Good morning, ladies and gentlemen. Welcome to Yduqs video conference to discuss the results for the fourth quarter of 2025. This video conference is being recorded, and the replay can be accessed on the company's website, www.yduqs.com.br. The presentation is available for download also on the company's website. Please be advised that all participants will only be watching the video conference during the presentation, and then we will start the Q&A session when further instructions will be provided. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, projections, and operational and financial goals are beliefs and assumptions of Yduqs' board of directors based on the current information available to the company. Those statements may involve risks and uncertainties as they relate to future events and therefore depend on circumstances that may or may not occur.
Investors, analysts, and journalists should take into account that events related to the macroeconomic environment, the education segment, and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. It's important to stress that for a better viewing of the presentation, we recommend to enable full screen mode. Present at this video conference we have Mr. Rossano Marques, CEO of Yduqs, Mr. Alexandre Aquino, CFO, and Mr. Marcel Desco, Vice President of Sales and Marketing. I would now like to give the floor to Mr. Rossano Marques, who will begin the presentation. Please, Mr. Marques, you may proceed.
Good morning, everyone. Welcome to the Yduqs earnings results Q4 and the whole year of 2025. Thanks for taking your time to take part with us. Myself and our CFO, we're going to have other guests during the presentation.
Our highlights of this year, very strong cash generation, reaching over BRL 1 billion of net cash flow before payment of interest to the market at high levels, considering the basic rates of the economy currently. Apart from the flow, BRL 500 million for results of shareholders, it's our guidance. We keep building a company that is increasingly more consistent with very sound cash generation and remunerating our shareholders the best way possible. As we said on our last Yduqs Day, we are reducing our debt. This is our main goal of capital allocation. This is priority number one. We're going to get the 1x net debt/EBITDA. We are below 1.5x. This will drop even further 2026, and we'll get to our target by 2027.
If we hadn't made our efforts to compensate shareholders, especially dividend programs in 2024 buyback BRL 300 million of share buyback in 2024-2025, we would be at 1.3x . Even with this program, we assume that in 2027 we're going to reach our target. This is our priority number one of our capital allocation framework. We said we would take opportunities for acquisitions, and Unifametro is a classical example of that. A high-quality institution in a city where we have strong tradition in Fortaleza. Unifametro is right joining us in the Wyden, very strong brand. 8,000 students, 60 yearly seats in the medical schools that are 100% filled, showing the strength and the power of this business to our Yduqs ecosystem. We also said that we would keep paying dividends every year, close to the minimum.
We have been aiming the minimum, considering adjusted net income, 2025 and 2026, BRL 150 million paid in dividends. We said that since the IPO, we have been paying dividends every year, showing consistency of returns to shareholders down on the left. The strong cash generation is followed by the improvement in quality of revenue and results in general. Some actions were taken over 2025, improving the quality of our revenue. We have a provision with exemption for non-engaged students. Over the semester, we had a drop in this. This actually reduces our bad debt. We started seeing that fourth quarter, 2025. This will be stronger in 2026, something that features this scenario, this provision for non-engaged students and the movement we made of private funding receiving during the semester a drop in DSO year-over-year, nine days considering the previous quarter.
This quality of results, strong cash generation are structured moves that are continuous, that will keep happening over 2026. In the business, we want to highlight the strong performance of the Premium segment, growing by two-digit Ibmec, 22% year-over-year, EBITDA, 38% growth. Strong margin growth, 5% margin growth of Ibmec with the expansion that we've had in the business, and IDOMED in a more challenging competitive environment. The business keeps growing with very high margins, close to 50%. High margin for this kind of business. Well, let's talk about net revenue. The quality of the revenue is being supported by reduction of DIS or the disappearance decline. Our students prefer more traditional funding models and the reduction of DSO, reducing bad debt. It's a result of this movement. It's hard to compare the revenues when you consider the intake levels.
2024, 2025, we would have actually a growth of NOR in a market that has been challenging. The legal framework impacted our distance learning. That was important for the industry as a whole in this environment. With comparable basis, we've grown 6% year-over-year. A strong year again, with the adjustments we've made, with the reduction of DIS. Very strong year of growth for the company. On the slide, On-Campus, it's been very strong. The great highlight, growth of Semi On-Campus, supported by the restriction imposed by the nursing school. We had an adjustment for that. Very strong growth with Semi On-Campus. After the new regulation, officializing Semi On-Campus as a reality in the market, and this trends to keep the movement. 2026, we're going to see an intake, as it shows a very strong year for Semi On-Campus.
This has actually accelerated second half, making the margin to growth. Fourth quarter closing at a margin that was very good. Part of it, this is the move from third to fourth quarter. Adjusted margin on a pro forma way. Stable margin year-over-year, showing the strength of the market starting very strong in 2026. It should be benefited by this revenue that is more conservative with bad debt that we should have. We're prepared to face challenges that we should have at margin in intake and our On-Campus very strong. We keep the ticket of monthly undergraduate is kept. On-Campus is very well equipped to keep this process of ticket recovered after years of drop of ticket. After FIES, we stabilized demand On-Campus and the ticket growing at least following the inflation. This is the scenario we envisage for the forthcoming years. We have 33%.
We worked for many years to reach this level of renewal. Investments have been made in the quality of the project, especially digital, strengthening the network of teachers, professors, and all the framework of technology, providing much better student experience, helping our retention levels. Moving to Digital Learning. Very good year considering great part of the demand moved to Semi On-Campus. A drop in the student base in undergraduate studies. From the beginning, it was a period of great growth. 2025, it inverts this rationale in a positive way that great part of the students are migrating to Semi On-Campus. Even so, we kept stable margin year over year, a slight recovery in the fourth quarter. Part of it coming from the efficiency actions we undertook over the year, putting Digital Learning well-positioned for 2026.
Undergraduate average ticket is stable modality that is more difficult to increase ticket, transfer inflation, et cetera. We have smaller student base. It's more challenging to increase the ticket. Good news is that we could keep the undergraduate average ticket for upperclassmen. We see actually a difference in the On-Campus. Technology has not been able to actually catch up in the virtual aspect. This has been evolved. The levels of renewal have increased a lot, 2 percentage points year-over-year in a trend of improvement that generates a lot of value to the company. The more you can keep the digital student, we had a retention level below On-Campus. The closer it is, more value is generated to the company as a whole. On our Premium block, a very strong year for IDOMED.
The new number of seats from 24-25 has brought tensions to the market, making it more competitive. Idiom proving that it's a Premium brand that protects our business. This has been very positive. Another year of two-digit growth, growing the student base. We draw the attention since we are small in postgraduate studies, where we have strategy for the investments is in the growth of our medical schools. In the number of doctors, this should generate a stronger volume for medical schools. We have a fair share of the graduate studies that is below our fair share, and we have room for growth, and it's a great strategy for the company. On the ticket side, with the growth of seats growing in numbers, where we have lower ticket, the average ticket is still growing.
