Anima Holding SA

BOVESPA:ANIM3

Earnings Call Analysis

Anima Delivers Record Revenues and Deleverages

Anima's financial narrative is one of gratitude and pride. Despite challenges in Brazil's economic landscape, the company generated EUR 711 million in cash, 2.8 times the cash generated in 2022. Leverage was successfully reduced, closing the year with a debt-to-EBITDA ratio of 3.25, outperforming guidance and proving Anima's resilience. There was also a significant improvement in margins, with Anima Core achieving a 26.6% margin, bolstering a record sixth consecutive quarter of revenue growth. EBITDA surged by 57% semester-over-semester, indicating a disciplined approach to cost management and efficiency. The company also witnessed major evolution in ticket size without impacting student dropout rates. Digital learning continues to grow within their brand portfolio, and Inspirali, which consolidates all medical schools under the Anima umbrella, is making strides with its Lifelong Learning platform.

A Journey of Growth and Stability

As investors delve into the story of Anima's recent quarter, a tale of growth, stability, and prudence emerges. The fourth quarter of 2023 emanates a vibrancy depicting a company with a strong grip on its journey and the passion behind its leadership team. The earnings presentation unfurls with CEO Marcelo Bueno and his formidable team at the helm, including Atila Simoes, the eagle-eyed CFO, and Guilherme Soarez, the CEO of Inspirali, reflecting the commitment of a company built on over seven decades of tradition.

Impressive Financial Fortitude

Financially, Anima stands robust. With a spectacular cash generation of EUR 711 million in 2023, the company beams with pride at a figure that is 2.8 times higher than that of 2022, symbolizing both organic deleveraging and prudent financial management. The margin has seen commendable growth, reaching 26.6%, illustrating a disciplined approach to cost controls and operational efficiencies. Anima's revenue narrative is yet another success story, showcasing six consecutive quarters of record revenue, testament to its consistent growth trajectory.

Strategic Expansion and Social Initiatives

Strategically, Anima is on the move. Its growth avenues are expansive, from the increase in seats through the new Mais Medicos public note to successful partnerships with prestigious hospitals, such as Sao Judas Campos Hospital. These moves bode well for the future and exemplify a strategy well executed. Moreover, the company demonstrates its commitment to social impact through the Inspirali-led Africa mission, which has provided care for over 6,000 inhabitants—a powerful act that intertwines Anima's core value of humanized teaching with its operational goals.

Solid Financial Infrastructure

Anima's financial infrastructure is designed for stability. Having comfortable cash levels, the company can confidently meet its obligations, giving it the latitude to pursue continuous improvement in efficiency and student services. The financial prudence extends into the future, with optimism surrounding interest rate reductions reducing net debt, fostering anticipation for a financially optimistic 2024.

Execution Excellence

The discipline across Anima's business operations stands out distinctly. Through comprehensive cost control and meticulous attention to efficiency and commitment to deliver, Anima's results are speaking volumes. The focus on improving EBITDA, decreasing cash consumption, and reducing leverage has led to a healthier company poised to give peace of mind to investors and stakeholders alike.

Earnings Call Transcript 2023-Q4

[Marina Gelman, executive]

Good morning, everyone. Welcome to the Fourth Quarter 2023 Earnings Results Presentation. And for the year for the education area, we have our CEO, President, Marcelo Bueno, Ãtila Simoes, our CFO; Guilherme Soarez, CEO of Inspirali and myself Marina, IR, then we have Fernando there from IR.You cannot see them, but they are making everything happen. Thank you for being with us, Marcelo. It's up to you.

