Afya Ltd (AFYA) 2024 Q4 法說會逐字稿

Thank you for joining us for Afya's conference call. I'm here today with Afya's CEO, Virgilio Gibbon; and our CFO, Luis Andre Blanco.

During today's presentation, our executives will make forward-looking statements. Forward-looking statements can be related to future events, future financial or operating performance, known and unknown risks, uncertainties, and other factors that may cause Afya's actual results to differ materially from those contemplated by these forward-looking statements.

Forward-looking statements in this presentation include, but are not limited to, statements related to the business and financial performance, expectations and guidance for future periods, or expectations regarding the company's strategic product initiatives and its related benefits. These risks include those more fully described in our filings with the Securities and Exchange Commission.

The forward-looking statements in this presentation are based on the information available to us as of the date hereof. You should not rely on them as predictions of future events, as we disclaim any obligation to update any forward-looking statements, except as required by law.

In addition, management may reference non-IFRS financial measures on this call. These measures are not intended to be considered in isolation or as a substitute of the results prepared in accordance with IFRS. This presentation has reconciled these non-IFRS financial measures to the most directly comparable IFRS financial measures.

Now, let me now turn the call over to Virgilio Gibbon, Afya's CEO, starting the next slide.

Thank you, Renata, and welcome to our financial conference call of 2024. We're excited to present another year of exceptional operational and financial performance for Afya. Once again, we have demonstrated the differentials of our business, the successful implementation of our strategy, and the reliability of our business model.

In this presentation, I will cover key strategic topics, including our performance highlights, the successful business execution across our three segments, the guidance for 2024, and the new goals for 2025. And finally, Luis Blanco will provide an in-depth look of our financial and operational performance.

Now, turning to page number 3. Let's begin by highlighting our performance achievements. Initially, our net revenue increased by 14.9%, reaching BRL3.3043 billion, accompanied by a growth in adjusted EBITDA of 25% year over year, reaching BRL1.4556 billion, with a margin of 44.1%.

Furthermore, we are pleased to report a record on cash flow generation from operating activities, concluding the year with BRL1.4532 billion, reflecting a 34% increase compared to the previous year, with a cash conversion rate of 102%.

With consistent momentum throughout the year, our net income reached BRL648.9 million in 2024, marking over 6% growth year over year with an EPS of BRL0.071, a remarkable 62.9% increase compared to the previous year. This underscores our disciplined capital allocation on buyback programs, M&A, and an efficient capital structure.

Transition to our operational updates for the year, we have expanded to 3,593 approved seats, witnessing a year-over-year increase of over 13%, facilitated by the acquisition of Unidom in July of 2024. In addition, our number of Undergrad medical students has reached more than 24,000 students, representing a 13% growth compared to 2023. Furthermore, we increased the net average ticket of medical school by 4.6%, reached BRL8,849.

Additionally, in the Continuing Education segment, we continue to see a significant growth, presenting a net revenue increase of 8% year over year, pure organically, reaching BRL255.4 million. Our Medical Practice Solutions revenue marked another great result with a 15% increase compared to 2023, pure organically, reaching a net revenue of BRL161.8 million.

This outcome underscored the vast opportunity in Medical Practice Solutions, driven by the ramp-up in B2P engagements, securing new contracts with pharmaceutical industry companies, and the continuous expansion in B2P contracts. Lastly, our ecosystem has 313,000 active users, exemplifying substantial penetration among physicians and medical students in Brazil.

In the next slide, we will discuss our robust business performance across the three business segments. Beginning with our core business, the Undergrad segment, we observed significant growth in the net average tickets of medicine, representing a growth of 4.6% year over year.

Gross margin expansion driven by the integration of UNIMA and FCM Jaboatão completed in the fourth-quarter 2023 and the ramp-up of the four Mais Médicos campuses launched in the third quarter 2022. Also, the closing of Unidompedro acquisition and the approval of 103 new medical seats, 80 of them additional at UNIMA, 40 additional at Guanambi, and the reconsideration of 10 seats in Unigranrio.

Continued Education was marked by gross margin expansion driven by an operational restructuring, which resulted in a growth in B2P students boosted by our residency journey offerings. Additionally, we are pleased to see an expansion of five new units in 2024, four of them being cross units in the Undergrad segment and one standalone campus.

