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Adtalem Global Education Fiscal Third Quarter 2024 Results; Guidance Raised

Revenue up 11.8% YoY

Total enrollment up 7.8% YoY

Diluted earnings per share $0.93; Adjusted EPS $1.50, growth of 32.7% YoY

Third Quarter Highlights

  • Revenue $412.7 million, up 11.8% year-over-year
  • Total student enrollment 85,809, up 7.8% year-over-year
  • Chamberlain University fifth straight quarter of total enrollment growth, up 9.0% year-over-year, highest total enrollment in university history
  • Walden University third straight quarter of total enrollment growth, up 8.4% year-over-year
  • Investing in Growth with Purpose strategy, GAAP net income $36.8 million, and adjusted EBITDA $107.1 million, up 24.6% year-over-year

Capital Allocation

  • Repurchased $91 million of shares
  • Net leverage 1.3x as of March 31, 2024

Fiscal Year 2024 Guidance

  • Revenue $1,560 million to $1,580 million
  • Adjusted earnings per share $4.80 to $5.00

Adtalem Global Education Inc. (NYSE: ATGE), the leading healthcare educator in the United States, today reported third quarter fiscal 2024 results (quarter ended March 31, 2024) reflecting robust operating performance through accelerated total enrollment growth and enhanced profitability.

“Our Growth with Purpose strategy, with its emphasis on operational excellence, continues to accelerate top- and bottom-line performance, permitting us to expand access to high-quality, in-demand programs,” said Steve Beard, president and chief executive officer, Adtalem Global Education.

“The momentum is built on strong enrollments, improved persistence and outstanding academic outcomes. With over 81,000 students graduated in the last three years, we are innately focused on our ability to have an outsized impact on U.S. healthcare.”

Financial Highlights

Selected financial data for the three months ended March 31, 2024:

  • Revenue of $412.7 million increased 11.8% compared with the prior year.
  • Operating income was $61.7 million, compared with $59.4 million in the prior year; adjusted operating income was $89.8 million, compared with $73.0 million in the prior year.
  • Net income was $36.8 million, compared with $45.9 million in the prior year; adjusted net income was $59.4 million, compared with $51.6 million in the prior year.
  • Diluted earnings per share was $0.93, compared with $1.00 in the prior year; adjusted earnings per share was $1.50, compared with $1.13 in the prior year.
  • Adjusted EBITDA was $107.1 million, compared with $85.9 million in the prior year; adjusted EBITDA margin was 25.9%, compared with 23.3% in the prior year.

Business Highlights

  • American University of the Caribbean School of Medicine and Ross University School of Medicine achieved a combined 98% first-time residency attainment rate for 2023-2024 graduates1, for the second straight year, placing more than 815 students and graduates into over 350 unique healthcare facilities spanning 44 states and territories. Over 500 will enter primary care residencies, poised to enhance healthcare outcomes for some of the more than 83 million Americans in underserved areas lacking adequate access to primary care. Of the more than 815 students and graduates, 189 identify as Black/African American or Hispanic, helping diversify the pipeline of physicians in the U.S. healthcare system where, based on 2021 data, Black Americans make up 13% of the population but only 6% of physicians, and Hispanics represent 19% of the population but only 7% of physicians.
  • Scott Liles rejoined Adtalem on April 1 as president of our Medical and Veterinary segment. Liles most recently served as the chief executive officer and executive board member for the Association of Certified Anti-Money Laundering Specialists (ACAMS). Liles was instrumental in returning ACAMS to growth in preparation for Adtalem’s divestiture of its Financial Services segment and in establishing ACAMS as an independent company.
  • Chamberlain University continues to expand its specialized nursing education that addresses areas of acute nursing shortages through its Practice Ready. Specialty Focused.™ model and a new partnership with the Emergency Nurses Association (ENA), offering in-depth introduction into emergency nursing. The ENA emergency nursing offering is in addition to partnerships with DaVita® for nephrology, BrightStar Care® for home healthcare as well as the Association of periOperative Registered Nurses for perioperative nursing. Chamberlain’s proprietary specialty model, created with a grant from the American Nurses Foundation, is now offered at all 23 Chamberlain campuses.
  • Walden University experienced some of the strongest new enrollment growth in its history, offering flexibility to working adults through part-time, self-paced and Tempo Learning® competency-based programs.
  • Walden University celebrated over 5,500 graduates at its 70th anniversary commencement. College of Nursing and the College of Social and Behavioral Health degrees accounted for more than 60% of the degrees awarded, further showcasing Adtalem's commitment to delivering practice-ready professionals at scale to the U.S. healthcare system.

Segment Highlights

Chamberlain

$ in millions

 

Three Months Ended

Mar. 31,

 

 

2024

2023

% Change

Revenue

 

$170.3

$149.7

13.8%

Operating Income

 

$43.3

$39.6

9.5%

Adj. Operating Income

 

$43.3

$39.6

9.5%

Adj. EBITDA

 

$50.5

$44.9

12.3%

Total Students (2)

 

37,985

34,847

9.0%

  • Total student enrollment increased 9.0% compared with the prior year, driven by continued growth in pre-licensure and post-licensure nursing programs as well as higher persistence.

