Adtalem Global Education Inc (ATGE)

Interest coverage

Jun 30, 2025 Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021
Earnings before interest and tax (EBIT) US$ in thousands 350,832 227,596 175,007 77,854 126,257
Interest expense US$ in thousands 52,318 63,659 63,171 129,348 42,838
Interest coverage 6.71 3.58 2.77 0.60 2.95

June 30, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $350,832K ÷ $52,318K
= 6.71

The interest coverage ratio of Adtalem Global Education Inc. has exhibited significant fluctuations over the analyzed period from June 30, 2021, to June 30, 2025. As of June 30, 2021, the ratio stood at 2.95, indicating that the company was earning nearly three times its interest expenses, which suggests a relatively comfortable capacity to service interest liabilities during that year. However, this ratio declined sharply to 0.60 by June 30, 2022, signaling a substantial deterioration in earnings relative to interest obligations; such a low ratio indicates potential difficulties in covering interest expenses solely from operating earnings, raising concerns about financial sustainability in that period.

Subsequently, the ratio rebounded markedly to 2.77 on June 30, 2023, recovering to levels similar to those observed in 2021. This improvement indicates an increase in earnings that provided a more comfortable margin for interest payments. The upward trend continued in the following two years, with the interest coverage ratio reaching 3.58 by June 30, 2024, and further rising to 6.71 by June 30, 2025. These increases suggest that the company’s earnings have improved considerably, strengthening its ability to meet interest obligations with ample coverage.

Overall, while the company experienced a significant dip in interest coverage in 2022, the subsequent years demonstrate a robust recovery, culminating in a strong interest coverage ratio by 2025. This trajectory reflects an overall enhancement in earnings relative to interest expenses, supporting an optimistic view of Adtalem Global Education Inc.’s capacity to service its debt commitments in the near to medium term.