Q4 2024 Adtalem Global Education Inc Earnings Call

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Operator: Hello and welcome to the Adtalem Global Education Inc. 4th Quarter and Fiscal Year 2024 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the conference over to Jonathan Spitzer, Vice President of Investor Relations. Please go ahead, sir.

Speaker Change: Hello, and welcome to the Atone Global Education, Inc, fourth quarter and fiscal year 'twenty 'twenty four earnings conference call and webcast. At this time all participants are in a listen only mode.

Operator: 4th quarter in fiscal year 2024 earnings conference calling webcast at this time operatives pincerning listen only mode. If anyone requires operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question and cue at any time by pressing star one on your telephone keypad.

Speaker Change: If anyone should require operator assistance. Please press star zero on your telephone keypad.

Speaker Change: A question and answer session will follow the formal presentation you.

Speaker Change: You may be placed into the question queue at any time by pressing star one on your telephone keypad.

Operator: As a reminder, this conference is being recorded.

As a reminder, this conference is being recorded.

Jonathan Spitzer: It's not my pleasure to turn the conference over to Jonathan Spitzer by his President Invest Relations. Please go ahead, sir.

Speaker Change: It's now my pleasure to turn the conference over to Jonathan Spitzer, Vice President of Investor Relations. Please go ahead Sir.

Jonathan Spitzer: Good afternoon, and welcome to our earnings call for the fourth quarter fiscal year 2024 results. On the call with me today are Steve Beard, President and Chief Executive Officer of Adtalem Global Education, and Bob Phelan, Chief Financial Officer.

Steve Beard: Good afternoon and welcome to our earnings call for the 4th quarter fiscal year 2024 results.

Jonathan Spitzer: Good afternoon, and welcome to our earnings call for the fourth quarter fiscal year 2024 results.

Jonathan Spitzer: On the call for me today are Steve Beard, President and Chief Executive Officer of Adtalem Global Education and Bob Phelan, Chief Financial Officer. Before I hand you over to Steve, I will, as usual, take you to legal, safe harbor, and cautionary decorations. Certain statements and projections of future results made in this presentation constitute a forward looking statements that are based on current market, competitive, regulatory expectations and are subject to risks and certainty that could cause actual results to vary materially. We undertake no obligation to update publicly any forward-looking statement after this presentation, whether a result of new information, future events, changes, assumptions, or otherwise.

Speaker Change: On the call with me today are Steve Beard, President and Chief Executive Officer of add talent Global education, and BOP, failing Chief financial Officer.

Jonathan Spitzer: Before I hand you over to Steve, I will, as usual, take you through legal, safe harbor, and cautionary declarations. Certain statements and projections of future results made in this presentation constitute forward-looking statements that are based on current market-competitive regulatory expectations and are subject to risks and uncertainty that could cause actual results to vary materially. We undertake no obligation to update publicly any forward-looking statement after this presentation, whether as a result of new information, future events, changes in assumptions, or otherwise.

Speaker Change: Before I hand, you over to Steve I was usual I'll take you to legal safe Harbor and cautionary declarations.

Speaker Change: Certain statements and projections of future results made in this presentation constitute as forward looking statements that are based on current market competitive regulatory expectations and are <unk>.

Speaker Change: Subject to risks and uncertainties that could cause actual results to vary materially.

Steve: We undertake no obligation to update publicly any forward looking statement. After this presentation, whether result of new information future events change in assumptions or otherwise.

Jonathan Spitzer: Please circulate as form 10-K or 10-Q for discussion of risk factors that are laid to forward-looking statements. In today's presentation, we use certain non-GAAP financial measures. We refer you to the appendix of the presentation materials available on our Investor Relations website for reconciliation to the most directly comparable GAAP financial measures and related information.

Jonathan Spitzer: Please see our latest Form 10-K and Form 10-Q for a discussion of risk factors that relate to forelooking statements. In today's presentation, we use certain non-GAAP financial measures. Please refer to the appendix of the presentation materials available on our Investor Relations website for reconciliations to the most directly comparable GAAP financial measures and related information. You will find a link to the webcast on our Investor Relations website at investors.adtalem.com. After this call, the presentation webcast will be archived on the website for 30 days. I will now hand you over to Steve.

Please see our latest Form 10-K Form 10-Q for a discussion of risk factors that relate to forward looking statements in today's presentation, we use certain non-GAAP financial measures refer you to the appendix of the presentation materials available on our Investor Relations website for reconciliations to the most directly comparable GAAP financial measures and related information.

Jonathan Spitzer: You will find a link to the webcast and our Investor Relations website at investors.adtalem.com. After this call, the presentation webcast we archived on the website for 30 days.

Steve: You will find a link to the webcast on our Investor Relations website at investors Doc add talent dotcom.

After this call the presentation webcast archived on our website for 30 days.

Jonathan Spitzer: I will now hand you over to Steve. Thanks, Jay.

Steve: I'll now hand, you over to Steve.

Steve: Thanks Jay.

Steve Beard: Good afternoon, everyone, and welcome to Adtalem's fourth quarter and fiscal year 2024 earnings call. This year, we expanded our reach and amplified our impact through successful execution against our growth of purpose strategy. We've accelerated our strategic initiatives, achieved significant operational milestones, and exceeded the 2024 financial targets we set during our June 2023 Investor Day. We encourage, by our results, our growth trajectory and by the substantial impact we're making as a national leader in post-secondary higher education and the leading provider, a professional talent to U.S. healthcare.

