Adtalem Education (US:ATGE)2026-01-28 21:21Revenue Growth - Adtalem's revenue increased by 12.4%, or $55.7 million, to $503.4 million in Q2 FY 2026 compared to the prior year period, driven by growth across all segments [138]. - Walden's revenue surged by 27.0%, or $46.3 million, to $217.6 million in Q2 FY 2026, driven by increased enrollment and higher tuition rates [147]. - Chamberlain's revenue increased by 1.6%, or $2.8 million, to $183.8 million in Q2 FY 2026, supported by higher tuition rates despite a decline in post-licensure nursing program enrollment [145]. - Medical and Veterinary revenue grew by 6.9%, or $6.6 million, to $102.0 million in Q2 FY 2026, attributed to higher enrollment and tuition rates [149]. Income and Earnings - Net income rose by 0.7%, or $0.5 million, to $76.4 million in Q2 FY 2026, primarily due to increased revenue and decreased interest expense [138]. - Adjusted net income increased by 26.7%, or $18.5 million, to $87.9 million in Q2 FY 2026, reflecting strong revenue growth and lower interest expenses [138]. - Consolidated operating income increased 7.0%, or $7.2 million, to $111.1 million in the second quarter of fiscal year 2026 compared to the prior year [158]. - Adjusted net income for the six months ended December 31, 2025, was $152.8 million, compared to $119.9 million in the prior year [213]. Enrollment Trends - Total student enrollment at Chamberlain decreased by 1.0% for the November 2025 session compared to the same session last year, while Walden's enrollment increased by 13.0% as of December 31, 2025 [138]. Tuition Rates - Tuition rates for Chamberlain programs increased by approximately 4.6% from the prior year, while Walden's rates increased by about 2.0% [146][148]. - Tuition rates for RUSM's medical program increased by 4.5% and for RUSVM's veterinary program by 3.0% effective September 2025 [153]. Expenses and Cost Management - Cost of educational services increased 10.1%, or $18.8 million, to $205.4 million in the second quarter of fiscal year 2026 compared to the prior year [151]. - As a percentage of revenue, cost of educational services was 40.8% in the second quarter of fiscal year 2026, down from 41.7% in the prior year period, indicating improved cost efficiencies [152]. - Student services and administrative expense increased 16.5%, or $25.9 million, to $182.8 million in the second quarter of fiscal year 2026 compared to the prior year [154]. Operating Income - Operating income for Chamberlain decreased 24.2%, or $10.2 million, to $32.0 million in the second quarter of fiscal year 2026 compared to the prior year [158]. - Operating income for Walden increased 53.8%, or $26.3 million, to $75.2 million in the second quarter of fiscal year 2026 compared to the prior year [158]. - Walden's segment adjusted operating income increased by 70.0%, or $32.3 million, to $78.5 million in Q2 FY 2026, and increased by 51.5%, or $45.7 million, to $134.5 million in the first six months compared to the prior year [162]. Share Repurchase and Financing - Adtalem repurchased 1,727,565 shares at an average cost of $95.45 per share during Q2 FY 2026, with future repurchases dependent on market conditions [138]. - Adtalem authorized a share repurchase program allowing for the repurchase of up to $750.0 million of common stock through December 15, 2028, with $727.5 million remaining as of December 31, 2025 [194][195]. - Net cash used in financing activities was $267.2 million for the six months ended December 31, 2025, driven by share repurchases of $172.4 million [193]. Cash Flow and Liquidity - Adtalem's net cash provided by operating activities increased by $94.2 million to $160.1 million for the six months ended December 31, 2025, compared to $66.0 million in the prior year period [191]. - Cash collections from students rose by $81.0 million, contributing to the overall increase in operating cash flow [191]. - As of December 31, 2025, Adtalem's consolidated cash and cash equivalents totaled $56.3 million, down from $199.6 million as of June 30, 2025 [190]. Regulatory and Compliance - The One Big Beautiful Bill Act (OBBBA) may significantly impact federal student aid availability, which could affect Adtalem's business operations [140]. - Adtalem's composite score declined to 0.2 as of September 25, 2023, impacting its eligibility for Title IV programs, but management does not expect material adverse effects on operations [176]. - 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 [183]. - Adtalem's institutions are subject to heightened cash monitoring and additional reporting requirements due to provisional certifications stemming from the decline in the composite score [181]. Interest and Other Income - Interest expense decreased to $10.9 million in Q2 FY 2026 and $22.0 million in the first six months, down from $13.9 million and $28.4 million in the prior year periods [164]. - Other income, net was $1.7 million in Q2 FY 2026 and $4.2 million in the first six months, compared to $2.2 million and $4.9 million in the prior year periods [165]. Adjusted Earnings and EBITDA - Adjusted earnings per share for the six months ended December 31, 2025, was $4.17, up from $3.09 in the prior year [214]. - Adjusted EBITDA for Adtalem Global Education increased by 23.9% to $154,903,000 for the three months ended December 31, 2025, compared to $125,012,000 in the same period of 2024 [216]. - Adjusted EBITDA margin for Adtalem Global Education improved to 30.8% for the three months ended December 31, 2025, up from 27.9% in the same period of 2024 [216].