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What changed in Adtalem Global Education Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Adtalem Global Education Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+502 added−629 removedSource: 10-K (2023-08-10) vs 10-K (2022-08-11)

Top changes in Adtalem Global Education Inc.'s 2023 10-K

502 paragraphs added · 629 removed · 381 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

108 edited+19 added−69 removed157 unchanged
Biggest changeOnly) ​ All Levels ​ 75 % ​ 36 % Management ​ 71 % ​ 31 % Director ​ 68 % ​ 23 % Executive ​ 42 % ​ 21 % Adtalem offers a comprehensive benefits package including wellness programs for eligible employees.
Biggest changeOnly) ​ Level ​ June 30, 2023 ​ ​ June 30, 2022 ​ ​ June 30, 2023 ​ ​ June 30, 2022 ​ All Levels ​ 71 % ​ 75 % ​ 37 % ​ 36 % Management ​ 70 % ​ 71 % ​ 34 % ​ 31 % Director ​ 67 % ​ 68 % ​ 24 % ​ 23 % Executive ​ 47 % ​ 42 % ​ 23 % ​ 21 % Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Chamberlain ​ 80 % ​ 87 % ​ 38 % ​ 36 % Walden ​ 72 % ​ 70 % ​ 34 % ​ 34 % Medical and Veterinary ​ 60 % ​ 59 % ​ 57 % ​ 54 % Home Office ​ 61 % ​ 60 % ​ 39 % ​ 39 % Adtalem offers a comprehensive benefits package including wellness programs for eligible employees.
Doctor of Social Work To be considered for this program, applicants must hold a MSW degree from a CSWE accredited program with a minimum grade point average of 3.0 and have at least three years full-time and equivalent practice experience beyond the master’s degree. A resume is required to document experience.
Doctor of Social Work To be considered for this program, applicants must hold a MSW degree from a CSWE accredited program with a minimum grade point average of 3.0 and have at least three years of full-time and equivalent practice experience beyond the master’s degree. A resume is required to document experience.
The mission of AUC is to train tomorrow’s physicians, whose service to their communities and their patients is enhanced by international learning experiences, a diverse learning community, and an emphasis on social accountability and engagement. RUSM RUSM, founded in 1978 and acquired by Adtalem in 2003, provides medical education and confers the Doctor of Medicine degree.
The mission of AUC is to train tomorrow’s physicians, whose service to their communities and their patients is enhanced by international learning experiences, a diverse learning community, and an emphasis on social accountability and engagement. RUSM, founded in 1978 and acquired by Adtalem in 2003, provides medical education and confers the Doctor of Medicine degree.
In addition, we continue to incur costs associated with ongoing litigation and settlements related to the DeVry University divestiture, which was completed during fiscal year 2019, and are classified as expense within discontinued operations. See Note 4 “Discontinued Operations and Assets Held for Sale” to the Consolidated Financial Statements in Item 8.
In addition, we continue to incur costs associated with ongoing litigation and settlements related to the DeVry University divestiture, which was completed during fiscal year 2019, and those costs are classified as expense within discontinued operations. See Note 4 “Discontinued Operations and Assets Held for Sale” to the Consolidated Financial Statements in Item 8.
Walden has ranked #2 for awarding doctoral degrees in psychology, public health, and social service professions to Hispanic students. In addition, Walden has rich experience in delivering innovative accelerated programs through distance delivery.
Walden has ranked #2 for awarding research doctoral degrees in psychology, public health, and social service professions to Hispanic students. In addition, Walden has rich experience in delivering innovative accelerated programs through distance delivery.
The online MSN degree program offers five non-direct-care specialty tracks: Educator, Executive, Informatics, Population Health, and Healthcare Policy. These programs require 36 credit hours and 144 to 217 practicum hours and are designed to be completed in approximately two years of part-time study. The accelerated MSN program offers an advanced generalist and clinical nursing leadership (“CNL”) concentration.
The online MSN degree program offers five non-direct-care specialty tracks: Nurse Educator, Nurse Executive, Nursing Informatics, Population Health, and Healthcare Policy. These programs require 36 credit hours and 144 to 217 practicum hours and are designed to be completed in approximately two years of part-time study. The accelerated MSN program offers an Advanced Generalist and Clinical Nurse Leadership concentration.
For information regarding such pending investigations and litigation, and the potential impact such matters could have on our institutions or on Adtalem, see in this Annual Report on Form 10-K: (1) Note 20 “Commitments and Contingencies” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data,” (2) the subsection of Item 1A.
For information regarding such pending investigations and litigation, and the potential impact such matters could have on our institutions or on Adtalem, see in this Annual Report on Form 10-K: (1) Note 21 “Commitments and Contingencies” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data,” (2) the subsection of Item 1A.
Chamberlain and Walden undergraduate students may also be eligible for Subsidized Loans within the Federal Direct Student Loan Program. ● Direct Subsidized Loan: Awarded on the basis of student financial need, it is a low-interest loan (a portion of the interest is subsidized by the Federal government) available to undergraduate students with interest charges and principal repayment deferred until six months after a student no longer attends school on at least a half-time basis (the student is responsible for paying the interest charges during the six months after no longer attending school on at least a half-time basis for those loans with a first disbursement between July 1, 2012 and July 1, 2014).
Chamberlain and Walden undergraduate students may also be eligible for Subsidized Loans within the Federal Direct Student Loan Program. ● Direct Subsidized Loan: Awarded on the basis of student financial need, it is a low-interest loan (a portion of the interest is subsidized by the Federal government) available to undergraduate students with interest charges and principal repayment deferred until six months after a student no longer attends school on at least a half-time 13 Table of Contents basis (the student is responsible for paying the interest charges during the six months after no longer attending school on at least a half-time basis for those loans with a first disbursement between July 1, 2012 and July 1, 2014).
The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The content of the websites mentioned above is not incorporated into and should not be considered a part of this report. 25 Table of Contents
The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The content of the websites mentioned above is not incorporated into and should not be considered a part of this report. 22 Table of Contents
In the U.S., the Higher Education Act (as reauthorized, the “HEA”) guides the federal government’s support of postsecondary education. The HEA was last reauthorized by the U.S. Congress in July 2008 and was signed into law in August 2008. In the 117 th Congress, a comprehensive HEA reauthorization bill has not been introduced.
In the U.S., the Higher Education Act (as reauthorized, the “HEA”) guides the federal government’s support of postsecondary education. The HEA was last reauthorized by the U.S. Congress in July 2008 and was signed into law in August 2008. In the 118 th Congress, a comprehensive HEA reauthorization bill has not been introduced.
College and university administrators depend on the accredited status of an institution when evaluating transfer credit and applicants to their schools; employers rely on the accreditation status of an institution when evaluating a candidate’s credentials; parents and high school counselors look to accreditation for assurance that an institution meets quality educational standards; and many professions require candidates to graduate from an accredited program in order to obtain professional licensure in their respective 13 Table of Contents fields.
College and university administrators depend on the accredited status of an institution when evaluating transfer credit and applicants to their schools; employers rely on the accreditation status of an institution when evaluating a candidate’s credentials; parents and high school counselors look to accreditation for assurance that an institution meets quality educational standards; and many professions require candidates to graduate from an accredited program in order to obtain professional licensure in their respective fields.
Applicants may be offered conditional admission to Walden with a stipulation for academic performance at the level of a cumulative grade point average of 3.0 or higher for master’s and doctoral students or a cumulative grade point average of 2.0 or higher for undergraduate students, the successful completion of academic progress requirements during the initial term(s) of enrollment, the completion of prerequisites, and/or other stipulations (including receipt of official records).
Applicants may be offered conditional admission to Walden with a stipulation for academic performance at the level of a cumulative grade point average of 3.0 or higher for master’s and doctoral students or a cumulative grade point average 5 Table of Contents of 2.0 or higher for undergraduate students, the successful completion of academic progress requirements during the initial term(s) of enrollment, the completion of prerequisites, and/or other stipulations (including receipt of official records).
In addition, this lower score typically requires that the institution be subject to heightened cash monitoring requirements and post a letter of credit (equal to a minimum of 10% of the Title IV aid it received in the institution's most recent fiscal year). 20 Table of Contents For the past several years, Adtalem’s composite score has exceeded the required minimum of 1.5.
In addition, this lower score typically requires that the institution be subject to heightened cash monitoring requirements and post a letter of credit (equal to a minimum of 10% of the Title IV aid it received in the institution's most recent fiscal year). For the past several years, Adtalem’s composite score has exceeded the required minimum of 1.5.
“Risk Factors” titled “Risks Related to Adtalem’s Highly Regulated Industry,” and (3) the subsection of Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” titled “Regulatory Environment.” Eligibility and Certification Procedures The HEA specifies the manner in which ED reviews institutions for eligibility and certification to participate in Title IV programs.
“Risk Factors” titled 16 Table of Contents “Risks Related to Adtalem’s Highly Regulated Industry,” and (3) the subsection of Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” titled “Regulatory Environment.” Eligibility and Certification Procedures The HEA specifies the manner in which ED reviews institutions for eligibility and certification to participate in Title IV programs.
The amount of the typical loan varies significantly according to the student’s enrollment and unmet need. Most private loans are approved on the basis of the student’s and/or a co-borrower’s credit history. The cost of these loans varies, but in almost all cases will be more expensive than the federal programs.
The amount of the typical loan varies significantly according to the student’s enrollment and unmet need. 14 Table of Contents Most private loans are approved on the basis of the student’s and/or a co-borrower’s credit history. The cost of these loans varies, but in almost all cases will be more expensive than the federal programs.
Additionally, funding for student financial assistance programs may be impacted during appropriations and budget actions. Information about Particular U.S. and Canadian Government Financial Aid Programs Chamberlain, Walden, AUC, RUSM, and RUSVM students participate in many U.S. and Canadian financial aid programs. Each of these programs is briefly described below. 15 Table of Contents U.S.
Additionally, funding for student financial assistance programs may be impacted during appropriations and budget actions. Information about Particular U.S. and Canadian Government Financial Aid Programs Chamberlain, Walden, AUC, RUSM, and RUSVM students participate in many U.S. and Canadian financial aid programs. Each of these programs is briefly described below. U.S.
The BSN program enables students to complete their BSN degree in three years of full-time study as opposed to the typical four-year BSN program with summer breaks. Beginning in September 2019, Chamberlain also began offering an evening/weekend BSN option at select campuses.
The BSN program enables students to complete their BSN degree in three years of full-time study as opposed to the typical four-year BSN program with summer breaks. Beginning in September 2019, Chamberlain also 2 Table of Contents began offering an evening/weekend BSN option at select campuses.
For a variety of reasons, higher default rates are often found in private-sector institutions and community colleges, 21 Table of Contents many of which tend to have a higher percentage of low-income students enrolled compared to four-year publicly supported and independent colleges and universities.
For a variety of reasons, higher default rates are often found in private-sector institutions and community colleges, many of which tend to have a higher percentage of low-income students enrolled compared to four-year publicly supported and independent colleges and universities.
Moreover, in the U.S., accreditation is necessary for students to qualify for federal financial assistance and most scholarship commissions restrict their awards to students attending accredited institutions. Chamberlain Chamberlain is institutionally accredited by the HLC, an institutional accreditation agency recognized by ED. In addition to institutional accreditation, Chamberlain has also obtained programmatic accreditation for specific programs.
Moreover, in the U.S., accreditation is necessary for students to qualify for federal financial assistance and most scholarship commissions restrict their awards to students attending accredited institutions. 11 Table of Contents Chamberlain Chamberlain is institutionally accredited by the HLC, an institutional accreditation agency recognized by ED. In addition to institutional accreditation, Chamberlain has also obtained programmatic accreditation for specific programs.
Successfully passing USMLE Step 2 Clinical Skills previously was a requirement for graduation and for certification by the Educational Commission for Foreign Medical Graduates (“ECFMG”) to enter the U.S. residency match. Due to COVID-19 restrictions, USMLE Step 2 Clinical Skills has been discontinued. ECFMG has developed alternative pathways to replace this requirement, for which AUC and RUSM are generally eligible.
Successfully passing USMLE Step 2 Clinical Skills previously was a requirement for graduation and for certification by the Educational Commission for Foreign Medical Graduates (“ECFMG”) to enter the U.S. residency match. USMLE Step 2 Clinical Skills has been discontinued indefinitely. ECFMG has developed alternative pathways to replace this requirement, for which AUC and RUSM are generally eligible.
RUSVM offers a one-semester Veterinary Preparatory Program (“Vet Prep”) designed to enhance the pre-clinical science knowledge and study skills that are critical to success in veterinary school. The Vet Prep advancement rate for 2019-2020 was 87%, which represents the percent of Vet Prep students in 2019-2020 who started at RUSVM within one year.
RUSVM offers a one-semester Veterinary Preparatory Program (“Vet Prep”) designed to enhance the pre-clinical science knowledge and study skills that are critical to success in veterinary school. The Vet Prep advancement rate for 2021-2022 was 76%, which represents the percent of Vet Prep students in 2020-2021 who started at RUSVM within one year.
These may have been acquired through a master’s, specialist, or certification program at a university. A valid principal license, or eligibility for a principal license based on a university principal preparation program, is also required. If not certified, applicants should provide a university document that states eligibility for certification based on the 7 Table of Contents program.
These may have been acquired through a master’s, specialist, or certification program at a university. A valid principal license, or eligibility for a principal license based on a university principal preparation program, is also required. If not certified, applicants should provide a university document that states eligibility for certification based on the program.
Students at AUC may be eligible for an institutional scholarship, ranging from $5,000 to $80,000 to cover expenses incurred from tuition and fees. Students at RUSM may be eligible for various institutional scholarships, ranging from $5,000 to $108,000, to cover expenses incurred from housing, tuition and fees.
Students at AUC may be eligible for an institutional scholarship, ranging from $5,000 to $80,000 to cover expenses incurred from tuition and fees. Students at RUSM may be eligible for various institutional scholarships, ranging from $3,000 to $100,000, to cover expenses incurred from housing, tuition and fees.
The accelerated RN-to-MSN program offers associate or diploma-prepared RNs an opportunity to earn an MSN versus a BSN with the option of completing the advanced generalist concentration requiring 45 credit hours and 144 practicum hours completed in one year of full-time study and the CNL concentration requires 52 credit hours and 432 practicum hours completed in one and a half years of full-time study.
The accelerated RN-to-MSN program offers associate or diploma-prepared RNs an opportunity to earn an MSN versus a BSN with the option of completing the Advanced Generalist concentration requiring 45 credit hours and 144 practicum hours completed in one year of full-time study and the Clinical Nurse Leadership concentration requiring 52 credit hours and 432 practicum hours completed in one and a half years of full-time study.
Chamberlain’s RN-to-BSN degree completion option has received three certifications from Quality Matters, an independent global organization leading quality assurance in online teaching and 12 Table of Contents learning environments. Chamberlain has earned the Online Learning Support, Online Teaching Support, and Online Learner Success certifications.
Chamberlain’s RN-to-BSN degree completion option has received three certifications from Quality Matters, an independent global organization leading quality assurance in online teaching and learning environments. Chamberlain has earned the Online Learning Support, Online Teaching Support, and Online Learner Success certifications.
This change was subject to negotiated rulemaking, which ended in March 19 Table of Contents 2022. The amended rule will first apply to institutional fiscal years beginning on or after January 1, 2023. The following table details the percentage of revenue on a cash basis from federal financial assistance programs as calculated under current regulations (excluding the U.S.
This change was subject to negotiated rulemaking, which ended in March 2022. The amended rule applies to institutional fiscal years beginning on or after January 1, 2023. The following table details the percentage of revenue on a cash basis from federal financial assistance programs as calculated under the current regulations (excluding the U.S.
The MSN-to-DNP track is ideal for RNs who have earned a MSN degree. Ph.D. in Nursing Walden offers three tracks for Ph.D. in Nursing. The bridge option offers students who hold a DNP degree a shorter path to a Ph.D. in Nursing. The BSN-to-Ph.D. track is ideal for applicants that are a RN and have earned their BSN degree.
The bridge option offers students who hold a DNP degree a shorter path to a Ph.D. in Nursing. The BSN-to-Ph.D. track is ideal for applicants that are a RN and have earned their BSN degree. The MSN-to-Ph.D. track is ideal for applicants that are a RN and have earned their MSN degree.
The earliest we believe any new rules will be effective is July 1, 2024. State Authorization Institutions that participate in Title IV programs must be authorized to operate by the appropriate postsecondary regulatory authority in each state where the institution has a physical presence. Chamberlain is specifically authorized to operate in all of the domestic jurisdictions that require such authorizations.
We anticipate any amended rules will be effective on July 1, 2024. State Authorization Institutions that participate in Title IV programs must be authorized to operate by the appropriate postsecondary regulatory authority in each state where the institution has a physical presence. Chamberlain is specifically authorized to operate in all of the domestic jurisdictions that require such authorizations.
Chamberlain has obtained licensure in states which require such licensure and where their students are enrolled and is an institutional participant in the National Council for State Authorization Reciprocity Agreements (“NC-SARA”) initiative.
Chamberlain has obtained licensure in states which require such licensure 18 Table of Contents and where their students are enrolled and is an institutional participant in the National Council for State Authorization Reciprocity Agreements (“NC-SARA”) initiative.
Default rates for Chamberlain, Walden, AUC, RUSM, and RUSVM students are as follows: ​ ​ ​ ​ ​ ​ ​ ​ Cohort Default Rate ​ ​ 2018 ​ 2017 Chamberlain University ​ 2.6 % 3.4 % Walden University ​ 4.7 % 6.8 % American University of the Caribbean School of Medicine ​ 0.7 % 1.4 % Ross University School of Medicine ​ 0.9 % 1.3 % Ross University School of Veterinary Medicine ​ 0.4 % 0.9 % Satisfactory Academic Progress In addition to the requirements that educational institutions must meet, student recipients of financial aid must maintain satisfactory academic progress toward completion of their program of study and an appropriate grade point average.
Default rates for Chamberlain, Walden, AUC, RUSM, and RUSVM students are as follows: ​ ​ ​ ​ ​ ​ ​ ​ Cohort Default Rate ​ ​ 2019 ​ 2018 Chamberlain University ​ 0.5 % 2.6 % Walden University ​ 1.1 % 4.7 % American University of the Caribbean School of Medicine ​ 0.2 % 0.7 % Ross University School of Medicine ​ 0.2 % 0.9 % Ross University School of Veterinary Medicine ​ 0.2 % 0.4 % 19 Table of Contents Satisfactory Academic Progress In addition to the requirements that educational institutions must meet, student recipients of financial aid must maintain satisfactory academic progress toward completion of their program of study and an appropriate grade point average.
Chamberlain has 23 campuses located in 15 states. In Fall 2021, according to data obtained from the American Association of Colleges of Nursing (“AACN”), Chamberlain had the largest pre-licensure program in the U.S. In post-licensure nursing education, there are more than 700 institutions offering RN-to-BSN programs and more than 600 institutions offering MSN programs.
Chamberlain has 23 campuses located in 15 states. In Fall 2022, according to data obtained from the American Association of Colleges of Nursing (“AACN”), Chamberlain had the largest pre-licensure program in the U.S based on total enrollments. In post-licensure nursing education, there are more than 700 institutions offering RN-to-BSN programs and more than 600 institutions offering MSN programs.
The wellness strategy entitled Live Well takes a wholistic approach to wellbeing through four pillars: Physical, Social, Financial and Emotional. Our health benefits remain competitive with generous paid time off, retirement plan, domestic partner benefits, 24 Table of Contents adoption assistance, paid parent leave for both mothers and fathers, among others.
The wellness strategy entitled Live Well takes a holistic approach to wellbeing through four pillars: Physical, Social, Financial and Emotional. Our health benefits remain competitive with generous paid time off, retirement plan, domestic partner benefits, adoption assistance, paid parent leave for both mothers and fathers, among others.
The failure of an institution to satisfy any of the criteria used to assess administrative capability may cause ED to determine that the institution lacks administrative capability and, therefore, subject the institution to additional scrutiny or deny its eligibility for Title IV programs. ED has initiated rulemaking proceedings to amend the administrative capability regulations.
The failure of an institution to satisfy any of the criteria used to assess administrative capability may cause ED to determine that the institution lacks administrative capability and, therefore, subject the institution to additional scrutiny or deny its eligibility for Title IV programs. ED has proposed rules to amend the administrative capability regulations.
Applicants with degrees and coursework from a non-U.S. institution have their academic record evaluated for comparability to a U.S. degree or coursework by our Global Transcript Evaluation (“GTE”) service offered by Walden or 5 Table of Contents any credential evaluation service that is a member of the National Association of Credential Evaluation Services (“NACES”).
Applicants with degrees and coursework from a non-U.S. institution have their academic record evaluated for comparability to a U.S. degree or coursework by our Global Transcript Evaluation (“GTE”) service offered by Walden or any credential evaluation service that is a member of the National Association of Credential Evaluation Services (“NACES”) or member of Association of International Credential Evaluators (“AICE”).
