CVSA 8-K
Covista Inc. (CVSA)
8-K
2022-11-03
For: 2022-11-03
View Original
Added on
April 10, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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): November 3, 2022
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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(Address of principal executive offices) (Zip Code)
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(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):
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol |
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Name of each exchange on which registered
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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 November 3, 2022, Adtalem Global Education Inc. (“Adtalem”) issued a press release announcing its first 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 November 3, 2022, 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
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.
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ADTALEM GLOBAL EDUCATION INC.
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By:
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/s/ Robert J. Phelan
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Robert J. Phelan
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Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
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Date: November 3, 2022
Exhibit 99.1
News Release
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Investor Contact
Chandrika Nigam
312-681-3209
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Adtalem Global Education Announces Fiscal First Quarter 2023 Results
Continued margin expansion across all segments
CHICAGO – Nov. 3, 2022 – Adtalem Global Education
Inc. (NYSE: ATGE), a leading healthcare educator, today reported academic, operating and financial results for its first quarter fiscal 2023 ended Sept. 30, 2022.
“I’m pleased to report another solid quarter, largely in line with expectations. I continue to be impressed by the resilience of our colleagues and their
ability to successfully navigate a dynamic environment,” said Steve Beard, president and CEO of Adtalem Global Education. “Over the last year, we
embarked on a journey to reposition ourselves as a national leader in post-secondary education and a leading provider of professional talent to the healthcare industry. We have made great strides in this endeavor, which has supported margin
expansion from operating leverage, while implementing a thoughtful approach to capital allocation.”
Beard continued, “Looking ahead to the balance of fiscal 2023, we remain cautiously optimistic that the demand environment will improve in the latter
half of the year, allowing us to benefit from our new, more efficient operating model along with strategic investments made across a full range of enrollment and student support activities. We remain uniquely positioned through our high-quality
institutions to produce highly trained, practice-ready healthcare professionals while driving superior student outcomes.”
Financial Highlights
Selected financial data for the three months ended Sept. 30, 2022:
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Revenue of $354.6 million increased 22.7% compared with the prior year due to the timing of the acquisition of Walden
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●
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Diluted earnings per share increased to $0.05 from a loss of $1.17 in the prior year; adjusted earnings per share, increased to
$0.88 or by 151.4%, compared with $0.35 in the prior year
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●
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Operating income was $23.1 million, compared with an operating loss of $22.1 million in the prior year; adjusted operating
income was $65.1 million, an increase of 78.7% compared with the prior year. Operating margin was 6.5% and adjusted operating margin increased to 18.4% from 12.6% driven by integration and cost reduction efforts
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●
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Net income was $2.2 million, compared with a loss of $58.0 million in the prior year; adjusted net income was $41.0 million, an
increase of 133.1% compared with the prior year
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Adjusted EBITDA was $82.1 million, an increase of 62.6% compared with the prior year. Adjusted EBITDA margins increased to 23.1%
from 17.5%
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Gross debt was reduced by $101 million, representing a decrease of 11.7% in the first quarter
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Business Highlights
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American University of the Caribbean School of Medicine and Ross
University School of Medicine established a partnership with Southern California University of Health Services to expand pathways to medicine for aspiring physicians
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Ross University School of Medicine entered into a collaboration
with Bethune-Cookman University, a historically Black university, to create pathways for aspiring medical students, many of whom identify as a race or ethnicity underrepresented in medicine
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Chamberlain University announced a transition agreement to
help recently displaced Stratford University nursing students continue their education and achieve their career ambitions
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Adtalem’s FY 2019* combined cohort default rate remained well below combined cohort default rate for all schools nationally,
including public and not-for-profit four-year sectors, which is representative of the quality of our programs and the employability of our graduates.
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*Overall cohort default rates were impacted by
the pandemic pause
Segment Highlights
Chamberlain
First quarter segment revenue was relatively flat compared with the prior year, at $135.4 million, and segment operating income increased
25.6% to $26.2 million primarily due to lower labor from continued cost reduction initiatives. Adjusted EBITDA increased to $33.8 million or by 25.1% compared with the prior year.
Total student enrollment decreased 4.0% compared with the
prior year, primarily attributable to COVID-related headwinds in Chamberlain’s post-licensure programs, partially offset by continued improvement in enrollment in pre-licensure programs.
