EX-99.1 2 a52959534ex99_1.htm EXHIBIT 99.1
Exhibit 99.1

News Release
Investor Contact
Chandrika Nigam
Chandrika.Nigam@Adtalem.com
312-681-3209

Media Contact
Kelly Finelli
Kelly.Finelli@Adtalem.com
872-270-0230


Adtalem Global Education Announces Fiscal First Quarter 2023 Results
 
Continued margin expansion across all segments
 
 
CHICAGO – Nov. 3, 2022 – Adtalem Global Education Inc. (NYSE: ATGE), a leading healthcare educator, today reported academic, operating and financial results for its first quarter fiscal 2023 ended Sept. 30, 2022.
 
“I’m pleased to report another solid quarter, largely in line with expectations. I continue to be impressed by the resilience of our colleagues and their ability to successfully navigate a dynamic environment,” said Steve Beard, president and CEO of Adtalem Global Education. “Over the last year, we embarked on a journey to reposition ourselves as a national leader in post-secondary education and a leading provider of professional talent to the healthcare industry. We have made great strides in this endeavor, which has supported margin expansion from operating leverage, while implementing a thoughtful approach to capital allocation.”
 
Beard continued, “Looking ahead to the balance of fiscal 2023, we remain cautiously optimistic that the demand environment will improve in the latter half of the year, allowing us to benefit from our new, more efficient operating model along with strategic investments made across a full range of enrollment and student support activities. We remain uniquely positioned through our high-quality institutions to produce highly trained, practice-ready healthcare professionals while driving superior student outcomes.”
 

Financial Highlights
 
Selected financial data for the three months ended Sept. 30, 2022:


●
Revenue of $354.6 million increased 22.7% compared with the prior year due to the timing of the acquisition of Walden
●
Diluted earnings per share increased to $0.05 from a loss of $1.17 in the prior year; adjusted earnings per share, increased to $0.88 or by 151.4%, compared with $0.35 in the prior year
●
Operating income was $23.1 million, compared with an operating loss of $22.1 million in the prior year; adjusted operating income was $65.1 million, an increase of 78.7% compared with the prior year. Operating margin was 6.5% and adjusted operating margin increased to 18.4% from 12.6% driven by integration and cost reduction efforts
●
Net income was $2.2 million, compared with a loss of $58.0 million in the prior year; adjusted net income was $41.0 million, an increase of 133.1% compared with the prior year
●
Adjusted EBITDA was $82.1 million, an increase of 62.6% compared with the prior year.  Adjusted EBITDA margins increased to 23.1% from 17.5%
●
Gross debt was reduced by $101 million, representing a decrease of 11.7% in the first quarter


Business Highlights
 
●
American University of the Caribbean School of Medicine and Ross University School of Medicine established a partnership with Southern California University of Health Services to expand pathways to medicine for aspiring physicians
●
Ross University School of Medicine entered into a collaboration with Bethune-Cookman University, a historically Black university, to create pathways for aspiring medical students, many of whom identify as a race or ethnicity underrepresented in medicine
●
Chamberlain University announced a transition agreement to help recently displaced Stratford University nursing students continue their education and achieve their career ambitions
●
Adtalem’s FY 2019* combined cohort default rate remained well below combined cohort default rate for all schools nationally, including public and not-for-profit four-year sectors, which is representative of the quality of our programs and the employability of our graduates.
*Overall cohort default rates were impacted by the pandemic pause


Segment Highlights
 

Chamberlain
 
First quarter segment revenue was relatively flat compared with the prior year, at $135.4 million, and segment operating income increased 25.6% to $26.2 million primarily due to lower labor from  continued cost reduction initiatives. Adjusted EBITDA increased to $33.8 million or by 25.1% compared with the prior year.
 
Total student enrollment decreased 4.0% compared with the prior year, primarily attributable to COVID-related headwinds in Chamberlain’s post-licensure programs, partially offset by continued improvement in enrollment in pre-licensure programs.
 

Walden
 
Revenue in the first quarter increased to $130.9 million from $68.6 million in the prior year due to the timing of the Walden acquisition. Segment operating income was $1.8 million, and adjusted segment operating income was $23.4 million. Adjusted EBITDA was $27.9 million or 107.7% higher compared with the prior year, driven by the timing of the acquisition.
 
