UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): May 5, 2022
 
ADTALEM GLOBAL EDUCATION INC.
(Exact name of registrant as specified in its charter)
 
Delaware
001-13988
36-3150143
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
 
 
500 West Monroe
 
 
Chicago, IL
 
60661
(Address of principal executive offices)
 
(Zip Code)

(866) 374-2678
(Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
 
Trading Symbol
 
Name of each exchange on
which registered
Common Stock $0.01 Par Value
  ATGE
 
New York Stock Exchange
Common Stock $0.01 Par Value
 
ATGE
 
Chicago Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02          Results of Operations and Financial Condition

On May 5, 2022, Adtalem Global Education Inc. (“Adtalem”) issued a press release announcing its fiscal 2022 third quarter academic, operating and financial results.  The press release is attached hereto as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
 
The information furnished pursuant to this Item 2.02, including Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Adtalem under the Securities Act of 1933, as amended, or the Exchange Act.
 
Forward-Looking Statements
 
Certain statements contained in this Form 8-K and related press release are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, which includes statements regarding the Company’s future growth, the future impacts of the COVID-19 pandemic, the efficacy and distribution of the vaccines, and the expected synergies from the recent Walden acquisition.  Forward-looking statements can also be identified by words such as “future,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “may,” “will,” “would,” “could,” “can,” “continue,” “preliminary,” “range,” and similar terms. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include the risk factors described in Item 1A. “Risk Factors” of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and our other filings with the SEC.
 
These forward-looking statements are based on information as of May 5, 2022, and Adtalem assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized, except as required by law.

Item 9.01          Financial Statements and Exhibits

99.1            Press Release of Adtalem Global Education Inc., dated May 5, 2022.


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
ADTALEM GLOBAL EDUCATION INC.
 
 
 
 
 
By:
 /s/ Robert J. Phelan
 
 
 
Robert J. Phelan
 
 
 
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
 
 
Date: May 5, 2022
Exhibit 99.1

 
News Release
 
 
Investor Contact
Chandrika Nigam
Chandrika.Nigam@Adtalem.com
 
 
 
Media Contact
 
Kelly Finelli
 
Kelly.Finelli@Adtalem.com
 
872-270-0230

Adtalem Global Education Announces Fiscal Third Quarter 2022 Results
 
Strengthened balance sheet and capital allocation drive increased FY’22 EPS guidance
 
CHICAGO – May 5, 2022 – Adtalem Global Education Inc. (NYSE: ATGE), a leading healthcare educator, today reported academic, operating and financial results for its fiscal 2022 third quarter ended March 31, 2022.
 
“During the quarter, we successfully completed the divestiture of our Financial Services segment, which is an important milestone in our strategy to be the leading healthcare education provider,” said Steve Beard, president and CEO of Adtalem Global Education. “I’m also encouraged by our operational performance in the third quarter. We continue to expand margins across the business despite the pandemic's adverse impact on organic revenue growth, which is a result of our focus on operational efficiency and realization of cost synergies associated with the Walden integration. Moreover, we achieved this while deleveraging the balance sheet and returning capital to shareholders.”
 
Beard added, “Additionally, I’m proud of the first-time residency attainment rates at our two medical schools during the quarter, which were among the highest we have ever achieved. Our ability to consistently deliver high-quality academics, excellent value and strong outcomes for our students is a central pillar of our long-term growth strategy.”

Financial Highlights
 
Selected financial data for the three months ended March 31, 2022:

Revenue of $365.6 million increased 58.8% compared with the prior year due to the acquisition of Walden
Diluted earnings per share was $7.09 compared with $0.48 in the prior year; diluted earnings per share from continuing operations, excluding special items, was $0.87, compared with $0.60 in the prior year
Operating income was $33.3 million, compared with $36.0 million in the prior year; operating income, excluding special items, was $76.5 million, a 87.4% increase compared with the prior year
Net income attributable to Adtalem was $349.8 million compared with $24.7 million in the prior year, driven primarily by gain on the sale of the Financial Services segment; net income from continuing operations, excluding special items, was $42.8 million, a 39.5% increase compared with the prior year
Adjusted EBITDA was $92.5 million, a 75.0% increase compared with the prior year

Selected financial data for the nine months ended March 31, 2022:

Revenue of $1,025.9 million increased 50.1% compared with the prior year due to the acquisition of Walden
Diluted earnings per share was $6.26 compared with $1.30 in the prior year; diluted earnings per share from continuing operations, excluding special items, was $1.97, compared with $1.83 in the prior year
Operating income was $35.9 million, compared with $91.0 million in the prior year; operating income, excluding special items, was $183.2 million, a 47.2% increase compared with the prior year. On a sequential basis, operating margins excluding special items, increased for the second consecutive quarter
Net income attributable to Adtalem was $309.7 million compared with $67.9 million in the prior year, driven primarily by the gain on the sale of the Financial Services segment; net income from continuing operations, excluding special items, was $98.2 million, a 3.1% increase compared with the prior year
Adjusted EBITDA was $229.1 million, a 43.0% increase compared with the prior year