For the 2021-2022 school year, eligible students could receive Federal Pell Grants ranging from $650 to $6,495. ● Federal Supplemental Educational Opportunity Grant (“FSEOG”): This is a supplement to the Federal Pell Grant and is only available to the neediest undergraduate students. Federal rules restrict the amount of FSEOG funds that may go to a single institution.
For the 2022-2023 school year, eligible students could receive Federal Pell Grants ranging from $700 to $6,895. ● Federal Supplemental Educational Opportunity Grant (“FSEOG”): This is a supplement to the Federal Pell Grant and is only available to the neediest undergraduate students. Federal rules restrict the amount of FSEOG funds that may go to a single institution.
According to ED, the three-year cohort default rate for all colleges and universities eligible for federal financial aid was 7.3% for the fiscal year 2018 cohort (the latest available) and 9.7% for the fiscal year 2017 cohort.
According to ED, the three-year cohort default rate for all colleges and universities eligible for federal financial aid was 2.3% for the fiscal year 2019 cohort (the latest available) and 7.3% for the fiscal year 2018 cohort.
In 2020 and 2021, instruction for both the RUSVM and Vet Prep programs was partially offered online in response to COVID-19 travel restrictions. All students have returned to full-time instruction in St. Kitts.
In 2020 and 2021, instruction for both the RUSVM and Vet Prep programs was partially offered online in response to the novel coronavirus (“COVID-19”) travel restrictions. All students have returned to full-time instruction in St. Kitts.
Adtalem will continue to strive to achieve superior student outcomes by providing quality education and student services, growing and diversifying into new program areas, and building quality brands and the infrastructure necessary to compete in an increasingly competitive global market.
Adtalem will continue to strive to achieve superior student outcomes by providing quality education and student services, growing and diversifying into new program areas, and building quality brands and the infrastructure necessary to compete.
The advanced generalist concentration requires 30 credit hours and 144 practicum hours designed to be completed in as little as nine months of full-time study. The CNL concentration requires 36 credit hours and 432 practicum hours designed to be completed in one year of full-time study.
The Advanced Generalist concentration requires 30 credit hours and 144 practicum hours designed to be completed in as little as nine months of full-time study. The Clinical Nurse Leadership concentration requires 37 credit hours and 432 practicum hours designed to be completed in one year of full-time study.
ED has initiated rulemaking proceedings and may amend the rules to require that a program meet state licensure requirements in lieu of the aforementioned disclosures. The earliest we believe any new rules will be effective is July 1, 2024. Cohort Default Rates ED has instituted strict regulations that penalize institutions whose students have high default rates on federal student loans.
ED has proposed to amend the rules to require that a program meet state licensure requirements in lieu of the aforementioned disclosures. The earliest any amended rules will be effective is July 1, 2024. Cohort Default Rates ED has instituted strict regulations that penalize institutions whose students have high default rates on federal student loans.
Chamberlain is also enrolling new students for its Master of Physician Assistant Studies (“MPAS”) degree program, offered at the Chicago, Illinois campus, with the first cohort scheduled to begin classes in September 2022. Chamberlain provides an educational experience distinguished by a high level of care for students, academic excellence, and integrity delivered through its 23 campuses and online.
Chamberlain also offers a Master of Physician Assistant Studies (“MPAS”) degree program at the Chicago, Illinois campus; the first cohort began classes in September 2022. Chamberlain provides an educational experience distinguished by a high level of care for students, academic excellence, and integrity delivered through its 23 campuses and online.
Regular Employees ​ Participation ​ Financial ​ Retirement Planning (auto enrollment feature for new hire) ​ 92 % Emotional* ​ Mental Health Wellbeing - Ginger Utilization ​ 8 % *EAP standard utilization is 3-5% Finally, Adtalem launched additional opportunities for employees to pursue their educational goals through our Education Assistance program.
Regular Employees ​ Participation ​ Financial ​ Retirement planning (auto enrollment feature for new hire) ​ 92 % Emotional* ​ Mental health wellbeing - Ginger utilization ​ 18 % Physical ​ Employees completing annual physicals ​ 84 % *EAP standard utilization is 3-5% Finally, Adtalem provides additional opportunities for employees to pursue their educational goals through our Education Assistance program.
The test is based upon a composite score of three ratios: an equity ratio that measures the institution’s capital resources; a primary reserve ratio that measures an institution’s ability to fund its operations from current resources; and a net income ratio that measures an institution’s ability to operate profitably.
Applying various financial elements from the fiscal year audited financial statements, the test is based upon a composite score of three ratios: an equity ratio that measures the institution’s capital resources; a primary reserve ratio that measures an institution’s ability to fund its operations from current resources; and a net income ratio that measures an institution’s ability to operate profitably.
If Adtalem were unable to meet the tests of financial responsibility for a specific jurisdiction, and could not otherwise demonstrate financial responsibility, Adtalem could be required to cease operations in that state. To date, Adtalem has successfully demonstrated its financial responsibility where required.
Adtalem believes its institutions are in compliance with state and Canadian provincial regulations. If Adtalem were unable to meet the tests of financial responsibility for a specific jurisdiction, and could not otherwise demonstrate financial responsibility, Adtalem could be required to cease operations in that state. To date, Adtalem has successfully demonstrated its financial responsibility where required.
AUC has also been deemed acceptable by the Graduate Medical Council (“GMC”), the accrediting body in the U.K., which allows AUC graduates to apply for post-graduate (residency) programs in the U.K. 14 Table of Contents RUSM’s primary accreditor is Caribbean Accreditation Authority for Education in Medicine and other Health Professions (“CAAM-HP”).
AUC has also been deemed acceptable by the Graduate Medical Council (“GMC”), the accrediting body in the U.K., which allows AUC graduates to apply for residency programs in the U.K. RUSM’s primary accreditor is Caribbean Accreditation Authority for Education in Medicine and other Health Professions (“CAAM-HP”). CAAM-HP is authorized to accredit medical programs by the government of Barbados.
The MSN-to-Ph.D. track is ideal for applicants that are a RN and have earned their MSN degree. Program Admission Considerations (BSN-to-Ph.D.): To be considered for this doctoral program track, applicants must have a current, active RN license, a BSN or equivalent from an accredited school, and meet the general admission requirements.
Program Admission Considerations (BSN-to-Ph.D.): To be considered for this doctoral program track, applicants must have a current, active RN license, a BSN or equivalent from an accredited school, and meet the general admission requirements.
CAAM-HP is authorized to accredit medical programs by the government of Barbados. On July 26, 2018, Barbados authorized RUSM to confer the Doctor of Medicine degree. The NCFMEA has affirmed that CAAM-HP has established and enforces standards of educational accreditation that are comparable to those promulgated by the LCME.
On July 26, 2018, Barbados authorized RUSM to confer the Doctor of Medicine degree. The NCFMEA has affirmed that CAAM-HP has established and enforces standards of educational accreditation that are comparable to those promulgated 12 Table of Contents by the LCME.
A co-borrower may be used to meet the credit requirements. 3. Federal Work-study. Chamberlain participates in this program, which offers work opportunities, both on or off campus, on a part-time basis to students who demonstrate financial need.
A co-borrower may be used to meet the credit requirements. 3. Federal Work-study. Chamberlain participates in this program, which offers work opportunities, both on or off campus, on a part-time basis to students who demonstrate financial need. Federal Work-study wages are paid partly from federal funds and partly from qualified employer funds.
Students at RUSVM may be eligible for an institutional scholarship, ranging from $2,000 to $27,123 to cover expenses incurred from tuition and fees. 17 Table of Contents Adtalem’s credit extension programs are available to students at Chamberlain, AUC, RUSM, and RUSVM.
Students at RUSVM may be eligible for an institutional scholarship, ranging from $2,000 to $22,683 to cover expenses incurred from tuition and fees. Adtalem’s credit extension programs are available to students at Chamberlain, AUC, RUSM, and RUSVM.
As a result, ED may withdraw an institution’s provisional certification more easily than if it is fully certified. Provisional certification does not otherwise limit access to Title IV program funds by students attending the institution. ED has initiated rulemaking proceedings to amend the certification procedures. The earliest we believe any new rules will be effective is July 1, 2024.
As a result, ED may withdraw an institution’s provisional certification more easily than if it is fully certified. Provisional certification does not otherwise limit access to Title IV program funds by students attending the institution. ED has published proposed rules to amend the certification procedures. We anticipate the amended rules will be effective on July 1, 2024.
Additionally, applicants must have had three years of administrative experience and must provide an acknowledgement form verifying they have access to and the ability to collect data from a K–12 school setting. Ph.D. in Public Health Walden offers two tracks for applicants. Applicants are eligible for track 1 if they have a MPH or a MS in Public Health.
Additionally, applicants must have had three years of administrative experience and must provide an acknowledgement form verifying they have access to and the ability to collect data from a K–12 school setting. 7 Table of Contents Ph.D. in Public Health Walden offers two tracks for applicants.
The advanced standing option is for students that hold a Bachelor of Social Work (“BSW”) degree from a Council on Social Work Education (“CSWE”) accredited program and graduated with a minimum grade point average of 3.0.
The advanced standing option is for students that hold a Bachelor of Social Work (“BSW”) degree from a Council on Social Work Education (“CSWE”) accredited program and graduated with a minimum grade point average of 3.0. This option allows students to skip foundational courses and start their MSW with advanced-level courses.
Available Information We use our website (www.adtalem.com) as a routine channel of distribution of company information, including press releases, presentations, and supplemental information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
Adtalem vigorously defends against infringements of its trademarks, service marks, certification marks, patents, and copyrights. Available Information We use our website (www.adtalem.com) as a routine channel of distribution of company information, including press releases, presentations, and supplemental information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
Chamberlain’s RN-to-BSN degree completion option, MSN degree program, and DNP degree program are approved in 50 states, the District of Columbia, and the U.S. Virgin Islands. The MSN FNP track is approved in 46 states and the U.S. Virgin Islands, while the AGACP and AGPCP tracks are approved in 42 states and the U.S. Virgin Islands.
Chamberlain’s RN-to-BSN degree completion option, MSN degree program, and DNP degree program are approved in 50 states, the District of Columbia, and the U.S. Virgin Islands. The MSN FNP track is approved in 47 states and the U.S. Virgin Islands, the AGACNP and AGPCNP tracks are approved in 44 states and the U.S.
Changes in or new interpretations of applicable laws, rules, or regulations could have a material adverse effect on our eligibility to participate in Title IV programs, accreditation, authorization to operate in various states, permissible activities, and operating costs.
Changes in or new interpretations of applicable laws, rules, or regulations could have a material adverse effect on our eligibility to participate in Title IV programs, accreditation, authorization to operate in various states, permissible activities, and operating costs. The failure to maintain or renew any required regulatory approvals, accreditation, or state authorizations could have a material adverse effect on us.
Chamberlain is committed to graduating health professionals who are empowered to transform healthcare worldwide. Chamberlain had 32,891 students enrolled in the May 2022 session, a decrease of 5.8% compared to the prior year. 2 Table of Contents Chamberlain’s pre-licensure BSN degree is a baccalaureate program offered at its campus locations as well as online in specific states.
Chamberlain is committed to graduating health professionals who are empowered to transform healthcare worldwide. Chamberlain had 33,284 students enrolled in the May 2023 session, an increase of 1.2% compared to the prior year. Chamberlain’s pre-licensure BSN degree is a baccalaureate program offered at its campus locations as well as online in specific states.
Market Trends and Competition Chamberlain Chamberlain competes in the U.S. nursing education market, which has more than 2,000 programs leading to RN licensure. These include four-year educational institutions, two-year community colleges, and diploma schools of nursing.
Adtalem received $2.9 million and $4.1 million during fiscal year 2022 and 2023, respectively, related to the earnout. Market Trends and Competition Chamberlain Chamberlain competes in the U.S. nursing education market, which has more than 2,000 programs leading to RN licensure. These include four-year educational institutions, two-year community colleges, and diploma schools of nursing.
In addition, we continue to incur costs associated with ongoing litigation and settlements related to the DeVry University divestiture, which was completed during fiscal year 2019, and are classified as expense within discontinued operations.
In addition, we continue to incur costs associated with ongoing litigation and settlements related to the DeVry University divestiture, which was completed during fiscal year 2019, and are classified as expense within discontinued operations. EduPristine On June 17, 2022, Adtalem completed the sale of EduPristine for de minimis consideration.
This sale is the culmination of a long-term strategy to sharpen the focus of our portfolio and enhance our ability to address the rapidly growing and unmet demand for healthcare professionals in the U.S. Adtalem Brazil On April 24, 2020, Adtalem completed the sale of Adtalem Brazil to Estácio Participações S.A.
This sale is the culmination of a long-term strategy to sharpen the focus of our portfolio and enhance our ability to address the rapidly growing and unmet demand for healthcare professionals in the U.S.
In the U.S., each Chamberlain location is approved to grant degrees by the respective state in which it is located. Additionally, many states require approval for out-of-state institutions to recruit within their state or offer instruction through online modalities to residents of their states. Adtalem believes its institutions are in compliance with all state requirements as an out-of-state institution.
In the U.S., each Chamberlain location is approved to grant degrees by the respective state in which it is located. Walden is registered in its home state of Minnesota with the Minnesota Office of Higher Education. Additionally, many states require approval for out-of-state institutions to recruit within their state or offer instruction through online modalities to residents of their states.
There is no assurance that such recertification would be obtained on a timely basis. After a material change in ownership or change of control, most institutions will participate in Title IV programs on a provisional basis for a period of one to three years.
After a material change in ownership or change of control, most institutions will participate in Title IV programs on a provisional basis for a period of one to three years.
The program offers both a traditional and advanced standing option. The traditional option requires 60 credit hours while the advanced standing option requires 36 credit hours and is for students who have completed a baccalaureate degree in social work. The MPAS degree program prepares students for the practice of general medicine in collaboration with a licensed physician and healthcare team.
The program offers both a traditional and advanced standing option. The traditional option requires 60 credit hours, while the advanced standing option requires 36 credit hours and is for students who have completed a baccalaureate degree in social work.
Chamberlain pre-licensure BSN students who completed the National Council Licensure Examination (“NCLEX”) had an overall pass rate of 85% in 2021 and 91% in 2020. The national NCLEX pass rate was 86% for 2021 and 90% for 2020.
Chamberlain pre-licensure BSN students who completed the National Council Licensure Examination (“NCLEX”) had a first-time pass rate of 76% in 2022 and 85% in 2021. The national NCLEX pass rate was 82% for 2022 and 86% for 2021.
Of first-time eligible AUC graduates, 92% and 96% attained residency positions in 2021 and 2022, respectively. RUSM students achieved a 91% and 83% first-time pass rate on the USMLE Step 1 exam in 2020 and 2021, respectively. Of first-time eligible RUSM graduates, 92% and 95% attained residency positions in 2021 and 2022, respectively.
Of first-time eligible AUC graduates, 96% and 97% attained residency positions in 2022 and 2023, respectively. 8 Table of Contents RUSM students achieved an 83% and 81% first-time pass rate on the USMLE Step 1 exam in 2021 and 2022, respectively. Of first-time eligible RUSM graduates, 96% and 98% attained residency positions in 2022 and 2023, respectively.
Walden The market for fully online higher education, in which Walden competes, remains a highly competitive and growing space. As a comprehensive university offering degrees at the bachelor’s, master’s and doctoral level, in addition to certificates and a school of lifelong learning, the competition varies depending on the degree level and the discipline.
As a comprehensive university offering degrees at the bachelor’s, master’s and doctoral level, in addition to certificates and a school of lifelong learning, the competition varies depending on the degree level and the discipline.
Department of Veterans Affairs and military tuition assistance benefits) for each of Adtalem’s Title IV-eligible institutions for fiscal years 2021 and 2020.
Department of Veterans Affairs and military tuition assistance benefits) for each of Adtalem’s Title IV-eligible institutions for fiscal years 2022 and 2021. Final data for fiscal year 2023 is not yet available.
AUC is located in St. Maarten and is one of the most established international medical schools in the Caribbean, producing over 7,500 graduates from over 78 countries.
AUC and RUSM AUC, founded in 1978 and acquired by Adtalem in 2011, provides medical education and confers the Doctor of Medicine degree. AUC is located in St. Maarten and is one of the most established international medical schools in the Caribbean, producing over 7,500 graduates from over 78 countries.
Certain programs require three years of professional/academic experience related to the program for which application is made. Doctor of Nursing Practice Walden offers two tracks for DNP. Most of our DNP specializations offer a BSN entry point. The BSN-to- DNP track is ideal for RNs who have earned a BSN degree.
Doctor of Nursing Practice Walden offers two tracks for DNP. Most of our DNP specializations offer a BSN entry point. The BSN-to-DNP track is ideal for RNs who have earned a BSN degree. The MSN-to-DNP track is ideal for RNs who have earned a MSN degree. Ph.D. in Nursing Walden offers three tracks for a Ph.D. in Nursing.
Applicants are eligible for track 2 if they have a bachelor’s degree or higher in an academic discipline other than the public health field. Post-Master’s Certificate A minimum grade point average of 3.0 in post-bachelor’s degree coursework and three years of professional/academic experience related to the program for which application is made.
Post-Master’s Certificate A minimum grade point average of 3.0 in post-bachelor’s degree coursework and three years of professional/academic experience related to the program for which application is made.
Employer-Provided Tuition Assistance Chamberlain and Walden students who receive employer tuition assistance may choose from several deferred tuition payment plans. Students eligible for tuition reimbursement plans may have their tuition billed directly to their employers or payment may be deferred until after the end of the session.
Students eligible for tuition reimbursement plans may have their tuition billed directly to their employers or payment may be deferred until after the end of the session. Walden students eligible for tuition reimbursement must make payment arrangements with Walden and then be reimbursed by their employer.
AUC and RUSM clinical programs are accredited as part of their programs of medical education by their respective accrediting bodies, approved by the appropriate boards in those states that have a formal process to do so, and are reported to ED as required. Many states require private-sector postsecondary education institutions to post surety bonds for licensure.
Adtalem believes its institutions are in compliance with all state requirements as an out-of-state institution. AUC and RUSM clinical programs are accredited as part of their programs of medical education by their respective accrediting bodies, approved by the appropriate boards in those states that have a formal process to do so, and are reported to ED as required.
Standards of Financial Responsibility A financial responsibility test is required for continued participation by an institution’s students in U.S. federal financial assistance programs. For Adtalem’s participating institutions, this test is calculated at the consolidated Adtalem level.
Standards of Financial Responsibility An ED defined financial responsibility test is required for continued participation by an institution in Title IV aid programs. For Adtalem’s institutions, this test is calculated at the consolidated Adtalem level.
In the U.S., Adtalem has posted approximately $27.9 million of surety bonds with regulatory authorities on behalf of Chamberlain, Walden, AUC, RUSM, and RUSVM. Certain states have set standards of financial responsibility that differ from those prescribed by federal regulation. Adtalem believes its institutions are in compliance with state and Canadian provincial regulations.
Many states require private-sector postsecondary education institutions to post surety bonds for licensure. In the U.S., Adtalem has posted $31.9 million of surety bonds with regulatory authorities on behalf of Chamberlain, Walden, AUC, RUSM, and RUSVM. 20 Table of Contents Certain states have set standards of financial responsibility that differ from those prescribed by federal regulation.
This option allows students to skip foundational courses and start their MSW with advanced-level courses. 6 Table of Contents MSED Educational Leadership & Administration (Principal Licensure Preparation) This program requires one year of lead K-12 teaching experience and a valid teaching certification. Doctoral The Doctor program requires a minimum grade point average of 3.0 in post-baccalaureate degree coursework.
MSED Educational Leadership & Administration (Principal Licensure Preparation) This program requires one year of lead K-12 teaching experience and a valid teaching certification. 6 Table of Contents Doctoral The Doctor program requires a minimum grade point average of 3.0 in post-baccalaureate degree coursework. Certain programs require three years of professional/academic experience related to the program for which application is made.
Federal Work-study wages are paid partly from federal funds and partly from qualified employer funds. 16 Table of Contents State Financial Aid Programs Certain states, including Arizona, California, Florida, Illinois, Indiana, Ohio, and Vermont, offer state grant or loan assistance to eligible undergraduate students attending Adtalem institutions.
State Financial Aid Programs Certain states, including Arizona, California, Florida, Illinois, Indiana, Ohio, and Vermont, offer state grants or loan assistance to eligible undergraduate students attending Adtalem institutions.
Eligible Walden students may receive an institutional grant valued up to $750 per term. Walden offers a number of different scholarships discounts and other tuition assistance.
Walden offers a number of different scholarships discounts and other tuition assistance to eligible students.
A successful applicant must have completed the required prerequisite courses and, for AUC and RUSM, taken the Medical College Admission Test (“MCAT”), while RUSVM applicants must have completed the Graduate Record Exam (“GRE”). Candidates for admission must interview with an admissions representative and all admission decisions are made by the admissions committees of the medical and veterinary schools.
A successful applicant must have completed the required prerequisite courses and, for AUC and RUSM, taken the Medical College Admission Test (“MCAT”), while RUSVM applicants are strongly encouraged but not required to have completed the Graduate Record Exam (“GRE”).
