Anima Holding SA

BOVESPA:ANIM3

Earnings Call Transcript 2023-Q2

[Marcus Vinicius Cuiabano Peixoto, executive]

Good morning, everyone. It is a pleasure to have the presence of so many investors, analysts so many participants in our earnings results webinar. It's a pleasure to present the results of our second quarter 2023. We have Marcelo Bueno, one of Founders, CEO; and Guilherme Soarez, CEO of Inspirali, great medical subsidiary; and Atila Simoes, our CFO; and myself, Marcus Peixoto, IR Officer, are available to you. We're going to start by turning over to Marcelo.

[Marcelo Bueno, executive]

Good morning. Good morning, everyone. I'd like to start by saying that where we should keep that in mind. We are an educational company. We start our semester. All the schools in the Brazilian ecosystem are starting classes to create our teachers, professors, our educators who are now starting such a magical semester, which is a time that we have our students resuming the semester.

And actually, thinking about education, very good morning. It's a great honor to be here with this wonderful team. We've completed this year 20 years of -- well, we were on getting to Buenos Aires on the 2nd of May 2003, well we have a beautiful history. And this semester in this quarter, I'd like to share some messages with you.

It has been a semester of discipline. We can see the discipline we've had on the avenue of renegotiating our physical spaces. The numbers already show the nature advance in optimizing physical spaces. It's an agenda of simplifying our corporate structure of our operating structure.

This is something we can see a trend that is already reflected in July and now in this semester that starts today the third avenue of our optimizing, of our faculty that will be noticed from now on. So these are the main messages of the three avenues of this quarter. Well, the even number quarters are usually weaker. It's important for us to show this discipline.

On the other hand, I think it's important. Well, the main message is here that we share, we are bringing an EBITDA the old fashioned EBITDA ex IFRS 16 and EBITDA that again shows a gain of 1.4% points. So it is important to bring it up as a first message and also the reduction of dropout rate, this is a very important number. We will drop out rate reduction shows an important scenario in terms of the soundness of our operations.

Cash generation or recurring cash generation, it is important message here of BRL 136 million in terms of cash generation. As I mentioned, those two important points: a new lease level of BRL [ 782 ] million. And in July, if you see an agenda of simplify the SG&A and personnel, almost 10% of reduction in those costs. So we're going to see those trends from now onwards.

With that, I turn it over to my dear [ Botafogo ] to proceed with the presentation.

[Marcus Vinicius Peixoto, executive]

Perfect. Thank you, Marcelo, and everyone present. Of course, at all times, we have specific challenges. We have victories and many things that have been attained. We should actually look back and take into perspective the past few months, not the last few quarters we have this chart that many of you know quite well which are the past 5 years. In these past 5 years of management that it has been very disciplined, focused on shareholders' profitability. We've been having or reaping the benefits of the discipline.

We had a record of profitability, a fourth record again. First quarter again, second quarter is the fourth consecutive quarter, in which the EBITDA margin, the LTM, to move away from the seasonality quarter-over-quarter in the past 12 months is a record. EBITDA, in the old-fashioned way after paying loans, which is essential in our business, you see EBITDA actually cash. After paying rent, we reached 21.4% in the past 12 months, and we know this is still below what we want to deliver, what we expect to deliver in the forthcoming periods, but it is already an important result.

And we are very happy about it, especially in such a challenging macro scenario. We see a bit of the results of each one of the three businesses. It's just like as if Anima managed the portfolio with three very different portfolios with value creation drivers that are quite different and times that according to the macro scenario, they're going to perform differently. And we know particularly that some of those businesses have growth momentum that is quite strong in the case of Distance Learning and Inspirali and our core on campus that feels the impact of this went against is part of this macro scenario. We had a performance in terms of [indiscernible], that has been recorded.

Our core has grown 11% in the semester in terms of Distance Learning to 21% and Inspirali grew 10%. Although it's a [sound] number, it's no surprise. It's like a Swiss clock, and these numbers grow as there is a maturation with causes. So there are sound numbers, but very much expected.

And then dropout rate, it's important to show, especially in the core because dropout in Inspirali is always very low. Well, it goes a bit up, a bit down in Distance Learning, and there is a lot of turnaround because of the business. But 60% of our revenue in our core, the dropout should be in line. In the quarter, it dropped 1% point. In the semester it dropped 2% points. And this dropout rate is a focus, as Marcelo mentioned, a great attention of ours to keep the students here so that they continue their journey in education.

