Adtalem Global Education Inc (ATGE)

Interest coverage

		Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	326,752	320,086	310,033	288,477	246,001	216,452	199,213	180,491	174,743	177,087	147,987	130,129	57,727	55,472	70,369	74,684	160,654	124,397	240,152	224,181
Interest expense (ttm)	US$ in thousands	50,103	50,824	54,310	59,309	60,484	64,204	62,101	60,997	63,100	67,247	89,375	99,715	129,348	135,289	107,259	85,066	41,365	19,908	16,544	17,874
Interest coverage		6.52	6.30	5.71	4.86	4.07	3.37	3.21	2.96	2.77	2.63	1.66	1.31	0.45	0.41	0.66	0.88	3.88	6.25	14.52	12.54

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $326,752K ÷ $50,103K
= 6.52

The interest coverage ratio of Adtalem Global Education Inc demonstrates notable fluctuations over the analyzed period. As of September 30, 2020, the ratio stood at 12.54, indicating a robust capacity to cover interest expenses relative to earnings before interest and taxes (EBIT). This strong coverage persisted through the end of 2020, reaching a peak of 14.52 by December 31, 2020.

However, starting in early 2021, a decline in the interest coverage ratio is observed. By March 31, 2021, the ratio decreased significantly to 6.25, and continued to decline through mid-2021, reaching a low of 0.88 by September 30, 2021. This sharp decline suggests a substantial deterioration in the company’s ability to comfortably cover interest expenses, possibly reflecting operational challenges, increased debt levels, or reduced profitability during this period.

Subsequently, the ratio further declined into late 2021 and early 2022, with values of 0.66 on December 31, 2021, and 0.41 on March 31, 2022. During this timeframe, the company’s interest coverage remained below the generally accepted threshold of 1.5 to 2.0, indicating heightened financial risk and potential difficulties in meeting interest obligations from operating income.

In the latter half of 2022 and into 2023, a modest recovery is noted. The ratio increases to 1.31 on September 30, 2022, and further to 1.66 by December 31, 2022, suggesting some improvement in the company’s ability to generate sufficient earnings to cover interest expenses. The upward trajectory continues into 2023 with ratios of 2.63 on March 31, 2023, and 2.77 on June 30, 2023, indicating a strengthening capacity for interest coverage.

Looking into late 2023 and beyond, the ratio sustains an upward trend, reaching 2.96 on September 30, 2023, and 3.21 by December 31, 2023. The positive trend persists into 2024, with ratios of 3.37 on March 31, 2024, and further improvements to 4.07 on June 30, 2024, and 4.86 on September 30, 2024. The ratio continues to enhance into early 2025, attaining 5.71 by December 31, 2024, and reaching 6.30 by March 31, 2025.

In conclusion, the company experienced a significant downturn in interest coverage during 2021 but has shown a consistent recovery from late 2022 onward, reaching healthier levels well above the critical thresholds. These improvements suggest a reversal of earlier financial strains, though the earlier decline underscores periods of heightened financial risk requiring close monitoring.