Anima Holding SA

BOVESPA:ANIM3

Earnings Call Transcript 2022-Q3

[Marcus Vinicius Cuiabano Peixoto, executive]

[Interpreted] Good morning, everyone. Welcome to the Anima webinar. We're just waiting for everybody to join. Good morning, everyone. It's a pleasure to have you all with us. Thank you very much for taking part. You have been so diligent in the analysis of our results.

Today, we have Marcelo Bueno, CEO of Anima; Guilherme Soarez, Inspirali CEO; André Tavaras, Anima's CFO; and we from the IR, [ Esther Mateos ], myself, we are here available to you to talk a bit about the results of Q3 and talk about the future outlook and what we expect ahead of us.

Thank you very much for your time. We're going to give one more minute to wait for everyone to join and then we'll start. Thank you. It is important to explain how the interpretation is going to work. Sure.

[André Tavares, executive]

[Interpreted] Okay. Thank you. As Botafogo mentioned, it's an honor, a privilege to be with all of you here to talk about the results of Q3. And I'd like to ask our CEO, Marcelo Bueno, to make an introduction with the main highlights of our third quarter.

Good morning, Marcelo.

[Marcelo Bueno, executive]

[Interpreted] Good morning, André, Botafogo. It's a pleasure to be here with you, using technology once again in this hybrid conference since we made the choice a year ago to have hybrid education. We are walking the talk with a video conference and Botafogo and [ Retavaris ] at New York, taking part of a conference that is starting tomorrow, Guilherme Soarez, [ Indi Octuva ], myself in Sao Paulo, [ Esther Mateos ] here in Sao Paulo, so good morning, everyone. It is a great pleasure to be here.

I'd like to start by saying that this is the earnings result of Q3. I've remembered my learnings in management, something that really struck me. I had a professor, [ Luis Carlos Krosabrera ], who supports us, one of the greatest experts in corporate governance. He always said that one of responsibilities of CEO is not to generate surprises to the Board of Directors and consequently, to the market. This is a quarter in which we've generated no surprises.

We're here with strong results, two-digit revenue growth, two-digit in ticket growth. This is quite important, especially a 10.7% growth in the core growth and 12.5% in the growth of Inspirali. If you look back to last year Q3, we talked about the quarters had some results that were atypical, things that regard our operations, especially regarding M&A in the operation we were going through with Laureate that we still are. And at the time, there were some special issues in that quarter. If you remove BRL 62 million from the reversion that we're having, BRL 14 million in terms of lease of Portugal that have not been renewed, normalization of our bad debt in the past, so a positive bad debt rather than negative. So to this, we see strong growth in the margin, in the EBITDA margin.

And I would suggest that you all look, particularly, as we always do, this is one of the main indicators, but look with a magnifying glass at this operating cash generation; quite strong with 25%. I think these are the main messages of this quarter.

We're going to work on it. The environment plays several difficulties and stabilities and we are here focused working to generate value and to add more education to the country.

With this, I'll turn it over to Botafogo so that he can continue the presentation, and will be back later.

[Marcus Vinicius Cuiabano Peixoto, executive]

[Interpreted] Thank you, Marcelo, and everyone present. When we look at the results, it's always important to remember that since last quarter, we've been publishing our results with the goal of showing our investors and showing the market and analysts how the company actually runs its business. And the company has a vision that is very clear, very well-established governance and very clear management process. So we have drivers that are quite different.

Our business -- our main business, that represents 63% of the revenue of the company, is Anima Core. And it's in person and medical schools, all these dozens and dozens of campuses throughout Brazil, over 90 campuses, over 100 addresses that we have in Brazil, we have a very relevant presence, very important one for its nature.

It's very exposed to the macro environment that we have been going through of an inflation that finally demonstrates signs of being reducing elevation -- inflation that was quite high, very positive action of the central bank with a high interest rate or SELIC. Large part of families that are not safe, and this removes their purchasing power.

And the strategies regarding future, we had elections this year, we didn't know what was going to happen; what Brazil was going to be like next year. All these uncertainties reduced the trust of consumers and the confidence of consumers, our students that decide to register and continue their course and their families that many times contribute to the payment of the tuition fees. So the Anima Core has been facing this sort of counter event of the macro environment. As Marcelo mentioned, we've had very satisfactory results regarding this challenging environment.

We have 2 other businesses that considering their own features, they have moments that are different and the growth momentum that is quite different. We have distance learning, which is quite small, 6% of our revenues. It has shown great growth. We know tickets are low. But we've had a major increase in the number of students. This is important for our ecosystem for us to take the ecosystem despite the restrictions. It's important to take education to more people.

