8-K
Covista Inc. (CVSA)
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, 2021
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, IL | 60661 | |
| (Address of principal executive offices) | (Zip Code) |
(866) 374-2678
(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<br><br> <br>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, 2021, Adtalem Global Education Inc. (“Adtalem”) issued a press release announcing its fiscal 2021 second quarter operating and enrollment 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 Company’s future growth and the future impacts of the COVID-19 pandemic and the pending acquisition of Walden University. 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, 2021, 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<br> Release of Adtalem Global Education Inc., dated February 2, 2021. |
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/ Michael O. Randolfi | |
| Michael O. Randolfi | ||
| Senior Vice President and Chief | ||
| Financial Officer | ||
| (Principal Financial Officer) | ||
| Date: February 2, 2021 |
Exhibit 99.1
| News Release<br><br> <br><br><br> <br>Investor Contact:<br><br> <br>Maureen Resac<br><br> <br>Maureen.Resac@Adtalem.com<br><br> <br>312-651-1481<br><br> <br><br><br> <br>Media Contact:<br><br> <br>John Kristoff<br><br> <br>John.Kristoff@Adtalem.com<br><br> <br>312-651-1437 |
|---|
Adtalem Global Education Announces Second Quarter Fiscal 2021 Results
Operational execution accelerates growth
CHICAGO – Feb. 2, 2021 – Adtalem Global Education Inc. (NYSE: ATGE), a leading workforce solutions provider, today reported academic, operating and financial results for its fiscal 2021 second quarter ended December 31, 2020.
“We continue to successfully execute our leading workforce solutions provider strategy by meeting the needs of our students and our employer partners,” said Lisa Wardell, chairman and CEO of Adtalem. “We once again delivered strong revenue and earnings growth in the second quarter, driven by robust financial performance across the Medical and Healthcare segment, including a double-digit increase in total enrollment at Chamberlain University. Through strategic investments such as our pending acquisition of Walden University, we have positioned Adtalem to meet the needs of an evolving market and capitalize on long-term growth trends. We are accelerating and prioritizing those elements of our strategy that allow us to capitalize on the robust demand in medical, healthcare, and online education. That demand has continued to increase during the pandemic and provides us greater opportunity to differentiate our online offerings given our decades of experience in quality online education delivery.”
“Our institutions are addressing the critical workforce gaps in healthcare through strong student outcomes and graduating more new nurses and doctors than any single U.S. institution. In addition, our financial services segment revenue increased 6% from the prior year driven by execution in the mortgage training market by OnCourse Learning and ongoing momentum in the continuing education market by Becker,” concluded Wardell.
Financial Highlights
Selected financial data for the three months ended December 31, 2020:
| • | Revenue of $283.1 million increased 6.4% compared with the prior year |
|---|---|
| • | Diluted earnings per share was $0.44 compared with diluted earnings per share of $0.10 in the prior year; diluted earnings per share from<br> continuing operations, excluding special items, was $0.77, compared to $0.57 in the prior year, a 35.1% increase |
| --- | --- |
| • | New and total student enrollment for Chamberlain University’s November session increased 8.1% and 10.2%, respectively |
| --- | --- |
| • | Operating income was $40.3 million, flat compared with the prior year; operating income excluding special items was $52.6 million, a 24.4%<br> increase compared with the prior year |
| --- | --- |
| • | Net income attributable to Adtalem was $23.3 million, compared with $5.5 million in the prior year; net income from continuing operations<br> attributable to Adtalem, excluding special items, was $40.5 million, a 31.1% increase compared with the prior year |
| --- | --- |
| • | COVID-19 resulted in an estimated revenue loss of approximately $7 million, an operating income loss of approximately $7 million and a loss of<br> earnings per share of approximately $0.11 |
| --- | --- |
Selected financial data for the six months ended December 31, 2020:
| • | Revenue of $551.4 million increased 5.9% compared with prior year |
|---|---|
| • | Diluted earnings per share was $0.82 compared with diluted earnings per share of $0.36 in the prior year; diluted earnings per share from<br> continuing operations, excluding special items, was $1.55, a 72.2% increase |
| --- | --- |
| • | Operating income was $77.0 million compared with $66.1 million in the prior year; operating income excluding special items was $106.9 million, a<br> 53.3% increase compared with the prior year |
| --- | --- |
| • | Net income attributable to Adtalem was $43.2 million, compared with $19.9 million in the prior year; net income from continuing operations<br> attributable to Adtalem, excluding special items, was $81.7 million, a 64.0% increase compared with the prior year |
| --- | --- |
| • | COVID-19 resulted in an estimated revenue loss of approximately $22 million, an operating income loss of approximately $14 million and a loss of<br> earnings per share of approximately $0.22 |
| --- | --- |
Fiscal 2021 second quarter results from continuing operations included special items totaling $8.8 million, net of tax, primarily from business acquisition and integration expense.
