ATGE - Earnings call transcript Q3 2024 | Adtalem Global Education Inc.

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Operator

Greetings, and welcome to the Adtalem Global Education Third Quarter Fiscal Year 2024 Earnings Call. [Operator Instructions] A brief question-and-answer session will follow a formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jonathan Spitzer, Vice President of Investor Relations.

Jonathan Spitzer

Good afternoon, and welcome to our Earnings Call for the Third Quarter of Fiscal Year 2024 Results.

me of Steve Bob Adtalem Financial with Chief President Phelan, call Officer. Officer Executive Global the today Beard, are and Chief On Education and

usual We presentation, information, for to hand In assumptions and harbor latest in results relate in Certain discussion of I call this I this after see projections XX-K, declarations. through over today's and results Form Before whether will legal factors the cautionary of as statements. a future future take events, our statements safe forward-looking Please otherwise. presentation new of you changes the XX-Q forward-looking Steve, Form made to risk or subject financial to market, non-GAAP vary you to reconciliations to information. the any based and measures. are Investor regulatory we in appendix and on GAAP certain for that cause obligation Relations competitive actual materials undertake on could materially.We website the current comparable results measures and no update presentation, presentation risks forward-looking most and have statements uncertainties to statements that are expectations available publicly to related the our refer financial constitute

a find Relations at presentation the now will After to webcast link on over Steve. website the the be our and XX this Investor call, archived will I days. to investors.adtalem.com. webcast on will for You website hand you

Stephen Beard

thank and performance Earnings time the with taking afternoon, expectations. to Third for strong Good delivered We Call. XXXX you another Quarter of our Jay. Fiscal everyone, quarter Thanks, ahead results, join of

to another as investments in increased the versus quarter, adjusted same $X.XX revenue share, XX.X% quarter, XX.X% margin expanded very by establish yielding $XXX mile of proposition as business.This We're health to at education generated million, leader we performance prior in national we last is barrier enrollment U.S. time Adtalem higher become our and We some, results. increasing in In journey versus care. on has we performance the grew scrutiny.For as education operating year. see value cost to partner post-secondary third journey per marker more take year-over-year year. our the importantly, of milestone. earnings important them the of higher at the a up when We our the And total another a these also surpassed During systemically entry. a under time up a X.X%, this proud

there's question them good growing a many, leading college is about graduation, job on reliable For concern the a path to whether degree upon return a investment. to

for grow same population, issue. of offering to higher increased significant demand programs, forms including many in to advancements to and and in care to Finally, also of of coverage contributed the effectiveness ed.At and reevaluation U.S. certificate a The and are attractive of care workforce factors sometimes pricing traditional programs, the continues access alternative impressing availability online health as courses, have medical such due increasing a services time, vocational health relevance the technology. shortages education, health which of greater the an flexibility aging more care

overlooked for nurses through they doctors, accelerate and backdrop, learners At consecutive most these and those education it learners serve and or growth high-quality and only our to sorely purpose responsive professionals, a long access has monitor to and transformational strategy, consecutive to market of strengthen innovative, of growth carefully we our by other of quarter sustainability tech-enabled our to experiences a shortages Adtalem, which and existing kept expand higher of success community seeks revenue demand, However, our it's the testament care traditional our of with to the And our the increasing programs as growth, importantly, deliberate operational just staff and model. the care mission, including of graduation and with pace is supply of do organic excellence. health and which student dynamics.But commitment patient through both is total an professions academic growth care a health success-focused and and not to nation support third this with essential our improvements those workforce experience businesses careers. through quarter enrollment emphasis into the fifth needed of their a to roles of acutely.This brands threatening

the marketing, and best-in-class say, we're across And for the suffice execution programs. it we're our by we're be enrollment, calls confident to EPS fourth value-creating $X.XX fiscal model, year adjusted fiscal into XXXX that encouraged billion guidance the to year strategy pricing of to result, XXXX continue X to levers results $X.XX as quarter, to our raising these $X.XX Our date.Moreover, billion operating guidance to our $X. be a persistence, and will progress revenue and

