```markdown [Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Adtalem Global Education Inc. for the period ended March 31, 2024, including the balance sheets, statements of income, cash flows, and shareholders' equity, along with detailed notes explaining significant accounting policies, segment information, and other financial disclosures [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show a decrease in total assets from $2,810.5 million at June 30, 2023, to $2,715.0 million at March 31, 2024, primarily driven by a reduction in cash and cash equivalents and prepaid expenses. Total liabilities increased slightly, while total shareholders' equity decreased from $1,457.3 million to $1,321.0 million over the same period, largely due to treasury stock repurchases Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2024 | June 30, 2023 | | :---------------------------- | :------------- | :------------ | | Cash and cash equivalents | $179,762 | $273,689 | | Total current assets | $387,634 | $478,539 | | Total assets | $2,715,034 | $2,810,541 | | Total current liabilities | $509,110 | $431,203 | | Total liabilities | $1,394,071 | $1,353,205 | | Total shareholders' equity | $1,320,963 | $1,457,336 | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) For the three months ended March 31, 2024, revenue increased by 11.8% year-over-year, but net income decreased by 19.7% due to higher operating costs, business integration expenses, and income tax provision. For the nine months ended March 31, 2024, revenue grew by 8.2%, and net income increased by 22.8% compared to the prior year, despite increased operating expenses Consolidated Statements of Income Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Revenue | $412,658 | $369,082 | $1,174,745 | $1,086,185 | | Total operating cost and expense | $350,933 | $309,653 | $1,026,214 | $957,572 | | Operating income | $61,725 | $59,429 | $148,531 | $128,613 | | Income from continuing operations | $37,441 | $48,563 | $87,113 | $78,202 | | Net income and comprehensive income | $36,821 | $45,869 | $87,358 | $71,114 | | Diluted EPS (Continuing operations) | $0.94 | $1.06 | $2.13 | $1.70 | | Total diluted earnings per share | $0.93 | $1.00 | $2.14 | $1.54 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities from continuing operations significantly increased to $246.8 million for the nine months ended March 31, 2024, up from $149.8 million in the prior year, driven by higher income and favorable working capital changes. Investing activities resulted in a net cash outflow of $51.9 million, a shift from a net inflow in the prior year, primarily due to increased capital expenditures. Financing activities used $291.1 million, largely due to substantial share repurchases and debt repayments Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :-------------------------------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $255,205 | $149,417 | | Net cash (used in) provided by investing activities | $(51,886) | $30,697 | | Net cash used in financing activities | $(291,070) | $(210,874) | | Net decrease in cash, cash equivalents and restricted cash | $(87,751) | $(30,760) | | Cash, cash equivalents and restricted cash at end of period | $187,324 | $317,177 | - Capital expenditures increased significantly to **$52.0 million** in the first nine months of fiscal year 2024, compared to **$19.1 million** in the prior year, primarily for IT investments and Chamberlain's campus development[15](index=15&type=chunk)[250](index=250&type=chunk) - Repurchases of common stock for treasury increased to **$250.5 million** in the first nine months of fiscal year 2024, up from **$44.7 million** in the prior year[15](index=15&type=chunk)[254](index=254&type=chunk) [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) Total shareholders' equity decreased from $1,457.3 million at June 30, 2023, to $1,321.0 million at March 31, 2024. This decline was primarily driven by significant repurchases of common stock for treasury, totaling $252.6 million, partially offset by net income of $87.4 million and stock-based compensation Consolidated Statements of Shareholders' Equity Highlights (in thousands) | Metric | June 30, 2023 | March 31, 2024 | | :----------------------------------- | :------------ | :------------- | | Common Stock, $0.01 par value | $822 | $831 | | Additional Paid-In Capital | $568,761 | $603,671 | | Retained Earnings | $2,403,750 | $2,491,090 | | Treasury Stock, at cost | $(1,513,770) | $(1,772,402) | | Total Shareholders' Equity | $1,457,336 | $1,320,963 | - Repurchases of common stock for treasury amounted to **$252.6 million** for the nine months ended March 31, 2024[18](index=18&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and breakdowns of the figures presented in the consolidated financial statements, covering accounting policies, discontinued operations, revenue recognition, restructuring, income taxes, earnings per share, various asset and liability accounts, debt, share repurchases, stock-based compensation, fair value measurements, commitments, contingencies, and segment information [Note 1. Nature of Operations](index=9&type=section&id=Note%201.%20Nature%20of%20Operations) Adtalem Global Education Inc. is a leading healthcare educator in the U.S., operating Chamberlain University, Walden University, and the medical and veterinary schools (AUC, RUSM, RUSVM). These institutions form the company's reportable segments - Adtalem is the **leading healthcare educator** in the U.S[22](index=22&type=chunk) - Key schools include Chamberlain University, Walden University, American University of the Caribbean School of Medicine (AUC), Ross University School of Medicine (RUSM), and Ross University School of Veterinary Medicine (RUSVM)[22](index=22&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements are prepared in accordance with GAAP for interim reporting, with all necessary adjustments included. The company uses estimates and assumptions that affect reported amounts. Recent accounting standards, ASU No. 2022-02 (Credit Losses), ASU No. 2023-07 (Segment Reporting), and ASU No. 2023-09 (Income Tax Disclosures), have been adopted or are pending, impacting disclosures but not the consolidated financial statements themselves - Unaudited consolidated financial statements are prepared in accordance with **U.S. GAAP** for interim periods[23](index=23&type=chunk) - Business integration expense was **$18.5 million** and **$30.6 million** for the three and nine months ended March 31, 2024, respectively, related to integrating Walden and transformation initiatives[24](index=24&type=chunk) - Adopted **ASU No. 2022-02 (Credit Losses)** on July 1, 2023, impacting disclosures but not financial statements[26](index=26&type=chunk) - **ASU No. 2023-07 (Segment Reporting)** and **ASU No. 2023-09 (Income Tax Disclosures)** are effective for fiscal years beginning after December 15, 2023, and December 15, 2024, respectively, and will impact disclosures[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 3. Discontinued Operations](index=11&type=section&id=Note%203.%20Discontinued%20Operations) Adtalem has divested several businesses, including DeVry University, ACAMS, Becker, OCL, and EduPristine, which are reported as discontinued operations. The company continues to incur litigation costs related to these divestitures and receives earn-out payments from the DeVry University sale - DeVry University, ACAMS, Becker, OCL, and EduPristine are presented as **discontinued operations** due to strategic shifts[31](index=31&type=chunk)[32](index=32&type=chunk) - Adtalem received **$5.5 million** and **$4.1 million** in earn-out payments from the DeVry University sale during Q2 FY2024 and Q2 FY2023, respectively, totaling **$12.5 million** to date[31](index=31&type=chunk) (Loss) Income from Discontinued Operations (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | (Loss) income from discontinued operations before income taxes | $(832) | $(3,993) | $329 | $(6,734) | | Loss on disposal of discontinued operations before income taxes | $— | $(402) | $— | $(3,576) | | Benefit from (provision for) income taxes | $212 | $1,701 | $(84) | $3,222 | | **(Loss) income from discontinued operations** | **$(620)** | **$(2,694)** | **$245** | **$(7,088)** | [Note 4. Revenue](index=12&type=section&id=Note%204.