In all places, despite competitiveness, we exceed inflation, both to freshmen and upperclassmen. We have very high levels, reaching 9%, as the students that join into Med, they are delighted. We're close to one of the campuses that is a reference in Brazil in terms of quality, infrastructure, academic quality of its faculty. One of the products that makes us feel most proud within the company. EBITDA. EBITDA stable year-over-year, operating at very stable levels year-over-year. At Ibmec, still in our Premium segment. Fantastic year for Ibmec. Showing with the turn of the year, moving from the city center to Botafogo. It's perhaps the most dynamic neighborhood in Rio, very well located in an area. We have the highest concentration of good schools in Rio. We made important investment in the growth of Ibmec in Rio.
The Barra campus is doing quite well, and we have new strength of this migration from São Paulo to Rio. With numbers, revenue growing by 22%. A very profitable business bringing relevant growth. Maturation of some campuses that are newer. Student base growing by 10%. In the graduate studies, we have some acceleration. A number that is below fair share. Great opportunity for growth for Ibmec and incredible margins, five percentage points, reaching a margin of 45%. Mature business, no restrictions for the offerings of the courses that Ibmec offers. Even so, it is able to work with very strong margins. Ticket growth is fast with the mix has important features. We could transfer strong ticket operating amongst the highest tickets in the region, compared to competitors.
We try to be the brand number one in marketplace we operate. We are amongst the top three in all marketplaces, and our aim is to be the main brand operating at high levels. Very quality product being recognized by students at very high renewal rates. I'm going to turn over to Aquino, who's going to talk about costs and expenses.
Let's talk about our operating results of fourth quarter. It's been very strong. We had important gains in cost and G&A, and we closed with a gain of almost 4 percentage point reduction vis-à-vis Q4 2024. Well, as I mentioned, we had a difference of the cost curve between the third and fourth quarter between 2024 and 2025. Super important to reinstate that first half, the margins were below 2024. We were able to recover, as we had been telling you in the full year.
We closed the year with a margin a bit above 25%. This increase in margin, 1 percentage point, does not reflect the reality of the gain we had over the year because part of the results was contaminated. Our revenues was contaminated by the provision for low-engagement student and the decline in this admission or adherence. We had a drop in debt, and we have an increase in the bad debt, or we have a reduction of 1 percentage point of our bad debt, and the reduction will increase of our PDD in 2026. If we had no effect of that, our margin would be more than 1 percentage point regarding 2024. Looking at our revenue comparable business, if we adjust the provision for non-engaged students, there was a decision of the company. Had a growth year-over-year.
7% of our revenue, 7% of our. Again, we have the beauty of having a diversified portfolio in education, allowing us to grow according to the most demanded brands. In the past years, since 2021 to now, we have had the growth pushed by the Premium brands. Ibmec, IDOMED moved from 5% to 44% over 2025. We had a very strong growth at IDOMED from 25% to 34%. More impressive is the growth of Ibmec that doubled, moving from 4% to 9% in this quarter. We have an important slant on non-recurring effect. Unlike what had been happening previously, we have our M&A spending with layoffs of faculty, well, footprint of our properties. That was important before.
We had a growth that we felt it was important to share with you, first, because we have a series of extraordinary effects, and we will keep our drop of non-recurring effects. Important to clarify what happened in 2025. First point we had in the second half, we had an impairment of an operation we acquired before the pandemic 2019 with great impact or great focus again on C ampus, and that was very much impacted by pandemic and education sector. The impairment has no cash impact, just like any impairment. Additionally, we took some actions that are important for us to improve our profitability from now on. We restructured our corporate. That was announced over the result of the third quarter in 2024. Fourth quarter, we had a higher layoff of our faculty to minimize the effect of our legal framework on our costs.
Lastly, we have an important effect which was Refis tax debt incentive that was carried out over the third quarter of 2025. All of those extraordinary effect led us to have for the first time in many years, a growth of non-recurring effects, and we will have another reduction moving to levels below what we had in 2024 in the forthcoming years. When we look at our adjusted net income, we had a drop of BRL 80 million, basically because of the increase of our interest rate, our Selic. We had this negative impact of the increase of the interest rate impacting several companies in Brazil.
I think another very important point here when we look at the actions that from the standpoint of cash have almost zero impact, that are favorable for our cash in the year, we would reach earnings per share BRL 193 million against BRL 173 million in 2024, and total income of BRL 1.507 billion compared to 2024, with a negative impact of the increase of interest. Looking at the number of earnings per share that we reached in 2025, we reached BRL 151 million. That is a miss regarding our low part of our guidance is 1.7%. Whereas per share, that was actually impacted by revenue. We have very well high leveraged income, which generates 1% in NOR impacted net income by BRL 50 million.
We had a reduction of this in the second half that we were not expecting, generating this beginning of our guidance. Important to show that this actually, especially the construction non-engaged migration, has no impact for 2026, was very positive for the evolution of profit or in comparable basis to 2025. The growth in net income for 2026 will be very high. We'll have favorable winds in reduction of the interest rates of Selic. The cash flow for shareholders measures what is the profit of the company. We have payment of interest. We had a result that was very important this year with a growth of 38% compared to the previous years, reaching BRL 500 million, the base of our guidance.
Even considering a year with very high interest rates, Selic reaching 15%, we still generated cash to our shareholders. Our performance in receivables is important. We have better operational performance, renewal of students, more engagement before renewal, better procedures of collection of our team. Also due to actions, despite they have a negative effect on our revenue and our EBITDA and our net income, if they have no negative impact to the cash, we have a presence in the days sales outstanding. The students reduced tiers to this. We have provision for low-engaged freshmen, and we have payment that were different from a private. Actually, they had a private bank source. We have a clear trend of growth that should remain in 2026.
Certainly, we will communicate at the end of the first quarter a better outlook as to where we see cash generation for 2026. What we can say now is that we're going to have a very good year, at least equal to 2025. Let's talk about indebtedness or debt. Very important in an election year, the market may turn overnight, as you know, about regarding our market. We were able to reduce our leverage. We got it to the end of 2025, a leverage of 1.46x . It would be lower if it hadn't been the initiative of having the buyback and dividends payment out. We closed the year with a cash position that was very strong.
BRL 500 million after an issuance of BRL 500 million, our second debenture that was very much sought by the market. We were able to have an issuance with the lowest rate spread of 0.7%, lowest spread in the education segment. We had 1.03% and the payment of BRL 430 million that you'll see our schedule of amortization for 2026. In January this year, we paid BRL 430 million. With this payment of the two debt had a higher spread, BRL 125 million, BRL 150 million, we dropped to a spread below 1%. Again, a new reference to educational sector in Brazil. We have very strong cash position. We have no need to make new issuances to cover the amortization that we have over the year.
Another important highlight with a quarter that naturally is a quarter that burns cash. We kept net debt that was stable during the period. Very comfortable position, the debt. The payments over the year under control, we have only BRL 200 million in 2026. With this very comfortable cash position, it will be a very easy year. Looking ahead to 2028, 2029, we feel assured to have this timeline to benefit from the best opportunities that come up, and this is reflected low cost of debt that we have. Being able to make the issuances at the best market timings. Okay, we're going to have Marcel now. Have a good day and see you next time. Whilst Marcel sits down, we're going to go over the slide that we like, this quarterly routine of showing the market. Actually keeps away from long-term.