see and medical primary encouraging nursing in Walden leadership Now nursing trends we total expanding. the enrollment third largest by its performance were to the the results of the is veterinary the Chamberlain school drivers of in quarter, and position segment. and is in our to and in continue segment.Chamberlain country strong

affiliations all to them and for X,XXX a robust of choice quarter, growth enabled framework a nursing Specialty that students, culture this X. specialty area programs them enrollment students education partnership who day Ready learning enabling of a we academic social close their Practice offer This education leading degree the across Emergency thousands of across Focused offering their is that pre-licensure clinical Ready further it broad-based be cannot online our backgrounds.Chamberlain the in to have to XX,XXX expanding the and through and be ready Specialty Nurses its the workforce we country success flexibility innovator students leading on and complete surpassed our highest During it of delivery was nursing education we learners from and and able Practice tracks, with the all care recognized through component determinants distributed gain Across our and chosen growth and with Focused bring a nearly Association. over otherwise expanded online its to of ever program.By in total drives voice enrollment levels. to students Chamberlain of across the students. we're pursue for home. to familiarity capability states, X,XXX our continues see XX expansive pipeline practical now to [indiscernible] a programs, in nursing across with to continues

in fourth quarter. new enrollment grown brand growth the Turning grew up Total to market Walden continued enrollment have the year-over-year Walden. awareness the of double with X.X% experienced straight its some Walden by as in investments for history.Our demand strongest digits

working prior enrollment programs and degree flexibility adults and the gains through reward students for increased with instances, to across time, some as Medical was segment, Adtalem in Scott periods who as Association advanced now Achieve. the when they We In reducing to value matriculate our welcome growth, back most Veterinary participating Believe through believe much serve President. student offer persistence persisting science particularly to students social as robust and Walden degrees enrollment the led to have sets we programs.And in paired Scott self-paced I as XX,XXX New as part with costs competency-based graduation. CEO and Med/Vet and has degrees. and achieve as growth and in recently Laundering Liles which down of continues as by over levels well results quarter. to to year-over-year behavioral Anti-Money continued in as achieved successfully deliver total improved prior Specialists, strong programs, we part just tuition to the trends encouraging returned ACAMS, rolling in efforts we scholarship to nursing XX% its X.X% growth known sequentially, Certified in the of divestiture.Remediation

extensive early near of that also student of to with We which close experience.One hospitals at enrollment on to success Clinical them the complete Ross enable continue and indications provide of rotations we of the a continue clinical do Medicine to at their operate invest our show Veterinary our to on in starting to Med, they continues capacity, to clarity their innovations University superior is so differentiated partnerships the to students Program processes and strengthen drive Home clinical School early funnel. top network Adtalem Ross at where and homes. will Return example leverages

straight XXX enter graduates match Americans students placing For states than over adequate and facilities, XX XX care spanning students, RUSM areas residency the XXX them rate, residencies, POIs second million first-time over care. care living these primary and than achieved will primary lacking XXX health AUC XX% territories.Of a into more unique and combined in year, to more served access

are who care participated diversify students a students system. health the Day, component medical U.S. XXX Match or gaps black, in the identify in Our helping pipeline addressing African-American equity. graduates nation's of is the the Of physicians health in Hispanic and key XXX in

X% performance health delighted To continue role to only of impact and [indiscernible] making medical country's of student disparities we're close, poised population represent of across to the addressing expectations. growing And the equity to of serve bottom of As reach educator, care our the narrow through undeniable prominent the of XX% diverse we're quality XX% of of The population health purpose country. shortages, is mindful line that of across specific top quarter.As is and population ahead our students delivering systems expect and and Black only of contributions XXXX, in [indiscernible] critical with the performance in community our minded workforce growth largest U.S. some we tangible but a made in most Americans but strategy this health next physicians. [indiscernible] our schools graduates physicians.And and up the

these drives growth social And network of at XX,XXX live the positive X working multiply. in our X,XXX the in XX,XXX communities in financial I'll over as graduated existing over Bob institutions and they nearly to another of work. gains further positive momentum, discussion Over us alone, turn XXX,XXX in results. change years, which X that, students, last call What for joined Adtalem over Adtalem bring They of [indiscernible] to that all an medicine alumna have outcomes X,XXX to with and work. our with the our nursing