Walden

$ in millions

 

Three Months Ended

Mar. 31,

 

 

2024

2023

% Change

Revenue

 

$150.6

$132.9

13.3%

Operating Income

 

$23.6

$10.3

128.0%

Adj. Operating Income

 

$31.9

$24.6

29.4%

Adj. EBITDA

 

$35.9

$27.8

28.9%

Total Students (2)

 

42,751

39,427

8.4%

  • Total student enrollment increased 8.4% compared with the prior year, driven by growth in healthcare programs and high persistence.

Medical and Veterinary

$ in millions

 

Three Months Ended

Mar. 31,

 

 

2024

2023

% Change

Revenue

 

$91.7

$86.5

6.1%

Operating Income

 

$22.8

$16.5

38.2%

Adj. Operating Income

 

$23.0

$16.9

35.9%

Adj. EBITDA

 

$27.0

$20.7

30.3%

Total Students (2)

 

5,073

5,312

(4.5)%

  • Total student enrollment decreased 4.5% compared with the prior year, primarily driven by declines at the medical schools.

Fiscal Year 2024 Outlook

Adtalem guidance for fiscal year 2024, raises revenue guidance to a range of $1,560 million to $1,580 million from $1,520 million to $1,560 million, and raises adjusted earnings per share to be in the range of $4.80 to $5.00 from $4.55 to $4.75.

Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its fiscal third quarter 2024 results today at 4:00 p.m. CT (5:00 p.m. ET).

The call can be accessed by dialing +1 877-407-6184 (U.S. participants) or +1 201-389-0877 (international participants) stating “Adtalem earnings call” or use conference ID: 13745553. The call will be simulcast through the Adtalem investor relations website at: https://investors.adtalem.com.

Adtalem will archive a replay of the call for 30 days. To access the replay, dial +1 877-660-6853 (U.S.) or +1 201-612-7415 (international), conference ID: 13745553, or visit the Adtalem investor relations website.

About Adtalem Global Education

Adtalem Global Education (NYSE: ATGE) is the No. 1 provider of healthcare education in the U.S.3 and a systemically important solution for preparing a diverse talent workforce that meets needs of the healthcare industry. We are redefining the education pathway into healthcare and meeting the evolving patient needs for a thriving society. Adtalem recognizes the potential in each individual and guides them to success while maintaining the top-tier standards and rigor needed to fill the workforce deficit, by creating more opportunities to connect practice-ready clinicians with employers at scale. We empower a diverse learner population to achieve their goals and make inspiring contributions to their communities with a family of institutions dedicated to nursing, medicine, veterinary medicine, social work and more. Our community is comprised of approximately 80,000 students, over 300,000 alumni and nearly 10,000 employees. Visit Adtalem.com for more information and follow us on LinkedIn, Instagram and Facebook.

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 Adtalem’s future growth. 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 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.

A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of special items that may be incurred in the future, although these special items could be material to Adtalem's results in accordance with GAAP.

1 First-time residency attainment rate is the percent of students attaining a 2024-25 residency position out of all graduates or expected graduates in 2023-24 who were active applicants in the 2024 NRMP match or who attained a residency position outside the NRMP match.

 

2 Represents total students attending sessions during each institution’s most recent enrollment period in Q3 FY 2024 and Q3 FY 2023.

 

3 Based on most recent reported year, 2022, according to U.S. government IPEDS database.

Adtalem Global Education Inc.

Consolidated Balance Sheets

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

March 31,

 

June 30,

 

 

2024

 

2023

Assets:

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

179,762

 

$

273,689

Restricted cash

 

 

7,562

 

 

1,386

Accounts and financing receivables, net

 

 

140,909

 

 

102,749

Prepaid expenses and other current assets

 

 

59,401

 

 

100,715

Total current assets

 

 

387,634

 

 

478,539

Noncurrent assets:

 

 

 

 

 

 

Property and equipment, net

 

 

272,792

 

 

258,522

Operating lease assets

 

 

169,498

 

 

174,677

Deferred income taxes

 

 

64,213

 

 

56,694

Intangible assets, net

 

 

784,042

 

 

812,338

Goodwill

 

 

961,262

 

 

961,262

Other assets, net

 

 

67,768

 

 

68,509

Assets held for sale

 

 

7,825

 

 

Total noncurrent assets

 

 

2,327,400

 

 

2,332,002

Total assets

 

$

2,715,034

 

$

2,810,541

 

 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

92,198

 

$

81,812

Accrued payroll and benefits

 

 

67,647

 

 

52,041

Accrued liabilities

 

 

114,224

 

 

105,806

Deferred revenue

 

 

202,566

 

 

153,871

Current operating lease liabilities

 

 

32,475

 

 

37,673

Total current liabilities

 

 

509,110

 

 

431,203

Noncurrent liabilities:

 

 

 

 

 

 

Long-term debt

 

 

648,106

 

 

695,077

Long-term operating lease liabilities

 

 

159,717

 

 

163,441

Deferred income taxes

 

 

28,937

 

 

26,068

Other liabilities

 

 

48,201

 

 

37,416

Total noncurrent liabilities

 

 

884,961

 

 

922,002

Total liabilities

 

 

1,394,071

 

 

1,353,205

Commitments and contingencies

 

 

 

 

 

 

Total shareholders' equity

 

 

1,320,963

 

 

