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 Adtalem Global Education Announces Fiscal Fourth Quarter and Year End 2019 Results
   Thursday, August 22, 2019 4:05:00 PM ET

CHICAGO--(BUSINESS WIRE)--Adtalem Global Education Inc. (NYSE: ATGE), a leading workforce solutions provider, today reported academic, operating and financial results for its fiscal 2019 fourth quarter and year ended June 30, 2019.

“We made significant progress in transforming Adtalem Global Education into a leading workforce solutions provider in fiscal 2019. We completed the divestitures of DeVry University and Carrington College, streamlined our three verticals to support our enterprise growth strategy and expanded the financial services customer base through our acquisition of OnCourse Learning,” said Lisa Wardell, chairman and CEO of Adtalem. “In the fourth quarter, we capitalized on strong demand, employer partnerships and superior student outcomes to deliver revenue growth in line with expectations despite some top-line challenges in Brazil. Our students achieved NCLEX pass rates of 90 percent at Chamberlain, and first-time residency attainment rates at the American University of the Caribbean School of Medicine and Ross University School of Medicine were 91% and 92% respectively. I am excited about the future of Adtalem, and I want to thank our dedicated faculty and staff for their ongoing hard work and dedication to our students and employer partners.”



Financial Highlights

Selected financial highlights for the three months ended June 30, 2019:

  • Revenue of $330.3 million increased 3.3 percent compared with the prior year
  • Operating income from continuing operations was $71.9 million compared with $65.2 million in the prior year; operating income from continuing operations excluding special items was $70.1 million compared with $67.1 million in the prior year
  • Net income was $49.5 million compared with $62.8 million in the prior year; net income from continuing operations excluding special items was $55.4 million compared with $53.0 million in the prior year
  • Diluted earnings per share was $0.86 compared with $1.02 in the prior year; diluted earnings per share from continuing operations excluding special items was $0.97 compared with $0.86 in the prior year
  • Approximately 1.67 million shares of common stock were repurchased during the fourth quarter of fiscal 2019 at an average purchase price of $45.35 for a total of $75.9 million

Selected financial highlights for the 12 months ended June 30, 2019:

  • Revenue of $1,239.7 million increased 0.7 percent compared with the prior year
  • Operating income from continuing operations was $186.0 million compared with $207.5 million in the prior year; operating income from continuing operations excluding special items was $215.7 million compared with $212.5 million in the prior year
  • Net income was $95.2 million compared with $33.8 million in the prior year; net income from continuing operations excluding special items was $167.2 million compared with $172.9 million in the prior year
  • Diluted earnings per share was $1.60 compared with $0.54 in the prior year; diluted earnings per share from continuing operations excluding special items was $2.82 compared with $2.78 in the prior year
  • Approximately 5.31 million shares of common stock were repurchased during fiscal 2019 at an average purchase price of $47.65 for a total of $252.9 million

Fiscal 2019 fourth quarter results contained special items including total pre-tax restructuring charges of $8.8 million, primarily related to real estate consolidations at Adtalem’s home office and a pre-tax gain of $10.6 million related to settlement of certain derivative lawsuits.

Adtalem completed the transfer of ownership of DeVry University and Carrington College during the second quarter of fiscal 2019. An additional loss on discontinued operations of $2.3 million was recorded in the fourth quarter of fiscal 2019 related to these divestitures.

Segment Highlights

Medical and Healthcare

Fourth quarter segment revenue increased 5.2 percent to $211.6 million compared with the prior year.

Chamberlain revenue in the fourth quarter increased 6.9 percent compared with the prior year. Fourth quarter new student average enrollment increased 0.9 percent while total student enrollment increased 2.4 percent compared with the prior year with growth in the campus Bachelor of Science of Nursing program as well as the graduate programs.

Revenue in the fourth quarter for the medical and veterinary schools increased 3.0 percent from the prior year.

In the May 2019 session, new student enrollment declined 0.6 percent while total student enrollment declined 6.0 percent compared with the prior year.

Segment operating income in the fourth quarter was $39.7 million compared with $48.1 million in the prior year. Excluding special items, segment operating income in the fourth quarter declined 17.0 percent to $40.1 million compared with $48.3 million in the prior year. The decrease in segment operating income is the result of increased marketing expenses to drive future enrollment growth and a higher level of corporate allocation expense.

Financial Services

Fourth quarter segment revenue increased 18.1 percent to $53.5 million compared with the prior year. Becker Accounting revenue grew 8.4 percent and the Association of Anti-Money Laundering Specialists (ACAMS) revenue increased 26.8 percent. Segment operating income in the quarter was $14.7 million compared with $12.6 million in the prior year. Excluding special items, segment operating income in the fourth quarter grew 23.3 percent to $16.0 million compared with $13.0 million in the prior year.

