# Covista Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [Covista Inc.](/companies/cvsa.md) (CIK 730464)
- Form: 10-Q
- Filed: 2024-05-02
- Accepted by EDGAR: May 2, 2024, 16:20 ET
- Period: 2024-03-31
- Accession: 0001558370-24-006552
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/730464/000155837024006552/atge-20240331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/730464/000155837024006552/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $412.7m | us-gaap:Revenues |
| Revenue | 9 months, 2023-07-01 to 2024-03-31 | $1.17bn | us-gaap:Revenues |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $175.3m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-07-01 to 2024-03-31 | $516.0m | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $156.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-07-01 to 2024-03-31 | $478.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $61.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-07-01 to 2024-03-31 | $148.5m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $16.6m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-07-01 to 2024-03-31 | $48.9m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $10.6m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-07-01 to 2024-03-31 | $21.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $36.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-07-01 to 2024-03-31 | $87.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.93 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-07-01 to 2024-03-31 | $2.14 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.95 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-07-01 to 2024-03-31 | $2.18 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 39,636,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-07-01 to 2024-03-31 | 40,874,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-07-01 to 2024-03-31 | $255.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-07-01 to 2024-03-31 | $52.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2023-07-01 to 2024-03-31 | $250.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-31 | $179.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $387.6m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $2.72bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $509.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $1.39bn | us-gaap:Liabilities |
| Long-term debt | at 2024-03-31 | $648.1m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2024-03-31 | $1.32bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 87,026 characters.

In this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), Adtalem Global Education Inc., together with its subsidiaries, is collectively referred to as “Adtalem,” “we,” “our,” “us,” or similar references.

Discussions within this MD&A may contain forward-looking statements. See the “Forward-Looking Statements” section for details about the uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements.

Throughout this MD&A, we sometimes use information derived from the Consolidated Financial Statements 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. See the “Non-GAAP Financial Measures and Reconciliations” section for the reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures.

Certain items presented in tables may not sum due to rounding. Percentages presented are calculated from the underlying numbers in thousands. Discussions throughout this MD&A are based on continuing operations unless otherwise noted. The MD&A should be read in conjunction with the Consolidated Financial Statements and the notes thereto.

### 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. Accordingly, investors should monitor our website in addition to following press releases, SEC filings, and public conference calls and webcasts. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts. You may also access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, as well as other reports relating to us that are filed with or furnished to the SEC, free of charge in the investor relations section of our website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. 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.

### Segments

We present three reportable segments as follows:

**Chamberlain –** Offers degree and non-degree programs in the nursing and health professions postsecondary education industry. This segment includes the operations of Chamberlain University (“Chamberlain”).

**Walden –** Offers online certificate programs and 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.

**Medical and Veterinary –** Offers degree and non-degree programs in the medical and veterinary postsecondary education industry. This segment includes the operations of 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. Financial and descriptive information about Adtalem’s reportable segments is presented in Note 18 “Segment Information” to the Consolidated Financial Statements.

### Third Quarter Highlights

Financial and operational highlights for the third quarter of fiscal year 2024 include:

- Adtalem revenue increased $43.6 million, or 11.8%, in the third quarter of fiscal year 2024 compared to the year-ago period driven by increased revenue at Chamberlain, Walden, and Medical and Veterinary.
- Net income of $36.8 million ($0.93 diluted earnings per share) decreased $9.0 million ($0.07 diluted earnings per share) in the third quarter of fiscal year 2024 compared to net income of $45.9 million in the year-ago period. This decrease was primarily driven by increases in business integration expense, incentive compensation expense, provision for bad debts, and income tax expense in the current period and a gain on assets held for sale and a tax valuation allowance release recorded in the year-ago period. These were partially offset by an increase in revenue and a decrease in intangible amortization expense in the current year period.
- Adjusted net income of $59.4 million increased $7.8 million, or 15.1%, in the third quarter of fiscal year 2024 compared to the year-ago period. This increase was primarily driven by an increase in revenue, partially offset by increases in costs to deliver instruction, investments to support growth initiatives, incentive compensation expense, provision for bad debts, and income tax expense.
- Diluted adjusted earnings per share of $1.50 increased $0.37, or 32.7%, in the third quarter of fiscal year 2024 compared to the year-ago period driven by lower diluted shares due to share repurchases and the increase in adjusted net income.
- For the January 2024 and March 2024 sessions, total student enrollment at Chamberlain increased 7.0% and 9.0%, respectively, compared to the same sessions last year.
- As of March 31, 2024, total student enrollment at Walden increased 8.4% compared to March 31, 2023.
- For the January 2024 semester, total student enrollment at the medical and veterinary schools decreased 4.5% compared to the same semester last year.
- On January 26, 2024, we made a prepayment of $50.0 million on our Term Loan B debt.
- Adtalem repurchased a total of 1,771,603 shares of Adtalem’s common stock under its share repurchase programs at an average cost of $51.60 per share during the third quarter of fiscal year 2024. On January 16, 2024, Adtalem completed its thirteenth share repurchase program. On January 19, 2024, we announced that the Board of Directors authorized Adtalem’s fourteenth share repurchase program, which allows repurchase of up to $300.0 million of its common stock through January 16, 2027. The timing and amount of any future repurchases will be determined based on an evaluation of market conditions and other factors.

### Results of Operations

The following table presents selected Consolidated Statements of Income data as a percentage of revenue:

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2024 ​ | ​ ​ ​ ​ 2023 ​ | ​ ​ ​ ​ | ​ ​ Nine Months Ended March 31, 2024 ​ | ​ ​ ​ ​ 2023 ​ |
| --- | --- | ---: | ---: | --- | ---: | ---: |
| Revenue | ​ | 100.0% | 100.0% | ​ | 100.0% | 100.0% |
| Cost of educational services | ​ | 42.5% | 44.9% | ​ | 43.9% | 44.6% |
| Student services and administrative expense | ​ | 38.0% | 39.2% | ​ | 40.7% | 39.8% |
| Restructuring expense | ​ | 0.1% | 0.3% | ​ | 0.1% | 1.6% |
| Business integration expense | ​ | 4.5% | 3.1% | ​ | 2.6% | 3.3% |
| Gain on sale of assets | ​ | —% | (3.6)% | ​ | —% | (1.2)% |
| Total operating cost and expense | ​ | 85.0% | 83.9% | ​ | 87.4% | 88.2% |
| Operating income | ​ | 15.0% | 16.1% | ​ | 12.6% | 11.8% |
| Interest expense | ​ | (4.0)% | (3.9)% | ​ | (4.2)% | (4.4)% |
| Other income, net | ​ | 0.7% | 1.1% | ​ | 0.7% | 0.3% |
| Income from continuing operations before income taxes | ​ | 11.6% | 13.3% | ​ | 9.2% | 7.7% |
| Provision for income taxes | ​ | (2.6)% | (0.1)% | ​ | (1.8)% | (0.5)% |
| Income from continuing operations | ​ | 9.1% | 13.2% | ​ | 7.4% | 7.2% |
| (Loss) income from discontinued operations, net of tax | ​ | (0.2)% | (0.7)% | ​ | 0.0% | (0.7)% |
| Net income | ​ | 8.9% | 12.4% | ​ | 7.4% | 6.5% |

### Revenue

The following tables present revenue by segment detailing the changes from the year-ago periods (in thousands):

| ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended March 31, 2024 Chamberlain | ​ ​ ​ Walden | ​ ​ ​ Medical and Veterinary | ​ ​ ​ Consolidated |
| --- | --- | ---: | ---: | ---: | ---: |
| Fiscal year 2023 | ​ | $149,737 ​ | $132,874 ​ | $86,471 ​ | $369,082 ​ |
| Growth | ​ | ​ 20,601 ​ | ​ 17,733 ​ | ​ 5,242 ​ | ​ 43,576 ​ |
| Fiscal year 2024 | ​ | $170,338 ​ | $150,607 ​ | $91,713 ​ | $412,658 ​ |
| % change from prior year | ​ | ​ 13.8% | ​ 13.3% | ​ 6.1% | ​ 11.8% |

| ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Nine Months Ended March 31, 2024 Chamberlain | ​ ​ ​ Walden | ​ ​ ​ Medical and Veterinary | ​ ​ ​ Consolidated |
| --- | --- | ---: | ---: | ---: | ---: |
| Fiscal year 2023 | ​ | $426,538 ​ | $395,715 ​ | $263,932 ​ | $1,086,185 ​ |
| Growth | ​ | ​ 39,949 ​ | ​ 43,308 ​ | ​ 5,303 ​ | ​ 88,560 ​ |
| Fiscal year 2024 | ​ | $466,487 ​ | $439,023 ​ | $269,235 ​ | $1,174,745 ​ |
| % change from prior year | ​ | ​ 9.4% | ​ 10.9% | ​ 2.0% | ​ 8.2% |

### Chamberlain

#### Chamberlain Student Enrollment:

| ​ ​ Session | ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year 2024 ​ ​ ​ July 2023 ​ Sept. 2023 ​ Nov. 2023 ​ Jan. 2024 ​ Mar. 2024 ​ ​ ​ |
| --- | --- | ---: |
| Total students | ​ | 32,175 ​ 34,889 ​ 35,592 ​ 37,196 ​ 37,985 ​ ​ ​ |
| % change from prior year | ​ | 2.6% 5.2% 6.6% 7.0% 9.0% ​ ​ |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| **​** | **​** | **Fiscal Year 2023** **​** |
| **Session** | **​** | **July 2022** **​** **Sept. 2022** **​** **Nov. 2022** **​** **Jan. 2023** **​** **Mar. 2023** **​** **May 2023** |
| Total students | ​ | 31,371 ​ 33,153 ​ 33,390 ​ 34,760 ​ 34,847 ​ 33,284 ​ |
| % change from prior year | ​ | (4.1)% (4.0)% (0.8)% 1.8% 2.0% 1.2% |

Chamberlain revenue increased 13.8%, or $20.6 million, to $170.3 million in the third quarter and increased 9.4%, or $39.9 million, to $466.5 million in the first nine months of fiscal year 2024 compared to the year-ago periods, driven by an increase in enrollment and higher tuition rates. Enrollment has improved in several graduate and doctoral programs and the undergraduate Bachelor of Science in Nursing (“BSN”) programs. In the March 2024 session, the Registered Nurse to Bachelor of Science in Nursing (“RN-to-BSN”) online degree program also saw increased total enrollment. Management believes Chamberlain is achieving growth through leveraging scale and national footprint and providing a full breadth of nursing programs and modalities.

