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Section 1: 8-K (ADTALEM GLOBAL EDUCATION INC. 8-K)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
______________

FORM 8-K
______________


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

Date of Report
(Date of earliest event reported)

May 3, 2018
______________

ADTALEM GLOBAL EDUCATION INC.
(Exact name of registrant as specified in its charter)
______________

Delaware

1-13988

36-3150143

(State of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

500 West Monroe

Chicago, Illinois

60661

(Address of principal executive offices)

(Zip Code)

(630) 515-7700
(Registrant’s telephone number, including area code)

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

______________

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

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

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

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CPR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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 May 3, 2018, Adtalem Global Education Inc. (“Adtalem”) issued a press release announcing its fiscal 2018 third quarter operating and enrollment results.  The press release is attached hereto as Exhibit 99.1 to this Form 8-K.

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 (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 or the Exchange Act.

Forward Looking Statements

Certain statements contained in this Form 8-K and related press release, including those that affect Adtalem’s expectations or plans, may constitute forward-looking statements subject to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as Adtalem Global Education Inc. or its management “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “foresees,” “intends,” “plans” or other words or phrases of similar import.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause Adtalem’s actual results to differ materially from those projected or implied by these forward-looking statements.  Additional information regarding factors that could cause results to differ can be found in Adtalem’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017, and its most recent Form 10-Q for the quarter ending March 31, 2018.

These forward-looking statements are based on information as of May 3, 2018, 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.

Item 9.01 Financial Statements and Exhibits
 
99.1 Press Release dated May 3, 2018


SIGNATURES

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


ADTALEM GLOBAL EDUCATION INC.

(Registrant)
 
Date:

May 3, 2018

By:

/s/ Kathleen A. Carroll

Kathleen A. Carroll

Vice President, Controller



EXHIBIT INDEX



Exhibit Number

 

Description

99.1

Press Release dated May 3, 2018

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

Adtalem Global Education Announces Third Quarter Fiscal 2018 Results

CHICAGO--(BUSINESS WIRE)--May 3, 2018--Adtalem Global Education (NYSE: ATGE), a leading global education provider, today reported academic, operating and financial results for its fiscal 2018 third quarter ended March 31, 2018, including enrollment results at Adtalem Education Brazil, Carrington College, Chamberlain University, and DeVry University/Keller Graduate School of Management.

“Our ongoing portfolio transformation positions the organization for sustainable long-term growth in our medical and healthcare, professional education and technology and business verticals,” said Lisa Wardell, president and CEO of Adtalem Global Education. “Driven by our student-centric culture, we are focused on delivering superior outcomes and achieving academic excellence across our portfolio of institutions. The underlying economics of our organization continue to improve and our financial position remains strong, supporting our ability to invest in growth initiatives and consistently return capital to our fellow owners.”

Financial and Operating Highlights

Selected financial data for the three months ended March 31, 2018:


During the second quarter of fiscal 2018, Adtalem signed an agreement to transfer ownership of DeVry University to Cogswell Education LLC. The agreement is subject to certain terms and conditions to be met during the transition process, including regulatory and accreditor approval, and the transaction is anticipated to be completed in early fiscal year 2019. As a result of this transaction, DeVry University has been classified as a discontinued operation. Adtalem recorded an after-tax loss from discontinued operations of $5.2 million in the third quarter.

Segment Highlights

Medical and Healthcare Segment

Third quarter segment revenue of $220.1 million increased 5.7 percent compared to the prior year. Chamberlain revenue in the quarter increased 2.9 percent from the prior year to $128.5 million, with increases in new student enrollment of 4.3 percent and total student enrollment of 4.5 percent in the March 2018 session compared to the same term last year. Revenue in the quarter for the medical and veterinary schools increased 10.0 percent from the prior year to $91.6 million, with increases in new student enrollment of 11.5 percent and total student enrollment of 1.3 percent in the January 2018 semester compared to the same term last year. The medical schools, which include American University of the Caribbean School of Medicine (AUC) and Ross University School of Medicine (RUSM), experienced a shift in revenue from the first half of the fiscal year to the third quarter caused by the delayed September 2017 semester start due to disruption caused by Hurricanes Irma and Maria. Third quarter operating income for the segment was $60.3 million, representing an increase of 20.2 percent from the prior year.


