NOVA LIMA, Brazil - Afya (NASDAQ:AFYA) Limited (NASDAQ:AFYA; B3:A2FY34), a prominent medical education group in Brazil, has announced the purchase of Unidom Participações S.A., a move that will increase its operational medical school seats by 300 in Salvador. This acquisition, carried out through Afya Participações S.A., encompasses the complete share capital of Unidompedro and Faculdade Dom Luiz, with locations in Salvador, Luis Eduardo Magalhães, Barreiras, and Ribeira do Pombal.
The transaction, valued at R$ 660.0 million, will see R$ 347.8 million paid in cash at closing and the remainder in up to 10 annual installments, subject to certain conditions relating to the authorization of the medical seats. The deal is structured to account for the ongoing authorization status of 175 seats, with adjustments to the payment balance contingent upon the final legal outcome.
The acquisition is expected to yield an EV/EBITDA ratio of 4.2x post synergies, with Unidom's projected net revenue for 2024 estimated at R$ 110.5 million, predominantly from the Medicine course. By 2027, the revenue is anticipated to reach R$ 267 million, with over 95% derived from the medical school, which will have reached full maturity.
Furthermore, an additional payment of R$250 thousand per seat will be made if Unidompedro or Faculdade Dom Luiz secures seats in the Mais Médicos 3 Program. The completion of this acquisition is contingent upon standard conditions, including antitrust regulatory approval.
This strategic acquisition by Afya, which is recognized for its comprehensive ecosystem supporting medical students and physicians throughout their careers, signifies a continued investment in the expansion of medical education in Brazil. The information is based on a press release statement.
InvestingPro Insights
As Afya Limited (NASDAQ:AFYA; B3:A2FY34) continues to expand its footprint in the medical education sector in Brazil, the company's financial metrics provide a window into its market position and performance. With a market capitalization of approximately $1.57 billion and a Price to Earnings (P/E) ratio of 20.74, Afya stands out for its impressive gross profit margins, which were reported at 61.41% for the last twelve months as of Q4 2023. This underlines the company's ability to maintain profitability in its operations.
The acquisition of Unidom Participações S.A. is expected to contribute to Afya’s revenue growth, which has already been robust, with a 23.48% increase in revenue in the last twelve months as of Q4 2023. This financial maneuver is also anticipated to enhance earnings, as analysts predict that the company will remain profitable this year. The company's strategic moves, including this latest acquisition, position it as a prominent player in the Diversified Consumer Services industry.
InvestingPro Tips highlight that while Afya is trading at a high P/E ratio relative to near-term earnings growth, it operates with a moderate level of debt, which may provide some financial flexibility in its expansion efforts. For readers interested in a more comprehensive analysis, there are additional InvestingPro Tips available for Afya, which can be explored at https://www.investing.com/pro/AFYA. To gain access to these insights, users can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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