GlobeNewswire Inc | Aug 27, 2020 07:31PM EDT

August 27, 2020

NOVA LIMA, Brazil and MINAS GERAIS, Brazil, Aug. 27, 2020 (GLOBE NEWSWIRE) -- Afya Limited (Nasdaq: AFYA) (Afya or the Company), the leading medical education group in Brazil, today reported financial and operating results for the three and six-month periods ended June 30, 2020 (second quarter 2020, 2Q20 and first half 2020, respectively). Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).

Second Quarter 2020

-- Net Revenue in 2Q20 increased 53.6% year over year (YoY) to R$274.2 million, this value does not include R$14.4 million of net revenue, that was deferred due to the interruption of practical activities on campus. Net Revenue excluding UniRedentor and UniSL grew 22.6%, reaching R$218.8 million. -- Adjusted EBITDA in 2Q20 increased 76.6% YoY reaching R$118.2 million, considering the deferred revenue recognition of R$14.4 million related to the interruption of practical activities on campus, with Adjusted EBITDA margin of 43.1%, expanding 560 basis points (bps). Adjusted EBITDA excluding UniRedentor and UniSL grew 46.6%. -- Adjusted Net Income in 2Q20 of R$82.6 million was 163.1% higher than 2Q19.

First Half 2020 Highlights

-- First Half 2020 Net Revenue of R$546.5 million, up 69.2% YoY, this value does not include R$14.4 million of net revenue, that was deferred due to the interruption of practical activities on campus. Net Revenue excluding UniRedentor and UniSL increased 47.3% YoY reaching R$475.8 million. -- Adjusted EBITDA for first half 2020 (1H20) increased 82.7% YoY reaching R$258.8 million, with Adjusted EBITDA margin of 47.4%, expanding 360 bps. Adjusted EBITDA excluding UniRedentor and UniSL increased 66.5% YoY, reaching R$235.9 million, with Adjusted EBITDA margin of 49.6%. -- Adjusted Net Income in 1H20 of R$206.6 million was 143.3% higher than 1H19. -- Cash conversion of 82.6% with a solid cash position of R$1.1 billion at quarter-end. -- Subsequent events: Entrance into the digital health services segment with the acquisition of PEBMED, strengthening BU-2. PEBMED helps physicians in the decision making process through Whitebook with more than 165,000 active users per month, of which 91,000 are paying subscribers. It also provides Nursebook app and PEBMED portal;Entrance into a purchase agreement for the acquisition of Faculdade Cincias Mdicas da Paraba, or FCMPB and Faculdade de Ensino Superior da Amaznia Reunida, or FESAR, adding a combined total of 277 medical seats. The transactions are subject to customary closing conditions and antitrust regulatory approvals. It is Afyas first medical school in Paraba state and FESAR, the second one, in the state of Par.

Table 1:Financial Highlights For the three months period ended June 30, For the six months period ended June 30, (in 2020 Ex % Chg Ex 2020 Ex % Chg Exthousand 2020 Uniredentor 2019 % Chg Uniredentor 2020 Uniredentor 2019 % Chg Uniredentor of R$) and UniSL and UniSL and UniSL and UniSL(a) Net 274,211 218,813 178,493 53.6 % 22.6 % 546,515 475,811 323,071 69.2 % 47.3 % Revenue(b) Proforma Net 274,211 218,813 184,229 48.8 % 18.8 % 546,515 475,811 402,172 35.9 % 18.3 % Revenue

(c)Adjusted 118,152 98,072 66,909 76.6 % 46.6 % 258,796 235,867 141,639 82.7 % 66.5 % EBITDA(d) = (c )/(a)Adjusted 43.1 % 44.8 % 37.5 % 560 bps 730 bps 47.4 % 49.6 % 43.8 % 360 bps 580 bps EBITDAMargin(g) ProformaAdjusted 118,152 98,072 68,127 73.4 % 44.0 % 258,796 235,867 152,509 69.7 % 54.7 % EBITDA

(h) = (e)/(b) Proforma 43.1 % 44.8 % 37.0 % 610 bps 780 bps 47.4 % 49.6 % 37.9 % 950 bps 1170 bps AdjustedEBITDA Margin(i)Adjusted 82,558 68,689 31,376 163.1 % 118.9 % 206,569 190,654 84,907 143.3 % 124.5 % NetIncome1. Due to the interruption of pratical classes during the pandemic R$ 14.4 million of 1H2020 Net Revenue will be recognized in the 2H2020.2. Includes the pro-forma results of Medcel, IPEMED and FASA, as if the acquisition had been consummated on January 1, 2019.3. See more information on "Non-GAAP Financial Measures" (Item 8).

