ｱﾄﾞﾀﾚﾑｸﾞﾛｰﾊﾞﾙｴﾃﾞｭｹｰｼｮﾝの適時開示・決算・その他

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 2, 2023

ADTALEM GLOBAL EDUCATION INC.

(Exact name of registrant as specified in its charter)

Delaware	001-13988	36-3150143
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

500 West Monroe

Chicago, Illinois 60661

(Address of principal executive offices) (Zip Code)

(312) 651-1400

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock $0.01 Par Value	ATGE	New York Stock Exchange
Common Stock $0.01 Par Value	ATGE	Chicago Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On February 2, 2023, Adtalem Global Education Inc. (“Adtalem”) issued a press release announcing its second quarter fiscal 2023 academic, operating and financial results. The press release is attached hereto as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Adtalem under the Securities Act of 1933, as amended, or the Exchange Act.

Forward-Looking Statements

Certain statements contained in this Form 8-K and related press release are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, which includes statements regarding the future impacts of the COVID-19 pandemic and the expected synergies from the Walden acquisition. Forward-looking statements can also be identified by words such as “future,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “may,” “will,” “would,” “could,” “can,” “continue,” “preliminary,” “range,” and similar terms. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in the statements. These risks 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 as of February 2, 2023, 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.

Item 9.01 Financial Statements and Exhibits

99.1 Press Release of Adtalem Global Education Inc., dated February 2, 2023.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ADTALEM GLOBAL EDUCATION INC.

	By:	/s/ Robert J. Phelan
		Robert J. Phelan
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Date: February 2, 2023

EX-99.1 2 a53298458ex991.htm EXHIBIT 99.1

Exhibit 99.1

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

	Media Contact Rosalind D’Eugenio Rosalind.Deugenio@adtalem.com 312-906-6600

Adtalem Global Education Announces Fiscal Second Quarter 2023 Results

Ongoing margin expansion supported by solid operational execution

CHICAGO – Feb. 2, 2023 – 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 second quarter fiscal 2023 ended Dec. 31, 2022.

“During the second quarter, we maintained our commitment to disciplined operational execution and enhanced student outcomes, which delivered solid results. Our ability to maximize operational effectiveness across our institutions, coupled with the implementation of a number of transformational initiatives, gives us confidence that we remain on track to deliver on our full year expectations,” said Steve Beard, president and CEO of Adtalem Global Education.

Beard continued, “Our teams have done an impressive job building the foundation to advance Adtalem’s leading position in healthcare education, supporting an expanding margin profile while positioning us for sustainable, long-term growth. Heading into the latter half of fiscal 2023, we remain optimistic that the demand environment will see modest improvement. Our strategic investments and enhanced operational effectiveness leave us well prepared to maximize the benefit of an improved macro dynamic for the benefit of all our stakeholders.”

Financial Highlights

Selected financial data for the three months ended Dec. 31, 2022:

•	Revenue of $363.3 million decreased 2.1% compared with the prior year

•	Diluted earnings per share increased to $0.52 from $0.36 in the prior year; adjusted earnings per share increased to $1.17 or by 56.0%, compared with $0.75 in the prior year

•	Operating income was $46.0 million, compared with $24.7 million in the prior year; adjusted operating income was $79.5 million, an increase of 13.2% compared with the prior year. Operating margin was 12.7% and adjusted operating margin increased to 21.9% from 18.9%

•	Net income was $24.1 million, compared with $17.9 million in the prior year; adjusted net income was $54.2 million, an increase of 43.4% compared with the prior year

•	Adjusted EBITDA was $92.1 million, an increase of 7.0% compared with the prior year; adjusted EBITDA margin expanded by 220 basis points to 25.4% from 23.2%

•	Gross debt was reduced by $50 million, representing a 6.6% decrease from the prior quarter end gross debt balance

Selected financial data for the six months ended Dec. 31, 2022:

•	Revenue of $717.9 million increased 8.7% compared with the prior year primarily due to the timing of the acquisition of Walden

•	Diluted earnings per share was $0.57 compared with diluted loss per share of $0.81 in the prior year; adjusted earnings per share increased to $2.06 or by 87.3%, compared with $1.10 in the prior year