Segment Highlights
Medical and Healthcare
Second quarter segment revenue increased 6.5% to $234.4 million compared with the prior year.
Chamberlain revenue in the second quarter increased 13.2% compared with the prior year. Both new and total student enrollment for the November 2020 session reached all-time highs and increased 8.1% and 10.2%, respectively, compared with the prior year.
Revenue in the second quarter for the medical and veterinary schools decreased 2.4% compared with the prior year, driven by lower medical school housing and student transportation revenue due to campus closures and lower medical school clinical revenue associated with COVID-19. These decreases were partially offset by revenue growth from increases in student enrollment.
Segment operating income in the second quarter increased 24.5% to $51.3 million compared with the prior year. The increase in segment operating income was driven by strong enrollment trends over the past year for Chamberlain, decreased bad debt expense and operational improvements. This was partially offset by increased advertising and marketing expense to support future growth and a decline in revenue from the medical schools.
Financial Services
Second quarter segment revenue increased 5.9% to $48.7 million compared with the prior year, driven by increases in revenue for OnCourse Learning and Becker. The OnCourse Learning revenue increase was driven by focused execution and leveraging its leadership position in a favorable mortgage market. Becker revenue increased through growth in both CPA and CPE program offerings. Segment operating income in the second quarter increased 71.6% to $7.8 million compared with the prior year. Excluding special items, segment operating income in the second quarter increased 37.2% to $7.8 million compared with the prior year, driven primarily by growth in OnCourse Learning revenue.
Adtalem Outlook
Looking at the full fiscal 2021 year, Adtalem expects revenue growth of 5 to 7%, and growth for diluted earnings per share from continuing operations, excluding special items, of 28 to 32%, an increase from our previously issued outlook.
Conference Call and Webcast Information
Adtalem will hold a conference call to discuss its fiscal 2021 second quarter on Tuesday, February 2, 2021, at 4 p.m. CT (5 p.m. ET). The conference call will be led by Lisa Wardell, chairman and chief executive officer, and Mike Randolfi, 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: 13714067. Adtalem will also broadcast the conference call live on the web at:
https://78449.themediaframe.com/dataconf/productusers/age/mediaframe/42472/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 March 2, 2021. To access the replay, dial 877-660-6853 (United States) or +1 201-612-7415 (outside the United States), conference ID: 13714067, or visit the Adtalem website at: https://investors.adtalem.com/overview/default.aspx.
About Adtalem Global Education
The purpose of Adtalem Global Education is to empower students and members 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 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 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 pending Walden University 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 for the fiscal year ended June 30, 2020 filed with the Securities and Exchange Commission (SEC) on August 18, 2020 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.
