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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):

February 7, 2019

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

Delaware

1-13988

36-3150143

(State or other Jurisdiction of
incorporation)

(Commission File Number)

(IRS Employer Identification No.)

500 West Monroe
Chicago, IL

60661

(Address of principal executive
offices)

(Zip Code)

(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 as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  


Item 2.02          Results of Operations and Financial Condition.

On February 7, 2019, Adtalem Global Education Inc. (“Adtalem”) issued a press release announcing its second quarter fiscal 2019 operating and enrollment results.  The press release is attached hereto as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Adtalem under the Securities Act of 1933, as amended, or the Exchange Act.

Forward Looking Statements

Certain statements contained in this Form 8-K and related press release, including those that affect Adtalem’s expectations or plans, constitute forward-looking statements within the meaning of 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 or its management “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “foresees,” “intends,” “plans” "potential," "continue," "may," "will," "should," "could" or other words or phrases of similar import which predict or indicate future events or trends or that are not statements of historical matters.

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, 2018.

These forward-looking statements are based on information as of February 7, 2019, and Adtalem assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized, except as required by law.

Item 9.01          Financial Statements and Exhibits

99.1  Press Release of Adtalem Global Education Inc., dated February 7, 2019.


SIGNATURES

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

ADTALEM GLOBAL EDUCATION
INC.

 

 

 

By:

/s/ Kathleen A. Carroll

Kathleen A. Carroll

Vice President, Controller

 

 
 

Date:

February 7, 2019

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

Adtalem Global Education Announces Second Quarter Fiscal 2019 Results

New Student Enrollment Increased 4.9% in January 2019 Session

CHICAGO--(BUSINESS WIRE)--February 7, 2019--Adtalem Global Education Inc. (NYSE: ATGE), a leading global education provider, today reported academic, operating and financial results for its second quarter fiscal 2019 ended December 31, 2018.

“In the second quarter, we delivered growing enrollments in our medical and healthcare segment and strong results in our professional education segment driven by the refreshed product differentiation in the Becker business and continued growth in the Association of Certified Anti-Money Laundering Specialists (ACAMS). We also achieved several major milestones that further focused our portfolio, including the successful completion of the DeVry University and Carrington College transfers of ownership, as well as the permanent relocation of Ross University School of Medicine to Barbados,” said Lisa Wardell, president and CEO of Adtalem. “As we enter the second half of the fiscal year, we will continue to focus on delivering our value proposition to students and employer partners to help bridge the gap where talent supply and demand imbalances exist in the workforce.”

Financial Highlights

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


Selected financial data for the six months ended December 31, 2018:

Operating income from continuing operations excluding special items, net income from continuing operations excluding special items and earnings per share from continuing operations excluding special items are non-GAAP financial measures. Reconciliations of these non-GAAP financial measures are provided in the attached financial tables. Fiscal 2019 second quarter results contained special items including a pre-tax insurance settlement gain of $15.6 million related to Hurricanes Irma and Maria from September 2018, and total pre-tax restructuring charges of $3.6 million, primarily related to the closing of the Ross University School of Medicine campus in Dominica and real estate consolidations in Adtalem’s home office.


Adtalem completed the transfer of ownership of DeVry University and Carrington College during the second quarter of fiscal 2019. Adtalem recorded a pre-tax loss on disposal of discontinued operations of $32.7 million in the second quarter of fiscal 2019 related to these divestitures.

Segment Highlights

Medical and Healthcare

Second quarter segment revenue increased 4.6 percent to $212.6 million compared to the prior year.

Chamberlain revenue increased 6.2 percent in the second quarter compared to the prior year. November 2018 new student enrollment decreased 6.7 percent (online only). Total student enrollment increased 3.7 percent compared to the prior year. In the January 2019 session, new student enrollment increased 6.4 percent and total student enrollment increased 3.3 percent compared to the prior year as we drove strong growth in our campus Bachelor of Science of Nursing program.

