| • | Diluted loss per share was $1.17 compared with diluted earnings per share of $0.38 in the prior year; diluted earnings per share from continuing operations, excluding special items, was $0.62, compared to $0.78 in the prior year |
| • | Operating loss was $4.7 million, compared with operating income of $36.7 million in the prior year; operating income excluding special items was $54.6 million, a 0.4% increase compared with the prior year |
| • | Net loss attributable to Adtalem was $58.0 million compared with net income of $19.9 million in the prior year, driven primarily by higher interest expense, Walden intangible amortization expense, and business acquisition and integration expense; net income from continuing operations attributable to Adtalem, excluding special items, was $31.3 million, a 24.1% decrease compared with the prior year, primarily driven by additional interest expense related to the Walden acquisition |
Business Highlights
| • | Completed the acquisition of Walden University, significantly expanding Adtalem’s scale as a leading provider of professional talent to the healthcare industry. |
| • | Announced new operating model and key leadership changes to accelerate performance in the company’s core business, enhance focus on the fast growing and dynamic healthcare industry and successfully integrate Walden into the portfolio. |
| • | Made progress on new and existing partnerships with Emory Healthcare, LCMC Health, Association of periOperative Registered Nurses and Centura Health Foundations to address critical workforce challenges in the healthcare industry. |
| • | Further expanded access to healthcare education for students of diverse backgrounds and experiences through growing the Ross Vet Articulation Partner Scholarship initiative and launching Chamberlain University’s Social Determinants of Learning™ framework, as well as its high school student partnership with Stride, Inc. |
| • | Appointed Mayur Gupta – chief marketing and strategy officer at Gannett Co., – as an independent director, bringing more than 20 years of digital marketing insights to the Adtalem board. |
Segment Highlights
Chamberlain
First quarter segment revenue increased 1.4% to $135.6 million compared with the prior year, while segment operating income declined 30.9% to $20.9 million due primarily to increased investments in marketing and higher costs associated with a return to in-person campus instruction.
New and total student enrollment in the September session decreased 13.4% and 2.8%, respectively, compared with the same session last year. The decrease in new student enrollment represented a return to historical norms from record high enrollment levels in the comparable period and was primarily attributable to COVID-related headwinds in our post-licensure programs.
Walden
Revenue in the first quarter was $68.6 million. Segment operating loss was $11.6 million, driven primarily by intangible amortization expense. Segment operating income, excluding special items, was $11.0 million. With the acquisition closing on August 12, 2021, there are no prior year comparables.
New and total student enrollment in the September session decreased 15.5% and 5.5%, respectively, compared with the prior year. The decrease in new student enrollment represented a return to historical norms in Walden’s nursing and social and behavioral sciences programs after a surge in enrollment levels in the prior year period, and was primarily attributable to COVID-related headwinds in its nursing programs and negative publicity surrounding the now-concluded US Department of Justice inquiry. This inquiry ultimately concluded favorably, with no findings of misconduct by Walden.
Medical and Veterinary
Revenue in the first quarter of $84.8 million was essentially flat compared with the prior year. Segment operating income declined 31.4% to $15.7 million primarily driven by higher costs related to a return to in-person campus instruction. September session medical and veterinary school new student enrollment decreased 4.6% and total student enrollment decreased 6.9%, compared with the prior year, driven primarily by declines at RUSM.
Financial Services
First quarter segment revenue increased 19.9% to $59.3 million compared with the prior year, primarily driven by increases in revenue at ACAMS, Becker and OnCourse Learning. ACAMS revenue increased as non-conference certification offerings continue to perform well and conference revenue began to show a recovery. Becker revenue growth was driven by continued growth in its continuing education program offerings and an increase in CPA exam preparation revenue. OnCourse Learning’s continued focus on execution in a favorable mortgage market and strength in its continuing education business drove increased revenue in the quarter. Segment operating income was $12.6 million, an increase of 73.7% compared with the prior year. Segment operating income, excluding special items, increased 54.8% to $13.4 million compared with the prior year, driven primarily by higher revenue, which resulted in improved operating income.
