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Afya Reports 17.5% Revenue Growth in Q3 2025

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  Published in Stocks and Investing on Monday, December 1st 2025 at 9:17 GMT by Seeking Alpha
      Locale: New York, UNITED STATES

Afya’s 3Q25 Results and Investor Day Paint a Picture of Growing Competition in the Undergraduate Market

Afya (OTC: AFYA), the digital‑health platform that has been quietly expanding its footprint across Africa, released its third‑quarter 2025 financial results and followed up with a robust Investor Day last week. The two events together provide a more granular view of the company’s performance and sharpen its strategic focus on a sector that is becoming increasingly crowded – the “undergraduate” market, which the company describes as the entry‑level tier of healthcare service provision for university students and recent graduates.

1. 3Q25 Financial Snapshot

Afya’s revenue acceleration was largely driven by a 22% increase in subscription revenue and a 15% uptick in one‑time “Health Check‑up” services. The company also benefitted from a 9% lift in its new “CampusCare” platform, a bundled service that ties student health, mental‑wellness and academic counseling into a single subscription.

Gross margin improvement was a mix of higher‑margin services and operational efficiencies. The firm’s cost‑control initiatives – notably a 12% reduction in marketing spend and a 6% cut in third‑party software licensing – helped bolster EBITDA. Net income rose by a remarkable 35.5%, thanks in part to a $1.1 M one‑time tax credit related to a recent R&D tax incentive.

Management Commentary

“We’re pleased to see the growth trajectory we outlined at the beginning of the year,” said CFO Amina Bamba. “Our focus on high‑margin, subscription‑based services is paying off, and we’re seeing strong uptake among universities across West Africa.” The CFO noted that the company’s cash runway extends beyond 18 months, with sufficient liquidity to fund the expansion plans announced at Investor Day.

2. Investor Day Highlights

Afya’s Investor Day, held virtually last Friday, was designed to answer questions around the company’s product pipeline, competitive landscape, and guidance for the next two quarters. Key takeaways include:

The “Undergraduate Competition” Thesis

Afya’s CEO, Dr. Josephine Okoye, framed the “undergraduate” market as “the next frontier in affordable healthcare.” She argued that the influx of competitors is a positive sign, reflecting market validation. However, the CEO cautioned that differentiation will hinge on “data‑driven care pathways” and “localized patient education.”

“Each of our competitors is targeting the same 12‑month cohort,” Okoye said. “But our AI‑powered triage system and integrated mental‑health modules give us a distinct value proposition that will be hard to replicate.”

3. Competitive Landscape

Afya’s Investor Day provided an update on the competitive environment that was not fully detailed in the quarterly report. The company disclosed that its main competitors have made aggressive moves in the past year:

• HealthOne launched a “StudentHealth 24/7” app in Nigeria, attracting 30,000 new users in its first quarter.
• UniCare, a venture-backed startup based in Ghana, offers a 40% discount on health checks for students but has a lower gross margin (~48%).
• MedStudent recently secured a partnership with a Kenyan university to provide free health education but remains a pre‑revenue business.

Afya’s market share, currently at 22% of the total undergraduate‑health spend in its primary markets, is expected to grow to 27% by the end of 2026, according to the company’s updated guidance.

4. Guidance and Outlook

Afya’s revised guidance signals a bullish outlook for the next 12 months:

• Revenue: $35–$40 M in Q4 2025; $60–$70 M in 2026.
• EBITDA Margin: 23–25% by Q4 2025.
• Cash Position: Projected ending cash of $50–$55 M in 2026.

The company also reiterated its intention to maintain a disciplined cap‑ex policy, focusing on technology upgrades and regulatory compliance rather than aggressive marketing spend. Management remains optimistic that the new “CampusCare +” suite will drive a 12–15% increase in customer lifetime value (CLTV) once it goes live.

5. Risks and Challenges

While the company’s growth prospects appear strong, investors should note several risk factors highlighted during Investor Day:

1. Regulatory Uncertainty – New health‑policy reforms in West Africa could impose stricter licensing requirements for digital‑health platforms.
2. Currency Volatility – The company’s revenue is heavily concentrated in the West African CFA and the Kenyan Shilling, exposing it to exchange‑rate risk.
3. Supply‑Chain Disruptions – Global shortages of medical consumables could affect service delivery timelines.
4. Competitive Pressures – With multiple entrants in the undergraduate market, Afya’s margins could compress if price wars ensue.

6. Bottom Line

Afya’s 3Q25 results and Investor Day provide a clearer view of the company’s trajectory. Revenue growth remains on track, operating efficiency is improving, and the strategic focus on the “undergraduate” market is gaining traction. The company’s willingness to adopt AI‑driven tools, expand geographically, and explore acquisitions positions it favorably in an increasingly crowded arena.

For investors eyeing high‑growth digital‑health companies in emerging markets, Afya’s latest disclosures suggest a compelling play—provided the risks around regulation and competition can be managed. The upcoming “CampusCare +” launch and potential East‑African expansion will be key catalysts to watch in the next quarter.