Business and Law

Fourth quarter segment revenue decreased 11.1 percent to $66.1 million compared with the prior year. On a constant currency basis, revenue decreased 3.7 percent compared with the prior year driven by higher scholarships and discounts to offset reductions in government financial aid funding.

Despite the decrease in revenue, segment operating income in the fourth quarter increased to $14.3 million compared with $13.7 million in the prior year. Excluding special items, fourth quarter segment operating income grew 2.4 percent to $15.3 million compared with $14.9 million in the prior year. The increase in operating income is the result of reductions in back office and administrative costs.

Adtalem Outlook

Fiscal Year 2020

  • Revenue is expected to grow 5 to 7 percent compared with the prior year
  • Effective income tax rate is expected to be in the 17 to 18 percent range
  • Earnings per share from continuing operations, excluding special items, are expected to grow in the 7 to 9 percent range compared with the prior year
  • Full-year capital spending is expected to be in the $45 to $50 million range

Conference Call and Webcast Information

Adtalem will hold a conference call to discuss its fourth quarter fiscal 2019 earnings on Thursday, August 22, at 4 p.m. CT (5 p.m. ET). The conference call will be led by Lisa Wardell, chairman, and CEO, 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: 13689883. Adtalem will also broadcast the conference call on the Adtalem website at: https://78449.themediaframe.com/dataconf/productusers/age/mediaframe/31613/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 Sept. 22, 2019. To access the replay, dial 877-660-6853 (domestic) or 201-612-7415 (international), conference ID: 13689883. To access the webcast replay, please visit Adtalem's website at https://investors.adtalem.com/overview/default.aspx .

About Adtalem Global Education

The purpose of Adtalem Global Education 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 workforce solutions provider and the parent organization of Adtalem Educacional do Brasil (IBMEC, Damásio and Wyden institutions), 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 and Ross University School of Veterinary Medicine. 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 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.

 

 

 

4Q 2019

  

4Q 2018

  

% Change

Adtalem Global Education Student Enrollments(1)

 

 

 

  

 

  

 

New students

 

4,493

  

4,395

  

+2.2%

Total students

 

113,830

  

109,293

  

+4.2%

 

 

 

  

 

  

 

 

 

 

  

 

  

 

Chamberlain University

 

 

  

 

  

 

May Session

 

 

  

 

  

 

New students

 

3,997

  

3,896

  

+2.6%

Total students

 

30,867

  

30,309

  

+1.8%

 

 

 

  

 

  

 

Average Fourth Quarter Enrollment

 

 

  

 

  

 

New students(2)

 

3,997

  

3,896

  

+2.6%

Total students(3)

 

31,279

  

30,557

  

+2.4%

 

 

 

  

 

  

 

July Session

 

 

  

 

  

 

New students(4)

 

2,396

  

2,523

  

-5.0%

Total students

 

28,691

  

28,037

  

+2.3%

 

 

 

  

 

  

 

 

 

 

  

 

  

 

Medical and Veterinary

 

 

  

 

  

 

May Semester(5)

 

 

  

 

  

 

New students

 

496

  

499

  

-0.6%

Total students

 

5,220

  

5,556

  

-6.0%

 

 

 

  

 

  

 

1)

Includes fourth quarter 2019 enrollment sessions at Adtalem’s postsecondary institutions

2)

Based on New May session enrollment

3)

Summation of the weighted average by program: 1/3 March, 2/3 May

4)

The July session is made up almost entirely of online students, the majority of which are enrolled in the RN to BSN program

5)

Includes enrollments in its medical and veterinary preparatory programs

ADTALEM GLOBAL EDUCATION INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

 

 

 

 

 

 

June 30,

 

 

2019

 

2018

 

 

(in thousands, except share

 

 

and par value amounts)

ASSETS:

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

299,445

 

$

430,690

Investments in Marketable Securities

 

 

8,680

 

 

4,255

Restricted Cash

 

 

1,022

 

 

310

Accounts Receivable, Net

 

 

157,829

 

 

146,726

Prepaid Expenses and Other Current Assets

 

 

37,724

 

 

58,887

Current Assets Held for Sale

 

 

 

 

47,132

Total Current Assets

 

 

504,700

 

 

688,000

Land, Building and Equipment:

 

 

 

 

 

 

Land

 

 

44,609

 

 

48,177

Building

 

 

383,331

 

 

389,129

Equipment

 

 

281,551

 

 

302,516

Construction in Progress

 

 

16,222

 

 

25,360

 

 

 

725,713

 

 

765,182

Accumulated Depreciation

 

 

(361,030)

 

 

(376,528)

Land, Building and Equipment, Net

 

 

364,683

 

 

388,654

Noncurrent Assets:

 

 

 

 

 

 

Deferred Income Taxes

 

 

18,314

 

 

38,780

Intangible Assets, Net

 

 

418,097

 

 

362,931

Goodwill

 

 

874,451

 

 

813,887

Other Assets, Net

 

 

62,451

 

 

39,259

Other Assets Held for Sale

 

 