Adtalem Outlook
For the full fiscal year 2022, Adtalem reaffirmed its previous guidance of adjusted revenue, excluding special items, to be within the range of $1,685 million and $1,735 million, and adjusted diluted earnings per share of $4.20 to $4.45 from continuing operations, excluding special items.
Conference Call and Webcast Information
Adtalem will hold a conference call to discuss its fiscal 2022 first quarter on Wednesday, Nov. 3, 2021, at 4 p.m. CT (5 p.m. ET). The conference call will be led by Steve Beard, president and chief executive officer, and Bob Phelan, senior vice president and chief financial officer. For those participating by telephone, dial 877-407-6184 (United States) or +1 201-389-0877 (outside the United States) and request the “Adtalem Call” or use conference ID: 13724058. Adtalem will also broadcast the conference call live on the web at: https://78449.themediaframe.com/dataconf/productusers/age/mediaframe/46988/indexl.html.
Please access the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
Adtalem will archive a replay of the call until Dec. 3, 2021. To access the replay, dial 877-660-6853 (United States) or +1 201-612-7415 (outside the United States), conference ID: 13724058, or visit the Adtalem website at: https://investors.adtalem.com/overview/default.aspx.
About Adtalem Global Education
Adtalem Global Education (NYSE: ATGE), a leading workforce solutions provider, partners with organizations in the healthcare and financial services industries to solve critical workforce talent needs by expanding access to education, certifications and upskilling programs at scale. 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 the global community. Adtalem is the parent organization of ACAMS, American University of the Caribbean School of Medicine, Becker Professional Education, Chamberlain University, EduPristine, OnCourse Learning, Ross University School of Medicine, Ross University School of Veterinary Medicine and Walden University. Adtalem has more than 10,000 employees, a network of more than 275,000 alumni and serves over 86,000 members across 200 countries and territories. Adtalem was named one of America’s Most Responsible Companies 2021 by Newsweek and one of America’s Best Employers for Diversity 2021 by Forbes. Follow Adtalem on Twitter (@adtalemglobal), LinkedIn or visit adtalem.com for more information.
Forward-Looking Statements
Certain statements contained in this release are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, which includes statements regarding the future impacts of the COVID-19 pandemic and the integration of Walden into the portfolio. Forward-looking statements can also be identified by words such as “future,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “may,” “will,” “would,” “could,” “can,” “continue,” “preliminary,” “range,” and similar terms. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in the statements. These risk and uncertainties include the risk factors described in Item 1A. “Risk Factors” of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and our other filings with the SEC. These forward-looking statements are based on information available to us as of the date any such statements are made, and we do not undertake any obligation to update any forward-looking statement, except as required by law.