#### Tuition Rates:

Tuition for the BSN onsite and online degree program ranges from $705 to $753 per credit hour. Tuition for the RN-to-BSN online degree program is $635 per credit hour. Tuition for the online Master of Science in Nursing (“MSN”) degree program is $695 per credit hour. Tuition for the online Family Nurse Practitioner (“FNP”) degree program is $710 per credit hour. Tuition for the online Doctor of Nursing Practice (“DNP”) degree program is $806 per credit hour. Tuition for the online Master of Public Health (“MPH”) degree program is $590 per credit hour. Tuition for the online Master of Social Work (“MSW”) degree program is $695 per credit hour. Tuition for the onsite Master of Physician Assistant Studies (“MPAS”) is $8,000 per session. In some cases, these tuition rates increased by approximately 3% to 8% from the prior year for new students. These tuition rates do not include the cost of course fees, books, supplies, transportation, clinical fees, living expenses, or other fees as listed in the Chamberlain academic catalog.

### Walden

#### Walden Student Enrollment:

| ​ ​ ​ Period | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year 2024 ​ ​ ​ September 30, ​ December 31, ​ March 31, ​ ​ ​ 2023 ​ 2023 ​ 2024 ​ ​ ​ |
| --- | --- | ---: |
| Total students | ​ | 40,975 ​ 40,971 ​ 42,751 ​ ​ ​ |
| % change from prior year | ​ | 0.5% 7.9% 8.4% ​ ​ |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| **​** | **​** | **Fiscal Year 2023** **​** |
| **​** | **​** | **September 30,** **​** **December 31,** **​** **March 31,** **​** **June 30,** **​** |
| **Period** | **​** | **2022** **​** **2022** **​** **2023** **​** **2023** **​** |
| Total students | ​ | 40,772 ​ 37,956 ​ 39,427 ​ 37,582 ​ |
| % change from prior year | ​ | (9.2)% (7.8)% (7.9)% (4.8)% |

Walden total student enrollment represents those students attending instructional sessions as of the dates identified above. Walden revenue increased 13.3%, or $17.7 million, to $150.6 million in the third quarter and increased 10.9%, or $43.3 million, to $439.0 million in the first nine months of fiscal year 2024 compared to the year-ago periods, driven by an increase in enrollment, higher tuition rates, and an increase in average credit hours per student. Management believes Walden’s performance turnaround in enrollment in the first nine months of fiscal year 2024 has been accelerated by investments in student experience and brand along with providing flexibility to working adults through part-time and Tempo Learning® competency-based programs.

#### 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 $340 per credit hour. Other programs such as those with a subscription-based learning modality or those billed on a subscription period or term basis range from $1,550 to $7,325 per term. Students are charged a program fee that ranges from $50 to $230 per term as well as a clinical fee of $160 per course for specific programs. Some programs require students to attend residencies, skills labs, and pre-practicum labs, which are charged at a range of $1,000 to $2,550 per event. In most cases, these tuition rates, event charges, and fees represent increases of approximately 0% to 4% with an average of approximately 2% from the prior year. These tuition rates, event charges, and fees do not include the cost of books or personal technology, supplies, transportation, or living expenses.

### Medical and Veterinary

#### Medical and Veterinary Student Enrollment:

| ​ ​ Semester | ​ ​ ​ | ​ ​ ​ ​ ​ ​ Fiscal Year 2024 ​ ​ ​ Sept. 2023 ​ Jan. 2024 ​ ​ ​ |
| --- | --- | ---: |
| Total students | ​ | 5,209 ​ 5,073 ​ ​ ​ |
| % change from prior year | ​ | (7.5)% (4.5)% ​ ​ |
| ​ | ​ | ​ ​ ​ ​ ​ ​ |
| **​** | **​** | **Fiscal Year 2023** **​** |
| **Semester** | **​** | **Sept. 2022** **​** **Jan. 2023** **​** **May 2023** |
| Total students | ​ | 5,634 ​ 5,312 ​ 4,869 ​ |
| % change from prior year | ​ | 3.4% 1.6% (8.2)% |

Medical and Veterinary revenue increased 6.1%, or $5.2 million, to $91.7 million in the third quarter and increased 2.0%, or $5.3 million, to $269.2 million in the first nine months of fiscal year 2024 compared to the year-ago periods, driven by tuition rate increases at all three institutions in this segment, partially offset by decreased enrollment.

Management’s plan to increase enrollment centers around renewed focus on operational efficiency, specifically academic support and the enrollment experience.

#### Tuition Rates:

- Effective for semesters beginning in September 2023, for students first enrolled prior to May 2022, tuition rates for the beginning basic sciences and final clinical rotation portions of AUC’s medical program are $26,680 and $31,328, respectively, per semester, which represents a 6.8% and 12.0% increase, respectively, from the prior academic year. Effective for semesters beginning in September 2023, for students first enrolled in May 2022 and after, tuition rates for the beginning basic sciences and final clinical rotation portions of AUC’s medical program are $21,568 and $28,146, respectively, per semester, which represents a 6.8% and 12.0% increase, respectively, from the prior academic year. In addition, students first enrolled in May 2022 and after are charged administrative fees of $5,430 and $3,841 for the basic sciences and final clinical rotation portions of the program, respectively, per semester, which represents a 6.8% and 12.0% increase, respectively, from the prior academic year.
- Effective for semesters beginning in September 2023, for students first enrolled prior to May 2022, tuition rates for the beginning basic sciences and final clinical rotation portions of RUSM’s medical program are $27,547 and $30,397, respectively, per semester. These tuition rates represent a 6.0% increase from the prior academic year. Effective for semesters beginning in September 2023, for students first enrolled in May 2022 and after, tuition rates for the beginning basic sciences and final clinical rotation portions of RUSM’s medical program are $23,284 and $27,447, respectively, per semester. In addition, students first enrolled in May 2022 and after are charged administrative fees ranging from $5,883 to $6,662 for the basic sciences portion of the program and $3,420 for the

final clinical rotation portion of the program, per semester. These tuition rates and fees represent a 6.0% increase from the prior academic year.

- Effective for semesters beginning in September 2023, for students who first enrolled prior to September 2018, tuition rates for the pre-clinical (semesters 1-7) and clinical curriculum (semesters 8-10) of RUSVM’s veterinary program are $22,334 and $28,034, respectively, per semester. Effective for semesters beginning in September 2023, for students first enrolled in September 2018 and after, tuition rates for the pre-clinical and clinical curriculum of RUSVM’s veterinary program are $24,044 per semester. All of these tuition rates represent a 6.0% increase from the prior academic year.

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. 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. We have not 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. The following tables present cost of educational services by segment detailing the changes from the year-ago periods (in thousands):

| ​ ​ ​ ​ ​ | ​ ​ ​ Three Months Ended March 31, 2024 Chamberlain | ​ ​ ​ Walden | ​ ​ ​ Medical and Veterinary | ​ ​ ​ Consolidated ​ |
| --- | ---: | ---: | ---: | ---: |
| Fiscal year 2023 | $65,253 ​ | $51,025 | $49,542 ​ | $165,820 ​ |
| Cost increase (decrease) | 5,312 ​ | 5,194 | (1,005) ​ | 9,501 ​ |
| Fiscal year 2024 | $70,565 ​ | $56,219 | $48,537 ​ | $175,321 ​ |
| % change from prior year | ​ 8.1% | 10.2% | ​ (2.0)% | ​ 5.7% |

| ​ ​ ​ ​ ​ | ​ ​ ​ Nine Months Ended March 31, 2024 Chamberlain | ​ ​ ​ Walden | ​ ​ ​ Medical and Veterinary | ​ ​ ​ Consolidated ​ |
| --- | ---: | ---: | ---: | ---: |
| Fiscal year 2023 | $186,069 ​ | $149,605 | $149,094 ​ | $484,768 ​ |
| Cost increase (decrease) | 17,175 ​ | 15,632 ​ | (1,567) ​ | 31,240 ​ |
| Fiscal year 2024 | $203,244 ​ | $165,237 | $147,527 ​ | $516,008 ​ |
| % change from prior year | ​ 9.2% | 10.4% | ​ (1.1)% | ​ 6.4% |

Cost of educational services increased 5.7%, or $9.5 million, to $175.3 million in the third quarter and increased 6.4%, or $31.2 million, to $516.0 million in the first nine months of fiscal year 2024 compared to the year-ago periods. These cost increases were primarily driven by an increase in labor and other costs to support increased enrollment, and an increase in provision for bad debts at Chamberlain and Walden.

As a percentage of revenue, cost of educational services was 42.5% and 43.9% in the third quarter and first nine months of fiscal year 2024, respectively, compared to 44.9% and 44.6% in the year-ago periods. The decreases in the percentages were primarily the result of revenue growth accompanied with cost efficiencies.

### Student Services and Administrative Expense

The student services and administrative expense category includes expenses related to student admissions, marketing and advertising, general and administrative, and amortization expense of finite-lived intangible assets related to business acquisitions. We have not experienced significant inflationary pressures on wages or other costs of providing services to our students and educational institutions; however, should inflation persist in the overall economy, cost increases could affect our results of operations in the future. The following tables present student services and administrative expense by segment detailing the changes from the year-ago periods (in thousands):

| ​ ​ ​ | ​ ​ | ​ ​ ​ Three Months Ended March 31, 2024 Chamberlain | ​ ​ ​ Walden | ​ ​ ​ Medical and Veterinary | ​ ​ Home Office and Other | ​ ​ | ​ ​ ​ Consolidated ​ |
| --- | --- | ---: | ---: | ---: | --- | --- | ---: |
| Fiscal year 2023 | ​ | $44,895 ​ | $71,453 ​ | $20,036 ​ | $8,142 | ​ | $144,526 ​ |
| Cost increase | ​ | 11,530 ​ | 5,296 ​ | 186 ​ | 249 | ​ | 17,261 ​ |
| Intangible amortization expense change | ​ | ​ — ​ | ​ (5,946) ​ | ​ — ​ | ​ — | ​ | ​ (5,946) ​ |
| Debt modification costs change | ​ | ​ — ​ | ​ — ​ | ​ — ​ | ​ 848 | ​ | ​ 848 ​ |
| Fiscal year 2024 | ​ | $56,425 ​ | $70,803 ​ | $20,222 ​ | $9,239 | ​ | $156,689 ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ ​ |
| Fiscal year 2024 % change: | ​ | ​ ​ | ​ ​ ​ | ​ ​ | ​ ​ | ​ | ​ ​ ​ |
| Cost increase | ​ | ​ 25.7% | 7.4% | ​ 0.9% | NM | ​ | ​ 11.9% |
| Intangible amortization expense change | ​ | — ​ | (8.3)% | — ​ | NM | ​ | (4.1)% |
| Debt modification costs change | ​ | — ​ | — ​ | — ​ | NM | ​ | 0.6% |
| Fiscal year 2024 % change | ​ | 25.7% | (0.9)% | 0.9% | NM | ​ | 8.4% |

