Adtalem Global Education Announces Fiscal Third Quarter 2023 Results

Adtalem Global Education Inc. (NYSE: ATGE), a national leader in post-secondary education and a leading provider of professional talent to the healthcare industry, today reported academic, operating and financial results for its third quarter fiscal 2023 ended March 31, 2023.

“Our third quarter results showcase our unwavering commitment to provide access to high-quality, post-secondary and graduate level programs to nearly 80,000 diverse students and working adults. We continue to make steady progress in strengthening our operational excellence, supporting our portfolio of programs and solutions in ways that benefit all our stakeholders, especially our students. One testament to these benefits are the first time residency attainment rates for American University of the Caribbean School of Medicine and Ross University School of Medicine students attaining 2023/24 residency positions which, at 97%, are among the highest-ever for these institutions,” said Steve Beard, president and CEO of Adtalem Global Education.

Beard continued, “With market leading scale and a commitment to broad access and quality outcomes, we are addressing critical talent shortages in healthcare for the benefit of communities nationwide. Our strategic vision, disciplined execution, results, and improving industry outlook positions Adtalem to drive long-term sustainable growth.”

Financial Highlights

Selected financial data for the three months ended March 31, 2023:

• Revenue of $369.1 million increased 1.3% compared with the prior year.
• Operating income was $59.4 million, compared with $32.9 million in the prior year; adjusted operating income was $73.0 million, a decrease of 4.3% compared with $76.2 million in the prior year. Operating margin was 16.1% compared with 9.0% in the prior year, and adjusted operating margin was 19.8% compared with 20.9% in the prior year.
• Net income was $45.9 million, compared with $347.7 million in the prior year; adjusted net income was $51.6 million, an increase of 24.7% compared with $41.4 million in the prior year.
• Diluted earnings per share decreased to $1.00 from $7.04 in the prior year; adjusted earnings per share increased to $1.13, up 34.5% compared with $0.84 in the prior year.
• Adjusted EBITDA was $85.9 million, a decrease of 6.8% compared with $92.2 million in the prior year; adjusted EBITDA margin was 23.3% compared with 25.3% in the prior year.

Selected financial data for the nine months ended March 31, 2023:

• Revenue of $1,086.2 million increased 6.4% compared with the prior year.
• Operating income was $128.6 million, compared with $30.8 million in the prior year; adjusted operating income was $217.6 million, an increase of 22.2% compared with $178.0 million in the prior year. Operating margin improved to 11.8% from 3.0% and adjusted operating margin increased to 20.0% from 17.4% in the prior year.
• Net income was $71.1 million, compared with $304.2 million in the prior year; adjusted net income was $146.9 million, an increase of 57.3% compared with $93.4 million in the prior year.
• Diluted earnings per share decreased to $1.54 from $6.15 in the prior year; adjusted earnings per share increased to $3.19, up 70.6% compared with $1.87 in the prior year.
• Adjusted EBITDA was $260.2 million, an increase of 16.2% compared with $223.9 million in the prior year; adjusted EBITDA margin was 24.0% compared with 21.9% in the prior year.

Business Highlights

• Chamberlain University’s pre-licensure Bachelor of Science in Nursing (BSN) is accredited by the Higher Learning Commission and Commission on Collegiate Nursing Education. The online option now has over 500 enrollees spread across 22 states in just 2.5 years since launch.
• First-time residency attainment rates for American University of the Caribbean School of Medicine and Ross University School of Medicine are at 97% for students attaining 2023/24 residency positions, among the highest-ever rates for the institutions, with 66% of those residents going into the all-important primary care specialty.
• More than 875 students and graduates from Ross University School of Medicine and American University of the Caribbean School of Medicine will enter U.S. residency programs in 2023, representing 29 specialties deployed across 45 states. 26% of the students and graduates entering residency are from underrepresented minorities.
• Walden University’s Master of Healthcare Administration program achieved Candidate Status from the Commission on Accreditation of Healthcare Management Education (CAHME).
• Chamberlain University and Ochsner Health, the largest healthcare system and private employer in the state of Louisiana, partnered to launch the new Heart of Healthcare Program which awards up to three years of partial tuition coverage to eligible new students enrolled in the three-year Bachelor of Science in Nursing (BSN) degree program at Chamberlain University College of Nursing at Ochsner Health campus in New Orleans.