And we have Inspirali that has been increasingly more important and relevant, as you know, accounted for 31% of our revenue. Quite sound results as Guilherme Soarez, the Inspirali CEO will mention later. We have over -- well, rounding it up, almost 400,000 students, an important number.

If we look at the next slide, we look at the student intake, and we see clearly what we've been talking about in terms of the macro environment, this slight drop for Inspirali is not relevant, so 400 students to 307, so this is an adjustment of intake that is marginal of Q3.

When we look at the two businesses, Anima Core and distance learning, we see Anima Core has had an intake Q3 last year, almost 42,000 students. And this Q was almost, well, 39,000, 38,000 students. This is an intake that considering the current scenario, we were quite happy.

And in terms of distance learning, it's quite an impressive number. We are a small player. So we have great room for growth in the marketplaces where we are present and where we are relevant, and we see this growth in digital or distant learning of almost 80%.

On this next slide, we see more -- a few more details in our main businesses, Anima Core. Once again, this is a business where we have the greatest impact in terms of the macro context. And we noticed some important things here.

In the ticket breakdown, many of you have followed that we had a great challenge of repricing the units that have been integrated -- that were integrated in June last year. This effort of repricing started last year, but especially this year, in a very intense way in the first quarter this year.

The tickets we price as today compared to the tickets of the third quarter, have grown 20%. In the second, Q2, they grew 29% when compared to year-over-year, before we implemented more important reprices. Starting in Q3 last year, the difference is a bit smaller. We still see 20% growth year-over-year. And then precisely because of this repricing strategy, we have made a modest increase, and we have a stable growth in the integrated units that are stable in terms of growth. So we have a healthy ticket growth. It's relevant because we managed to reduce speed to keep the tickets at the integrated units and make a major effort for the units in integration. So André, who's here, well, he talks about intake.

When the macro environment improves, volumes arrive at any level where you are in terms of the price. If it's low, balance will grow at the low level and zero profitable. And if we have been able to reprice, as we've done, when the volumes, when they increase, when the macro scenario will improve, they will grow from a more appropriate basis. This perhaps is the most important information in this Q.

Dropout has been a bit ahead well, 11.3%, 1.4 percent points year-over-year so from 9.3% for 11.3%. We had a small variation, very much under control considering the macro environment.

The last aspect important for us to see here is how the volumes have behaved for the units in integration. These volumes in the first half as a whole, compared to first half last year, had dropped 14%, quite reasonable volume, considering important repricing, and semester over semester, we had a single-digit drop of only 5%. Now in Q3, we've seen something quite comparable.

In the second quarter this year, year-over-year volumes had dropped 14.6% and Q3, we had less of a drop, 10.9%; and quarter-over-quarter to see sequential evolution over time, in Q3 this year, vis-à-vis second quarter, only 5.1%. So we trust that repricing has been well accepted by students and families. This shows -- although it's very difficult to prove, this shows we are confident that this shows very clearly that actually, the brands have a strong meaning for the students and their families. So this has been very good news at Anima Core.

On the next slide, we see the results for distance learning. We have an important disclaimer, still a small business to us, 6% of our consolidated revenue, but it's been growing in a very healthy format with small tickets or we are aware of it. It had been BRL 183, a bit below what we had been practicing considering our mix. When we speed up growth in some marketplaces, in some places where we have brands that are less known, we are price takers and not price makers. So we have to have a ticket that is competitive in that location. And the final ticket is a consequence of the mix where we have good pricing and the places where we are less known.

With low ticket, but no doubt, major growth in terms of revenue of almost 19% year-over-year. Student base growing from 84 to 123 students, 47% growth and increasing even more in the undergraduate, from 57 to 94.4. So we are happy in the student front where we have a student-based growth.

For the next slide, I'd like to invite Guilherme Soarez to talk about our Inspirali.

[Guilherme Soarez, executive]

[Interpreted] Thank you, Botafogo, and good morning, everyone. Well, 2022 has been a year of strong structuring for Inspirali from the closing with the arrival of DNA Capital, as a shareholder of Inspirali at the end of the first quarter, moving over the consolidation, governance structure, the makeup of the leadership team of Inspirali, we are actually very confident and happy with this year of preparation and structuring of Inspirali. We've also had a very strong focus on the implementation of the integrated curriculum, the Inspirali [indiscernible] in the schools and integration.

Now all the 14 schools of Inspirali have their curriculum updated, especially for the freshmen that started early this year. We've also devoted a strong energy in the design of the lifelong learning strategy from the IBCMED arrival that has joined the Inspirali project at the end of 2021. Our results, as you can see, are quite sound. And we can show that in the past quarters, they are a good proxy for the level of results that Inspirali will seek from the structuring and this new configuration as a carve-out of Anima.