Total student enrollment decreased 9.2% compared with the prior year, which was primarily attributable to COVID-related headwinds in Walden’s post-licensure nursing programs and declines in the management and technology programs, while the social and behavioral science programs – on a relative basis – continued to perform well.
 

 
Medical and Veterinary
 
Revenue in the first quarter increased 4.1% to $88.3 million compared with the prior year. Segment operating income of $10.5 million decreased by 32.8% compared with the prior year. Adjusted segment operating income was $17.4 million, an increase of 10.8% compared with the prior year, driven primarily by the increase in revenue. Adjusted EBITDA increased to $21.9 million or by 9.4% compared with the prior year.
 
Total student enrollment increased 3.4% compared with the prior year, due to growth in new student enrollment and higher persistence.
 

Adtalem Outlook

Adtalem reaffirmed its guidance of fiscal year 2023 revenue to be within the range of $1,380 million and $1,450 million, and adjusted earnings per share to be within the range of $3.95 to $4.20.
 
 
Conference Call and Webcast Information
 
Adtalem will hold a conference call to discuss its fiscal 2023 first quarter on Thursday, Nov. 3, 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: 13732401. Adtalem will also broadcast the conference call live on the web at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Gef8ciIq.
 
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 Dec. 3, 2022. To access the replay, dial 877-660-6853 (United States) or +1 201-612-7415 (outside the United States), conference ID: 13732401, 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 in 2021 and 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, and the expected synergies from the 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.

 

     
Q1 2023
      
Q1 2022
    
% Change
  
Adtalem Global Education Student Enrollments
                      
Total students(1)
    
79,559
      
84,874
      
-6.3
%
                         
                         
Chamberlain University
                        
Total students
    
33,153
      
34,539
      
-4.0
%
                         
                         
Walden University
                        
Total students
    
40,772
      
44,886
      
-9.2
%
                         
                         
Medical & Veterinary
                        
Total students
    
5,634
      
5,449
      
3.4
%


(1)
Represents total students attending sessions during each institution’s most recent enrollment period in Q1 FY 2023 and Q1 FY 2022


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

   
September 30,
   
June 30,
   
September 30,
 
   
2022
    
2022
    
2021
  
Assets:
                  
Current assets:
                  
Cash and cash equivalents
  
$
327,515
    
$
346,973
    
$
323,994
  
Restricted cash
    
2,480
      
964
      
20,220
  
Accounts receivable, net
    
111,858
      
81,635
      
140,390
  
Prepaid expenses and other current assets
    
128,069
      
126,467
      
162,463
  
Current assets held for sale
    
—
      
—
      
62,725
  
Total current assets
    
569,922
      
556,039
      
709,792
  
Noncurrent assets:
                        
Property and equipment, net
    
281,581
      
289,926
      
308,759
  
Operating lease assets
    
158,287
      
177,995
      
167,249
  
Deferred income taxes
    
49,318
      
51,093
      
61,654
  
Intangible assets, net
    
855,049
      
873,577
      
954,400
  
Goodwill
    
961,262
      
961,262
      
952,764
  
Other assets, net
    
120,630
      
119,283
      
113,819
  
Noncurrent assets held for sale
    
—
      
—
      
530,627
  
Total noncurrent assets
    
2,426,127
      
2,473,136
      
3,089,272
  
Total assets
  
$
2,996,049
    
$
3,029,175
    
$
3,799,064
  
                         
Liabilities and shareholders' equity:
                        
Current liabilities:
                        
Accounts payable
  
$
64,407
    
$
57,140
    
$
99,691
  
Accrued payroll and benefits
    
55,034
      
66,642
      
57,463
  
Accrued liabilities
    
93,805
      
98,124
      
124,748
  
Deferred revenue
    
227,238
      
144,840
      
236,990
  
Current operating lease liabilities
    
50,065
      
50,781
      
55,925
  
Current portion of long-term debt
    
—
      
—
      
6,375
  
Current liabilities held for sale
    
—
      
—
      
55,038
  
Total current liabilities
    
490,549
      
417,527
      
636,230
  
Noncurrent liabilities:
                        
