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Adtalem (ATGE) Lags on Q3 Earnings, Ups FY22 Adjusted EPS View

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Adtalem Global Education Inc. (ATGE - Free Report) reported mixed third-quarter fiscal 2022 results. The company’s earnings lagged the Zacks Consensus Estimate due to the pandemic-related challenges, but revenues beat the same. On a year-over-year basis, revenues and earnings increased on the back of the Walden acquisition.

In this connection, Steve Beard, president and CEO of Adtalem, said, “I’m also encouraged by our operational performance in the third quarter. We continue to expand margins across the business despite the pandemic's adverse impact on organic revenue growth, which is a result of our focus on operational efficiency and realization of cost synergies associated with the Walden integration. Moreover, we achieved this while deleveraging the balance sheet and returning capital to shareholders.”

ATGE completed the divesture of its Financial Services segment to a consortium of Wendel Group and Colibri Group for $1 billion in cash. This will enhance the company’s focus as a pure play, leading provider of talent to the healthcare industry.

Earnings & Revenues Discussion

Adjusted earnings of 87 cents per share missed the consensus mark of 88 cents by 1.1% and increased 45% from 60 cents in the year-ago quarter.

Adtalem Global Education Inc. Price, Consensus and EPS Surprise


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 $365.6 million beat the consensus mark of $363 million by 0.9% and increased 58.8% year over year, driven by the Walden acquisition. For the fiscal third quarter, enrollment of total students fell 6.3% year over year to 82,174.

Adjusted operating income rose 87.4% from the prior-year quarter’s levels to $76.5 million. Adjusted EBITDA was $92.5 million, up 75% from the prior-year quarter’s levels.

Segment Details

Chamberlain: Revenues in the segment fell 2.6% from the year-ago quarter’s figure to $142.6 million. Adjusted operating income increased 7.8% from the prior-year quarter’s levels to $38.9 million, primarily due to lower labor and other expenses. Adjusted EBITDA was $45.5 million, up 9.7% from the prior-year quarter’s levels.

Total student enrollment declined 4.3%, primarily owing to COVID-related headwinds in Chamberlain’s post-licensure programs, partially offset by improved enrollment and persistence in on-campus pre-licensure programs.

Walden: The segment generated revenues of $139.1 million. Total student enrollment in the quarter declined 8.4% year over year due to COVID-related headwinds in Walden’s post-licensure nursing programs and a decline in the management and technology programs. Adjusted operating income came in at $26.2 million. Adjusted EBITDA was $29.6 million.

Medical and Veterinary: Revenues in the segment were almost flat from the year-ago quarter’s figure to $84 million. Total student enrollment declined 1.2% from the prior-year quarter’s levels. Adjusted operating income increased 30.1% from the prior-year quarter’s figure to $19.5 million on cost reductions across the segment. Adjusted EBITDA was $23.95 million, up 23.1% from the prior-year quarter’s levels.

Liquidity & Cash Flow

As of Mar 31, 2022, Adtalem had cash and cash equivalents of $788.7 million compared with $476.4 million at the fiscal 2021-end. Long-term debt was $1.23 billion, up from $1.07 billion at the fiscal 2021-end.

For the first nine months of fiscal 2022, cash provided by operating activities totaled $51.5 million compared with $144.2 million in the year-ago period. Free cash flow in the quarter was $69.9 million compared with $58.8 million a year ago.

Fiscal 2022 Guidance Updated

For fiscal 2022, Adtalem expects revenues within $1,350-$1,390 million. The company raised adjusted earnings per share guidance to $3.15-$3.35 versus the anticipated $2.90-$3.10 earlier. In fiscal 2021, it reported revenues of $1,112.4 million and adjusted earnings of $2.98 per share.

Zacks Rank

Adtalem 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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