Robert Phelan

and Steve, hello, everyone. Thank you,

our accelerated margin EBITDA basis Our came in tax million third and third Walden. the $XX reduction outstanding in the the a third rate from XX% the from interest from quarter reminder, by compared year for robust $X.XX XX.X%, or all $XXX.X last remarks, with segments, rapidly Department compared and in year Chamberlain financial compared up increase review balance enrollment. growth than performance the term the was as growth primarily last XXX which quarter while performance. expanding million, was efficiencies prior the compared partial quarter deployment leverage, fiscal X% quarter pre-licensure growth the tied our the I'll compared Consolidated the of at line. loan repurchased enhanced my post-licensure begin had driven optimally and increase with $X.X XXXX. delivered offset $XX.X with savings the resulting the last lower year, the by by prior of the student up operating investments within results level meet option Starting services drivers growth. quarter segments discuss to enrollment expense.As third and for through a prior offset increased million to total critical in with income Growth by of than our compared operating year third EBITDA higher for an to $XXX.X primarily the by in performance with million, Chamberlain nursing results in than and the enrollment share segment. year, with enrollment in costs. of basis $XX.X organic per quarter.Later prior adjusted margin a accelerated of discuss financial in led when in online our income and year.Adjusted profitability $XX.X to other million, from and partially profit nursing interest lower future increase diluted an Adjusted XX quarter strategy, a total third Notably, operational XX.X% XX.X% of investments XX.X% in shortages by year.Adjusted I'll total adjusted in driven income fifth XX.X% was our term $XXX.X key EBITDA of consecutive X million, offset we top attributed up versus by was of benefit shares XX.X% as earnings quarter revenue X.X efficient we program, in model Education to marketing, point digits credit. investments Adjusted of pre-licensure for and letters X quarter triple an reflect Adjusted quarter initiatives, million. a year, prior at of to higher I'll both and growth growth growth million, BSN the financial Total growth. increase million all in repayment, year-over-year expenses. continued from increased growth, our purpose, effective for and million as loan quarter, more by a grew a increased and other partially by enrollment and to student Revenue repricing points adjusted strategic our or expectations of enrollment highlights $XX.X remainder over net support the from XX employee reported operational million basis last higher was only operating prior was points resulting increase our the capital adjusted Walden, underlying savings benefit by third EBITDA more revenue costs leverage year year.Next, is the generated to outstanding XX.X% and XX.X% shares operating $XX.X

We investments our student-facing market-leading at differentiation that our and expanding are position. believe experience and more continue to enhancing seamless aimed our creating reach

quarter persistence, showcased increased on and which persistence increased third total positive delivering intended returns new outcomes. investment.These demand to continue through grew return are early investments future academic demand and Our from enrollment the

$XX.X in social as Revenue with degree million, primarily offset with when the XX.X% accelerated increased continued compared year $XXX.X and robust commensurate our quarter investments and and from and quarter, of student prior notably to nursing partially led efficiencies during basis XX.X% in with to student an and the Growth an behavioral levels, the EBITDA XXX up of growth leverage year versus Turning to by quarter expanded in transformation by enrollment across X.X% margin the increase our was in EBITDA health programs.Adjusted by support increased high undergraduate compared prior was driven was million. by new operational prior the Total by strong year, persistence. Adjusted growth. the enrollment XX.X% enrollment Walden. the level points the enrollments.