| | 1Q 2022 | 1Q 2021 | % Change |
Adtalem Global Education Student Enrollments(1) | | | |
| New students | 14,778 | 17,210 | -14.1 % |
| Total students | 84,874 | 88,861 | -4.5 % |
| | | | |
| | | | |
| Chamberlain University | | | |
| September Session | | | |
| New students | 5,487 | 6,333 | -13.4 % |
| Total students | 34,539 | 35,525 | -2.8 % |
| | | | |
July Session(2) | | | |
| New students | 2,810 | 2,768 | +1.5 % |
| Total students | 32,729 | 32,198 | +1.6 % |
| | | | |
Walden University(3) | | | |
| July – September Quarter | | | |
| New students | 8,413 | 9,957 | -15.5 % |
| Total students | 44,886 | 47,486 | -5.5 % |
| | | | |
Medical and Veterinary(4) | | | |
| September Semester | | | |
| New students | 878 | 920 | -4.6 % |
| Total students | 5,449 | 5,850 | -6.9 % |
| | | | |
| 1) | Includes the most recently reported enrollment sessions at Adtalem’s postsecondary institutions |
| 2) | Post-licensure online programs only; Pre-licensure campus-based programs start in September, January and May; Total students includes pre- and post-licensure enrollment |
| 3) | Prior year Walden enrollment figures are as calculated by Walden while controlled by Laureate Education, Inc., and are included here for comparative purposes only. |
| 4) | Includes enrollments in its medical and veterinary preparatory programs |
Adtalem Global Education Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except par value)
| | September 30, | | | June 30, | | | September 30, | |
| | 2021 | | | 2021 | | | 2020 | |
| Assets: | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents | $ | 360,095 | | | $ | 494,613 | | | $ | 561,170 | |
| Restricted cash | | 20,220 | | | | 819,003 | | | | 947 | |
| Accounts receivable, net | | 163,211 | | | | 67,996 | | | | 99,536 | |
| Prepaid expenses and other current assets | | 165,731 | | | | 133,341 | | | | 106,820 | |
| Total current assets | | 709,257 | | | | 1,514,953 | | | | 768,473 | |
| Noncurrent assets: | | | | | | | | | | | |
| Property and equipment, net | | 322,305 | | | | 297,237 | | | | 289,944 | |
| Operating lease assets | | 168,626 | | | | 168,943 | | | | 186,824 | |
| Deferred income taxes | | 31,315 | | | | 22,479 | | | | 18,325 | |
| Intangible assets, net | | 1,090,663 | | | | 276,249 | | | | 285,027 | |
| Goodwill | | 1,328,928 | | | | 686,374 | | | | 686,480 | |
| Other assets, net | | 117,096 | | | | 87,601 | | | | 94,824 | |
| Total noncurrent assets | | 3,058,933 | | | | 1,538,883 | | | | 1,561,424 | |
| Total assets | $ | 3,768,190 | | | $ | 3,053,836 | | | $ | 2,329,897 | |
| | | | | | | | | | | | |
| Liabilities and shareholders' equity: | | | | | | | | | | | |
| Current liabilities: | | | | | | | | | | | |
| Accounts payable | $ | 113,577 | | | $ | 56,071 | | | $ | 48,148 | |
| Accrued payroll and benefits | | 65,047 | | | | 64,452 | | | | 31,491 | |
| Accrued liabilities | | 126,818 | | | | 129,258 | | | | 107,148 | |
| Deferred revenue | | 266,654 | | | | 100,697 | | | | 168,253 | |
| Current operating lease liabilities | | 57,224 | | | | 55,329 | | | | 51,897 | |
| Current portion of long-term debt | | 6,375 | | | | 3,000 | | | | 3,000 | |
| Total current liabilities | | 635,695 | | | | 408,807 | | | | 409,937 | |
| Noncurrent liabilities: | | | | | | | | | | | |
| Long-term debt | | 1,600,043 | | | | 1,067,711 | | | | 285,621 | |
| Long-term operating lease liabilities | | 164,675 | | | | 167,855 | | | | 189,607 | |
| Deferred income taxes | | 27,206 | | | | 26,991 | | | | 25,410 | |
| Other liabilities | | 73,600 | | | | 79,612 | | | | 85,590 | |
| Total noncurrent liabilities | | 1,865,524 | | | | 1,342,169 | | | | 586,228 | |
| Total liabilities | | 2,501,219 | | | | 1,750,976 | | | | 996,165 | |
| Commitments and contingencies | | | | | | | | | | | |
| Redeemable noncontrolling interest | | 1,790 | | | | 1,790 | | | | 2,761 | |
| Shareholders' equity: | | | | | | | | | | | |
Common stock, $0.01 par value per share, 200,000 shares authorized; 49,753, 49,253, and 52,089 shares outstanding as of September 30, 2021, June 30, 2021, and September 30, 2020, respectively | | 817 | | | | 811 | | | | 810 | |
| Additional paid-in capital | | 537,402 | | | | 519,826 | | | | 508,487 | |
| Retained earnings | | 1,947,101 | | | | 2,005,105 | | | | 1,947,498 | |
| Accumulated other comprehensive loss | | (740 | ) | | | (7,365 | ) | | | (8,612 | ) |
Treasury stock, at cost, 31,903, 31,846, and 28,912 shares as of September 30, 2021, June 30, 2021, and September 30, 2020, respectively | | (1,219,399 | ) | | | (1,217,307 | ) | | | (1,117,212 | ) |
| Total shareholders' equity | | 1,265,181 | | | | 1,301,070 | | | | 1,330,971 | |
| Total liabilities and shareholders' equity | $ | 3,768,190 | | | $ | 3,053,836 | | | $ | 2,329,897 | |
Adtalem Global Education Inc.
