Adtalem Global Education (ATGE) 8-K Adtalem Global Education Announces Fiscal First Quarter 2020 Results

Exhibit 99.1

News Release

  Investor Contact: John Kristoff John.Kristoff@Adtalem.com 312-651-1437
Media Contact: Ernie Gibble Ernie.Gibble@Adtalem.com  630-353-9920

Adtalem Global Education Announces Fiscal First Quarter 2020 Results

• Revenue of $254.6 million increased 7.5% compared with the prior year

• Operating income from continuing operations was $25.7 million compared with a loss of $3.2 million in the prior year; operating income from continuing operations, excluding special items, was $27.5 million compared with $36.2 million in the prior year

• Net income was $14.4 million compared with a loss of $9.5 million in the prior year; net income from continuing operations, excluding special items, was $18.9 million compared with $26.7 million in the prior year

• Diluted earnings per share was $0.26 compared with a loss of $0.16 in the prior year; diluted earnings per share from continuing operations, excluding special items, was $0.34 compared with $0.44 in the prior year.  Approximately 0.9 million shares of common stock were repurchased during the first quarter of fiscal 2020 at an average purchase price of $43.81 for a total of $40.3 million

CHICAGO – Oct. 29, 2019 – Adtalem Global Education Inc. (NYSE: ATGE), a leading workforce solutions provider, today reported academic, operating and financial results for its fiscal 2020 first quarter ended Sept. 30, 2019.  The first quarter results reflect the Business and Law segment in discontinued operations as a result of the recently announced agreement to divest Adtalem Educacional do Brasil, which made up the entire segment.

“As part of our transition into a leading workforce solutions provider, we recently announced the divestiture of our Brazil assets. This strategic milestone allows us to further align our portfolio to serve our markets in a more competitive and comprehensive way, while unlocking significant shareholder value,” said Lisa Wardell, chairman and CEO of Adtalem. “During the first quarter, we also capitalized on solid demand in our other vertical markets to deliver high-single digit revenue growth overall. In Medical and Healthcare, we continued to build on institutional and employer partnerships, leveraging these relationships to create superior student outcomes. In Financial Services, we are making progress with the integration of OnCourse Learning, which contributed to the strong double-digit growth in the vertical during the quarter. We remain focused on driving growth across the business, including further investment in our strategic initiatives, which gives us confidence in delivering on our targets for the full year.”

Fiscal 2020 first quarter results contained special items including total pre-tax restructuring charges of $6.5 million, primarily related to the sale of Becker’s courses for healthcare students and real estate consolidations at Adtalem’s home office, in addition to a pre-tax gain on sale of assets of $4.8 million from the sale of Adtalem’s Columbus, Ohio, campus.

Adtalem recorded a loss on discontinued operations of $3.2 million during the first quarter of fiscal year 2020. This relates to costs associated with the DeVry University and Carrington College transfer of ownerships completed in the second quarter of fiscal year 2019 and Adtalem Educacional do Brasil operations.

Segment Highlights

Medical and Healthcare

First quarter segment revenue increased 2.7% to $207.5 million compared with the prior year.

Chamberlain revenue in the first quarter increased 2.5% compared with the prior year. September new student enrollment increased2.9% while total student enrollment increased 1.4% compared with the prior year, driven by growth in the campus Bachelor of Science in Nursing program, as well as graduate programs including the Master of Social Work program, which launched in September.

Revenue in the first quarter for the medical and veterinary schools increased 2.9% from the prior year. In the September 2019 session, new student enrollment declined 1.9% while total student enrollment declined 4.7% compared with the prior year, primarily reflecting lingering effects of the permanent campus relocation of Ross University School of Medicine to Barbados in the fiscal third quarter of 2019.

Segment operating income in the first quarter was $28.5 million compared with $1.7 million in the prior year. Excluding special items, segment operating income in the first quarter declined 29.6% to $28.6 million compared with $40.7 million in the prior year. The decrease in segment operating income is the result of increased marketing expenses to drive future enrollment growth, cost of expansion and growth in campus and online programs, an increase in our bad debt reserve, and corporate costs that were previously allocated to our Business and Law segment.

Financial Services

First quarter segment revenue increased 32.2% to $47.1 million compared with the prior year. Becker Accounting revenue grew 0.3% and the Association of Anti-Money Laundering Specialists (ACAMS) revenue increased 37.4%. First quarter segment revenue included $7.6 million of revenue from the fourth quarter of fiscal year 2019 acquisition of OnCourse Learning. Segment operating income in the quarter was $2.1 million compared with $4.8 million in the prior year. Excluding special items, segment operating income in the first quarter declined 13.5% to $4.1 million compared with $4.8 million in the prior year. The decrease in segment operating income is the result of increased expenses to support segment growth and a higher level of corporate expense allocation.