Business Highlights
 
Completed the divestiture of Financial Services segment to a consortium of Wendel Group and Colibri Group in an all-cash transaction for $1 billion, thereby enhancing the company’s focus as a pure play, leading provider of talent to the healthcare industry
Utilized $770 million of net proceeds from the divestiture of Financial Services segment to pay down debt, reducing debt by 46.7%
Repurchased 4.7 million shares of the company’s common stock for $150 million in an accelerated share buyback program using existing cash, reducing shares outstanding by 9.4%
Received authorization from the Adtalem board of directors for open market share repurchases of up to $300 million of the company’s common stock over 36 months, demonstrating confidence in the company’s long-term growth strategy
Achieved first-time residency attainment rates of 96%* for American University of the Caribbean School of Medicine and 95%* for Ross University School of Medicine with more than 700 current and former graduates entering U.S. residency programs in 2022
*Residency attainment rates continued to improve to 96% for AUC as of April 2022, and 95% for RUSM as of March 2022
 
Segment Highlights
 
Chamberlain
 
Third quarter segment revenue decreased 2.6% to $142.6 million compared with the prior year, and segment operating income increased 2.4% to $37.0 million due primarily to lower labor and other expenses.
 
Total student enrollment decreased 4.3% compared with the prior year, which was primarily attributable to COVID-related headwinds in Chamberlain’s post-licensure online programs, partially offset by improved enrollment and persistence in on-campus pre-licensure programs.
 
Walden
 
Revenue in the third quarter was $139.1 million. Segment operating loss was $2.9 million, driven primarily by intangible assets amortization expense. Segment operating income, excluding special items, was $26.2 million. With the acquisition closing on August 12, 2021, there are no prior year comparables.

Total student enrollment decreased 8.4% compared with the prior year, which was primarily attributable to COVID-related headwinds in Walden’s post-licensure nursing programs and decline in the management and technology programs.

Medical and Veterinary
 
Revenue in the third quarter was $84.0 million, essentially flat compared with the prior year. Segment operating income of $14.9 million decreased by 0.4% compared to prior year. Segment operating income, excluding special items, was $19.5 million, an increase of 30.1% compared with the prior year, driven by cost reductions across the segment.
 
Total student enrollment decreased 1.2% compared with the prior year, which was primarily attributable to COVID-related headwinds.
 
Adtalem Outlook

For the full fiscal year 2022, Adtalem reiterated its guidance of adjusted revenue, excluding special items, to be within the range of $1,350 million and $1,390 million, and increased the fiscal year 2022 guidance for adjusted diluted earnings per share from continuing operations, excluding special items, in excess of 8% to a range of $3.15 to $3.35, based on the key factors below:

-
The use of $770 million of net proceeds from the sale of the Financial Services segment towards repayment of debt, thereby reducing interest expense
-
Accelerated share repurchase program for $150 million of the company’s common stock, which is expected to be completed by the second quarter of fiscal 2023, reducing outstanding shares

Conference Call and Webcast Information
 
Adtalem will hold a conference call to discuss its fiscal 2022 third quarter on Thursday, May 5, 2022, at 4 p.m. CDT (5 p.m. EDT). The conference call will be led by Steve Beard, president and chief executive officer, and Bob Phelan, senior vice president and chief financial officer. For those participating by telephone, dial 877-407-6184 (United States) or +1 201-389-0877 (outside the United States) and request the “Adtalem Call” or use conference ID: 13728036. Adtalem will also broadcast the conference call live on the web at: https://themediaframe.com/mediaframe/webcast.html?webcastid=8dYWyDjX.
 
Please access the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
 
Adtalem will archive a replay of the call until June 5, 2022. To access the replay, dial 877-660-6853 (United States) or +1 201-612-7415 (outside the United States), conference ID: 13728036, or visit the Adtalem website at: https://investors.adtalem.com/overview/default.aspx.

About Adtalem Global Education
Adtalem Global Education (NYSE: ATGE) is a leading healthcare educator and provider of professional talent to the healthcare industry. With a dedicated focus on driving strong outcomes that increase workforce preparedness, Adtalem empowers a diverse learner population to achieve their goals and make inspiring contributions to their communities. Adtalem is the parent organization of American University of the Caribbean School of Medicine, Chamberlain University, Ross University School of Medicine, Ross University School of Veterinary Medicine and Walden University. Adtalem and its institutions have more than 10,000 employees and a network of more than 275,000 alumni. Adtalem was named one of America’s Most Responsible Companies 2021 by Newsweek, and one of America’s Best Employers for Diversity 2022 by Forbes. Follow Adtalem on Twitter @adtalemglobal, LinkedIn or visit Adtalem.com for more information.

Forward-Looking Statements
Certain statements contained in this release are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, which includes statements regarding the future impacts of the COVID-19 pandemic, the efficacy and distribution of the vaccines, and the expected synergies from the recent Walden acquisition. Forward-looking statements can also be identified by words such as “future,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “may,” “will,” “would,” “could,” “can,” “continue,” “preliminary,” “range,” and similar terms. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in the statements. These risk and uncertainties include the risk factors described in Item 1A. “Risk Factors” of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and our other filings with the SEC. These forward-looking statements are based on information available to us as of the date any such statements are made, and we do not undertake any obligation to update any forward-looking statement, except as required by law.

