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Adtalem Global Education Inc. (ATGE)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 delivered accelerating growth and a clean beat on Street numbers: revenue $466.1M (+12.9% YoY) and adjusted EPS $1.92 (+28% YoY). Both topped S&P Global consensus; revenue beat by ~$19.3M and EPS beat by ~$0.27. Management raised FY25 guidance on revenue and EPS and lifted margin expansion outlook, supported by robust enrollment momentum at Walden and Chamberlain . EPS/revenue estimates*: $1.6525 EPS vs 1.92 actual; $446.8M revenue vs $466.1M actual*.
  • Segment mix healthy: Walden’s adjusted EBITDA margin expanded 650 bps to 30.3%; Chamberlain posted its ninth straight enrollment growth quarter; Med/Vet returned to revenue growth but margins compressed on timing of growth investments .
  • Capital allocation remains a catalyst: completed $300M buyback (May 5) and authorized new $150M through May 2028; net leverage 0.8x, $219M cash, positioning for continued repurchases and growth investments .
  • Guidance raised: FY25 revenue to $1.760–$1.775B and adjusted EPS to $6.40–$6.60; adjusted EBITDA margin expansion now “>150 bps,” up from “>100 bps” prior, with incremental Q4 growth investments to set up FY26 .

What Went Well and What Went Wrong

  • What Went Well
    • “Seven consecutive quarters of enrollment growth” underpinning results; Q3 adjusted EPS up 28% YoY to $1.92 and adjusted EBITDA margin up 150 bps to 27.4% .
    • Walden strength: enrollment +13.5% and adjusted EBITDA +50.6% with margin +650 bps to 30.3% on operational excellence and digital investments improving retention .
    • Chamberlain continued to lead nursing education: ninth straight enrollment growth quarter (+6.8%) and BSN Online scaling (36 states, 53 clinical hubs, >3,000 students), with programs co-developed with providers .
  • What Went Wrong
    • Medical & Veterinary margin compression: adjusted EBITDA down 15.3%, margin down 540 bps to 24.0% due to timing of one-time and structural costs supporting growth initiatives despite enrollment ticking up 1.2% .
    • Home Office expenses reflected asset impairment ($6.4M) and strategic advisory costs ($5.1M), impacting consolidated non-GAAP reconciliations and optics on GAAP margins .
    • Elevated investment cadence: management flagged increased growth investments in Q4 which may temper near-term margin optics even as full-year margin expansion outlook increased .

Financial Results

MetricQ1 FY25 (Sep qtr)Q2 FY25 (Dec qtr)Q3 FY25 (Mar qtr)
Revenue ($USD Millions)$417.4 $447.7 $466.1
YoY Revenue Growth (%)13.2% 13.9% 12.9%
Diluted EPS (GAAP) ($)$1.18 $1.98 $1.59
Adjusted EPS (Non-GAAP) ($)$1.29 $1.81 $1.92
Adjusted EBITDA ($USD Millions)$96.7 $125.0 $127.8
Adjusted EBITDA Margin (%)23.2% 27.9% 27.4%

Segment breakdown (Q3 FY25):

SegmentRevenue ($M)Operating Income ($M)Adjusted Operating Income ($M)Adjusted EBITDA ($M)Total Students
Chamberlain$192.6 $47.5 $47.5 $56.8 40,564
Walden$178.4 $45.2 $48.0 $54.0 48,526
Medical & Veterinary$95.0 $17.8 $17.9 $22.9 5,133

KPIs and balance sheet:

KPIQ3 FY25
Total Enrollment94,223
Free Cash Flow (TTM, $k)$287,155
Net Leverage (TTM)0.8x
Cash & Equivalents$219.0M
Long-Term Debt$552.2M
Shares Repurchased (Q3)791,000

Consensus vs actual (S&P Global) — Q3 FY25:

MetricConsensus*Actual*Company Reported
Revenue ($USD Millions)$446.8*$466.1*$466.1
Primary EPS ($)$1.6525*$1.92*GAAP $1.59; Adj $1.92
EBITDA ($USD Millions)$111.2*$110.5*Adj EBITDA $127.8

Values retrieved from S&P Global*.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY25$1.730–$1.760 $1.760–$1.775 Raised
Adjusted EPS ($)FY25$6.10–$6.30 $6.40–$6.60 Raised
Adjusted EBITDA Margin Expansion (bps)FY25>100 bps >150 bps Raised
Capital Return (Buybacks)Program$300M program remaining $140M (Q2) $300M completed (May 5) + new $150M through May 2028 Actioned/Authorized

