Afya Ltd
NASDAQ:AFYA
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Afya Ltd
Earnings Call Analysis
Q4-2023 Analysis
Afya Ltd
Afya's financial achievements in 2023 have been noteworthy, showcasing the company's robust growth trajectory. A 24% surge in adjusted net revenue took the figure to R$2.874 billion, while adjusted net income followed suit with a 10% increase, reaching R$591 million. Earnings per share (EPS) also witnessed a 12% climb, standing at R$6.37.
Operational expansion played a key role in Afya's success, with undergraduate medical student enrolment swelling by 19% to over 21,000. The education segment outperformed with a 35% organic revenue growth, significantly contributing to the company's diversified income stream. Meanwhile, the Digital Health Services sector recorded a 21% organic revenue boost, underpinning the potential in digital solutions. Notably, the B2B revenue soared by an impressive 64%, indicative of the company's expanding market presence and ambitious strategy.
Since Afya's IPO in 2019, the company has quadrupled its adjusted net revenue, reaching R$2.874 billion in 2023. This remarkable growth underscores the effective combination of organic and inorganic strategies intertwined with disciplined capital allocation, ultimately leading to the doubling of EPS within the same period.
Looking to the future, the guidance for 2024 is optimistic, with projected net revenues ranging between R$3.25 billion and R$3.5 billion and adjusted EBITDA forecasted to be between R$1.3 billion and R$1.4 billion. This forward-looking sentiment is further reinforced by a Capital Expenditure (CapEx) plan, which anticipates an outlay between R$220 million and R$260 million, exclusive of R$49.6 million in earn-out payments.
Afya's commitment to healthcare extends beyond financial metrics. The company's initiatives have contributed to over 2 million clinical consultations and the graduation of more than 20,000 physicians, emphasizing their dedication to enhancing healthcare access and education. Additionally, the platform has facilitated over 32 million medical decision-making access points, demonstrating the significant influence Afya has on both medical professionals and the healthcare ecosystem at large.
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Good night, everyone, and thank you for joining us for Afya's Fourth Quarter and Full-Year 2023 Conference Call. Today, I'm here with Afya's CEO, Virgilio Gibbon, and Luis Andre Blanco, our CFO. During this presentation, are executives will make forward-looking statements. Forward-looking statements can be related to future events, future financial or operating performance, no one know unknown risks, uncertainties, and other factors that may cause Afya's actual results to differ materially from those contemplated by those forward-looking statements. Forward-looking statements in this presentation include but are not limited to, statements related to the business and financial performance, expectations and guidance for future periods or expectations regarding the company's strategic product initiatives. Its related benefits and our expectations regarding the market. These risks include those more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on the information available to us as of the date hereof. You should not rely on them as predictions of future events, and we disclaim any obligation to update any forward-looking statements, except as required by law. In addition, management may reference non-IFRS financial measures on this call. These measures are not intended to be considered in isolation or as a substitute of the results prepared in accordance with IFRS. This presentation has reconciled those non-IFRS financial measures to the most directly comparable IFRS financial measures. Let me now turn the call over to Virgilio Gibbon, our CEO.
Thank you, Renata, and welcome to our Final Conference Call of 2023. We are excited to present another year of exceptional operational and financial performance for Afya. Once again, we have demonstrated the resilience of our business, the successful implementation of our strategy, and the reliability of our business model. In this presentation, I will cover key strategic topics, including our performance highlights, the successful business acquisition across our 3 segments, guidance for 2023, and the new goals for 2024. And finally, Luis Blanco will provide an in-depth look at our financial and operational performance. Now turning to Page #3. Let's begin by highlighting our performance achievements. Initially, our adjusted net revenue increased by 24%, reaching R$2.874 billion, accompanied by a growth of an adjusted EBITDA of over 21% year-over-year, reached R$1.166 billion, with a margin of 40.6%. Furthermore, we are pleased to report a record on cash flow generation from operating activities, concluding the year with R$1.89 billion, reflecting a 24% increase compared to the previous year, with a cash conversion rate of 97%, which is 270 bps better than the previous year. With consistent momentum throughout the year, our adjusted net income reached R$591 million in 2023, marking over 10% growth year-over-year with an EPS of R$6.37, a remarkable 12% increase compared to the previous year. This underscores our disciplined cryptolocation on Buy Back programs, M&A, and an efficient capital structure. Transition to our operational updates for the year, we have expanded to 3,113 operating seats, witnessing a year-over-year increase of over 12%, facilitated by the acquisition of UNIMA in Faculdade de Ciências Médicas Jaboatão in January of 2023. In addition, our number of undergrad medical students has reached more than 21,000 represent a 19% growth compared to 2022. Additionally, we are delighted to report significant growth in net revenue for our continued education segment. We expanded by more than 35% year-on-year organically, reaching a net revenue of R$147 million. Our Digital