Steve Beard: Good afternoon, everyone, and welcome to Adtalem's fourth quarter and fiscal year 2024 earnings call. This year, we expanded our reach and amplified our impact through successful execution of our growth of purpose strategy. We've accelerated our strategic initiatives, achieved significant operational milestones, and exceeded the 2024 financial targets we set during our June 2023 Investor Day. We're encouraged by our results, our growth trajectory, and by the substantial impact we're making as a national leader in post-secondary higher education and the leading provider of professional talent to U.S. healthcare. As we reflect on fiscal 2024, I'd like to note the following specific highlights.

Steve: Good afternoon, everyone and welcome to <unk> fourth quarter and fiscal year 'twenty 'twenty four earnings call.

Speaker Change: This year, we expanded our reach and amplify their impact through successful execution against our growth with purpose strategy.

Speaker Change: We've accelerated our strategic initiatives.

Steve: Achieved significant operational milestones and exceeded the 'twenty 'twenty four financial targets, we set during our June 2023 Investor day.

We're encouraged by our results our growth trajectory and by the substantial impact were making at the National leader in post secondary higher education.

And the leading provider of professional talent to U S health care.

Steve Beard: As we reflect on fiscal 2024, I'd like to note the following specific highlights. We further integrated our five institutions, creating a more efficient operating model with durable synergies, attractive profitability, and real operating leverage. Our data-driven marketing strategies have enhanced brand awareness, producing double-digit growth and enterprise increase for the fiscal year. We utilized economies of scale to boost student-facing investments while maintaining an attractive adjusted EVA dot operating margin profile. Total enrollment returned to growth in the first quarter and consistently approved throughout the year, returning to pre-pandemic levels and ending the year with a 10% year-over-year increase for the fourth quarter.

As we reflect on fiscal 'twenty four 'twenty 'twenty four I'd like to note. The following specific highlights.

Steve Beard: We further integrated our five institutions, creating a more efficient operating model with durable synergies, attractive profitability, and real operating leverage. Our data-driven marketing strategies have enhanced brand awareness, producing double-digit growth and enterprise inquiries for the fiscal year. We utilize economies of scale to boost student-facing investments while maintaining an attractive adjusted EBITDA operating margin profile. Total enrollment returned to growth in the first quarter and consistently improved throughout the year, returning to pre-pandemic levels and ending the year with a 10% year-over-year increase for the fourth quarter. Our revenue for the year was $1.58 billion, up 9.2% year over year; we delivered an adjusted EBITDA margin of approximately 24%, resulting in adjusted earnings per share of $5.01, an increase of 19% year-over-year.

We further integrated our five institutions, creating a more efficient operating model with durable synergies attractive profitability and real operating leverage.

Steve: Our data driven marketing strategies have enhanced brand awareness producing double digit growth in enterprise inquiries for the fiscal year.

We utilize the economies of scale to boost student facing investments, while maintaining an attractive adjusted EBITDA operating margin profile.

Total enrollment returned to growth in the first quarter and consistently improved throughout the year, returning to pre pandemic levels and ending the year with a 10% year over year increase for the fourth quarter.

Steve Beard: Our revenue for the year was $1.58 billion of 9.2% year-over-year. We delivered an adjusted EVA dot margin of approximately 24%, resulting in an adjusted earnings per share of $5.1 and an increase of 19% year-over-year. Finally, we strengthened our financial position, generating $239 million in free cash flow and returning $261 million in capital to our shareholders.

Speaker Change: Our revenue for the year was $1.58 billion up 9.2% year over year.

We delivered an adjusted EBITDA margin of approximately 24%.

Speaker Change: Resulting in adjusted earnings per share of $5 and one set.

An increase of 19% year over year.

Steve Beard: Finally, we strengthened our financial position, generating $239 million in free cash flow and returning $261 million in capital to our shareholders. From here, I'd like to turn to our segment. Chamberlain University, the nation's leading nursing school, continues to enhance its national presence through a diverse range of nursing programs and learning modalities, achieving a notable 10.4% increase in total enrollment this quarter. We're actively expanding our online Bachelor of Science in Nursing option, while making strategic investments to enhance capacity and program offerings at our physical locations.

Speaker Change: Finally, we strengthened our financial position generating $239 million in free cash flow.

And returning $261 million in capital to our shareholders.

Steve Beard: From here, I'd like to turn to our segment. Chabilan University, the nation's leading nursing school, continues to enhance its national presence through a diverse range of nursing programs and learning modalities, achieving a notable 10.4% increase in total enrollment this quarter. We're actively expanding our online bachelor's science and nursing option while making strategic investments to enhance capacity and program offerings at our physical locations. In July, we proudly open our new relocated Phoenix campus, capable of accommodating nearly 1,100 students. This campus features a modernized learning environment, including an expansive simulation lab. In addition, the campus is also designed to house a physician assistance program that would represent our second location for this in-demand field.

Speaker Change: From here I'd like to turn to our segments.

Speaker Change: Chamberlain University, the nation's leading nursing school continues to enhance its national presence through a diverse range of nursing programs and learning modalities.

Achieving a notable 10.4% increase in total enrollment this quarter.

Speaker Change: We're actively expanding our online Bachelor of science in nursing option, while making strategic investments to enhance capacity and program offerings at our physical locations.

Steve Beard: In July, we proudly opened our new relocated Phoenix campus, capable of accommodating nearly 1,100 students. This campus features a modernized learning environment, including an expansive simulation lab. In addition, the campus is also designed to house a physician assistance program that would represent our second location for this in-demand field. Today, we're excited to announce our plan to enter the Kansas City market with our 24th Chamberlain location, which will serve approximately 550 students.

Speaker Change: In July we proudly opened our new relocated Phoenix campus.

Capable of accommodating nearly 1100 students.