Lastly, in our Medical Practice Solutions segment, we ended the quarter with over 6% increase in active payers, driven by 5% growth in clinical decision and almost 13% growth in clinical management. This result reinforce the opportunity ahead in Medical Practice Solutions. And it's explained by the ramp-up in B2P engagements that boosted net revenues and grew almost 30% with new contracts with the pharma industry and the continuous ramp-up in business to physicians contracts.

Now, transitioning to the slide number 5. We take immense pride not only in our financial and operational achievements but also in the significant social impact generated by Afya's investments. This commitment led us to calculate our social return on investment, SROI, using robust globally recognized methodologies.

Our study applies the value of statistical life, deeply adopted by institutions such as OECD and World Bank, which quantifies the financial impact of mortality reduction. In Brazil, this value is estimated to be at BRL4.2 million, reflecting the value on preventing a single death.

By leveraging these metrics, we quantify the social impact of preventing deaths in the studied municipalities, reaching an extraordinary BRL14.5 billion. This demonstrates that Afya's effort in medical education and the presence of students in these communities not only enhance healthcare access but also generate significant economic and social returns.

According to our social return on investment, SROI study, every BRL1 we invested resulted in BRL3.58 in social benefits for the population and the municipalities analyzed. This reflects reduced mortality, increased life expectancy, and positive economic impacts such as wage growth and local financial activity. Based on these results, Afya strongly reinforced its commitment not only of creating value for its shareholders but also maintaining a high social impact in the regions where we operate.

Now, moving to slide number 6. We are thrilled to share some exciting news. Thanks to Afya's robust cash generation and disciplined financial management, we are pleased to announce that we will distribute the first dividends to our shareholders and at the same time, staying fully committed to our ambitious growth plans.

The Board of Directors has approved a cash dividend payout of 20% of 2024 net income. The dividend will be payable on April 4, 2025, to shareholders of record as of the close of business on March 26. This decision underscores our dedication to delivering long-term value and sharing the results of our solid financial performance with our shareholders.

Now on slide number 7, we will present our 2024 guidance achievement and introduce our new guidance for 2025. Afya's 2024 net revenue was more than four times higher than in 2019, the year of our IPO, reaching BRL3.3043 billion, surpassing our mid-guidance for 2024 adjusted net revenue of BRL3.275 billion.

Furthermore, 2024 adjusted EBITDA was BRL1.4556 billion, followed by an adjusted EBITDA margin of 44.1%, also surpassing our EBITDA mid-guidance of BRL1.425 billion. These outstanding results reflect Afya's consistent growth and operational excellence. This consistency added to another strong intake cycle, paved the foundation for our 2025 guidance.

Net revenue is expected to range between BRL3.670 billion and BRL3.770 billion, while adjusted EBITDA is anticipated to be between BRL1.620 billion and BRL1.720 billion, excluding any acquisition that may be concluded after the issuance of this guidance.

Once again, we are guiding another strong round, and improving Afya's resilience and ability to keep delivering solid results with a high predictability. Furthermore, shown in the chart, our CapEx for 2025 expects to be between BRL250 million and BRL290 million.

In my last slide, I would like to welcome Dr. Gustavo Meirelles as the Chief Medical Officer of Afya, reaffirming our mission of transforming healthcare through education and technology. One of his top priorities will be driving innovation, evolving our products, and strengthening relationships within the health industry.

Dr. Meirelles has a proven track record in leadership, research, and consultancy, focusing on transformative change in healthcare. Welcome aboard. And now I will be turning the call over to Luis Blanco, Afya's CFO, to provide more insights into the financial and operational metrics. Thank you.

Thank you, Virgilio, and good evening, everyone. Starting with slide number 9 for discussions of key operational metrics by business unit, starting with the Undergrad programs.

Our number of medical students grew 13% year over year, reaching more than 24,000 students. And approved medical seats increased 13% yearly. Our medical school net average ticket, excluding the Unidom acquisitions, increased by 4.6% for the 12 months, reaching BRL8,849.

We achieved BRL2.896 billion in net revenues, up from BRL2.511 billion from the prior year, an increase over 15%. Regarding the revenue mix, 86% was derived from medical school students and 94% from health-related courses.

On the next page, I will present our Continuing Education metrics. We approach Continuing Education through three main journeys, starting with the residency journey. We saw a 35% increase, reaching 16,381 students by the end of the period. In the graduate journey, students number grew 10%, reaching 8,527 students, primarily driven by student graduations.