We have education that is long-term, long cycles. We should look at this long-term view. The company since 2019, so we see CAGR of 1%-8%. Considering the pandemic in 2019, we have some remains of traces of years which felt the year would stabilize. We have very harsh pandemic, two years with this debate of regulation, of distance learning threatening the industry. Consistency is impressive, the growth of the company. 8% CAGR year-over-year, keeping stable, healthy margins since 2021. Every year we have margin growth at very high levels, 34% now. Again, a business that grows even in hard years in a consistent way with very high margins and stable ones. Paying dividends every year since our IPO, we kept the payment of dividends.
Even having declared very strongly our Yduqs Day, we keep this model of capital allocation with focus number one, reducing leverage. We said we would pay dividends at least close to the minimum every year, and we have been doing that even above the minimum in a very consistent way, paying BRL 150 million last year, BRL 150 million now in February. We've just paid that. Our commitment of constant return is stability of return to shareholders. This is all enabled through the great cash flow growth. This was the new model in the industry as a whole. It's becoming an industry that is strong cash generator with growth that is a bit smaller, but strong cash generation. We have been growing. We were burning cash in 2022, reaching incredible levels, BRL 500 million cash generation for shareholders.
Incredible margin that we have been mentioning to the market. That was our main business focus. Moving to the next. Great. We have Marcel next to me, who's going to talk about technology, one of the most important strategic pillars for Yduqs. Marcel is going to talk about what we delivered in 2025. It's a great pleasure to talk about technology at this meeting.
I'm going to talk about AI with the strategic pillar of the company of development we've been talking about for a long time on all our initiatives.
The company today follows seeking the three pillars, better quality of teaching to our students, more operational efficiency, and preparing students to a world that is totally different from what we have in the past, including AI in all our grids and our contents, providing them opportunity to be in touch with this technology as early as possible in their learning journey. We have over 100 initiatives that have been implemented, capturing results in the company. We have from efficiencies in CSC with document processing time, we're reducing by 90% average document processing time in documents that are for the intake process. In content production, a drastic reduction in the value that we have for the creation for each theme. Intensive use of AI in the flow control and the content production and also in sales. We have been using AI.
We have been mentioning in other quarters AI in student support. We have enrollments that are much more self-service based on self-checkout. We have our bots and WhatsApp. We have an end-to-end journey. When they're interested in a course, they clarify doubts on that, and at the end when they make the payment and deliver documents, and we use it for assisted acquisition. We have a growth that is for affiliates using AI to clarify doubts or understand pricing offers, and students have a bit more confidence to follow on, and affiliates use that to have intake faster and a much greater response time. Apart from that, we have been working hard to transform the company and take this logic of AI-first to everyone. We started this process of cultural and AI literacy in all areas.
This involves capacity building, having people from all management areas of the company, having AI agents for action on their day-to-day. Over 90% of the company boards with at least one AI agent and more than 40 practical use cases developed for real business impact coming from pains that come up in the day-to-day of the company.
Great, Marcel. It's great to see our approach that is top-down and bottom-up. We have things that came with efficiency, with better results for the company as whole. We're concerned in training people that are going to generate those initiatives in building the company. We know the power of AI in transforming people and how much people must be to be empowered to transform these things.
These use cases are coming from the people themselves, the pains that everyone has in their day-to-day processes and how they are seeking solutions using AI to improve their work and things on their day-to-day. Marcel will stay with us. In addition to technology, he's responsible for the market. Great intake leader. It's important to have technology positioning in this market strategic, you know, getting technology close to the business. Technology in Yduqs is very strategic. We want to be increasingly more connected to the market and to business. Marcel, whilst he breathes a little bit, let's talk about ESG, another fundamental pillar at Yduqs. We see several accomplishments we had in 2025 on this slide. We start with a very cool photo of our students of Imperatriz, Maranhão State, an environment project we have. We understand Yduqs as an education company.
Our fundamental role in ESG is transforming our students. We increase our outreach to more than a million people that will spread this ESG knowledge and concept to the whole world. This is our commitment to ESG. Speaking of commitment, this year I highlight one of the developments, 2025 adhesion to the commitment net zero connected to the Global Compact with the UN. We've been working very closely with the UN in our programs. We developed in 2025 our planning of ESG. This is one of the most important verticals in this block. Moving to the tenth photo, since we talked about the Global Compact, we have Rebeca Andrade, our gymnast. We have been counting on Rebecca in our communications with Cláudia, President of Yduqs, President in the Global Compact. Actually, at the Education and Sport panel at UN headquarters in 2025.
Our transition program of career athletes. We have over 1,000 athletes that have been benefited from the career transition program. They're little visible in society, but very relevant contribution of the Yduqs Institute in this career transition program. Let's talk about 2026 intake. We bring a snapshot for you to have an idea of the intake pacing. We're at almost 80% of intake cycle completed. We have about 18-20 days ahead, which is an important part that we call academic conversion. Students are about to complete the documentation stage. That's what we are following. We wanted to share with you a snapshot of the modalities and how the volumes are behaving. As expected, we have very strong expansion on Semi On- Campus from the publishing of the legal framework.
We made great efforts to create those Semi On-Campus offers to start our operational adjustments so that we could comply with the new legal framework. We have some results on Campus. Semi On-Campus grows by 74% compared to last year. Digital dropping 37%. It was expected. Most of them happens in the course that cannot be offered on a digital basis as distance learning. We see positive view on this difference in migration from digital to Semi On-Campus. This will convert into an increase in price, which is compatible with the offer of Semi On-Campus. For On-C ampus, we see a 5% drop, a contraction that we are assessing and following from the beginning of the intake cycle of the first quarter. We have a drop of 7% compared to the previous year.
It's important to highlight that we have been following that, and we have been following reports of the market that bring those snapshots month after month. We have a similar performance in some modalities, even better than the market. We follow that following the Hoper or Indicap that is published once a month. Thanks, Marcel, for the presentation. Important to highlight that despite the small drop in total intake of the Estácio Wyden, you have a mix, a reduction in digital, great increase in Semi On-Campus brings a, you know, positive effect for the total NOR. Even you have a reduction in the total intake, you have stable positioning of revenue year-over-year. Moving to our final slide, our final, remarks of our presentation. Very important.
The take-away message is to see very positive year in 2025 with even better outlook for 2026 is a structural turn in the industry, very strong in cash generation. Yduqs is positioning its model for some years. The result, 2025 should consolidate this vision. We've done this, making our results even more transparent, consistent, and predictable. This is something we always said. All analysts, buy side, sell side in the industry been showing that this has been increasingly more the brand of our result. Transparency, consistency, predictability, considering the adjustments we've made in the company over the years. We keep the commitment that we'll have strong cash generation results increasingly more transparent, consistent, predictable. I want to reinstate this triad. Highlights of the year, adjusted EBITDA growth in the margin as in the business whole. Very positive results in Premium.
The recovery of margin we had over the second half in Estácio Wyden. Net debt dropping, structured consistent will be even better in 2026 considering the benefits we mentioned for 2025. Premium reaching 44% of our EBITDA. Many times more of the Estácio Wyden. We're getting to a brand that is close to the result coming from the two Premium verticals. Well prepared for the legal or regulatory framework. We are very well prepared for this new framework. It brings challenges. It actually impacts the industry. We have opportunities considering the challenges. We are prepared to be winners in this scenario, the new scenario. In distance learning, we have good news in 2025 consolidating 2026 Unifametro acquisition. We have the closing, very strong brand based in Fortaleza with 8,000 students in the Estácio Wyden.