Message from Management

Virgilio Gibbon, Afyas CEO, stated:

Our organization has responded and adapted to the challenges of the COVID-19 in an incredible and agile manner. I am extremely proud of the way Afya has adapted and executed to meet the significant changes and delivered an outstanding performance during the second quarter, which was ahead of our expectations.

The story of the second quarter was dictated by the COVID-19 pandemic. Our priorities remain unchanged as we continue to navigate these challenging times. We are focused on taking care of our employees and students and operating in a safe environment that protects both our team members and students. To that end, in mid-March, we shifted all our classes online and moved to a remote work situation for all corporate employees. Our ability to adapt to these changes allowed us to deliver a strong performance in the second quarter and surpass our first half guidance. Importantly, we closed the quarter having exceeded all the key financial targets we laid out for first half 2020.

We began the year with a very strong intake process, had completed the enrollment process and delivered 100% occupancy for the first half. We also saw strong demand for medical seats for the upcoming semester, thus, we are once again assured of 100% occupancy for the remainder of the year.

The COVID-19 pandemic intensified and accelerated some behavior shifts that were already underway, and caused us to rethink where best to invest our resources. In addition, as evidenced by the pandemic, the medical community and patients alike have embraced a digital component to healthcare. We discussed in the past that digital assets were appealing to us so that we can add more services to medical students and professionals, thus maximizing our product offering. Subsequent to quarter end, we furthered our Afya Digital with the acquisition of PEBMED, our first and significant acquisition in the health tech segment. This acquisition enables us to deepen our relationships with our students as well as getting our brand in front of many new doctors, nurses and other medical personnel and students, enhancing our competitive position and our capabilities.

Additionally, and also subsequent to quarter end, we announced two medical school acquisitions adding a further 277 seats marking our entry in the state of Paraba and strengthening our presence in the state of Par. We are successfully executing on our strategy as we have completed 15 acquisitions over the past 2 years - 6 since we became public one year ago - and have added close to 700 medical seats in less than one year, or approximately 70% of our three-year target of 1,000 seats shared during our IPO. Importantly, we have a solid track record of integrating acquired companies and delivering cost efficiencies and synergies that can be seen in the margin expansion we are delivering. These acquisitions set us up to deliver continued strong results in the months and years to come.

We continue to have a peer-leading capital structure, providing agility to adapt to the dynamic environment we are operating in. Given our strong free cash flow and liquidity, we remain committed to our long-term capital priorities, with a balanced approach to invest in the business and return strong cash to our stockholders, all while keeping our students, faculty members and employees safe and managing through this volatile environment.

We are celebrating our one year anniversary of being a public company. Since then, we have all experienced significant change and new challenges over these past several months. Things we never predicted are now realities that we are all adapting to. Things we thought would evolve over the course of several years have changed in weeks. We are very pleased with our first half performance and are encouraged with how the back half is shaping up which is reflected in the guidance that we are introducing today.

To close, I could not be prouder of the Afya organization for how they have responded, the way we kept our focus on our people, students and physicians and delivered superior execution, leading to an outstanding first half in 2020.

1.First Half 2020 Guidance

Guidance for 1H20 Actual 1H20Net Revenue^(1)(2) R$475 mn ? ? ? R$510 mn R$516.1 mnAdjusted EBITDA Margin^(3) 45% ? ? ? 46.5% 48.1%

(1) Includes Uniredentor starting February 1st, 2020, and excludes any acquisition that was concluded after the issuance of the guidance; for instance, it does not include UniSL that was concluded on May 5, 2020, subsequent to the original issuance of guidance.(2) Includes the postponement in the recognition of Net Revenue in the amount of R$14.4 million, due to the interruption of practical classes during the pandemic.(3) Includes the impact of the adoption of IFRS16.

2.Second Half 2020 Guidance

The Company is introducing guidance for 2H20 which takes into account the successfully concluded acceptances of new medicine students for the second half of 2020 and assuming a certain degree of potential impacts of COVID-19 into the business during 2H20. We assume that the practical educational on-campus activities resume in second half but some portion might be provided only in 2021.

The global Coronavirus outbreak is an unprecedented and still evolving situation. When considering Afyas guidance for 2H20, it is paramount that shareholders and the market in general be advised that the COVID-19 pandemic is still evolving in Brazil, some state authorities may maintain quarentines or shelter in place status for a still undefined period of time and/or take other actions not contemplated into the guidance, all of which are outside of the Companys control.

Considering the above factors, the guidance for 2H20 is defined in the following table.

Guidance for 2H20 Important considerations * Includes PEBMED starting on July 20, 2020. * Includes R$14.4 million of Net Revenue related to the 1H20 that was not recognized due to theNet Revenue is expected to postponement of practical classes during thebe between R$600 million ? pandemic.R$640 million * Excludes any acquisition that may be concluded after the issuance of the guidance. For instance does not include FCMPB and FESAR.