   
3Q 2022
   
3Q 2021
   
% Change
Adtalem Global Education Student Enrollments
                 
Total students(1)
   
82,174
     
87,685
     
-6.3
%
                         
                         
Chamberlain University
                       
Total students
   
34,158
     
35,702
     
-4.3
%
                         
                         
Walden University(3)
                       
Walden University(2)
                       
Total students
   
42,788
     
46,691
     
-8.4
%
                         
                         
Walden University(3)
                       
                         
Medical & Veterinary
                       
Total students
   
5,228
     
5,292
     
-1.2
%
                         
                         
1)
Represents total students attending sessions during each institution’s most recent enrollment period in 3Q FY 2022.
2)
Prior year Walden enrollment figures are as calculated by Walden while controlled by Laureate Education, Inc., and are included here for comparative purposes only.


 Adtalem Global Education Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except par value)

   
March 31,
   
June 30,
   
March 31,
 
   
2022
   
2021
   
2021
 
Assets:
                 
Current assets:
                 
Cash and cash equivalents
 
$
788,729
   
$
476,377
   
$
461,605
 
Restricted cash
   
1,266
     
819,003
     
808,034
 
Accounts receivable, net
   
96,064
     
43,041
     
58,108
 
Prepaid expenses and other current assets
   
123,505
     
128,217
     
109,651
 
Current assets held for sale
   
1,432
     
48,315
     
60,127
 
Total current assets
   
1,010,996
     
1,514,953
     
1,497,525
 
Noncurrent assets:
                       
Property and equipment, net
   
294,538
     
283,692
     
278,864
 
Operating lease assets
   
186,968
     
167,365
     
162,557
 
Deferred income taxes
   
47,574
     
53,486
     
57,979
 
Intangible assets, net
   
896,884
     
137,500
     
137,500
 
Goodwill
   
961,262
     
310,210
     
310,210
 
Other assets, net
   
120,145
     
86,040
     
84,291
 
Noncurrent assets held for sale
   
93
     
531,597
     
532,859
 
Total noncurrent assets
   
2,507,464
     
1,569,890
     
1,564,260
 
Total assets
 
$
3,518,460
   
$
3,084,843
   
$
3,061,785
 
                         
Liabilities and shareholders' equity:
                       
Current liabilities:
                       
Accounts payable
 
$
67,252
   
$
42,421
   
$
34,446
 
Accrued payroll and benefits
   
56,705
     
54,331
     
40,906
 
Accrued liabilities
   
176,921
     
126,344
     
108,277
 
Deferred revenue
   
167,576
     
68,807
     
87,308
 
Current operating lease liabilities
   
51,335
     
53,991
     
53,598
 
Current portion of long-term debt
   
     
3,000
     
3,000
 
Current liabilities held for sale
   
1,417
     
59,913
     
54,917
 
Total current liabilities
   
521,206
     
408,807
     
382,452
 
Noncurrent liabilities:
                       
Long-term debt
   
1,225,360
     
1,067,711
     
1,067,564
 
Long-term operating lease liabilities
   
188,955
     
167,066
     
163,251
 
Deferred income taxes
   
25,862
     
26,177
     
25,949
 
Other liabilities
   
65,729
     
78,705
     
80,225
 
Noncurrent liabilities held for sale
   
41
     
33,517
     
33,627
 
Total noncurrent liabilities
   
1,505,947
     
1,373,176
     
1,370,616
 
Total liabilities
   
2,027,153
     
1,781,983
     
1,753,068
 
Commitments and contingencies
                       
Redeemable noncontrolling interest
   
     
1,790
     
2,493
 
Shareholders' equity:
                       
Common stock, $0.01 par value per share, 200,000 shares authorized; 45,138, 49,253, and 49,700 shares outstanding as of March 31, 2022, June 30, 2021, and March 31, 2021, respectively
   
818
     
811
     
811
 
Additional paid-in capital
   
517,431
     
519,826
     
516,627
 
Retained earnings
   
2,314,796
     
2,005,105
     
1,995,465
 
Accumulated other comprehensive loss
   
(2,209
)
   
(7,365
)
   
(7,756
)
Treasury stock, at cost, 36,621, 31,846, and 31,366 shares as of March 31, 2022, June 30, 2021, and March 31, 2021, respectively
   
(1,339,529
)
   
(1,217,307
)
   
(1,198,923
)
Total shareholders' equity
   
1,491,307
     
1,301,070
     
1,306,224
 
Total liabilities and shareholders' equity
 
$
3,518,460
   
$
3,084,843
   
$
3,061,785
 


Adtalem Global Education Inc.
Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)

   
Three Months Ended
   
Nine Months Ended
 
   
March 31,
   
March 31,
 
   
2022
   
2021
   
2022
   
2021
 
Revenue
 
$
365,623
   
$
230,213
   
$
1,025,891
   
$
683,435
 
Operating cost and expense:
                               
Cost of educational services
   
166,027
     
114,977
     
498,497
     
341,497
 
Student services and administrative expense
   
149,890
     
74,412
     
432,923
     
217,502
 
Restructuring expense
   
10,518
     
1,217
     
16,999
     
5,299
 
Business acquisition and integration expense
   
5,924
     
3,646
     
41,537
     
28,161
 
Total operating cost and expense
   
332,359
     
194,252
     
989,956
     
592,459
 
Operating income
   
33,264
     
35,961
     
35,935
     
90,976
 
Other income (expense):
                               
