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Adtalem Global Education Inc. (ATGE)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 delivered double‑digit top-line growth and a material EPS beat vs consensus: revenue $462.3M (+10.8% YoY) and adjusted EPS $1.75 (+35.7% YoY); GAAP diluted EPS $1.67 . Versus S&P Global consensus, ATGE beat on both EPS ($1.75 vs $1.58*) and revenue ($462.3M vs $452.3M*) .
  • Growth was broad-based: Walden revenue +17.6% with record total enrollment (52,216), Med/Vet revenue +5.9%, Chamberlain revenue +6.7% despite conversion/marketing execution missteps that pressured margins; enterprise adjusted EBITDA margin expanded ~100 bps YoY to 24.2% .
  • FY2026 guidance maintained: revenue $1.90B–$1.94B (+6.0%–8.5% YoY) and adjusted EPS $7.60–$7.90 (+14.0%–18.5% YoY), reaffirmed post‑quarter; Investor Day set for Feb 24, 2026 .
  • Balance sheet and capital return supportive: net leverage 0.6x; $8M repurchased in Q1 and acceleration announced to deploy remaining ~$136M authorization; revolver upsized to $500M; $50M TLB repayment on Oct 29 .
  • Near‑term stock catalysts: visible execution fixes at Chamberlain, sustained Walden momentum, AI credentialing partnership with Google Cloud, and guidance credibility through maintained FY outlook .

What Went Well and What Went Wrong

What Went Well

  • Walden achieved ninth straight quarter of total enrollment growth and record total enrollment; revenue +17.6% and adjusted EBITDA +29.5% with 300 bps margin expansion (32.6%), reflecting strong demand and operational leverage .
  • Enterprise profitability expanded: adjusted operating income +19% to $90.3M and adjusted EBITDA +15.8% to $112.0M; adjusted EPS +35.7% YoY to $1.75 .
  • Strategic initiatives advanced: partnership with Google Cloud to co‑develop AI credentials tailored to healthcare students and clinicians; expanding pathways into medical school via Wolverhampton/AMP India/ScribeAmerica .
  • Quote (CEO): “We delivered an outstanding start to Fiscal Year 2026… adjusted EPS up 35.7% and revenue up 10.8%… ninth consecutive quarter of enrollment growth… net leverage at 0.6x and strong free cash flow” .

What Went Wrong

  • Chamberlain margin pressure and conversion miss: adjusted EBITDA -5.1% with margin down to 19.6% (-240 bps YoY), driven by marketing mix and funnel conversion execution in September intake; softness expected in Q2–Q3 before recovery .
  • Segment mix constrained enterprise margin upside: Chamberlain’s reinvestment and post‑licensure deceleration tempered consolidated margin expansion despite Walden outperformance .
  • Analyst concerns on competitive share and tech resiliency addressed: management emphasized Chamberlain misstep was execution‑specific (not share loss) and reiterated confidence in tech stack robustness relative to peers .

Financial Results

Consolidated Performance (oldest → newest)

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Millions)$466.1 $457.1 $462.3
GAAP Diluted EPS ($)$1.59 $1.44 $1.67
Adjusted EPS ($)$1.92 $1.66 $1.75
Operating Income ($USD Millions)$90.5 $76.9 $85.5
Adjusted Operating Income ($USD Millions)$105.4 $87.5 $90.3
Net Income ($USD Millions)$60.8 $54.2 $61.8
Adjusted Net Income ($USD Millions)$73.3 $62.4 $64.9
Adjusted EBITDA ($USD Millions)$127.8 $110.2 $112.0
Adjusted EBITDA Margin (%)27.4% 24.1% 24.2%

Segment Breakdown (yoy comparison, Q1)

SegmentQ1 2025 Revenue ($MM)Q1 2026 Revenue ($MM)Q1 2025 Adj. EBITDA ($MM)Q1 2026 Adj. EBITDA ($MM)Q1 2025 StudentsQ1 2026 Students
Chamberlain$167.9 $179.2 $37.0 $35.1 38,987 39,846
Walden$161.5 $190.0 $47.8 $61.9 45,979 52,216
Medical & Veterinary$88.0 $93.1 $19.2 $21.4 5,174 5,297

KPIs

KPIQ4 2025Q1 2026
Total Student Enrollment (students)91,780 97,359
Net Leverage (x)0.8x 0.6x
Cash & Equivalents ($USD Millions)$199.6 $264.7
Deferred Revenue ($USD Millions)$214.1 $322.9
Share Repurchase (in‑quarter, $USD Millions)Completed $211M FY25 authorization $8

Results vs Estimates (S&P Global consensus, Q1 2026)

MetricConsensusActualOutcome
EPS ($)1.58*1.75Beat
Revenue ($USD Millions)452.3*462.3Beat
# EPS Estimates4*——
# Revenue Estimates4*——