%20Revenue) Revenue is primarily derived from tuition and fees, recognized on a straight-line basis over the academic term. Variable consideration from discounts, scholarships, and refunds is accounted for, with deferred revenue balances increasing significantly from June 30, 2023, to March 31, 2024 - Revenue is recognized when control of goods or services is transferred to students, primarily from **tuition and fees**[36](index=36&type=chunk)[39](index=39&type=chunk) Revenue by Segment (in thousands) | Segment | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Chamberlain | $170,338 | $149,737 | $466,487 | $426,538 | | Walden | $150,607 | $132,874 | $439,023 | $395,715 | | Medical and Veterinary | $91,713 | $86,471 | $269,235 | $263,932 | | **Total Consolidated Revenue** | **$412,658** | **$369,082** | **$1,174,745** | **$1,086,185** | - Deferred revenue (current liabilities) increased from **$153.9 million** at June 30, 2023, to **$202.6 million** at March 31, 2024[10](index=10&type=chunk)[46](index=46&type=chunk) [Note 5. Restructuring Charges](index=16&type=section&id=Note%205.%20Restructuring%20Charges) Restructuring charges for the three and nine months ended March 31, 2024, were $0.5 million and $1.2 million, respectively, significantly lower than the prior year periods. These charges primarily relate to prior real estate consolidations and exited leased spaces - Restructuring charges for Q3 FY2024 were **$0.5 million**, down from **$1.3 million** in Q3 FY2023[12](index=12&type=chunk)[49](index=49&type=chunk) - Restructuring charges for the nine months ended March 31, 2024, were **$1.2 million**, a substantial decrease from **$17.7 million** in the prior year, mainly due to higher real estate consolidations in the prior year[12](index=12&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) Restructuring Charges by Segment (in thousands) | Segment | Three Months Ended March 31, 2024 | Nine Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :------------------------------- | | Walden | $— | $(776) | | Medical and Veterinary | $194 | $379 | | Home Office and Other | $279 | $1,614 | | **Total** | **$473** | **$1,217** | [Note 6. Other Income, Net](index=18&type=section&id=Note%206.%20Other%20Income%2C%20Net) Other income, net, for the three months ended March 31, 2024, was $2.9 million, a decrease from $4.0 million in the prior year. For the nine months ended March 31, 2024, it increased to $8.6 million from $3.3 million, primarily due to the absence of a $5.0 million investment impairment recorded in the prior year Other Income, Net (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Interest and dividend income | $2,165 | $3,152 | $7,367 | $7,423 | | Investment gain (loss) | $706 | $828 | $1,281 | $(4,122) | | **Total Other Income, Net** | **$2,871** | **$3,980** | **$8,648** | **$3,301** | - The increase in other income, net, for the nine-month period was primarily due to the absence of a **$5.0 million investment impairment** recorded in the prior year[55](index=55&type=chunk)[220](index=220&type=chunk) [Note 7. Income Taxes](index=18&type=section&id=Note%207.%20Income%20Taxes) The effective tax rate from continuing operations increased to 22.1% for the three months and 19.5% for the nine months ended March 31, 2024, compared to 0.8% and 7.0% in the prior year periods. This increase is mainly due to a net tax benefit from a valuation allowance release in the prior year and a higher percentage of earnings from domestic operations in the current year Effective Tax Rates from Continuing Operations | Period | March 31, 2024 | March 31, 2023 | | :----------------------------------- | :------------- | :------------- | | Three Months Ended | 22.1% | 0.8% | | Nine Months Ended | 19.5% | 7.0% | - The increase in tax provision is primarily due to a **$6.2 million net tax benefit** from a valuation allowance release in the prior year and an increased percentage of earnings from domestic operations in the current year[56](index=56&type=chunk) - International operations (AUC, RUSM, RUSVM) benefit from local tax incentives, with RUSM exempt until **2039** and RUSVM until **2037**[57](index=57&type=chunk) [Note 8. Earnings per Share](index=19&type=section&id=Note%208.%20Earnings%20per%20Share) Basic and diluted earnings per share calculations are provided, reflecting the impact of dilutive stock awards and, in prior periods, an accelerated share repurchase (ASR) agreement. Weighted-average basic shares outstanding decreased significantly year-over-year due to share repurchases Earnings (Loss) Per Share (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) - Continuing operations | $37,441 | $48,563 | $87,113 | $78,202 | | Net income (loss) - Discontinued operations | $(620) | $(2,694) | $245 | $(7,088) | | **Total basic earnings per share** | **$0.95** | **$1.02** | **$2.18** | **$1.57** | | **Total diluted earnings per share** | **$0.93** | **$1.00** | **$2.14** | **$1.54** | | Weighted-average basic shares outstanding | 38,713 | 45,125 | 40,000 | 45,276 | | Weighted-average diluted shares outstanding | 39,636 | 45,801 | 40,874 | 46,089 | - Weighted-average basic shares outstanding decreased from **45,125 thousand** to **38,713 thousand** for the three months ended March 31, 2024, and from **45,276 thousand** to **40,000 thousand** for the nine months ended March 31, 2024, primarily due to share repurchases[12](index=12&type=chunk)[60](index=60&type=chunk) [Note 9. Accounts and Financing Receivables](index=19&type=section&id=Note%209.%20Accounts%20and%20Financing%20Receivables) Accounts and financing receivables, net, increased from $102.7 million at June 30, 2023, to $140.9 million at March 31, 2024. The company provides credit extension programs to students, with credit quality primarily assessed by delinquency. The allowance for credit losses increased to $49.4 million at March 31, 2024, from $40.7 million at June 30, 2023 Accounts and Financing Receivables, Net (in thousands) | Metric | March 31, 2024 | June 30, 2023 | | :-------------------------------------- | :------------- | :------------ | | Accounts receivables, current | $138,210 | $100,128 | | Financing receivables, current | $2,699 | $2,621 | | **Accounts and financing receivables, current** | **$140,909** | **$102,749** | | Total financing receivables | $29,495 | $29,657 | - The allowance for credit losses increased to **$49.4 million** at March 31, 2024, from **$40.7 million** at June 30, 2023[69](index=69&type=chunk) - Financing receivables are offered to students at Chamberlain, AUC, RUSM, and RUSVM, with interest rates from **3.0% to 12.0%** per annum[64](index=64&type=chunk) [Note 10. Property and Equipment, Net](index=22&type=section&id=Note%2010.%20Property%20and%20Equipment%2C%20Net) Property and equipment, net, increased to $272.8 million at March 31, 2024, from $258.5 million at June 30, 2023. During Q2 FY2024, a building in Naperville, Illinois, with a carrying value of $8.4 million, was reclassified as assets held for sale and adjusted to an estimated fair value of $7.8 million, resulting in a $0.6 million charge Property and Equipment, Net (in thousands) | Metric | March 31, 2024 | June 30, 2023 | | :------------------------------------ | :------------- | :------------ | | Property and equipment, gross | $599,906 | $597,350 | | Accumulated depreciation | $(327,114) | $(338,828) | | **Property and equipment, net** | **$272,792** | **$258,522** | - A building with a carrying value of **$8.4 million** was classified as assets held for sale and adjusted to **$7.8 million**, resulting in a **$0.6 million** charge in Q2 FY2024[71](index=71&type=chunk) [Note 11. Leases](index=22&type=section&id=Note%2011.