Interest and dividend income
   
1,045
     
910
     
2,784
     
3,133
 
Interest expense
   
(36,585
)
   
(8,555
)
   
(109,907
)
   
(15,983
)
Investment gain
   
     
479
     
     
2,002
 
Net other expense
   
(35,540
)
   
(7,166
)
   
(107,123
)
   
(10,848
)
(Loss) income from continuing operations before income taxes
   
(2,276
)
   
28,795
     
(71,188
)
   
80,128
 
Benefit from (provision for) income taxes
   
8,133
     
(4,557
)
   
38,897
     
(12,363
)
Income (loss) from continuing operations
   
5,857
     
24,238
     
(32,291
)
   
67,765
 
Discontinued operations:
                               
Income from discontinued operations before income taxes
   
4,071
     
1,416
     
2,180
     
2,159
 
Gain on disposal of discontinued operations before income taxes
   
474,003
     
     
474,003
     
 
Provision for income taxes
   
(134,089
)
   
(1,104
)
   
(134,201
)
   
(2,386
)
Income (loss) from discontinued operations
   
343,985
     
312
     
341,982
     
(227
)
Net income
   
349,842
     
24,550
     
309,691
     
67,538
 
Net loss attributable to redeemable noncontrolling interest from discontinued operations
   
     
102
     
     
359
 
Net income attributable to Adtalem
 
$
349,842
   
$
24,652
   
$
309,691
   
$
67,897
 
                                 
Amounts attributable to Adtalem:
                               
Net income (loss) from continuing operations
 
$
5,857
   
$
24,238
   
$
(32,291
)
 
$
67,765
 
Net income from discontinued operations
   
343,985
     
414
     
341,982
     
132
 
Net income attributable to Adtalem
 
$
349,842
   
$
24,652
   
$
309,691
   
$
67,897
 
                                 
Earnings (loss) per share attributable to Adtalem:
                               
Basic:
                               
Continuing operations
 
$
0.12
   
$
0.48
   
$
(0.65
)
 
$
1.31
 
Discontinued operations
 
$
7.03
   
$
0.01
   
$
6.91
   
$
0.00
 
Total basic earnings per share
 
$
7.15
   
$
0.49
   
$
6.26
   
$
1.31
 
Diluted:
                               
Continuing operations
 
$
0.12
   
$
0.47
   
$
(0.65
)
 
$
1.30
 
Discontinued operations
 
$
6.97
   
$
0.01
   
$
6.91
   
$
0.00
 
Total diluted earnings per share
 
$
7.09
   
$
0.48
   
$
6.26
   
$
1.30
 
                                 
Weighted-average shares outstanding:
                               
Basic shares
   
48,925
     
50,658
     
49,459
     
51,799
 
Diluted shares
   
49,377
     
51,111
     
49,459
     
52,101
 


Adtalem Global Education Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)

             
   
Nine Months Ended
 
   
March 31,
 
   
2022
   
2021
 
Operating activities:
           
Net income
 
$
309,691
   
$
67,538
 
(Income) loss from discontinued operations
   
(341,982
)
   
227
 
(Loss) income from continuing operations
   
(32,291
)
   
67,765
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Stock-based compensation expense
   
18,604
     
10,429
 
Amortization and adjustments to operating lease assets
   
35,251
     
39,346
 
Depreciation
   
33,471
     
25,325
 
Amortization of intangible assets
   
73,967
     
 
Amortization and write-off of debt discount and issuance costs
   
34,481
     
1,548
 
Provision for bad debts
   
19,552
     
7,978
 
Deferred income taxes
   
3,425
     
(4,558
)
Loss on disposals, accelerated depreciation, and adjustments to property and equipment
   
2,274
     
1,589
 
Realized and unrealized gain on investments
   
     
(2,002
)
Changes in assets and liabilities:
               
Accounts receivable
   
(40,520
)
   
1,804
 
Prepaid expenses and other current assets
   
3,531
     
(7,297
)
Accounts payable
   
(5,737
)
   
(826
)
Accrued payroll and benefits
   
(23,221
)
   
(884
)
Accrued liabilities
   
(92,528
)
   
8,128
 
Deferred revenue
   
87,811
     
23,813
 
Operating lease liabilities
   
(36,159
)
   
(36,683
)
Other assets and liabilities
   
(23,514
)
   
(9,799
)
Net cash provided by operating activities-continuing operations
   
58,397
     
125,676
 
Net cash (used in) provided by operating activities-discontinued operations
   
(6,915
)
   
18,487
 
Net cash provided by operating activities
   
51,482
     
144,163
 
Investing activities:
               
Capital expenditures
   
(22,249
)
   
(28,591
)
Proceeds from sales of marketable securities
   
     
2,387
 
Purchases of marketable securities
   
     
(2,414
)
Payment for purchase of business, net of cash and restricted cash acquired
   
(1,488,054
)
   
 
Cash received on DeVry University loan
   
10,000
     
 
Net cash used in investing activities-continuing operations
   
(1,500,303
)
   
(28,618
)
Net cash used in investing activities-discontinued operations
   
(3,287
)
   
(6,253
)
Proceeds from sale of business, net of cash transferred
   
962,652
     
 
Net cash used in investing activities
   
(540,938
)
   
(34,871
)
Financing activities:
               