1,457,336

Total liabilities and shareholders' equity

 

$

2,715,034

 

$

2,810,541

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,

 

 

2024

 

2023

 

2024

 

2023

Revenue

 

$

412,658

 

 

$

369,082

 

 

$

1,174,745

 

 

$

1,086,185

 

Operating cost and expense:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of educational services

 

 

175,321

 

 

 

165,820

 

 

 

516,008

 

 

 

484,768

 

Student services and administrative expense

 

 

156,689

 

 

 

144,526

 

 

 

478,368

 

 

 

432,713

 

Restructuring expense

 

 

473

 

 

 

1,278

 

 

 

1,217

 

 

 

17,706

 

Business integration expense

 

 

18,450

 

 

 

11,346

 

 

 

30,621

 

 

 

35,702

 

Gain on sale of assets

 

 

 

 

 

(13,317

)

 

 

 

 

 

(13,317

)

Total operating cost and expense

 

 

350,933

 

 

 

309,653

 

 

 

1,026,214

 

 

 

957,572

 

Operating income

 

 

61,725

 

 

 

59,429

 

 

 

148,531

 

 

 

128,613

 

Interest expense

 

 

(16,560

)

 

 

(14,457

)

 

 

(48,910

)

 

 

(47,806

)

Other income, net

 

 

2,871

 

 

 

3,980

 

 

 

8,648

 

 

 

3,301

 

Income from continuing operations before income taxes

 

 

48,036

 

 

 

48,952

 

 

 

108,269

 

 

 

84,108

 

Provision for income taxes

 

 

(10,595

)

 

 

(389

)

 

 

(21,156

)

 

 

(5,906

)

Income from continuing operations

 

 

37,441

 

 

 

48,563

 

 

 

87,113

 

 

 

78,202

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from discontinued operations before income taxes

 

 

(832

)

 

 

(3,993

)

 

 

329

 

 

 

(6,734

)

Loss on disposal of discontinued operations before income taxes

 

 

 

 

 

(402

)

 

 

 

 

 

(3,576

)

Benefit from (provision for) income taxes

 

 

212

 

 

 

1,701

 

 

 

(84

)

 

 

3,222

 

(Loss) income from discontinued operations

 

 

(620

)

 

 

(2,694

)

 

 

245

 

 

 

(7,088

)

Net income and comprehensive income

 

$

36,821

 

 

$

45,869

 

 

$

87,358

 

 

$

71,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.97

 

 

$

1.08

 

 

$

2.18

 

 

$

1.73

 

Discontinued operations

 

$

(0.02

)

 

$

(0.06

)

 

$

0.01

 

 

$

(0.16

)

Total basic earnings per share

 

$

0.95

 

 

$

1.02

 

 

$

2.18

 

 

$

1.57

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.94

 

 

$

1.06

 

 

$

2.13

 

 

$

1.70

 

Discontinued operations

 

$

(0.02

)

 

$

(0.06

)

 

$

0.01

 

 

$

(0.15

)

Total diluted earnings per share

 

$

0.93

 

 

$

1.00

 

 

$

2.14

 

 

$

1.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic shares

 

 

38,713

 

 

 

45,125

 

 

 

40,000

 

 

 

45,276

 

Diluted shares

 

 

39,636

 

 

 

45,801

 

 

 

40,874

 

 

 

46,089

 

Adtalem Global Education Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

March 31,

 

 

2024

 

2023

Operating activities:

 

 

 

 

 

 

Net income

 

$

87,358

 

 

$

71,114

 

(Income) loss from discontinued operations

 

 

(245

)

 

 

7,088

 

Income from continuing operations

 

 

87,113

 

 

 

78,202

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Stock-based compensation expense

 

 

19,405

 

 

 

10,908

 

Amortization and impairments to operating lease assets

 

 

24,705

 

 

 

37,928

 

Depreciation

 

 

32,106

 

 

 

31,618

 

Amortization of intangible assets

 

 

28,296

 

 

 

48,936

 

Amortization and write-off of debt discount and issuance costs

 

 

4,550

 

 

 

7,974

 

Provision for bad debts

 

 

35,741

 

 

 

23,391

 

Deferred income taxes

 

 

(4,650

)

 

 

(1,718

)

Loss on disposals, accelerated depreciation, and impairments to property and equipment

 

 

50

 

 

 

3,999

 

Gain on extinguishment of debt

 

 

 

 

 

(71

)

(Gain) loss on investments

 

 

(1,281

)

 

 

4,122

 

Gain on sale of assets

 

 

 

 

 

(13,317

)

Unrealized loss on assets held for sale

 

 

647

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts and financing receivables

 

 

(73,661

)

 

 

(56,477

)

Prepaid expenses and other current assets

 

 

(2,484

)

 

 

7,034

 

Accounts payable

 

 

10,841

 

 

 

12,286

 

Accrued payroll and benefits

 

 

15,671

 

 

 

(11,719

)

Accrued liabilities

 

 

39,748

 

 

 

(20,275

)

Deferred revenue

 

 

60,935

 

 

 

26,038

 

Operating lease liabilities

 

 

(28,448

)

 

 

(37,758

)

Other assets and liabilities

 

 

(2,475

)

 

 

(1,280

)

Net cash provided by operating activities-continuing operations

 