| ​ ​ ​ | ​ ​ | ​ ​ ​ Nine Months Ended March 31, 2024 Chamberlain | ​ ​ ​ Walden | ​ ​ ​ Medical and Veterinary | ​ ​ Home Office and Other | ​ ​ | ​ ​ ​ Consolidated ​ |
| --- | --- | ---: | ---: | ---: | --- | --- | ---: |
| Fiscal year 2023 | ​ | $140,649 ​ | $216,865 ​ | $58,333 ​ | $16,866 | ​ | $432,713 ​ |
| Cost increase | ​ | 25,281 ​ | 12,716 ​ | 3,854 ​ | 4,449 | ​ | 46,300 ​ |
| Intangible amortization expense change | ​ | ​ — ​ | ​ (20,640) ​ | ​ — ​ | ​ — | ​ | ​ (20,640) ​ |
| Litigation reserve change | ​ | ​ — ​ | ​ 18,500 ​ | ​ — ​ | ​ — | ​ | ​ 18,500 ​ |
| Loss on assets held for sale change | ​ | ​ — ​ | ​ — ​ | ​ — ​ | ​ 647 | ​ | ​ 647 ​ |
| Debt modification costs change | ​ | ​ — ​ | ​ — ​ | ​ — ​ | ​ 848 | ​ | ​ 848 ​ |
| Fiscal year 2024 | ​ | $165,930 ​ | $227,441 ​ | $62,187 ​ | $22,810 | ​ | $478,368 ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ ​ |
| Fiscal year 2024 % change: | ​ | ​ ​ | ​ ​ ​ | ​ ​ | ​ ​ | ​ | ​ ​ ​ |
| Cost increase | ​ | ​ 18.0% | 5.9% | ​ 6.6% | NM | ​ | ​ 10.7% |
| Intangible amortization expense change | ​ | — ​ | (9.5)% | — ​ | NM | ​ | (4.8)% |
| Litigation reserve change | ​ | — ​ | 8.5% | — ​ | NM | ​ | 4.3% |
| Loss on assets held for sale change | ​ | — ​ | — ​ | — ​ | NM | ​ | 0.1% |
| Debt modification costs change | ​ | — ​ | — ​ | — ​ | NM | ​ | 0.2% |
| Fiscal year 2024 % change | ​ | 18.0% | 4.9% | 6.6% | NM | ​ | 10.6% |

Student services and administrative expense increased 8.4%, or $12.2 million, to $156.7 million in the third quarter and increased 10.6%, or $45.7 million, to $478.4 million in the first nine months of fiscal year 2024 compared to the year-ago periods. Excluding intangible amortization expense and debt modification costs, student services and administrative expense increased 11.9%, or $17.3 million, in the third quarter of fiscal year 2024 compared to the year-ago period. Excluding intangible amortization expense, litigation reserve, loss on assets held for sale, and debt modification costs, student services and administrative expense increased 10.7%, or $46.3 million, in the first nine months of fiscal year 2024 compared to the year-ago period. These cost increases were primarily driven by an increase in incentive compensation expense, marketing expense, and investments to support growth initiatives.

As a percentage of revenue, student services and administrative expense was 38.0% and 40.7% in the third quarter and first nine months of fiscal year 2024, respectively, compared to 39.2% and 39.8% in the year-ago periods. The decrease in the percentage for the third quarter of fiscal year 2024 was primarily the result of efficiencies in marketing spend and a decrease in intangible amortization expense. The increase in the percentage for the first nine months of fiscal year 2024 was primarily the result of increased incentive compensation expense and litigation reserves in the first nine months of fiscal year 2024, partially offset by a decrease in intangible amortization expense.

### Restructuring Expense

Restructuring expense in the third quarter and first nine months of fiscal year 2024 was $0.5 million and $1.2 million, respectively, compared to $1.3 million and $17.7 million in the year-ago periods. The restructuring expense decreases in the third quarter and first nine months of fiscal year 2024 were primarily driven by higher real estate consolidations in the third quarter and first nine months of fiscal year 2023 at Walden, Medical and Veterinary, and Adtalem’s home office resulting in impairments on operating lease assets and property and equipment. See Note 5 “Restructuring Charges” to the Consolidated Financial Statements for additional information on restructuring charges. We continue to incur restructuring charges or reversals related to exited leased space from previous restructuring activities.

### Business Integration Expense

Business integration expense in the third quarter and first nine months of fiscal year 2024 was $18.5 million and $30.6 million, respectively, compared to $11.3 million and $35.7 million in the year-ago periods. These are costs associated with integrating Walden into Adtalem. In addition, during the first quarter of fiscal year 2023, we initiated transformation initiatives to accelerate growth and organizational agility. Certain costs relating to this transformation are included in business integration expense in the Consolidated Statements of Income. We expect to incur additional business integration expense through the remainder of fiscal year 2024 at a decreasing rate.

### Gain on Sale of Assets

On July 31, 2019, Adtalem sold its Chicago, Illinois, campus facility to DePaul College Prep Foundation (“DePaul College Prep”) for $52.0 million. Adtalem received $5.2 million of cash at the time of closing and held a mortgage, secured by the property, from DePaul College Prep for $46.8 million. The mortgage was due on July 31, 2024 as a balloon payment and bore interest at a rate of 4% per annum, payable monthly. DePaul College Prep had an option to make prepayments. Due to Adtalem’s involvement with financing the sale, the transaction did not qualify as a sale for accounting purposes at the time of closing. Adtalem continued to maintain the assets associated with the sale on the Consolidated Balance Sheets. We recorded a note receivable of $40.3 million and a financing payable of $45.5 million at the time of the sale, which were classified as other assets, net and other liabilities, respectively, on the Consolidated Balance Sheets. On February 23, 2023, DePaul College Prep paid the mortgage in full. Upon receiving full repayment of the mortgage, Adtalem no longer is involved in the financing of the sale and therefore derecognized the note receivable, the financing payable, and the assets associated with the campus facility, which resulted in recognizing a gain on sale of assets of $13.3 million in the three and nine months ended March 31, 2023. This gain was recorded at Adtalem’s home office, which is classified as “Home Office and Other” in Note 18 “Segment Information” to the Consolidated Financial Statements.

### Operating Income

The following tables present operating income by segment detailing the changes from the year-ago periods (in thousands):

| ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2024 Chamberlain | ​ | ​ ​ Walden | ​ | ​ ​ Medical and Veterinary | ​ | ​ ​ Home Office and Other | ​ ​ | ​ ​ Consolidated |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Fiscal year 2023 | ​ | $39,589 | ​ | $10,343 | ​ | $16,472 | ​ | $(6,975) | ​ | $59,429 |
| Organic change | ​ | ​ 3,760 | ​ | ​ 7,243 | ​ | ​ 6,060 | ​ | ​ (249) | ​ | ​ 16,814 |
| Restructuring expense change | ​ | ​ — | ​ | ​ 53 | ​ | ​ 227 | ​ | ​ 525 | ​ | ​ 805 |
| Business integration expense change | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ (7,104) | ​ | ​ (7,104) |
| Intangible amortization expense change | ​ | ​ — | ​ | ​ 5,946 | ​ | ​ — | ​ | ​ — | ​ | ​ 5,946 |
| Debt modification costs change | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ (848) | ​ | ​ (848) |
| Gain on sale of assets change | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ (13,317) | ​ | ​ (13,317) |
| Fiscal year 2024 | ​ | $43,349 | ​ | $23,585 | ​ | $22,759 | ​ | $(27,968) | ​ | $61,725 |

| ​ ​ ​ | ​ ​ ​ | ​ ​ Nine Months Ended March 31, 2024 Chamberlain | ​ | ​ ​ Walden | ​ | ​ ​ Medical and Veterinary | ​ | ​ ​ Home Office and Other | ​ ​ | ​ ​ Consolidated |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Fiscal year 2023 | ​ | $99,002 | ​ | $26,071 | ​ | $49,172 | ​ | $(45,632) | ​ | $128,613 |
| Organic change | ​ | ​ (2,507) | ​ | ​ 14,960 | ​ | ​ 3,015 | ​ | ​ (4,448) | ​ | ​ 11,020 |
| Restructuring expense change | ​ | ​ 818 | ​ | ​ 3,950 | ​ | ​ 6,955 | ​ | ​ 4,766 | ​ | ​ 16,489 |
| Business integration expense change | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 5,081 | ​ | ​ 5,081 |
| Intangible amortization expense change | ​ | ​ — | ​ | ​ 20,640 | ​ | ​ — | ​ | ​ — | ​ | ​ 20,640 |
| Litigation reserve change | ​ | ​ — | ​ | ​ (18,500) | ​ | ​ — | ​ | ​ — | ​ | ​ (18,500) |
| Loss on assets held for sale change | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ (647) | ​ | ​ (647) |
| Debt modification costs change | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ (848) | ​ | ​ (848) |
| Gain on sale of assets change | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ (13,317) | ​ | ​ (13,317) |
| Fiscal year 2024 | ​ | $97,313 | ​ | $47,121 | ​ | $59,142 | ​ | $(55,045) | ​ | $148,531 |

