Good evening, ladies and gentlemen, and welcome to Vitru's Second Quarter 2021 Earnings Conference Call. All participants are in a listen-only mode. Later on, we will conduct the question and answer session, and instructions will follow at that time. As a reminder, this call is being recorded and will be available on Vitru's IR website. Now, I would like to introduce the host for today's conference call, Mr. Carlos Freitas, Vitru CFO. You may begin.
Thank you, operator, and good afternoon, everyone. Thanks for joining us. It is a real pleasure to be here with you for the release of our second quarter 2021 numbers. I hope you all are doing well and healthy. Here with me, I have Pedro Graça, the CEO of Vitru, as you know, Maria Carolina F. Gonçalves, the Head of IR, and also Raquel Suzaki from our investor relations team. A slide presentation will be part of today's webcast, which is also available on our Investor Relations website at investor.vitru.com.br. I trust you all have this presentation in front of you. Before we begin, I would like just to make note that as detailed in slide two and three of this presentation, Safe Harbor is in effect for this call. Now I invite you to go to page five of the presentation.
Here we have a glimpse of the highlights of the second quarter of this year, and as not a surprise to you all, the first highlight is the announcement that we made yesterday regarding the agreement for business combination with UniCesumar, which, as we discussed, is a leading institution for high-quality education here in Brazil, and also with a fine presence in health-related courses, including medicine. We are very happy and very proud to have reached this agreement with the families that control UniCesumar. This transaction is still subject to antitrust authority authorization, which we expect to have by the beginning of next year. Second highlight is that we have new courses. We got the approval for the law courses in digital education. This was granted. We have the five grades granted by the Ministry of Education. We are still not allowed to offer this course.
There are still some pending steps in this process. But once it is done, we are going to be allowed to offer more than 22,000 seats of law in digital education. They are going to be a game changer, a revolution in the industry. Also we got authorization, or in fact, we got a grade 5 from Ministry of Education to offer law courses, and we got the authorization to offer now nursing courses in digital education as well, which we already started to offer two weeks ago, in fact. This is also a major push for digital education in Brazil. Nursing is a leading course today on campus. By the way, our nursing digital course is already the second-largest we have today in the current intaking cycle, and that with only two weeks of intake. So there is a huge demand.
We are taking high-quality education to all the places in Brazil where there is no brick-and-mortar education available, and that with all the quality that you know that we offer. This is also an important game-changing movement in the sector. The results, we reached nearly 364,000 students in digital education with important growth in the Southeast, which I will show you later. Net revenue in our core digital education segment grew 35% in the second quarter of this year, and the consolidated net revenue grew around 30%, so very sound numbers. Regarding adjusted EBITDA, it increased 22% in the quarter and almost 29% in the first semester of this year. Later on, I will explain the difference between the second quarter and the first semester numbers. Our EBITDA margin in the first half of this year was now 30% compared to 29% one year before.
Cash flow generation from operations increasing 33%, reaching BRL 76 billion in the first half of this year, with an important cash conversion of around 84%. Now on page six, some highlights of UniCesumar, just for those who could not participate in the call we had yesterday morning. UniCesumar is a leading institution with net revenue of around BRL 730 million in 2020, and more than BRL 250 million last year as well, with a 35% margin. With 760 hubs, so more or less the number of hubs that we have as well. In total, more than 300, in fact 214,000 digital education students, including graduation and undergraduation. 17,000 on campus and an important CAGR of around 6% in the last three or four years. On top of that, it is a very relevant player in medicine.
It is among the top 10% of medical courses in the educational standards, and a high demand ratio of 11:1 applicants per seat in two sites there in Maringá and now in Corumbá. With the best overall indicators of quality. As you can see here on the right, they have a CI, an institutional concept of five, such as in ourselves. They have this IGC, this course quality index of four for 10 years, which is quite unique in the industry. They have an IDD of 3.75. IDD, as you remember, is that indicator that measures the evolution of the students throughout the course, comparing the grades of the Enem with the grade of the Enade. That is the value added provided by the institution, is measured by the IDD.