Professional Education

Third quarter segment revenue increased 5.7 percent to $31.5 million compared to the prior year, driven by revenue growth from Association of Certified Anti-Money Laundering Specialists (ACAMS), which was partially offset by a decline in revenue at Becker Professional Education. Segment operating income for the third quarter was $2.4 million, compared to $2.6 million in the prior year.

Technology and Business

Third quarter segment revenue decreased 4.5 percent to $59.0 million compared to the prior year. On a constant currency basis, revenue decreased 0.4 percent. Revenue was impacted in the quarter by process delays in Brazilian public loan programs which impacted student enrollment. New student enrollment was up 3.7 percent for the March session and total enrollment was down 4.9 percent compared to the same term last year. Segment operating loss for the third quarter was $103,000 compared to income of $5.4 million in the prior year.

US Traditional Postsecondary

Third quarter segment revenue declined 4.2 percent to $32.1 million compared to the prior year. An operating loss of $251,000 was reported in the third quarter compared to an operating loss of $3.1 million in the prior year.

Adtalem Outlook

Fiscal 2018 fourth quarter revenue is expected to increase 1 to 2 percent compared to the prior year. Revenue growth within the Medical and Healthcare and Professional Education segments is expected to be partially offset by decreases in revenue within the Technology and Business and US Traditional Postsecondary segments. Fourth quarter operating costs before special items are expected to be flat to up 1 percent compared to the prior year. Fourth quarter expenses may be impacted by the timing of insurance proceeds for the reimbursement of hurricane-related expenses.


Fiscal 2018 full year revenue is expected to increase 1 to 2 percent compared to the prior year and earnings growth from continuing operations before special items is expected to be 10 to 12 percent compared to the prior year. Full year capital spending is expected to be in the $60 to $65 million range, excluding hurricane-related spending. The effective income tax rate on continuing operations for the fiscal year is expected to be 14 to 16 percent, before special items. Adtalem’s outlook excludes potential charges related to restructuring plans and the pending sale of DeVry University.

Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its fiscal 2018 third quarter earnings on Thursday, May 3, at 4 p.m. CT (5 p.m. ET). The conference call will be led by Lisa Wardell, president and chief executive officer; and Patrick Unzicker, chief financial officer and treasurer.

For those wishing to participate by telephone, dial 877-407-6184 (domestic) or 201-389-0877 (international) and ask for the Adtalem call or use conference ID: 13678951. Adtalem will also broadcast the conference call on Adtalem's website at: http://www.investorcalendar.com/event/28016.

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 telephone replay of the call until June 3, 2018. To access the replay, dial 877-660-6853 (domestic) or 201-612-7415 (international), conference ID: 13678951. To access the webcast replay, please visit Adtalem's website at: http://www.investorcalendar.com/event/28016.

About Adtalem Global Education

The purpose of Adtalem Global Education is to empower students to achieve their goals, find success, and make inspiring contributions to our global community. Adtalem Global Education Inc. (NYSE: ATGE; member S&P MidCap 400 Index) is a leading global education provider and the parent organization of Adtalem Educacional do Brasil, American University of the Caribbean School of Medicine, Association of Certified Anti-Money Laundering Specialists, Becker Professional Education, Carrington College, Chamberlain University, DeVry University and its Keller Graduate School of Management, Ross University School of Medicine and Ross University School of Veterinary Medicine. For more information, please visit adtalem.com.


Forward Looking Statement

Certain statements contained in this release concerning Adtalem Global Education’s future performance, including those statements concerning expectations or plans, may constitute forward-looking statements subject to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as Adtalem Global Education or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Actual results may differ materially from those projected or implied by these forward-looking statements. Potential risks, uncertainties and other factors that could cause results to differ are described more fully in Item 1A, "Risk Factors," in the most recent Annual Report on Form 10-K for the year ending June 30, 2017 and filed with the Securities and Exchange Commission (SEC) on August 24, 2017 and its most recent Quarterly Report on Form 10-Q for the quarter ending March 31, 2018 and filed with the SEC on May 3, 2018.