Walden
Revenue in the first quarter increased to $130.9 million from
$68.6 million in the prior year due to the timing of the Walden acquisition. Segment operating income was $1.8 million, and adjusted segment operating income was $23.4 million. Adjusted EBITDA was $27.9 million or 107.7% higher compared with the prior year, driven by the timing of the acquisition.
Total student enrollment decreased 9.2% compared with the
prior year, which was primarily attributable to COVID-related headwinds in Walden’s post-licensure nursing programs and declines in the
management and technology programs, while the social and behavioral science programs – on a relative basis – continued to perform well.
Medical and Veterinary
Revenue in the first quarter increased 4.1% to $88.3 million compared with the prior year. Segment operating income of $10.5 million
decreased by 32.8% compared with the prior year. Adjusted segment operating income was $17.4 million, an increase of 10.8% compared with the prior year, driven primarily by the increase in revenue. Adjusted EBITDA increased to $21.9 million or by
9.4% compared with the prior year.
Total student enrollment increased 3.4% compared with the prior year, due to growth in new student enrollment and higher persistence.
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
first quarter on Thursday, Nov. 3, 2022, at 4 p.m. CDT (5 p.m. EDT). 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: 13732401. Adtalem will also broadcast the conference call live on the web at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Gef8ciIq.
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, 2022. To access the replay, dial 877-660-6853 (United States) or +1 201-612-7415 (outside the United
States), conference ID: 13732401, or visit the Adtalem website at: https://investors.adtalem.com/overview/default.aspx.
About Adtalem Global Education
Adtalem Global Education (NYSE: ATGE) is a leading healthcare educator and 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 and its institutions have more than 10,000 employees and a
network of more than 275,000 alumni. Adtalem was named one of America’s Most Responsible Companies 2021 by Newsweek, and one of America’s Best Employers for Diversity in 2021 and 2022 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 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.
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Q1 2023
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Q1 2022
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% Change
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||||||||||
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Adtalem Global Education Student Enrollments
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Total students(1)
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79,559
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84,874
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-6.3
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%
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Chamberlain University
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Total students
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33,153
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34,539
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-4.0
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%
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Walden University
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Total students
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40,772
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44,886
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-9.2
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%
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Medical & Veterinary
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Total students
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5,634
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5,449
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3.4
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%
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(1)
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Represents total students attending sessions during each institution’s most recent enrollment period in Q1 FY 2023
and Q1 FY 2022
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Adtalem Global Education Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except par value)
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September 30,
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June 30,
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September 30,
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||||||||||
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2022
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2022
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2021
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Assets:
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Current assets:
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Cash and cash equivalents
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$
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327,515
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$
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346,973
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$
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323,994
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Restricted cash
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2,480
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964
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20,220
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Accounts receivable, net
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111,858
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81,635
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140,390
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Prepaid expenses and other current assets
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128,069
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126,467
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162,463
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Current assets held for sale
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—
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—
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62,725
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Total current assets
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569,922
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556,039
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709,792
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Noncurrent assets:
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Property and equipment, net
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281,581
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289,926
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308,759
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Operating lease assets
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158,287
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177,995
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167,249
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Deferred income taxes
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49,318
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51,093
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61,654
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Intangible assets, net
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855,049
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873,577
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954,400
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Goodwill
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961,262
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961,262
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952,764
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Other assets, net
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120,630
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119,283
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113,819
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Noncurrent assets held for sale
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—
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—
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530,627
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Total noncurrent assets
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2,426,127
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2,473,136
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3,089,272
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Total assets
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$
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2,996,049
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$
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3,029,175
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$
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3,799,064
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Liabilities and shareholders' equity:
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Current liabilities:
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Accounts payable
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$
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64,407
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$
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57,140
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$
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99,691
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Accrued payroll and benefits
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55,034
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66,642
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57,463
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Accrued liabilities
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93,805
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98,124
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124,748
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Deferred revenue
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227,238
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144,840
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236,990
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Current operating lease liabilities
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50,065
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50,781
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55,925
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|||||||||
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Current portion of long-term debt
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—
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—
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6,375
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Current liabilities held for sale
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—
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—
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55,038
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|||||||||
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Total current liabilities
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490,549
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417,527
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636,230
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Noncurrent liabilities:
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||||||||||||
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Long-term debt
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741,696
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838,908
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1,600,043
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Long-term operating lease liabilities
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164,840
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177,045
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164,172
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Deferred income taxes
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26,408
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25,554
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26,390
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Other liabilities
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62,517
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65,074
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72,688
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Noncurrent liabilities held for sale
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—
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—
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32,570
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Total noncurrent liabilities
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995,461
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1,106,581
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1,895,863
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Total liabilities
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1,486,010
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1,524,108
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2,532,093
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Commitments and contingencies
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Redeemable noncontrolling interest
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—
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—
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1,790
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Shareholders' equity:
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Common stock, $0.01 par value per share, 200,000 shares authorized; 45,396, 45,177, and 49,753 shares
outstanding as of September 30, 2022, June 30, 2022, and September 30, 2021, respectively
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821
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818
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817
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Additional paid-in capital
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529,229
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521,848
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537,402
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Retained earnings
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2,325,002
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2,322,810
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1,947,101
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Accumulated other comprehensive loss
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(2,227
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)
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(960
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)
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(740
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)
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Treasury stock, at cost, 36,703, 36,619, and 31,903 shares as of September 30, 2022, June 30, 2022,
and September 30, 2021, respectively
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(1,342,786
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)
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(1,339,449
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)
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(1,219,399
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)
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||||||
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Total shareholders' equity
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1,510,039
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1,505,067
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1,265,181
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Total liabilities and shareholders' equity
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$
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2,996,049
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$
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3,029,175
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$
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3,799,064
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Adtalem Global Education Inc.
