency and the international transfer of reais by any person or legal entity, regardless of the amount, subject to certain regulatory procedures. 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$4.8413 per US$1.00 on December 31, 2023, which reflected a 7.2% appreciation in the real against the U.S. dollar during 2023. On December 31, 2024, the exchange rate for the sale of U.S. dollars reported by the Central Bank was R$6.1923 per US$1.00, which reflected a 27.9% depreciation in the real against the U.S. dollar during 2024. As of April 24, 2025, the exchange rate for the sale of U.S. dollars as reported by the Central Bank was R$ 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. The Central Bank has intervened occasionally in the foreign exchange market to attempt to control instability in foreign exchange rates. We cannot predict whether the Central Bank or the Brazilian government will continue to allow the real to float freely or will intervene in the exchange rate market by re-implementing a currency band system or otherwise. The real may depreciate or appreciate substantially against the U.S. dollar in the future. Furthermore, Brazilian law provides that, whenever there is a serious imbalance in Brazil’s balance of payments or there are serious reasons to foresee a serious imbalance, temporary restrictions may be imposed on remittances of foreign capital abroad. We cannot assure you that the Brazilian government will not place restrictions on remittances of foreign capital abroad in the future. The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rates for the purchase of U.S. dollars expressed in Brazilian reais per U.S. dollar. The monthly and annual average rates are calculated by using the average of reported exchange rates by the Central Bank on each day during a monthly period and on the last day of each month during an annual period, respectively. Year Period-end Average(1) Low(2) High(3) 2020 5.196 5.158 4.021 5.937 2021 5.580 5.395 4.920 5.839 2022 5.218 5.165 4.618 5.704 2023 4.841 4.995 4.720 5.446 2024 6.192 5.392 4.854 6.199 Source: Central Bank. (1) Represents the average of the exchange rates on the closing of each day during the year. (2) Represents the minimum of the exchange rates on the closing of each day during the year. (3) Represents the maximum of the exchange rates on the closing of each day during the year. Month Period-end Average(1) Low(2) High(3) October 2024 5.7779 5.6241 5.4305 5.7801 November 2024 6.0535 5.8071 5.6624 6.0535 December 2024 6.1923 6.0970 5.9408 6.1991 January 2025 5.8301 6.0218 5.8301 6.2086 February 2025 5.8488 5.7656 5.6979 5.8687 March 2025 5.7422 5.7468 5.6628 5.8346 April 2025 (through April 24, 2025) 5.6738 5.8133 5.6067 6.0605 Source: Central Bank. (1) Represents the average of the exchange rates on the closing of each day during the month. (2) Represents the minimum of the exchange rates on the closing of each day during the month. (3) Represents the maximum of the exchange rates on the closing of each day during the month. 96 Table of Contents Significant Factors Affecting Our Results of Operations We believe that our results of operations and financial performance will be driven by the following trends and factors: Regulatory Environment and “Mais Médicos” Program Our business is significantly influenced by the regulatory environment of the educational industry in Brazil. We are subject to various federal laws and extensive government regulations by MEC, CNE, INEP, FIES and CONAES, among others. In particular, medical education in Brazil is subject to regulations that aim to control the supply of medical school seats across Brazil and their geographic allocation including, but not limited to the “Mais Médicos” Law, which created the “Mais Médicos” program, whose main objectives include addressing the provision of doctors for primary care in municipalities, strengthen health care infrastructure and allocate medical workforce to vulnerable areas. With the increase in annual offerings through “Mais Médicos,” 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. However, on April 5, 2023, MEC issued Ordinance No. 650/2023, which revoked the suspension under Ordinance No. 328/18 and set new rules for the opening of new medicine courses. In particular, MEC will be required to conduct a public call for new courses, i.e., through the Mais Médicos program pursuant to the “Mais Médicos” Law, and subject any such courses to the prior review by the Interministerial Commission for Health Education Management (Comissão Interministerial de Gestão da Educação na Saúde). On October 4, 2023, the Ministry of Education, through SERES, exercising its legal powers and based on Article 3 of the “Mais Médicos” Law, announced the public call and set the rules, procedures, decision-making standards and the calendar in connection with the fulfillment of medicine course vacancies, this will result in the creation of new medical education courses or medicine course vacancies, which will in turn increase competition. As a result, we may be required to reduce our tuition fees or increase our operating expenses (including our costs per student) in order to retain or attract students or to pursue new market opportunities and reduce our ability to fill all our medical school seats capacity. For further information, see “Item 4. Information on the Company—Business Overview—Regulatory Overview,” “Item 3. Key Information—D. Risk Factors—Certain Risks Relating to Our Business and Industry—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,” “Item 3. Key Information—D. Risk Factors—Certain Risks Relating to Our Business and Industry—We are subject to supervision by MEC and, consequently, may suffer sanctions as a result of non-compliance with any regulatory requirements” and “Item 3. Key Information—D. Risk Factors—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.” Scholarships, Student Financing and Tax Benefits A large number of our students fund their tuition fees through financing from FIES. In addition, we participate in the PROUNI scholarship program, and we benefit from tax benefits in return. For more information on our students enrolled in these programs, see “Item 4. Information on the Company—Business Overview—Regulatory Overview—Financing Alternatives for Students: Incentive Programs—University for All Program” “Regulatory Overview—Financing Alternatives for Students: Incentive Programs—Student Financing Program (FIES),” “Item 3. Key Information—D. Risk Factors—Certain Risks Relating to Our Business and Industry—Changes to the rules or delays or suspension of tuition payments made through FIES may adversely affect our cash flows and our business,” and “Item 3. Key Information—D. Risk Factors—Certain Risks Relating to Our Business and Industry—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.” In addition to PROUNI and FIES, Afya participates in private financing programs through external partners (Bradesco, BNB, Sicoob, CashMe and Alume) for undergraduate students. Moreover, in 2024 Afya launched its own financing program for some of its units to support medical students who were not eligible for other types of financing. 