Revenue in the quarter for the medical and veterinary schools increased 2.4 percent from the prior year to $90.4 million. New student enrollment declined 8.5 percent and total student enrollment declined 6.6 percent in the January 2019 semester compared to the same semester last year. The decline in new students is due to the shift in starts of students in the prior year from the September to January session due to Hurricanes Irma and Maria. Excluding this impact, new student enrollments increased 6.6 percent.

Segment operating income in the second quarter was $60.6 million compared to $55.0 million in the prior year. Excluding special items, segment operating income in the second quarter was $47.5 million compared to $55.0 million in the prior year.

Professional Education

Second quarter segment revenue increased 38.8 percent to $42.1 million compared to the prior year.

Becker revenue increased 15.9% while ACAMS revenue increased 64.7%, including the impact of the shift of the North American annual conference to the second quarter of fiscal 2019 from the first quarter of fiscal 2019.


Segment operating income was $9.6 million compared to $2.2 million in the prior year.

Technology and Business

Second quarter segment revenue decreased 16.6 percent to $62.6 million compared to the prior year. On a constant currency basis, revenue decreased 2.4 percent compared to the prior year. The decreases were the result of lower tuition pricing in response to student financial aid program reductions and increased competition.

Segment operating income in the second quarter was $8.5 million compared to $14.0 million in the prior year. Second quarter operating income on a constant currency basis was $10.6 million.

Adtalem Outlook

Fiscal Third Quarter 2019

Fiscal Year 2019


Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its second quarter fiscal 2019 earnings on Thursday, February 7, 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: 13686825. Adtalem will also broadcast the conference call on the Adtalem website at https://78449.themediaframe.com/dataconf/productusers/age/mediaframe/28515/indexl.html.

Please access the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

Adtalem will archive a telephone replay of the call until March 7, 2019. To access the replay, dial 877-660-6853 (domestic) or 201-612-7415 (international), conference ID: 13686825. To access the webcast replay, please visit Adtalem's website at http://investors.adtalem.com/CorporateProfile.

About Adtalem Global Education Inc.

The purpose of Adtalem Global Education Inc. 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, Chamberlain University, EduPristine, 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 expected future performance, including those statements concerning expectations or plans, constitute “forward-looking statements” within the meaning of the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. These forward-looking statements generally can be identified by phrases such as Adtalem Global Education or its management “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “may,” “will,” “should,” “could,” or other words or phrases of similar import which predict or indicate future events or trends or that are not statements of historical matters. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include the risks discussed in Item 1A, “Risk Factors,” in our most recent Annual Report on Form 10-K for the year ending June 30, 2018 filed with the Securities and Exchange Commission (SEC) on August 24, 2018 and our other filings with the SEC. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. All forward-looking statements set forth in this release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this release speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.


  FY 2019   FY 2018   % Change
Adtalem Global Education Student Enrollments(1)

January Session

New students 5,230 4,987 +4.9%
Total students 118,990 115,611 +2.9%
 
Chamberlain University
November Session
New students² 2,617 2,806 -6.7%
Total students 30,833 29,719 +3.7%
 
January Session
New students 4,759 4,472 +6.4%
Total students 32,354 31,333 +3.3%
 

Medical and Veterinary

January Semester(3)
New students 471 515 -8.5%
Total students 5,548 5,938 -6.6%
1)   Includes the most recently reported enrollments at Adtalem’s postsecondary institutions
2) Post-licensure online programs only; pre-licensure campus-based programs start in September, January and May; Total students includes pre and post-licensure enrollment
3) Includes enrollments in its medical and veterinary preparatory programs