Enrollment from Continuing Operations

     
FY 2018 FY 2017 % Change
Adtalem Global Education Student Enrollments
New students 27,991 27,136 +3.2%
Total students(1) 118,233 121,179 -2.4%

Adtalem Education of Brazil(2)

March Session
New students 23,367 22,531 +3.7%
Total students 75,700 79,564 -4.9%
 
Chamberlain University
March Session(3)
New students 2,830 2,713 +4.3%
Total students 31,053 29,726 +4.5%
 
Carrington College
3 months ending March 31, 2018
New students 1,794 1,892 -5.2%
Total students 5,542 6,026 -8.0%
 

Enrollment from Discontinued Operations

 
DeVry University FY 2018 FY 2017 % Change
Undergraduate – March Session
New students 2,627 2,545 +3.2%
Total students 17,936 22,192 -19.2%
Graduate – March Session
Coursetakers(5) 7,299 9,185 -20.5%

1) Includes the most recently reported enrollments at Adtalem’s postsecondary institutions
2) Excludes Damásio test prep students
3) Post-licensure online programs only; pre-licensure campus-based programs start in September, January and May
4) Includes enrollments in its medical and veterinary preparatory programs
5) The term “coursetaker” refers to the number of courses taken by a student. Thus one student taking two courses equals two coursetakers


 
ADTALEM GLOBAL EDUCATION INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
PRELIMINARY
           
March 31, June 30, March 31,
2018   2017   2017  
ASSETS: (in thousands, except share and par value amounts)
Current Assets:
Cash and Cash Equivalents $ 265,325 $ 240,426 $ 208,759
Marketable Securities and Investments 4,200 4,013 3,950
Restricted Cash 1,042 4,759 1,335
Accounts Receivable, Net 169,343 161,405 133,683
Prepaid Expenses and Other Current Assets 71,906 37,886 37,474
Current Assets Held for Sale 27,524   22,718   43,391  
Total Current Assets 539,340   471,207   428,592  
Land, Building and Equipment:
Land 48,369 48,947 49,085
Building 410,960 436,418 439,334
Equipment 331,045 307,308 324,043
Construction in Progress 30,550   22,240   16,207  
820,924 814,913 828,669
Accumulated Depreciation (402,565 ) (371,589 ) (378,738 )
Land, Building and Equipment Held for Sale, Net -   45,502   48,331  
Land, Building and Equipment, Net 418,359   488,826   498,262  
Noncurrent Assets:
Deferred Income Taxes, Net 29,479 33,772 35,497
Intangible Assets, Net 405,342 412,158 421,304
Goodwill 845,843 829,086 838,805
Other Assets, Net 35,492 40,696 57,090
Other Assets Held for Sale 13,450   38,290   38,259  
Total Noncurrent Assets 1,329,606   1,354,002   1,390,955  
TOTAL ASSETS $ 2,287,305   $ 2,314,035   $ 2,317,809  
 
LIABILITIES:
Current Liabilities:
Accounts Payable $ 38,351 $ 46,417 $ 30,203
Accrued Salaries, Wages and Benefits 63,860 81,661 70,435
Accrued Liabilities 78,464 90,515 88,384
Deferred Revenue 142,143 115,770 136,612
Current Liabilities Held for Sale 55,808   42,964   76,531  
Total Current Liabilities 378,626   377,327   402,165  
Noncurrent Liabilities:
Revolving Loan 120,000 125,000 120,000
Deferred Income Taxes, Net 33,519 34,712 30,228
Deferred Rent and Other Liabilities 96,920 101,672 104,492
Income Taxes Payable 88,562   -   -  
Total Noncurrent Liabilities 339,001   261,384   254,720  
TOTAL LIABILITIES 717,627   638,711   656,885  
NONCONTROLLING INTEREST 11,391   6,285   6,600  
SHAREHOLDERS' EQUITY:
Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized; 60,369,000,
62,371,000 and 62,618,000 Shares Outstanding at March 31, 2018,
June 30, 2017 and March 31, 2017, respectively 792 781 778
Additional Paid-in Capital 450,120 415,912 404,800
Retained Earnings 1,852,122 1,881,397 1,837,738
Accumulated Other Comprehensive Loss (59,195 ) (59,119 ) (37,013 )
Treasury Stock, at Cost, 18,852,000, 15,691,000 and 15,208,000 Shares at
March 31, 2018, June 30, 2017 and March 31, 2017, respectively (685,552 ) (569,932 ) (551,979 )
TOTAL SHAREHOLDERS' EQUITY 1,558,287   1,669,039   1,654,324  
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND
SHAREHOLDERS' EQUITY $ 2,287,305   $ 2,314,035   $ 2,317,809  
 