Health Services revenue marked another great result with a 21% increase compared to 2022 period organically, reaching a net revenue of R$229 million. This outcome underscores the best opportunity in digital services, driven by the ramp-up in B2B engagements, securing new contracts with pharmaceutical industry companies, and the continuous expansion in B2P contracts. Lastly, our ecosystem has 268,000 active users, exemplifying substantial penetration among physicians and medical students in Brazil. In the next slide, we will discuss our robust business performance across our 3 business segments. Beginning with our core business, the undergrad segment, we observed significant growth in the net average sites of medicine, represented a growth of 8.2% over last year. The completeness of UNIMA and Faculdade de Ciências Médicas Jaboatão integration process in November, less than 1 year after its acquisition, proving our commitment to extract synergies within the operation. We are pleased to note that the most substantial revenue growth of the year came from our continuing education segment with a robust intake process, 3 new campuses, and course-maturation, we can see once more our students, employees, and partners benefit from our constant developer ecosystem. On our digital service segment, we take pride in our 2 assistant decision throughout their medical journey. Concurrently, we are expanding our ecosystem to facilitate new interactions and revenue streams beyond physicians, including engagements with pharmaceutical players, hospitals, labs, and drug source streams. Dividends of this expansion is seen in the growth of our B2B strategy, fortifying our market presence and extending our reach. Consequently, we achieved a 64% year-over-year growth in our B2B revenues. Transition to Slide #5, we will explore how the company's financial results reaffirm the resilience and predictability of our business model. After 2023, adjusted net revenue was almost 4x higher than in 2019, the year of our IPO, reaching R$2.874 billion, surpassing our mid guidance for 2023. Furthermore, 2023 adjusted EBITDA was R$1.166 billion, followed by an adjusted EBITDA margin of 40.6% also surpassed our mid guidance of R$1.150 billion for EBITDA. Moreover, our EPS has more than doubled since 2019. Underscore our capacity to combine organic and inorganic growth with strange capital allocation discipline, thereby delivering significant returns to our shares. We are pleased to introduce our new guidance for 2024, which considers the successful acceptance of new medical students, ensuring 100% of occupancy in all of our medical schools. Given these factors, the guidance for 2024 is as follows: Net revenue is expected to range between R$3.50 billion and R$3.250 billion, while adjusted EBITDA is anticipated to be between R$1.3 billion and R$1.4 billion, excluding any acquisitions that may be concluded after the issuance of this guidance. Once again, we are guiding another strong round ahead, improving Afya's resilience and ability to keep delivering solid results with a high predictability. Now let's move to Slide #6. Furthermore, in addition to the guidance we provided earlier, we are excited to share our first CapEx guidance. Shown in the chart, our CapEx for 2024 expects to be between R$220 million and R$260 million. It's important to note that 2024 CapEx guidance does not in compacts the earn-out payments in the amount of R$49.6 million related to the 40-seat increase at Faculdades Integradas Padrão (FIPGuanambi) and the CapEx presented disregards any additional license and goodwill. The Slide #7, we will check our ESG initiatives. Our company's dedication to sustainability and environmental care is exemplified by our remarkable achievements. Annually, our photovoltaic plants contribute to 6,341 megawatts hour units of power generation capacity, showcasing our significant investment in renewable energy. Additionally, 16 education institutions now have installed photovoltaic plants, reflecting our commitment beyond corporate boundaries. Notably, this integration of sustainable energy source has enabled 100% of our education operations to operate completely free from greenhouse gas emissions associated with electricity consumption. These accomplishments highlight our commitment to creating a greener, more sustainable future that impacts our stakeholders and investors. With 9,680 employees, our workforce represents diversity and inclusion at its core, highlighting our commitment to promoting quality and opportunities for minority communities. Additionally, 58% of our workforce consists female employees, reflecting our dedication to gender diversity and environment in the workplace. Also, 45% of leadership roles in our company are held by women, reflecting a growth of over 4 percentage points over last year. This is reinforced by our public commitment to have by 2030, 50% of our leadership team occupied by women. In our governance structure, we prioritize transparency, accountability, and equality in the decision-making process. Afya has 36% of our Board of Directors composed by women, more than 36% of our Board Members are independent ensuring diverse viewpoints and fair oversight. Our dedication to health reaches far beyond our organization, extending to the communities we serve. Since 2019, we have offered 2 million clinical consultations, striving to enhance healthcare sensibility for everyone. By 2023, our programs we have graduated over 20,000 physicians in reaching healthcare services within our communities. Furthermore, our platform provide over 32 million medical access points to help in decision-making for medical management. In conclusion, these achievements resonate profoundly with our stakeholders and investors, reflecting our comprehensive approach to responsible business practices. Now I'll turn the call over to Luis Blanco, our CFO, to give more color into our financial and operational metrics. Thank you.
