Adtalem Global Education Inc. (NYSE:ATGE) Q3 2022 Earnings Conference Call May 5, 2022 5:00 PM ET Company Participants Chandrika Nigam – Senior Director-Investor Relations Steve Beard – President and Chief Executive Officer Bob Phelan – Senior Vice President and Chief Financial Officer Conference Call Participants Jeff Meuler – Baird Operator Greetings. Welcome to the Third Quarter Fiscal Year 2022 Earnings Call for Adtalem Global Education. [Operator Instructions] Please note, this conference is being reco ...

Financial Data and Key Metrics Changes - Revenue in the second quarter increased 58.4% to $371.2 million compared with the prior year driven by the acquisition of Walden [19] - Consolidated operating income, excluding special items, was $70.2 million, a 70% increase compared with the prior year [19] - Net income from continuing operations, excluding special items, was $37.8 million, a 17.3% increase compared with the prior year [19] - Diluted earnings per share, excluding special items, for the quarter was $0.75, an increase of 23% compared with the same period in the prior year [20] Business Line Data and Key Metrics Changes - Chamberlain segment reported second quarter revenue of $139.1 million, a decrease of 2% compared with the prior year, with operating income dropping from $32.5 million to $25.5 million [20] - Walden segment revenue was $140.6 million, with a segment operating loss of $2.4 million driven primarily by intangible amortization expense [21] - Medical and Vet segment revenue was $91.5 million, a decline of 1% compared with the prior year, while segment operating income increased from $18.8 million to $19.5 million [23] Market Data and Key Metrics Changes - New and total student enrollment in Chamberlain's November session decreased 0.5% and 2.1% respectively compared with the prior year [20] - Walden's new and total student enrollment during the quarter decreased 18.3% and 9.1% respectively compared with the prior year [22] - The overall pressure on enrollments is most pronounced in nursing, particularly in post-licensure programs [40] Company Strategy and Development Direction - The company is focused on simplifying its portfolio with an enhanced focus on core healthcare assets, including the divestiture of the Financial Services segment for $1 billion [7][8] - Integration of Walden University is progressing as planned, with projected cost synergies of $60 million within two years [9][21] - The company aims to enhance operational efficiency through a new enterprise-wide operating model and strategic use of shared services [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing COVID-related headwinds affecting higher education, particularly in post-licensure nursing programs [14] - Despite these challenges, management remains confident in the long-term demand for healthcare professionals exceeding supply [15] - The divestiture of the Financial Services segment is expected to enhance financial flexibility and focus on healthcare education [26] Other Important Information - The company will retroactively report the Financial Services segment as a discontinued operation starting with Q2 of fiscal 2022 [18] - Adjusted revenue guidance for the remainder of fiscal 2022 is expected to be between $1.35 billion and $1.39 billion [24] - The divestiture is anticipated to be dilutive to adjusted earnings per share from continuing operations by approximately $0.90 on a full-year basis [26] Q&A Session Summary Question: Clarification on adjusted EPS guidance - The prior guidance for adjusted EPS was $4.20 to $4.45, now revised to $2.90 to $3.10, with $0.90 impacted by the Financial Services divestiture and $0.40 by COVID-related headwinds [30][31] Question: Confidence in post-licensure programs - Management believes the current decline in post-licensure programs is temporary, expecting relief from the Omicron spike and a return to strong incentives for continuing education [34] Question: Change in enrollment data reporting - The company will transition to reporting total enrollment instead of new enrollment to provide a clearer view of business trends [35][36] Question: Goodwill impairment charge - Management does not anticipate taking a goodwill impairment charge [38] Question: Non-nursing enrollment at Chamberlain - There is downward pressure on enrollments across the board, but it is most acute in nursing, particularly in post-licensure programs [40]

