Good afternoon, ladies and gentlemen. Thank you for waiting, and welcome to Cruzeiro do Sul's conference call to discuss the first quarter of 2022 results. Today with us, we have Mr. Fábio Fossen, CEO, Luis Felipe Bresaola, CFO and Investor Relations Officer, and other members of the executive board. We would like to inform that participants will be in listen-only mode during the company presentation, and afterwards, we will have the Q&A session when further instructions will be given. Should you need assistance during the call, please press star zero to reach the operator. We would like to inform that this call will be presented in Portuguese by the company's management and for the English conference, there will be simultaneous translation. This event is being broadcast simultaneously on the internet via webcast.
Before proceeding, we would like to mention that forward-looking statement that might be made during this call in relation to the company's business perspectives, operating and financial projections and targets, our beliefs and assumptions of Cruzeiro do Sul's management, as well as information currently available to the company. Forward-looking statements are no guarantee of performance. They involve risks, uncertainties, and assumptions, and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operating factors may affect the future results of the company and may lead to results that differ materially from those expressed in such forward-looking statements. Now, I would like to turn the conference over to Mr. Fábio Fossen, who will start the presentation. Mr. Fossen, you may proceed.
Good afternoon, everyone.
Here is Fábio Fossen, CEO of the company, and thank you for participating Cruzeiro do Sul Educacional call. Before getting to the details of the quarter, I would like to start by highlighting important actions for 2022 and for the future of the company. On-campus intake ex medical courses in 1Q 2022 was about 26% higher year-on-year, and we should close the first half with an intake of about 15% higher year-on-year. This intake cycle led us to a growth of 6.5% in our base, 132,000 students representing 4.7% growth vis-à-vis the end of 2019 before the pandemic, and in line with 1Q 2020, already including Braz Cubas and Universidade Positivo pro forma. The student base growth was higher in our higher education institution in the São Paulo metropolitan area. Braz Cubas is growing 25%, 61% higher than the acquisition base in 2020.
CSC and UNICE with about 11% in the same period. The student base increase was accompanied by a higher average ticket in the quarter, 6.6% higher year-on-year due to the better efficiency in the price discount management and more important with an intake with higher tickets than 2021 pointed to a reversal in the downward trend of the last few years. Another quarter that confirmed the quality of our education, the resilience of our brand, and our capacity to attract students. By the way, Universidade de Franca was again ranked by Times Higher Education as the best private HEI in Brazil. We went up four positions in the Latin American ranking, going to the 151st, including public schools and foundations.
In medical courses, we grew the student base by 6.8% a year due to the progress in the number of seats improving about 9% of the tickets already adjusted for the injunctions that impacted 2021. In DL, we grew intake by 20%, and we expect to end with about 15% growth year-on-year, which lead us to a growth of 16% in the number of students. The average DL ticket in the quarter dropped slightly, 3% year-on-year, and due in part to the higher share of tuition from students onboarded during the pandemic, partially mitigated by a freshman intake with a slightly higher monthly tuition fee than in 1Q 2021. The change in the ticket trend for the on-campus NDL in this intake show that the changes made in our commercial strategies start to bear fruit to balance the price value ratio of our education.
Our ADI levels and the percentage of the financed base are stable at the 2021 levels. With these measures, our net revenue went up 12.3% year-on-year, BRL 473 million. Our margin went up 80 BPS year-on-year, thanks to the revenue increase and the academic reorganization carried out last December, which partially mitigated the cost increase driven by the return to the campus and the bigger on-campus student base. Adjusted EBITDA grew 12.6% with a 30.2% margin, 10 bps more year-on-year impacted by the timing of marketing expenses intake higher at the beginning of the year vis-à-vis 2021, plus inflation. I would like to end with a remark about our governance that we mentioned in previous calls and that consolidated in 1Q 2022.