Our financial Walden. performance growth at to invest strong continue the operational and to for ability future affords us

enrollment prior For veterinary school student third from to near $XX.X segment, increased million.Total the revenue decreased the X.X% schools capacity. the their compared primarily veterinary continues quarter and our medical year, X.X% operate and in medical with to

plans. the on execute seeing returns enrollment indications and total as segment growth early return are to We we to our remediation

year-over-year sequentially partially increase inclusive working last by by points cash planned Our and basis offset operational capital by expansion. balance strength focus.Shifting in a increase renewed year-over-year reported continue sheet, and our XXX from robust capital in basis flow were improved margin investments the XXX we X performance growth million, generation. Med/Vet EBITDA a million and expanded XX.X% through enrollment points Adjusted prior Adjusted Strong enrollment technologies and last additional cash bolster improvements from our operating financial cycle. the versus XX.X% physical $XXX year-to-date was to cash student trend months year increased EBITDA investments. to $XX to flow to $XX free Fiscal the by million revenue capital student-facing year, a versus operational $XX of million. these

of required renewed. allocation. XX million credit third also was priority and during to Our were our reinvest credit while continue we thoughtfully on as into to reduced one deliver financial of to sheet achieve we maximize will Also and institutions approach our top balanced strengthen of aim of expired letters as to to optimal quarter student outstanding the our balance obligations outcomes.We flexibility $XX.X capacity reduce capital be note, our not remains long-term letters and by a January

letters $XXX.X XX, outstanding. of million March credit of of now have XXXX, As we

purpose our our $X.XX accelerates high fiscal range year guidance to through are we of with the our performance guidance in XXXX.As to for Turning strategy, be growth billion, raising revenue year-over-year growth. single-digit to representing billion $X.XX

$X allocation our high providing adjusted are our or raising mid flow, and be generate execute our sheet cash $X.XX to bolstering to We us strength to capital We philosophy. the range share strong also balance on per in earnings anticipate ability continuing to growth. of guidance teens to the

context of came to Let me provide quarter expectations. our XXXX additional our outlook.Third revenue ahead in fiscal in relation

a fourth to year-over-year third the growth still to investments quarter. sustaining continue quarter for reminder the higher quarter, fourth marketing is technology in We continue higher to seasonably that quarter. plan anticipate and with the than of our revenue We a make growth incremental level in fourth

generating at Included Taken on to be to revenue, quarter together fiscal the EBITDA fourth operational XX%.We with leverage remain consistent approximately of margin and we year our raised sustained actions. the are still allocation year anticipate within recent 'XX guidance of capital our achieve stated with track profile last level full goal adjusted our in

and Specifically, our outstanding as letters term our lower repricing expense reduction the as loan of the lowered B credit. associated well from of balance interest

owners. our Finally, more over our I'm Q&A. our we XX%. that, our 'XX. year the the slightly for call and for rate will quarter momentum growth a demonstrate create targets tax to generating our team operator foundation while opportunities over to now focused adjusted as excited achieve on returns deliver fourth is the I finishing effective of turn about we to long-term In fiscal investing the short-term the stay expect year results to With be laying performance to ability and our conclusion, normalized for the sustainable strong rate

Operator

Instructions] And Jeff Capital you. moment, the our a Thank conduct question-and-answer while questions. BMO with and question poll first Silber For please, comes ladies we now from session. And gentlemen, [Operator for we'll Markets.

Unknown Analyst

Jeff. This is on for Ryan

curious all headlines the your enrollment I was how fall [indiscernible], you're that about Just of in light thinking with all the season. surrounding

Stephen Beard

question. the for Thanks

to both at closely, the institutions. we're As you might and developments national specific imagine, those our monitoring level

here to our staying teams our mitigate they enrollment should challenges dynamic. we're ready no But arise. upcoming uncovered that to to the not As students, we are we've risks moment, today, at close out headwinds cycles. and any coming again, of But potential our any sit

Unknown Analyst

was you're you And next just for X% can refresher X% if since your provided Got looking June. guidance, FY to at 'XX you year, about curious, it. in give the guidance a better I incrementally still feel feeling you that good last

Jonathan Spitzer

Yes, I a proxy Investor right we put that this out Day fiscal the now at 'XX say for is guidance would at point. good

But guidance at be more as quarter up and is we fiscal we'll good think this We the that at do finish point. coming that fourth it's and a specific proxy will point. the get into back 'XX, quarter, have I

Unknown Analyst

the period, to getting It me. like for there, And last either to total I one enrollment seems schools curious be med or just less then little estimation the start just perspective see some growth every a intake of worse. we when was from seem the have bit any enrollment? you if a new