•	Operating income was $69.1 million, compared with $2.7 million in the prior year; adjusted operating income was $144.6 million, an increase of 35.6% compared with the prior year. Operating margin was 9.6% and adjusted operating margin increased to 20.1% from 16.2%

•	Net income was $26.3 million compared with a net loss of $40.2 million in the prior year, adjusted net income was $95.2 million, an increase of 71.9% compared with the prior year

•	Adjusted EBITDA was $174.2 million, an increase of 27.6%, compared with the prior year; adjusted EBITDA margin expanded by 360 basis points to 24.3% compared with 20.7% in the prior year

Business Highlights

•	Chamberlain University launched a home health specialty initiative with $1.2 million grant from American Nurses Foundation awarded to Chamberlain in May for its Practice Ready Specialty FocusedTM model to address the dire need of healthcare professionals in continuing care and home health.

•	Walden University, a pioneer in flexible learning, launched the Believe and Achieve ScholarshipTM in line with its mission to empower students throughout their educational journey, paving a way for them to effect change in their careers and the communities they serve.

•

Adtalem was named one of America’s Most Responsible Companies 2023 by Newsweek magazine and Statista Inc. Statista is the world-leading statistics portal and industry ranking provider. Adtalem was selected based on key performance indicators derived from corporate social responsibility reports, as well as an independent survey of U.S. residents.

•	Michael Malafronte was elected as Chairman of Adtalem's board of directors. Having previously served as an independent director since 2016, Malafronte will lead the board’s oversight of Adtalem’s vision and strategy.

•

Blake Simpson was appointed as Senior Vice President and Chief Communications Officer. In this newly created role, Simpson is responsible for the development and implementation of Adtalem’s enterprise brand and communications strategy, including investor, government, and media relations, as well as sustainability.

Segment Highlights

Chamberlain

Revenue in the second quarter increased to $141.4 million from $139.1 million in the prior year, and segment operating income increased 30.5% to $33.2 million primarily due to continued benefit from value capture initiatives and lower labor costs. Adjusted EBITDA increased to $37.7 million or by 17.2% compared with the prior year.

Total student enrollment decreased 0.8% compared with the prior year, primarily attributable to growth in pre-licensure nursing programs offset by declines in post-licensure nursing programs.

Walden

Revenue in the second quarter decreased to $131.9 million from $140.6 million in the prior year. Segment operating income increased to $12.8 million. Adjusted segment operating income decreased by 10.5% to $29.0 million compared with the prior year, due to lower revenue, partially offset by lower expenses. Adjusted EBITDA decreased to $31.6 million or by 11.5% compared with the prior year.

Total student enrollment decreased 7.8% compared with the prior year, which was primarily attributable to headwinds faced by post-licensure nursing programs.

Medical and Veterinary

Revenue in the second quarter decreased to $90.0 million from $91.5 million in the prior year. Segment operating income increased 17.5% to $22.9 million compared with the prior year due to continued benefit from cost discipline initiatives. Adjusted EBITDA increased to $26.3 million or by 8.0% compared with the prior year.

Adtalem Outlook

Adtalem reaffirmed its guidance of fiscal year 2023 revenue to be within the range of $1,380 million and $1,450 million, and adjusted earnings per share to be within the range of $3.95 to $4.20.

Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its fiscal 2023 second quarter on Thursday, Feb. 2, 2023, at 4 p.m. CST (5 p.m. EST). 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: 13734624. Adtalem will also broadcast the conference call live on the web at:

https://event.choruscall.com/mediaframe/webcast.html?webcastid=N0txs9lD.

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 March 3, 2023. To access the replay, dial 877-660-6853 (United States) or +1 201-612-7415 (outside the United States), conference ID: 13734624, or visit the Adtalem website at: https://investors.adtalem.com/overview/default.aspx.

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 the future impacts of the COVID-19 pandemic, and the expected synergies from the Walden acquisition. Forward-looking statements can also be identified by words such as “future,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “may,” “will,” “would,” “could,” “can,” “continue,” “preliminary,” “range,” and similar terms. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in the statements. These risk and uncertainties include the risk factors described in Item 1A. “Risk Factors” of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and our other filings with the SEC. These forward-looking statements are based on information available to us as of the date any such statements are made, and we do not undertake any obligation to update any forward-looking statement, except as required by law.