97 Table of Contents Brazilian Macroeconomic Environment All of our operations are located in Brazil. As a result, our revenues and profitability are affected by political and economic developments in Brazil and the effect that these factors have on the availability of credit, disposable income, employment rates and average wages in Brazil. Our operations, and the industry in general, may be affected changes in economic conditions. Brazil is the largest economy in Latin America, as measured by gross domestic product, or GDP. The following table shows data for real GDP, inflation and interest rates in Brazil and the U.S. dollar/real exchange rate at the dates and for the periods indicated. For the Year Ended December 31, 2024 2023 2022 Real growth (contraction) in gross domestic product 3.4% 2.9% 2.9% Inflation (IGP-M)(1) 6.5% (3.2)% 5.5% Inflation (IPCA)(2) 4.8% 4.6% 5.8% Long-term interest rates—TJLP (average)(3) 7.4% 5.7% 7.2% CDI interest rate(4) 12.15% 13.2% 13.7% Period-end exchange rate—reais per US$1.00 6.192 4.841 5.218 Average exchange rate—reais per US$1.00(5) 5.392 4.995 5.165 Appreciation (depreciation) of the real vs. US$ in the period(6) (27.9)% 7.2% 6.5% Unemployment rate(7) 6.2% 7.4% 7.9% Source: FGV, IBGE, Central Bank and Bloomberg. (1) Inflation (IGP-M) is the general market price index measured by the FGV. (2) Inflation (IPCA) is a broad consumer price index measured by the IBGE. (3) TJLP is the Brazilian long-term interest rate (average of monthly rates for the period). (4) The CDI (Certificado de Depósito Interbancário) interest rate is an average of interbank overnight rates in Brazil. (5) Average of the exchange rate on each business day of the year. (6) Comparing the US$ closing selling exchange rate as reported by the Central Bank at the end of the period’s last day with the day immediately prior to the first day of the period discussed. (7) Average unemployment rate for the year as measured by the IBGE. Inflation directly affects our current operating costs and expenses, adjusted by reference to indexes that reflect the inflation rate such as the IGP-M or IPCA, primarily as a result of annual adjustments to faculty member and employee salaries. Historically, inflation has been more than offset by the tuition fees we charge our students. Our financial performance is also marginally tied to fluctuations in interest rates, such as the CDI rate, because such fluctuations affect the value of our financial investments. We are also exposed to fluctuations in interest rates on our accounts payable to selling shareholders and loans and financing which are indexed to the CDI, IPCA and SELIC. Pillar Two Global Minimum Tax 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 that fall 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. 98 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%. As a result, this new regulation is expected to impact our effective tax rate and may have an adverse effect on our results of operations. 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. 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. Acquisitions We may face significant challenges in the process of integrating the operations of our acquired companies. If we are not able to manage these integrations effectively, our results of operations may be affected. See “Item 3. Key Information—D. Risk Factors—Certain Risks Relating to Our Business and Industry—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” and “Item 4. Information on the Company—B. Business Overview—Our Recent Acquisitions.” Business Segments Our three operating segments are as follows: · Undergrad, which provides educational services through undergraduate courses related to medicine, other health sciences and other non-health-related undergraduate programs; · Continuing Education, which includes our medical education programs (including preparatory courses for residency and specialization tests, as well as other medical capabilities), medical specializations and graduate courses in medicine, each offered through digital and in-person means; and · Medical Practice Solutions (previously denominated Digital Services), which provides digital solutions (i) to assist physicians with clinical decision, clinical management and doctor-patient relationships and (ii) to assist other healthcare players with access, demand and efficiency for their businesses. Segment information is presented consistently with the internal reports provided to our chief executive officer, who is our chief operating decision maker (CODM) and is responsible for allocating resources, assessing the performance of our operating segments, and making our strategic decisions. No operating segments have been aggregated to form the above reportable operating segments. There is only one geographic region and the results are monitored and evaluated as a single business. In 2024, in connection with a restructuring project occurred across the Continuing Education and Medical Practice Solutions segments, the Pillar 1 entities (Medcel, Além da Medicina, CardioPapers and Medical Harbour), which offer residency preparation programs, specialization test preparation and other medical capabilities, were moved from the Medical Practice Solutions segment into the Continuing Education segment. This strategic project integrated all Continuing Education capabilities into a single structure that will be responsible for services that address physicians education and continuous needs from graduation throughout their careers, while exploring the potential synergies among those operations. 