Lastly, other courses and B2P offerings decreased by 6% over the same 12-month period of the prior year. Overall, this effort pushed Continuing Education net revenues to BRL255 million in the 12-month period of 2024, up from BRL236 million in the 12 months of 2023, reflecting a growth over 8%. This includes a 10% increase in B2P revenue and 11% decrease in B2P.

Moving to slide number 11, I will discuss the Medical Practice Solutions' operational metrics. The first graph shows our total active payers, representing revenues generated in the business to physicians, B2P. Following a steady growth trend, the number of paying users rose to over 195,000, a 6% increase over the same quarter last year.

The second graph highlights our monthly active users, which accounts for 238,000, slightly lower than the 248,000 record last year. This change is primarily due to the transition from the PEBMED portal to the Afya portal.

Lastly, the third graph shows the net revenues from our Medical Practice Solutions segment, which grew 15% year over year, reaching BRL162 million. Of this total, BRL135 million was generated by B2P, showing an increase of 13%, while B2P contributed in BRL26 million, growing almost 30% in the 12-month period.

In the next slide, we also present Afya ecosystem. We are pleased to highlight Afya's substantial contributions to the Brazilian healthcare community. By the end of the fourth quarter of 2024, our ecosystem encompassed 313,000 physicians and medical students using our service and products.

Moving forward to page 14, I want to discuss our financial overview for the fourth quarter of 2024. With great satisfaction, I present another strong quarterly performance for Afya. Net revenue for the fourth quarter of 2024 reached BRL849 million, representing a 16% increase compared to the last year. Net revenue totaled BRL3.304 billion for the 12-month period, up 15% year over year.

The yearly revenue increase was mainly due to higher tickets in medicine courses; the maturations of medical school seats; the additions of 40 seats at Guanambi and 80 seats at UNIMA; the reconsideration of 10 seats in Unigranrio, Rio de Janeiro; the acquisitions of Unidom; and the advancement of Medical Practice Solutions and Continuing Education segments.

In fourth quarter 2024, adjusted EBITDA rose by 27%, reaching BRL366 million with adjusted EBITDA margins of 43.1%, again, up 350 basis points compared to the fourth-quarter 2023. For the 12-month period, adjusted EBITDA amounted to BRL1.456 billion, an increase of 25% year over year with an adjusted EBITDA margins of 44.1%, representing a 360 basis points increase over the same period.

Expansion in adjusted EBITDA margin is largely attributed to gross margin expansions in Undergrad and Continuing Education segments, completion of UNIMA and Afya Jaboatão integration process in November 2023, the ramp-up of four Mais Médicos campus that started operations in third-quarter 2022, operations restructuring efforts in Continued Education and Medical Practice Solutions segments, and more efficiency in selling, general, and administrative expenses.

Moving to the next slide, the year's cash flow from operating activities rose by 34%, reaching BRL1.453 million, reflecting a strong operational performance. The operational cash conversion ratio was 102% in 2024. Net income for the fourth quarter of 2024 came at BRL154 million, marking an increase of 51% from the same period in 2023. And adjusted net income was BRL194 million, an 18% increase.

For the 12-month period ending December 2024, net income totaled BRL649 million, representing an increase of 60.1%, while adjusted net income amounted to BRL820 million, up 39% year over year. This performance is mainly due to enhancement of our operational results and lower effective tax rates compared to the last year. Regarding EPS, we reached BRL1.66 in the fourth quarter, a 52% growth compared to the prior year with BRL7.01 per share in the 12-month period, representing a 63% increase.

And now moving to my last two slides, I will discuss our cash and net debt positions, also giving more color on our cost of debt. This slide is a table detailing our gross debt compositions and total cost of debt, covering our primary obligations: the SoftBank transactions, debentures, other financial liabilities, the IFC financing, and accounts payables to selling shareholders. Afya's net debt structure remains solid with a conservative leverage positions and low cost of debt. Afya's net debt, excluding the effect of IFRS 16 divided by the 2024 adjusted EBITDA, was 1.25 times.

On the next page, we can look closely at our net debt variation. As of fourth-quarter 2024, our net debt stood at BRL1.815 billion, stable when compared to the end of 2023. Even accounting for the BRL157 million earn-out payments regarding the additional seats for Guanambi and UNIMA and the BRL660 million regarding the acquisitions of Unidom, we were able to reduce our net debt to adjusted EBITDA, thanks to our strong cash flow from operating activities in the 12-month period.