Consolidated Statements of Income (Loss)
(unaudited)
(in thousands, except per share data)
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Three Months Ended
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||||||||
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September 30,
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||||||||
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2022
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2021
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Revenue
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$
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354,559
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$
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289,070
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Operating cost and expense:
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Cost of educational services
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159,645
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152,050
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||||||
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Student services and administrative expense
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148,341
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129,436
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||||||
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Restructuring expense
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15,065
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3,094
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Business acquisition and integration expense
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8,415
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26,553
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Total operating cost and expense
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331,466
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311,133
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||||||
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Operating income (loss)
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23,093
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(22,063
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)
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Other income (expense):
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||||||||
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Interest income
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1,567
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878
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Interest expense
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(17,760
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)
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(47,393
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)
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Net other expense
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(16,193
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)
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(46,515
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)
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Income (loss) from continuing operations before income taxes
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6,900
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(68,578
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)
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|||||
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Provision for income taxes
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(1,054
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)
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(8,604
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)
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Income (loss) from continuing operations
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5,846
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(77,182
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)
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Discontinued operations:
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||||||||
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Loss from discontinued operations before income taxes
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(3,438
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)
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(6,050
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)
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||||
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Loss on disposal of discontinued operations before income taxes
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(3,359
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)
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—
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|||||
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Benefit from income taxes
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3,143
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25,228
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||||||
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(Loss) income from discontinued operations
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(3,654
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)
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19,178
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|||||
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Net income (loss)
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$
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2,192
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$
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(58,004
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)
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|||
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Earnings (loss) per share:
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||||||||
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Basic:
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||||||||
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Continuing operations
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$
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0.13
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$
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(1.55
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)
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|||
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Discontinued operations
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$
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(0.08
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)
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$
|
0.39
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|||
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Total basic earnings (loss) per share
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$
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0.05
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$
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(1.17
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)
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Diluted:
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||||||||
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Continuing operations
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$
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0.13
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$
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(1.55
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)
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|||
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Discontinued operations
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$
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(0.08
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)
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$
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0.39
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|||
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Total diluted earnings (loss) per share
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$
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0.05
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$
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(1.17
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)
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|||
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Weighted-average shares outstanding:
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||||||||
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Basic shares
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45,274
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49,663
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||||||
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Diluted shares
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46,342
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49,663
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Adtalem Global Education Inc.
