"Growth with Purpose, our organic growth strategy, accelerated total enrollment growth and delivered enhanced profitability through a more efficient operating model while we optimally balanced the continued increase in the level of investments for future growth." - Steve Beard
Adtalem Global Education Inc (ATGE) Q3 FY2024 Results — Revenue Growth, Margin Expansion and Guidance Uplift Driven by Chamberlain and Walden Enrollment Momentum
Executive Summary
Adtalem Global Education delivered a solid Q3 FY2024, with revenue of $412.66 million reflecting an 11.8% year-over-year increase and roughly 5% quarter-over-quarter growth. The quarter was led by Chamberlain and Walden enrollment strength, with Chamberlain total enrollment up 9% and Walden up 8.4% year over year, contributing to double-digit top-line growth across both brands. The Medical and Veterinary segment posted a more modest rise in revenue (+6.1%) as total enrollment declined 4.5% YoY, though sequential improvements in remediation efforts point to a potential early-stage stabilization and eventual growth in that segment. Adjusted EBITDA rose 24.6% YoY to $107.1 million, yielding an adjusted EBITDA margin of 25.9%. GAAP operating income reached $80.6 million (operating margin 19.5%), while net income was $36.8 million (net margin 8.9%) and GAAP diluted EPS was $0.93, with adjusted EPS of $1.50 for the quarter (up 32.7% YoY). Management boosted FY2024 revenue guidance to $1.56–$1.58 billion and adj. EPS to $4.80–$5.00, signaling confidence in continued enrollment momentum and operating leverage. The company continued to deploy capital via share repurchases (~1.8 million shares in the quarter) and balance-sheet optimization, including a reduction in letters of credit and meaningful debt management actions. Management emphasized Growth with Purpose as the driver of ongoing profitability and capacity expansion, while signaling continued investments in marketing, technology, and student services to sustain enrollment and persistence gains.
Revenue and profitability metrics:
- Revenue: $412.658 million, up 11.8% YoY; QoQ growth ~5.0% (Q2: $393.242 million).
- Gross profit: $241.768 million; gross margin 58.59% (0.5859).
- EBITDA: $107.691 million; EBITDA margin 26.10% (0.2610).
- Adjusted EBITDA: $107.1 million; adjusted EBITDA margin 25.9% (vs. prior year +260 bps).
- Operating income: $80.648 million; operating margin 19.54% (0.1954).
- Net income: $36.821 million; net margin 8.92% (0.0892); YoY net income change roughly -19.7%, QoQ -7.7% per earnings metrics.
- EPS (GAAP): Diluted $0.93; basic $0.95; Adjusted EPS: $1.50 (up 32.7% YoY).
- Shares: Weighted average diluted shares 39.636 million; basic 38.713 million; quarter diluted shares ~6.2 million lower YoY.
- Operating cash flow: $162.621 million; free cash flow: $140.935 million; cash at end of period $187.324 million; cash flow per share (operating) $4.20; FCF per share $3.64.
- Capital structure and liquidity: total debt $840.298 million; net debt $652.974 million; cash/net cash equivalents $187.324 million; total assets $2.715 billion; current ratio 0.761; debt ratio 0.309; debt/equity 0.636. Letters of credit outstanding reduced to $241.9 million.
- Growth and guidance: FY2024 revenue guidance raised to $1.56–$1.58 billion; adj. EPS guidance raised to $4.80–$5.00. Management expects Q4 to sustain higher YoY revenue growth and to deliver EBITDA margin around the prior-year level (≈24%).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
412.66M
11.81%
4.94%
Gross Profit
241.77M
18.94%
9.31%
Operating Income
80.65M
135.06%
37.60%
Net Income
36.82M
-19.73%
-7.70%
EPS
0.95
-7.77%
-5.00%
Key Financial Ratios
currentRatio
0.76
grossProfitMargin
58.6%
operatingProfitMargin
19.5%
netProfitMargin
8.92%
returnOnAssets
1.36%
returnOnEquity
2.79%
debtEquityRatio
0.64
operatingCashFlowPerShare
$4.2
freeCashFlowPerShare
$3.64
priceToBookRatio
1.53
priceEarningsRatio
13.76
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways from the Q3 earnings call, grouped by theme:
- Growth strategy and execution: Steve Beard highlighted Growth with Purpose as the driver of top-line momentum and margin improvements, noting: Growth with Purpose has accelerated total enrollments and delivered enhanced profitability through a more efficient operating model while balancing investments for future growth. The company intends to sustain this momentum into the fourth quarter and beyond.
- Enrollment momentum and program mix: Chamberlain and Walden led the quarter’s strength, with Chamberlain total enrollment surpassing prior records (nearly 38,000) and Walden enrollment up 8.4% YoY. Beard cited the BSN Online expansion and increased persistence as critical drivers, while Walden benefited from growth across undergraduate and advanced nursing and social/behavioral sciences.
- Med-Vet remediation and near-term outlook: The Med-Vet segment showed a sequential improvement in enrollment trends, down 4.5% YoY in Q3, with remediation efforts delivering encouraging results. Management indicated continued top-of-funnel improvements and a path toward positive YoY enrollment in fiscal 2025.
- Capital allocation and financial discipline: Bob Phelan emphasized a balanced approach to capital allocation—investing for growth while reducing debt and returning capital via share repurchases. He noted a $76.1 million reduction in letters of credit during the quarter and 1.8 million shares repurchased in Q3, underscoring ongoing earnings accretion and balance-sheet strengthening.