ADTALEM GLOBAL EDUCATION INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
     
December 31, June 30, December 31,
2018 2018 2017
ASSETS: (in thousands, except share and par value amounts)
Current Assets:
Cash and Cash Equivalents $ 294,801 $ 430,690 $ 212,239
Marketable Securities and Investments 7,269 4,255 4,268
Restricted Cash 818 310 33
Accounts Receivable, Net 138,708 146,726 134,274
Prepaid Expenses and Other Current Assets 64,953 58,887 75,499
Current Assets Held for Sale -   47,132   43,496  
Total Current Assets 506,549   688,000   469,809  
Land, Building and Equipment:
Land 43,829 48,177 46,908
Building 364,417 389,129 391,574
Equipment 271,979 302,516 293,665
Construction in Progress 23,136   25,360   26,225  
703,361 765,182 758,372
Accumulated Depreciation (345,062 ) (376,528 ) (360,854 )
Land, Building and Equipment Held for Sale, Net -   -   20,821  
Land, Building and Equipment, Net 358,299   388,654   418,339  
Noncurrent Assets:
Deferred Income Taxes 19,141 38,780 31,968
Intangible Assets, Net 358,415 362,931 386,800
Goodwill 813,176 813,887 832,943
Other Assets, Net 66,643 39,259 34,671
Noncurrent Assets Held for Sale -   13,450   37,070  
Total Other Assets 1,257,375   1,268,307   1,323,452  
TOTAL ASSETS $ 2,122,223   $ 2,344,961   $ 2,211,600  
 
LIABILITIES:
Current Liabilities:
Accounts Payable $ 48,525 $ 47,477 $ 32,730
Accrued Salaries, Wages and Benefits 57,856 71,289 59,794
Accrued Liabilities 83,756 80,803 77,134
Deferred Revenue 51,173 106,773 69,953
Current Portion of Long-Term Debt 3,000 3,000 -
Current Liabilities Held for Sale -   56,439   57,208  
Total Current Liabilities 244,310   365,781   296,819  
Noncurrent Liabilities:
Long-Term Debt 289,084 290,073 165,000
Deferred Income Taxes 32,398 29,115 31,745
Other Liabilities 118,133 131,380 101,232
Income Taxes Payable - - 88,562
Noncurrent Liabilities Held for Sale -   216   878  
Total Other Liabilities 439,615   450,784   387,417  
TOTAL LIABILITIES 683,925   816,565   684,236  
NONCONTROLLING INTEREST 8,651   9,110   7,405  
SHAREHOLDERS' EQUITY:
Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized; 58,212,000,
59,893,000 and 60,295,000 Shares Outstanding at December 31, 2018,
June 30, 2018 and December 31, 2017, respectively 801 793 787
Additional Paid-in Capital 479,946 454,653 433,855
Retained Earnings 1,926,134 1,917,373 1,812,746
Accumulated Other Comprehensive Loss (143,518 ) (142,168 ) (60,745 )
Treasury Stock, at Cost, 21,883,000, 19,390,000 and 18,451,000 Shares at
December 31, 2018, June 30, 2018 and December 31, 2017, respectively (833,716 ) (711,365 ) (666,684 )
TOTAL SHAREHOLDERS' EQUITY 1,429,647   1,519,286   1,519,959  
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND
SHAREHOLDERS' EQUITY

$

2,122,223   $ 2,344,961   $ 2,211,600  

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

December 31,

  Six Months Ended

December 31,

2018   2017 2018   2017
(in thousands, except per share amounts)
REVENUE $ 316,594 $ 308,211 $ 600,784 $ 601,354
OPERATING COST AND EXPENSE:
Cost of Educational Services 158,232 157,443 306,885 330,619
Student Services and Administrative Expense 99,989 89,423 198,486 178,367
Restructuring Expense 3,645 1,426 43,193 2,563
Insurance Settlement Gain (15,571 ) -   (15,571 ) -  
Total Operating Cost and Expense 246,295   248,292   532,993   511,549  
Operating Income from Continuing Operations 70,299   59,919   67,791   89,805  
OTHER INCOME (EXPENSE):
Interest and Dividend Income 2,173 1,365 4,118 3,483
Interest Expense (5,556 ) (2,481 ) (11,758 ) (4,397 )
Investment Loss (1,122 ) -   (1,122 ) -  
Net Other Expense (4,505 ) (1,116 ) (8,762 ) (914 )
Income from Continuing Operations Before Income Taxes 65,794 58,803 59,029 88,891
Income Tax Provision (13,165 ) (110,276 ) (11,278 ) (114,751 )
Equity Method Investment Income (Loss) -   6   -   (38 )
Income (Loss) from Continuing Operations 52,629   (51,467 ) 47,751   (25,898 )
DISCONTINUED OPERATIONS:
Loss from Discontinued Operations Before Income Taxes (8,313 ) (48,409 ) (14,448 ) (63,858 )
Loss on Disposal of Discontinued Operations Before
Income Taxes (32,714 ) - (32,714 ) -
Income Tax Benefit 5,904   19,094   7,332   21,890  
Loss from Discontinued Operations (35,123 ) (29,315 ) (39,830 ) (41,968 )
NET INCOME (LOSS) 17,506 (80,782 ) 7,921 (67,866 )
Net Income Attributable to Noncontrolling Interest (211 ) (374 ) (156 ) (505 )
NET INCOME (LOSS) ATTRIBUTABLE TO ADTALEM
GLOBAL EDUCATION $ 17,295   $ (81,156 ) $ 7,765   $ (68,371 )
 