99 Table of Contents This restructuring project took place in 2024 and represents how the segments are monitored internally. Due to changes in operating segments, the segment information as of December 31, 2023 and for the years ended December 31, 2023 and 2022 has been retroactively adjusted for comparison purposes. Description of Principal Line Items Revenue Our revenue consists primarily of tuition fees charged for medical courses. We also generate revenue from tuition fees for other undergraduate and graduate courses, student fees, certain education-related activities, digital education content and subscription of digital services. Cost of services Cost of services includes expenses related to payroll, rent, hospital agreements, utilities and depreciation and amortization. Cost of services amounted to 36.8%, 38.6% and 36.9% of our revenue in the years ended December 31, 2024, 2023 and 2022, respectively. Operating expenses Our operating expenses includes expenses for personnel, general and administrative, management and officer compensation, marketing and other income (expenses), net. Personnel. Personnel expenses consist of wages, overtime, benefits (meal vouchers, transportation vouchers and medical and dental insurance, among others), profit sharing, social contribution and payroll taxes. In Brazil, social contribution and payroll taxes consist of the Brazilian Social Security Institute (Instituto Nacional do Seguro Social) contribution, or INSS, and the Brazilian Unemployment Severance Fund (Fundo de Garantia do Tempo de Serviço) contribution, or FGTS. Selling, general and administrative. Selling, general and administrative expenses mainly consist of: (i) building infrastructure expenses, such as leases and property maintenance; (ii) utilities expenses; (iii) expenses for computer system maintenance and office automation, such as software licenses, as well as for integrated accounting, treasury, financial planning and cost management systems; (iv) sales and marketing expenses; (v) allowance for expected credit losses; and (vi) amounts paid for professional services, such as consultants, auditors and outside counsel. Other income (expenses), net. Other income (expenses), net, consists mainly of miscellaneous income and/or expense items. Finance result Our finance result includes finance income and finance expenses. Our finance income consists mainly of income from interest earned on financial investments and interest received on late payments from students. Our finance expenses consist mainly of interest expenses from accounts payable to selling shareholders, loans and financing, lease liabilities, and banking fees. We also have cash and cash equivalents denominated in U.S. dollars, and accordingly, we have foreign exchange gain or losses from the changes in U.S. dollars against the Brazilian real. Income taxes expenses Income taxes expenses includes current income taxes and social contribution. Consolidated Results of Operations Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 The following table sets forth our consolidated income statement data for the years ended December 31, 2024 and 2023: 100 Table of Contents For the Year Ended December 31, 2024 2023 Change (%) (in R$ millions, except for percentages) Revenue 3,304.3 2,875.9 14.9% Cost of services (1,215.6) (1,109.8) 9.5% Gross profit 2,088.7 1,766.1 18.3% Selling, general and administrative expenses (1,069.3) (1,014.7) 5.4% Other income (expenses), net (7.3) 15.6 n.m. Operating income 1,012.1 767.1 31.9% Finance income 111.3 110.6 0.6% Finance expenses (458.7) (457.6) 0.2% Finance result (347.5) (347.0) 0.1% Share of income of associate 11.7 9.5 23.5% Income before income taxes 676.4 429.6 57.4% Income taxes expenses (27.5) (24.2) 0.1% Net income 648.9 405.4 60.1% n.m. = not meaningful Revenue Revenue for the year ended December 31, 2024 was R$3,304.3 million, an increase of R$428.4 million, or 14.9%, from R$2,875.9 million for the year ended December 31, 2023. The increase in our revenue was primarily affected by the following: · In our Undergrad segment, revenue for the year ended December 31, 2024 was R$2,895.7 million, an increase of 15.3%, or R$384.7 million, from R$2,511.0 million for the year ended December 31, 2023. This increase was primarily attributable to: (i) an increase of 13.8% in our total number of operating seats, from 3,113 seats in 2023 to 3,543 seats in 2024, as a result of the Unidom acquisition; and (ii) increase of 4.6% in the medical school net average ticket, from an average ticket of R$8,460 in 2023 to R$8,849 in 2024; · In our Continuing Education segment, revenue for the year ended December 31, 2024 was R$255.4 million, an increase of 8.3%, or R$19.6 million, from R$235.8 million for the year ended December 31, 2023. This increase was primarily attributable to a 7.3% increase in average total students from 47,080 paying students in 2023 to 50,521 paying students in 2024; and · In our Medical Practice Solutions segment, revenue for the year ended December 31, 2024 was R$161.8 million, an increase of 15.3%, or R$21.5 million, from R$140.3 million for the year ended December 31, 2023. This increase was primarily attributable to an increase of 6.2% in Medical Practice Solutions total active paying users from 183,602 active paying users in 2023 to 195,018 active paying users in 2024, and as a result of price adjustments. Cost of services Cost of services for the year ended December 31, 2024 was R$1,215.6 million, an increase of R$105.8 million, or 9.5%, from R$1,109.8 million for the year ended December 31, 2023. As a percentage of revenue, our cost of services decreased to 36.8% for the year ended December 31, 2024, compared to 38.6% for the year ended December 31, 2023. The increase in our cost of services was primarily affected by the following: · In our Undergrad segment, cost of services for the year ended December 31, 2024 was R$1,086.1 million, an increase of R$88.1 million, or 8.8%, from R$998.0 million for the year ended December 31, 2023. This increase was primarily attributable to: (i) the consolidation of the results of operations for the year ended December 31, 2024 of Unidom in 2024, resulting in an increase of R$16 million in our Undergrad segment’s cost of services; (ii) an increase of R$6.8 million applied to salaries and wages, both related to increase in the number of personnel and yearly readjustment of wages; and (iii) other cost-related effects, such as an increase in costs from hospital and medical agreements and facilities and utilities; 101 Table of Contents · In our Continuing Education segment, cost of services for the year ended December 31, 2024 was R$96.2 million, an increase of R$4.3 million, or 4.6%, from R$91.9 million for the year ended December 31, 2023. This increase was primarily attributable to (i) an increase in costs associated with the opening of new IPEMED units in 2024, and (ii) a general increase in expenses with salaries across our operating units as a result of an increase in the number of personnel and annual readjustment of wages; and · In our Medical Practice Solutions segment, cost of services for the year ended December 31, 2024 was R$41.9 million, an increase of R$10.8 million, or 34.6%, from R$31.1 million for the year ended December 