It's worth stressing that the -- what has been mentioned by Marcelo and Botafogo, well, we've had some adjustments that happened specifically on the baseline of 2021 that have slightly hindered the comparison of profitability of the operating result semester over semester.

So isolating them, Inspirali as it's been described in our release, has a gain of 2.4 percent points showing this trajectory that is quite solid of the Inspirali project. We are still very confident in the Inspirali project. Very confident with the transformation and impact power that we have, both in health care and education. Well, we inspire the passion for life.

Lastly, I'd like to invite you all to take part of the Anima Day on the 23rd of November. Inspirali will have its own room to discuss in more depth these and other topics, and we'll also have several experiences to demonstrate how we use our technologies towards the learning of our students.

André, I turn over to you.

[André Tavares, executive]

[Interpreted] Thank you, Guilherme, and thank you for -- okay, for giving us a hand on the Anima Day. We'll be there. And no doubt Inspirali will be a point of highlight and sign on our Anima Day.

Moving towards the end, so that we can move on to our Q&A, the most important part of our call, considering everything that has been said by Marcelo, Botafogo and Guilherme, we have here, obviously, based on specific effects that were localized from last year that turn our base a bit more difficult to be compared.

We would have a slight drop in EBITDA. But when we remove these effects, focusing on normalization of PDD and earn-out, and we've had a dilution of EBITDA margin of 3.6 percent points in Q3 and almost 4 percent points in the first 9 months accumulated of this year. We mentioned it proves this would be an approximate growth of 25% of our EBITDA and a nice double check of that is the growth in operating cash that grew 25% as well.

Looking at the next slide, we'll talk about, well, CapEx, quite important in our cash generation process. We have been -- especially after the acquisition of the Laureate units, we've been reducing our CapEx, moving from 7.2% of revenue in the past -- in the 9 months of last year to 5.8% in the past 9 months this year, with strength and a stake that is very much active of the CapEx in our digital transformation.

Our systems and technology that we expect necessarily that the investment should have their benefits, and we are reaping the benefits, be it in the area of the student experience in the classroom and better experience in services outside the classroom and also in the efficiency and agility of processes, especially in terms of back office, bringing more efficiency and greater synergies to us and also in the core of our business, which is the physical infrastructure.

We are hybrid, but our physical infrastructure is very important. The virtual laboratories, all the experience in the classroom and learning experience, that is extremely important to our students and where CapEx plays a role, that is very important here in this CapEx line as well. So safeguarding these major initiatives that are fundamental to generate additional margins and the future of the company, even so we are very firm that we are making all the investments needed for the company. Even so, considering the scale gains, we are managing to get dilution and CapEx has been representing less in our revenue.

On the next slide, we stress that the cash generation, as we mentioned, the operating cash generation has grown 25%, in line with what we already expected in terms of evolution of our results. We have a cash conversion, cash and EBITDA, strong, practically equal, slightly higher than the EBIT of the period that once again reinforces the resilience and financial soundness of our company.

To wrap up, we talk about cash and the debt, or indebtedness. Considering the reduction in reported EBITDA, we had a slight increase, although our net debt did not increase at all. So it was BRL 8 million -- it was EUR 2,640 million. Now it's EUR 2,648 million. The leverage has increased a bit to 3.8%, precisely because of the effect that we mentioned of reducing EBITDA in the past 12 months. It's important to stress that these effects that have had a reduction on EBITDA do not have effect on the cash. We continue quite focused on this priority agenda of deleveraging. We understand that we must end the year in a number that is much closer than we were in the second quarter. So we are very much focused and very attentive to -- and everyone converging to this agenda of deleverage from operating cash generation that is growing.

And along with that, we are also focused in the strategies and activities of liability management. As you followed, we made an important move in the first quarter with the transfer of the debt of BRL 2 billion of the Anima Debentures to Inspirali. That has increased -- improved a lot our financial costs moving from a CDI or more BRL 475 million to BRL 260 million.

As we all know, not a novelty or news to anyone, we suffered an impact especially in financial expenses in the increase of the basic interest rate. Last year, SELIC was about 5.5%, average SELIC of third quarter last year, and this year, it's almost 14% our interest rate. This certainly has a major impact on our financial expenses. This does not only annoys us, it moves us to actually get the deleverage with cash generation as quickly as possible.

I think we complete our presentation now, and I'd like to start our Q&A opening up for the questions that you may have.

[Unknown Executive]

[Interpreted] [Operator Instructions] Our first question is from [ Luca Marquezini ], Itau BBA analyst.

[Unknown Analyst]

[Interpreted] We have 2 questions on our side. First, in terms of intake, you see that Anima Core had a drop in intake considering the strategy with the ticket position. If you could comment on the trend expectation and trend of growth in this segment, how much of this impact should we see this in the next quarters, please?