	Q2 2023	Q2 2022	% Change
Adtalem Global Education Student Enrollments
Total students(1)	76,980	80,255	-4.1	%


Chamberlain University
Total students	33,390	33,648	-0.8	%

Walden University(3)
Walden University
Total students	37,956	41,158	-7.8	%
Walden University(3)

Medical & Veterinary(2)
Total students	5,634	5,449	3.4	%

(1)	Represents total students attending sessions during each institution’s most recent enrollment period in Q2 FY 2023 and Q2 FY 2022

(2)	Medical and Veterinary segment does not have an intake period during the fiscal second quarter

Adtalem Global Education Inc.

Consolidated Balance Sheets

(unaudited)

(in thousands, except par value)

	December 31,			June 30,			December 31,
	2022			2022			2021
Assets:
Current assets:
Cash and cash equivalents	$	207,776		$	346,973		$	275,420
Restricted cash		2,234			964			1,224
Accounts receivable, net		99,542			81,635			92,744
Prepaid expenses and other current assets		113,564			126,467			166,722
Current assets held for sale		—			—			74,397
Total current assets		423,116			556,039			610,507
Noncurrent assets:
Property and equipment, net		275,617			289,926			301,666
Operating lease assets		175,097			177,995			155,356
Deferred income taxes		52,460			51,093			61,536
Intangible assets, net		838,873			873,577			923,701
Goodwill		961,262			961,262			960,058
Other assets, net		116,613			119,283			117,621
Noncurrent assets held for sale		—			—			529,328
Total noncurrent assets		2,419,922			2,473,136			3,049,266
Total assets	$	2,843,038		$	3,029,175		$	3,659,773

Liabilities and shareholders' equity:
Current liabilities:
Accounts payable	$	71,189		$	57,140		$	65,422
Accrued payroll and benefits		42,465			66,642			52,086
Accrued liabilities		93,705			98,124			134,585
Deferred revenue		115,658			144,840			124,347
Current operating lease liabilities		48,445			50,781			54,845
Current portion of long-term debt		—			—			8,500
Current liabilities held for sale		—			—			57,690
Total current liabilities		371,462			417,527			497,475
Noncurrent liabilities:
Long-term debt		693,781			838,908			1,599,538
Long-term operating lease liabilities		166,496			177,045			155,827
Deferred income taxes		26,676			25,554			27,127
Other liabilities		61,901			65,074			58,040
Noncurrent liabilities held for sale		—			—			32,086
Total noncurrent liabilities		948,854			1,106,581			1,872,618
Total liabilities		1,320,316			1,524,108			2,370,093
Commitments and contingencies
Redeemable noncontrolling interest		—			—			1,790
Shareholders' equity:
Common stock, $0.01 par value per share, 200,000 shares authorized; 45,443, 45,177, and 49,797 shares outstanding as of December 31, 2022, June 30, 2022, and December 31, 2021, respectively		822			818			817
Additional paid-in capital		561,376			521,848			542,296
Retained earnings		2,349,146			2,322,810			1,964,954
Accumulated other comprehensive loss		(2,227	)		(960	)		(634	)
Treasury stock, at cost, 36,713, 36,619, and 31,908 shares as of December 31, 2022, June 30, 2022, and December 31, 2021, respectively		(1,386,395	)		(1,339,449	)		(1,219,543	)
Total shareholders' equity		1,522,722			1,505,067			1,287,890
Total liabilities and shareholders' equity	$	2,843,038		$	3,029,175		$	3,659,773

Adtalem Global Education Inc.

Consolidated Statements of Income (Loss)

(unaudited)

