Adtalem (ATGE) Q2 Earnings & Revenues Top, '24 View Raised
Adtalem Global Education Inc. ATGE reported impressive results for second-quarter fiscal 2024. Earnings and revenues surpassed the respective Zacks Consensus Estimate and increased year over year.
Shares of this leading education provider gained 1.6% in the after-hour trading session on Jan 30.
The company’s quarterly results reflect solid enrollment growth along with the efficient execution of its Growth with Purpose strategy. The continuous focus on this growth strategy has sparked organic revenue growth, improved operational efficiencies and yielded outstanding academic outcomes. Owing to the quarter’s uptrend, ATGE has raised its fiscal 2024 guidance. With more than 81,000 students and 300,000 alumni, the company is well-equipped to address critical healthcare provider shortages.
Earnings & Revenue Discussion
Adjusted earnings per share (EPS) of $1.23 topped the Zacks Consensus Estimate of $1.01 by 21.8% and increased 51.4% from $1.17 in the year-ago quarter.
Adtalem Global Education Inc. Price, Consensus and EPS Surprise
Adtalem Global Education Inc. price-consensus-eps-surprise-chart | Adtalem Global Education Inc. Quote
Revenues of $393.2 million beat the consensus mark of $374.1 million by 5.1% and increased 8.4% year over year. Strong demand at Chamberlain University and Walden University boosted the results.
For the fiscal second quarter, the enrollment of total students increased 6.2% year over year to 81,772 students. Our Zacks model predicted a total student enrollment of 77,607 in the reported quarter.
Adjusted operating income declined 3% from the prior-year quarter’s level to $75.6 million. Adjusted operating margin declined 230 basis points (bps) year over year to 19.2%.
Adjusted EBITDA was $92.6 million, up 2.3% from the prior-year quarter’s level. Adjusted EBITDA margin contracted 150 bps year over year to 23.5%. This value can be compared with our expectation of 20.5% for the metric.
Segment Details
Chamberlain: Revenues in the segment were up 8.6% from the year-ago quarter’s level, totaling $153.6 million. Total student enrollment increased 6.6% to 35,592 students, driven by continued growth in pre-licensure and post-licensure nursing programs and higher persistence across the segment.
Adjusted operating income declined 10.8% from the prior-year quarter’s level to $29.6 million. Adjusted operating margin contracted 420 bps year over year to 19.3%. Adjusted EBITDA was $36.9 million, down 2.2% from the prior-year quarter’s level. Adjusted EBITDA margin also fell 270 bps to 24%.
Walden: The segment generated revenues of $146.8 million, up 11.3% year over year. Total student enrollment in the quarter increased 7.9% year over year to 40,971 students, driven by growth in healthcare and non-healthcare programs, and high persistence.
Adjusted operating income was $30.2 million, up 3.9% from a year ago. Adjusted operating margin contracted 140 bps year over year to 20.6%. Adjusted EBITDA was $34.6 million, up 9.8% from the prior-year period’s level. Adjusted EBITDA margin declined 30 bps year over year to 23.6%.
Medical and Veterinary: Revenues in the segment grew 3.8% to $92.9 million from the year-ago quarter’s figure. Total student enrollment declined 7.5% from the prior-year quarter’s level to 5,209. This school did not have a new enrollment period starting the fiscal second quarter of 2024 and is the same as the prior quarter.
Adjusted operating income declined 2% from the prior-year quarter’s figure to $22.5 million. Adjusted operating margin contracted 130 bps year over year to 23.8%. Adjusted EBITDA was $26.4 million, up 2.3% from the prior-year quarter’s level. Adjusted EBITDA margin fell 40 bps year over year to 28.4%.
Liquidity & Cash Flow
As of Dec 31, 2023, Adtalem had cash and cash equivalents of $182.9 million compared with $273.7 million at the end of fiscal 2023. Long-term debt was $696.4 million, up from $695.1 million at the end of fiscal 2023. Trailing 12-month net debt to adjusted EBITDA was 1.5x at December 2023-end.
For the first six months of fiscal 2024, net cash provided by operating activities (continuing operations) totaled $83.1 million compared with $42.3 million in the year-ago period. Free cash flow in the quarter was $(23) million compared with $(53) million a year ago.
Raised Fiscal 2024 Guidance
Adtalem now expects revenues in the range of $1,520-$1,560 million, up from the prior expectation of $1,470-$1,530 million. Adjusted EPS is expected to be in the range of $4.55-$4.75 per share, up from the prior estimate of $4.25-$4.45 per share.
Zacks Rank & Key Picks
Adtalem currently carries a Zacks Rank #3 (Hold).
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The Zacks Consensus Estimate for NFLX’s 2024 sales and EPS suggests growth of 11.7% and 21.8%, respectively, from the year-ago levels.
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