Second question is regarding ticket, especially in the digital learning. You've mentioned that there was a drop in ticket because of the expansion to new marketplaces. If you could comment on it, give more details on this ticket and the performance in the marketplaces where the company already has operations, this would help a lot, please.

[André Tavares, executive]

[Interpreted] Thank you, [ Luca ]. Thank you for your question. I'm going to talk about intake, and then I'll ask Botafogo to talk a bit about the ticket dynamics in digital learning. [ Luca ], no doubt we currently -- what we have been feeling as we've said, is that we believe that the great trigger volume in student intake are the macroeconomic aspects. Our effort currently is, therefore, much more directed to repositioning the ticket, especially in the units in integration from Laureate, and as you've been following, in the past 3 years, we've been growing a lot our ticket at the integrated units, those that came from Anima.

And we've been using our revenue management model to grow a bit less in tickets in the integrated units, offsetting by the volume. You've seen that integrated units have grown a bit in terms of intake volume in this quarter, in the report we are disclosing now. I'd say that from the standpoint of intake in the units in integration, I'd say the worst is behind us. And we should see now a stability that is greater -- a slight reduction in the units in integration as this ticket dynamic is continued and most of it has happened. And in the integrated units, something similar to what we see now, some stability in Anima Core.

The Inspirali intake is still strong, still growing, and the distance learning is still growing at very strong rates. I would say that currently with the visibility that we have, this is the scenario. Of course, that as the macro scenario improves, we believe that we are ready to have these numbers with significant improvement, and we'll have the prices correctly positioned to have this optimum positioning in terms of optimum or positive impact to our revenue.

Let's talk about the growth dynamic in distance learning. There are 2 dynamics that are very important. One is of the inertia growth volume. This very strong growth that you see is owed to 2 things: opening of new centers; and maturing of the centers that we have been opening recently that are not super mature. The distance learning centers take about 5 cycles of half year or midyear intake, so they are maturing and they bring growth that are -- this year plus the centers that we are opening.

So what happens, considering this growth and strategic reasons, we look at the map and close to our schools where we have strong brand, where we would like to go into a marketplace that is big and relevant. We can imagine 4 quadrants.

Let's split a page into 4 pieces: the large relevant; marketplace is small ones; places where we have a lot of brand; and places where we have little brand. The best combinations where we have a brand that is very strong, our brands are known and an average sized market and we want to grow always there. There are other places where we want to grow because they are interesting markets, but our brands are not yet known. So we are price taker not price maker.

[Marcus Vinicius Cuiabano Peixoto, executive]

[Interpreted] Let's not stick to numbers. Let's assume that we could charge -- at a given curriculum, you could charge on -- in persons or on-campus BRL 750 in terms of tuition fee, where a place where we have a brand, you could have just 30%, 40% of this amount. You could go to BRL 140 to distance learning. So in a place that we're little known, you should have very competitive for us, BRL 160, around that. And as you grow, the mix varies a lot as a result of these various marketplaces and the various prices you have in different locations. So this is a result of that.

What is important for us to view here: that the revenue has been growing in a very healthy way; number of studies has been growing in a very relevant way, but it is a small business to us. 6% of our revenue, we look at it as very dearly, but we have to put the 2 sides to it, okay?

Thank you very much, [ Luca ] and everyone from Itau BBa.

[Unknown Executive]

[Interpreted] Our next question is from Lucas Nagano from Morgan Stanley.

[Lucas Nagano, analyst]

[Interpreted] Actually, I just want to -- we just have one question in terms of moving parts regarding the expansion of distance learning. It's been quite accelerated. It would be more interesting if you could give us more flavor as how the growth has been. First point is early this year, you had some pilot in distance learning and integrated brands for the second semester. How much of the intake came from organic brands and how much from Laureate schools?

And second point is regarding precisely this geographical or regional distribution. So you focus in the market where you operate, in bigger places, or smaller towns. What is your perception in a potential cannibalization where you already operate with your on-campus operations?

[Unknown Executive]

[Interpreted] Well, Lucas, thank you. I'll ask Marcelo Bueno to answer the question.

[Marcelo Bueno, executive]

[Interpreted] I think it's always good for us to remember that our main point in terms of management is for us to continue this initiative of going digital Laureate, which was a successful one, learn from it and actually understand whether the thesis that there is another market that Anima would not be serving that other market in misalignment with our purpose in transforming the country through education. So maybe there would be some people not having accessed that. So we decided to keep on with this business and increasing it. This is what has been done. You can look from this angle; part of our mandate.