IDD of UniCesumar is around 4% above the one of the market and even above the one of UNIASSELVI, which is the highest average IDD in digital education among all listed companies in Brazil. On page seven, some reminders about the transaction details. After the analysis of the antitrust authorities, hopefully beginning of next year, Vitru Brazil will own 100% of the total share capital of CESUMAR, which is the company that owns UniCesumar. To be paid around 60% at closing, 18% after one year after closing, and 19% in Vitru shares to be issued at closing. For a total equity value of BRL 3.15 billion, enterprise value of BRL 3.2 billion, which means an implied multiple of EV/EBITDA, considering the last 12 months as of now June, which now the numbers are available, of around 11.8.
From a P/E perspective, it is a very attractive transaction. The last 12 months net with both net profit of UniCesumar is above BRL 200 million. So it is a transaction of around 15x P/E, if you look at the last 12 months numbers. If you look at the prospecting number, the future numbers for 2021, 2022, et cetera, it is even lower.
A transaction with a lot of important synergies, which are here on the right. Not only cost synergies but also commercial synergies. We have already estimated that the synergies regarding costs and expenses will amount to between BRL 115 million- BRL 130 million per year by 2024. So in two years from now, synergies of around BRL 115 million or to BRL 130 million per year, which if we bring to today's value, taking inflation out, it is between BRL 100 million- BRL 110 million per year.
A very sizable amount of synergies, with a total present value of synergies in cost and expenses of more than BRL 1 billion. On top of that, we have very important potential commercial synergies, which are here on the right, the first two bullets. The faster expansion, with the potential use of both brands in cities with only today one brand. Today, there are 600 cities in Brazil with only a hub from either UniCesumar or UNIASSELVI. So the potential for cross-selling here is huge, and also with the increase of offering of courses that we, for example, have here in UNIASSELVI. We have today around 150 undergraduate courses in digital education, while UniCesumar has a bit more than 60 courses. So also here, important potential to offer these courses in both brands.
After the transaction, the families that today control UniCesumar will hold around 23.6% of Vitru. The three private equity firms, around 66.6%, and free floats are around 20%. On page eight, another important highlight, as I mentioned, the new courses we have in digital undergraduate courses. First, nursing. Nursing is already being offered, as I said, and today around 6% of all our intake is in nursing, is the second largest [audio distortion] course in our intake for the current cycle. Again, this started three weeks ago. So there's a huge potential demand for nursing courses. So this is going to be an important driver for growth here going forward. Also law and psychology, by the way, as well, are one step behind.
We have already been granted the grades from the Ministry of Education, but there's still a final process to offer these courses of law and psychology, which we hope that we can offer this quite soon. Here in the pie chart on the bottom right, you can see the size and the relevance of nursing, law, and psychology in the current on-campus enrollment. So the three together represent around 27%, more than one-fourth of all students in on-campus courses. On page nine, some more numbers about our growth in our digital education courses. We reached 308,000 students, a growth of 30% quarter-on-quarter, in line with the CAGR we have in the last years. Reaching a total number of around 371,000 students, of which 98% in digital education.
As you know, as we discussed already in the last call, the intake cycle for this year, for the first semester of this year, was quite a bit different than what we had last year. You see here on the bar chart, in the bottom, that there was a certain delay in the intake for the first semester of this year, which had some impacts that I will show you later in the average ticket, by the way. The intake cycle was strong. Again, this is already presented in the past. We had an increase of 32% in the intake for under-graduation courses this year. By the way, the current intake cycle is also very strong. We are still far from the end of the intake cycle. As you know, we have this modular academic approach, through which we have incoming students basically throughout the year.
We are still far from that. What we have seen so far is that on a comparable basis, intake is very strong again. On page 10, the expansion throughout Brazil comparing June- over- June. You see here that we had growth throughout Brazil, throughout the country. In our core market, the original market in the south of Brazil, is 17% growth, even being in COVID here. Throughout Brazil, in the center, north, northeast, strong growth. Particularly in the Southeast. In Southeast, we are doubling the number of students year- over- year- over- year. This is not only pushed by the maturation of our courses, but also by the expansion in. Sorry, maturation of our hubs, but also from the expansion of our hubs. You see here on the right that we have increased by 31% the number of hubs in the last 12 months.