Looking at each one of these segments, perhaps one of the main aspects, of course, that we've been facing a contraction of volumes because of the macro scenario. But this contraction has been smaller. We're actually almost close to a turning point to have a growth in volumes despite the challenging macro scenario. We had a drop of 9.5 percentage in terms of the student volume. Now we're dropping 1.7%, in this charter is very clear that the drop is smaller, quite close to a turning point.

Within Anima Core, when we look at the results, we still feel an impact of the faculty costs in the first semester that has been high, and we are paying great attention and great granularity in terms of all the curricular offer to gain efficiency to try the cost to contribute in the increase of profitability in the second half. We're very much focus in this faculty cost.

As to commercial expenses, we have an increase in marketing and also sales. Well, we had bad debt that has been reduced. We have been having these expenses and marketing to have -- to boost the intake we had at solid intake of students, and we have the focus on SG&A, general and administrative expenses. We're going to show that we can see already some improvement in this area as well.

As to digital learning, we have different drivers. We see the growth that is quite fast. Distance Learning is growing a lot. The margin is still expanding slightly. The margin is still expanding, and there is strong growth in terms of the business. And it will implicitly more account in our consolidated is about 7% with the significant growth, with the positive trend and also growing for the business. We're very happy about Distance Learning, and it's an increased focus for the company for this growth to be sustainable.

I think Guilherme can talk better than anyone about Inspirali.

[Guilherme Soarez, executive]

Thank you, Bota. Good morning, everyone, Marcelo, Eduardo. Once again, we are here to talk about the results of Inspirali that have constant evolution as a project, as a vertical as an independent company, always looking at growth yet at quality. Well, we are starting this semester today. We are welcoming our professors and our students over 11,000 students going back to class, and they go back to environments that have undergone great investment on focusing on quality.

In terms of hands on our integrated health centers, new technologies and also in training and the faculty valuation with our -- considering all our students with us. And the result reflect that our focus on quality and also in terms of growth, be it growth by maturing our seats and the expansion of new seats and also in terms of lifelong learning, we start having quite solid or some result of this journey that is a journey that started last year.

And I stress here the movement that we made that we disclosed over the acquisition of 100% of IBCMED showing our commitment with quality learning and our intent of putting Inspirali as a partner of a journey with doctors throughout their careers. It's very important to mention that this quarter, in the medical courses we had an impact of FG-FIES, a change that was expected in the criteria, but we do not have all the necessary visibility as to how this withholding is happening. This would be discussed with regulating agencies so that we can understand so that we can have a proactive approach to the improvement of those indices.

It's important to mention that the journey of growth of Inspirali has organic opportunities and also inorganic opportunities that is part of our mandate within our project. So Botafogo, this is what I wanted to highlight. Thank you, and I'll be available for questions later on.

[Marcus Vinicius Peixoto, executive]

Thank you. Looking at our consolidated. We see revenue and gross margin. Looking at the whole, we see different moments, different performances of each one of those components net revenue drops slightly in our core, but with a great improvement, both on Inspirali and distance learning. In the case of margin, slight contraction of margin that we see in core. It is also partially offset by the distance learning margin improvement.

In the case of gross margin in Inspirali, as Guilherme mentioned quite well, we had this greater withholding of FG-FIES and the retention of the first quarter. Best way for us to look and understand what would be a recurring basis was to normalize this for the first semester results. In this case, our average ticket would increase about 4%. And we have a revenue that is more normalized as we are allowed to. And it allows us to see revenue in the second half.

It's not so strong as we see in the first quarter and new analysts and investors will see other companies in this industry. This is an effect that actually happened in this industry as a whole. After this, I think it's important for us to think a bit about the future and think that the academic offer adjustment is very granular management of the academic offer and faculty for the second semester should have a visible impact in the second half.

Looking at the quarter as a whole and the main positive impact and also the negative ones for us to think about the future, the next semester and also think about 2024. In terms of faculty cost, we had an increase of BRL 246 million to BRL 268 million in the quarter. We're looking at the second half very attentively. It was not possible to reduce this level in the second half quarter. The level we had in the first quarter because it was a curricular offering for the semester, we're working quite hard. So that way, in the second half, we have a contribution that is more positive in terms of teaching cost or faculty costs.