Over 60 annual medical seats built. We're very comfortable that we're going to reach great results for this umbrella that is Wyden. Marcel mentioned quite well on our focus on AI. We're a teaching institution. We're focused on AI. We invest time and money to ensure Yduqs is very well-positioned to capture all the AI benefits. The triad and Marcel are focused on AI, very large. With the students that we're preparing for the new AI world. You know, education is even better with AI, and the company is more efficient using new technologies. On cash, we have our main focus of capital allocation, reducing leverage. We'll drop one below 1.5x at the end of the year. This will drop in 2026, reaching our goal that we actually discussed in our Yduqs Day. 1x net debt over EBITDA.
We had an increase of 38% FCFE reaching our yearly guidance of BRL 500 million in 2025. We close our presentation. Once again, I'd like to thank all of you that have been present with us. We have a opportunity of a year that we could close in a very positive way. We have 2026 with very strong results outlook. Let's move on to the Q&A session.
Thank you all for staying with us until now. We will now start the Q&A session for investors and analysts. If you wish to ask a question, please click on Raise Hand. If your question is answered, you can leave the queue by clicking on Lower Your Hand. Our first question comes from Flavio Yoshida from Bank of America.
Hello. Good morning, Rossano. Good morning, everyone.
Thanks for the time to ask question. I have two on our side. The first is regarding intake that you've shown so far of the 2026 cycle. What drew our attention is drop in On-Campus that you showed of 5%. When we talk to your competitors, we understand that you are underperforming competitors. I'd like to understand what is your reading or your take on that, because why do you think you're underperforming competitors on the On-Campus side? First question. The second is, regarding cash generation for 2026. You closed 2025 within the guidance, but I'd like to understand the main levers when we think about margin, especially, to keep robust cash generation for 2026. Thank you.
Good morning, Flavio. Thanks for your question.
Let me start with the last, and then I'll ask Aquino to add, and then Marcel to add. Address the first On-Campus. Cash, we reinstate. I did this during the call. Our trust on cash generation for 2026. This has been a year, as you've seen highlighting in the presentation, strong cash generation for shareholders over 2025. 2026, we're going to have some waves that will help this grow even further. We're very confident on the growth again in the growth of shareholder cash growth in 2026. Regardless of having a drop in interest rates, we can count on this macroeconomic evolution. We should have a drop in spending in interest payment because we're reducing leverage. Reduction in leverage should benefit directly this cash generation in addition to natural EBITDA growth.
Our cash generation to keep at high levels, and this should actually be directly related to more strong cash generation. Aquino, would you like to add?
You covered the main points. Our company is strong for having constant growth of operating cash generation. Our record, you know, we had FCF growth that was record in considering our leverage, the probable not assured reduction of the interest rates. We are able to reduce interest rate payment, improve our financial result, convert more our FCF to FCFE. The operating results, we're going to have a better conversion of FCF and FCFE. We had a level of non-recurring in 2025 that is quite high of BRL 100 million-BRL 120 million with cash effect, with the outlook of having an important reduction of this level in 2026.
This will also convert into more cash reduction, FCF and FCFE. We don't yet have the numbers to share with you on guidance for 2026, but when we see the closing of first quarter and the disclosure of our results, we're very confident that we're going to have a level equal, if not higher, to 2025. What we see in the first quarter is very positive. Just the cash generation for shareholders from January plus February 2026 has exceeded the number that we had in the whole first quarter of last year. Before moving on to Marcel, there's a good point on non-recurring that we had in fourth quarter. We had a level that was above what we had and a route or a journey of non-recurring that was growing.
We felt we could start a cost structure that was lower. We decided to follow this path. We understand that the market view of analysts, the analysis, more difficult recommendations that, you know, goes to cash. Ultimately, cash is our ultimate goal, and the reduction of BRL 500 million, there is no effect. Effective cash generated regardless the result has an having been with recurring or non-recurring. There are specific expenses that have an impact to cash in the fourth quarter will not happen in 2026. Very positive effect to increase the trust or confidence in cash generation. 2026, Marcel , can you address the drop in On-Campus intake?
I think the first point is that we have no expectation of very strong market this year in the On-Campus modality. We have been following several variables.
We are in a year of decisions that may take longer. Elections and indebtedness of families, we've been following carefully. As I mentioned on the intake page, we have been looking into this market indicator that Hoper publishes. We don't see a growing market. This report is out. We see in January a market that is dropping. We're looking in depth so that we can resume growth as soon as we have a clear opportunity. It's worth remembering we haven't made any strong promotional action. It's important this intake cycle. We have kept the strategy of keeping the ticket that we call M7 ticket after the first semester of the student. This naturally to us, we understand it's an important lever for the long term, and we didn't want to touch that even with more fierce competition in some marketplaces.
Okay. Very good.
Thank you.
Thank you, Flavio.
Our next question is from Samuel Alves from BTG.
Good morning, Rossano, Aquino, Marcel. Good morning, everyone. We have two questions on our side. The first is on restructuring our faculty in the fourth quarter, anticipating the new framework. The question is whether you've reached a recurrent of the faculty, if we can read there this level of fourth quarter is normalized quarterly. Or if you have something to be made. More details on the guidance of midterm income. You mentioned on the release, considering the challenges related to non-recurring, company was below the 2025 number. Do you intend to re-anchor the expectations of 2026 - 2030, as you did in that material fact of May last year or not?
If the idea is just provide a guidance of cash generation as you were commenting a while ago. This is it. Thank you.
Well, Samuel, I'm going to start with the last. I think I can address both. As to guidance, the market had the consensus below the guidance of net income, a more challenging topic for us to reach. We were more confident with the cash. Even with the additional spending, we reached the guidance of cash. We talked about our look of guidance of cash for 2026. We have the guidance for the first quarter. We wait for the closing of the first quarter. We know for higher education, it's very relevant, especially in terms of intake and renewal over the first quarter, very determining for the results as a whole. We wait for the first quarter to be closed to revise the guidance.
That's what we always do in disclosing first quarter. We're going to do that again to revise our net income. For the guidance in terms of earnings per share, well, since it's much lower than NOR, you know, a lot of things involved in the tax. At 1% of the variation of revenue impact, BRL 50 million in the net income. This is practically BRL 0.20 in the earnings per share. Very small revenue variation, it brings great relevance to the net income and earnings per share. We have volatility in the number plus small volatility, and the revenue actually impacts highly net income. We're very positive regarding the growth scenario of net income. As has been mentioned, very important factor, we had a negative impact of tax, and we imagine this curve will drop as of next year.
Selic and our deleveraging coverage should have a cost that is relevant between net income and EBITDA. We're very positive considering the growth income, the guidance for 2026 we're going to impact when we see things. It's not what we saw in the beginning of the year, so we had underestimated that with a small variability in top line may impact net income. We'll be more aware in the goals for the next years. It doesn't change our outlook of strong growth of net income for the company, not only for 2026, but both coming years. As to faculty, thanks for your question. Excellent question. Has been a market question. Let's clarify this move. It's not made to adapt to the legal framework. Not that the legal framework will demand more On-C ampus and more moderators.