This campus features a modernized learning environment, including an expansive simulation lab.

In addition, the campus is also designed to house a physician assistance program that would represent our second location for this in demand field.

Steve Beard: Today, we're excited to announce our plan to enter the Kansas City market with our 24th Chamberlain location, which will serve approximately 550 students. Our extensive campus footprint, combined with flexible online and hybrid pathways, positions Chamberlain as a leader in delivering education to students in a way that aligns with their individual learning preferences. We're further expanding our practice-ready specialty focus program through a new partnership with the American Association of Critical Care Nurses. Beginning in January of 2025, this collaboration will provide an in-depth introduction to carry forth cutely and critically ill patients and their families. The AAC and partnership marks our fifth marquee specialization, addressing critical workforce needs identified by industry leaders.

Speaker Change: Today, we're excited to announce our plan to enter the Kansas City market with our twenty-four Chamberlain location, which will serve approximately 550 students.

Steve Beard: Our extensive campus footprint combined with flexible online and hybrid pathways positions Chamberlain as a leader in delivering education to students in a way that aligns with their individual learning preferences. We're further expanding our practice-ready, specialty-focused program through a new partnership with the American Association of Critical Care Nurses. Beginning in January of 2025, this collaboration will provide an in-depth introduction to caring for acutely and critically ill patients and their families. The AACN partnership marks our fifth marquee specialization, addressing critical workforce needs identified by industry leaders. Since the launch of practice-ready specialty-focused programs in January 2022, we've enrolled over 2,000 BSN students, with more than 650 successfully completing specialty clinical tracks. Now, I'm turning to Walden University.

Speaker Change: Our extensive campus footprint combined with flexible online and hybrid pathways.

Speaker Change: Physicians Chamberlain as a leader in delivering education to students in a way that aligns with their individual learning preferences.

Speaker Change: We're further expanding our practice ready specialty focused program through a new partnership with the American Association of critical care nurses.

Steve: Beginning in January of 2025.

This collaboration will provide an in depth introduction to carry for acutely and critically ill patients and their families.

The E C N partnership marks our fifth marquee specialization addressing critical workforce needs identified by industry leaders.

Steve Beard: Since the launch of practice-ready specialty focus programs in January 2022, we've enrolled over 2,000 BSN students, with more than 650 successfully completing specialty clinical tracks, now turning to Walden University. Our go-to-market strategy, commitment to operational excellence, and focus on flexible distance learning for working adults have resulted in another quarter of impressive enrollment, reflecting an 11.3% increase year-over-year. Our ongoing operational improvements and the implementation of industry-leading technology are not only attracting new students, but also driving high persistence rates. by prioritizing a seamless student experience through tech-enabled enhancements in areas such as enrollment, virtual classrooms, student support platforms, and advising methods, we remain confident in Walden's position as a leader in digital learning for working professionals.

Since the launch of practice ready specialty focused programs in January 2022 we've enrolled over 2000 BSN students with more than 650 successfully completing specialty clinical tracks.

Speaker Change: Now turning to Walden University.

Steve Beard: Our go-to-market strategy, commitment to operational excellence, and focus on flexible distance learning for working adults have resulted in another quarter of impressive enrollment, reflecting an 11.3% increase year-over-year. Our ongoing operational improvements and the implementation of industry-leading technology are not only attracting new students but also driving high retention rates. By prioritizing a seamless student experience through tech-enabled enhancements in areas such as enrollment, virtual classrooms, student support platforms, and advising methods, we remain confident in Walden's position as a leader in digital learning for working professionals.

Speaker Change: Our go to market strategy commitment to operational excellence and focus on flexible distance learning for working adults have resulted in another quarter of impressive enrollment, reflecting at 11, 3% increase year over year.

Speaker Change: Our ongoing operational improvements and the implementation of industry leading technology.

Speaker Change: Not only attracting new students, but also driving high persistence rates.

Speaker Change: By prioritizing our seamless student experience through tech enabled enhancements in areas such as enrollment.

Speaker Change: Virtual classrooms students support platforms and advising methods, we remain confident in Walden position as a leader in digital learning for working professionals.

Steve Beard: The latest addition to our tech-enabled enhancements is the launch of our newly redesigned Walden website, which offers students a more streamlined navigation experience. Walden remains a leader in addressing nursing labor shortages, breaking as the second largest producer of Master of Science in Nursing graduates in the country, just behind its sister university, Chamberlain. Additionally, we're making significant strides in tackling the mental health crisis through our comprehensive counseling, psychology, social work, and human services programs. Furthermore, our TIPPO program, which is competency-based, has experienced double-digit enrollment growth each quarter this year. Our believe in achieved scholarship designed to provide financial clarity and reward persistence has had over 25,000 participants since its launch.

Steve Beard: The latest addition to our tech-enabled enhancements is the launch of our newly redesigned Walden website, which offers students a more streamlined navigation experience. Waldo remains a leader in addressing nursing labor shortages, ranking as the second largest producer of Master of Science in Nursing graduates in the country, just behind its sister university, Chamberlain.

Speaker Change: The latest edition to our tech enabled enhancements is the launch of our newly redesigned Walden website, which offer students a more streamlined navigation experience.

Speaker Change: While there remains a leader in addressing nursing labor shortages ranking as the second largest producer of master of science in nursing graduate in the country just behind its sister University Chamberlain.

Steve Beard: Additionally, we're making significant strides in tackling the mental health crisis through our comprehensive counseling, psychology, social work, and human services programs. Furthermore, our Tempo program, which is competency-based, has experienced double-digit enrollment growth each quarter this year. Our Believe and Achieve Scholarship, designed to provide financial clarity and reward persistence, has had over 25,000 participants since its launch. These initiatives, along with our continued technological advancements, contribute to our confidence in Walden's promising growth trajectory.