| 2Q 2021 | 2Q 2020 | % Change | |||||
|---|---|---|---|---|---|---|---|
| Adtalem Global Education Student Enrollments^(1)^ | |||||||
| New students | 3,851 | 3,583 | +7.5 | % | |||
| Total students | 40,237 | 36,823 | +9.3 | % | |||
| Chamberlain University | |||||||
| November Session^(2)^ | |||||||
| New students | 2,931 | 2,711 | +8.1 | % | |||
| Total students | 34,387 | 31,215 | +10.2 | % | |||
| 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<br> post-licensure enrollment | ||||||
| --- | --- |
Adtalem Global Education Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except par value)
| June 30, | December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | 449,296 | $ | 500,516 | $ | 67,282 | |||
| Investments in marketable securities | 10,541 | 8,968 | 9,229 | |||||
| Restricted cash | 39,425 | 589 | 3,465 | |||||
| Accounts receivable, net | 91,051 | 87,042 | 93,394 | |||||
| Prepaid expenses and other current assets | 90,134 | 95,651 | 45,275 | |||||
| Current assets held for sale | — | — | 171,284 | |||||
| Total current assets | 680,447 | 692,766 | 389,929 | |||||
| Noncurrent assets: | ||||||||
| Property and equipment, net | 290,236 | 286,102 | 281,975 | |||||
| Operating lease assets | 192,954 | 174,935 | 187,520 | |||||
| Deferred income taxes | 23,489 | 22,277 | 10,242 | |||||
| Intangible assets, net | 282,518 | 287,514 | 292,736 | |||||
| Goodwill | 686,557 | 686,214 | 686,805 | |||||
| Other assets, net | 88,463 | 78,879 | 82,850 | |||||
| Noncurrent assets held for sale | — | — | 458,553 | |||||
| Total noncurrent assets | 1,564,217 | 1,535,921 | 2,000,681 | |||||
| Total assets | 2,244,664 | $ | 2,228,687 | $ | 2,390,610 | |||
| Liabilities and shareholders' equity: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | 49,035 | $ | 46,484 | $ | 31,457 | |||
| Accrued payroll and benefits | 38,994 | 48,835 | 39,088 | |||||
| Accrued liabilities | 100,364 | 104,431 | 89,507 | |||||
| Deferred revenue | 97,400 | 91,589 | 51,413 | |||||
| Current operating lease liabilities | 51,950 | 51,644 | 53,029 | |||||
| Current portion of long-term debt | 3,000 | 3,000 | 3,000 | |||||
| Current liabilities held for sale | — | — | 36,694 | |||||
| Total current liabilities | 340,743 | 345,983 | 304,188 | |||||
| Noncurrent liabilities: | ||||||||
| Long-term debt | 284,131 | 286,115 | 412,105 | |||||
| Long-term operating lease liabilities | 195,840 | 176,032 | 180,002 | |||||
| Deferred income taxes | 25,792 | 24,975 | 24,916 | |||||
| Other liabilities | 81,784 | 82,309 | 88,945 | |||||
| Noncurrent liabilities held for sale | — | — | 82,460 | |||||
| Total noncurrent liabilities | 587,547 | 569,431 | 788,428 | |||||
| Total liabilities | 928,290 | 915,414 | 1,092,616 | |||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interest | 2,595 | 2,852 | 3,082 | |||||
| Shareholders' equity: | ||||||||
| Common stock, 0.01 par value per share, 200,000 shares authorized; 50,632, 51,871, and 52,953 shares outstanding as of December<br> 31, 2020, June 30, 2020, and December 31, 2019, respectively | 810 | 807 | 806 | |||||
| Additional paid-in capital | 512,102 | 504,434 | 496,674 | |||||
| Retained earnings | 1,970,813 | 1,927,568 | 2,032,788 | |||||
| Accumulated other comprehensive loss | (7,711 | ) | (9,055 | ) | (159,118 | ) | ||
| Treasury stock, at cost, 30,389, 28,794, and 27,623 shares as of December 31, 2020, June 30, 2020, and December 31, 2019,<br> respectively | (1,162,235 | ) | (1,113,333 | ) | (1,076,238 | ) | ||
| Total shareholders' equity | 1,313,779 | 1,310,421 | 1,294,912 | |||||
| Total liabilities and shareholders' equity | 2,244,664 | $ | 2,228,687 | $ | 2,390,610 |
All values are in US Dollars.
