ADTALEM GLOBAL EDUCATION INC. Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes of Operations (type 10-Q)

On this Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes
of Operations (“MD&A”), Adtalem International Schooling Inc., along with its
subsidiaries, is collectively known as “Adtalem,” “we,” “our,” “us,” or
comparable references.

Discussions inside this MD&A might include forward-looking statements. See the
“Ahead-Trying Statements” part for particulars in regards to the uncertainties that
might trigger our precise outcomes to be materially completely different than these expressed
in our forward-looking statements.

All through this MD&A, we typically use data derived from the Consolidated
Monetary Statements and the notes thereto however not offered in accordance with
U.S. usually accepted accounting ideas (“GAAP”). Sure of these things
are thought-about “non-GAAP monetary measures” underneath the Securities and Change
Fee (“SEC”) guidelines. See the “Non-GAAP Monetary Measures and
Reconciliations” part for the explanations we use these non-GAAP monetary
measures and the reconciliations to their most straight comparable GAAP
monetary measures.

Sure objects offered in tables might not sum on account of rounding. Percentages
offered are calculated from the underlying numbers in 1000’s. Discussions
all through this MD&A are based mostly on persevering with operations until in any other case famous.
The MD&A must be learn along with the Consolidated Monetary
Statements and the notes thereto.

Obtainable Data

We use our web site (www.adtalem.com) as a routine channel of distribution of
firm data, together with press releases, shows, and supplemental
data, as a way of revealing materials personal data and for
complying with our disclosure obligations underneath Regulation FD. Accordingly,
traders ought to monitor our web site along with following press releases,
SEC filings, and public convention calls and webcasts. Buyers and others can
obtain notifications of recent data posted on our investor relations
web site in actual time by signing up for e-mail alerts.

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You may additionally entry our annual reviews on Type 10-Ok, quarterly reviews on Type
10-Q, present reviews on Type 8-Ok, and amendments to these reviews, in addition to
different reviews referring to us which can be filed with or furnished to the SEC, free
of cost within the investor relations part of our web site as quickly as fairly
practicable after such materials is electronically filed with or furnished to the
SEC. The SEC additionally maintains an internet site that comprises reviews, proxy and
data statements, and different data concerning issuers that file
electronically with the SEC at www.sec.gov. The content material of the web sites
talked about above shouldn’t be included into and shouldn’t be thought-about part of
this report.

Segments

Throughout the first quarter of fiscal yr 2022, Adtalem made a change to its
reportable segments to align with present strategic priorities and useful resource
allocation. We current 4 reportable segments as follows:

Chamberlain – Gives diploma and non-degree packages within the nursing postsecondary
schooling business. This phase contains the operations of Chamberlain
College (“Chamberlain”).

Walden – Gives greater than 100 on-line certificates, bachelor’s, grasp’s, and
doctoral levels. This phase contains the operations of Walden College
(“Walden”), which was acquired by Adtalem on August 12, 2021. See Be aware 3
“Acquisitions” to the Consolidated Monetary Statements for added
data on the acquisition.

Medical and Veterinary – Gives diploma and non-degree packages within the medical
and veterinary postsecondary schooling business. This phase contains the
operations of the American College of the Caribbean College of Drugs
(“AUC”), Ross College College of Drugs (“RUSM”), and Ross College College
of Veterinary Drugs (“RUSVM”), that are collectively known as the
“medical and veterinary colleges.”

Monetary Providers – Gives check preparation, certifications, conferences,
seminars, memberships, and subscriptions to enterprise professionals within the areas
of accounting, anti-money laundering, banking, and mortgage lending. This
phase contains the operations of the Affiliation of Licensed Anti-Cash
Laundering Specialists (“ACAMS”), Becker Skilled Schooling (“Becker”),
OnCourse Studying (“OCL”), and EduPristine. On August 4, 2021, Adtalem introduced
we’re exploring strategic options for the Monetary Providers phase.

“Dwelling Workplace and Different” contains actions not allotted to a reportable
phase. Monetary and descriptive details about Adtalem’s reportable
segments is offered in Be aware 20 “Section Data” to the Consolidated
Monetary Statements.

We proceed to incur prices related to ongoing litigation and settlements
associated to the DeVry College divestiture, which was accomplished throughout fiscal
yr 2019, and are categorised as expense inside discontinued operations. See
Be aware 4 “Discontinued Operations and Belongings Held for Sale” to the Consolidated
Monetary Statements for added discontinued operations data.

Walden College Acquisition

On August 12, 2021, Adtalem accomplished the acquisition of all of the issued and
excellent fairness curiosity in Walden e-Studying, LLC, a Delaware restricted
legal responsibility firm (“e-Studying”), and its subsidiary, Walden College, LLC, a
Florida restricted legal responsibility firm, from Laureate Schooling, Inc. (“Laureate” or
“Vendor”) in trade for a purchase order worth of $1.48 billion in money, topic to
sure changes set forth within the Membership Curiosity Buy Settlement (the
“Settlement) (the “Acquisition”). See the “Liquidity and Capital Sources”
part of this MD&A for a dialogue on the financing used to fund the
Acquisition. The dangers and uncertainties associated to the Acquisition are
described in Merchandise 1A. “Danger Elements” of our Annual Report on Type 10-Ok for the
fiscal yr ended June 30, 2021 (“2021 Type 10-Ok”).

First Quarter Highlights

Monetary and operational highlights for the primary quarter of fiscal yr 2022
embody:

Adtalem income grew $80.1 million, or 29.9%, within the first quarter of fiscal

? yr 2022 in comparison with the year-ago quarter. Excluding the impact of the Walden

acquisition, Adtalem income grew $11.5 million, or 4.3%, within the first

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quarter of fiscal yr 2022 in comparison with the year-ago quarter. The Chamberlain

and Monetary Providers segments noticed elevated income.

Web loss attributable to Adtalem of $58.Zero million ($1.17 diluted loss per

share) decreased $77.9 million ($1.55 per share) within the first quarter of fiscal

yr 2022 in comparison with internet revenue attributable to Adtalem of $19.9 million in

the year-ago quarter. This lower was primarily pushed by a rise of

$43.7 million in curiosity expense, $16.5 million in Walden intangible

amortization expense, and $13.1 million in enterprise acquisition and integration

? expense recorded within the first quarter of fiscal yr 2022 in comparison with the

year-ago quarter. Web revenue from persevering with operations attributable to Adtalem

excluding particular objects of $31.Three million ($0.62 diluted earnings per share)

decreased $9.9 million ($0.16 per share), or 24.1%, within the first quarter of

fiscal yr 2022 in comparison with the year-ago quarter. This lower was pushed

principally by elevated curiosity expense, partially offset by a lower in

revenue tax expense pushed by decrease pre-tax revenue.

For the September 2021 session, new and whole pupil enrollment at Chamberlain

decreased 13.4% and a pair of.8%, respectively, in comparison with the identical session final yr.

? Chamberlain skilled declining enrollment in a number of packages, with essentially the most

pronounced being within the Registered Nurse to Bachelor of Science in Nursing

(“RN-to-BSN”) on-line diploma program.

On August 12, 2021, Adtalem accomplished its acquisition of Walden. For the

? September 2021 time period, Adtalem added new and whole pupil enrollment at Walden

of 8,413 and 44,886 college students, respectively.

For the September 2021 semester, new and whole enrollment on the medical and

? veterinary colleges decreased 4.6% and 6.9%, respectively, in comparison with the identical

semester final yr.

? ACAMS memberships have elevated to greater than 86,00Zero as of September 30, 2021

in comparison with greater than 82,00Zero as of September 30, 2020.

Overview of the Affect of COVID-19

On March 11, 2020, the novel coronavirus (“COVID-19”) outbreak was declared a
pandemic by the World Well being Group. COVID-19 has had tragic penalties
throughout the globe and altered enterprise and shopper exercise throughout many
industries. Administration initiated a number of modifications to the operations of our
establishments and administrative capabilities so as to defend the well being of
Adtalem workers, college students, and prospects and to mitigate the monetary results
of COVID-19 and its resultant financial slowdown. We are going to proceed to judge,
and if acceptable, undertake different measures sooner or later required for the continued
security of our college students, prospects, and workers.

Outcomes of Operations

COVID-19 didn’t lead to any important income, working revenue, or
earnings per share losses within the first quarter of fiscal yr 2022. Administration
anticipates COVID-19 might nonetheless negatively have an effect on consolidated income,
working revenue, internet revenue, and earnings per share throughout the the rest of
fiscal yr 2022 and past or so long as social distancing and different measures
established to fight COVID-19 proceed to disrupt the traditional enterprise
operations of our conference suppliers and Monetary Providers prospects. Within the
first quarter of fiscal yr 2022, we skilled larger variable bills
related to bringing college students again to campus and offering a protected
surroundings within the context of COVID-19 as we proceed to maneuver again to in-person
instruction at Chamberlain and the medical and veterinary colleges. These larger
variable bills are anticipated to proceed throughout the the rest of fiscal yr
2022; nonetheless, these are bills incurred within the regular course of on campus
operations and won’t be categorized as COVID-19 bills. COVID-19 results on
the primary quarter of fiscal yr 2022 and 2021 outcomes of operations of the
Adtalem establishments are described beneath.

