Afya (NASDAQ: AFYA) has raised its sales guidance for the fiscal year ending in 2026, signaling improved revenue expectations for the period. The company updated its outlook to a range of $750.168 million to $778.656 million, replacing the previous estimate of $731.710 million to $759.496 million.

This upward revision brings the company's projected top line closer to market expectations, which stood at $781.560 million. While the new guidance remains slightly below the consensus estimate, the increase reflects a positive shift in the company's near-term revenue trajectory.

Guidance Revision Details

The adjustment highlights a narrowing gap between internal projections and external analyst forecasts. The lower bound of the new guidance represents an increase of approximately $18.5 million from the prior lower bound, while the upper bound saw a rise of roughly $19.2 million.

The company did not provide additional details on operational metrics, margin movements, or specific drivers behind the revision in this update.

Afya Limited (NASDAQ: AFYA, B3: A2FY34) reported a 14.0% year-on-year increase in net income to R$201.3 million for the second quarter ended June 30, 2026. The medical education group’s revenue rose 5.7% to R$972.1 million, supported by organic growth of 5.4% excluding acquisitions.

Despite the top-line expansion, Adjusted EBITDA grew only 1.4% to R$406.5 million, causing the Adjusted EBITDA margin to contract by 180 basis points to 41.8% from 43.6% in the prior-year period. For the first half of 2026, net income reached R$463.1 million, a 6.8% increase, while revenue climbed 7.0% to R$1,984.8 million.

Segment Performance

The Undergraduate segment remained the primary growth engine, with revenue rising 7.4% to R$1,762.2 million in the first half. Medical School revenue increased 6.5% to R$1,499.4 million, driven by a 3.9% rise in net average ticket prices and a 2.7% expansion in the student base to 26,421. Health Sciences student numbers surged 18.0% to 30,350.

Continuing Education revenue grew 4.6% to R$143.9 million, fueled by higher intake in short-term programs that carry lower average tickets. The total student base in this segment expanded 23.6% to 56,237. Medical Practice Solutions saw modest revenue growth of 1.5% to R$85.3 million, while active payers in Clinical Management rose 20.4% to 50,499.

What the Numbers Show

The divergence between robust revenue growth (7.0%) and sluggish Adjusted EBITDA growth (2.8%) highlights the impact of Afya’s current investment cycle. Management attributed the margin compression to lower gross profit contribution from Continuing Education due to a less favorable revenue mix, alongside higher payroll and sales expenses associated with investments in Continuing Education and Medical Practice Solutions. This strategic spending weighed on profitability despite strong cash generation.

Capital Allocation and Balance Sheet

Afya maintained its aggressive capital return policy, distributing R$447.9 million to shareholders in the first half through dividends (R$314.9 million) and share repurchases (R$133.0 million). This payout exceeded the period’s Free Cash Flow to Equity of R$423.4 million, resulting in a payout ratio of 105.8%.

Cash and cash equivalents stood at R$1,006.5 million as of June 30, 2026, a 10.6% decline from year-end 2025. Net Debt, excluding IFRS 16 effects, remained broadly stable at R$1,394.0 million, increasing by only R$24.5 million despite the significant shareholder returns. Operating Cash Conversion ratio held steady at 87.8%.

Moody’s reaffirmed Afya’s credit rating at AAA.br with a stable outlook, citing the company’s revenue growth, strong margins, and robust liquidity. The company reaffirmed its 2026 guidance, targeting revenue between R$3,950 million and R$4,100 million, and Adjusted EBITDA between R$1,700 million and R$1,800 million.