The following table presents a reconciliation of operating income (GAAP) to adjusted operating income (non-GAAP) by segment (in thousands):

| ​ ​ ​ ​ ​ Chamberlain: | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Three Months Ended March 31, ​ ​ ​ 2024 ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ | ​ ​ Increase/(Decrease) $​% ​ ​ | ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Nine Months Ended March 31, ​ ​ ​ 2024 ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ | ​ ​ Increase/(Decrease) $​% ​ ​ | ​ ​ | ​ ​ ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Operating income (GAAP) | ​ | $43,349 ​ | $39,589 ​ | $3,760 | ​ | 9.5% | ​ | $97,313 ​ | $99,002 ​ | $(1,689) | ​ | (1.7)% |
| Restructuring expense | ​ | ​ — ​ | ​ — ​ | ​ — | ​ | ​ ​ | ​ | ​ — ​ | ​ 818 ​ | ​ (818) | ​ | ​ ​ |
| Adjusted operating income (non-GAAP) | ​ | $43,349 ​ | $39,589 ​ | $3,760 | ​ | 9.5% | ​ | $97,313 ​ | $99,820 ​ | $(2,507) | ​ | (2.5)% |
| Operating margin (GAAP) | ​ | ​ 25.4% | ​ 26.4% | ​ ​ | ​ | ​ ​ | ​ | ​ 20.9% | ​ 23.2% | ​ ​ | ​ | ​ ​ |
| Operating margin (non-GAAP) | ​ | ​ 25.4% | ​ 26.4% | ​ ​ | ​ | ​ ​ | ​ | ​ 20.9% | ​ 23.4% | ​ ​ | ​ | ​ ​ |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Walden:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Operating income (GAAP) | ​ | $23,585 ​ | $10,343 ​ | $13,242 | ​ | 128.0% | ​ | $47,121 ​ | $26,071 ​ | $21,050 | ​ | 80.7% |
| Restructuring expense | ​ | ​ — ​ | ​ 53 ​ | ​ (53) | ​ | ​ ​ | ​ | ​ (776) ​ | ​ 3,174 ​ | ​ (3,950) | ​ | ​ ​ |
| Intangible amortization expense | ​ | ​ 8,286 ​ | ​ 14,232 ​ | ​ (5,946) | ​ | ​ ​ | ​ | ​ 28,296 ​ | ​ 48,936 ​ | ​ (20,640) | ​ | ​ ​ |
| Litigation reserve | ​ | ​ — ​ | ​ — ​ | ​ — | ​ | ​ ​ | ​ | ​ 18,500 ​ | ​ — ​ | ​ 18,500 | ​ | ​ ​ |
| Adjusted operating income (non-GAAP) | ​ | $31,871 ​ | $24,628 ​ | $7,243 | ​ | 29.4% | ​ | $93,141 ​ | $78,181 ​ | $14,960 | ​ | 19.1% |
| Operating margin (GAAP) | ​ | ​ 15.7% | ​ 7.8% | ​ ​ | ​ | ​ ​ | ​ | ​ 10.7% | ​ 6.6% | ​ ​ | ​ | ​ ​ |
| Operating margin (non-GAAP) | ​ | ​ 21.2% | ​ 18.5% | ​ ​ | ​ | ​ ​ | ​ | ​ 21.2% | ​ 19.8% | ​ ​ | ​ | ​ ​ |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Medical and Veterinary:** | **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** | **​** | ​ **​** |
| Operating income (GAAP) | ​ | $22,759 ​ | $16,472 ​ | $6,287 | ​ | 38.2% | ​ | $59,142 ​ | $49,172 ​ | $9,970 | ​ | 20.3% |
| Restructuring expense | ​ | ​ 194 ​ | ​ 421 ​ | ​ (227) | ​ | ​ ​ | ​ | ​ 379 ​ | ​ 7,334 ​ | ​ (6,955) | ​ | ​ ​ |
| Adjusted operating income (non-GAAP) | ​ | $22,953 ​ | $16,893 ​ | $6,060 | ​ | 35.9% | ​ | $59,521 ​ | $56,506 ​ | $3,015 | ​ | 5.3% |
| Operating margin (GAAP) | ​ | ​ 24.8% | ​ 19.0% | ​ ​ | ​ | ​ ​ | ​ | ​ 22.0% | ​ 18.6% | ​ ​ | ​ | ​ ​ |
| Operating margin (non-GAAP) | ​ | ​ 25.0% | ​ 19.5% | ​ ​ | ​ | ​ ​ | ​ | ​ 22.1% | ​ 21.4% | ​ ​ | ​ | ​ ​ |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Home Office and Other:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Operating loss (GAAP) | ​ | $(27,968) ​ | $(6,975) ​ | $(20,993) | ​ | (301.0)% | ​ | $(55,045) ​ | $(45,632) ​ | $(9,413) | ​ | (20.6)% |
| Restructuring expense | ​ | ​ 279 ​ | ​ 804 ​ | ​ (525) | ​ | ​ ​ | ​ | ​ 1,614 ​ | ​ 6,380 ​ | ​ (4,766) | ​ | ​ ​ |
| Business integration expense | ​ | ​ 18,450 ​ | ​ 11,346 ​ | ​ 7,104 | ​ | ​ ​ | ​ | ​ 30,621 ​ | ​ 35,702 ​ | ​ (5,081) | ​ | ​ ​ |
| Loss on assets held for sale | ​ | ​ — ​ | ​ — ​ | ​ — | ​ | ​ ​ | ​ | ​ 647 ​ | ​ — ​ | ​ 647 | ​ | ​ ​ |
| Debt modification costs | ​ | ​ 848 ​ | ​ — ​ | ​ 848 | ​ | ​ ​ | ​ | ​ 848 ​ | ​ — ​ | ​ 848 | ​ | ​ ​ |
| Gain on sale of assets | ​ | ​ — ​ | ​ (13,317) ​ | ​ 13,317 | ​ | ​ ​ | ​ | ​ — ​ | ​ (13,317) ​ | ​ 13,317 | ​ | ​ ​ |
| Adjusted operating loss (non-GAAP) | ​ | $(8,391) ​ | $(8,142) ​ | $(249) | ​ | (3.1)% | ​ | $(21,315) ​ | $(16,867) ​ | $(4,448) | ​ | (26.4)% |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Adtalem Global Education:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Operating income (GAAP) | ​ | $61,725 ​ | $59,429 ​ | $2,296 | ​ | 3.9% | ​ | $148,531 ​ | $128,613 ​ | $19,918 | ​ | 15.5% |
| Restructuring expense | ​ | ​ 473 ​ | ​ 1,278 ​ | ​ (805) | ​ | ​ ​ | ​ | ​ 1,217 ​ | ​ 17,706 ​ | ​ (16,489) | ​ | ​ ​ |
| Business integration expense | ​ | ​ 18,450 ​ | ​ 11,346 ​ | ​ 7,104 | ​ | ​ ​ | ​ | ​ 30,621 ​ | ​ 35,702 ​ | ​ (5,081) | ​ | ​ ​ |
| Intangible amortization expense | ​ | ​ 8,286 ​ | ​ 14,232 ​ | ​ (5,946) | ​ | ​ ​ | ​ | ​ 28,296 ​ | ​ 48,936 ​ | ​ (20,640) | ​ | ​ ​ |
| Litigation reserve | ​ | ​ — ​ | ​ — ​ | ​ — | ​ | ​ ​ | ​ | ​ 18,500 ​ | ​ — ​ | ​ 18,500 | ​ | ​ ​ |
| Loss on assets held for sale | ​ | ​ — ​ | ​ — ​ | ​ — | ​ | ​ ​ | ​ | ​ 647 ​ | ​ — ​ | ​ 647 | ​ | ​ ​ |
| Debt modification costs | ​ | ​ 848 ​ | ​ — ​ | ​ 848 | ​ | ​ ​ | ​ | ​ 848 ​ | ​ — ​ | ​ 848 | ​ | ​ ​ |
| Gain on sale of assets | ​ | ​ — ​ | ​ (13,317) ​ | ​ 13,317 | ​ | ​ ​ | ​ | ​ — ​ | ​ (13,317) ​ | ​ 13,317 | ​ | ​ ​ |
| Adjusted operating income (non-GAAP) | ​ | $89,782 ​ | $72,968 ​ | $16,814 | ​ | 23.0% | ​ | $228,660 ​ | $217,640 ​ | $11,020 | ​ | 5.1% |
| Operating margin (GAAP) | ​ | ​ 15.0% | ​ 16.1% | ​ ​ | ​ | ​ ​ | ​ | ​ 12.6% | ​ 11.8% | ​ ​ | ​ | ​ ​ |
| Operating margin (non-GAAP) | ​ | ​ 21.8% | ​ 19.8% | ​ ​ | ​ | ​ ​ | ​ | ​ 19.5% | ​ 20.0% | ​ ​ | ​ | ​ ​ |

Consolidated operating income increased 3.9%, or $2.3 million, to $61.7 million in the third quarter and increased 15.5%, or $19.9 million, to $148.5 million in the first nine months of fiscal year 2024 compared to the year-ago periods. The operating income increase in the third quarter of fiscal year 2024 was primarily driven by an increase in revenue and decreases in restructuring expense and intangible amortization expense, partially offset by increases in incentive compensation expense, business integration expense, marketing expense, provision for bad debts, and labor and other costs to support increased enrollment, and the gain on sale of assets in the year-ago period. The operating income increase in the first nine months of fiscal year 2024 was primarily driven by an increase in revenue and decreases in restructuring expense, business integration expense, and intangible amortization expense, partially offset by increases in litigation reserves, incentive compensation expense, marketing expense, provision for bad debts, and labor and other costs to support increased enrollment, and the gain on sale of assets in the year-ago period. The decrease in intangible amortization expense is driven by the decrease in amortization relating to the Walden student relationships intangible asset. This intangible asset is amortized based on the estimated retention of the students and considers the revenue and cash flow associated with these existing students, which are concentrated at the beginning of the asset’s useful life.

Consolidated adjusted operating income increased 23.0%, or $16.8 million, to $89.8 million in the third quarter and increased 5.1%, or $11.0 million, to $228.7 million in the first nine months of fiscal year 2024 compared to the year-ago periods. The adjusted operating income increases in the third quarter and first nine months of fiscal year 2024 were primarily driven by an increase in revenue, partially offset by increases in labor and other costs to support increased enrollment, marketing expense, provision for bad debts, and incentive compensation expense.

### Chamberlain

Chamberlain operating income increased 9.5%, or $3.8 million, to $43.3 million in the third quarter and decreased 1.7%, or $1.7 million, to $97.3 million in the first nine months of fiscal year 2024 compared to the year-ago periods. Segment adjusted operating income increased 9.5%, or $3.8 million, to $43.3 million in the third quarter and decreased 2.5%, or $2.5 million, to $97.3 million in the first nine months of fiscal year 2024 compared to the year-ago periods. The adjusted operating income increase in the third quarter of fiscal year 2024 was primarily driven by an increase in revenue, partially offset by increases in labor and other costs to support increased enrollment, marketing expense, and provision for bad debts. The adjusted operating income decrease in the first nine months of fiscal year 2024 was primarily driven by the increases in labor and other costs to support increased enrollment, marketing expense, and provision for bad debts, partially offset by an increase in revenue.

### Walden

Walden operating income increased 128.0%, or $13.2 million, to $23.6 million in the third quarter and increased 80.7%, or $21.1 million, to $47.1 million in the first nine months of fiscal year 2024 compared to the year-ago periods. Segment adjusted operating income increased 29.4%, or $7.2 million, to $31.9 million in the third quarter and increased 19.1%, or $15.0 million, to $93.1 million in the first nine months of fiscal year 2024 compared to the year-ago periods. The adjusted operating income increase in the third quarter and first nine months of fiscal year 2024 was primarily driven by the increase in revenue, partially offset by increases in labor and other costs to support increased enrollment, provision for bad debts, and graduation expense.