Segment Highlights

Chamberlain

• Revenue in the third quarter increased 5.0% to $149.7 million from $142.6 million in the prior year.
• Segment operating income increased 7.1% to $39.6 million from $37.0 million in the prior year. Adjusted segment operating income increased 1.7% to $39.6 million from $38.9 million in the prior year.
• Adjusted EBITDA decreased 1.3% to $44.9 million compared with $45.5 million in the prior year.
• Total student enrollment increased 2.0% compared with the prior year, driven by growth in pre-licensure and post-licensure nursing programs as well as higher persistence across the segment.

Walden

• Revenue in the third quarter decreased 4.5% to $132.9 million from $139.1 million in the prior year.
• Segment operating income increased to $10.3 million compared with segment operating loss of $3.2 million in the prior year. Adjusted segment operating income decreased 4.7% to $24.6 million compared with $25.8 million in the prior year.
• Adjusted EBITDA decreased 4.9% to $27.8 million compared with $29.3 million in the prior year.
• Total student enrollment decreased 7.9% compared with the prior year, primarily attributable to declines in non-healthcare programs and to a lesser extent to healthcare programs partially offset by higher persistence across the segment. Elimination of off-cycle start dates adversely impacted year-over-year total enrollment growth by 2.2%.

Medical and Veterinary

• Revenue in the third quarter increased 4.6% to $86.5 million from $82.7 million in the prior year.
• Segment operating income increased by 21.4% to $16.5 million from $13.6 million in the prior year. Adjusted segment operating income decreased 6.9% to $16.9 million compared with $18.1 million in the prior year.
• Adjusted EBITDA decreased 8.4% to $20.7 million compared with $22.6 million in the prior year.
• Total student enrollment increased 1.6% compared with the prior year, driven by growth in both medical and veterinary programs.

Fiscal Year 2023 Outlook

Adtalem narrowed its guidance for fiscal year 2023 revenue to a range of $1,400 million to $1,450 million from a range of $1,380 million to $1,450 million, and adjusted earnings per share to a range of $4.05 to $4.20 from a range of $3.95 to $4.20.

Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its fiscal 2023 third quarter results today at 4:30 p.m. CDT (5:30 p.m. EDT).

The call can be accessed by dialing [phone] (U.S. participants) or [phone] (international participants) stating “Adtalem earnings call” or use conference ID: 13737030. 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 [phone] (U.S.) or [phone] (international), conference ID: 13737030, or visit the Adtalem investor relations website at: https://investors.adtalem.com.

Investor Day

Adtalem will host an Investor Day on Tuesday, June 20, 2023, at 9:00 a.m. CDT at Adtalem’s Chamberlain University Chicago campus. Advanced registration will be required to attend the event in-person. To register, please visit Adtalem’s Investor Day website.

During the investor event, Adtalem’s executive leadership team will discuss the Company’s strategic priorities, growth strategy, and financial outlook. Investors and analysts will have the opportunity to participate in a Q&A session. In-person participants are invited to join the leadership team to tour the campus.

About Adtalem Global Education

Adtalem Global Education (NYSE: ATGE) is a national leader in post-secondary education and leading 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’s family of institutions has more than 300,000 alumni and 10,000 employees. Adtalem was named one of America’s Most Responsible Companies in 2021 and 2023 by Newsweek and Statista, and one of America’s Best Employers for Diversity in 2021 and 2022 by Forbes and Statista. Visit Adtalem.com for more information and follow on Twitter and LinkedIn.

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, 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 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.