 

246,809

 

 

 

149,821

 

Net cash provided by (used in) operating activities-discontinued operations

 

 

8,396

 

 

 

(404

)

Net cash provided by operating activities

 

 

255,205

 

 

 

149,417

 

Investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(52,014

)

 

 

(19,056

)

Proceeds from sales of marketable securities

 

 

626

 

 

 

7,635

 

Purchases of marketable securities

 

 

(498

)

 

 

(1,508

)

Proceeds from note receivable related to property sold

 

 

 

 

 

46,800

 

Net cash (used in) provided by investing activities-continuing operations

 

 

(51,886

)

 

 

33,871

 

Payment for working capital adjustment for sale of business

 

 

 

 

 

(3,174

)

Net cash (used in) provided by investing activities

 

 

(51,886

)

 

 

30,697

 

Financing activities:

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

15,412

 

 

 

1,622

 

Employee taxes paid on withholding shares

 

 

(6,600

)

 

 

(4,214

)

Proceeds from stock issued under Colleague Stock Purchase Plan

 

 

581

 

 

 

451

 

Repurchases of common stock for treasury

 

 

(250,463

)

 

 

(44,710

)

Payment on equity forward contract

 

 

 

 

 

(13,162

)

Proceeds from issuance of long-term debt

 

 

1,896

 

 

 

 

Repayments of long-term debt

 

 

(51,896

)

 

 

(150,861

)

Net cash used in financing activities

 

 

(291,070

)

 

 

(210,874

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(87,751

)

 

 

(30,760

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

275,075

 

 

 

347,937

 

Cash, cash equivalents and restricted cash at end of period

 

$

187,324

 

 

$

317,177

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Accrued capital expenditures

 

$

11,086

 

 

$

10,474

 

Accrued liability for repurchases of common stock

 

$

2,995

 

 

$

2,699

 

Accrued excise tax on share repurchases

 

$

3,257

 

 

$

361

 

Settlement of financing liability with assets

 

$

 

 

$

38,606

 

Adtalem Global Education Inc.

Segment Information

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31,

 

March 31,

 

 

 

 

 

 

 

 

Increase/(Decrease)

 

 

 

 

 

 

 

Increase/(Decrease)

 

 

2024

 

2023

 

$

 

%

 

2024

 

2023

 

$

 

%

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chamberlain

 

$

170,338

 

 

$

149,737

 

 

$

20,601

 

 

13.8

%

 

$

466,487

 

 

$

426,538

 

 

$

39,949

 

 

9.4

%

Walden

 

 

150,607

 

 

 

132,874

 

 

 

17,733

 

 

13.3

%

 

 

439,023

 

 

 

395,715

 

 

 

43,308

 

 

10.9

%

Medical and Veterinary

 

 

91,713

 

 

 

86,471

 

 

 

5,242

 

 

6.1

%

 

 

269,235

 

 

 

263,932

 

 

 

5,303

 

 

2.0

%

Total consolidated revenue

 

$

412,658

 

 

$

369,082

 

 

$

43,576

 

 

11.8

%

 

$

1,174,745

 

 

$

1,086,185

 

 

$

88,560

 

 

8.2

%

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chamberlain

 

$

43,349

 

 

$

39,589

 

 

$

3,760

 

 

9.5

%

 

$

97,313

 

 

$

99,002

 

 

$

(1,689

)

 

(1.7

)%

Walden

 

 

23,585

 

 

 

10,343

 

 

 

13,242

 

 

128.0

%

 

 

47,121

 

 

 

26,071

 

 

 

21,050

 

 

80.7

%

Medical and Veterinary

 

 

22,759

 

 

 

16,472

 

 

 

6,287

 

 

38.2

%

 

 

59,142

 

 

 

49,172

 

 

 

9,970

 

 

20.3

%

Home Office and Other

 

 

(27,968

)

 

 

(6,975

)

 

 

(20,993

)

 

(301.0

)%

 

 

(55,045

)

 

 

(45,632

)

 

 

(9,413

)

 

(20.6

)%

Total consolidated operating income

 

$

61,725

 

 

$

59,429

 

 

$

2,296

 

 

3.9

%

 

$

148,531

 

 

$

128,613

 

 

$

19,918

 

 

15.5

%

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 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) – Measure of Adtalem’s net income adjusted for restructuring expense, business integration expense, intangible amortization expense, gain on sale of assets, write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, investment impairment, loss on assets held for sale, debt modification costs, net tax benefit related to a valuation allowance release, and loss (income) from discontinued operations.

Adjusted earnings per share (most comparable GAAP measure: diluted earnings per share) – Measure of Adtalem’s diluted earnings per share adjusted for restructuring expense, business integration expense, intangible amortization expense, gain on sale of assets, write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, investment impairment, loss on assets held for sale, debt modification costs, net tax benefit related to a valuation allowance release, and loss (income) from discontinued operations.