Proceeds from exercise of stock options
   
8,433
     
889
 
Employee taxes paid on withholding shares
   
(2,727
)
   
(4,144
)
Proceeds from stock issued under Colleague Stock Purchase Plan
   
400
     
160
 
Repurchases of common stock for treasury
   
(120,000
)
   
(81,568
)
Payment for purchase of equity forward contract
   
(30,000
)
   
 
Proceeds from long-term debt
   
850,000
     
800,000
 
Repayments of long-term debt
   
(687,667
)
   
(2,250
)
Payment of debt discount and issuance costs
   
(49,553
)
   
(18,047
)
Payment for purchase of redeemable noncontrolling interest of subsidiary
   
(1,790
)
   
 
Net cash (used in) provided by financing activities
   
(32,904
)
   
695,040
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
   
12
     
343
 
Net (decrease) increase in cash, cash equivalents and restricted cash
   
(522,348
)
   
804,675
 
Cash, cash equivalents and restricted cash at beginning of period
   
1,313,616
     
501,105
 
Cash, cash equivalents and restricted cash at end of period
   
791,268
     
1,305,780
 
Less: cash, cash equivalents and restricted cash of discontinued operations at end of period
   
1,273
     
36,141
 
Cash, cash equivalents and restricted cash of continuing operations at end of period
 
$
789,995
   
$
1,269,639
 


Adtalem Global Education Inc.
Segment Information
(unaudited)
(in thousands)

   
Three Months Ended
   
Nine Months Ended
 
   
March 31,
   
March 31,
 
   
2022
   
2021
   
Increase
(Decrease)
   
2022
   
2021
   
Increase
(Decrease)
 
Revenue:
                                   
Chamberlain
 
$
142,550
   
$
146,313
     
(2.6
)%
 
$
417,310
   
$
422,054
     
(1.1
)%
Walden
   
139,081
     
   
NM
     
348,325
     
   
NM
 
Medical and Veterinary
   
83,992
     
83,900
     
0.1
%
   
260,256
     
261,381
     
(0.4
)%
Total consolidated revenue
 
$
365,623
   
$
230,213
     
58.8
%
 
$
1,025,891
   
$
683,435
     
50.1
%
Operating income (loss):
                                               
Chamberlain
 
$
36,979
   
$
36,107
     
2.4
%
 
$
83,290
   
$
98,758
     
(15.7
)%
Walden
   
(2,854
)
   
   
NM
     
(16,943
)
   
   
NM
 
Medical and Veterinary
   
14,913
     
14,977
     
(0.4
)%
   
50,096
     
56,626
     
(11.5
)%
Home Office and Other
   
(15,774
)
   
(15,123
)
   
(4.3
)%
   
(80,508
)
   
(64,408
)
   
(25.0
)%
Total consolidated operating income
 
$
33,264
   
$
35,961
     
(7.5
)%
 
$
35,935
   
$
90,976
     
(60.5
)%

Non-GAAP Financial Measures and Reconciliations
We believe that certain non-GAAP financial measures provide investors with useful supplemental information regarding the underlying business trends and performance of Adtalem’s ongoing operations and are useful for period-over-period comparisons. We use these supplemental non-GAAP financial measures internally in our assessment of performance and budgeting process. However, these non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The following are non-GAAP financial measures used in the subsequent GAAP to non-GAAP reconciliation tables:
 
Net income from continuing operations excluding special items (most comparable GAAP measure: net income attributable to Adtalem) – Measure of Adtalem’s net income attributable to Adtalem adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, Walden intangible amortization expense, pre-acquisition interest expense and write-off of debt discount and issuance costs, and net income from discontinued operations attributable to Adtalem.
 
Earnings per share from continuing operations excluding special items (most comparable GAAP measure: earnings per share) – Measure of Adtalem’s diluted earnings per share adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, Walden intangible amortization expense, pre-acquisition interest expense and write-off of debt discount and issuance costs, and net income from discontinued operations attributable to Adtalem.
 
Operating income excluding special items (most comparable GAAP measure: operating income) – Measure of Adtalem’s operating income adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, and Walden intangible amortization expense. This measure is applied on a consolidated and segment basis, depending on the context of the discussion.
 
Adjusted EBITDA (most comparable GAAP measure: net income attributable to Adtalem) – Measure of Adtalem’s net income attributable to Adtalem adjusted for net income from discontinued operations attributable to Adtalem, net other expense, (benefit from) provision for income taxes, depreciation and amortization, stock-based compensation, deferred revenue adjustment, CEO transition costs, restructuring expense, and business acquisition and integration expense. This measure is applied on a consolidated and segment basis, depending on the context of the discussion. Income taxes and net other expense is not recorded at the reportable segments, and therefore, the segment adjusted EBITDA reconciliations begin with operating income.
 
Free cash flow (most comparable GAAP measure: net cash provided by operating activities-continuing operations) – Defined as net cash provided by operating activities-continuing operations less capital expenditures.
 
Net debt – Defined as long-term debt less cash and cash equivalents.
 
Net leverage – Defined as net debt divided by adjusted EBITDA.