Adtalem Global Education Inc.
Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Revenue | $ | 283,111 | $ | 266,172 | $ | 551,352 | $ | 520,785 | ||||
| Operating cost and expense: | ||||||||||||
| Cost of educational services | 126,823 | 127,258 | 240,521 | 255,292 | ||||||||
| Student services and administrative expense | 103,721 | 96,648 | 203,899 | 195,735 | ||||||||
| Restructuring expense | 1,165 | 1,955 | 5,388 | 8,485 | ||||||||
| Business acquisition and integration expense | 11,079 | — | 24,515 | — | ||||||||
| Gain on sale of assets | — | — | — | (4,779 | ) | |||||||
| Total operating cost and expense | 242,788 | 225,861 | 474,323 | 454,733 | ||||||||
| Operating income | 40,323 | 40,311 | 77,029 | 66,052 | ||||||||
| Other income (expense): | ||||||||||||
| Interest and dividend income | 1,219 | 1,215 | 2,223 | 1,893 | ||||||||
| Interest expense | (3,736 | ) | (5,066 | ) | (7,428 | ) | (10,394 | ) | ||||
| Investment gain | 1,005 | 419 | 1,523 | 442 | ||||||||
| Loss on derivative | — | (28,006 | ) | — | (28,006 | ) | ||||||
| Net other expense | (1,512 | ) | (31,438 | ) | (3,682 | ) | (36,065 | ) | ||||
| Income from continuing operations before income taxes | 38,811 | 8,873 | 73,347 | 29,987 | ||||||||
| Provision for income taxes | (7,223 | ) | (7,570 | ) | (14,313 | ) | (11,276 | ) | ||||
| Income from continuing operations | 31,588 | 1,303 | 59,034 | 18,711 | ||||||||
| Discontinued operations: | ||||||||||||
| (Loss) income from discontinued operations before income taxes | (11,187 | ) | 3,294 | (21,271 | ) | 411 | ||||||
| Benefit from income taxes | 2,748 | 823 | 5,225 | 550 | ||||||||
| (Loss) income from discontinued operations | (8,439 | ) | 4,117 | (16,046 | ) | 961 | ||||||
| Net income | 23,149 | 5,420 | 42,988 | 19,672 | ||||||||
| Net loss attributable to redeemable noncontrolling interest | 166 | 105 | 257 | 214 | ||||||||
| Net income attributable to Adtalem Global Education | $ | 23,315 | $ | 5,525 | $ | 43,245 | $ | 19,886 | ||||
| Amounts attributable to Adtalem Global Education: | ||||||||||||
| Net income from continuing operations | $ | 31,754 | $ | 1,408 | $ | 59,291 | $ | 18,925 | ||||
| Net (loss) income from discontinued operations | (8,439 | ) | 4,117 | (16,046 | ) | 961 | ||||||
| Net income attributable to Adtalem Global Education | $ | 23,315 | $ | 5,525 | $ | 43,245 | $ | 19,886 | ||||
| Earnings (loss) per share attributable to Adtalem Global Education: | ||||||||||||
| Basic: | ||||||||||||
| Continuing operations | $ | 0.61 | $ | 0.03 | $ | 1.13 | $ | 0.35 | ||||
| Discontinued operations | $ | (0.16 | ) | $ | 0.08 | $ | (0.31 | ) | $ | 0.02 | ||
| Net | $ | 0.45 | $ | 0.10 | $ | 0.83 | $ | 0.36 | ||||
| Diluted: | ||||||||||||
| Continuing operations | $ | 0.61 | $ | 0.03 | $ | 1.13 | $ | 0.34 | ||||
| Discontinued operations | $ | (0.16 | ) | $ | 0.08 | $ | (0.30 | ) | $ | 0.02 | ||
| Net | $ | 0.44 | $ | 0.10 | $ | 0.82 | $ | 0.36 | ||||
| Weighted-average shares outstanding: | ||||||||||||
| Basic shares | 52,251 | 53,890 | 52,358 | 54,691 | ||||||||
| Diluted shares | 52,441 | 54,280 | 52,622 | 55,192 |
Adtalem Global Education Inc.