Long-term debt
    
741,696
      
838,908
      
1,600,043
  
Long-term operating lease liabilities
    
164,840
      
177,045
      
164,172
  
Deferred income taxes
    
26,408
      
25,554
      
26,390
  
Other liabilities
    
62,517
      
65,074
      
72,688
  
Noncurrent liabilities held for sale
    
—
      
—
      
32,570
  
Total noncurrent liabilities
    
995,461
      
1,106,581
      
1,895,863
  
Total liabilities
    
1,486,010
      
1,524,108
      
2,532,093
  
Commitments and contingencies
                        
Redeemable noncontrolling interest
    
—
      
—
      
1,790
  
Shareholders' equity:
                        
Common stock, $0.01 par value per share, 200,000 shares authorized; 45,396, 45,177, and 49,753 shares
outstanding as of September 30, 2022, June 30, 2022, and September 30, 2021, respectively
    
821
      
818
      
817
  
Additional paid-in capital
    
529,229
      
521,848
      
537,402
  
Retained earnings
    
2,325,002
      
2,322,810
      
1,947,101
  
Accumulated other comprehensive loss
    
(2,227
)
    
(960
)
    
(740
)
Treasury stock, at cost, 36,703, 36,619, and 31,903 shares as of September 30, 2022, June 30, 2022,
and September 30, 2021, respectively
    
(1,342,786
)
    
(1,339,449
)
    
(1,219,399
)
Total shareholders' equity
    
1,510,039
      
1,505,067
      
1,265,181
  
Total liabilities and shareholders' equity
  
$
2,996,049
    
$
3,029,175
    
$
3,799,064
  


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

   
Three Months Ended
  
   
September 30,
 
   
2022
    
2021
  
Revenue
  
$
354,559
    
$
289,070
  
Operating cost and expense:
                
Cost of educational services
    
159,645
      
152,050
  
Student services and administrative expense
    
148,341
      
129,436
  
Restructuring expense
    
15,065
      
3,094
  
Business acquisition and integration expense
    
8,415
      
26,553
  
Total operating cost and expense
    
331,466
      
311,133
  
Operating income (loss)
    
23,093
      
(22,063
)
Other income (expense):
                
Interest income
    
1,567
      
878
  
Interest expense
    
(17,760
)
    
(47,393
)
Net other expense
    
(16,193
)
    
(46,515
)
Income (loss) from continuing operations before income taxes
    
6,900
      
(68,578
)
Provision for income taxes
    
(1,054
)
    
(8,604
)
Income (loss) from continuing operations
    
5,846
      
(77,182
)
Discontinued operations:
                
Loss from discontinued operations before income taxes
    
(3,438
)
    
(6,050
)
Loss on disposal of discontinued operations before income taxes
    
(3,359
)
    
—
  
Benefit from income taxes
    
3,143
      
25,228
  
(Loss) income from discontinued operations
    
(3,654
)
    
19,178
  
Net income (loss)
  
$
2,192
    
$
(58,004
)
                 
Earnings (loss) per share:
                
Basic:
                
Continuing operations
  
$
0.13
    
$
(1.55
)
Discontinued operations
  
$
(0.08
)
  
$
0.39
  
Total basic earnings (loss) per share
  
$
0.05
    
$
(1.17
)
Diluted:
                
Continuing operations
  
$
0.13
    
$
(1.55
)
Discontinued operations
  
$
(0.08
)
  
$
0.39
  
Total diluted earnings (loss) per share
  
$
0.05
    
$
(1.17
)
                 
Weighted-average shares outstanding:
                
Basic shares
    
45,274
      
49,663
  
Diluted shares
    
46,342
      
49,663
  


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

   
Three Months Ended
  
   
September 30,
 
   
2022
    
2021
  
Operating activities:
            
Net income (loss)
  
$
2,192
    
$
(58,004
)
Loss (income) from discontinued operations
    
3,654
      
(19,178
)
Income (loss) from continuing operations
    
5,846
      
(77,182
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                
Stock-based compensation expense
    
6,145
      
9,711
  
Amortization and impairments to operating lease assets
    
19,708
      
12,323
  
Depreciation
    
10,805
      
10,499
  
Amortization of intangible assets
    
18,528
      
16,451
  
Amortization and write-off of debt discount and issuance costs
    
4,227
      
17,858
  
Provision for bad debts
    
5,991
      
6,189
  
Deferred income taxes
    
2,629
      
(10,186
)
Loss on disposals, accelerated depreciation, and impairments to property and equipment
    
