Adtalem Global Education Inc. [ATGE] Filings

10-Q 1 atge-20230331x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended March 31, 2023

	or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _____ to _____

	Commission File Number: 001-13988

Adtalem Global Education Inc.

(Exact name of registrant as specified in its charter)


Delaware	36-3150143
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

500 West Monroe Street
Chicago, Illinois	60661
(Address of principal executive offices)	(Zip Code)

(312) 651-1400

(Registrant’s telephone number; including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	ATGE	New York Stock Exchange
Common stock, $0.01 par value per share	ATGE	Chicago Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	þ	Accelerated filer	☐
Non-accelerated filer	◻	Smaller reporting company	☐
		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. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of April 28, 2023, there were 43,609,242 shares of the registrant’s common stock, $0.01 par value per share outstanding.

Table of Contents

Adtalem Global Education Inc.

Form 10-Q

Table of Contents

		Page
	Part I. Financial Information
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Cash Flows	4
	Consolidated Statements of Shareholders’ Equity	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 4.	Controls and Procedures	65
	Part II. Other Information
Item 1.	Legal Proceedings	65
Item 1A.	Risk Factors	65
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	66
Item 6.	Exhibits	67
	Signature	68

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

Adtalem Global Education Inc.

Consolidated Balance Sheets

(unaudited)

(in thousands, except par value)


	March 31,		June 30,		March 31,
	2023		2022		2022
Assets:
Current assets:
Cash and cash equivalents	$	315,373	$	346,973	$	788,729
Restricted cash		1,804		964		1,266
Accounts receivable, net		113,284		81,635		96,064
Prepaid expenses and other current assets		102,573		127,532		124,968
Current assets held for sale		—		—		1,432
Total current assets		533,034		557,104		1,012,459
Noncurrent assets:
Property and equipment, net		252,797		289,926		294,538
Operating lease assets		173,271		177,995		186,968
Deferred income taxes		54,494		51,093		47,574
Intangible assets, net		824,641		873,577		896,884
Goodwill		961,262		961,262		961,262
Other assets, net		67,618		119,283		120,145
Noncurrent assets held for sale		—		—		93
Total noncurrent assets		2,334,083		2,473,136		2,507,464
Total assets	$	2,867,117	$	3,030,240	$	3,519,923

Liabilities and shareholders' equity:
Current liabilities:
Accounts payable	$	73,307	$	57,140	$	67,252
Accrued payroll and benefits		56,023		67,792		57,510
Accrued liabilities		86,691		98,124		176,921
Deferred revenue		175,488		149,810		171,937
Current operating lease liabilities		46,411		50,781		51,335
Current liabilities held for sale		—		—		1,417
Total current liabilities		437,920		423,647		526,372
Noncurrent liabilities:
Long-term debt		694,429		838,908		1,225,360
Long-term operating lease liabilities		164,185		177,045		188,955
Deferred income taxes		27,237		25,554		25,862
Other liabilities		32,961		73,700		74,380
Noncurrent liabilities held for sale		—		—		41
Total noncurrent liabilities		918,812		1,115,207		1,514,598
Total liabilities		1,356,732		1,538,854		2,040,970
Commitments and contingencies (Note 19)
Shareholders' equity:
Common stock, $0.01 par value per share, 200,000 shares authorized; 44,232, 45,177, and 45,138 shares outstanding as of March 31, 2023, June 30, 2022, and March 31, 2022, respectively		822		818		818
Additional paid-in capital		564,363		521,848		517,431
Retained earnings		2,381,506		2,310,396		2,303,650
Accumulated other comprehensive loss		(2,227)		(2,227)		(3,417)
Treasury stock, at cost, 37,939, 36,619, and 36,621 shares as of March 31, 2023, June 30, 2022, and March 31, 2022, respectively		(1,434,079)		(1,339,449)		(1,339,529)
Total shareholders' equity		1,510,385		1,491,386		1,478,953
Total liabilities and shareholders' equity	$	2,867,117	$	3,030,240	$	3,519,923

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Adtalem Global Education Inc.