 

 

13,450

Total Noncurrent Assets

 

 

1,373,313

 

 

1,268,307

TOTAL ASSETS

 

$

2,242,696

 

$

2,344,961

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts Payable

 

$

57,627

 

$

47,477

Accrued Salaries, Wages and Benefits

 

 

64,492

 

 

71,289

Accrued Liabilities

 

 

86,722

 

 

80,803

Deferred Revenue

 

 

99,790

 

 

106,773

Current Portion of Long-Term Debt

 

 

3,000

 

 

3,000

Current Liabilities Held for Sale

 

 

 

 

56,439

Total Current Liabilities

 

 

311,631

 

 

365,781

Noncurrent Liabilities:

 

 

 

 

 

 

Long-Term Debt

 

 

398,094

 

 

290,073

Deferred Income Taxes

 

 

29,426

 

 

29,115

Other Liabilities

 

 

102,472

 

 

131,380

Noncurrent Liabilities Held for Sale

 

 

 

 

216

Total Noncurrent Liabilities

 

 

529,992

 

 

450,784

TOTAL LIABILITIES

 

 

841,623

 

 

816,565

NONCONTROLLING INTEREST

 

 

9,543

 

 

9,110

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized; 55,303,000 and 59,893,000 Shares Outstanding at June 30, 2019 and June 30, 2018, respectively

 

 

801

 

 

793

Additional Paid-in Capital

 

 

486,061

 

 

454,653

Retained Earnings

 

 

2,012,902

 

 

1,917,373

Accumulated Other Comprehensive Loss

 

 

(137,290)

 

 

(142,168)

Treasury Stock, at Cost, 24,830,000 and 19,390,000 Shares at June 30, 2019 and June 30, 2018, respectively

 

 

(970,944)

 

 

(711,365)

TOTAL SHAREHOLDERS’ EQUITY

 

 

1,391,530

 

 

1,519,286

TOTAL LIABILITIES, NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY

 

$

2,242,696

 

$

2,344,961

ADTALEM GLOBAL EDUCATION INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

June 30,

 

June 30,

 

 

2019

 

2018

 

2019

 

2018

 

 

(in thousands, except per share amounts)

REVENUE

 

$

330,294

 

$

319,787

 

$

1,239,687

 

$

1,231,211

OPERATING COST AND EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Educational Services

 

 

160,316

 

 

155,673

 

 

623,540

 

 

645,604

Student Services and Administrative Expense

 

 

99,863

 

 

97,064

 

 

400,411

 

 

373,064

Restructuring Expense

 

 

8,830

 

 

1,883

 

 

55,925

 

 

5,067

Settlement Gains

 

 

(10,607)

 

 

 

 

(26,178)

 

 

Total Operating Cost and Expense

 

 

258,402

 

 

254,620

 

 

1,053,698

 

 

1,023,735

Operating Income from Continuing Operations

 

 

71,892

 

 

65,167

 

 

185,989

 

 

207,476

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

Interest and Dividend Income

 

 

1,855

 

 

1,015

 

 

7,976

 

 

5,827

Interest Expense

 

 

(6,604)

 

 

(7,373)

 

 

(23,631)

 

 

(14,620)

Investment Gain (Loss)

 

 

254

 

 

 

 

(153)

 

 

Net Other Expense

 

 

(4,495)

 

 

(6,358)

 

 

(15,808)

 

 

(8,793)

Income from Continuing Operations Before Income Taxes

 

 

67,397

 

 

58,809

 

 

170,181

 

 

198,683

Income Tax (Provision) Benefit

 

 

(15,337)

 

 

38,673

 

 

(34,157)

 

 

(84,102)

Equity Method Investment Loss

 

 

 

 

 

 

 

 

(138)

Income from Continuing Operations

 

 

52,060

 

 

97,482

 

 

136,024

 

 

114,443

DISCONTINUED OPERATIONS:

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Discontinued Operations Before Income Taxes

 

 

(2,220)

 

 

(52,882)

 

 

(14,630)

 

 

(124,162)

Loss on Disposal of Discontinued Operations Before Income Taxes

 

 

(625)

 

 

 

 

(33,604)

 

 

Income Tax Benefit

 

 

579

 

 

18,275

 

 

7,791

 

 

44,016

Loss from Discontinued Operations

 

 

(2,266)

 

 

(34,607)

 

 

(40,443)

 

 

(80,146)

NET INCOME

 

 

49,794

 

 

62,875

 

 

95,581

 

 

34,297

Net Income Attributable to Noncontrolling Interest

 

 

(296)

 

 

(69)

 

 

(413)

 

 

(528)

NET INCOME ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION

 

$

49,498

 

$

62,806

 

$

95,168

 

$

33,769

 

 

 

 

 

 

 

 

 

 

 

 

 

AMOUNTS ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION:

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

51,764

 

$

97,413

 

$

135,611

 