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 FY25)Trend
AI/Technology InitiativesHippocratic AI partnership; Nurse Ally AI tutor; Chief Digital Officer named to drive digital stack “Deepened partnership with Hippocratic AI” to pioneer AI-driven curricula at medical schools Expanding scope and integration
Regulatory/MacroExpect lighter regulatory overhang; constructive engagement with new administration “Constructive” DoE interactions; proposals not actionable yet; positive environment for career-focused education Improved tone; monitoring
Enrollment & Persistence10th–11th consecutive total enrollment growth; strong persistence at Walden 7th consecutive enrollment growth; Walden near record persistence aided by predictive analytics Sustained/improving
Marketing & Growth InvestmentsDynamic marketing mix; shifted spend Q1→Q2; leverage expected Incremental Q4 growth investments to set up FY26; margin expansion outlook raised Ongoing, with Q4 ramp
Medical & Veterinary Capacity/MarginsJanuary intake demand up; Vet near capacity; remediation plans progressing Revenue grew +3.6% YoY; margins compressed on one-time/structural costs; expect build into next year Turning corner; investment timing affects margins
Capital AllocationRepurchased shares; repriced debt; reduced letters of credit Completed $300M buyback; authorized new $150M; net leverage 0.8x Continued balance-sheet strength

Management Commentary

  • “Our focus on delivering flexible, personalized, tech enabled and career relevant programs for today’s modern student has driven seven consecutive quarters of enrollment growth… We’re investing in innovative programs to meet rising demand” — Steve Beard, CEO .
  • “Consolidated adjusted EBITDA came in at $127.8 million, up 19.3%… adjusted earnings per share was $1.92… We repurchased 791,000 shares… diluted shares 38.2M” — Bob Phelan, CFO .
  • “Our Medical & Veterinary segment returned to growth… AUC and Ross Med achieved a 95%+ first-time residency attainment rate… over 40% placements in medically underserved areas” — Steve Beard .
  • “We now anticipate adjusted EBITDA margin expansion in fiscal year 2025 to be greater than 150 basis points… and we plan to increase growth investments in Q4” — Bob Phelan .

Q&A Highlights

  • Regulatory outlook: Management characterized DoE interactions as “extremely constructive” and sees a favorable environment for career-focused programs; no observed student financing hesitancy despite D.C. noise .
  • Med/Vet margins: Compression driven by one-time and structural costs to position for growth; positive enrollment turned the corner; expected to build in FY26 .
  • Margin trajectory: FY25 adjusted EBITDA margin expansion raised to >150 bps; FY26 outlook for ~100 bps expansion unchanged .
  • Digital/analytics: Walden’s predictive analytics tools enhance engagement and persistence, delivering near record persistence across largest programs .
  • Capacity scaling: Constraints mainly at Vet (near capacity); levers include expanding existing programs, geographic expansion, acquisitions, and de novo programs .

Estimates Context

  • Q3 FY25: Revenue $466.1M vs S&P consensus $446.8M (beat); Primary EPS $1.92 vs $1.6525 (beat). EBITDA $110.5M vs $111.2M (slight miss by S&P’s definition), while company’s adjusted EBITDA was $127.8M (different non-GAAP definition) . Estimates*: Revenue $446.8M; EPS $1.6525; EBITDA $111.2; actual*: $466.1M; $1.92; $110.5.
  • FY25 implications: Raised guidance on revenue and adjusted EPS suggests Street models likely move higher; margin expansion guide to >150 bps implies upward revisions to EBITDA/EBIT margins near term .

Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Broad-based beat with revenue and EPS above consensus and guide raised; shares likely respond to the combination of operational momentum and heightened FY25 margin expansion outlook .
  • Walden’s margin expansion and Chamberlain’s sustained enrollment growth de-risk near-term profitability while digital/predictive analytics underpin persistence .
  • Med/Vet is inflecting on enrollment; margin pressure appears timing-related due to growth investments—watch for margin recovery into FY26 as initiatives scale .
  • Capital allocation optionality remains high: new $150M buyback authorization, net leverage at 0.8x, and strong TTM FCF ($287M) provide downside support and flexibility .
  • Model updates: Raise FY25 revenue to $1.760–$1.775B and adjusted EPS to $6.40–$6.60; incorporate >150 bps margin expansion and Q4 growth investment ramp .
  • Narrative catalyst: Continued evidence of AI-enabled learning and partnerships (Hippocratic AI) plus residency attainment in underserved areas strengthens the mission-driven growth story that resonates with policymakers and providers .
  • Risk checks: Monitor regulatory developments (student loan/accountability frameworks) and Med/Vet margin trajectory amid investment timing; management’s tone suggests constructive backdrop and confidence .