* Includes PEBMED starting on July 20, 2020. * Includes R$14.4 million of Net Revenue related to the 1H20 that was not recognized due to theAdjusted EBITDA margin is postponement of practical classes during theexpected to be between pandemic.45.5-47.0% * Excludes any acquisition that may be concluded after the issuance of the guidance. For instance does not include FCMPB and FESAR. * Includes the impact of the adoption of IFRS 16.

3.Overview of 2Q20

Operational Review

Afya is the only company offering technological solutions to support students across every stage of the medical career, from undergraduate students in its medical school years through medical residency preparatory courses, medical specialization programs and continuing medical education.

The Company operates two distinct business units. The first (Business Unit 1 or BU1), is comprised of Undergraduate medical schools, other healthcare programs and ex-health degrees. Revenue is generated from the monthly tuition fees the Company charges students enrolled in the undergraduate programs. The Company also offers Residency Preparatory and Specialization Programs, as well as Digital Health Services (Business Unit 2 or BU2). Revenue is comprised of fees from these programs.

Table 2: Key Revenue Drivers Six months ended June 30, 2020 2019 % Chg Business Unit 1: Educational Services Segment MEDICAL SCHOOL Approved Seats 1,866 1,352 38.0 % Operating Seats 1,516 1,102 37.6 % Total Students 9,097 5,550 63.9 % Total Students (ex-UniSL and ex- Uniredentor) 7,319 5,550 31.9 % Tuition Fees (ex- UniSL and ex- Uniredentor - R$MM) 358,214 239,280 49.7 % Tuition Fees (Total - R$MM) 406,439 239,280 69.9 % Medical School Avg, Ticket (ex- UniSL and ex- 8,157 7,186 13.5 % Uniredentor - R$/month)UNDERGRADUATE HEALTH SCIENCE Total Students 13,853 6,939 99.6 % Total Students (ex-UniSL and ex- Uniredentor) 7,031 6,939 1.3 % Tuition Fees (ex- UniSL and ex- Uniredentor - R$MM) 52,249 49,570 5.4 % Tuition Fees (Total - R$MM) 68,723 49,570 38.6 % OTHER UNDERGRADUATE Total Students 16,031 12,711 26.1 % Total Students (ex-UniSL and ex- Uniredentor) 8,723 12,711 -31.4 % Tuition Fees (ex- UniSL and ex- Uniredentor - R$MM) 58,829 60,504 -2.8 % Tuition Fees (Total - R$MM) 80,707 60,504 33.4 % Business Unit 2: Prep Courses & CME and Medical SpecializationActive Paying Students Prep Courses & CME - B2C 10,594 8,415 25.9 % Prep Courses & CME - B2B 890 732 21.6 % Medical Specialization & Others 4,513 1,728 161.2 % Medical Specialization & Others (ex-Uniredentor) 2,188 1,728 26.6 % Revenue from courses (ex- Uniredentor - R$MM) 86,643 23,371 270.7 % 1. Uniredentor average tuition fee for medical school in 1H2020 was R$9,431 and for UniSL was R$7,691.2. This number does not includes FCMPB and FESAR that were acquired in August, 2020 and contribute 277 seats to Afya.3. As Medcel and Ipemed were acquired on March 31, 2019 and on May 9, 2019respectively, revenue from courses for BU2 were not accounted for in 1Q19. The number of students is disclosed to contribute with investors analysis.

Along with the active paying students, 11,619 medical students from 46 public and private medical schools are still accessing the Companys Digital platform with a temporary free access during the pandemic crisis.

Total monthly active users (MaU) increased 27.6% quarter over quarter, reaching 20,420 users at the end of June. MaU represents the number of unique individuals that consumed Afyas digital content in the last 30 days. Afyas offers to its MaU a significant amount of learning assets, comprised of e-books, videos, podcasts and question/answer documents.

Table 3: Key Operational 2020Drivers for BU2 2Q20 1Q20 % ChgTotal Monthly Active Users 27.6%(MaU) 20,420 16,008

*Does not include PEBMEDs numbers

Seasonality

Afyas two businesses are impacted by seasonality but at different time periods. The first is associated with the concentration of prep course revenues in the first and fourth quarters of each year, when new content (books and e-books) is delivered and most part of the revenues are recognized. The second is associated with the maturation of several medical schools, which leads to a higher enrollment base in the second half of each year. As a result, in a typical year, the first quarter is normally the strongest. The fourth quarter is normally the second strongest, followed by the third and second quarters, respectively. Finally, the second half of the year is normally stronger than the first half.