Consolidated Statements of Income (Loss)
(unaudited)
(in thousands, except per share data)
| | Three Months Ended | |
| | September 30, | |
| | 2021 | | | 2020 | |
| Revenue | $ | 348,327 | | | $ | 268,241 | |
| Operating cost and expense: | | | | | | | |
| Cost of educational services | | 163,110 | | | | 113,698 | |
| Student services and administrative expense | | 159,479 | | | | 100,178 | |
| Restructuring expense | | 3,916 | | | | 4,223 | |
| Business acquisition and integration expense | | 26,553 | | | | 13,436 | |
| Total operating cost and expense | | 353,058 | | | | 231,535 | |
| Operating (loss) income | | (4,731 | ) | | | 36,706 | |
| Other income (expense): | | | | | | | |
| Interest and dividend income | | 878 | | | | 1,004 | |
| Interest expense | | (47,393 | ) | | | (3,692 | ) |
| Investment gain | | — | | | | 518 | |
| Net other expense | | (46,515 | ) | | | (2,170 | ) |
| (Loss) income from continuing operations before income taxes | | (51,246 | ) | | | 34,536 | |
| Benefit from (provision for) income taxes | | 10,612 | | | | (7,090 | ) |
| (Loss) income from continuing operations | | (40,634 | ) | | | 27,446 | |
| Discontinued operations: | | | | | | | |
| Loss from discontinued operations before income taxes | | (23,382 | ) | | | (10,084 | ) |
| Benefit from income taxes | | 6,012 | | | | 2,477 | |
| Loss from discontinued operations | | (17,370 | ) | | | (7,607 | ) |
| Net (loss) income | | (58,004 | ) | | | 19,839 | |
| Net loss attributable to redeemable noncontrolling interest | | — | | | | 91 | |
| Net (loss) income attributable to Adtalem Global Education | $ | (58,004 | ) | | $ | 19,930 | |
| | | | | | | | |
| Amounts attributable to Adtalem Global Education: | | | | | | | |
| Net (loss) income from continuing operations | $ | (40,634 | ) | | $ | 27,537 | |
| Net loss from discontinued operations | | (17,370 | ) | | | (7,607 | ) |
| Net (loss) income attributable to Adtalem Global Education | $ | (58,004 | ) | | $ | 19,930 | |
| | | | | | | | |
| Earnings (loss) per share attributable to Adtalem Global Education: | | | | | | | |
| Basic: | | | | | | | |
| Continuing operations | $ | (0.82 | ) | | $ | 0.52 | |
| Discontinued operations | $ | (0.35 | ) | | $ | (0.14 | ) |
| Net | $ | (1.17 | ) | | $ | 0.38 | |
| Diluted: | | | | | | | |
| Continuing operations | $ | (0.82 | ) | | $ | 0.52 | |
| Discontinued operations | $ | (0.35 | ) | | $ | (0.14 | ) |
| Net | $ | (1.17 | ) | | $ | 0.38 | |
| | | | | | | | |
| Weighted-average shares outstanding: | | | | | | | |
| Basic shares | | 49,663 | | | | 52,464 | |
| Diluted shares | | 49,663 | | | | 52,797 | |
Adtalem Global Education Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
| | Three Months Ended | |
| | September 30, | |
| | 2021 | | | 2020 | |
| Operating activities: | | | | | |
| Net (loss) income | $ | (58,004 | ) | | $ | 19,839 | |
| Loss from discontinued operations | | 17,370 | | | | 7,607 | |