31, 2023. This increase was primarily attributable to an increase in costs with consultancy and third-party services in the amount of R$7.8 million, mostly as a result of the hiring of consultancy services for projects aiming to increase the efficiency of operations of companies in our Medical Practice Solutions segment. Gross profit As a result of the foregoing, gross profit for the year ended December 31, 2024 was R$2,088.7 million, an increase of R$322.6 million, or 18.3%, from R$1,766.1 million for the year ended December 31, 2023. Our gross profit by segment was the following: · In our Undergrad segment, gross profit for the year ended December 31, 2024 was R$1,809.6 million, an increase of R$296.6 million, or 19.6%, from R$1,513.0 million for the year ended December 31, 2023; · In our Continuing Education segment, gross profit for the year ended December 31, 2024 was R$159.3 million, an increase of R$15.3 million, or 10.7%, from R$143.9 million for the year ended December 31, 2023; and · In our Medical Practice Solutions segment, gross profit for the year ended December 31, 2024 was R$119.9 million, an increase of R$10.7 million, or 9.8%, from R$109.1 million for the year ended December 31, 2023. Selling, general and administrative expenses Selling, general and administrative expenses for the year ended December 31, 2024 was R$1,069.3 million, an increase of R$54.6 million, or 5.4%, from R$1,014.7 million for the year ended December 31, 2023. This increase was primarily attributable to: (i) an increase of R$28.5 million in payroll expenses as a result of an increase in the total number of personnel and yearly readjustment of wages, (ii) an increase of R$23.6 million in maintenance expenses, mostly related to periodic conservation procedures on equipment and furniture of educational institutions, and (iii) an increase of R$13.7 million in sales and marketing expenses, mostly related to rebranding efforts, marketing campaigns and advertising expenses, which was partially offset by a reduction of R$16.6 million in consulting fees. Other income (expenses), net Other expense, net for the year ended December 31, 2024 was R$7.3 million, a variation of R$22.9 million from other income, net of R$15.6 million in the year ended December 31, 2023, which was primarily due to the settlement in 2023 of Unigranrio’s tax proceeding in respect to ISS (tax on services) with the municipality of Rio de Janeiro. Operating income For the reasons discussed above, operating income for the year ended December 31, 2024 was R$1,012.1 million, an increase of R$245.0 million, or 31.9%, from R$767.1 million for the year ended December 31, 2023. Finance result Finance result for the year ended December 31, 2024 was a net finance expense of R$347.5 million, compared to a net finance expense of R$347.0 million for the year ended December 31, 2023, for the reasons described below. 102 Table of Contents Finance income. Finance income for the year ended December 31, 2024 was R$111.3 million, remaining stable year over year when compared to R$110.6 million for the year ended December 31, 2023. Finance expenses. Finance expenses for the year ended December 31, 2024 was R$458.7 million, remaining stable year over year when compared to R$457.6 million for the year ended December 31, 2023. Income before income taxes As a result of the foregoing, income before income taxes for the year ended December 31, 2024 was R$676.4 million, an increase of R$246.8 million, or 57.4%, from R$429.6 million for the year ended December 31, 2023. Income taxes expenses Income taxes expenses for the year ended December 31, 2024 was R$27.5 million, remaining stable year over year when compared to R$24.2 million for the year ended December 31, 2023, and the effective tax rate decreased from 5.62% for the year ended December 31, 2023, to 4.10% for the year ended December 31, 2024. This decrease in our effective tax rate was primarily attributable to the effects of: (i) an increase in the amount of PROUNI fiscal incentives received, from R$310.0 million in 2023 to R$379.7 million in 2024. Net income As a result of the foregoing, our net income for the year ended December 31, 2024 was R$648.9 million, an increase of R$243.5 million, or 60.1%, from R$405.4 million for the year ended December 31, 2023. Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 The following table sets forth our consolidated income statement data for the years ended December 31, 2023 and 2022: For the Year Ended December 31, 2023 2022 Change (%) (in R$ millions, except for percentages) Revenue 2,875.9 2,329.1 23.5% Cost of services (1,109.8) (859.6) 29.1% Gross profit 1,766.1 1,469.5 20.2% Selling, general and administrative expenses (1,014.7) (798.2) 27.1% Other income (expenses), net 15.6 (7.3) n.m. Operating income 767.1 664.1 15.5% Finance income 110.6 102.0 8.4% Finance expenses (457.6) (349.9) 30.8% Finance result (347.0) (247.9) 40.0% Share of income of associate 9.5 12.2 (22.1)% Income before income taxes 429.6 428.4 0.3% Income taxes expenses (24.2) (35.7) (32.2)% Net income 405.4 392.8 3.2% n.m. = not meaningful Revenue Revenue for the year ended December 31, 2023 was R$2,875.9 million, an increase of R$546.8 million, or 23.5%, from R$2,329.1 million for the year ended December 31, 2022. The increase in our revenue was primarily affected by the following: · In our Undergrad segment, revenue for the year ended December 31, 2023 was R$2,511.0 million, an increase of 23.2%, or R$473.1 million, from R$2,037.9 million for the year ended December 31, 2022. This increase was primarily attributable to: (i) an increase of 12.3% in our total number of operating seats, from 2,773 seats in 2022 to 3,113 seats in 2023, as a result of the DelRey acquisition; and (ii) increase of 6.1% in the net average ticket of Medical programs, from an average ticket of R$7,973 in 2022 compared to R$8,460 in 2023; 103 Table of Contents · In our Continuing Education segment, revenue for the year ended December 31, 2023 was R$235.8 million, an increase of 28.6%, or R$52.5 million, from R$183.3 million for the year ended December 31, 2022. This increase was primarily attributable to an 8.2% increase in total students (from 43,519 paying students in 2022 compared to 47,080 paying students in 2023); and · In our Medical Practice Solutions segment, revenue for the year ended December 31, 2023 was R$140.3 million, an increase of 21.5%, or R$24.8 million, from R$115.5 million for the year ended December 31, 2022. This increase was primarily attributable to an increase of 12.3% in Medical Practice Solutions total active paying users (from 163,446 active paying users in 2022 to 183,602 active paying users in 