Revenue

Total Net Revenue for second quarter 2020 was R$274.2 million, an increase of 53.6% over the same period of prior year. Pro forma Net Revenue, which considers results of Medcel, IPEMED and FASA as if they were acquired on January 1st 2019, was R$274.2 million in 2Q20, up 48.8% over the same period of the prior year. Excluding UniSL and UniRedentor, Pro Forma Net Revenue in 2Q20 increased 18.8% YoY, reaching R$218.8 million. This increase was primarily driven by organic revenue growth, mainly due to the maturation of medical school seats and increase in average ticket.

For the six-months ended June 30, 2020 Total Net Revenue was R$546.5 million, an increase of 69.2% over the same period of last year. For the six-months ended June 30, 2020, Pro forma Net Revenue increased 35.9% over the same period of last year, to R$546.5 million. Excluding UniSL and UniRedentor, Pro Forma Net Revenue in six-months ended June 30 increased 18.3% YoY, reaching R$475.8 million.

Taking into account the interruption of on-campus activities and that some non-practical educational activities had to be rearranged to 2H20, according to IFRS15, the Company concluded it was necessary to defer R$14.4 million of its 2Q20 Net Revenue, with no postponement of costs or expenses in the same period. The Company expects these activities to gradually resume during 2H20 and the associated deferred revenues to be recognized at that time.

Table 4: Revenue & Revenue Mix

(in thousand of R$) For the three months period ended June 30, For the six months period ended June 30, 2020 Ex % Chg Ex 2020 Ex % Chg Ex 2020 Uniredentor 2019 % Chg Uniredentor 2020 Uniredentor 2019 % Chg Uniredentor and UniSL and UniSL and UniSL and UniSLNet Revenue Mix Business 240,102 190,064 156,940 53.0 % 21.1 % 451,886 389,168 301,518 49.9 % 29.1 %Unit-1Business 34,109 28,749 23,371 45.9 % 23.0 % 95,606 86,643 23,371 309.1 % 270.7 %Unit-2Inter-segment - - (1,818 ) - - (977 ) - (1,818 ) -46.3 % - transactionsTotal Reported Net 274,211 218,813 178,493 53.6 % 22.6 % 546,515 475,811 323,071 69.2 % 47.3 %RevenueTotal Pro Forma Net 274,211 218,813 184,229 48.8 % 18.8 % 546,515 475,811 402,172 35.9 % 18.3 %Revenue1. Includes the pro-forma results of Medcel, IPEMED and FASA, as if theacquisition had been consummated on January 1, 2019.

Adjusted EBITDA

Adjusted EBITDA in the three-months ended June 30, 2020 increased 76.6% to R$118.2 million, from R$66.9 million in the same period of the prior year. Adjusted EBITDA margin of 43.1% was up from 37.5% reported in the three-months ended June 30, 2019. For the six-months ended June 30, 2020, Adjusted EBITDA increased 82.7% to R$258.8 million, from R$141.6 million in the six-months ended June 30, 2019. Adjusted EBITDA margin of 47.4% was 360 basis points higher than the 43.8% reported in the six-months ended June 30, 2019.

Excluding the consolidation of UniRedentor and UniSL, Pro forma Adjusted EBITDA in the three-months ended June 30, 2020 increased 44.0% YoY to R$98.1 million from R$68.1 million while Pro forma Adjusted EBITDA margin increased 780 basis points, to 44.8% from 37.0%. For the six-months ended June 30, 2020, Pro forma Adjusted EBITDA excluding Uniredentor and UniSL increased 54.7% YoY to R$235.9 million up from R$152.5 million and Pro forma Adjusted EBITDA margin increased 1170 basis points, to 49.6% from 37.9%. Both improvements reflect mainly operational leverage, synergies obtained from recent acquisitions and other improvements.

Table 5:Adjusted EBITDA(inthousand For the three months period ended June 30, For the six months period ended June 30,of R$) 2020 Ex % Chg Ex 2020 Ex % Chg Ex 2020 Uniredentor 2019 % Chg Uniredentor 2020 Uniredentor 2019 % Chg Uniredentor and UniSL and UniSL and UniSL and UniSLAdjusted 118,152 98,072 66,909 76.6 % 46.6 % 258,796 235,867 141,639 82.7 % 66.5 %EBITDA% Margin 43.1 % 44.8 % 37.5 % 560 730 bps 47.4 % 49.6 % 43.8 % 360 580 bps bps bpsProformaAdjusted 118,152 98,072 68,127 73.4 % 44.0 % 258,796 235,867 152,509 69.7 % 54.7 %EBITDA% Margin 43.1 % 44.8 % 37.0 % 610 780 bps 47.4 % 49.6 % 37.9 % 950 1170 bps bps bps1. Includes the pro-forma results of Medcel, IPEMED and FASA, as if theacquisition had been consummated on January 1, 2019.