| (Loss) income from continuing operations | | (40,634 | ) | | | 27,446 | |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | | | | | | | |
| Stock-based compensation expense | | 9,906 | | | | 4,004 | |
| Amortization and adjustments to operating lease assets | | 12,524 | | | | 14,639 | |
| Depreciation | | 11,550 | | | | 8,975 | |
| Amortization of intangible assets | | 18,937 | | | | 2,518 | |
| Amortization of debt discount and issuance costs | | 17,858 | | | | 392 | |
| Provision for bad debts | | 6,329 | | | | 1,723 | |
| Deferred income taxes | | (10,852 | ) | | | 4,346 | |
| Loss on disposals, accelerated depreciation, and adjustments to property and equipment | | 282 | | | | 1,486 | |
| Realized and unrealized gain on investments | | — | | | | (518 | ) |
| Changes in assets and liabilities: | | | | | | | |
| Accounts receivable | | (76,289 | ) | | | (13,356 | ) |
| Prepaid expenses and other current assets | | (23,571 | ) | | | (1,735 | ) |
| Accounts payable | | 26,582 | | | | 2,089 | |
| Accrued payroll and benefits | | (23,768 | ) | | | (17,341 | ) |
| Accrued liabilities | | (25,090 | ) | | | (443 | ) |
| Deferred revenue | | 154,999 | | | | 76,664 | |
| Operating lease liabilities | | (13,722 | ) | | | (12,700 | ) |
| Other assets and liabilities | | (4,125 | ) | | | (13,535 | ) |
| Net cash provided by operating activities-continuing operations | | 40,916 | | | | 84,654 | |
| Net cash used in operating activities-discontinued operations | | (52 | ) | | | (4,727 | ) |
| Net cash provided by operating activities | | 40,864 | | | | 79,927 | |
| Investing activities: | | | | | | | |
| Capital expenditures | | (7,324 | ) | | | (14,443 | ) |
| Proceeds from sales of marketable securities | | — | | | | 1,014 | |
| Purchases of marketable securities | | — | | | | (963 | ) |
| Payment for purchase of business, net of cash and restricted cash acquired | | (1,481,789 | ) | | | — | |
| Net cash used in investing activities | | (1,489,113 | ) | | | (14,392 | ) |
| Financing activities: | | | | | | | |
| Proceeds from exercise of stock options | | 7,685 | | | | 55 | |
| Employee taxes paid on withholding shares | | (2,228 | ) | | | (3,921 | ) |
| Proceeds from stock issued under Colleague Stock Purchase Plan | | 114 | | | | 31 | |
| Proceeds from long-term debt | | 850,000 | | | | — | |
| Repayments of long-term debt | | (291,000 | ) | | | (750 | ) |
| Payment of debt discount and issuance costs | | (49,553 | ) | | | — | |
| Net cash provided by (used in) financing activities | | 515,018 | | | | (4,585 | ) |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | | (70 | ) | | | 62 | |
| Net (decrease) increase in cash, cash equivalents and restricted cash | | (933,301 | ) | | | 61,012 | |
| Cash, cash equivalents and restricted cash at beginning of period | | 1,313,616 | | | | 501,105 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 380,315 | | | $ | 562,117 | |
Adtalem Global Education Inc.