AMOUNTS ATTRIBUTABLE TO ADTALEM GLOBAL
EDUCATION:
Income (Loss) from Continuing Operations $ 52,418 $ (51,841 ) $ 47,595 $ (26,403 )
Loss from Discontinued Operations (35,123 ) (29,315 ) (39,830 ) (41,968 )
NET INCOME (LOSS) ATTRIBUTABLE TO ADTALEM
GLOBAL EDUCATION $ 17,295   $ (81,156 ) $ 7,765   $ (68,371 )
 
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE
TO ADTALEM GLOBAL EDUCATION SHAREHOLDERS:
Basic:
Continuing Operations $ 0.89 $ (0.85 ) $ 0.80 $ (0.43 )
Discontinued Operations $ (0.59 ) $ (0.48 ) $ (0.67 ) $ (0.68 )
Total $ 0.29 $ (1.33 ) $ 0.13 $ (1.10 )
Diluted:
Continuing Operations $ 0.87 $ (0.85 ) $ 0.79 $ (0.43 )
Discontinued Operations $ (0.59 ) $ (0.48 ) $ (0.66 ) $ (0.68 )
Total $ 0.29 $ (1.33 ) $ 0.13 $ (1.10 )

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

December 31,

2018 2017
(in thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 7,921 $ (67,866 )
Loss from Discontinued Operations 39,830 41,968
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:
Stock-Based Compensation Expense 7,360 8,780
Depreciation 20,597 21,693
Amortization of Intangible Assets 4,238 4,960
Amortization of Deferred Debt Issuance Costs 784 351
Provision for Bad Debts 6,432 8,117
Deferred Income Taxes 22,924 380
Loss on Disposals, Accelerated Depreciation and Adjustments to Land, Building and Equipment 41,875 29,987
Realized Loss on Investments 108 -
Unrealized Loss on Investments 1,014 -
Insurance Settlement Gain (15,571 ) -
Changes in Assets and Liabilities:
Accounts Receivable 1,423 6,674
Prepaid Expenses and Other (41,459 ) (32,592 )
Accounts Payable 1,691 (4,769 )
Accrued Salaries, Wages, Benefits and Liabilities (12,458 ) (27,265 )
Deferred Revenue (55,583 ) (33,613 )
Income Taxes Payable, Long-Term -   88,562  
Net Cash Provided by Operating Activities-Continuing Operations 31,126 45,367
Net Cash (Used in) Provided by Operating Activities-Discontinued Operations (8,105 ) 4,412  
NET CASH PROVIDED BY OPERATING ACTIVITIES 23,021   49,779  
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (35,355 ) (31,473 )
Insurance Proceeds Received for Damage to Building and Equipment 35,706 -
Sales of Marketable Securities 1,136 -
Purchases of Marketable Securities (5,290 ) (136 )
Payment for Purchase of Businesses, Net of Cash Acquired - (972 )
Loan to DeVry University (10,000 ) -  
Net Cash Used in Investing Activities-Continuing Operations (13,803 ) (32,581 )
Net Cash (Used in) Provided by Investing Activities-Discontinued Operations (1,833 ) 7,454
Cash and Restricted Cash Transferred in Divestitures of Discontinued Operations (48,876 ) -  
NET CASH USED IN INVESTING ACTIVITIES (64,512 ) (25,127 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Exercise of Stock Options 16,784 9,582
Employee Taxes Paid on Withholding Shares (6,401 ) (3,806 )
Proceeds from Stock Issued Under Colleague Stock Purchase Plan 312 391
Repurchase of Common Stock for Treasury (115,933 ) (93,178 )
Payments of Seller Financed Obligations (846 ) (7,941 )
Borrowings Under Credit Facility - 201,000
Repayments Under Credit Facility (1,500 ) (161,000 )
NET CASH USED IN FINANCING ACTIVITIES (107,584 ) (54,952 )
Effects of Exchange Rate Differences 289   (1,043 )
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (148,786 ) (31,343 )
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 444,405   251,096  
Cash, Cash Equivalents and Restricted Cash at End of Period 295,619 219,753
Less: Cash, Cash Equivalents and Restricted Cash of Discontinued Operations at End of Period -   7,481  
Cash, Cash Equivalents and Restricted Cash at End of Period $ 295,619   $ 212,272  