### Medical and Veterinary

Medical and Veterinary operating income increased 38.2%, or $6.3 million, to $22.8 million in the third quarter and increased 20.3%, or $10.0 million, to $59.1 million in the first nine months of fiscal year 2024 compared to the year-ago periods. Segment adjusted operating income increased 35.9%, or $6.1 million, to $23.0 million in the third quarter and increased 5.3%, or $3.0 million, to $59.5 million in the first nine months of fiscal year 2024 compared to the year-ago periods. The adjusted operating income increase in the third quarter and first nine months of fiscal year 2024 was primarily driven by an increase in revenue and a decrease in provision for bad debts.

### Interest Expense

Interest expense in the third quarter and first nine months of fiscal year 2024 was $16.6 million and $48.9 million, respectively, compared to $14.5 million and $47.8 million in the year-ago periods. The interest expense increase in the third quarter of fiscal year 2024 was primarily driven by the increase in letter of credit fees and a write-off of debt discount and issuance costs on the Term Loan B upon repayment of a portion of the debt. The interest expense increase in the first nine months of fiscal year 2024 was primarily driven by the increase in letter of credit fees and a higher interest rate on outstanding Term Loan B debt (as defined and discussed in Note 13 “Debt” to the Consolidated Financial Statements), partially offset by a decrease in write-off of debt discount and issuance costs on the Term Loan B upon repayment of a portion of the debt.

### Other Income, Net

Other income, net in the third quarter and first nine months of fiscal year 2024 was $2.9 million and $8.6 million, respectively, compared to $4.0 million and $3.3 million in the year-ago periods. The other income, net, increase in the first nine months of fiscal year 2024 was primarily driven by the year-ago period incurring a $5.0 million investment impairment of an equity investment.

### 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 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.

Our effective tax rates from continuing operations were 22.1% and 19.5% in the three and nine months ended March 31, 2024, respectively, and 0.8% and 7.0% in the three and nine months ended March 31, 2023, respectively. The income tax provision for the third quarter and first nine months of fiscal year 2024 increased compared to the year-ago periods primarily due to us recording a net tax benefit of $6.2 million in the year-ago periods primarily for the release of a valuation allowance on certain deferred tax assets based on our reassessment of the amount of state net operating loss carryforwards that are more likely than not to be realized. The current year income tax provision also increased due to an increase in the percentage of earnings from domestic operations, which are generally taxed at higher rates than foreign earnings.

The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) requires taxpayers to capitalize and subsequently amortize research and experimental (“R&E”) expenditures that fall within the scope of Internal Revenue Code Section 174 for tax years starting after December 31, 2021. This rule became effective for Adtalem during fiscal year 2023 and resulted in the deferred tax asset for capitalization of R&E costs of $8.1 million, based on interpretation of the law as currently enacted. Adtalem will capitalize and amortize these costs for tax purposes over 5 years for R&E performed in the U.S. and over 15 years for R&E performed outside of the U.S.

### Discontinued Operations

Beginning in the second quarter of fiscal year 2022, the Association of Certified Anti-Money Laundering Specialists (“ACAMS”), Becker Professional Education (“Becker”), OnCourse Learning (“OCL”), and EduPristine operations were classified as discontinued operations. In addition, we continue to incur costs associated with ongoing litigation and settlements related to the DeVry University and Carrington College divestitures, which were completed during fiscal year 2019, and are classified as expense within discontinued operations.

Loss from discontinued operations in the third quarter of fiscal year 2024 was $0.6 million. This loss consisted of the following: (i) loss of $0.8 million driven by ongoing litigation costs and settlements related to the DeVry University divestiture and (ii) a benefit from income taxes of $0.2 million associated with the items listed above.

Loss from discontinued operations in the third quarter of fiscal year 2023 was $2.7 million. This loss consisted of the following: (i) loss of $4.0 million driven by ongoing litigation costs and settlements related to the DeVry University divestiture; (ii) a loss on the sale of ACAMS, Becker, and OCL of $0.4 million for a tax return to provision adjustment; and (iii) a benefit from income taxes of $1.7 million associated with the items listed above.

Income from discontinued operations in the first nine months of fiscal year 2024 was $0.2 million. This income consisted of the following: (i) income of $0.3 million driven from the DeVry University earn-out, partially offset by ongoing litigation costs and settlements related to DeVry University and Carrington College divestitures; and (ii) a provision from income taxes of $0.1 million associated with the items listed above.

Loss from discontinued operations in the first nine months of fiscal year 2023 was $7.1 million. This loss consisted of the following: (i) loss of $6.7 million driven by ongoing litigation costs and settlements related to the DeVry University divestiture, partially offset by income from the DeVry University earn-out; (ii) a loss on the sale of ACAMS, Becker, and OCL of $3.6 million for working capital adjustments to the initial sales prices and a tax return to provision adjustment; and (iii) a benefit from income taxes of $3.2 million associated with the items listed above.

### Regulatory Environment

Like other higher education companies, Adtalem is highly dependent upon the timely receipt of federal financial aid funds. All financial aid and assistance programs are subject to political and governmental budgetary considerations. In the U.S., the Higher Education Act (“HEA”) guides the federal government’s support of postsecondary education. If there are changes to financial aid programs that restrict student eligibility or reduce funding levels, Adtalem’s financial condition and cash flows could be materially and adversely affected. See Item 1A. “Risk Factors” in our fiscal year 2023 Form 10-K for a discussion of student financial aid related risks.

In addition, government-funded financial assistance programs are governed by extensive and complex regulations in the U.S. Like any other educational institution, Adtalem’s administration of these programs is periodically reviewed by various regulatory agencies and is subject to audit or investigation by other governmental authorities. Any violation could be the basis for penalties or other disciplinary action, including initiation of a suspension, limitation, or termination proceeding.

If the U.S. Department of Education (“ED”) determines that we have failed to demonstrate either financial responsibility or administrative capability in any pending program review, or otherwise determines that an institution has violated the terms of its Program Participation Agreement (“PPA”), we could be subject to sanctions including: fines, penalties, reimbursement for discharged loan obligations, a requirement to post a letter of credit, and/or suspension or termination of our eligibility to participate in the Title IV programs.

Passage of an ED-defined financial responsibility test, also known as a “composite score,” 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. 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. A minimum score of 1.5 is necessary to meet ED’s financial standards. Institutions with scores of less than 1.5 but greater than or equal to 1.0 are considered financially responsible but require additional oversight. These institutions are subject to heightened cash monitoring and other participation requirements. An institution with a score of less than 1.0 is considered not financially responsible. However, an institution with a score of less than 1.0 may continue to participate in the Title IV programs under provisional certification. 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 had exceeded the required minimum of 1.5. However, on September 25, 2023, Adtalem was notified by ED that its fiscal year 2022 composite score had declined to 0.2. As previously disclosed, this was expected due to the acquisition of Walden. ED advised that Adtalem’s five institutions will be permitted to continue to participate in Title IV under provisional certifications with heightened cash monitoring and continued reporting. A letter of credit in the amount of $157.9 million, representing 10% of the consolidated Title IV funds Adtalem’s institutions received during fiscal year 2022, was delivered to ED on November 1, 2023. Management does not believe these conditions will have a material adverse effect on Adtalem’s operations.

Chamberlain was most recently recertified and issued an unrestricted PPA in September 2020, with a reapplication date that has been extended by ED to June 30, 2024, due to a delay in ED’s system platform implementation used for such applications. During the fourth quarter of fiscal year 2020 and the first quarter of fiscal year 2021, ED provisionally recertified AUC, RUSM, and RUSVM’s Title IV PPAs with expiration dates of December 31, 2022, March 31, 2023, and June 30, 2023, respectively. AUC and RUSM have been notified that their applications to renew their participation in Title IV programs have been completed and approved by ED. The lengthy PPA recertification process is such that ED allows unhampered continued access to Title IV funding after PPA expiration, so long as materially complete applications are submitted at least 90 days in advance of expiration. A complete application for RUSVM’s PPA recertification has been timely submitted to ED. RUSVM is awaiting an update on its renewal application from ED.

Walden must apply periodically to ED for continued certification to participate in Title IV programs. Such recertification generally is required every six years, but may be required earlier, including when an institution undergoes a change in control. ED may place an institution on provisional certification status if it finds that the institution does not fully satisfy all of the eligibility and certification standards and in certain other circumstances, such as when an institution is certified for the first time or undergoes a change in control. 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 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. Walden was issued a Temporary Provisional PPA (“TPPPA”) on September 17, 2021 in connection with its acquisition by Adtalem. 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, previously described above, and ED’s approval of Laureate’s initial public offering in February 2017, which it viewed as a change in control. 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. 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. Walden also is subject to a restriction on changes to its educational programs, including a prohibition on the addition of new programs or locations that had not been approved by ED prior to the change in ownership during the period in which Walden participates under provisional certification (either as a result of the change in ownership or because of the continuation of the financial responsibility letter of credit).

ED has recently allowed reductions in our letters of credit totaling $90.8 million. On January 31, 2024, ED allowed a $76.2 million letter of credit in favor of ED to expire without any requirement for Adtalem to renew it. Adtalem had a surety-backed letter of credit outstanding of $84.0 million as of March 31, 2024, in favor of ED on behalf of Walden, which allows Walden to participate in Title IV programs. In addition, Adtalem had a letter of credit outstanding under its Revolver in the amount of $157.9 million as of March 31, 2024, in favor of ED, which allows Adtalem institutions to participate in Title IV programs. As of March 31, 2024, Adtalem had $241.9 million of letters of credit outstanding in favor of ED. On April 26, 2024, ED indicated that it will permit Adtalem to reduce the surety-backed letter of credit from $84.0 million to $69.4 million and requested that this letter of credit be extended through December 31, 2024. As of when this further reduction takes place, Adtalem will have $227.3 million of letters of credit outstanding in favor of ED. See Note 13 “Debt” to the Consolidated Financial Statements for additional information on the Notes and our Credit Agreement.

The provisional nature of the existing agreements for AUC, RUSM, and RUSVM stemmed from increased and/or repeated Title IV compliance audit findings. While corrective actions have been taken to resolve past compliance matters and eliminate the incidence of repetition, if Walden, AUC, RUSM, or RUSVM fail to maintain administrative capability as defined by ED while under provisional status or otherwise fail to comply with ED requirements, the institution(s) could lose eligibility to participate in Title IV programs or have that eligibility adversely conditioned, which could have a material adverse effect on the businesses, financial condition, results of operations, and cash flows.