Values with asterisk retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Aug 7, 2025)Current Guidance (Oct 30, 2025)Change
Revenue ($USD Billions)FY2026$1.90–$1.94 $1.90–$1.94 Maintained
Adjusted EPS ($)FY2026$7.60–$7.90 $7.60–$7.90 Maintained
Guidance reaffirmationFY2026—Reaffirmed post‑quarter Reaffirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2025)Previous Mentions (Q4 FY2025)Current Period (Q1 FY2026)Trend
AI/Technology initiativesPredictive analytics at Walden boosting persistence; Hippocratic AI curriculum pilots Ongoing student‑facing tech investments; LOI with Sallie Mae to address loan changes Google Cloud partnership to co‑develop AI credentials across healthcare programs; tech stack robust vs peers Expanding scope and differentiation
Regulatory/macro landscapePositive stance on career‑focused programs; monitoring “One Big Beautiful Bill” proposals Constructive DOE tone; LOI with Sallie Mae; lower regulatory risk No spike in fraudulent enrollments; low active‑duty military exposure; continued monitoring Constructive engagement; mitigations in place
Chamberlain executionStrong growth and reinvestments; margin variability from timing Strategic investment weighed on Q4 margins Marketing mix and conversion missteps in September intake; fixes underway; softness in Q2–Q3 then recovery Temporary headwind; corrective actions
Enrollment momentumBroad‑based growth; raised FY2025 guidance Sustained growth across segments Ninth consecutive quarter of enterprise enrollment growth; Walden record enrollment Sustained/accelerating in Walden & Med/Vet
Capital allocationCompleted $300M buyback; low leverage New $150M authorization; 0.8x net leverage $8M repurchase; net leverage 0.6x; accelerating buybacks Increasing returns, strengthened flexibility

Management Commentary

  • CEO framing: “Our focus remains singular: creating sustainable, long‑term shareholder value by serving as essential talent infrastructure for America’s healthcare workforce.” .
  • Chamberlain corrective plan: “We underperformed in local marketing effectiveness… and failed to convert inquiry volume at historical rates… We’ve streamlined our enrollment processes… and made key leadership changes.” .
  • Walden momentum: “Record total enrollment… investments in program enhancements… and AI‑enabled technology are translating directly into enrollment growth.” .
  • Med/Vet pathways: “Largest September new student start in five years… partnerships in UK and India… MedPath program with ScribeAmerica to advance frontline workers into medical school.” .
  • CFO margin outlook: “We remain committed to expanding our fiscal year 2026 adjusted EBITDA margin by approximately 100 basis points.” .

Q&A Highlights

  • Chamberlain softness: Management expects temporary softness in post‑licensure in Q2–Q3 due to September intake execution, with recovery in back half; emphasizes no structural competitive share loss .
  • Technology resilience: Management reported confidence in infrastructure across front‑end funnel and student journey; no analogous issues like peer disruptions .
  • Regulatory/verification: No spike in fraudulent enrollments; verification processes not a driver of Chamberlain deceleration .
  • Military exposure: Active duty exposure “very low”; no disbursement issues observed (VA/Title IV); continued monitoring .
  • Financing solutions: Progress toward definitive documentation with Sallie Mae to support student financing across programs .

Estimates Context

  • ATGE materially beat consensus: adjusted EPS $1.75 vs $1.58* and revenue $462.3M vs $452.3M*, supported by Walden outperformance and enterprise operating leverage . Values with asterisk retrieved from S&P Global.
  • Consensus breadth: 4 estimates for EPS and revenue in the quarter*, implying a reasonably covered name. Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Walden is the growth engine near‑term (record enrollment, margin expansion), providing offset while Chamberlain executes conversions and localized marketing fixes .
  • Temporary Chamberlain pressure is execution‑driven (not capacity or demand) with clear remediation (marketing reallocation, funnel simplification, leadership changes); expect back‑half improvement .
  • Guidance credibility strengthened by strong Q1 beat and reaffirmation; FY2026 margin expansion target (~100 bps) reiterated by CFO .
  • Capital deployment accelerating: net leverage 0.6x, revolver at $500M, $50M debt repaid post‑quarter, buybacks actively ramping—supports per‑share compounding and downside protection .
  • Strategic differentiation via AI credentials (Google Cloud) and expanded Med/Vet pathways (UK/India/ScribeAmerica) bolster student value proposition and long‑term enrollment pipelines .
  • Near‑term trading setup: consensus beat on both lines with maintained guide and announced Investor Day should support sentiment; watch Chamberlain intake cadence in Q2/Q3 for evidence of conversion recovery .
  • Medium‑term thesis: secular healthcare workforce shortages and scalable, tech‑enabled delivery across nursing/social‑behavioral/medical programs underpin durable growth and margin expansion potential .