Improving total enrollment trends

Strategic transformation momentum

Narrows guidance for fiscal year 2023

Third quarter highlights

• Revenue $369.1 million, up 1.3% year-over-year
• Total student enrollment 79,586, down 3.1% year-over-year, a quarterly sequential improvement of 100 basis points
• Chamberlain University strong demand in pre-licensure BSN and post-licensure MSN programs
• Diluted earnings per share $1.00 from $7.04 in the prior year; adjusted earnings per share $1.13, up 34.5% versus prior year

Fiscal year 2023 guidance

• Revenue $1,400 million to $1,450 million
• Adjusted earnings per share $4.05 to $4.20

Repurchased $48 million of shares in the third quarter against $300 million Board authorized share repurchase program

Adtalem Global Education Inc. (NYSE: ATGE), a national leader in post-secondary education and a leading provider of professional talent to the healthcare industry, today reported academic, operating and financial results for its third quarter fiscal 2023 ended March 31, 2023.

“Our third quarter results showcase our unwavering commitment to provide access to high-quality, post-secondary and graduate level programs to nearly 80,000 diverse students and working adults. We continue to make steady progress in strengthening our operational excellence, supporting our portfolio of programs and solutions in ways that benefit all our stakeholders, especially our students. One testament to these benefits are the first time residency attainment rates for American University of the Caribbean School of Medicine and Ross University School of Medicine students attaining 2023/24 residency positions which, at 97%, are among the highest-ever for these institutions,” said Steve Beard, president and CEO of Adtalem Global Education.

Beard continued, “With market leading scale and a commitment to broad access and quality outcomes, we are addressing critical talent shortages in healthcare for the benefit of communities nationwide. Our strategic vision, disciplined execution, results, and improving industry outlook positions Adtalem to drive long-term sustainable growth.”

Financial Highlights

Selected financial data for the three months ended March 31, 2023:

• Revenue of $369.1 million increased 1.3% compared with the prior year.
• Operating income was $59.4 million, compared with $32.9 million in the prior year; adjusted operating income was $73.0 million, a decrease of 4.3% compared with $76.2 million in the prior year. Operating margin was 16.1% compared with 9.0% in the prior year, and adjusted operating margin was 19.8% compared with 20.9% in the prior year.
• Net income was $45.9 million, compared with $347.7 million in the prior year; adjusted net income was $51.6 million, an increase of 24.7% compared with $41.4 million in the prior year.
• Diluted earnings per share decreased to $1.00 from $7.04 in the prior year; adjusted earnings per share increased to $1.13, up 34.5% compared with $0.84 in the prior year.
• Adjusted EBITDA was $85.9 million, a decrease of 6.8% compared with $92.2 million in the prior year; adjusted EBITDA margin was 23.3% compared with 25.3% in the prior year.

Selected financial data for the nine months ended March 31, 2023:

• Revenue of $1,086.2 million increased 6.4% compared with the prior year.
• Operating income was $128.6 million, compared with $30.8 million in the prior year; adjusted operating income was $217.6 million, an increase of 22.2% compared with $178.0 million in the prior year. Operating margin improved to 11.8% from 3.0% and adjusted operating margin increased to 20.0% from 17.4% in the prior year.
• Net income was $71.1 million, compared with $304.2 million in the prior year; adjusted net income was $146.9 million, an increase of 57.3% compared with $93.4 million in the prior year.
• Diluted earnings per share decreased to $1.54 from $6.15 in the prior year; adjusted earnings per share increased to $3.19, up 70.6% compared with $1.87 in the prior year.
• Adjusted EBITDA was $260.2 million, an increase of 16.2% compared with $223.9 million in the prior year; adjusted EBITDA margin was 24.0% compared with 21.9% in the prior year.

Business Highlights

• Chamberlain University’s pre-licensure Bachelor of Science in Nursing (BSN) is accredited by the Higher Learning Commission and Commission on Collegiate Nursing Education. The online option now has over 500 enrollees spread across 22 states in just 2.5 years since launch.
• First-time residency attainment rates for American University of the Caribbean School of Medicine and Ross University School of Medicine are at 97% for students attaining 2023/24 residency positions, among the highest-ever rates for the institutions, with 66% of those residents going into the all-important primary care specialty.
• More than 875 students and graduates from Ross University School of Medicine and American University of the Caribbean School of Medicine will enter U.S. residency programs in 2023, representing 29 specialties deployed across 45 states. 26% of the students and graduates entering residency are from underrepresented minorities.
• Walden University’s Master of Healthcare Administration program achieved Candidate Status from the Commission on Accreditation of Healthcare Management Education (CAHME).
• Chamberlain University and Ochsner Health, the largest healthcare system and private employer in the state of Louisiana, partnered to launch the new Heart of Healthcare Program which awards up to three years of partial tuition coverage to eligible new students enrolled in the three-year Bachelor of Science in Nursing (BSN) degree program at Chamberlain University College of Nursing at Ochsner Health campus in New Orleans.

Segment Highlights

Chamberlain

• Revenue in the third quarter increased 5.0% to $149.7 million from $142.6 million in the prior year.
• Segment operating income increased 7.1% to $39.6 million from $37.0 million in the prior year. Adjusted segment operating income increased 1.7% to $39.6 million from $38.9 million in the prior year.
• Adjusted EBITDA decreased 1.3% to $44.9 million compared with $45.5 million in the prior year.
• Total student enrollment increased 2.0% compared with the prior year, driven by growth in pre-licensure and post-licensure nursing programs as well as higher persistence across the segment.