In terms of bad debt or it says here on the chart, PDA, we have certain things that are aspects of great quality of less quality and as well. Well, this bad debt varies quarter-by-quarter. We should remember that it's a comparison to last year's base so that was very high. Well, we had several effects of the bonds and arrears in an approach that was more conservative or the same tax ID so we increased last year.

And the management, well, took it improves a lot because the basis is very high. It's not that this is wrong. We've had a great focus on taking care of this bad debt. All the internal processes to have to anticipate proactively the management of the debt. And we believe that we should keep this level even though bad debt is something that varies quarter-by-quarter.

Then we have certain aspects of which we are focusing a lot in terms of improved marketing, publicity and advertising, which would have continuous effort for the second half to improve it. In the first half, we have made efforts towards intake and also, we wanted to improve intake in winter that we have in midyear. We're trying to address this over the second half.

As to G&A and personnel, very difficult for analysts and investors to calculate and look into the future. On this chart on the right, we have a very clear reading. This is personnel expenses we have, adding core and business learning and we noticed the reduction of head count of over 400 people that we had, especially in May and June, cannot yet be noticed in the results of the second quarter so -- because it happened along or during the quarter, if we take June and compared to the monthly average of the first quarter, for example, there's a reduction of 9%. And this reduction, obviously, is transferred to the third and fourth quarters.

And obviously, expenses again. It's like mowing the lawn, you have to own it again. You have to be very disciplined, but we are very much focused to keep this level and even improve it in terms of the margin and contribution of such expenses, very much focused on that. And rent payments. We should praise Marcelo Bueno and all the team to the assets, and we had this improvement. The first quarter is kept in the second half -- second quarter. This is great quality. This would last for the forthcoming quarters.

[Marcelo Bueno, executive]

Actually, I can add to this. Sure, Botafogo. This is it. I think all the explanations. And well, good morning, everyone. It's a pleasure to be back here. And I'm very constructive regarding all these aspects to all these elements you've mentioned, there's a lot being done with a lot of discipline since the faculty cost, we are making deep analysis of the office, a number of students per class shift. We're revising other things that have evolved a lot changes in the policy. So there is a lot of work that we're looking into a very positive regarding what's to come.

Regarding bad debt, well, we have several facts. We mentioned them quite well. Last year, we had these car effect or train car effect, that is a jargon that we use. Things are being done quite well. Today, we can with AI, we can have a negotiation of payment in arrears well, via an app or WhatsApp. So everything done by via Whatsapp so there are lots of improvements coming up in a part of collection and great part of these results start being shown we should think that it is an element that quarter-by-quarter may undergo changes.

[Átila da Cunha, executive]

But I may tell you that there is a lot being done and our level of provisioning, Botafogo, is very robust. It is quite consistent to its historical levels. We are very confident regarding our management of this element. As to marketing, we have invested more in the first semester trying to drive intake I don't believe this level of investment will be repeated. And what Marcelo said, the discipline and DNA, it is key. We have been working on this by heart. You can see that reflected in the numbers. And from now on, this will be more visible in our statements.

And our I'd like to say that discipline will increasingly bring green numbers in these charts. This is also reflected in the trust the market has in our numbers. This discipline, this care, this work is recognized in the trust of our financial agents, so we had heavy investments made over the semester. We reduced the average spread. So our financing has been growing increasingly or every time this is reflected in the numbers. Unfortunately, we still have great high wage of leverage.

Our financial expenses are impacted and -- or impact our results. We're not comfortable with that. We're not here to pay to work and pay interest. We're working hard on this, and we believe that if the work that we have been carrying out will gradually reduce this number and it shows in the chart what I'm talking about.

Another important thing to highlight is that in this quarter. Well, actually, the semester, we had an important mobilization. We closed units. We reduced physical spaces, and this has driven our CapEx adapting the spaces that we had where we had students. So we had to do some renewal work. So we had a reduction in CapEx in the nonrecurring way. So in terms of systems and technology, we continue investing a lot in these systems and technology, we believe it's the future. But on the other hand, we've been reaping benefits of investments in the past and ERP. So this tends to reduce from now onwards. So a very positive in terms of these numbers.