This concludes our prepared remarks. We are proud of our accomplishment and robust performance across all areas. Our commitment to advancing in a medical journey through an integrated educational system and medical practice solutions remains strong, supporting healthcare professionals' growth, continuous learning, accuracy, and productivity.

As we look ahead, we are enthusiastic about the opportunities that lies before us. I'll now open the conference for the Q&A section. Thank you.

(Event Instructions) The first question comes from Andre Salles from UBS. Andre, you may now go.

Hi, good evening, Virgilio, Blanco, and Renata. I have two questions on my end here. The first one is regarding the vision of the company on capital allocation. Can we expect the dividend levels to be sustainable ahead? Or you see the dividends that you disclosed as a more opportunistic due to specific points in 2024?

And my second question is regarding the top-line guidance. What are the drivers that you think are important for us to monitor in order for you to reach the bottom part of the guidance? That's it. Thank you.

Hi, Andre. It's Blanco speaking. Thank you for your questions. Regarding dividends, we established these dividends for this year. We did not establish a formal policy for going ahead. But our capital allocation -- minds didn't change.

We want to keep our -- capturing our organic and inorganic opportunity. In organic opportunities, of course, we see the [management industry] opportunities and inorganic step, we continue to see opportunities of growing -- acquiring 200 seats per year.

So did not change this minds, capturing this growth according to our long-term view. And with this -- executing this long-term view, we saw these opportunities to establish our first payments of dividends equivalent of 20% of our consolidated net income of 2024.

Regarding the guidance for 2025, for the last years, we've been providing yearly guidance. And we've been -- in all of these years, we've been achieving it. So that's the same view. We provide the guidance for 2025. We are pretty confident that we're going to deliver that during the year.

Got it. Thank you.

Of course. The next question comes from Flavio Yoshida from Bank of America Merrill Lynch. Flavio, you may now go.

Hi, Virgilio, Blanco, and Renata. Congrats on the results. I have two questions on my side. The first one is on the M&A pipeline. So given that you guys are now distributing dividends, how should we think about the M&A pipeline following this announcement?

And if you could share some update on the pipeline, if you guys are seeing a higher offering given the [new junctions] already approved? What are your expectations for M&As for 2025 and also related to prices as well?

And then my second question is on tuition fees. We noticed that you guys increased tuitions by 5%. And if you guys are seeing any trouble to pass through a higher level because if I'm not wrong, historically, you guys managed to pass through a higher level than inflation. So if you guys are seeing some difficulties to increase prices to newcomers or to upperclassmen. If you could share some details, I would appreciate that. Thanks.

Hi, Flavio, Virgilio. Thanks for your question here. So regarding M&A and capital allocation here, so we are not changing our long-term guidance here in terms of inorganic growth. We see -- we saw the opportunity here also to start being a company that will pay dividend for the -- at least a minimum rate for our shareholders in the long term and keeping our commitment to keep acquiring the [company].

Remember that we have a milestone this year in the first semester, the Mais Médicos III, that depending on the results, we will have additional CapEx here. So this is a variable that will demand more capital this year. But we will continue to deliver the inorganic growth as expected on our guidance for the long-term guidance.

So regarding tuition, we keep also our commitment here to pass at least inflation in a consistent way. We are seeing a very healthy intake process for this first semester. Here, we have more than seven candidates around Brazil, around all of our offerings here in Brazil. So what we are seeing here, it's a good opportunity.

We saw that our brand, our differentials, is getting even higher in most of the regions. So we are seeing a sustainable way to pass at least inflation as we are doing since the IPO. So about the opportunities also on the pipeline on M&A, yes, so the pipeline is hot.

We are seeing many institutions that because of the [injections], they also don't have a good condition to start its operation. But we have been very selective in terms of assets, the quality, and also the region where we are going to apply and allocate our capital to acquire at least 200 seats (inaudible).

All right.

If I make a point, Flavio, when you said that you used to pass more price in the past and what we are correcting right now, you guys always need to remember that when we pass prices really above inflation is when we do acquisitions, and the assets are repriced.

So in the past, the deal acquisition, they were more representative in our results. And now they are not that representative anymore. And some of the times, those assets are already well priced. So that's the difference. I wouldn't say that the difference here is because of the market dynamics.