%20Leases) Adtalem has operating leases for academic sites, housing, and office space, expiring through November 2039. Total lease cost for the nine months ended March 31, 2024, was $26.7 million, with future lease liabilities totaling $192.2 million. The company also has sublease agreements, generating $7.3 million in income for the nine-month period - Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of future lease payments[73](index=73&type=chunk) Components of Lease Cost (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :----------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Operating lease cost | $10,944 | $12,302 | $34,014 | $36,272 | | Sublease income | $(1,928) | $(3,301) | $(7,310) | $(10,388) | | **Total lease cost** | **$9,016** | **$9,001** | **$26,704** | **$25,884** | Maturities of Lease Liabilities (as of March 31, 2024, in thousands) | Fiscal Year | Operating Leases | | :---------------------- | :--------------- | | 2024 (remaining) | $11,271 | | 2025 | $44,524 | | 2026 | $41,027 | | 2027 | $39,533 | | 2028 | $32,472 | | Thereafter | $104,857 | | **Total lease payments** | **$273,684** | | Less: imputed interest | $(72,861) | | **Present value of lease liabilities** | **$192,192** | [Note 12. Goodwill and Intangible Assets](index=26&type=section&id=Note%2012.%20Goodwill%20and%20Intangible%20Assets) Goodwill remained stable at $961.3 million at March 31, 2024. Amortizable intangible assets, primarily student relationships and curriculum, had a net carrying amount of $31.2 million, with amortization expense of $28.3 million for the nine months ended March 31, 2024. Indefinite-lived intangible assets, mainly trade names and Title IV eligibility, totaled $752.9 million and are not amortized but tested for impairment annually. No impairment triggering events were identified as of March 31, 2024 Goodwill Balances by Reporting Unit (in thousands) | Reporting Unit | March 31, 2024 | June 30, 2023 | | :------------- | :------------- | :------------ | | Chamberlain | $4,716 | $4,716 | | Walden | $651,052 | $651,052 | | AUC | $68,321 | $68,321 | | RUSM | $180,089 | $180,089 | | RUSVM | $57,084 | $57,084 | | **Total** | **$961,262** | **$961,262** | Amortizable Intangible Assets (in thousands) | Asset | March 31, 2024 Carrying Amount | June 30, 2023 Carrying Amount | Weighted-Average Amortization Period | | :---------------------- | :----------------------------- | :---------------------------- | :----------------------------------- | | Student relationships | $4,543 | $24,424 | 3 Years | | Curriculum | $26,639 | $35,054 | 5 Years | | **Total** | **$31,182** | **$59,478** | | - Amortization expense for intangible assets was **$28.3 million** for the nine months ended March 31, 2024, a decrease from **$48.9 million** in the prior year[12](index=12&type=chunk)[90](index=90&type=chunk) - No impairment triggering events were identified for goodwill and indefinite-lived intangible assets as of March 31, 2024[95](index=95&type=chunk) [Note 13. Debt](index=29&type=section&id=Note%2013.%20Debt) Long-term debt, net of unamortized discount and issuance costs, decreased to $648.1 million at March 31, 2024, from $695.1 million at June 30, 2023. This includes $405.0 million in Senior Secured Notes due 2028 and $253.3 million in Term Loan B, which saw a $50.0 million prepayment in January 2024. The company also maintains a $400.0 million Revolver, with $242.1 million unused. Adtalem was in compliance with all debt covenants as of March 31, 2024 Long-Term Debt (in thousands) | Metric | March 31, 2024 | June 30, 2023 | | :-------------------------------------- | :------------- | :------------ | | Senior Secured Notes due 2028 | $404,950 | $404,950 | | Term Loan B | $253,333 | $303,333 | | Total principal | $658,283 | $708,283 | | Unamortized debt discount and issuance costs | $(10,177) | $(13,206) | | **Long-term debt** | **$648,106** | **$695,077** | - A **$50.0 million prepayment** was made on the Term Loan B on January 26, 2024, reducing its principal balance to **$253.3 million**[108](index=108&type=chunk) - The company has a **$400.0 million Revolver**, with **$242.1 million** unused as of March 31, 2024[110](index=110&type=chunk) - Adtalem was in compliance with all Credit Agreement debt covenants and Notes covenants as of March 31, 2024[124](index=124&type=chunk) [Note 14. Share Repurchases](index=37&type=section&id=Note%2014.%20Share%20Repurchases) Adtalem completed its thirteenth share repurchase program in January 2024 and authorized a new $300.0 million program through January 2027. During the nine months ended March 31, 2024, the company repurchased 5.3 million shares for $252.6 million - Adtalem completed its **thirteenth share repurchase program** on January 16, 2024[125](index=125&type=chunk) - A **fourteenth share repurchase program** was authorized on January 19, 2024, allowing repurchases of up to **$300.0 million** of common stock through January 16, 2027[125](index=125&type=chunk) Share Repurchases (Nine Months Ended March 31, 2024) | Metric | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :----------------------------------- | :------------------------------- | :------------------------------- | | Total number of share repurchases | 5,280,736 | 1,228,890 | | Total cost of share repurchases | $252,594 | $47,770 | | Average price paid per share | $47.83 | $38.87 | [Note 15. Stock-Based Compensation](index=39&type=section&id=Note%2015.%20Stock-Based%20Compensation) Stock-based compensation expense for the nine months ended March 31, 2024, was $19.4 million, an increase from $10.9 million in the prior year. The company grants RSUs and PSUs, with stock options no longer being granted since fiscal year 2023. Unrecognized compensation expense for unvested awards totals $34.1 million Stock-Based Compensation Expense (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Stock-based compensation | $5,900 | $2,795 | $19,405 | $10,908 | | Income tax benefit | $(1,532) | $(721) | $(6,515) | $(3,024) | | **Stock-based compensation, net of tax** | **$4,368** | **$2,074** | **$12,890** | **$7,884** | - As of March 31, 2024, **$0.5 million** of unrecognized expense for stock options, **$17.3 million** for RSUs, and **$16.3 million** for PSUs is expected to be recognized over weighted-average periods of **1.3, 1.8, and 1.8 years**, respectively[137](index=137&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk) [Note 16. Fair Value Measurements](index=42&type=section&id=Note%2016.%20Fair%20Value%20Measurements) Adtalem classifies fair value measurements into Level 1, 2, or 3 based on input observability. Cash and cash equivalents are Level 1. Investments in a rabbi trust and credit extension programs are Level 1 and Level 2, respectively. Long-term debt, including Senior Secured Notes (Level 1) and Term Loan B (Level 2), is also measured at fair value. No assets or liabilities were measured using Level 3 inputs as of March 31, 2024 - Fair value hierarchy classifies inputs into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1 prices), and **Level 3** (unobservable inputs)[143](index=143&type=chunk)[144](index=144&type=chunk) - Cash, cash equivalents, and restricted cash are classified as **Level 1**[146](index=146&type=chunk) - Investments in the rabbi trust (**$14.0 million**) are **Level 1**, and credit extension programs (**$29.5 million**) are **Level 2**[146](index=146&type=chunk)[147](index=147&type=chunk) - The fair value of Senior Secured Notes was **$388.8 million (Level 1)**, and Term Loan B was **$254.3 million (Level 2)** as of March 31, 2024[149](index=149&type=chunk)[151](index=151&type=chunk) [Note 17. Commitments and Contingencies](index=44&type=section&id=Note%2017.