This was actually identifying opportunity with the challenge that we have with the framework. It increases cost to the company. We've been talking about that, our expectations in 2027, when it will be finally in effect. It should actually have, you know, 27% impact. For 2026, we must adapt. We have an impact of 0.3%. Understanding this cost challenge that we're going to have over 2026, in 2025, Rodolfo's team is doing very focused work in the adaptation process for the framework. We, company as a whole, try to mobilize, try to find levers of cost reduction that could be applied. One of them was to actually speed up the faculty cost reduction process. You usually make a great adjustment in the fourth quarter to for the faculty to adjust for the future year. We had challenges considering the framework.
We had opportunity to make a reduction that was more relevant, stronger than we had performed in the previous years into the faculty. This will bring lower cost basis for 2026. The trend is that we start 2026 lighter considering this increase in cost in 2025. This benefits 2026. We should have a lower cost structure, non-recurring. We're reducing staff for this reduction staff. The constant way that we had in reducing faculty has been dropping every year. Q4 was an outlier in this process. We should resume this faster drop rate of cost for, you know, dismissal of faculties. It should operate. That should be lower than previous years. This was the reason of this stronger restructuring process in 2025. Have I answered your question? If not, I'll complement.
No. Thank you, Rossano. Just a brief follow-up.
The line of personnel and service provided 9.4%. You mentioned on the release because of the restructuring process. If I understood correctly, you are actually adjusting the staff, and this actually adjusted the line because of one-offs, but you may have other increases ahead.
Yes, precisely. Actually, this increase we had of non-recurring was increase in reduction. When you have a reduction, you have, you know, layoffs and dismissal rates. Benefits will only arise in 2026. You're adjusting your structure in December to reap the benefits in 2026. You should not see the benefits yet in 2025. It's a benefit to be actually reaped in 2026. Now, we still have the estimate of increase, especially in our partnering operation, deriving from the new framework, 0.3% of 2026.
This should help the cost structure as a whole, not directly related to the framework, but the cost structure for faculty, especially in our own operations.
Thank you, Rossano.
Thank you for your question.
Next question from Marcelo Santos from JP Morgan.
Good morning, everyone. Rossano, Aquino, Marcel. Thanks for the opportunity of asking questions. First, considering cost adjustments and incremental costs that you're having this year with the reform of distance learning, should it, you know, behave the margin evolution purposes for the business as a whole? At least the great levers that you're going to have this year. Second question is, now that you have tidied up the house, you have, you know, for estimated revenue, draw a decline in this, what's the appetite for M&A? What are the main types of assets that have interested, if anything has been interested you? Thank you.
Thanks, Marcelo, for your question. I'll answer the second, and then I'll go back to Aquino to help me on the first. Excellent take. We are on this actually housekeeping task. We have the goal getting leverage of 1x net debt EBITDA. This leverage is the main focus of the company. Going to sit down, replan, it should become a company that is paying dividends at much higher levels than currently. This is the main focus we declared when we talked about the framework of capital allocation, that we would have opportunities that may arise in M&A that add value to us. That was the case of Unifametro that we've just approved with CADE at the closing in February.
That is a very positive deal for the company, a regional brand that is very strong, that comes into our Wyden umbrella regional brand, bringing 60 seats of medical seats that are already filled. A strong traditional brand in the city, bringing a medical school very much in line with our courses that we have at IDOMED. You know, those will be our target at the correct value. There are things that add to our business. Other things may arise in the levels you see during the presentation that Vida Toda in the Premium, the lifelong learning. The Premium segment are segments we see as relevant to us. It is our fair share if we look at the undergraduate lifelong is quite small, and they are growing markets, especially in medicine. We talk about the challenges of undergraduate in medicine.
We have more seats in the undergraduate market. It's more competitive. You train people, you have the need for more specializations. It's a market that is going to grow in the forthcoming years. We are under-penetrated, so we have room for growth. This growth path was strategic. If there are obvious opportunities of M&A that may help us speed up this path, being accretive that generate value to shareholders, this will be something for us to pursue. You know, overall our business strategies, if we have opportunities, we're very selective. You know, the number of acquisitions we made, it's quite small year after year. We don't see that speeding up, intensive use of cash to follow this path. Our main path is to deleverage. We'll keep fighting to get 1x net debt over EBITDA. Aquino, will you go on that?
Marcelo, thank you for your question. We're a very disciplined company considering our debt. We have margins that are very healthy. We made some harsh measures in the second half to start 2026 with a low cost to continue on this healthy cost level. The point is that when we get to a level of margins that is close to ours, we have to be careful to not exaggerate for growing margin recurrently, impacting the quality we provide to the students. We try to balance continuous enhancement of the service we provide to students with maintenance of healthy margins. We notice in 2026 what we project is a level of margins very similar to what we had in the past two years, 34%. I hope I've answered your question.
Yes, very clear. Thank you for the two answers.
For the next question, we have Caio Moscardini from Santander.
Thank you. We have a question on our side on margins. When we look at the makeup of preliminary intake seems to be positive for ticket and mix effect. You mentioned that revenue should be flat looking at the two modalities together. This makeup positioning margin for mix considering distance learning is much higher margin. You have Premium that grows more, a margin that is higher. My question is trying to understand those effects on the margin, especially considering the fact that you have some levers that may help you on the margin, bad debt, G&A. How do you see those effects? Especially, mix. Alexandre Aquino mentioned that he sees margins in a more flat way, but there are still some makeup that can help you expand margin in 2026. Thank you.
Caio, thank you for your question.
I'll answer the first part regarding ticket, and I'll turn over to Aquino since he talked a lot about margin, to talk about the levers that you're certainly correct. We have important levers to mention. As to the mix, as we mentioned, despite having this drop in intake, we benefited in the NOR because there is a turn in the NOR. We should not expect a drop in NOR. On the margin point, I'll let Aquino talk about that overall. You're correct. On an isolated point, that digital has more margin, it impacts in isolation. But think that you bringing an additional revenue to a cost structure, basically most part is already set up or built. The what is not built, it comes from the structure adjustment that we have to make to adapt to the framework.
Rodolfo and I have been talking about that. We received 0.3% of NOR, 0.7% that should happen to a different step. It should be in the negative effect of adapting portfolio. When you see the company consolidated as a whole, we have, you know, growth and the structure of cost that is there. Great part that is happening Semi On-Campus is happening in our own. Our first growth lever of On-Campus was to expand that to partnering units. That was a first great lever when we started offering that. Now, those levers of Semi On-Campus are present in our own operations. Migration of nursing school, we have a volume migrating to our own units, you know. It's. We have variable costs for students that is, you know, small.
We have everything implemented, you know, agreements signed, variable cost is small, so we gain revenue that is additional. Of course, you're losing in the, you know, distance or digital structure, but you have an increase in the On-Campus. Same comes from those coming from digital to Semi On-Campus. When we have it On-C ampus, it's already there. On the consolidated, it may have a neutral to positive effect on the margin, even if you're growing the business on a margin that is below digital in terms of value. You're right regarding mix. When you look at Premium, you have businesses that have high margins that is growing strongly. IDOMED with 50%, Ibmec with 45%, both with two-digit growth, and we should benefit from that. Turn over to Aquino to talk about the consolidated view and the levers we have for margins.