And, Flavio, just to add additional color on the M&A pipeline, with these new assets that come to the market, as Virgilio mentioned, we're being very selective in cherry-picking the locations that we see opportunities to operate.

And with these new assets that are in place, what we see that we have good opportunities on doing good negotiations regarding the price per seat. So we can see the next deals being more like with the one that we signed in December that was in Contagem, that was FUNIC, that we are right now between signing and closing. These assets should be with a lower size, more similar with Contagem with 60 seats.

All right. Thanks, guys.

Of course. Next question comes from Jessica from JPMorgan. Jessica, you may now go.

Hi, good evening, Virgilio, Blanco, Renata. Thank you for taking my question. I want to know about the Continuing Education. Should we continue to see this segment expanding in 2025? What is the outlook for this segment? Thank you.

Yes, Jessica, yes, we can expect -- we have a large cohort of students graduating this second semester. But the intake level that started that kicked off on October, November was quite high. So expecting a little bit --even higher than what we are seeing for 2024 in 2025 in Continuing Medical Education.

Thank you.

And next question comes from Gustavo Miele from Goldman Sachs.

Good evening, Virgilio, Blanco, Renata. Thanks for the presentation. I have two questions. The first one, I just want to bounce back here to the guidance discussion more on the profitability front. So if we consider the mid of the range for both revenues and EBITDA, we have an adjusted EBITDA margin expanding 80 bps versus 2024.

So I just want to reconcile the main drivers for such expansion. Or if this is related to purely G&A dilution or if there's any other line in cost here that you would highlight as one of the main drivers for such movement. This is the first one.

And on a second note here, I would like to ask you to provide a bit more of content and details on how do you guys saw the Mais Médicos III preliminary result announced a couple of weeks ago? How did you view your competition? And what are the expectations for the final outcome to be announced in May? Thank you.

Hi, Gustavo. Blanco speaking. Thank you for your questions. I'll take the first one, and Virgilio will take the question about Mais Médicos III.

Regarding the expansion that you just make the calculations between the midpoint of the EBITDA with the midpoint of the revenues compared to 2024, the expectations come in increasing level of efficiency that we got from the grant. We expected to do the integrations of Unidompedro in the first semester. So we're going to have a positive impact on that and keep getting some efficiency opportunities that we have in the Undergrad segment.

In Digital and in Medical Practice Solutions and Continuing Education, what we're seeing is that the operational leverage -- as we're expanding these segments with a higher growth, what we see that we can capture the operational leverage, increasing the margins that we have in these segments.

And on top of that, we are always capturing opportunities on holding and shared service opportunities. We implemented two or three years ago our zero budget methodology that helped us a lot during 2024 to increase margins. And we see some opportunities to capture this in 2025. We're pretty confident that we'll have this opportunity for 2025 and capturing once again this guidance that we're providing to the market.

Hi, Gustavo, just adding here the first question. Yeah. So it's basically operational leverage. Undergrad, it's a major part of the business. We still have maturation on our Mais Médicos campuses -- the Mais Médicos II campuses. And also, we still have more students to come on Unidompedro. It's a very large operation, and it's a huge impact on the overall operational margin.

And both the other segments, Continuing Med Education and also Digital Medical Practice, they are leveraging -- they're growing its operation. We launched many new campuses also on Continuing Med Education. So we have opportunity here to dilute fixed costs. And so that is the source where the margin improvements will come in 2025.

Regarding Mais Médicos III, well, we liked the results. So it's just the first phase where we have been recognized and able to participate in all 23 cities that we send out our proposal. So the likelihood here is quite positive.

We have -- in some areas, we have more competition; in others, it's a low competition. We are quite excited here with the opportunity, but it's still early in the process. I wouldn't like to give any data here, what will be the number that we're expecting.

But we are very short in the process here. But maybe in some weeks, we'll have the final results about that. So it's 23 new opportunities. Remember that Mais Médicos II, we bid for nine, we won seven. Now we are bidding for 23. The competition is much higher. We are also much better prepared. So let's wait. I think it's better.

That's clear. Thank you.

Of course. Next question comes from Lucas Nagano from Morgan Stanley.

Hey, good evening, Virgilio, Luis, Renata. Thanks for the space here. We have two questions. The first question is related to the intake. You mentioned the intake process was successful, but more competitive.

