Afya's Q2 2026 revenue rose 5.7% to R$972.1m on medical-school tuition gains, but net income's 14% jump rests on a lower Pillar Two tax charge (pre-tax +4.8%), and a merger into Yduqs would end its Nasdaq listing.
Revenue
BRL 972M
+5.7% YoY
Net income
BRL 201M
+14.0% YoY
Diluted EPS
BRL 2.21
+17.6% YoY
Operating margin
30.6%
This period vs a year ago
Same period last year
This period
Revenue▲+5.7%
≈BRL 920M
BRL 972M
Net income▲+14.0%
≈BRL 177M
BRL 201M
Diluted EPS▲+17.6%
≈BRL 1.88
BRL 2.21
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
A 14% profit jump that is mostly a tax-timing effect, released weeks before a merger that would take Afya off Nasdaq
Afya, Brazil's largest medical-school operator by number of medical school seats, reported second-quarter 2026 revenue of R$972.1 million, up 5.7% from a year earlier. Net income rose 14.0% to R$201.3 million and diluted earnings per share rose 17.6% to R$2.21. Almost none of that faster profit growth came from the business itself. Profit before tax grew only 4.8%. Income tax fell from R$17.5 million to R$2.0 million because Brazil's new global minimum tax (the OECD "Pillar Two" top-up) was booked mostly in the first quarter this year and mostly in the second quarter last year. The underlying picture is steady tuition-driven growth in medical schools, while the two newer businesses (continuing education and software for doctors) are shrinking in revenue and still absorbing investment. Six weeks after these results, on September 23, Afya signed a binding agreement to merge into Brazilian higher-education group Yduqs. If the deal closes, Afya's Nasdaq shares would be delisted and the combined company would trade only on Brazil's B3 exchange.
All figures are in Brazilian reais (R$) under IFRS, as Afya reports them. Afya is a foreign private issuer, so it furnishes quarterly results to the SEC on Form 6-K rather than filing a 10-Q. For a US-dollar investor, the return also depends on the real's exchange rate, which these results do not show.
At a glance
Revenue +5.7% to R$972.1m (+5.4% excluding the FUNIC acquisition). All of the growth came from undergraduate programs (+6.8%). Continuing education (-2.3%) and medical practice solutions (-1.1%) both had lower revenue than a year ago.
Profit before tax +4.8%, net income +14.0%. The quarter's effective tax rate was 1.0%, down from 9.0%. For the first half as a whole it was 8.8%, against 8.9%, so the quarterly jump is a timing effect.
R$447.9m returned to shareholders in the first half. That was 106% of the period's free cash flow to equity (R$423.4m) and is part of why net debt did not fall.
Results
Metric
Q2 2026
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Q2 2025
YoY Change
Revenue
R$972.1m
R$919.4m
+5.7%
Revenue ex-acquisitions
R$969.3m
R$919.4m
+5.4%
Gross profit
R$598.7m
R$576.7m
+3.8%
Operating income
R$297.9m
R$285.2m
+4.4%
Operating margin
30.6%
31.0%
-0.4 pts
Adjusted EBITDA (non-IFRS)
R$406.5m
R$400.8m
+1.4%
Adjusted EBITDA margin
41.8%
43.6%
-1.8 pts
Income before taxes
R$203.3m
R$194.0m
+4.8%
Net income
R$201.3m
R$176.5m
+14.0%
Diluted EPS
R$2.21
R$1.88
+17.6%
Basic EPS
R$2.22
R$1.90
+16.7%
Medical school students (end of period)
26,421
25,733
+2.7%
Medical school operating seats
3,768
3,543
+6.4%
Medical school net avg. monthly ticket, H1 (ex-acquisitions)
R$9,443
R$9,089
+3.9%
Operating margin is the share of revenue left after running the business, before interest and tax. Adjusted EBITDA is the company's own measure. It adds back depreciation, share-based pay and one-off costs and is not defined by accounting standards. The "net average ticket" is the monthly tuition a medical student actually pays after discounts.
First half (six months to June 30): revenue R$1,984.8m (+7.0%), operating income R$691.5m (+5.1%), net income R$463.1m (+6.8%), diluted EPS R$5.06 against R$4.64 (+9.1%). The first half is the cleaner read on earnings because the tax-timing swing between quarters nets out.
Where the growth came from
Afya reports three segments. Undergraduate programs, mostly medical school, are nearly 90% of revenue.
Segment revenue
Q2 2026
Q2 2025
YoY
H1 2026
H1 YoY
Undergraduate
R$869.7m
R$814.1m
+6.8%
R$1,762.2m
+7.4%
Continuing Education
R$64.9m
R$66.4m
-2.3%
R$143.9m
+4.6%
Medical Practice Solutions
R$41.9m
R$42.3m
-1.1%
R$85.3m
+1.5%
Medical schools earned R$1,499.4m in the first half (+6.5%). Higher prices did more than enrolment. The net average ticket rose 3.9% to R$9,443 a month, while the average number of medical students rose only 2.5%. Operating seats (the annual intake Brazil's Ministry of Education authorizes) rose 6.4% to 3,768, partly from the 60 seats added with FUNIC in May 2025. Seats take six years to fill with students, so today's seat count sets up future enrolment.
Health sciences and other undergraduate courses grew faster from a much smaller base. Health sciences revenue rose 12.9% to R$147.5m on 18.0% more students, and non-health courses rose 11.3% to R$115.3m.