%20Commitments%20and%20Contingencies) Adtalem is involved in various legal proceedings, including a class action lawsuit against Walden University regarding DBA program misrepresentation, which resulted in a $28.5 million settlement accrual. The company also faces numerous borrower defense to repayment applications at its institutions and is subject to ongoing litigation costs from prior divestitures - A class action lawsuit against Walden University was preliminarily settled for **$28.5 million**, accrued as a loss contingency as of March 31, 2024[154](index=154&type=chunk)[155](index=155&type=chunk) - Adtalem expects to receive **$5.5 million** from Laureate Education, Inc. in connection with the Walden settlement indemnification claim[155](index=155&type=chunk)[157](index=157&type=chunk) - ED received approximately **14,565 borrower defense to repayment applications** from students at Chamberlain, RUSM, RUSVM, and Walden between June 2022 and November 2022[160](index=160&type=chunk) [Note 18. Segment Information](index=46&type=section&id=Note%2018.%20Segment%20Information) Adtalem operates through three reportable segments: Chamberlain, Walden, and Medical and Veterinary. Performance is evaluated based on adjusted operating income, which excludes special items like restructuring and business integration expenses. Revenue by geographic area shows the majority from domestic operations - Reportable segments are Chamberlain, Walden, and Medical and Veterinary (AUC, RUSM, RUSVM)[161](index=161&type=chunk) - Performance is evaluated based on **adjusted operating income**, excluding restructuring, business integration, intangible amortization, litigation reserve, loss on assets held for sale, debt modification costs, and gain on sale of assets[161](index=161&type=chunk) Total Consolidated Revenue by Geographic Area (in thousands) | Geographic Area | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Domestic operations | $320,945 | $282,611 | $905,510 | $822,253 | | Barbados, St. Kitts, and St. Maarten | $91,713 | $86,471 | $269,235 | $263,932 | | **Total consolidated revenue** | **$412,658** | **$369,082** | **$1,174,745** | **$1,086,185** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Adtalem's financial performance and condition, discussing key financial highlights for the third quarter of fiscal year 2024, detailed analysis of revenue and expenses by segment, liquidity and capital resources, and the regulatory environment affecting the company. It also includes forward-looking statements and reconciliations of non-GAAP financial measures [Third Quarter Highlights](index=51&type=section&id=Third%20Quarter%20Highlights) Adtalem reported an 11.8% revenue increase to $412.7 million in Q3 FY2024, but net income decreased by 19.7% to $36.8 million due to higher expenses and taxes. Adjusted net income rose 15.1% to $59.4 million, leading to a 32.7% increase in diluted adjusted EPS to $1.50, aided by share repurchases. Student enrollment grew at Chamberlain (7.0-9.0%) and Walden (8.4%), while medical and veterinary schools saw a 4.5% decrease. The company also prepaid $50.0 million on Term Loan B and repurchased 1.8 million shares Third Quarter Financial Highlights (in millions, except EPS) | Metric | Q3 FY2024 | Q3 FY2023 | YoY Change | | :----------------------------------- | :-------- | :-------- | :--------- | | Revenue | $412.6 | $369.1 | +11.8% | | Net income | $36.8 | $45.9 | -19.7% | | Diluted EPS | $0.93 | $1.00 | -7.0% | | Adjusted net income | $59.4 | $51.6 | +15.1% | | Diluted adjusted EPS | $1.50 | $1.13 | +32.7% | - Chamberlain student enrollment increased **7.0% (January 2024)** and **9.0% (March 2024)** YoY[176](index=176&type=chunk) - Walden student enrollment increased **8.4%** YoY as of March 31, 2024[177](index=177&type=chunk) - Medical and veterinary schools' student enrollment decreased **4.5%** YoY for the January 2024 semester[177](index=177&type=chunk) - Adtalem repurchased **1,771,603 shares** at an average cost of **$51.60 per share** during Q3 FY2024[177](index=177&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance for the three and nine months ended March 31, 2024, compared to the prior year, detailing changes in revenue, operating costs, operating income, interest expense, other income, and income taxes, both on a consolidated and segment-specific basis [Revenue](index=53&type=section&id=Revenue) Consolidated revenue increased by 11.8% to $412.7 million in the third quarter and 8.2% to $1,174.7 million for the first nine months of fiscal year 2024, driven by growth across all segments: Chamberlain, Walden, and Medical and Veterinary Revenue Growth by Segment (in thousands) | Segment | Q3 FY2024 Revenue | Q3 FY2023 Revenue | Q3 YoY % Change | 9M FY2024 Revenue | 9M FY2023 Revenue | 9M YoY % Change | | :------------------------- | :---------------- | :---------------- | :-------------- | :---------------- | :---------------- | :-------------- | | Chamberlain | $170,338 | $149,737 | 13.8% | $466,487 | $426,538 | 9.4% | | Walden | $150,607 | $132,874 | 13.3% | $439,023 | $395,715 | 10.9% | | Medical and Veterinary | $91,713 | $86,471 | 6.1% | $269,235 | $263,932 | 2.0% | | **Total Consolidated Revenue** | **$412,658** | **$369,082** | **11.8%** | **$1,174,745** | **$1,086,185** | **8.2%** | [Chamberlain](index=54&type=section&id=Chamberlain) Chamberlain's revenue increased by 13.8% to $170.3 million in Q3 FY2024 and 9.4% to $466.5 million for the first nine months, driven by enrollment growth (7.0% in January, 9.0% in March) and higher tuition rates across graduate, doctoral, and BSN programs Chamberlain Student Enrollment | Session | Jan. 2024 | Mar. 2024 | Jan. 2023 | Mar. 2023 | | :---------- | :-------- | :-------- | :-------- | :-------- | | Total students | 37,196 | 37,985 | 34,760 | 34,847 | | % change YoY | 7.0% | 9.0% | 1.8% | 2.0% | - Revenue growth was driven by increased enrollment and higher tuition rates (approximately **3% to 8% increase** for new students)[182](index=182&type=chunk)[183](index=183&type=chunk) [Walden](index=54&type=section&id=Walden) Walden's revenue increased by 13.3% to $150.6 million in Q3 FY2024 and 10.9% to $439.0 million for the first nine months, fueled by an 8.4% increase in total student enrollment as of March 31, 2024, higher tuition rates (average 2% increase), and increased average credit hours per student Walden Student Enrollment | Period | March 31, 2024 | March 31, 2023 | % change YoY | | :--------------- | :------------- | :------------- | :----------- | | Total students | 42,751 | 39,427 | 8.4% | - Revenue growth was driven by increased enrollment, higher tuition rates (average **2% increase**), and an increase in average credit hours per student[184](index=184&type=chunk)[187](index=187&type=chunk) [Medical and Veterinary](index=56&type=section&id=Medical%20and%20Veterinary) Medical and Veterinary schools' revenue increased by 6.1% to $91.7 million in Q3 FY2024 and 2.0% to $269.2 million for the first nine months, primarily due to tuition rate increases (6.0% to 12.0%) across all three institutions, partially offset by a 4.5% decrease in total student enrollment for the January 2024 semester Medical and Veterinary Student Enrollment | Semester | Jan. 2024 | Jan. 2023 | % change YoY | | :------------- | :-------- | :-------- | :----------- | | Total students | 5,073 | 5,312 | (4.5)% | - Tuition rates increased by **6.0% to 12.0%** across AUC, RUSM, and RUSVM for semesters beginning September 2023[189](index=189&type=chunk)[190](index=190&type=chunk)[192](index=192&type=chunk) [Cost of Educational Services](index=58&type=section&id=Cost%20of%20Educational%20Services) Cost of educational services increased by 5.7% to $175.3 million in Q3 FY2024 and 6.4% to $516.0 million for the first nine months, primarily due to higher labor and other costs supporting increased enrollment and an increase in provision for bad debts at Chamberlain and Walden. As a percentage of revenue, it decreased to 42.5% in Q3 FY2024 and 43.9% for the nine months, reflecting cost efficiencies Cost of Educational Services (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | Q3 