Thank you, Virgilio, and good evening, everyone. Slide #9 will now guide us through the discussions of the financial highlights of the fourth quarter. With great pleasure, I present another strong quarterly results for Afya. Adjusted net revenue for the fourth quarter of 2023 reached R$730 million, marking an 23% increase compared to the same period of the prior year. Furthermore, in 2023, adjusted net revenue reached R$2,874 million, reflecting a 24% surge over 2022. This growth trajectory can be attributed primarily to higher tickets in medical course, maturations of medical seats, the acquisitions of UNIMA and FCM Jaboatão, the continued educational segment growth and digital service performance. Adjusted EBITDA for the fourth quarter of 2023 saw a 19% increase, reaching R$289 million, with an adjusted EBITDA margin of 39.6%. For the full year, adjusted EBITDA amounted to R$1,166 million, reflecting a 21% increase with an adjusted EBITDA margin of 40.6%, representing a marginal decrease of 90 basis points compared to 2022. These reductions can be attributed to factors such, mix of net revenue with higher participation of continued educational segment and launch of 4 Mais Médicos campus in the third quarter of 2022 that are still in early stage of maturation. However, in each semester until full maturation revenues will increase offsetting the impact of the fixed cost of the operation. Transitioning to the next slide, adjusted cash flow generation witnessed a 24% year-over-year increase, totaling R$1,089 million for 2023. The operational cash conversion ratio stood at 97% for 2023, 270 bps above 2022. It is important to highlight that one of our differentiations is our cash flow from operational activities. Adjusted net income for the fourth quarter of 2023 amounted to R$164 million, marking a 28% increase over 2022. For the full-year, adjusted net income reached R$591 million, reflecting 11% year-over-year increase. Our adjusted EPS witnessed a robust expansion with 28% growth for the quarter, reaching R$6.37 for the year, reflecting an 11% increase year-over-year. This performance underscores the growth in our net income and disciplined capital allocation through business combination. Transactions show Slide #11 for discussions of key operational metrics by business unit. Beginning with the undergrad products. Our number of medical students witnessed a 19% year-over-year growth, reaching more than 21,000 students with approved medical seats increasing by 12%, primarily driven by the acquisitions and maturations of 340 seats in UNIMA in the beginning of 2023. Therefore, considering the authorizations by the Ministry of Education of 40 additional medical seats of Faculdades Integradas Padrão in the City of Guanambi located in the state of Bahia. Afya reaches 100 medical seats on these campuses and 3,203 approved seats as of today. With our net average ticket increasing over 8% year-over-year, reaching R$8,548 compared to R$7,898 in 2022. The last graph illustrates a 24% growth in combined tuition fees reaching R$3,267 million, up from R$2,635 million from the prior year, 79% of which are related to medicine. This demonstrates that our medical educational business remains and will continue to be the cornerstone of our business. In the short and the middle terms, delivering high predictable growth, combined with solid profitability and cash generation. On the following page, I will present our continuing educational metrics. As previously mentioned, we witnessed another year of significant growth in our continued educational segment. With more than 60% increase in the number of students compared to last year, reaching 4,976 students. Additionally, for the year, net revenues grew by 35% compared to 2022, boosted by the growth in the number of students. Moving to Slide #13 to discuss the digital service operational metrics. The first graph illustrates our active payers, which are the ones that generate revenues in business position. With a continuous growth trends reaching 226,000 paying users, marking an 11% growth compared to the last year. The second graph showcase our monthly active users reaching 268,000 users, representing around 34% of all medical students and physicians in Brazil. Finally, our digital service net revenue witnessed almost 20% year-over-year increase, reaching R$229 million. Since the beginning of 2022, we also started to break down our digital service net revenue within B2P and B2B segments. With over R$191 million generated from B2P and more than R$39 million from B2B, showing casing a 64% growth compared to the prior year. And now transition to my final 2 slides to discuss our cash and net debt positions and providing more insights into our cost of tax. I presented the net debt reconciliation for 2023. The cash flow from operating activities was allocated to income tax and lease payments, CapEx activities for the service of the financial debt for our share Buy Back program alongside the additional acquisitions of 15% of image. Excluding the business combination of UNIMA, we were able to generate R$391 million as free cash and reduces our net debt in the 12-month period. On my last slide, you can observe a table showing the breakdown of our gross debt and total cost of tax, considering our main debts. The Softbank transactions, the debentures, other financial obligations, and accountable payables to selling shareholders. We continue to maintain a low cost of debt that remains below the CDI rates. This concluded our prepared remarks, strong performance, consistent growth, success in all segments, and public recognitions. These are the pillars of our evolutions and our missions to provide an ecosystem that integrates educational and digital solutions for the entire medical journey. We are proud of our achievements thus far, and we are excited about our future plans. I shall now open the conference for the Q&A session. Thank you.