And it would be interesting to hear from you how this expansion of seats is manifesting. Maybe if you have examples of regions that are more competitive or commercial offers you're observing? And what steps you took to offset this pressure?

And the second question is related to regulation. So what are your thoughts on the recent comments from Carlos Santana about monitoring prices in medical schools as he suggested they might be too high? And also share your thoughts on the proposal in the Senate about a proficiency exam for physicians similar to OAB for lawyers. Thanks.

Lucas, can you ask -- can you repeat your last part of the second question?

Yes, it was about the -- there's a proposal in the Senate about a proficiency exam for physicians who are graduating, which is similar to the OAB exams for lawyers. How this would impact the sector?

Okay. Lucas, thanks for your question. So about the intake, I think it's a very good message here. We have a very successful intake in 2025 first semester when compared to 2024. That was even better in terms of candidates ratio that we have. So -- and that was spread.

This was most dependent on the local competition. Let me give you an example. I just came from North region in Brazil. I visited four campuses. Two of them was from Mais Médicos, and the other two was a traditional medical school.

And all of four campuses, they had more than six and seven candidates per ratio. One of them, almost 20, and it was on a very small city north of Pará state. So depending on the competition, the local competition was too far. So we have a very successful intake on that.

So we are seeing that brand of Afya it's -- I think it's helping us a lot to be recognized. The awareness that we have from physicians on our ecosystem is also much higher than we have last year and last two years that Afya was not known in the segment. So this is helping us on the commercial cycle overall.

About regulation, I mean, the second part here, the proficiency exam here. This is -- I think everything that put the bar higher here in terms of quality in the market, we are supportive. So I think it has to be another differential here. Remember that we are helping physicians here to get prepared for residency. That's a very high competition here.

So it's a quite good opportunity also to help students to get prepare for this type of bar exam there. And about the recent communication, I think it's too soon in the process to say about any regulation. So higher education is something very stable in terms of pricing based on a federal law since 1999.

The law is 3870, if I'm not wrong here. So this is that we have -- for all cohorts of new students that we have to enroll, we have no pricing control. We just have to follow our internal inflation, internal cost inflation, to follow the contract until the student graduate on our campuses. So I think it's too soon to understand what has come from this speech, the recent speech, okay?

Super helpful, Virgilio. Thanks.

Welcome.

(Event Instructions) Our next question comes from Lucca Marquezini from Itau.

Hey, good evening, everyone. And thank you for taking our questions. Just one question considering the capital allocation strategy of the company and looking at the Medical Practice Solutions segment. Should we expect the company to engage in M&A activities in this vertical? And if so, is there a specific solution that the company should be focused on? Or going forward, we should only expect organic growth on this segment? That will be helpful. Thank you.

Thank you, Lucca. Thank you for your questions. Regarding M&A opportunities, we always chase opportunities in the three segments, okay? And we are very strict regarding capital allocation and the returns that we can get for each one of the business combinations independently, if it comes from Undergrad, Medical Practice Solutions, or the Continuing Education.

So we are always looking for opportunities. We don't chase any specific functionality on it. But we are always looking forward for great entrepreneurs and great solutions that we can add to our ecosystem, whether it's in the Medical Practice Solutions.

So just to make clear, totally clear, the guidance for 2025 do not include any kind of business combination on it. So if it comes, we're pretty sure that will be very accretive and very positive for the ecosystem as we are very strict in our capital allocation.

Very clear. Thank you.

Of course. The next question comes from Renan Prata from Citi. Renan, you may now go.

Hi, everyone. Thank you for taking the question and for the speech. Just a very quick question here, just to clarify. So regarding the 2025 guidance, looking at the CapEx, I mean, do you have any anticipated like expenditure relating to the Mais Médicos III embedded on the guidance? Or I mean, it should be more backloaded to 2026?

Hi, Renan. Blanco speaking. We don't put the III Mais in the CapEx guidance for 2025 -- the Mais Médicos III. Because we don't know yet how many cities that we're going to win among the 23 that we are participating on the bid. So when we put that -- when we receive that, you can use as a proxy BRL25 million per each one of the locations that we are competing to. So Mais Médicos III is not included in the CapEx guidance.

Okay. That's very helpful. Thank you very much.

Of course. So we don't have any other questions. I just want to make sure that you guys know that if you want to ask anything else, you can reach us in our Investor Relations department. We are going to be pretty happy to help you guys.

Thank you, and have a good night.