Segment Highlights

Medical and Healthcare

Second quarter segment revenue increased 3.6% to $220.2 million compared with the prior year.

Chamberlain revenue in the second quarter increased 2.7% compared with the prior year. New student enrollment for the November 2019 session increased 3.6% while total student enrollment increased 1.2% compared with the prior year, driven by improved marketing and recruiting programs resulting in an increase in new student enrollment in the RN to BSN program, which represented the majority of the November enrollment session. This represents a positive trend for RN to BSN enrollment.

Revenue in the second quarter for the medical and veterinary schools increased 4.8% from the prior year.

Segment operating income in the second quarter decreased 32.1% to $41.2 million compared with prior year. Excluding special items, segment operating income in the second quarter declined 12.5% to $41.6 million. The decrease in segment operating income is the result of increased marketing expenses to drive future enrollment growth, an increase in the bad debt reserve and corporate costs that were previously allocated to our former Business and Law segment.

Financial Services

Second quarter segment revenue increased 9.1% to $46.0 million compared with the prior year. Becker Accounting revenue decreased 3.4% and the Association of Anti-Money Laundering Specialists (ACAMS) revenue decreased 9.9%. The decrease in Becker Accounting revenue is due to timing of certain enterprise orders which will positively impact the second half of the year. The decrease in ACAMS revenue is due to a year-over-year change in the timing of the Las Vegas conference, which shifted from the second quarter in 2019 to the first quarter in 2020. Second quarter segment revenue included $8.1 million of revenue from the fourth quarter of fiscal year 2019 acquisition of OnCourse Learning. Segment operating income decreased 52.8% to $4.5 million compared with the prior year. Excluding special items, segment operating income in the second quarter declined 41.0% to $5.7 million. The decrease in segment operating income is the result of the timing of the ACAMS conference and corporate costs that were previously allocated to our former Business and Law segment.

Share Repurchase Authorization

Adtalem’s board of directors has approved an additional share repurchase authorization for $300 million which expires December 31, 2021. The new program will commence when the repurchases from the current program (approximately $82 million remaining as of December 31, 2019) are complete, which is expected to occur in calendar year 2020.

Adtalem Outlook

Fiscal Year 2020

The outlook for the full year 2020 remains unchanged from our guidance issued in the first quarter earnings press release.

●	Revenue is expected to grow 5% to 7% compared with the prior year

●	Effective income tax rate is expected to be in the 19% to 20% range

●	Earnings per share from continuing operations, excluding special items, are expected to grow in the 7 to 9% range compared with the prior year

●	Full-year capital spending is expected to be in the $45 million to $50 million range

Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its fiscal 2020 second quarter on Tuesday, February 4, 2020, at 4 p.m. CT (5 p.m. ET). The conference call will be led by Lisa Wardell, chairman of the board, president and chief executive officer, and Mike Randolfi, senior vice president and chief financial officer.

For those participating by telephone, dial 844-582-0106 (United States) or +1 825-312-2256 (outside the United States) and request the “Adtalem Call” or use conference ID: 5983068. Adtalem will also broadcast the conference call live on the web at:

https://event.on24.com/wcc/r/2150102/B9C9BC65F1EACF0D0AE0ACCE1D6EB708.

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 replay of the call until March 4, 2020. To access the replay, dial 800-585-8367 (United States) or +1 416-621-4642 (outside the United States), conference ID: 5983068, or visit the Adtalem website at: https://investors.adtalem.com/overview/default.aspx.

About Adtalem Global Education

The purpose of Adtalem Global Education is to empower students and members 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 workforce solutions provider and the parent organization of American University of the Caribbean School of Medicine, Association of Certified Anti-Money Laundering Specialists, Becker Professional Education, Chamberlain University, EduPristine, OnCourse Learning, Ross University School of Medicine, Ross University School of Veterinary Medicine and Adtalem Educacional do Brasil (IBMEC, Damásio and Wyden institutions). For more information, please visit adtalem.com and follow us on Twitter (@adtalemglobal) and LinkedIn.

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 fiscal year ended June 30, 2019 filed with the Securities and Exchange Commission (SEC) on August 28, 2019 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.