[Operator Instructions]. Our first question will come from [indiscernible] from Bank of America.
I have 2 questions here. First, if you guys could comment a bit on the competitive environment for 2024, if you have seen any significant change on the candidate per seat on any region? And second, what are the expectations on the Mais Médicos auction in terms of timing after the postponement? And also if the recent change that established a cap for proposals for the big players change any expectation you may have on the final results, given that now you'll be able to submit less proposals.
Okay, [ Mirela ], thanks for your question. Regard your first question about the competition landscape. We just completed our intake process for first half of 2024. Our ratio candidates per seat was around almost 6 candidates per seat. It was a very strong intake. So we have also not only the intake, but our renewal also completed. So we are running as expected with a very good demand for all of our campuses around the country. So no changing when we compare to last year. Actually, the ratio that we are seeing, it's even higher than before the pandemic. So that was how we are seeing the competition on the intake process for medical undergrad process. Besides that, we are also seeing a very strong intake coming from health programs on our campuses. I think that can be related to the new brand that now it's all the campuses working under the umbrella of Afya. So a very good campaign and a strong intake coming from other health programs, both on campus and online programs. So for the second question about the Mais Médicos [indiscernible] schedule. So we're expecting to deliver the proposal now by the current schedule by July of this year, and the answer will be only the beginning of 2024, with the new change to 2025, I'm sorry. And by the new changing, the change was -- from the previous one, we got 36 opportunities to beat in order to participate under the public bid. And now with the change that each institution can only offer for one state that reduced from 36 to 23 campuses that will be allowed to bid for the mismatch. So that's all the updates on this tranche, okay?
If I had to point here, [ Mirela ]. The first one regarding the Mais Médicos, yes, we can bid for less campus, but all the competitive players also can bid for less campus. So in the end of the day, we will be less competitive than we thought before. And regarding the first question, I would also like to add that we established the prices to increase around 4.9% when we started our intake process. And now we can see that on average, we should see price increases over than 5.8%, considering on the maturation of new tickets and also the ticket increase across all campus. That's it. Of course. So the next question will come from Jessica Mehler from JPMorgan.
I have 2 as well. So first, what is the outlook for digital education margins in 2024? And also, should we continue to see continued education expanding in 2024? What is the outlook for this segment?
Hi, Jessica. Luis Blanco speaking here. As a whole, we see in our 3 segments margin expansions during 2024. Starting with the continued educational, what we see that we're going to expand the margins because we are having operational leverage to our operations. We established new campuses, this campus being fulfilled with students so we can get more efficiency on this campus regarding our graduate costs. Regarding our digital service, what we see that with the expansions of our service expansions in our B2P users and new B2B contracts, we are going to see an increase in margins year-over-year as well. And in undergrad, we have the effect that we finalized the integration of UNIT last November. So it will be the first year that will be 100% of FITS having UNIMA/FCM Jaboatão being 100% integrated. So we're going to have expansions on these 3 segments and on top of that, on holding level, we established last year our zero budget projects, and we are going to run our zero budget during 2024. So with these scenarios, we are comfortable to give this guidance of 2024, where is implied expansions in terms of EBITDA margins for 2024, if you compare to 2023.
Jessica, just adding here. So based on our guidance here that our top-line is moving close to 12%, around 12%, and the bottom line growing 16% year-over-year. That is a combination of around 10% growth coming from undergrad year-over-year pure organic 50% coming from volume, 50% comes from tuition. On continuing medical education, it's around 20% organic growth and digital services around 30% growth expected to 2024. In all the 3 segments, we are seeing margin expansion as expected also in our guidance.