(in thousands, except per share data)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2022			2021			2022			2021
Revenue	$	363,302		$	371,198		$	717,861		$	660,268
Operating cost and expense:
Cost of educational services		159,303			180,420			318,948			332,470
Student services and administrative expense		140,668			153,597			289,009			283,033
Restructuring expense		1,363			3,387			16,428			6,481
Business acquisition and integration expense		15,941			9,060			24,356			35,613
Total operating cost and expense		317,275			346,464			648,741			657,597
Operating income		46,027			24,734			69,120			2,671
Interest expense		(15,589	)		(25,929	)		(33,349	)		(73,322	)
Other (expense) income, net		(2,574	)		861			(1,007	)		1,739
Income (loss) from continuing operations before income taxes		27,864			(334	)		34,764			(68,912	)
(Provision for) benefit from income taxes		(4,247	)		39,368			(5,301	)		30,764
Income (loss) from continuing operations		23,617			39,034			29,463			(38,148	)
Discontinued operations:
Income (loss) from discontinued operations before income taxes		524			4,159			(2,914	)		(1,891	)
Gain (loss) on disposal of discontinued operations before income taxes		185			—			(3,174	)		—
(Provision for) benefit from income taxes		(182	)		(25,340	)		2,961			(112	)
Income (loss) from discontinued operations		527			(21,181	)		(3,127	)		(2,003	)
Net income (loss)	$	24,144		$	17,853		$	26,336		$	(40,151	)

Earnings (loss) per share:
Basic:
Continuing operations	$	0.52		$	0.78		$	0.65		$	(0.77	)
Discontinued operations	$	0.01		$	(0.43	)	$	(0.07	)	$	(0.04	)
Total basic earnings (loss) per share	$	0.53		$	0.36		$	0.58		$	(0.81	)
Diluted:
Continuing operations	$	0.51		$	0.78		$	0.64		$	(0.77	)
Discontinued operations	$	0.01		$	(0.42	)	$	(0.07	)	$	(0.04	)
Total diluted earnings (loss) per share	$	0.52		$	0.36		$	0.57		$	(0.81	)

Weighted-average shares outstanding:
Basic shares		45,425			49,776			45,350			49,719
Diluted shares		46,121			50,237			46,232			49,719

Adtalem Global Education Inc.

Consolidated Statements of Cash Flows
(unaudited)

(in thousands)

	Six Months Ended
	December 31,
	2022			2021
Operating activities:
Net income (loss)	$	26,336		$	(40,151	)
Loss from discontinued operations		3,127			2,003
Income (loss) from continuing operations		29,463			(38,148	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation expense		8,113			13,931
Amortization and impairments to operating lease assets		28,612			24,421
Depreciation		21,461			22,130
Amortization of intangible assets		34,704			47,150
Amortization and write-off of debt discount and issuance costs		6,819			19,985
Provision for bad debts		14,275			12,577
Deferred income taxes		(245	)		(9,331	)
Loss on disposals, accelerated depreciation, and impairments to property and equipment		3,483			266
Gain on extinguishment of debt		(71	)		—
Loss on investment		5,000			—
Changes in assets and liabilities:
Accounts receivable		(25,045	)		(33,765	)
Prepaid expenses and other current assets		227			(29,686	)
Accounts payable		13,233			(8,304	)
Accrued payroll and benefits		(24,145	)		(26,594	)
Accrued liabilities		(4,849	)		(10,524	)
Deferred revenue		(29,182	)		44,582
Operating lease liabilities		(25,923	)		(23,027	)
Other assets and liabilities		(13,654	)		(24,631	)
Net cash provided by (used in) operating activities-continuing operations		42,276			(18,968	)
Net cash (used in) provided by operating activities-discontinued operations		(862	)		20,062
Net cash provided by operating activities		41,414			1,094
Investing activities:
Capital expenditures		(9,747	)		(14,772	)
Payment for purchase of business, net of cash and restricted cash acquired		—			(1,488,054	)
Net cash used in investing activities-continuing operations		(9,747	)		(1,502,826	)
Net cash used in investing activities-discontinued operations		—			(2,199	)
Payment for working capital adjustment for sale of business		(3,174	)		—
Net cash used in investing activities		(12,921	)		(1,505,025	)
Financing activities:
Proceeds from exercise of stock options		1,422			8,200
Employee taxes paid on withholding shares		(4,108	)		(2,518	)
Proceeds from stock issued under Colleague Stock Purchase Plan		289			244
Payment on equity forward contract		(13,162	)		—
Proceeds from long-term debt		—			850,000
Repayments of long-term debt		(150,861	)		(291,000	)
Payment of debt discount and issuance costs		—			(49,553	)
Net cash (used in) provided by financing activities		(166,420	)		515,373
Effect of exchange rate changes on cash, cash equivalents and restricted cash		—			36
Net decrease in cash, cash equivalents and restricted cash		(137,927	)		(988,522	)
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		210,010			325,094
Less: cash, cash equivalents and restricted cash of discontinued operations at end of period		—			48,450
Cash, cash equivalents and restricted cash of continuing operations at end of period	$	210,010		$	276,644
Non-cash investing and financing activities:
Accrued capital expenditures	$	5,209		$	3,247

Adtalem Global Education Inc.