We recently launched enhancements to our Employee Assistance Program and our mental health and wellbeing application, entitled Ginger. We track participation in our retirement plans and the Ginger application as noted below: ​ ​ ​ ​ ​ ​ Wellness Pillar ​ Segment: U.S.
We recently launched enhancements to our Employee Assistance Program and our mental health and well-being application, entitled Ginger. Employee participation for certain programs is listed below: ​ ​ ​ ​ ​ ​ Wellness Pillar ​ Segment: U.S.
Discontinued Operations In accordance with GAAP, the ACAMS, Becker, OCL, and EduPristine entities, which were divested during fiscal year 2022 and Adtalem Brazil, which was divested during fiscal year 2020, are classified as “Discontinued Operations.” As a result, all financial results, disclosures, and discussions of continuing operations in this Annual Report on Form 10-K exclude these entities operations, unless otherwise noted.
RUSVM later revised their policy to highly recommend but not require applicants to submit a GRE score, giving priority in the application review process for those who have taken the GRE. 9 Table of Contents Discontinued Operations In accordance with GAAP, the ACAMS, Becker, OCL, and EduPristine entities, which were divested during fiscal year 2022, are classified as “Discontinued Operations.” As a result, all financial results, disclosures, and discussions of continuing operations in this Annual Report on Form 10-K exclude these entities operations, unless otherwise noted.
Beginning in the second quarter of fiscal year 2022, Adtalem eliminated its Financial Services segment when ACAMS, Becker, OCL, and EduPristine were classified as discontinued operations and assets held for sale.
Financial and descriptive information about Adtalem’s reportable segments is presented in Note 22 “Segment Information” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data.” Beginning in the second quarter of fiscal year 2022, Adtalem eliminated its Financial Services segment when ACAMS, Becker, OCL, and EduPristine were classified as discontinued operations and assets held for sale.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Adtalem’s Business Outbreaks of communicable infections or diseases, or other public health pandemics, such as the global coronavirus outbreak and the efficacy and distribution of COVID-19 vaccines, in the locations in which we, our students, faculty, and employees live, work, and attend classes, could substantially harm our business.
Biggest changeThese presentations may influence some prospective students to exclude our institutions from their consideration, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows. 34 Table of Contents Risks Related to Adtalem’s Business Outbreaks of communicable infections or diseases, or other public health pandemics in the locations in which we, our students, faculty, and employees live, work, and attend classes, could substantially harm our business.
Alternatively, ED could recertify our institutions but require our institutions to accept significant limitations as a condition of their continued participation in Title IV programs. ● If we fail to maintain our institutional accreditation or if our institutional accrediting body loses recognition by ED, we would lose our ability to participate in Title IV programs. ● A bankruptcy filing by us or by any of our Title IV Institutions, or a closure of one of our Title IV Institutions, would lead to an immediate loss of eligibility to participate in Title IV programs. ● Student loan defaults could result in the loss of eligibility to participate in Title IV programs. 26 Table of Contents ● If we fail to maintain any of our state authorizations, we would lose our ability to operate in that state and to participate in Title IV programs in that state. ● Our ability to place our medical schools’ students in hospitals in the U.S. may be limited by efforts of certain state government regulatory bodies, which may limit the growth potential of our medical schools, put our medical schools at a competitive disadvantage to other medical schools, or force our medical schools to substantially reduce their class sizes. ● Budget constraints in states that provide state financial aid to our students could reduce the amount of such financial aid that is available to our students, which could reduce our enrollment and adversely affect our 90/10 Rule percentage. ● We could be subject to sanctions if we fail to calculate accurately and make timely payment of refunds of Title IV program funds for students who withdraw before completing their educational program. ● A failure of our vendors to comply with applicable regulations in the servicing of our students and institutions could subject us to fines or restrictions on or loss of our ability to participate in Title IV programs. ● We provide financing programs to assist some of our students in affording our educational offerings.
Alternatively, ED could recertify our institutions but require our institutions to accept significant limitations as a condition of their continued participation in Title IV programs. ● If we fail to maintain our institutional accreditation or if our institutional accrediting body loses recognition by ED, we would lose our ability to participate in Title IV programs. ● A bankruptcy filing by us or by any of our Title IV Institutions, or a closure of one of our Title IV Institutions, would lead to an immediate loss of eligibility to participate in Title IV programs. ● Excessive student loan defaults could result in the loss of eligibility to participate in Title IV programs. ● If we fail to maintain any of our state authorizations, we would lose our ability to operate in that state and to participate in Title IV programs in that state. 23 Table of Contents ● Our ability to place our medical schools’ students in hospitals in the U.S. may be limited by efforts of certain state government regulatory bodies, which may limit the growth potential of our medical schools, put our medical schools at a competitive disadvantage to other medical schools, or force our medical schools to substantially reduce their class sizes. ● Budget constraints in states that provide state financial aid to our students could reduce the amount of such financial aid that is available to our students, which could reduce our enrollment and adversely affect our 90/10 Rule percentage. ● We could be subject to sanctions if we fail to calculate accurately and make timely payment of refunds of Title IV program funds for students who withdraw before completing their educational program. ● A failure of our vendors to comply with applicable regulations in the servicing of our students and institutions could subject us to fines or restrictions on or loss of our ability to participate in Title IV programs. ● We provide financing programs to assist some of our students in affording our educational offerings.
Our failure to comply with ED’s credit hour rule could result in sanctions and other liability. In 2009 and 2010, ED’s Office of Inspector General criticized three accreditors, including the Higher Learning Commission (“HLC”), which is the accreditor for Chamberlain, for deficiency in their oversight of institutions’ credit hour allocations.
Our failure to comply with ED’s credit hour rule could result in sanctions and other liability. In 2009 and 2010, ED’s Office of Inspector General criticized three accreditors, including the Higher Learning Commission (“HLC”), which is the accreditor for Chamberlain and Walden, for deficiency in their oversight of institutions’ credit hour allocations.
If any one of our Title IV Institutions were to close or have unpaid ED liabilities, ED could seek to have those liabilities repaid by one of our other Title IV Institutions. Student loan defaults could result in the loss of eligibility to participate in Title IV programs.
If any one of our Title IV Institutions were to close or have unpaid ED liabilities, ED could seek to have those liabilities repaid by one of our other Title IV Institutions. Excessive student loan defaults could result in the loss of eligibility to participate in Title IV programs.
Unresolved investigations, claims, and actions, or adverse resolutions or settlements thereof, could also result in additional inquiries, administrative actions or lawsuits, increased scrutiny, the withholding of authorizations, and/or the imposition of other sanctions by state education and professional licensing authorities, taxing authorities, our accreditors and other regulatory agencies governing us, which, individually or 28 Table of Contents in the aggregate, could have a material adverse effect on our business, financial condition, results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate.
Unresolved investigations, claims, and actions, or adverse resolutions or settlements thereof, could also result in additional inquiries, administrative actions or lawsuits, increased scrutiny, the withholding of authorizations, and/or the imposition of other sanctions by state education and professional licensing authorities, taxing authorities, our accreditors and other regulatory agencies governing us, which, individually or 25 Table of Contents in the aggregate, could have a material adverse effect on our business, financial condition, results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate.
To the extent that we expand internationally, we will face risks that are inherent in international operations including, but not limited to: · Compliance with foreign laws and regulations; · Management of internal operations; · Foreign currency exchange rate fluctuations; · Ability to protect intellectual property; · Monetary policy risks, such as inflation, hyperinflation, and deflation; · Price controls or restrictions on exchange of foreign currencies; · Political and economic instability in the countries in which we operate; · Potential unionization of employees under local labor laws; 41 Table of Contents · Multiple and possibly overlapping and conflicting tax laws; · Inability to cost effectively repatriate cash balances; and · Compliance with U.S. laws and regulations such as the Foreign Corrupt Practices Act.
To the extent that we expand internationally, we will face risks that are inherent in international operations including, but not limited to: · Compliance with foreign laws and regulations; · Management of internal operations; · Foreign currency exchange rate fluctuations; · Ability to protect intellectual property; · Monetary policy risks, such as inflation, hyperinflation, and deflation; · Price controls or restrictions on exchange of foreign currencies; · Political and economic instability in the countries in which we operate; · Potential unionization of employees under local labor laws; · Multiple and possibly overlapping and conflicting tax laws; · Inability to cost effectively repatriate cash balances; and · Compliance with U.S. laws and regulations such as the Foreign Corrupt Practices Act.
Alternatively, ED could (1) renew the certifications for an institution, but restrict or delay 33 Table of Contents receipt of Title IV funds, limit the number of students to whom an institution could disburse such funds, or place other restrictions on that institution, or (2) delay recertification after an institution’s PPA expires, in which case the institution’s certification would continue on a month-to-month basis, any of which could have a material adverse effect on the businesses, financial condition, results of operations, and cash flows of the institution or Adtalem as a whole and could result in the imposition of significant restrictions on the ability of the institution or Adtalem as a whole to operate.
Alternatively, ED could (1) renew the certifications for an institution, but restrict or delay receipt of Title IV funds, limit the number of students to whom an institution could disburse such funds, or place other restrictions on that institution, or (2) delay recertification after an institution’s PPA expires, in which case the institution’s certification would continue on a month-to-month basis, any of which could have a material adverse effect on the businesses, financial condition, results of operations, and cash flows of the institution or Adtalem as a whole and could result in the imposition of significant restrictions on the ability of the institution or Adtalem as a whole to operate.
If any of our third-party servicers discontinues providing such services to us, we may not be able to replace such third-party servicer in a timely, cost-efficient, or effective manner, or at all, and we could lose our ability to comply with collection, lending, and Title IV requirements, which could have a material adverse effect our enrollment, revenue, and results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate.
If any of our third-party servicers discontinues providing such services to us, we may not be able to replace such third-party servicer in a timely, cost-efficient, or effective 33 Table of Contents manner, or at all, and we could lose our ability to comply with collection, lending, and Title IV requirements, which could have a material adverse effect on our enrollment, revenue, and results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate.
Alleged violations of such laws or regulations may form the basis of civil actions for violation of state and/or federal false claims statutes predicated on violations of a PPA, including pursuant to lawsuits brought by private plaintiffs on behalf of governments (qui tam actions), that have the potential to generate very significant damages linked to our receipt of Title IV funding from the government over a period of several years.
Alleged violations of such laws or regulations may form the basis of civil actions for violation of state and/or federal false claims statutes predicated on violations of a PPA, including pursuant to lawsuits brought by private 27 Table of Contents plaintiffs on behalf of governments (qui tam actions), that have the potential to generate very significant damages linked to our receipt of Title IV funding from the government over a period of several years.
Some of our competitors, both public and private, are able to offer programs similar to ours at a lower tuition level for a variety of reasons, including the availability of direct and indirect government subsidies, government and foundation grants, large endowments, tax-deductible contributions, and other financial resources not available to proprietary institutions, or by providing fewer student services or larger class sizes.
Some of our competitors, both public and private, are able to offer programs similar to ours at a lower tuition level 35 Table of Contents for a variety of reasons, including the availability of direct and indirect government subsidies, government and foundation grants, large endowments, tax-deductible contributions, and other financial resources not available to proprietary institutions, or by providing fewer student services or larger class sizes.
As of June 30, 2022, a substantial portion of our outstanding capital stock is owned by a small group of institutional shareholders. We cannot prevent a material change of ownership or change of control that could arise from a transfer of voting stock by any combination of those shareholders.
As of June 30, 2023, a substantial portion of our outstanding capital stock is owned by a small group of institutional shareholders. We cannot prevent a material change of ownership or change of control that could arise from a transfer of voting stock by any combination of those shareholders.
The administrative capability criteria require, among other things, that our institutions (1) have an adequate number of qualified personnel to administer Title IV programs, (2) have adequate procedures for disbursing and safeguarding Title IV funds and for maintaining records, (3) submit all required reports and consolidated financial statements in a timely manner, and (4) not have significant problems that affect the institution’s ability to administer Title IV programs.
The administrative capability criteria require, among other things, that our institutions (1) have an adequate number of qualified personnel to administer Title IV programs, (2) have adequate procedures for disbursing and safeguarding Title IV funds and for maintaining records, (3) submit all required reports and consolidated financial statements in a timely manner, and 29 Table of Contents (4) not have significant problems that affect the institution’s ability to administer Title IV programs.
In addition, the reduction or elimination of these non-Title IV sources of student funding may adversely affect our 90/10 Rule percentage. 36 Table of Contents We could be subject to sanctions if we fail to calculate accurately and make timely payment of refunds of Title IV program funds for students who withdraw before completing their educational program.
In addition, the reduction or elimination of these non-Title IV sources of student funding may adversely affect our 90/10 Rule percentage. We could be subject to sanctions if we fail to calculate accurately and make timely payment of refunds of Title IV program funds for students who withdraw before completing their educational program.
Uncertainty regarding our future financial performance may limit our ability to attract new employees with competitive compensation or increase our cost of recruiting and retaining such new employees. We may not be able to successfully identify, pursue, or integrate acquisitions. As part of our strategy, we are actively considering acquisition opportunities primarily in the U.S.
Uncertainty regarding our future financial performance may limit our ability to attract new employees with competitive compensation or increase our cost of recruiting and retaining such new employees. 37 Table of Contents We may not be able to successfully identify, pursue, or integrate acquisitions. As part of our strategy, we are actively considering acquisition opportunities primarily in the U.S.
There is no assurance that reinstatement of accreditation could be obtained on a timely basis, if at all, and accreditation from a different qualified 34 Table of Contents accrediting authority, if available, would require a significant amount of time. Any material disruption in accreditation would materially and adversely impact our business, financial condition, results of operations, and cash flow.
There is no assurance that reinstatement of accreditation could be obtained on a timely basis, if at all, and accreditation from a different qualified accrediting authority, if available, would require a significant amount of time. Any material disruption in accreditation would materially and adversely impact our business, financial condition, results of operations, and cash flow.
The manner, timing and amount of any share repurchases may fluctuate and will be determined by us based on a variety of factors, including the market price of our common stock, our priorities for 42 Table of Contents the use of cash to support our business operations and plans, general business and market conditions, tax laws, and alternative investment opportunities.
The manner, timing and amount of any share repurchases may fluctuate and will be determined by us based on a variety of factors, including the market price of our common stock, our priorities for the use of cash to support our business operations and plans, general business and market conditions, tax laws, and alternative investment opportunities.
It is possible that a finding or allegation arising from current or future legal proceedings or governmental administrative actions may create significant liability under the proposed regulations. ● Within the Defense to Repayment regulations, pending or future lawsuits, investigations, program reviews, and other events could each trigger, automatically or in some cases at ED’s discretion, the posting of letters of credit or other securities. ● We are subject to risks relating to regulatory matters.
It is possible that a finding or allegation arising from current or future legal proceedings or governmental administrative actions may create significant liability under the proposed regulations. ● Within Title IV regulations, pending or future lawsuits, investigations, program reviews, and other events could each trigger, automatically or in some cases at ED’s discretion, the posting of letters of credit or other securities. ● We are subject to risks relating to regulatory matters.
In June 2010, the House Education and Labor Committee held a hearing concerning accrediting agencies’ 35 Table of Contents standards for assessing institutions’ credit hour policies. The 2010 Program Integrity Regulations defined the term “credit hour” for the first time and required accrediting agencies to review the reliability and accuracy of an institution’s credit hour assignments.
In June 2010, the House Education and Labor Committee held a hearing concerning accrediting agencies’ standards for assessing institutions’ credit hour policies. The 2010 Program Integrity Regulations defined the term “credit hour” for the first time and required accrediting agencies to review the reliability and accuracy of an institution’s credit hour assignments.
The Defense to Repayment regulations could require Adtalem to post multiple and substantial letters of credit or other securities in connection with, among other things, certain pending and future claims, investigations, and program reviews, regardless of the merits of our actions or available defenses, or, potentially, the severity of any findings or facts stipulated.
ED regulations could require Adtalem to post multiple and substantial letters of credit or other securities in connection with, among other things, certain pending and future claims, investigations, and program reviews, regardless of the merits of our actions or available defenses, or, potentially, the severity of any findings or facts stipulated.
Any material change of ownership or change of control of Adtalem, depending on the type of change, may have significant regulatory consequences for each of our Title IV Institutions. Such a change of ownership or control could require recertification by ED, the reevaluation of accreditation by each institution’s accreditors and/or reauthorization by each institutions’ state licensing agencies.
Any material change of ownership or change of control of Adtalem, depending on the type of change, may have significant regulatory consequences for each of our Title IV Institutions. Such a change of ownership or control could require recertification by ED, the reevaluation of accreditation by each institution’s accreditors, reauthorization by each institutions’ state licensing agencies, and/or providing financial protections.
As a result, the suspension, limitation, or termination of the eligibility of any of our institutions to participate in Title IV programs could 30 Table of Contents have a material adverse effect on our business, financial condition, results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate.
As a result, the suspension, limitation, or termination of the eligibility of any of our institutions to participate in Title IV programs could have a material adverse effect on our business, financial condition, results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate.
If any of the following risks are realized, Adtalem’s business, results of operations, financial condition, and cash flows could be materially and adversely affected, and as a result, the price of Adtalem’s common stock could be materially and adversely affected. Management cannot predict all the possible risks and uncertainties that may arise.
If any of the following risks are realized, Adtalem’s business, results of operations, financial condition, and cash flows could be materially and adversely affected, and as a result, the price of Adtalem’s common stock could be materially and adversely 24 Table of Contents affected. Management cannot predict all the possible risks and uncertainties that may arise.
In 38 Table of Contents addition, technological innovations in the delivery of low-cost education alternatives and increased competition could negatively affect enrollment. We are subject to risks relating to enrollment of students. If we are not able to continue to successfully recruit and retain our students, our revenue may decline.
In addition, technological innovations in the delivery of low-cost education alternatives and increased competition could negatively affect enrollment. We are subject to risks relating to enrollment of students. If we are not able to continue to successfully recruit and retain our students, our revenue may decline.
If we are not able to continue to successfully recruit and retain our students, our revenue may decline. ● If our graduates are unable to find appropriate employment opportunities or obtain professional licensure or certification, we may not be able to recruit new students. ● We face heightened competition in the postsecondary education market from both public and private educational institutions. ● The personal information that we collect may be vulnerable to breach, theft, or loss that could adversely affect our reputation and operations. ● System disruptions and vulnerability from security risks to our computer network or information systems could severely impact our ability to serve our existing students and attract new students. ● Our ability to open new campuses, offer new programs, and add capacity is dependent on regulatory approvals and requires financial and human resources. ● We may not be able to attract, retain, and develop key employees necessary for our operations and the successful execution of our strategic plans. ● We may not be able to successfully identify, pursue, or integrate acquisitions. ● Proposed changes in, or lapses of, U.S. tax laws regarding earnings from international operations could adversely affect our financial results. ● Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results.
If we are not able to continue to successfully recruit and retain our students, our revenue may decline. ● If our graduates are unable to find appropriate employment opportunities or obtain professional licensure or certification, we may not be able to recruit new students. ● We face heightened competition in the postsecondary education market from both public and private educational institutions. ● The personal information that we collect may be vulnerable to breach, theft, or loss that could adversely affect our reputation and operations. ● System disruptions and vulnerability from security risks to our computer network or information systems could severely impact our ability to serve our existing students and attract new students. ● Our ability to open new campuses, offer new programs, and add capacity is dependent on regulatory approvals and requires financial and human resources. ● We may not be able to attract, retain, and develop key employees necessary for our operations and the successful execution of our strategic plans. ● We may not be able to successfully identify, pursue, or integrate acquisitions. ● Proposed changes in, or lapses of, U.S. tax laws regarding earnings from international operations could adversely affect our financial results. ● Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results. ● We and our subsidiaries may not be able to generate sufficient cash to service all of our indebtedness and may not be able to refinance our debt obligations.
New laws, regulations, or interpretations related to doing business over the internet could 40 Table of Contents increase our costs and materially and adversely affect our enrollment, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
New laws, regulations, or interpretations related to doing business over the internet could increase our costs and materially and adversely affect our enrollment, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
In the event of any bankruptcy affecting one or more of our Title IV Institutions, ED could hold our other Title IV Institutions jointly liable for any Title IV program liabilities, whether asserted or unasserted at the time of such bankruptcy, of the institution whose Title IV program eligibility was terminated.
In the event of any bankruptcy affecting one or more of our Title IV Institutions, ED 31 Table of Contents could hold our other Title IV Institutions jointly liable for any Title IV program liabilities, whether asserted or unasserted at the time of such bankruptcy, of the institution whose Title IV program eligibility was terminated.
The loss of state authorization would, among other things, render the affected institution ineligible to participate in Title IV programs, at least at those state campus locations, and otherwise limit that school’s ability to operate in that state.
The loss 32 Table of Contents of state authorization would, among other things, render the affected institution ineligible to participate in Title IV programs, at least at those state campus locations, and otherwise limit that school’s ability to operate in that state.
These factors are heavily influenced by broader economic drivers, including the personal or family wealth of our students, the overall employment outlook for their area of study, and the availability of private financing sources.
These factors are heavily influenced by 28 Table of Contents broader economic drivers, including the personal or family wealth of our students, the overall employment outlook for their area of study, and the availability of private financing sources.
