• Revenue: Increased by 13.9% to $447.7 million.
• Total Enrollment: Up 11.6% year over year, serving over 91,000 students.
• Adjusted EBITDA: $125 million, up 35.1% with a margin of 27.9%.
• Adjusted Operating Income: $101.4 million, up 34.2%.
• Adjusted Net Income: $69.4 million, up 38.1%.
• Adjusted Earnings Per Share: $1.81, a 47.2% increase.
• Share Repurchase: 471,000 shares repurchased, reducing diluted shares outstanding to 38.4 million.
• Chamberlain Revenue: $181 million, up 17.9% with enrollment growth of 11.5%.
• Walden Revenue: $171.3 million, up 16.7% with enrollment growth of 13.2%.
• Medical and Veterinary Revenue: $95.4 million, up 2.8%.
• Free Cash Flow: $232 million on a trailing 12-month basis.
• Cash and Leverage: $194 million in cash with a net leverage of 1.1 times.
• Fiscal 2025 Guidance: Revenue expected between $1.73 billion and $1.76 billion; adjusted EPS of $6.10 to $6.30.

• Warning! GuruFocus has detected 5 Warning Sign with ATGE.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Adtalem Global Education Inc (NYSE:ATGE) reported a 14% increase in revenue to $448 million, with total enrollment up 11.6% year over year.
• The adjusted EBITDA margin expanded by 440 basis points, leading to a 47% increase in adjusted earnings per share to $1.81.
• Chamberlain University, the largest nursing school in the U.S., saw enrollment growth of 11.5%, reaching record levels.
• Walden University experienced a 13.2% increase in enrollment, driven by successful marketing campaigns and high student engagement.
• The company is integrating AI into healthcare education, partnering with Hippocratic AI to produce clinicians skilled in practical AI applications.

Negative Points

• The medical and veterinary segment showed only a 2.8% revenue increase, with no change in student enrollment for the second quarter.
• There are concerns about potential regulatory changes with the new administration, which could impact the industry.
• Marketing expenses were flat for Chamberlain, indicating potential challenges in maintaining growth momentum without increased investment.
• The company faces a competitive environment in key areas such as nursing and medicine, which could impact market share.
• The second half of the fiscal year is expected to have more challenging comparisons, potentially slowing growth rates.

Q & A Highlights

Q: Can we expect the same level of operating leverage in 2026 and beyond as seen in 2025? A: Yes, we anticipate 100 basis points plus in fiscal '26, above what we've raised for fiscal '25. - Robert Phelan, CFO

Q: What are your thoughts on potential regulatory changes with the new administration? A: We expect a lighter regulatory environment but are not speculating yet. We look forward to engaging with the new Secretary to discuss transparency, accountability, and expanding opportunities to address healthcare workforce shortages. - Stephen Beard, CEO

Q: Can you provide an update on the remediation plans for the medical and veterinary segment? A: We are encouraged by the remediation efforts, which are unfolding as expected. We anticipate demonstrating positive results in the next quarter's operations. - Stephen Beard, CEO

Q: How should we expect marketing expenses to trend in the second half of the year? A: Marketing expenses were flat in the second quarter for Chamberlain, and we expect to grow marketing spend at a lower rate than revenue for the full year, similar to last year's trend. - Stephen Beard, CEO

Q: What drove the significant outperformance in the quarter? A: Greater efficiency in marketing spend, a successful new campaign at Walden, improved enrollment conversions, and better persistence across institutions contributed to the outperformance. - Stephen Beard, CEO

Q: Can you provide insights into the competitive environment? A: The environment is competitive, especially in nursing and medicine. However, we maintain market-leading positions and continue to gain share, particularly in post-licensure nursing and Caribbean medical schools. - Stephen Beard, CEO

Q: What factors should we consider for the implied step-down in second-half growth rate? A: We face more challenging comps in the second half. Our guidance is risk-adjusted, and we aim to be prudent. We still expect strong growth, albeit slightly below the first half. - Stephen Beard, CEO and Robert Phelan, CFO

Q: Can you elaborate on the digital transformation initiatives? A: As we enter year two of our growth strategy, more initiatives have a tech dependency. Michael Betts will lead our digital center of excellence, focusing on core tech stack, product engineering, data science, and innovation, ensuring successful execution of tech-focused initiatives. - Stephen Beard, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.