2023). Cost of services Cost of services for the year ended December 31, 2023 was R$1,109.8 million, an increase of R$250.2 million, or 29.1%, from R$859.6 million for the year ended December 31, 2022. As a percentage of revenue, our cost of services increased to 38.6% for the year ended December 31, 2023, compared to 36.9% for the year ended December 31, 2022. The increase in our cost of services was primarily affected by the following: · In our Undergrad segment, cost of services for the year ended December 31, 2023 was R$998.0 million, an increase of R$234.8 million, or 30.8%, from R$763.2 million for the year ended December 31, 2022. This increase was primarily attributable to: (i) the consolidation of the results of operations for the year ended December 31, 2023 of DelRey in 2023, resulting in an increase of R$106.9 million in our Undergrad segment’s cost of services; (ii) an increase of R$57.9 million applied to salaries and wages, both related to increase in the number of personnel and yearly readjustment of wages; and (iii) other cost-related effects, such as an increase in costs from hospital and medical agreements and facilities and utilities; · In our Continuing Education segment, cost of services for the year ended December 31, 2023 was R$91.9 million, an increase of R$14.5 million, or 18.7%, from R$77.4 million for the year ended December 31, 2022. This increase was primarily attributable to (i) an increase in costs associated with the opening of new IPEMED units in 2023, and (ii) a general increase in expenses with salaries across our operating units as a result of an increase in the number of personnel and annual readjustment of wages; and · In our Medical Practice Solutions segment, cost of services for the year ended December 31, 2023 was R$31.1 million, an increase of R$4.5 million, or 16.9%, from R$26.6 million for the year ended December 31, 2022. This increase was primarily attributable to an increase in costs with consultancy and third-party services, mostly as a result of the hiring of consultancy services for projects aiming to increase the efficiency of operations of companies in our Medical Practice Solutions segment. Gross profit As a result of the foregoing, gross profit for the year ended December 31, 2023 was R$1,766.1 million, an increase of R$296,6 million, or 20.2%, from R$1,469.5 million for the year ended December 31, 2022. Our gross profit by segment was the following: · In our Undergrad segment, gross profit for the year ended December 31, 2023 was R$1,513.0 million, an increase of R$238.3 million, or 18.7%, from R$1,274.7 million for the year ended December 31, 2022; · In our Continuing Education segment, gross profit for the year ended December 31, 2023 was R$143.9 million, an increase of R$38.0 million, or 35.9%, from R$105.9 million for the year ended December 31, 2022; and · In our Medical Practice Solutions segment, gross profit for the year ended December 31, 2023 was R$109.1 million, an increase of R$20.2 million, or 22.7%, from R$88.9 million for the year ended December 31, 2022. 104 Table of Contents Selling, general and administrative expenses Selling, general and administrative expenses for the year ended December 31, 2023 was R$1,014.7 million, an increase of R$216.5 million, or 27.1%, from R$798.2 million for the year ended December 31, 2022. This increase was primarily attributable to: (i) the consolidation of the results of operations of DelRey in 2023, resulting in an increase of R$38.3 million in our selling, general and administrative expenses in 2023; (ii) an increase of R$25.9 million in sales and marketing expenses, mostly related to rebranding efforts, marketing campaigns and advertising expenses; (iii) an increase of R$29.4 million in maintenance expenses, mostly related to periodic conservation procedures on equipment and furniture of educational institutions; and (iv) an increase of R$76.5 million in payroll expenses as a result of an in the total number of personnel and yearly readjustment of wages. Other income (expenses), net Other income, net for the year ended December 31, 2023 was R$15.6 million, a variation of R$22.9 million from other expenses, net of R$7.3 million in the year ended December 31, 2022, which was primarily due to the tax amnesty program on interest and penalties entered into by Unigranrio in order to settle a tax proceeding in respect to ISS (city tax on services) with the municipality of Rio de Janeiro. Operating income For the reasons discussed above, operating income for the year ended December 31, 2023 was R$767.1 million, an increase of R$103.1 million, or 15.5%, from R$664.0 million for the year ended December 31, 2022. Finance result Finance result for the year ended December 31, 2023 was a net finance expense of R$347.0 million, compared to a net finance expense of R$247.9 million for the year ended December 31, 2022, for the reasons described below. Finance income Finance income for the year ended December 31, 2023 was R$110.6 million, an increase of R$8.6 million, from R$102.0 million for the year ended December 31, 2022. This increase was primarily attributable to (i) an increase in interest received of R$6.3 million, and (ii) an increase in income from financial investments of R$5.9 million. Finance expenses Finance expenses for the year ended December 31, 2023 was R$457.6 million, an increase of R$107,7 million, from R$349.9 million for the year ended December 31, 2022. This increase was primarily attributable to (i) an increase in interest expenses on lease liabilities of R$12.3 million, as a result of the companies acquired and new lease agreements in the period (including those associated with the acquired company); and (ii) an increase in interest expense of R$85.4 million, mainly as a result of debentures issued in December 2022. Income before income taxes As a result of the foregoing, income before income taxes for the year ended December 31, 2023 was R$429.6 million, an increase of R$1.2 million, or 0.3%, from R$428.4 million for the year ended December 31, 2022. Income taxes expenses Income taxes expenses for the year ended December 31, 2023 was R$24.2 million, a decrease of R$11.5 million, from R$35.7 million for the year ended December 31, 2022, and the effective tax rate decreased from 8.33% for the year ended December 31, 2022, to 5.62% for the year ended December 31, 2023. This decrease in our effective tax rate was primarily attributable to the effects of: (i) an increase in the amount of PROUNI fiscal incentives received, from R$270.1 million in 2022 to R$310.0 million in 2023; and (ii) an increase in our unrecognized deferred tax assets from R$117.4 million in 2022 to R$154.1 million in 2023. 