ADTALEM GLOBAL EDUCATION INC.
CONTINUING OPERATIONS BY SEGMENT INFORMATION
(Unaudited)
           
Three Months Ended

December 31,

Six Months Ended

December 31,

2018 2017 Increase

(Decrease)

2018 2017 Increase

(Decrease)

REVENUE: (in thousands)
Medical and Healthcare $ 212,627 $ 203,297 4.6 % $ 414,727 $ 394,582 5.1 %
Professional Education 42,142 30,359 38.8 % 77,788 70,401 10.5 %
Technology and Business 62,633 75,133 (16.6 )% 109,884 137,572 (20.1 )%
Home Office and Other (808 ) (578 ) NM (1,615 ) (1,201 ) NM
Total Consolidated Revenue 316,594   308,211   2.7 % 600,784   601,354   (0.1 )%
OPERATING INCOME (LOSS):
Medical and Healthcare 60,647 55,047 10.2 % 62,303 81,279 (23.3 )%
Professional Education 9,633 2,193 339.3 % 14,383 12,700 13.3 %
Technology and Business 8,471 13,991 (39.5 )% 5,726 15,852 (63.9 )%
Home Office and Other (8,452 ) (11,312 ) NM (14,621 ) (20,026 ) NM
Total Consolidated Operating Income $ 70,299   $ 59,919   17.3 % $ 67,791   $ 89,805   (24.5 )%

NON-GAAP INFORMATION

In accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the operating results of DeVry University and Carrington College ("Carrington") are reclassified as discontinued operations for the second quarter and first six months of fiscal year 2019 and 2018. During the second quarter and the first six months of fiscal year 2019, Adtalem recorded special items related to the following: (i) restructuring expense related to the closing of the Ross University School of Medicine ("RUSM"), which is part of the Medical and Healthcare segment, campus in Dominica; (ii) loss on sale charges at Adtalem Brazil, which is part of the Technology and Business segment, related to the disposition of the Joao Pessoa institution (presented as restructuring expense); (iii) restructuring expense at Adtalem's home office (not related to any segment); (iv) insurance settlement gain related to the final insurance settlement related to Hurricanes Irma and Maria at the American University of the Caribbean School of Medicine ("AUC") and RUSM; and (v) adjustments to the preliminary income tax charges related to the implementation of the Tax Cuts and Jobs Act of 2017 and tax charges related to the divestiture of DeVry University. During the second quarter and the first six months of fiscal year 2018, Adtalem recorded special items related to the following: (i) restructuring expense primarily related to workforce reductions and real estate consolidations at Adtalem's home office. The following tables illustrate the effects of the discontinued operations and special items on Adtalem’s operating income from continuing operations and net income from continuing operations. Management believes that the non-GAAP disclosure of operating income from continuing operations excluding special items, net income from continuing operations excluding special items and earnings per share 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, insurance settlement gain and certain income tax charges. 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).