Speaker Change: Additionally, we're making significant strides in tackling the middle health crisis through our comprehensive counseling psychology, social work and human services programs.

Speaker Change: Furthermore, our tempo program, which its competency base has experienced double digit enrollment growth each quarter. This year.

Speaker Change: Our belief and achieve scholarship designed to provide financial clarity and reward persistence has had over 25000 participants since its launch.

Steve Beard: These initiatives, along with our continued technological advancements, contribute to our confidence in Walden's promising growth trajectory.

Speaker Change: These initiatives along with our continued technological advancement contribute to our confidence and weldon's promising growth trajectory.

Steve Beard: With respect to the medical and veterinary segment, we're making significant progress in our medical schools as we work to return to year-over-year growth. Our remediation plans are starting to yield positive results as evidenced by the improved enrollment trends for the May student intake. Our newly established leadership team remains dedicated to implementing initiatives and identifying opportunities to enhance our institutions and improve the enrollment journey for prospective students. We continue to see strong interest in Ross Med's clinical return home program. Additionally, students enrolled in the first cohort of Capstone, a Ross Med elective, have achieved promising academic outcomes on USMLE Step 1, prompting us to incorporate its insights into our basic sciences curriculum.

Steve Beard: With respect to the medical and veterinary segment, we're making significant progress in our medical schools as we work to return to year-over-year growth. Our remediation plans are starting to yield positive results, as evidenced by the improved enrollment trends for the May student intake. Our newly established leadership team remains dedicated to implementing initiatives and identifying opportunities to enhance our institutions and improve the enrollment journey for prospective students. We continue to see strong interest in Ross Med's Clinical Return Home Program.

Speaker Change: With respect to the medical and veterinary segment, we're making significant progress in our medical schools as we work to return to year over year growth.

Speaker Change: Our remediation plans are starting to yield positive results.

Speaker Change: Evidenced by the improved enrollment trends for the May student intake.

Speaker Change: Our newly established leadership team remains dedicated to implementing initiatives and identify opportunities to enhance our institutions and improve the enrollment journey for prospective students.

Speaker Change: We continue to see strong interests and Ross Med clinical returned home program.

Steve Beard: Additionally, students enrolled in the first cohort of Capstone, a RossMED elective, achieved promising academic outcomes on USMLE Step 1, prompting us to incorporate its insights into our basic sciences curriculum. Ross Vette is operating near capacity. In May, we celebrated our annual commencement, graduating nearly 400 new doctors of veterinary medicine. In the most recently reported academic year, 2022, Rossvet accounted for approximately 9% of all DVM graduates in the United States. Looking ahead, we anticipate that total enrollment trends in our medical and veterinary segment will continue to improve in fiscal year 2025.

Speaker Change: Additionally.

Speaker Change: Students enrolled in the first cohort of Capstone Ross Med elected have achieved promising academic outcomes on U S. M. A lease step one problem.

Speaker Change: Prompting us to incorporate its insights into our basic science its curriculum.

Steve Beard: Ross Vett is operating near capacity. In May, we celebrated our annual commencement, graduating nearly 400 new Doctors of Veterinary Medicine. In the most recently reported academic year, 2022, Ross Vet accounted for approximately 9% of all DVM graduates in the United States.

Speaker Change: Ross Vet is operating near capacity.

Speaker Change: In May we celebrated our annual commencement.

Speaker Change: Graduating nearly 400, new doctors of veterinary medicine.

Speaker Change: In the most recently reported academic year 2022 Ross vet accounted for approximately 9% of all DBM graduate in the United States.

Steve Beard: Looking ahead, we anticipate that total enrollment trends in our medical and veterinary segment will continue to improve in fiscal year 2025. We expect that our growth with purpose strategy, with its focus on operational excellence, will continue to drive top and bottom line results.

Speaker Change: Looking ahead.

Speaker Change: We anticipate that total enrollment trends in our medical and veterinary segment will continue to improve in fiscal year 2020 five.

Speaker Change: We expect that our Brookwood purpose strategy with its focus on operational excellence will continue to drive top and bottom line results.

Steve Beard: We expect fiscal year 2025 to be another record year, with projected revenue of $1.66 billion to $1.7 billion, and adjusted earnings per share of $5.60 to $5.85.

Speaker Change: We expect fiscal year 'twenty 'twenty five to be another record year.

Speaker Change: With projected revenue of $1.66 billion to $1.7 billion.

Speaker Change: And adjusted earnings per share of $5 60 to $5.85.

Steve Beard: Before I hand the call over to Bob for a detailed financial overview, I'd like to thank our nearly 10,000 colleagues who come to work every day with the goal of making our talent a force for good. I continue to be awestruck by your dedication and unwavering commitment to serving our students, striving remarkable outcomes, and making a positive impact on society.

Speaker Change: Before I hand, the call over to Bob for a detailed financial overview I'd like to thank our nearly 10000 colleagues who come to work every day with the goal of making our talent a force for good.

Speaker Change: I continue to be awestruck by your dedication and unwavering commitment to serving our students.

Bob: <unk> remarkable outcomes.

Bob: And making a positive impact on society.

Bob Phelan: And with that, I'll turn the call over to Bob. Thank you, Steve, and hello, everyone. Our fourth quarter and full-year results highlight our sustainable momentum and trajectory. Returns against our growth with purpose strategic initiatives are amplifying our total enrollment growth and delivering enhanced leverage through our disciplined operational performance. In turn, we achieve strong top and bottom line growth for the quarter and the year, as well as yielded robust cash generation. We not only achieve financial and operational results ahead of our initial expectations set heading into the year, but we also exceeded our most recent updated guidance range.

