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Income Taxes (Tables)

12 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income before Income Tax

Income from continuing operations before income taxes, classified by source of income, was as follows (in thousands):

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended June 30,
​	​	2023		​	2022		​	2021
Domestic	​	$	51,422	​	$	(112,151)	​	$	12,471
Foreign	​		60,613	​		60,657	​		63,295
Total	​	$	112,035	​	$	(51,494)	​	$	75,766

Income Tax Provisions (Benefits)

The components of the provision for (benefit from) income taxes were as follows (in thousands):

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended June 30,
​		2023		​	2022		​	2021
Current tax provision (benefit):		​	​	​	​	​	​	​	​
U.S. federal	​	$	13,761	​	$	(6,767)	​	$	9,860
State and local	​		824	​		4,154	​		1,691
Foreign	​		614	​		725	​		547
Total current	​		15,199	​		(1,888)	​		12,098
Deferred tax provision (benefit):	​	​	​	​	​	​	​	​	​
U.S. federal	​		(1,099)	​		(6,425)	​		(2,970)
State and local	​		(4,347)	​		(6,597)	​		996
Foreign	​		530	​		(629)	​		2,194
Total deferred	​		(4,916)	​		(13,651)	​		220
Provision for (benefit from) income taxes	​	$	10,283	​	$	(15,539)	​	$	12,318

Income Tax Provisions Computed using Statutory U.S. Federal Rate

The effective tax rate differs from the statutory tax rates as follows (in thousands):

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Year Ended June 30,
​	​	2023				​	​	2022				​	​	2021
Income tax at statutory rate	​	$	23,527	​	21.0	%	​	$	(10,814)	​	21.0	%	​	$	15,911	​	21.0	%
Lower rates on foreign operations	​		(11,668)		(10.4)	%	​		(12,879)		25.0	%	​		(10,664)		(14.1)	%
State income taxes	​		2,719		2.4	%	​		(661)		1.3	%	​		1,199		1.6	%
Loss on investment in subsidiary	​		—		—	%	​		(1,669)		3.2	%	​		—		—	%
Deferred tax benefit from acquisitions and divestitures	​		—		—	%	​		(1,153)		2.2	%	​		—		—	%
Research and development tax credits	​	​	(1,862)	​	(1.7)	%	​	​	—		—	%	​	​	—		—	%
Change in valuation allowance	​	​	(9,769)	​	(8.7)	%	​	​	5,406		(10.5)	%	​	​	(162)		(0.2)	%
Reduction in state loss carryforwards	​	​	2,340	​	2.1	%	​	​	(5,882)		11.4	%	​	​	—		—	%
Permanent non-deductible items	​		1,630		1.5	%	​		2,788		(5.4)	%	​		796		1.1	%
Foreign tax provisions under GILTI	​	​	3,569	​	3.2	%	​		8,581	​	(16.7)	%	​		4,787	​	6.3	%
Other	​		(203)		(0.2)	%	​		744		(1.4)	%	​		451		0.6	%
Provision for (benefit from) income taxes	​	$	10,283		9.2	%	​	$	(15,539)		30.2	%	​	$	12,318		16.3	%

Deferred Tax Assets (Liabilities)

The components of the deferred income tax assets and liabilities were as follows (in thousands):

​

​	​	​	​	​	​	​
​	​	June 30,
​	​	2023		​	2022
Employee benefits	​	$	11,719	​	$	9,936
Stock-based compensation	​		7,310	​		6,675
Receivable reserve	​		6,246	​		6,919
Capitalized research and experimental costs	​		8,075	​		—
Operating lease liabilities	​	​	41,235	​	​	44,089
Other reserves	​		6,246	​		1,865
Loss and credit carryforwards, net	​		19,259	​		21,206
Less: valuation allowance	​		(621)	​		(10,390)
Gross deferred tax assets	​		99,469	​		80,300
Depreciation	​		(5,643)	​		(5,314)
Deferred taxes on unremitted foreign earnings	​	​	(428)	​	​	(397)
Amortization of intangible assets	​		(31,294)	​		(18,975)
Operating lease assets	​	​	(31,478)	​	​	(30,075)
Gross deferred tax liability	​		(68,843)	​		(54,761)
Net deferred tax asset	​	$	30,626	​	$	25,539

Net Operating Loss and Credit Carryforwards

Adtalem has the following tax net operating loss (tax effected), interest (tax effected), and credit carryforwards as of June 30, 2023 (in thousands):

​

​	​	​	​	​	​	​	​
​	​	June 30,		​	Years of Expiration
​	​	2023		​	Beginning	​	Ending
U.S. interest expense carryforwards	​	$	1,861		no expiration
U.S. credit carryforwards	​	​	672	​	2027	​	2030
State net operating loss carryforwards	​		10,388		2024		2042
State interest expense carryforwards	​	​	862	​	no expiration
Foreign net operating loss carryforwards	​		5,476		2024		2033
Total loss and credit carryforwards, net	​	$	19,259		​	​	​

Changes in Unrecognized Tax Benefits

The changes in our unrecognized tax benefits were (in thousands):

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended June 30,
​	​	2023		​	2022		​	2021
Balance at beginning of period	​	$	11,645	​	$	9,836	​	$	10,473
Increases from positions taken during prior periods	​		1,299	​		1,074	​		—
Decreases from positions taken during prior periods	​		—	​		(1,737)	​		(419)
Increases from positions taken during the current period	​		665	​		2,845	​		42
Reductions due to lapse of statute	​		(481)	​		(373)	​		(257)
Reductions due to settlement	​		—	​		—	​		(3)
Balance at end of period	​	$	13,128	​	$	11,645	​	$	9,836

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