Adtalem Outlook

Fiscal Year 2020

• Revenue is expected to grow 5% to 7% compared with the prior year

• Effective income tax rate is expected to be in the 19% to 20% range

• Earnings per share from continuing operations, excluding special items, are expected to grow in the 7 to 9% range compared with the prior year

• Full-year capital spending is expected to be in the $45 million to $50 million range

Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its fiscal 2020 first quarter on Tuesday, Oct. 29, 2019, at 4 p.m. CT (5 p.m. ET). The conference call will be led by Lisa Wardell, chairman of the board, president and chief executive officer, and Mike Randolfi, senior vice president and chief financial officer.

For those participating by telephone, dial 844-582-0106 (United States) or +1 825-312-2256 (outside the United States) and request the “Adtalem Call” or use conference ID: 3664928. Adtalem will also broadcast the conference call live on the web at:

https://event.on24.com/wcc/r/2113644/440710983A97D538212E30BAAE55611D.

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 Nov. 29, 2019. To access the replay, dial 800-585-8367 (United States) or +1 416-621-4642 (outside the United States), conference ID: 3664928, or visit the Adtalem website at: http://investors.adtalem.com/CorporateProfile.

About Adtalem Global Education

The purpose of Adtalem Global Education is to empower students to achieve their goals, find success and make inspiring contributions to our global community. Adtalem Global Education Inc. (NYSE: ATGE; member S&P MidCap 400 Index) is a leading workforce solutions provider and the parent organization of Adtalem Educacional do Brasil (IBMEC, Damásio and Wyden institutions), American University of the Caribbean School of Medicine, Association of Certified Anti-Money Laundering Specialists, Becker Professional Education, Chamberlain University, EduPristine, OnCourse Learning, Ross University School of Medicine and Ross University School of Veterinary Medicine. For more information, please visit adtalem.com and follow us on Twitter (@adtalemglobal) and LinkedIn.

Forward-Looking Statement

Certain statements contained in this release concerning Adtalem Global Education’s expected future performance, including those statements concerning expectations or plans, constitute “forward-looking statements” within the meaning of the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. These forward-looking statements generally can be identified by phrases such as Adtalem Global Education or its management “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “may,” “will,” “should,” “could,” or other words or phrases of similar import which predict or indicate future events or trends or that are not statements of historical matters. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include the risks discussed in Item 1A, “Risk Factors,” in our most recent Annual Report on Form 10-K for the fiscal year ended June 30, 2019 filed with the Securities and Exchange Commission (SEC) on August 28, 2019 and our other filings with the SEC. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. All forward-looking statements set forth in this release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this release speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.

	1Q 2020	1Q 2019	% Change
Adtalem Global Education Student Enrollments(1)
New students	6,467	6,324	+2.3%
Total students	37,344	37,182	+0.4%
Chamberlain University
September Session
New students	5,595	5,435	+2.9%
Total students	31,736	31,295	+1.4%
Medical and Veterinary
September Semester(2)
New students	872	889	-1.9%
Total students	5,608	5,887	-4.7%

1) Includes the most recently reported enrollment sessions at Adtalem’s postsecondary institutions, excluding Brazil

