Headquartered in Chicago, Adtalem Global Education, Inc. (NYSE: ATGE) is a leading for-profit education provider. Founded in 1931 by Herman A. DeVry as the DeForest Training School, it eventually became DeVry University. Today, after several strategic transactions and a name change, the company focuses primarily on healthcare education. Through its Chamberlain, Ross, American University of the Caribbean and Walden brands, it is the number one grantor of nursing degrees and the number two provider of medical residents in the country. Counterintuitively, the pandemic’s strain on hospital staffing proved to be a headwind for the demand for healthcare degrees. Adtalem is well-positioned for long-term growth and offers the brands and scale to address the rising nursing and doctor shortages in the U.S.

Making the Grade

In early 2016, Adtalem’s stock price had fallen to its lowest level in a decade over concerns of heightened regulatory scrutiny and increased online competition. Then CEO Lisa Wardell took decisive action to increase the focus on return on invested capital and shed underperforming assets. Since that time, pending regulatory investigations have been settled; several institutions have been sold; and the succeeding CEO, Steven Beard, has effectively integrated the acquisition of online educator, Walden University.

No Sick Days

COVID-19 put tremendous pressure on hospitals by spotlighting the country’s expanding need for nursing care. The crisis was so intense that existing nurses tabled their advanced degrees and potential nurses questioned entering the field. Not surprisingly, Adtalem’s nursing enrollments fell and the stock price languished for most of the pandemic. Given the recovery, the company’s degrees are more attractive than ever. In nursing, the staffing scarcity is expected to increase from approximately 200,000 to 400,000 by 2025 while the dearth of physicians is anticipated to double from 60,000 to 120,000 by 2034. As a leading healthcare educator, Adtalem is favorably positioned to help close these gaps.

Leading by Example

When Stephen Beard took the helm in 2021, he doubled down on the focused strategic vision of its prior CEO to acquire Walden University. Founded in 1970, Walden’s purely online platform dramatically boosted Adtalem’s scale by adding leading programs in counseling, psychology and social work that address the country’s mental health crisis. Shortly after the acquisition, the company sold its remaining non-healthcare businesses and used the proceeds to reduce debt and repurchase shares. With its focus and scale, investors are beginning to properly value Adtalem’s growth potential. The stock has appreciated +240% since its 2016 low through year-end.

Life-Long Learning

Despite its impressive performance, we believe investors still view the company through an outdated lens. The nation’s healthcare worker shortage is a secular tailwind for education, which suggests the demand is not yet being fully recognized. As of December 31, 2023, shares traded at $58.95, an 8% discount to our private market value of $64.17.

The companies highlighted in the Company Spotlights were held in one or more of the following Fund portfolios during the quarter ending December 31, 2023: Ariel Fund, Ariel Appreciation Fund, Ariel Focus Fund, Ariel International Fund and Ariel Global Fund. We candidly discuss various individual companies to illustrate our investment process. The information and our opinions were current as of the date above but are subject to change. The information shown does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. These securities do not represent all securities purchased or sold to investors during the period. The performance of any single portfolio holding is no indication of the performance of other portfolio holdings of any Fund or of any particular Fund itself. Portfolio holdings are subject to change. Past performance does not guarantee future results. Click here for the top holdings of the Funds.

Investing in equity stocks is risky and subject to the volatility of the markets. The performance of any single portfolio holding is no indication of the performance of other portfolio holdings or its strategy. Investing in small- and mid-cap stocks is more risky and volatile than investing in large-cap stocks. Investments in non-U.S. securities may underperform and may be more volatile than comparable U.S. stocks because of the risks involving non-U.S. economies, markets, political systems, regulatory standards, currencies, and taxes. The intrinsic value of the stocks in which the Funds invest may never be recognized by the broader market. The Funds are often concentrated in fewer sectors than their benchmarks, and their performance may suffer if these sectors underperform the overall stock market. Ariel Focus Fund is a non-diversified fund and therefore may be subject to greater volatility than a more diversified investment. Investments in emerging and developing markets present additional risks, such as difficulties in selling on a timely basis and at an acceptable price.

Investors should consider carefully the investment objectives, risks, and charges and expenses before investing. For a current prospectus or summary prospectus which contains this and other information about the funds offered by Ariel Investment Trust, call us at 800-292-7435, visit our website, arielinvestments.com or click here. Please read the prospectus or summary prospectus carefully before investing. Distributed by Ariel Distributors LLC, a wholly-owned subsidiary of Ariel Investments LLC. Ariel Distributors, LLC is a member of the Securities Investor Protection Corporation.