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Accounts and Financing Receivables

6 Months Ended

Dec. 31, 2024

9. Accounts and Financing Receivables

Our accounts receivables relate to student balances occurring in the normal course of business. Accounts receivables have a term of less than one year and are included in accounts and financing receivables, net on our Consolidated Balance Sheets. Our financing receivables relate to credit extension programs, which provides student with payment terms in excess of one year and are included in accounts and financing receivables, net and other assets, net on our Consolidated Balance Sheets.

The classification of our accounts and financing receivable balances was as follows (in thousands):


	December 31, 2024
		Gross		Allowance		Net
Accounts receivables, current	$	181,103	$	(36,752)	$	144,351
Financing receivables, current		5,415		(2,793)		2,622
Accounts and financing receivables, current	$	186,518	$	(39,545)	$	146,973

Financing receivables, current	$	5,415	$	(2,793)	$	2,622
Financing receivables, noncurrent		34,032		(10,266)		23,766
Total financing receivables	$	39,447	$	(13,059)	$	26,388


	June 30, 2024
		Gross		Allowance		Net
Accounts receivables, current	$	159,406	$	(35,336)	$	124,070
Financing receivables, current		5,239		(2,476)		2,763
Accounts and financing receivables, current	$	164,645	$	(37,812)	$	126,833

Financing receivables, current	$	5,239	$	(2,476)	$	2,763
Financing receivables, noncurrent		36,214		(10,082)		26,132
Total financing receivables	$	41,453	$	(12,558)	$	28,895

Our financing receivables relate to credit extension programs available to students at Chamberlain, AUC, RUSM, and RUSVM. These credit extension programs are designed to assist students who are unable to completely cover educational costs consisting of tuition, fees, and books, and are available only after all other student financial assistance has been applied toward those purposes. In addition, AUC, RUSM, and RUSVM allow students to finance their living expenses. Repayment plans for financing agreements are developed to address the financial circumstances of the particular student. Interest charges at rates from 3.0% to 12.0% per annum accrue each month on the unpaid balance once a student withdraws or graduates from a program. Most students are required to begin repaying their loans while they are still in school with a minimum payment level. Payments may increase upon completing or departing school.

Credit Quality

The primary credit quality indicator for our financing receivables is delinquency. Balances are considered delinquent when contractual payments on the loan become past due. We generally write-off financing receivable balances when they are at least 181 days past due. Payments are applied first to outstanding interest and then to the unpaid principal balance.

The credit quality analysis of financing receivables as of December 31, 2024 was as follows (in thousands):


	Amortized Cost Basis by Origination Year
	Prior		2021		2022		2023		2024		2025		Total
1-30 days past due	$	692	$	269	$	234	$	646	$	630	$	595	$	3,066
31-60 days past due		169		100		130		170		541		57		1,167
61-90 days past due		19		3		—		57		600		64		743
91-120 days past due		230		51		17		159		254		141		852
121-150 days past due		168		24		23		77		569		—		861
Greater than 150 days past due		2,684		1,424		1,092		2,325		2,767		—		10,292
Total past due		3,962		1,871		1,496		3,434		5,361		857		16,981
Current		5,510		3,219		1,620		3,233		5,636		3,248		22,466
Financing receivables, gross	$	9,472	$	5,090	$	3,116	$	6,667	$	10,997	$	4,105	$	39,447
Gross write-offs	$	737	$	433	$	424	$	517	$	262	$	—	$	2,373

The credit quality analysis of financing receivables as of June 30, 2024 was as follows (in thousands):


	Amortized Cost Basis by Origination Year
	Prior		2020		2021		2022		2023		2024		Total
1-30 days past due	$	552	$	—	$	214	$	111	$	1,188	$	1,146	$	3,211
31-60 days past due		213		90		65		37		567		1,488		2,460
61-90 days past due		174		—		5		110		370		257		916
91-120 days past due		—		11		434		20		206		791		1,462
121-150 days past due		51		88		63		314		268		91		875
Greater than 150 days past due		2,556		466		1,366		1,300		1,920		987		8,595
Total past due		3,546		655		2,147		1,892		4,519		4,760		17,519
Current		6,014		748		3,944		1,897		4,549		6,782		23,934
Financing receivables, gross	$	9,560	$	1,403	$	6,091	$	3,789	$	9,068	$	11,542	$	41,453
Gross write-offs	$	1,145	$	279	$	509	$	597	$	729	$	2	$	3,261

Allowance for Credit Losses

The allowance for credit losses represents an estimate of the lifetime expected credit losses inherent in our accounts and financing receivable balances as of each balance sheet date. In evaluating the collectability of our accounts and financing receivable balances, we utilize historical events, current conditions, and reasonable and supportable forecasts about the future.

For our accounts receivables, we use historical loss rates based on an aging schedule and a student’s status to determine the allowance for credit losses. As these accounts receivables are short-term in nature, management believes a student’s status provides the best credit loss estimate, while also factoring in delinquency. Students still attending classes, recently graduated, or current on payments are more likely to pay than those who are inactive due to being on a leave of absence, withdrawing from school, or not current on payments.

For our financing receivables, we use historical loss rates based on an aging schedule. As these financing receivables are based on long-term financing agreements offered by Adtalem, management believes that delinquency provides the best credit loss estimate. As the financing receivable balances become further past due, it is less likely we will receive payment, causing our estimate of credit losses to increase.

The following tables provide a roll-forward of the allowance for credit losses (in thousands):


	Three Months Ended December 31, 2024						Six Months Ended December 31, 2024
	Accounts		Financing		Total		Accounts		Financing		Total
Beginning balance	$	36,691	$	13,467	$	50,158	$	35,336	$	12,558	$	47,894
Write-offs		(16,759)		(1,275)		(18,034)		(29,870)		(2,373)		(32,243)
Recoveries		2,207		481		2,688		4,784		657		5,441
Provision for credit losses		14,613		386		14,999		26,502		2,217		28,719
Ending balance	$	36,752	$	13,059	$	49,811	$	36,752	$	13,059	$	49,811


	Three Months Ended December 31, 2023						Six Months Ended December 31, 2023
	Accounts		Financing		Total		Accounts		Financing		Total
Beginning balance	$	32,361	$	12,186	$	44,547	$	29,190	$	11,468	$	40,658
Write-offs		(11,139)		(421)		(11,560)		(19,551)		(1,157)		(20,708)
Recoveries		2,307		254		2,561		4,928		444		5,372
Provision for credit losses		11,491		1,307		12,798		20,453		2,571		23,024
Ending balance	$	35,020	$	13,326	$	48,346	$	35,020	$	13,326	$	48,346