ADTALEM GLOBAL EDUCATION INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
PRELIMINARY
             
Three Months Ended

March 31,

Nine Months Ended

March 31,

2018 2017 2018 2017
(in thousands, except per share amounts)
REVENUE:
Tuition $ 296,126 $ 287,774 $ 878,333 $ 875,935
Other Educational 46,067 44,901 126,382 119,725
Total Revenue 342,193 332,675 1,004,715 995,660
OPERATING COST AND EXPENSE:
Cost of Educational Services 179,736 182,216 554,647 548,850
Student Services and Administrative Expense 108,046 103,690 309,590 308,322
Restructuring Expense 621 2,804 5,562 9,117
Regulatory Settlements - - - 52,150
Total Operating Cost and Expense 288,403 288,710 869,799 918,439
Operating Income from Continuing Operations 53,790 43,965 134,916 77,221
INTEREST:
Interest Income 1,329 1,689 4,812 3,721
Interest Expense (2,850) (1,995) (7,247) (6,410)
Net Interest Expense (1,521) (306) (2,435) (2,689)
Income from Continuing Operations Before Income Taxes 52,269 43,659 132,481 74,532
Income Tax Provision (7,656) (7,343) (120,888) (4,980)
Equity Method Investment Loss (100) - (138) -
Income from Continuing Operations 44,513 36,316 11,455 69,552
DISCONTINUED OPERATIONS:
(Loss) Income from Discontinued Operations Before
Income Taxes (8,708) 3,329 (63,887) 8,045
Income Tax Benefit 3,483 377 23,854 2,329
(Loss) Income from Discontinued Operations (5,225) 3,706 (40,033) 10,374
NET INCOME (LOSS) 39,288 40,022 (28,578) 79,926
Net Loss (Income) Attributable to Noncontrolling Interest 46 (163) (459) (502)
NET INCOME (LOSS) ATTRIBUTABLE TO ADTALEM GLOBAL
EDUCATION $ 39,334 $ 39,859 $ (29,037) $ 79,424
 
AMOUNTS ATTRIBUTABLE TO ADTALEM GLOBAL
EDUCATION:
Income from Continuing Operations $ 44,559 $ 36,153 $ 10,996 $ 69,050
(Loss) Income from Discontinued Operations (5,225) 3,706 (40,033) 10,374
NET INCOME (LOSS) ATTRIBUTABLE TO ADTALEM GLOBAL
EDUCATION $ 39,334 $ 39,859 $ (29,037) $ 79,424
 
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE
TO ADTALEM GLOBAL EDUCATION SHAREHOLDERS:
Basic:
Continuing Operations $ 0.73 $ 0.57 $ 0.18 $ 1.09
Discontinued Operations $ (0.09) $ 0.06 $ (0.65) $ 0.16
Total $ 0.64 $ 0.63 $ (0.47) $ 1.25
Diluted:
Continuing Operations $ 0.72 $ 0.56 $ 0.18 $ 1.08
Discontinued Operations $ (0.08) $ 0.06 $ (0.64) $ 0.16
Total $ 0.63 $ 0.62 $ (0.46) $ 1.24
 
Cash Dividends Declared per Common Share $ - $ - $ - $ 0.18
 

ADTALEM GLOBAL EDUCATION INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
PRELIMINARY
         