Consolidated Statements of Income

(unaudited)

(in thousands, except per share data)


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2023		2022		2023		2022
Revenue	$	369,082	$	364,281	$	1,086,185	$	1,021,195
Operating cost and expense:
Cost of educational services		165,820		166,027		484,768		498,497
Student services and administrative expense		144,526		148,863		432,713		433,379
Restructuring expense		1,278		10,518		17,706		16,999
Business acquisition and integration expense		11,346		5,924		35,702		41,537
Gain on sale of assets		(13,317)		—		(13,317)		—
Total operating cost and expense		309,653		331,332		957,572		990,412
Operating income		59,429		32,949		128,613		30,783
Interest expense		(14,457)		(36,585)		(47,806)		(109,907)
Other income (expense), net		3,980		(327)		3,301		2,435
Income (loss) from continuing operations before income taxes		48,952		(3,963)		84,108		(76,689)
(Provision for) benefit from income taxes		(389)		8,363		(5,906)		39,597
Income (loss) from continuing operations		48,563		4,400		78,202		(37,092)
Discontinued operations:
(Loss) income from discontinued operations before income taxes		(3,993)		3,426		(6,734)		1,535
(Loss) gain on disposal of discontinued operations before income taxes		(402)		474,003		(3,576)		474,003
Benefit from (provision for) income taxes		1,701		(134,089)		3,222		(134,201)
(Loss) income from discontinued operations		(2,694)		343,340		(7,088)		341,337
Net income	$	45,869	$	347,740	$	71,114	$	304,245

Earnings (loss) per share:
Basic:
Continuing operations	$	1.08	$	0.09	$	1.73	$	(0.75)
Discontinued operations	$	(0.06)	$	7.02	$	(0.16)	$	6.90
Total basic earnings per share	$	1.02	$	7.11	$	1.57	$	6.15
Diluted:
Continuing operations	$	1.06	$	0.09	$	1.70	$	(0.75)
Discontinued operations	$	(0.06)	$	6.95	$	(0.15)	$	6.90
Total diluted earnings per share	$	1.00	$	7.04	$	1.54	$	6.15

Weighted-average shares outstanding:
Basic shares		45,125		48,925		45,276		49,459
Diluted shares		45,801		49,377		46,089		49,459

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Adtalem Global Education Inc.

Consolidated Statements of Comprehensive Income

(unaudited)

(in thousands)


	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2023		2022		2023		2022
Net income	$	45,869	$	347,740	$	71,114	$	304,245
Other comprehensive income (loss), net of tax:
(Loss) gain on foreign currency translation adjustments		—		(24)		—		12
Comprehensive income before reclassification		45,869		347,716		71,114		304,257
Reclassification adjustment for realized gain on foreign currency translation adjustments		—		(906)		—		(906)
Reclassification adjustment for loss on interest rate swap		—		—		—		6,695
Comprehensive income	$	45,869	$	346,810	$	71,114	$	310,046

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Adtalem Global Education Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	Nine Months Ended
	March 31,
	2023		2022
Operating activities:
Net income	$	71,114	$	304,245
Loss (income) from discontinued operations		7,088		(341,337)
Income (loss) from continuing operations		78,202		(37,092)
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense		10,908		18,604
Amortization and impairments to operating lease assets		37,928		35,251
Depreciation		31,618		33,471
Amortization of intangible assets		48,936		73,967
Amortization and write-off of debt discount and issuance costs		7,974		34,481
Provision for bad debts		23,391		19,552
Deferred income taxes		(1,718)		3,425
Loss on disposals, accelerated depreciation, and impairments to property and equipment		3,999		2,274
Gain on extinguishment of debt		(71)		—
Loss on investments		4,122		807
Gain on sale of assets		(13,317)		—
Changes in assets and liabilities:
Accounts receivable		(43,345)		(40,520)
Prepaid expenses and other current assets		7,034		2,398
Accounts payable		12,286		(5,737)
Accrued payroll and benefits		(11,719)		(22,416)
Accrued liabilities		(20,275)		(92,528)
Deferred revenue		26,038		92,507
Operating lease liabilities		(37,758)		(36,159)
Other assets and liabilities		(14,412)		(23,514)
Net cash provided by operating activities-continuing operations		149,821		58,771
Net cash used in operating activities-discontinued operations		(404)		(6,915)
Net cash provided by operating activities		149,417		51,856
Investing activities:
Capital expenditures		(19,056)		(22,249)
Proceeds from sale of marketable securities		7,635		941
Purchases of marketable securities		(1,508)		(1,315)
Proceeds from note receivable related to property sold		46,800		—
Payment for purchase of business, net of cash and restricted cash acquired		—		(1,488,054)
Cash received on DeVry University loan		—		10,000
Net cash provided by (used in) investing activities-continuing operations		33,871		(1,500,677)
Net cash used in investing activities-discontinued operations		—		(3,287)
Proceeds from sale of business, net of cash transferred		—		962,652
Payment for working capital adjustment for sale of business		(3,174)		—
Net cash provided by (used in) investing activities		30,697		(541,312)
Financing activities:
Proceeds from exercise of stock options		1,622		8,433
Employee taxes paid on withholding shares		(4,214)		(2,727)
Proceeds from stock issued under Colleague Stock Purchase Plan		451		400
Repurchases of common stock for treasury		(44,710)		(120,000)
Payment on equity forward contract		(13,162)		(30,000)
Proceeds from long-term debt		—		850,000
Repayments of long-term debt		(150,861)		(687,667)
Payment of debt discount and issuance costs		—		(49,553)
Payment for purchase of redeemable noncontrolling interest of subsidiary		—		(1,790)
Net cash used in financing activities		(210,874)		(32,904)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		—		12
Net decrease in cash, cash equivalents and restricted cash		(30,760)		(522,348)
Cash, cash equivalents and restricted cash at beginning of period		347,937		1,313,616
Cash, cash equivalents and restricted cash at end of period		317,177		791,268
Less: cash, cash equivalents and restricted cash of discontinued operations at end of period		—		1,273
Cash, cash equivalents and restricted cash of continuing operations at end of period	$	317,177	$	789,995
Non-cash investing and financing activities:
Accrued capital expenditures	$	10,474	$	5,408
Accrued liability for repurchases of common stock	$	2,699	$	—
Accrued excise tax on share repurchases	$	361	$	—
Settlement of financing liability with assets	$	38,606	$	—