	2Q 2020		2Q 2019		% Change
Adtalem Global Education Student Enrollments⁽¹⁾
New students		2,711		2,617		+3.6	%
Total students		36,823		36,720		+0.3	%


Chamberlain University
November Session⁽²⁾
New students		2,711		2,617		+3.6	%
Total students		31,215		30,833		+1.2	%

1)	Includes the most recently reported enrollment sessions at Adtalem’s postsecondary institutions, excluding Adtalem Brazil

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

# # #

Adtalem Global Education Inc.

Consolidated Balance Sheets

(unaudited)

(in thousands, except par value)

	December 31,			June 30,			December 31,
	2019			2019			2018
Assets:
Current assets:
Cash and cash equivalents	$	67,282		$	204,202		$	208,295
Investments in marketable securities		9,229			8,680			7,269
Restricted cash		3,465			1,022			818
Accounts receivable, net		93,394			83,560			81,990
Prepaid expenses and other current assets		45,275			29,313			55,158
Current assets held for sale		171,284			177,923			153,019
Total current assets		389,929			504,700			506,549
Noncurrent assets:
Property and equipment, net		281,975			283,433			275,546
Operating lease assets		187,520			—			—
Deferred income taxes		15,588			18,314			19,141
Intangible assets, net		292,736			297,989			238,613
Goodwill		686,805			687,256			627,594
Other assets, net		82,850			52,113			57,743
Other assets held for sale		453,207			398,891			397,037
Total noncurrent assets		2,000,681			1,737,996			1,615,674
Total assets	$	2,390,610		$	2,242,696		$	2,122,223

Liabilities and shareholders' equity:
Current liabilities:
Accounts payable	$	31,457		$	53,385		$	46,442
Accrued payroll and benefits		39,088			46,664			42,782
Accrued liabilities		89,507			76,529			76,035
Deferred revenue		51,413			95,944			47,097
Current operating lease liabilities		53,029			—			—
Current portion of long-term debt		3,000			3,000			3,000
Current liabilities held for sale		36,694			36,109			28,954
Total current liabilities		304,188			311,631			244,310
Noncurrent liabilities:
Long-term debt		412,105			398,094			289,084
Long-term operating lease liabilities		180,002			—			—
Deferred income taxes		28,845			29,426			32,398
Other liabilities		91,643			86,326			97,329
Noncurrent liabilities held for sale		75,833			16,146			20,804
Total noncurrent liabilities		788,428			529,992			439,615
Total liabilities		1,092,616			841,623			683,925
Commitments and contingencies
Redeemable noncontrolling interest		3,082			9,543			8,651
Shareholders' equity:
Common stock, $0.01 par value per share, 200,000 shares authorized; 52,953, 55,303, and 58,212 shares outstanding as of December 31, 2019, June 30, 2019 and December 31, 2018, respectively		806			801			801
Additional paid-in capital		496,674			486,061			479,946
Retained earnings		2,032,788			2,012,902			1,926,134
Accumulated other comprehensive loss		(159,118	)		(137,290	)		(143,518	)
Treasury stock, at Cost, 27,623, 24,830, and 21,883 shares as of December 31, 2019, June 30, 2019 and December 31, 2018, respectively		(1,076,238	)		(970,944	)		(833,716	)
Total shareholders' equity		1,294,912			1,391,530			1,429,647
Total liabilities and shareholders' equity	$	2,390,610		$	2,242,696		$	2,122,223

Adtalem Global Education Inc.

Consolidated Statements of Income

(unaudited)

(in thousands, except per share data)