$

113,915

Loss from Discontinued Operations

 

 

(2,266)

 

 

(34,607)

 

 

(40,443)

 

 

(80,146)

NET INCOME ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION

 

$

49,498

 

$

62,806

 

$

95,168

 

$

33,769

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION SHAREHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

0.92

 

$

1.60

 

$

2.32

 

$

1.85

Discontinued Operations

 

$

(0.04)

 

$

(0.57)

 

$

(0.69)

 

$

(1.30)

Total

 

$

0.88

 

$

1.03

 

$

1.63

 

$

0.55

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

0.90

 

$

1.58

 

$

2.29

 

$

1.83

Discontinued Operations

 

$

(0.04)

 

$

(0.56)

 

$

(0.68)

 

$

(1.29)

Total

 

$

0.86

 

$

1.02

 

$

1.60

 

$

0.54

ADTALEM GLOBAL EDUCATION INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

 

 

 

 

 

 

Year Ended June 30,

 

 

2019

 

2018

 

 

(in thousands)

CASH FLOW FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net Income

 

$

95,581

 

$

34,297

Loss from Discontinued Operations

 

 

40,443

 

 

80,146

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

 

 

 

 

 

 

Stock-Based Compensation Expense

 

 

13,217

 

 

14,499

Depreciation

 

 

43,029

 

 

43,286

Amortization of Intangible Assets

 

 

8,712

 

 

9,538

Amortization of Deferred Debt Issuance Costs

 

 

1,566

 

 

2,273

Impairment of Intangible Assets

 

 

 

 

400

Provision for Bad Debts

 

 

19,141

 

 

16,920

Deferred Income Taxes

 

 

20,761

 

 

(10,595)

Loss on Disposals, Accelerated Depreciation and Adjustments to Land, Building and Equipment

 

 

45,862

 

 

31,728

Realized Loss on Investments

 

 

207

 

 

Unrealized Loss on Investments

 

 

(54)

 

 

Insurance Settlement Gain

 

 

(15,571)

 

 

Changes in Assets and Liabilities:

 

 

 

 

 

 

Accounts Receivable

 

 

(27,706)

 

 

(26,413)

Prepaid Expenses and Other

 

 

(24,300)

 

 

16,793

Accounts Payable

 

 

9,199

 

 

9,964

Accrued Salaries, Wages, Benefits and Liabilities

 

 

6,451

 

 

(4,938)

Deferred Revenue

 

 

(10,089)

 

 

3,382

Net Cash Provided by Operating Activities-Continuing Operations

 

 

226,449

 

 

221,280

Net Cash (Used in) Provided by Operating Activities-Discontinued Operations

 

 

(21,591)

 

 

17,909

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

204,858

 

 

239,189

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Capital Expenditures

 

 

(64,751)

 

 

(66,530)

Insurance Proceeds Received for Damage to Buildings and Equipment

 

 

35,706

 

 

Sales of Marketable Securities

 

 

1,841

 

 

Purchases of Marketable Securities

 

 

(6,321)

 

 

(159)

Payment for Purchase of Businesses, Net of Cash Acquired

 

 

(118,409)

 

 

(4,041)

Payment for Investment in Business

 

 

 

 

(5,000)

Loan to DeVry University (see "Note 2: Discontinued Operations")

 

 

(10,000)

 

 

Net Cash Used in Investing Activities-Continuing Operations

 

 

(161,934)

 

 

(75,730)

Net Cash (Used in) Provided by Investing Activities-Discontinued Operations

 

 

(1,833)

 

 

4,280

Cash and Restricted Cash Transferred in Divestitures of Discontinued Operations

 

 

(50,069)

 

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(213,836)

 

 

(71,450)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from Exercise of Stock Options

 

 

16,994

 

 

23,821

Employee Taxes Paid on Withholding Shares

 

 

(6,801)

 

 

(4,203)

Proceeds from Stock Issued Under Colleague Stock Purchase Plan

 

 

421

 

 

803

Repurchase of Common Stock for Treasury

 

 

(252,852)

 

 

(137,028)

Payments of Seller Financed Obligations

 

 

(2,295)

 

 

(11,413)

Borrowings Under Credit Facility

 

 

135,000

 

 

578,000

Repayments Under Credit Facility

 

 

(28,000)

 

 

(403,000)

Payment of Debt Issuance Costs

 

 

 

 

(9,871)

Capital Investment from Noncontrolling Interest

 

 

 

 

95

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

 

 

(137,533)

 

 

37,204

Effects of Exchange Rate Differences

 

 

2,573

 

 

(11,634)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

(143,938)

 

 

193,309

Cash, Cash Equivalents and Restricted Cash at Beginning of Period

 

 

444,405

 

 

251,096

Cash, Cash Equivalents and Restricted Cash at End of Period

 

 

300,467

 

 

444,405

Less: Cash, Cash Equivalents and Restricted Cash of Discontinued Operations at End of Period

 

 

 

 

13,405

Cash, Cash Equivalents and Restricted Cash at End of Period

 

$

300,467

 

$

431,000

ADTALEM GLOBAL EDUCATION INC.