If our business results and financial condition were materially and adversely impacted, then such intangible assets and goodwill could be impaired, requiring a possible write-off of up to $873.6 million of intangible assets and up to $961.3 million of goodwill.
If our business results and financial condition were materially and adversely impacted, then such intangible assets and goodwill could be impaired, requiring a possible write-off of up to $812.3 million of intangible assets and up to $961.3 million of goodwill.
We identified a single server in our environment with SolarWinds software installed. It is important to note that this single server was used only for IP address management and was not configured in a manner that could allow for 39 Table of Contents system compromise.
We identified a single server in our environment with SolarWinds software installed. It is important to note that this single server was used only for IP address management and was not configured in a manner that could allow for system compromise.
We are required to periodically report tuition, fees, and enrollment to the sponsoring agencies. As a recipient of funds, we 37 Table of Contents are subject to periodic reviews and audits.
We are required to periodically report tuition, fees, and enrollment to the sponsoring agencies. As a recipient of funds, we are subject to periodic reviews and audits.
Such events could have a material adverse effect on the reputation of our institutions, our financial condition, results of operations, and cash flows.
Such events could have a material adverse effect on the reputation of our institutions, our financial 36 Table of Contents condition, results of operations, and cash flows.
If our business experiences prolonged occurrences of adverse public health conditions, such as the coronavirus, and the attendant stay-at-home orders or reinstatement of stay-at-home orders, we believe it could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
If our business experiences prolonged occurrences of adverse public health conditions and the reinstatement of stay-at-home orders, we believe it could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
As of June 30, 2022, intangible assets from business combinations totaled $873.6 million and goodwill totaled $961.3 million. Natural disasters or other extraordinary events or political disruptions may cause us to close some of our schools .
As of June 30, 2023, intangible assets from business combinations totaled $812.3 million and goodwill totaled $961.3 million. Natural disasters or other extraordinary events or political disruptions may cause us to close some of our schools .
Risks Related to Adtalem’s Business ● Outbreaks of communicable infections or diseases, or other public health pandemics, such as the global coronavirus outbreak and the efficacy and distribution of COVID-19 vaccines, in the locations in which we, our students, faculty, and employees live, work, and attend classes, could substantially harm our business. ● Natural disasters or other extraordinary events or political disruptions may cause us to close some of our schools. ● Student enrollment at our schools is affected by legislative, regulatory, and economic factors that may change in ways we cannot predict.
Risks Related to Adtalem’s Business ● Outbreaks of communicable infections or diseases, or other public health pandemics in the locations in which we, our students, faculty, and employees live, work, and attend classes, could substantially harm our business. ● Natural disasters or other extraordinary events or political disruptions may cause us to close some of our schools. ● Student enrollment at our schools is affected by legislative, regulatory, and economic factors that may change in ways we cannot predict.
Within the Defense to Repayment regulations, pending or future lawsuits, investigations, program reviews, and other events could each trigger, automatically or in some cases at ED’s discretion, the posting of letters of credit or other securities.
Within Title IV regulations, pending or future lawsuits, investigations, program reviews, and other events could each trigger, automatically or in some cases at ED’s discretion, the posting of letters of credit or other securities.
Such activities could interfere with our ability to execute our business plans, be costly and time-consuming, disrupt our operations, and divert the attention of management, any of which could have an adverse effect on our business or stock price.
Such activities could interfere with our ability to execute our business plans, be costly and time-consuming, disrupt our operations, and divert the attention of management, any of which could have an adverse effect on our business or stock price. Item 1B. Unresolved Staff Comments None.
ED regulations in effect for federal Stafford loans first disbursed between July 1, 2017 and July 1, 2020 prohibit any “substantial misrepresentation” by our Title IV Institutions, employees, and agents regarding the nature of the institution’s educational programs, its financial charges, or the employability of its graduates.
ED regulations in effect for federal Stafford loans prohibit any “substantial misrepresentation” by our Title IV Institutions, employees, and agents regarding the nature of the institution’s educational programs, its financial charges, or the employability of its graduates.
An economic downturn, or a worsening economic outlook resulting from COVID-19, among other things, could impact these factors, which could have a material adverse effect on our business, financial condition, results of operation, and cash flows and result in the imposition of significant restrictions on us and our ability to operate. ED rules prohibiting “substantial misrepresentation” are very broad.
An economic downturn could impact these factors, which could have a material adverse effect on our business, financial condition, results of operation, and cash flows and result in the imposition of significant restrictions on us and our ability to operate. ED rules prohibiting “substantial misrepresentation” are very broad.
Our share repurchase program may be modified, suspended or terminated at any time, which may result in a decrease in the trading prices of our common stock. Even if our share repurchase program is fully implemented, it may not enhance long-term stockholder value. Risks Related to Acquisition The Acquisition has and will involve substantial costs.
Our share repurchase program may be modified, suspended or terminated at any time, which may result in a decrease in the trading prices of our common stock. Even if our share repurchase program is fully implemented, it may not enhance long-term stockholder value.
“Financial Statements and Supplementary Data”) could serve as the basis for claims by students or ED under the Defense to Repayment regulations, the posting of substantial letters of credit, or the termination of eligibility of our institutions to participate in the Title IV program based on ED’s institutional capability assessment, any of which could, individually or in the aggregate, have a material adverse effect on our business, financial condition, results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate.
“Financial Statements and Supplementary Data”) could serve as the basis for claims by students or ED under the Defense to Repayment regulations, the posting of substantial letters of credit, or the termination of eligibility of our institutions to participate in the Title IV program based on ED’s institutional capability assessment, any of which could, individually or in the aggregate, have a material adverse effect on our business, financial condition, results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate. 26 Table of Contents While we intend to defend ourselves vigorously in all pending and future legal proceedings, we may settle certain matters.
Any of the forgoing actions could have a material adverse effect on our business, financial condition, results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate. ED has proposed amendments to the definition of substantial misrepresentation.
Any of the foregoing actions could have a material adverse effect on our business, financial condition, results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate.
Those actions were unsealed on March 2, 2020, and we cannot predict their outcome. Due to the regulatory and enforcement efforts at times directed at proprietary postsecondary higher education institutions and adverse publicity arising from such efforts, we may face additional government and regulatory investigations and actions, lawsuits from private plaintiffs, and shareholder class actions and derivative claims.
Due to the regulatory and enforcement efforts at times directed at proprietary postsecondary higher education institutions and adverse publicity arising from such efforts, we may face additional government and regulatory investigations and actions, lawsuits from private plaintiffs, and shareholder class actions and derivative claims.
We anticipate these changes will be effective on July 1, 2023. 32 Table of Contents Regulations governing the eligibility of our U.S. degree-granting institutions to participate in Title IV programs preclude us from compensating any employee or third-party involved in student recruitment, admissions, or the awarding of financial aid based on their success in those areas.
Regulations governing the eligibility of our U.S. degree-granting institutions to participate in Title IV programs preclude us from compensating any employee or third-party involved in student recruitment, admissions, or the awarding of financial aid based on their success in those areas.
As of June 30, 2022, intangible assets from business combinations totaled $873.6 million and goodwill totaled $961.3 million. Together, these assets equaled 61% of total assets as of such date.
As of June 30, 2023, intangible assets from business combinations totaled $812.3 million and goodwill totaled $961.3 million. Together, these assets equaled 63% of total assets as of such date.
While we intend to defend ourselves vigorously in all pending and future legal proceedings, we may settle certain matters. Moreover, regardless of the merits of our actions and defenses, if we are unable to resolve certain legal proceedings or regulatory actions, indirect consequences arising from unproven allegations or appealable regulatory findings may have adverse consequences to us.
Moreover, regardless of the merits of our actions and defenses, if we are unable to resolve certain legal proceedings or regulatory actions, indirect consequences arising from unproven allegations or appealable regulatory findings may have adverse consequences to us.
If this law is not extended, or a similar law adopted, our consolidated tax provision would be impacted beginning in our fiscal year 2027, and we may not be able to allocate international capital optimally without realizing U.S. income taxes, which would increase our effective income tax rate and adversely impact our earnings and cash flows.
If this law is not extended, or a similar law adopted, our consolidated tax provision would be impacted beginning in our fiscal year 2027, and we may not be able to allocate international capital optimally without realizing U.S. income taxes, which would increase our effective income tax rate and adversely impact our earnings and cash flows. 38 Table of Contents Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results.
These proposed changes could increase financial liability and reputational risk. 29 Table of Contents The outcome of any legal proceeding instituted by a private party or governmental authority, facts asserted in pending or future lawsuits, and/or the outcome of any future governmental inquiry, lawsuit, or enforcement action (including matters described in Note 20 “Commitments and Contingencies” to the Consolidated Financial Statements in Item 8.
The outcome of any legal proceeding instituted by a private party or governmental authority, facts asserted in pending or future lawsuits, and/or the outcome of any future governmental inquiry, lawsuit, or enforcement action (including matters described in Note 21 “Commitments and Contingencies” to the Consolidated Financial Statements in Item 8.
If we cannot make scheduled payments on our indebtedness, we will be in default, and holders of the Notes could declare all outstanding principal and interest to be due and payable, the lenders under the credit facilities could terminate their commitments to loan money, our secured lenders (including the lenders under the credit facilities and the holders of the Notes) could foreclose against the assets securing their loans and the Notes and we could be forced into bankruptcy or liquidation. 44 Table of Contents The combined company may be unable to successfully integrate the business of Adtalem and the Walden business acquired in the Acquisition and realize the anticipated benefits of the Acquisition.
If we cannot make scheduled payments on our indebtedness, we will be in default, and holders of the Notes could declare all outstanding principal and interest to be due and payable, the lenders under the credit facilities could terminate their commitments to loan money, our secured lenders (including the lenders under the credit facilities and the holders of the Notes) could foreclose against the assets securing their loans and the Notes and we could be forced into bankruptcy or liquidation.
We have acquired and expect to acquire additional education institutions or education related businesses that complement our strategic direction, some of which could be material to our operations.
We have acquired and expect to acquire additional education institutions or education related businesses that complement our strategic direction.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness, including the Notes.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
Pursuant to applicable state limited liability company laws and other laws and regulations, our non-guarantor subsidiaries may not be able to, or may not be permitted to, make distributions to us in order to enable us to make payments in respect of the Notes.
Pursuant to applicable state limited liability company laws and other laws and regulations, our non-guarantor subsidiaries may not be able to, or may not be permitted to, make distributions to us in order 39 Table of Contents to enable us to make payments in respect of the Notes (as defined in Note 14 “Debt” to the Consolidated Financial Statements in Item 8.
Adtalem’s business operations are subject to numerous risks and uncertainties, some of which are not entirely within our control. Investors should carefully consider the risk factors described below and all other information contained in this Annual Report on Form 10-K before making an investment decision with respect to Adtalem’s common stock.
Investors should carefully consider the risk factors described below and all other information contained in this Annual Report on Form 10-K before making an investment decision with respect to Adtalem’s common stock.
Disease outbreaks and other public health conditions, such as the current outbreak of the coronavirus currently being experienced and the efficacy and distribution of COVID-19 vaccines, in the locations in which we, our students, faculty, and employees live, work, and attend classes could have a significant negative impact on our revenue, profitability, and business.
Disease outbreaks and other public health conditions in the locations in which we, our students, faculty, and employees live, work, and attend classes could have a significant negative impact on our revenue, profitability, and business.
Our Board authorized a share repurchase program pursuant to which we may repurchase up to $300.0 million of our common stock through February 25, 2025.
Our Board authorized a share repurchase program pursuant to which we may repurchase up to $300.0 million of our common stock through February 25, 2025. As of June 30, 2023, $172.7 million of authorized share repurchases were remaining under this share repurchase program.
In addition, any actual cost savings of the Acquisition could be less than anticipated. Risks Related to Shareholder Activism We may face risks associated with shareholder activism Publicly traded companies are subject to campaigns by shareholders advocating corporate actions related to matters such as corporate governance, operational practices, and strategic direction.
Risks Related to Shareholder Activism We may face risks associated with shareholder activism. Publicly traded companies are subject to campaigns by shareholders advocating corporate actions related to matters such as corporate governance, operational practices, and strategic direction. We have previously been subject to shareholder activity and demands and may be subject to further shareholder activity and demands in the future.
Further, if an institution exceeds the 90% threshold for any single fiscal year, ED could place that institution on provisional certification status for the institution’s following two fiscal years.
Further, if an institution exceeds the 90% threshold for any single fiscal year, ED could place that institution on provisional certification status for the institution’s following two fiscal years. In October 2022, ED published new 90/10 rules effective for fiscal years beginning on or after January 1, 2023.
In the event that we do not receive distributions from our non-guarantor subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.
“Financial Statements and Supplementary Data”) and our Term Loan B (as defined in Note 14 “Debt” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data”) . In the event that we do not receive distributions from our non-guarantor subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.
ED has considerable discretion under the regulations to impose the foregoing sanctions and, in some cases, such sanctions could be imposed without advance notice or any prior right of review or appeal.
ED has considerable discretion under the regulations to impose the foregoing sanctions and, in some cases, such sanctions could be imposed without advance notice or any prior right of review or appeal. Adtalem expects its consolidated fiscal year 2022 composite score to fall below 1.5 at its next financial responsibility test.
If ED does not recertify any one of our institutions to continue participating in Title IV programs, students at that institution would lose their access to Title IV program funds. Alternatively, ED could recertify our institutions but require our institutions to accept significant limitations as a condition of their continued participation in Title IV programs.
Alternatively, ED could recertify our institutions but require our institutions to accept significant limitations as a condition of their continued participation in Title IV programs.
In addition, there can be no assurance that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our Revolver (as defined below) in an amount sufficient to enable us to pay our indebtedness, including the Notes, or to fund our other liquidity needs.
In addition, there can be no assurance that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our Revolver (as defined in Note 14 “Debt” to the Consolidated Financial Statements in Item 8.
Some of these bills could be included in a larger legislative package, which could include the HEA. When the HEA is reauthorized, existing programs and participation requirements are subject to change. Additionally, funding for student financial assistance programs may be impacted during appropriations and budget actions. The U.S.
When the HEA is reauthorized, existing programs and participation requirements are subject to change. Additionally, funding for student financial assistance programs may be impacted during appropriations and budget actions. The U.S. Congress can change the laws affecting Title IV programs in annual federal appropriations bills and other laws it enacts between the HEA reauthorizations.
We do not anticipate any adverse impact to our institutions as a result of these amendments. In the 117 th Congress, a comprehensive HEA reauthorization bill has not been introduced. However, standalone bills impacting Title IV federal financial aid programs have been introduced in both chambers of Congress.
In the 118 th Congress, a comprehensive HEA reauthorization bill has not been introduced. However, standalone bills impacting Title IV federal financial aid programs have been introduced in both chambers of Congress. Some of these bills could be included in a larger legislative package, which could include the HEA.
Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments and the indenture governing the Notes may restrict us from adopting some of these alternatives.
Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
If we fail to maintain our institutional accreditation or if our institutional accrediting body loses recognition by ED, we would lose our ability to participate in Title IV programs.
ED has proposed changes to the certification rules. The earliest any amended rules will be effective is July 1, 2024. 30 Table of Contents If we fail to maintain our institutional accreditation or if our institutional accrediting body loses recognition by ED, we would lose our ability to participate in Title IV programs.
Since a significant percentage of Adtalem’s revenue is tied to Title IV programs, any 31 Table of Contents action by the U.S.
At this time, Adtalem cannot predict any or all of the changes that the U.S. Congress may ultimately make. Since a significant percentage of Adtalem’s revenue is tied to Title IV programs, any action by the U.S.
We and our subsidiaries may not be able to generate sufficient cash to service all of our indebtedness, including the Notes (as defined below), and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
We and our subsidiaries may not be able to generate sufficient cash to service all of our indebtedness and may not be able to refinance our debt obligations.
These resources primarily rely on and present data for first-time, full-time residential students, which is not representative of most of our prospective students. These presentations may influence some prospective students to exclude our institutions from their consideration, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
These resources primarily rely on and present data for first-time, full-time residential students, which is not representative of most of our prospective students.
On July 1, 2020, new Defense to Repayment regulations went into effect that include a higher threshold for establishing misrepresentation, provides for a statute of limitation for claims submission, narrows the current triggers allowed for letter of credit requirements, and eliminates provisions for group discharges.
On July 1, 2023, new Defense to Repayment regulations went into effect that include a lower threshold for establishing misrepresentation, expands acts which lead to an approved claim, removes a statute of limitation for claims submission, implements a single federal standard regardless of when the loan was first disbursed, and reinstates provisions for group discharges.
The latest period for which final three-year default rates data is available is fiscal year 2018. Default rates for Chamberlain, Walden, AUC, RUSM, and RUSVM students for fiscal year 2018 is 2.6%, 4.7%, 0.7%, 0.9%, and 0.4%, respectively.
The latest three-year default rates are for the federal fiscal year 2019 cohort entering repayment. Default rates for the fiscal year 2019 cohort for Chamberlain, Walden, AUC, RUSM, and RUSVM are 0.5%, 1.1%, 0.2%, 0.2%, and 0.2%, respectively.
Removed
Risks Related to Acquisition ● In connection with the Acquisition, we incurred additional indebtedness, which could adversely affect Adtalem, including our business flexibility and has increased our interest expense. ● Despite current indebtedness levels, we may still be able to incur substantially more debt, including secured debt, which could further exacerbate the risks we face. ● The combined company may be unable to realize the anticipated benefits of the Acquisition. 27 Table of Contents Risks Related to Shareholder Activism ● Shareholder activism, including public criticism of Adtalem or our management team, may adversely affect us.
Added
Risks Related to Shareholder Activism ● We may face risks associated with shareholder activism. Adtalem’s business operations are subject to numerous risks and uncertainties, some of which are not entirely within our control.
Removed
As described in Note 20 “Commitments and Contingencies,” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data,” Adtalem, and former subsidiaries DeVry University, Inc., and DeVry/New York Inc. are the subject of consumer lawsuits alleging facts similar to those alleged by the FTC and ED in previously resolved actions.
Added
ED has proposed new Gainful Employment (“GE”) rules that would condition Title IV eligibility for each program at Adtalem’s institutions on passing debt to earnings ratio thresholds. These ratios would be based on the debt incurred by graduates and their post-graduate earnings.
Removed
On February 27, 2020, the Department of Justice (“DOJ”) notified the U.S. District Court for the District of Georgia that it would decline to intervene in two qui tam False Claims Act actions filed by former DeVry University employees related to the subject matter of the Civil Investigative Demands.
Added
A program would lose eligibility if it failed in any two of three consecutive years that it was measured. Warnings must be issued to students and prospective students if a program may lose eligibility in the following GE year (e.g., if it failed in the first year). Adtalem’s Title IV Institutions could be adversely impacted by the rule.
Removed
The new regulations are effective with claims on loans disbursed on or after July 1, 2020. On July 13, 2022, ED published proposed amendments to the borrower defense rules.
Added
ED also included a six-year statute of limitations for recovery from institutions. These changes may increase financial liability and reputational risk.
Removed
The proposal reintroduces a group claims process, implements a single federal standard regardless of when the loan was first disbursed, removes any limitation period for filing a claim and expands acts which lead to an approved claim. ED is also proposing to revert to a six-year statute of limitations for recovery from institutions.
Added
ED has proposed changes to the financial responsibility and administrative capability rules. The earliest any amended rules will be effective is July 1, 2024. If ED does not recertify any one of our institutions to continue participating in Title IV programs, students at that institution would lose their access to Title IV program funds.

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Item 2. Properties

Properties — owned and leased real estate

10 edited+0 added−0 removed1 unchanged
Biggest changeThe RUSVM campus is also supported by administrative staff located in office space in North Brunswick, New Jersey. 46 Table of Contents Home Office Adtalem’s home office staff is located in a leased facility in Chicago, Illinois utilizing approximately 84,000 square feet of office space.
Biggest changeHome Office Adtalem’s home office staff is located in a leased facility in Chicago, Illinois utilizing approximately 57,000 square feet of office space.
These lease and sublease agreements were entered into at comparable market rates and the terms range from one to four years. Chamberlain Chamberlain’s home office is located in Chicago, Illinois. Chamberlain currently operates 23 campuses in various U.S. locations, of which 3 are in Adtalem owned locations and 20 in leased facilities.
These lease and sublease agreements were entered into at comparable market rates and the terms range from one to three years. Chamberlain Chamberlain’s home office is located in Chicago, Illinois. Chamberlain currently operates 23 campuses in various U.S. locations, of which 3 are in Adtalem owned locations and 20 in leased facilities.
Adtalem’s owned facilities total approximately 883,000 square feet worldwide. No facility that is owned by Adtalem is subject to a mortgage or other indebtedness. Adtalem is leasing space to DeVry University at two facilities owned by Adtalem.
Adtalem’s owned facilities total approximately 883,000 square feet worldwide. No facility that is owned by Adtalem is subject to a mortgage or other indebtedness. Adtalem is leasing space to DeVry University at one facility owned by Adtalem.
The AUC campus is also supported by administrative staff located in office space in Miramar, Florida. RUSM RUSM’s campus is located in Barbados and is comprised of approximately 450,000 square feet of leased facilities.