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2019			2018			2019			2018
Revenue	$	266,172		$	253,961		$	520,785		$	490,900
Operating cost and expense:
Cost of educational services		127,258			118,077			255,292			229,611
Student services and administrative expense		96,648			89,251			195,735			178,415
Restructuring expense		1,955			3,535			8,485			43,008
Gain on sale of assets		—			—			(4,779	)		—
Settlement gain		—			(15,571	)		—			(15,571	)
Total operating cost and expense		225,861			195,292			454,733			435,463
Operating income from continuing operations		40,311			58,669			66,052			55,437
Other income (expense):
Interest and dividend income		1,215			1,173			1,893			2,142
Interest expense		(5,066	)		(5,006	)		(10,394	)		(9,924	)
Investment gain (loss)		419			(1,122	)		442			(1,122	)
Loss on derivative		(28,006	)		—			(28,006	)		—
Net other expense		(31,438	)		(4,955	)		(36,065	)		(8,904	)
Income from continuing operations before income taxes		8,873			53,714			29,987			46,533
Income tax provision		(7,570	)		(11,857	)		(11,276	)		(9,527	)
Income from continuing operations		1,303			41,857			18,711			37,006
Discontinued operations:
Income (loss) from discontinued operations before income taxes		3,294			3,768			411			(1,951	)
Loss on disposal of discontinued operations before income taxes		—			(32,714	)		—			(32,714	)
Income tax benefit		823			4,595			550			5,580
Income (loss) from discontinued operations		4,117			(24,351	)		961			(29,085	)
Net income		5,420			17,506			19,672			7,921
Net loss attributable to redeemable noncontrolling interest from continuing operations		105			88			214			152
Net income attributable to redeemable noncontrolling interest from discontinued operations		—			(299	)		—			(308	)
Net income attributable to Adtalem Global Education	$	5,525		$	17,295		$	19,886		$	7,765

Amounts attributable to Adtalem Global Education:
Net income from continuing operations	$	1,408		$	41,945		$	18,925		$	37,158
Net income (loss) from discontinued operations		4,117			(24,650	)		961			(29,393	)
Net income attributable to Adtalem Global Education	$	5,525		$	17,295		$	19,886		$	7,765

Earnings (loss) per share attributable to Adtalem Global Education:
Basic:
Continuing operations	$	0.03		$	0.71		$	0.35		$	0.62
Discontinued operations	$	0.08		$	(0.42	)	$	0.02		$	(0.49	)
Net	$	0.10		$	0.29		$	0.36		$	0.13
Diluted:
Continuing operations	$	0.03		$	0.70		$	0.34		$	0.61
Discontinued operations	$	0.08		$	(0.41	)	$	0.02		$	(0.49	)
Net	$	0.10		$	0.29		$	0.36		$	0.13

Weighted-average shares outstanding:
Basic shares		53,890			59,185			54,691			59,756
Diluted shares		54,280			60,000			55,192			60,598

Adtalem Global Education Inc.

Consolidated Statements of Cash Flows
(unaudited)

(in thousands)


	Six Months Ended
	December 31,
	2019			2018
Operating activities:
Net income	$	19,672		$	7,921
(Income) loss from discontinued operations		(961	)		29,085
Income from continuing operations		18,711			37,006
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense		8,547			7,360
Amortization and adjustments to operating lease assets		21,309			—
Depreciation		17,224			15,913
Amortization		5,893			3,995
Provision for bad debts		11,436			2,657
Deferred income taxes		2,131			22,924
Loss on disposals, accelerated depreciation, and adjustments to property and equipment		1,100			39,949
Realized and unrealized (gain) loss on investments		(442	)		1,122
Realized gain on sale of assets		(4,779	)		—
Insurance settlement gain		—			(15,571	)
Unrealized loss on derivative		28,006			—
Changes in assets and liabilities:
Accounts receivable		(14,779	)		(14,430	)
Prepaid expenses and other current assets		(19,445	)		(21,131	)
Accounts payable		(20,906	)		2,785
Accrued payroll and benefits		(7,576	)		(13,341	)
Accrued liabilities		(916	)		3,802
Deferred revenue		(44,531	)		(51,850	)
Operating lease liabilities		(27,549	)		—
Other assets and liabilities		2,270			(19,126	)
Net cash (used in) provided by operating activities-continuing operations		(24,296	)		2,064
Net cash provided by operating activities-discontinued operations		10,622			20,957
Net cash (used in) provided by operating activities		(13,674	)		23,021
Investing activities:
Capital expenditures		(20,311	)		(32,058	)
Insurance proceeds received for damage to buildings and equipment		—			35,706
Proceeds from sales of marketable securities		702			1,136
Purchases of marketable securities		(753	)		(5,290	)
Proceeds from sale of assets		6,421			—
Cash received on purchase price adjustment		92			—
Loan to DeVry University		—			(10,000	)
Net cash used in investing activities-continuing operations		(13,849	)		(10,506	)
Net cash used in investing activities-discontinued operations		(2,585	)		(5,130	)
Cash and restricted cash transferred in divestitures of discontinued operations		—			(48,876	)
Net cash used in investing activities		(16,434	)		(64,512	)
Financing activities:
Proceeds from exercise of stock options		2,028			16,784
Employee taxes paid on withholding shares		(5,232	)		(6,401	)
Proceeds from stock issued under Colleague Stock Purchase Plan		—			312
Repurchases of common stock for treasury		(100,019	)		(115,933	)
Borrowings under credit facility		160,000			—
Repayments under credit facility		(146,500	)		(1,500	)
Proceeds from down payment on seller loan		5,200			—
Payment for purchase of redeemable noncontrolling interest of subsidiary		(6,247	)		—
Net cash used in financing activities-continuing operations		(90,770	)		(106,738	)
Net cash used in financing activities-discontinued operations		(1,765	)		(846	)
Net cash used in financing activities		(92,535	)		(107,584	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(3,037	)		289
Net decrease in cash, cash equivalents and restricted cash		(125,680	)		(148,786	)
Cash, cash equivalents and restricted cash at beginning of period		300,467			444,405
Cash, cash equivalents and restricted cash at end of period		174,787			295,619
Less: cash, cash equivalents and restricted cash of discontinued operations at end of period		104,040			86,506
Cash, cash equivalents and restricted cash at end of period	$	70,747		$	209,113