[Marcelo Bueno, executive]

Good morning, everyone. It's a great honor to be here. Next to my partner, Atila, who is on that Monday, 6th of May, 2023 lending in the Bulia to start the history a bit more over 70 years, Guilherme's been with us for over 10 years is here to lead Inspirali.It's been several years, and our dear Marina, who is here to help us make Anima public which has helped us with our IP and Marina, thank you so much. And on the backstage, Fernando and Guilherme, it's a great honor. I think the results speak for themselves.In the previous call, I got several messages saying that, well, I never saw the CEO. Thank you, people who have been dismissed in the units that had to be shut down. And today, my stress will be gratitude.Gratitude to this wonderful team that actually has been able to deliver the results, well, appreciation and grade to you, I believe that Anima continued with us some. It's so difficult times not for Anima, but for Brazil for the industry, for everyone.For such challenging situations, you have generated EUR 711 million of cash. It's an impressive number, 2.8x cash generated in 2022. This is a generation that makes us proud and deleverages the company organically.We had 3.5 where we have this guidance with that. I as the CEO could say that Anima was never in areas of a lease payment and bank. And on the third quarter, we were below the covenant 3.4 million, and we consolidated, we closed the year at 3.25. This makes us very proud.So, those are major results, especially the attention we had in our Anima Core. You're looking at the whole, having a margin expression reaching 26.6% with 7.1 percentage points of margin IFRS 16x IFRS, 16 are important, with a growth of margin 1.8%. And we had the growth of ticket. That's very important. It makes us very proud.It shows that Anima increasingly is consolidated and makes itself perennial Anima is Anima, is our eighth principle sales.On the next slide, I believe we are very proud to show it. That's showing our revenue growing quarter-over-quarter. And that's the sixth consecutive quarter that we hit a record in terms of our revenue. This is our chart.I dedicated to Botafogo. This is your chart. Another record reached in the fourth quarter 2023 makes us very proud. And with this, I turn over to Atila to continue with the numbers in the presentation.

[Átila da Cunha, executive]

Well, let me take the opportunity and thank Botafogo. Botabofogo you've been with us until the 31st of December. So, these results are also yours and this chart will not be out of here. As a tribute to you, it's going to go up always. Thank you all very much for your presence.As Marcelo said, the result is a result of thousands and thousands of people educators of Anima. Is a result built with a lot of commitment, competence and engagement of everyone that makes up our ecosystem. To all of you watching all the educators from Anima, honoring us, we would like to say thank you very much. Congratulations. We have the results of all of you on the screen. Thank you very much.Well, a key point is that we've worked a lot. Second half last year was leverage. As Marcelo said, we've always trusted our ability to deliver lower leverage and very confident to comply with covenants. And reality showed our trust and our confidence that really was applicable.We reached the year with 3.20, where we move from 3.9% or 30, it drops to 3.4%. 30th September, we reached to 3.25. This is a result of better EBITDA because of several actions. We are going to focus to make the company generate cash. As Marcelo said, BRL 711 million are represented in this chart.As we anticipated to all of you in the previous call, the fourth quarter is a quarter that consumes cash as every quarter, but highlights how we've managed to improve regarding the last quarter of previous year.The debt variation of BRL 194 million. If we exclude the effect of dividends, we would have cash consumption last quarter under BRL 38 million. It compares to BRL 160 million the previous year, almost half. So, this gives you the magnitude of the effort of the results and the quality of the numbers we present to you today.So, Fernando, please this is also a reflect of all the initiatives improvement of organizational performance in top line and expenses.We've been talking and our earnings results cause our commitment to organizational results. Delivery results are improving 600 points from 1 half to the other is quite impressive. We should be very disciplined.I'd like to draw your attention towards here, we're not comparing fourth quarter to fourth quarter that would be twice as much. We're comparing half year to half year to show the seriousness of our work and our earnings release.Comparing semester to semester, we have a significant growth from BRL 160 million to BRL 340 of EBITDA, a growth of 57% and 600 basis points of margin. This comes from several items, the old way.With all the items, this is a continuation of the work that we've been carrying out throughout the year. As we usually reinstate, this result reflects the end of the time of integration. I joke that Integra is out and our delivery is in. So, our team is no longer worried about combining systems and processes.The final teams are in their places. And now we start looking closely how we can deliver more value to our shareholders. The head of our team is no longer of integrating us delivering actually. We deliver cost, better faculty, more efficient, more efficient administrative costs and G&A as a whole more efficiently.We still have some challenges. Marketing has been spending more. It's a decision we've taken to reinforce the Inspirali brand, which is growing, concrete space, increase it more, Guilherme will talk a bit more about that and market dynamics.Regarding bad debt, the other red row, it's a change that we had last year. This year, we're very comfortable with our provisioning level. Practices and policies continue the same. We are increasingly more disciplined and more efficient in our collection.So overall, when we look at this number, we see results of great quality, significant EBITDA growth, margin growth that is quite significant with quality and cash generation.This derived from several segments, from all our segments. We started with Core, where we have most of our students and our revenue, and we highlighted the margin growth. Our Core was able throughout 2023 to deliver significant results, not only in terms of margin, but throughout the year.If you look how much the ticket evolved quarter-after-quarter, we see a ticket develop major evolution. This is a result of the strategy that we have of valuing easily our margin, making our students to recognize the value of the schools where they study all the policies of meritocratic. The session of scholarships were implemented over 2023.We were able to improve the ticket with these students and the base with no impact to drop out. This shows the strength of our project. We're very happy with core from the standpoint of efficiency and also from the standpoint of resilience of our base and valuing our brands.On digital, we follow our trajectory. We keep on growing, taking quality digital learning to the integrated brands. Our growth also has an important factor, which is the arrival of digital learning to important brands as Una, Sao Judas and also rescuing other brands that have been very powerful in digital as Unisul.Those brands now, they deliver major growth to the company, both from the standpoint of volume and also ticket. They are renowned and strong and value brand. So, digital also follows its consistent trajectory.Moving on segment for our brands, I turn over to Guilherme talk about Inspirali.