The AUC campus is also supported by administrative staff located in office space in Miramar, Florida. RUSM RUSM’s campus is located in Barbados and is comprised of approximately 490,000 square feet of leased facilities.
Educational facilities include 102,000 square feet of classrooms, labs for anatomy and radiology imaging, simulation, physiology and pathology, exam rooms, private and group study, and faculty and administrative space. A residential village includes 5,000 square feet of administrative student services space surrounded by shopping and recreational facilities and over 400 multi-bedroom student units totaling 367,000 square feet.
Educational facilities include 120,000 square feet of classrooms, labs for anatomy and radiology imaging, simulation, physiology and pathology, exam rooms, private and group study, and faculty and administrative space. A residential village includes 7,000 square feet of administrative student services space surrounded by shopping and recreational facilities and over 400 multi-bedroom student units totaling 367,000 square feet.
Adtalem is subleasing space, in full or in part, at an additional 11 facilities, of which 7 are subleased to DeVry University and/or Carrington College (a business formerly owned by Adtalem). Adtalem remains the primary lessee on the 11 underlying leases.
Adtalem is subleasing space, in full or in part, at an additional seven facilities, of which five are subleased to DeVry University and/or Carrington College (a business formerly owned by Adtalem). Adtalem remains the primary lessee on the seven underlying leases.
Item 2. Properties Adtalem’s leased facilities are occupied under leases whose remaining terms range from 1 to 10 years. A majority of these leases contain provisions giving Adtalem the right to terminate early or renew its lease for additional periods at various rental rates, although generally at rates higher than are currently being paid.
Item 2. Properties Adtalem’s leased facilities are occupied under leases whose remaining terms range from 1 to 12 years. Some of our leases contain provisions giving Adtalem the right to terminate early or renew its lease for additional periods at various rental rates, although generally at rates higher than are currently being paid.
Maarten. The campus is owned and includes approximately 240,000 square feet of academic, student-life, and student residence facilities. In addition to classrooms and auditoriums, educational facilities include a gross anatomy lab, a multi-purpose learning lab, library and learning resource centers, offices, cafeteria, and recreational space facilities.
Medical and Veterinary AUC AUC’s nine-acre campus is located in St. Maarten. The campus is owned and includes approximately 240,000 square feet of academic, student-life, and student residence facilities. In addition to classrooms and auditoriums, educational facilities include a gross anatomy lab, a multi-purpose learning lab, library and learning resource centers, offices, cafeteria, and recreational space facilities.
Chamberlain’s total portfolio of academic and administrative operations comprise approximately 1.0 million square feet. Walden Walden’s home office is located in a leased facility in Columbia, Maryland utilizing approximately 90,000 square feet of office space. In addition, Walden has office space in Minneapolis, Minnesota utilizing approximately 10,000 square feet. Medical and Veterinary AUC AUC’s nine-acre campus is located in St.
Chamberlain’s total portfolio of academic and administrative operations comprise approximately 1.0 million square feet. 40 Table of Contents Walden Walden’s home office is located in a leased facility in Columbia, Maryland utilizing approximately 34,000 square feet of office space. In addition, Walden has office space in Minneapolis, Minnesota utilizing approximately 10,000 square feet.
Animal care facilities include kennels, an aviary, and livestock barns. Student-life and student residence facilities are also located on the campus.
Animal care facilities include kennels, an aviary, and livestock barns. Student-life and student residence facilities are also located on the campus. The RUSVM campus is also supported by administrative staff located in office space in North Brunswick, New Jersey.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changePreviously, Mr. Beck served in a legal capacity in a number of other companies across a variety of industries including Alberto Culver, Navistar, and Allegiance Healthcare. Michael Betz President, Walden University ​ 49 ​ Mr. Betz joined Adtalem in May 2022 as President of Walden University. Prior to joining Adtalem, Mr.
Biggest changeBeck held a variety of leadership roles at Hub Group from 2011 through 2021 and was most recently Executive Vice President, General Counsel and Secretary. Previously, Mr. Beck served in a legal capacity in a number of other companies across a variety of industries including Alberto Culver, Navistar, and Allegiance Healthcare. Michael Betz President, Walden University ​ 50 ​ Mr.
Cox was Senior Vice President for Patient Care Services and Chief Nursing Officer from 2004 through 2006. John Danaher President, Medical and Veterinary ​ ​ 63 ​ Mr. Danaher joined Adtalem in August 2021 as President, Medical and Veterinary. Prior to joining Adtalem, Mr. Danaher served as President, Global Clinical Solutions at Elsevier from 2017 through 2021.
Cox was Senior Vice President for Patient Care Services and Chief Nursing Officer from 2004 through 2006. John Danaher President, Medical and Veterinary ​ ​ 64 ​ Mr. Danaher joined Adtalem in August 2021 as President, Medical and Veterinary. Prior to joining Adtalem, Mr. Danaher served as President, Global Clinical Solutions at Elsevier from 2017 through 2021.
Prior to that role, Mr. Danaher was President, Education from 2013 through 2017. Manjunath Gangadharan Vice President, Chief Accounting Officer ​ ​ 40 ​ Mr. Gangadharan joined Adtalem in April 2022 as Vice President, Chief Accounting Officer. Prior to joining Adtalem, Mr. Gangadharan served as Vice President, Corporate Controller at Culligan International since April 2021. Previously, Mr.
Prior to that role, Mr. Danaher was President, Education from 2013 through 2017. Manjunath Gangadharan Vice President, Chief Accounting Officer ​ ​ 41 ​ Mr. Gangadharan joined Adtalem in April 2022 as Vice President, Chief Accounting Officer. Prior to joining Adtalem, Mr. Gangadharan served as Vice President, Corporate Controller at Culligan International since April 2021. Previously, Mr.
Beard joined Adtalem in February 2018 as Senior Vice President, Secretary and General Counsel. In January 2019, Mr. Beard was appointed Chief Operating Officer and General Counsel. In February 2020, Mr. Beard assumed responsibilities for our former Financial Services segment and was relieved of his General Counsel responsibilities. In September 2021, Mr.
Beard President and Chief Executive Officer ​ ​ 52 ​ Mr. Beard joined Adtalem in February 2018 as Senior Vice President, Secretary and General Counsel. In January 2019, Mr. Beard was appointed Chief Operating Officer and General Counsel. In February 2020, Mr. Beard assumed responsibilities for our former Financial Services segment and was relieved of his General Counsel responsibilities.
Trent joined Adtalem in August 2019 as Vice President, Strategy and Corporate Development. In July 2022, Mr. Trent was appointed Senior Vice President, Chief Strategy and Transformation Officer. Prior to joining Adtalem, Mr. Trent served as Chief Operating Officer at HBR Consulting from 2018 through 2019. Previously, Mr.
In July 2022, Mr. Trent was appointed Senior Vice President, Chief Strategy and Transformation Officer. Prior to joining Adtalem, Mr. Trent served as Chief Operating Officer at HBR Consulting from 2018 through 2019. Previously, Mr. Trent served as Vice President, Strategy and Corporate Development at Heidrick & Struggles from 2014 through 2018. ​ PART II
Maurice Herrera Senior Vice President, Chief Marketing Officer ​ ​ 52 ​ Mr. Herrera joined Adtalem in October 2021 as Senior Vice President, Chief Marketing Officer. Prior to joining Adtalem, Mr. Herrera served as Senior Vice President, Americas Chief Marketing Officer at Avis Budget from 2018 through 2021. Previously, Mr.
Herrera joined Adtalem in October 2021 as Senior Vice President, Chief Marketing Officer. Prior to joining Adtalem, Mr. Herrera served as Senior Vice President, Americas Chief Marketing Officer at Avis Budget from 2018 through 2021. Previously, Mr. Herrera served as Senior Vice President, Head of Marketing at Weight Watchers from 2014 through 2018.
Item 4. Mine Safety Disclosures Not applicable. ​ ​ Information About Our Executive Officers Our executive officers are as follows, along with each executive officer’s position, age, and business experience as of the date of this filing: ​ Name and Current Position Age Business Experience Stephen W. Beard President and Chief Executive Officer ​ ​ 51 ​ Mr.
Item 4. Mine Safety Disclosures Not applicable. ​ ​ 41 Table of Contents Information About Our Executive Officers Our executive officers are as follows, along with each executive officer’s position, age, and business experience as of the date of this filing: ​ Name and Current Position Age Business Experience Stephen W.
Phelan joined Adtalem in February 2020 as Vice President, Chief Accounting Officer. Effective April 24, 2021, Mr. Phelan served as Interim Chief Financial Officer and was appointed Senior Vice President, Chief Financial Officer in October 2021. Prior to joining Adtalem, Mr.
Phelan served as Interim Chief Financial Officer and was appointed Senior Vice President, Chief Financial Officer in October 2021. Prior to joining Adtalem, Mr.
Gangadharan served as the Chief Accounting Officer at Groupon Inc. since February 2020 and prior to that served in various leadership roles at Groupon including as Senior Director, North America Controller and Head of Global Payroll and Shared Services from May 2019 to February 2020; Director of Corporate Accounting from April 2018 to May 2019; and International Goods Controller from December 2016 to April 2018.
Gangadharan served as the Chief Accounting Officer at Groupon Inc. since February 2020 and prior to that served in various leadership roles at Groupon including as Senior Director, North America Controller and Head of Global Payroll and Shared Services from May 2019 to February 2020; Director of Corporate Accounting from April 2018 to May 2019; and International Goods Controller from December 2016 to April 2018. 42 Table of Contents ​ Name and Current Position Age Business Experience Maurice Herrera Senior Vice President, Chief Marketing Officer ​ ​ 53 ​ Mr.
Beard was appointed Adtalem’s President and Chief Executive Officer. Prior to joining Adtalem, Mr. Beard held a variety of leadership roles at Heidrick & Struggles, International from 2003 through 2018 and was most recently Executive Vice President, Chief Administrative Officer and General Counsel. James Bartholomew Senior Vice President, Chamberlain University and Institutional Shared Services ​ 55 Mr.
In September 2021, Mr. Beard was appointed Adtalem’s President and Chief Executive Officer. Prior to joining Adtalem, Mr. Beard held a variety of leadership roles at Heidrick & Struggles, International from 2003 through 2018 and was most recently Executive Vice President, Chief Administrative Officer and General Counsel. Douglas G.
Betz served in a variety of leadership roles at McKinsey & Co. from 2017 through 2022 where he most recently served as partner and was a leader in McKinsey’s higher education and growth transformation practices. 47 Table of Contents ​ Name and Current Position Age Business Experience Dr. Karen Cox President, Chamberlain University 62 Dr.
Betz joined Adtalem in May 2022 as President of Walden University. Prior to joining Adtalem, Mr. Betz served in a variety of leadership roles at McKinsey & Co. from 2017 through 2022 where he most recently served as partner and was a leader in McKinsey’s higher education and growth transformation practices. Dr. Karen Cox President, Chamberlain University 63 Dr.
Herrera served as Senior Vice President, Head of Marketing at Weight Watchers from 2014 through 2018. Cheryl James Senior Vice President, Chief Human Resources Officer ​ 59 ​ Ms. James joined Adtalem in February 2022 as Senior Vice President, Chief Human Resources Officer. Prior to joining Adtalem, Ms.
Cheryl James Senior Vice President, Chief Human Resources Officer ​ 60 ​ Ms. James joined Adtalem in February 2022 as Senior Vice President, Chief Human Resources Officer. Prior to joining Adtalem, Ms. James served as Chief Human Resources Officer at Hillrom from 2020 through 2022. Prior to that role, Ms.
Prior to that role, Mr. Tom was Vice President at Laureate Education leading technology innovation and digital experience from 2016 through 2018. Previously, Mr. Tom served as Senior Vice President of Analytics, Innovation and Learning at TESSCO Technologies from 2011 through 2016. Evan Trent Senior Vice President, Chief Strategy and Transformation Officer ​ ​ 43 ​ Mr.
Prior to that role, Mr. Tom was Vice President at Laureate Education leading technology innovation and digital experience from 2016 through 2018. Previously, Mr.
James served as Chief Human Resources Officer at Hillrom from 2020 through 2022. Prior to that role, Ms. James was VP, HR, Global Surgical Solutions, APAC & Corporate Functions from 2019 through 2020 and VP, HR, International & Corporate Functions from 2015 through 2015 through 2019. Robert J. Phelan Senior Vice President, Chief Financial Officer ​ ​ 57 ​ Mr.
James was VP, HR, Global Surgical Solutions, APAC & Corporate Functions from 2019 through 2020 and VP, HR, International & Corporate Functions from 2015 through 2019. Robert J. Phelan Senior Vice President, Chief Financial Officer ​ ​ 58 ​ Mr. Phelan joined Adtalem in February 2020 as Vice President, Chief Accounting Officer. Effective April 24, 2021, Mr.
Phelan was the Senior Vice President, Finance - Treasurer & Chief Audit Executive at Sears from July 2016 through May 2018. Mr.
Phelan was the Senior Vice President, Finance - Treasurer & Chief Audit Executive at Sears from July 2016 through May 2018. Mr. Phelan also served as Senior Vice President and President – Inventory & Space Management at Sears from September 2007 through June 2016. Blake Simpson Senior Vice President, Chief Communications Officer and Corporate Affairs Officer ​ 48 ​ Ms.
Phelan also served as Senior Vice President and President – Inventory & Space Management at Sears from September 2007 through June 2016. 48 Table of Contents ​ Name and Current Position Age Business Experience Steven Tom Senior Vice President, Chief Customer Officer ​ ​ 41 ​ Mr.
Tom served as Senior Vice President of Analytics, Innovation and Learning at TESSCO Technologies from 2011 through 2016. 43 Table of Contents ​ Name and Current Position Age Business Experience Evan Trent Senior Vice President, Chief Strategy and Transformation Officer ​ ​ 44 ​ Mr. Trent joined Adtalem in August 2019 as Vice President, Strategy and Corporate Development.
Beck Senior Vice President, General Counsel and Corporate Secretary ​ ​ 55 ​ Mr. Beck joined Adtalem in June 2021 as Senior Vice President, General Counsel and Corporate Secretary. Prior to joining Adtalem, Mr. Beck held a variety of leadership roles at Hub Group from 2011 through 2021 and was most recently Executive Vice President, General Counsel and Secretary.
Beck Senior Vice President, General Counsel, Corporate Secretary and Institutional Support Services ​ ​ 56 ​ Mr. Beck joined Adtalem in June 2021 as Senior Vice President, General Counsel and Corporate Secretary. In January 2023, Mr. Beck assumed responsibilities for our institutional support services. Prior to joining Adtalem, Mr.
Removed
Bartholomew re-joined Adtalem in 2020 as President, Adtalem Medical. In 2021, Mr. Bartholomew was appointed Senior Vice President of integration and transformation and later in 2021 was appointed Senior Vice President, Chamberlain University and Institutional Shared Services. Prior to re-joining Adtalem, Mr.
Added
Simpson joined Adtalem in December 2022 as Senior Vice President, Chief Communications Officer and Corporate Affairs Officer. Prior to joining Adtalem, Ms. Simpson served as Senior Vice President, Global Communications, Impact, Events, Access, Creative at Under Armour, Inc. from 2020 through 2022. Previously, Ms.
Removed
Bartholomew served as President and CEO of DeVry University, Inc. from 2017 through 2020 and their Chief Operating Officer from 2014 through 2017. Previously, Mr. Bartholomew was President at Le Cordon Bleu in 2013 and served in a variety of leadership roles at Universal Technical Institute from 2010 through 2012. Douglas G.
Added
Simpson served as Vice President of Public Affairs and Communications at CKE Restaurants, Inc. from 2018 through 2022 and as Director Corporate Communications at Gap Inc. from 2015 through 2018. Steven Tom Senior Vice President, Chief Customer Officer ​ ​ 42 ​ Mr.
Removed
Trent served as Vice President, Strategy and Corporate Development at Heidrick & Struggles from 2014 through 2018. Lisa W. Wardell Executive Chairman of the Board ​ 52 ​ Ms. Wardell joined Adtalem in May 2016 as President and Chief Executive Officer and was appointed Chairman of the Board in July 2019. Ms.
Removed
Wardell has served on the Adtalem Board of Directors since 2008 and previously chaired the audit and finance committee. On September 8, 2021, Mr. Beard succeeded Ms. Wardell as Adtalem’s Chief Executive Officer and Ms. Wardell currently serves as Executive Chairman of the Board for a one-year term. Prior to joining Adtalem, Ms.
Removed
Wardell was Executive Vice President and Chief Operating Officer of The RLJ Companies from 2004 through 2016. ​ PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following graph is not “soliciting material,” is not deemed filed with the Securities and Exchange 50 Table of Contents Commission, and is not incorporated by reference in any of our filings under the Securities Act of 1933 or the Exchange Act of 1934, whether made before or after the data of this Form 10-K and irrespective of any general incorporation language in any such filing.
Biggest changeThe following graph is not “soliciting material,” is not deemed filed with the Securities and Exchange Commission, and is not incorporated by reference in any of our filings under the Securities Act of 1933 or the Exchange Act of 1934, whether made before or after the data of this Form 10-K and irrespective of any general incorporation language in any such filing. 45 Table of Contents Comparison of Five-Year Cumulative Total Return Among Adtalem Global Education Inc., NYSE Composite Index, and a Peer Group ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ 2018 ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 Adtalem Global Education Inc. ​ 100 ​ 94 ​ 65 ​ 74 ​ 75 ​ 71 NYSE Composite Index (U.S.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Adtalem’s common stock is listed on the New York Stock Exchange and Chicago Stock Exchange under the symbol “ATGE.” The stock transfer agent and registrar for Adtalem’s common stock is Computershare Investor Services, L.L.C.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Adtalem’s common stock is listed on the New York Stock Exchange and Chicago Stock Exchange under the symbol “ATGE.” The stock transfer agent and registrar for Adtalem’s common stock is Computershare Investor Services, LLC.
Security Holders There were 282 current holders of record of Adtalem’s common stock as of August 4, 2022. The number of holders of record does not include beneficial owners of its securities whose shares are held by various brokerage firms, other financial institutions, Adtalem’s 401(k) Retirement Plan, and its Colleague Stock Purchase Plan.
Security Holders There were 217 current holders of record of Adtalem’s common stock as of August 4, 2023. The number of holders of record does not include beneficial owners of its securities whose shares are held by various brokerage firms, other financial institutions, Adtalem’s 401(k) Retirement Plan, and its Colleague Stock Purchase Plan.
Dividends Adtalem did not pay any dividends in fiscal year 2021 or 2022. Adtalem does not expect to pay any cash dividends in the foreseeable future.
Dividends Adtalem did not pay any dividends in fiscal year 2022 or 2023. Adtalem does not expect to pay any cash dividends in the foreseeable future.
Any future payment of dividends will be at the discretion of the Adtalem Board of Directors (the “Board”) and will be dependent on projections of future earnings, cash flow, financial requirements of Adtalem, and other factors as the Board deems relevant. Recent Sales of Unregistered Securities 49 Table of Contents None.
Any future payment of dividends will be at the discretion of the Adtalem Board of Directors (the “Board”) and will be dependent on projections of future earnings, cash flow, financial requirements of Adtalem, and other factors as the Board deems relevant. Recent Sales of Unregistered Securities None. Securities Authorized for Issuance Under Equity Compensation Plans See Item 12.
Securities Authorized for Issuance Under Equity Compensation Plans See Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in Part III of this Annual Report on Form 10-K.
“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in Part III of this Annual Report on Form 10-K.
Other Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total Number of Shares Purchased (1) ​ Average Price Paid per Share ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ​ Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs April 1, 2022 - April 30, 2022 ​ — ​ $ — ​ NA ​ NA May 1, 2022 - May 31, 2022 ​ 1,227 ​ ​ 29.39 ​ NA ​ NA June 1, 2022 - June 30, 2022 ​ 2,226 ​ ​ 31.69 ​ NA ​ NA Total ​ 3,453 ​ $ 30.87 ​ NA ​ NA (1) Represents shares delivered back to Adtalem for payment of withholding taxes from employees for vesting restricted stock units and shares swapped for payment on exercise of incentive stock options pursuant to the terms of Adtalem's stock incentive plans.
“Financial Statements and Supplementary Data” for additional information on our share repurchase programs . 44 Table of Contents Other Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total Number of Shares Purchased (1) ​ Average Price Paid per Share ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ​ Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs April 1, 2023 - April 30, 2023 ​ 438 ​ $ 37.91 ​ NA ​ NA May 1, 2023 - May 31, 2023 ​ 6,153 ​ ​ 41.97 ​ NA ​ NA June 1, 2023 - June 30, 2023 ​ 2,686 ​ ​ 38.56 ​ NA ​ NA Total ​ 9,277 ​ $ 40.79 ​ NA ​ NA (1) Represents shares delivered back to Adtalem for payment of withholding taxes from employees for vesting restricted stock units and shares swapped for payment on exercise of incentive stock options pursuant to the terms of Adtalem's stock incentive plans.
The stock price performance on the following graph is not necessarily indicative of future stock performance.
