Adtalem (ATGE) Tops Q1 Earnings Estimates, Raises '24 View
Adtalem Global Education Inc. ATGE reported impressive results for first-quarter fiscal 2024. Earnings and revenues surpassed their respective Zacks Consensus Estimate and increased year over year, given strong enrollment growth and strategic initiatives.
Shares of this leading education provider jumped by 0.51% in the after-hours trading session on Oct 26.
The company's accelerated performance across five operational pillars highlights its market-leading scale and healthcare focus. The company also raised its fiscal 2024 guidance. With 80,000 students and 300,000 alumni, ATGE is well-equipped to address the critical healthcare provider shortages.
Earnings & Revenue Discussion
Adjusted earnings of 93 cents per share topped the consensus mark of 82 cents by 13.4% and increased 3.3% from 90 cents 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 $368.8 million beat the consensus mark of $362.4 million by 1.8% and increased 4.1% year over year. Strong demand at Chamberlain University and Walden University (led by healthcare programs) boosted the results.
For the fiscal first quarter, enrollment of total students increased 1.9% year over year to 81,073 students. Our Zacks model predicted a total student enrollment of 77,785 in the reported quarter.
Adjusted operating income declined 5.2% from the prior-year quarter’s level to $63.3 million. Adjusted operating margin declined by 160 basis points (bps) year over year to 17.2%.
Adjusted EBITDA was $80.5 million, down 3.8% from the prior-year quarter’s level. Adjusted EBITDA margin contracted 180 bps year over year to 21.8%, in line with our expectation.
Segment Details
Chamberlain: Revenues in the segment were up 5.3% from the year-ago quarter’s level, totaling $142.6 million. Total student enrollment increased by 5.2% to 34,889 students, driven by growth in pre-licensure and post-licensure nursing programs and higher persistence across the segment.
Adjusted operating income declined 9.9% from the prior-year quarter’s level to $24.3 million. Adjusted operating margin contracted 280 bps year over year to 17.1%. Adjusted EBITDA was $31.5 million, down 6.5% from the prior-year quarter’s level. Adjusted EBITDA margin also fell 280 bps to 22.1%.
Walden: The segment generated revenues of $141.6 million, up 8.2% year over year. Total student enrollment in the quarter increased 0.5% year over year to 40,975 students, driven by growth in healthcare programs and high persistence. However, the elimination of off-cycle start dates impacted year-over-year total enrollment growth by 2.9%.
Adjusted operating income came in at $31.1 million, up 26.8% from a year ago. Adjusted operating margin expanded 330 bps year over year to 22%. Adjusted EBITDA was $35.1 million, up 21% from the prior-year period’s level. Adjusted EBITDA margin increased 260 bps year over year to 24.8%.
Medical and Veterinary: Revenues in the segment fell 3.8% to $84.6 million from the year-ago quarter’s figure. Total student enrollment declined 7.5% from the prior-year quarter’s level to 5,209 students due to declines in medical schools.
Adjusted operating income declined 15.2% from the prior-year quarter’s figure to $14.5 million. Adjusted operating margin contracted 230 bps year over year to 17.1%. Adjusted EBITDA was $19.1 million, down 11.9% from the prior-year quarter’s level. Adjusted EBITDA margin fell 210 bps year over year to 22.5%.
Liquidity & Cash Flow
As of Sep 30, 2023, Adtalem had cash and cash equivalents of $262.4 million compared with $273.7 million at the end of fiscal 2023. Long-term debt was $695.7 million, slightly up from $695.1 million at the end of fiscal 2023. Trailing 12-month net debt to adjusted EBITDA was 1.3x at September end.
For the first three months of fiscal 2024, cash provided by operating activities (continuing operations) totaled $90.7 million compared with $91.5 million in the year-ago period. Free cash flow in the quarter was $75.7 million compared with $86 million a year ago.
Fiscal 2024 Guidance Raised
Adtalem now expects revenues within the range of $1,470-$1,530 million, up from the prior estimate of $1,460-$1,520 million. Adjusted earnings in the range of $4.25-$4.45 per share, up from the prior estimate of $4.20-$4.40 per share.
Zacks Rank & Recent Consumer Discretionary Releases
Adtalem currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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