Thank you. [Operator Instructions]. The next question will come from Lucas Nagano from Morgan Stanley.
We have 2 questions. The first one is related to digital services growth. B2P seems to be growing at a consistent rate, but there was acceleration in B2B sales growth in Q4 compared to the rest of the year. Can you give us some color on the initiatives on B2B, the challenges to help us better understand the growth rates from there? And the second question is related to M&A. If you could comment about a potential return in M&A? Like how active is the pipeline? If discussions are somewhat returning as rates fall and if you see upside in the current multiples.
Hi, Lucas. Virgilio here. So first on B2B business to physician contracts. I think that the constant growth here is much more related, cross-selling, upselling our solutions as we have a very large penetration under or at least our biggest penetration solution, there is Whitebook from PEBMED as almost 80% of physician between 1 to 5 years after graduation that are using this solution.So the opportunity here is more upselling of other solutions and also cross-selling, continued medical education for these clients, for these physicians. On B2B, we are collecting the hanging fruits from the lending expanding strategy. So as we said in the past that we are just experiencing our relationship with big pharma companies. Now we have multiple contracts with very large companies and also with a higher value from each company. So the B2B contracts this year grew more than 60% pure organic. So it's a huge opportunity and the sales got -- the opportunity that we have seen on our pipeline for 2024 is even higher here. So it's keeping a very good trend and the growth will be boosted for sure by B2B contracts along 2024.
Yes. And if I may add with some questions that we received to the shaft here about the B2B growth on the digital segments year-over-year. What is driving the B2B growth on that, if I may add, to Virgilio, we saw during 2023 the increases in terms of contracts within the pharmaceutical industry come from products that we call campaign products. So we are hired by the pharmaceutical companies that have been the international ones and the national ones. They are highest to do campaigns, certain campaigns about certain drugs that they have under their portfolio to do these marketing campaigns for them using our apps and our sites as the channel to reach the right physicians at the right time. So this products drive our growth during 2023 and for the next year for 2024. On top of that, we launched at the end of 2023, some recurring products to the surgical companies as well to provide insights in their sales on that. This product didn't get tractions during 2023. But we are excited for the perspective of these offers for the pharmaceutical companies. And I think we have this additional growth in 2024 with this new product that we launched, that we call our X insights.
Just to finish your question then about M&A. We are seeing -- do you want to go?
Yes. Sorry, again, I forgot the question about M&A. The talking about M&A does not stop. We're always talking with the targets as we have a very specific niche of targets. Just remember that our target is just the institutions that have on the maturations more than 60% of their revenues coming from the medicine business. Always, we have come and goals with targets and we're still comfortable with the target that we've put in the market to grow to 206 per year. About multiples on that, we don't like this [indiscernible] per seats multiple, we prefer always to see a target within per EBITDA and evaluate it through IRR from these acquisitions, to have more than 20% on leveraged IRR on each transactions. But I think the next new deal would have the multiple that was below the last acquisition that we have that was UNIMA/FCM Jaboatão. I would say that it's our expectations to have this multiple in the next transaction. But we are always talking and always look opportunities to best allocate our capital.
Thank you, Nagano. The next question comes from Lucca Marquezini from Itau.
Just 2 questions from our side. The first one, if you could just provide an updated view on the potential authorization of new seats, the injunctions, and then how this could impact the competitive landscape in the regions where the company operates. And then the second question, if you consider the midpoint of the guidance for 2024, this implies an adjusted EBITDA margin expansion for the year. Can you please comment on which of the segments should be the most responsible for this expansion, please?
Hi, Lucca. About the new seats authorization from the injunctions here so we still don't have like a final result from Supreme Court in this manner here. But what I expect by the end of the day, independently, what is the final response on the Supreme Court will be the Minister of Education that we will have to fulfill and to approve all the additional seats. So what I believe is that the combination between the public policy that we are aiming to expand more medical seats for countryside through the Mais Médicos street combined with any alternative way that can be from the legal side, if that will be the final solution can be combined what the Minister of Education is expecting to have as a total expansion for the sector. So we are seeing that the total estimate by what they released in the past was around 9,000 to 10,000 additional seats. If they come from injunction from additional seats from the other alternatives from Mais Médicos streets, I think in the long term, it would be added something close to 10,000 seats in 5 to 6 years. That's the time that, well, you have to get the final answer. You have to build the campus or have to have and receive the final visit to get the authorization, the normative authorization, and then we start holding take process. So by the end of the day, that is, I think, it will be the largest impact around 9,000 to 10,000 seats in all of the cities that the Mais Médicos is aiming to have additional programs or additional seats as an increase of supply for the entire country.