On September 27, 2023, ED announced a final Gainful Employment (“GE”) regulation effective July 1, 2024. The regulation applies to all Title IV certificate programs at all institutions and to all Title IV degree programs at proprietary institutions. Covered programs must meet a debt-to-earnings test in which graduates’ annual debt payments must not exceed 8% of their annual earnings or 20% of their discretionary earnings and must also pass an earnings premium test in which graduates’ earnings must exceed those of a typical high school graduate. Under the regulation, programs that fail either metric must provide warnings to students and prospective students that the program is at risk of losing Title IV eligibility and programs that fail the same measure in two out of three consecutive years lose Title IV eligibility. The GE regulation also includes a transparency framework in which debt-to-earnings, earnings premium, and a wide range of other program outcomes are disclosed on a website to be hosted by ED. We are reviewing the regulation to determine what impact, if any, the regulation will have on our programs.

An ED regulation known as the “90/10 Rule” affects only proprietary postsecondary institutions, such as Chamberlain, Walden, AUC, RUSM, and RUSVM. Under this regulation, an institution that derives more than 90% of its revenue on a cash basis from Title IV student financial assistance programs in two consecutive fiscal years loses eligibility to participate in these programs for at least two fiscal years. 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. 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. Department of Veterans Affairs and military tuition assistance benefits) for each of Adtalem’s institutions for fiscal years 2023 and 2022. As an institution’s 90/10 compliance must be calculated using the financial results of an entire fiscal year, we are including Walden’s amounts for the full fiscal year 2022 in the table below, including the portion of the year not under Adtalem’s ownership.

| ​ ​ ​ ​ ​ ​ | ​ ​ Fiscal Year 2023 ​ | ​ ​ 2022 |
| --- | ---: | ---: |
| Chamberlain University | 65% | 65% |
| Walden University | 78% | 73% |
| American University of the Caribbean School of Medicine | 81% | 81% |
| Ross University School of Medicine | 87% | 85% |
| Ross University School of Veterinary Medicine | 79% | 81% |
| Consolidated | 75% | 72% |

### Liquidity and Capital Resources

Adtalem’s primary source of liquidity is the cash received from payments for student tuition, fees, books, and other educational materials. These payments include funds originating as financial aid from various federal and state loan and grant programs, student and family educational loans, employer educational reimbursements, scholarships, and student and family financial resources. Adtalem continues to provide financing options for its students, including Adtalem’s credit extension programs.

The pattern of cash receipts during the year is seasonal. Adtalem’s cash collections on accounts receivable peak at the start of each institution’s term. Accounts receivable reach their lowest level at the end of each institution’s term.

Adtalem’s consolidated cash and cash equivalents balance of $179.8 million and $273.7 million as of March 31, 2024 and June 30, 2023, respectively, included cash and cash equivalents held at Adtalem’s international operations of $5.4 million and $7.2 million as of March 31, 2024 and June 30, 2023, respectively, which is available to Adtalem for general corporate purposes.

### Cash Flow Summary

### Operating Activities

The following table provides a summary of cash flows from operating activities (in thousands):

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Nine Months Ended March 31, 2024 | ​ ​ | ​ ​ 2023 |
| --- | --- | ---: | --- | ---: |
| Income from continuing operations | ​ | $87,113 | ​ | $78,202 |
| Non-cash items | ​ | 139,569 | ​ | 153,770 |
| Changes in assets and liabilities | ​ | 20,127 | ​ | (82,151) |
| Net cash provided by operating activities-continuing operations | ​ | $246,809 | ​ | $149,821 |

Net cash provided by operating activities from continuing operations in the nine months ended March 31, 2024 was $246.8 million compared to $149.8 million in the year-ago period. The increase was driven by an increase in income from continuing operations and changes in working capital, partially offset by lower non-cash items. The decrease of $14.2 million in non-cash items between the nine months ended March 31, 2024 and the nine months ended March 31, 2023 was primarily driven by decreases in impairments to operating lease assets and amortization of intangible assets. The increase of $102.3 million in cash generated from changes in assets and liabilities was primarily due to timing differences in accounts and financing receivables, prepaid assets, prepaid income taxes, accounts payable, accrued payroll and benefits, accrued liabilities, accrued interest, and deferred revenue.

### Investing Activities

Capital expenditures in the first nine months of fiscal year 2024 and 2023 were $52.0 million and $19.1 million, respectively. The capital expenditures in the first nine months of fiscal year 2024 primarily consisted of spending for information technology investments and Chamberlain’s campus development. For the remainder of fiscal year 2024, we expect capital spending on information technology, new campus development at Chamberlain, and facility improvements at the medical and veterinary schools. Management anticipates full fiscal year 2024 capital spending to be in the $65 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).

During the first nine months of fiscal year 2024 and 2023, we received proceeds from the sale of marketable securities held in a Rabbi Trust of $0.6 million and $7.6 million, respectively, and made additional investments in marketable securities held by this trust of $0.5 million and $1.5 million, respectively.

On July 31, 2019, Adtalem sold its Chicago, Illinois, campus facility to DePaul College Prep for $52.0 million. Adtalem received $5.2 million of cash at the time of closing and held a mortgage loan, secured by the property, from DePaul College Prep for $46.8 million. The mortgage loan was due on July 31, 2024 as a balloon payment and bore interest at a rate of 4% per annum, payable monthly. The buyer had an option to make prepayments. On February 23, 2023, DePaul College Prep paid the mortgage loan in full. The $46.8 million received during the third quarter of fiscal year 2023 is classified as an investing activity in the Consolidated Statements of Cash Flows.

During the first nine months of fiscal year 2023, we paid $3.2 million for a working capital adjustment to the initial sales prices for ACAMS, Becker, and OCL.

### Financing Activities

The following table provides a summary of cash flows from financing activities (in thousands):

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Nine Months Ended March 31, 2024 | ​ ​ | ​ ​ 2023 |
| --- | --- | ---: | --- | ---: |
| Repurchases of common stock for treasury | ​ | $(250,463) | ​ | $(44,710) |
| Payment on equity forward contract | ​ | ​ — | ​ | ​ (13,162) |
| Net repayments of long-term debt | ​ | ​ (50,000) | ​ | ​ (150,861) |
| Other | ​ | 9,393 | ​ | (2,141) |
| Net cash used in financing activities | ​ | $(291,070) | ​ | $(210,874) |

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. On January 16, 2024, Adtalem completed its thirteenth share repurchase program. On January 19, 2024, we announced that the Board authorized Adtalem’s fourteenth share repurchase program, which allows Adtalem to repurchase up to $300.0 million of its common stock through January 16, 2027. As of March 31, 2024, after repurchases that were made during the nine months ended March 31, 2024, there remained $220.2 million for additional share repurchases under the fourteenth share repurchase program. The timing and amount of any future repurchases will be determined based on an evaluation of market conditions and other factors. See Note 14 “Share Repurchases” to the Consolidated Financial Statements for additional information on our share repurchase programs.

On March 14, 2022, we entered into an ASR agreement to repurchase $150.0 million of common stock. We received an initial delivery of 4,709,576 shares of common stock representing approximately 80% of the total shares expected to be delivered at the time of executing the ASR based on the per share price on the day prior to the execution date. 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. Based on the volume-weighted average price of Adtalem’s common stock during the term of the ASR agreement, Adtalem owed the counter party 332,212 shares of common stock. We elected to settle the contract in cash instead of delivering shares by making a cash payment of $13.2 million on November 2, 2022.

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 entered into its new credit agreement (the “Credit Agreement”) that provides for (1) a $850.0 million senior secured term loan (“Term Loan B”) with a maturity date of August 12, 2028 and (2) a $400.0 million senior secured revolving loan facility (“Revolver”) with a maturity date of August 12, 2026. We refer to the Term Loan B and Revolver collectively as the “Credit Facility.” 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. On April 11, 2022, we repaid $373.3 million of Notes at a price equal to 100% of the principal amount of the Notes. 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. In July 2022, we repurchased an additional $0.9 million of Notes. On September 22, 2022, November 22, 2022, and January 26, 2024, we made prepayments of $100.0 million, $50.0 million, and $50.0 million, respectively, on the Term Loan B. As of March 31, 2024, the principal balance of the Notes and Term Loan B was $405.0 million and $253.3 million, respectively. See Note 13 “Debt” to the Consolidated Financial Statements for additional information on the Notes and our Credit Agreement.

In the event of unexpected market conditions or negative economic changes that could negatively affect Adtalem’s earnings and/or operating cash flow, Adtalem maintains a $400.0 million revolving credit facility with availability of $242.1 million as of March 31, 2024.

### Material Cash Requirements

*Long-Term Debt –* As of March 31, 2024, we have principal balances of $405.0 million of Notes and $253.3 million of Term Loan B, which requires interest payments. With the Term Loan B prepayment noted above, we are no longer required to make quarterly principal installment payments on the Term Loan B. In addition, we maintain a $400.0 million revolving credit facility with availability of $242.1 million as of March 31, 2024.

ED has recently allowed reductions in our letters of credit totaling $90.8 million. On January 31, 2024, ED allowed a $76.2 million letter of credit in favor of ED to expire without any requirement for Adtalem to renew it. Adtalem had a surety-backed letter of credit outstanding of $84.0 million as of March 31, 2024, in favor of ED on behalf of Walden, which allows Walden to participate in Title IV programs. In addition, Adtalem had a letter of credit outstanding under its Revolver in the amount of $157.9 million as of March 31, 2024, in favor of ED, which allows Adtalem institutions to participate in Title IV programs. As of March 31, 2024, Adtalem had $241.9 million of letters of credit outstanding in favor of ED. On April 26, 2024, ED indicated that it will permit Adtalem to reduce the surety-backed letter of credit from $84.0 million to $69.4 million and requested that this letter of credit be extended through December 31, 2024. As of when this further reduction takes place, Adtalem will have $227.3 million of letters of credit outstanding in favor of ED. See Note 13 “Debt” to the Consolidated Financial Statements for additional information on our Notes and Credit Agreement.

Many states require private-sector postsecondary education institutions to post surety bonds for licensure. In the U.S., Adtalem has posted $42.5 million of surety bonds as of March 31, 2024 with regulatory authorities on behalf of Chamberlain, Walden, AUC, RUSM, and RUSVM.

*Operating Lease Obligations –* We have operating lease obligations for the minimum payments required under various lease agreements which are recorded on the Consolidated Balance Sheets. In addition, we sublease certain space to third parties, which partially offsets the lease obligations at these facilities. See Note 11 “Leases” to the Consolidated Financial Statements for additional information on our lease agreements.