We finalized the reorganization of committees that support the board with effective implementation of three new commitments: people, academic, and innovation and strategy committees. We hired three external members to coordinate the people, finance, M&A, and academic committees. These three professionals have a wide-ranging experience in their respective areas, helping us challenge the status quo and build new growth alternatives. With these initiatives, we believe that we have the right model of governance for the challenges of this new phase. I end my remarks here and turn the floor over to Luis Felipe Silva Bresaola, who will talk in detail about the results of the first quarter. Thank you.
Thank you, Fábio. Going to Slide 15, I will talk about the quarter net revenue. We reached BRL 473 million, a 12.4% increase year-on-year.
Net of the effect of the mandatory discount in injunctions of Unipê, BRL 9.9 million in 1Q21, revenue would have been 9.8% due to the higher student base and on-campus increase in the medical course of number of seats and consistent expansion in distance learning student base. I should mention the progress of our health courses in our revenue reaching 67% in 1Q22, vis-à-vis 63% last year. On Slide 16, we show the adjusted gross margin in the quarter, 50.1%, 30 bps higher year-on-year. Management initiatives to boost efficiency help mitigate the impact of the 4% salary adjustment in the 2021 agreement in effect in January 2022, and the increase in the technical and teaching teams with the progress of the health courses.
Beside the guideline was impacted by the higher amortization of the right of use, which is affected by the monetary restatement of the IGPM applied on rent and the increase in third-party services given the return to 100% campus classes. Adjusted EBITDA in the quarter was BRL 142.9 million, 12.8% hike year-on-year, driven by a 30.2% margin, 10 bps higher year-on-year. The margin expansion reflects the expansion of the company's gross profit and the lower ADA, which was mitigated by the higher marketing costs and the higher intake in the period and the 4% salary adjustment from the agreement signed in 2022, impacting January 2022. On Slide 18, we show the evolution of the adjusted net income and accounts receivable. Adjusted net income went from BRL 31.5 million in 1Q21 to BRL 19 million this year, impacted mainly by the higher interest rates and rents.
On the right, we show the accounts receivable reiterating our position of keeping a low number of students in financing programs, which in 1Q 2022 was approximately 6.2% of the base. Our average account receivables was 41 days, in line with the half year ended in December 2021. On the next slide, we show investments made by the company in 1Q 2022. About BRL 21 million, vis-à-vis BRL 18 million last year, driven by the return of maintenance investment project that had come to a halt due to the pandemic and the return of on-campus classes. On the right, we break down our operating cash generation, BRL 126 million, vis-à-vis BRL 184 million last year. The adjusted operating cash generation was 93% of the adjusted EBITDA, vis-à-vis 149% last year, impacted partially by the higher accounts receivable.
Lastly, on Slide 20, we talk about our net debt of the lease liabilities that read BRL 460 million, 5% below the BRL 487 million in December, reflecting the operating improvement. Now, I end my remarks, and I would like to give the floor to the operator to open the Q&A session.
Thank you. We will now begin the Q&A session. If you have a question, please dial star one on your touch tone phone. If your question is answered, you can remove yourself from the queue by dialing star two. Questions will be answered in the order in which they are received. You may ask your questions, and we want to get excellent sound quality. Our first question comes from Ilan Sznifer with BTG Pactual.
Good afternoon. I would like to ask three questions. The first is about a ticket dynamic. I would like to understand if the dynamic we saw in 1Q 2022 makes sense for the rest of the year. I want to get a sense if you're thinking about the consolidated freshmen plus matured students. So, if that applies to the rest of the year, I want to understand about on-campus and distance learning.
My second question has to do with volumes. With a good resumption in the student intake for on-campus, we can see particularly on-campus better. I would like to know if you keep this perception for the rest of the year, if in the second half of the year this will continue. That is for on-campus, and I would like to learn about the strategy for distance learning. Do you want to continue to increase the number of hubs to have a greater student intake for DL? My third question is about M&As. I would like to understand how your pipeline is, if there is any conversations ongoing, and if you are confident that there will be more organic growth this year. Those are my questions. Thank you very much.
Well, the first question was about the ticket dynamics. Well, we saw that in the first student intake in Q1.