Adjusted operating income (most comparable GAAP measure: operating income) – Measure of Adtalem’s operating income adjusted for restructuring expense, business integration expense, intangible amortization expense, litigation reserve, loss on assets held for sale, debt modification costs, and gain on sale of assets. 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) – Measure of Adtalem’s net income adjusted for loss (income) from discontinued operations, interest expense, other income, net, provision for income taxes, depreciation and amortization, stock-based compensation, restructuring expense, business integration expense, litigation reserve, loss on assets held for sale, debt modification costs, and gain on sale of assets. This measure is applied on a consolidated and segment basis, depending on the context of the discussion. Provision for income taxes, interest expense, and other income, net 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:

  • Restructuring expense primarily related to real estate consolidations at Walden, Medical and Veterinary, and Adtalem’s home office. We do not include normal, recurring, cash operating expenses in our restructuring expense.
  • Business integration expense include expenses related to the Walden acquisition and certain costs related to growth transformation initiatives. We do not include normal, recurring, cash operating expenses in our business integration expense.
  • Intangible amortization expense on acquired intangible assets.
  • Gain on sale of Adtalem’s Chicago, Illinois, campus facility.
  • Write-off of debt discount and issuance costs and gain on extinguishment of debt related to prepayments of debt, reserves related to significant litigation, impairment of an equity investment, loss on assets held for sale related to a fair value write-down on assets, and debt modification costs related to refinancing our Term Loan B loan.
  • Net tax benefit related to a valuation allowance release.
  • Loss (income) from discontinued operations includes expense from ongoing litigation costs and settlements related to the DeVry University and Carrington College divestitures, a loss on sale of ACAMS, Becker, and OCL for working capital adjustments to the initial sales prices and a tax return to provision adjustment, and the earn-outs we received.

Adtalem Global Education Inc.

Non-GAAP Operating Income by Segment

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31,

 

March 31,

 

 

 

 

 

 

 

 

Increase/(Decrease)

 

 

 

 

 

 

 

Increase/(Decrease)

 

 

2024

 

2023

 

$

 

%

 

2024

 

2023

 

$

 

%

Chamberlain:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (GAAP)

 

$

43,349

 

$

39,589

 

$

3,760

 

 

9.5

%

 

$

97,313

 

$

99,002

 

$

(1,689

)

 

(1.7

)%

Restructuring expense

 

 

 

 

 

 

 

 

 

 

 

 

 

818

 

 

(818

)

 

 

Adjusted operating income (non-GAAP)

 

$

43,349

 

$

39,589

 

$

3,760

 

 

9.5

%

 

$

97,313

 

$

99,820

 

$

(2,507

)

 

(2.5

)%

Operating margin (GAAP)

 

 

25.4

%

 

26.4

%

 

 

 

 

 

 

20.9

%

 

23.2

%

 

 

 

 

Operating margin (non-GAAP)

 

 

25.4

%

 

26.4

%

 

 

 

 

 

 

20.9

%

 

23.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walden:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (GAAP)

 

$

23,585

 

$

10,343

 

$

13,242

 

 

128.0

%

 

$

47,121

 

$

26,071

 

$

21,050

 

 

80.7

%

Restructuring expense

 

 

 

 

53

 

 

(53

)

 

 

 

 

(776

)

 

3,174

 

 

(3,950

)

 

 

Intangible amortization expense

 

 

8,286

 

 

14,232

 

 

(5,946

)

 

 

 

 

28,296

 

 

48,936

 

 

(20,640

)

 

 

Litigation reserve

 

 

 

 

 

 

 

 

 

 

 

18,500

 

 

 

 

18,500

 

 

 

Adjusted operating income (non-GAAP)

 

$

31,871

 

$

24,628

 

$

7,243

 

 

29.4

%

 

$

93,141

 

$

78,181

 

$

14,960

 

 

19.1

%

Operating margin (GAAP)

 

 

15.7

%

 

7.8

%

 

 

 

 

 

 

10.7

%

 

6.6

%

 

 

 

 

Operating margin (non-GAAP)

 

 

21.2

%

 

18.5

%

 

 

 

 

 

 

21.2

%

 

19.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical and Veterinary:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (GAAP)

 

$

22,759

 

$

16,472

 

$

6,287

 

 

38.2

%

 

$

59,142

 

$

49,172

 

$

9,970

 

 

20.3

%

Restructuring expense

 

 

194

 

 

421

 

 

(227

)

 

 

 

 

379

 

 

7,334

 

 

(6,955

)

 

 

Adjusted operating income (non-GAAP)

 

$

22,953

 

$

16,893

 

$

6,060

 

 

35.9

%

 

$

59,521

 

$

56,506

 

$

3,015

 

 

5.3

%

Operating margin (GAAP)

 

 

24.8

%

 

19.0

%

 

 

 

 

 

 

22.0

%

 

18.6

%

 

 

 

 

Operating margin (non-GAAP)

 

 

25.0

%

 

19.5

%

 

 

 

 

 

 

22.1

%

 

21.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home Office and Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss (GAAP)

 

$

(27,968

)

$

(6,975

)

$

(20,993

)

 

(301.0

)%

 

$

(55,045

)

$

(45,632

)

$

(9,413

)

 

(20.6

)%

Restructuring expense

 

 

279

 

 

804

 

 

(525

)

 

 

 

 

1,614

 

 

6,380

 

 

(4,766

)

 

 

Business integration expense

 

 

18,450

 

 

11,346

 

 

7,104

 

 

 

 

 

30,621

 

 

35,702

 

 

(5,081

)

 

 

Loss on assets held for sale

 

 

 

 

 

 