On page 11, some more color about the Southeast expansion. As I said, we are doubling the number of students year- over- year. So we had 16,000 two years ago, one year ago. Sorry, in December of 2019, 16,000. In December of 2020, 30,000. Now in June this year, 43,000. So we are roughly doubling year- over- year. This is a region that we are still shy. Now with the business combination with UniCesumar, we are going to accelerate the penetration in the Southeast. Just as a reminder, the portfolio of hubs of UNIASSELVI and UniCesumar are very complementary. For example, UniCesumar has more than 130 hubs in the state of São Paulo. So it is a very complementary portfolio of hubs if we sum the two institutions.
On page 12, the maturation of our current hubs. This is a very known chart that I like a lot. This is just to highlight that we keep maturing the hubs that we opened the last years. The base hubs and the mature hubs are mature, they are stable, they are more or less between 100,000 and 110,000 students, which is normal. They are virtually in full capacity as a normal, and all the expansion hubs growing as planned throughout the country. Today we have a maturation index. If we sum all the expansion hubs of around 34%, which means a potential to increase threefold the number of people in the hubs. On page 13, some more financial numbers.
Here I would like to highlight the increase in net revenue of 35%, as I said, in this quarter, and 28% in the first half of this year. Very strong numbers in our core business and also in the consolidated numbers. Here on the right, what I said, this was already presented as well in the first quarter of this year. The delay in the intake cycle in the first semester of this year, basically because of the Enem delay. As you know, Enem is an important trigger for enrollment in Brazil. Enem was delayed from early January to end of March, so the whole sector had this effect of a more back-ended intake cycle. Which means that the newcomers that joined us throughout the first intake cycle, they left on the table less revenues than last year.
Basically, that is the reason for the slight reduction of 3% in the average tickets. On page 14, some consolidated figures. As I said before, 30% increase in net revenue in the quarter, 35% gross profit increase, and adjusted EBITDA increasing as well and reaching 96.5% EBITDA in the first six months of this year. For more details on that, on page 15, we have a strong growth in this location, as I said, but also in continuing education, very strong growth here as well of more than 21% this quarter. On-campus undergraduates, virtually flat. This is declining over time, as you know. This is more than compensated by the growth in digital education. On page 16, some more details about continuing education and on campus.
Continuing education keeps growing as fast as undergraduation and on campus, as I said, it is declining a little bit year-after-year. We have as well here, important just to remind you all, that we have virtually no dependence on FIES. FIES was, in the second quarter of this year, only BRL 0.7 million. So virtually zero. This is the image view going forward. On page 17, the breakdown of our adjusted EBITDA. Here, we have a slight increase in the margins in the first half of this year and a slight decrease in the margin in the second quarter of this year. Here, I would just like to point out that we should look here at the half-year numbers. Basically because last year, and this I tried to explain in the last call.
Last year, when we had COVID, we made additional provisions for certain costs, in the first quarter of last year that we reversed in the second quarter of last year when we did not incur these costs. So the comparative basis of last year is a bit choppy, that is why it is better to compare half year- over- half year. That is basically the reason we had last year in the first quarter, a BRL 3 million provision for material that we sent to students, that we did not send, and this provision was reverted in the second quarter.
That is why the comparison base of last year is a bit strange. If you look at the first semester numbers, there was an expansion of 1.1 point in margin. Cost of sales decreasing to 28%, selling and PDD increasing a little bit, and I will show you a bit later.
At the end, we overcast the 30% adjusted EBITDA threshold this half year. At page 18, some details here as well. If you look again at the first half numbers, comparing this year with last year, there was an important reduction in cost of service. So 34% going down to 28%. The nominal number was virtually flat year-over-year. This is through gains of scale. This is through the implementation of the Flex course. This is through general optimizations of personnel as we go further. As we grow, we are able to optimize more and more, for example, the ratio of students per class. We are able to dilute fixed costs. This is a clear gains of scale as we go.
On the G&A side, on the right, we are more or less stable with 7.5% of revenues this semester and 6.5% in the quarter. Here, the important highlight that we were not a listed company last year, now we are. We have some more costs this year. But going forward, the trend here is to have further gains of scale and a further reduction in the G&A cost as a percentage of net revenue, which by the way, is very, very lower than the peers. On page 19, selling expenses and PDD. A slight increase in selling expenses this year. Basically because a big part of the intake last year in the cycle of intaking last year, a big part, I don't know, was made before the pandemic, so in January, February. Now the whole intake cycle this year was within a pandemic scenario.