- Market dynamics and external risks: Management acknowledged higher education value proposition scrutiny and FAFSA/related policy developments, but stated no immediate headwinds to upcoming enrollment cycles as of the call, while continuing to monitor macro trends and policy changes affecting access to financing for students.
Growth with Purpose, our organic growth strategy, accelerated total enrollment growth and delivered enhanced profitability through a more efficient operating model while we optimally balanced the continued increase in the level of investments for future growth.
— Steve Beard
Remediation efforts in Med/Vet continue to deliver encouraging results as total enrollment trends improve sequentially, down just 4.5% year-over-year in the quarter.
— Steve Beard
Forward Guidance
Outlook and how management views the trajectory:
- Guidance uplift: Full-year revenue guidance raised to $1.56–$1.58 billion and adj. EPS guidance raised to $4.80–$5.00, signaling confidence in sustained enrollment momentum and operating leverage through the remainder of fiscal 2024.
- Margin trajectory: Management reiterated an objective of achieving a full-year adjusted EBITDA margin of about 24% (roughly flat to prior year) and anticipated margin expansion in fiscal 2025–2026 as Growth with Purpose investments compound operating leverage.
- Fourth-quarter expectations: Q4 is seasonally weaker than Q3 but is expected to deliver continued revenue growth and operating leverage, supported by ongoing investments in marketing, technology, and student services to sustain persistence and program mix advantages.
- Key factors to monitor: (1) Med-Vet enrollment remediation progress and Match Day outcomes (especially the vet school regulatory environment), (2) enrollment progression at Chamberlain/Walden and program mix shifts (e.g., BSN Online and online degree programs), (3) changes in federal student aid policy impacting FAFSA processing and access to financing, (4) capital allocation decisions including debt reduction and potential further buybacks, and (5) macro dynamics affecting healthcare workforce demand and higher education pricing.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ATGE Focus
58.59%
19.50%
2.79%
13.76%
LOPE
99.10%
20.20%
5.43%
24.80%
AFYA
60.20%
26.30%
2.67%
19.11%
ARCE
75.30%
-19.60%
-3.88%
-11.74%
BEDU
36.60%
-15.20%
-4.65%
-46.50%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Adtalem enters the post-secondary healthcare education space with a defensible, diversified portfolio anchored by Chamberlain’s nursing leadership and Walden’s online/part-time offerings. The Q3 print demonstrates meaningful top-line growth (revenue up 11.8% YoY) and healthy operating leverage, driven by enrollment gains and persistent programs. The adj. EBITDA margin of 25.9% and free cash flow generation (~$141M in the quarter; YTD FCF ~$195M) support a constructive medium-term investment thesis, particularly as the Growth with Purpose initiative is monetized through higher retention, improved program mix, and capacity expansion. Management’s updated guidance for FY2024 (revenue $1.56–$1.58B; adj. EPS $4.80–$5.00) reflects confidence in continued momentum and cost discipline, with an eye toward mid-to-long-term margin expansion into fiscal 2025–26 as programs scale and investments mature. Risks center on Med-Vet enrollment volatility, regulatory dynamics affecting veterinary education, and policy shifts affecting student financing and admissions. A disciplined stance on capital allocation (debt reduction, selective investments, and buybacks) remains a key supportive signal. Overall, the stock warrants a Positive/On-Watch stance with a long-term, growth-oriented thesis supported by solid cash flow, scale in essential healthcare education, and a clear runway for margin expansion if enrollment trends persist.
Key Investment Factors
Growth Potential
ATGE's Growth with Purpose strategy positions the company to sustain enrollment growth and profitability through higher persistence, expanded online offerings (e.g., Chamberlain BSN Online), and continued expansion of Walden's online and competency-based programs. Enrollment growth at Chamberlain (+9% YoY) and Walden (+8.4% YoY) underpins revenue acceleration, while high-demand health professions tracks support pricing power and capitalizable operating leverage. The Medical and Veterinary segment, with near-capacity Ross University and remediation-focused improvements, offers upside as enrollment stabilizes and new clinical programs scale.
Profitability Risk
Key downside risks include: (1) Med-Vet enrollment volatility, (2) regulatory/policy risks affecting veterinary education (DOE gainful employment rules) and the regulatory environment around medical/dental/veterinary education financing, (3) FAFSA/loan policy shifts that could affect fall enrollment timing and student access to funding, (4) competition from online providers and public/private programs, (5) macroeconomic shocks affecting student affordability and enrollment decisions.
Financial Position
Balance sheet demonstrates solid cash generation and leverage management, with annualized metrics suggesting robust cash flow generation (free cash flow per share $3.64; operating cash flow per share $4.20). Net debt of approximately $653 million on total debt of $840 million yields a conservative leverage profile (debt/EBITDA not provided here but implied by margins and cash flow). Liquidity is supported by $187.3 million cash and $24.1 million in LOCs, though liquidity ratios show a current ratio of 0.76, signaling working-capital management is important. The company returned capital via $89.9 million in share repurchases in the quarter and continued debt/credit optimization via reduced letters of credit (~$76.1 million) in Q3 2024, supporting deleveraging and capital flexibility.
SWOT Analysis
Strengths
Market-leading nursing education through Chamberlain with nearly 38k students and continued pre-licensure online expansion
Strong brand and online-capable Walden University with double-digit demand growth and high persistence
Diversified portfolio across three segments (Chamberlain, Walden, Med-Vet) with scalable clinical partnerships and a large alumni network (>300,000 Adtalem alumni)
Robust enrollment momentum providing top-line resilience and potential for continued margin leverage
Weaknesses
Med-Vet enrollments declined 4.5% YoY in Q3, introducing segment-level volatility and execution risk
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