?Chamberlain: Roughly 30% of Chamberlain’s college students are based mostly at campus
places and pursuing their Bachelor of Science in Nursing (“BSN”) diploma; at
the onset of the COVID-19 outbreak, all campus-based college students transitioned to
on-line studying for didactic and choose medical experiences. The remaining 70%
of Chamberlain’s college students are enrolled in on-line packages that will or might not
have medical elements and people packages continued to efficiently function.
For the September 2021 session, college students and workers returned to a number of

Chamberlain campuses

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for onsite instruction. Administration believes that COVID-19 disruptions within the
healthcare business might have pushed the enrollment choices of potential
college students within the September 2021 session; nonetheless, COVID-19 didn’t lead to
measurable income losses or elevated prices at Chamberlain within the first
quarters of fiscal yr 2022 or 2021. The extent of the affect throughout the
the rest of fiscal yr 2022 and past might be decided based mostly on the size
and severity of the consequences of COVID-19, the efficacy and distribution of the
vaccines, and whether or not any pandemic surge impacts healthcare amenities’ means
to proceed to supply medical experiences, all of which have resumed.
Chamberlain has medical partnerships with healthcare amenities throughout the
U.S., minimizing the danger of suspension of all onsite medical schooling
experiences.
?Walden: Administration believes that COVID-19 disruptions within the healthcare
business might have pushed the enrollment choices of potential college students within the
September 2021 session; nonetheless, COVID-19 didn’t lead to measurable income
losses or elevated prices at Walden within the first quarter of fiscal yr 2022.
The extent of the affect throughout the the rest of fiscal yr 2022 and past
might be decided based mostly on the size and severity of the consequences of COVID-19
and the efficacy and distribution of the vaccines.
?AUC and RUSM: Medical college students enrolled within the fundamental science portion of their
program transitioned to on-line studying on the onset of the COVID-19 outbreak.
Many college students left St. Maarten and Barbados to proceed their research remotely
from different places. AUC and RUSM have been in a position to present distant studying and have
college students stay eligible for U.S. federal monetary support help underneath a
waiver supplied by the U.S. Secretary of Schooling that was included within the
Coronavirus Assist, Reduction, and Financial Safety Act (the “CARES Act”) signed into
legislation in March 2020. The waiver was dependent upon the host nation’s coronavirus
state of emergency declaration. The nation of St. Maarten lifted their
declaration in June 2020, and in consequence, AUC’s means to supply distance
schooling ended after the September 2020 semester, requiring all AUC college students to
return to St. Maarten for fundamental science instruction efficient January 2021. A
restricted variety of RUSM college students started returning to Barbados in January and Might
2021 with a full return occurring for the September 2021 semester. The
Consolidated Appropriates Act, 2021 (the “Appropriations Act”) was signed into
legislation in December 2020, and corrected technical errors within the CARES Act, which
clarified the authority to function through distance studying on account of a declaration of
an emergency in an relevant nation or a qualifying emergency within the U.S. This
part additionally extends these flexibilities by the tip of the qualifying
emergency or June 30, 2022, whichever is later. The Appropriations Act gives
Adtalem’s international establishments the flexibility to proceed distance schooling
with out disruption to their college students’ Title IV federal monetary support. COVID-19
didn’t lead to important income losses or elevated prices throughout the fundamental
science packages on the medical colleges within the first quarters of fiscal yr
2022 or 2021, besides with respect to housing operations, as mentioned beneath.
COVID-19 will seemingly have minimal affect on fundamental science program income in
fiscal yr 2022, until college students select to not proceed or begin their research
throughout this time of uncertainty. The extent of the affect throughout the the rest
of fiscal yr 2022 and past might be decided based mostly on the size and
severity of the consequences of COVID-19 and the efficacy and distribution of the
vaccines. College students who’ve accomplished their fundamental science schooling progress to
medical rotations within the U.S. and the U.Ok. Scientific rotations for all college students
have been briefly suspended in March 2020; nonetheless, some college students have been in a position to
take part in on-line medical elective programs throughout this transition interval
and past. The COVID-19 surge skilled throughout the winter in fiscal yr 2021
throughout the U.S. triggered many companion hospitals to once more cut back the hours
out there for medical experiences. Because of this, though many college students have been
in a position to resume their medical schooling throughout the second quarter of fiscal yr
2021, administration estimates that not having the ability to provide a full medical program
decreased mixed income of AUC and RUSM by roughly $Four million and
working revenue losses by roughly $2 million within the first quarter of
fiscal yr 2021. As of June 2021, all medical companions of AUC and RUSM have
resumed their medical packages. Because of this, COVID-19 didn’t lead to any
misplaced medical income within the first quarter of fiscal yr 2022. Ought to future
surges in COVID-19 once more limit the variety of medical hours out there to our
college students, we might expertise detrimental results on income and working revenue
in future durations. Adtalem has medical partnerships with hospitals throughout the
U.S. and the U.Ok., minimizing the danger of suspension of all onsite medical
schooling experiences. Along with the lack of medical income and working
revenue at AUC and RUSM, administration estimates losses of housing and pupil
transportation income and working revenue of roughly $5 million and $3
million, respectively, within the first quarter of fiscal yr 2021 on account of college students
not returning to the St. Maarten and Barbados campuses. All college students have been again
on the 2 campuses within the first quarter of fiscal yr 2022, and subsequently,
COVID-19 didn’t lead to misplaced housing and pupil transportation income in
the primary quarter of fiscal yr 2022.
?RUSVM: All fundamental science veterinary college students transitioned to on-line studying
starting in March 2020. Many college students left St. Kitts in March 2020 to proceed
their research remotely from different places. As of Might 2021, all fundamental

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science college students have returned to St. Kitts the place lectures proceed to be
delivered remotely and labs are in-person. COVID-19 didn’t lead to
important income losses or elevated prices throughout the fundamental science program
within the first quarters of fiscal yr 2022 or 2021. We don’t count on a
important affect from COVID-19 on the essential science program in fiscal yr
2022, until college students select to not proceed or begin their research throughout this
time of uncertainty. RUSVM continued to supply distant studying throughout the
pandemic and college students remained eligible for U.S. federal monetary support
help underneath a waiver supplied by the CARES Act and the Appropriations Act.
The Appropriations Act extends by the tip of the qualifying emergency or
June 30, 2022, whichever is later, as described above. College students who’ve
accomplished their fundamental science schooling progress to medical rotations at choose
universities within the U.S., Canada, Australia, Eire, New Zealand, and the U.Ok.
Just a few universities initially suspended onsite medical experiences and
transitioned college students to on-line schooling. All universities have since resumed
onsite medical programs. The preliminary suspensions didn’t considerably cut back
income or working revenue within the first quarters of fiscal yr 2022 or 2021.
Whereas we don’t count on a big affect from COVID-19 at RUSVM, the extent
of the affect on medical experiences throughout the the rest of fiscal yr 2022
and past might be decided based mostly on the size and severity of the consequences of
COVID-19 and the efficacy and distribution of the vaccines.
?Monetary Providers: Most Monetary Providers content material, together with examination
preparation, certification coaching, persevering with schooling, and subscriptions is
delivered on-line. Any classroom-based studying was moved to on-line. COVID-19 did
not lead to important income or working revenue losses within the first
quarter of fiscal yr 2022. No important COVID-19 associated price will increase have been
realized in Monetary Providers within the first quarters of fiscal yr 2022 or
2021. COVID-19 did lead to estimated income and working revenue losses of
roughly $5 million and $Three million, respectively, in first quarter of
fiscal yr 2021, primarily pushed by the substitute of the Las Vegas reside
convention with a digital convention. ACAMS was in a position to provide a hybrid (reside and
digital) Las Vegas convention in September 2021; nonetheless, reside convention
income shouldn’t be anticipated to return to pre-pandemic ranges till COVID-19
restrictions are totally lifted internationally and buyer apprehension
dissipates. Digital conferences have been carried out all through the pandemic, and
further convention income might be generated with digital or hybrid occasions in
the longer term; nonetheless, digital conferences are unlikely to generate the identical stage
of income and working revenue as reside conferences. Administration believes that
aside from the ACAMS conferences, longer-term working ends in the Monetary
Providers phase is not going to be considerably affected by COVID-19 until there are
main employment losses with accounting professionals and up to date accounting
graduates, or within the banking and mortgage sectors. This isn’t identified and can’t
be predicted right now. At Becker, CPA testing websites are working with
out there capability; nonetheless, administration believes hiring at CPA companies has not but
totally recovered.
?Administrative Operations: Most establishment and residential workplace administrative
operations proceed to principally be carried out remotely. This contains
operations in each the U.S. and all international places. These distant work
preparations haven’t adversely affected Adtalem’s means to keep up
operations, monetary reporting methods, inside management over monetary
reporting, or disclosure controls and procedures. The effectiveness of our
distant expertise allows our means to keep up these methods and controls.
Administration doesn’t anticipate Adtalem might be materially impacted by any
constraints or different impacts on our human capital sources and productiveness.
Journey restrictions and border closures will not be anticipated to have a fabric
affect on our means to function and obtain operational objectives. Whereas current
journey expenditures have decreased, we might count on these prices to extend as
the consequences of COVID-19 dissipate. No important dwelling workplace prices have been
incurred associated to COVID-19 within the first quarters of fiscal yr 2022 or 2021
and no such prices are anticipated throughout the the rest of fiscal yr 2022 and
past.