105 Table of Contents Net income As a result of the foregoing, our net income for the year ended December 31, 2023 was R$405.4 million, an increase of R$12.6 million, or 3.2%, from R$392.8 million for the year ended December 31, 2022. Critical Accounting Estimates and Assumptions Our consolidated financial statements are prepared in conformity with IFRS. In preparing our audited consolidated financial statements, we make assumptions, judgments and estimates that can have a significant impact on amounts reported in our consolidated financial statements. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. We regularly reevaluate our assumptions, judgments and estimates. Our material accounting policies are described in note 2 and our critical accounting estimates and assumptions are described in note 2.5 to our audited consolidated financial statements included elsewhere in this annual report. Recent Accounting Pronouncements The new and amended standards and interpretations that were applied for the first time in 2024 did not have a significant impact on our consolidated financial statements. We have not adopted new and amended standards and interpretations that are not yet effective. B. Liquidity and Capital Resources As of December 31, 2024, we had R$911.0 million in cash and cash equivalents. We believe that our current available cash and cash equivalents and the cash flows from our operating activities will be sufficient to meet our working capital requirements and capital expenditures in the ordinary course of business for the next 12 months. Future cash needs in the short and long term will be funded by our operating cash flow and from funds raised in the debt or equity capital markets. The following table shows the cash flows for the years ended December 31, 2024, 2023 and 2022: For the Year Ended December 31, 2024 2023 2022 (in R$ millions) Cash Flow Data Net cash flows from operating activities 1,432.7 1,043.6 843.9 Net cash flows used in investing activities (1,091.6) (1,143.0) (591.5) Net cash flows (used in) from financing activities 24.0 (439.9) 92.9 Operating Activities We had net cash flows from operating activities of R$1,432.7 million in 2024, an increase of R$389.1 million, or 37.3%, as compared to R$1,043.6 million in 2023, mainly due to: the acquisition of Unidom in July 2024 which increased our medical school seats approved, which led to an increase in our operating results, partially offset by a reduction of R$40 million in working capital balances and a reduction of R$24.6 million in income taxes paid. Investing Activities We had net cash flows used in investing activities of R$1,091.6 million in 2024, as compared to net cash flows used in investing activities of R$1,143.0 million in 2023 mainly as a result of a decrease of R$187.4 million in the acquisition of subsidiaries, net of cash acquired, from R$815.0 million in 2023 to R$627.6 million in 2024, which was partially offset by an increase of R$128.7 million in cash used in the acquisition of intangibles assets from R$127.0 million in 2023 to R$255.7 million in 2024. Financing Activities We had net cash flows generated in financing activities of R$24.0 million in 2024, as compared to a net cash used from financing activities of R$439.9 million in 2023, mainly as a result of an increase from a new loan granted by the IFC of R$500 million in 2024. The payments of principal and interest of loans and financing and lease liabilities increased R$34.8 million in 2024 compared to 2023. 106 Table of Contents For a discussion of changes in our consolidated cash flows in the year ended December 31, 2023 compared to the year ended December 31, 2022, see our annual report on Form 20-F for the fiscal year ended December 31, 2023, filed with the SEC on April 26, 2024. Liquidity Our management has responsibility for monitoring liquidity risk. In order to achieve the Company’s objective, our management regularly reviews the risk and maintains appropriate reserves, including bank credit facilities with first tier financial institutions. Our management also continuously monitors projected and actual cash flows and the combination of the maturity profiles of the financial assets and liabilities. The main requirements for financial resources used by the Company arise from the need to make payments for suppliers, operating expenses, labor and social obligations, loans and financing and accounts payable to selling shareholders. Our total liquidity, which we calculate as the sum of cash and cash equivalents, increased by 64.7%, from R$553.0 million as of December 31, 2023 to R$911.0 million as of December 31, 2024. Indebtedness As of December 31, 2024, we had outstanding debt, comprised of our loans and financings, in the aggregate amount of R$2,195.2 million. The following table summarizes our loans and financings as of December 31, 2024 and 2023: Financial institution Currency Interest rate Maturity 2024 2023 (in R$ thousands) Banco Itaú Unibanco S.A. Brazilian real CDI + 1.90% p.y. 2025 309,496 412,880 FINEP Brazilian real TJLP p.y. 2027 8,209 11,193 Banco Itaú Unibanco S.A. Brazilian real CDI + 1.75% p.y. 2024 - 21,405 Softbank Brazilian real 6.5% p.y. 2026 845,492 825,957 Debentures Brazilian real CDI + 1.80% p.y. 2028 526,946 529,340 IFC Brazilian real CDI + 1.20% p.y. 2030 505,018 - Total Loans and Financing 2,195,161 1,800,775 Current 363,554 179,252 Non-current 1,831,607 1,621,523 Loans On October 1, 2020 (as amended on September 28, 2022), Afya Brazil entered into a loan with Banco Itaú Unibanco S.A. in the principal amount of R$500.0 million. The loan incurs interest at the CDI rate plus 1.62% per year, through September 28, 2022, and 1.90% per year from September 28, 2022. The loan is repayable in three installments in October 2023, April 2024 and October 2025. The loan is subject to certain obligations including financial covenants. Under the terms of the loan, we are required to maintain our EBITDA at certain levels so that our EBITDA is not reduced by 50% or more year over year during the term of the loan. On July 23, 2019, Medcel entered into a loan of R$16.2 million with Financiadora de Estudos e Projetos (“FINEP”), a governmental agency focused on financing investments on R&D, which has an interest rate based on TJLP (Long term interest rate), and maturity in 2027. The first and second tranches of R$6.7 million and R$4.1 million, respectively, were drawn down in October 2019 and December 2020, respectively, in order to develop the Medical web series and other digital content. There are no financial covenants under this agreement. The total loan balance is guaranteed by a bank warranty. On October 28, 