Nine Months Ended

March 31,

2018   2017  
(in thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) Income $ (28,578 ) $ 79,926
Loss (Income) from Discontinued Operations 40,033 (10,374 )
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities:
Stock-Based Compensation Expense 11,517 13,292
Depreciation 38,347 39,841
Amortization of Intangible Assets 7,333 8,487
Amortization of Deferred Debt Issuance Costs 528 528
Provision for Refunds and Uncollectible Accounts 31,787 31,883
Deferred Income Taxes 4,562 (1,388 )
Loss on Disposals, Accelerated Depreciation and Adjustments to Land, Building and Equipment 30,176 2,725
Changes in Assets and Liabilities:
Accounts Receivable (38,581 ) (24,680 )
Prepaid Expenses and Other (29,936 ) (17,979 )
Accounts Payable (2,443 ) (11,496 )
Accrued Salaries, Wages, Benefits and Liabilities (30,918 ) (5,067 )
Deferred Revenue 25,619 29,127
Income Taxes Payable, Long-Term 88,562   -  
Net Cash Provided by Operating Activities-Continuing Operations 148,008 134,825
Net Cash Provided by Operating Activities-Discontinued Operations 35,256   34,962  
NET CASH PROVIDED BY OPERATING ACTIVITIES 183,264   169,787  
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (52,653 ) (29,551 )
Payment for Purchase of Businesses, Net of Cash Acquired (4,041 ) (330,567 )
Marketable Securities Purchased (145 ) (82 )
Net Cash Used in Investing Activities-Continuing Operations (56,839 ) (360,200 )
Net Cash Provided by (Used in) Investing Activities-Discontinued Operations 7,409   (2,978 )
NET CASH USED IN INVESTING ACTIVITIES (49,430 ) (363,178 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Exercise of Stock Options 22,557 20,390
Employee Taxes Paid on Withholding Shares (3,862 ) (2,719 )
Proceeds from Stock Issued Under Colleague Stock Purchase Plan 585 635
Repurchase of Common Stock for Treasury (111,626 ) (30,552 )
Cash Dividends Paid - (11,414 )
Payments of Seller Financed Obligations (10,559 ) (3,943 )
Borrowings Under Revolving Credit Facility 258,000 465,000
Repayments Under Revolving Credit Facility (263,000 ) (345,000 )
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (107,905 ) 92,397  
Effects of Exchange Rate Differences (714 ) 324  
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 25,215 (100,670 )
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 251,096   315,347  
Cash, Cash Equivalents and Restricted Cash at End of Period 276,311 214,677
Less: Cash, Cash Equivalents and Restricted Cash of Discontinued Operations at End of Period 9,944   4,583  
Cash, Cash Equivalents and Restricted Cash at End of Period $ 266,367   $ 210,094  
 

ADTALEM GLOBAL EDUCATION INC.
SEGMENT INFORMATION
(Unaudited)
PRELIMINARY
                   
Three Months Ended

March 31,

Nine Months Ended

March 31,

2018 2017 Increase

(Decrease)

2018 2017 Increase

(Decrease)

REVENUE: (in thousands)
Medical and Healthcare $ 220,067 $ 208,153 5.7 % $ 614,649 $ 609,331 0.9 %
Professional Education 31,505 29,810 5.7 % 101,906 91,906 10.9 %
Technology and Business 59,030 61,810 (4.5 )% 196,602 193,437 1.6 %
U.S. Traditional Postsecondary 32,123 33,537 (4.2 )% 93,291 102,967 (9.4 )%
Home Office and Other (532 ) (635 ) 16.2 % (1,733 ) (1,981 ) 12.5 %
Total Consolidated Revenue 342,193   332,675   2.9 % 1,004,715   995,660   0.9 %
OPERATING INCOME (LOSS):
Medical and Healthcare 60,304 50,150 20.2 % 141,583 146,166 (3.1 )%
Professional Education 2,382 2,619 (9.0 )% 15,082 8,810 71.2 %
Technology and Business (103 ) 5,358 NM 15,749 16,864 (6.6 )%
U.S. Traditional Postsecondary (251 ) (3,067 ) 91.8 % (11,544 ) (11,369 ) (1.5 )%
Home Office and Other (8,542 ) (11,095 ) 23.0 % (25,954 ) (83,250 ) 68.8 %
Total Consolidated Operating Income $ 53,790   $ 43,965   22.3 % $ 134,916   $ 77,221   74.7 %

