ATGE - Adtalem Global Education Announces Fiscal First Quarter 2024 Results

Revenue up 4.1% YoY

Total enrollment up 1.9% YoY

Diluted earnings per share $0.25; Adjusted EPS $0.93, growth of 3.3% YoY

Raises fiscal year 2024 revenue guidance to a range of $1,470 million to $1,530 million and Adjusted EPS guidance to a range of $4.25 to $4.45

First quarter highlights

• Revenue $368.8 million, up 4.1% year-over-year
• Total student enrollment 81,073, up 1.9% year-over-year
• Chamberlain University third straight quarter of total enrollment growth, up 5.2% year-over-year
• Walden University returned to total enrollment growth, up 0.5% year-over-year
• Investing in Growth with Purpose strategy, GAAP net income $10.6 million, and adjusted EBITDA $80.5 million, down 3.8% year-over-year

Capital allocation

• Repurchased $92 million of shares against $300 million Board authorized share repurchase program
• Net leverage 1.3x

Fiscal year 2024 guidance

• Revenue $1,470 million to $1,530 million
• Adjusted earnings per share $4.25 to $4.45

Adtalem Global Education Inc. (NYSE: ATGE) today reported first quarter fiscal 2024 results (ended Sept. 30, 2023) reflecting a return to total enrollment growth and enhanced academic outcomes.

“Our strategic transformation program – Growth with Purpose – achieved another milestone during the first quarter – returning Adtalem to total enrollment growth,” said Steve Beard, president, and chief executive officer, Adtalem Global Education.

Beard continued, “As we accelerate our performance across our five operational pillars, we are increasingly afforded the opportunity to take full advantage of our market leading scale and our market responsive healthcare focus. This gives us the confidence to raise our expectations for fiscal 2024. With more than 80,000 students and 300,000 alumni, Adtalem is well-positioned to address critical healthcare provider shortages. And our enterprise-wide emphasis on advancing health equity has never been more important.”

Financial Highlights

Selected financial data for the three months ended Sept. 30, 2023:

• Revenue of $368.8 million increased 4.1% compared with the prior year.
• Operating income was $28.2 million, compared with $23.6 million in the prior year; adjusted operating income was $63.3 million, compared with $66.8 million in the prior year.
• Net income was $10.6 million, compared with $0.6 million in the prior year; adjusted net income was $39.4 million, compared with $41.6 million in the prior year.
• Diluted earnings per share was $0.25, compared with $0.01 in the prior year; adjusted earnings per share was $0.93, compared with $0.90 in the prior year.
• Adjusted EBITDA was $80.5 million, compared with $83.7 million in the prior year; adjusted EBITDA margin was 21.8%, compared with 23.6% in the prior year.

Business Highlights

• Chamberlain University continues to innovate in specialized nursing education that addresses areas of acute nursing shortages, such as peri-operative, home health, nephrology, and emergency, through its Practice Ready. Specialty Focused. ^TM model. This model has provided more than 1,000 students in Chamberlain’s Bachelor of Science in Nursing degree program, the opportunity for specialized training. The proprietary learning model has been expanded to all 23 Chamberlain campuses, broadening access to more students.
• Walden’s 69th commencement celebrated the conferral of more than 6,500 doctoral, master’s, and bachelor’s degrees to students from all 50 U.S. states and more than 40 countries, of which nearly 35% were for post-licensure nursing programs. More than 50% of the graduates who reported their race, identified as being from minority groups.
• Faculty members from Walden and Chamberlain were elected into the Leadership Academy in Social Determinants of Health and Social Change , which further equips current nurse educators and interprofessional leaders to prepare future care providers to confidently and competently promote social change and advance health equity. The academy is the cornerstone of the groundbreaking collaboration between the National League for Nursing and Walden University.
• Adtalem’s ongoing investment in innovating the student experience was recognized with 4 Telly and 12 Viddy awards for immersive “user-centered design” and short-videos for enhanced learning curriculum.
• Our 2023 Sustainability Report , which encapsulates our mission, vision and sustainability efforts, was recently released and highlights the many ways Adtalem serves to bridge the gap between accessible education and systemic change in healthcare and demonstrates our continued global impact for a better future.

Segment Highlights

Chamberlain

• Total student enrollment increased 5.2% compared with the prior year, driven by continued growth in pre-licensure and post-licensure nursing programs as well as high persistence.

Walden

• Total student enrollment increased 0.5% compared with the prior year, driven by growth in healthcare programs and high persistence. Elimination of off-cycle start dates adversely impacted year-over-year total enrollment growth by 2.9%.

Medical and Veterinary

• Total student enrollment decreased 7.5% compared with the prior year, driven by declines in medical schools.

Fiscal Year 2024 Outlook

Adtalem guidance for fiscal year 2024, raises revenue guidance to a range of $1,470 million to $1,530 million from $1,460 million to $1,520 million, and raises adjusted earnings per share to be in the range of $4.25 to $4.45 from $4.20 to $4.40.

Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its fiscal 2024 first quarter results today at 4:30 p.m. CDT (5:30 p.m. EDT).

The call can be accessed by dialing +1 877-407-6184 (U.S. participants) or +1 201-389-0877 (international participants) stating “Adtalem earnings call” or use conference ID: 13740758. The call will be simulcast through the Adtalem investor relations website at: https://investors.adtalem.com .

Adtalem will archive a replay of the call for 30 days. To access the replay, dial +1 877-660-6853 (U.S.) or +1 201-612-7415 (international), conference ID: 13740758, or visit the Adtalem investor relations website.

About Adtalem Global Education

Adtalem Global Education (NYSE: ATGE) is a national leader in post-secondary education and leading provider of professional talent to the healthcare industry. With a dedicated focus on driving strong outcomes that increase workforce preparedness, Adtalem empowers a diverse learner population to achieve their goals and make inspiring contributions to their communities. Adtalem is the parent organization of American University of the Caribbean School of Medicine, Chamberlain University, Ross University School of Medicine, Ross University School of Veterinary Medicine and Walden University. Adtalem’s family of institutions has more than 300,000 alumni and nearly 10,000 employees. Adtalem was named one of America’s Most Responsible Companies in 2021 and 2023 by Newsweek and Statista, and one of America’s Best Employers for Diversity in 2021 and 2022 by Forbes and Statista. Visit Adtalem.com for more information and follow on Twitter and LinkedIn .

Forward-Looking Statements

Certain statements contained in this release are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, which includes statements regarding Adtalem’s future growth. Forward-looking statements can also be identified by words such as “future,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “may,” “will,” “would,” “could,” “can,” “continue,” “preliminary,” “range,” and similar terms. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in the statements. These risk and uncertainties include the risk factors described in Item 1A. “Risk Factors” of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and our other filings with the SEC. These forward-looking statements are based on information available to us as of the date any such statements are made, and Adtalem assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized, except as required by law.

A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of special items that may be incurred in the future, although these special items could be material to Adtalem's results in accordance with GAAP.

Non-GAAP Financial Measures and Reconciliations

We believe that certain non-GAAP financial measures provide investors with useful supplemental information regarding the underlying business trends and performance of Adtalem’s ongoing operations as seen through the eyes of management and are useful for period-over-period comparisons. We use these supplemental non-GAAP financial measures internally in our assessment of performance and budgeting process. However, these non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The following are non-GAAP financial measures used in the subsequent GAAP to non-GAAP reconciliation tables:

Adjusted net income (most comparable GAAP measure: net income) – Measure of Adtalem’s net income adjusted for restructuring expense, business integration expense, intangible amortization expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, and net loss from discontinued operations.

Adjusted earnings per share (most comparable GAAP measure: earnings per share) – Measure of Adtalem’s diluted earnings per share adjusted for restructuring expense, business integration expense, intangible amortization expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, and net loss from discontinued operations.

Adjusted operating income (most comparable GAAP measure: operating income) – Measure of Adtalem’s operating income adjusted for restructuring expense, business integration expense, intangible amortization expense, and litigation reserve. This measure is applied on a consolidated and segment basis, depending on the context of the discussion.

Adjusted EBITDA (most comparable GAAP measure: net income) – Measure of Adtalem’s net income adjusted for net loss from discontinued operations, interest expense, other income, net, provision for income taxes, depreciation and amortization, stock-based compensation, restructuring expense, business integration expense, and litigation reserve. This measure is applied on a consolidated and segment basis, depending on the context of the discussion. Income taxes, interest expense, and other income, net is not recorded at the reportable segments, and therefore, the segment adjusted EBITDA reconciliations begin with operating income.

Free cash flow (most comparable GAAP measure: net cash provided by operating activities-continuing operations) – Defined as net cash provided by operating activities-continuing operations less capital expenditures.

Net debt – Defined as long-term debt less cash and cash equivalents.

Net leverage – Defined as net debt divided by adjusted EBITDA.

A description of special items in our non-GAAP financial measures described above are as follows:

• Restructuring expense primarily related to real estate consolidations at Walden, Medical and Veterinary, and Adtalem’s home office. We do not include normal, recurring, cash operating expenses in our restructuring expense.
• Business integration expense include expenses related to the Walden acquisition and certain costs related to growth transformation initiatives. We do not include normal, recurring, cash operating expenses in our business integration expense.
• Intangible amortization expense on acquired intangible assets.
• Write-off of debt discount and issuance costs and gain on extinguishment of debt related to prepayments of debt, and reserves related to significant litigation.
• Net loss from discontinued operations includes expense from ongoing litigation costs and settlements related to the DeVry University divestiture and a loss on the sale of ACAMS, Becker, and OCL for working capital adjustments to the initial sales prices.