10-K: Adtalem Global Education Reports Strong FY25 Growth

Adtalem Global Education Inc. announced a significant increase in fiscal year 2025 revenue and net income, driven by enrollment growth across its healthcare education segments.

Summary

• Revenue increased 12.9%, or $203.6 million, to $1,788.3 million in fiscal year 2025 compared to the prior year.
• Net income increased 73.3%, or $100.3 million, to $237.1 million in fiscal year 2025 compared to the prior year.
• Diluted earnings per share increased 82.3%, or $2.79, to $6.18 in fiscal year 2025 compared to the prior year.
• Adjusted net income increased 26.7%, or $53.8 million, to $255.6 million in fiscal year 2025 compared to the prior year.
• Diluted adjusted earnings per share increased 33.1%, or $1.66, to $6.67 in fiscal year 2025 compared to the prior year.
• Average total student enrollment at Chamberlain increased 9.3% in fiscal year 2025.
• Average total student enrollment at Walden increased 13.5% in fiscal year 2025.
• Average total student enrollment at the medical and veterinary schools increased 0.5% in fiscal year 2025.
• A prepayment of $100.0 million was made on the Term Loan B debt on January 17, 2025.
• Adtalem repurchased a total of 2,317,937 shares of its common stock at an average cost of $91.21 per share during fiscal year 2025.
• The Board of Directors authorized Adtalem's fifteenth share repurchase program on May 6, 2025, allowing for repurchases of up to $150.0 million of common stock through May 6, 2028.
• The U.S. Congress passed the One Big Beautiful Bill Act (OBBBA) in July 2025, introducing substantial changes to federal student aid and the tax landscape, with the full impact yet to be determined.

Sentiment

Score: 8

Explanation: Adtalem Global Education reported exceptionally strong financial results for fiscal year 2025, with significant increases in revenue, net income, and EPS, driven by robust enrollment growth across all segments. The company's proactive debt management and ongoing share repurchase programs further enhance shareholder value. While new regulatory changes like OBBBA introduce future uncertainties, management is actively addressing these and the company maintains a strong market position in healthcare education, outperforming its peers.

Positives

• Reported strong revenue growth of 12.9% to $1,788.3 million in fiscal year 2025.
• Achieved a significant 73.3% increase in net income, reaching $237.1 million in fiscal year 2025.
• Diluted EPS saw an impressive 82.3% increase to $6.18 in fiscal year 2025.
• Adjusted net income grew by 26.7% to $255.6 million, and diluted adjusted EPS increased by 33.1% to $6.67.
• Experienced robust enrollment growth across all segments: Chamberlain (9.3%), Walden (13.5%), and Medical and Veterinary schools (0.5%).
• Chamberlain University held the largest pre-licensure BSN, BSN, MSN, FNP, and DNP programs in the U.S. based on Fall 2024 total enrollments.
• Walden University is recognized as a leading doctoral and master's degree conferrer in several key fields.
• Successfully reduced debt with a $100.0 million prepayment on the Term Loan B, contributing to lower interest expense.
• The Board authorized a new $150.0 million share repurchase program, signaling continued commitment to shareholder returns.
• Operating margin (GAAP) improved from 13.7% to 19.1%, and adjusted operating margin (non-GAAP) increased from 19.5% to 20.7%.
• Received $5.6 million from an indemnification claim related to the Walden acquisition.
• Maintains a robust Cyber Risk Management Framework (CRMF) aligned with industry standards like NIST 800-53.
• Reported positive employee relations with no collective bargaining agreements.
• The Organizational Health Index (OHI) pulse survey in January 2024 showed a 4-point increase in overall OHI score, moving up a full quartile against the global benchmark.
• Cohort Default Rates (CDRs) for all institutions are significantly below federal thresholds (0.0% for FY2021/2020, 0.2-1.1% for FY2019 vs. national 2.3% for FY2019).
• 90/10 Rule rates for all institutions are well below the 90% threshold for FY2024 (Chamberlain 68%, Walden 82%, AUC 87%, RUSM 87%, RUSVM 78%).
• Increased the revolving credit facility to $500.0 million on August 6, 2025, enhancing liquidity.