Additionally, the Peer Group is weighted by the market capitalization of each component company. The stock price performance on the following graph is not necessarily indicative of future stock performance.
Companies), the New Peer Group (as defined below), and the Old Peer Group (as defined below) for the period from June 30, 2017 through June 30, 2022, assuming an investment of $100 in each on June 30, 2017 and also assumes the reinvestment of dividends.
Performance Graph The following graph compares the cumulative total returns of Adtalem’s common stock, the NYSE Composite Index (U.S. Companies), and a Peer Group (as defined below) for the period from June 30, 2018 through June 30, 2023, assuming an investment of $100 in each on June 30, 2018 and also assumes the reinvestment of dividends.
Issuer Purchases of Equity Securities The following information describes Adtalem’s stock repurchases during the fourth quarter of the fiscal year ended June 30, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total Number of Shares Purchased ​ Average Price Paid per Share ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) ​ Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) April 1, 2022 - April 30, 2022 ​ — ​ $ — ​ — ​ $ 300,000,000 May 1, 2022 - May 31, 2022 ​ — ​ ​ — ​ — ​ ​ 300,000,000 June 1, 2022 - June 30, 2022 ​ — ​ ​ — ​ — ​ ​ 300,000,000 Total ​ — ​ $ — ​ — ​ $ 300,000,000 (1) On November 8, 2018, we announced that the Board authorized the eleventh share repurchase program, which allowed Adtalem to repurchase up to $300.0 million of its common stock through December 31, 2021.
Issuer Purchases of Equity Securities The following information describes Adtalem’s stock repurchases during the fourth quarter of the fiscal year ended June 30, 2023, which includes the market price of the shares, commissions, and excise tax. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total Number of Shares Purchased ​ Average Price Paid per Share ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) ​ Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) April 1, 2023 - April 30, 2023 ​ 629,432 ​ $ 39.75 ​ 629,432 ​ $ 227,212,317 May 1, 2023 - May 31, 2023 ​ 638,097 ​ ​ 42.20 ​ 638,097 ​ ​ 200,282,566 June 1, 2023 - June 30, 2023 ​ 710,617 ​ ​ 38.75 ​ 710,617 ​ ​ 172,746,398 Total ​ 1,978,146 ​ $ 40.18 ​ 1,978,146 ​ $ 172,746,398 (1) See Note 16 “Share Repurchases” to the Consolidated Financial Statements in Item 8.
(formerly known as Strayer Education, Inc.). The “Old Peer Group” consists of the following companies: American Public Education, Inc., Chegg Inc., Graham Holdings Company, Grand Canyon Education, Inc., Laureate Education, Inc., Perdoceo Education Corporation (formerly known as Career Education Corporation), and Strategic Education, Inc. (formerly known as Strayer Education, Inc.).
(APEI), Graham Holdings Company (GHC), Grand Canyon Education, Inc. (LOPE), Laureate Education, Inc. (LAUR), Perdoceo Education Corporation (formerly known as Career Education Corporation) (PRDO), and Strategic Education, Inc. (formerly known as Strayer Education, Inc.) (STRA). Item 6. Selected Financial Data Not required. ​ ​
Companies) ​ 100 ​ 109 ​ 117 ​ 110 ​ 156 ​ 140 New Peer Group (1) ​ 100 ​ 116 ​ 131 ​ 95 ​ 99 ​ 104 Old Peer Group (1) ​ 100 ​ 126 ​ 148 ​ 137 ​ 153 ​ 101 Source data: Zacks Investment Research (1) The self-determined “New Peer Group” consists of the following companies selected on the basis of similarity in nature of their businesses: American Public Education, Inc., Graham Holdings Company, Grand Canyon Education, Inc., Laureate Education, Inc., Perdoceo Education Corporation (formerly known as Career Education Corporation), and Strategic Education, Inc.
Companies) ​ 100 ​ 107 ​ 100 ​ 143 ​ 128 ​ 144 Peer Group (1) ​ 100 ​ 113 ​ 82 ​ 85 ​ 90 ​ 94 Source data: Zacks Investment Research (1) The self-determined “Peer Group” consists of the following companies selected on the basis of similarity in nature of their businesses: American Public Education, Inc.
Removed
The eleventh share repurchase program commenced in January 2019 and was completed in January 2021. On February 4, 2020, we announced that the Board authorized Adtalem’s twelfth share repurchase program, which allowed Adtalem to repurchase up to $300.0 million of its common stock through December 31, 2021.
Removed
The twelfth share repurchase program commenced in January 2021 and expired on December 31, 2021. On March 1, 2022, we announced that the Board authorized Adtalem’s thirteenth share repurchase program, which allows Adtalem to repurchase up to $300.0 million of its common stock through February 25, 2025.
Removed
The timing and amount of any future repurchases will be determined based on an evaluation of market conditions and other factors. On March 14, 2022, we entered into an accelerated share repurchase (“ASR”) agreement to repurchase $150.0 million of common stock under which 4,709,576 shares were initially delivered.
Removed
See Note 15 “Share Repurchases” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for additional information on our share repurchase programs, including the ASR agreement .
Removed
Performance Graph The following graph compares the cumulative total returns of Adtalem’s common stock, the NYSE Composite Index (U.S.
Removed
Comparison of Five-Year Cumulative Total Return Among Adtalem Global Education Inc., NYSE Composite Index, and a Peer Group ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ 2017 ​ 2018 ​ 2019 ​ 2020 ​ 2021 ​ 2022 Adtalem Global Education Inc. ​ 100 ​ 127 ​ 119 ​ 82 ​ 94 ​ 95 NYSE Composite Index (U.S.
Removed
We removed Chegg Inc. from our peer group due to Adtalem exiting similar markets served by Chegg Inc as a result of our recent divestitures.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

160 edited+91 added−120 removed43 unchanged
Biggest changeNet income (loss) attributable to Adtalem reconciliation to net income from continuing operations attributable to Adtalem excluding special items (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ 2022 ​ 2021 ​ 2020 Net income (loss) attributable to Adtalem (GAAP) ​ $ 317,705 ​ $ 76,909 ​ $ (85,334) Deferred revenue adjustment ​ ​ 8,561 ​ ​ — ​ ​ — CEO transition costs ​ ​ 6,195 ​ ​ — ​ ​ — Restructuring expense ​ ​ 25,628 ​ ​ 6,869 ​ ​ 23,683 Business acquisition and integration expense ​ ​ 53,198 ​ ​ 31,593 ​ ​ — Walden intangible amortization expense ​ ​ 97,274 ​ ​ — ​ ​ — Pre-acquisition interest expense, write-off of debt discount and issuance costs, and gain on extinguishment of debt ​ ​ 48,804 ​ ​ 26,746 ​ ​ — Gain on sale of assets ​ ​ — ​ ​ — ​ ​ (4,779) Gain on derivative ​ ​ — ​ ​ — ​ ​ (110,723) Tax charges related to the Tax Cuts and Jobs Act of 2017 and the divestiture of DeVry University ​ ​ — ​ ​ — ​ ​ (2,230) Net tax benefit for a former subsidiary investment loss ​ ​ — ​ ​ — ​ ​ (25,688) Income tax impact on non-GAAP adjustments (1) ​ ​ (51,683) ​ ​ (16,297) ​ ​ (4,399) Net (income) loss from discontinued operations attributable to Adtalem ​ ​ (347,532) ​ ​ (6,579) ​ ​ 305,259 Net income from continuing operations excluding special items (non-GAAP) ​ $ 158,150 ​ $ 119,241 ​ $ 95,789 (1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements. 79 Table of Contents Earnings (loss) per share reconciliation to earnings per share from continuing operations excluding special items (shares in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ 2022 ​ 2021 ​ 2020 Earnings (loss) per share, diluted (GAAP) ​ $ 6.57 ​ $ 1.49 ​ $ (1.58) Effect on diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred revenue adjustment ​ ​ 0.18 ​ ​ - ​ ​ - CEO transition costs ​ ​ 0.13 ​ ​ - ​ ​ - Restructuring expense ​ ​ 0.53 ​ ​ 0.13 ​ ​ 0.44 Business acquisition and integration expense ​ ​ 1.09 ​ ​ 0.61 ​ ​ - Walden intangible amortization expense ​ ​ 1.99 ​ ​ - ​ ​ - Pre-acquisition interest expense, write-off of debt discount and issuance costs, and gain on extinguishment of debt ​ ​ 1.00 ​ ​ 0.52 ​ ​ - Gain on sale of assets ​ ​ - ​ ​ - ​ ​ (0.09) Gain on derivative ​ ​ - ​ ​ - ​ ​ (2.05) Tax charges related to the Tax Cuts and Jobs Act of 2017 and the divestiture of DeVry University ​ ​ - ​ ​ - ​ ​ (0.04) Net tax benefit for a former subsidiary investment loss ​ ​ - ​ ​ - ​ ​ (0.47) Income tax impact on non-GAAP adjustments (1) ​ ​ (1.06) ​ ​ (0.32) ​ ​ (0.08) Net (income) expense from discontinued operations attributable to Adtalem ​ ​ (7.18) ​ ​ (0.13) ​ ​ 5.64 Earnings per share from continuing operations excluding special items, diluted (non-GAAP) ​ $ 3.24 ​ $ 2.31 ​ $ 1.77 Diluted shares used in non-GAAP EPS calculation ​ ​ 48,804 ​ ​ 51,645 ​ ​ 54,094 (1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.
Biggest changeThe operating income reconciliation is included in the results of operations section within this MD&A. 73 Table of Contents Net income attributable to Adtalem reconciliation to adjusted net income (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ 2023 ​ 2022 ​ 2021 Net income attributable to Adtalem (GAAP) ​ $ 93,358 ​ $ 310,991 ​ $ 70,027 Deferred revenue adjustment ​ ​ — ​ ​ 8,561 ​ ​ — CEO transition costs ​ ​ — ​ ​ 6,195 ​ ​ — Restructuring expense ​ ​ 18,817 ​ ​ 25,628 ​ ​ 6,869 Business acquisition and integration expense ​ ​ 42,661 ​ ​ 53,198 ​ ​ 31,593 Intangible amortization expense ​ ​ 61,239 ​ ​ 97,274 ​ ​ — Gain on sale of assets ​ ​ (13,317) ​ ​ — ​ ​ — Pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, and investment impairment ​ ​ 19,226 ​ ​ 48,804 ​ ​ 26,746 Net tax benefit related to a valuation allowance release ​ ​ (6,184) ​ ​ — ​ ​ — Income tax impact on non-GAAP adjustments (1) ​ ​ (31,997) ​ ​ (51,683) ​ ​ (16,297) Net loss (income) from discontinued operations attributable to Adtalem ​ ​ 8,394 ​ ​ (346,946) ​ ​ (6,579) Adjusted net income (non-GAAP) ​ $ 192,197 ​ $ 152,022 ​ $ 112,359 (1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.
This expense category also includes the costs of facilities, adjunct faculty, supplies, housing, bookstore, other educational materials, student education-related support activities, and the provision for bad debts.
This expense category also includes the costs of facilities, adjunct faculty, supplies, housing, bookstore, other educational materials, student education-related support activities, and the provision for bad debts.
Chamberlain was most recently recertified and issued an unrestricted PPA in September 2020, with an expiration date of March 31, 2024. Walden was issued a Temporary Provisional PPA (“TPPPA”) in connection with their acquisition by Adtalem on September 17, 2021.
Chamberlain was most recently recertified and issued an unrestricted PPA in September 2020, with an expiration date of March 31, 2024. Walden was issued a Temporary Provisional PPA (“TPPPA”) on September 17, 2021 in connection with their acquisition by Adtalem.
The Swap was designated as a cash flow hedge and as such, changes in its fair value were recognized in accumulated other comprehensive loss on the Consolidated Balance Sheets and were reclassified into the Consolidated Statements of Income (Loss) within interest expense in the periods in which the hedged transactions affected earnings.
The Swap was designated as a cash flow hedge and as such, changes in its fair value were recognized in accumulated other comprehensive loss on the Consolidated Balance Sheets and were reclassified into the Consolidated Statements of Income within interest expense in the periods in which the hedged transactions affected earnings.
If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset or asset group, the amount of the impairment is the difference between the carrying amount and the fair value of the asset or asset group.
If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset or asset group, the amount of the impairment is the difference between the carrying amount and the fair value of the asset or asset group.
The provisional nature of the agreements for AUC, RUSM, and RUSVM stemmed from increased and/or repeated Title IV compliance audit findings. Walden’s TPPPA included financial requirements, which were in place prior to acquisition, such as a letter of credit, heightened cash monitoring, and additional reporting. No similar requirements were imposed on AUC, RUSM, or RUSVM.
The provisional nature of the existing agreements for AUC, RUSM, and RUSVM stemmed from increased and/or repeated Title IV compliance audit findings. Walden’s TPPPA included financial requirements, which were in place prior to acquisition, such as a letter of credit, heightened cash monitoring, and additional reporting. No similar requirements were imposed on AUC, RUSM, or RUSVM.
On March 10, 2022, we completed the sale of ACAMS, Becker, and OCL and on June 17, 2022, we completed the sale of EduPristine. In addition, we continue to incur costs associated with ongoing litigation and settlements related to the DeVry University divestiture, which was completed during fiscal year 2019, and are classified as expense within discontinued operations.
On March 10, 2022, we completed the sale of ACAMS, Becker, and OCL and on June 17, 2022, we completed the sale of EduPristine. In addition, we continue to incur costs associated with ongoing litigation and settlements related to the DeVry University divestiture, which was completed during fiscal year 2019, and those costs are classified as expense within discontinued operations.
During June 2022, we repurchased on the open market an additional $20.8 million of Notes at a price equal to approximately 90% of the principal amount of the Notes, resulting in a gain on extinguishment of $2.1 million recorded within interest expense in the Consolidated Statements of Income (Loss) for the year ended June 30, 2022.
During June 2022, we repurchased on the open market an additional $20.8 million of Notes at a price equal to approximately 90% of the principal amount of the Notes, resulting in a gain on extinguishment of $2.1 million recorded within interest expense in the Consolidated Statements of Income for the year ended June 30, 2022.
The following table presents cost of educational services by segment detailing the changes from the prior year (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, 2022 ​ Chamberlain Walden Medical and Veterinary Home Office and Other ​ Consolidated ​ Fiscal year 2021 as reported $ 252,422 ​ $ — $ 203,363 ​ $ 2,120 $ 457,905 ​ Cost increase (decrease) 2,346 ​ — ​ (1,035) ​ (2,120) (809) ​ Effect of acquisitions — ​ 202,680 — ​ — 202,680 ​ Fiscal year 2022 as reported $ 254,768 ​ $ 202,680 $ 202,328 ​ $ — $ 659,776 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal year 2022 % change: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost increase (decrease) ​ 0.9 % NM ​ ​ (0.5) % NM ​ ​ (0.2) % Effect of acquisitions ​ — ​ NM ​ ​ — ​ NM ​ ​ 44.3 % Fiscal year 2022 % change as reported ​ 0.9 % NM ​ ​ (0.5) % NM ​ ​ 44.1 % Cost of educational services increased 44.1%, or $201.9 million, to $659.8 million in fiscal year 2022 compared to the prior year.
The following table presents cost of educational services by segment detailing the changes from the prior year (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, 2022 ​ Chamberlain Walden Medical and Veterinary ​ Home Office and Other ​ Consolidated ​ Fiscal year 2021 $ 252,422 ​ $ — $ 203,363 $ 2,120 $ 457,905 ​ Cost increase (decrease) 2,346 ​ — ​ (1,035) (2,120) (809) ​ Effect of acquisitions — ​ 202,680 — — 202,680 ​ Fiscal year 2022 $ 254,768 ​ $ 202,680 $ 202,328 $ — $ 659,776 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal year 2022 % change: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost increase (decrease) ​ 0.9 % NM ​ ​ (0.5) % ​ NM ​ ​ (0.2) % Effect of acquisitions ​ — ​ NM ​ ​ — ​ ​ NM ​ ​ 44.3 % Fiscal year 2022 % change ​ 0.9 % NM ​ ​ (0.5) % ​ NM ​ ​ 44.1 % Cost of educational services increased 44.1%, or $201.9 million, to $659.8 million in fiscal year 2022 compared to fiscal year 2021.
Walden revenue was $485.4 million in fiscal year 2022, which includes the deferred revenue purchase accounting adjustment of $8.6 million. There was no comparable revenue in the prior year as Adtalem acquired Walden on August 12, 2021.
Walden revenue was $485.4 million in fiscal year 2022, which includes the deferred revenue purchase accounting adjustment of $8.6 million. There was no comparable revenue in fiscal year 2021 as Adtalem acquired Walden on August 12, 2021.
On March 24, 2020, we executed a pay-fixed, receive-variable interest rate swap agreement (the “Swap”) with a multinational financial institution to mitigate risks associated with the variable interest rate on our Prior Term Loan B (as defined in Note 13 “Debt” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data”) debt.
On March 24, 2020, we executed a pay-fixed, receive-variable interest rate swap agreement (the “Swap”) with a multinational financial institution to mitigate risks associated with the variable interest rate on our Prior Term Loan B (as defined in Note 14 “Debt” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data”) debt.
On March 1, 2021, we issued $800.0 million aggregate principal amount of 5.50% Senior Secured Notes due 2028 (the “Notes”), which mature on March 1, 2028. On August 12, 2021, Adtalem replaced the Prior Credit Facility and Prior Credit Agreement (as defined in Note 13 “Debt” to the Consolidated Financial Statements in Item 8.
On March 1, 2021, we issued $800.0 million aggregate principal amount of 5.50% Senior Secured Notes due 2028 (the “Notes”), which mature on March 1, 2028. On August 12, 2021, Adtalem replaced the Prior Credit Facility and Prior Credit Agreement (as defined in Note 14 “Debt” to the Consolidated Financial Statements in Item 8.
The effective tax rate includes a tax benefit of $1.7 million from a loss for certain uncollectible subsidiary receivables as well as a benefit of $1.2 million to adjust deferred state tax balances for the acquisition of Walden and the sale of ACAMS, Becker, and OCL, offset by $3.0 million for limitations on deductions for executive compensation.
The effective tax rate included a tax benefit of $1.7 million from a loss for certain uncollectible subsidiary receivables as well as a benefit of $1.2 million to adjust deferred state tax balances for the acquisition of Walden and the sale of ACAMS, Becker, and OCL, offset by $3.0 million for limitations on deductions for executive compensation.
The Revolver will be used to finance ongoing working capital and for general corporate purposes. During fiscal year 2022, we made a prepayment of $396.7 million on the Term Loan B. With this prepayment, we are no longer required to make quarterly installment payments.
The Revolver will be used to finance ongoing working capital and for general corporate purposes. During fiscal year 2022, we made a prepayment of $396.7 million on the Term Loan B. With that prepayment, we are no longer required to make quarterly installment payments.
Restructuring Expense Restructuring expense in fiscal year 2022 was $25.6 million compared to $6.9 million in the prior year. The increased restructure expense in fiscal year 2022 was primarily driven by workforce reductions and contract terminations related to synergy actions with regard to the Walden acquisition and Medical and Veterinary and Adtalem’s home office real estate consolidations.
Restructuring Expense Restructuring expense in fiscal year 2022 was $25.6 million compared to $6.9 million in fiscal year 2021. The increased restructure expense in fiscal year 2022 was primarily driven by workforce reductions and contract terminations related to synergy actions with regard to the Walden acquisition and Medical and Veterinary and Adtalem’s home office real estate consolidations.
While we believe that the amount accrued to-date is adequate, future changes in circumstances could impact these determinations. See Note 20 “Commitments and Contingencies” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for additional information on our loss contingencies.
While we believe that the amount accrued to-date is adequate, future changes in circumstances could impact these determinations. See Note 21 “Commitments and Contingencies” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for additional information on our loss contingencies.
Excluding the effect of the Walden acquisition, cost of educational services decreased 0.2%, or $0.8 million, in fiscal year 2022 compared to the prior year. Decreased costs excluding Walden in fiscal year 2022 were primarily driven by cost reduction efforts across all institutions, partially offset by return to campus cost increases at Chamberlain.
Excluding the effect of the Walden acquisition, cost of educational services decreased 0.2%, or $0.8 million, in fiscal year 2022 compared to fiscal year 2021. Decreased costs excluding Walden in fiscal year 2022 were primarily driven by cost reduction efforts across all institutions, partially offset by return to campus cost increases at Chamberlain.
This income consisted of the following: (i) income of $9.5 million driven by the operating results of ACAMS, Becker, OCL, and EduPristine and ongoing litigation costs and settlements related to the DeVry University divestiture and (ii) a provision for income taxes of $3.3 million associated with the items listed above.
This income consisted of the following: (i) income of $9.3 million driven by the operating results of ACAMS, Becker, OCL, and EduPristine and ongoing litigation costs and settlements related to the DeVry University divestiture and (ii) a provision for income taxes of $3.2 million associated with the items listed above.
We have not yet experienced significant inflationary pressures on wages or other costs of delivering our educational services; however, should inflation 59 Table of Contents persist in the overall economy, cost increases could affect our results of operations in the future.