Consolidated Statements of Cash Flows
\(unaudited\)
(in thousands)
| Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| December 31, | ||||||
| 2020 | 2019 | |||||
| Operating activities: | ||||||
| Net income | $ | 42,988 | $ | 19,672 | ||
| Loss (income) from discontinued operations | 16,046 | (961 | ) | |||
| Income from continuing operations | 59,034 | 18,711 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Stock-based compensation expense | 7,652 | 8,547 | ||||
| Amortization and adjustments to operating lease assets | 27,057 | 21,309 | ||||
| Depreciation | 18,325 | 17,224 | ||||
| Amortization of intangible assets | 5,037 | 5,110 | ||||
| Amortization of deferred debt issuance costs | 828 | 783 | ||||
| Provision for bad debts | 5,377 | 11,436 | ||||
| Deferred income taxes | (583 | ) | 2,067 | |||
| Loss on disposals, accelerated depreciation, and adjustments to property and equipment | 1,593 | 1,100 | ||||
| Realized and unrealized gain on investments | (1,524 | ) | (442 | ) | ||
| Realized gain on sale of assets | — | (4,779 | ) | |||
| Unrealized loss on derivative | — | 28,006 | ||||
| Changes in assets and liabilities: | ||||||
| Accounts receivable | (6,698 | ) | (14,779 | ) | ||
| Prepaid expenses and other current assets | 5,517 | (19,445 | ) | |||
| Accounts payable | 2,701 | (20,906 | ) | |||
| Accrued payroll and benefits | (9,832 | ) | (7,576 | ) | ||
| Accrued liabilities | 1,758 | (916 | ) | |||
| Deferred revenue | 5,811 | (44,531 | ) | |||
| Operating lease liabilities | (24,962 | ) | (27,549 | ) | ||
| Other assets and liabilities | (11,805 | ) | 2,390 | |||
| Net cash provided by (used in) operating activities-continuing operations | 85,286 | (24,240 | ) | |||
| Net cash (used in) provided by operating activities-discontinued operations | (21,893 | ) | 10,566 | |||
| Net cash provided by (used in) operating activities | 63,393 | (13,674 | ) | |||
| Investing activities: | ||||||
| Capital expenditures | (24,175 | ) | (20,311 | ) | ||
| Proceeds from sales of marketable securities | 1,565 | 702 | ||||
| Purchases of marketable securities | (1,613 | ) | (753 | ) | ||
| Proceeds from sale of assets | — | 6,421 | ||||
| Net cash used in investing activities-continuing operations | (24,223 | ) | (13,849 | ) | ||
| Net cash used in investing activities-discontinued operations | — | (2,585 | ) | |||
| Net cash used in investing activities | (24,223 | ) | (16,434 | ) | ||
| Financing activities: | ||||||
| Proceeds from exercise of stock options | 56 | 2,028 | ||||
| Employee taxes paid on withholding shares | (4,073 | ) | (5,232 | ) | ||
| Proceeds from stock issued under Colleague Stock Purchase Plan | 83 | — | ||||
| Repurchases of common stock for treasury | (44,963 | ) | (100,019 | ) | ||
| Borrowings under credit facility | — | 160,000 | ||||
| Repayments under credit facility | (1,500 | ) | (146,500 | ) | ||
| Proceeds from down payment on seller loan | — | 5,200 | ||||
| Payment for purchase of redeemable noncontrolling interest of subsidiary | — | (6,247 | ) | |||
| Payment of debt issuance costs | (1,722 | ) | — | |||
| Net cash used in financing activities-continuing operations | (52,119 | ) | (90,770 | ) | ||
| Net cash used in financing activities-discontinued operations | — | (1,765 | ) | |||
| Net cash used in financing activities | (52,119 | ) | (92,535 | ) | ||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 565 | (3,037 | ) | |||
| Net decrease in cash, cash equivalents and restricted cash | (12,384 | ) | (125,680 | ) | ||
| Cash, cash equivalents and restricted cash at beginning of period | 501,105 | 300,467 | ||||
| Cash, cash equivalents and restricted cash at end of period | 488,721 | 174,787 | ||||
| Less: cash, cash equivalents and restricted cash of discontinued operations at end of period | — | 104,040 | ||||
| Cash, cash equivalents and restricted cash at end of period | $ | 488,721 | $ | 70,747 |
Adtalem Global Education Inc.