Negatives

• The Medical and Veterinary segment's adjusted operating income decreased by 3.2% to $69.3 million in fiscal year 2025.
• Other income, net, decreased from $10.5 million in fiscal year 2024 to $9.3 million in fiscal year 2025.
• The effective income tax rate increased from 16.0% in fiscal year 2024 to 22.1% in fiscal year 2025.
• Cash and cash equivalents decreased from $219.3 million to $199.6 million year-over-year.
• Net cash used in financing activities increased from $301.8 million to $316.0 million.
• Experienced increases in asset impairments and strategic advisory costs in fiscal year 2025.
• Increased labor and other costs to support increased enrollment, marketing expense, growth initiatives, provision for bad debts, and stock-based compensation.
• The One Big Beautiful Bill Act (OBBBA) introduces new aggregate federal loan caps and phases out the Grad PLUS loan program for new students starting July 1, 2026, which could negatively impact student funding.
• New Financial Value Transparency (FVT) and Gainful Employment (GE) rules, effective July 1, 2024, could lead to programs losing Title IV eligibility if they fail debt-to-earnings or earnings premium tests.
• The 'Do No Harm' provisions of OBBBA could result in program loss of Title IV eligibility if completers' earnings do not exceed those of high school or bachelor's diploma holders.
• New Borrower Defense to Repayment regulations, though currently blocked until 2035, could increase financial liability and reputational risk for the company.
• Faces heightened competition in the online higher education market from both traditional public and private institutions.

Risks

• Subject to regulatory audits, investigations, lawsuits, or other proceedings related to compliance with numerous laws and regulations in the postsecondary education industry.
• An enforcement action against one Title IV institution could materially adversely affect other Title IV institutions due to financial responsibility rules.
• Adverse publicity from investigations, claims, or actions could negatively affect reputation, student enrollment, revenue, and stock price.
• Significant costs and expenses may be incurred for defending and resolving legal and regulatory matters, potentially exceeding existing insurance coverage.
• ED's Borrower Defense to Repayment regulations could lead to significant liability, the posting of substantial letters of credit, or termination of Title IV eligibility.
• Required to post multiple and substantial letters of credit or other securities, which could limit borrowing capacity and investment opportunities.
• Failure to comply with extensive regulatory requirements could result in fines, penalties, or loss of access to federal and state student financial aid.
• Government budgetary pressures and changes to laws governing financial aid programs, such as OBBBA, could reduce student enrollment or delay tuition payments.
• Economic downturns could impact students' ability to avoid loan defaults, obtain remunerative employment, or secure private financing, affecting Title IV eligibility.
• ED rules prohibiting substantial misrepresentation create exposure to litigation from student complaints and enforcement actions.
• Failure to demonstrate financial responsibility or administrative capability may result in the loss of eligibility to participate in Title IV programs.
• Loss of institutional accreditation or if the institutional accrediting body loses recognition by ED would result in loss of Title IV eligibility.
• Regulators' non-approval or delayed approval of transactions involving a material change of ownership or control could impair Title IV eligibility, accreditations, and state licenses.
• A bankruptcy filing by the company or any Title IV institution, or a closure of one, would lead to an immediate loss of Title IV eligibility.
• Excessive student loan defaults could result in the loss of eligibility to participate in Title IV programs if rates exceed federal thresholds.
• Loss of Title IV eligibility if the percentage of revenue derived from federal programs (90/10 Rule) is too high for two consecutive fiscal years.
• Failure to maintain state authorizations could lead to an inability to operate in affected states.
• Efforts by certain state government regulatory bodies may limit the ability to place medical school students in U.S. hospitals, restricting growth.
• Budget constraints in states providing financial aid could reduce available funds, impacting enrollment and the 90/10 Rule percentage.
• Sanctions could be imposed for inaccurate or untimely calculation and payment of refunds of Title IV program funds for withdrawing students.
• Failure of third-party vendors to comply with applicable regulations in servicing students and institutions could subject the company to fines or loss of Title IV eligibility.
• Financing programs provided to students are subject to various federal and state rules and regulations, with non-compliance potentially leading to fines or obligations to discharge loans.
• Release of confidential information could subject the company to civil penalties or cause loss of Title IV eligibility.
• Sanctions for failure to accurately and timely report sponsored students' tuition, fees, and enrollment to sponsoring agencies.
• Student enrollment is affected by legislative, regulatory, and economic factors that are not entirely within the company's control.
• If applicant career interests or employer needs shift away from healthcare fields, future enrollment and revenue may decline.
• Inability of graduates to find appropriate employment opportunities or obtain professional licensure/certification could negatively impact recruitment.
• Heightened competition in the postsecondary education market from public and private institutions, including those with greater resources and lower tuition.
• Outbreaks of communicable infections or diseases, or other public health pandemics, could substantially harm the business.
• Natural disasters or other extraordinary events or political disruptions may cause school closures or casualty losses.
• The personal information collected may be vulnerable to breach, theft, or loss, adversely affecting reputation and operations.
• System disruptions and vulnerability from security risks to computer networks or information systems could severely impact the ability to serve students.
• Government regulations relating to the internet could increase costs of doing business and affect growth.
• Ability to open new campuses, offer new programs, and add capacity is dependent on regulatory approvals and requires significant resources.
• Inability to attract, retain, and develop key employees necessary for operations and strategic plans.
• Inability to successfully integrate acquisitions, leading to operational and financial risks.
• Expansion into new international markets subjects the company to risks inherent in international operations (e.g., foreign laws, currency fluctuations, political instability, tax laws).
• Changes in tax laws or exposure to additional income tax liabilities, such as those from OECD Pillar Two, may negatively impact financial results.
• Goodwill and intangible assets could be impaired if business results and financial condition are materially and adversely impacted.
• The share repurchase program may not be utilized to its full value or enhance long-term stockholder value, and could increase stock price volatility.
• Inability to generate sufficient cash to service all indebtedness and potential inability to refinance debt obligations.