And now we are proving that actually there is another market and this market, we have an opportunity at hand, and we are running pilot tests precisely regarding noncannibalization, the older public price being a price maker, as Botafogo mentioned, all of that, we're going to give you more visibility. As Botafogo has mentioned, this is a project that we're still adding energy to it, but we're still verifying all these theses. And we're going to use our brands test market by market to see actually whether this would generate a great opportunity to us to further move in our mission and also to generate value.

[Unknown Executive]

[Interpreted] Thank you, Lucas and Javier. Greetings to all of you. Our next question is from Leandro Bastos, analyst from Citi.

[Leandro Bastos, analyst]

[Interpreted] On my side, I have 2 questions. First, on bad debt. We've seen a lower rate in the quarter, close to 3%. Just a guidance as to how you see that in terms of recurrence ahead. It's been kind of erratic coming from a reversion in the period compared to last year. This is the first point.

The second question is on this investment agenda you've been talking about, deleverage through cash generation and operating improvement of the business. But making a parallel here, if you could give us an update on the divestiture agenda, how you see the market for some kind of short-term operations? That's it.

[Unknown Executive]

[Interpreted] Leandro, thank you. I'm going to answer the second question, and I'll turn it over to Botafogo for the second.

[André Tavares, executive]

[Interpreted] With regards to bad debt, Leandro, bad debt compared to last year, actually, it was a bit erratic. But I'd say that this is a result -- as we've been mentioning to you, this is the result of the harmonization that we have been carrying out of the methodologies of Anima and the methodology that we've learned. This, no doubt, has been an area that the Laureate units were more evolved, and we learned a lot from them. In Q3 -- in the fourth quarter last year, well, part of what we see regarding that quarter and this quarter has been reverted.

In 2022, we've evolved in the methodology of calculating bad debt or BTD, being more conservative as we used to be at Anima, more strict. But on the other hand, we dropped all the default model that we had from Laureate. So we have receivables management that is much more effective. So in our view, what we are reporting now in Q3 is very much closer to what would be the normalized, what would be recurrent from now onwards.

I just remind you that we've always had -- we continue having in higher education, seasonality between odd numbered and even numbered quarters. In the odd number that that is reasonably smaller. At the time we renegotiate students that were in arrears, they pay their debt. And in the even numbered quarters, it's higher. We should see in Q4 a slightly higher bad debt that is compared to what we've seen in Q3 because of seasonality. But we'd say that we are very close to what is normal.

In terms of the methodology, that is already stabilized, totally harmonized amongst all the institutions and with the model of receivables management that is totally proven. So on yearly basis, we should see a bad debt that is a bit higher than what we've seen in the Q3, but not higher, but I would even say that the bad debt is a bit smaller than what we saw last year, for example, okay? Bota?

[Marcus Vinicius Cuiabano Peixoto, executive]

[Interpreted] This investment or divestitures, the theme of deleverage and the expected deleveraging over time is a total priority to us. So what is on the side -- the negative side that we need to address is a leverage that is 3.8x EBITDA, not considering IFRS 16.

What is the positive side? The positive side is in the short term. Despite leverage being a core topic to us, very important to our investors and to all of us in company's management, if we look at the net financial results in Q3 last year, it was BRL 144 million, as André mentioned, with an average SELIC or interest rate of about 50% -- 5%. The net result was BRL 170 million, 18% above "with great modesty", only 18% above, although the interest rate moved from 5% to 13.5% on average for the Q3 this year.

The quite reasonable growth quite modest, considering such significant growth in interest rate, our SELIC rate was owed to reduction in cost and expenses, better profitability, cash generation that amortizes the growth of our net debt and specific topics such as the interest of our DNA partner that actually has invested major capital to Inspirali with a great debt negotiation, liability management and from a debt that was BRL 2 billion, that was like [ liquid ] plus 475. And SELIC was 260 bps, but we think it's expensive, but it's well below what it was. All of this amortizes the increase in the interest rates.

What could we do to increase the cash generation of the company for value generation for equity holders rather than paying debt to our bondholders? What could we do? Of course, we could deleverage by selling an asset. So it needs from somebody outside, not only us. We are asset light. We have no properties. We have 2 properties came with the acquisition of Laureate, and we haven't had the sales backdrop as so [indiscernible]. So we could try to sell those assets once -- we have almost 14% of the SELIC, the buyers are getting huge cash flow. It's not easy to buy. These things are interconnected even for those not in the financial markets.

So what happens? We would like to make some speeding up of deleverage inorganically. It doesn't depend only on us. It's difficult to run. Well, it depends on us, 100% on us, 3 fronts. First, rentals. Over 100 addresses, we have very important strategies of reducing cost, be it with sub-branding part of the campus, reorganizing, as we've done in -- 4x this year for those BRL 15 million of nonrecurring of the first semester. And now we've had more of the amount that was BRL 14 million in terms of rental reduction of [ Cheam ], reduction in the Q3.