2) Includes enrollments in its medical and veterinary preparatory programs

# # #

ADTALEM GLOBAL EDUCATION INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

	September 30,			June 30,			September 30,
	2019			2019			2018
	(in thousands, except share and par value amounts)
ASSETS:
Current Assets:
Cash and Cash Equivalents	$	121,079		$	204,202		$	334,222
Investments in Marketable Securities		8,763			8,680			8,402
Restricted Cash		710			1,022			877
Accounts Receivable, Net		116,212			83,560			108,213
Prepaid Expenses and Other Current Assets		39,476			29,313			60,031
Current Assets Held for Sale		169,873			177,923			227,641
Total Current Assets		456,113			504,700			739,386
Land, Building and Equipment:
Land		41,441			41,938			41,183
Building		309,893			322,657			288,438
Equipment		235,027			228,533			221,294
Construction in Progress		8,681			13,545			25,799
		595,042			606,673			576,714
Accumulated Depreciation		(314,219	)		(323,240	)		(306,340	)
Land, Building and Equipment Held for Sale, Net		73,763			81,250			81,029
Land, Building and Equipment, Net		354,586			364,683			351,403
Noncurrent Assets:
Operating Lease Assets		195,238			—			—
Deferred Income Taxes		14,977			18,314			31,080
Intangible Assets, Net		295,324			297,989			240,166
Goodwill		686,992			687,256			627,239
Other Assets, Net		91,086			52,113			45,201
Other Assets Held for Sale		366,008			317,641			315,390
Total Noncurrent Assets		1,649,625			1,373,313			1,259,076
TOTAL ASSETS	$	2,460,324		$	2,242,696		$	2,349,865
LIABILITIES:
Current Liabilities:
Accounts Payable	$	44,674		$	53,385		$	48,087
Accrued Salaries, Wages and Benefits		30,071			46,664			32,056
Accrued Liabilities		61,966			76,529			80,591
Deferred Revenue		168,533			95,944			173,856
Current Operating Lease Liabilities		54,057			—			—
Current Portion of Long-Term Debt		3,000			3,000			3,000
Current Liabilities Held for Sale		50,174			36,109			121,496
Total Current Liabilities		412,475			311,631			459,086
Noncurrent Liabilities:
Long-Term Debt		327,600			398,094			289,579
Long-Term Operating Lease Liabilities		192,055			—			—
Deferred Income Taxes		29,094			29,426			29,378
Other Liabilities		92,252			86,326			101,561
Noncurrent Liabilities Held for Sale		76,468			16,146			21,412
Total Noncurrent Liabilities		717,469			529,992			441,930
TOTAL LIABILITIES		1,129,944			841,623			901,016
NONCONTROLLING INTEREST		3,187			9,543			8,814
SHAREHOLDERS’ EQUITY:
Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized; 54,649,000, 55,303,000 and 59,120,000 Shares Outstanding at September 30, 2019, June 30, 2019 and September 30, 2018, respectively		805			801			798
Additional Paid-in Capital		492,151			486,061			469,545
Retained Earnings		2,027,263			2,012,902			1,908,465
Accumulated Other Comprehensive Loss		(176,739	)		(137,290	)		(163,168	)
Treasury Stock, at Cost, 25,862,000, 24,830,000 and 20,727,000 Shares at September 30, 2019, June 30, 2019 and September 30, 2018, respectively		(1,016,287	)		(970,944	)		(775,605	)
TOTAL SHAREHOLDERS’ EQUITY		1,327,193			1,391,530			1,440,035
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY	$	2,460,324		$	2,242,696		$	2,349,865

ADTALEM GLOBAL EDUCATION INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(unaudited)

	Three Months Ended
	September 30,
	2019			2018
	(in thousands, except per share amounts)
REVENUE	$	254,613		$	236,939
OPERATING COST AND EXPENSE:
Cost of Educational Services		128,034			111,534
Student Services and Administrative Expense		99,087			89,164
Restructuring Expense		6,530			39,473
Gain on Sale of Assets		(4,779	)		—
Total Operating Cost and Expense		228,872			240,171
Operating Income (Loss) from Continuing Operations		25,741			(3,232	)
OTHER INCOME (EXPENSE):
Interest and Dividend Income		678			969
Interest Expense		(5,328	)		(4,918	)
Investment Gain		23			—
Net Other Expense		(4,627	)		(3,949	)
Income (Loss) from Continuing Operations Before Income Taxes		21,114			(7,181	)
Income Tax (Provision) Benefit		(3,706	)		2,330
Income (Loss) from Continuing Operations		17,408			(4,851	)
DISCONTINUED OPERATIONS:
Loss from Discontinued Operations Before Income Taxes		(2,883	)		(5,719	)
Income Tax (Provision) Benefit		(273	)		985
Loss from Discontinued Operations		(3,156	)		(4,734	)
NET INCOME (LOSS)		14,252			(9,585	)
Net Loss Attributable to Noncontrolling Interest from Continuing Operations		109			64
Net Income Attributable to Noncontrolling Interest from Discontinued Operations		—			(9	)
NET INCOME (LOSS) ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION	$	14,361		$	(9,530	)
AMOUNTS ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION:
Income (Loss) from Continuing Operations	$	17,517		$	(4,787	)
Loss from Discontinued Operations		(3,156	)		(4,743	)
NET INCOME (LOSS) ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION	$	14,361		$	(9,530	)
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION SHAREHOLDERS:
Basic:
Continuing Operations	$	0.32		$	(0.08	)
Discontinued Operations	$	(0.06	)	$	(0.08	)
Total	$	0.26		$	(0.16	)
Diluted:
Continuing Operations	$	0.31		$	(0.08	)
Discontinued Operations	$	(0.06	)	$	(0.08	)
Total	$	0.26		$	(0.16	)