Future Outlook

The U.S. Congress passed the One Big Beautiful Bill Act (OBBBA) in July 2025, which introduces substantial changes to federal student aid, including increased unsubsidized loan limits for professional programs, eventual phasing out of the Grad PLUS loan program for new students starting July 1, 2026, and new aggregate federal loan caps. OBBBA also includes 'Do No Harm' provisions that could lead to Title IV eligibility loss for programs if graduates' earnings do not exceed those of high school or bachelor's diploma holders. The company is currently analyzing the impact of OBBBA, which is not yet fully known due to pending regulations and guidance. Management anticipates that potential relationships with other financing sources will result in loan programs to replace funding limited by OBBBA. The company expects the regulatory environment to continue for the foreseeable future and plans to expand new campuses, offer new educational programs, and add capacity, subject to regulatory approvals.

Management Comments

• "Adtalem is the leading healthcare educator in the U.S. and a systemically important solution for preparing a diverse talent workforce that meets the needs of the healthcare industry."
• "The purpose of Adtalem is to empower students to achieve their goals, find success, and make inspiring contributions to our global community."
• "Adtalem remains focused on expanding access to aspiring students through a seamless student experience, leveraging innovative learning technologies, bringing new programs to market, and utilizing our Growth with Purpose operating model to provide the infrastructure necessary to meet the needs of where, when, and how students learn best."
• "Management does not believe these conditions [provisional certifications due to composite score decline] will have a material adverse effect on Adtalem's operations."
• "We are currently analyzing the changes made by OBBBA and what effect they may have on Adtalem and our programs. These changes could have a material adverse effect on our business, financial condition, cash flows, or results of operations."
• "Certain aspects of OBBBA may have a positive effect on our business. By applying the same rules to all Title IV participating institutions, OBBBA puts proprietary higher education on a level playing field with other segments of the higher education market regarding such rules."
• "We anticipate that potential relationships with one or more of these financing sources will result in loan programs for our students which will replace some or all the funding which will be limited by OBBBA."
• "Management's focus is on increasing enrollment and renewing operational effectiveness, specifically around academic support and the enrollment experience."

Industry Context

Adtalem Global Education operates in the U.S. healthcare education market, which is characterized by a growing supply/demand imbalance for medical doctors and veterinarians, driving demand for educational programs. The company positions itself as a critical provider of talent to the U.S. healthcare system. The broader online higher education market, where Walden University competes, is increasingly competitive, with traditional institutions expanding their online offerings. Regulatory changes, such as the recently enacted One Big Beautiful Bill Act (OBBBA) and new Gainful Employment rules, are significantly impacting all Title IV participating institutions, potentially leveling the playing field for proprietary schools but also introducing new challenges related to student financial aid and program eligibility.

Comparison to Industry Standards

• Chamberlain University had the largest pre-licensure BSN, BSN, MSN, FNP, and DNP programs in the U.S. in Fall 2024 based on total enrollments, according to data from the American Association of Colleges of Nursing (AACN).
• Walden University is a leading doctoral degree conferrer in nursing, public health, public policy, business/management, education, and psychology, and a leading conferrer of master's degrees in nursing, psychology, social work, human services, education, and counseling.
• Adtalem's institutions' three-year Cohort Default Rates (CDRs) for fiscal year 2021 (0.0%) and 2020 (0.0%), and for fiscal year 2019 (0.2% to 1.1%), are significantly lower than the national average for all Title IV institutions (0.0% for FY2021/2020, 2.3% for FY2019), indicating superior student loan repayment performance.
• The company's 90/10 Rule rates for fiscal year 2024 (ranging from 68% to 87% for individual institutions and 77% consolidated) are well below the 90% threshold, demonstrating a healthy and compliant revenue mix compared to federal requirements for proprietary institutions.
• Adtalem's common stock cumulative total return of 408% from June 30, 2020, through June 30, 2025, significantly outperformed the NYSE Composite Index (193%) and its self-determined Peer Group (213%) over the same period, which includes American Public Education, Inc. (APEI), Graham Holdings Company (GHC), Grand Canyon Education, Inc. (LOPE), Laureate Education, Inc. (LAUR), Perdoceo Education Corporation (PRDO), and Strategic Education, Inc. (STRA).

