Yahoo Finance Adtalem Global Education Inc (ATGE) (Q3 2024) Earnings Call Transcript Highlights: Strong ...
Total Enrollment Growth: Increased by 7.8%
Revenue: $413 million, up 11.8% year-over-year
Operating Margin: Expanded alongside increased year-over-year investment
Adjusted Earnings Per Share (EPS): $1.50, up 32.7% from last year
Fiscal Year 2024 Revenue Guidance: Raised to $1.56 billion to $1.58 billion
Fiscal Year 2024 Adjusted EPS Guidance: Raised to $4.80 to $5.00
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Adtalem Global Education Inc reported a strong financial performance with a 11.8% increase in revenue to $413 million compared to the previous year.
Total enrollment grew by 7.8%, demonstrating continued demand for Adtalem's educational offerings.
Adjusted earnings per share increased by 32.7%, indicating improved profitability and operational efficiency.
Significant growth in new student enrollments at Walden, particularly in advanced nursing and social and behavioral sciences degrees.
Adtalem raised its fiscal year 2024 revenue guidance to $1.56 billion to $1.58 billion and adjusted EPS guidance to $4.80 to $5.00, reflecting confidence in continued strong performance.
Negative Points
Despite overall growth, total enrollment in the medical and veterinary segment decreased by 4.5% year over year.
The medical schools faced challenges in execution, impacting enrollment numbers, although remediation efforts are underway.
Increased competition in medical education from DO schools and other institutions in the lower 48 states.
Potential regulatory challenges with the Department of Education regarding gainful employment regulations, particularly for veterinary programs.
Investments in marketing, student support services, and other expenses have slightly offset the underlying operational leverage, as seen in the 40 basis points decrease in adjusted EBITDA margin for Chamberlain.
Q & A Highlights
Q: With all the headlines surrounding fat surgeries, how are you thinking about that in light of your fall enrollment season? A: Stephen Beard, President and CEO of Adtalem, noted that the company is closely monitoring developments both nationally and specifically related to their institutions. Currently, there are no uncovered risks to upcoming enrollment cycles, and the team is prepared to mitigate any challenges should they arise.
Q: Can you give a refresher on your FY25 guidance and whether you feel good about the 4% to 6% growth for next year? A: Robert Phelan, CFO of Adtalem, confirmed that the guidance provided during Investor Day for fiscal '25 remains a good proxy. More specific guidance will be provided after the fourth quarter and as fiscal 25 approaches.
Q: Every intake period, the NetSchools seem to be getting a little bit less worse. Do you have any estimation of when we might start to see some growth there, either from a new enrollment perspective or total enrollment? A: Stephen Beard explained that the remediation efforts put in place are working as anticipated. The company expects total enrollment at the segment to improve sequentially over time, with the opportunity to go positive year over year early in fiscal 25.
Q: Can you provide additional color on how you're thinking about the balance between reinvestment back in the business and lining up operational leverage to flow to the bottom line? A: Stephen Beard emphasized that investing in driving the organic growth of the business is currently the most accretive use of cash. The company aims to manage down debt and return capital to shareholders through share repurchase while ensuring the momentum continues over the near and long term.
Q: How is the stubborn RN to BSN program performing, and are you taking share by declining less or increasing? A: Stephen Beard indicated that the RN to BSN program is performing well, with both Adtalem institutions taking share in this market. Despite the overall market for this offering being flat to down, Adtalem continues to perform well relative to market dynamics.
Q: Regarding the veterinary school operating at or near capacity, what are your options if the Department of Education does not provide the relief similar to medical programs under the gainful employment regulation? A: Stephen Beard mentioned that Adtalem is engaged with the Department of Education about extending a longer measurement period to DVM programs. The company is pursuing multiple paths to ensure the ongoing viability of the program, confident in its ability to continue operating effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