Segment Information
(unaudited)
(in thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||||||||||||
| 2020 | 2019 | Increase<br><br> (Decrease) | 2020 | 2019 | Increase<br><br> (Decrease) | |||||||||||||
| Revenue: | ||||||||||||||||||
| Medical and Healthcare | $ | 234,396 | $ | 220,180 | 6.5 | % | $ | 453,222 | $ | 427,667 | 6.0 | % | ||||||
| Financial Services | 48,715 | 45,992 | 5.9 | % | 98,130 | 93,118 | 5.4 | % | ||||||||||
| Total consolidated revenue | $ | 283,111 | $ | 266,172 | 6.4 | % | $ | 551,352 | $ | 520,785 | 5.9 | % | ||||||
| Operating income (loss): | ||||||||||||||||||
| Medical and Healthcare | $ | 51,290 | $ | 41,183 | 24.5 | % | $ | 104,300 | $ | 69,683 | 49.7 | % | ||||||
| Financial Services | 7,793 | 4,542 | 71.6 | % | 15,065 | 6,670 | 125.9 | % | ||||||||||
| Home Office and Other | (18,760 | ) | (5,414 | ) | (246.5 | )% | (42,336 | ) | (10,301 | ) | (311.0 | )% | ||||||
| Total consolidated operating income | $ | 40,323 | $ | 40,311 | 0.0 | % | $ | 77,029 | $ | 66,052 | 16.6 | % |
Non-GAAP Financial Measures and Reconciliations
We believe that certain non-GAAP financial measures 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. 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 income attributable to Adtalem) – Measure of Adtalem’s net income attributable to Adtalem adjusted for restructuring expense, business acquisition and integration expense, pre-acquisition interest expense, gain on sale of assets, loss on derivative, and loss (income) from discontinued operations.
Earnings per share from continuing operations excluding special items (most comparable GAAP measure: earnings per share) – Measure of Adtalem’s diluted earnings per share adjusted for restructuring expense, business acquisition and integration expense, pre-acquisition interest expense, gain on sale of assets, loss on derivative, and loss (income) from discontinued operations.
Operating income excluding special items (most comparable GAAP measure: operating income) – Measure of Adtalem’s operating income adjusted for restructuring expense, business acquisition and integration expense, and gain on sale of assets. This measure is applied on a consolidated and segment basis, depending on the context of the discussion.