This number is an important point for the growth of the company. Well, considering all of it, we made a point about clarifying to you in terms of cash and net debt position were quite robust in terms of liquidity, cash generation in the quarter is something that is highlighted. Marcelo mentioned in the beginning, this was -- is very important amongst all our disciplines that are part of our day-to-day. I think a discipline that is consistently being a focus of us is working capital. We can see quite significant numbers regarding what we had seen before.

This is reflected in the cash generation and also cash generation. This is very clear on the chart. And most important is the liquidity and health of the company. We have sufficient cash for maturities until next year or end of next year, this makes us feel comfortable to follow in the trajectory of reducing spreads and a trajectory that leads company to have fewer financial expenses.

The chart also shows we try to break down what has been a recurring element of our net debt, so it's not recurring. So we start with the cash generation that is quite significant. When we see recurring cash generation minus debt. So it's quite significant regarding previous quarters and CapEx as well is impacted. And you can see that we have all its weight in the quarter as new CapEx that are nonrecurring will disappear from this number, we'll have better results and ultimately, considering the improvement of our EBITDA. We were able to reduce from 3.9 to 3.8, the leverage. So considering specific effects of this quarter, especially the dividends, we have great impact.

On the dividends of previous years, we get to a level of debt to 3.9x, leverage of BRL 3 billion net. We are working on that. We are diligently working on that. Our total focus is reducing leverage, it in a way that we can pay less interest in our financial statements in our -- So this chart clarifies to everyone what has been the debt movement in this quarter.

And we move on to our final remarks that makes us feel very optimistic regarding what's to come. As Eduardo mentioned, the dropout rate drop shows the importance of the work we've been carrying out our -- the importance of our working on our shop floor, which are the classrooms, the students being pleased and we see a clear trend in our student base development discipline in restructuring, the payroll, start showing results and the very close viewpoint of our offers makes us feel confident that we have a lot to offer in second half.

Digital learning is quite consistent and that is quite robust. And Inspirali, as Guilherme mentioned, sound trajectory of growth. I'd like to highlight Guilherme, the whole trajectory of lifelong learning of Inspirali we have numbers that are not so significant as a whole, it shows the assertiveness of the work Inspirali has been carrying out. And I believe all of this together makes us feel very confident that the second half is a semester that work and discipline will become very visible, Marcelo. And I believe that the numbers that we present now give some idea of what is about to come.

Well, I thank you all very much for your time. I turn over to Marcelo.

[Marcelo Bueno, executive]

Thank you very much for allowing me to be back here with you. Thank you, Atila. I should welcome you Atila. Atila was until the 6th of May 2003. He was there at the Pampulha Airport. Following this trajectory, he's been to all areas of the ecosystem. He's back here with us. He's here very actively. [indiscernible] I'd like to thank you, who's been with us for 5 years. He is switched off. [indiscernible], I'd like to thank him. Guilherme Soarez, well, so many years with Anima, 4 years is Inspirali. 4 years so they are important date and on Saturday so we had 51 years in the campus.

I would like to greet all the institutions of the Anima ecosystem. I'd like to conclude stating the welcome of the over 400,000 students that today are starting their classes in the second half of the year. And the reason why we all work and I'd like to welcome all of you, all the professors and educators, teachers that are enabling our mission of transforming the country through education.

With that, I thank you all for your time. And I'd like to open up for the Q&A session.

[Operator]

[Operator Instructions] The first question is from Marcelo Santos, JPMorgan.

[Marcelo Bueno, executive]

I have two questions. The first is from the final slide, you talk about an intake with volume recovery in the second half of the year, if you can give a bit more color to that. What do you see in terms of competitive environment in terms of intake?

[Unknown Executive]

Well, yes, breaking down into on-campus, distance and medical.

[Marcelo Santos, analyst]

Yes, in terms of cost, what is the part of semi on campus? What is the relevance of that? If you think you already have the fair share of the semi on-campus in the core, what are the news that we can see in this subsegment?

[Unknown Executive]

I'll start here. Excellent questions. I think it's important it's quite early, but we're working and we have to be in line with our expectations. I think it's important for us to have clarity of hybrid education. Our ecosystem is the greatest quality education that is hybrid. In-house, we have a renowned consulting firm doing work on digital to us so that we have totally hybrid offer. We can stop there in 100% using technology that is asynchronous for those that actually need to have access. And then it goes all the way to the medical school. This is part of the concept.