3,483
      
282
  
Gain on extinguishment of debt
    
(71
)
    
—
  
Changes in assets and liabilities:
                
Accounts receivable
    
(33,219
)
    
(78,283
)
Prepaid expenses and other current assets
    
(1,602
)
    
(199
)
Accounts payable
    
7,586
      
26,706
  
Accrued payroll and benefits
    
(11,593
)
    
(21,231
)
Accrued liabilities
    
(9,010
)
    
(24,846
)
Deferred revenue
    
82,398
      
157,225
  
Operating lease liabilities
    
(12,921
)
    
(13,397
)
Other assets and liabilities
    
(7,406
)
    
(2,414
)
Net cash provided by operating activities-continuing operations
    
91,524
      
29,506
  
Net cash (used in) provided by operating activities-discontinued operations
    
(130
)
    
11,358
  
Net cash provided by operating activities
    
91,394
      
40,864
  
Investing activities:
                
Capital expenditures
    
(5,551
)
    
(6,691
)
Payment for purchase of business, net of cash and restricted cash acquired
    
—
      
(1,481,789
)
Net cash used in investing activities-continuing operations
    
(5,551
)
    
(1,488,480
)
Net cash used in investing activities-discontinued operations
    
—
      
(633
)
Payment for working capital adjustment for sale of business
    
(811
)
    
—
  
Net cash used in investing activities
    
(6,362
)
    
(1,489,113
)
Financing activities:
                
Proceeds from exercise of stock options
    
1,241
      
7,685
  
Employee taxes paid on withholding shares
    
(3,486
)
    
(2,228
)
Proceeds from stock issued under Colleague Stock Purchase Plan
    
132
      
114
  
Proceeds from long-term debt
    
—
      
850,000
  
Repayments of long-term debt
    
(100,861
)
    
(291,000
)
Payment of debt discount and issuance costs
    
—
      
(49,553
)
Net cash (used in) provided by financing activities
    
(102,974
)
    
515,018
  
Effect of exchange rate changes on cash, cash equivalents and restricted cash
    
—
      
(70
)
Net decrease in cash, cash equivalents and restricted cash
    
(17,942
)
    
(933,301
)
Cash, cash equivalents and restricted cash at beginning of period
    
347,937
      
1,313,616
  
Cash, cash equivalents and restricted cash at end of period
    
329,995
      
380,315
  
Less: cash, cash equivalents and restricted cash of discontinued operations at end of period
    
—
      
36,101
  
Cash, cash equivalents and restricted cash of continuing operations at end of period
  
$
329,995
    
$
344,214
  
Non-cash investing and financing activities:
                
Accrued capital expenditures
  
$
4,713
    
$
6,576
  


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

   
Three Months Ended
  
   
September 30,
 
               
Increase/(Decrease)
  
   
2022
    
2021
     $    

%
  
Revenue:
                          
Chamberlain
  
$
135,405
    
$
135,639
    
$
(234
)
    
(0.2
)%
Walden
    
130,901
      
68,617
      
62,284
      
90.8
%
Medical and Veterinary
    
88,253
      
84,814
      
3,439
      
4.1
%
Total consolidated revenue
  
$
354,559
    
$
289,070
    
$
65,489
      
22.7
%
Operating income (loss):
                                
Chamberlain
  
$
26,184
    
$
20,855
    
$
5,329
      
25.6
%
Walden
    
1,783
      
(11,646
)
    
13,429
    
NM
  
Medical and Veterinary
    
10,528
      
15,665
      
(5,137
)
    
(32.8
)%
Home Office and Other
    
(15,402
)
    
(46,937
)
    
31,535
      
67.2
%
Total consolidated operating income (loss)
  
$
23,093
    
$
(22,063
)
  
$
45,156
    
NM
  

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 as seen through the eyes of management 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:
 
Adjusted net income (most comparable GAAP measure: net income (loss)) – Measure of Adtalem’s net income (loss) adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, intangible amortization expense, pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, and net loss (income) from discontinued operations.
 
Adjusted earnings per share (most comparable GAAP measure: earnings (loss) per share) – Measure of Adtalem’s diluted earnings (loss) per share adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, intangible amortization expense, pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, and net loss (income) from discontinued operations.
 