Though COVID-19 has had a detrimental impact on the working outcomes of all 5
reporting items that include goodwill and indefinite-lived intangible property as
of September 30, 2021, right now not one of the results are thought-about
important sufficient to create an impairment triggering occasion since our annual
goodwill impairment evaluation on Might 31, 2021. Whereas administration has thought-about
the consequences of the COVID-19 pandemic in evaluating the existence of an
impairment triggering occasion, it’s doable that results to income and money
flows might be extra important than presently anticipated if the consequences of the
COVID-19 pandemic and social distancing measures established to fight the virus
proceed for an prolonged time frame. Ought to financial circumstances deteriorate
past expectations throughout the the rest of fiscal yr 2022, an impairment
triggering occasion might come up and require reassessment of the truthful values of
goodwill and intangible property.

Liquidity

Adtalem’s money and money equivalents stability as of September 30, 2021 was $360.1
million. Adtalem generated $40.9 million in working money stream from persevering with
operations within the first three months of fiscal yr 2022. Within the occasion of

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surprising market circumstances or detrimental financial modifications, together with these
brought on by COVID-19, that would negatively have an effect on Adtalem’s earnings and/or
working money stream, Adtalem maintains a $400 million revolving credit score facility
with availability of $246.6 million as of September 30, 2021. Administration
presently tasks that COVID-19 will proceed to impact operations;
nonetheless, we consider the present balances of money, money generated from
operations, and our credit score facility might be adequate to fund each Adtalem’s
present home and worldwide operations and development plans within the
foreseeable future. See additional dialogue on the brand new financing executed to
shut the Acquisition within the part of this MD&A titled “Liquidity and Capital
Sources.”

Outcomes of Operations

The next desk presents chosen Consolidated Statements of Revenue (Loss)
information as a proportion of income:

Three Months Ended
September 30,
2021 2020
Income 100.0 % 100.0 %
Price of academic companies 46.8 % 42.4 %
Scholar companies and administrative expense 45.8 % 37.3 %
Restructuring expense 1.1 % 1.6 %
Enterprise acquisition and integration expense 7.6 % 5.0 %
Whole working price and expense 101.4 % 86.3 %
Working (loss) revenue (1.4) % 13.7 %
Web different expense (13.4) % (0.8) %
(Loss) revenue from persevering with operations earlier than
revenue taxes (14.7) % 12.9 %
Profit from (provision for) revenue taxes 3.0 % (2.6) %
(Loss) revenue from persevering with operations (11.7) % 10.2 %
Loss from discontinued operations, internet of tax (5.0) % (2.8) %
Web (loss) revenue (16.7) %

7.4 %
Web loss attributable to redeemable noncontrolling
curiosity

0.0 % 0.0 %
Web (loss) revenue attributable to Adtalem (16.7) % 7.4 %

Income

The next desk presents income by phase detailing the modifications from the
year-ago interval (in 1000’s):

Three Months Ended September 30, 2021
Medical and Monetary
Chamberlain Walden Veterinary Providers Consolidated
Fiscal yr 2021 as reported $ 133,764 $ – $ 85,062 $ 49,415 $ 268,241
Natural development (decline) 1,875 – (248) 9,842 11,469
Impact of acquisitions – 68,617 – – 68,617
Fiscal yr 2022 as reported $ 135,639 $ 68,617 $ 84,814 $ 59,257 $ 348,327

Fiscal yr 2022 % change:
Natural development (decline) 1.4 % NM (0.3) % 19.9 % 4.3 %
Impact of acquisitions – NM – – 25.6 %
Fiscal yr 2022 % change as
reported 1.4 % NM (0.3) % 19.9 % 29.9 %

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Chamberlain

Chamberlain Scholar Enrollment:

Fiscal 12 months 2022
Session July 2021 Sept. 2021
New college students 2,810 5,487
% change from prior yr 1.5 % (13.4) %
Whole college students 32,729 34,539
% change from prior yr 1.6 % (2.8) %

Fiscal 12 months 2021
Session July 2020 Sept. 2020 Nov. 2020 Jan. 2021 Mar. 2021 Might 2021
New college students 2,768 6,333 2,931 5,202 3,283 4,363
% change from prior yr 15.5 % 13.2 % 8.1 % (1.7) % 6.8 % 3.6 %
Whole college students 32,198 35,525 34,387 35,750 35,702 34,930
% change from prior yr 12.2 % 11.9 % 10.2 %

5.6 % 5.8 % 4.6 %

Chamberlain income elevated 1.4%, or $1.9 million, to $135.6 million within the
first quarter of fiscal yr 2022 in comparison with the year-ago interval, pushed by an
improve in whole pupil enrollment throughout the July 2021 session in comparison with
the identical session from the prior yr. The July session contributes two-thirds of
the income for the primary quarter. Administration believes that the launch of recent
packages, the addition of weekend and night lessons, the scaling supplied by
our multi-campus mannequin, and the effectiveness of current advertising and marketing investments
have contributed to the enrollment improve and can drive future enrollment
development. Chamberlain admitted its largest class of campus college students in September
2020, which partially explains the decline within the September 2021 comparable
session, as enrollment returns to historic ranges. Administration believes {that a}
lower in new and whole pupil enrollment in a number of packages, with essentially the most
pronounced being within the RN-to-BSN on-line diploma program, might partially be pushed
by extended COVID-19 pandemic disruptions within the healthcare business.

Chamberlain presently operates 23 campuses in 15 states, together with Chamberlain’s
latest campus in Irwindale, California, which started instruction in Might 2021.

Tuition Charges:

Tuition for the Bachelor of Science in Nursing (“BSN”) onsite diploma program
ranges from $675 to $730 per credit score hour. Tuition for the Registered Nurse to
BSN (“RN-to-BSN”) on-line diploma program is $590 per credit score hour. Tuition for the
on-line Grasp of Science in Nursing (“MSN”) diploma program is $650 per credit score
hour. Tuition for the web Household Nurse Practitioner (“FNP”) diploma program is
$665 per credit score hour. Tuition for the web Physician of Nursing Observe (“DNP”)
diploma program is $775 per credit score hour. Tuition for the web Grasp of Public
Well being (“MPH”) diploma program is $550 per credit score hour. Tuition for the web
Grasp of Social Work (“MSW”) diploma program is $695 per credit score hour. These
tuition charges don’t embody the price of course charges, books, provides,
transportation, medical charges, residing bills, or different charges as listed within the
catalog.

Walden

Walden Scholar Enrollment:

Fiscal 12 months 2022
Time period Sept. 2021
New college students 8,413
Whole college students 44,886

Walden new and whole pupil enrollment represents these college students attending
educational periods as of September 30, 2021. Walden income was $68.6
million within the first quarter of fiscal yr 2022, which incorporates the deferred
income buy accounting adjustment. There was no comparable income within the
year-ago interval as Adtalem acquired Walden

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on August 12, 2021. Administration believes new and whole enrollment was presumably
negatively affected by COVID-19 disruptions within the healthcare business and the
detrimental publicity surrounding the now concluded U.S. Division of Justice
inquiry into potential false representations and false promoting to college students.
This inquiry in the end concluded favorably, with no findings of misconduct by
Walden. As well as, the uncertainty from potential college students across the change
in management and the Walden acquisition might have negatively affected enrollment.

Tuition Charges:

On a per credit score hour foundation, tuition for Walden packages vary from $120 per
credit score hour to $995 per credit score hour, with the big selection because of the nature of
the packages. Basic schooling programs are charged at $325 per credit score hour.
Different subscription based mostly studying modalities are billed on a subscription or
time period foundation and vary from $1,500 to $6,800 per time period. College students are charged a
expertise price that ranges from $75 to $210 per time period in addition to a medical price
of $150 per course for particular packages. Some packages require college students to
attend residencies, expertise labs and pre-practicum labs that are charged at a
vary of $975 to $2,475 per occasion. These tuition charges, occasion expenses, and costs
don’t embody the price of books or private expertise, provides,
transportation, or residing bills.