Bob: And with that I'll turn the call over to Bob.

Bob: Thank you, Steve and Hello, everyone, our fourth quarter and full year results highlight our sustainable momentum and trajectory rich.

Bob: Returns against our growth with purpose strategic initiatives are amplifying, our total enrollment growth and delivering enhanced leverage through our disciplined operational performance.

Bob: In turn we achieved strong top and bottom line growth for the quarter and the year as well as yielded robust cash generation.

Bob: We not only achieve financial and operational results ahead of our initial expectations set heading into the year, but we also exceeded our most recent updated guidance range.

Bob Phelan: I'll begin with the review of our financial results and key drivers for our performance in the fourth quarter in the full year. Later in my remarks, I will discuss our expectations and assumptions for fiscal year 2025. Starting with the top line, revenue in the fourth quarter increased by 12.4% to $409.9 million, driven by growth in all three segments, in particular, through accelerated enrollment growth at Chamberlain and Walden. For the full year, revenue was $1.58 billion, up 9.2%. Our enrollment growth trends sequentially improve every quarter throughout the year across all three segments as growth with purpose initiatives and our marketing investments generated their intended returns.

Speaker Change: I'll begin with a review of our financial results and key drivers for our performance in the fourth quarter and the full year.

Bob: Later in my remarks, I will discuss our expectations and assumptions for fiscal year, 2020 five.

Bob: Starting with the topline.

Bob: Revenue in the fourth quarter increased by 12.4% to $409.9 million driven by growth in all three segments in particular through accelerated enrollment growth at Chamberlain and wall then for the full year revenue was $1.58 billion up 9.2%.

Bob: Our enrollment growth trends sequentially improved every quarter throughout the year across all three segments as growth with purpose initiatives and our marketing investments generated their intended returns.

Bob Phelan: During the quarter, consolidated adjusted EBITDA came in at $97.4 million, up 16.9% compared to the prior year from growth in all three segments. This growth was led by Chamberlain and Walden and resulted in an adjusted EBITDA margin of 23.8%, a 100 basis point increase from last year. Adjusted operating income was $80.1 million, up 14.6% compared to the prior year, as revenue growth and efficiencies generated operational leverage. Looking at the full year, adjusted EBITDA was $377.5 million, an increase of 9.9% compared with the prior year. We continued to achieve a high adjusted EBITDA margin of 23.8%, meeting our fiscal year goal as we optimally balanced our long-term growth investments with our more efficient, integrated, and scaled operational foundation across our three segments in home office.

Bob: During the quarter consolidated adjusted EBITDA came in at $97.4 million up 16.9% compared to the prior year from growth in all three segments.

Bob: This growth was led by Chamberlain in Walden and resulted in an adjusted EBITDA and EBITDA margin of 23.8%, a 100 basis point increase from last year.

Bob: Adjusted operating income was $80.1 million up 14.6% compared to the prior year as revenue growth and efficiencies generated operational leverage.

Bob: Looking at the full year, adjusted EBITDA was $377.5 million, an increase of 9.9% compared with the prior year.

Bob: We continued to achieve a high adjusted EBITDA margin of 23.8% meeting our fiscal year goal as we optimally balance our long term growth investments with our more efficient integrated and scale operational foundation across our three segments and home office.

Bob Phelan: Fiscal Year 2024 adjusted operating income was $308.8 million, up 7.4% compared to the prior year. Adjusted net income for the quarter was $52.8 million, with adjusted earnings per share of $1.37. For the full year, adjusted net income increased by 5% to $201.8 million, resulting in an adjusted earnings per share of $5.1, a 19% increase compared with the prior year, as adjusted operating income growth and lower diluted shares outstanding was partially offset by higher net interest expense and a higher effective tax rate. DeLuted shares outstanding were approximately 5.3 million lower this year, at 40.3 million, as we returned a total of 261 million dollars of capital to shareholders through open market share repurchases in an average cost basis of $47.96 per share for the year.

Bob: Fiscal year 'twenty 'twenty four adjusted operating income was $308.8 million up 7.4% compared to the prior year.

Bob: Adjusted net income for the quarter was $52.8 million with adjusted earnings per share of $1 37.

Bob: For the full year adjusted net income increased by 5% to $201.8 million, resulting in an adjusted earnings per share of $5.01, a 19% increase compared with the prior year as adjusted operating income growth and lower diluted shares outstanding was part.

Bob: We offset by higher net interest expense and a higher effective tax rate.

Bob: Diluted shares outstanding were approximately 5.3 million lower this year at $40.3 million as we returned a total of $261 million of capital to shareholders through open market share repurchases at an average cost basis of $47.96 per share.

Bob: For the year actions that we believe have increased long term intrinsic value for the benefit of our shareholders.

Bob Phelan: Actions that we believe have increased long-term intrinsic value for the benefit of our shareholders.

Bob Phelan: Next, I will discuss fourth quarter financial highlights by segment. Chamberlain reported fourth quarter revenue of $167 million, an increase of 15.6% when compared with the prior year, driven primarily by growth and enrollments. Total student enrollment during the quarter increased 10.4% compared to the prior year. A sixth consecutive quarter of both pre-licensure and post-licensure nursing program growth. We continue to rapidly expand our pre-licensure BSN online option, now offered in 34 states, growing over triple digits year-over-year, expanding access to nursing education for students who previously had limited or no traditional local options available. Adjusted EBITDA increased by 15.1% to $47.3 million for the fourth quarter.