 

 

 

 

 

647

 

 

 

 

647

 

 

 

Debt modification costs

 

 

848

 

 

 

 

848

 

 

 

 

 

848

 

 

 

 

848

 

 

 

Gain on sale of assets

 

 

 

 

(13,317

)

 

13,317

 

 

 

 

 

 

 

(13,317

)

 

13,317

 

 

 

Adjusted operating loss (non-GAAP)

 

$

(8,391

)

$

(8,142

)

$

(249

)

 

(3.1

)%

 

$

(21,315

)

$

(16,867

)

$

(4,448

)

 

(26.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adtalem Global Education:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (GAAP)

 

$

61,725

 

$

59,429

 

$

2,296

 

 

3.9

%

 

$

148,531

 

$

128,613

 

$

19,918

 

 

15.5

%

Restructuring expense

 

 

473

 

 

1,278

 

 

(805

)

 

 

 

 

1,217

 

 

17,706

 

 

(16,489

)

 

 

Business integration expense

 

 

18,450

 

 

11,346

 

 

7,104

 

 

 

 

 

30,621

 

 

35,702

 

 

(5,081

)

 

 

Intangible amortization expense

 

 

8,286

 

 

14,232

 

 

(5,946

)

 

 

 

 

28,296

 

 

48,936

 

 

(20,640

)

 

 

Litigation reserve

 

 

 

 

 

 

 

 

 

 

 

18,500

 

 

 

 

18,500

 

 

 

Loss on assets held for sale

 

 

 

 

 

 

 

 

 

 

 

647

 

 

 

 

647

 

 

 

Debt modification costs

 

 

848

 

 

 

 

848

 

 

 

 

 

848

 

 

 

 

848

 

 

 

Gain on sale of assets

 

 

 

 

(13,317

)

 

13,317

 

 

 

 

 

 

 

(13,317

)

 

13,317

 

 

 

Adjusted operating income (non-GAAP)

 

$

89,782

 

$

72,968

 

$

16,814

 

 

23.0

%

 

$

228,660

 

$

217,640

 

$

11,020

 

 

5.1

%

Operating margin (GAAP)

 

 

15.0

%

 

16.1

%

 

 

 

 

 

 

12.6

%

 

11.8

%

 

 

 

 

Operating margin (non-GAAP)

 

 

21.8

%

 

19.8

%

 

 

 

 

 

 

19.5

%

 

20.0

%

 

 

 

 

Adtalem Global Education Inc.

Non-GAAP Adjusted EBITDA by Segment

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31,

 

March 31,

 

 

 

 

 

 

 

 

Increase/(Decrease)

 

 

 

 

 

 

 

Increase/(Decrease)

 

 

2024

 

2023

 

$

 

%

 

2024

 

2023

 

$

 

%

Chamberlain:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (GAAP)

 

$

43,349

 

$

39,589

 

$

3,760

 

 

9.5

%

 

$

97,313

 

$

99,002

 

$

(1,689

)

 

(1.7

)%

Restructuring expense

 

 

 

 

 

 

 

 

 

 

 

 

 

818

 

 

(818

)

 

 

Depreciation

 

 

5,312

 

 

4,405

 

 

907

 

 

 

 

 

14,790

 

 

12,985

 

 

1,805

 

 

 

Stock-based compensation

 

 

1,795

 

 

923

 

 

872

 

 

 

 

 

6,791

 

 

3,600

 

 

3,191

 

 

 

Adjusted EBITDA (non-GAAP)

 

$

50,456

 

$

44,917

 

$

5,539

 

 

12.3

%

 

$

118,894

 

$

116,405

 

$

2,489

 

 

2.1

%

Adjusted EBITDA margin (non-GAAP)

 

 

29.6

%

 

30.0

%

 

 

 

 

 

 

25.5

%

 

27.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walden:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (GAAP)

 

$

23,585

 

$

10,343

 

$

13,242

 

 

128.0

%

 

$

47,121

 

$

26,071

 

$

21,050

 

 

80.7

%

Restructuring expense

 

 

 

 

53

 

 

(53

)

 

 

 

 

(776

)

 

3,174

 

 

(3,950

)

 

 

Intangible amortization expense

 

 

8,286

 

 

14,232

 

 

(5,946

)

 

 

 

 

28,296

 

 

48,936

 

 

(20,640

)

 

 

Litigation reserve

 

 

 

 

 

 

 

 

 

 

 

18,500

 

 

 

 

18,500

 

 

 

Depreciation

 

 

2,214

 

 

2,439

 

 

(225

)

 

 

 

 

6,681

 

 

7,303

 

 

(622

)

 

 

Stock-based compensation

 

 

1,770

 

 

754

 

 

1,016

 

 

 

 

 

5,822

 

 

2,945

 

 

2,877

 

 

 

Adjusted EBITDA (non-GAAP)

 

$

35,855

 

$

27,821

 

$

8,034

 

 

28.9

%

 

$

105,644

 

$

88,429

 

$

17,215

 

 

19.5

%

Adjusted EBITDA margin (non-GAAP)

 

 

23.8

%

 

20.9

%

 

 

 

 

 

 

24.1

%

 

22.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical and Veterinary:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (GAAP)

 

$

22,759

 

$

16,472

 

$

6,287

 