Segment Information

(unaudited)

(in thousands)

	Three Months Ended												Six Months Ended
	December 31,												December 31,
							Increase/(Decrease)												Increase/(Decrease)
	2022			2021			$				%			2022			2021		$				%
Revenue:
Chamberlain	$	141,396		$	139,121		$	2,275			1.6	%	$	276,801		$	274,760		$	2,041			0.7	%
Walden		131,940			140,627			(8,687	)		(6.2	)%		262,841			209,244			53,597			25.6	%
Medical and Veterinary		89,966			91,450			(1,484	)		(1.6	)%		178,219			176,264			1,955			1.1	%
Total consolidated revenue	$	363,302		$	371,198		$	(7,896	)		(2.1	)%	$	717,861		$	660,268		$	57,593			8.7	%
Operating income (loss):
Chamberlain	$	33,229		$	25,456		$	7,773			30.5	%	$	59,413		$	46,311		$	13,102			28.3	%
Walden		12,795			(2,443	)		15,238		NM				14,578			(14,089	)		28,667		NM
Medical and Veterinary		22,930			19,518			3,412			17.5	%		33,458			35,183			(1,725	)		(4.9	)%
Home Office and Other		(22,927	)		(17,797	)		(5,130	)		(28.8	)%		(38,329	)		(64,734	)		26,405			40.8	%
Total consolidated operating income	$	46,027		$	24,734		$	21,293			86.1	%	$	69,120		$	2,671		$	66,449			2,487.8	%

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 (loss)) – Measure of Adtalem’s net income (loss) adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, intangible amortization expense, pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, investment impairment, and net (income) loss from discontinued operations.

Adjusted earnings per share (most comparable GAAP measure: earnings (loss) per share) – Measure of Adtalem’s diluted earnings (loss) per share adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, intangible amortization expense, pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, investment impairment, and net (income) loss 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, and intangible amortization expense. This measure is applied on a consolidated and segment basis, depending on the context of the discussion.

Adjusted EBITDA (most comparable GAAP measure: net income (loss)) – Measure of Adtalem’s net income (loss) adjusted for net (income) loss from discontinued operations, interest expense, other expense (income), net, provision for (benefit from) income taxes, depreciation and amortization, stock-based compensation, deferred revenue adjustment, CEO transition costs, restructuring expense, and business acquisition and integration expense. This measure is applied on a consolidated and segment basis, depending on the context of the discussion. Income taxes, interest expense, and other expense (income), net is not recorded at the reportable segments, and therefore, the segment adjusted EBITDA reconciliations begin with operating income.

Free cash flow (most comparable GAAP measure: net cash provided by operating activities-continuing operations) – Defined as net cash provided by operating activities-continuing operations less capital expenditures.

Net debt – Defined as long-term debt less cash and cash equivalents.

Net leverage – Defined as net debt divided by adjusted EBITDA.

A description of special items in our non-GAAP financial measures described above are as follows:

•	Deferred revenue adjustment related to a revenue purchase accounting adjustment to record Walden’s deferred revenue at fair value.

•	CEO transition costs related to acceleration of stock-based compensation expense.

•	Restructuring expense primarily related to plans to achieve synergies with the Walden acquisition and real estate consolidations at Walden, Medical and Veterinary, and Adtalem’s home office.

•	Business acquisition and integration expense include expenses related to the Walden acquisition and certain costs related to growth transformation initiatives.

•	Intangible amortization expense on acquired intangible assets.

•	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 (income) loss from discontinued operations includes the operations of ACAMS, Becker, OCL, and EduPristine, in addition to costs related to DeVry University.

Adtalem Global Education Inc.