We're making great efforts and we have dozens of initiatives. And this is as important and Marcelo Bueno is the leader in this task force to reduce rental cost that generates 10% of our revenue.

Second effort that is inorganic is actually reducing corporate revenue or expenses. So we tend to reduce that. As many of you know, because we've been talking about this, it depends on an integration of the systems that we're making in our ERP to get much more process automation to turn the structure more efficient. When we look over time and along the next quarters, we see a trend of gradual reduction of corporate expenses.

Third, liability management. We saw a tranche of debt of BRL 500 million, SELIC was 355 bps at Anima and then we spin out, so Anima plus [indiscernible] and so considering the credit of Inspirali, we have all the possibility of having it reduced in the midterm. In other words, paying less interest with a funding cost that is smaller with less expenses of rental and corporate expense, we expect to deleverage organically. This is what depends on that.

If the macro scenario improves, and this is an uncertainty, this is also part of the problem doesn't depend on what companies can do regarding it, but if towards the next 12 months, mid next year, second half next year, if we've done our homework, reducing rent, corporate, done [ rapidly ] management and the macro scenario improves, our intake improves possibly with a pricing that is good. And perhaps SELIC or the interest rates will show a reduction in the restriction of the monetary policy, we're going to have an excellent scenario and the deleverage process will be accelerated very much.

This, of course, depends on the scenario that we'll be following, and we hope to be confirmed. If this happens, it will be wonderful. But this will be for us to verify over time.

I'd just like to briefly add that there is great convergence internally between management, the Board, that we should take the opportunities of deleverage that speed up deleveraging. But obviously, as it is our responsibility, all of us are also shareholders of the company as well as you are that these movements generate value.

Just as it's been, for example, the movement of having DNA Capital joining Inspirali, we are very much focused on that. But clearly, the moment in the market and the multiples that we've seen are hindering more inorganic processes of deleveraging that generate value.

But sure, deleveraging is a priority. We're very [ annoyed ] by it, but we know that we're going to deleverage our company with cash generation, operating cash generation and we should see other opportunities speeding up our deleveraging in an inorganic way, always considering the stone-carved principle of generating value to our shareholders. It's a part of our agenda as the CEO of the company and supported by the Board of Directors' studying sales of assets and alternatives as indeed done in carve-out in the medical schools to have this deleveraging as quickly as possible. That's it. Okay?

[Leandro Bastos, analyst]

[Interpreted] Very clear.

[Marcus Vinicius Cuiabano Peixoto, executive]

[Interpreted] Thank you, Leandro.

[Unknown Executive]

[Interpreted] Our next question is from Mirela Oliveira from Bank of America.

[Mirela Rodrigues de Oliveira, analyst]

[Interpreted] I have 2 very brief questions. Actually, we've seen in Q3 growing number of students depending on financing. We understand there is an impact of the pandemic. If you could comment on the strategy regarding this, from now onwards, what would be a more normalized intake percent depending on this kind of financing or student loan?

If you could talk about cash generated deriving from G&A, should we expect something regarding the use of this money? Should we expect something from now onwards?

[Marcelo Bueno, executive]

[Interpreted] So I'm going to answer the first question and, Guilherme, I'll turn the second one to you. Okay? Well, Mirela, I'd say the following. When you look at the increase in student loan or that we -- it's been deliberate and planned because the units that came from Laureate did not work with student loans properly. And it's a partner that is a strong one of ours as you well know.

When we look at the -- so actually, what happened, we had from 8% to 10% of intake coming from private student sales, PraValer, and when we had the integrated units with the acquisition of Laureate, the number dropped to half, was about 4% or 6%. So what we see now is a return to normality of what used to be Anima in the past.

We've implemented the processes at PraValer in the integrating units, and we should go back to this level, around 10% of intake coming from students with private student loans, especially by PraValer. I just remind you that we follow the rationale that mostly the students that are -- have loans, about 10% of our base here, mostly fund it with the risk of PraValer, of our partner. Of about 20%, 25% of these, 10%, 2% to 2.5% of our base in that product that is called management [indiscernible] that we Anima take on the risk. And we do that for students to have better academic accomplishments, to privilege academic performance. And the others in the PraValer risk impact somehow our financial expenses, but there are students that we know that contribute positively to our operating margin evolution. Guilherme?