ADTALEM GLOBAL EDUCATION INC.
NON-GAAP OPERATING INCOME FROM CONTINUING OPERATIONS BY SEGMENT
(Unaudited)
           
Three Months Ended

December 31,

Six Months Ended

December 31,

2018 2017

Increase

(Decrease)

2018 2017

Increase

(Decrease)

Medical and Healthcare Operating Income $ 60,647 $ 55,047 10.2 % $ 62,303 $ 81,279 (23.3 )%
Restructuring Expense 2,445 - NM 41,460 112 NM
Insurance Settlement Gain (15,571 ) -   NM (15,571 ) -   NM
Medical and Healthcare Operating Income
Excluding Special Items $ 47,521   $ 55,047   (13.7 )% $ 88,192   $ 81,391   8.4 %
 
Technology and Business Operating Income $ 8,471 $ 13,991 (39.5 )% $ 5,726 $ 15,852 (63.9 )%
Restructuring Expense 110   -   NM 185   -   NM
Technology and Business Operating Income
Excluding Special Items $ 8,581   $ 13,991   (38.7 )% $ 5,911   $ 15,852   (62.7 )%
 
Home Office and Other Operating Loss $ (8,452 ) $ (11,312 ) NM $ (14,621 ) $ (20,026 ) NM
Restructuring Expense 1,090   1,426   NM 1,548   2,451   NM
Home Office and Other Operating Loss
Excluding Special Items $ (7,362 ) $ (9,886 ) NM $ (13,073 ) $ (17,575 ) NM
 
Adtalem Global Education Operating Income $ 70,299 $ 59,919 17.3 % $ 67,791 $ 89,805 (24.5 )%
Restructuring Expense 3,645 1,426 NM 43,193 2,563 NM
Insurance Settlement Gain (15,571 ) -   NM (15,571 ) -   NM
Adtalem Global Education Operating Income
Excluding Special Items $ 58,373   $ 61,345   (4.8 )% $ 95,413   $ 92,368   3.3 %

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

December 31,

Six Months Ended

December 31,

2018 2017 2018 2017
(in thousands, except per share amounts)
Net Income (Loss) $ 17,295 $ (81,156 ) $ 7,765 $ (68,371 )
Earnings (Loss) per Share (diluted-2018, basic-2017) $ 0.29 $ (1.33 ) $ 0.13 $ (1.10 )
Continuing Operations:
Restructuring Expense $ 3,645 $ 1,426 $ 43,193 $ 2,563
Effect on Earnings per Share (diluted) $ 0.06 $ 0.02 $ 0.71 $ 0.04
Insurance Settlement Gain $ (15,571 ) $ - $ (15,571 ) $ -
Effect on Earnings per Share (diluted) $ (0.26 ) $ - $ (0.26 ) $ -
Tax Cuts and Jobs Act of 2017 and Tax Charges Related
to the Divestiture of DeVry University $ 1,526 $ 101,196 $ 1,526 $ 101,196
Effect on Earnings per Share (diluted) $ 0.03 $ 1.63 $ 0.03 $ 1.61
Income Tax Impact on Non-GAAP Adjustments $ 2,483 $ (528 ) $ (4,969 ) $ (855 )
Effect on Earnings per Share (diluted) $ 0.04 $ (0.01 ) $ (0.08 ) $ (0.01 )
Discontinued Operations, net of tax $ 35,123 $ 29,315 $ 39,830 $ 41,968
Effect on Earnings per Share (diluted-2018, basic-2017) $ 0.59 $ 0.48 $ 0.66 $ 0.68
Net Income from Continuing Operations Excluding Special
Items, net of tax $ 44,501 $ 50,253 $ 71,774 $ 76,501
Earnings per Share from Continuing Operations Excluding
Special Items, net of tax (diluted) $ 0.74 $ 0.81 $ 1.18 $ 1.22
Shares used in EPS calculation
Basic NA 61,234 NA 62,009
Diluted 60,000 62,023 60,598 62,705

SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
         
Three Months Ended December 31, 2018
(in thousands)
Revenue:

Medical and

Healthcare

Professional

Education

Technology

and Business

Home Office

and Other

Consolidated
Fiscal Year 2018 as Reported $ 203,297 $ 30,359 $ 75,133 $ (578 ) $ 308,211
Organic Growth (Decline) 8,438 10,834 (2,242 ) (230 ) 16,800
Effect of Acquisitions - 949 474 - 1,423
Hurricane Impact 892 - - - 892
Effect of Currency Change -   -   (10,732 ) -   (10,732 )
Fiscal Year 2019 as Reported $ 212,627   $ 42,142   $ 62,633   $ (808 ) $ 316,594  
 
Fiscal Year 2019 % Change:
Organic Growth (Decline) 4.2 % 35.7 % (3.0 %) NM 5.5 %
Effect of Acquisitions - 3.1 % 0.6 % NM 0.5 %
Hurricane Impact 0.4 % -   -   NM   0.3 %
Constant Currency Change 4.6 % 38.8 % (2.4 %) NM 6.2 %
Effect of Currency Change -   -   (14.3 %) NM   (3.5 %)
Fiscal Year 2019 % Change
as Reported 4.6 % 38.8 % (16.6 %) NM   2.7 %
 
Six Months Ended December 31, 2018
(in thousands)
Revenue:

Medical and

Healthcare

Professional

Education

Technology

and Business

Home Office

and Other

Consolidated
Fiscal Year 2018 as Reported $ 394,582 $ 70,401 $ 137,572 $ (1,201 ) $ 601,354
Organic Growth (Decline) 11,909 5,496 (5,464 ) (414 ) 11,527
Effect of Acquisitions - 1,891 1,100 - 2,991
Hurricane Impact 8,236 - - - 8,236
Effect of Currency Change -   -   (23,324 ) -   (23,324 )
Fiscal Year 2019 as Reported $ 414,727   $ 77,788   $ 109,884   $ (1,615 ) $ 600,784  
 
Fiscal Year 2019 % Change:
Organic Growth (Decline) 3.0 % 7.8 % (4.0 %) NM 1.9 %
Effect of Acquisitions - 2.7 % 0.8 % NM 0.5 %
Hurricane Impact 2.1 % -   -   NM   1.4 %
Constant Currency Change 5.1 % 10.5 % (3.2 %) NM 3.8 %
Effect of Currency Change -   -   (17.0 %) NM   (3.9 %)
Fiscal Year 2019 % Change
as Reported 5.1 % 10.5 % (20.1 %) NM   (0.1 %)

SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
 
  Three Months Ended December 31, 2018
(in thousands)
Total Operating Cost and Expense:

Medical and

Healthcare

 

Professional

Education

 

Technology

and Business

 

Home Office

and Other

  Consolidated
Fiscal Year 2018 as Reported $ 148,249 $ 28,166 $ 61,142 $ 10,735 $ 248,292
Cost Increase (Reduction) 16,612 3,110 1,262 (2,755 ) 18,229
Effect of Acquisitions - 1,233 233 - 1,466
Hurricane Impact 245 - - - 245
Restructuring Expense Change 2,445 - 110 (336 ) 2,219
Insurance Settlement Gain (15,571 ) - - - (15,571 )
Effect of Currency Change -   -   (8,585 ) -   (8,585 )
Fiscal Year 2019 as Reported $ 151,980   $ 32,509   $ 54,162   $ 7,644   $ 246,295  
 