Non-GAAP Operating Income by Segment

(unaudited)

(in thousands)

	Three Months Ended												Six Months Ended
	December 31,												December 31,
							Increase/(Decrease)												Increase/(Decrease)
	2022			2021			$				%			2022			2021		$				%
Chamberlain:
Operating income (GAAP)	$	33,229		$	25,456		$	7,773			30.5	%	$	59,413		$	46,311		$	13,102			28.3	%
Restructuring expense		—			335			(335	)					818			335			483
Adjusted operating income (non-GAAP)	$	33,229		$	25,791		$	7,438			28.8	%	$	60,231		$	46,646		$	13,585			29.1	%
Operating margin (GAAP)		23.5	%		18.3	%								21.5	%		16.9	%
Operating margin (non-GAAP)		23.5	%		18.5	%								21.8	%		17.0	%

Walden:
Operating income (loss) (GAAP)	$	12,795		$	(2,443	)	$	15,238		NM			$	14,578		$	(14,089	)	$	28,667		NM
Deferred revenue adjustment		—			2,354			(2,354	)					—			8,561			(8,561	)
Restructuring expense		41			1,791			(1,750	)					3,121			1,791			1,330
Intangible amortization expense		16,176			30,699			(14,523	)					34,704			47,150			(12,446	)
Adjusted operating income (non-GAAP)	$	29,012		$	32,401		$	(3,389	)		(10.5	)%	$	52,403		$	43,413		$	8,990			20.7	%
Operating margin (GAAP)		9.7	%		(1.7	)%								5.5	%		(6.7	)%
Operating margin (non-GAAP)		22.0	%		23.0	%								19.9	%		20.7	%

Medical and Veterinary:
Operating income (GAAP)	$	22,930		$	19,518		$	3,412			17.5	%	$	33,458		$	35,183		$	(1,725	)		(4.9	)%
Restructuring expense		87			188			(101	)					6,913			188			6,725
Adjusted operating income (non-GAAP)	$	23,017		$	19,706		$	3,311			16.8	%	$	40,371		$	35,371		$	5,000			14.1	%
Operating margin (GAAP)		25.5	%		21.3	%								18.8	%		20.0	%
Operating margin (non-GAAP)		25.6	%		21.5	%								22.7	%		20.1	%

Home Office and Other:
Operating loss (GAAP)	$	(22,927	)	$	(17,797	)	$	(5,130	)		(28.8	)%	$	(38,329	)	$	(64,734	)	$	26,405			40.8	%
CEO transition costs		—			—			—						—			6,195			(6,195	)
Restructuring expense		1,235			1,073			162						5,576			4,167			1,409
Business acquisition and integration expense		15,941			9,060			6,881						24,356			35,613			(11,257	)
Adjusted operating loss (non-GAAP)	$	(5,751	)	$	(7,664	)	$	1,913			25.0	%	$	(8,397	)	$	(18,759	)	$	10,362			55.2	%

Adtalem Global Education:
Operating income (GAAP)	$	46,027		$	24,734		$	21,293			86.1	%	$	69,120		$	2,671		$	66,449			2,487.8	%
Deferred revenue adjustment		—			2,354			(2,354	)					—			8,561			(8,561	)
CEO transition costs		—			—			—						—			6,195			(6,195	)
Restructuring expense		1,363			3,387			(2,024	)					16,428			6,481			9,947
Business acquisition and integration expense		15,941			9,060			6,881						24,356			35,613			(11,257	)
Intangible amortization expense		16,176			30,699			(14,523	)					34,704			47,150			(12,446	)
Adjusted operating income (non-GAAP)	$	79,507		$	70,234		$	9,273			13.2	%	$	144,608		$	106,671		$	37,937			35.6	%
Operating margin (GAAP)		12.7	%		6.7	%								9.6	%		0.4	%
Operating margin (non-GAAP)		21.9	%		18.9	%								20.1	%		16.2	%

Adtalem Global Education Inc.