Okay. Blanco speaking. Taking your question about the margin expansions for 2024. As Virgilio mentioned before, in terms of top-line, we can expect around 10% in the undergrad segment around 20% in the continued education, and around 30% in terms of digital service expansion in top-line. Coming to the expansions in these 3 segments, just to give more color on that. On the undergrad, we can expect margin expansion because it will be the full year. The first 2 years that we're going to have UNIMA/FCM Jaboatão, fulfilled 100% of the year under our model. So we did the maturations of their operations to our shared service. We implement our national curriculum in UNIMA in this first semester of 2024. So we're going to the past 1-year entire year with them, with under our structure, so we can expect an expansion of margins on the undergrads because of that. On the continued educational segment, what we are doing that is the operational leverage of the segment itself. We've ended the 2023 with a growth of roughly 35% in these segments. We have new locations of continuing educational and we're fulfilling these units with students. We have a very good strong demands for our graduate forces as a path for them to get the specialization title. So our offer is very strong and is getting vary tractions within the physicians and with this increase in these new units being fulfilled, we're going to gain operational leverage and increase margins. And these for itself, as we're still growing both B2P and B2B, we can get this more efficient and get more margins as well. All of them being supported by these zero-budget project that we implemented for the budget of 2024 that we are very confident that we can gain some efficiencies on the holding levels in each one of the segments that will be supported. And that's why we established this guidance that is implied in the midpoint of the guidance, as you mentioned, margin expansion.
Lucca, just an additional point about the dynamic on undergrad here. If you remember, during the 3 first quarters, we were losing gross margins on the undergrad segment. And the reason of that was not only because of the acquisition, but most of them come from the maturation of the 6 Mais Médicos campuses that was launched in 2022, 2021, they were maturing as they have only 60 seats. The margin coming from these campuses was very loaded at the gross margin coming from this capital was lower. And then in the fourth quarter, if you take a look on the spreadsheet that we are releasing also together for our financial statement is the first quarter that we have higher gross margin on the undergrad segment when you compare to the fourth quarter 2022. So that's a very good trend that will keep the same trend in 2024, but also that will be pushed also for the other 2 segments, as Blanco mentioned. Is that okay?
That's very clear.
[Operator Instructions]. Our next question comes from Leandro Bastos from Citibank.
Just one question on our side. If you could comment a little bit on the latest intake cycle you have for red courses, how you saw a competition, the new strategy for Medcel, how was acceptance from the student as much as you could share? I mean it would be helpful to hear.
Leandro, thank you for your question here. So we are not tracking here only the track course take, but not for residents, but also all the track for title that we are offering with another brand here that is papers, the CardioPapers, not only for residents but also for title. But taking a look product by product on the Medcel, there's a focus on residency programs. The fourth quarter was the first quarter since the last 2 years that we have a higher intake and higher sales volume when you compare it to the last year. On the other hand, for [indiscernible], we are boosting our operation and compared to last year, growing more than 30% year-over-year, when you can take a look for the papers and all of this, it's combined on our digital operation. It's one of the reasons why we will also leverage margins along 2024.
And our next question comes from Lucas Nagano from Morgan Stanley.
I have a follow-up question on the Supreme Court debate. The vote by [indiscernible] seems a little open to different scenarios for us. First, this counted a vote against the injunctions. And second, you commented on some things about reviewing the Mais Médicos policy. Does that imply any change to the current Mais Médicos program taking place now?
Lucas, we are seeing the [indiscernible] vote as a very strong argument against not the Mais Médicos 3, but all the noise that is coming from the injunctions. So what we still have to wait is another vote if we have another vote against the modulation that is the modulation to the second modulation that where the Ministry of Education is allowed to analyze some injunctions process after some stage that will finish all the questions about that. But one thing is true. All of the changes on Mais Médicos 3 is creating some noise. I hope they fulfill their schedule now, and we can release our proposals by July this year and wait for the final launch in the beginning of 2025 to start working the new campus of the new programs released to the market.
We do not have any other questions. So if you want to have a follow-up question, please just contact our IR team. We will be happy to help you. Have a good night, everyone.