Consolidated Statements of Cash Flows
(unaudited)
(unaudited)
(in thousands)
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Three Months Ended
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||||||||
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September 30,
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||||||||
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2022
|
2021
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|||||||
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Operating activities:
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||||||||
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Net income (loss)
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$
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2,192
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$
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(58,004
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)
|
|||
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Loss (income) from discontinued operations
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3,654
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(19,178
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)
|
|||||
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Income (loss) from continuing operations
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5,846
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(77,182
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)
|
|||||
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Adjustments to reconcile net income (loss) to net cash provided by operating activities:
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||||||||
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Stock-based compensation expense
|
6,145
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9,711
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||||||
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Amortization and impairments to operating lease assets
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19,708
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12,323
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||||||
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Depreciation
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10,805
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10,499
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||||||
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Amortization of intangible assets
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18,528
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16,451
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||||||
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Amortization and write-off of debt discount and issuance costs
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4,227
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17,858
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||||||
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Provision for bad debts
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5,991
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6,189
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||||||
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Deferred income taxes
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2,629
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(10,186
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)
|
|||||
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Loss on disposals, accelerated depreciation, and impairments to property and equipment
|
3,483
|
282
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||||||
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Gain on extinguishment of debt
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(71
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)
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—
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|||||
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Changes in assets and liabilities:
|
||||||||
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Accounts receivable
|
(33,219
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)
|
(78,283
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)
|
||||
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Prepaid expenses and other current assets
|
(1,602
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)
|
(199
|
)
|
||||
|
Accounts payable
|
7,586
|
26,706
|
||||||
|
Accrued payroll and benefits
|
(11,593
|
)
|
(21,231
|
)
|
||||
|
Accrued liabilities
|
(9,010
|
)
|
(24,846
|
)
|
||||
|
Deferred revenue
|
82,398
|
157,225
|
||||||
|
Operating lease liabilities
|
(12,921
|
)
|
(13,397
|
)
|
||||
|
Other assets and liabilities
|
(7,406
|
)
|
(2,414
|
)
|
||||
|
Net cash provided by operating activities-continuing operations
|
91,524
|
29,506
|
||||||
|
Net cash (used in) provided by operating activities-discontinued operations
|
(130
|
)
|
11,358
|
|||||
|
Net cash provided by operating activities
|
91,394
|
40,864
|
||||||
|
Investing activities:
|
||||||||
|
Capital expenditures
|
(5,551
|
)
|
(6,691
|
)
|
||||
|
Payment for purchase of business, net of cash and restricted cash acquired
|
—
|
(1,481,789
|
)
|
|||||
|
Net cash used in investing activities-continuing operations
|
(5,551
|
)
|
(1,488,480
|
)
|
||||
|
Net cash used in investing activities-discontinued operations
|
—
|
(633
|
)
|
|||||
|
Payment for working capital adjustment for sale of business
|
(811
|
)
|
—
|
|||||
|
Net cash used in investing activities
|
(6,362
|
)
|
(1,489,113
|
)
|
||||
|
Financing activities:
|
||||||||
|
Proceeds from exercise of stock options
|
1,241
|
7,685
|
||||||
|
Employee taxes paid on withholding shares
|
(3,486
|
)
|
(2,228
|
)
|
||||
|
Proceeds from stock issued under Colleague Stock Purchase Plan
|
132
|
114
|
||||||
|
Proceeds from long-term debt
|
—
|
850,000
|
||||||
|
Repayments of long-term debt
|
(100,861
|
)
|
(291,000
|
)
|
||||
|
Payment of debt discount and issuance costs
|
—
|
(49,553
|
)
|
|||||
|
Net cash (used in) provided by financing activities
|
(102,974
|
)
|
515,018
|
|||||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
(70
|
)
|
|||||
|
Net decrease in cash, cash equivalents and restricted cash
|
(17,942
|
)
|
(933,301
|
)
|
||||
|
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
|
329,995
|
380,315
|
||||||
|
Less: cash, cash equivalents and restricted cash of discontinued operations at end of period
|
—
|
36,101
|
||||||
|
Cash, cash equivalents and restricted cash of continuing operations at end of period
|
$
|
329,995
|
$
|
344,214
|
||||
|
Non-cash investing and financing activities:
|
||||||||
|
Accrued capital expenditures
|
$
|
4,713
|
$
|
6,576
|
||||
Adtalem Global Education Inc.
Segment Information
(unaudited)
(in thousands)
|
Three Months Ended
|
||||||||||||||||
|
September 30,
|
||||||||||||||||
|
Increase/(Decrease)
|
||||||||||||||||
|
2022
|
2021
|
$ |
|
%
|
||||||||||||
|
Revenue:
|
||||||||||||||||
|
Chamberlain
|
$
|
135,405
|
$
|
135,639
|
$
|
(234
|
)
|
(0.2
|
)%
|
|||||||
|
Walden
|
130,901
|
68,617
|
62,284
|
90.8
|
%
|
|||||||||||
|
Medical and Veterinary
|
88,253
|
84,814
|
3,439
|
4.1
|
%
|
|||||||||||
|
Total consolidated revenue
|
$
|
354,559
|
$
|
289,070
|
$
|
65,489
|
22.7
|
%
|
||||||||
|
Operating income (loss):
|
||||||||||||||||
|
Chamberlain
|
$
|
26,184
|
$
|
20,855
|
$
|
5,329
|
25.6
|
%
|
||||||||
|
Walden
|
1,783
|
(11,646
|
)
|
13,429
|
NM
|
|||||||||||
|
Medical and Veterinary
|
10,528
|
15,665
|
(5,137
|
)
|
(32.8
|
)%
|
||||||||||
|
Home Office and Other
|
(15,402
|
)
|
(46,937
|
)
|
31,535
|
67.2
|
%
|
|||||||||
|
Total consolidated operating income (loss)
|
$
|
23,093
|
$
|
(22,063
|
)
|
$
|
45,156
|
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 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, and net loss (income) 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, and net loss (income) from discontinued operations.