Medical and Veterinary

Medical and Veterinary Scholar Enrollment:

Fiscal 12 months 2022
Semester Sept. 2021
New college students 878
% change from prior yr (4.6) %
Whole college students 5,449
% change from prior yr (6.9) %

Fiscal 12 months 2021
Semester Sept. 2020 Jan. 2021 Might 2021
New college students 920 589 611
% change from prior yr 5.5 % 21.2 % 12.3 %
Whole college students 5,850 5,292 5,126
% change from prior yr 4.3 % (6.2) % (1.2) %

Medical and Veterinary income decreased 0.3%, or $0.2 million, to $84.Eight million
within the first quarter of fiscal yr 2022 in comparison with the year-ago interval, pushed
by decrease enrollment, partially offset by a rise in medical income at AUC
and RUSM and elevated housing income at RUSM.

Within the September 2021 semester, whole pupil enrollment elevated at AUC however
declined at RUSM and RUSVM whereas new pupil enrollment elevated at RUSVM however
declined at AUC and RUSM. The decline in whole pupil enrollment at RUSM was
pushed by the shortcoming to supply medical experiences to all eligible college students
brought on by a rise in college students ready to move their USMLE Step 1 examination. If a
pupil has not but began in a medical program, shouldn’t be eligible to be
enrolled in a medical program, or not collaborating in different academic
experiences, they aren’t included within the enrollment depend for that semester.
Administration believes elevated competitors for college students and hesitancy on
collaborating in on campus instruction have been drivers of decrease new pupil
enrollment. Whole enrollment at RUSM and RUSVM additionally declined on account of larger
pupil withdrawals and leaves of absence. Administration is executing its plan to
differentiate the medical and veterinary colleges from the competitors, with a
core objective of accelerating worldwide college students, growing affiliations with
traditionally black faculties and universities (“HBCU”) and Hispanic-serving
establishments (“HSI”), increasing AUC’s medical schooling program based mostly within the
U.Ok. in partnership with the College of Central Lancashire (“UCLAN”), and
bettering the effectiveness of selling and enrollment investments.

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Tuition Charges:

Efficient for semesters starting in September 2021, tuition charges for the

? starting fundamental sciences and ultimate medical rotation parts of AUC’s medical

program are $23,800 and $26,625, respectively, per semester. These tuition

charges characterize a 2.4% improve from the prior tutorial yr.

Efficient for semesters starting in September 2021, tuition charges for the

? starting fundamental sciences and ultimate medical rotation parts of RUSM’s medical

program are $24,750 and $27,310, respectively, per semester. These tuition

charges characterize a 2.4% improve from the prior tutorial yr.

For college students who entered the RUSVM program in September 2018 or later, the

tuition fee for the pre-clinical (Semesters 1-7) and medical curriculum

(Semesters 8-10) is $21,063 per semester efficient September 2021. For college students

? who entered RUSVM earlier than September 2018, tuition charges for the pre-clinical and

medical curriculum are $20,066 and $25,190, respectively, per semester

efficient September 2021. These tuition charges characterize a 3.5% improve from

the prior tutorial yr.

The respective tuition charges for AUC, RUSM, and RUSVM don’t embody the price of
transportation, residing bills, or medical health insurance.

Monetary Providers

Monetary Providers income elevated 19.9%, or $9.Eight million, to $59.Three million in
the primary quarter of fiscal yr 2022 in comparison with the year-ago interval, pushed
principally by elevated income at ACAMS and Becker. The ACAMS income improve
was pushed by gross sales of certification and coaching merchandise in addition to a hybrid
Las Vegas convention within the first quarter of fiscal yr 2022, which was
completely digital final yr on account of COVID-19 restrictions. ACAMS memberships have
elevated to greater than 86,00Zero as of September 30, 2021 in comparison with greater than
82,00Zero as of September 30, 2020, pushed by sturdy development within the European area.
The Becker income improve was pushed by gross sales of the Licensed Administration
Accountant (“CMA”) examination assessment merchandise in addition to the CPA examination assessment merchandise.

Price of Academic Providers

The most important element of price of academic companies is the price of school and
employees who assist academic operations. This expense class additionally contains
the prices of amenities, adjunct school, provides, housing, bookstore, different
academic supplies, pupil education-related assist actions, and the
provision for dangerous money owed. The next desk presents price of academic
companies by phase detailing the modifications from the year-ago interval (in
1000’s):

Three Months Ended September 30, 2021
Medical and Monetary Dwelling Workplace
Chamberlain Walden Veterinary Providers and Different Consolidated
Fiscal yr 2021 as
reported $ 59,732 $ – $ 45,379 $ 8,005 $ 582 $ 113,698
Price improve (lower) 5,956 – 6,930 3,055 (582) 15,359
Impact of acquisitions – 34,053 – – – 34,053
Fiscal yr 2022 as
reported $ 65,688 $ 34,053 $ 52,309 $ 11,060 $ – $ 163,110

Fiscal yr 2022 %
change:
Price improve 10.0 % NM 15.3 % 38.2 % NM 13.5 %
Impact of acquisitions – NM – – NM 30.0 %
Fiscal yr 2022 % change
as reported 10.0 % NM 15.3 % 38.2 % NM 43.5 %

Price of academic companies elevated 43.5%, or $49.Four million, to $163.1
million within the first quarter of fiscal yr 2022 in comparison with the year-ago
interval. Excluding the impact of the Walden acquisition, price of schooling
companies elevated 13.5%, or $15.Four million, within the first quarter of fiscal yr
2022 in comparison with the year-ago interval. Prices elevated within the first quarter of
fiscal yr 2022 primarily pushed by return to campus price will increase at
Chamberlain, AUC, RUSM, and RUSVM, elevated convention prices from delivering
the ACAMS hybrid Las Vegas convention, elevated medical expense to assist
elevated medical hours and prices to assist Chamberlain campus development.

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As a proportion of income, price of academic companies was 46.8% and 42.4% in
the primary quarter of fiscal yr 2022 and 2021, respectively. The rise in
the proportion was primarily the results of return to campus and the decrease
margins on ACAMS hybrid conferences.

Scholar Providers and Administrative Expense

The coed companies and administrative expense class contains bills
associated to gross sales, pupil admissions, advertising and marketing and promoting, normal and
administrative, and amortization expense of finite-lived intangible property
associated to enterprise acquisitions. The next desk presents pupil companies
and administrative expense by phase detailing the modifications from the year-ago
interval (in 1000’s):

Three Months Ended September 30, 2021
Medical and

Monetary Dwelling Workplace

Chamberlain Walden Veterinary Providers and Different Consolidated
Fiscal yr 2021 as
reported $ 43,864 $ – $ 16,841 $ 32,723 $ 6,750 $ 100,178
Price improve (lower) 5,232 – (2) 2,025 (359) 6,896
Impact of acquisitions
excluding particular objects – 29,759 – – – 29,759
Walden intangible
amortization expense – 16,451 – – – 16,451
CEO transition prices – – – – 6,195 6,195
Fiscal yr 2022 as
reported $ 49,096 $ 46,210 $ 16,839 $

34,748 $ 12,586 $ 159,479

Fiscal yr 2022 %
change:
Price improve (lower) 11.9 % NM (0.0) % 6.2 % NM 6.9 %
Impact of acquisitions
excluding particular objects – NM – – NM 29.7 %
Impact of Walden
intangible amortization
expense – NM – – NM 16.4 %
Impact of CEO transition
prices – NM – – NM 6.2 %
Fiscal yr 2022 % change
as reported 11.9 % NM (0.0) % 6.2 % NM 59.2 %

Scholar companies and administrative expense elevated 59.2%, or $59.Three million,
to $159.5 million within the first quarter of fiscal yr 2022 in comparison with the
year-ago interval. Excluding the impact of the Walden acquisition and CEO
transition prices, pupil companies and administrative expense elevated 6.9%, or
$6.9 million, within the first quarter of fiscal yr 2022 in comparison with the year-ago
interval. Elevated prices at Chamberlain have been primarily pushed by larger advertising and marketing
expense. Prices elevated at Monetary Providers to assist development.

As a proportion of income, pupil companies and administrative expense was
45.8% and 37.3% within the first quarter of fiscal yr 2022 and 2021, respectively.
The rise within the proportion was primarily the results of Walden intangible
amortization expense and CEO transition prices.

Restructuring Expense

Restructuring expense was $3.9 million and $4.2 million within the first quarter of
fiscal yr 2022 and 2021, respectively. The first driver of the decreased
restructure expense within the first quarter of fiscal yr 2022 was the results of a
larger quantity of expenses within the first quarter of fiscal yr 2021 associated to
Adtalem’s dwelling workplace and ACAMS actual property consolidations. See Be aware 6
“Restructuring Prices” to the Consolidated Monetary Statements for added
data on restructuring expenses.

Along with persevering with to incur restructuring expenses or reversals associated to
exiting leased house from earlier restructuring actions, we now have begun
further restructuring plans to attain synergies with the Walden acquisition.