Adtalem Global Education Inc.

Segment Information

(unaudited)

(in thousands)

	Three Months Ended									Six Months Ended
	December 31,									December 31,
	2019			2018			Increase (Decrease)			2019			2018			Increase (Decrease)
Revenue:
Medical and Healthcare	$	220,180		$	212,627			3.6	%	$	427,667		$	414,727			3.1	%
Financial Services		45,992			42,142			9.1	%		93,118			77,788			19.7	%
Home Office and Other		—			(808	)	NM				—			(1,615	)	NM
Total consolidated revenue	$	266,172		$	253,961			4.8	%	$	520,785		$	490,900			6.1	%
Operating income (loss):
Medical and Healthcare	$	41,183		$	60,647			(32.1	)%	$	69,683		$	62,303			11.8	%
Financial Services		4,542			9,633			(52.8	)%		6,670			14,383			(53.6	)%
Home Office and Other		(5,414	)		(11,611	)		53.4	%		(10,301	)		(21,249	)		51.5	%
Total consolidated operating income	$	40,311		$	58,669			(31.3	)%	$	66,052		$	55,437			19.1	%

Non-GAAP Financial Measures and Reconciliations

We believe that certain non-GAAP financial measures 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. We use these supplemental non-GAAP financial measures internally in our assessment of performance and budgeting process. However, these non-GAAP financial measures should be 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:

Net income from continuing operations attributable to Adtalem excluding special items (most comparable GAAP measure: net income attributable to Adtalem) – Measure of Adtalem’s net income attributable to Adtalem adjusted for restructuring expense, gain on sale of assets, settlement gain, tax charges related to the divestiture of DeVry University, loss on derivative, and discontinued operations.

Earnings per share from continuing operations excluding special items (most comparable GAAP measure: earnings per share) – Measure of Adtalem’s diluted earnings per share adjusted for restructuring expense, gain on sale of assets, settlement gain, tax charges related to the divestiture of DeVry University, loss on derivative, and discontinued operations.

Operating income from continuing operations excluding special items (most comparable GAAP measure: operating income from continuing operations) – Measure of Adtalem’s operating income from continuing operations adjusted for restructuring expense, gain on sale of assets, and settlement gain. This measure is applied on a consolidated and segment basis, depending on the context of the discussion.

A description of special items in our non-GAAP financial measures described above are as follows:

●	Restructuring charges primarily related to the sale of Becker’s courses for healthcare students, real estate consolidations at Adtalem’s home office, and the closing of the Ross University School of Medicine (“RUSM”) campus in Dominica.

●	Gain on the sale of Adtalem’s Columbus, Ohio, campus facility.

●	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.

●	Loss on the deal-contingent foreign currency hedge arrangement entered into in connection with the announced proposed sale of Adtalem Brazil to economically hedge the Brazilian Real denominated purchase price through mitigation of the currency exchange rate risk.

●	Tax charges related to the divestiture of DeVry University.