ADTALEM GLOBAL EDUCATION INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Three Months Ended
	September 30,
	2019			2018
	(in thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss)	$	14,252		$	(9,585	)
Loss from Discontinued Operations		3,156			4,734
Adjustments to Reconcile Net Income (Income) to Net Cash Provided by Operating Activities:
Stock-Based Compensation Expense		5,223			4,137
Amortization and Adjustments to Operating Lease Assets		12,804			—
Depreciation		8,393			7,727
Amortization of Intangible Assets		2,534			1,605
Amortization of Deferred Debt Issuance Costs		392			392
Provision for Bad Debts		5,554			1,203
Deferred Income Taxes		2,991			7,915
Loss on Disposals, Accelerated Depreciation and Adjustments to Land, Building and Equipment		1,053			37,984
Realized Loss on Investments		11			—
Unrealized Loss on Investments		(33	)		—
Gain on Sale of Assets		(4,779	)		—
Changes in Assets and Liabilities:
Accounts Receivable		(38,206	)		(39,199	)
Prepaid Expenses and Other Current Assets		(13,646	)		(11,308	)
Accounts Payable		(7,566	)		1,397
Accrued Salaries, Wages, Benefits and Liabilities		(19,010	)		(14,257	)
Deferred Revenue		72,589			74,909
Operating Lease Liabilities		(13,681	)		—
Other Assets and Liabilities		1,270			(14,137	)
Net Cash Provided by Operating Activities-Continuing Operations		33,301			53,517
Net Cash Provided by Operating Activities-Discontinued Operations		14,167			24,497
NET CASH PROVIDED BY OPERATING ACTIVITIES		47,468			78,014
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures		(10,436	)		(13,321	)
Sales of Marketable Securities		290			—
Purchases of Marketable Securities		(292	)		(4,152	)
Proceeds from Sale of Assets		6,421			—
Net Cash Used in Investing Activities-Continuing Operations		(4,017	)		(17,473	)
Net Cash Used in Investing Activities-Discontinued Operations		(1,728	)		(2,946	)
NET CASH USED IN INVESTING ACTIVITIES		(5,745	)		(20,419	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Exercise of Stock Options		828			10,492
Employee Taxes Paid on Withholding Shares		(5,045	)		(5,188	)
Proceeds from Stock Issued Under Colleague Stock Purchase Plan		—			159
Repurchase of Common Stock for Treasury		(40,255	)		(59,175	)
Borrowings Under Credit Facility		30,000			—
Repayments Under Credit Facility		(100,750	)		(750	)
Proceeds from Down Payment on Seller Loan		5,200			—
Payment for Purchase of Noncontrolling Interest of Subsidiary		(6,247	)		—
Net Cash Used in Financing Activities-Continuing Operations		(116,269	)		(54,462	)
Net Cash Used in Financing Activities-Discontinued Operations		(480	)		(470	)
NET CASH USED IN FINANCING ACTIVITIES		(116,749	)		(54,932	)
Effects of Exchange Rate Differences		(6,750	)		(1,579	)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(81,776	)		1,084
Cash, Cash Equivalents and Restricted Cash at Beginning of Period		300,467			444,405
Cash, Cash Equivalents and Restricted Cash at End of Period		218,691			445,489
Less: Cash, Cash Equivalents and Restricted Cash of Discontinued Operations at End of Period		96,902			110,390
Cash, Cash Equivalents and Restricted Cash at End of Period	$	121,789		$	335,099

ADTALEM GLOBAL EDUCATION INC.