Non-GAAP Adjusted EBITDA by Segment

(unaudited)

(in thousands)

	Three Months Ended												Six Months Ended
	December 31,												December 31,
							Increase/(Decrease)												Increase/(Decrease)
	2022			2021			$				%			2022			2021		$				%
Chamberlain:
Operating income (GAAP)	$	33,229		$	25,456		$	7,773			30.5	%	$	59,413		$	46,311		$	13,102			28.3	%
Restructuring expense		—			335			(335	)					818			335			483
Depreciation		4,099			4,726			(627	)					8,580			9,310			(730	)
Stock-based compensation		404			1,688			(1,284	)					2,677			3,235			(558	)
Adjusted EBITDA (non-GAAP)	$	37,732		$	32,205		$	5,527			17.2	%	$	71,488		$	59,191		$	12,297			20.8	%
Adjusted EBITDA margin (non-GAAP)		26.7	%		23.1	%								25.8	%		21.5	%

Walden:
Operating income (loss) (GAAP)	$	12,795		$	(2,443	)	$	15,238		NM			$	14,578		$	(14,089	)	$	28,667		NM
Deferred revenue adjustment		—			2,354			(2,354	)					—			8,561			(8,561	)
Restructuring expense		41			1,791			(1,750	)					3,121			1,791			1,330
Intangible amortization expense		16,176			30,699			(14,523	)					34,704			47,150			(12,446	)
Depreciation		2,269			2,516			(247	)					4,864			4,228			636
Stock-based compensation		286			760			(474	)					2,191			1,467			724
Adjusted EBITDA (non-GAAP)	$	31,567		$	35,677		$	(4,110	)		(11.5	)%	$	59,458		$	49,108		$	10,350			21.1	%
Adjusted EBITDA margin (non-GAAP)		23.9	%		25.4	%								22.6	%		23.5	%

Medical and Veterinary:
Operating income (GAAP)	$	22,930		$	19,518		$	3,412			17.5	%	$	33,458		$	35,183		$	(1,725	)		(4.9	)%
Restructuring expense		87			188			(101	)					6,913			188			6,725
Depreciation		3,031			3,645			(614	)					6,136			7,100			(964	)
Stock-based compensation		229			971			(742	)					1,704			1,899			(195	)
Adjusted EBITDA (non-GAAP)	$	26,277		$	24,322		$	1,955			8.0	%	$	48,211		$	44,370		$	3,841			8.7	%
Adjusted EBITDA margin (non-GAAP)		29.2	%		26.6	%								27.1	%		25.2	%

Home Office and Other:
Operating loss (GAAP)	$	(22,927	)	$	(17,797	)	$	(5,130	)		(28.8	)%	$	(38,329	)	$	(64,734	)	$	26,405			40.8	%
CEO transition costs		—			—			—						—			6,195			(6,195	)
Restructuring expense		1,235			1,073			162						5,576			4,167			1,409
Business acquisition and integration expense		15,941			9,060			6,881						24,356			35,613			(11,257	)
Depreciation		1,257			744			513						1,881			1,492			389
Stock-based compensation		1,049			801			248						1,541			1,135			406
Adjusted EBITDA (non-GAAP)	$	(3,445	)	$	(6,119	)	$	2,674			43.7	%	$	(4,975	)	$	(16,132	)	$	11,157			69.2	%

Adtalem Global Education:
Net income (loss) (GAAP)	$	24,144		$	17,853		$	6,291			35.2	%	$	26,336		$	(40,151	)	$	66,487		NM
Net (income) loss from discontinued operations		(527	)		21,181			(21,708	)					3,127			2,003			1,124
Interest expense		15,589			25,929			(10,340	)					33,349			73,322			(39,973	)
Other expense (income), net		2,574			(861	)		3,435						1,007			(1,739	)		2,746
Provision for (benefit from) income taxes		4,247			(39,368	)		43,615						5,301			(30,764	)		36,065
Operating income (GAAP)		46,027			24,734			21,293						69,120			2,671			66,449
Depreciation and amortization		26,832			42,330			(15,498	)					56,165			69,280			(13,115	)
Stock-based compensation		1,968			4,220			(2,252	)					8,113			7,736			377
Deferred revenue adjustment		—			2,354			(2,354	)					—			8,561			(8,561	)
CEO transition costs		—			—			—						—			6,195			(6,195	)
Restructuring expense		1,363			3,387			(2,024	)					16,428			6,481			9,947
Business acquisition and integration expense		15,941			9,060			6,881						24,356			35,613			(11,257	)
Adjusted EBITDA (non-GAAP)	$	92,131		$	86,085		$	6,046			7.0	%	$	174,182		$	136,537		$	37,645			27.6	%
Adjusted EBITDA margin (non-GAAP)		25.4	%		23.2	%								24.3	%		20.7	%

Adtalem Global Education Inc.