Segment Information
(unaudited)
(in thousands)
| | Three Months Ended | |
| | September 30, | |
| | 2021 | | | 2020 | | | Increase
(Decrease) | |
| Revenue: | | | | | | | | |
| Chamberlain | $ | 135,639 | | | $ | 133,764 | | | | 1.4 | % |
| Walden | | 68,617 | | | | — | | | NM | |
| Medical and Veterinary | | 84,814 | | | | 85,062 | | | | (0.3 | )% |
| Financial Services | | 59,257 | | | | 49,415 | | | | 19.9 | % |
| Total consolidated revenue | $ | 348,327 | | | $ | 268,241 | | | | 29.9 | % |
| Operating income (loss): | | | | | | | | | | | |
| Chamberlain | $ | 20,855 | | | $ | 30,169 | | | | (30.9 | )% |
| Walden | | (11,646 | ) | | | — | | | NM | |
| Medical and Veterinary | | 15,665 | | | | 22,841 | | | | (31.4 | )% |
| Financial Services | | 12,628 | | | | 7,272 | | | | 73.7 | % |
| Home Office and Other | | (42,233 | ) | | | (23,576 | ) | | | (79.1 | )% |
| Total consolidated operating (loss) income | $ | (4,731 | ) | | $ | 36,706 | | | NM | |
Non-GAAP Financial Measures and Reconciliations
We believe that certain non-GAAP financial measures provide investors with useful supplemental information regarding the underlying business trends and performance of Adtalem’s ongoing operations and are useful for period-over-period comparisons. We use these supplemental non-GAAP financial measures internally in our assessment of performance and budgeting process. However, these non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The following are non-GAAP financial measures used in the subsequent GAAP to non-GAAP reconciliation tables:
Net income from continuing operations attributable to Adtalem excluding special items (most comparable GAAP measure: net (loss) income attributable to Adtalem) – Measure of Adtalem’s net (loss) income attributable to Adtalem adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, Walden intangible amortization expense, pre-acquisition interest expense, and loss from discontinued operations.
Earnings per share from continuing operations excluding special items (most comparable GAAP measure: (loss) earnings per share) – Measure of Adtalem’s diluted (loss) earnings per share adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, Walden intangible amortization expense, pre-acquisition interest expense, and loss from discontinued operations.
Operating income excluding special items (most comparable GAAP measure: operating (loss) income) – Measure of Adtalem’s operating (loss) income adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, and Walden intangible amortization expense. This measure is applied on a consolidated and segment basis, depending on the context of the discussion.
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.
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 charges primarily related to plans to achieve synergies with the Walden acquisition and real estate consolidations at Adtalem’s home office and ACAMS. |
| • | Business acquisition and integration expense include expenses related to the Walden acquisition. |
| • | Walden amortization expense on acquired intangible assets. |
| • | Pre-acquisition interest expense related to financing arrangements in connection with the Walden acquisition. |
| • | Loss from discontinued operations includes costs related to DeVry University. |
Adtalem Global Education Inc.
Non-GAAP Operating Income by Segment
(unaudited)
(in thousands)
| | Three Months Ended | |
| | September 30, | |
| | 2021 | | | 2020 | | | Increase
(Decrease) | |
| Chamberlain: | | | | | | | | |
| Operating income (GAAP) | $ | 20,855 | | | $ | 30,169 | | | (30.9 | )% |
| Operating income excluding special items (non-GAAP) | $ | 20,855 | | | $ | 30,169 | | | (30.9 | )% |
| | | | | | | | | | | |
| Walden: | | | | | | | | | | |
| Operating loss (GAAP) | $ | (11,646 | ) | | $ | — | | | NM | |