 

38.2

%

 

$

59,142

 

$

49,172

 

$

9,970

 

 

20.3

%

Restructuring expense

 

 

194

 

 

421

 

 

(227

)

 

 

 

 

379

 

 

7,334

 

 

(6,955

)

 

 

Depreciation

 

 

3,174

 

 

3,231

 

 

(57

)

 

 

 

 

9,228

 

 

9,367

 

 

(139

)

 

 

Stock-based compensation

 

 

851

 

 

587

 

 

264

 

 

 

 

 

3,687

 

 

2,291

 

 

1,396

 

 

 

Adjusted EBITDA (non-GAAP)

 

$

26,978

 

$

20,711

 

$

6,267

 

 

30.3

%

 

$

72,436

 

$

68,164

 

$

4,272

 

 

6.3

%

Adjusted EBITDA margin (non-GAAP)

 

 

29.4

%

 

24.0

%

 

 

 

 

 

 

26.9

%

 

25.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home Office and Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss (GAAP)

 

$

(27,968

)

$

(6,975

)

$

(20,993

)

 

(301.0

)%

 

$

(55,045

)

$

(45,632

)

$

(9,413

)

 

(20.6

)%

Restructuring expense

 

 

279

 

 

804

 

 

(525

)

 

 

 

 

1,614

 

 

6,380

 

 

(4,766

)

 

 

Business integration expense

 

 

18,450

 

 

11,346

 

 

7,104

 

 

 

 

 

30,621

 

 

35,702

 

 

(5,081

)

 

 

Loss on assets held for sale

 

 

 

 

 

 

 

 

 

 

 

647

 

 

 

 

647

 

 

 

Debt modification costs

 

 

848

 

 

 

 

848

 

 

 

 

 

848

 

 

 

 

848

 

 

 

Gain on sale of assets

 

 

 

 

(13,317

)

 

13,317

 

 

 

 

 

 

 

(13,317

)

 

13,317

 

 

 

Depreciation

 

 

692

 

 

82

 

 

610

 

 

 

 

 

1,407

 

 

1,963

 

 

(556

)

 

 

Stock-based compensation

 

 

1,484

 

 

531

 

 

953

 

 

 

 

 

3,105

 

 

2,072

 

 

1,033

 

 

 

Adjusted EBITDA (non-GAAP)

 

$

(6,215

)

$

(7,529

)

$

1,314

 

 

17.5

%

 

$

(16,803

)

$

(12,832

)

$

(3,971

)

 

(30.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adtalem Global Education:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

 

$

36,821

 

$

45,869

 

$

(9,048

)

 

(19.7

)%

 

$

87,358

 

$

71,114

 

$

16,244

 

 

22.8

%

Loss (income) from discontinued operations

 

 

620

 

 

2,694

 

 

(2,074

)

 

 

 

 

(245

)

 

7,088

 

 

(7,333

)

 

 

Interest expense

 

 

16,560

 

 

14,457

 

 

2,103

 

 

 

 

 

48,910

 

 

47,806

 

 

1,104

 

 

 

Other income, net

 

 

(2,871

)

 

(3,980

)

 

1,109

 

 

 

 

 

(8,648

)

 

(3,301

)

 

(5,347

)

 

 

Provision for income taxes

 

 

10,595

 

 

389

 

 

10,206

 

 

 

 

 

21,156

 

 

5,906

 

 

15,250

 

 

 

Operating income (GAAP)

 

 

61,725

 

 

59,429

 

 

2,296

 

 

 

 

 

148,531

 

 

128,613

 

 

19,918

 

 

 

Depreciation and amortization

 

 

19,678

 

 

24,389

 

 

(4,711

)

 

 

 

 

60,402

 

 

80,554

 

 

(20,152

)

 

 

Stock-based compensation

 

 

5,900

 

 

2,795

 

 

3,105

 

 

 

 

 

19,405

 

 

10,908

 

 

8,497

 

 

 

Restructuring expense

 

 

473

 

 

1,278

 

 

(805

)

 

 

 

 

1,217

 

 

17,706

 

 

(16,489

)

 

 

Business integration expense

 

 

18,450

 

 

11,346

 

 

7,104

 

 

 

 

 

30,621

 

 

35,702

 

 

(5,081

)

 

 

Litigation reserve

 

 

 

 

 

 

 

 

 

 

 

18,500

 

 

 

 

18,500

 

 

 

Loss on assets held for sale

 

 

 

 

 

 

 

 

 

 

 

647

 

 

 

 

647

 

 

 

Debt modification costs

 

 

848

 

 

 

 

848

 

 

 

 

 

848

 

 

 

 

848

 

 

 

Gain on sale of assets

 

 

 

 

(13,317

)

 

13,317

 

 

 

 

 

 

 

(13,317

)

 

13,317

 

 

 

Adjusted EBITDA (non-GAAP)

 

$

107,074

 

$

85,920

 

$

21,154

 

 

24.6

%

 

$

280,171

 

$

260,166

 

$

20,005

 

 

7.7

%

Adjusted EBITDA margin (non-GAAP)

 

 

25.9

%

 

23.3

%

 

 

 

 

 

 

23.8

%

 

24.0

%

 

 

 

 

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,

 

 

2024

 

2023

 

2024

 