And the core is on this -- is based on this assumption. So it's important for you to look at this array of experiences in our ecosystem with more or less use of technology and appropriate pricing and quality appropriate to this proposal of experience, which I'd like to add to this. I think it's -- this is perfect. We still have this intake in the way. We have the first aspect that we are confident, but we prefer to have a vision that is our to you in a few more weeks.

As to on-campus or semi on campus. It's a leverage strategy that is very important for Anima from the aspect of purpose and business. Assume a student, girl or boy that lives close to Sao Paulo, [indiscernible] that does not commute to Sao Paulo everday to have quality on-campus learning at [indiscernible] but could be in Sao Paulo twice a week. The semi on-campus is to chose technology working effectively on a hybrid approach, and we have an offering that is more complete that allows us to have greater outreach of more students that we would have rather than we would have differently. So if we want to change lives through quality education, this is wonderful. Within the business, it's excellent.

I'm getting to the student, the average ticket is lower. It brings down the average ticket. It is not bad news, much on the contrary. It's good news because we're growing with the student base that we wouldn't have an outreach. So this will be increasingly relevant. What we need to do here, Marcelo, to address your question. As of the next quarter, we should have a breakdown showing the appropriate volumes, an offer that is relatively recent to us. Semi on-campus and part online is derived from Distance Learning so it's asynchronous.

Reported classes and on-campus that is greater quality, focus is synchronous. So we have online access, but the class, the lesson is happening right now with your class and professors we try to break down a bit more in the future. What's important is that is part of growth with great hybrid offer. We have broader offer to have an outreach of more students. It's very important for our purpose and our business.

[Operator]

Next question from Lucas Nagano from Morgan Stanley.

[Lucas Nagano, analyst]

I have two questions. First question is regarding ticket of Inspirali, there was an impact of BRL 16 million because of the transfers. How much of it is recurring should continue in the next quarters? And if the Inspirali margin impact has been fully -- impact of this pass? Or the second point that I have -- second question, you list some efficiency leverages as rent, G&A and factory cost, G&A and rent well addressed. I'd like you to give color to this reorganization and faculty offer. How is this being perceived by students?

[Átila da Cunha, executive]

Lucas, starting to address FG-FIES. The whole industry has been impacted by that. There is intense discussion undergoing to improve the efficiency. Institutions are being penalized due to delinquency in the portfolio with no action. They don't even know which students are delinquent. So this is a process that needs to move forward. And through the class agencies, we have been contact with federal government to improve. We believe this is a process that has started now but still has some room to be advances to governance.

From the standpoint of recurrence, the number of the second quarter has been impacted specifically because it was real to actively reflecting the first quarter. So it's not recurring. What we can think is that it is something closer to what happened in the semester is what we should expect if we maintain the current levels, and we believe that there should be changes from now onwards and that there should be changes in the governance of such process.

As to efficiency, with regards to growth rent, things have been done and G&A. There's a lot that should be done. Well, a lot has been done, but we still have a lot to be done. We still operate with two ERPs. So the process is still evolving. We still have a lot to reap from now onwards. As to academic offer, we don't believe this impacts students because we're basically looking into opportunities of having classes being readjusted and also shift that we had to that were not so well balanced.

We have improved in terms of the balance of all the classes. And while I don't believe in this hypothesis because the numbers that we have been following is -- enrollments are quite consistent with what we had, and there is no risk in that. But I do believe that with such changes, we have important space to improve in terms of those numbers. So I'm very confident regarding the space we have to move on in this area.

[Lucas Nagano, analyst]

Very clear. Thank you, Atila.

[Operator]

Our next question is from Samuel Alves from BTG.

[Samuel Alves, analyst]

Marcelo, Atila, Guilherme, Botafogo, two questions on my side. First one is just more for clarification to validate our understanding. What you put on your release, it's an update regarding synergies with [Laureate], increasing the EBITDA, deflated EBITDA into 5 years, you say that you've captured BRL 327 million. You've captured over 90% of the target. Do you believe the operating margin of the company is open to the normalized pattern? More to validate this understanding.