### Critical Accounting Estimates

There have been no material changes in our critical accounting estimates as disclosed in our fiscal year 2023 Form 10-K.

### Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements.

### Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, which includes statements regarding Adtalem’s future growth. Forward-looking statements can also be identified by words such as “future,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “may,” “will,” “would,” “could,” “can,” “continue,” “preliminary,” “range,” and similar terms. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include the risk factors described in Item 1A. “Risk Factors” of our fiscal year 2023 Form 10-K and that might be contained in this Quarterly Report on Form 10-Q, which should be read in conjunction with these forward-looking statements. These forward-looking statements are based on information available to us as of the date any such statements are made, and Adtalem assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized, except as required by law.

### Non-GAAP Financial Measures and Reconciliations

We believe that certain non-GAAP financial measures provide investors with useful supplemental information regarding the underlying business trends and performance of Adtalem’s ongoing operations as seen through the eyes of management and are useful for period-over-period comparisons. We use these supplemental non-GAAP financial measures internally in our assessment of performance and budgeting process. However, these non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The following are non-GAAP financial measures used in this Quarterly Report on Form 10-Q:

*Adjusted net income (most comparable GAAP measure: net income) –* Measure of Adtalem’s net income adjusted for restructuring expense, business integration expense, intangible amortization expense, gain on sale of assets, write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, investment impairment, loss on assets held for sale, debt modification costs, net tax benefit related to a valuation allowance release, and loss (income) from discontinued operations.

*Adjusted earnings per share (most comparable GAAP measure: diluted earnings per share) –* Measure of Adtalem’s diluted earnings per share adjusted for restructuring expense, business integration expense, intangible amortization expense, gain on sale of assets, write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, investment impairment, loss on assets held for sale, debt modification costs, net tax benefit related to a valuation allowance release, and loss (income) from discontinued operations.

*Adjusted operating income (most comparable GAAP measure: operating income) –* Measure of Adtalem’s operating income adjusted for restructuring expense, business integration expense, intangible amortization expense, litigation reserve, loss on assets held for sale, debt modification costs, and gain on sale of assets. This measure is applied on a consolidated and segment basis, depending on the context of the discussion.

*Adjusted EBITDA (most comparable GAAP measure: net income) –* Measure of Adtalem’s net income adjusted for loss (income) from discontinued operations, interest expense, other income, net, provision for income taxes, depreciation and amortization, stock-based compensation, restructuring expense, business integration expense, litigation reserve, loss on assets held for sale, debt modification costs, and gain on sale of assets. This measure is applied on a consolidated and segment basis, depending on the context of the discussion. Provision for income taxes, interest expense, and other income, net is not recorded at the reportable segments, and therefore, the segment adjusted EBITDA reconciliations begin with operating income.

A description of special items in our non-GAAP financial measures described above are as follows:

- Restructuring expense primarily related to real estate consolidations at Walden, Medical and Veterinary, and Adtalem’s home office. We do not include normal, recurring, cash operating expenses in our restructuring expense.
- Business integration expense include expenses related to the Walden acquisition and certain costs related to growth transformation initiatives. We do not include normal, recurring, cash operating expenses in our business integration expense.
- Intangible amortization expense on acquired intangible assets.
- Gain on sale of Adtalem’s Chicago, Illinois, campus facility.
- Write-off of debt discount and issuance costs and gain on extinguishment of debt related to prepayments of debt, reserves related to significant litigation, impairment of an equity investment, loss on assets held for sale related to a fair value write-down on assets, and debt modification costs related to refinancing our Term Loan B loan.
- Net tax benefit related to a valuation allowance release.
- Loss (income) from discontinued operations includes expense from ongoing litigation costs and settlements related to the DeVry University and Carrington College divestitures, a loss on sale of ACAMS, Becker, and OCL for working capital adjustments to the initial sales prices and a tax return to provision adjustment, and the earn-outs we received.

The following tables provide a reconciliation from the most directly comparable GAAP measure to these non-GAAP financial measures. The operating income reconciliation is included in the results of operations section within this MD&A.

### Net income reconciliation to adjusted net income (in thousands):

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2024 | ​ ​ | ​ ​ 2023 | ​ ​ ​ ​ | ​ ​ Nine Months Ended March 31, 2024 | ​ ​ | ​ ​ 2023 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net income (GAAP) | ​ | $36,821 | ​ | $45,869 | ​ | $87,358 | ​ | $71,114 |
| Restructuring expense | ​ | ​ 473 | ​ | ​ 1,278 | ​ | ​ 1,217 | ​ | ​ 17,706 |
| Business integration expense | ​ | ​ 18,450 | ​ | ​ 11,346 | ​ | ​ 30,621 | ​ | ​ 35,702 |
| Intangible amortization expense | ​ | ​ 8,286 | ​ | ​ 14,232 | ​ | ​ 28,296 | ​ | ​ 48,936 |
| Gain on sale of assets | ​ | ​ — | ​ | ​ (13,317) | ​ | ​ — | ​ | ​ (13,317) |
| Write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, investment impairment, loss on assets held for sale, and debt modification costs | ​ | ​ 1,961 | ​ | ​ — | ​ | ​ 21,108 | ​ | ​ 9,226 |
| Net tax benefit related to a valuation allowance release | ​ | ​ — | ​ | ​ (6,184) | ​ | ​ — | ​ | ​ (6,184) |
| Income tax impact on non-GAAP adjustments (1) | ​ | ​ (7,260) | ​ | ​ (4,359) | ​ | ​ (19,355) | ​ | ​ (23,341) |
| Loss (income) from discontinued operations | ​ | ​ 620 | ​ | ​ 2,694 | ​ | ​ (245) | ​ | ​ 7,088 |
| Adjusted net income (non-GAAP) | ​ | $59,351 | ​ | $51,559 | ​ | $149,000 | ​ | $146,930 |

(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.

### Diluted earnings per share reconciliation to adjusted earnings per share (shares in thousands):

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2024 | ​ ​ | ​ ​ 2023 | ​ ​ ​ ​ | ​ ​ Nine Months Ended March 31, 2024 | ​ ​ | ​ ​ 2023 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Diluted earnings per share (GAAP) | ​ | $0.93 | ​ | $1.00 | ​ | $2.14 | ​ | $1.54 |
| Effect on diluted earnings per share: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Restructuring expense | ​ | ​ 0.01 | ​ | ​ 0.03 | ​ | ​ 0.03 | ​ | ​ 0.38 |
| Business integration expense | ​ | ​ 0.47 | ​ | ​ 0.25 | ​ | ​ 0.75 | ​ | ​ 0.77 |
| Intangible amortization expense | ​ | ​ 0.21 | ​ | ​ 0.31 | ​ | ​ 0.69 | ​ | ​ 1.06 |
| Gain on sale of assets | ​ | ​ - | ​ | ​ (0.29) | ​ | ​ - | ​ | ​ (0.29) |
| Write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, investment impairment, loss on assets held for sale, and debt modification costs | ​ | ​ 0.05 | ​ | ​ - | ​ | ​ 0.52 | ​ | ​ 0.20 |
| Net tax benefit related to a valuation allowance release | ​ | ​ - | ​ | ​ (0.14) | ​ | ​ - | ​ | ​ (0.13) |
| Income tax impact on non-GAAP adjustments (1) | ​ | ​ (0.18) | ​ | ​ (0.10) | ​ | ​ (0.47) | ​ | ​ (0.51) |
| Loss (income) from discontinued operations | ​ | ​ 0.02 | ​ | ​ 0.06 | ​ | ​ (0.01) | ​ | ​ 0.15 |
| Adjusted earnings per share (non-GAAP) | ​ | $1.50 | ​ | $1.13 | ​ | $3.65 | ​ | $3.19 |
| Diluted shares used in non-GAAP EPS calculation | ​ | ​ 39,636 | ​ | ​ 45,801 | ​ | ​ 40,874 | ​ | ​ 46,089 |

(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.