We have not yet experienced significant inflationary pressures on wages or other costs of delivering our educational services; however, should inflation 60 Table of Contents persist in the overall economy, cost increases could affect our results of operations in the future.
In fiscal year 2022, we experienced higher variable expenses associated with bringing students back to campus and providing a safe environment in the context of COVID-19 as in-person instruction continues at Chamberlain and the medical and veterinary schools.
In fiscal year 2022, we experienced higher variable expenses associated with bringing students back to campus and providing a safe environment in the context of COVID-19 as in-person instruction returned at Chamberlain and the medical and veterinary schools.
During the period of provisional certification, the institution must comply with any additional conditions included in the institution’s program participation agreement. In addition, ED may more closely review an institution that is provisionally certified if it applies for recertification or approval to open a new location, add an educational program, acquire another institution or make any other significant change.
During the period of provisional certification, the institution must comply with any additional conditions included in the institution’s PPA. In addition, ED may more closely review an institution that is provisionally certified if it applies for recertification or approval to open a new location, add an educational program, acquire another institution, or make any other significant change.
Students attending provisionally certified institutions remain eligible to receive Title IV program funds. If ED determines that a provisionally certified institution is unable to meet its responsibilities under its program participation agreement, it may seek to revoke the institution’s certification to participate in Title IV programs without advance notice or opportunity for the institution to challenge the action.
Students attending provisionally certified institutions remain eligible to receive Title IV program funds. If ED determines that a provisionally certified institution is unable to meet its responsibilities under its PPA, it may seek to revoke the institution’s certification to participate in Title IV programs without advance notice or opportunity for the institution to challenge the action.
This gain was recorded at Adtalem’s home office, which is classified as “Home Office and Other” in Note 21 “Segment Information” to the Consolidated Financial Statements in Item 8.
This gain was recorded at Adtalem’s home office, which is classified as “Home Office and Other” in Note 22 “Segment Information” to the Consolidated Financial Statements in Item 8.
Walden’s provisional certification prior to acquisition was due to Walden’s prior parent company (Laureate Education Inc.) failing composite score under ED’s financial responsibility standards and ED’s approval of Laureate’s initial public offering in February 2017, which it viewed as a change in control.
Walden’s 65 Table of Contents provisional certification prior to acquisition was due to Walden’s prior parent company (Laureate Education Inc.) failing composite score under ED’s financial responsibility standards and ED’s approval of Laureate’s initial public offering in February 2017, which it viewed as a change in control.
Adtalem reduces its net tax assets for the estimated additional tax and interest that may result from tax authorities disputing uncertain tax positions Adtalem has taken. 77 Table of Contents Contingencies Adtalem is subject to contingencies, such as various claims and legal actions that arise in the normal conduct of its business.
Adtalem reduces its net tax assets for the estimated additional tax and interest that may result from tax authorities disputing uncertain tax positions Adtalem has taken. Contingencies Adtalem is subject to contingencies, such as various claims and legal actions that arise in the normal conduct of its business.
“Financial Statements and Supplementary Data” and the notes thereto but not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these items are considered “non-GAAP financial measures” under the Securities and Exchange Commission (“SEC”) rules.
“Financial Statements and Supplementary Data” and the notes thereto but not presented in accordance with U.S. generally 46 Table of Contents accepted accounting principles (“GAAP”). Certain of these items are considered “non-GAAP financial measures” under the Securities and Exchange Commission (“SEC”) rules.
For Adtalem’s participating institutions, this test is calculated at the consolidated Adtalem level.
For Adtalem’s institutions, this test is calculated at the consolidated Adtalem level.
“Financial Statements and Supplementary Data.” The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure 75 Table of Contents of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period.
“Financial Statements and Supplementary Data.” The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period.
This segment includes the operations of the American University of the Caribbean School of Medicine (“AUC”), Ross University School of Medicine (“RUSM”), and Ross University School of Veterinary Medicine (“RUSVM”), which are collectively referred to as the “medical and veterinary schools.” 52 Table of Contents “Home Office and Other” includes activities not allocated to a reportable segment.
This segment includes the operations of the American University of the Caribbean School of Medicine (“AUC”), Ross University School of Medicine (“RUSM”), and Ross University School of Veterinary Medicine (“RUSVM”), which are collectively referred to as the “medical and veterinary schools.” “Home Office and Other” includes activities not allocated to a reportable segment.
Although COVID-19 has had a negative effect on the operating results of all four reporting units that contain goodwill and indefinite-lived intangible assets as of June 30, 2022, none of the effects are considered significant enough to create an impairment triggering event during fiscal year 2022.
Although COVID-19 has had a negative effect on the operating results of all five reporting units that contain goodwill and indefinite-lived intangible assets as of June 30, 2023, none of the effects are considered significant enough to create an impairment triggering event during fiscal year 2023.
The Swap was set to terminate on February 28, 2025. On July 29, 2021, prior to refinancing our Prior Credit Agreement (as discussed 74 Table of Contents below), we settled and terminated the Swap for $4.5 million, which resulted in a charge to interest expense for this amount in fiscal year 2022.
The Swap was set to terminate on February 28, 2025. On July 29, 2021, prior to refinancing our Prior Credit Agreement (as discussed below), we settled and terminated the Swap for $4.5 million, which resulted in a charge to interest expense for this amount in fiscal year 2022.
Financial and descriptive information about Adtalem’s reportable segments is presented in Note 21 “Segment Information” to the Consolidated Financial Statements in Item 8.
Financial and descriptive information about Adtalem’s reportable segments is presented in Note 22 “Segment Information” to the Consolidated Financial Statements in Item 8.
The respective tuition rates for AUC, RUSM, and RUSVM do not include the cost of transportation, living expenses, or health insurance. 65 Table of Contents Cost of Educational Services The largest component of cost of educational services is the cost of faculty and staff who support educational operations.
The respective tuition rates for AUC, RUSM, and RUSVM do not include the cost of transportation, living expenses, or health insurance. Cost of Educational Services The largest component of cost of educational services is the cost of faculty and staff who support educational operations.
These tuition rates represent a 2.4% increase from the prior academic year. ● For students who entered the RUSVM program in September 2018 or later, the tuition rate for the pre-clinical (Semesters 1-7) and clinical curriculum (Semesters 8-10) is $21,603 per semester effective September 2021.
These tuition rates represented a 2.4% increase from the prior academic year. ● For students who entered the RUSVM program in September 2018 or later, the tuition rate for the pre-clinical (Semesters 1-7) and clinical curriculum (Semesters 8-10) was $21,603 per semester effective September 2021.
Cost reduction efforts and a decrease in employee benefit costs were offset with a decrease in revenue, increased costs for return to campus, and increased marketing expense. Walden Walden operating loss was $4.2 million in fiscal year 2022, which was impacted by intangible amortization expense and the deferred revenue purchase accounting adjustments.
Cost reduction efforts and a decrease in employee benefit costs were offset with a decrease in revenue, increased costs for return to campus, and increased marketing expense. Walden Walden operating loss was $5.3 million in fiscal year 2022, which was impacted by intangible amortization expense and the deferred revenue purchase accounting adjustments.
Tuition Rates: ● Effective for semesters beginning in September 2021, tuition rates for the beginning basic sciences and final clinical rotation portions of AUC’s medical program are $23,800 and $26,625, respectively, per semester.
Tuition Rates (2022): ● Effective for semesters beginning in September 2021, tuition rates for the beginning basic sciences and final clinical rotation portions of AUC’s medical program were $23,800 and $26,625, respectively, per semester.
These tuition rates represent a 2.4% increase from the prior academic year. ● Effective for semesters beginning in September 2021, tuition rates for the beginning basic sciences and final clinical rotation portions of RUSM’s medical program are $24,750 and $27,310, respectively, per semester.
These tuition rates represented a 2.4% increase from the prior academic year. ● Effective for semesters beginning in September 2021, tuition rates for the beginning basic sciences and final clinical rotation portions of RUSM’s medical program were $24,750 and $27,310, respectively, per semester.
For students who entered RUSVM before September 2018, tuition rates for the pre-clinical and clinical curriculum are $20,066 and $25,190, respectively, per semester effective September 2021. All of these tuition rates represent a 3.5% increase from the prior academic year.
For students who entered RUSVM before September 2018, tuition rates for the pre-clinical and clinical curriculum were $20,066 and $25,190, respectively, per semester effective September 2021. All of these tuition rates represented a 3.5% increase from the prior academic year.
Tuition Rates: Tuition for the BSN onsite and online degree program ranges from $675 to $699 per credit hour. Tuition for the RN-to-BSN online degree program is $590 per credit hour. Tuition for the online Master of Science in Nursing (“MSN”) degree program is $650 per credit hour.
Tuition Rates: Tuition for the BSN onsite and online degree program ranges from $675 to $753 per credit hour. Tuition for the RN-to-BSN online degree program is $590 per credit hour. Tuition for the online Master of Science in Nursing (“MSN”) degree program is $675 per credit hour.
Beginning in the second quarter of fiscal year 2022, Adtalem eliminated its Financial Services segment when the Association of Certified Anti-Money Laundering Specialists (“ACAMS”), Becker Professional Education (“Becker”), OnCourse Learning (“OCL”), and EduPristine, were classified as discontinued operations and assets held for sale.
“Financial Statements and Supplementary Data.” Beginning in the second quarter of fiscal year 2022, Adtalem eliminated its Financial Services segment when the Association of Certified Anti-Money Laundering Specialists (“ACAMS”), Becker Professional Education (“Becker”), OnCourse Learning (“OCL”), and EduPristine were classified as discontinued operations and assets held for sale.
In the event of unexpected market conditions or negative economic changes, including those caused by COVID-19, that could negatively affect Adtalem’s earnings and/or operating cash flow, Adtalem maintains a $400.0 million revolving credit facility with availability of $316.0 million as of June 30, 2022.
In the event of unexpected market conditions or negative economic changes, including those caused by COVID-19, that could negatively affect Adtalem’s earnings and/or operating cash flow, Adtalem maintains a $400.0 million revolving credit facility with availability of $323.8 million as of June 30, 2023.
Net income from discontinued operations for the year ended June 30, 2022 was $347.5 million.
Net income from discontinued operations for the year ended June 30, 2022 was $347.0 million.
Tuition Rates: On a per credit hour basis, tuition for Walden programs range from $123 per credit hour to $1,020 per credit hour, with the wide range due to the nature of the programs. General education courses are charged at $333 per credit hour.
Tuition Rates: On a per credit hour basis, tuition for Walden programs range from $130 per credit hour to $1,060 per credit hour, with the wide range due to the nature of the programs. General education courses are charged at $333 per credit hour.
“Financial Statements and Supplementary Data.” Certain expenses previously allocated to ACAMS, Becker, OCL, and EduPristine within our former Financial Services segment during fiscal year 2020, fiscal year 2021, and the first quarter of fiscal year 2022 have been reclassified to Home Office and Other based on discontinued operations reporting guidance regarding allocation of corporate overhead.
Certain expenses previously allocated to ACAMS, Becker, OCL, and EduPristine within our former Financial Services segment during fiscal year 2021 and the first quarter of fiscal year 2022 have been reclassified to Home Office and Other based on discontinued operations reporting guidance regarding allocation of corporate overhead.
As a percentage of revenue, student services and administrative expense was 41.0% in fiscal year 2022 compared to 32.3% in the prior year. The increase in the percentage was primarily the result of an increase in Chamberlain and Medical and Veterinary marketing expense, Walden intangible amortization expense, and CEO transition costs.
As a percentage of revenue, student services and administrative expense was 41.0% in fiscal year 2022 compared to 32.5% in fiscal year 2021. The increase in the percentage was primarily the result of an increase in Chamberlain and Medical and Veterinary marketing expense, intangible amortization expense, and CEO transition costs.
As a result of Adtalem’s acquisition of Walden, the provisional nature of Walden’s program participation agreement remains in effect on a month-to-month basis while ED reviews the change in ownership application relating to the acquisition of Walden by Adtalem.
As a result of Adtalem’s acquisition of Walden, the provisional nature of Walden’s PPA remains in effect on a month-to-month basis while ED reviews the change in ownership application relating to the acquisition of Walden by Adtalem.
This income consisted of the following: (i) loss of $0.4 million driven by the operating results and divestiture costs related to ACAMS, Becker, OCL, and EduPristine, and ongoing litigation costs and settlements to the DeVry University divestiture; (ii) a gain on the sale of ACAMS, Becker, OCL, and EduPristine of $473.5 million; and (iii) a provision for income taxes of $125.6 million associated with the items listed above.
This income consisted of the following: (i) loss of $1.0 million driven by ongoing litigation costs and settlements related to the DeVry University divestiture, partially offset by the operating results related to ACAMS, Becker, OCL, and EduPristine, and income from the DeVry University earn-out; (ii) a gain on the sale of ACAMS, Becker, OCL, and EduPristine of $473.5 million; and (iii) a provision for income taxes of $125.6 million associated with the items listed above.
Other programs such as those with a subscription-based learning modality or those billed on a subscription period or term basis range from $1,500 to $6,970 per term. Students are charged a technology fee that ranges from $50 to $220 per term as well as a clinical fee of $150 per course for specific programs.
Other programs such as those with a subscription-based learning modality or those billed on a subscription period or term basis range from $1,500 to $7,180 per term. Students are charged a technology fee that ranges from $50 to $230 per term as well as a clinical fee of $150 per course for specific programs.
Management anticipates fiscal year 2023 capital spending to be in the $60 to $70 million range. The source of funds for this capital spending will be from operations or the Credit Facility (as defined and discussed in Note 13 “Debt” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data”).
Management anticipates fiscal year 2024 capital spending to be in the $50 to $60 million range. The source of funds for this capital spending will be from operations or the Credit Facility (as defined and discussed in Note 14 “Debt” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data”).
Walden Walden Student Enrollment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year 2022 ​ ​ ​ September 30, ​ December 31, ​ March 31, ​ June 30, ​ Period ​ 2021 ​ 2021 ​ 2022 ​ 2022 ​ Total students ​ 44,886 ​ 41,158 ​ 42,788 ​ 39,470 ​ Walden total student enrollment represents those students attending instructional sessions as of September 30, 2021, December 31, 2021, March 31, 2022, and June 30, 2022.
Walden Walden Student Enrollment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year 2022 ​ ​ ​ September 30, ​ December 31, ​ March 31, ​ June 30, ​ Period ​ 2021 ​ 2021 ​ 2022 ​ 2022 ​ Total students ​ 44,886 ​ 41,158 ​ 42,788 ​ 39,470 ​ Walden total student enrollment represents those students attending instructional sessions as of the dates identified above.
Tuition for the online Family Nurse Practitioner (“FNP”) degree program is $665 per credit hour. Tuition for the online Doctor of Nursing Practice (“DNP”) degree program is $775 per credit hour. Tuition for the online Master of Public Health (“MPH”) degree program is $550 per credit hour.
Tuition for the online Family Nurse Practitioner (“FNP”) degree program is $690 per credit hour. Tuition for the online Doctor of Nursing Practice (“DNP”) degree program is $800 per credit hour. Tuition for the online Master of Public Health (“MPH”) degree program is $550 per credit hour.
Management believes that the decrease in total enrollment compared to the previous year may partially be driven by prolonged COVID-19 disruptions in the healthcare industry and the negative publicity surrounding the now concluded U.S. Department of Justice inquiry into potential false representations and false advertising to students. This inquiry ultimately concluded favorably, with no findings of misconduct by Walden.
Management believes that the decrease in total enrollment during fiscal year 2022 may have been partially driven by prolonged COVID-19 disruptions in the healthcare industry and the negative publicity surrounding the now concluded U.S. Department of Justice inquiry into potential false representations and false advertising to students. This inquiry ultimately concluded favorably, with no findings of misconduct by Walden.
The twelfth share repurchase program commenced in January 2021 and expired on December 31, 2021. On March 1, 2022, we announced that the Board authorized Adtalem’s thirteenth share repurchase program, which allows Adtalem to repurchase up to $300.0 million of its common stock through February 25, 2025.
The twelfth share repurchase program commenced in January 2021 and expired on December 31, 2021. On March 1, 2022, we announced that the Board authorized Adtalem’s thirteenth share repurchase program, which allows Adtalem to repurchase up to $300.0 million of its common stock through February 25, 2025, and we repurchased shares under that program during fiscal year 2023.
As a percentage of revenue, cost of educational services was 47.6% in fiscal year 2022 compared to 50.5% in the prior year. The decrease in the percentage was primarily the result of the influence of Walden’s higher gross margins. Walden’s fully online operating model results in lower comparable cost of educational services.
As a percentage of revenue, cost of educational services was 47.7% in fiscal year 2022 compared to 50.9% in fiscal year 2021 . The decrease in the percentage was primarily the result of the influence of Walden’s higher gross margins. Walden’s fully online operating model results in lower comparable cost of educational services.
The decrease of $74.4 million in cash generated from changes in assets and liabilities was primarily due to timing differences in accounts receivable, prepaid assets, prepaid income taxes, accounts payable, accrued payroll and benefits, accrued liabilities, accrued interest, and deferred revenue. Investing Activities Capital expenditures in fiscal year 2022 were $31.1 million compared to $39.9 million in the prior year.
The decrease of $9.8 million in cash generated from changes in assets and liabilities was primarily due to timing differences in accounts receivable, prepaid assets, prepaid income taxes, accounts payable, accrued payroll and benefits, accrued liabilities, accrued interest, and deferred revenue. Investing Activities Capital expenditures in fiscal year 2023 were $37.0 million compared to $31.1 million in the prior year.
The estimate of our credit losses involves a significant level of uncertainty as it requires significant judgment to estimate the amount we will collect in the future on our account receivable balances. See Note 9 “Accounts Receivable and Credit Losses” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for additional information on our credit losses.
The estimate of our credit losses involves a significant level of uncertainty as it requires significant judgment to estimate the amount we will collect in the future on our account receivable balances. See Note 10 “Accounts Receivable and Credit Losses” to the Consolidated Financial Statements in Item 8.
The final number of shares to be repurchased will be based on the average of the daily volume-weighted average price of Adtalem’s common stock during the term of the ASR agreement, less a discount and subject to adjustments pursuant to the terms of the ASR agreement.
The final number of shares to be repurchased was based on the volume-weighted average price of Adtalem’s common stock during the term of the ASR agreement, less a discount and subject to adjustments pursuant to the terms of the ASR agreement. The ASR agreement ended on October 14, 2022.
The test is based upon a composite score of three ratios: an equity ratio that measures the institution’s capital resources; a primary reserve ratio that measures an institution’s ability to fund its operations from current resources; and a net income ratio that measures an institution’s ability to operate profitably.
Applying various financial elements from the fiscal year audited financial statements, the test is based upon a composite score of three ratios: an equity ratio that measures the institution’s capital resources; a primary reserve ratio that measures an institution’s ability to fund its operations from current resources; and a net income ratio that measures an institution’s ability to operate profitably.
Goodwill and Intangible Assets Goodwill and indefinite-lived intangibles are not amortized, but are tested for impairment annually and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist. Our annual testing date is May 31. Adtalem first assesses goodwill for impairment qualitatively for each reporting unit that contains goodwill.
Goodwill and Intangible Assets Goodwill and indefinite-lived intangible assets are not amortized, but are tested for impairment annually and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist. Our annual testing date is May 31.
Fiscal Year Ended June 30, 2021 Revenue The following table presents revenue by segment detailing the changes from the prior year (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, 2022 ​ ​ Chamberlain Walden Medical and Veterinary Consolidated Fiscal year 2021 as reported ​ $ 563,814 ​ $ — ​ $ 343,087 ​ $ 906,901 ​ Organic (decline) growth ​ ​ (6,278) ​ ​ — ​ ​ 1,106 ​ ​ (5,172) ​ Effect of acquisitions ​ ​ — ​ ​ 485,393 ​ ​ — ​ ​ 485,393 ​ Fiscal year 2022 as reported ​ $ 557,536 ​ $ 485,393 ​ $ 344,193 ​ $ 1,387,122 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal year 2022 % change: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Organic (decline) growth ​ ​ (1.1) % ​ NM ​ ​ 0.3 % ​ (0.6) % Effect of acquisitions ​ ​ — ​ ​ NM ​ ​ — ​ ​ 53.5 % Fiscal year 2022 % change as reported ​ ​ (1.1) % ​ NM ​ ​ 0.3 % ​ 53.0 % Chamberlain Chamberlain Student Enrollment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year 2022 ​ Session ​ July 2021 ​ Sept. 2021 ​ Nov. 2021 ​ Jan. 2022 ​ Mar. 2022 ​ May 2022 ​ Total students ​ 32,729 ​ 34,539 ​ 33,648 ​ 34,141 ​ 34,158 ​ 32,891 ​ % change from prior year ​ 1.6 % (2.8) % (2.1) % (4.5) % (4.3) % (5.8) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year 2021 ​ Session ​ July 2020 ​ Sept. 2020 ​ Nov. 2020 ​ Jan. 2021 ​ Mar. 2021 ​ May 2021 Total students ​ 32,198 ​ 35,525 ​ 34,387 ​ 35,750 ​ 35,702 ​ 34,930 ​ % change from prior year ​ 12.2 % 11.9 % 10.2 % 5.6 % 5.8 % 4.6 % 57 Table of Contents Chamberlain revenue decreased 1.1%, or $6.3 million, to $557.5 million in fiscal year 2022 compared to the prior year, driven by declining total enrollments in the September 2021 through May 2022 sessions compared to the same sessions from the prior year.