NON-GAAP INFORMATION

During the third quarter and first nine months of fiscal year 2018, Adtalem classified the operating results of DeVry University as discontinued operations, and recorded special items related to the following: (i) Restructuring charges related to severance for workforce reductions and real estate consolidations at the medical and veterinary schools, which is part of the Medical and Healthcare segment, Carrington College ("Carrington"), which is part of the U.S. Traditional Postsecondary segment, and Adtalem's home office (not related to any segment) in order to align its cost structure with enrollments; and (ii) Income tax charges related to implementation of the Tax Cuts and Jobs Act of 2017. During the third quarter and first nine months of fiscal year 2017, Adtalem recorded special items related to the following: (i) Restructuring charges related to severance for workforce reductions and real estate consolidations at the administrative support operations of the medical and veterinary schools, Carrington and Adtalem's home office in order to align its cost structure with enrollments; and (ii) Charges related to regulatory settlement agreements. In addition, in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the operating results of DeVry University are reclassified as discontinued operations for the third quarter and first nine months of fiscal year 2017. The following tables illustrate the effects of the discontinued operations and special items on Adtalem’s operating income and net income. Management believes that the non-GAAP disclosure of operating income and net income excluding the discontinued operations and special items provides investors with useful supplemental information regarding the underlying business trends and performance of Adtalem’s ongoing operations and is useful for period-over-period comparisons of such operations given the special nature of discontinued operations, restructuring charges and regulatory settlements. Adtalem uses these supplemental financial measures internally in its management and budgeting process. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, Adtalem’s reported results prepared in accordance with GAAP. The following tables reconcile these non-GAAP measures to the most directly comparable GAAP information (in thousands):
          Three Months Ended

March 31,

  Nine Months Ended

March 31,

2018     2017    

Increase

(Decrease)

2018     2017    

Increase

(Decrease)

Medical and Healthcare Operating Income $ 60,304 $ 50,150 20.2 % $ 141,583 $ 146,166 (3.1 )%
Restructuring Expense 530   667   (20.5 )% 642   667   (3.7 )%
Medical and Healthcare Operating Income
Excluding Special Items $ 60,834   $ 50,817   19.7 % $ 142,225   $ 146,833   (3.1 )%
 
U.S. Traditional Postsecondary Operating Loss $ (251 ) $ (3,067 ) 91.8 % $ (11,544 ) $ (11,369 ) (1.5 )%
Restructuring Expense -   725   NM 2,378   4,429   (46.3 )%
U.S. Traditional Postsecondary Operating Loss
Excluding Special Items $ (251 ) $ (2,342 ) 89.3 % $ (9,166 ) $ (6,940 ) (32.1 )%
 
Home Office and Other Operating Loss $ (8,542 ) $ (11,095 ) 23.0 % $ (25,954 ) $ (83,250 ) 68.8 %
Restructuring Expense 91 1,412 (93.6 )% 2,542 4,021 (36.8 )%
Regulatory Settlement -   -   NM -   52,150   NM
Home Office and Other Operating Loss
Excluding Special Items $ (8,451 ) $ (9,683 ) 12.7 % $ (23,412 ) $ (27,079 ) 13.5 %
 

