Adtalem to Buy OnCourse Learning's Financial Services Unit

Adtalem Global Education Inc. ATGE has inked a deal to acquire the financial services business of OnCourse Learning. Notably,  this buyout will strengthen its position as a leading workforce solutions provider. The transaction, which is expected to close in fourth-quarter fiscal 2019, is valued at approximately $121 million in cash.

Benefits of Adtalem

Owned by Bertelsmann, OnCourse Learning is a Brookfield, WI-based leading provider of compliance training, licensure preparation, continuing education and professional development across the United States. The financial services division of OnCourse Learning, which generated nearly $31-million revenues in 2018, has an EBITDA margin profile of more than 30%.

The acquisition will also include the sub-brands in the financial services portfolio such as BankersEdge and TTS, leading providers of compliance training to the banking and credit union markets. The company will have access to OnCourse Learning’s mortgage licensing and education programs that are approved by the Nationwide Multistate Licensing System & Registry.

Meanwhile, Adtalem’s financial services portfolio comprises professional education products and services including the Association of Certified Anti-Money Laundering Specialists (“ACAMS”), Becker Professional Education and EduPristine.

This takeover will broaden Adtalem’s reach across the governance, risk and compliance sector, and boost its ability to meet the requirements of employers in the dynamic financial services industry.

Although Adtalem does not expect any impact from the OnCourse Learning acquisition on fiscal 2019 earnings, it anticipates it to be modestly accretive to fiscal 2020 results.

Adtalem has plans to ensure a balanced focus on investment initiatives to deliver direct returns to its shareholders. However, shares of Adtalem have gained 4.6% year to date compared with its industry’s 28.7% rally. Its adjusted earnings in the first six months of fiscal 2019 declined 3.3% from the comparable year-ago period to $1.18 per share. Restructuring charges related to the closing of the Ross University School of Medicine campus in Dominica and real estate consolidations significantly impacted the company’s earnings in the last reported quarter.

Nonetheless, Adtalem has been undertaking initiatives to achieve strong multi-year organic growth. The latest acquisition unlocks expansion opportunities for Adtalem across global financial services industry.

Zacks Rank & Key Picks

Adtalem currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the Zacks Schools industry include Career Education Corp. CECO, Lincoln Educational Services Corp. LINC and Grand Canyon Education, Inc. LOPE, each carrying a Zacks Rank #2 (Buy). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Career Education has a three-five year expected EPS growth rate of 12.5%.

Lincoln has an expected earnings growth rate of 148.2% for 2019.

Grand Canyon has a three-five year expected EPS growth rate of 16%.

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