Adtalem refutes short seller’s claims of mismanagement

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The education company, which operates several medical and veterinary schools, including the largest nursing school in the United States, has criticized Safkhet Capital’s report, calling it a “reckless attempt to defame” and challenging its credibility. Adtalem’s President and CEO, Steve Beard, pointed out specific examples of incorrect information, such as misstated leadership roles and enrollment figures.

Adtalem has emphasized its significant role in the U.S. healthcare system, noting its substantial contributions to the education of practice-ready clinicians. The company has also defended its acquisition of Walden University, stating that the $1.48 billion transaction’s recognition of intangible assets and goodwill is standard practice, audited externally, and showed no impairment as of the most recent test in May 2023.

Furthermore, Adtalem has reported enrollment growth across its institutions, contrary to Safkhet Capital’s claims of stagnation. The company highlighted a 6% increase in total enrollment as of December 31, 2023, with Chamberlain University and Walden University experiencing growth in consecutive quarters.

In response to Safkhet’s assertions regarding graduation rates, Adtalem has provided data to demonstrate favorable comparisons to national averages, citing a 77% graduation rate for new full-time students at Chamberlain University and over 70% six-year graduation rates for its medical schools.

Adtalem has also refuted claims about the potential impact of the gainful employment rule and 90/10 rule changes on its operations, maintaining that its programs comply and will continue to comply with regulatory requirements. The company further addressed an ongoing Department of Education investigation into Walden University, clarifying that no accusations of wrongdoing have been made and that they are cooperating fully with the request.

The company has dismissed comparisons to the Corinthian Colleges bankruptcy and has defended its executive compensation policy as being aligned with long-term shareholder value. Adtalem’s response to the short seller’s report is based on a press release statement.

Amidst the contention between Adtalem Global Education Inc. and the claims of Safkhet Capital, investors and stakeholders are seeking clarity on the company’s financial health and future prospects. InvestingPro data reveals that Adtalem (NYSE: ATGE) has a market capitalization of $1.99 billion and a trailing twelve-month P/E ratio of 14.85, suggesting a potentially attractive valuation relative to earnings. The company’s revenue growth over the last twelve months as of Q2 2024 stands at 3.73%, with a notable quarterly revenue growth of 8.38% in Q2 2024, indicating a positive trajectory in earnings.

InvestingPro Tips highlight that management’s aggressive share buybacks and a high shareholder yield could be signs of confidence in the company’s value. Additionally, with analysts predicting profitability for the year and a profitable track record over the last twelve months, these factors may provide reassurance to investors concerned about the company’s performance. It’s also worth noting that Adtalem does not pay a dividend, which could be relevant for income-focused investors.

The InvestingPro product, now available on a special New Year sale with discounts of up to 50%, offers more insights into Adtalem’s performance and future outlook. By using the coupon code “SFY24” for an additional 10% off a 2-year InvestingPro+ subscription, or “SFY241” for an additional 10% off a 1-year subscription, investors can access a wealth of additional tips—7 in total for Adtalem—to further inform their investment decisions.

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