2020, UnifipMoc entered into a loan with Banco Itaú Unibanco S.A. in the amount of R$30.0 million. On June 30, 2021 this agreement was amended and so that interest would be adjusted by the CDI rate plus an interest rate of 1.75% per year. The loan was fully paid in three installments in July 2023, January 2024 and July 2024. On August 7, 2024, Afya Brazil and certain other guarantors party thereto, including Afya Limited, entered into a loan agreement with the International Finance Corporation (IFC) in the principal amount of R$500.0 million. This financing represents IFC’s first sustainability-linked loan based on social targets in the education sector and provides for a potential interest rate reduction as Afya Brazil meets predefined performance targets in selected social key performance indicators ("Sustainability Performance Targets"). The loan incurs interest at the Brazilian CDI rate plus a spread of 1.2% per year, which may be reduced by up to 0.15% if the Sustainability Performance Targets are achieved. The loan is repayable in seven equal semi-annual installments starting in April 2027. The Sustainability Performance Targets are defined based on two key performance indicators (KPIs), each capable of reducing the spread by 0.075% if met. KPI 1 relates to the number of free medical consultations delivered by students, reinforcing Afya Brazil’s commitment to expanding access to healthcare in underserved communities. KPI 2 is linked to the academic quality of Afya Brazil’s medical courses and is measured by the percentage of courses that achieve a quality grade of 4 or 5 in the Brazilian Ministry of Education’s evaluation system. 107 Table of Contents The loan is subject to certain obligations including financial covenants. Under the terms of the loan, we are required to: (i) maintain an Adjusted Net Debt to EBITDA ratio of not more than 3.0x, on a consolidated basis, as of the last day of each quarter until maturity. Adjusted Net Debt for purposes of the agreement means, as of any date of calculation, (a) the aggregate amount of our consolidated financial debt (whether classified as current or not current liabilities), including accounts payable with respect to acquisitions in which the seller finances a portion of the sale price owed by us, excluding, for the avoidance of doubt, lease liabilities and without double counting, any financial debt with affiliates, minus (b) Afya Brazil’s cash and cash equivalents (including earnings thereon) and the aggregate outstanding balance of the Series A perpetual convertible preferred shares calculated on the basis of the most recently quarterly financial statements (ii) ensure that as of June 30th and December 31st of each financial year, the Aggregate EBITDA Amount for the relevant period is at least equal to the 60% of our consolidated EBITDA. Aggregate EBITDA Amount for purposes of the agreement means the sum of (a) Afya Brazil’s unconsolidated EBITDA for the relevant period, plus (b) the unconsolidated EBITDA of each of the guarantors under the agreement, for the relevant period, plus (c) any cash received by Afya Brazil, during the relevant period, as cash dividend (or capital reduction), from any entity other than the guarantors. Debentures On December 16, 2022, Afya Brazil issued 500,000 simple, non-convertible, unsecured debentures in a single series, each with a par value of R$1.00, totaling an aggregate amount of R$500.0 million, in a public distribution with restricted placement efforts in the Brazilian market, under the terms of the Brazilian Securities Commission (Comissão de Valores Mobiliários) Rule No. 476. We expect to use the proceeds of the offering for general corporate purposes, strengthening our cash position, and extending our debt maturity profile. The debentures were issued with a maturity date of January 15, 2028, with the principal to be amortized in two equal installments payable on January 15, 2027 and January 15, 2028, corresponding to the fourth and fifth years of the transaction, respectively. The debentures bear interest at 100% of the CDI rate plus 1.80% per year, payable semi-annually on January 15 and July 15 of each year, until the maturity date. The debentures are subject to certain obligations including financial covenants. Under the terms of the debentures, we are required to maintain a net debt (excluding our Series A perpetual convertible preferred shares and our lease liabilities) to Adjusted EBITDA ratio of below or equal to 3.0x, as of the end of each fiscal year, until the maturity date. Adjusted EBITDA considers, for purposes of this ratio, is calculated as net income plus (i) income taxes expenses, (ii) net financial result (excluding interest expenses on lease liabilities), (iii) depreciation and amortization expenses (excluding right-of-use depreciation expenses), (iv) share-based compensation expenses, (v) share of income of associate, (vi) interest received and (vii) non-recurring expenses. As of December 31, 2024, we were in compliance with all obligations set forth under the terms of the debentures. Series A Perpetual Convertible Shares On April 26, 2021, we issued and sold 150,000 perpetual convertible preferred shares designated as Series A perpetual convertible preferred shares, with a par value of U.S.$0.00005 per share, for US$150.0 million, equivalent to R$821.8 million, on the issuance date. The Series A perpetual convertible preferred shares is a class of equity security that ranks senior to the common shares with respect to dividend rights or rights upon liquidation. Each Series A perpetual convertible preferred share is entitled to a dividend of 6.5% per annum and is convertible, at the holder’s discretion, into our Class A common shares at an initial conversion price of US$25.35. We may require mandatory conversion of any or all of the Series A perpetual convertible preferred shares at any time on or after the three-year anniversary of the original issuance date if certain conditions set forth in the certificate of designation are met (if for 20 out of 30 consecutive trading days prior, Afya’s stock price is equal or above 150% of the conversion rate). We may also redeem any or all of the Series A perpetual convertible preferred shares for cash, common shares or a combination thereof at its election, at any time on or after the seven-year anniversary of the original issuance date as determined in the certificate of designation at 105% premium. On or after the five-year anniversary of the original issuance date, the holders of the Series A perpetual convertible preferred shares shall have the right to redeem all of the outstanding Series A perpetual convertible preferred shares for cash, our common shares or a combination thereof (at our election, subject to certain conditions) to be determined in the certificate of designation at 105% premium. Upon the occurrence of a change of control, the holders will have the right to redeem their Series A perpetual convertible preferred shares for cash at a price set forth in the certificate of designation. The Series A perpetual convertible preferred shares will be entitled to the same voting rights as the common shares only when converted into common shares. 