	Q3 2023	Q3 2022	% Change
Adtalem Global Education Student Enrollments
Total students(1)	79,586 5	82,174	-3.1%
Chamberlain University
Total students	34,847	34,158	2.0%
Walden University(3)
Walden University
Total students	39,427	42,788	-7.9%
Walden University(3)
Medical & Veterinary
Total students	5,312	5,228	1.6%
(1) Represents total students attending sessions during each institution’s most recent enrollment period in Q3 FY 2023 and Q3 FY 2022

Adtalem Global Education Inc. Consolidated Balance Sheets (unaudited) (in thousands, except par value)
		March 31,				June 30,				March 31,
		2023				2022				2022
Assets:
Current assets:
Cash and cash equivalents		$	315,373			$	346,973			$	788,729
Restricted cash			1,804				964				1,266
Accounts receivable, net			113,284				81,635				96,064
Prepaid expenses and other current assets			102,573				127,532				124,968
Current assets held for sale			—				—				1,432
Total current assets			533,034				557,104				1,012,459
Noncurrent assets:
Property and equipment, net			252,797				289,926				294,538
Operating lease assets			173,271				177,995				186,968
Deferred income taxes			54,494				51,093				47,574
Intangible assets, net			824,641				873,577				896,884
Goodwill			961,262				961,262				961,262
Other assets, net			67,618				119,283				120,145
Noncurrent assets held for sale			—				—				93
Total noncurrent assets			2,334,083				2,473,136				2,507,464
Total assets		$	2,867,117			$	3,030,240			$	3,519,923
Liabilities and shareholders' equity:
Current liabilities:
Accounts payable		$	73,307			$	57,140			$	67,252
Accrued payroll and benefits			56,023				67,792				57,510
Accrued liabilities			86,691				98,124				176,921
Deferred revenue			175,488				149,810				171,937
Current operating lease liabilities			46,411				50,781				51,335
Current liabilities held for sale			—				—				1,417
Total current liabilities			437,920				423,647				526,372
Noncurrent liabilities:
Long-term debt			694,429				838,908				1,225,360
Long-term operating lease liabilities			164,185				177,045				188,955
Deferred income taxes			27,237				25,554				25,862
Other liabilities			32,961				73,700				74,380
Noncurrent liabilities held for sale			—				—				41
Total noncurrent liabilities			918,812				1,115,207				1,514,598
Total liabilities			1,356,732				1,538,854				2,040,970
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value per share, 200,000 shares authorized; 44,232, 45,177, and 45,138 shares outstanding as of March 31, 2023, June 30, 2022, and March 31, 2022, respectively			822				818				818