●	Discontinued operations include the operations of Adtalem Brazil, Carrington, and DeVry University.

Adtalem Global Education Inc.

Non-GAAP Operating Income from Continuing Operations by Segment

(unaudited)

(in thousands)

	Three Months Ended									Six Months Ended
	December 31,									December 31,
	2019			2018			Increase (Decrease)			2019			2018			Increase (Decrease)
Medical and Healthcare:
Operating income (GAAP)	$	41,183		$	60,647			(32.1	)%	$	69,683		$	62,303			11.8	%
Restructuring expense		417			2,445			(82.9	)%		544			41,460			(98.7	)%
Settlement gain		—			(15,571	)	NM				—			(15,571	)	NM
Operating income excluding special items (non-GAAP)	$	41,600		$	47,521			(12.5	)%	$	70,227		$	88,192			(20.4	)%

Financial Services:
Operating income (GAAP)	$	4,542		$	9,633			(52.8	)%	$	6,670		$	14,383			(53.6	)%
Restructuring expense		1,137			—		NM				3,116			—		NM
Operating income excluding special items (non-GAAP)	$	5,679		$	9,633			(41.0	)%	$	9,786		$	14,383			(32.0	)%

Home Office and Other:
Operating loss (GAAP)	$	(5,414	)	$	(11,611	)		53.4	%	$	(10,301	)	$	(21,249	)		51.5	%
Restructuring expense		401			1,090			(63.2	)%		4,825			1,548			211.7	%
Gain on sale of assets		—			—		NM				(4,779	)		—		NM
Operating loss excluding special items (non-GAAP)	$	(5,013	)	$	(10,521	)		52.4	%	$	(10,255	)	$	(19,701	)		47.9	%

Adtalem Global Education:
Operating income (GAAP)	$	40,311		$	58,669			(31.3	)%	$	66,052		$	55,437			19.1	%
Restructuring expense		1,955			3,535			(44.7	)%		8,485			43,008			(80.3	)%
Gain on sale of assets		—			—		NM				(4,779	)		—		NM
Settlement gain		—			(15,571	)	NM				—			(15,571	)	NM
Operating income excluding special items (non-GAAP)	$	42,266		$	46,633			(9.4	)%	$	69,758		$	82,874			(15.8	)%

Adtalem Global Education Inc.

Non-GAAP Earnings Disclosure

(unaudited)

(in thousands, except per share data)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2019			2018			2019			2018
Net income attributable to Adtalem (GAAP)	$	5,525		$	17,295		$	19,886		$	7,765
Restructuring expense		1,955			3,535			8,485			43,008
Gain on sale of assets		—			—			(4,779	)		—
Settlement gain		—			(15,571	)		—			(15,571	)
Loss on derivative		28,006			—			28,006			—
Tax charges related to the divestiture of DeVry University		—			1,526			—			1,526
Income tax impact on non-GAAP adjustments (1)		(461	)		2,829			(804	)		(5,123	)
(Income) loss from discontinued operations		(4,117	)		24,650			(961	)		29,393
Net income from continuing operations attributable to Adtalem excluding special items (non-GAAP)	$	30,908		$	34,264		$	49,833		$	60,998

(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2019			2018			2019			2018
Earnings per share, diluted (GAAP)	$	0.10		$	0.29		$	0.36		$	0.13
Effect on diluted earnings per share:
Restructuring expense		0.04			0.06			0.15			0.71
Gain on sale of assets		-			-			(0.09	)		-
Settlement gain		-			(0.26	)		-			(0.26	)
Loss on derivative		0.52			-			0.51			-
Tax charges related to the divestiture of DeVry University		-			0.03			-			0.03
Income tax impact on non-GAAP adjustments (1)		(0.01	)		0.05			(0.01	)		(0.08	)
(Income) loss from discontinued operations		(0.08	)		0.41			(0.02	)		0.49
Earnings per share from continuing operations excluding special items, diluted (non-GAAP)	$	0.57		$	0.57		$	0.90		$	1.01
Diluted shares used in EPS calculation		54,280			60,000			55,192			60,598

(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.

	News Release

	Investor Contact: Maureen Resac Maureen.Resac@Adtalem.com 312-651-1481 Media Contact: John Kristoff John.Kristoff@Adtalem.com 312-651-1437