And the second is more detail on CapEx. You were actually mentioning during the presentation. Well, if you could share with the CapEx of the budget for 2023 just to give us an idea of what would be this quarterly normalized pattern?

[Unknown Executive]

Well, Samuel, regarding synergies, great part of what we expected to have in synergies were deriving from maturing of seats and the medical costs. This has been happening. You've been following that. There's another part that we had price in the past of administrative and rent efficiencies that is also happening, and this has been a number of 2 years, I don't know how long ago. From then on, a lot has changed.

We see opportunities in other fronts. It's not because that number is already close to being sourced. It doesn't mean that we have no other opportunities. Much on the contrary, where we have in the area of faculty, the administrative, I'm very confident that the chart that Botafogo presented in the beginning showing quarter-over-quarter in terms of margin evolution, it will continue in the same trend.

With regards to CapEx, well, as you know quite well, we don't talk very much about future. We talk about what's happened, which has -- we have a very diligent regarding a good use of our CapEx. Our CapEx pattern is under control. It shows very well behaved. So we're very confident and constructive regarding it because a lot that we've had this year will not be repeated. We're very confident in our CapEx pattern.

Perhaps, Samuel, to help all of you on the call, on Page 12 of the slide deck, we clearly pointed to a part that is nonrecurring, which was readjustments of some campuses to receive students from other units. So there, you have a first possibility of viewing greater recurrence more on the level 55 rather than 65. And in addition, we are in this process of integrating the Anima Core's ERP that leads us to spend much more on IT this year. Once this process is completed, late this year, early next year, we should also have a level that will be more modest in terms of investment in technology. So there you have some important or major levers to think about numbers from now onwards.

[Operator]

Next question is from Vinicius Figueiredo from Itau.

[Vinicius Figueiredo, analyst]

Just a follow-up for the first question regarding Anima Core, you comment that the average ticket suffered a bit of pressure because of the on-campus gaining some more room. So if you take with the like -- so semi on-campus so campus within campus, how has this average ticket being developed? But thinking about average ticket. Looking at the scenario as a whole, the industry as a whole. When we look at the competition, we've seen some players distancing from the growth of perhaps better groups of students. So I'd like to ask you about the competitive scenario if the industries has been able to transfer a bit more inflation to the tickets? And how do you expect within Anima this to behave within Anima over the next quarter or semester?

[Unknown Executive]

As to hybrid education, as Botafogo said, it has been growing has been showing traction product that has been very much priced. We've been developing every quarter being improved, and we believe very much in the potential of this number. As Botafogo said, we would rather give you more color to the churn, understand how it behaves so the level of disclosure will come up. But we're very confident that be it on the on-campus ticket, maintaining the student base that we've been working on in terms of sustaining the ticket on the on-campus and the very hybrid or semi on-campus. We understand they once the product improves, we feel more possibility of bringing the ticket up. So these are levels that we believe we have to use from now onwards.

As to the competitive scenario, we feel that there are no relevant changes regarding what we've seen in the first half. We are confident regarding the industry that as the whole macro scenario evolves the industry will evolve faster. And so we are very confident regarding this recovery. Although it is important and this is that, of course, if you do not transfer inflation, you're losing value. And so the plane is dropping. So when there's price war, everybody loses. So we're going to pay -- keep paying attention to quality and trying to actually carry over minimum inflation rate as possible.

[Operator]

Next question is from Fred Mendes from Bank of America.

[Frederico Mendes, analyst]

I have two questions here as well. The first one that is more strategic, regarding private funding. You see there is a bit more space to that. I'd like to understand from you if this kind of product will gain relevance over time, how this possibly communicate or relate to bad debt? First question. The second is perhaps more clarification. Well, the process of [indiscernible] E2A, what is to be expected on that? That was published on the 9th of August challenges. Is there a concern or not? Just an update for us to understand it here.

[Marcelo Bueno, executive]

Fred, thank you for your questions. With regards to the intake levels for Facilita and Pravaler, they are used specifically -- used with great granularity. Pravaler, we use a NIM score as a credit scoring evaluation. So we are very careful regarding that. So much so that our provisioning level, well, we understand it as very appropriate. We have ended the quarter with the same provisioning that we opened. We see behavior of delinquency that is quite disciplined. So I do not see any concern, we have a provisioning level that is relatively high, which is -- so what we reflect on our financial statements is very safe in terms of its accomplishment. So we look at that very closely. You can look at actually the evolution of our accounts receivable. It's quite controlled. So this is a very important element of our strategy.