| Deferred revenue adjustment | | 6,207 | | | | — | | | NM | |
| Walden intangible amortization expense | | 16,451 | | | | — | | | NM | |
| Operating income excluding special items (non-GAAP) | $ | 11,012 | | | $ | — | | | NM | |
| | | | | | | | | | | |
| Medical and Veterinary: | | | | | | | | | | |
| Operating income (GAAP) | $ | 15,665 | | | $ | 22,841 | | | (31.4 | )% |
| Operating income excluding special items (non-GAAP) | $ | 15,665 | | | $ | 22,841 | | | (31.4 | )% |
| | | | | | | | | | | |
| Financial Services: | | | | | | | | | | |
| Operating income (GAAP) | $ | 12,628 | | | $ | 7,272 | | | 73.7 | % |
| Restructuring expense | | 821 | | | | 1,415 | | | | |
| Operating income excluding special items (non-GAAP) | $ | 13,449 | | | $ | 8,687 | | | 54.8 | % |
| | | | | | | | | | | |
| Home Office and Other: | | | | | | | | | | |
| Operating loss (GAAP) | $ | (42,233 | ) | | $ | (23,576 | ) | | (79.1 | )% |
| CEO transition costs | | 6,195 | | | | — | | | | |
| Restructuring expense | | 3,095 | | | | 2,808 | | | | |
| Business acquisition and integration expense | | 26,553 | | | | 13,436 | | | | |
| Operating loss excluding special items (non-GAAP) | $ | (6,390 | ) | | $ | (7,332 | ) | | 12.8 | % |
| | | | | | | | | | | |
| Adtalem Global Education: | | | | | | | | | | |
| Operating (loss) income (GAAP) | $ | (4,731 | ) | | $ | 36,706 | | | NM | |
| Deferred revenue adjustment | | 6,207 | | | | — | | | | |
| CEO transition costs | | 6,195 | | | | — | | | | |
| Restructuring expense | | 3,916 | | | | 4,223 | | | | |
| Business acquisition and integration expense | | 26,553 | | | | 13,436 | | | | |
| Walden intangible amortization expense | | 16,451 | | | | — | | | | |
| Operating income excluding special items (non-GAAP) | $ | 54,591 | | | $ | 54,365 | | | 0.4 | % |
Adtalem Global Education Inc.
Non-GAAP Earnings Disclosure
(unaudited)
(in thousands, except per share data)
| | Three Months Ended | |
| | September 30, | |
| | 2021 | | | 2020 | |
| Net (loss) income attributable to Adtalem (GAAP) | $ | (58,004 | ) | | $ | 19,930 | |
| Deferred revenue adjustment | | 6,207 | | | | — | |
| CEO transition costs | | 6,195 | | | | — | |
| Restructuring expense | | 3,916 | | | | 4,223 | |
| Business acquisition and integration expense | | 26,553 | | | | 13,436 | |
| Walden intangible amortization expense | | 16,451 | | | | — | |
| Pre-acquisition interest expense | | 31,634 | | | | — | |
| Income tax impact on non-GAAP adjustments (1) | | (19,064 | ) | | | (3,998 | ) |
| Loss from discontinued operations | | 17,370 | | | | 7,607 | |
| Net income from continuing operations attributable to Adtalem excluding special items (non-GAAP) | $ | 31,258 | | | $ | 41,198 | |
(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.
| | Three Months Ended | |
| | September 30, | |
| | 2021 | | | 2020 | |
| (Loss) earnings per share, diluted (GAAP) | $ | (1.17 | ) | | $ | 0.38 | |
| Effect on diluted earnings per share: | | | | | | | |
| Deferred revenue adjustment | | 0.12 | | | | - | |
| CEO transition costs | | 0.12 | | | | - | |
| Restructuring expense | | 0.08 | | | | 0.08 | |
| Business acquisition and integration expense | | 0.53 | | | | 0.25 | |
| Walden intangible amortization expense | | 0.33 | | | | - | |
| Pre-acquisition interest expense | | 0.63 | | | | - | |
| Income tax impact on non-GAAP adjustments (1) | | (0.38 | ) | | | (0.08 | ) |
| Loss from discontinued operations | | 0.35 | | | | 0.14 | |
| Earnings per share from continuing operations excluding special items, diluted (non-GAAP) | $ | 0.62 | | | $ | 0.78 | |
| Diluted shares used in non-GAAP EPS calculation | | 50,222 | | | | 52,797 | |
Note: May not sum due to rounding.
(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.
Adtalem Global Education Inc.