Walden

• Revenue in the third quarter decreased 4.5% to $132.9 million from $139.1 million in the prior year.
• Segment operating income increased to $10.3 million compared with segment operating loss of $3.2 million in the prior year. Adjusted segment operating income decreased 4.7% to $24.6 million compared with $25.8 million in the prior year.
• Adjusted EBITDA decreased 4.9% to $27.8 million compared with $29.3 million in the prior year.
• Total student enrollment decreased 7.9% compared with the prior year, primarily attributable to declines in non-healthcare programs and to a lesser extent to healthcare programs partially offset by higher persistence across the segment. Elimination of off-cycle start dates adversely impacted year-over-year total enrollment growth by 2.2%.

Medical and Veterinary

• Revenue in the third quarter increased 4.6% to $86.5 million from $82.7 million in the prior year.
• Segment operating income increased by 21.4% to $16.5 million from $13.6 million in the prior year. Adjusted segment operating income decreased 6.9% to $16.9 million compared with $18.1 million in the prior year.
• Adjusted EBITDA decreased 8.4% to $20.7 million compared with $22.6 million in the prior year.
• Total student enrollment increased 1.6% compared with the prior year, driven by growth in both medical and veterinary programs.

Fiscal Year 2023 Outlook

Adtalem narrowed its guidance for fiscal year 2023 revenue to a range of $1,400 million to $1,450 million from a range of $1,380 million to $1,450 million, and adjusted earnings per share to a range of $4.05 to $4.20 from a range of $3.95 to $4.20.

Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its fiscal 2023 third quarter results today at 4:30 p.m. CDT (5:30 p.m. EDT).

The call can be accessed by dialing +1 877-407-6184 (U.S. participants) or +1 201-389-0877 (international participants) stating “Adtalem earnings call” or use conference ID: 13737030. The call will be simulcast through the Adtalem investor relations website at: https://investors.adtalem.com.

Adtalem will archive a replay of the call for 30 days. To access the replay, dial +1 877-660-6853 (U.S.) or +1 201-612-7415 (international), conference ID: 13737030, or visit the Adtalem investor relations website at: https://investors.adtalem.com.

Investor Day

Adtalem will host an Investor Day on Tuesday, June 20, 2023, at 9:00 a.m. CDT at Adtalem’s Chamberlain University Chicago campus. Advanced registration will be required to attend the event in-person. To register, please visit Adtalem’s Investor Day website.

During the investor event, Adtalem’s executive leadership team will discuss the Company’s strategic priorities, growth strategy, and financial outlook. Investors and analysts will have the opportunity to participate in a Q&A session. In-person participants are invited to join the leadership team to tour the campus.

About Adtalem Global Education

Adtalem Global Education (NYSE: ATGE) is a national leader in post-secondary education and leading provider of professional talent to the healthcare industry. With a dedicated focus on driving strong outcomes that increase workforce preparedness, Adtalem empowers a diverse learner population to achieve their goals and make inspiring contributions to their communities. Adtalem is the parent organization of American University of the Caribbean School of Medicine, Chamberlain University, Ross University School of Medicine, Ross University School of Veterinary Medicine and Walden University. Adtalem’s family of institutions has more than 300,000 alumni and 10,000 employees. Adtalem was named one of America’s Most Responsible Companies in 2021 and 2023 by Newsweek and Statista, and one of America’s Best Employers for Diversity in 2021 and 2022 by Forbes and Statista. Visit Adtalem.com for more information and follow on Twitter and LinkedIn.

Forward-Looking Statements

Certain statements contained in this release are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, which includes statements regarding Adtalem’s future growth, 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 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.

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

Adjusted earnings per share (most comparable GAAP measure: earnings per share) – Measure of Adtalem’s diluted earnings per share adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, intangible amortization expense, gain on sale of assets, pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, investment impairment, net tax benefit related to a valuation allowance release, and net loss (income) from discontinued operations.

Adjusted operating income (most comparable GAAP measure: operating income) – Measure of Adtalem’s operating income adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, intangible amortization expense, and gain on sale of assets. 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) – Measure of Adtalem’s net income adjusted for net loss (income) from discontinued operations, interest expense, other (income) expense, net, provision for (benefit from) income taxes, depreciation and amortization, stock-based compensation, deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, and gain on sale of assets. This measure is applied on a consolidated and segment basis, depending on the context of the discussion. Income taxes, interest expense, and other (income) expense, net 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. We do not include normal, recurring, cash operating expenses in our restructuring expense.
• Business acquisition and integration expense include expenses related to the Walden acquisition and certain costs related to growth transformation initiatives. We do not include normal, recurring, cash operating expenses in our business acquisition and integration expense.
• Intangible amortization expense on acquired intangible assets.
• Gain on sale of Adtalem’s Chicago, Illinois, campus facility.
• Pre-acquisition interest expense related to financing arrangements in connection with the Walden acquisition, write-off of debt discount and issuance costs and gain on extinguishment of debt related to prepayments of debt, and impairment of an equity investment.
• Net tax benefit related to a valuation allowance release.
• Net loss (income) from discontinued operations includes the operations of ACAMS, Becker, OCL, including the after-tax gain on the sale of these businesses, and EduPristine operations, in addition to costs related to DeVry University.