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Enterprise Acquisition and Integration Expense

Enterprise acquisition and integration expense was $26.6 million and $13.Four million
within the first quarter of fiscal yr 2022 and 2021, respectively. These are
transaction prices related to buying Walden and prices related to
integrating Walden into Adtalem. We count on to incur further integration prices
by the rest of fiscal yr 2022.

Working (Loss) Revenue

The next desk presents working (loss) revenue by phase detailing the
modifications from the year-ago interval (in 1000’s):

Three Months Ended

September 30, 2021

Medical and

Monetary Dwelling Workplace

Chamberlain Walden Veterinary Providers and Different Consolidated
Fiscal yr 2021 as
reported $ 30,169 $ – $ 22,841 $ 7,272 $ (23,576) $ 36,706
Natural change (9,314) – (7,176) 4,762 942 (10,786)
Impact of acquisitions
excluding particular objects – 11,012 – – – 11,012
Deferred income adjustment
change – (6,207) – – – (6,207)
CEO transition prices change – – – – (6,195) (6,195)
Restructuring expense
change – – – 594 (287) 307
Enterprise acquisition and
integration expense change – – – – (13,117) (13,117)
Walden intangible
amortization expense change – (16,451) – – – (16,451)
Fiscal yr 2022 as
reported $ 20,855 $ (11,646) $ 15,665 $ 12,628 $ (42,233) $ (4,731)

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The next desk presents a reconciliation of working (loss) revenue (GAAP)
to working revenue excluding particular objects (non-GAAP) by phase (in
1000’s):

Three Months Ended
September 30,
Improve
2021 2020 (Lower)
Chamberlain:
Working revenue (GAAP) $ 20,855 $ 30,169 (30.9) %
Working revenue excluding particular objects
(non-GAAP) $ 20,855 $ 30,169 (30.9) %

Walden:
Working loss (GAAP) $ (11,646) $ – NM
Deferred income adjustment 6,207 –
Walden intangible amortization expense 16,451 –
Working revenue excluding particular objects
(non-GAAP) $ 11,012 $ – NM

Medical and Veterinary:
Working revenue (GAAP) $ 15,665 $ 22,841 (31.4) %
Working revenue excluding particular objects
(non-GAAP) $ 15,665 $ 22,841 (31.4) %

Monetary Providers:
Working revenue (GAAP) $ 12,628 $ 7,272 73.7 %
Restructuring expense 821 1,415
Working revenue excluding particular objects
(non-GAAP) $ 13,449 $ 8,687 54.8 %

Dwelling Workplace and Different:
Working loss (GAAP) $ (42,233) $ (23,576) (79.1) %
CEO transition prices 6,195 –
Restructuring expense 3,095 2,808

Enterprise acquisition and integration expense 26,553 13,436
Working loss excluding particular objects
(non-GAAP)

$ (6,390) $ (7,332)

12.8 %

Adtalem International Schooling:
Working (loss) revenue (GAAP) $ (4,731) $ 36,706

NM

Deferred income adjustment 6,207 –
CEO transition prices 6,195 –
Restructuring expense 3,916 4,223

Enterprise acquisition and integration expense 26,553 13,436
Walden intangible amortization expense

16,451 –
Working revenue excluding particular objects
(non-GAAP) $ 54,591 $ 54,365

0.4 %

Whole consolidated working lack of $4.7 million decreased $41.Four million within the
first quarter of fiscal yr 2022 in comparison with working revenue of $36.7 million
within the year-ago interval. Excluding the impact of the Walden acquisition, whole
consolidated working revenue decreased $29.Eight million. The first drivers of
the lower have been elevated prices at Chamberlain and Medical and Veterinary for
return to campus, elevated advertising and marketing expense at Chamberlain, elevated enterprise
acquisition and integration prices, and CEO transition prices. These decreases
have been partially offset by elevated working revenue at Monetary Providers which
was pushed by income development throughout the phase. Consolidated working revenue
excluding particular objects elevated within the first quarter of fiscal yr 2022 to
$54.6 million, or 0.4%, in comparison with the year-ago interval. The addition of
working revenue excluding particular objects from Walden was principally offset by the
drivers defined above for the opposite segments.

Chamberlain

Chamberlain working revenue decreased 30.9%, or $9.Three million, to $20.9 million
within the first quarter of fiscal yr 2022 in comparison with the year-ago interval. The
main driver of the lower in working revenue was a rise in prices for
return to campus and elevated advertising and marketing expense.

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Walden

Walden working loss was $11.6 million within the first quarter of fiscal yr
2022, pushed by intangible amortization expense and the deferred income
buy accounting adjustment. Section working revenue excluding particular objects
was $11.Zero million within the first quarter of fiscal yr 2022. There was no
comparable working revenue within the year-ago interval as Adtalem acquired Walden on
August 12, 2021.

Medical and Veterinary

Medical and Veterinary working revenue decreased 31.4%, or $7.2 million, to
$15.7 million within the first quarter of fiscal yr 2022 in comparison with the year-ago
interval. The first driver of the lower in working revenue was a rise
in prices for return to campus.

Monetary Providers

Monetary Providers working revenue elevated 73.7%, or $5.Four million, to $12.6
million within the first quarter of fiscal yr 2022 in comparison with the year-ago
interval. Section working revenue excluding particular objects elevated 54.8%, or
$4.Eight million, within the first quarter of fiscal yr 2022 in comparison with the year-ago
interval. The first driver of this improve was a rise in income at ACAMS
and Becker, which resulted in improved working revenue.

Web Different Expense

Web different expense was $46.5 million and $2.2 million within the first quarter of
fiscal yr 2022 and 2021, respectively. The rise in internet different expense was
primarily the results of elevated borrowings (as mentioned in Be aware 13 “Debt” to
the Consolidated Monetary Statements) to finance the Walden acquisition.

Profit from (Provision for) Revenue Taxes

Our efficient revenue tax fee (“ETR”) from persevering with operations can differ from
the 21% U.S. federal statutory fee on account of a number of components, together with the speed
of tax utilized by state and native jurisdictions, the speed of tax utilized to
earnings outdoors the U.S., tax incentives, modifications in valuation allowances,
liabilities for unsure tax positions, and tax advantages on stock-based
compensation awards. Moreover, our ETR is impacted by the provisions from
the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which primarily features a
tax on international intangible low-taxed revenue (“GILTI”), a deduction for international
derived intangible revenue (“FDII”), and a limitation of tax advantages on sure
govt compensation. The affect of the Tax Act could also be revised in future
durations as we get hold of further information and think about any new laws or
steering that could be launched.

Our ETR from persevering with operations was 20.7% and 20.5% within the three months ended
September 30, 2021 and 2020, respectively.

On December 27, 2020, the Appropriations Act was enacted in response to the
COVID-19 pandemic. The Appropriations Act, amongst different issues, briefly
extends by December 31, 2025, sure expiring tax provisions, together with
look-through therapy of funds of dividends, curiosity, rents, and royalties
obtained or accrued from associated managed international firms. Moreover,
the Appropriations Act enacted new provisions and prolonged sure provisions
originated throughout the CARES Act, enacted on March 27, 2020, together with an
extension of time for compensation of the deferred portion of workers’ payroll
tax by December 31, 2021, and a brief allowance for full deduction of
sure enterprise meals. Adtalem has elected to not defer the workers’ portion
of payroll tax. Administration doesn’t count on that the opposite provisions of the
Appropriations Act would lead to a fabric tax or money profit.

On March 11, 2021, the American Rescue Plan Act of 2021 (the “Rescue Act”) was
enacted in response to the COVID-19 pandemic. The Rescue Act, amongst different
issues, expands the variety of workers topic to the tax deductibility
limitation of worker compensation in extra of $1 million for tax years
starting after December 31, 2026 and repeals the election for U.S. affiliated
teams to allocate curiosity expense on a worldwide foundation. Administration doesn’t
count on that the opposite provisions of the Rescue Act would lead to a fabric
tax or money detriment.

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Discontinued Operations

We proceed to incur prices related to ongoing litigation and settlements
associated to the DeVry College divestiture, which was accomplished throughout fiscal
yr 2019, and are categorised as expense inside discontinued operations.

Regulatory Setting

Scholar Funds

Adtalem’s main supply of liquidity is the money obtained from funds for
pupil tuition, books, different academic supplies, and costs. These funds
embody funds originating as monetary support from numerous federal and state mortgage
and grant packages, pupil and household academic loans (“non-public loans”),
employer academic reimbursements, scholarships, and pupil and household
monetary sources. Adtalem continues to supply financing choices for its
college students, together with Adtalem’s credit score extension packages.

The next desk, which excludes Adtalem Brazil, Carrington, and DeVry
College income, summarizes Adtalem’s income by fund supply as a proportion
of whole income for fiscal years 2020 and 2019. Closing information for fiscal yr

2021
shouldn’t be but out there.