YoY % Change | 9M FY2024 | 9M FY2023 | 9M YoY % Change | | :----------------------------------- | :-------- | :-------- | :-------------- | :-------- | :-------- | :-------------- | | Cost of educational services | $175,321 | $165,820 | 5.7% | $516,008 | $484,768 | 6.4% | | As a percentage of revenue | 42.5% | 44.9% | -2.4 pp | 43.9% | 44.6% | -0.7 pp | - Cost increases were driven by higher labor and other costs to support increased enrollment and an increase in provision for bad debts at Chamberlain and Walden[194](index=194&type=chunk) [Student Services and Administrative Expense](index=58&type=section&id=Student%20Services%20and%20Administrative%20Expense) Student services and administrative expense increased by 8.4% to $156.7 million in Q3 FY2024 and 10.6% to $478.4 million for the first nine months, primarily due to higher incentive compensation, marketing, and growth initiative investments. As a percentage of revenue, it decreased to 38.0% in Q3 FY2024 due to marketing efficiencies and lower intangible amortization, but increased to 40.7% for the nine months due to higher incentive compensation and litigation reserves Student Services and Administrative Expense (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | Q3 YoY % Change | 9M FY2024 | 9M FY2023 | 9M YoY % Change | | :------------------------------------------- | :-------- | :-------- | :-------------- | :-------- | :-------- | :-------------- | | Student services and administrative expense | $156,689 | $144,526 | 8.4% | $478,368 | $432,713 | 10.6% | | As a percentage of revenue | 38.0% | 39.2% | -1.2 pp | 40.7% | 39.8% | +0.9 pp | - Cost increases were primarily driven by higher incentive compensation expense, marketing expense, and investments to support growth initiatives[198](index=198&type=chunk) [Restructuring Expense](index=61&type=section&id=Restructuring%20Expense) Restructuring expense significantly decreased to $0.5 million in Q3 FY2024 and $1.2 million for the first nine months, compared to $1.3 million and $17.7 million in the prior year periods, respectively. This reduction is mainly due to lower real estate consolidations and related impairments in the current year Restructuring Expense (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | 9M FY2024 | 9M FY2023 | | :-------------------- | :-------- | :-------- | :-------- | :-------- | | Restructuring expense | $473 | $1,278 | $1,217 | $17,706 | - The decrease was primarily driven by higher real estate consolidations and related impairments in the prior year at Walden, Medical and Veterinary, and Adtalem's home office[202](index=202&type=chunk) [Business Integration Expense](index=62&type=section&id=Business%20Integration%20Expense) Business integration expense increased to $18.5 million in Q3 FY2024 from $11.3 million in the prior year, but decreased to $30.6 million for the first nine months from $35.7 million. These costs are associated with integrating Walden and transformation initiatives, with expectations for a decreasing rate through the remainder of fiscal year 2024 Business Integration Expense (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | 9M FY2024 | 9M FY2023 | | :--------------------------- | :-------- | :-------- | :-------- | :-------- | | Business integration expense | $18,450 | $11,346 | $30,621 | $35,702 | - Costs are associated with integrating Walden into Adtalem and transformation initiatives to accelerate growth and organizational agility[203](index=203&type=chunk) [Gain on Sale of Assets](index=62&type=section&id=Gain%20on%20Sale%20of%20Assets) No gain on sale of assets was recognized in Q3 or the first nine months of fiscal year 2024. In the prior year periods, a $13.3 million gain was recognized from the full repayment of a mortgage loan related to the 2019 sale of the Chicago campus facility - A gain on sale of assets of **$13.3 million** was recognized in the three and nine months ended March 31, 2023, from the full repayment of a mortgage loan related to the 2019 sale of the Chicago campus facility[12](index=12&type=chunk)[178](index=178&type=chunk)[204](index=204&type=chunk) [Operating Income](index=63&type=section&id=Operating%20Income) Consolidated operating income increased by 3.9% to $61.7 million in Q3 FY2024 and 15.5% to $148.5 million for the first nine months, driven by revenue growth and lower restructuring/intangible amortization expenses, partially offset by higher incentive compensation, business integration, marketing, and bad debt expenses. Adjusted operating income increased by 23.0% to $89.8 million in Q3 and 5.1% to $228.7 million for the nine months, primarily due to revenue growth Consolidated Operating Income (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | Q3 YoY % Change | 9M FY2024 | 9M FY2023 | 9M YoY % Change | | :----------------------------------- | :-------- | :-------- | :-------------- | :-------- | :-------- | :-------------- | | Operating income (GAAP) | $61,725 | $59,429 | 3.9% | $148,531 | $128,613 | 15.5% | | Adjusted operating income (non-GAAP) | $89,782 | $72,968 | 23.0% | $228,660 | $217,640 | 5.1% | - The increase in operating income was driven by revenue growth and decreases in restructuring and intangible amortization expense, partially offset by increases in incentive compensation, business integration, marketing, bad debts, and the absence of a prior year gain on asset sale[210](index=210&type=chunk) - The decrease in intangible amortization expense is due to the concentration of amortization at the beginning of the Walden student relationships asset's useful life[211](index=211&type=chunk)[213](index=213&type=chunk) [Chamberlain](index=66&type=section&id=Chamberlain_Operating_Income) Chamberlain's operating income increased by 9.5% to $43.3 million in Q3 FY2024 but decreased by 1.7% to $97.3 million for the first nine months. Adjusted operating income followed similar trends, with the Q3 increase driven by revenue growth and the 9-month decrease due to higher labor, marketing, and bad debt costs Chamberlain Operating Income (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | Q3 YoY % Change | 9M FY2024 | 9M FY2023 | 9M YoY % Change | | :----------------------------------- | :-------- | :-------- | :-------------- | :-------- | :-------- | :-------------- | | Operating income (GAAP) | $43,349 | $39,589 | 9.5% | $97,313 | $99,002 | (1.7)% | | Adjusted operating income (non-GAAP) | $43,349 | $39,589 | 9.5% | $97,313 | $99,820 | (2.5)% | [Walden](index=66&type=section&id=Walden_Operating_Income) Walden's operating income significantly increased by 128.0% to $23.6 million in Q3 FY2024 and 80.7% to $47.1 million for the first nine months. Adjusted operating income also grew substantially, up 29.4% to $31.9 million in Q3 and 19.1% to $93.1 million for the nine months, primarily driven by increased revenue Walden Operating Income (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | Q3 YoY % Change | 9M FY2024 | 9M FY2023 | 9M YoY % Change | | :----------------------------------- | :-------- | :-------- | :-------------- | :-------- | :-------- | :-------------- | | Operating income (GAAP) | $23,585 | $10,343 | 128.0% | $47,121 | $26,071 | 80.7% | | Adjusted operating income (non-GAAP) | $31,871 | $24,628 | 29.4% | $93,141 | $78,181 | 19.1% | [Medical and Veterinary](index=66&type=section&id=Medical_and_Veterinary_Operating_Income) Medical and Veterinary schools' operating income increased by 38.2% to $22.8 million in Q3 FY2024 and 20.3% to $59.1 million for the first nine months. Adjusted operating income also saw strong growth, up 35.9% to $23.0 million in Q3 and 5.3% to $59.5 million for the nine months, primarily due to increased revenue and decreased provision for bad debts Medical and Veterinary Operating Income (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | Q3 YoY % Change | 9M FY2024 | 9M FY2023 | 9M YoY % Change | | :----------------------------------- | :-------- | :-------- | :-------------- | :-------- | :-------- | :-------------- | | Operating