Management Changes

Corporate Governance

Legal Proceedings

• Walden University settled a class-action lawsuit for $28.5 million on September 21, 2023, alleging that it targeted, deceived, and exploited Black and female Doctor of Business Administration (DBA) students by misrepresenting capstone credits. Final approval was granted on October 17, 2024, and the payment was made on November 27, 2024.
• Adtalem made a claim for indemnification under the Membership Interest Purchase Agreement with Laureate Education, Inc. (related to the Walden acquisition) in January 2024 and received $5.6 million in November 2024.
• The U.S. Department of Education (ED) sent notices in late January and early February 2024 to Chamberlain, Ross University School of Medicine (RUSM), Ross University School of Veterinary Medicine (RUSVM), and Walden regarding approximately 3,225, 1,700, 1,900, and 7,740 Borrower Defense to Repayment applications, respectively. The institutions have responded, believing none properly stated a claim for loan forgiveness.
• ED sent notice in June 2025 to American University of the Caribbean School of Medicine (AUC) regarding approximately 330 similar Borrower Defense to Repayment applications, to which AUC will timely respond.
• Adtalem agreed to indemnify DeVry University for certain losses up to $340.0 million under the Stock Purchase Agreement dated December 4, 2017.

Stakeholder Impact

• **Shareholders**: Positive impact from strong financial performance, increased earnings per share, strategic debt reduction, and ongoing share repurchase programs. Potential negative impact from regulatory uncertainties (e.g., OBBBA, GE rules) and potential for stock price volatility.
• **Students**: Benefit from expanded access to healthcare education, innovative learning technologies, and new programs. Potential negative impact from changes to federal student aid (e.g., Grad PLUS phase-out, loan caps under OBBBA) and new Gainful Employment/Do No Harm rules that could affect program eligibility or funding.
• **Employees**: Benefit from a comprehensive and competitive total rewards package, including generous paid time off, retirement savings plans with 401(k) match, paid parental leave, enhanced mental health resources, and tuition assistance. Workforce reductions were noted as part of restructuring expenses.
• **Customers (Healthcare Industry)**: Adtalem aims to deliver highly qualified healthcare clinicians, addressing the supply/demand imbalance in the healthcare industry, which benefits healthcare providers and patients.
• **Communities**: The Board may consider the effect of corporate actions on communities in which the company does business, indicating a broader social responsibility.

Next Steps

• Evaluate the full tax and student aid impacts of the One Big Beautiful Bill Act (OBBBA), with tax impacts to be reflected in fiscal year 2026 consolidated financial statements.
• Participate in negotiated rulemaking committees for Financial Value Transparency and Gainful Employment, as announced by the U.S. Department of Education (ED) on July 25, 2025.
• Seek and establish relationships with other financing sources to provide loan programs for students, aiming to replace funding that will be limited by OBBBA.
• Conduct the next Organizational Health Index (OHI) pulse survey in Fall 2025 to inform continued enterprise and segment-level action plans for talent engagement and retention.
• Timely respond to approximately 330 Borrower Defense to Repayment applications filed by students at American University of the Caribbean School of Medicine (AUC).
• Continue to make share repurchases under the newly authorized $150.0 million share repurchase program through May 6, 2028.
• Stephen W. Beard's 10b5-1 Plan sales are estimated to begin no earlier than September 12, 2025.
• Douglas Beck's 10b5-1 Plan sales are estimated to begin no earlier than September 12, 2025.

Key Dates

Recommendation

Adtalem Global Education demonstrated exceptional financial performance in fiscal year 2025, with substantial increases in revenue, net income, and diluted EPS. The company's core healthcare education segments are experiencing robust enrollment growth, particularly Chamberlain and Walden, indicating strong demand for its offerings. Strategic debt reduction and ongoing share repurchase programs reflect sound capital management and a commitment to shareholder returns. While new regulatory frameworks like OBBBA and GE rules introduce some uncertainty, Adtalem's strong compliance record (low CDRs, healthy 90/10 ratios) and proactive engagement with financing alternatives suggest resilience. The company's significant outperformance against both the NYSE Composite Index and its peer group over the past five years underscores its strong market position and growth trajectory. The current valuation, considering the strong growth and strategic initiatives, presents a compelling investment opportunity.

Keywords

Adtalem Global Education, ATGE, Healthcare Education, Nursing Education, Medical Education, Veterinary Medicine, Online Learning, SEC Filing, 10-K, Financial Results, Enrollment Growth, Student Financial Aid, Regulatory Compliance, Corporate Governance, Share Repurchase, Debt Management, Risk Factors, Chamberlain University, Walden University, Ross University School of Medicine, American University of the Caribbean School of Medicine, Ross University School of Veterinary Medicine, OBBBA