Fiscal 12 months
2020 2019
Federal help (Title IV) program funding (grants and
loans) 59 % 59 %
Non-public loans 2 %

2 %
Scholar accounts, money funds, non-public scholarships,
employer and army supplied tuition help, and different 39 %

39 %
Whole 100 % 100 %

The sample of money receipts throughout the yr is seasonal. Adtalem’s money
collections on accounts receivable peak at first of every establishment’s time period.
Accounts receivable attain their lowest stage on the finish of every establishment’s
time period.

Monetary Assist

Like different larger schooling corporations, Adtalem is extremely dependent upon the
well timed receipt of federal monetary support funds. All monetary support and help
packages are topic to political and governmental budgetary issues. In
the U.S., the Greater Schooling Act (“HEA”) guides the federal authorities’s
assist of postsecondary schooling. If there are modifications to monetary support
packages that limit pupil eligibility or cut back funding ranges, Adtalem’s
monetary situation and money flows could possibly be materially and adversely affected.
See Merchandise 1A. “Danger Elements” in our 2021 Type 10-Ok for a dialogue of pupil
monetary support associated dangers.

As well as, government-funded monetary help packages are ruled by
intensive and complicated laws within the U.S. Like every other academic
establishment, Adtalem’s administration of those packages is periodically reviewed
by numerous regulatory companies and is topic to audit or investigation by different
governmental authorities. Any violation could possibly be the premise for penalties or
different disciplinary motion, together with initiation of a suspension, limitation, or
termination continuing.

If the U.S. Division of Schooling (“ED”) determines that we now have did not
reveal both monetary accountability or administrative functionality in any
pending program assessment, or in any other case determines that an establishment has violated
the phrases of its Program Participation Settlement (“PPA”), we could possibly be topic to
sanctions together with: fines, penalties, reimbursement for discharged mortgage
obligations, a requirement to publish a letter of credit score, and/or suspension or
termination of our eligibility to take part within the Title IV packages.

Throughout the fourth quarter of fiscal yr 2020 and the primary quarter of fiscal
yr 2021, ED provisionally recertified AUC, RUSM, and RUSVM’s Title IV PPAs
with expiration dates of December 31, 2022, March 31, 2023, and June 30, 2023,
respectively. The provisional nature of the agreements stemmed from elevated
and/or repeated Title IV compliance audit findings. No monetary ramifications,
reminiscent of a letter of credit score, heightened money monitoring, or pupil enrollment
limitations, have been imposed on any of those establishments. Whereas corrective actions
have been taken to resolve previous compliance

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issues and eradicate the incidence of repetition, if AUC, RUSM, or RUSVM fail
to keep up administrative functionality as outlined by ED whereas underneath provisional
standing or in any other case fail to adjust to ED necessities, the establishment(s)
might lose eligibility to take part in Title IV packages or have that
eligibility adversely conditioned, which might have a fabric hostile impact on
the companies, monetary situation, outcomes of operations, and money flows.

On October 13, 2016, DeVry College and ED reached a negotiated settlement (the
“ED Settlement”) to settle the claims asserted in a Discover of Intent to Restrict
from the Multi-Regional and Overseas College Participation Division of the Federal
Scholar Assist workplace of the Division of Schooling (“ED FSA”). Beneath the phrases of
the ED Settlement, amongst different issues, with out admitting wrongdoing, DeVry
College agreed to sure compliance necessities concerning its previous and
future promoting, that DeVry College’s participation in Title IV packages
is topic to provisional certification for 5 years and that DeVry College
is required to publish a letter of credit score equal to the higher of 10% of DeVry
College’s annual Title IV disbursements or $68.Four million for a five-year
interval. The posted letter of credit score continues to be posted by Adtalem following
the closing of the sale of DeVry College and reduces Adtalem’s borrowing
capability dollar-for-dollar underneath its Credit score Facility (as outlined in Be aware 13
“Debt” to the Consolidated Monetary Statements).

Walden should apply periodically to ED for continued certification to take part
in Title IV packages. Such recertification usually is required each six
years, however could also be required earlier, together with when an establishment undergoes a
change in management. ED might place an establishment on provisional certification
standing if it finds that the establishment doesn’t totally fulfill all the
eligibility and certification requirements and in sure different circumstances, such
as when an establishment is licensed for the primary time or undergoes a change in
management. Throughout the interval of provisional certification, the establishment should
adjust to any further circumstances included within the establishment’s program
participation settlement. As well as, ED might extra intently assessment an establishment
that’s provisionally licensed if it applies for recertification or approval to
open a brand new location, add an academic program, purchase one other establishment or
make every other important change. College students attending provisionally licensed
establishments stay eligible to obtain Title IV program funds. If ED determines
{that a} provisionally licensed establishment is unable to fulfill its
obligations underneath its program participation settlement, it could search to
revoke the establishment’s certification to take part in Title IV packages
with out advance discover or alternative for the establishment to problem the
motion. Walden College is presently on a brief provisional program
participation settlement which is required for participation in Title IV packages
on a month-to-month foundation. Walden’s provisional certification previous to
acquisition was on account of Walden’s prior guardian firm (Laureate Schooling Inc.)
failing composite rating underneath ED’s monetary accountability requirements and ED’s
approval of Laureate’s preliminary public providing in February 2017, which it considered
as a change in management. Because of Adtalem’s acquisition of Walden, the
provisional nature of Walden’s program participation settlement stays in impact
on a month-to-month foundation whereas ED critiques the change in possession utility
referring to the acquisition of Walden by Adtalem. Walden is also topic to a
letter of credit score and is topic to more money administration necessities with
respect to its disbursements of Title IV funds, in addition to sure further
reporting and disclosure necessities. As of September 30, 2021, Adtalem
maintains a letter of credit score for $83.6 million in favor of ED, which permits
Walden to take part in Title IV packages. This letter of credit score, which was
assumed within the Acquisition, reduces Adtalem’s borrowing capability
dollar-for-dollar underneath its Credit score Facility (as outlined in Be aware 13 “Debt” to the
Consolidated Monetary Statements).

We’re required by numerous states to publish a surety bond. The bonds replicate a
monetary assure of the whole quantity of non-Title IV adjusted gross tuition
and costs from the enrollment of scholars. Restricted money of $18.Four million
associated to those surety bonds was recorded inside restricted money on the
Consolidated Stability Sheet as of September 30, 2021.

An ED regulation often known as the “90/10 Rule” impacts solely proprietary
postsecondary establishments, reminiscent of Chamberlain, Walden, AUC, RUSM, and RUSVM.
Beneath this regulation, an establishment that derives greater than 90% of its income
on a money foundation from Title IV pupil monetary help packages in two
consecutive fiscal years loses eligibility to take part in these packages for
not less than two fiscal years. The Rescue Act enacted on March 11, 2021 amended the
90/10 rule to require {that a} proprietary establishment derive not more than 90% of
its income from federal schooling help funds, together with however not restricted
to beforehand excluded U.S. Division of Veterans Affairs and army tuition
help advantages. This modification is topic to negotiated rulemaking, which can
not start previous to January 2022. The amended rule will first apply to
institutional fiscal years starting on or after January 1, 2023. The next
desk particulars the proportion of income on a money foundation from federal monetary
help packages (excluding the U.S. Division of Veterans Affairs

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and army tuition help advantages) for every of Adtalem’s Title
IV-eligible establishments for fiscal years 2020 and 2019. Closing information for fiscal
yr 2021 shouldn’t be but out there.

Fiscal 12 months
2020 2019
Chamberlain College 62 % 62 %

American College of the Caribbean College of Drugs 81 % 75 %
Ross College College of Drugs

85 % 83 %
Ross College College of Veterinary Drugs 84 % 83 %

Fiscal yr information for Walden shouldn’t be out there as they beforehand reported on a
calendar yr foundation. As reported by Laureate Schooling, Inc. of their February
2021 Annual Report on Type 10-Ok, Walden derived roughly 76% of its
revenues (calculated on a money foundation) from Title IV program funds for the yr
ended December 31, 2020.

In September 2016, Adtalem dedicated to voluntarily restrict to 85% the quantity of
income that every of its Title IV-eligible establishments derive from federal
funding, together with the U.S. Division of Veterans Affairs and army tuition
help advantages. As disclosed within the third occasion assessment reviews which have
been made publicly out there, Adtalem’s establishments that have been owned at every
reporting date have met this decrease threshold for every fiscal yr because the
dedication was made. Adtalem is dedicated to implementing measures to advertise
accountable recruitment and enrollment, profitable pupil outcomes, and
knowledgeable pupil alternative. Administration believes college students deserve higher
transparency to make knowledgeable selections about their schooling. This dedication
builds upon a stable basis and brings Adtalem to a brand new self-imposed stage of
public accountability and transparency.