With regards to the processes that you talked about, we're very confident we've received all the materials. Now we've been to Brazilia. We are quite comfortable that all the questions will be clarified.

[Átila da Cunha, executive]

Fred, we should think that access is an important point for Brazilia. We've been talking about the funding. From the very first day we founded Animas. So fund student funding is part of it, private, public. So while we have [Laureate] helping as part of it so it's important we expect that the country realizes that it's increasingly important to have funding and good best practices. We've been talking to Brazilia trying to bring contributions. They bring a new FIES. So funding is always an agenda because it's part of our G&A, okay?

[Frederico Mendes, analyst]

Perfect. Super clear. Thank you, Marcelo, Atila, Botafogo Guilherme.

[Operator]

Next question from [ Rafael Bajos from XP ].

[Unknown Analyst]

I have two. First, on medical seats that you mentioned on the release, the result of some administrative processes. Just to understand a bit what we should expect in terms of next steps, timing for you to start having more intake on those seats, how many seats in those processes? Now I also have a question that is a bit more long-term or strategic on the part of digital learning. It's a business that grows a lot. You have a lot of room to grow in this business. Now I'd like to understand on your side, what you see in terms of how long it will take for the business to reach a more mature level, so to speak, and stabilize.

[Unknown Executive]

Thank you, Rafael, for the question. Actually, Inspirali for some time, along with Anima, has a competitive advantage because we have 14 medical schools and Anima has 80 campuses throughout Brazil. So we carried out a study and identified in which campuses we could have, we have vocation in the healthcare area with nursing schools, and we would also have the possibility of having medical school considering the context of each one of those locations.

Recently, last week, Minister [indiscernible] actually published our measure reinforcing the importance of [indiscernible] magic or the opening of more schools and there is still process that needs to be voted on a plenary and those schools that were ahead of a given stage, they should continue with their courses. And we have some in this situation, 9 to be precise with 7 already having been visited with scores that were 4 and 5. In other words, very good caused by the regulatory agency. And those courses followed the course of all the procedures. It's hard to say what the timing will be, but we are confident that the regulating agencies doing its work in very efficiently and diligently, and we try to offer quality education in these units where we understand we have the opportunity.

So it's worth highlighting that these processes have been -- have had investments, CapEx that actually you see in our results. And Inspirali is increasingly becoming this company that is more sound. Recently, we had the concession of category by severe for Inspirali, and now we have several commitments with our debenture and shareholders and considering our earnings results communication, of course, there are stages in the regulation level and to confirm the decision of Minister [indiscernible].

As to digital learning, Rafael, it's important to remember, as we start the process of the integration of Laureate and Anima, our Board asked us to follow the thesis of Laureate. So Laureate has a thesis that is go digital. And their thesis is that there is a great market that Anima was not tapping into. That is a market that is mostly sensitive to access. But the local brands would make a difference and would not cannibalize the offers. That was Laureate's thesis and we are mandated to follow this project, but ramping it up, and I put it directly to link to me as a CEO of the company.

And in parallel, we would have a discussion to see what would to have in terms of the best to offer and then we could approve it or not to have the business integrated to our value proposal, generating value to all to students in Brazil. And to our shareholders, we are at the final stage of this decision-making process. Shortly, we will present the line and things will be much clearer in terms of the situation, actually showing the value generation and the possibilities we have ahead of us.

[Operator]

Next question from Caio Moscardini from Santander.

[Caio Moscardini, analyst]

First is whether you could comment on receivables on those [indiscernible] 5 days. It's gotten to 6 days, quarter-over-quarter, very much to credit card receivables. So I'd like to understand a bit what should be expected of receivables from now on? Now the question is on the comment you made in the release that you keep on seeking alternatives to strengthen the company's capital structure, of course, without losing sight of value generation for shareholders. I'd like to understand whether you have new alternatives for deleveraging, what are they? If there is a process of divestiture that is moving faster now?