SEGMENT INFORMATION

(unaudited)

	Three Months Ended
	September 30,
	2019			2018			Increase(Decrease)
	(in thousands)
REVENUE:
Medical and Healthcare	$	207,487		$	202,100			2.7	%
Financial Services		47,126			35,646			32.2	%
Home Office and Other		—			(807	)	NM
Total Consolidated Revenue		254,613			236,939			7.5	%
OPERATING INCOME (LOSS):
Medical and Healthcare		28,500			1,656			1,621.0	%
Financial Services		2,128			4,750			(55.2	)%
Home Office and Other		(4,887	)		(9,638	)		49.3	%
Total Consolidated Operating Income (Loss)	$	25,741		$	(3,232	)	NM

NON-GAAP INFORMATION

In accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the operating results of DeVry University, Carrington College ("Carrington") and Adtalem Brazil are reclassified as discontinued operations for the first quarter of fiscal year 2020 and 2019. During the first quarter of fiscal year 2020, Adtalem recorded special items related to the following: (i) restructuring charges primarily related to the sale of Becker’s courses for healthcare students, which is part of the Financial Services segment, and real estate consolidations at Adtalem’s home office (not related to any segment); and (ii) gain on sale of assets related to the sale of Adtalem’s home office Columbus, Ohio, campus facility. During the first quarter of fiscal year 2019, Adtalem recorded special items related to restructuring charges, including asset write-offs, primarily related to the closing of the Ross University School of Medicine (“RUSM”), which is part of the Medical and Healthcare segment, campus in Dominica and Adtalem’s home office real estate consolidations. The following tables illustrate the effects of the discontinued operations and special items on Adtalem’s operating income from continuing operations excluding special items and net income from continuing operations excluding special items. Management believes that the non-GAAP disclosure of operating income from continuing operations, net income from continuing operations and earnings per share excluding the discontinued operations and special items provides investors with useful supplemental information regarding the underlying business trends and performance of Adtalem’s ongoing operations and is useful for period-over-period comparisons of such operations given the special nature of discontinued operations, restructuring charges and gain on sale of assets. Adtalem uses these supplemental financial measures internally in its management and budgeting process. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, Adtalem’s reported results prepared in accordance with GAAP. The following tables reconcile these non-GAAP measures to the most directly comparable GAAP information.

ADTALEM GLOBAL EDUCATION INC.

NON-GAAP OPERATING INCOME FROM CONTINUING OPERATIONS BY SEGMENT

(unaudited)

	Three Months Ended
	September 30,
	2019			2018			Increase(Decrease)
	(in thousands)
Medical and Healthcare Operating Income	$	28,500		$	1,656			1,621.0	%
Restructuring Expense		127			39,015			(99.7	)%
Medical and Healthcare Operating Income Excluding Special Items	$	28,627		$	40,671			(29.6	)%
Financial Services Operating Income	$	2,128		$	4,750			(55.2	)%
Restructuring Expense		1,979			—		NM
Financial Services Operating Income Excluding Special Items	$	4,107		$	4,750			(13.5	)%
Home Office and Other Operating Loss	$	(4,887	)	$	(9,638	)		49.3	%
Restructuring Expense		4,424			458			865.9	%
Gain on Sale of Assets		(4,779	)		—		NM
Home Office and Other Operating Loss Excluding Special Items	$	(5,242	)	$	(9,180	)		42.9	%
Adtalem Global Education Operating Income (Loss)	$	25,741		$	(3,232	)	NM
Restructuring Expense		6,530			39,473			(83.5	)%
Gain on Sale of Assets		(4,779	)		—		NM
Adtalem Global Education Operating Income Excluding Special Items	$	27,492		$	36,241			(24.1	)%

ADTALEM GLOBAL EDUCATION INC.

NON-GAAP EARNINGS DISCLOSURE

(unaudited)

	Three Months Ended
	September 30,
	2019			2018
	(in thousands, except per share amounts)
Net Income (Loss)	$	14,361		$	(9,530	)
Earnings (Loss) per Share (diluted-2019, basic-2018)	$	0.26		$	(0.16	)
Continuing Operations:
Restructuring Expense	$	6,530		$	39,473
Effect on Earnings per Share (diluted)	$	0.12		$	0.64
Gain on Sale of Assets	$	(4,779	)	$	—
Effect on Earnings per Share (diluted)	$	(0.09	)	$	—
Income Tax Impact on Non-GAAP Adjustments	$	(343	)	$	(7,952	)
Effect on Earnings per Share (diluted)	$	(0.01	)	$	(0.13	)
Discontinued Operations, net of tax	$	3,156		$	4,743
Effect on Earnings per Share (diluted)	$	0.06		$	0.08
Net Income from Continuing Operations Excluding Special Items, net of tax	$	18,925		$	26,734
Earnings per Share from Continuing Operations Excluding Special Items, net of tax (diluted)	$	0.34		$	0.44
Shares used in Basic EPS Calculation		N/A			60,328
Shares used in Diluted EPS Calculation		56,140			61,202