ADTALEM GLOBAL EDUCATION INC.
NON-GAAP EARNINGS DISCLOSURE
(Unaudited)
PRELIMINARY
             
Three Months Ended

March 31,

Nine Months Ended

March 31,

2018 2017 2018 2017
(in thousands, except per share amounts)
Net Income (Loss) $ 39,334 $ 39,859 $ (29,037 ) $ 79,424
Earnings (Loss) per Share (diluted) $ 0.63 $ 0.62 $ (0.46 ) $ 1.24
Continuing Operations:
Restructuring Expense $ 621 $ 2,804 $ 5,562 $ 9,117
Effect on Earnings per Share (diluted) $ 0.01 $ 0.04 $ 0.09 $ 0.14
Tax Cuts and Jobs Act of 2017 $ - $ - $ 101,196 $ -
Effect on Earnings per Share (diluted) $ - $ - $ 1.62 $ -
Regulatory Settlements $ - $ - $ - $ 52,150
Effect on Earnings per Share (diluted) $ - $ - $ - $ 0.81
Income Tax Impact on Non-GAAP Adjustments $ (320 ) $ (1,096 ) $ (1,604 ) $ (22,952 )
Effect on Earnings per Share (diluted) $ (0.01 ) $ (0.02 ) $ (0.03 ) $ (0.36 )
Discontinued Operations, net of tax $ 5,225 $ (3,706 ) $ 40,033 $ (10,374 )
Effect on Earnings per Share (diluted) $ 0.08 $ (0.06 ) $ 0.64 $ (0.16 )
Net Income from Continuing Operations Excluding Special
Items, net of tax $ 44,860 $ 37,861 $ 116,150 $ 107,365
Earnings per Share from Continuing Operations Excluding
Special Items, net of tax $ 0.72 $ 0.59 $ 1.86 $ 1.68
Shares used in EPS calculation 61,965 64,266 62,474 63,991
 

SUPPLEMENTAL RECONCILIATIONS
(Unaudited)
PRELIMINARY
               
Three Months Ended March 31, 2018
(in thousands)
Revenue:

Medical and

Healthcare

Professional

Education

Technology and

Business

U.S. Traditional

Postsecondary

Home

Office

and

Other

Consolidated
Fiscal Year 2017 as Reported $ 208,153 $ 29,810 $ 61,810 $ 33,537 $ (635 ) $ 332,675
Organic Growth (Decline) 8,245 1,313 (998 ) (1,414 ) 103 7,249
Effect of Acquisitions - 382 775 - - 1,157
Hurricane Impact 3,669 - - - - 3,669
Effect of Currency Change -   -   (2,557 ) -   -   (2,557 )
Fiscal Year 2018 as Reported $ 220,067   $ 31,505   $ 59,030   $ 32,123   $ (532 ) $ 342,193  
 
Fiscal Year 2018 % Change:
Organic Growth (Decline) 4.0 % 4.4 % (1.6 %) (4.2 %) NM 2.2 %
Effect of Acquisitions -   1.3 % 1.3 % -   NM   0.3 %
Constant Currency Change 4.0 % 5.7 % (0.4 %) (4.2 %) NM 2.5 %
Hurricane Impact 1.8 % - - - NM 1.1 %
Effect of Currency Change -   -   (4.1 %) -   NM   (0.8 %)
Fiscal Year 2018 % Change
as Reported 5.7 % 5.7 % (4.5 %) (4.2 %) NM   2.9 %
 
      Nine Months Ended March 31, 2018
(in thousands)
Revenue:

Medical and

Healthcare

 

Professional

Education

 

Technology and

Business

 

U.S. Traditional

Postsecondary

 

Home

Office

and

Other

  Consolidated
Fiscal Year 2017 as Reported $ 609,331 $ 91,906 $ 193,437 $ 102,967 $ (1,981 ) $ 995,660
Organic Growth (Decline) 9,885 9,618 1,950 (9,676 ) 248 12,025
Effect of Acquisitions - 382 993 - - 1,375
Hurricane Impact (4,567 ) - - - - (4,567 )
Effect of Currency Change -   -   222   -   -   222  
Fiscal Year 2018 as Reported $ 614,649   $ 101,906   $ 196,602   $ 93,291   $ (1,733 ) $ 1,004,715  
 