SEGMENT INFORMATION

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

June 30,

 

June 30,

 

 

2019

 

2018

 

Increase
(Decrease)

 

 

2019

 

2018

 

Increase
(Decrease)

 

 

 

(in thousands)

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical and Healthcare

 

$

211,559

 

$

201,025

 

5.2

%

 

$

849,861

 

$

815,674

 

4.2

%

Financial Services

 

 

53,488

 

 

45,289

 

18.1

%

 

 

167,211

 

 

147,195

 

13.6

%

Business and Law

 

 

66,053

 

 

74,332

 

(11.1)

%

 

 

225,844

 

 

270,934

 

(16.6)

%

Home Office and Other

 

 

(806)

 

 

(859)

 

6.2

%

 

 

(3,229)

 

 

(2,592)

 

(24.6)

%

Total Consolidated Revenue

 

 

330,294

 

 

319,787

 

3.3

%

 

 

1,239,687

 

 

1,231,211

 

0.7

%

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical and Healthcare

 

 

39,726

 

 

48,089

 

(17.4)

%

 

 

155,122

 

 

189,672

 

(18.2)

%

Financial Services

 

 

14,694

 

 

12,613

 

16.5

%

 

 

34,163

 

 

27,695

 

23.4

%

Business and Law

 

 

14,296

 

 

13,682

 

4.5

%

 

 

17,461

 

 

29,431

 

(40.7)

%

Home Office and Other

 

 

3,176

 

 

(9,217)

 

NM

 

 

 

(20,757)

 

 

(39,322)

 

47.2

%

Total Consolidated Operating Income

 

$

71,892

 

$

65,167

 

10.3

%

 

$

185,989

 

$

207,476

 

(10.4)

%

 

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 fourth quarter and full fiscal year 2019 and 2018. During the fourth quarter and full fiscal year 2019, Adtalem recorded special items related to the following: (i) restructuring charges, including asset write-offs, primarily related to the closing of the Ross University School of Medicine ("RUSM"), which is part of the Medical and Healthcare segment, campus in Dominica and real estate consolidations and workforce reductions at Adtalem Brazil, which is part of the Business and Law segment, and Adtalem’s home office (not related to any segment); (ii) insurance settlement gain related to the final proceeds received for damages from Hurricanes Irma and Maria at the American University of the Caribbean School of Medicine ("AUC"), which is part of the Medical and Healthcare segment, and RUSM; (iii) gain related to a lawsuit settlement against the Adtalem Board of Directors; and (iv) 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 fourth quarter and full fiscal year 2018, Adtalem recorded special items related to the following: (i) restructuring charges related to workforce reductions and real estate consolidations at the medical and veterinary schools, which is part of the Medical and Healthcare segment, Becker Professional Education, which is part of the Financial Services segment, and Adtalem’s home office; (ii) asset impairment charges at Adtalem Brazil related to the planned fiscal year 2019 dispositions of the São Luis and Joao Pessoa institutions (presented as restructuring expense), which were completed in fiscal year 2019; (iii) income tax charges related to the implementation of the Tax Cuts and Jobs Act of 2017; and (iv) a net tax benefit for the loss on Adtalem’s investment in Carrington. The following tables illustrate the effects of the discontinued operations and special items on Adtalem’s operating income from continuing operations excluding special items and net income from continuing operations excluding special items. Management believes that the non-GAAP disclosure of operating income from continuing operations, net income from continuing operations 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, settlement gains and certain income tax charges and deductions. 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.

ADTALEM GLOBAL EDUCATION INC.

NON-GAAP OPERATING INCOME FROM CONTINUING OPERATIONS BY SEGMENT

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

June 30,

 

June 30,

 

 

2019

 

2018

 

Increase
(Decrease)

 

 

2019

 

2018

 

Increase
(Decrease)

 

 

 

(in thousands)

Medical and Healthcare Operating Income

 

$

39,726

 

$

48,089

 

(17.4)

%

 

$

155,122

 

$

189,672

 

(18.2)

%

Restructuring Expense

 

 

339

 

 

161

 

110.6

%

 

 

41,666

 

 

803

 

5,088.8

%

Settlement Gains

 

 

 

 

 

NM

 

 

 

(15,571)

 

 

 

NM

 

Medical and Healthcare Operating Income Excluding Special Items

 

$

40,065

 

$

48,250

 

(17.0)

%

 

$

181,217

 

$

190,475

 

(4.9)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Services Operating Income

 

$

14,694

 

$

12,613

 

16.5

%

 

$

34,163

 

$

27,695

 

23.4

%

Restructuring Expense

 

 

1,304

 

 

357

 

265.3

%

 

 

1,304

 

 

357

 