income (GAAP) | $22,759 | $16,472 | 38.2% | $59,142 | $49,172 | 20.3% | | Adjusted operating income (non-GAAP) | $22,953 | $16,893 | 35.9% | $23,000 | $16,893 | 5.3% | [Interest Expense](index=66&type=section&id=Interest%20Expense) Interest expense increased to $16.6 million in Q3 FY2024 from $14.5 million in the prior year, and to $48.9 million for the first nine months from $47.8 million. This rise was primarily driven by higher letter of credit fees and a write-off of debt discount and issuance costs on the Term Loan B Interest Expense (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | 9M FY2024 | 9M FY2023 | | :----------------- | :-------- | :-------- | :-------- | :-------- | | Interest expense | $16,560 | $14,457 | $48,910 | $47,806 | - The increase was primarily driven by higher letter of credit fees and a write-off of debt discount and issuance costs on the Term Loan B upon repayment of a portion of the debt[217](index=217&type=chunk) [Other Income, Net](index=66&type=section&id=Other%20Income%2C%20Net) Other income, net, was $2.9 million in Q3 FY2024 and $8.6 million for the first nine months. The nine-month increase from $3.3 million in the prior year was primarily due to the absence of a $5.0 million investment impairment recorded in the prior year Other Income, Net (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | 9M FY2024 | 9M FY2023 | | :---------------- | :-------- | :-------- | :-------- | :-------- | | Other income, net | $2,871 | $3,980 | $8,648 | $3,301 | - The increase in other income, net, for the nine-month period was primarily driven by the year-ago period incurring a **$5.0 million investment impairment** of an equity investment[220](index=220&type=chunk) [Provision for Income Taxes](index=68&type=section&id=Provision%20for%20Income%20Taxes) The effective tax rate from continuing operations increased to 22.1% in Q3 FY2024 and 19.5% for the first nine months, compared to 0.8% and 7.0% in the prior year periods. This increase is mainly due to a net tax benefit from a valuation allowance release in the prior year and a higher percentage of earnings from domestic operations in the current year Effective Tax Rates from Continuing Operations | Period | March 31, 2024 | March 31, 2023 | | :----------------------------------- | :------------- | :------------- | | Three Months Ended | 22.1% | 0.8% | | Nine Months Ended | 19.5% | 7.0% | - The income tax provision increased due to a prior-year net tax benefit of **$6.2 million** from a valuation allowance release and an increase in the percentage of earnings from domestic operations[222](index=222&type=chunk) [Discontinued Operations](index=68&type=section&id=Discontinued%20Operations) Loss from discontinued operations was $0.6 million in Q3 FY2024, primarily due to ongoing litigation costs. For the first nine months, income from discontinued operations was $0.2 million, driven by DeVry University earn-outs, partially offset by litigation costs. This contrasts with a $7.1 million loss in the prior nine-month period, which included significant losses from working capital adjustments on asset sales (Loss) Income from Discontinued Operations (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | 9M FY2024 | 9M FY2023 | | :-------------------------------------- | :-------- | :-------- | :-------- | :-------- | | (Loss) income from discontinued operations | $(620) | $(2,694) | $245 | $(7,088) | - Q3 FY2024 loss was driven by ongoing litigation costs and settlements related to the DeVry University divestiture[224](index=224&type=chunk) - 9M FY2024 income was driven by the DeVry University earn-out, partially offset by litigation costs[225](index=225&type=chunk) [Regulatory Environment](index=70&type=section&id=Regulatory%20Environment) Adtalem is highly dependent on federal financial aid and subject to extensive regulations. Its fiscal year 2022 composite score declined to 0.2, leading to provisional certifications for its institutions and a $157.9 million letter of credit requirement. The company also faces new Gainful Employment regulations effective July 1, 2024, and the amended 90/10 Rule, which now includes all federal education assistance funds - Adtalem's fiscal year 2022 composite score declined to **0.2**, below the **1.5 minimum**, resulting in provisional certifications for its institutions and a **$157.9 million letter of credit**[232](index=232&type=chunk) - ED recently allowed reductions in letters of credit totaling **$90.8 million**, with a further reduction of **$14.6 million** expected, bringing total outstanding letters of credit to **$227.3 million**[113](index=113&type=chunk)[237](index=237&type=chunk) - A new **Gainful Employment regulation**, effective July 1, 2024, requires covered programs to meet debt-to-earnings and earnings premium tests to maintain Title IV eligibility[239](index=239&type=chunk) 90/10 Rule Compliance (Percentage of revenue from federal financial assistance programs) | Institution | Fiscal Year 2023 | Fiscal Year 2022 | | :---------------------------------------- | :--------------- | :--------------- | | Chamberlain University | 65% | 65% | | Walden University | 78% | 73% | | American University of the Caribbean School of Medicine | 81% | 81% | | Ross University School of Medicine | 87% | 85% | | Ross University School of Veterinary Medicine | 79% | 81% | | **Consolidated** | **75%** | **72%** | - The amended **90/10 rule**, effective January 1, 2023, now includes U.S. Department of Veterans Affairs and military tuition assistance benefits in the federal revenue calculation[241](index=241&type=chunk)[243](index=243&type=chunk) [Liquidity and Capital Resources](index=74&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Adtalem's sources of liquidity, cash flow patterns, and significant cash requirements, including long-term debt, letters of credit, surety bonds, and operating lease obligations [Cash Flow Summary](index=74&type=section&id=Cash%20Flow%20Summary) Summary of cash flows from operating, investing, and financing activities [Operating Activities](index=74&type=section&id=Operating%20Activities) Net cash provided by operating activities from continuing operations increased significantly to $246.8 million for the nine months ended March 31, 2024, compared to $149.8 million in the prior year. This increase was driven by higher income from continuing operations and favorable changes in working capital, partially offset by lower non-cash items Net Cash Provided by Operating Activities - Continuing Operations (in thousands) | Metric | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :-------------------------------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities-continuing operations | $246,809 | $149,821 | - The increase was driven by higher income from continuing operations and a **$102.3 million** increase in cash generated from changes in assets and liabilities (working capital)[248](index=248&type=chunk) [Investing Activities](index=76&type=section&id=Investing%20Activities) Investing activities resulted in a net cash outflow of $51.9 million for the nine months ended March 31, 2024, a significant change from a $30.7 million inflow in the prior year. This was primarily due to increased capital expenditures of $52.0 million, mainly for IT and Chamberlain's campus development, and the absence of $46.8 million in mortgage loan proceeds received in the prior year Net Cash (Used In) Provided By Investing Activities (in thousands) | Metric | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :-------------------------------------------------------- | :------------------------------- | :------------------------------- | | Net cash (used in) provided by investing activities | $(51,886) | $30,697 | - Capital expenditures increased to **$52.0 million** in 9M FY2024 from **$19.1 million** in 9M FY2023, primarily for IT investments and Chamberlain's campus development[250](index=250&type=chunk) - The