Adtalem Global Education Inc. Q1 FY2026 earnings call

• Chamberlain's enrollment growth fell short in Q1 due to execution failures in marketing and enrollment operations; actions taken include enhancing local market focus in marketing mix, streamlining enrollment processes, and making key leadership changes.
• Walden achieved ninth consecutive quarter of enrollment growth, with record total enrollment over 52,000 students, leveraging its digital learning platform and flexible offerings, and optimizing marketing mix and program enhancements.
• Medical and Veterinary segment showed consistent progress, with Ross Med having largest September new student start in 5 years and Ross Vet operating near capacity; partnerships across institutions to enhance educational access, like with Google Cloud for AI credentials and ScribeAmerica for MedPath program.
• Strong financial position with $265 million cash and equivalents, $500 million revolving credit facility extended to August 2030, and $150 million share repurchase program with $142 million remaining.

Chamberlain: First quarter revenue was $179.2 million, an increase of 6.7% year-over-year, driven by enrollment growth and pricing optimization. Total student enrollment increased 2.2%, the 11th consecutive quarter of growth, but adjusted EBITDA decreased by 5.1% to $35.1 million, with an adjusted EBITDA margin of 19.6% (240 basis points lower than prior year). Walden: First quarter revenue was $190 million, an increase of 17.6% year-over-year, driven by strong enrollment growth (up 13.6%, ninth consecutive quarter of growth across all degree levels). Adjusted EBITDA increased by 29.5% to $61.9 million, with an adjusted EBITDA margin of 32.6% (expanded 300 basis points vs prior year). Medical and Veterinary segment: First quarter revenue was $93.1 million, an increase of 5.9% year-over-year. Total student enrollment was up 2.4%, and adjusted EBITDA increased by 11.6% to $21.4 million, with an adjusted EBITDA margin of 23% (increased 120 basis points vs prior year).

• Maintained full year fiscal 2026 guidance: revenue $1.9 billion to $1.94 billion, adjusted earnings per share $7.60 to $7.90.
• Anticipate revenue growth higher in first half of the year than second half; Chamberlain may see softness in post-licensure enrollment in second and third quarters but expect recovery in back half of the year.
• Aim to expand adjusted EBITDA margin by approximately 100 basis points for fiscal year 2026.

• Execution issues at Chamberlain related to marketing and enrollment operations in the September intake cycle.
• Potential impact of government shutdown on military tuition assistance, though currently not affecting Adtalem's programs significantly.
• Administrative burdens from Department of Education's increased fraud verification efforts, though not currently seen as a major issue across Adtalem's program set.

Q: Jack Slevin from Jefferies asked about the range of outcomes for Chamberlain's enrollment moving forward and margin trajectory.

A: Stephen Beard stated the deceleration in post-licensure nursing is a discrete issue due to execution miss, expects recovery, and margin will expand as top line recovers.

Q: Jeffrey Silber from BMO Capital Markets asked about Chamberlain not losing share and partnership with Sallie Mae.

A: Stephen Beard said Chamberlain still has strong brand in post-licensure nursing and work continues to finalize documentation with Sallie Mae.

Q: Alexander Paris from Barrington Research asked about DOE fraud verification and Google Cloud partnership.

A: Stephen Beard said no spike in fraudulent enrollments at Chamberlain, and Google Cloud partnership involves ancillary certificate programs with no incremental cost for students.

Q: Steven Pawlak from Baird asked about confidence marketing mix is appropriate for other programs.

A: Stephen Beard said Chamberlain's issue is specific to its local marketing localization and steps taken will address it.