That is kind of in keeping with what we expect for the rest of the year. It will really depend on macroeconomic conditions, of course, but in terms of visibility, the visibility that we have, our brands can attract a lot of students on campus, mainly. The strength of our brands can take advantage of the initiatives we adopted to reorganize to have a greater efficiency of prices and discounts. I think the same applies for the volume of students on campus. We have shown over time, particularly in our on-campus brands, we always had a characteristic of making acquisitions and being regional leaders in on-campus. This has shown to be very important during the pandemic and last year. With everything that happened, we dropped our student base by only 1%.
I do not know about the census data of 2021, but with public data, if there is the reported results in the stock exchange, compared to our peers, our performance last year was very relevant. This year, we are growing the on-campus student intake with a higher ticket. That is an important point. We also have to take into account cohorts of students that impacts the dynamic. We have these cohorts of students that were captured during the pandemic, and those that were captured before the pandemic are graduating. There is this dynamic of inflow and outflow of tickets and cohorts of students, and that normally puts some pressure on tickets. But we were able to show this quarter that we were able to increase student intake over last year, and we have plans to continue with that very same pace. As for your last question regarding M&As.
This is one of the reasons why we went public. We continue to evaluate a number of themes. When there is something more tangible, we will communicate to the market. But we continue to be very aware and very thorough regarding the investments we make in terms of mergers and acquisitions. That is as far as I can tell you now at this point. Thank you.
Excellent. Very clear. Thank you very much.
Our next question is by Luca Marchesini with Itaú BBA.
Good afternoon. Thank you for taking my questions. I have three questions as well. First, regarding healthcare courses, the company has been showing a greater share of that modality in the on-campus, now at 50%. I want to understand in the long term, how relevant is this segment? My second question is about DL.
The company reported a one percentage point reduction in dropout, which is justified as a reflex of competition in the end of the student intake cycle. Could you comment on the competitive landscape? Have you seen any difference in different cities, or is this a generalized practice? Thirdly, a quick question regarding governance. Could you talk about the main initiatives of the company, such as the creation of committees? That could be very helpful. Thank you.
Hi, Luca, this is Wilson Diniz speaking. I'm going to answer your first two questions, and then I'll turn the floor to Fossen to talk about governance. You mentioned something important. Our on-campus student base has a good volume of healthcare courses and growing, accounting for 50% of our base. These are more resilient courses to churn, higher ticket, greater predictability of revenues. This is always important to us.
It's always been in our strategy, and this was reinforced in the new student intake. Looking forward, the penetration of health courses will gain relevance in the total mass of students and courses on campus. To answer your question, we will move forward with this in the coming years, most likely at the same pace that we had comparing 2022 with 2021. Your second question about the dynamic of distance learning. The scenario is more competitive, more fierce. There are some regional particularities. We see intense competition, particularly for 100% DL courses, also with hybrid courses, DL with some on-campus activities. A small effect on dropout, that has to do with the natural dynamic of competition in this segment. We see this dynamic applying looking forward, but we understand that we are very well-positioned. We could get a good volume of students.
16%, almost 15% intake, growing 16% our base. The hybrid courses today, 17% of our DL base that we started escalating strongly last year, will move forward. This will give us more predictability of revenues, lower churn, and that is important. We're looking at a competitive landscape, just like in the first intake. We see that the whole year should follow that same dynamic. I'll turn the floor to Fossen to answer your third question about governance.
Luca, regarding governance, we took a stride forward. Last year we had two big moves. First, the IPO, which of course, brings up the need to make adjustments and changes to any company regarding governance. In our case, there was another fact. The fact that the members of the family left. They were the founders of the company, and they moved to the board of directors.
Last year, in the nine months since I've been with the company, we reorganized the committees of the board. We created three new committees, which I believe is very important because the people who handled the business for a long time, they're focusing on the strategy. We have committees focused on dealing with people, academic excellence, and innovation and strategy. We maintain our DNA alive in the strategy that brought Cruzeiro do Sul this far, so that this will help us in the next 50-odd years ahead of us. Also important are three specific themes, people, M&A, and academic excellence. We decided to bring external coordinators who are not board members, who are not in the company. These people were called to help challenge us in these three points. Our people asset is an important asset to us.