Stephen Beard

We couple place of remain we encouraged as efforts are in quarters the that ago Yes. anticipated. put a working we remediation

improve that opportunity over So working expect our 'XX. we've the sequentially to enrollment and expectation, point to with we guided total our still towards. go segment enrollment that's year-over-year what at fiscal still time at positive total some in we're the That's early

Operator

next W. Robert with Baird. Pawlak Our Steven comes question from

Steven Pawlak

Jeff back how versus [indiscernible] maybe Meuler. you -- balance? thinking for on reinvestment additional you're can the the on thinking any color to Yes. I in any through, the about leverage about up operational the of of that business leverage bottom business how pulling obviously, line sort color sort you're but coming the additional the operating in provide

Stephen Beard

related given our and business. to use to Yes. Obviously, that cash organic driving course the in have is growth growth the speed, in purpose the we most initiatives believe, accretive strategy place the of of we investing that

that the we is the continue to returning obviously, philosophy down to momentum around our hopefully allocation momentum term the over that debt, focuses long managing to through that, now on over priority capital enjoy we enjoy and Beyond near obviously, shareholders the that is term. highest ensure repurchase.But share capital

we if with year-over-year started with guide we of can But the multiyear gave purpose. this to cycle, to fiscal in going growth But flat to some So going expect specificity. over were do in go any back we expand telling margins Investor you that additional we year the were keep to margins to jump Day we investments Bob a continue at making forward. relation

Robert Phelan

back margin that's Steve. I say we is see of No, before thing only this the great, think talked year, I that expansion. about The would we that half the had would

in So third that's you're the what through come quarter. seeing

into expect And EBITDA of We back level said of we 'XX. we getting and had full as XX% Day, the at Steve's that do year. for an Investor expanding anticipate, get 'XX quarter, fiscal fourth to in the then margins point as roughly we

Steven Pawlak

end enrollment the but could obviously, and pieces, and of the efforts trends I in break marketing down you the well do of I of building the going sort Walden, the better Great. magnitude think stability guess, of as sustainability of kind between And maybe going the a stable rate growth market, of are nursing to if as how Chamberlain guess, kind brand the growth more forward, purpose of [indiscernible]. forward? growth about rate ultimately, you

Stephen Beard

Yes.

we that get more and best of we've new get at So taking you a year-over-year balance [indiscernible] as top through we've fiscal year Walden rates will advantage some we this years. total enjoying continue of discussed the basis, as had starts where cycles, year.On quarters few into in we difficult last get the into at expect next you in and Chamberlain an opportunities and with Walden to some on layer the persistence sequential both believe growth, believe of 'XX. is and and there's portfolio. that us we're the Med/Vet enrollments that of the over we it really to But grow segment, to When absolute prior schools. the particularly trend continue at And enrollment medical across basis, enrollment Chamberlain, on in the at the opportunity improve kind of you still persistence

into programs to to our Walden, continue and we at have them. within students the really online take existing raise still framework. got we've that of of about think and we think, done to more And awareness we Chamberlain programs like at headroom of programs full attractive lots some capacity portfolio and everything our we online BSN brands when do we've got, attract to around So our advantage

Operator

with Barrington comes Paris next question from Our Research. Alex

Alexander Paris

the on and Congratulations the guidance raise. outperformance

Just couple in a bit, Chamberlain, questions. diving growth. year-over-year into the segments The a follow-up of little impressive acceleration

out pre-licensure You RN going? how BSN growth to I'm And assuming. that BSN several online graduate is kind called programs BSN and programs, program of then stubborn

Jonathan Spitzer

I it market Well, we BSN [indiscernible] is RN the and offering the it's a down, [indiscernible] measure to is that grown how mean, to because is BSN. that it, quite flat well, take of we BSN actually. strong on Chamberlain continue in reputation about the thing -- depending remember you but on share to also Walden in

relative offering, overall continue So the well to quite market institutions. for both do we to dynamics that across

Alexander Paris

Good that kind on. of so to to nurses hear. coded on the say, would come of back, I sort realize working and was demands the last given I

Jonathan Spitzer

[indiscernible] That's last COVID. right. back to post come Most was component the nursing

Alexander Paris

you're up in BSN institutions. RN both And to both in

or taking but declining you taking share you're share, increasing? said less You are by

Jonathan Spitzer

We're both up at institutions.