A description of special items in our non-GAAP financial measures described above are as follows:
Deferred revenue adjustment related to a revenue purchase accounting adjustment to record Walden’s deferred revenue at fair value.
CEO transition costs related to acceleration of stock-based compensation expense.
Restructuring expense primarily related to plans to achieve synergies with the Walden acquisition and real estate consolidations at Medical and Veterinary and Adtalem’s home office.
Business acquisition and integration expense include expenses related to the Walden acquisition.
Walden amortization expense on acquired intangible assets.
Pre-acquisition interest expense and write-off of debt discount and issuance costs related to financing arrangements in connection with the Walden acquisition and prepayment of debt.
Net income from discontinued operations attributable to Adtalem includes the operations of ACAMS, Becker, OCL, including the after-tax gain on the sale of these businesses, and EduPristine operations, in addition to costs related to DeVry University.


Adtalem Global Education Inc.
Non-GAAP Operating Income by Segment
(unaudited)
(in thousands)

   
Three Months Ended
   
Nine Months Ended
 
   
March 31,
   
March 31,
 
   
2022
   
2021
   
Increase
(Decrease)
   
2022
   
2021
   
Increase
(Decrease)
 
Chamberlain:
                                   
Operating income (GAAP)
 
$
36,979
   
$
36,107
     
2.4
%
 
$
83,290
   
$
98,758
     
(15.7
)%
Restructuring expense
   
1,931
     
             
2,266
     
         
Operating income excluding special items (non-GAAP)
 
$
38,910
   
$
36,107
     
7.8
%
 
$
85,556
   
$
98,758
     
(13.4
)%
                                                 
Walden:
                                               
Operating loss (GAAP)
 
$
(2,854
)
 
$
   
NM
   
$
(16,943
)
 
$
   
NM
 
Deferred revenue adjustment
   
     
             
8,561
     
         
Restructuring expense
   
2,225
     
             
4,016
     
         
Walden intangible amortization expense
   
26,817
     
             
73,967
     
         
Operating income excluding special items (non-GAAP)
 
$
26,188
   
$
   
NM
   
$
69,601
   
$
   
NM
 
                                                 
Medical and Veterinary:
                                               
Operating income (GAAP)
 
$
14,913
   
$
14,977
     
(0.4
)%
 
$
50,096
   
$
56,626
     
(11.5
)%
Restructuring expense
   
4,569
     
             
4,757
     
         
Operating income excluding special items (non-GAAP)
 
$
19,482
   
$
14,977
     
30.1
%
 
$
54,853
   
$
56,626
     
(3.1
)%
                                                 
Home Office and Other:
                                               
Operating loss (GAAP)
 
$
(15,774
)
 
$
(15,123
)
   
(4.3
)%
 
$
(80,508
)
 
$
(64,408
)
   
(25.0
)%
CEO transition costs
   
     
             
6,195
     
         
Restructuring expense
   
1,793
     
1,217
             
5,960
     
5,299
         
Business acquisition and integration expense
   
5,924
     
3,646
             
41,537
     
28,161
         
Operating loss excluding special items (non-GAAP)
 
$
(8,057
)
 
$
(10,260
)
   
21.5
%
 
$
(26,816
)
 
$
(30,948
)
   
13.4
%
                                                 
Adtalem Global Education:
                                               
Operating income (GAAP)
 
$
33,264
   
$
35,961
     
(7.5
)%
 
$
35,935
   
$
90,976
     
(60.5
)%
Deferred revenue adjustment
   
     
             
8,561
     
         
CEO transition costs
   
     
             
6,195
     
         
Restructuring expense
   
10,518
     
1,217
             
16,999
     
5,299
         
Business acquisition and integration expense
   
5,924
     
3,646
             
41,537
     
28,161
         
Walden intangible amortization expense
   
26,817
     
             
73,967
     
         
Operating income excluding special items (non-GAAP)
 
$
76,523
   
$
40,824
     
87.4
%
 
$
183,194
   
$
124,436
     
47.2
%


Adtalem Global Education Inc.
Non-GAAP Adjusted EBITDA by Segment
(unaudited)
(in thousands)

   
Three Months Ended
   
Nine Months Ended
 
   
March 31,
   
March 31,
 
   
2022
   
2021
   
Increase
(Decrease)
   
2022
   
2021
   
Increase
(Decrease)
 
Chamberlain:
                                   
Operating income (GAAP)
 
$
36,979
   
$
36,107
     
2.4
%
 
$
83,290
   
$
98,758
     
(15.7
)%
Restructuring expense
   
1,931
     
             
2,266
     
         
Depreciation
   
4,738
     
4,091
             
14,048
     
11,998
         
Stock-based compensation
   
1,869
     
1,296
             
5,104
     
4,195
         
Adjusted EBITDA (non-GAAP)
 
$
45,517
   
$
41,494
     
9.7
%
 
$
104,708
   
$
114,951
     
(8.9
)%
                                                 
Walden:
                                               
Operating loss (GAAP)
 
$
(2,854
)
 
$
   
NM
   
$
(16,943
)
 
$
   
NM
 
Deferred revenue adjustment
   
     
             
8,561
     
         
Restructuring expense
   
2,225
     
             
4,016
     
         
Walden intangible amortization expense
   
26,817
     
             
73,967
     
         
Depreciation
   
2,573
     
             
6,801
     
         
Stock-based compensation
   
841
     
             
2,308
     
         
Adjusted EBITDA (non-GAAP)
 