265.3

%

Financial Services Operating Income Excluding Special Items

 

$

15,998

 

$

12,970

 

23.3

%

 

$

35,467

 

$

28,052

 

26.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business and Law Operating Income

 

$

14,296

 

$

13,682

 

4.5

%

 

$

17,461

 

$

29,431

 

(40.7)

%

Restructuring Expense

 

 

957

 

 

1,216

 

(21.3)

%

 

 

2,858

 

 

1,216

 

135.0

%

Business and Law Operating Income Excluding Special Items

 

$

15,253

 

$

14,898

 

2.4

%

 

$

20,319

 

$

30,647

 

(33.7)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home Office and Other Operating Income (Loss)

 

$

3,176

 

$

(9,217)

 

NM

 

 

$

(20,757)

 

$

(39,322)

 

47.2

%

Restructuring Expense

 

 

6,230

 

 

149

 

4,081.2

%

 

 

10,097

 

 

2,691

 

275.2

%

Settlement Gains

 

 

(10,607)

 

 

 

NM

 

 

 

(10,607)

 

 

 

NM

 

Home Office and Other Operating Loss Excluding Special Items

 

$

(1,201)

 

$

(9,068)

 

86.8

%

 

$

(21,267)

 

$

(36,631)

 

41.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adtalem Global Education Operating Income

 

$

71,892

 

$

65,167

 

10.3

%

 

$

185,989

 

$

207,476

 

(10.4)

%

Restructuring Expense

 

 

8,830

 

 

1,883

 

368.9

%

 

 

55,925

 

 

5,067

 

1,003.7

%

Settlement Gains

 

 

(10,607)

 

 

 

NM

 

 

 

(26,178)

 

 

 

NM

 

Adtalem Global Education Operating Income Excluding Special Items

 

$

70,115

 

$

67,050

 

4.6

%

 

$

215,736

 

$

212,543

 

1.5

%

ADTALEM GLOBAL EDUCATION INC.

NON-GAAP EARNINGS DISCLOSURE

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

June 30,

 

June 30,

 

 

2019

 

2018

 

2019

 

2018

 

 

(in thousands, except per share amounts)

Net Income

 

$

49,498

 

$

62,806

 

$

95,168

 

$

33,769

Earnings per Share (diluted)

 

$

0.86

 

$

1.02

 

$

1.60

 

$

0.54

Continuing Operations:

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring Expense

 

$

8,830

 

$

1,883

 

$

55,925

 

$

5,067

Effect on Earnings per Share (diluted)

 

$

0.15

 

$

0.03

 

$

0.94

 

$

0.08

Settlement Gains

 

$

(10,607)

 

$

 

$

(26,178)

 

$

Effect on Earnings per Share (diluted)

 

$

(0.19)

 

$

 

$

(0.44)

 

$

Tax Cuts and Jobs Act of 2017 and Tax Charges Related to the Divestiture of DeVry University

 

$

2,058

 

$

2,682

 

$

3,584

 

$

103,878

Effect on Earnings per Share (diluted)

 

$

0.04

 

$

0.04

 

$

0.06

 

$

1.67

Net Tax Benefit on Carrington Loss

 

$

 

$

(48,903)

 

$

 

$

(48,903)

Effect on Earnings per Share (diluted)

 

$

 

$

(0.79)

 

$

 

$

(0.79)

Income Tax Impact on Non-GAAP Adjustments (1)

 

$

3,342

 

$

(84)

 

$

(1,732)

 

$

(1,083)

Effect on Earnings per Share (diluted)

 

$

0.06

 

$

(0.00)

 

$

(0.03)

 

$

(0.02)

Discontinued Operations, net of tax

 

$

2,266

 

$

34,607

 

$

40,443

 

$

80,146

Effect on Earnings per Share (diluted)

 

$

0.04

 

$

0.56

 

$

0.68

 

$

1.29

Net Income from Continuing Operations Excluding Special Items, net of tax

 

$

55,387

 

$

52,991

 

$

167,210

 

$

172,874

Earnings per Share from Continuing Operations Excluding Special Items, net of tax (diluted)

 

$

0.97

 

$

0.86

 

$

2.82

 

$

2.78

Diluted Shares used in EPS calculation

 

 

57,284

 

 

61,659

 

 

59,330

 

 

62,280

ADTALEM GLOBAL EDUCATION INC.