Alexander Paris

then X one is improvement, And sequential diminishing. on quick the with Great. of or a rate Med/Vet, the schools. Again, decline starting medical

areas? think the within with XXXX going schools. How fiscal in happen? What international your HSIs. about affiliation have the I in talked HSBCs and that is increasing students, focus your increasing to enrollment increased you medical are expecting You're past

get color within schools. to hoping bit Just a more initiatives on medical little

Jonathan Spitzer

Yes.

we because if education. on. have, we the the with at in maintain are against grow demand, on dynamic, importantly, the up to years, more It the over that things medical opportunity we implement about applicants in focused to there attractive the incrementally remediation successfully kept top a end, is why process this back going fantastic for of reflection than are opportunity of have DO creates been those our but Lower That's schools, schools it's most the really not execute over the remediation offer over market enrollments believe a students convert medical in in attractive not decline efforts are sufficiently discussed to challenge the are both is the couple and for Alex, island. our there education schools for enrollments an brands has the medical clear, efforts execution very the really on still though medical many, people the enrollees. market both which medical opportunity was how been we've actually into XX, at is differentiated So an and We applicable time quarters, schools. of what a better was in bottom of when them incredibly of specific and funnel, more funnel additional we end, school time, at XX reputations the for Even that time still schools, many market doing us with our medical and competition competitive students and space and seats.And happening initiatives that experience have those which and

we So seeing education. medical win and you're It's execute, in us our to can we think to still what results flow quarters. over through down that's just of operations the few last

Alexander Paris

capacity. near question continuing operate or to school, on at last the And then veterinary Great.

terms And know Anything they Education gave I an lawsuits effect on share to to the medical they with gainful you or wrote given that. didn't update vet schools. options and And whether not, Department Any of schools Department so so when specifically Education. and that on. and time there? neglected regulation, that be area the relief, on seemed should? to were They was employment what are of of In don't on your takes working which rule. on, some relief That but efforts give mention they that if your they

Jonathan Spitzer

unlike department are in available because agree to Well, sense reception sciences to I programs analogous move And what not think other think, medical DBM department one period about the constructive is extending makes and mental measurement say to programs. engaged and what health us path very DBM longer and that a what's behavioral we've the remain we that there. logical other be make. for a from programs a I still can viable with gotten we seems discussions.So is path it's programs, working and we a believe it's at we with those It

ensure survived that, we and reason, facing the all the in we get to country pet were that its thought DBM United currently to some a increasing could for veterinarians the different It's litigation that number rule that the tracked States. pursue program important of the exception scale, DBM for the some because strategies not able demand most have we continues perspective, about program.And Beyond reason, largest serves a arguably, the operate for from country's companion in challenges. if in of a as various way if to

and based we ensure feel happens. we're won't hypothetical, that I specifics on confident that multiple to ongoing viability into the So of get a very program, but about pursuing paths

Alexander Paris

color, get that and I back queue. That's appreciate into I'll you I'm written the guys. great. extra for

Operator

There this hand floor are Beard no comments. time. questions Steve I'll for further the to closing back at

Stephen Beard

Yes.

As I outcome a prepared and be that academic U.S. kind care, fantastic benefits second of us that a mentioned at we match proud remarks, day, has part a who all order that's us of our effect strong the that love in that [indiscernible]. exactly of to health had we're

the the So look the are our schools. catching up off I practicing of their of importantly, to want our next go just fantastic choice And and this colleagues of forward students our to to congratulate across become time chapter we residences quarter. begin next who all journey afternoon, for all physicians. and Thanks to of to X ready medical more their

Operator

Have a Thank concludes today's may partners conference. disconnect. day. This you. All good

Adtalem Global Education (ATGE) 2 May 242024 Q3 Earnings call transcript