Net Income

Adjusted Net Income for the second quarter 2020 was R$82.6 million, increasing 163.1% over the same period of the prior year. For the six-months ended June 30, 2020, the Company reported Adjusted Net Income of R$206.6 million, compared to an Adjusted Net Income of R$84.9 million in the six-months ended June 30, 2019, an increase of 143.3%. Both increases reflect mainly the revenue contribution, synergies captured and margin expansion from the consolidation of acquisitions as well as organic growth.

(in thousand of R$) For the three months period For the six months period ended June 30, ended June 30, 2020 2019 % Chg 2020 2019 % ChgNet income 63,886 21,326 199.6 % 167,556 70,802 136.7 %Amortization ofcustomer 12,515 9,182 36.3 % 24,416 12,196 100.2 %relationships andtrademark (1)Share-based 6,157 868 609.3 % 14,597 1,909 664.6 %compensationAdjusted Net Income 82,558 31,376 163.1 % 206,569 84,907 143.3 % (1) Consists of amortization of customerrelationships and trademark recorded under business combinations.

Balance Sheet and Cash Flow

Cash and cash equivalents, including restricted cash, at June 30, 2020 were R$1.1 billion, compared to R$1.3 billion at March 31, 2020, a decrease of 19.0% due to the acquisitions concluded during the 1H20.

For the six-month period ended June 30, 2020, Afya reported an Adjusted Cash Flow from Operations of R$201.8 million up from R$111.2 million in same period of previous year, an 81.5% year-over-year increase.

Operating Cash Conversion Ratio for the six-month period ended June 30, 2020 was 82.6% compared with 85.4% in same period of the previous year. This decrease was mainly due to the consolidation of Medcel results in 1H20 figures and our students renegotiation of overdue monthly installments due to Covid-19 crisis. Prep courses revenues are recognized mainly in the first and fourth quarters of each year, but the receivables are mostly stable during the year, Medcels results negatively affects cash conversion in the first and fourth quarters.

Table 6: Operating Cash Conversion Ratio For the six months periodReconciliation ended June 30,(in thousand of R$) Considering the adoption of IFRS 16 2020 2019 % Chg(a) Cash flow from operations 189,417 108,810 74.1 %(b) Income taxes paid 12,397 2,392 418.3 %(c) = (a) + (b) Adjusted cash flow from 201,814 111,202 81.5 %operations (d) Adjusted EBITDA 258,796 141,639 82.7 %(e) Non-recurring expenses: - Integration of new companies (1) 4,982 3,607 38.1 %- M&A advisory and due diligence (2) 5,636 1,099 412.8 %- Expansion projects (3) 2,091 943 121.7 %- Restructuring Expenses (4) 1,762 5,749 -69.4 %(f) = (d) - (e) Adjusted EBITDA ex- non-recurring 244,325 130,241 87.6 %expenses(g) = (a) / (f) Operating cash conversion ratio 82.6 % 85.4 % -280 bps(1) Consists of expenses related to the integration of newly acquired companies.(2) Consists of expenses related to professional and consultant fees inconnection with due diligence services for M&A transactions.(3) Consists of expenses related to professional and consultant fees in connection with the opening of new campuses.(4) Consists of expenses related to the employee redundancies in connectionwith the organizational restructuring of acquired companies.

4.Subsequent Events

Acquisition of PEBMEDOn July 20, 2020, the Company announced the acquisition of 100% of the total share capital of PEBMED, through its wholly-owned subsidiary Afya Participaes S.A. PEBMED offers content and clinical decision applications with the aim of assisting healthcare professionals make quicker and/or better decisions by providing up to date information at their fingertips, through its products WhiteBook, Nursebook and Portal PEBMED. The business model consists of both paid subscriptions and free content. The net purchase price was R$132.9 million, with the assumption of estimated net debt of R$7.1 million, of which: (i) 86.8% was paid in cash, and (ii) 13.2% was paid in Afyas stock. The price multiple is equivalent to 4x PEBMEDs annual recurring revenue.

Acquisition ofFaculdade Cincias Mdicas da Paraba (FCMPB)On August 20, 2020, the Company announced it entered into a purchase agreement for the acquisition, through its wholly-owned subsidiary Afya Participaes S.A., of 100% of the total share capital of Faculdade Cincias Mdicas da Paraba. FCMPB is a post-secondary education institution with government authorization to offer on-campus, undergraduate courses in medicine in the State of Paraba. The projected Net Revenue for FCMPB in 2024 is R$107.0 million with an EV/EBITDA post synergies and maturation of 6.3x, all derived from its medical school. The aggregate purchase price is R$380.0 million, of which: (i) 50% is payable in cash on the transaction closing date, and (ii) 50% is payable in cash in four equal installments through 2024, adjusted by the CDI rate. The acquisition will contribute 157 medical school seats to Afya, increasing Afyas total medical school seats to 2,023.