[Guilherme Colin Soarez, executive]

Thank you, Atila, Marina and Marcello. It's a pleasure to be here with you. Good morning, everyone. I'd like to congratulate for the results presented. We have been witnesses of all the effort, indication of this wonderful team.Inspirali continues in its journey of consolidating itself with the company that consolidates all the medical schools of the Anima ecosystem, strengthening its governance and its strategy that we call Dual strategy and the main focus of consolidation of our quality offer, but also in the building of continuous or Lifelong Learning platform. And the results show the results of this strategy.I will talk about some recent events in a while. And I'd like to highlight here the growth of Lifelong Learning or continued medical education, that is the integrational we had in mid-2023 and the strategy of expanding portfolio and also geographically.We're very confident with this growth, vertical that we have and other growth avenues through the new Mais Medicos public note and increase in seats. As I'd like to stress in the past week, we've had the publishing of the audience with increase of 100 seats in Ngaji AGES, which is an operation that is fantastic. Last week, I had the opportunity of visiting the partners of AGES.It is, say, the Hospital Mario Suprio and the EDC Hospital, and we see very proudly all the curriculum at the Inspirali matrix in practice integrated with the public health system, and this just makes us feel very proud, and we are on the right track. And thinking about lover love, I'd like to highlight the visit to Uno Curui by the Ministry of Education. In February, we got Core5 and the new operation in the Amazon is underway. We hope to shortly have some news on that.And, I should not fail to mention all the advances that have taken place. With Anhembi Morumbi and Sao Judas Campos, we've recently opened an integrated health center in such important marketplace and such important unit. And we signed a previous week a partnership with this Institute [indiscernible] that operates Sao Judas Campos Hospital. It's one of the main hospitals in Brazil operating through the public health system. And this makes us feel very confident that we are on the right track.And lastly, I'd like to mention and share the Africa mission. We took 30 students from all our schools in late January, early February this year, plus 15 doctor professors in [indiscernible].In Africa, they cared for over 6,000 inhabitants in the region. If you don't know, Africa, but it's been one of the hubs where they had the largest number of slaves, 80% of the 5 million people that were in slaves that came to Brazil, and we have this debt to Benin, and we started contributing with these people that suffer so much taking our students and our professors to provide minimum comfort to the population. This is a result of all the work humanized teaching of Inspirali. Thank you.