Adjusted operating income (most
comparable GAAP measure: operating income (loss)) – Measure of Adtalem’s operating income (loss) 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 loss (income) from discontinued operations, net other expense, provision for 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 and
net other expense is not recorded at the reportable segments, and therefore, the segment adjusted EBITDA reconciliations begin with operating income (loss).
Free cash flow (most comparable
GAAP measure: net cash provided by operating activities-continuing operations) – Defined as net cash provided by operating activities-continuing operations less capital expenditures.
Net debt – Defined as
long-term debt less cash and cash equivalents.
Net leverage – Defined as
net debt divided by adjusted EBITDA.
A description of special items in our non-GAAP financial measures described above are as follows:
|
●
|
Deferred revenue adjustment related to a revenue purchase accounting adjustment to record Walden’s deferred revenue at fair value.
|
|
●
|
CEO transition costs related to acceleration of stock-based compensation expense.
|
|
●
|
Restructuring expense primarily related to plans to achieve synergies with the Walden acquisition and real estate consolidations at Walden,
Medical and Veterinary, and Adtalem’s home office.
|
|
●
|
Business acquisition and integration expense include expenses related to the Walden acquisition and growth transformation initiatives.
|
|
●
|
Intangible amortization expense on acquired intangible assets.
|
|
●
|
Pre-acquisition interest expense, write-off of debt discount and issuance costs, and gain on extinguishment of debt related to financing
arrangements in connection with the Walden acquisition and prepayment of debt.
|
|
●
|
Net loss (income) 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
|
||||||||||||||||
|
September 30,
|
||||||||||||||||
|
Increase/(Decrease)
|
||||||||||||||||
|
2022
|
2021
|
$ |
|
%
|
||||||||||||
|
Chamberlain:
|
||||||||||||||||
|
Operating income (GAAP)
|
$
|
26,184
|
$
|
20,855
|
$
|
5,329
|
25.6
|
%
|
||||||||
|
Restructuring expense
|
818
|
—
|
818
|
|||||||||||||
|
Adjusted operating income (non-GAAP)
|
$
|
27,002
|
$
|
20,855
|
$
|
6,147
|
29.5
|
%
|
||||||||
|
Operating margin (GAAP)
|
19.3
|
%
|
15.4
|
%
|
||||||||||||
|
Operating margin (non-GAAP)
|
19.9
|
%
|
15.4
|
%
|
||||||||||||
|
Walden:
|
||||||||||||||||
|
Operating income (loss) (GAAP)
|
$
|
1,783
|
$
|
(11,646
|
)
|
$
|
13,429
|
NM
|
||||||||
|
Deferred revenue adjustment
|
—
|
6,207
|
(6,207
|
)
|
||||||||||||
|
Restructuring expense
|
3,080
|
—
|
3,080
|
|||||||||||||
|
Intangible amortization expense