Acquisition of Faculdade de Ensino Superior da Amaznia Reunida (FESAR)On August 26, 2020, the Company announced it entered into a purchase agreement for the acquisition, through its wholly-owned subsidiary Afya Participaes S.A., of 100% of the total share capital of Faculdade de Ensino Superior da Amaznia Reunida. FESAR is a post-secondary education institution with government authorization to offer on-campus, undergraduate courses in medicine in the State of Par. The projected Net Revenue for FESAR in 2024 is R$88.6 million with an EV/EBITDA post synergies and maturation of 4.7x adjusted by the real estate. The aggregate purchase price is R$260 million, of which 100% is payable in cash on the transaction closing date. The enterprise value also includes real estate which is valued at R$21.0 million. The acquisition will contribute 120 medical school seats to Afya, increasing Afyas total medical school seats to 2,143.

5.Conference Call and Webcast Information

When: August 28, 2020 at 11:00 a.m. ET. Mr. Virgilio Gibbon, Chief Executive OfficerWho: Mr. Luis Andr Blanco, Chief Financial Officer Ms. Renata Costa Couto, Head of Investor Relations

Dial-in +55-11-3181-8565 or +1-844- 204-8586 or +1-412-717-9627 (International), conference ID: Afya

Webcast: ir.afya.com.br

Replay available between August 28, 2020 until September 9, 2020, by dialing +1-412-317-0088 conference ID: 10147648.

6.About Afya Limited (Nasdaq: AFYA)

Afya is the leading medical education group in Brazil based on number of medical school seats, delivering an end-to-end physician-centric ecosystem that serves and empowers students to be lifelong medical learners from the moment they enroll as medical students through their medical residency preparation, graduation program, and continuing medical education activities. Afya also offers content and clinical decision applications for healthcare professionals, through its products WhiteBook, Nursebook and Portal PEBMED. For more information, please visit www.afya.com.br.

7.Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements other than statements of historical fact, could be deemed forward looking, including risks and uncertainties related to statements about our competition; our ability to attract, upsell and retain students; our ability to increase tuition prices and prep course fees; our ability to anticipate and meet the evolving needs of student and teachers; our ability to source and successfully integrate acquisitions; general market, political, economic, and business conditions; and our financial targets such as revenue, share count and IFRS and non-IFRS financial measures including gross margin, operating margin, net income (loss) per diluted share, and free cash flow. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the potential impacts of the COVID-19 pandemic on our business operations, financial results and financial position and on the Brazilian economy.

The Company undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. Readers should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent managements beliefs and assumptions only as of the date such statements are made. Further information on these and other factors that could affect the Companys financial results is included in filings made with the United States Securities and Exchange Commission (SEC) from time to time, including the section titled Risk Factors in the most recent Rule 434(b) prospectus. These documents are available on the SEC Filings section of the investor relations section of our website at: https://ir.afya.com.br/.

8.Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements, which are prepared and presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards BoardIASB, Afya uses Proforma Revenue, Adjusted EBITDA, Pro Forma Adjusted EBITDA, Pro Forma Adjusted Net Income 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.

Afya calculates Adjusted EBITDA as net income plus/minus net financial result plus income taxes expense plus depreciation and amortization plus interest received on late payments of monthly tuition fees, plus share-based compensation plus/minus income share associate plus/minus non-recurring expenses. Pro Forma Adjusted EBITDA is calculated as pro forma net income plus/minus pro forma net financial result plus pro forma income taxes expense plus pro forma depreciation and amortization plus pro forma interest received on late payments of monthly tuition fees, plus pro forma share-based compensation plus/minus pro forma income share associate plus/minus pro forma non-recurring expenses. The calculation for Adjusted Net Income is net income plus amortization of customer relationships and trademark, plus shared based compensation. We calculate Operating Cash Conversion Ratio as the cash flows from operations, adjusted with income taxes paid divided by Adjusted EBITDA plus/minus non-recurring expenses.

Management presents Adjusted EBITDA, Pro Forma Adjusted EBITDA and Pro Forma Adjusted Net Income because it believes these measures provide investors with a supplemental measure of the financial performance of the core operations that facilitates period-to-period comparisons on a consistent basis. Afya also presents Operating Cash Conversion Ratio because it believes this measure provides investors with a measure of how efficiently the Company converts EBITDA into cash. The non-GAAP financial measures described in this prospectus are not a substitute for the IFRS measures of earnings. Additionally, calculations of Adjusted EBITDA, Pro Forma Adjusted EBITDA, Pro Forma Adjusted Net Income and Operating Cash Conversion Ratio may be different from the calculations used by other companies, including competitors in the education services industry, and therefore, Afyas measures may not be comparable to those of other companies.