Rossano covered it quite well.
When we look at businesses in an individualized way, the relative growth we're having Premium will push margin up. Semi On-Campus has a smaller margin than digital, and Semi On-Campus also has, you know, higher margin than On-Campus. There's a relevant point that Rossano mentioned. We have a fixed cost structure. Margin per student of Semi On-Campus is higher than digital. Well, since ticket is higher, we have a margin per student that is higher. So it's hard to put everything together. Another positive effect that we expect for 2026, very important, which is continuity of the drop in bad debt. With the mix in lower DIS adherence, we have a percent drop from 2025 to 2026, and we keep seeing a new reduction we had from 2024 to 2025. Then for 2026, we expect a drop in our bad debt.
We may have better results than we imagined, but overall, we expect a margin that is quite similar to the 2025 for 2026.
Great. Thank you.
Our next question comes from Andre Salles from UBS.
Good morning, everyone. Thanks for your presentation and time for my question. I have two on our side. One is on this mix topic, the new intake structure of the company. If you can mention to us possible cannibalization between On-Campus and Semi. If you can add some color also that lost a bit on Semi On-Campus, On-Campus. If you have a relationship between the two modalities. The third is Ibmec. You mentioned that the Ibmec has been evolving very well over the past years. I'd like to understand what is the maturing ramp of the Botafogo campus. How does it communicate with this margin journey of Ibmec?
Is it reasonable that we may have a continuity in this expansion rate for 2026 as well? Thank you.
Thanks, Andre. Let me talk about Ibmec Botafogo campus, then we go back to the first. Can you hear me all right? The Ibmec Botafogo campus, important to remember that it's the migration from the city center to Botafogo. We noticed it's not greenfield, so we noticed deterioration in the downtown area. It was very isolated, and people feel a little reassured regarding security. We decided to migrate, and we took the opportunity to move into the southern part of Rio de Janeiro. Botafogo is in the south zone. It's one of the most dynamic neighborhoods in the city that grows the most with greatest expansion in residential building and also commercial buildings. We have a very important area in Rio de Janeiro.
What we expect with the campus, we expect to have an increase in ticket and volume. You know, had already high volumes, very reasonable intake in the downtown area. The new market, we have opportunity for growth of intake. Should not be relevant volume, although we should be able to position the ticket in a stronger way than before. Migration also, despite migrating from a neighborhood that was deteriorated to a more noble area, the contract previously was very high value, one of the most expensive contracts we had in this street to bring some savings in the line of property that is quite relevant. Movement that is quite accretive to the margin, both for the base and ticket growth and reduction in the cost structure. This should help us in 2026 and keep on helping over the next years.
Remind me of what was the topic of the first question. Sorry.
Potential cannibalization between Semi On-Campus and On-Campus.
This is a good question. When we look at the consolidated demand dropping by 7% and On-Campus 5%, I don't think that I know data shows us that the main factor of this drop is migration. It's following more or less a market drop overall. We see this connected to some macroeconomic factors. Well, I don't have such long statistics. In election years usually are not strong years for intake in higher education. They are years that bring certain uncertainties in. Well, when you talk about higher education, it's long-term. You must actually be committed to long-term when you are enrolling in higher education.
It's not for class A, but when you go, you know, to classes B or C, you know, your decisions depend on your availability, financial availability in the future. 2026 seems to be a year of low trust. In the future, we see high level of indebtedness of families. This is related to our intake levels. This On-Campus is related to this consolidated view better than the consolidated move. We keep on not seeing a migration movement to that is relevant from On-Campus to Semi On-Campus. We don't see a relevant concentration in one specific course of growth. This growth and the On-Campus is very strong in all courses. The movement that the government had been making, putting in a more negative way the 100% distance learning courses and actually strengthening the On-Campus or Semi On-Campus.
It has strengthened the Semi On-Campus, and we can perhaps a bit our On-Campuses. You know, the Semi On-Campus that, you know, complies with the framework is pretty much what we've had, and it's very well-positioned for us to keep on growing. I hope I've answered your question, perhaps not on the details expected course by course. On statistics, we see a migration from On-Campus to semi as something relevant in the result of our intake of On-Campus.
Very clear. Thank you.
Thank you, Andre.
Our next question is from Vinicius Figueiredo from Itaú BBA.
Good morning. Thanks for the question. Just a very brief point regarding intake costs. I'd like to ask whether there is any kind of calendar effect that we should take into consideration when we compare last year. This year you had Carnival that was earlier.
I'd like to understand if those 20% that is not yet considered in your guidance regarding intake could have some kind of rebound, perhaps some acceleration in reducing this drop that we have been observing, especially on the On-Campus. I'd like to address a point in medicine. There's an intake cycle more difficult considering the competition. I'd like to understand how we've seen intake in marketplace further away from capital cities, if you have to add the offerings of FIES to have more students or more intake in the specific point of FIES, if there is any kind of impact on your medicine margin. Lastly, if I could ask a bit on more technical aspects on the remuneration model of. You have Pravaler. You have differences between years, so there should be a difference in 2026.
You have an effect that is a bit less positive regarding cash. Your financial results should also have some kind of impact. If you could comment on the expectation as to how this flows over 2026, that would be great help. Thank you.
Well, thanks, Vinicius, for your question. This Carnival one, it's been a tense month for us, February. There's detachment of Carnival dates. It's incredible how Carnival is a very impactful element to Brazilian society. Yes, it was a seesaw. Since Carnival this year was much earlier than last year, it impacts the comparison basis, makes it difficult for us to know the volume regarding previous years. Post-Carnival of last year. We had strong recovery of intake, and it's something we see a trend that is happening. It should improve our bottom lines.
I don't know, you know, how much this lag, you know, Post-Carnival effect should last. How much? Maybe you're right. We still have a positive effect on intake. We're more conservative. We prefer to assume that the number we're disclosing now will reflect the end of intake. Since the trend is positive, we may have positive surprises towards the end. I'll start talking about medicine, then I'll turn over to Silvio to add. As we've mentioned, the medicine scenario very much impacted by the new seats approved legally over the past two, three years. They naturally, as we've been saying, over 2025 impacts competitiveness locally. Depending on the number of seats approved and the institutions that had the seats, this may impact the competitive environment in some regions.
Naturally, the regions in smaller marketplaces with the demand that is not 100% local is impacted because you're threatened by different cities that had, you know, programs filling seats there. An interesting phenomenon that we mentioned. Rio was impacted last year because a lot of seats being authorized. Over 25, one of them, we went back, and then we managed to get some injunction from the Ministry of Education. Our Premium brand, our positioning of high quality would prevail. We start seeing that this year, 2026. Rio has been one of the great highlights in terms of intake. We may have new institutions, new brands will come up. This may happen anywhere.