$
29,602
   
$
   
NM
   
$
78,710
   
$
   
NM
 
                                                 
Medical and Veterinary:
                                               
Operating income (GAAP)
 
$
14,913
   
$
14,977
     
(0.4
)%
 
$
50,096
   
$
56,626
     
(11.5
)%
Restructuring expense
   
4,569
     
             
4,757
     
         
Depreciation
   
3,397
     
3,646
             
10,497
     
10,802
         
Stock-based compensation
   
1,075
     
831
             
2,974
     
2,689
         
Adjusted EBITDA (non-GAAP)
 
$
23,954
   
$
19,454
     
23.1
%
 
$
68,324
   
$
70,117
     
(2.6
)%
                                                 
Home Office and Other:
                                               
Operating loss (GAAP)
 
$
(15,774
)
 
$
(15,123
)
   
(4.3
)%
 
$
(80,508
)
 
$
(64,408
)
   
(25.0
)%
CEO transition costs
   
     
             
6,195
     
         
Restructuring expense
   
1,793
     
1,217
             
5,960
     
5,299
         
Business acquisition and integration expense
   
5,924
     
3,646
             
41,537
     
28,161
         
Depreciation
   
633
     
866
             
2,125
     
2,525
         
Stock-based compensation
   
888
     
1,335
             
2,023
     
3,545
         
Adjusted EBITDA (non-GAAP)
 
$
(6,536
)
 
$
(8,059
)
   
18.9
%
 
$
(22,668
)
 
$
(24,878
)
   
8.9
%
                                                 
Adtalem Global Education:
                                               
Net income attributable to Adtalem (GAAP)
 
$
349,842
   
$
24,652
     
1,319.1
%
 
$
309,691
   
$
67,897
     
356.1
%
Net income from discontinued operations attributable to Adtalem
   
(343,985
)
   
(414
)
           
(341,982
)
   
(132
)
       
Net other expense
   
35,540
     
7,166
             
107,123
     
10,848
         
(Benefit from) provision for income taxes
   
(8,133
)
   
4,557
             
(38,897
)
   
12,363
         
Operating income (GAAP)
   
33,264
     
35,961
             
35,935
     
90,976
         
Depreciation and amortization
   
38,158
     
8,603
             
107,438
     
25,325
         
Stock-based compensation
   
4,673
     
3,462
             
12,409
     
10,429
         
Deferred revenue adjustment
   
     
             
8,561
     
         
CEO transition costs
   
     
             
6,195
     
         
Restructuring expense
   
10,518
     
1,217
             
16,999
     
5,299
         
Business acquisition and integration expense
   
5,924
     
3,646
             
41,537
     
28,161
         
Adjusted EBITDA (non-GAAP)
 
$
92,537
   
$
52,889
     
75.0
%
 
$
229,074
   
$
160,190
     
43.0
%


Adtalem Global Education Inc.
Non-GAAP Earnings Disclosure
(unaudited)
(in thousands, except per share data)

   
Three Months Ended
   
Nine Months Ended
 
   
March 31,
   
March 31,
 
   
2022
   
2021
   
2022
   
2021
 
Net income attributable to Adtalem (GAAP)
 
$
349,842
   
$
24,652
   
$
309,691
   
$
67,897
 
Deferred revenue adjustment
   
     
     
8,561
     
 
CEO transition costs
   
     
     
6,195
     
 
Restructuring expense
   
10,518
     
1,217
     
16,999
     
5,299
 
Business acquisition and integration expense
   
5,924
     
3,646
     
41,537
     
28,161
 
Walden intangible amortization expense
   
26,817
     
     
73,967
     
 
Pre-acquisition interest expense and write-off of debt discount and issuance costs
   
12,471
     
4,951
     
44,105
     
4,996
 
Income tax impact on non-GAAP adjustments (1)
   
(18,769
)
   
(3,365
)
   
(60,871
)
   
(10,972
)
Net income from discontinued operations attributable to Adtalem
   
(343,985
)
   
(414
)
   
(341,982
)
   
(132
)
Net income from continuing operations excluding special items (non-GAAP)
 
$
42,818
   
$
30,687
   
$
98,202
   
$
95,249
 
(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.

   
Three Months Ended
   
Nine Months Ended
 
   
March 31,
   
March 31,
 
   
2022
   
2021
   
2022
   
2021
 
Earnings per share, diluted (GAAP)
 
$
7.09
   
$
0.48
   
$
6.26
   
$
1.30
 
Effect on diluted earnings per share:
                               
Deferred revenue adjustment
   
-
     
-
     
0.17
     
-
 
CEO transition costs
   
-
     
-
     
0.12
     
-
 
Restructuring expense
   
0.21
     
0.02
     
0.34
     
0.10
 
Business acquisition and integration expense
   
0.12
     
0.07
     
0.83
     
0.54
 
Walden intangible amortization expense
   
0.54
     
-
     
1.48
     
-
 
Pre-acquisition interest expense and write-off of debt discount and issuance costs
   
0.25
     
0.10
     
0.88
     
0.10
 
Income tax impact on non-GAAP adjustments (1)
   
(0.38
)
   
(0.07
)
   
(1.22
)
   
(0.21
)
Net income from discontinued operations attributable to Adtalem
   
(6.97
)
   
(0.01
)
   
(6.91
)
   
(0.00
)
Earnings per share from continuing operations excluding special items, diluted (non-GAAP)
 
$
0.87
   
$
0.60
   
$
1.97
   
$
1.83
 
Diluted shares used in non-GAAP EPS calculation
   
49,377
     
51,111
     
49,872
     
52,101
 
Note: May not sum due to rounding.
(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.