|
18,528
|
16,451
|
2,077
|
|||||||||||||
|
Adjusted operating income (non-GAAP)
|
$
|
23,391
|
$
|
11,012
|
$
|
12,379
|
112.4
|
%
|
||||||||
|
Operating margin (GAAP)
|
1.4
|
%
|
(17.0
|
)%
|
||||||||||||
|
Operating margin (non-GAAP)
|
17.9
|
%
|
16.0
|
%
|
||||||||||||
|
Medical and Veterinary:
|
||||||||||||||||
|
Operating income (GAAP)
|
$
|
10,528
|
$
|
15,665
|
$
|
(5,137
|
)
|
(32.8
|
)%
|
|||||||
|
Restructuring expense
|
6,826
|
—
|
6,826
|
|||||||||||||
|
Adjusted operating income (non-GAAP)
|
$
|
17,354
|
$
|
15,665
|
$
|
1,689
|
10.8
|
%
|
||||||||
|
Operating margin (GAAP)
|
11.9
|
%
|
18.5
|
%
|
||||||||||||
|
Operating margin (non-GAAP)
|
19.7
|
%
|
18.5
|
%
|
||||||||||||
|
Home Office and Other:
|
||||||||||||||||
|
Operating loss (GAAP)
|
$
|
(15,402
|
)
|
$
|
(46,937
|
)
|
$
|
31,535
|
67.2
|
%
|
||||||
|
CEO transition costs
|
—
|
6,195
|
(6,195
|
)
|
||||||||||||
|
Restructuring expense
|
4,341
|
3,094
|
1,247
|
|||||||||||||
|
Business acquisition and integration expense
|
8,415
|
26,553
|
(18,138
|
)
|
||||||||||||
|
Adjusted operating loss (non-GAAP)
|
$
|
(2,646
|
)
|
$
|
(11,095
|
)
|
$
|
8,449
|
76.2
|
%
|
||||||
|
Adtalem Global Education:
|
||||||||||||||||
|
Operating income (loss) (GAAP)
|
$
|
23,093
|
$
|
(22,063
|
)
|
$
|
45,156
|
NM
|
||||||||
|
Deferred revenue adjustment
|
—
|
6,207
|
(6,207
|
)
|
||||||||||||
|
CEO transition costs
|
—
|
6,195
|
(6,195
|
)
|
||||||||||||
|
Restructuring expense
|
15,065
|
3,094
|
11,971
|
|||||||||||||
|
Business acquisition and integration expense
|
8,415
|
26,553
|
(18,138
|
)
|
||||||||||||
|
Intangible amortization expense
|
18,528
|
16,451
|
2,077
|
|||||||||||||
|
Adjusted operating income (non-GAAP)
|
$
|
65,101
|
$
|
36,437
|
$
|
28,664
|
78.7
|
%
|
||||||||
|
Operating margin (GAAP)
|
6.5
|
%
|
(7.6
|
)%
|
||||||||||||
|
Operating margin (non-GAAP)
|
18.4
|
%
|
12.6
|
%
|
||||||||||||
Adtalem Global Education Inc.
Non-GAAP Adjusted EBITDA by Segment
(unaudited)
(in thousands)
|
Three Months Ended
|
||||||||||||||||
|
September 30,
|
||||||||||||||||
|
Increase/(Decrease)
|
||||||||||||||||
|
2022
|
2021
|
$ |
|
%
|
||||||||||||
|
Chamberlain:
|
||||||||||||||||
|
Operating income (GAAP)
|
$
|
26,184
|
$
|
20,855
|
$
|
5,329
|
25.6
|
%
|
||||||||
|
Restructuring expense
|
818
|
—
|
818
|
|||||||||||||
|
Depreciation
|
4,481
|
4,584
|
(103
|
)
|
||||||||||||
|
Stock-based compensation
|
2,274
|
1,547
|
727
|
|||||||||||||
|
Adjusted EBITDA (non-GAAP)
|
$
|
33,757
|
$
|
26,986
|
$
|
6,771
|
25.1
|
%
|
||||||||
|
Adjusted EBITDA margin (non-GAAP)
|
24.9
|
%
|
19.9
|
%
|
||||||||||||
|
Walden:
|
||||||||||||||||
|
Operating income (loss) (GAAP)