Fiscal Year Ended June 30, 2021 Revenue The following table presents revenue by segment detailing the changes from the prior year (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, 2022 ​ ​ Chamberlain Walden Medical and Veterinary Consolidated Fiscal year 2021 ​ $ 563,814 ​ $ — ​ $ 335,434 ​ $ 899,248 ​ Organic (decline) growth ​ ​ (6,278) ​ ​ — ​ ​ 3,479 ​ ​ (2,799) ​ Effect of acquisitions ​ ​ — ​ ​ 485,393 ​ ​ — ​ ​ 485,393 ​ Fiscal year 2022 ​ $ 557,536 ​ $ 485,393 ​ $ 338,913 ​ $ 1,381,842 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal year 2022 % change: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Organic growth (decline) ​ ​ (1.1) % ​ NM ​ ​ 1.0 % ​ (0.3) % Effect of acquisitions ​ ​ — ​ ​ NM ​ ​ — ​ ​ 54.0 % Fiscal year 2022 % change ​ ​ (1.1) % ​ NM ​ ​ 1.0 % ​ 53.7 % 58 Table of Contents Chamberlain Chamberlain Student Enrollment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year 2022 ​ Session ​ July 2021 ​ Sept. 2021 ​ Nov. 2021 ​ Jan. 2022 ​ Mar. 2022 ​ May 2022 Total students ​ 32,729 ​ 34,539 ​ 33,648 ​ 34,141 ​ 34,158 ​ 32,891 ​ % change from prior year ​ 1.6 % (2.8) % (2.1) % (4.5) % (4.3) % (5.8) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year 2021 ​ Session ​ July 2020 ​ Sept. 2020 ​ Nov. 2020 ​ Jan. 2021 ​ Mar. 2021 ​ May 2021 Total students ​ 32,198 ​ 35,525 ​ 34,387 ​ 35,750 ​ 35,702 ​ 34,930 ​ % change from prior year ​ 12.2 % 11.9 % 10.2 % 5.6 % 5.8 % 4.6 % Chamberlain revenue decreased 1.1%, or $6.3 million, to $557.5 million in fiscal year 2022 compared to fiscal year 2021, driven by declining total enrollments in the September 2021 through May 2022 sessions compared to the same sessions from fiscal year 2021.
Segment operating income excluding special items increased 9.7%, or $6.6 million, in fiscal year 2022 compared to the prior year. The primary drivers of the increase in operating income excluding special items were cost reduction efforts and decreased employee benefit costs.
Segment operating income excluding special items increased 14.9%, or $8.9 million, to $69.1 million in fiscal year 2022 compared to fiscal year 2021. The primary drivers of the increase in operating income excluding special items were cost reduction efforts and decreased employee benefit costs.
Excluding the effect of the Walden acquisition and CEO transition costs, student services and 60 Table of Contents administrative expense decreased 4.6%, or $13.4 million, in fiscal year 2022 compared to the prior year. Decreased costs excluding Walden in fiscal year 2022 were primarily driven by cost reduction efforts across all institutions and home office.
Excluding the effect of the Walden acquisition and CEO transition costs, student services and administrative expense decreased 5.5%, or $16.2 million, in fiscal year 2022 compared to fiscal year 2021. Decreased 61 Table of Contents costs excluding Walden in fiscal year 2022 were primarily driven by cost reduction efforts across all institutions and home office.
The capital expenditures in fiscal year 2022 primarily consisted of spending for Chamberlain’s new campus development and improvements. Capital spending for fiscal year 2023 will support continued investment for new campus development at Chamberlain, maintenance at the medical and veterinary schools, and Adtalem’s home office.
The capital expenditures in fiscal year 2023 primarily consisted of spending for Chamberlain’s new campus development and improvements and Adtalem’s home office, including information technology investments. Capital spending for fiscal year 2024 will support continued investment for new campus development at Chamberlain, maintenance at the medical and 67 Table of Contents veterinary schools, and information technology.
If a student has not yet started in a clinical program, is not eligible to be enrolled in a clinical program, or not participating in other educational experiences, they are not included in the enrollment count for that semester.
If a student has not yet started in a clinical program, is not eligible to be enrolled in a clinical program, or not participating in other educational experiences, they are not included in the enrollment count for that semester. In the January 2022 and May 2022 semesters, this clinical backlog continued to decrease.
The Rescue Act enacted on March 11, 2021 amended the 90/10 rule to require that a proprietary institution derive no more than 90% of its revenue from federal education assistance funds, including but not limited to previously excluded U.S. Department of Veterans Affairs and military tuition assistance benefits. This change was subject to negotiated rulemaking, which ended in March 2022.
The American Rescue Plan Act of 2021 (the “Rescue Act”) enacted on March 11, 2021 amended the 90/10 rule to require that a proprietary institution derive no more than 90% of its revenue from federal education assistance funds, including but not limited to previously excluded U.S. Department of Veterans Affairs and military tuition assistance benefits.
Benefit from (Provision for) Income Taxes Our effective income tax rate (“ETR”) from continuing operations can differ from the 21% U.S. federal statutory rate due to several factors, including the rate of tax applied by state and local jurisdictions, the rate of tax applied to earnings outside the U.S., tax incentives, changes in valuation allowances, liabilities for uncertain tax positions, and tax benefits on stock-based compensation awards.
(Provision for) Benefit from Income Taxes Our effective income tax rate (“ETR”) from continuing operations can differ from the 21% U.S. federal statutory rate due to several factors, including tax on global intangible low-taxed income (“GILTI”), limitation of tax benefits on certain executive compensation, the rate of tax applied by state and local jurisdictions, the rate of tax applied to earnings outside the U.S., tax incentives, tax credits related to research and development expenditures, changes in valuation allowance, liabilities for uncertain tax positions, and tax benefits on stock-based compensation awards.
Walden is currently on a temporary provisional program participation agreement which is required for participation in Title IV programs on a month-to-month basis.
Walden is currently on a TPPPA which is required for participation in Title IV programs on a month-to-month basis.
“Financial Statements and Supplementary Data.” Financing Activities The following table provides a summary of cash flows from financing activities (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ 2022 ​ 2021 Repurchases of common stock for treasury ​ $ (120,000) ​ $ (100,000) Payment for purchase of equity forward contract ​ ​ (30,000) ​ ​ — Net (repayments) proceeds from long-term debt ​ ​ (229,713) ​ ​ 797,000 Payment of debt discount and issuance costs ​ ​ (49,553) ​ ​ (18,047) Payment for purchase of redeemable noncontrolling interest of subsidiary ​ ​ (1,790) ​ ​ — Other ​ 6,580 ​ (2,487) Net cash (used in) provided by financing activities ​ $ (424,476) ​ $ 676,466 On November 8, 2018, we announced that the Board authorized Adtalem’s eleventh share repurchase program, which allowed Adtalem to repurchase up to $300.0 million of its common stock through December 31, 2021.
Financing Activities The following table provides a summary of cash flows from financing activities (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ 2023 ​ 2022 Repurchases of common stock for treasury ​ $ (123,133) ​ $ (120,000) Payment on equity forward contract ​ ​ (13,162) ​ ​ (30,000) Net repayments of long-term debt ​ ​ (150,861) ​ ​ (229,713) Payment of debt discount and issuance costs ​ ​ — ​ ​ (49,553) Payment for purchase of redeemable noncontrolling interest of subsidiary ​ ​ — ​ ​ (1,790) Other ​ (1,359) ​ 6,580 Net cash used in financing activities ​ $ (288,515) ​ $ (424,476) On November 8, 2018, we announced that the Board authorized Adtalem’s eleventh share repurchase program, which allowed Adtalem to repurchase up to $300.0 million of its common stock through December 31, 2021.
Consolidated operating income excluding special items increased 73.4%, or $114.8 million, in fiscal year 2022 compared to the prior year. The primary driver of the operating income excluding special items increase was the addition of operating income excluding special items from Walden.
Consolidated operating income excluding special items increased 79.8%, or $118.7 million, in fiscal year 2022 compared to fiscal year 2021. The primary driver of the operating income excluding special items increase was the addition of operating income excluding special items from Walden.
The following are non-GAAP financial measures used in this Annual Report on Form 10-K: Net income from continuing operations excluding special items (most comparable GAAP measure: net income (loss) attributable to Adtalem) – Measure of Adtalem’s net income (loss) attributable to Adtalem adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, Walden intangible amortization expense, pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, gain on sale of assets, gain on derivative, tax charges related to the implementation of the Tax Act and the divestiture of DeVry University, a net tax benefit for a former subsidiary investment loss, and net (income) loss from discontinued operations attributable to Adtalem.
The following are non-GAAP financial measures used in this Annual Report on Form 10-K: Adjusted net income (most comparable GAAP measure: net income attributable to Adtalem) – Measure of Adtalem’s net income attributable to Adtalem adjusted for deferred revenue adjustment, CEO transition costs, restructuring expense, business acquisition and integration expense, intangible amortization expense, gain on sale of assets, pre-acquisition interest expense, write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, investment impairment, net tax benefit related to a valuation allowance release, and net loss (income) from discontinued operations attributable to Adtalem.
This debt was subsequently retired. As of June 30, 2022, the amount of debt outstanding under the Notes and Credit Facility was $859.2 million. See Note 13 “Debt” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for additional information on the Notes and our Credit Agreement.
As of June 30, 2023, the amount of debt outstanding under the Notes and Credit Facility was $708.3 million. See Note 14 “Debt” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for additional information on the Notes and our Credit Agreement.
Walden – Offers more than 100 online certificate, bachelor’s, master’s, and doctoral degrees, including those in nursing, education, counseling, business, psychology, public health, social work and human services, public administration and public policy, and criminal justice. This segment includes the operations of Walden University (“Walden”), which was acquired by Adtalem on August 12, 2021.
This segment includes the operations of Chamberlain University (“Chamberlain”). Walden – Offers more than 100 online certificate, bachelor’s, master’s, and doctoral degrees, including those in nursing, education, counseling, business, psychology, public health, social work and human services, public administration and public policy, and criminal justice.
Excluding the effect of the Walden acquisition, total consolidated operating income decreased $33.4 million in fiscal year 2022 compared to the prior year.
Excluding the effect of the Walden acquisition, total consolidated operating income decreased $28.3 million in fiscal year 2022 compared to fiscal year 2021.
Liquidity and Capital Resources Adtalem’s consolidated cash and cash equivalents balance o f $347.0 million and $476.4 million as of June 30, 2022 and 2021, respectively, included cash and cash equivalents held at Adtalem’s international operations of $34.2 million and $111.7 million as of June 30, 2022 and 2021, respectively, which is available to Adtalem for general corpora te purposes.
Adtalem’s consolidated cash and cash equivalents balance of $273.7 million and $347.0 million as of June 30, 2023 and 2022, respectively, included cash and cash equivalents held at Adtalem’s international operations of $7.2 million and $34.2 million as of June 30, 2023 and 2022, respectively, which is available to Adtalem for general corpora te purposes.
Although our current estimates contemplate current conditions, including the impact of COVID-19, and how we anticipate them to change in the future, as appropriate, it is reasonably possible that actual conditions could differ from what was anticipated in those estimates, which could materially affect our results of operations and financial condition.
Although our current estimates contemplate current conditions, including, but not limited to, the impact of (i) the COVID-19 pandemic, (ii) rising interest rates, and (iii) labor and material cost increases and shortages, and how we anticipate them to change in the future, as appropriate, it is reasonably possible that actual conditions could differ from what was anticipated in those estimates, which could materially affect our results of operations and financial condition.
Chamberlain Chamberlain operating income decreased 3.4%, or $4.4 million, to $124.4 million in fiscal year 2022 compared to the prior year. Segment operating income excluding special items decreased 1.2%, or $1.6 million, in fiscal year 2022 compared to the prior year.
Chamberlain Chamberlain operating income decreased 3.4%, or $4.4 million, to $124.4 million in fiscal year 2022 compared to fiscal year 2021. Segment operating income excluding special items decreased 1.2%, or $1.6 million, to $127.3 million in fiscal 63 Table of Contents year 2022 compared to fiscal year 2021.
Adtalem also recognizes future tax benefits associated with tax loss and credit carryforwards as deferred tax assets. Adtalem’s deferred tax assets are reduced by a valuation allowance, when in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Adtalem’s deferred tax assets are reduced by a valuation allowance, when in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The following table presents student services and administrative expense by segment detailing the changes from the prior year (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, 2022 ​ Chamberlain Walden Medical and Veterinary Home Office and Other ​ Consolidated ​ Fiscal year 2021 as reported ​ $ 182,540 ​ $ — ​ $ 71,874 ​ $ 38,068 ​ $ 292,482 ​ Cost decrease ​ (7,024) ​ — ​ (4,438) ​ (1,976) ​ (13,438) ​ Effect of acquisitions excluding special items ​ — ​ 185,543 ​ — ​ — ​ 185,543 ​ Walden intangible amortization expense ​ ​ — ​ ​ 97,274 ​ ​ — ​ ​ — ​ ​ 97,274 ​ CEO transition costs ​ ​ — ​ ​ — ​ ​ — ​ ​ 6,195 ​ ​ 6,195 ​ Fiscal year 2022 as reported ​ $ 175,516 ​ $ 282,817 ​ $ 67,436 ​ $ 42,287 ​ $ 568,056 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal year 2022 % change: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost decrease ​ ​ (3.8) % NM ​ ​ (6.2) % NM ​ ​ (4.6) % Effect of acquisitions excluding special items ​ — ​ NM ​ — ​ NM ​ 63.4 % Effect of Walden intangible amortization expense ​ — ​ NM ​ — ​ NM ​ 33.3 % Effect of CEO transition costs ​ — ​ NM ​ — ​ NM ​ 2.1 % Fiscal year 2022 % change as reported ​ (3.8) % NM ​ (6.2) % NM ​ 94.2 % Student services and administrative expense increased 94.2%, or $275.6 million, to $568.1 million in fiscal year 2022 compared to the prior year.
The following table presents student services and administrative expense by segment detailing the changes from the prior year (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, 2022 ​ Chamberlain Walden Medical and Veterinary Home Office and Other ​ Consolidated ​ Fiscal year 2021 ​ $ 182,540 ​ $ — ​ $ 71,874 ​ $ 38,068 ​ $ 292,482 ​ Cost decrease ​ (7,024) ​ — ​ (4,438) ​ (4,688) ​ (16,150) ​ Effect of acquisitions ​ — ​ 186,693 ​ — ​ — ​ 186,693 ​ Intangible amortization expense ​ ​ — ​ ​ 97,274 ​ ​ — ​ ​ — ​ ​ 97,274 ​ CEO transition costs ​ ​ — ​ ​ — ​ ​ — ​ ​ 6,195 ​ ​ 6,195 ​ Fiscal year 2022 ​ $ 175,516 ​ $ 283,967 ​ $ 67,436 ​ $ 39,575 ​ $ 566,494 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal year 2022 % change: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost decrease ​ ​ (3.8) % NM ​ ​ (6.2) % NM ​ ​ (5.5) % Effect of acquisitions ​ — ​ NM ​ — ​ NM ​ 63.8 % Effect of intangible amortization expense ​ — ​ NM ​ — ​ NM ​ 33.3 % Effect of CEO transition costs ​ — ​ NM ​ — ​ NM ​ 2.1 % Fiscal year 2022 % change ​ (3.8) % NM ​ (6.2) % NM ​ 93.7 % Student services and administrative expense increased 93.7%, or $274.0 million, to $566.5 million in fiscal year 2022 compared to fiscal year 2021.
The amended rule will first apply to institutional fiscal years beginning on or after January 1, 2023. The following table details the percentage of revenue on a cash basis from federal financial assistance programs as calculated under the current regulations (excluding the U.S.
This change was subject to negotiated rulemaking, which ended in March 2022. The amended rule applies to institutional fiscal years beginning on or after January 1, 2023. The following table details the percentage of revenue on a cash basis from federal financial assistance programs as calculated under the current regulations (excluding the U.S.
“Financial Statements and Supplementary Data” for additional information on our lease agreements. Contingencies For a discussion of legal proceedings, see Note 20 “Commitments and Contingencies” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data.” Critical Accounting Estimates We describe our significant accounting policies in the Notes to Consolidated Financial Statements in Item 8.
Contingencies For information regarding legal proceedings, including developments in legal proceedings, see Note 21 “Commitments and Contingencies” to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data.” Critical Accounting Estimates We describe our significant accounting policies in the Notes to Consolidated Financial Statements in Item 8.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−9 removed2 unchanged
Biggest changeThe interest rate on Adtalem’s Term Loan B is based upon LIBOR for eurocurrency rate loans or an alternative base rate for periods typically ranging from one to three months. As of June 30, 2022, Adtalem had $453.3 million in outstanding borrowings under the Term Loan B with an interest rate of 5.60%.
Biggest changeSubstantially all of their financial transactions are denominated in the U.S. dollar. As of June 30, 2023, the interest rate on Adtalem’s Term Loan B was based upon LIBOR for eurocurrency rate loans or an alternative base rate for periods typically ranging from one to three months.
Although the amount on deposit at a given institution typically will exceed amounts subject to guarantee, Adtalem has not experienced any deposit losses to date, nor does management expect to incur such losses in the future.
Adtalem’s cash is held in accounts at various large, financially secure depository institutions. Although the amount on deposit at a given institution typically will exceed amounts subject to guarantee, Adtalem has not experienced any deposit losses to date, nor does management expect to incur such losses in the future.
We have not yet experienced significant inflationary pressures on wages or other costs of delivering our educational services; however, should inflation persist in the overall economy, cost increases could affect our results of operations in the future.
We have not yet experienced significant inflationary pressures on wages or other costs of delivering our educational services; however, should inflation persist in the overall economy, cost increases could affect our results of operations in the future. 76 Table of Contents The financial position and results of operations of AUC, RUSM, and RUSVM Caribbean operations are measured using the U.S. dollar as the functional currency.
Based upon borrowings of $453.3 million, a 100 basis point increase in short-term interest rates would result in $4.5 million of additional annual interest expense. Adtalem’s cash is held in accounts at various large, financially secure depository institutions.
As of June 30, 2023, Adtalem had $303.3 million in outstanding borrowings under the Term Loan B with an interest rate of 9.19%. Based upon borrowings of $303.3 million, a 100 basis point increase in short-term interest rates would result in $3.0 million of additional annual interest expense.
Removed
The financial position and results of operations of AUC, RUSM, and RUSVM Caribbean operations are measured using the U.S. dollar as the functional currency. Substantially all of their financial transactions are denominated in the U.S. dollar.
Added
On June 27, 2023, Adtalem entered into Amendment No. 1 to Credit Agreement, identifying the Secured Overnight Financing Rate (“SOFR”) as the replacement benchmark rate for eurocurrency rate loans within the Credit Agreement. Beginning with the next interest rate reset in July 2023, the base rate will change to SOFR.
Removed
On March 24, 2020, we executed a pay-fixed, receive-variable interest rate swap agreement (the “Swap”) with a multinational financial institution to mitigate risks associated with the variable interest rate on our Prior Term Loan B debt.
Removed
We paid interest at a fixed rate of 0.946% and received variable interest of one-month LIBOR (subject to a minimum of 0.00%), on a notional amount equal to the amount outstanding under the Prior Term Loan B. The effective date of the Swap was March 31, 2020 and settlements with the counterparty occurred on a monthly basis.
Removed
The Swap was set to terminate on February 28, 2025. On July 29, 2021, prior to refinancing our Prior Credit Agreement (as discussed below), we settled and terminated the Swap for $4.5 million, which resulted in a charge to interest expense for this amount in fiscal year 2022.
Removed
During the operating term of the Swap, the annual interest rate on the amount of the Prior Term Loan B was fixed at 3.946% (including the impact of the 3% interest rate margin on LIBOR loans) for the applicable interest rate period.
Removed
The Swap was designated as a cash flow hedge and as such, changes in its fair value were recognized in accumulated other comprehensive loss on the Consolidated Balance Sheets and were reclassified into the Consolidated Statements of Income (Loss) within interest expense in the periods in which the hedged transactions affected earnings.
Removed
Interest on our Credit Facility is set based on LIBOR, which is based on observable market transactions. The U.K. Financial Conduct Authority, which regulates LIBOR, has announced that no new contracts referencing LIBOR are allowed.
Removed
In addition, publication of one-week and two-month LIBOR rates ceased on December 31, 2021; however, all other LIBOR tenors will be published through June 30, 2023. Various parties, including government agencies, are seeking to identify an alternative rate to replace LIBOR. Management is monitoring their efforts.
Removed
The Credit Agreement provides guidance surrounding the implementation of a replacement benchmark rate, however the specific replacement benchmark rate has not been identified . We expect to amend the Credit Agreement during fiscal year 2023 to transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”). 81 Table of Contents

Other ATGE 10-K year-over-year comparisons