Afya Limited (NASDAQ:AFYA) Q3 2019 Earnings Conference Call - Final Transcript
Dec 02, 2019 • 11:00 am ET
conversion of 108% of our adjusted EBITDA for the 9 months ended September 30. 84% in the same period in 2018. Finally, we respect to our key operating net in this line Number 4. We have reached 1,572 medical seats approved and 6,400 medical students enrolled by the end of the third quarter, 15% above the final student base in the first half of 2019.
Afya is the leading medical education play in Brazil with a potential to reach a 11,300 medical students consider the seats are ready ultra right. Our average tuition fees in the third quarter reached BRL8,100, 8% above the second quarter this year. This increase is in line with our strategy and explained by the mix effect of the new students cohort enrolling with a higher tuition, combined with the students graduating with a lower tuition. As regard to BU2, our prep course and CME and medical specialization student-base grew by 12% over the first semester, showing already a strong growth in the first intake process concluded after IPO.
Now, I'll turn this presentation to Luciano Campos, Afya's CFO, to detail our financial results.
Thank you, Virgilio, and good morning, everyone. As I will demonstrate in my presentation, our focus on medical education provides highly predictable growth, strong profitability and cash generation for Afya's investment case. Before I get into the details of the quarter, as a reminder along with our reported figures, we also provide pro forma figures for some key line items. The 2019 pro forma figures give effect to the acquisitions of Medcel, FASA, and IPEMED, as if they had occurred in January 1st, 2019.
It is also important to remember that our adjusted EBITDA and net income exclude the impact of IFRS 16. Starting with net revenue on Slide No. 5. We have provided a bridge for our reported figures in 2019 through to our third-quarter and nine-months' results in 2019.
Our net revenue in the third-quarter 2019 increased 124% year over year to BRL207 million. And for this quarter, the reported and pro forma figures are the same. Growth was driven by an increase in medical school enrollments, higher average tuition fees, as well as, the acquisitions of Novafapi, FADEP, FASA, IPEMED, and Medcel. For the nine-month period, revenue increased 133% to BRL530 million, and on a pro forma basis, reached BRL609 million, with a contribution of approximately BRL79 million from Medcel, FASA, and IPEMED.
On Slide No. 6, we have our net revenue by business unit. Business Unit 1 net revenue of BRL176 million represented 85% of total net revenue of the third quarter and increased 91% year over year. The factors driving our growth were: first, medical school seat maturation, remember that [Indecipherable] medical school takes six years to mature and reach full potential; second, medical tuition fees increased above inflation; and finally, acquisitions in the period.
Next Business Unit 2, net revenues of BRL31 million represented approximately 15% of our net revenues in the third quarter. It is