A monetary accountability check is required for continued participation by an
establishment’s college students in U.S. federal monetary help packages. For
Adtalem’s collaborating establishments, this check is calculated on the
consolidated Adtalem stage. The check relies upon a composite rating of three
ratios: an fairness ratio that measures the establishment’s capital sources; a
main reserve ratio that measures an establishment’s means to fund its
operations from present sources; and a internet revenue ratio that measures an
establishment’s means to function profitably. A minimal rating of 1.5 is important
to fulfill ED’s monetary requirements. Establishments with scores of lower than 1.5 however
higher than or equal to 1.Zero are thought-about financially accountable, however require
further oversight. These establishments are topic to heightened money
monitoring and different participation necessities. An establishment with a rating of
lower than 1.Zero is taken into account not financially accountable. Nonetheless, an establishment
with a rating of lower than 1.Zero might proceed to take part within the Title IV
packages underneath provisional certification. As well as, this decrease rating
sometimes requires that the establishment be topic to heightened money monitoring
necessities and publish a letter of credit score (equal to a minimal of 10% of the Title
IV support it obtained within the establishment’s most up-to-date fiscal yr).

For the previous a number of years, Adtalem’s composite rating has exceeded the required
minimal of 1.5. Modifications to the style through which the composite rating is calculated
that have been efficient on July 1, 2020 has negatively affected Adtalem’s composite
rating for fiscal yr 2021 and can proceed to negatively have an effect on future Adtalem
scores. Right now, administration doesn’t consider these modifications by themselves
will outcome within the rating falling beneath 1.5. Nonetheless, because of the
acquisition of Walden and the associated transactions, Adtalem expects its
consolidated composite rating to fall beneath 1.5 for its fiscal yr 2022
monetary accountability check. If Adtalem turns into unable to fulfill requisite
monetary accountability requirements throughout the laws, administration believes
it is going to be in a position to in any other case reveal its means to proceed to supply
academic companies; nonetheless, our establishments might nonetheless be topic to
further state regulatory approvals, heightened money monitoring, or be
required to publish a letter of credit score to proceed to take part in federal and
state monetary help packages.

Liquidity and Capital Sources

Adtalem’s consolidated money and money equivalents stability of $360.1 million,
$494.6 million, and $561.2 million as of September 30, 2021, June 30, 2021, and
September 30, 2020, respectively, included money and money equivalents held at
Adtalem’s worldwide operations of $73.7 million, $127.2 million, and $82.0
million as of September 30, 2021, June 30, 2021, and September 30, 2020,
respectively, which is on the market to Adtalem for normal company functions.

Beneath the phrases of Adtalem establishments’ participation in monetary support
packages, sure money obtained from state governments and ED is maintained in
restricted financial institution accounts. Adtalem receives these funds both after the
monetary support authorization and disbursement course of for the good thing about the
pupil is accomplished, or simply previous to that authorization. As soon as

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the authorization and disbursement course of for a specific pupil is
accomplished, the funds could also be transferred to unrestricted accounts and develop into
out there for Adtalem to make use of in operations. This course of usually happens throughout
the tutorial time period for which such funds have been approved. Money within the quantity
of $1.Eight million, $0.Four million, and $0.9 million was held in restricted financial institution
accounts as of September 30, 2021, June 30, 2021, and September 30, 2020,
respectively. As well as, restricted money of $18.Four million associated to the
surety bonds mentioned above was recorded inside restricted money on the
Consolidated Stability Sheet as of September 30, 2021. Lastly, $818.6 million was
recorded inside restricted money on the Consolidated Stability Sheet as of June 30,
2021, which represents money held in an escrow account designated to fund the
Acquisition and was not out there to Adtalem for normal company functions (see
Be aware 13 “Debt” to the Consolidated Monetary Statements for added
data).

Money Circulation Abstract

Working Actions

The next desk gives a abstract of money flows from working actions
(in 1000’s):

Three Months Ended
September 30,
2021 2020

(Loss) revenue from persevering with operations $ (40,634) $

27,446

Non-cash objects 66,534

37,565

Modifications in property and liabilities 15,016

19,643

Web money supplied by working activities-continuing
operations $ 40,916 $

84,654

Web money supplied by working actions from persevering with operations within the
three months ended September 30, 2021 was $40.9 million in comparison with $84.7
million within the year-ago interval. The lower was pushed by elevated curiosity
funds and funds for enterprise acquisition and integration bills associated
to the Walden acquisition. The rise of $29.Zero million in non-cash objects
between the three months ended September 30, 2021 and the three months ended
September 30, 2020 was principally pushed by will increase in Walden intangible
amortization expense, amortization of deferred financing charges, and stock-based
compensation expense associated to the CEO transition. The lower of $4.6 million
in money generated from modifications in property and liabilities was primarily on account of
modifications in accounts receivable, pay as you go bills, pay as you go revenue taxes, accounts
payable, accrued payroll and associated taxes, accrued liabilities, accrued revenue
taxes, accrued curiosity, and deferred income.

Investing Actions

Capital expenditures within the first three months of fiscal yr 2022 and 2021 have been
$7.Three million and $14.Four million, respectively. The capital expenditures in fiscal
yr 2022 primarily consisted of spending for Chamberlain new campus improvement
and enhancements. Capital spending for the rest of fiscal yr 2022 will
assist continued funding for brand new campus improvement at Chamberlain,
upkeep on the medical and veterinary colleges, and Adtalem’s dwelling workplace.
Administration anticipates full fiscal yr 2022 capital spending to be within the $75
to $85 million vary, together with $7.Three million spent throughout the first three months
of fiscal yr 2022. The supply of funds for this capital spending might be from
operations or the Credit score Facility (as outlined and mentioned in Be aware 13 “Debt” to
the Consolidated Monetary Statements).

Financing Actions

The next desk gives a abstract of money flows from financing actions
(in 1000’s):

Three Months Ended
September 30,
2021 2020

Web proceeds from (repayments of) long-term debt $ 559,000 $

(750)

Fee of debt low cost and issuance prices (49,553)

–

Different 5,571

(3,835)

Web money supplied by (utilized in) financing
activities-continuing operations $ 515,018 $

(4,585)

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On November 8, 2018, we introduced that the Board approved Adtalem’s eleventh
share repurchase program, which allowed Adtalem to repurchase as much as $300 million
of its frequent inventory by December 31, 2021. The eleventh share repurchase
program commenced in January 2019 and was accomplished in January 2021. On February
4, 2020, we introduced that the Board approved Adtalem’s twelfth share
repurchase program, which permits Adtalem to repurchase as much as $300 million of its
frequent inventory by December 31, 2021. The twelfth and present share repurchase
program commenced in January 2021. Repurchases have been suspended in Might 2021 after
reaching administration’s goal of $100 million in repurchases for fiscal yr
2021. We didn’t make any share repurchases throughout the three months ended
September 30, 2021 and 2020. As of September 30, 2021, $245.2 million of
approved share repurchases have been remaining underneath the present share repurchase
program. The timing and quantity of any future repurchases might be decided
based mostly on an analysis of market circumstances and different components. See Be aware 15
“Share Repurchases” to the Consolidated Monetary Statements for added
data on our share repurchase packages.

On March 24, 2020, we executed a pay-fixed, receive-variable rate of interest swap
settlement (the “Swap”) with a multinational monetary establishment to mitigate
dangers related to the variable rate of interest on our Prior Time period Mortgage B (as
outlined in Be aware 13 “Debt” to the Consolidated Monetary Statements) debt. We
paid curiosity at a set fee of 0.946% and obtained variable curiosity of
one-month LIBOR (topic to a minimal of 0.00%), on a notional quantity equal to
the quantity excellent underneath the Prior Time period Mortgage B. The efficient date of the
Swap was March 31, 2020 and settlements with the counterparty occurred on a
month-to-month foundation. The Swap was set to terminate on February 28, 2025. Throughout the
working time period of the Swap, the annual rate of interest on the quantity of the Prior
Time period B Mortgage is mounted at 3.946% (together with the affect of our present 3% curiosity
fee margin on LIBOR loans) for the relevant rate of interest interval. The Swap
was designated as a money stream hedge and as such, modifications in its truthful worth are
acknowledged in collected different complete loss on the Consolidated Stability
Sheet and are reclassified into the Consolidated Statements of Revenue (Loss)
inside curiosity expense within the durations through which the hedged transactions have an effect on
earnings. On July 29, 2021, previous to refinancing our Prior Credit score Settlement (as
mentioned beneath), we settled and terminated the Swap for $4.5 million, which
resulted in a cost to curiosity expense for this quantity within the first quarter of
fiscal yr 2022.