Additional paid-in capital			564,363				521,848				517,431
Retained earnings			2,381,506				2,310,396				2,303,650
Accumulated other comprehensive loss			(2,227	)			(2,227	)			(3,417	)
Treasury stock, at cost, 37,939, 36,619, and 36,621 shares as of March 31, 2023, June 30, 2022, and March 31, 2022, respectively			(1,434,079	)			(1,339,449	)			(1,339,529	)
Total shareholders' equity			1,510,385				1,491,386				1,478,953
Total liabilities and shareholders' equity		$	2,867,117			$	3,030,240			$	3,519,923

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,
		2023				2022				2023				2022
Revenue		$	369,082			$	364,281			$	1,086,185			$	1,021,195
Operating cost and expense:
Cost of educational services			165,820				166,027				484,768				498,497
Student services and administrative expense			144,526				148,863				432,713				433,379
Restructuring expense			1,278				10,518				17,706				16,999
Business acquisition and integration expense			11,346				5,924				35,702				41,537
Gain on sale of assets			(13,317	)			—				(13,317	)			—
Total operating cost and expense			309,653				331,332				957,572				990,412
Operating income			59,429				32,949				128,613				30,783
Interest expense			(14,457	)			(36,585	)			(47,806	)			(109,907	)
Other income (expense), net			3,980				(327	)			3,301				2,435
Income (loss) from continuing operations before income taxes			48,952				(3,963	)			84,108				(76,689	)
(Provision for) benefit from income taxes			(389	)			8,363				(5,906	)			39,597
Income (loss) from continuing operations			48,563				4,400				78,202				(37,092	)
Discontinued operations:
(Loss) income from discontinued operations before income taxes			(3,993	)			3,426				(6,734	)			1,535
(Loss) gain on disposal of discontinued operations before income taxes			(402	)			474,003				(3,576	)			474,003
Benefit from (provision for) income taxes			1,701				(134,089	)			3,222				(134,201	)
(Loss) income from discontinued operations			(2,694	)			343,340				(7,088	)			341,337
Net income		$	45,869			$	347,740			$	71,114			$	304,245
Earnings (loss) per share:
Basic:
Continuing operations		$	1.08			$	0.09			$	1.73			$	(0.75	)
Discontinued operations		$	(0.06	)		$	7.02			$	(0.16	)		$	6.90
Total basic earnings per share		$	1.02			$	7.11			$	1.57			$	6.15
Diluted:
Continuing operations		$	1.06			$	0.09			$	1.70			$	(0.75	)
Discontinued operations		$	(0.06	)		$	6.95			$	(0.15	)		$	6.90
Total diluted earnings per share		$	1.00			$	7.04			$	1.54			$	6.15
Weighted-average shares outstanding:
Basic shares			45,125				48,925				45,276				49,459
Diluted shares			45,801				49,377				46,089				49,459