[Átila da Cunha, executive]

Well, first, this Africa mission is something that, well, gives us goosebumps. And I'd like to urge you to visit our website to see how humanized teaching makes teaching different. This is enriching to all of you who want to know what Anima is beyond numbers, well beyond numbers to get a bit to know this project.I'd like to take the opportunity of this photo because every now and then, people ask me, oh, Atila actually, you are reducing CapEx. How are you maintaining the unit? I think this photo answers for itself. So, if somebody asked about these new seats, do you need more CapEx?Well, CapEx is there. I think this is an example that is very clear of what our commitment is. We will never disagree or actually go be against our units. They are the tangible element of our services. So, we'll never fail to take care of them. So, this is a further that shows that congratulations to the whole team of AGES and also Professor Wilson, congratulations.Well, this chart is very important to show the solidness of our projects. We keep on having totally comfortable cash levels that ensure us to pay the bills that we have had to give us continuity so that we can work every quarter looking into our business to improve efficiency, service to students, to add our value proposal with security from the standpoint of liquidity. So, we're very reassured regarding this dimension of our business.Financial results. It's important to highlight that over 2023, it has being quite heavy on our financial statements, but we see that in the future, well, we're very optimistic reduction of interest rates will bring a great net debt about BRL 3 billion.So, every basis point interest rate reduction, we have BRL 30 million cash a year. So, how much we had the reduction from end of the previous year to this, we see how official this cycle is for our business and cash generation. This is extremely important information that makes us look at 2024 in a very positive way and very optimistically.So, to give you some time for questions, we see we have a lot of people that have raised their hand. We see the results of the last quarter and consequently, the year, it shows the soundness of a trajectory. I'd say that this is clean results, results which numbers speak more than text.The results that shows the pace and discipline of thousands of people towards delivering results through cost control, through a very close look to efficiency, and also through commitment that we have every quarter telling you everything we have been doing.From what we have been doing, we attain results. We talk about the efficiency and the faculty. We talk about unit reduction and lease. We have that. We talked about administrative efficiency, cost reduction and various year look to G&A, and we have it.And we've talked about removing scholarship or meritocratic scholarship granting, improving ticket of upper classmen. This is a slide that shows commitment to delivering to thousands of people that shows growth in EBITDA, cash reduction, reducing leverage. And, at the end of the day, a company that is increasingly healthier to give comfort to all of those that invest and work for it. Marcelo?

[Marcelo Bueno, executive]

Thank you, Atila. Before anything, I would like to greet Andre Tavares, I know it's your birthday to release the results consolidating, and quite strongly, this is a great gift.As Atila said, we've been talking about a lot of discipline and sobriety throughout the year, those avenues that Atila mentioned here and we have the results being delivered. Now, we'll have time to focus more energy to three avenues. One of them, Atila mentioned in the beginning, but I think it's important to note that the company today has all its systems integrated. This is not an easy task moving from 19 to 6 systems and having an ERP integration. It was actually an implementation because Anima's ERP was being discontinued.And as of the previous leverages, we had to end a new Oracle ERP in the company. This is not easy. Congratulations to this wonderful team, they have managed to implement it. But what's important here is that once we have systems integrated, we can channel our energy and our experience to our differentials, our value proposal.And with this, we have this maxim that education has now priced, but has value. This is the main avenue. Considering more energy to our value proposal. Second, capital costs. We have to focus more energy and re-profiling renegotiation or debtness so that it can be more competitive and taking less effort. It's an important avenue for us to focus from now onwards reduced in actually restructuring our debt.And I'm very grateful and honored to say that we have placed Anima in positioning to make its choices with no pressure in terms of opportunities organic deleverage. We managed to place Anima in a position which we have the capital markets opening. It's not an end.It means we can actually, with no pressure, we can make the best fiduciary choices to our shareholders in our company. I think it's important to say that we're going to focus energy increasingly more to those avenues.With this, I'd like to thank you and open for questions.

[Marina Gelman, executive]

Let's start with the people that have enrolled. The first person is Fred Mendes from Bank of America.

[Frederico Mendes, analyst]

I have two questions on my side. First of all, I know you gave the guidance, what you can share in terms of funding. Especially if you could talk about volume campus the other players are very optimistic regarding pending on campus, but I think you could talk about this, it would be great.Second, Atila mentioned, what else can be done in a part of expenses? I think that's great highlights. Great job. You did in bort of expenses and costs, especially. When we look to marketing it cell line or row that draws our attention a bit. And, of course, it communicates with intake.So, in an intake that is smaller would you have space to reduce this role or you have to strengthen the Inspirali brand. So, how far can you go?