As mentioned within the earlier part of this MD&A titled “Walden College
Acquisition,” on August 12, 2021, Adtalem acquired all the issued and
excellent fairness curiosity in Walden, in trade for a purchase order worth of $1.48
billion in money, topic to sure changes set forth within the Settlement. On
March 1, 2021, we issued $800 million combination principal quantity of 5.50% Senior
Secured Notes due 2028 (the “Notes”), which mature on March 1, 2028. On August
12, 2021, Adtalem changed the Prior Credit score Facility and Prior Credit score Settlement
(as outlined in Be aware 13 “Debt” to the Consolidated Monetary Statements) by
coming into into its new credit score settlement (the “Credit score Settlement”) that gives
for (1) a $850 million senior secured time period mortgage (“Time period Mortgage B”) with a maturity
date of August 12, 2028 and (2) a $400 million senior secured revolving mortgage
facility (“Revolver”) with a maturity date of August 12, 2026. We confer with the
Time period Mortgage B and Revolver collectively because the “Credit score Facility.” The proceeds of
the Notes and the Time period Mortgage B have been used, amongst different issues, to finance the
Acquisition, refinance Adtalem’s Prior Credit score Settlement, and pay charges and
bills associated to the Acquisition. The Revolver might be used to finance
ongoing working capital and for normal company functions. As of September 30,
2021, the quantity of debt excellent underneath the Notes and Credit score Facility was
$1,650.Zero million. See Be aware 13 “Debt” to the Consolidated Monetary Statements
for added data on the Notes and our Credit score Settlement.

Administration presently tasks that COVID-19 will proceed to impact
operations and, in consequence, liquidity, as mentioned within the earlier part of
this MD&A titled “Overview of the Affect of COVID-19”; nonetheless, we consider the
present balances of money, money generated from operations, and our Credit score
Facility might be adequate to fund each Adtalem’s present home and
worldwide operations and development plans for the foreseeable future.

Materials Money Necessities

Lengthy-Time period Debt – We now have issued $800 million of Notes and preserve a $1,250
million credit score facility, which requires principal and curiosity funds. As of
September 30, 2021, the quantity of debt excellent underneath the Notes and our
Credit score Facility was $1,650.Zero million. See Be aware 13 “Debt” to the Consolidated
Monetary Statements for added data on our Credit score Settlement.

Working Lease Obligations – We now have working lease obligations for the
minimal funds required underneath numerous lease agreements that are recorded on
the Consolidated Stability Sheet. As well as, we sublease sure house to 3rd

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events, which partially offsets the lease obligations at these amenities. See
Be aware 11 “Leases” to the Consolidated Monetary Statements for added
data on our lease agreements.

Seasonality

The seasonal sample of Adtalem’s enrollments and its academic packages’
beginning dates have an effect on the outcomes of operations and the timing of money flows.
Subsequently, administration believes that comparisons of its outcomes of operations
ought to primarily be made to the corresponding interval within the previous yr.
Comparisons of economic place must be made to each the tip of the earlier
fiscal yr and to the tip of the corresponding quarterly interval within the
previous yr.

Crucial Accounting Insurance policies and Estimates

There have been no materials modifications in our crucial accounting insurance policies and
estimates as disclosed in our 2021 Type 10-Ok.

Latest Accounting Pronouncements

For a dialogue of current accounting pronouncements, see Be aware 2 “Abstract of
Vital Accounting Insurance policies” to the Consolidated Monetary Statements.

Ahead-Trying Statements

Sure statements on this Quarterly Report on Type 10-Q are forward-looking
statements as outlined within the Non-public Securities Litigation Reform Act of 1995.
Ahead-looking statements present present expectations of future occasions based mostly
on sure assumptions and embody any assertion that doesn’t straight relate
to any historic or present truth, which incorporates statements concerning the
future affect of the COVID-19 pandemic, and the efficacy and distribution of the
vaccines. Ahead-looking statements will also be recognized by phrases reminiscent of
“future,” “consider,” “count on,” “anticipate,” “estimate,” “plan,” “intend,”
“might,” “will,” “would,” “might,” “can,” “proceed,” “preliminary,” “vary,” and
comparable phrases. These forward-looking statements are topic to dangers and
uncertainties that would trigger precise outcomes to vary materially from these
described within the statements. These dangers and uncertainties embody the danger
components described in Merchandise 1A. “Danger Elements” of our 2021 Type 10-Ok and this
Quarterly Report on Type 10-Q, which must be learn along with the
forward-looking statements on this Quarterly Report on Type 10-Q. These
forward-looking statements are based mostly on data out there to us as of the
date any such statements are made, and we don’t undertake any obligation to
replace any forward-looking assertion, besides as required by legislation.

Non-GAAP Monetary Measures and Reconciliations

We consider that sure non-GAAP monetary measures present traders with
helpful supplemental data concerning the underlying enterprise developments and
efficiency of Adtalem’s ongoing operations and are helpful for
period-over-period comparisons. We use these supplemental non-GAAP monetary
measures internally in our evaluation of efficiency and budgeting course of.
Nonetheless, these non-GAAP monetary measures shouldn’t be thought-about as a
substitute for, or superior to, measures of economic efficiency ready in
accordance with GAAP. The next are non-GAAP monetary measures used on this
Quarterly Report on Type 10-Q:

Web revenue from persevering with operations attributable to Adtalem excluding particular
objects (most comparable GAAP measure: internet (loss) revenue attributable to Adtalem)
– Measure of Adtalem’s internet (loss) revenue attributable to Adtalem adjusted for
deferred income adjustment, CEO transition prices, restructuring expense,
enterprise acquisition and integration expense, Walden intangible amortization
expense, pre-acquisition curiosity expense, and loss from discontinued
operations.

Earnings per share from persevering with operations excluding particular objects (most
comparable GAAP measure: (loss) earnings per share) – Measure of Adtalem’s
diluted (loss) earnings per share adjusted for deferred income adjustment, CEO
transition prices, restructuring expense, enterprise acquisition and integration
expense, Walden intangible amortization expense, pre-acquisition curiosity
expense, and loss from discontinued operations.

Working revenue excluding particular objects (most comparable GAAP measure:
working (loss) revenue) – Measure of Adtalem’s working (loss) revenue adjusted
for deferred income adjustment, CEO transition prices, restructuring expense,

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enterprise acquisition and integration expense, and Walden intangible amortization
expense. This measure is utilized on a consolidated and phase foundation, relying
on the context of the dialogue.

An outline of particular objects in our non-GAAP monetary measures described
above are as follows:

? Deferred income adjustment associated to a income buy accounting adjustment

to report Walden’s deferred income at truthful worth.

? CEO transition prices associated to acceleration of stock-based compensation

expense.

Restructuring expenses primarily associated to plans to attain synergies with the

? Walden acquisition and actual property consolidations at Adtalem’s dwelling workplace and

ACAMS.

? Enterprise acquisition and integration expense embody bills associated to the

Walden acquisition.

? Walden amortization expense on acquired intangible property.

? Pre-acquisition curiosity expense associated to financing preparations in

reference to the Walden acquisition.

? Loss from discontinued operations contains prices associated to DeVry College.

The next tables present a reconciliation from essentially the most straight comparable
GAAP measure to those non-GAAP monetary measures. The working revenue
reconciliation is included within the outcomes of operations part inside this
MD&A.

Web (loss) revenue attributable to Adtalem reconciliation to internet revenue from
persevering with operations attributable to Adtalem excluding particular objects (in
1000’s):

Three Months Ended
September 30,
2021 2020
Web (loss) revenue attributable to Adtalem (GAAP) $ (58,004) $ 19,930
Deferred income adjustment 6,207 –
CEO transition prices 6,195 –
Restructuring expense 3,916 4,223
Enterprise acquisition and integration expense 26,553

13,436

Walden intangible amortization expense 16,451

–

Pre-acquisition curiosity expense 31,634

–

Revenue tax affect on non-GAAP changes (1) (19,064)

(3,998)

Loss from discontinued operations 17,370

7,607

Web revenue from persevering with operations attributable
to Adtalem excluding particular objects (non-GAAP)

$ 31,258 $

41,198

(1) Represents the revenue tax affect of non-GAAP persevering with operations

changes that’s acknowledged in our GAAP monetary statements.

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(Loss) earnings per share reconciliation to earnings per share from persevering with
operations excluding particular objects (shares in 1000’s):

Three Months Ended
September 30,
2021 2020

(Loss) earnings per share, diluted (GAAP) $ (1.17) $

0.38

Impact on diluted earnings per share:
Deferred income adjustment 0.12 –
CEO transition prices 0.12 –
Restructuring expense 0.08 0.08

Enterprise acquisition and integration expense 0.53

0.25

Walden intangible amortization expense 0.33

–

Pre-acquisition curiosity expense 0.63

–

Revenue tax affect on non-GAAP changes (1) (0.38)

(0.08)

Loss from discontinued operations 0.35

0.14

Earnings per share from persevering with operations
excluding particular objects, diluted (non-GAAP) $ 0.62 $

0.78

Diluted shares utilized in non-GAAP EPS calculation 50,222

52,797

(1) Represents the revenue tax affect of non-GAAP persevering with operations

changes that’s acknowledged in our GAAP monetary statements.

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