Non-GAAP Earnings Disclosure

(unaudited)

(in thousands, except per share data)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2022			2021			2022			2021
Net income (loss) (GAAP)	$	24,144		$	17,853		$	26,336		$	(40,151	)
Deferred revenue adjustment		—			2,354			—			8,561
CEO transition costs		—			—			—			6,195
Restructuring expense		1,363			3,387			16,428			6,481
Business acquisition and integration expense		15,941			9,060			24,356			35,613
Intangible amortization expense		16,176			30,699			34,704			47,150
Pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, and investment impairment		6,402			—			9,226			31,634
Income tax impact on non-GAAP adjustments (1)		(9,309	)		(46,742	)		(18,982	)		(42,102	)
Net (income) loss from discontinued operations		(527	)		21,181			3,127			2,003
Adjusted net income (non-GAAP)	$	54,190		$	37,792		$	95,195		$	55,384

(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2022			2021			2022			2021
Earnings (loss) per share, diluted (GAAP)	$	0.52		$	0.36		$	0.57		$	(0.81	)
Effect on diluted earnings per share:
Deferred revenue adjustment		-			0.05			-			0.17
CEO transition costs		-			-			-			0.12
Restructuring expense		0.03			0.07			0.36			0.13
Business acquisition and integration expense		0.35			0.18			0.53			0.71
Intangible amortization expense		0.35			0.61			0.75			0.94
Pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, and investment impairment		0.14			-			0.20			0.63
Income tax impact on non-GAAP adjustments (1)		(0.20	)		(0.93	)		(0.41	)		(0.84	)
Net (income) loss from discontinued operations		(0.01	)		0.42			0.07			0.04
Adjusted earnings per share, diluted (non-GAAP)	$	1.17		$	0.75		$	2.06		$	1.10
Diluted shares used in non-GAAP EPS calculation		46,121			50,237			46,232			50,166

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			FY22			FY22			FY22
	Q2			Q2			Q2			Q1			Q4			Q3			Q2
Net cash (used in) provided by operating activities-continuing operations (GAAP)	$	(49,248	)	$	(48,474	)	$	225,069		$	225,843		$	163,825		$	101,481		$	91,835
Capital expenditures		(4,196	)		(8,081	)		(26,029	)		(29,914	)		(31,054	)		(33,539	)		(34,949	)
Free cash flow (non-GAAP)	$	(53,444	)	$	(56,555	)	$	199,040		$	195,929		$	132,771		$	67,942		$	56,886

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)	$	$1.90 to 2.15
Expected effects on diluted earnings per share:
Restructuring expense		0.36
Integration costs		0.53
Estimated intangible amortization		1.32
Write-off of debt discount and issuance costs, gain on extinguishment of debt, and investment impairment		0.20
Estimated incremental integration costs		0.25
Estimated income tax impact on non-GAAP adjustments(1)		(0.68	)
Net loss from discontinued operations		0.07
Expected adjusted earnings per share, diluted (non-GAAP)(2)	$	$3.95 to 4.20
Diluted shares used in EPS calculation		46,232

(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, write-off of debt discount and issuance costs, gain on extinguishment of debt, investment impairment, and loss from discontinued operations includes the results realized through December 31, 2022. We are not able to further estimate certain special items for the full fiscal year. Additional charges to these special items, or additional special items not currently identified, which may occur during the remainder of fiscal year 2023, would impact the GAAP expected EPS provided above.

Adtalem Global Education Inc.

Non-GAAP Net Leverage Disclosure

(unaudited)

(in thousands)

	Twelve Months Ended
	December 31, 2022
Adtalem Global Education:
Net income (GAAP)		$	384,192
Net income from discontinued operations			(346,408	)
Interest expense			89,375
Other income, net			(1,074	)
Benefit from income taxes			20,828
Depreciation and amortization			128,733
Stock-based compensation			16,793
Restructuring expense			35,575
Business acquisition and integration expense			41,941
Adjusted EBITDA (non-GAAP)		$	369,955

	December 31, 2022
Long-term debt		$	708,283
Less: Cash and cash equivalents			(207,776	)
Net debt (non-GAAP)		$	500,507

Net leverage (non-GAAP)			1.4	x