Non-GAAP Free Cash Flow Disclosure
(unaudited)
(in thousands)
| | Three Months Ended | | | Twelve Months Ended | |
| | FY22 | | | FY21 | | | FY22 | | | FY21 | | | FY21 | | | FY21 | | | FY21 | | | FY20 | | | FY20 | | | FY20 | | | FY20 | |
| | Q1 | | | Q1 | | | Q1 | | | Q4 | | | Q3 | | | Q2 | | | Q1 | | | Q4 | | | Q3 | | | Q2 | | | Q1 | |
Net cash provided by operating activities- continuing operations (GAAP) | $ 40,916 | | | $ 84,654 | | | $ 179,420 | | | $ 223,158 | | | $ 224,740 | | | $ 259,091 | | | $ 200,743 | | | $ 149,565 | | | $ 170,304 | | | $ 159,150 | | | $ 165,413 | |
| Capital expenditures | (7,324 | ) | | (14,443 | ) | | (41,545 | ) | | (48,664 | ) | | (47,047 | ) | | (48,001 | ) | | (48,144 | ) | | (44,137 | ) | | (44,239 | ) | | (45,827 | ) | | (54,689 | ) |
| Free cash flow (non-GAAP) | $ 33,592 | | | $ 70,211 | | | $ 137,875 | | | $ 174,494 | | | $ 177,693 | | | $ 211,090 | | | $ 152,599 | | | $ 105,428 | | | $ 126,065 | | | $ 113,323 | | | $ 110,724 | |
Adtalem Global Education Inc.
Non-GAAP Outlook Disclosure
(unaudited)
(in millions, except per share data)
| | Year Ended | |
| | June 30, 2022 | |
| Expected earnings per share, diluted (GAAP) | $ | 0.92 to 1.17 | |
| Expected effects on diluted earnings per share: | | | |
| Estimated purchase accounting adjustment - deferred revenue | | 0.17 | |
| CEO transition costs | | 0.12 | |
| Restructuring expense | | 0.08 | |
| Business acquisition and integration costs | | 0.53 | |
| Estimated purchase accounting adjustment - intangible amortization | | 1.94 | |
| Pre-acquisition interest expense | | 0.63 | |
| Estimated incremental acquisition integration costs | | 0.44 | |
| Estimated income tax impact on non-GAAP adjustments(1) | | (0.98 | ) |
| Loss from discontinued operations | | 0.35 | |
| Expected adjusted earnings per share from continuing operations excluding special items, diluted (non-GAAP)(2) | $ | 4.20 to 4.45 | |
| Diluted shares used in EPS calculation | | 50,222 | |
(1) Represents the estimated income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.
(2) The outlook provided above does not reflect the potential impact of any business or asset acquisitions or dispositions that may occur during the remainder of fiscal year 2022. The expected effects on diluted earnings per share (“EPS”) of (1) the estimated purchase accounting adjustment – deferred revenue, (2) the estimated purchase accounting adjustment – intangible amortization, and (3) the estimated incremental acquisition integration costs are estimates related to the Walden University acquisition. The expected effects on diluted EPS of CEO transition costs, restructuring expense, business acquisition and integration costs, pre-acquisition interest expense, and loss from discontinued operations include the results realized through September 30, 2021. We are not able to further estimate these special items for the full fiscal year. Additional charges to these special items, or additional special items not currently identified, which may occur during the remainder of fiscal year 2022, would impact the GAAP expected EPS provided above.
| | Year Ended | |
| | June 30, 2022 | |
| Expected revenue (GAAP) | $ | 1,676 to 1,726 | |
| Estimated incremental purchase accounting adjustment - deferred revenue | | 9 | |
| Expected revenue excluding special items (non-GAAP)(3) | $ | 1,685 to 1,735 | |
(3) The outlook provided above does not reflect the potential impact of any business or asset acquisitions or dispositions that may occur during the remainder of fiscal year 2022. The expected effects on revenue of the item listed above is an estimate related to the Walden University acquisition.