Fiscal Year 2018 % Change:
Organic Growth (Decline) 1.6 % 10.5 % 1.0 % (9.4 %) NM 1.2 %
Effect of Acquisitions -   0.4 % 0.5 % -   NM   0.1 %
Constant Currency Change 1.6 % 10.9 % 1.5 % (9.4 %) NM 1.3 %
Hurricane Impact (0.7 %) - - - NM (0.5 %)
Effect of Currency Change -   -   0.1 % -   NM   0.0 %
Fiscal Year 2018 % Change
as Reported 0.9 % 10.9 % 1.6 % (9.4 %) NM   0.9 %
 

SUPPLEMENTAL RECONCILIATIONS
(Unaudited)
PRELIMINARY
               
Three Months Ended March 31, 2018
(in thousands)
Total Expenses:

Medical and

Healthcare

Professional

Education

Technology and

Business

U.S. Traditional

Postsecondary

Home

Office

and

Other

Consolidated
Fiscal Year 2017 as Reported $ 158,003 $ 27,192 $ 56,453 $ 36,603 $ 10,459 $ 288,710
Cost Investment (Reduction) 1,898 1,256 4,051 (3,504 ) (1,129 ) 2,572
Effect of Acquisitions - 675 455 - - 1,130
Hurricane Impact - - - - - -
Restructuring Expense Change (137 ) - - (725 ) (1,321 ) (2,183 )
Effect of Currency Change -   -   (1,826 ) -   -   (1,826 )
Fiscal Year 2018 as Reported $ 159,764   $ 29,123   $ 59,133   $ 32,374   $ 8,009   $ 288,403  
 
Fiscal Year 2018 % Change:
Cost Investment (Reduction) 1.2 % 4.6 % 7.2 % (9.6 %) NM 0.9 %
Effect of Acquisitions -   2.5 % 0.8 % -   NM   0.4 %
Constant Currency Change 1.2 % 7.1 % 8.0 % (9.6 %) NM 1.3 %
Hurricane Impact - - - - NM -
Restructuring Expense Change (0.1 %) - - (2.0 %) NM (0.8 %)
Effect of Currency Change -   -   (3.2 %) -   NM   (0.6 %)
Fiscal Year 2018 % Change
as Reported 1.1 % 7.1 % 4.7 % (11.6 %) NM   (0.1 %)
 
      Nine Months Ended March 31, 2018
(in thousands)
Total Expenses:

Medical and

Healthcare

 

Professional

Education

 

Technology and

Business

 

U.S. Traditional

Postsecondary

 

Home

Office

and

Other

  Consolidated
Fiscal Year 2017 as Reported $ 463,165 $ 83,097 $ 176,573 $ 114,335 $ 81,269 $ 918,439
Cost Investment (Reduction) (3,446 ) 3,052 3,186 (7,449 ) (3,419 ) (8,076 )
Effect of Acquisitions - 675 606 - - 1,281
Hurricane Impact 13,372 - - - - 13,372
Restructuring Expense Change (25 ) - - (2,051 ) (1,479 ) (3,555 )
Regulatory Settlement Change - - - - (52,150 ) (52,150 )
Effect of Currency Change -   -   488   -   -   488  
Fiscal Year 2018 as Reported $ 473,066   $ 86,824   $ 180,853   $ 104,835   $ 24,221   $ 869,799  
 
Fiscal Year 2018 % Change:
Cost Investment (Reduction) (0.7 %) 3.7 % 1.8 % (6.5 %) NM (0.9 %)
Effect of Acquisitions -   0.8 % 0.3 % -   NM   0.1 %
Constant Currency Change (0.7 %) 4.5 % 2.1 % (6.5 %) NM (0.7 %)
Hurricane Impact 2.9 % - - - NM 1.5 %
Restructuring Expense Change (0.0 %) - - (1.8 %) NM (0.4 %)
Regulatory Settlement Change - - - - NM (5.7 %)
Effect of Currency Change -   -   0.3 % -   NM   0.1 %
Fiscal Year 2018 % Change
as Reported 2.1 % 4.5 % 2.4 % (8.3 %) NM   (5.3 %)
 

CONTACT:
Adtalem Global Education
Investor Contact:
Beth Coronelli
Beth.Coronelli@Adtalem.com
630-353-9035
or
Media Contact:
Ernie Gibble
Ernie.Gibble@Adtalem.com
630-353-9920

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