[Marcelo Bueno, executive]

Well, Fred, thank you for your question. A few comfortable sitting here. Well, I don't feel comfortable giving guidance and promises. This is not always the time. We have to keep on quality of our revenue, optimum point between press-out and ticket and especially margin growth. That's an important point.These are the things that show us that we're going to be firmly working on 2024, 2025. I don't want to sit here and say that what has to be good or bad. We don't have this profile. I respect this to do that, we'll keep our standards here and say that the companies will increasingly focus on the quality of our revenue. Would you like to add?

[Átila da Cunha, executive]

Well, Fred, thank you for your question. I think that what Marcelo says is our model. It was confident regarding what we're doing and the quality of results and cash generation. What we reaped last year is an element that is unquestionable of this commitment.Regarding marketing, what happens is, this number grew from last year to this. We see a scenario which we understand that we must keep on investing in our brands through investment in our brands.Will we be able to make an increasingly better future? This pattern that we see this year is a pattern that we should see in the forthcoming times, of course, we are seeking more efficiency, doing more with less every real hour that we take from our pocket.We have to be confident that it will add value. And this is to all other numbers items. We have naturally the rollout of quarters. We will have quarters that are, say, sounder terms of cost with leaner orders of costs, we'll see a rollout that is natural of this move and the bulk of efficiency measures that has been implemented. We'll see ahead marginal measures.So, don't expect great leaps. Once we ended all the rollout of quarter, we won't see great leaps that we see here, but we see a continuous and growing evolution of efficiency. I believe our company is absolutely confident regarding this viewpoint every month that is over, we deliver more efficiency.We look at our business, our educators are increasingly more having more time to deliver leaving the integrated to the past. This is naturally translating into more efficiency and margin reduction we've seen.Leads us a lot of work that has been done in our recurring, you will see that we have contractile reduction that is important with the return of a campus from Hwata and Villa Olympia. This will break it not [indiscernible]. The effect of that to the results. This is something that happened late year.We have a rollout for that ahead and in a very confident way, I believe in the potential of improvement of our ticket with our upper classmen.What we have been doing within classrooms, what we have been improving in terms of services make us confident to know that our students will value increasingly more the services they have.We have seen this delivered in the results of the fourth quarter. If you see the earnings result, at least you see how much the ticket has grown over the year and how much Anima Core semester and the last quarter.And this is a growing ladder. And this is what we're going to keep on doing from now onwards. So, with that, we have a very constructive view for 2024. Very confident regarding our capacity of delivering EBITDA and margin growth.

[Marina Gelman, executive]

The next one on our list is Marcelo Santos from JP Morgan.

[Marcelo Santos, analyst]

I have two on my side. I'd like to ask about bad debt. If there is a risk of having higher bad debt, when we look at aging of accounts receivable, it's a bit heavier. Would we be see higher PDD or bad debt in 2024?I'd like to comment on the expenses on debt interest. It had a slight increase, not so much in the fourth quarter. When we look at it's under BRL 156 million regarding BRL 148 million in Q3. How should we see that behaving?

[Átila da Cunha, executive]

Marcelo, thank you very much for your question. First of all, it's important to say that our bad debt policies have been consistent over the years. They are objective audit, of course, but all the governance instances of the company, and they are the same year after year.What happens in practice is that within the measures of management of working capital that we've been to the less use of our balance sheet, placing interest for those that need that and several other points, collection has been something that we have been involving quite a lot.5 days within an invoice that matures the students can negotiate on WhatsApp. Everything can be done online. So, all the delinquency team has been working day by day to improve collection of our accounts receivable in 2023 closed with less delinquency compared to 2022 because we've been evolving in this line.So, I feel very confident regarding the provisioning level, we don't have under provisioned portfolio, much on the contrary and the provisioning. Well, the coverage grew a bit year-over-year. So, I have no fear or risks ahead regarding this figure.As to interest expense in Q4, we had a specific event to market of swap with hedges of our dollar with IFC, and this is a specific event. It's not repeated. And we adjusted accounting to draw the curve.So, the Q4 result is something that, in fact, does not reflect what the year is, but it's just a specific adjustment addressed as recurrent. And our financial expense levels continue dropping over 2024 for the work that we have been carrying out for liability management and the natural drop of the interest rate.