We had to incur in more online media. We and all the peers, we had to incur in more online media as a result of the pandemic, especially in our case, as the hubs were closed. As you know, the hubs are important peaks in our selling machine. With the hubs closed, we had to incur in more online media. The delay in the Enem also was important to increase the need for more marketing expenses. But on top of that, there is another important factor, which is the important increase in the intaking. We had a very strong intake this year, and also a very important intake last year, which now translates into a slight higher PDD. Here on the right, you see the PDD on a quarterly basis.
As a reminder, last year, in the second half of last year, our intaking grew by around 40% compared to the intaking in the second half of 2019. As you know, the newcomers, they represent a big chunk, the bigger chunk in fact, of PDD. Now we have this effect in the second half of this year. On page 20, adjusted net income, a bit down compared to last year. Here, the most important reason is that we recognized last year for the first time, in the beginning of last year, before tax assets. The comparable base here is not up this year. But also we had an increase in financial expenses this year. Most of our debt is linked to IPCA, is still linked to the acquisition of UNIASSELVI from Kroton five and a half years ago.
As you know, IPCA was much higher than expected in the first half of this year. But on the right, the adjusted cash flow from operations, as I said, very strong, growing a lot this year and with important cash conversion. We not only show actually nice net revenue and EBITDA numbers, but also we are focused on generating cash and cash flow. We generated BRL 76 million of cash flow in the first half of this year for a cash conversion of around 84%. On page 21, just to wrap up, just to thank you all for your time and to highlight once again that we are very happy with the transaction that we announced with UniCesumar. So far in the last, let's say, 20 years, we have been growing a lot purely on organic basis.
All those numbers that I mentioned before, just to remind, are on organic basis. The growth in hubs, the growth in intake, the growth in revenue, EBITDA, purely on organic basis. But we also told you, throughout the last year and in the IPO process, that we raised funds for M&A and we were going to look for nice M&A opportunities that make sense. And now with UniCesumar, we found this ideal partner. We share the same culture, we share the same values, we share the purpose of taking high quality education in the four corners of Brazil. We are very proud for that game-changing transaction. Clearly a transformational transaction for us and for the sector as a whole. And with, as I said, a very complementary footprint, with scale and important value creation through synergies going forward, not only cost, but also commercial.
Thank you all, and I'd like to open for questions, please.
At this time, I would like to remind everyone, in order to ask your questions, you may press star, then the number one on your telephone keypad. Again, that's star one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Again, I would like to remind everyone, in order to ask your questions, you may press star one on your telephone keypad. There are no more questions at this time. Presenters, please continue.
Yes. There are questions here from the webcast. First question from Vitor Tomita from Goldman Sachs. Hello, Vitor. First question is, could you give us some more color on UniCesumar's current exposure to law, nursing, and psychology courses, and on whether that could support the launch and promotion of digital courses in those areas? Very nice question. Thank you, Vitor. One of the competitive advantages of UniCesumar is the high quality and the focus that they have in health-related courses. They are very known in Paraná, and they have campuses in Maringá, Londrina, Curitiba. They are very known for high-quality health courses. It is very clear that we will be able to join forces once approved by the authorities, and then take profit of their knowledge together with our knowledge, because we also have courses in psychology and nursing, and create a very nice product.
Our nursing courses is already being offered, as I said. Their nursing courses will still be offered, but once it is approved, it will be also a success for sure. For law, in our case and also in their case, a very important course on campus. We are very confident that once it is allowed to be offered through this location, it is also going to be a success as strong as the one of nursing. The second question from Vitor is that, "Now that Flex courses are launched more widely, could you give us some additional color on the command for Flex, especially in terms of how average ticket compares to your pre-existing hybrid courses? Thank you very much." Very important question, Vitor, because there is some confusion about it. The ticket is the same. There is no differentiation between the Flex course and the typical hybrid course.
In the Flex course, you have live encounters, live classes with a tutor. There is a dedicated tutor from the region. You have a class, you have classmates, you have everything the same. The only difference is that instead of going to the hub, you meet online. The pricing is the same. There is no price differentiation here for a Flex course. It is an opportunity for us to enter into either smaller cities that do not support a traditional UNIASSELVI hub, and/or those courses that do not have a sufficient demand in a given city. Those are the questions. Thank you very much. It was a pleasure. We are available here, myself, Carol, Raquel, and Pedro, to answer further questions going forward. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.