Adtalem Global Education Second Quarter Fiscal Year 2025 Results; Guidance Raised

Total enrollment up 11.6% YoY

Revenue up 13.9% YoY

Diluted earnings per share $1.98; Adjusted EPS $1.81, growth of 47.2% YoY

Second quarter highlights

• Total student enrollment 91,264, up 11.6% year-over-year
• Revenue $447.7 million, up 13.9% year-over-year
• Chamberlain University achieved eighth straight quarter of total enrollment growth, up 11.5% year-over-year, highest total enrollment in university history
• Walden University achieved sixth straight quarter of total enrollment growth, up 13.2% year-over-year
• Strong momentum, GAAP net income $75.9 million and adjusted EBITDA $125.0 million, up 35.1% year-over-year
• Growth with Purpose strategy generating significant and sustainable returns

Capital allocation

• Repurchased $38 million of shares, $140 million remaining under $300 million Board authorized share repurchase program through January 2027
• Repaid $100 million of outstanding Term Loan B balance on Jan. 17, 2025
• Net leverage 1.1x as of Dec. 31, 2024

Fiscal year 2025 guidance

• Revenue $1,730 million to $1,760 million
• Adjusted earnings per share $6.10 to $6.30

Adtalem Global Education Inc. (NYSE:ATGE), the leading healthcare educator in the United States, today reported second quarter fiscal year 2025 results (ended Dec. 31, 2024), expanding the Company's societal and healthcare impact at an industry-leading pace.

"Growth with Purpose, our operational excellence strategy, has delivered exceptional results—marked by six straight quarters of enrollment growth—while advancing our mission to develop skilled healthcare professionals," said Steve Beard, chairman and chief executive officer, Adtalem Global Education. "By optimizing the student experience and with a commitment to student outcomes, we're successfully scaling critical care education. These consistent and sustainable results give us confidence to raise our expectations for fiscal 2025."

Financial Highlights

Selected financial data for the three months ended Dec. 31, 2024:

• Revenue of $447.7 million increased 13.9% compared with the prior year
• Operating income of $103.9 million, compared with $58.6 million in the prior year; adjusted operating income of $101.4 million, compared with $75.6 million in the prior year
• Net income of $75.9 million, compared with $39.9 million in the prior year; adjusted net income of $69.4 million, compared with $50.3 million in the prior year
• Diluted earnings per share of $1.98, compared with $0.98 in the prior year; adjusted earnings per share of $1.81, compared with $1.23 in the prior year
• Adjusted EBITDA of $125.0 million, compared with $92.6 million in the prior year; adjusted EBITDA margin of 27.9%, compared with 23.5% in the prior year

Business Highlights

• Adtalem produced more graduates with Psychiatric-Mental Health Nurse Practitioner (MSN-PMHNP) degrees than the top 20 programs combined, according to the most recently published 2023 data from the American Association of Colleges of Nursing. Adtalem is addressing critical U.S. healthcare issues, as The National Institute for Health Care Management estimates that approximately 49% of Americans live in a mental health workforce shortage area. As of Dec. 31, 2024, Chamberlain University enrolled over 3,000 MSN-PMHNP students, with Walden University enrolling over 6,600. Further, Walden University currently has over 21,000 students enrolled in Social and Behavioral Sciences programs.
• Chamberlain University continues to build a robust pipeline of nurses through programs including its Bachelor of Science in Nursing (BSN) Online Option, which offers flexibility and experiential learning opportunities to students in 36 states. The program boasts over 2,500 current enrollees since launching four years ago and operates 44 clinical hub locations at partner healthcare sites.
• Walden University launched "Get the W," a new brand campaign that celebrates the wins that drive our students and graduates to make a meaningful impact in healthcare and beyond.
• Ross University School of Veterinary Medicine (RUSVM) hosted the West Indies Veterinary Conference 2024, a prominent event in the global veterinary community that brings together hundreds of veterinary professionals, including over 300 RUSVM alumni. The event featured continuing education, including lectures and master classes on topics ranging from wound care to business management.

Segment Highlights

• Total student enrollment increased 11.5% compared with the prior year, driven by continued growth in pre-licensure and post-licensure nursing programs.

• Total student enrollment increased 13.2% compared with the prior year, driven by growth in healthcare and non-healthcare programs.

• Medical and Veterinary schools do not have a new enrollment period starting in the second quarter fiscal year 2025. Second quarter fiscal year 2025 enrollment period is the same as first quarter fiscal year 2025 enrollment period and corresponding reported enrollment data.

Fiscal Year 2025 Outlook

Adtalem raises guidance for fiscal year 2025, with revenue in the range of $1,730 million to $1,760 million, approximately 9.0% to 11.0% growth year-over-year. Adjusted earnings per share to be in the range of $6.10 to $6.30, approximately 21.5% to 25.5% growth year-over-year.

Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its second quarter fiscal year 2025 results today at 4:00 p.m. CT (5:00 p.m. ET).

The call can be accessed by dialing +1 877-407-6184 (U.S. participants) or +1 201-389-0877 (international participants) and stating "Adtalem earnings call" or by using conference ID: 13750710. The call will be simulcast through the Adtalem investor relations website at: https://investors.adtalem.com.

Adtalem will archive a replay of the call for 30 days. To access the replay, dial +1 877-660-6853 (U.S.) or +1 201-612-7415 (international), conference ID: 13750710, or visit the Adtalem investor relations website.

About Adtalem Global Education

Adtalem Global Education is the leading provider of healthcare education in the U.S., shaping the future of healthcare by preparing a diverse workforce with high-quality academic programs. We innovate education pathways, align with industry needs and empower individuals to reach their full potential. Our commitment to excellence and inclusivity is reflected in our expansive network of institutions, serving over 90,000 students and supported by a strong community of approximately 350,000 alumni and nearly 10,000 dedicated employees. Visit Adtalem.com for more information and follow us on LinkedIn, Instagram and Facebook.

Cautionary Disclosure Regarding Forward-Looking Statements

Certain statements contained in this release are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, which includes statements regarding Adtalem's future growth. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "future," "believe," "expect," "anticipate," "estimate," "plan," "intend," "may," "will," "would," "could," "can," "continue," "preliminary," "range," and similar terms. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include the risk factors described in Item 1A. "Risk Factors" of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and our other filings with the SEC. These forward-looking statements are based on information available to us as of the date any such statements are made, and Adtalem assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized, except as required by law.

A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of special items that may be incurred in the future, although these special items could be material to Adtalem's results in accordance with GAAP.

¹ Represents total students attending sessions during each institution's most recent enrollment period in Q2 FY 2025 and Q2 FY 2024.

Non-GAAP Financial Measures and Reconciliations

We believe that certain non-GAAP financial measures provide investors with useful supplemental information regarding the underlying business trends and performance of Adtalem's ongoing operations as seen through the eyes of management and are useful for period-over-period comparisons. We use these supplemental non-GAAP financial measures internally in our assessment of performance and budgeting process. However, these non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The following are non-GAAP financial measures used in the subsequent GAAP to non-GAAP reconciliation tables:

Adjusted net income (most comparable GAAP measure: net income) – Measure of Adtalem's net income adjusted for restructuring expense, business integration expense, amortization of acquired intangible assets, litigation reserve, debt modification costs, loss on assets held for sale, and income from discontinued operations.

Adjusted earnings per share (most comparable GAAP measure: diluted earnings per share) – Measure of Adtalem's diluted earnings per share adjusted for restructuring expense, business integration expense, amortization of acquired intangible assets, litigation reserve, debt modification costs, loss on assets held for sale, and income from discontinued operations.

Adjusted operating income (most comparable GAAP measure: operating income) – Measure of Adtalem's operating income adjusted for restructuring expense, business integration expense, amortization of acquired intangible assets, litigation reserve, debt modification costs, and loss on assets held for sale. This measure is applied on a consolidated and segment basis, depending on the context of the discussion.

Adjusted EBITDA (most comparable GAAP measure: net income) – Measure of Adtalem's net income adjusted for income from discontinued operations, interest expense, other income, net, provision for income taxes, depreciation, amortization of acquired intangible assets, amortization of cloud computing implementation assets, stock-based compensation, restructuring expense, business integration expense, litigation reserve, loss on assets held for sale, and debt modification costs. This measure is applied on a consolidated and segment basis, depending on the context of the discussion. Provision for income taxes, interest expense, and other income, net is not recorded at the reportable segments, and therefore, the segment adjusted EBITDA reconciliations begin with operating income.

Free cash flow (most comparable GAAP measure: net cash provided by operating activities-continuing operations) – Defined as net cash provided by operating activities-continuing operations less capital expenditures.

Net debt – Defined as long-term debt less cash and cash equivalents.

Net leverage – Defined as net debt divided by adjusted EBITDA.

A description of special items in our non-GAAP financial measures described above are as follows:

• Restructuring expense primarily related to workforce reductions, costs to exit certain course offerings, and prior real estate consolidations at Adtalem's home office. We do not include normal, recurring, cash operating expenses in our restructuring expense.
• Business integration expense include expenses related to the Walden acquisition and certain costs related to growth transformation initiatives. We do not include normal, recurring, cash operating expenses in our business integration expense.
• Amortization of acquired intangible assets.
• Amortization of cloud computing implementation assets.
• Reserves related to significant litigation, debt modification costs related to refinancing our Term Loan B loan, and loss on assets held for sale related to a fair value write-down on assets.
• Income from discontinued operations includes expense from ongoing litigation costs and settlements related to the DeVry University divestiture and the earn-outs we received.