ATGE Q2 Deep Dive: Health Care Enrollment and Partnerships Drive Outperformance

Vocational education company Adtalem Global Education (NYSE:ATGE) announced better-than-expected revenue in Q2 CY2025, with sales up 11.5% year on year to $457.1 million. The company’s full-year revenue guidance of $1.92 billion at the midpoint came in 1.7% above analysts’ estimates. Its non-GAAP profit of $1.66 per share was 8.3% above analysts’ consensus estimates.

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StockStory’s Take

Adtalem’s second quarter performance was driven by robust enrollment gains across its Chamberlain and Walden University segments, reflecting both program flexibility and enhanced brand awareness. Management credited the company’s strategy of integrating AI-powered student-facing tools and targeted marketing for improved student persistence and lower acquisition costs. CEO Stephen Beard highlighted that “the momentum we’re seeing is real, and it’s the result of deliberate action,” specifically citing partnerships with health care employers and a unified operating model that improved profitability.

Looking ahead, Adtalem’s forward guidance is underpinned by continued demand for career-aligned health care programs and strategic investments to expand capacity and access. Management expects partnerships with health care providers, such as the recently announced SSM Health collaboration, to create direct employment pathways and further differentiate its education-to-employment model. Beard emphasized, “We’re investing strategically to expand capacity and reduce barriers to access, and we have the scale, strategy and execution capability to drive long-term sustainable growth.”

Key Insights from Management’s Remarks

Management attributed the quarter’s results to enrollment growth, marketing innovation, and operational leverage, particularly in the nursing and behavioral health segments.

• Enrollment growth momentum: Walden University achieved its eighth consecutive quarter of accelerating enrollment, up 15% year-over-year, while Chamberlain University posted 5.8% enrollment growth, marking ten straight quarters of gains.
• Marketing and brand strategy: Management cited the evolution of its brand and segmented marketing campaigns as key to driving higher conversion rates and capturing more share, especially as program-level and local marketing efforts increased student inquiries.
• AI-powered student support: The rollout of proprietary data tools and AI-driven learning platforms improved student persistence and academic outcomes, supporting higher retention rates across all segments.
• Health care partnerships: A new partnership with SSM Health was highlighted as an example of how Adtalem is creating direct employment pathways and scaling its education-to-employment approach, with management expecting this model to be replicable with other health systems.
• Regulatory adaptability: Management addressed new education legislation and loan caps, stating that alternative financing solutions, such as a letter of intent with Sallie Mae, will ensure continued access for students, with no current signs of reduced demand due to regulatory changes.

Drivers of Future Performance

Management expects growth to be supported by secular demand for health care professionals, new capacity investments, and expanded partnerships with employers.

• Secular workforce demand: CEO Stephen Beard noted persistent and growing demand for nurses, physicians, and behavioral health professionals, driven by both industry shortages and retiring clinicians, which the company expects to support enrollment and revenue growth.
• Capacity expansion initiatives: Adtalem plans to invest in new programs, additional campuses, and student-facing technologies, aiming to meet rising demand and maximize operating leverage, particularly at Walden University where new program launches are anticipated.
• Navigating regulatory changes: Management is proactive in addressing changes in student loan policies through alternative financing partnerships and expects current legislative developments to reduce long-term regulatory risk, helping maintain enrollment momentum.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be watching (1) the impact of new health care partnerships on enrollment and employment outcomes, (2) the rollout and effectiveness of AI-powered student support technologies, and (3) the company’s ability to expand program capacity while managing regulatory and financing changes. Additional attention will be paid to the execution of new program launches and alternative lending arrangements.

Adtalem currently trades at $120.22, in line with $119.26 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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