2023

Net income (GAAP)

 

$

36,821

 

 

$

45,869

 

 

$

87,358

 

 

$

71,114

 

Restructuring expense

 

 

473

 

 

 

1,278

 

 

 

1,217

 

 

 

17,706

 

Business integration expense

 

 

18,450

 

 

 

11,346

 

 

 

30,621

 

 

 

35,702

 

Intangible amortization expense

 

 

8,286

 

 

 

14,232

 

 

 

28,296

 

 

 

48,936

 

Gain on sale of assets

 

 

 

 

 

(13,317

)

 

 

 

 

 

(13,317

)

Write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, investment impairment, loss on assets held for sale, and debt modification costs

 

 

1,961

 

 

 

 

 

 

21,108

 

 

 

9,226

 

Net tax benefit related to a valuation allowance release

 

 

 

 

 

(6,184

)

 

 

 

 

 

(6,184

)

Income tax impact on non-GAAP adjustments (1)

 

 

(7,260

)

 

 

(4,359

)

 

 

(19,355

)

 

 

(23,341

)

Loss (income) from discontinued operations

 

 

620

 

 

 

2,694

 

 

 

(245

)

 

 

7,088

 

Adjusted net income (non-GAAP)

 

$

59,351

 

 

$

51,559

 

 

$

149,000

 

 

$

146,930

 

(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,

 

 

2024

 

2023

 

2024

 

2023

Diluted earnings per share (GAAP)

 

$

0.93

 

 

$

1.00

 

 

$

2.14

 

 

$

1.54

 

Effect on diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expense

 

 

0.01

 

 

 

0.03

 

 

 

0.03

 

 

 

0.38

 

Business integration expense

 

 

0.47

 

 

 

0.25

 

 

 

0.75

 

 

 

0.77

 

Intangible amortization expense

 

 

0.21

 

 

 

0.31

 

 

 

0.69

 

 

 

1.06

 

Gain on sale of assets

 

 

-

 

 

 

(0.29

)

 

 

-

 

 

 

(0.29

)

Write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, investment impairment, loss on assets held for sale, and debt modification costs

 

 

0.05

 

 

 

-

 

 

 

0.52

 

 

 

0.20

 

Net tax benefit related to a valuation allowance release

 

 

-

 

 

 

(0.14

)

 

 

-

 

 

 

(0.13

)

Income tax impact on non-GAAP adjustments (1)

 

 

(0.18

)

 

 

(0.10

)

 

 

(0.47

)

 

 

(0.51

)

Loss (income) from discontinued operations

 

 

0.02

 

 

 

0.06

 

 

 

(0.01

)

 

 

0.15

 

Adjusted earnings per share (non-GAAP)

 

$

1.50

 

 

$

1.13

 

 

$

3.65

 

 

$

3.19

 

Diluted shares used in non-GAAP EPS calculation

 

 

39,636

 

 

 

45,801

 

 

 

40,874

 

 

 

46,089

 

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

 

Nine Months Ended

 

Twelve Months Ended

 

 

FY24

 

FY23

 

FY24

 

FY23

 

FY24

 

FY24

 

FY24

 

FY23

 

FY23

 

 

Q3

 

Q3

 

Q3

 

Q3

 

Q3

 

Q2

 

Q1

 

Q4

 

Q3

Net cash provided by operating activities-continuing operations (GAAP)

 

$

163,740

 

 

$

107,544

 

 

$

246,809

 

 

$

149,821

 

 

$

302,672

 

 

$

246,476

 

 

$

204,934

 

 

$

205,684

 

 

$

255,052

 

Capital expenditures

 

 

(21,686

)

 

 

(9,309

)

 

 

(52,014

)

 

 

(19,056

)

 

 

(69,966

)

 

 

(57,589

)

 

 

(46,503

)

 

 

(37,008

)

 

 

(27,861

)

Free cash flow (non-GAAP)

 

$

142,054

 

 

$

98,235

 

 

$

194,795

 

 

$

130,765

 

 

$

232,706

 

 

$

188,887

 

 

$

158,431

 

 

$

168,676

 

 

$

227,191

 

Adtalem Global Education Inc.

Non-GAAP Net Leverage Disclosure

(unaudited)

(in thousands)

 

 

 

 

 

 

Twelve Months Ended

 

 

March 31, 2024

Adtalem Global Education:

 

 

 

Net income (GAAP)

 

$

109,602

 

Loss from discontinued operations

 

 

1,061

 

Interest expense

 

 

64,204

 

Other income, net

 

 

(12,312

)

Provision for income taxes

 

 

25,533

 

Depreciation and amortization

 

 

82,662

 

Stock-based compensation

 

 

22,796

 

Restructuring expense

 

 

2,328

 

Business integration expense

 

 

37,580

 

Litigation reserve

 

 

28,500

 

Loss on assets held for sale

 

 

647

 

Debt modification costs

 

 

848

 

Adjusted EBITDA (non-GAAP)

 

$

363,449

 

 

 

 

 

 

 

March 31, 2024

Long-term debt

 

$

658,283

 

Less: Cash and cash equivalents

 

 

(179,762

)

Net debt (non-GAAP)

 

$

478,521

 

 

 

 

 

Net leverage (non-GAAP)

 

 

1.3 x

 

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