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Adtalem Education (ATGE) - 2021 Q2 - Earnings Call Transcript
ATGEAdtalem Education (ATGE)2021-02-03 04:40
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Financial Data and Key Metrics Changes - Revenue increased by 6.4% to 283.1million,anddilutedearningspersharefromcontinuingoperationsgrewby35.1283.1 million, and diluted earnings per share from continuing operations grew by 35.1% to 0.77 [29][32] - Operating income excluding special items increased by 24.4% to 52.6million,drivenbyincreasedrevenueandefficiency[31][32]−Netincomefromcontinuingoperationsexcludingspecialitemswas52.6 million, driven by increased revenue and efficiency [31][32] - Net income from continuing operations excluding special items was 40.5 million, compared to 30.9millionintheprioryear[32]BusinessLineDataandKeyMetricsChanges−MedicalandHealthcarerevenueincreasedby6.530.9 million in the prior year [32] Business Line Data and Key Metrics Changes - Medical and Healthcare revenue increased by 6.5% to 234.4 million, primarily driven by Chamberlain's strong enrollment [32][34] - Chamberlain's revenue increased by 13.2%, with new and total student enrollment rising by 8.1% and 10.2% respectively [33] - Financial Services segment revenue grew by 5.9% to 48.7million,drivenbyOnCourseLearningandBecker[34]MarketDataandKeyMetricsChanges−Thedemandforhealthcareprofessionalsremainsstrong,withAdtaleminstitutionscontributingtovaccinedistributionefforts[8][9]−TheU.S.nursingeducationmarketisvaluedat48.7 million, driven by OnCourse Learning and Becker [34] Market Data and Key Metrics Changes - The demand for healthcare professionals remains strong, with Adtalem institutions contributing to vaccine distribution efforts [8][9] - The U.S. nursing education market is valued at 28 billion and is expected to grow at a 21% CAGR to 60billionby2024[11]−TheaveragecohortdefaultrateforAdtalem′sinstitutionsissignificantlylowerthanthenationalaverage,indicatingstrongstudentoutcomes[26]CompanyStrategyandDevelopmentDirection−Thecompanyaimstoincreasethetalentsupplyforhealthcareprofessionalsandaddressworkforceshortagesexacerbatedbythepandemic[9][10]−TheplannedacquisitionofWaldenUniversityisexpectedtoenhanceonlinecapabilitiesandhealthcareofferings,with7760 billion by 2024 [11] - The average cohort default rate for Adtalem's institutions is significantly lower than the national average, indicating strong student outcomes [26] Company Strategy and Development Direction - The company aims to increase the talent supply for healthcare professionals and address workforce shortages exacerbated by the pandemic [9][10] - The planned acquisition of Walden University is expected to enhance online capabilities and healthcare offerings, with 77% of Walden's revenue coming from healthcare-related programs [10][12] - Adtalem is focused on operational efficiency and streamlining its portfolio to enhance shareholder value [27][28] Management's Comments on Operating Environment and Future Outlook - Management raised full-year earnings guidance due to strong operational execution and enrollment trends [8][38] - The company anticipates modest COVID-19 related headwinds impacting revenue and expenses in the near term, but expects to overcome these challenges [39] - Long-term growth is expected to align with mid-single-digit revenue growth and low double-digit earnings growth targets [40] Other Important Information - The company has generated 211 million of free cash flow on a trailing 12-month basis, with expectations for significant growth in the coming years [37] - Adtalem is committed to increasing diversity and access in medicine through partnerships with HBCUs and HSIs [20] Q&A Session Summary Question: What are the specific COVID-19 headwinds impacting revenue? - Management noted moderate headwinds related to clinical supply and increased costs for campus safety measures [44] Question: Can you provide quality metrics for Walden similar to those for Chamberlain? - Management highlighted Walden's cohort default rate of around 6.8%, which is competitive compared to peers, and emphasized the need for improvement in employer partnerships [46][47] Question: What is the status of the DOJ inquiry regarding Walden? - Management stated that they have not found evidence supporting the allegations and are conducting a thorough investigation [55]