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Adtalem (ATGE) Q3 Earnings Top, Revenues Lag, Enrollment Up Y/Y

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Adtalem Global Education Inc. (ATGE - Free Report) reported mixed results for third-quarter fiscal 2021. Its earnings topped the Zacks Consensus Estimate but revenues lagged the same. Despite top-line growth, adjusted earnings declined on a year-over-year basis.

Lisa Wardell, chairman and CEO of Adtalem said, “We continued to successfully execute on our workforce solutions provider strategy in the third quarter, as we delivered results in line with our expectations and reaffirmed our full-year outlook of a 5-7% revenue increase and 28-32% EPS growth.”

Earnings & Revenues Discussion

Adjusted earnings came in at 72 cents per share, which surpassed the consensus mark of 70 cents by 2.9%. The metric, however, declined 11.1% year over year owing to COVID-related disruptions.

Revenues of $280.7 million lagged the consensus mark of $283 million by 0.9% but increased 3.4% year over year. For the fiscal third quarter, enrollment of new and total students grew 8.8% and 4.1% year over year, respectively.

Adjusted operating income of $49.1 million decreased 12.9% year over year.

Segment Details

Medical and Healthcare: Revenues in the segment increased 1.3% from the year-ago figure to $230.2 million. In Chamberlain, revenues grew 8.3% year over year, driven by persistent increase in new and total enrollments over the last 18 months. New student enrollment for the January session decreased 1.7% but the same in the March session increased 6.8% year over year. Total student enrollment increased 5.6% and 5.8% in the January and March sessions, respectively, from the prior-year level.

Medical and Veterinary schools’ revenues decreased 9.1% year over year due to lower medical school clinical revenues owing to COVID-related clinical program limitations at some partner hospitals and reduced medical school housing revenues on account of campus closures. Enrollment of new students grew 21.2%, while that of total students fell 6.2% year over year. Segment’s operating income was $51.1 million, down 10% from the prior-year level.

Financial Services: Revenues in the segment totaled $50.4 million, which increased 14.3% year over year driven by rise in revenues at ACAMS, OnCourse Learning and Becker. At ACAMS, revenues marked an increase as the business continued to diversify its offerings to address a broader range of customer needs. OnCourse Learning revenue growth was driven by focus on execution and leveraging its leadership position in a favorable mortgage market as well as persistent growth in the continuing education business. Revenues at Becker rose from the prior-year quarter owing to growth in continuing education program offerings, offset by a decline in CPA exam preparation.

Operating income declined 6.8% from the prior-year quarter to $3.9 million due to increased sales and marketing expense.

Liquidity & Cash Flow

As of Mar 31, 2021, Adtalem had cash and cash equivalents of $497.7 million compared with $500.5 million at fiscal 2020-end. In the fiscal first quarter, cash provided by operating activities totaled $144.2 million compared with $105.5 million in the year-ago period.


For fiscal 2021, Adtalem expects revenue growth of 5-7% and adjusted earnings per share within 28-32% (25-30% expected earlier). Notably, the Walden acquisition is expected to generate adjusted earnings of $4.00 per share for fiscal 2022.

Zacks Rank

Adtalem — which shares space with American Public Education, Inc. (APEI - Free Report) , Strategic Education, Inc. (STRA - Free Report) and Lincoln Educational Services Corporation (LINC - Free Report) in the Zacks Schools  industry — currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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