SUPPLEMENTAL REVENUE INFORMATION

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2019

 

 

 

(in thousands)

 

 

 

Medical and

 

Financial

 

Business and

 

Home Office

 

 

 

 

Revenue:

 

Healthcare

 

Services

 

Law

 

and Other

 

Consolidated

 

Fiscal Year 2018 as Reported

 

$

201,025

 

$

45,289

 

$

74,332

 

$

(859)

 

$

319,787

 

Organic Growth (Decline)

 

 

10,534

 

 

6,437

 

 

(2,752)

 

 

53

 

 

14,272

 

Effect of Acquisitions

 

 

 

 

1,762

 

 

 

 

 

 

1,762

 

Effect of Currency Change

 

 

 

 

 

 

(5,527)

 

 

 

 

(5,527)

 

Fiscal Year 2019 as Reported

 

$

211,559

 

$

53,488

 

$

66,053

 

$

(806)

 

$

330,294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic Growth (Decline)

 

 

5.2

%

 

14.2

%

 

(3.7)

%

 

NM

 

 

4.5

%

Effect of Acquisitions

 

 

 

 

3.9

%

 

 

 

NM

 

 

0.6

%

Constant Currency

 

 

5.2

%

 

18.1

%

 

(3.7)

%

 

NM

 

 

5.0

%

Effect of Currency Change

 

 

 

 

 

 

(7.4)

%

 

NM

 

 

(1.7)

%

Fiscal Year 2019 % Change as Reported

 

 

5.2

%

 

18.1

%

 

(11.1)

%

 

NM

 

 

3.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended June 30, 2019

 

 

 

(in thousands)

 

 

 

Medical and

 

Financial

 

Business and

 

Home Office

 

 

 

 

Revenue:

 

Healthcare

 

Services

 

Law

 

and Other

 

Consolidated

 

Fiscal Year 2018 as Reported

 

$

815,674

 

$

147,195

 

$

270,934

 

$

(2,592)

 

$

1,231,211

 

Organic Growth (Decline)

 

 

29,620

 

 

15,781

 

 

(9,389)

 

 

(637)

 

 

35,375

 

Effect of Acquisitions

 

 

 

 

4,235

 

 

1,100

 

 

 

 

5,335

 

Hurricane Impact

 

 

4,567

 

 

 

 

 

 

 

 

4,567

 

Effect of Currency Change

 

 

 

 

 

 

(36,801)

 

 

 

 

(36,801)

 

Fiscal Year 2019 as Reported

 

$

849,861

 

$

167,211

 

$

225,844

 

$

(3,229)

 

$

1,239,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic Growth (Decline)

 

 

3.6

%

 

10.7

%

 

(3.5)

%

 

NM

 

 

2.9

%

Effect of Acquisitions

 

 

 

 

2.9

%

 

0.4

%

 

NM

 

 

0.4

%

Hurricane Impact

 

 

0.6

%

 

 

 

 

 

NM

 

 

0.4

%

Constant Currency

 

 

4.2

%

 

13.6

%

 

(3.1)

%

 

NM

 

 

3.7

%

Effect of Currency Change

 

 

 

 

 

 

(13.6)

%

 

NM

 

 

(3.0)

%

Fiscal Year 2019 % Change as Reported

 

 

4.2

%

 

13.6

%

 

(16.6)

%

 

NM

 

 

0.7

%

ADTALEM GLOBAL EDUCATION INC.

SUPPLEMENTAL OPERATING COST AND EXPENSE INFORMATION

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2019

 

 

 

(in thousands)

 

 

 

Medical and

 

Financial

 

Business and

 

Home Office

 

 

 

 

Total Operating Cost and Expense:

 

Healthcare

 

Services

 

Law

 

and Other

 

Consolidated

 

Fiscal Year 2018 as Reported

 

$

152,937

 

$

32,676

 

$

60,651

 

$

8,356

 

$

254,620

 

Cost Increase (Reduction)

 

 

18,717

 

 

2,465

 

 

(4,869)

 

 

(7,811)

 

 

8,502

 

Effect of Acquisitions

 

 

 

 

2,706

 

 

 

 

 

 

2,706

 

Restructuring Expense Change

 

 

178

 

 

947

 

 

(259)

 

 

6,081

 

 

6,947

 

Settlement Gains

 

 

 

 

 

 

 

 

(10,607)

 

 

(10,607)

 

Effect of Currency Change

 

 

 

 

 

 

(3,766)

 

 

 

 

(3,766)

 

Fiscal Year 2019 as Reported

 

$

171,832

 

$

38,794

 

$

51,757

 

$

(3,981)

 

$

258,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost Increase (Reduction)

 

 

12.2

%

 

7.5

%

 

(8.0)

%

 

NM

 

 

3.3

%

Effect of Acquisitions

 

 

 

 

8.3

%

 

 

 

NM

 

 

1.1

%

Restructuring Expense Change

 

 

0.1

%

 

2.9

%

 

(0.4)

%

 

NM

 

 

2.7

%

Settlement Gains

 

 

 

 

 

 

 

 

NM

 

 

(4.2)

%

Constant Currency Change

 

 

12.4

%

 

18.7

%

 

(8.5)

%

 

NM

 

 

3.0

%

Effect of Currency Change

 

 

 

 

 

 

(6.2)

%

 

NM

 

 

(1.5)

%

Fiscal Year 2019 % Change as Reported

 

 

12.4

%

 

18.7

%

 

(14.7)

%

 