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:
| • | Restructuring charges primarily related to real estate consolidations at Adtalem’s home office and ACAMS and the sale of Becker’s courses for<br> healthcare students. |
|---|---|
| • | Business acquisition and integration expense include expenses related to the pending Walden University acquisition. |
| --- | --- |
| • | Pre-acquisition interest expense related to financing arrangements in connection with the pending Walden University acquisition. |
| --- | --- |
| • | Gain on the sale of Adtalem’s Columbus, Ohio, campus facility. |
| --- | --- |
| • | Loss on the deal-contingent foreign currency hedge arrangement entered into in connection with the sale of Adtalem Brazil completed on April 24,<br> 2020 to economically hedge the Brazilian Real denominated purchase price through mitigation of the currency exchange rate risk. |
| --- | --- |
| • | Loss (income) from discontinued operations include the operations of Adtalem Brazil, Carrington, and 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, | |||||||||||||||||
| 2020 | 2019 | Increase<br><br> (Decrease) | 2020 | 2019 | Increase<br><br> (Decrease) | |||||||||||||
| Medical and Healthcare: | ||||||||||||||||||
| Operating income (GAAP) | $ | 51,290 | $ | 41,183 | 24.5 | % | $ | 104,300 | $ | 69,683 | 49.7 | % | ||||||
| Restructuring expense | — | 417 | NM | — | 544 | NM | ||||||||||||
| Operating income excluding special items (non-GAAP) | $ | 51,290 | $ | 41,600 | 23.3 | % | $ | 104,300 | $ | 70,227 | 48.5 | % | ||||||
| Financial Services: | ||||||||||||||||||
| Operating income (GAAP) | $ | 7,793 | $ | 4,542 | 71.6 | % | $ | 15,065 | $ | 6,670 | 125.9 | % | ||||||
| Restructuring expense | — | 1,137 | NM | 1,415 | 3,116 | (54.6 | )% | |||||||||||
| Operating income excluding special items (non-GAAP) | $ | 7,793 | $ | 5,679 | 37.2 | % | $ | 16,480 | $ | 9,786 | 68.4 | % | ||||||
| Home Office and Other: | ||||||||||||||||||
| Operating loss (GAAP) | $ | (18,760 | ) | $ | (5,414 | ) | (246.5 | )% | $ | (42,336 | ) | $ | (10,301 | ) | (311.0 | )% | ||
| Restructuring expense | 1,165 | 401 | 190.5 | % | 3,973 | 4,825 | (17.7 | )% | ||||||||||
| Business acquisition and integration expense | 11,079 | — | NM | 24,515 | — | NM | ||||||||||||
| Gain on sale of assets | — | — | NM | — | (4,779 | ) | NM | |||||||||||
| Operating loss excluding special items (non-GAAP) | $ | (6,516 | ) | $ | (5,013 | ) | (30.0 | )% | $ | (13,848 | ) | $ | (10,255 | ) | (35.0 | )% | ||
| Adtalem Global Education: | ||||||||||||||||||
| Operating income (GAAP) | $ | 40,323 | $ | 40,311 | 0.0 | % | $ | 77,029 | $ | 66,052 | 16.6 | % | ||||||
| Restructuring expense | 1,165 | 1,955 | (40.4 | )% | 5,388 | 8,485 | (36.5 | )% | ||||||||||
| Business acquisition and integration expense | 11,079 | — | NM | 24,515 | — | NM | ||||||||||||
| Gain on sale of assets | — | — | NM | — | (4,779 | ) | NM | |||||||||||
| Operating income excluding special items (non-GAAP) | $ | 52,567 | $ | 42,266 | 24.4 | % | $ | 106,932 | $ | 69,758 | 53.3 | % |
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, | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Net income attributable to Adtalem (GAAP) | $ | 23,315 | $ | 5,525 | $ | 43,245 | $ | 19,886 | ||||
| Restructuring expense | 1,165 | 1,955 | 5,388 | 8,485 | ||||||||
| Business acquisition and integration expense | 11,079 | — | 24,515 | — | ||||||||
| Pre-acquisition interest expense | 45 | — | 45 | — | ||||||||
| Gain on sale of assets | — | — | — | (4,779 | ) | |||||||
| Loss on derivative | — | 28,006 | — | 28,006 | ||||||||
| Income tax impact on non-GAAP adjustments (1) | (3,513 | ) | (461 | ) | (7,511 | ) | (804 | ) | ||||
| Loss (income) from discontinued operations | 8,439 | (4,117 | ) | 16,046 | (961 | ) | ||||||
| Net income from continuing operations attributable to Adtalem excluding special items (non-GAAP) | $ | 40,530 | $ | 30,908 | $ | 81,728 | $ | 49,833 |