Adjusted operating income (most comparable GAAP measure: operating income (loss)) – Measure of Adtalem’s operating income (loss) adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, and 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 (loss)) – Measure of Adtalem’s net income (loss) adjusted for net loss (income) from discontinued operations, net other expense, 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 (loss).
 
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 Walden, Medical and Veterinary, and Adtalem’s home office.
●
Business acquisition and integration expense include expenses related to the Walden acquisition and growth transformation initiatives.
●
Intangible amortization expense on acquired intangible assets.
●
Pre-acquisition interest expense, write-off of debt discount and issuance costs, and gain on extinguishment of debt related to financing arrangements in connection with the Walden acquisition and prepayment of debt.
●
Net loss (income) from discontinued operations includes the operations of ACAMS, Becker, OCL, and EduPristine, in addition to costs related to DeVry University.






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

   
Three Months Ended
  
   
September 30,
 
               
Increase/(Decrease)
  
   
2022
    
2021
     $    

%
  
Chamberlain:
                          
Operating income (GAAP)
  
$
26,184
    
$
20,855
    
$
5,329
      
25.6
%
Restructuring expense
    
818
      
—
      
818
          
Adjusted operating income (non-GAAP)
  
$
27,002
    
$
20,855
    
$
6,147
      
29.5
%
Operating margin (GAAP)
    
19.3
%
    
15.4
%
                
Operating margin (non-GAAP)
    
19.9
%
    
15.4
%
                
                                 
Walden:
                                
Operating income (loss) (GAAP)
  
$
1,783
    
$
(11,646
)
  
$
13,429
    
NM
  
Deferred revenue adjustment
    
—
      
6,207
      
(6,207
)
        
Restructuring expense
    
3,080
      
—
      
3,080
          
Intangible amortization expense
    
18,528
      
16,451
      
2,077
          
Adjusted operating income (non-GAAP)
  
$
23,391
    
$
11,012
    
$
12,379
      
112.4
%
Operating margin (GAAP)
    
1.4
%
    
(17.0
)%
                
Operating margin (non-GAAP)
    
17.9
%
    
16.0
%
                
                                 
Medical and Veterinary:
                                
Operating income (GAAP)
  
$
10,528
    
$
15,665
    
$
(5,137
)
    
(32.8
)%
Restructuring expense
    
6,826
      
—
      
6,826
          
Adjusted operating income (non-GAAP)
  
$
17,354
    
$
15,665
    
$
1,689
      
10.8
%
Operating margin (GAAP)
    
11.9
%
    
18.5
%
                
Operating margin (non-GAAP)
    
19.7
%
    
18.5
%
                
                                 
Home Office and Other:
                                
Operating loss (GAAP)
  
$
(15,402
)
  
$
(46,937
)
  
$
31,535
      
67.2
%
CEO transition costs
    
—
      
6,195
      
(6,195
)
        
Restructuring expense
    
4,341
      
3,094
      
1,247
          
Business acquisition and integration expense
    
8,415
      
26,553
      
(18,138
)
        
Adjusted operating loss (non-GAAP)
  
$
(2,646
)
  
$
(11,095
)
  
$
8,449
      
76.2
%
                                 
Adtalem Global Education:
                                
Operating income (loss) (GAAP)
  
$
23,093
    
$
(22,063
)
  
$
45,156
    
NM
  
Deferred revenue adjustment
    
—
      
6,207
      
(6,207
)
        
CEO transition costs
    
—
      
6,195
      
(6,195
)
        
Restructuring expense
    
15,065
      
3,094
      
11,971
          
Business acquisition and integration expense
    
8,415
      
26,553
      
(18,138
)
        
Intangible amortization expense
    
18,528
      
16,451
      
2,077
          
Adjusted operating income (non-GAAP)
  
$
65,101
    
$
36,437
    
$
28,664
      
78.7
%
Operating margin (GAAP)
    
6.5
%
    
(7.6
)%
                
Operating margin (non-GAAP)
    
18.4
%
    
12.6
%
                


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

   
Three Months Ended
  
   
September 30,
 
               
Increase/(Decrease)
  
   
2022
    
2021
     $    

%
  
Chamberlain:
                          
Operating income (GAAP)
  