|
$
|
1,783
|
$
|
(11,646
|
)
|
$
|
13,429
|
NM
|
||||||||
|
Deferred revenue adjustment
|
—
|
6,207
|
(6,207
|
)
|
||||||||||||
|
Restructuring expense
|
3,080
|
—
|
3,080
|
|||||||||||||
|
Intangible amortization expense
|
18,528
|
16,451
|
2,077
|
|||||||||||||
|
Depreciation
|
2,595
|
1,712
|
883
|
|||||||||||||
|
Stock-based compensation
|
1,905
|
707
|
1,198
|
|||||||||||||
|
Adjusted EBITDA (non-GAAP)
|
$
|
27,891
|
$
|
13,431
|
$
|
14,460
|
107.7
|
%
|
||||||||
|
Adjusted EBITDA margin (non-GAAP)
|
21.3
|
%
|
19.6
|
%
|
||||||||||||
|
Medical and Veterinary:
|
||||||||||||||||
|
Operating income (GAAP)
|
$
|
10,528
|
$
|
15,665
|
$
|
(5,137
|
)
|
(32.8
|
)%
|
|||||||
|
Restructuring expense
|
6,826
|
—
|
6,826
|
|||||||||||||
|
Depreciation
|
3,105
|
3,455
|
(350
|
)
|
||||||||||||
|
Stock-based compensation
|
1,475
|
928
|
547
|
|||||||||||||
|
Adjusted EBITDA (non-GAAP)
|
$
|
21,934
|
$
|
20,048
|
$
|
1,886
|
9.4
|
%
|
||||||||
|
Adjusted EBITDA margin (non-GAAP)
|
24.9
|
%
|
23.6
|
%
|
||||||||||||
|
Home Office and Other:
|
||||||||||||||||
|
Operating loss (GAAP)
|
$
|
(15,402
|
)
|
$
|
(46,937
|
)
|
$
|
31,535
|
67.2
|
%
|
||||||
|
CEO transition costs
|
—
|
6,195
|
(6,195
|
)
|
||||||||||||
|
Restructuring expense
|
4,341
|
3,094
|
1,247
|
|||||||||||||
|
Business acquisition and integration expense
|
8,415
|
26,553
|
(18,138
|
)
|
||||||||||||
|
Depreciation
|
624
|
748
|
(124
|
)
|
||||||||||||
|
Stock-based compensation
|
491
|
334
|
157
|
|||||||||||||
|
Adjusted EBITDA (non-GAAP)
|
$
|
(1,531
|
)
|
$
|
(10,013
|
)
|
$
|
8,482
|
84.7
|
%
|
||||||
|
Adtalem Global Education:
|
||||||||||||||||
|
Net income (loss) (GAAP)
|
$
|
2,192
|
$
|
(58,004
|
)
|
$
|
60,196
|
NM
|
||||||||
|
Net loss (income) from discontinued operations
|
3,654
|
(19,178
|
)
|
22,832
|
||||||||||||
|
Net other expense
|
16,193
|
46,515
|
(30,322
|
)
|
||||||||||||
|
Provision for income taxes
|
1,054
|
8,604
|
(7,550
|
)
|
||||||||||||
|
Operating income (loss) (GAAP)
|
23,093
|
(22,063
|
)
|
45,156
|
||||||||||||
|
Depreciation and amortization
|
29,333
|
26,950
|
2,383
|
|||||||||||||
|
Stock-based compensation
|
6,145
|
3,516
|
2,629
|
|||||||||||||
|
Deferred revenue adjustment
|
—
|
6,207
|
(6,207
|
)
|
||||||||||||
|
CEO transition costs
|
—
|
6,195
|
(6,195
|
)
|
||||||||||||
|
Restructuring expense
|
15,065
|
3,094
|
11,971
|
|||||||||||||
|
Business acquisition and integration expense
|
8,415
|
26,553
|
(18,138
|
)
|
||||||||||||
|
Adjusted EBITDA (non-GAAP)
|
$
|
82,051
|
$
|
50,452
|
$
|
31,599
|
62.6
|
%
|
||||||||
|
Adjusted EBITDA margin (non-GAAP)
|
23.1
|
%
|
17.5
|
%
|
||||||||||||
Adtalem Global Education Inc.