Adtalem Global Education Inc. Consolidated Statements of Cash Flows (unaudited) (in thousands)
		Nine Months Ended
		March 31,
		2023				2022
Operating activities:
Net income		$	71,114			$	304,245
Loss (income) from discontinued operations			7,088				(341,337	)
Income (loss) from continuing operations			78,202				(37,092	)
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense			10,908				18,604
Amortization and impairments to operating lease assets			37,928				35,251
Depreciation			31,618				33,471
Amortization of intangible assets			48,936				73,967
Amortization and write-off of debt discount and issuance costs			7,974				34,481
Provision for bad debts			23,391				19,552
Deferred income taxes			(1,718	)			3,425
Loss on disposals, accelerated depreciation, and impairments to property and equipment			3,999				2,274
Gain on extinguishment of debt			(71	)			—
Loss on investments			4,122				807
Gain on sale of assets			(13,317	)			—
Changes in assets and liabilities:
Accounts receivable			(43,345	)			(40,520	)
Prepaid expenses and other current assets			7,034				2,398
Accounts payable			12,286				(5,737	)
Accrued payroll and benefits			(11,719	)			(22,416	)
Accrued liabilities			(20,275	)			(92,528	)
Deferred revenue			26,038				92,507
Operating lease liabilities			(37,758	)			(36,159	)
Other assets and liabilities			(14,412	)			(23,514	)
Net cash provided by operating activities-continuing operations			149,821				58,771
Net cash used in operating activities-discontinued operations			(404	)			(6,915	)
Net cash provided by operating activities			149,417				51,856
Investing activities:
Capital expenditures			(19,056	)			(22,249	)
Proceeds from sale of marketable securities			7,635				941
Purchases of marketable securities			(1,508	)			(1,315	)
Proceeds from note receivable related to property sold			46,800				—
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 provided by (used in) investing activities-continuing operations			33,871				(1,500,677	)
Net cash used in investing activities-discontinued operations			—				(3,287	)
Proceeds from sale of business, net of cash transferred			—				962,652
Payment for working capital adjustment for sale of business			(3,174	)			—
Net cash provided by (used in) investing activities			30,697				(541,312	)
Financing activities:
Proceeds from exercise of stock options			1,622				8,433
Employee taxes paid on withholding shares			(4,214	)			(2,727	)
Proceeds from stock issued under Colleague Stock Purchase Plan			451				400
Repurchases of common stock for treasury			(44,710	)			(120,000	)
Payment on equity forward contract			(13,162	)			(30,000	)
Proceeds from long-term debt			—				850,000
Repayments of long-term debt			(150,861	)			(687,667	)
Payment of debt discount and issuance costs			—				(49,553	)
Payment for purchase of redeemable noncontrolling interest of subsidiary			—				(1,790	)
Net cash used in financing activities			(210,874	)			(32,904	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			—				12
Net decrease in cash, cash equivalents and restricted cash			(30,760	)			(522,348	)
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			317,177				791,268
Less: cash, cash equivalents and restricted cash of discontinued operations at end of period			—				1,273
Cash, cash equivalents and restricted cash of continuing operations at end of period		$	317,177			$	789,995
Non-cash investing and financing activities:
Accrued capital expenditures		$	10,474			$	5,408
Accrued liability for repurchases of common stock		$	2,699			$	—
Accrued excise tax on share repurchases		$	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)
		2023				2022				$				%				2023				2022				$			%
Revenue:
Chamberlain		$	149,737			$	142,550			$	7,187			5.0		%		$	426,538			$	417,310			$	9,228		2.2		%
Walden			132,874				139,081				(6,207	)		(4.5	)	%			395,715				348,325				47,390		13.6		%
Medical and Veterinary			86,471				82,650				3,821			4.6		%			263,932				255,560				8,372		3.3		%
Total consolidated revenue		$	369,082			$	364,281			$	4,801			1.3		%		$	1,086,185			$	1,021,195			$	64,990		6.4		%
Operating income (loss):
Chamberlain		$	39,589			$	36,979			$	2,610			7.1		%		$	99,002			$	83,290			$	15,712		18.9		%
Walden			10,343				(3,199	)			13,542			NM					26,071				(17,748	)			43,819		NM
Medical and Veterinary			16,472				13,571				2,901			21.4		%			49,172				45,400				3,772		8.3		%
Home Office and Other			(6,975	)			(14,402	)			7,427			51.6		%			(45,632	)			(80,159	)			34,527		43.1		%
Total consolidated operating income		$	59,429			$	32,949			$	26,480			80.4		%		$	128,613			$	30,783			$	97,830		317.8		%