$
26,184
    
$
20,855
    
$
5,329
      
25.6
%
Restructuring expense
    
818
      
—
      
818
          
Depreciation
    
4,481
      
4,584
      
(103
)
        
Stock-based compensation
    
2,274
      
1,547
      
727
          
Adjusted EBITDA (non-GAAP)
  
$
33,757
    
$
26,986
    
$
6,771
      
25.1
%
Adjusted EBITDA margin (non-GAAP)
    
24.9
%
    
19.9
%
                
                                 
Walden:
                                
Operating income (loss) (GAAP)
  
$
1,783
    
$
(11,646
)
  
$
13,429
    
NM
  
Deferred revenue adjustment
    
—
      
6,207
      
(6,207
)
        
Restructuring expense
    
3,080
      
—
      
3,080
          
Intangible amortization expense
    
18,528
      
16,451
      
2,077
          
Depreciation
    
2,595
      
1,712
      
883
          
Stock-based compensation
    
1,905
      
707
      
1,198
          
Adjusted EBITDA (non-GAAP)
  
$
27,891
    
$
13,431
    
$
14,460
      
107.7
%
Adjusted EBITDA margin (non-GAAP)
    
21.3
%
    
19.6
%
                
                                 
Medical and Veterinary:
                                
Operating income (GAAP)
  
$
10,528
    
$
15,665
    
$
(5,137
)
    
(32.8
)%
Restructuring expense
    
6,826
      
—
      
6,826
          
Depreciation
    
3,105
      
3,455
      
(350
)
        
Stock-based compensation
    
1,475
      
928
      
547
          
Adjusted EBITDA (non-GAAP)
  
$
21,934
    
$
20,048
    
$
1,886
      
9.4
%
Adjusted EBITDA margin (non-GAAP)
    
24.9
%
    
23.6
%
                
                                 
Home Office and Other:
                                
Operating loss (GAAP)
  
$
(15,402
)
  
$
(46,937
)
  
$
31,535
      
67.2
%
CEO transition costs
    
—
      
6,195
      
(6,195
)
        
Restructuring expense
    
4,341
      
3,094
      
1,247
          
Business acquisition and integration expense
    
8,415
      
26,553
      
(18,138
)
        
Depreciation
    
624
      
748
      
(124
)
        
Stock-based compensation
    
491
      
334
      
157
          
Adjusted EBITDA (non-GAAP)
  
$
(1,531
)
  
$
(10,013
)
  
$
8,482
      
84.7
%
                                 
Adtalem Global Education:
                                
Net income (loss) (GAAP)
  
$
2,192
    
$
(58,004
)
  
$
60,196
    
NM
  
Net loss (income) from discontinued operations
    
3,654
      
(19,178
)
    
22,832
          
Net other expense
    
16,193
      
46,515
      
(30,322
)
        
Provision for income taxes
    
1,054
      
8,604
      
(7,550
)
        
Operating income (loss) (GAAP)
    
23,093
      
(22,063
)
    
45,156
          
Depreciation and amortization
    
29,333
      
26,950
      
2,383
          
Stock-based compensation
    
6,145
      
3,516
      
2,629
          
Deferred revenue adjustment
    
—
      
6,207
      
(6,207
)
        
CEO transition costs
    
—
      
6,195
      
(6,195
)
        
Restructuring expense
    
15,065
      
3,094
      
11,971
          
Business acquisition and integration expense
    
8,415
      
26,553
      
(18,138
)
        
Adjusted EBITDA (non-GAAP)
  
$
82,051
    
$
50,452
    
$
31,599
      
62.6
%
Adjusted EBITDA margin (non-GAAP)
    
23.1
%
    
17.5
%
                


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

   
Three Months Ended
  
   
September 30,
 
   
2022
    
2021
  
Net income (loss) (GAAP)
  
$
2,192
    
$
(58,004
)
Deferred revenue adjustment
    
—
      
6,207
  
CEO transition costs
    
—
      
6,195
  
Restructuring expense
    
15,065
      
3,094
  
Business acquisition and integration expense
    
8,415
      
26,553
  
Intangible amortization expense
    
18,528
      
16,451
  
Pre-acquisition interest expense, write-off of debt discount and issuance costs, and gain on extinguishment of debt
    
2,824
      
31,634
  
Income tax impact on non-GAAP adjustments (1)
    
(9,673
)
    
4,640
  
Net loss (income) from discontinued operations
    
3,654
      
(19,178
)
Adjusted net income (non-GAAP)
  
$
41,005
    
$
17,592
  
(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.