9.Unaudited Pro Forma Condensed Consolidated Financial Information

The unaudited interim pro forma condensed consolidated statement of income for the three and six months ended June 30, 2019 is based on the historical unaudited interim consolidated financial statements of each company, and gives effect of the acquisition of Medcel, IPEMED and FASA by Afya Brazil as if it had been consummated on January 1, 2019. Pro forma adjustments were made to reflect the acquisition of Medcel, IPEMED and FASA by Afya Brazil.

10.Investor Relations Contact

Renata Couto, Head of Investor Relations Phone: +55 31 3515.7564|+55 31 98463.3341 E-mail:renata.couto@afya.com.br



11.Financial Tables

Interim condensed consolidated statements of income and comprehensive income

For the three and six-months periods ended June 30, 2020 and 2019

(In thousands of Brazilian Reais, except earnings per share)

Three-month period ended Six-month period ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 (unaudited) (unaudited) (unaudited) (unaudited) Net revenue 274,211 178,493 546,515 323,071 Cost of services ) (82,283 ) (195,934 ) (136,647 ) (106,683Gross profit 167,528 96,210 350,581 186,424 General andadministrative (90,039 ) (59,584 ) (176,762 ) (90,818 )expensesOther(expenses) (689 ) 576 (748 ) 370 income, net Operating income 76,800 37,202 173,071 95,976 Finance income 13,954 4,650 42,780 9,817 Finance (23,130 ) (19,721 ) (40,802 ) (31,957 )expenses Finance (9,176 ) (15,071 ) 1,978 (22,140 )result Share ofincome of 2,603 920 4,905 920 associate Income before 70,227 23,051 179,954 74,756 income taxes Income taxes (6,341 ) (1,725 ) (12,398 ) (3,954 )expense Net income 96 63,886 21,326 167,556 70,802 Othercomprehensive - - - - incomeTotalcomprehensive 63,886 21,326 167,556 70,802 income Income attributable toEquity holders 60,679 16,317 160,495 57,852 of the parentNon-controlling 3,207 5,009 7,061 12,950 interests 63,886 21,326 167,556 70,802 Basic earnings per sharePer common share 0.65 0.23 1.74 0.91 Diluted earningsper share 0.65 0.23 1.73 0.89 Per common share

Interim condensed consolidated statements of financial position

As of June 30, 2020 and December 31, 2019

(In thousands of Brazilian Reais)

June 30, December 31, 2020 2019Assets (unaudited) Current assets Cash and cash equivalents 1,041,462 943,209Restricted cash 10,902 14,788Trade receivables 238,874 125,439Inventories 5,375 3,932Recoverable taxes 18,774 6,485Derivatives 8,720 -Other assets 14,108 17,912Total current assets 1,338,215 1,111,765 Non-current assets Restricted cash 2,053 2,053Trade receivables 13,611 9,801Other assets 41,240 17,267Investment in associate 50,539 45,634Property and equipment 192,686 139,320Right-of-use assets 376,023 274,275Intangible assets 1,835,823 1,312,338Total non-current assets 2,511,975 1,800,688 Total assets 3,850,190 2,912,453 Liabilities Current liabilities Trade payables 23,234 17,628Loans and financing 42,094 53,607Derivatives - 757Lease liabilities 46,920 22,693Accounts payable to selling shareholders 149,879 131,883Notes payable 9,322 -Advances from customers 40,621 36,860Labor and social obligations 98,916 46,770Taxes payable 32,483 19,442Income taxes payable 4,395 3,213Other liabilities 14,662 376Total current liabilities 462,526 333,229 Non-current liabilities Loans and financing 19,308 6,750Lease liabilities 347,320 261,822Accounts payable to selling shareholders 245,567 168,354Notes payable 69,115 -Taxes payable 23,924 21,304Provision for legal proceedings 19,807 5,269Other liabilities 3,048 1,999Total non-current liabilities 728,089 465,498Total liabilities 1,190,615 798,727 Equity Share capital 17 17Additional paid-in capital 2,300,513 1,931,047Share-based compensation reserve 32,711 18,114Retained earnings 276,411 115,916Equity attributable to equity holders of the 2,609,652 2,065,094parentNon-controlling interests 49,923 48,632Total equity 2,659,575 2,113,726 Total liabilities and equity 3,850,190 2,912,453

Interim condensed consolidated statements of cash flows

For the six-months periods ended June 30, 2020 and 2019

(In thousands of Brazilian Reais)