### Reconciliation to adjusted EBITDA (in thousands):

| ​ ​ ​ ​ ​ Chamberlain: | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Three Months Ended March 31, ​ ​ ​ 2024 ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ | ​ ​ Increase/(Decrease) $​% ​ ​ | ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Nine Months Ended March 31, ​ ​ ​ 2024 ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ | ​ ​ Increase/(Decrease) $​% ​ ​ | ​ ​ | ​ ​ ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Operating income (GAAP) | ​ | $43,349 ​ | $39,589 ​ | $3,760 | ​ | 9.5% | ​ | $97,313 ​ | $99,002 ​ | $(1,689) | ​ | (1.7)% |
| Restructuring expense | ​ | ​ — ​ | ​ — ​ | ​ — | ​ | ​ ​ | ​ | ​ — ​ | ​ 818 ​ | ​ (818) | ​ | ​ ​ |
| Depreciation | ​ | ​ 5,312 ​ | ​ 4,405 ​ | ​ 907 | ​ | ​ ​ | ​ | ​ 14,790 ​ | ​ 12,985 ​ | ​ 1,805 | ​ | ​ ​ |
| Stock-based compensation | ​ | ​ 1,795 ​ | ​ 923 ​ | ​ 872 | ​ | ​ ​ | ​ | ​ 6,791 ​ | ​ 3,600 ​ | ​ 3,191 | ​ | ​ ​ |
| Adjusted EBITDA (non-GAAP) | ​ | $50,456 ​ | $44,917 ​ | $5,539 | ​ | 12.3% | ​ | $118,894 ​ | $116,405 ​ | $2,489 | ​ | 2.1% |
| Adjusted EBITDA margin (non-GAAP) | ​ | ​ 29.6% | ​ 30.0% | ​ ​ | ​ | ​ ​ | ​ | ​ 25.5% | ​ 27.3% | ​ ​ | ​ | ​ ​ |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Walden:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Operating income (GAAP) | ​ | $23,585 ​ | $10,343 ​ | $13,242 | ​ | 128.0% | ​ | $47,121 ​ | $26,071 ​ | $21,050 | ​ | 80.7% |
| Restructuring expense | ​ | ​ — ​ | ​ 53 ​ | ​ (53) | ​ | ​ ​ | ​ | ​ (776) ​ | ​ 3,174 ​ | ​ (3,950) | ​ | ​ ​ |
| Intangible amortization expense | ​ | ​ 8,286 ​ | ​ 14,232 ​ | ​ (5,946) | ​ | ​ ​ | ​ | ​ 28,296 ​ | ​ 48,936 ​ | ​ (20,640) | ​ | ​ ​ |
| Litigation reserve | ​ | ​ — ​ | ​ — ​ | ​ — | ​ | ​ ​ | ​ | ​ 18,500 ​ | ​ — ​ | ​ 18,500 | ​ | ​ ​ |
| Depreciation | ​ | ​ 2,214 ​ | ​ 2,439 ​ | ​ (225) | ​ | ​ ​ | ​ | ​ 6,681 ​ | ​ 7,303 ​ | ​ (622) | ​ | ​ ​ |
| Stock-based compensation | ​ | ​ 1,770 ​ | ​ 754 ​ | ​ 1,016 | ​ | ​ ​ | ​ | ​ 5,822 ​ | ​ 2,945 ​ | ​ 2,877 | ​ | ​ ​ |
| Adjusted EBITDA (non-GAAP) | ​ | $35,855 ​ | $27,821 ​ | $8,034 | ​ | 28.9% | ​ | $105,644 ​ | $88,429 ​ | $17,215 | ​ | 19.5% |
| Adjusted EBITDA margin (non-GAAP) | ​ | ​ 23.8% | ​ 20.9% | ​ ​ | ​ | ​ ​ | ​ | ​ 24.1% | ​ 22.3% | ​ ​ | ​ | ​ ​ |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Medical and Veterinary:** | **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** **​** | **​** **​** **​** | **​** **​** | **​** | ​ **​** |
| Operating income (GAAP) | ​ | $22,759 ​ | $16,472 ​ | $6,287 | ​ | 38.2% | ​ | $59,142 ​ | $49,172 ​ | $9,970 | ​ | 20.3% |
| Restructuring expense | ​ | ​ 194 ​ | ​ 421 ​ | ​ (227) | ​ | ​ ​ | ​ | ​ 379 ​ | ​ 7,334 ​ | ​ (6,955) | ​ | ​ ​ |
| Depreciation | ​ | ​ 3,174 ​ | ​ 3,231 ​ | ​ (57) | ​ | ​ ​ | ​ | ​ 9,228 ​ | ​ 9,367 ​ | ​ (139) | ​ | ​ ​ |
| Stock-based compensation | ​ | ​ 851 ​ | ​ 587 ​ | ​ 264 | ​ | ​ ​ | ​ | ​ 3,687 ​ | ​ 2,291 ​ | ​ 1,396 | ​ | ​ ​ |
| Adjusted EBITDA (non-GAAP) | ​ | $26,978 ​ | $20,711 ​ | $6,267 | ​ | 30.3% | ​ | $72,436 ​ | $68,164 ​ | $4,272 | ​ | 6.3% |
| Adjusted EBITDA margin (non-GAAP) | ​ | ​ 29.4% | ​ 24.0% | ​ ​ | ​ | ​ ​ | ​ | ​ 26.9% | ​ 25.8% | ​ ​ | ​ | ​ ​ |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Home Office and Other:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Operating loss (GAAP) | ​ | $(27,968) ​ | $(6,975) ​ | $(20,993) | ​ | (301.0)% | ​ | $(55,045) ​ | $(45,632) ​ | $(9,413) | ​ | (20.6)% |
| Restructuring expense | ​ | ​ 279 ​ | ​ 804 ​ | ​ (525) | ​ | ​ ​ | ​ | ​ 1,614 ​ | ​ 6,380 ​ | ​ (4,766) | ​ | ​ ​ |
| Business integration expense | ​ | ​ 18,450 ​ | ​ 11,346 ​ | ​ 7,104 | ​ | ​ ​ | ​ | ​ 30,621 ​ | ​ 35,702 ​ | ​ (5,081) | ​ | ​ ​ |
| Loss on assets held for sale | ​ | ​ — ​ | ​ — ​ | ​ — | ​ | ​ ​ | ​ | ​ 647 ​ | ​ — ​ | ​ 647 | ​ | ​ ​ |
| Debt modification costs | ​ | ​ 848 ​ | ​ — ​ | ​ 848 | ​ | ​ ​ | ​ | ​ 848 ​ | ​ — ​ | ​ 848 | ​ | ​ ​ |
| Gain on sale of assets | ​ | ​ — ​ | ​ (13,317) ​ | ​ 13,317 | ​ | ​ ​ | ​ | ​ — ​ | ​ (13,317) ​ | ​ 13,317 | ​ | ​ ​ |
| Depreciation | ​ | ​ 692 ​ | ​ 82 ​ | ​ 610 | ​ | ​ ​ | ​ | ​ 1,407 ​ | ​ 1,963 ​ | ​ (556) | ​ | ​ ​ |
| Stock-based compensation | ​ | ​ 1,484 ​ | ​ 531 ​ | ​ 953 | ​ | ​ ​ | ​ | ​ 3,105 ​ | ​ 2,072 ​ | ​ 1,033 | ​ | ​ ​ |
| Adjusted EBITDA (non-GAAP) | ​ | $(6,215) ​ | $(7,529) ​ | $1,314 | ​ | 17.5% | ​ | $(16,803) ​ | $(12,832) ​ | $(3,971) | ​ | (30.9)% |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Adtalem Global Education:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Net income (GAAP) | ​ | $36,821 ​ | $45,869 ​ | $(9,048) | ​ | (19.7)% | ​ | $87,358 ​ | $71,114 ​ | $16,244 | ​ | 22.8% |
| Loss (income) from discontinued operations | ​ | ​ 620 ​ | ​ 2,694 ​ | ​ (2,074) | ​ | ​ ​ | ​ | ​ (245) ​ | ​ 7,088 ​ | ​ (7,333) | ​ | ​ ​ |
| Interest expense | ​ | ​ 16,560 ​ | ​ 14,457 ​ | ​ 2,103 | ​ | ​ ​ | ​ | ​ 48,910 ​ | ​ 47,806 ​ | ​ 1,104 | ​ | ​ ​ |
| Other income, net | ​ | ​ (2,871) ​ | ​ (3,980) ​ | ​ 1,109 | ​ | ​ ​ | ​ | ​ (8,648) ​ | ​ (3,301) ​ | ​ (5,347) | ​ | ​ ​ |
| Provision for income taxes | ​ | ​ 10,595 ​ | ​ 389 ​ | ​ 10,206 | ​ | ​ ​ | ​ | ​ 21,156 ​ | ​ 5,906 ​ | ​ 15,250 | ​ | ​ ​ |
| Operating income (GAAP) | ​ | ​ 61,725 ​ | ​ 59,429 ​ | ​ 2,296 | ​ | ​ ​ | ​ | ​ 148,531 ​ | ​ 128,613 ​ | ​ 19,918 | ​ | ​ ​ |
| Depreciation and amortization | ​ | ​ 19,678 ​ | ​ 24,389 ​ | ​ (4,711) | ​ | ​ ​ | ​ | ​ 60,402 ​ | ​ 80,554 ​ | ​ (20,152) | ​ | ​ ​ |
| Stock-based compensation | ​ | ​ 5,900 ​ | ​ 2,795 ​ | ​ 3,105 | ​ | ​ ​ | ​ | ​ 19,405 ​ | ​ 10,908 ​ | ​ 8,497 | ​ | ​ ​ |
| Restructuring expense | ​ | ​ 473 ​ | ​ 1,278 ​ | ​ (805) | ​ | ​ ​ | ​ | ​ 1,217 ​ | ​ 17,706 ​ | ​ (16,489) | ​ | ​ ​ |
| Business integration expense | ​ | ​ 18,450 ​ | ​ 11,346 ​ | ​ 7,104 | ​ | ​ ​ | ​ | ​ 30,621 ​ | ​ 35,702 ​ | ​ (5,081) | ​ | ​ ​ |
| Litigation reserve | ​ | ​ — ​ | ​ — ​ | ​ — | ​ | ​ ​ | ​ | ​ 18,500 ​ | ​ — ​ | ​ 18,500 | ​ | ​ ​ |
| Loss on assets held for sale | ​ | ​ — ​ | ​ — ​ | ​ — | ​ | ​ ​ | ​ | ​ 647 ​ | ​ — ​ | ​ 647 | ​ | ​ ​ |
| Debt modification costs | ​ | ​ 848 ​ | ​ — ​ | ​ 848 | ​ | ​ ​ | ​ | ​ 848 ​ | ​ — ​ | ​ 848 | ​ | ​ ​ |
| Gain on sale of assets | ​ | ​ — ​ | ​ (13,317) ​ | ​ 13,317 | ​ | ​ ​ | ​ | ​ — ​ | ​ (13,317) ​ | ​ 13,317 | ​ | ​ ​ |
| Adjusted EBITDA (non-GAAP) | ​ | $107,074 ​ | $85,920 ​ | $21,154 | ​ | 24.6% | ​ | $280,171 ​ | $260,166 ​ | $20,005 | ​ | 7.7% |
| Adjusted EBITDA margin (non-GAAP) | ​ | ​ 25.9% | ​ 23.3% | ​ ​ | ​ | ​ ​ | ​ | ​ 23.8% | ​ 24.0% | ​ ​ | ​ | ​ ​ |

## Market risk

As filed, 303 characters.

There have been no material changes in Adtalem’s market risk exposure during the first nine months of fiscal year 2024 from those set forth in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” contained in Adtalem’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

## Controls and procedures

As filed, 849 characters.

### Evaluation of Disclosure Controls and Procedures

Based on an evaluation of our disclosure controls and procedures (as such term is defined in Exchange Act Rule 13a-15(e)) that was conducted under the supervision and with the participation of Adtalem’s management, including our Chief Executive Officer and Chief Financial Officer, our Chief Executive Officer and Chief Financial Officer concluded that Adtalem’s disclosure controls and procedures were effective as of March 31, 2024.

### Changes in Internal Control Over Financial Reporting

There were no changes during the third quarter of fiscal year 2024 in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

## Risk factors

As filed, 1,394 characters.

Except for the risk factor discussed below, there have been no material changes to Adtalem’s risk factors from those set forth since Item 1A. “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

***We are currently, and may in the future be, subject to short selling strategies that may drive down the market price of our common stock.***

Short sellers are currently and may attempt in the future to drive down the market price of our common stock. Short selling is the practice of selling securities that the seller does not own but may have borrowed with the intention of buying identical securities back at a later date. The short seller hopes to profit from a decline in the value of the securities between the time the securities are borrowed and the time they are replaced. As it is in the short seller’s best interests for the price of the stock to decline, many short sellers publish negative opinions regarding the relevant issuer and its business prospects to create negative market momentum.

On January 30, 2024, a short seller report was published about us, which contained certain allegations against us. The publication of the short seller report adversely affected our share price. The allegations contained in the report, even if untrue, could result in legal proceedings such as shareholder suits and regulatory investigations.

Filed May 2, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-006552. Last ingested by Listed: Oct 29, 2026, 18:23 ET. No prices; not investment advice.