prior year included **$46.8 million** in proceeds from a mortgage loan repayment related to the sale of the Chicago campus facility[251](index=251&type=chunk) [Financing Activities](index=76&type=section&id=Financing%20Activities) Net cash used in financing activities increased to $291.1 million for the nine months ended March 31, 2024, from $210.9 million in the prior year. This was primarily driven by significantly higher repurchases of common stock ($250.5 million vs. $44.7 million) and debt repayments Net Cash Used in Financing Activities (in thousands) | Metric | Nine Months Ended March 31, 2024 | Nine Months Ended March 31, 2023 | | :----------------------------------- | :------------------------------- | :------------------------------- | | Repurchases of common stock for treasury | $(250,463) | $(44,710) | | Net repayments of long-term debt | $(50,000) | $(150,861) | | **Net cash used in financing activities** | **$(291,070)** | **$(210,874)** | - The increase in cash used was primarily due to higher common stock repurchases and debt repayments[254](index=254&type=chunk) - Adtalem completed its thirteenth share repurchase program and authorized a new **$300.0 million** program, with **$220.2 million** remaining as of March 31, 2024[254](index=254&type=chunk) [Material Cash Requirements](index=78&type=section&id=Material%20Cash%20Requirements) Adtalem's material cash requirements include $658.3 million in long-term debt principal (Notes and Term Loan B), $241.9 million in outstanding letters of credit to the ED (expected to reduce to $227.3 million), $42.5 million in state surety bonds, and operating lease obligations with a present value of $192.2 million. The company maintains a $400.0 million revolving credit facility with $242.1 million available for liquidity - Long-term debt principal balances are **$405.0 million** for Notes and **$253.3 million** for Term Loan B[260](index=260&type=chunk) - **$241.9 million** of letters of credit were outstanding in favor of ED as of March 31, 2024, expected to reduce to **$227.3 million**[261](index=261&type=chunk) - **$42.5 million** of surety bonds have been posted with regulatory authorities for state licensure[262](index=262&type=chunk) - Operating lease obligations have a present value of **$192.2 million** as of March 31, 2024[78](index=78&type=chunk)[262](index=262&type=chunk) - A **$400.0 million revolving credit facility** has **$242.1 million** available as of March 31, 2024[259](index=259&type=chunk)[260](index=260&type=chunk) [Critical Accounting Estimates](index=78&type=section&id=Critical%20Accounting%20Estimates) No material changes in critical accounting estimates were reported compared to the fiscal year 2023 Form 10-K - No material changes in critical accounting estimates from fiscal year 2023 Form 10-K[263](index=263&type=chunk) [Recent Accounting Pronouncements](index=78&type=section&id=Recent%20Accounting%20Pronouncements) For a discussion of recent accounting pronouncements, refer to Note 2 "Summary of Significant Accounting Policies" to the Consolidated Financial Statements - Refer to **Note 2 \"Summary of Significant Accounting Policies\"** for recent accounting pronouncements[264](index=264&type=chunk) [Forward-Looking Statements](index=80&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding Adtalem's future growth, which are subject to risks and uncertainties detailed in the company's fiscal year 2023 Form 10-K and this report. Adtalem assumes no obligation to update these statements - Forward-looking statements provide current expectations of future events and are subject to risks and uncertainties[265](index=265&type=chunk) - Adtalem assumes no obligation to publicly update or revise its forward-looking statements[265](index=265&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=80&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) Adtalem uses non-GAAP financial measures, including adjusted net income, adjusted earnings per share, adjusted operating income, and adjusted EBITDA, to provide supplemental information on underlying business trends and performance. These measures exclude special items such as restructuring expense, business integration expense, intangible amortization, and other non-recurring items, and are reconciled to their most directly comparable GAAP measures - Non-GAAP measures include **Adjusted net income**, **Adjusted earnings per share**, **Adjusted operating income**, and **Adjusted EBITDA**[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) - Special items excluded from non-GAAP measures include restructuring expense, business integration expense, intangible amortization expense, gain on sale of assets, debt-related write-offs/gains, litigation reserve, investment impairment, loss on assets held for sale, debt modification costs, net tax benefit related to

Exhibit 99.1 News Release Investor Contact Jay Spitzer Investor.Relations@Adtalem.com +1 312-906-6600 GLOBAL EDUCATION Media Contact Britt Mitchell AdtalemMedia@Adtalem.com +1 872-270-0301 Adtalem Global Education Fiscal Third Quarter 2024 Results; Guidance Raised Revenue up 11.8% YoY Total enrollment up 7.8% YoY Diluted earnings per share $0.93; Adjusted EPS $1.50, growth of 32.7% YoY Third Quarter Highlights ● Revenue $412.7 million, up 11.8% year-over-year ● Total student enrollment 85,809, up 7.8% year- ...

Core Viewpoint - Value investing focuses on selecting fundamentally sound stocks that have been undervalued due to external factors, with the potential for recovery as investors recognize their inherent value [1] Valuation Metrics - The Price to Cash Flow (P/CF) ratio is highlighted as a key metric for assessing a company's financial health, with lower values indicating better performance [2] - Cash flow is considered more reliable than earnings, as it reflects the actual money generated by a company and how effectively management utilizes it [2] Cash Flow Implications - Positive cash flow indicates an increase in liquid assets, allowing companies to settle debts, reinvest, and pay shareholders, while negative cash flow reduces liquidity and flexibility [3] Investment Criteria - A comprehensive investment strategy should include multiple metrics such as price-to-book, price-to-earnings, and price-to-sales ratios, along with a favorable Zacks Rank and Value Score to avoid value traps [3][4] Bargain Hunting Strategy - Parameters for selecting true value stocks include: - P/CF less than or equal to industry median - Stock price greater than or equal to $5 - Average 20-day volume greater than 100,000 - P/E, P/B, and P/S ratios less than or equal to industry medians [4] Stock Recommendations - PagSeguro Digital (PAGS) has a Zacks Rank 1, with a trailing four-quarter earnings surprise of 10.1%, and projected sales and EPS growth of 1.8% and 19.3% respectively, with shares up 39.2% in the past year [6] - Adtalem Global Education (ATGE) also holds a Zacks Rank 1, with a trailing earnings surprise of 16.9% and projected sales and EPS growth of 6.4% and 10.2% respectively, shares have increased by 17.4% [7] - KB Home (KBH) carries a Zacks Rank 1, with a trailing earnings surprise of 26.1% and projected sales and EPS growth of 5.6% and 13.9% respectively, shares have gained 61% [7] - General Motors (GM) has a Zacks Rank 2, with a trailing earnings surprise of 20% and projected sales and EPS growth of 1.8% and 18.2% respectively, shares have risen 22.6% [8]

When considering valuation metrics, the price-to-earnings (P/E) ratio has always been the obvious choice, as calculations based on earnings are easy and come in handy. However, in the case of companies that are incurring losses or are in an early cycle of development, generating meager or no profits, price-to-sales (P/S) is a good valuation metric. It helps investors identify cheap stocks.Other than P/E and P/S, the price-to-book ratio (P/B ratio) is also an easy-to-use tool for zeroing in on low-priced sto ...