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 deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, intangible amortization expense, gain on sale of assets, pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, investment impairment, net tax benefit related to a valuation allowance release, and net loss (income) from discontinued operations.

Adjusted earnings per share (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, intangible amortization expense, gain on sale of assets, pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, investment impairment, net tax benefit related to a valuation allowance release, and net loss (income) from discontinued operations.

Adjusted operating income (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, intangible amortization expense, 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 net loss (income) from discontinued operations, interest expense, other (income) expense, net, provision for (benefit from) income taxes, depreciation and amortization, stock-based compensation, deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, and gain on sale of assets. This measure is applied on a consolidated and segment basis, depending on the context of the discussion. Income taxes, interest expense, and other (income) expense, net 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. We do not include normal, recurring, cash operating expenses in our restructuring expense.
• Business acquisition and 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 acquisition and integration expense.
• Intangible amortization expense on acquired intangible assets.
• Gain on sale of Adtalem’s Chicago, Illinois, campus facility.
• Pre-acquisition interest expense related to financing arrangements in connection with the Walden acquisition, write-off of debt discount and issuance costs and gain on extinguishment of debt related to prepayments of debt, and impairment of an equity investment.
• Net tax benefit related to a valuation allowance release.
• Net loss (income) from discontinued operations 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,
										Increase/(Decrease)																Increase/(Decrease)
		2023				2022				$				%				2023				2022				$				%
Chamberlain:
Operating income (GAAP)		$	39,589			$	36,979			$	2,610			7.1		%		$	99,002			$	83,290			$	15,712			18.9		%
Restructuring expense			—				1,931				(1,931	)							818				2,266				(1,448	)
Adjusted operating income (non-GAAP)		$	39,589			$	38,910			$	679			1.7		%		$	99,820			$	85,556			$	14,264			16.7		%
Operating margin (GAAP)			26.4		%		25.9		%										23.2		%		20.0		%
Operating margin (non-GAAP)			26.4		%		27.3		%										23.4		%		20.5		%
Walden:
Operating income (loss) (GAAP)		$	10,343			$	(3,199	)		$	13,542			NM				$	26,071			$	(17,748	)		$	43,819			NM
Deferred revenue adjustment			—				—				—								—				8,561				(8,561	)
Restructuring expense			53				2,225				(2,172	)							3,174				4,016				(842	)
Intangible amortization expense			14,232				26,817				(12,585	)							48,936				73,967				(25,031	)
Adjusted operating income (non-GAAP)		$	24,628			$	25,843			$	(1,215	)		(4.7	)	%		$	78,181			$	68,796			$	9,385			13.6		%
Operating margin (GAAP)			7.8		%		(2.3	)	%										6.6		%		(5.1	)	%
Operating margin (non-GAAP)			18.5		%		18.6		%										19.8		%		19.8		%
Medical and Veterinary:
Operating income (GAAP)		$	16,472			$	13,571			$	2,901			21.4		%		$	49,172			$	45,400			$	3,772			8.3		%
Restructuring expense			421				4,569				(4,148	)							7,334				4,757				2,577
Adjusted operating income (non-GAAP)		$	16,893			$	18,140			$	(1,247	)		(6.9	)	%		$	56,506			$	50,157			$	6,349			12.7		%
Operating margin (GAAP)			19.0		%		16.4		%										18.6		%		17.8		%
Operating margin (non-GAAP)			19.5		%		21.9		%										21.4		%		19.6		%
Home Office and Other:
Operating loss (GAAP)		$	(6,975	)		$	(14,402	)		$	7,427			51.6		%		$	(45,632	)		$	(80,159	)		$	34,527			43.1		%
CEO transition costs			—				—				—								—				6,195				(6,195	)
Restructuring expense			804				1,793				(989	)							6,380				5,960				420
Business acquisition and integration expense			11,346				5,924				5,422								35,702				41,537				(5,835	)
Gain on sale of assets			(13,317	)			—				(13,317	)							(13,317	)			—				(13,317	)
Adjusted operating loss (non-GAAP)		$	(8,142	)		$	(6,685	)		$	(1,457	)		(21.8	)	%		$	(16,867	)		$	(26,467	)		$	9,600			36.3		%
Adtalem Global Education:
Operating income (GAAP)		$	59,429			$	32,949			$	26,480			80.4		%		$	128,613			$	30,783			$	97,830			317.8		%
Deferred revenue adjustment			—				—				—								—				8,561				(8,561	)
CEO transition costs			—				—				—								—				6,195				(6,195	)
Restructuring expense			1,278				10,518				(9,240	)							17,706				16,999				707
Business acquisition and integration expense			11,346				5,924				5,422								35,702				41,537				(5,835	)
Intangible amortization expense			14,232				26,817				(12,585	)							48,936				73,967				(25,031	)
Gain on sale of assets			(13,317	)			—				(13,317	)							(13,317	)			—				(13,317	)
Adjusted operating income (non-GAAP)		$	72,968			$	76,208			$	(3,240	)		(4.3	)	%		$	217,640			$	178,042			$	39,598			22.2		%
Operating margin (GAAP)			16.1		%		9.0		%										11.8		%		3.0		%
Operating margin (non-GAAP)			19.8		%		20.9		%										20.0		%		17.4		%