Again, we go back to a brand that is very traditional in places where we operate, especially here in Rio, in a positioning of very high quality with a brand that is very consolidated with our target audience. That's where we're going to land. In some countryside towns, this takes longer to happen. You have to position yourselves considering challenges in those places. In this transition time in a more competitive landscape, we need time to prove our Premium positioning as winners. FIES is an important lever for filling those seats. We should have more penetration of FIES in intake of medicine. It's always a bit delayed regarding, you know, initial intake. We are in the middle of the cycle. We should base more our intake on the FIES model indeed. This may bring a bit more pressure for margin in the first year of intake.
With the FIES student, you suffer a retention issue. You have a profile that is still low. You're not going to have maximum retention with FIES students. It happens, but at lower percentages. Courses that do not have a delinquency level, but we have some impact. It's important to remember those students bring zero delinquency or have, you know, revenue related to FIES. The retention is higher than normal students. It helps us keep retention. The lifetime value of students is not different from those paying tuition, but you may have an impact on margin in the short term depending on the FIES penetration level. The scenario is proving our thesis that medicine with high delivery for students, with very high quality that delivers perception of the logo brand has its competitive positioning overall protected.
We have to tackle things, mapping competitive levels market by market and be more efficient. Let me turn over to Silvio to add that. He is the expert on this topic. Go ahead.
Vinicius, thank you for the question. I think Rossano has gone over the main points here. Let me add some color that we actually see this move happening in the marketplaces where we've seen 2023, 2024-2025. Markets like Rio de Janeiro, Teresina presenting some impact in the arrival of the judicialized seats. After that, we have the reputation, the lack of agreements and consolidated practices, the aspect of the ministry being to revert some campuses actually dropping or actually suspending the examinations. Some students had to be transferred because, you know, their syllabus and their transcripts are not recognized.
We see great moves increasing the rates of candidates per seat, especially in Rio de Janeiro. Let me give you an example regarding FIES. You're right. In more distant marketplaces where courses are consolidated, where the capital had an increase in seats, naturally, you have greater difficulty of taking students to the inner state. No doubt, the FIES has helped a lot. In a deep analysis we carried out, not only FIES, private funding in addition to public one. As we analyze the permanence of students, you know, the groups and the segments of students, we see that the renewal rates of FIES students are much higher than tuition payers. In the private-funded FIES, it exceeds some marketplace actually, you know, the renewal rates of that.
If we look at what we have in terms of long-term students, we have to bet and be more active on FIES. FIES is a 100% calendar run by the Government, we were very passive. FIES would arrive, students would choose us, and we simply would go through the documentation process and enroll the student. Today, we're more active, more structured regarding bringing FIES students that end up choosing where we want to study. We've been working more surgically for FIES as we need it to fill the seats. It's worth reiterating that Rio, for example, has reached, you know. All our seats have been filled by tuition-paying students without the need of FIES. We have 10% of seats, you know, of authorized seats. According to the region we use, the funding to our favor, always trying to get to the end result.
We have no concern regarding that. It's proven the thesis we had, the reputation, history, and background certainly prevail regarding ticket buys or new courses that come into new marketplaces. Basically, this is the point. I hope I've answered your question. Alexandre Aquino, do you have anything on private funding?
Well, thank you for your question. Super important, I'll take the opportunity to explain the context for those that are listening to us. Over the year of 2025, we made a change in the way of receivables of private financing. We received as student paid. We started receiving the finance part in the same semester the students are enrolled, so the reduction of deferred future receivables. We have several positive effect, and it was very positive. It actually had a positive result. We had that the future for the.
Even if discounted for a receivable in the current semester at a lower rate than our debt financing was positive. We had negative in our net income impacted accounting, the comparability year-over-year. I think the whole market understood what is the positive effect that reduces over time. This year, we received the new financings with a new model, but we still have in accounts receivable the low financing of previous years that they drop over time in the first year. We received BRL 90 million of those financings of the previous semesters, about BRL 92 million, if I'm not mistaken. In 2026, we will receive BRL 30 million. We have a reduction year-over-year of BRL 60 million in the conversion of collection in cash.
Quality is in revenue, in collections. A reduction of BRL 60 million year-over-year, but we still have BRL 30 million that will be received this year. From 2027, this value is negligible. The curve, I don't know if it's a curve, is clear. BRL 90 million last year, about BRL 30 million this year, and almost zero from 2027.
Very clear. Thank you very much. Thank you for the very complete answers.
Thank you, Vinicius.
Our next question is from Gustavo Miele from Goldman Sachs.
Thanks for your presentation. I'd just like to have a deep dive on bad debt. Nine months of 2025, we had an improvement of bad debt year-over-year. Performance is a bit more flat. When we look at fourth quarter, you mentioned an effect of, I don't know if calendar is the best word, displacement of actual maturities of the renewal tuitions.
I'd like to understand if you have any other point in this line that draws your attention. Over the fourth quarter, more than that, what are the main drivers for more improvements of bad debt, as you mentioned, close to 1 point for 2026, vis-à-vis 2025 closed years. If there is a thing that is more micro in this front of renewal, recovery, or if you have anything that is more macroeconomic that you think can help. Second point related to the first is to understand how the micro, macro debates may affect your DSO. If you envisage more efficiency, especially in this context of very low DIS for 2026. Those are the points. Thank you.
Thank you, Gustavo Miele. Good questions. I'll briefly talk about two points, and then I'll turn to Alexandre Aquino to comment.
You've explained, you know, what happened in the fourth quarter. Yeah, it would be more or less comparative to fourth quarter. We direct you to have, you know, year-over-year drop in PDD or bad debt. We see the main levels. The most things that we've done that happened for student choice 2025, this benefit, a great part is actually taken in 2024 or reaped in 2026. Non-engaged students that we had worked on early in 2025. Part of it is reaped in 2025, and then mostly in 2026, which is renewal students first for 2026. You reap that fully. Over 2025, the drop to or decline in adherence to DIS impacts the impact on bad debt, especially in the dropout rates. It reduces volatility, it makes quarters more homogeneous, benefit you see more directly.
2026, those are the main levers. As to macro, you have macro for, you know, bad debt and delinquency. You see that engagement with families that is growing. As a contrast, we see a profile of default that is better at Yduqs in 2026. You don't see growth in default levels. You see result of the work that we've been carrying out in our operations, being closer to students in relationship, negotiating debts, that is very well structured, et cetera. Increasing student satisfaction, keeping retention, and improvement to the profile of the delinquency. This does not reflect the day-to-day of our operations. 2 points. On our DSO, we should have an improvement in DSO. First, reaping benefits of this, year-over-year is a student decision. This will vary up and down.
The student, depending on campaign that is being offered, competitors offering this too, they may decide to use more or less this DIS. In addition to what Aquino explained, we have private funding, so things are maturing. 2026, we have BRL 30 million to mature. That reduces your accounts receivable and improving DSO. DSO is still positive at 2026. Aquino, would you like to add?
No. Excellent. I think your explanation. Just to restate some points. Basically, the default levels, what happens in regulations, students once they enroll, even if they don't pay more than one tuition fee over the semester, they continue studying. We recognize their revenue. As they do not renew, this ends up becoming bad debt the following semester. When we have higher engagement students, as we've been having a better collection practices, we end up reducing our bad debt.