We look at that very carefully because this is what makes this company. As for M&A, we brought in a professional, very seasoned in investment banking. For the academic area, another professional, very experienced in the academic world, with a different background to help us challenge the academia piece in the future. With that, we complete a cycle of reorganization of the board and the management. We are also working at the management level with the separation, with the transformation of managers into a director. We now have a manager focused on human resources, again, that focus on people. We have an area, a technology area. We used to have just an IT manager. Now, this has a status of an officer, and they have a voice in the decisions, again, helping us decide where to invest, where we can derive competitive advantages.
Another officer, a legal and compliance officer for crisis management, and we are structuring that. We will bring on board a professional in the beginning of June. With that, we are restructuring the management, our internal organization, improving and fine-tuning the company to the new moment. We are a listed company, so we have to implement good market practices that will help us unlock the growth of the organization.
Perfect. Thank you very much.
Ladies and gentlemen, as a reminder, if you want to ask a question, please dial star one. Ladies and gentlemen, we have a question coming from the webcast. I turn the floor to the management. In the webcast, we have a question by Gabriel De Gaetano with SulAmérica. He asked us to comment on the impact of readjustment of rentals on the impact and the financial impact of that.
We are talking about rentals?
They adjusted in the second quarter. First quarter over first quarter last year does not have the same pattern. We have a mismatch of dates when the contracts are adjusted. Most of the contracts are pegged to IGP-M. There is only pegged to IPCA, and we should have a discussion in the second quarter regarding the rent. The financial result is basically linked to the Selic rate. Everything regarding the operation of students, we had an amount, a value that was stable. We have the benches all linked to the Selic interest rate, while our cash remuneration is below what we pay to the interest rates. There is a mismatch of indices and ratios considering cash and debt. This is how we can explain it.
All right, next question will be live by Artur Alves with Santander.
Hello, can you hear me?
Yes, we can.
I have one question regarding the dynamic of hybrid courses. How should we think about hybrid course tickets if the on-campus student intake continues to follow that trend of growth? There might be an improvement in tickets since competition in DL is quite strong. Thank you.
Hello, Artur. This is Wilson Diniz speaking again. We have a distance learning dynamic which is more competitive. There is greater competition in the 100% digital courses, but in hybrid courses, we see the possibility of a healthier ticket. Coupled with that, there is the strength of our local brands, and we can connect the national brand with strong local brands. This is an avenue of opportunities where we are capturing additional value in the tickets of hybrid courses. This has helped us in the first student intake in volume. 17% of the base is for hybrid courses.
In the intake of students, more than 23%. We are going to grow this half year after half year as we allocate these courses in the right markets and hubs, and these have all been mapped. Yes, there is room looking forward. We are looking at this dynamic of 100% digital, very competitive at this level in hybrid courses as an opportunity to mitigate losses of 100% DL courses. We see this stronger in our company, given the connection that we have 10 strong regional brands connected with an umbrella national brand that is also strong and offering DL hybrid with a more dynamic approach and capturing higher tickets. This is how we will be working, and we hope to continue in this dynamic in the next student intakes, so that we will leave the Red Sea of DL. Excellent. Thank you very much.
We are now ending the question-and-answer session. I would like to turn the floor back to Mr. Fábio Fossen for his final statements. Mr. Fossen, please proceed.
Well, I just would like to thank all of you for joining this earnings conference call. We started the year with a good pace, making the necessary changes in the organization. We have been successful in student intake. I always like to reinforce the strength of our on-campus courses and the strength of our brands. Our academic quality and reputation has yielded results during the pandemic. Now, with the resumption, it has become even more relevant for us in all of our results. We are confident in our results from now till year-end. It will basically depend on the external scenario, given the strong basis we were able to build. Thank you very much and have a good rest of day.
Thank you. Cruzeiro do Sul conference call is ended. Please disconnect and have a good day.