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)
		2023				2022				$				%				2023				2022				$				%
Chamberlain:
Operating income (GAAP)		$	39,589			$	36,979			$	2,610			7.1		%		$	99,002			$	83,290			$	15,712			18.9		%
Restructuring expense			—				1,931				(1,931	)							818				2,266				(1,448	)
Depreciation			4,405				4,738				(333	)							12,985				14,048				(1,063	)
Stock-based compensation			923				1,869				(946	)							3,600				5,104				(1,504	)
Adjusted EBITDA (non-GAAP)		$	44,917			$	45,517			$	(600	)		(1.3	)	%		$	116,405			$	104,708			$	11,697			11.2		%
Adjusted EBITDA margin (non-GAAP)			30.0		%		31.9		%										27.3		%		25.1		%
Walden:
Operating income (loss) (GAAP)		$	10,343			$	(3,199	)		$	13,542			NM				$	26,071			$	(17,748	)		$	43,819			NM
Deferred revenue adjustment			—				—				—								—				8,561				(8,561	)
Restructuring expense			53				2,225				(2,172	)							3,174				4,016				(842	)
Intangible amortization expense			14,232				26,817				(12,585	)							48,936				73,967				(25,031	)
Depreciation			2,439				2,573				(134	)							7,303				6,801				502
Stock-based compensation			754				841				(87	)							2,945				2,308				637
Adjusted EBITDA (non-GAAP)		$	27,821			$	29,257			$	(1,436	)		(4.9	)	%		$	88,429			$	77,905			$	10,524			13.5		%
Adjusted EBITDA margin (non-GAAP)			20.9		%		21.0		%										22.3		%		22.4		%
Medical and Veterinary:
Operating income (GAAP)		$	16,472			$	13,571			$	2,901			21.4		%		$	49,172			$	45,400			$	3,772			8.3		%
Restructuring expense			421				4,569				(4,148	)							7,334				4,757				2,577
Depreciation			3,231				3,397				(166	)							9,367				10,497				(1,130	)
Stock-based compensation			587				1,075				(488	)							2,291				2,974				(683	)
Adjusted EBITDA (non-GAAP)		$	20,711			$	22,612			$	(1,901	)		(8.4	)	%		$	68,164			$	63,628			$	4,536			7.1		%
Adjusted EBITDA margin (non-GAAP)			24.0		%		27.4		%										25.8		%		24.9		%
Home Office and Other:
Operating loss (GAAP)		$	(6,975	)		$	(14,402	)		$	7,427			51.6		%		$	(45,632	)		$	(80,159	)		$	34,527			43.1		%
CEO transition costs			—				—				—								—				6,195				(6,195	)
Restructuring expense			804				1,793				(989	)							6,380				5,960				420
Business acquisition and integration expense			11,346				5,924				5,422								35,702				41,537				(5,835	)
Gain on sale of assets			(13,317	)			—				(13,317	)							(13,317	)			—				(13,317	)
Depreciation			82				633				(551	)							1,963				2,125				(162	)
Stock-based compensation			531				888				(357	)							2,072				2,023				49
Adjusted EBITDA (non-GAAP)		$	(7,529	)		$	(5,164	)		$	(2,365	)		(45.8	)	%		$	(12,832	)		$	(22,319	)		$	9,487			42.5		%
Adtalem Global Education:
Net income (GAAP)		$	45,869			$	347,740			$	(301,871	)		(86.8	)	%		$	71,114			$	304,245			$	(233,131	)		(76.6	)	%
Net loss (income) from discontinued operations			2,694				(343,340	)			346,034								7,088				(341,337	)			348,425
Interest expense			14,457				36,585				(22,128	)							47,806				109,907				(62,101	)
Other (income) expense, net			(3,980	)			327				(4,307	)							(3,301	)			(2,435	)			(866	)
Provision for (benefit from) income taxes			389				(8,363	)			8,752								5,906				(39,597	)			45,503
Operating income (GAAP)			59,429				32,949				26,480								128,613				30,783				97,830
Depreciation and amortization			24,389				38,158				(13,769	)							80,554				107,438				(26,884	)
Stock-based compensation			2,795				4,673				(1,878	)							10,908				12,409				(1,501	)
Deferred revenue adjustment			—				—				—								—				8,561				(8,561	)
CEO transition costs			—				—				—								—				6,195				(6,195	)
Restructuring expense			1,278				10,518				(9,240	)							17,706				16,999				707
Business acquisition and integration expense			11,346				5,924				5,422								35,702				41,537				(5,835	)
Gain on sale of assets			(13,317	)			—				(13,317	)							(13,317	)			—				(13,317	)
Adjusted EBITDA (non-GAAP)		$	85,920			$	92,222			$	(6,302	)		(6.8	)	%		$	260,166			$	223,922			$	36,244			16.2		%
Adjusted EBITDA margin (non-GAAP)			23.3		%		25.3		%										24.0		%		21.9		%