Despite the macro scenario not being favorable, as Rossano mentioned, we have delinquency and allocation of family funds to pay debt at the highest level in the history of Brazil. We haven't seen that in our short-term default levels. When we look unit by unit, brand by brand, and we take the extraordinary effect that I'll mention in a while that helped us reduce the bad debt over the year, we don't see a drop in delinquency. Much on the contrary, we see an improvement in bad debt compared 2025 to 2024. What are the effects that reduced bad debt over 2025? First effect was revision to non-engaged students. More important effect for 2025, 2026. That's why we see one of the effects that we see an important reduction in 2026. Second important effect is decline in DIS adherence. Over last year, we see the adherence reduced.
In the first quarter 2026, we see lower levels than we've seen and that we saw in 2025. Third, that is super important. There was an increase in the participation or the of our Premium brands. They are structurally lower in terms of bad debt than those Estácio and Wyden. Those three factors we see result in 2026 that lead us to believe that despite macroeconomic conditions that are not favorable, we see a reduction of bad debt in 2026 compared to 2025.
Thank you. Have a good day.
Our next question is from Mauricio Cepeda from Morgan Stanley.
Hi, Rossano, Aquino, and other managers, directors. Thanks for the time. Two questions. Adding to this medicine discussion, talk about Enamed. If you could update us on sectorial discussions on Enamed and sanctions discussion, if this anyhow impacts you.
If you have expectation of traditionalizing the topic and the [Profimed discussions, how you see that? On this topic, considering that Enamed was published, not all schools that you have did well in the test, and if you see tick up and actually intake in your schools. The second question is regarding Premium segment, the focus that you have on Premium. We discussed this in the past that despite this excellent performance you have on Premium, and great very significant contribution to your bottom line, you prefer to remain focused on this possible expansion of C class.
My question now that is so we're almost getting to the half of your bottom line, if this somehow has changed, if you see opportunity of acquiring other Premium brands as was the case of Ibmec in the past and, you know, of advancing non-regulated teaching or even graduate studies law dentistry using recognized brands that perhaps you don't have today, that you may actually advance on them. Thank you.
Cepeda, thank you for your questions. Your first point regarding Enamed and Premium over Enamed did something good. Yeah, well, we disagree some points with the Ministry of Education. We are directly by association having this discussion with the Ministry. Well, we make decisions regarding judicializing that we have a collaboration path with the Ministry. It's ongoing debate. We don't know how much this will impact.
We're taking all the necessary measures to mitigate the impact over the years. Some institutions of ours would be impacted. Obviously, if there is impact, it will be on the intake of the second half that is smaller. Well, we reduce this impact, so we're taking all the measures to mitigate the impact. We don't yet see any impact in ticket directed to units or regarding, you know, Enamed results. We don't see that happening. The ticket moves will be more based on regional competitiveness. You see it happening. Clearly, we don't see any direct impact of Enamed. On your Premium point, actually, we never said that our focus of growth is just C and not Premium.
Our great strengths at Yduqs is to have this broad portfolio and you know head the business units focused on each one to ensure that we have focus on every one of them. Tapping into the great opportunity, the beauty of this diversified brand, it gives us some cushion or some protection to you know changes that may happen in any areas. We talked about challenges of medicine, you know, On-C ampus, you know, distance learning. Things happen, you know. This is the beauty of Yduqs. You know, people investing in Yduqs, they know they are investing in higher education in Brazil, not isolated risks in this industry. This will keep on being our strategy. When we talk about growth, we think that structurally in Brazil, the great growth opportunity in the industry comes from the C class that is under-penetrated.
Everybody from A and B classes go to higher education. Obviously, we as a super competitive brand are taking up more space trying to bring students to the Premium product, and we are very successful at that. To answer your question, yes, there may be opportunities that are more related to Premium that are interesting to us. On your lifelong thing, it's a great focus for the company. If we have opportunities that are accretive to the business, that are actually things that add value to our shareholders, we'll certainly pursue that. This is one of the levers that we may use. I hope I have answered your questions.
Thank you, Rossano. Thank you.
I thank you.
Next question from Leandro Bastos from Citi.
Thank you. Good morning. Two quick question. Number of centers we've seen, 2025, the number of units actually an increase.
As we get closer to the change to the legal framework, do you have any updates on rationalization and the number of units or some updates as to the economics of partners? Adding to the second point on the regulatory topic, last year, we had the regulation on nothing. Well, you need to have classes on campus.
The question would be if you see some demand, potential demand to speed up intake On-Campus second half as this measure is effective. These are the two points I wanted to address.
Thank you, Leandro, for your two questions. I'll turn over to Rodolfo, VP to our Partnering Operations. He can address the two points.
Thanks, Leandro. Thank you for your questions.
On the first, the number of centers overall, we're very careful. It's been practically a year and a half of the discussions on the legal framework have been taking place. Last quarter, we have very robust plan of going through a smooth process for the transition. The number of centers, we see a potential slight drop over 2026, nothing significant. We're mostly talking about centers in small towns that may have this move, something we were talking about, one of the great concerns on legal framework, limitation of access. This tends to happen in small towns, but we don't understand that this is a relevant or a significant number for effect of the bottom line.
The business unit of Yduqs, they are centers that have low productivity, the impact is more social, so to speak, limiting access than from the quantitative standpoint of results on economics of partners. This has been a great focus of ours over the past years. We had been talking about at Yduqs Days, that this was one of the great strengths we had, how much we followed not only our own economics at Yduqs. How this reflected in the profitability of partners. This is no news to us. We've had, practically four years that we've been following those trade-offs and supporting partners over this journey. This will not be different. The whole plan when we talk about legal framework, we also have great focus on the impact to partners, how much this will bring, benefits and much on the country.
This is not a concern to us, it's one of our strengths. This relationship that we have with very high levels that we have this partnerships of NPS that we have. We could go into details. As a fast track on your question, we understand that this understanding, well, we have positive balance. This actually limits access to the nursing's courses, but this reflects a lack of predictability in the regulatory environment. It's very unstable. Increasing the risk of this is fast acceleration and on the course side. Since we have stabilized footprint of our units, we cover in the 20 most part, we understand that this lever will be covered through our units, as Rossano mentioned.
We see this move happening over the quarter, and we are focused on making this adaptation to the legal framework in a smooth way and focusing on potential accreditation in a regular way, bringing predictability, both from the financial standpoint to the company, as well to the partner, having some adjustments to be made in terms of adapting and complying. I hope I've answered your question. I don't know if Rossano would like to add.
No, no, that was very good.
Thank you very much.
Thank you, Leandro.
The Q&A session is closed. We'd like to give the floor to Mr. Rossano Marques for the final remarks of the company.
Thank you, everyone. We close our session thanking you all for your presence, reinforcing that the main message that we believe we've delivered a very strong 2025, actually having the solid basis for sustainable growth of the company.
The important focus is cash generation, having end results. We took several initiatives to increase transparency, consistency, predictability. This, supported by a move of cash generation that is continually growing for the next years. We once again thank for the trust of all investors and those following us, and our team is always available for any additional questions that may arise. Thank you and have a good day.
The Yduqs video conference is closed. We thank everyone for their participation and wish you all a very good day.