Bob: Next I will discuss fourth quarter financial highlights by segment.

Bob: Chamberlain reported fourth quarter revenue of $167 million, an increase of 15.6% when compared with the prior year driven primarily by growth in enrollment.

Bob: Total student enrollment during the quarter increased 10.4% compared to the prior year, a sixth consecutive quarter of both pre licensure and post licensure nursing program growth.

Bob: We continue to rapidly expand our pre licensure BSN online option.

Bob: Now offered in 34 states growing over triple digits year over year, expanding access to nursing education for students, who previously had limited or no traditional local options available.

Steve Beard: Adjusted EBITDA increased by 15.1% to $47.3 million for the fourth quarter. Our student-facing investments are creating a more seamless student experience, enhancing our differentiation and market-leading position. Finally, we anticipate a normalized, adjusted, effective tax rate of approximately 22%.

Bob: Adjusted EBITDA increased by 15.1% to $47.3 million for the fourth quarter.

Bob Phelan: Adjusted EBITDA margin of 28.3% was 10 basis points lower than the prior year, as our underlying operational leverage was offset by investments in marketing, student support services to enhance academic outcomes, higher employee benefit costs tied to our performance, and higher provision for bad debt. Our student-facing investments are creating a more seamless student experience, enhancing our differentiation and market-leading position. Taken together with our marketing investments, we believe that we are expanding our top nursing education position.

Bob: Adjusted EBITDA margin of 28.3% was 10 basis points lower than the prior year as our underlying operational leverage was offset by investments in marketing student support services to enhance academic outcomes higher employee benefit costs tied to our performance.

Bob: And higher provision for bad debt.

Bob: Our student facing investments are creating a more seamless student experience enhancing our differentiation and market leading position.

Bob: Taken together with our marketing investments, we believe that we are expanding our top nursing education position.

Bob Phelan: Turning to Walden, fourth quarter revenue of $156.3 million, an increase of 13.3% versus the prior year, was driven by strong growth in enrollments. Total student enrollment accelerated in the quarter, up 11.3% compared to the prior year, from robust enrollment across degree levels and continued high persistence rates. The strong enrollment growth was led by social and behavioral health and nursing program, with non-health care programs also up in the quarter. Adjusted EBITDA increased by 16.6% to $41.1 million. Adjusted EBITDA margin expanded by 70 basis points versus the prior year to 26.3%, as our transformation and efficiency generate operational leverage, which is being balanced with an increased level of investments and new student support, commensurate with the strong growth in new enrollments.

Bob: Turning to Walden fourth quarter revenue of $156.3 million, an increase of 13.3% versus the prior year was driven by strong growth in enrollments.

Bob: Total student enrollment accelerated in the quarter up 11.3% compared to the prior year.

Bob: From robust enrollment across degree levels and continued high persistence rates.

Bob: The strong enrollment growth was led by social and behavioral health and nursing program with non health care programs also up in the quarter.

Bob: Adjusted EBITDA increased by 16.6% to $41.1 million.

Bob: Adjusted EBITDA margin expanded by 70 basis points versus the prior year to 26.3% yes.

Bob: As our transformation and efficiencies generate operational leverage which is being balanced with an increased level of investments and new students support commensurate with the strong growth in new enrollments.

Bob Phelan: Our operational focus continues to afford us the ability to invest for future growth at Walden.

Bob: Our operational focus continues to afford us the ability to invest for future growth at Walden.

Bob Phelan: For the medical and veterinary segment, revenue in a fourth quarter increased 5.4% to $86.6 million. Total student enrollment decreased 2.9% compared with the prior year, as our plans remain on track at the medical schools and Rosvat continues to operate near capacity. Adjusted EBITDA increased by 12.3% to 16.5 million dollars; adjusted EBITDA margin expanded by 120 basis points versus the prior year to 19% from revenue growth and our operational focus.

Speaker Change: For the medical and veterinary segment revenue in the fourth quarter increased 5.4% to $86.6 million.

Bob: Total student enrollment decreased 2.9% compared with the prior year as our plans remain on track at the medical schools and Ross Vet continues to operate near capacity.

Bob: Adjusted EBITDA increased by 12.3% to $16.5 million.

Bob: Adjusted EBITDA margin expanded by 120 basis points versus the prior year to 19% from revenue growth and our operational focus.

Bob Phelan: Shifting the cash flow and the balance sheet, we continue to enhance our financial strength through robust cash generation. Physically, year 2024, free cash flow was $239 million, a $70 million increase versus last year, inclusive of year-over-year increases in investments. Strong performance and working capital improvements drove the increase in free cash flow, while we continue to increase our planned investments in student-facing technologies and our physical expansion. Our balance sheet remains healthy, ending the year with $219 million in cash and a low adjusted EBITDA net leverage of 1.2 times. Our top priority remains to reinvest into our institutions as we aim to achieve optimal capacity and deliver positive student outcomes.

Bob: Shifting to cash flow and the balance sheet.

Bob: We continue to enhance our financial strength through robust cash generation.

Bob: Fiscal year, 'twenty 'twenty, four free cash flow was $239 million or $70 million increase versus last year inclusive of year over year increases in investments.

Bob: Strong performance and working capital improvements drove the increase in free cash flow, while we continue to increase our planned investments in student facing technologies and our physical expansion.

Bob: Our balance sheet remains healthy ending the year with $219 million in cash and a low adjusted EBITDA and net leverage of 1.2 times.

Bob: Our top priority remains to reinvest into our institutions as we aim to achieve optimal capacity and deliver positive student outcomes.