[Marcelo Santos, analyst]

So, now it's going to continue to move along with the curve. If you change the way you mark to market and the curve will be smoother. Is that it?

[Átila da Cunha, executive]

No, that's just an accounting effect as to what it was the way it was booked. We adjusted it according to the curve of the liability it hedges.

[Marina Gelman, executive]

Thank you, Marcelo. Next person analyst is Leandro Bastos from Citi.

[Leandro Bastos, analyst]

I have two questions. First is on funding. Comment on quality. Could you talk a bit about how you see the competitive environment in distance learning and on-campus. What about strategy you have for pricing in the cycle?And the second are specifically the ones results, we see an amount, BRL 27 million. You've done other transactions the passengers to remind us on the rationale of this kind of transaction? To what extent you can have that as a possibility for 2024? What do you think about that?

[Marcelo Bueno, executive]

Well, competitive environment, we are increasingly focusing on our value propose of our brands and experience on campus, semi or digital.So, clear positioning, we'll keep on investing. We have integrated tools to be able to have control to make the investments and find SKU correctly to be able to price appropriately our experiences, the experience students have with us.This is the way trying to find the optimal point between offering an appropriate ticket with a volume that is also appropriate. So, this is our rationale. It will not change. We are reassured with the integrated tools to be able to make this happen in the best way possible, increasing more.

[Átila da Cunha, executive]

Well, thank you, Marcelo. Just to go on the PraValer. Over time, we have been making our portfolios to be increasingly more ready to be sold. One of the important element is interest PraValer.We started including interest and also the funding that we make with credit cards, we started including interest rates so that we have the option that if we want to have a concession on receivables, we do it with a profit and not loss.If you look at it, we had significant growth in the revenue of interest with division fees. It almost doubled in the past quarter. This is a reflex or reflection of this philosophy of working capital, conscious use of our balance sheet, and we naturally are ready to make this. We have been making this business as usual within this philosophy that is absolutely clear.Revenue has to go fast to cash. It cannot be stopped or lie in the balance sheet. This philosophy will make us keep on growing cash generation, reducing leverage and value to shareholders.

[Marina Gelman, executive]

Next on this is Lucas Nagano from Morgan Stanley.

[Lucas Nagano, analyst]

We have two questions as well. Cost related deleveraging, we'd like to understand from your viewpoint, if you're comfortable with this pace of deleveraging, considering the covenant of two, the initiatives and cost receivables, the organic and inorganic deleveraging to the come to accelerate cash generation.Second one is on states margin in 2023. So far some effects of other items, FGTS, it should start impacting so we have more investment in marketing, maturing of the seats. We'd like to understand if the margin has normalized or it should be under pressure in 2024 with these effects.

[Marcelo Bueno, executive]

Lucas, we are comfortable. I think what's up to us in the seat of CEO and the company is for you to understand that is what is under our control is organic deleveraging.We have to place our company responding for its covenant organically. So, this is a clear agenda that has been done and delivered. Well, the thought we could not reach and we exceeded covenant organically.This is under our control, and it will be done and delivered. In parallel to that, as I mentioned in my final remarks, we are very happy to place Anima in a situation increasingly more in which we are reassured making important choices and inorganic deleveraging pathways that we have around.OS is a good problem. We'll look at it and say, does this make sense to the company led to the math will generate value, let deleverage faster. This is a clear agenda that will be intensified so that we can deleverage faster, generate more value to the company.