(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, | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Earnings per share, diluted (GAAP) | $ | 0.44 | $ | 0.10 | $ | 0.82 | $ | 0.36 | ||||
| Effect on diluted earnings per share: | ||||||||||||
| Restructuring expense | 0.02 | 0.04 | 0.10 | 0.15 | ||||||||
| Business acquisition and integration expense | 0.21 | - | 0.47 | - | ||||||||
| Pre-acquisition interest expense | 0.00 | - | 0.00 | - | ||||||||
| Gain on sale of assets | - | - | - | (0.09 | ) | |||||||
| Loss on derivative | - | 0.52 | - | 0.51 | ||||||||
| Income tax impact on non-GAAP adjustments (1) | (0.07 | ) | (0.01 | ) | (0.14 | ) | (0.01 | ) | ||||
| Loss (income) from discontinued operations | 0.16 | (0.08 | ) | 0.30 | (0.02 | ) | ||||||
| Earnings per share from continuing operations excluding special items, diluted (non-GAAP) | $ | 0.77 | $ | 0.57 | $ | 1.55 | $ | 0.90 | ||||
| Diluted shares used in EPS calculation | 52,441 | 54,280 | 52,622 | 55,192 |
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<br><br> Months Ended | Twelve<br><br> Months Ended | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| FY21 | FY20 | FY21 | FY21 | FY20 | FY20 | FY20 | FY20 | |||||||||||||||||
| Q2 | Q2 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||
| Net cash provided by (used in) operating activities-continuing operations (GAAP) | $ | 632 | $ | (57,716 | ) | $ | 259,091 | $ | 200,743 | $ | 149,565 | $ | 170,304 | $ | 159,150 | $ | 165,413 | |||||||
| Capital expenditures | (9,732 | ) | (9,875 | ) | (48,001 | ) | (48,144 | ) | (44,137 | ) | (44,239 | ) | (45,827 | ) | (54,689 | ) | ||||||||
| Free cash flow (non-GAAP) | $ | (9,100 | ) | $ | (67,591 | ) | $ | 211,090 | $ | 152,599 | $ | 105,428 | $ | 126,065 | $ | 113,323 | $ | 110,724 |
Adtalem Global Education Inc.
Non-GAAP Outlook Disclosure
(unaudited)
| Year Ended | ||||
|---|---|---|---|---|
| June 30, 2021 | ||||
| Expected earnings per share, diluted (GAAP) | $ | 2.19 to 2.28 | ||
| Expected effects on diluted earnings per share: | ||||
| Restructuring expense | 0.10 | |||
| Business acquisition and integration expense | 0.47 | |||
| Pre-acquisition interest expense | 0.00 | |||
| Income tax impact on non-GAAP adjustments(1) | (0.14 | ) | ||
| Loss from discontinued operations | 0.30 | |||
| Expected earnings per share from continuing operations excluding special items, diluted (non-GAAP)(2) | $ | 2.92 to 3.01 | ||
| Year over year increase | 28-32 | % | ||
| Diluted shares used in EPS calculation | 52,622 |
(1) Represents the 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 2021. The expected effects on diluted earnings per share (“EPS”) of restructuring expense, business acquisition and integration expense, pre-acquisition interest expense, and loss from discontinued operations include the results realized through December 31, 2020. 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 2021, would impact the GAAP expected EPS provided above. The expected range of EPS from continuing operations excluding special items provided above for the full fiscal year 2021 equates to a 28-32% increase over the $2.28 fiscal year 2020 EPS from continuing operations excluding special items, as reported in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020.
| Year Ended | |||
|---|---|---|---|
| June 30, 2020 | |||
| Loss per share, diluted (GAAP) | $ | (1.58 | ) |
| Effect on diluted earnings per share: | |||
| Restructuring expense | 0.53 | ||
| Gain on sale of assets | (0.09 | ) | |
| Gain on derivative | (2.05 | ) | |
| Tax Cuts and Jobs Act of 2017 | (0.04 | ) | |
| Net tax benefit for a former subsidiary investment loss | (0.47 | ) | |
| Income tax impact on non-GAAP adjustments(1) | (0.10 | ) | |
| Loss from discontinued operations | 6.09 | ||
| Earnings per share from continuing operations excluding special items, diluted (non-GAAP) | $ | 2.28 | |
| Diluted shares used in EPS calculation | 54,094 |
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.