[Guilherme Soarez, executive]

[Interpreted] Thank you, Mirela, for your question. We -- at Inspirali, we work -- well, following the experience and the tradition that Anima views to assets that may be incorporated and to participate in the ecosystem in a very diligent way. Obviously, the Inspirali project is one of growth, and we've had the privilege of the arrival of DNA Capital. And in addition to the competence in the health care industry, they have been supporting us gathering or uniting M&A pipelines, along with what Anima has. And we know that the changes in context have had major changes in the past quarters and some assets. This brings changes in expectations and players that have more experience. And as Anima that is a public company, they can adjust to this context faster than private players.

We continue with an active pipeline to the service of a strategy of participating and inviting brands that are relevant in marketplaces where we do not have operations or to the service of the strategy of lifelong learning, looking at the medical learning journey as a whole, understanding which elements we could gain speed and attract talent for the Inspirali ecosystem.

Now we're going to make decisions in a very confident way, always bringing businesses that are added or can be added to Inspirali. [ Mateos ], back to you.

[Unknown Executive]

[Interpreted] Thank you, Mirela. Our next question is from Pedro Lima from BTG.

[Pedro Lima, analyst]

[Interpreted] Andre, Botafogo, Marcelo, Guilherme, 2 brief questions on our side. The first is regarding CapEx. You've closed 9 months of 2022 with BRL 158 million approximately. We'd like to understand how much you expect at the end of the year and making a bridge? And how much do you expect or your view for next year in terms of percent of the revenue or nominally?

And the second question is regarding is FIES. So we have a more intense debate on this topic now. We'd like to understand on what front you see there would be a greater benefit to Anima. And if this would require some kind of additional investment on your part to the physical units or if you work with a [ vital ] capacity that could offset this increase in volume of students?

[André Tavares, executive]

[Interpreted] Thank you, Pedro, for your participation and for your questions. I'm going to answer the first, and I'm going to turn over to Botafogo and Marcelo to see if they want to talk about FIES.

On one side, the CapEx, there is a relative reduction in the part of real estate and construction works considering our hybrid model. And on the other hand, we see a growing investment in the digital transformation area. Somehow this -- in the consolidated results, this does not take from us our scale gain and the reduction or relative CapEx reduction even with all these investments being made to improve or to ensure the future of the company.

I'd say that for this year, we see the closing somewhere very close to what we see in the past 9 months, about 6% of net revenue. And next year, we believe that this process of dilution should continue. Next year, certainly, we should expect CapEx level to be below the 6% that we see now in 2022, perhaps 50 to 70 bps below what we should see in 2022. Okay?

And about FIES, I'm going to ask Botafogo to focus to start. And then, Marcelo, if he wants to give us some insight to FIES.

[Marcus Vinicius Cuiabano Peixoto, executive]

[Interpreted] Thank you, Pedro. Thank you, all. Greetings to all of you at BTG and all your diligence towards us. Throughout the time of the past years of electoral campaign, we've had these questions a lot. Perhaps we've been the most known annoying, most boring, perhaps more feet-on-the-ground players to discuss this topic.

First of all, even after election, we have no idea of what's going to be in details in terms of a state policy regarding education of funding on loans. And even more so, what can we see? We can see that our work, basically, it means that we are hired by you, investors, by you, market, to generate value to shareholders with low inflation rates, high inflation rates, you know, the interest rate, SELIC high or low, with the FIES, without the FIES, we simply analyze what is the macro scenario that is materialized and will work to generate value in the best way possible.

Having said this, we look at 2023, no doubt with a renewed viewpoint, a constructive viewpoint. And we know, it's been an administration that we know it's been during the labor party administration that [ Prowini ] was [indiscernible], so a great framework to social inclusion, great impact to society to take education to different social classes.

We know it's an administration that always paid much more attention to the topic of education and educational funding. We know that a poorly design FIES is worse than not having any. We know that getting to 733 contracts -- 1,000 contracts in 2014 and closed them abruptly generates more difficulties, destroys value to the industry, students and society and the total absence of funding our loans.

We expect that we should have once it is confirmed as we start having an increase in FIES, that it should be gradual, should take into consideration the framework or a lot of fiscal discipline at the time of fiscal challenges in Brazil and globally, the monetary scarcity increase, the cost of money around the world.

If this is done gradually, well designed, prioritizing quality and employability of students that are going to receive quality education to move forward in their lives, to transform their lives to actually obtain employability and so they can pay back, not creating houses or generation with poor funding and then they are not able to pay. But if it's well designed, okay, we're going to work on what depends on us to deleverage, reducing rentals, corporate expenses and funding.

If the scenario improves, we're going to have very positive impacts. If we have FIES, whenever FIES arrives, depending on how it arrives, we expect this to be very positive. But this is something that we'll only be looking with all discipline and attention, but we're not even close to it.