Bob Phelan: We'll thoughtfully strengthen our balance sheet while we also continue a balanced approach to capital allocation. We exited fiscal year 2024 strong as our growth with purpose initiatives generate tangible returns. We are creating sustainable momentum off a higher total enrollment base heading in the fiscal year 2025.

Bob: We'll thoughtfully strengthen our balance sheet, while we also continue our balanced approach to capital allocation.

Bob: We exited fiscal year 'twenty 'twenty four strong as our growth with purpose initiatives generate tangible returns.

Bob: We're creating sustainable momentum off of higher total enrollment base heading into fiscal year 'twenty 'twenty five.

Bob Phelan: As we continue to execute and accelerate performance, we are initiating fiscal year 2025 guidance, which exceeds our June 2023 Investor Day targets. Revenue in the range of $1.66 billion to $1.7 billion, approximately 5 to 7.5% growth year-over-year, with adjusted earnings per share in the range of $5.60 to $5.85, approximately 12% to 17% growth year-over-year. We plan to continue to make incremental growth investment primarily into student-facing technology and marketing, with revenue growth in fiscal year 25 growing faster than the level of year-over-year investments, resulting in an approximate 100 basis points adjusted EBITDA margin expansion from enhanced operational leverage.

Bob: As we continue to execute and accelerate performance, we are initiating fiscal year 'twenty twenty-five guidance, which exceeds our June 20th twenty-three investor day targets.

Bob: Revenue in the range of $1.66 billion to $1.7 billion.

Speaker Change: <unk> five to seven 5% growth year over year.

Bob: With adjusted earnings per share in the range of $5 60 to $5.85.

Bob: Proximately, 12% to 17% growth year over year.

Bob: We plan to continue to make incremental growth investments primarily into student facing technology and marketing with revenue growth in fiscal year, 'twenty five growing faster than the level of year over year investments.

Bob: Resulting in an approximate 100 basis points adjusted EBITDA margin expansion from enhanced operational leverage to.

Bob Phelan: To capture the current external market opportunities and to expand our reach through inclusive education access, we are investing more into marketing during the first quarter. We anticipate a slightly higher level of total revenue growth during the first half of the year compared to the second half. Though we expect fiscal year 2025 total revenue growth to be more balanced compared to the accelerating revenue growth we had seen throughout fiscal year 2024. Included within our guidance are the capital allocation actions from fiscal year 2024, as well as our continued strong cash flow generation. Finally, we anticipate a normalized, adjusted effective tax rate of approximately 22%.

Bob: To capture the current external market opportunities and to expand our reach through inclusive education access we are investing more into marketing during the first quarter.

Bob: We anticipate a slightly higher level of total revenue growth during the first half of the year compared to the second half.

Bob: Though we expect fiscal year 'twenty twenty-five total revenue growth to be more balanced compared to the accelerating revenue growth we had seen throughout fiscal year 'twenty 'twenty four.

Bob: Included within our guidance are the capital allocation actions from fiscal year, 'twenty 'twenty four as well as our continued strong cash flow generation.

Bob: Finally, we anticipate a normalized adjusted effective tax rate of approximately 22%.

Bob Phelan: In conclusion, we are well positioned to continue to make a positive, outsized impact on U.S. healthcare. Our growth with purpose strategy is amplifying our trajectory, growing enrollments through expanding access. As we continue to deliver outstanding student outcomes, the number of healthcare-focused graduates coming from an Adtalem institution will continue to grow, poised to have positive societal impacts for decades to come.

Bob: In conclusion, we are well positioned to continue to make a positive outsized impact on U S health care or.

Bob: Our growth with purpose strategy is amplifying our trajectory growing enrollments through expanding access.

Bob: As we continue to deliver outstanding student outcomes. The number of health care focused graduate coming from an AD Talon institution will continue to grow poised to have positive societal impacts for decades to come.

Operator: With that, I will now turn the call over to the operator for Q&A. Thank you. And now, if you're talking about a question and answer session, if you'd like to be placed in the question, Q, please press star one on your telephone keypad. You may press star two if you'd like to remove your question from the Q. Once again, that star one's be placed in the question, Q.

Speaker Change: With that I will now turn the call over to the operator for Q&A.

Speaker Change: Thank you and now I think he's asking a question answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad you May press Star two if you like to remove your question from the queue. Once again Thats star one to be placed in the question queue. Our first question today is coming from Jeff Silber from B.

Ryan Griffin: Our first question today is coming from Jeff Silver from BMO Capital Markets for Linus NLI. Hey, thank you so much. This is Ryan on for Jeff. Just curious to how much the admissions growth was driven by marketing spend. And then we still be able to get leverage in FY25 if you slow down that spend and achieve margin expansion. Thank you. Well, if the overall total enrollment gains were driven by accommodation of new enrollment and persistence, and as a result, the persistence portion of that wouldn't be impacted by marketing.

Speaker Change: Or capital markets. Your line is now live.

Ryan: Hey, Thank you. So much this is Ryan on for Jeff just curious to how much the admissions growth was driven by marketing spend and then will you still be able to get leverage in FY 'twenty five if you slow down that spend achieve margin expansion. Thank you.

Bob: What do you see.

Speaker Change: The overall total enrollment gains were driven by a combination of new enrollment and persistence.

Speaker Change: And as a result.

Speaker Change: The persistence portion of that wouldn't be impacted by marketing. We think we've got real momentum on the heels of the brand campaigns. We did last year are to sustain that kind of enrollment growth without material investments in marketing beyond the ordinary course refreshing of our campaigns.

Steve Beard: We think we've got real momentum on the heels of the brand campaigns we did last year to sustain that kind of enrollment growth without material investments in marketing beyond the ordinary course refreshing of our campaigns. Got it.