NM

 

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended June 30, 2019

 

 

 

(in thousands)

 

 

 

Medical and

 

Financial

 

Business and

 

Home Office

 

 

 

 

Total Operating Cost and Expense:

 

Healthcare

 

Services

 

Law

 

and Other

 

Consolidated

 

Fiscal Year 2018 as Reported

 

$

626,003

 

$

119,499

 

$

241,503

 

$

36,730

 

$

1,023,735

 

Cost Increase (Reduction)

 

 

56,816

 

 

6,702

 

 

(4,302)

 

 

(16,002)

 

 

43,214

 

Effect of Acquisitions

 

 

 

 

5,901

 

 

650

 

 

 

 

6,551

 

Hurricane Impact

 

 

(13,372)

 

 

 

 

 

 

 

 

(13,372)

 

Restructuring Expense Change

 

 

40,863

 

 

947

 

 

1,642

 

 

7,406

 

 

50,858

 

Settlement Gains

 

 

(15,571)

 

 

 

 

 

 

(10,607)

 

 

(26,178)

 

Effect of Currency Change

 

 

 

 

 

 

(31,110)

 

 

 

 

(31,110)

 

Fiscal Year 2019 as Reported

 

$

694,739

 

$

133,049

 

$

208,383

 

$

17,527

 

$

1,053,698

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost Increase (Reduction)

 

 

9.1

%

 

5.6

%

 

(1.8)

%

 

NM

 

 

4.2

%

Effect of Acquisitions

 

 

 

 

4.9

%

 

0.3

%

 

NM

 

 

0.6

%

Hurricane Impact

 

 

(2.1)

%

 

 

 

 

 

NM

 

 

(1.3)

%

Restructuring Expense Change

 

 

6.5

%

 

0.8

%

 

0.7

%

 

NM

 

 

5.0

%

Settlement Gains

 

 

(2.5)

%

 

 

 

 

 

NM

 

 

(2.6)

%

Constant Currency Change

 

 

11.0

%

 

11.3

%

 

(0.8)

%

 

NM

 

 

6.0

%

Effect of Currency Change

 

 

 

 

 

 

(12.9)

%

 

NM

 

 

(3.0)

%

Fiscal Year 2019 % Change as Reported

 

 

11.0

%

 

11.3

%

 

(13.7)

%

 

NM

 

 

2.9

%

ADTALEM GLOBAL EDUCATION INC.

SUPPLEMENTAL OPERATING INCOME INFORMATION

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2019

 

 

(in thousands)

 

 

Medical and

 

Financial

 

Business and

 

Home Office

 

 

 

Operating Income (Loss):

 

Healthcare

 

Services

 

Law

 

and Other

 

Consolidated

Fiscal Year 2018 as Reported

 

$

48,089

 

$

12,613

 

$

13,682

 

$

(9,217)

 

$

65,167

Organic Change

 

 

(8,185)

 

 

3,972

 

 

2,116

 

 

7,867

 

 

5,770

Effect of Acquisitions

 

 

 

 

(944)

 

 

 

 

 

 

(944)

Restructuring Expense Change

 

 

(178)

 

 

(947)

 

 

259

 

 

(6,081)

 

 

(6,947)

Settlement Gains

 

 

 

 

 

 

 

 

10,607

 

 

10,607

Effect of Currency Change

 

 

 

 

 

 

(1,761)

 

 

 

 

(1,761)

Fiscal Year 2019 as Reported

 

$

39,726

 

$

14,694

 

$

14,296

 

$

3,176

 

$

71,892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended June 30, 2019

 

 

(in thousands)

 

 

Medical and

 

Financial

 

Business and

 

Home Office

 

 

 

Operating Income (Loss):

 

Healthcare

 

Services

 

Law

 

and Other

 

Consolidated

Fiscal Year 2018 as Reported

 

$

189,672

 

$

27,695

 

$

29,431

 

$

(39,322)

 

$

207,476

Organic Change

 

 

(27,197)

 

 

9,081

 

 

(5,087)

 

 

15,364

 

 

(7,839)

Effect of Acquisitions

 

 

 

 

(1,666)

 

 

450

 

 

 

 

(1,216)

Hurricane Impact

 

 

17,939

 

 

 

 

 

 

 

 

17,939

Restructuring Expense Change

 

 

(40,863)

 

 

(947)

 

 

(1,642)

 

 

(7,406)

 

 

(50,858)

Settlement Gains

 

 

15,571

 

 

 

 

 

 

10,607

 

 

26,178

Effect of Currency Change

 

 

 

 

 

 

(5,691)

 

 

 

 

(5,691)

Fiscal Year 2019 as Reported

 

$

155,122

 

$

34,163

 

$

17,461

 

$

(20,757)

 

$

185,989

 

Investor Contact:
John Kristoff
John.Kristoff@Adtalem.com
312-651-1437

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

Source: Adtalem Global Education Inc.



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