June 30, June 30, 2020 2019 (unaudited) (unaudited)Operating activities Income before income taxes 179,954 74,756 Adjustments to reconcile income before income taxes Depreciation and amortization 51,330 28,441 Allowance for doubtful accounts 13,953 8,606 Share-based compensation expense 14,597 1,909 Net foreign exchange differences (14 ) (1,858 ) Net (gain) loss on derivatives (19,430 ) 2,809 Accrued interest 11,017 9,873 Accrued lease interest 20,428 14,540 Share of income of associate (4,905 ) (920 ) Provision for legal proceedings 1,183 (347 )Changes in assets and liabilities Trade receivables (104,831 ) (28,624 ) Inventories (976 ) 884 Recoverable taxes (11,464 ) (2,827 ) Other assets 2,940 (15,758 ) Trade payables 996 5,257 Taxes payables 10,214 1,139 Advances from customers (13,317 ) 1,428 Labor and social obligations 39,605 13,352 Other liabilities 10,534 (1,458 ) 201,814 111,202 Income taxes paid (12,397 ) (2,392 ) Net cash flows from operating activities 189,417 108,810 Investing activities Acquisition of property and equipment (37,583 ) (20,674 ) Acquisition of intangibles assets (7,766 ) (718 ) Restricted cash 3,870 (1,153 ) Payments of accounts payable to selling (67,304 ) (30,674 ) shareholders Payments of notes payable (1,611 ) - Acquisition of subsidiaries, net of cash (240,631 ) (148,880 ) acquired Loans to related parties - (1,695 ) Net cash flows used in investing activities (351,025 ) (203,794 ) Financing activities Payments of loans and financing (99,096 ) (23,868 ) Issuance of loans and financing 911 - Payments of lease liabilities (25,538 ) (17,316 ) Capital increase - 150,000 Proceeds from issuance of common shares 389,170 - Shares issuance cost (19,704 ) - Dividends paid to non-controlling interests (5,770 ) (7,621 ) Net cash flows from financing activities 239,973 101,195 Net foreign exchange differences 19,888 - Net increase in cash and cash equivalents 78,365 6,211 Cash and cash equivalents at the beginning of 943,209 62,260 the period Cash and cash equivalents at the end of the 1,041,462 68,471 period

Reconciliation between Net Income and Adjusted EBITDA, Pro Forma Adjusted EBITDA

(in thousand of R$) For the three months period For the six months period ended June 30, ended June 30, 2020 2019 % Chg 2020 2019 % ChgNet income 63,886 21,326 199.6 % 167,556 70,802 136.7 %Net financial 9,176 15,071 -39.1 % (1,978 ) 22,140 n.a.resultIncome taxes 6,341 1,725 267.6 % 12,398 3,954 213.6 %expenseDepreciation and 26,383 19,387 36.1 % 51,330 28,441 80.5 %amortizationInterest received 1,810 1,410 28.4 % 5,327 3,915 36.1 %(1)Income share (2,603 ) (920 ) 182.9 % (4,905 ) (920 ) 433.2 %associateShare-based 6,157 868 609.3 % 14,597 1,909 664.6 %compensationNon-recurring 7,002 8,042 -12.9 % 7,002 8,042 -12.9 %expenses:- Integrationof new companies 1,862 2,607 -28.6 % 4,982 3,607 38.1 %(2)- M&A advisoryand due diligence 2,886 959 200.9 % 5,636 1,099 412.8 %(3)- Expansion 1,308 638 105.0 % 2,091 943 121.7 %projects (4)- Restructuring 946 3,838 -75.4 % 1,762 5,749 -69.4 %expenses (5)Adjusted EBITDA 118,152 66,909 76.6 % 258,796 141,639 82.7 %Adjusted EBITDA 43.1 % 37.5 % 560 bps 47.4 % 43.8 % 360 bpsMarginAdjusted EBITDAcomparable to 107,363 66,909 60.5 % 248,007 141,639 75.1 %guidanceAdjusted EBITDAMargin comparable 44.0 % 37.5 % 650 bps 48.1 % 43.8 % 430 bpsto guidancePro Forma 118,152 68,127 73.4 % 258,796 152,509 69.7 %Adjusted EBITDAPro FormaAdjusted EBITDA 43.1 % 37.0 % 610 bps 47.4 % 37.9 % 950 bpsMargin (1) Represents the interestreceived on late payments of monthly tuition fees.(2) Consists of expensesrelated to the integration of newly acquired companies.(3) Consists of expenses related to professional andconsultant fees in connection with due diligence services for our M&A transactions.(4) Consists of expenses related toprofessional and consultant fees in connection with the opening of new campuses.(5) Consists of expenses related to the employeeredundancies in connection with the organizational restructuring of our acquired companies.