Fiscal Year 2019 % Change:
Cost Increase (Reduction) 11.2 % 11.0 % 2.1 % NM 7.3 %
Effect of Acquisitions - 4.4 % 0.4 % NM 0.6 %
Hurricane Impact 0.2 % - - NM 0.1 %
Restructuring Expense Change 1.6 % - 0.2 % NM 0.9 %
Insurance Settlement Gain (10.5 %) -   -   NM   (6.3 %)
Constant Currency Change 2.5 % 15.4 % 2.6 % NM 2.7 %
Effect of Currency Change -   -   (14.0 %) NM   (3.5 %)
Fiscal Year 2019 % Change
as Reported 2.5 % 15.4 % (11.4 %) NM   (0.8 %)
 
Six Months Ended December 31, 2018
(in thousands)
Total Operating Cost and Expense:

Medical and

Healthcare

Professional

Education

Technology

and Business

Home Office

and Other

Consolidated
Fiscal Year 2018 as Reported $ 313,303 $ 57,701 $ 121,720 $ 18,825 $ 511,549
Cost Increase (Reduction) 26,715 3,325 1,406 (4,915 ) 26,531
Effect of Acquisitions - 2,379 650 - 3,029
Hurricane Impact (13,372 ) - - - (13,372 )
Restructuring Expense Change 41,348 - 185 (903 ) 40,630
Insurance Settlement Gain (15,571 ) - - - (15,571 )
Effect of Currency Change -   -   (19,803 ) -   (19,803 )
Fiscal Year 2019 as Reported $ 352,423   $ 63,405   $ 104,158   $ 13,007   $ 532,993  
 
Fiscal Year 2019 % Change:
Cost Increase (Reduction) 8.5 % 5.8 % 1.2 % NM 5.2 %
Effect of Acquisitions - 4.1 % 0.5 % NM 0.6 %
Hurricane Impact (4.3 %) - - NM (2.6 %)
Restructuring Expense Change 13.2 % - 0.2 % NM 7.9 %
Insurance Settlement Gain (5.0 %) -   -   NM   (3.0 %)
Constant Currency Change 12.5 % 9.9 % 1.8 % NM 8.1 %
Effect of Currency Change -   -   (16.3 %) NM   (3.9 %)
Fiscal Year 2019 % Change
as Reported 12.5 % 9.9 % (14.4 %) NM   4.2 %

SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
         
Three Months Ended December 31, 2018
(in thousands)
Operating Income (Loss):

Medical and

Healthcare

Professional

Education

Technology

and Business

Home Office

and Other

Consolidated
Fiscal Year 2018 as Reported $ 55,047 $ 2,193 $ 13,991 $ (11,312 ) $ 59,919
Organic Change (8,173 ) 7,724 (3,504 ) 2,524 (1,429 )
Effect of Acquisitions - (284 ) 241 - (43 )
Hurricane Impact 647 - - - 647
Restructuring Expense Change (2,445 ) - (110 ) 336 (2,219 )
Insurance Settlement Gain 15,571 - - - 15,571
Effect of Currency Change -   -   (2,147 ) -   (2,147 )
Fiscal Year 2019 as Reported $ 60,647   $ 9,633   $ 8,471   $ (8,452 ) $ 70,299  
 
Six Months Ended December 31, 2018
(in thousands)
Operating Income (Loss):

Medical and

Healthcare

Professional

Education

Technology

and Business

Home Office

and Other

Consolidated
Fiscal Year 2018 as Reported $ 81,279 $ 12,700 $ 15,852 $ (20,026 ) $ 89,805
Organic Change (14,807 ) 2,171 (6,870 ) 4,502 (15,004 )
Effect of Acquisitions - (488 ) 450 - (38 )
Hurricane Impact 21,608 - - - 21,608
Restructuring Expense Change (41,348 ) - (185 ) 903 (40,630 )
Insurance Settlement Gain 15,571 - - - 15,571
Effect of Currency Change -   -   (3,521 ) -   (3,521 )
Fiscal Year 2019 as Reported $ 62,303   $ 14,383   $ 5,726   $ (14,621 ) $ 67,791  

CONTACT:
Investor Contact:
Chaka Patterson
Chaka.Patterson@Adtalem.com
630-353-9073

Media Contact:
Ernie Gibble
Ernie.Gibble@Adtalem.com
630-353-9920

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