Investors looking for stocks in the Schools sector might want to consider either Adtalem Global Education (ATGE) or Strategic Education (STRA) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes co ...

The Zacks Schools industry has been gaining traction these days as increasing demand for healthcare professionals and the launch of new technologies are benefiting the country. Along with this, the rising popularity of e-books and online learning is encouraging.However, the industry players have been facing challenges like higher advertising and marketing expenses, and costs pertaining to online education. Also, the advancement of generative artificial intelligence (AI) systems is a significant threat.Some ...

Core Insights - Adtalem Global Education Inc. is experiencing strong enrollment growth and implementing cost-saving initiatives, which are positively impacting its financial performance [1][2][3] Enrollment Growth - In Q2 fiscal 2024, Adtalem's revenues rose by 8.4% year over year to $393.2 million, driven by increased demand at Chamberlain University and Walden University [2] - Total student enrollment at Chamberlain University grew by 6.6% year over year to 35,592 students, supported by growth in nursing programs [2] - Walden University saw a 7.9% year-over-year increase in enrollment to 40,971 students, fueled by growth in both healthcare and non-healthcare programs [2] Cost Control Initiatives - To mitigate rising costs, Adtalem has implemented cost-saving measures such as workforce reduction, centralized operations, and managing discretionary spending [3] - The company reported an adjusted EPS of $1.23 for Q2 fiscal 2024, reflecting a 51.4% increase year over year, attributed to lower restructuring costs and revenue growth [3] Strategic Partnerships - Adtalem is focusing on strategic partnerships with corporations, hospitals, and government agencies to develop educational programs that meet the needs of employees and employers [4][5] - The company is advancing partnerships with local health systems in major markets through its Clinical Return Home program [5] Long-term Growth Prospects - Adtalem has a long-term earnings growth rate of 15% and aims for revenue growth of 10.2% and sales growth of 6.4% year over year for fiscal 2024 [1][6] - For fiscal 2024, the company expects revenues between $1,520 million and $1,560 million, and adjusted earnings per share in the range of $4.55 to $4.75 [6] - Revenue growth for fiscal 2025 is anticipated to be between 4-6%, while adjusted EPS growth is projected at 10-15% [6]

Group 1 - The Emergency Nurses Association (ENA) and Adtalem Global Education have partnered to offer a free course for nursing students, focusing on emergency nursing as part of the "Practice Ready. Specialty Focused." initiative [1][2] - The 16-week Introduction to Emergency Nursing course includes an eight-week clinical practicum in an emergency department, providing students with real-world experience [2][3] - The course is available online and at six Chamberlain campuses across Illinois, Louisiana, Georgia, and Virginia, and includes a one-year ENA membership [2][3] Group 2 - ENA President Chris Dellinger emphasized the importance of the course in preparing nursing students for the unique demands of emergency nursing [3] - Historically, new nursing graduates are not hired in emergency departments due to a lack of specialized training, but this course aims to bridge that gap [3] - Chamberlain University President Karen Cox highlighted the innovative partnership with ENA to train the next generation of emergency nurses and address the nursing shortage [3] Group 3 - The Emergency Nurses Association, founded in 1970, is dedicated to advancing emergency nursing through advocacy, education, and research, with nearly 50,000 members globally [4] - Chamberlain University is the largest nursing school in the U.S., offering a variety of nursing and health profession programs, and is accredited by the Higher Learning Commission [5] - Adtalem Global Education is recognized as the top provider of healthcare education in 2022, focusing on preparing a diverse workforce for the healthcare industry [6]

CHICAGO--(BUSINESS WIRE)--Adtalem Global Education Inc. (NYSE: ATGE) celebrated the 70th commencement of Walden University in January, honoring the accomplishments of the over 5,500 graduates since last year’s ceremony. The commencement brought together nearly 1,200 graduates from over 20 countries and almost 50 states to San Antonio, Texas. Walden University, which offers more than 100 degree and certificate programs online, ranks No. 1 in the U.S. in granting master’s degrees in nursing, is among the t ...

Core Viewpoint - Value investing focuses on selecting fundamentally sound stocks that have been undervalued due to external factors, with the potential for recovery as investors recognize their inherent value [1] Valuation Metrics - The Price to Cash Flow (P/CF) ratio is highlighted as a key metric for assessing a company's financial health, with lower values indicating better performance [2] - Cash flow is considered more reliable than earnings, as it reflects the actual money generated by a company and how effectively management utilizes it [2] Cash Flow Implications - Positive cash flow indicates an increase in liquid assets, allowing companies to manage debt, reinvest, and pay shareholders, while negative cash flow reduces liquidity and flexibility [3] Investment Criteria - A comprehensive approach to identifying undervalued stocks should include multiple metrics: P/CF, price-to-book (P/B), price-to-earnings (P/E), and price-to-sales (P/S) ratios, along with a favorable Zacks Rank and Value Score [3][4] Bargain Hunting Strategy - Parameters for selecting true value stocks include: - P/CF less than or equal to industry median - Stock price greater than or equal to $5 - Average 20-day volume greater than 100,000 - P/E and P/B ratios less than or equal to industry median - P/S ratio less than or equal to industry median [4] PEG Ratio - A PEG ratio of less than 1 indicates that a stock is undervalued relative to its earnings growth prospects, providing a more comprehensive valuation than the P/E ratio [5] Zacks Rank and Value Score - Stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) are expected to outperform the market, especially when combined with a Value Score of A or B [5][6] Stock Examples - General Motors (GM) has a Zacks Rank 1, with a trailing four-quarter earnings surprise of 20% and projected sales and EPS growth of 1.8% and 17.2% respectively [6][7] - Adtalem Global Education (ATGE) also holds a Zacks Rank 1, with a trailing earnings surprise of 16.9% and projected sales and EPS growth of 6.4% and 10.2% respectively [7] - Unum Group (UNM) has a Zacks Rank 2, with a trailing earnings surprise of 5.2% and projected sales and EPS growth of 4.2% and 6.9% respectively [7][8] - KB Home (KBH) carries a Zacks Rank 2, with a trailing earnings surprise of 32.4% and projected sales and EPS growth of 4.4% and 8% respectively [8]