[Átila da Cunha, executive]

Lucas, thank you for your question. I think you highlighted some of the main points. As we mature our projects, increasingly more, we have the trend of having a stability as fearless.If you break down Q4 2023, you'll be able to observe stability and a slight improvement compared to Q4 2022. So, in Q1, 2024, we will offer an effective comparison with the base of first quarter 2022. When the retentions of GCS did not happen in this model that has been implemented since the end of Q1 2023.We'll still have this difficulty of comparison. But as of the second quarter 2024, we'll have a comparison base that it will be clearer, so to speak, and we'll be able to notice in more explicitly the positioning of ticketing and the revenue of [Indiscernible] with its value proposal

[Marina Gelman, executive]

Next person enrolled is Vinicius Figueiredo from BBA.

[Vinicius Figueiredo, analyst]

I'd like to start with a point regarding the inorganic leverage pathways you've mentioned. When we think about Inspirali, considering that this week, now you've announced the hiring of an ROI for the company, I'd like to know whether the head of the company in a possible IPO would be to keep the control of the operation? Or would it be something that would probably seek a primary, now you have a limitation in terms of what you can comment on, but maybe the rationale a bit.And the second point I'd like to hear is a follow-up on the question of colleague, I think it was Marcelo, regarding coverage index. Just to try to understand and clarify because to us, it's not 100% clear. Where we look at the revision in provisioning, it was sort of season by season. You took your algorithm, and you said you conversed to this collection mechanism that is more efficient. So, we apply an algorithm with a bit more risk. Is it a bit like that? Or have we understood it or misunderstood it?

[Átila da Cunha, executive]

Well, Viniciuss is adding to you, I'd like to welcome Carina who's joined the Inspirali team, who's going to support us greatly in the maturing of our governance and the way we relate to all stakeholders.Marcelo said we are going through a moment of liability management. Those are important times that we will benefit a lot with the person that is the caliber of Carin and I'd like to turn over to Marcelo, who is the CEO of Inspirali who will allow another woman to brighten our ecosystem. Congratulations, and welcome.

[Marcelo Bueno, executive]

I think Vinicius, it's important -- well, IPO is a means, it's not an end. The market is not even open. We have to pay attention to that.Inspirali is a unique company, a health ecosystem with 15 medical schools, the best regions and marketplaces in Brazil with the best brands to unique assets. So, we have to pay attention. You can help us at the right time to help us make the best decision for the company in a reassured positioning that we have, especially regarding Inspirali.Let things happen. You have to know that we are paying attention to these important movements so that we can further move ahead in the longevity and raniality of our operations. Would you like to say a few things?

[Átila da Cunha, executive]

Well, Vinicius, this is an important point for everyone to understand. We are quite reassured regarding that. We haven't changed the level of provisioning with considering the level of payments in arrears.We have an increase in balance the provisioning level. Provision of the portfolio as a whole has increased a bit. You see that it has increased. We had a reduction in accounts receivable. We have a provisioning for those to mature. We had portfolios. We always have that when we and PraValer or Facilita and to mature the provisioning, the provisioning as a whole is may change. We have greater coverage for the other areas.So, we are quite okay and or a tease here. So, the indicators we follow on the day to day in terms of collection, they have been improving and professionally as a whole of the portfolio is super safe at comparable levels with those that we've been working on historically.

[Marina Gelman, executive]

Next person enrolled here is Samuel Alvis from BTG.

[Samuel Alvis, analyst]

We have two questions on our side. The first still on Inspirali. You comment on the 100 additional seats on the release on the measure of the ministry last week. It's just for you to clarify whether there are other requests of increasing seats regarding Mais Medicos previous or outstanding, if you could tell us a bit the stage of such requests? This is the first question.And the second one is regarding investment plans. In 2023, we've seen that the company was a bit more selective, had a drop of CapEx of 10%, close to the year and BRL 190 million CapEx. Could you just share with us what you have in terms of plans for '24 for investments? If you could imagine this level, if you could share some numbers of your budget in those on the slides.

[Marcelo Bueno, executive]

Thank you, Samuel, for the questions. I'll answer the first, and then I'll turn over to Atila. Well, we've recently had the Ministry of Education Publishing noting us to regulate the seat expansion for courses from the Mais Medicos School.Mais Medicos one and two and causes called traditional courses. Obviously, we have a fiduciary to following all our units. This increase in seats depends on some elements, such as local needs, capability, availability of bet in the location and also the quality of the services provided. We pay close attention. We follow. We've been acting according to the criteria.

