Adtalem Global Shares Rise After 3Q Beat, Guidance Boost
By Michel Dabaie
Shares of Adtalem Global Education Inc. rose 9.6% to $30.93 after posting quarterly results that beat analysts’ views and raised earnings expectations on lowering debt and the number of shares.
The healthcare education company after the bell on Thursday reported third-quarter revenue rose about 59% to $365.6 million, ahead of the FactSet consensus for $359.1 million. Adjusted EPS of 87 cents beat the FactSet consensus of 82 cents.
Adtalem raised its full-year outlook for Adjusted EPS to $3.15 to $3.35 from an earlier forecast of $2.90 to $3.10.
The company highlighted the use of $770 million of the net proceeds from the sale of its financial services segment for debt repayment, interest expense reduction and an accelerated share buyback program for $150 million of common stock, which is expected to be completed by the second quarter of fiscal 2023, reducing shares outstanding.
Adtalem in March completed the sale of its financial services segment to a consortium of Wendel Group and Colibri Group in an all-cash deal for $1 billion.
“While I am optimistic about our long-term prospects, in the short term, this remains a difficult time for our institutions and the industry in general in terms of student enrollment. Over the past few quarters, many professionals pandemic-weary health care providers have delayed their training plans, which has resulted in continued declines in enrollment, particularly in our post-licensure nursing programs,” Chief Executive Steve Beard said during the company conference call.
“However, as the pandemic-related headwinds ease and a more normalized demand environment emerges, we expect to see improved year-over-year enrollment trends with the possibility of grow revenue in an improved model with ever better operating leverage,” said Barbe.
BMO Capital analyst Jeffrey M. Silber said in a research note that the bank had raised its price target from $35 to $38 and was increasing its estimates for the year with the increase in forecasts for the society.
“We expect ATGE to reach an inflection point in new beginnings as the impact of the pandemic subsides. ATGE’s capital allocation priorities were the focus, reducing debt burden and number of shares leading to positive EPS forecast revisions,” BMO’s note said.
Write to Michael Dabaie at email@example.com