Speaker Change: Got it and then just for my follow up can you give any comments on the pricing environment. It looks like you've been successful in bringing up the tuition rates. There and was just curious how we should think about that in the competitive environment in 2025. Thank you.

Steve Beard: And then just from my fault, can you give any comments on the pricing environment? It looks like you've been successful in bringing up the tuition rates there, and which was curious how we should think about that and the competitive environment in 2025. Thank you. Yep. Price optimization is one of the core disciplines we've begun to adhere to as part of the purpose strategy, and by optimization, that can be taking price where we have pricing power. It also means potentially taking price down where we think we're not priced competitively. And so we, along with our teams and each of the three segments, review that on a regular basis and make adjustments accordingly to ensure that we're competitive in the marketplace and can take more than our fair share from the large pool of aspiring students for our programs. Got it.

Bob: Yeah.

Speaker Change: Price optimization is one of the core disciplines, we begun to adhere to as part of our growth with purpose strategy and.

Speaker Change: And by optimization that can mean, taking a price where we have pricing power. It also means potentially taking price down where we think without price competitively.

Bob: So we along with our teams in each of the three segments review that on a regular basis.

Bob: And make adjustments accordingly to ensure that we're competitive in the marketplace and can take more than our fair share.

Bob: From the large pool of aspiring students for our programs.

Speaker Change: Got it and just to confirm we should still be using a 100 basis points of adjusted EBITDA margin expansion this year.

Ryan Griffin: And just to confirm, we should still be using 100 basis points of adjusted EBITDA margin expansion this year. That's correct. Okay. Thank you very much. Of course. Thank you.

Speaker Change: That's correct.

Speaker Change: Okay. Thank you very much.

Speaker Change: Of course.

Speaker Change: Thank you. Our next question is coming from Stephen Polack from Baird. Your line is now life.

Stephen Pollack: And there's a question coming from Stephen Pollack from Berger Line that is not live. Yeah. Thank you.

Stephen Polack: Yeah. Thank you how would you characterize the current demand environment relative to a more normalized view.

Stephen Pollack: How would you characterize the current demand environment relative to a more normalized view. And I guess the reason I'm asking is, you know, I think there was still some catch up as hospital and clinical capacity to normalize it more normalized post-COVID. So just how would you characterize the environment relative to a more normal environment.

Stephen Polack: And then I guess the reason I'm asking is you know I think there were still some catch up as hospitals and clinical capacity toward normalized more normalized post COVID-19. So.

Speaker Change: Just how would you characterize the environment relative to a more normal.

Speaker Change: <unk>.

Steve Beard: I want to make sure I'm at the demand side. Your question, you're talking about the demand environment for clinicians or the demand environment for students in these programs. For students. So our view is that the demand environment for students normalized last year. There was a one-time reset in the wake of COVID, which had I think a real impact on undergraduate enrollments across all the higher ed. But I think we've been operating in a normalized demand environment for at least the last year. And what we've been really gratified by is our ability to take share in that normalized demand environment.

Speaker Change: Just want to make sure that of anti <unk>.

Speaker Change: Your question, you're talking about the demand environment for clinicians or demand environment for students in these programs for students.

Steve Beard: For students

Speaker Change: So our view is that the demand environment for students normalized last year. There was a one time reset in the wake of Covid, which had I think a real impact on undergraduate enrollments across all of higher Ed, but I think we've been operating in a normalized demand environment for at least the last year.

Speaker Change: And.

Speaker Change: What we've been really gratified by is our ability to take share in that normalized demand environment. That's something we expect to continue to do into fiscal 'twenty five.

Steve Beard: That's something we expect to continue to do into Fiscal 25.

Stephen Pollack: Okay.

Speaker Change: Okay, and then on within the guidance range any color you can provide on sort of what puts and takes would put you at the higher or lower end of that range.

Bob Phelan: And then, with the guidance range, any color you can provide on sort of what puts in takes would put you at the higher or lower end of that range. Sure. I what I would tell you is that right now we're basing this on what we see, the visibility on our enrollments, to the extent that our enrollments come in stronger in September, in particular. That would be one of the things we'll be looking at closely for future guidance in terms of what the rest of the year will look like. Obviously, the first period that you get into in September is really important for setting yourself up for the rest of the year.

Speaker Change: Yeah.

Speaker Change: Sure I would I would tell you is that.

Speaker Change: Right now we're basing this on what we see the visibility on our enrollments to the extent that our enrollments come in stronger in September in particular that would be one of the things we'll be looking at closely for for future guidance in terms of what the rest of the year will look like obviously the first the.

Speaker Change: The first period that you get into in September is really important for setting yourself up for the rest of the year.

Stephen Pollack: All right. Thank you.

Speaker Change: Alright, thank you.

Speaker Change: Thank you we've reached end of our question and answer session I'd like to turn the floor back over to management for any further or closing comments.

Operator: We've reached in with our question and answer session.

Steve Beard: I'd like to turn the floor back over to management for your further closing comments. I want to thank everyone for joining us on the call. Thank you for all of your support in Fiscal 24. We look forward to a record setting fiscal 25, and we'll talk to you next quarter. Thank you.

Speaker Change: I want to thank everyone for joining us on the call. Thank you for all of your support in fiscal 'twenty. Four we look forward to a record setting fiscal 'twenty and we'll talk to you next quarter. Thank you.

Speaker Change: Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.

Operator: That doesn't include today's telecom for some webcasts, and we have to disconnect your line at this time. Have a wonderful day. We thank you for your participation today.

Speaker Change: Yeah.