[Átila da Cunha, executive]

Regarding CapEx. I think that photo that you saw on the slide, it reflects our strategy. We have no time reduced CapEx because of financial issues and leverage restrictions. What happens is that we've had intense years of CapEx.We migrated systems, integrated platforms. We returned units. We had to adapt to new units and naturally would come from a heavier CapEx base. And they will move to a lighter CapEx space that should be the new brand of the company with no impact to our quality of services and comfort to our students. So, we keep on investing in technology.We keep on investing in our units now. Well, you should have no doubt that everywhere that goes is looked into, we have our CapEx committee every real that goes to the academic [indiscernible]. He's our Director of Operations. So [Technical Difficulty] VP of Digital Transformation approves that. It goes so, [Indiscernible], who is our Treasury and Financial Planning Director, follows daily consumed CapEx.This is part of life to have this management. But at no time do we understand that we are under CapEx? And we keep on investing on advancing debt. So, we have [indiscernible].

[Marina Gelman, executive]

[Interpreted] Last person with us here is a Kyle Moscardini from Santander.

[Kyle Moscardini, analyst]

I have two on my side. One is regarding dropout rates. Once you have more maturity in the more restrictive policies of renegotiating, we should like to understand a bit more as to how students respond to those policies and how the dropout is behaving early this year?And another question is on Inspirali. We've seen very good performance in continuous or life bond education. What is the opportunity you see for this segment? And how much could it represent for Inspirali in the mid, long term?

[Átila da Cunha, executive]

Thank you, Moscardini. You're always very kind and pleasant. Well, the dropout thing perhaps is the most demanding type of work that we have. We require thousands of heads.After all, we're talking about the permanence and continuity and the dreams of our students did go through the heads of teachers, professors, employees, cleaning people, service people customer service. This is the work of thousands of hands that have embraced this cost. We have a team led by Martin Fuji, they do very professional work.So, we have predictive algorithms of dropout students with higher potential dropout lower.We have segmentation, differentiated treatment that gets to look student by student level. This is done in a very disciplined way consistently that has been maturing or semester after semester. And the reason of which we are very confident that our students value the school were tested.In Q4, we saw a ticket improvement, of course, in the Core segment, where we have no intake ticket improvement is from upper classman and this shows us that students are valuing our brand and that our teams have embraced the calls of students. So, today, we're very confident to continue pulling our lever towards this direction.

[Marcelo Bueno, executive]

Thank you for your question. Actually, we are very keen towards the Lifelong Learning and medical education with Mais Medicos 1 and 2 and the growth in the base of doctors in Brazil and intensify the new technologies and innovations and new methods, even more so necessary that doctors we've updated in our study so that they can have the leading role in there are areas where they actually have increasingly specialties or sub specialties.And we keep on investing in this Lifelong Learning medical education so that we can be a quality educational provider. We are confident in building our organic projects or greenfield as we call them internally through partnerships.I highlighted the partnership with DASA. We launched the ultrasound school late last year, and we are already seeing a very positive reaction of doctors seeking us for that. The classes being set up as the partnership with Mattadais sports medicine, several classes.So, we have this growth front through partnerships, we have the growth from through the brands that have joined our ecosystem [Indiscernible] that have helped us develop a very interesting way of connecting to the ecosystem, placing those initiatives and start-ups, making them available to, well, all our scale comprehensiveness and our footprint, geographically.And we're looking into new start-ups, checks or new companies that may contribute to this legal puzzle of Lifelong Learning turning us into continuous complete offer and following doctors throughout their trajectory.

[Marina Gelman, executive]

Well, would you like to say some final words?

[Marcelo Bueno, executive]

Well, thank you very much. We had great attendance. Thank you for the interest, for your time. We will wrap up here, punctually and we will like to tell you that IR Stef, Berrnando, myself, are totally available.We thank you very much the whole team that have helped us in this earnings results call and thank Marina's return to the team, doing a wonderful job. It's an honor. Thank you very much. Have a good day.