[Marcelo Bueno, executive]

[Interpreted] Pedro, I'd just like to add that we have this wish and expectation, not only executives in the industry, but as Brazilian citizens, that FIES meets the demands of 3 major guidelines. First is fiscal responsibility, as Botafogo mentioned. No doubt the country needs FIES. No country has grown in higher education without the support that is major from the state. This, of course, is important, but it should actually meet 3 major pillars in terms of, first, privileged quality, institutions that actually add value. And I'm certain that we are very well positioned to that.

The second is actually ensuring that those that actually need FIES will get it. And [ Prowini ] has been for years giving various examples as to how to create criteria to actually give loans to those that actually need it: those that would not be able to attend higher education, economic conditions they have, conditions in terms of effort and academic performance.

And the third would be ideal to prioritize courses and careers that the country really needs and I would stress technology as well as health care. In other words, prioritizing these 2 areas, seems to me that is more important for the development of our country. And I believe that if you look from any of those viewpoints, Anima will be very well positioned in this possible return of the FIES.

[André Tavares, executive]

[Interpreted] Guys, I think I just want to reinforce and invite all of you to our Anima Day. As [indiscernible] said, Anima has always had -- we've always had student loans in our DNA. So FIES, so it's student loans, whenever I can, I do that. Because it's my personal case, I can tell you my history. My parents paid for my education of high quality, that it was private and I then was approved at the state university, and I actually studied for free. So this is the kind of discussion that we should have now, education going back to being a priority in Brazil.

This management has shown that it sees education as a priority for Brazil. The importance of higher education, private for Brazil, I think this is another important discussion; within this context, student loans. And we are prepared for that, not only to help in this discussion and offer our whole ecosystem to the service of a better Brazil.

[Pedro Lima, analyst]

[Interpreted] Very good.

[André Tavares, executive]

This is it, Pedro. We defend that the S of FIES be sustainable. Be sustainable.

[Unknown Executive]

[Interpreted] André, we have no more questions. So if Marcelo wants to give a final…

[André Tavares, executive]

Before Marcelo, before his final remarks, I'd like to once again thank the presence and the questions from all of you. And I'd just like to reinstate our invitation to our Anima Day. On the 23rd of November, we're going to be together at the campus of INB [indiscernible] at Mooca, neighborhood in Sao Paulo, be able to go into more details in the various topics, we talked about that. Inspirali will be their shining light with Guilherme with an exclusive room with various demonstrations of how much Inspirali adds value to our medical students. It will be really nice if you could be there also experiencing this with us.

And Marcelo, I'm sure that the Anima Day this year will be in a very warm atmosphere unlike what is here in New York. Guilherme and I used to [indiscernible] climate. That's okay, it's 4 degrees. I feel sorry for Botafogo and I'm very cold here.

Well, thank you very much. And I turn over to Marcelo to close our earnings results webinar.

[Marcelo Bueno, executive]

[Interpreted] Thank you, André. Thank you, everyone. So really, I think we put a sobriety to discipline and management. I think this is very important. We've been growing 14 quarters gaining margin, gaining operating margin. We're considering the atypical situations in comparing year-over-year in terms of quarters. So we have an increase in the margin. This makes us feel very proud for the whole team.

More than that, we have great prospects ahead. We always have to prepare the company for a scenario that we have, not expecting things to happen, but I think it is important, as André and Botafogo have quoted quite well and Guilherme as well. I think it's important for us from now onwards for you to look very well at the concern on real estate. We're concerned that physical spaces will be used differently. And with this, we have to optimize everything, generating more value to this optimization, our concern with a lighter and leaner structure, more efficient one, and actually leading to smaller SG&A, in addition to the avenues that we had of synergies with Laureate that we have. And we've gone over many of them here. I think it's important to say that. I'd like to share with you in my witness over these 5 years that I have been CEO, we've only been able -- we've only faced winds against us: the crisis post FIES; closing of FIES; we went through the pandemic, something that was unimaginable.

I always remember that Friday 13th of March 2020. Well, we put 144,000 students to study at home. We've left it strengthened. After that, we had a global inflationary scenario. And a brutal change of interest rates from 12% to 13.75%, something that has been not imagined. And recently, we had polarized election, so always working with the company with winds against it.

If we have our winds in favor or smooth winds, we have the message of a more optimistic scenario for 2023, years in which we complete our 20th anniversary.

Thank you [ Esther ], [indiscernible] founders of Anima, major shareholders, on 16th of [ month ], we were founding Anima. And next year, we complete our first 20 years. With this, I agree you all. I thank you for this wonderful team, and I greet our Board of Directors and each one and every one of you, shareholders, analysts, partners, thank you, very much. I wish you a great week and a good holiday for those of you in Brazil.

Thank you very much. Greetings to all of you. Bye-bye.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]