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,
		2023				2022				2023				2022
Net income (GAAP)		$	45,869			$	347,740			$	71,114			$	304,245
Deferred revenue adjustment			—				—				—				8,561
CEO transition costs			—				—				—				6,195
Restructuring expense			1,278				10,518				17,706				16,999
Business acquisition and integration expense			11,346				5,924				35,702				41,537
Intangible amortization expense			14,232				26,817				48,936				73,967
Gain on sale of assets			(13,317	)			—				(13,317	)			—
Pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, and investment impairment			—				12,471				9,226				44,105
Net tax benefit related to a valuation allowance release			(6,184	)			—				(6,184	)			—
Income tax impact on non-GAAP adjustments (1)			(4,359	)			(18,769	)			(23,341	)			(60,871	)
Net loss (income) from discontinued operations			2,694				(343,340	)			7,088				(341,337	)
Adjusted net income (non-GAAP)		$	51,559			$	41,361			$	146,930			$	93,401
(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,
		2023				2022				2023				2022
Earnings per share, diluted (GAAP)		$	1.00			$	7.04			$	1.54			$	6.15
Effect on diluted earnings per share:
Deferred revenue adjustment			-				-				-				0.17
CEO transition costs			-				-				-				0.12
Restructuring expense			0.03				0.21				0.38				0.34
Business acquisition and integration expense			0.25				0.12				0.77				0.83
Intangible amortization expense			0.31				0.54				1.06				1.48
Gain on sale of assets			(0.29	)			-				(0.29	)			-
Pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, and investment impairment			-				0.25				0.20				0.88
Net tax benefit related to a valuation allowance release			(0.14	)			-				(0.13	)			-
Income tax impact on non-GAAP adjustments (1)			(0.10	)			(0.38	)			(0.51	)			(1.22	)
Net loss (income) from discontinued operations			0.06				(6.95	)			0.15				(6.90	)
Adjusted earnings per share, diluted (non-GAAP)		$	1.13			$	0.84			$	3.19			$	1.87
Diluted shares used in non-GAAP EPS calculation			45,801				49,377				46,089				49,872
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				FY23				FY23				FY22				FY22
		Q3				Q3				Q3				Q2				Q1				Q4				Q3
Net cash provided by operating activities-continuing operations (GAAP)		$	107,544			$	77,739			$	255,052			$	225,247			$	225,972			$	164,002			$	101,855
Capital expenditures			(9,309	)			(7,477	)			(27,861	)			(26,029	)			(29,914	)			(31,054	)			(33,539	)
Free cash flow (non-GAAP)		$	98,235			$	70,262			$	227,191			$	199,218			$	196,058			$	132,948			$	68,316

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)		$	2.14 to 2.29
Expected effects on diluted earnings per share:
Restructuring expense			0.38
Integration costs			0.77
Estimated incremental integration costs			0.15
Estimated intangible amortization			1.33
Gain on sale of assets			(0.29)
Write-off of debt discount and issuance costs, gain on extinguishment of debt, and investment impairment			0.20
Net tax benefit related to a valuation allowance release			(0.13)
Estimated income tax impact on non-GAAP adjustments(1)			(0.65)
Net loss from discontinued operations			0.15
Expected adjusted earnings per share, diluted (non-GAAP)(2)		$	4.05 to 4.20
Diluted shares used in EPS calculation			46,089
(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 intangible amortization and (2) the estimated incremental integration costs are estimates related to the Walden University acquisition and certain costs related to growth transformation initiatives. The effects on diluted EPS of restructuring expense, integration costs, gain on sale of assets, write-off of debt discount and issuance costs, gain on extinguishment of debt, investment impairment, net tax benefit related to a valuation allowance release, and loss from discontinued operations includes the results realized through March 31, 2023. 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
		March 31, 2023
Adtalem Global Education:
Net income (GAAP)		$	77,860
Net income from discontinued operations			1,479
Interest expense			67,247
Other income, net			(1,974)
Provision for income taxes			29,964
Depreciation and amortization			114,964
Stock-based compensation			14,915
Restructuring expense			26,335
Business acquisition and integration expense			47,363
Gain on sale of assets			(13,317)
Adjusted EBITDA (non-GAAP)		$	364,836
		March 31, 2023
Long-term debt		$	708,283
Less: Cash and cash equivalents			(315,373)
Net debt (non-GAAP)		$	392,910
Net leverage (non-GAAP)			1.1 x

 

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The Adtalem Global Education Stock at the time of publication of the news with a raise of 0,00 % to 36,00EUR on Lang & Schwarz stock exchange (30. April 2023, 18:54 Uhr).