Financial Data and Key Metrics Changes - Revenue increased by 29.9% year-over-year to $348.3 million, primarily due to the acquisition of Walden University, with organic revenue growth of 4.3% to $279.7 million [22][13] - Consolidated operating income, excluding special items, was $54.6 million, a slight increase of 0.4% compared to the previous year [23] - Net income from continuing operations, excluding special items, decreased by 24.1% to $31.3 million due to higher interest expenses related to the acquisition [23] Business Line Data and Key Metrics Changes - Chamberlain segment reported revenue of $135.6 million, a 1.4% increase, but operating income declined from $30.2 million to $20.9 million due to increased marketing investments and costs associated with returning to in-person instruction [24] - Walden segment revenue was $68.6 million, with an operating loss of $11.6 million primarily due to intangible amortization expenses; new and total student enrollment decreased by 15.5% and 5.5% respectively [25] - Medical and Veterinary segment revenue was flat year-over-year, with operating income declining from $22.8 million to $15.7 million, driven by higher costs related to in-person instruction [26] - Financial Services segment revenue increased by 19.9% to $59.3 million, with operating income rising by 73.7% to $12.6 million [27] Market Data and Key Metrics Changes - Total new student enrollments decreased by 14.1%, primarily driven by declines in Chamberlain and Walden, while total enrollment decreased by 4.5% [13] - Chamberlain's new student enrollment decreased by 13.4%, attributed to a return to historical levels from record highs in the previous year and COVID-related challenges [24] - Walden's enrollment was impacted by negative publicity surrounding a concluded U.S. Department of Justice inquiry, although no misconduct was found [16] Company Strategy and Development Direction - The company aims to become a pure-play health care education provider, leveraging the acquisition of Walden University to enhance operational and financial performance [7][11] - A new enterprise-level operating model has been introduced to improve efficiency and focus on student success, with a target of achieving $60 million in annual run rate cost savings by the second anniversary of the Walden acquisition [8] - The company is exploring strategic alternatives for its Financial Services segment, with high interest from potential buyers [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming current headwinds related to COVID-19 and anticipates that demand for qualified nurses will continue to grow, creating future growth opportunities [15][24] - The integration process of Walden is proceeding as planned, and management remains optimistic about achieving projected cost synergies [17] - Long-term prospects for the company are viewed positively, with expectations of improved financial results and value creation for stakeholders [19] Other Important Information - The company ended the quarter with cash and cash equivalents of $360.1 million and outstanding bank borrowings of $1.65 billion [29] - Free cash flow for the quarter was $33.6 million, defined as cash provided by continuing operations less capital expenditures [29] Q&A Session Summary Question: What is the impact on nursing enrollment programs? - Management noted that high demand for nurses has led to less focus on continuing education, with many nurses opting to work instead of returning to school. There is also a sense of burnout among nurses due to COVID-19 [31][32] Question: Why is there a slowdown in pre-licensure programs? - The slowdown in pre-licensure programs is attributed to broader COVID-related dislocations affecting higher education enrollments, with students showing reluctance to return to school [34] Question: How can the company maintain its guidance despite enrollment declines? - Management indicated that while enrollment declines were more severe than anticipated, revenue for the quarter was within expectations, and they remain optimistic that headwinds will dissipate over time [36] Question: What is the strategy regarding increased marketing spend? - The company is targeting investments in marketing to preserve market share in a demand-challenged environment, with a focus on reallocating resources to areas with higher expected returns [40][42] Question: How have trends improved since the DOJ inquiry? - Management expects that remediation efforts will take time to reflect positively in enrollment trends, but they anticipate improvements within a quarter as negative perceptions dissipate [44]

Adtalem Global Education, Inc. (NYSE:ATGE) Q4 2021 Earnings Conference Call August 19, 2021 5:00 PM ET Company Participants John Kristoff - VP, Global Communications Lisa Wardell - Chairman, President & CEO Robert Phelan - VP, Interim CFO & CAO Stephen Beard - COO & Head, Financial Services Conference Call Participants Jeffrey Silber - BMO Capital Markets Jeffrey Meuler - Robert W. Baird & Co. Alexander Paris - Barrington Research Associates Gregory Pendy - Sidoti & Company Operator Greetings, and welcome t ...