   
Three Months Ended
  
   
September 30,
 
   
2022
    
2021
  
Earnings (loss) per share, diluted (GAAP)
  
$
0.05
    
$
(1.17
)
Effect on diluted earnings per share:
                
Deferred revenue adjustment
    
-
      
0.12
  
CEO transition costs
    
-
      
0.12
  
Restructuring expense
    
0.33
      
0.06
  
Business acquisition and integration expense
    
0.18
      
0.53
  
Intangible amortization expense
    
0.40
      
0.33
  
Pre-acquisition interest expense, write-off of debt discount and issuance costs, and gain on extinguishment of debt
    
0.06
      
0.63
  
Income tax impact on non-GAAP adjustments (1)
    
(0.21
)
    
0.09
  
Net loss (income) from discontinued operations
    
0.08
      
(0.39
)
Adjusted earnings per share, diluted (non-GAAP)
  
$
0.88
    
$
0.35
  
Diluted shares used in non-GAAP EPS calculation
    
46,342
      
50,222
  
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
  
   
FY23
  
FY22
  
FY23
  
FY22
  
FY22
  
FY22
  
FY22
  
FY21
  
 
    
Q1
    
Q1
    
Q1
  
Q4
  
Q3
  
Q2
  
Q1
  
Q4
  
Net cash provided by operating activities-
continuing operations (GAAP)
  
$
 91,524
  
$
 29,506
  
$
 225,843
  
$
 163,825
  
$
 101,481
  
$
 91,835
  
$
 124,742
  
$
 168,760
  
Capital expenditures
    
 (5,551)
    
 (6,691)
    
 (29,914)
    
 (31,054)
    
 (33,539)
    
 (34,949)
    
 (34,256)
    
 (39,881)
  
Free cash flow (non-GAAP)
  
$
 85,973
  
$
 22,815
  
$
 195,929
  
$
 132,771
  
$
 67,942
  
$
 56,886
  
$
 90,486
  
$
 128,879
  




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

   
Year Ended
   
June 30, 2023
Expected earnings per share, diluted (GAAP)
  
$
2.05 to 2.30
Expected effects on diluted earnings per share:
      
Restructuring expense
    
 0.33
Integration costs
    
 0.18
Estimated purchase accounting adjustment - intangible amortization
    
 1.32
Write-off of debt discount and issuance costs and gain on extinguishment of debt
    
 0.06
Estimated incremental integration costs
    
 0.56
Estimated income tax impact on non-GAAP adjustments(1)
    
 (0.63)
Net loss from discontinued operations
    
 0.08
Expected adjusted earnings per share, diluted (non-GAAP)(2)
  
$
3.95 to 4.20
Diluted shares used in EPS calculation
    
 46,342
(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 2023. The expected effects on diluted earnings per share (“EPS”) of (1) the estimated purchase accounting adjustment – intangible amortization and (2) the estimated incremental integration costs are estimates related to the Walden University acquisition and growth transformation initiatives. The effects on diluted EPS of restructuring expense, integration costs, write-off of debt discount and issuance costs, gain on extinguishment of debt, and loss from discontinued operations includes the results realized through September 30, 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 2023, would impact the GAAP expected EPS provided above.

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

 
Twelve Months Ended
  
  

September 30, 2022 
 
Adtalem Global Education:
      
Net income (GAAP)
  
$
377,901
  
Net income from discontinued operations
    
(324,700
)
Net other expense
    
95,206
  
Benefit from income taxes
    
(22,787
)
Depreciation and amortization
    
144,231
  
Stock-based compensation
    
19,045
  
Deferred revenue adjustment
    
2,354
  
Restructuring expense
    
37,599
  
Business acquisition and integration expense
    
35,060
  
Adjusted EBITDA (non-GAAP)
  
$
363,909
  
         
 

  September 30, 2022  
Long-term debt
  
$
758,283
  
Less: Cash and cash equivalents
    
(327,515
)
Net debt (non-GAAP)
  
$
430,768
  
         
Net leverage (non-GAAP)
    
1.2
x