Adtalem Education (US:ATGE)2025-10-30 20:21Revenue Growth - Adtalem's revenue increased 10.8%, or $44.9 million, to $462.3 million in Q1 FY 2026 compared to the prior year period, driven by increased revenue across all segments[130]. - Chamberlain revenue increased 6.7%, or $11.3 million, to $179.2 million in Q1 FY 2026, driven by enrollment growth and higher tuition rates[139]. - Walden revenue increased 17.6%, or $28.4 million, to $190.0 million in Q1 FY 2026, attributed to higher enrollment and tuition rates[142]. - Medical and Veterinary revenue increased 5.9%, or $5.2 million, to $93.1 million in Q1 FY 2026, driven by enrollment growth and higher tuition rates[144]. Enrollment Statistics - Total student enrollment at Chamberlain increased by 4.5% and 2.2% for the July and September 2025 sessions, respectively[130]. - Walden's total student enrollment increased 13.6% as of September 30, 2025, compared to the previous year[141]. - Medical and Veterinary schools' total student enrollment rose 2.4% for the September 2025 semester compared to the same semester last year[144]. Income and Profitability - Net income rose 33.9%, or $15.7 million, to $61.8 million in Q1 FY 2026, primarily due to increased revenue and decreased restructuring and interest expenses[130]. - Consolidated operating income increased by 21.7%, or $15.2 million, to $85.5 million in Q1 FY 2026, primarily due to revenue growth and reduced restructuring expenses[152]. - Adjusted operating income increased by 19.0%, or $14.4 million, to $90.3 million in Q1 FY 2026, driven by revenue growth, partially offset by increased costs[153]. - Walden segment adjusted operating income increased by 31.5%, or $13.4 million, to $56.1 million in Q1 FY 2026, primarily due to revenue growth[156]. Expenses and Costs - Cost of educational services increased by 7.9%, or $14.8 million, to $200.8 million in Q1 FY 2026 compared to the prior year period, primarily due to increased labor and other costs to support enrollment growth[147]. - As a percentage of revenue, cost of educational services decreased from 44.6% in Q1 FY 2025 to 43.4% in Q1 FY 2026, reflecting revenue growth and cost efficiencies[148]. - Student services and administrative expenses rose by 10.5%, or $16.7 million, to $175.7 million in Q1 FY 2026, driven by increased marketing expenses and investments in growth initiatives[149]. Financial Position - As of September 30, 2025, Adtalem's consolidated cash and cash equivalents were $264.7 million, up from $199.6 million as of June 30, 2025[187]. - Net cash provided by operating activities increased by $41.1 million to $130.6 million for the three months ended September 30, 2025, compared to $89.6 million in the prior year[189]. - Adtalem has $179.0 million in letters of credit outstanding in favor of the Department of Education as of September 30, 2025[194]. - The company has principal balances of $405.0 million in Senior Secured Notes due 2028 and $153.3 million in Term Loan B due 2028, with an additional prepayment of $50.0 million made on October 29, 2025[193]. - Adtalem's liquidity is supported by a $500.0 million revolving credit facility, fully available as of September 30, 2025[195]. Regulatory and Compliance - The One Big Beautiful Bill Act may have both adverse and positive effects on Adtalem's business, with significant changes to federal student aid impacting funding for students[133][134]. - The new Gainful Employment rules effective July 1, 2024, require programs to meet specific debt-to-earnings and earnings premium tests to maintain Title IV eligibility[178]. - The company continues to face risks related to federal financial aid programs, which could materially affect its business and financial condition[166]. Shareholder Actions - Adtalem repurchased 56,817 shares at an average cost of $133.66 per share during Q1 FY 2026[132]. - The diluted shares outstanding decreased to 37,057,000 in Q3 2025 from 39,109,000 in Q3 2024[210]. Tax and Interest - Interest expense decreased from $14.5 million in Q1 FY 2025 to $11.1 million in Q1 FY 2026, attributed to lower borrowings and interest rates[158]. - Effective tax rate from continuing operations decreased from 20.8% in Q1 FY 2025 to 20.6% in Q1 FY 2026, mainly due to increased tax benefits on stock-based compensation[161]. Adjusted Metrics - Adjusted net income for the same period was $64,932,000, compared to $50,524,000 in 2024, reflecting a significant year-over-year growth[208]. - Adjusted earnings per share (EPS) increased to $1.75 in Q3 2025 from $1.29 in Q3 2024, marking a 35.7% rise[210]. - Adjusted EBITDA for Adtalem Global Education reached $112,007,000, up 15.8% from $96,739,000 in the prior year[214]. - The adjusted EBITDA margin improved to 24.2% in Q3 2025, compared to 23.2% in Q3 2024[214].