108 Table of Contents We determined that the Series A perpetual convertible preferred shares should be classified as a financial liability at amortized cost upon their issuance since they are redeemable primarily according to the decision of the holder and there is a contractual obligation to deliver assets (cash, common shares or a combination thereof) that could not be avoided by us in an event of redemption. The financial liability is denominated in Brazilian Reais and thus not subject to foreign exchange changes. In addition, as the entire instrument is classified as a liability, the embedded put option to redeem the Series A perpetual convertible preferred shares for cash is an embedded derivative. The embedded derivative will not be treated separately once the exercise price of the option is closely related to the host contract. For further information on our loans and financing, see note 12.2.1(d) to the audited consolidated financial statements, included elsewhere in this annual report. Share Buyback Program For further information on our share buyback program, see note 15 to the audited consolidated financial statements, included elsewhere in this annual report, Exhibit 2.1, “Description of Securities Registered Under Section 12 of the Exchange Act - Share Repurchases” and “Item 16E. Purchases Of Equity Securities By The Issuer And Affiliated Purchasers.” Tabular Disclosure of Contractual Obligations The following is a summary of our contractual obligations, based on contractual undiscounted amounts, as of December 31, 2024: Payments Due by Period as of December 31, 2024 Total Less than 1 year 1 — 3 years 3 — 5 years More than 5 years (in R$ millions) Trade payables 128.1 128.1 - - - Loans and financing (1) 2,714.3 526.7 1,494.3 617.8 75.5 Lease liabilities 2,115.2 158.7 303.2 293.2 1,360.1 Accounts payable to selling shareholders 828.5 205.3 150.6 99.1 373.5 Total 5,786.1 1,018.8 1,948.1 1,010.1 1,809.1 (1) Loans and financing include the obligations related to our Series A perpetual convertible preferred shares discussed in note 12.2.1(d) to our audited consolidated financial statements included elsewhere in this annual report. Future cash needs in the short and long term will be funded by our operating cash flows and from proceeds raised in the debt or equity capital markets. As of December 31, 2024, we did not have any off-balance sheet arrangements. Principal Capital Expenditures We made capital expenditures (consisting of the purchase of property and equipment and intangible assets) of R$392.6 million, R$218.4 million and, R$318.2 million in 2024, 2023 and 2022, respectively. During these years, our capital expenditures mainly included expenditures related to R$157.2 million regarding the earn-out of Guanambi and UNIMA, due to the expansion of medical school seats, the expansion and maintenance of our campuses and headquarters including leasehold improvements, the implementation of our shared services center, development of new solutions in the Medical Practice Solutions segment and the development of the project that led to the certification of seven new greenfield medical schools as part of the “Mais Médicos II” program. For 2025, we have budgeted capital expenditures of R$267.9 million, mostly to support the growth in our business and operations. We expect to meet our capital expenditure needs for the foreseeable future from our operating cash flow and our existing cash and cash equivalents. Our future capital requirements may be adjusted from time to time as they depend on several factors, including our growth rate, the expansion of our research and development efforts, employee headcount, marketing and sales activities, the introduction of new features to our existing products, the continued market acceptance of our products. 109 Table of Contents C. Research and Development, Patents and Licenses As of December 31, 2024, we owned 285 trademark registrations in Brazil and 5 trademark registrations abroad. We have also filed 9 international trademark applications, covering a total of 7 classes. Out of these, three applications are still under examination — namely, the Afya application in the United States, the BioAtlas applications in the United States and Whitebook application in Mexico. We have a pending registration request for the Afya trademark in the United States. We have registered the BioAtlas (a Medical Harbour product) trademark in the European Union and have a pending registration request in the United States. We have two registered trademarks for Whitebook (a PEBMED product) in Mexico, and in Colombia and one in Portugal, and have a pending registration request in Mexico. Our request to register trademarks in China was rejected on November 22, 2022 by the Chinese Trademark Office of the National Intellectual Property Administration due to similarities with other trademarks and to the logo allegedly representing the content characteristics of the service. As of the date of this annual report, we have 119 pending trademark applications in Brazil and unregistered trademarks that we use to promote our brand, and also own 364 registered domain names in Brazil and 53 registered international domain names, and have registered three software programs in Brazil. See “Item 4. Information on the Company—Technology and Intellectual Property.” D. Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any other trends, uncertainties, demands, commitments or events for the year ended December 31, 2024 that are reasonably likely to have a material and adverse effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions. E. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with IFRS, as issued by the IASB. In preparing our audited consolidated financial statements, we make assumptions, judgments and estimates that can have a significant impact on amounts reported in our consolidated financial statements. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. We regularly reevaluate our assumptions, judgments and estimates, presenting our critical accounting estimates in note 2.5 of our audited consolidated financial statements included elsewhere in this annual report.