Adtalem Global Education Inc.
Non-GAAP Free Cash Flow Disclosure
(unaudited)
(in thousands)

   
Three Months Ended
   
Twelve Months Ended
 
   
FY22
   
FY21
   
FY22
   
FY22
   
FY22
   
FY21
 
     
Q3
     
Q3
     
Q3
     
Q2
     
Q1
     
Q4
 
Net cash provided by operating activities-continuing operations (GAAP)
 
$
77,365
   
$
67,719
   
$
101,481
   
$
91,835
   
$
124,742
   
$
168,760
 
Capital expenditures
   
(7,477
)
   
(8,887
)
   
(33,539
)
   
(34,949
)
   
(34,256
)
   
(39,881
)
Free cash flow (non-GAAP)
 
$
69,888
   
$
58,832
   
$
67,942
   
$
56,886
   
$
90,486
   
$
128,879
 


Adtalem Global Education Inc.
Non-GAAP Outlook Disclosure
(unaudited)
(in millions, except per share data)

 

  Year Ended  
 
  June 30, 2022  
Expected earnings per share, diluted (GAAP)

$ 6.76 to 6.96  
Expected effects on diluted earnings per share:
   
Purchase accounting adjustment - deferred revenue
 
$
0.18
 
CEO transition costs
   
0.13
 
Restructuring expense
   
0.35
 
Business acquisition and integration costs
   
0.85
 
Estimated purchase accounting adjustment - intangible amortization
   
1.99
 
Pre-acquisition interest expense and write-off of debt discount and issuance costs
   
0.90
 
Estimated incremental acquisition integration costs
   
0.14
 
Estimated income tax impact on non-GAAP adjustments(1)
   
(1.14
)
Net income from discontinued operations attributable to Adtalem
   
(7.01
)
Expected adjusted earnings per share from continuing operations excluding special items, diluted (non-GAAP)(2)

$ 3.15 to 3.35  
Diluted shares used in EPS calculation (in thousands)
   
48,800
 
(1) Represents the estimated income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.
(2) The outlook provided above does not reflect the potential impact of any business or asset acquisitions or dispositions that may occur during the remainder of fiscal year 2022. The expected effects on diluted earnings per share (“EPS”) of (1) the estimated purchase accounting adjustment – intangible amortization, and (2) the estimated incremental acquisition integration costs are estimates related to the Walden University acquisition. The effects on diluted EPS of purchase accounting adjustment – deferred revenue, CEO transition costs, restructuring expense, business acquisition and integration costs, pre-acquisition interest expense and write-off of debt discount and issuance costs, and income from discontinued operations attributable to Adtalem includes the results realized through March 31, 2022. We are not able to further estimate certain special items for the full fiscal year. Additional charges to these special items, or additional special items not currently identified, which may occur during the remainder of fiscal year 2022, would impact the GAAP expected EPS provided above.

 

  Year Ended  
 
  June 30, 2022  
Expected revenue (GAAP)
 
$
1,341 to 1,381  
Estimated incremental purchase accounting adjustment - deferred revenue
   
9
 
Expected revenue excluding special items (non-GAAP)(3)
 
$
1,350 to 1,390  
(3) The outlook provided above does not reflect the potential impact of any business or asset acquisitions or dispositions that may occur during the remainder of fiscal year 2022. The expected effects on revenue of the item listed above is an estimate related to the Walden University acquisition.


Adtalem Global Education Inc.
Non-GAAP Net Leverage Disclosure
(unaudited)
(in thousands)

   
Three Months Ended
   
Nine Months Ended
 
Twelve Months Ended
 
   
June 30, 2021
   
March 31, 2022
 
March 31, 2022
 
Adtalem Global Education:
                 
Net income attributable to Adtalem (GAAP)
 
$
9,012
   
$
309,691
   
$
318,703
 
Net income from discontinued operations attributable to Adtalem
   
(6,447
)
   
(341,982
)
   
(348,429
)
Net other expense
   
23,785
     
107,123
     
130,908
 
(Benefit from) provision for income taxes
   
726
     
(38,897
)
   
(38,171
)
Depreciation and amortization
   
8,563
     
107,438
     
116,001
 
Stock-based compensation
   
2,395
     
12,409
     
14,804
 
Deferred revenue adjustment
   
     
8,561
     
8,561
 
CEO transition costs
   
     
6,195
     
6,195
 
Restructuring expense
   
1,570
     
16,999
     
18,569
 
Business acquisition and integration expense
   
3,432
     
41,537
     
44,969
 
Adjusted EBITDA (non-GAAP)
 
$
43,036
   
$
229,074
   
$
272,110
 
                         
                 

  March 31, 2022  
Long-term debt
                 
$
1,253,333
 
Cash and cash equivalents
                   
788,729
 
Net debt (non-GAAP)
                 
$
464,604
 
                         
Net leverage (non-GAAP)
                   
1.7
x