Non-GAAP Earnings Disclosure
(unaudited)
(in thousands, except per share data)
|
Three Months Ended
|
||||||||
|
September 30,
|
||||||||
|
2022
|
2021
|
|||||||
|
Net income (loss) (GAAP)
|
$
|
2,192
|
$
|
(58,004
|
)
|
|||
|
Deferred revenue adjustment
|
—
|
6,207
|
||||||
|
CEO transition costs
|
—
|
6,195
|
||||||
|
Restructuring expense
|
15,065
|
3,094
|
||||||
|
Business acquisition and integration expense
|
8,415
|
26,553
|
||||||
|
Intangible amortization expense
|
18,528
|
16,451
|
||||||
|
Pre-acquisition interest expense, write-off of debt discount and issuance costs, and gain on extinguishment of debt
|
2,824
|
31,634
|
||||||
|
Income tax impact on non-GAAP adjustments (1)
|
(9,673
|
)
|
4,640
|
|||||
|
Net loss (income) from discontinued operations
|
3,654
|
(19,178
|
)
|
|||||
|
Adjusted net income (non-GAAP)
|
$
|
41,005
|
$
|
17,592
|
||||
(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,
|
||||||||
|
2022
|
2021
|
|||||||
|
Earnings (loss) per share, diluted (GAAP)
|
$
|
0.05
|
$
|
(1.17
|
)
|
|||
|
Effect on diluted earnings per share:
|
||||||||
|
Deferred revenue adjustment
|
-
|
0.12
|
||||||
|
CEO transition costs
|
-
|
0.12
|
||||||
|
Restructuring expense
|
0.33
|
0.06
|
||||||
|
Business acquisition and integration expense
|
0.18
|
0.53
|
||||||
|
Intangible amortization expense
|
0.40
|
0.33
|
||||||
|
Pre-acquisition interest expense, write-off of debt discount and issuance costs, and gain on extinguishment of
debt
|
0.06
|
0.63
|
||||||
|
Income tax impact on non-GAAP adjustments (1)
|
(0.21
|
)
|
0.09
|
|||||
|
Net loss (income) from discontinued operations
|
0.08
|
(0.39
|
)
|
|||||
|
Adjusted earnings per share, diluted (non-GAAP)
|
$
|
0.88
|
$
|
0.35
|
||||
|
Diluted shares used in non-GAAP EPS calculation
|
46,342
|
50,222
|
||||||
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
|
FY22
|
FY22
|
FY22
|
FY22
|
FY21
|
||||||||||||||||||
|
|
Q1
|
|
Q1
|
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
|||||||||||||||
|
Net cash provided by operating activities-
continuing operations (GAAP)
|
$
|
91,524
|
$
|
29,506
|
$
|
225,843
|
$
|
163,825
|
$
|
101,481
|
$
|
91,835
|
$
|
124,742
|
$
|
168,760
|
|||||||||
|
Capital expenditures
|
(5,551)
|
(6,691)
|
(29,914)
|
(31,054)
|
(33,539)
|
(34,949)
|
(34,256)
|
(39,881)
|
|||||||||||||||||
|
Free cash flow (non-GAAP)
|
$
|
85,973
|
$
|
22,815
|
$
|
195,929
|
$
|
132,771
|
$
|
67,942
|
$
|
56,886
|
$
|
90,486
|
$
|
128,879
|
|||||||||
Adtalem Global Education Inc.
Non-GAAP Outlook Disclosure
(unaudited)
(in thousands, except per share data)
|
Year Ended
|
|||
|
June 30, 2023
|
|||
|
Expected earnings per share, diluted (GAAP)
|
$
|
2.05 to 2.30
|
|
|
Expected effects on diluted earnings per share:
|
|||
|
Restructuring expense
|
0.33
|
||
|
Integration costs
|
0.18
|
||
|
Estimated purchase accounting adjustment - intangible amortization
|
1.32
|
||
|
Write-off of debt discount and issuance costs and gain on extinguishment of debt
|
0.06
|
||
|
Estimated incremental integration costs
|
0.56
|
||
|
Estimated income tax impact on non-GAAP adjustments(1)
|
(0.63)
|
||
|
Net loss from discontinued operations
|
0.08
|
||
|
Expected adjusted earnings per share, diluted (non-GAAP)(2)
|
$
|
3.95 to 4.20
|
|
|
Diluted shares used in EPS calculation
|
46,342
|
||
(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 purchase accounting adjustment – intangible amortization and (2) the estimated incremental integration costs are estimates related to the
Walden University acquisition and 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, and loss from discontinued
operations includes the results realized through September 30, 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
|
||||
|
|
September 30, 2022 |
|||
|
Adtalem Global Education:
|
||||
|
Net income (GAAP)
|
$
|
377,901
|
||
|
Net income from discontinued operations
|
(324,700
|
)
|
||
|
Net other expense
|
95,206
|
|||
|
Benefit from income taxes
|
(22,787
|
)
|
||
|
Depreciation and amortization
|
144,231
|
|||
|
Stock-based compensation
|
19,045
|
|||
|
Deferred revenue adjustment
|
2,354
|
|||
|
Restructuring expense
|
37,599
|
|||
|
Business acquisition and integration expense
|
35,060
|
|||
|
Adjusted EBITDA (non-GAAP)
|
$
|
363,909
|
||
|
|
September 30, 2022 | |||
|
Long-term debt
|
$
|
758,283
|
||
|
Less: Cash and cash equivalents
|
(327,515
|
)
|
||
|
Net debt (non-GAAP)
|
$
|
430,768
|
||
|
Net leverage (non-GAAP)
|
1.2
|
x
|
||