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Adtalem Global Education Inc.

Consolidated Statements of Shareholders’ Equity

(unaudited)

(in thousands)


									Accumulated
					Additional				Other
	Common Stock				Paid-In		Retained		Comprehensive		Treasury Stock
	Shares		Amount		Capital		Earnings		Loss		Shares		Amount		Total
December 31, 2021		81,705	$	817	$	542,296	$	1,955,910	$	(2,487)		31,908	$	(1,219,543)	$	1,276,993
Net income								347,740								347,740
Other comprehensive loss, net of tax										(24)						(24)
Reclassification adjustment for realized gain on foreign currency translation adjustments										(906)						(906)
Stock-based compensation						4,953										4,953
Net activity from stock-based compensation awards		54		1		232						9		(209)		24
Proceeds from stock issued under Colleague Stock Purchase Plan						(50)						(6)		223		173
Repurchases of common stock for treasury												4,710		(120,000)		(120,000)
Equity forward contract						(30,000)										(30,000)
March 31, 2022		81,759	$	818	$	517,431	$	2,303,650	$	(3,417)		36,621	$	(1,339,529)	$	1,478,953

December 31, 2022		82,156	$	822	$	561,376	$	2,335,641	$	(2,227)		36,713	$	(1,386,395)	$	1,509,217
Net income								45,869								45,869
Stock-based compensation						2,795										2,795
Net activity from stock-based compensation awards		15				199						2		(106)		93
Proceeds from stock issued under Colleague Stock Purchase Plan						(7)		(4)				(5)		192		181
Repurchases of common stock for treasury												1,229		(47,770)		(47,770)
March 31, 2023		82,171	$	822	$	564,363	$	2,381,506	$	(2,227)		37,939	$	(1,434,079)	$	1,510,385

Adtalem Global Education Inc. [ATGE] Filings
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10-Q	[2023-02-02]
10-Q	[2022-11-03]
10-K	[2022-08-11]
10-Q	[2022-05-05]
10-Q	[2022-02-08]
10-Q	[2021-11-03]
10-K	[2021-08-19]
10-Q	[2021-04-29]
10-Q	[2021-02-02]
10-Q	[2020-11-05]
10-K	[2020-08-18]
10-Q	[2020-05-05]
10-Q	[2020-02-04]
10-Q	[2019-10-29]
10-K	[2019-08-28]
10-Q	[2019-05-02]
10-Q	[2019-02-07]
10-Q	[2018-11-01]
10-K	[2018-08-24]
10-Q	[2018-05-03]
10-Q	[2018-02-06]
10-Q	[2017-11-02]
10-K	[2017-08-24]
10-Q	[2017-05-04]
10-Q	[2017-02-02]
10-Q	[2016-11-02]
10-K	[2016-08-25]
10-Q	[2016-05-05]
10-Q	[2016-02-08]
10-Q	[2015-11-04]
10-K	[2015-08-27]
10-Q	[2015-05-08]
10-Q	[2015-02-05]
10-Q	[2014-11-05]
10-K	[2014-08-27]
10-Q	[2014-05-05]
10-Q	[2014-02-04]
10-Q	[2013-11-05]
10-K	[2013-08-29]
10-Q	[2013-05-03]
10-Q	[2013-02-07]
10-Q	[2012-11-05]
10-K	[2012-08-28]
10-Q	[2012-05-03]
10-Q	[2012-02-06]