Continuing education (residency-exam prep and postgraduate courses for doctors) had 23.6% more students, at 56,237, but revenue fell 2.3% in the quarter. Management attributes this to "a higher intake in short-term programs that carry a lower average ticket per student". Business-to-business revenue fell 25.4% in the first half, to R$9.1m.
Medical practice solutions (clinical reference apps and practice-management software for doctors) is not growing overall. Clinical-management paying users rose 20.4% to 50,499, but clinical-decision paying users fell 5.9% to 150,048, and monthly active users fell 7.9% to 212,158.
The company says the margin decline came from "a lower gross profit contribution from Continuing Education, driven by a less favorable revenue mix, as well as higher payroll, sales, and marketing expenses associated with the investment cycle" in the two non-undergraduate segments. The income statement agrees: cost of services rose 9.0% in the quarter, faster than revenue's 5.7%, and gross margin slipped from 62.7% to 61.6%.
What the headline numbers hide
The tax line flatters the quarter. Afya pays little income tax because of PROUNI, a federal program that exempts private universities from income tax in exchange for granting scholarships. That benefit was worth R$115.4m in the quarter. Brazil's Pillar Two minimum-tax rules now claw part of it back. The top-up charge was R$4.1m in Q2 2026 against R$33.4m in Q2 2025, and R$30.4m against R$56.6m for the half. Afya books tax at its expected full-year rate, so the quarterly split moves with estimates. Net income grew 14.0%, but pre-tax income grew 4.8%. Treat 5–7% as the underlying profit growth rate. Separately, the R$89.9m Pillar Two liability for fiscal 2025 was paid on July 31, 2026, so it will reduce third-quarter cash.
Buybacks add about 2–3 points to EPS growth. Profit attributable to Afya's shareholders rose 14.4% (R$197.1m against R$172.3m), while basic EPS rose 16.7%. In the first half Afya repurchased 2.7 million shares for R$133.0m, about 3% of shares outstanding.
Cash conversion is solid, but payouts exceeded it. First-half operating cash flow was R$797.8m against net income of R$463.1m. Depreciation of R$183.6m and interest accruals, which Afya reports as financing flows, explain much of the gap. Free cash flow to equity (the company's measure of cash left after investment and debt service) was R$423.4m, down 2.1%. Dividends of R$314.9m, 40% of 2025 net income, plus the buybacks came to more than that. Cash fell 10.6% to R$1,006.5m, and net debt excluding leases rose slightly to R$1,394.0m.
Debt is modest but expensive. Gross debt, including amounts still owed to sellers of acquired schools, was R$2.4bn at an average cost of 15.1% a year. That rate tracks Brazil's CDI interbank rate, about 14.7% in the half. Net finance costs were R$98.9m in the quarter, about a third of operating income. Management puts net debt at 0.8x the midpoint of its 2026 adjusted-EBITDA guidance. Including R$1.07bn of lease liabilities, net debt is R$2.46bn.
Bad-debt charges are rising faster than sales. The allowance for expected credit losses (tuition the company expects not to collect) was R$20.2m, up 22.7%, or 2.1% of revenue against 1.8% a year ago. Trade receivables rose 14.3% from December to R$819.7m. That comparison is partly seasonal because tuition is billed by semester, but it is worth watching.
One-offs are small. Non-recurring items in adjusted EBITDA were zero this quarter, against R$5.2m of integration and M&A costs a year ago, so they do not distort the comparison. Capex fell 46.7% in the first half to R$120.0m because the prior-year figure included R$99.6m to acquire FUNIC's medical-seat licenses.
Takeaway: Under the 17.6% EPS gain, Afya grew operating income about 4–5%, driven by medical-school tuition increases and seat maturation. The other two segments are shrinking in revenue while costs rise, so group margins are falling. On current terms, the deal with Yduqs would turn AFYA holders into the 69% owners of a B3-only company, which matters more for US holders than this quarter's figures.
Outlook
Guidance (reaffirmed, excludes future acquisitions): 2026 revenue of R$3,950–4,100m, adjusted EBITDA of R$1,700–1,800m, and capex of R$340–380m. First-half revenue of R$1,984.8m is 49% of the revenue midpoint, and first-half adjusted EBITDA of R$918.0m is 52% of the EBITDA midpoint. The guidance assumes a normal second-semester student intake. The medical-seat count carries a filing footnote saying it does "not reflect any potential reductions resulting from ENAMED", the national exam for medical graduates that can lead to limits on low-scoring courses. That is a regulatory risk to the seat pipeline that the figures above do not include.
The Yduqs merger (announced September 23, 2026): Afya would merge into Yduqs Participações. Afya holders would own 69.0% of the combined company and Yduqs holders 31.0%, at 6.408347 new Yduqs shares per Afya share, a ratio fixed by reference to June 30, 2026 balance sheets. Bertelsmann would hold 47.4%. The combined company would list only on B3. Afya's Nasdaq listing would end. US shareholders who cannot certify that they are qualified institutional buyers, institutional accredited investors or non-US persons would not receive shares. Their shares would be sold on B3 after closing and they would get the cash. Closing requires both companies' shareholder votes, Brazilian antitrust approval and other conditions, with a deadline of March 31, 2028. Break-up fees of R$325m before the votes and R$650m after them apply in specified cases. Until closing, Afya expects to distribute the adjusted free cash flow it generates, so high payouts should continue.
Our read: The medical-school business keeps compounding at mid-to-high single digits through price increases and seat maturation, with strong cash generation. The investment in continuing education and physician software is not yet producing revenue growth, and Brazil's 15% interest rates take a third of operating income. For AFYA shareholders, the next milestones are probably the merger documents and shareholder votes rather than the third-quarter results.