[Unknown Executive]

Caio, the accounts receivable question is very important. We've been having an increasingly disciplined view on it. Several changes on policies, so that we can have equity lower or shorter terms or receiving. This is what we've been working on, and we'll keep on doing in our management. So we understand that management close to working capital is key for us to have good cash conversion of the revenue we generate. And we've been evolving towards that. So you can expect that, and you should know that this is a focus of the company, not only revenue when the revenue is turned into cash is a priority to us and the financial management of the company. So this is the first point.

Second point is that the change of the condition, especially of interest rates has created opportunities that we hadn't not be able to tap into before. So we are very attentive to such opportunities as Botafogo mentioned and quality portfolio as per valet any interest rate gains importance, all the macroeconomic scenario has led us to have possibilities of such nature to be closer to adding value to shareholders rather than they were on a short time ago. What is important, Caio, because some agendas go up to the agenda of CEO of the company.

I'm saying that Botafogo is talking about real estate. Now we have the simplifying the structure of being sitting down with the team, every Friday with Denis, Ricardo or Atila to look at the working hours, the faculty and the inorganic agenda here. What can we do what we're going to do. So it's important that, as Atila mentioned, with this outlook of interest rates going to situations that are minimally acceptable with the market. we'll go back to opening. We can make faster movements, always generating value to us shareholders of the company.

[Operator]

Lucas from Morgan Stanley raised his hand again. He wants to have a follow-up.

[Lucas Nagano, analyst]

Yes, I had raised my hand, but it's been answered. That was it.

[Operator]

Marcio Osako from Bradesco, go ahead.

[Marcio Osako, analyst]

Just a question regarding FG-FIES. What is the level of delinquency that is implicit in the current deductions of the first half? And how much a total of such reductions represent the net revenue in medicine?

[Unknown Executive]

Marcio, actually the level the fault is not visible to the company. We receive by institution and also split into medicine and other courses. What is the retention that the assuring fund does but without having visibility in terms of the criteria. As Atila mentioned, this is one of the topics on the debate with regulatory agencies so that we have more visibility and to see how we can act in the management of this portfolio in some way.

This is a pre-requirement, we would need to have a -- well, the governance of the process needs to be addressed so that we can be aware of the default and the level it happens per student so that we can act upon it since it is us that are paying the bill. So this is the date that is maturing. We expect it to evolve over the next semester, perhaps something in hand for the next program that what the government is working on. So the class agencies are working very much with the Ministry of Education so that we can move forward in that.

[Marcio Osako, analyst]

And the level, current level of deductions how much is being impacted, just taking FIES' deduction and the revenue, at what level are those numbers?

[Unknown Executive]

Well, at various campus by campus and by situation. So we are diving into the numbers to understand we're not opening it up. It's a process that has not stabilized. So was. If we talk about the number here and there. So next month, it may be different. So we're waiting for the numbers to mature a bit. So it is a process that is very new for the market and for the industry, and we believe it still requires a lot of clarify. We are asking for transparency because this should be part of the cost spreadsheet of our offers. Well, so we actually are faced with the situation that we cannot managed. So we're having the test for to have transparency, access to the numbers and minimum granularity so that we can work on that.

[Marcio Osako, analyst]

And just the last point, do you see any possibility of having the number increasing over the time -- over time in terms of percentage for FIES, a reduction of FIES?

[Unknown Executive]

Just considering the current inventory, our viewpoint. Well, it's very hard for you to talk about the future, from the standpoint of present. Yes, we are working to give more governance of the process. And certainly, when you give more governance to the process, it tends to improve from now onwards. So it is with this scenario that we're working on. So our results, if you look with other benchmarks for example, Pravaler, Anima students have another level. So that's different. So you have to understand the market in more detail.

[Marcus Vinicius Peixoto, executive]

We would just have a question on the chat. [indiscernible] from [ Telia ] has asked question, but [ Yuri ], well, they have been answered, but you would you like you can access our IR department agent for additional questions. And to close, we've exceeded our time of Cedars, it does not identify this company asked whether it is in the top line, the capital opening in Inspirali. Yes, we're working on that. So we have to have the capital markets as a means to actually enable the company to be [successful]. So if we -- well, if we have an agreement of our partner in the DNA, so this is always a means, not an end in itself. Thank you for your question.

With that, I think we close our Q&A session. Would you like to make your final remarks?

[Marcelo Bueno, executive]

Well, thank you very much to all of you for your attendance, and I wish you all an excellent week. And welcome to the newcomers. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]