Discontinued Operations and Assets Held for Sale

3 Months Ended

Sep. 30, 2021

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations and Assets Held for Sale

4. Discontinued Operations and Assets Held for Sale

On December 11, 2018, Adtalem completed the sale of DeVry University to Cogswell Education, LLC (“Cogswell”) for de minimis consideration. As the sale represented a strategic shift that had a major effect on Adtalem’s operations and financial results, DeVry University is presented in Adtalem’s financial reporting as a discontinued operation. The purchase agreement includes an earn-out entitling Adtalem to payments of up to $20 million over a ten-year period payable based on DeVry University’s free cash flow. In connection with the closing of the sale, Adtalem loaned to DeVry University $10.0 million under the terms of the promissory note, dated as of December 11, 2018 (the “ DeVry Note”). The DeVry Note bears interest at a rate of 4% per annum, payable annually in arrears, and has a maturity date of January 1, 2022. Based on the terms of the DeVry Note, DeVry University may make prepayments and may be required to make prepayments on the DeVry Note. The DeVry Note is included on the Consolidated Balance Sheet in prepaid expenses and other current assets as of each of September 30, 2021 and June 30, 2021, and other assets, net as of September 30, 2020. Adtalem has retained certain leases associated with DeVry University operations. Adtalem remains the primary lessee on these leases and subleases to DeVry University. In addition, Adtalem owns the buildings for certain DeVry University operating and administrative office locations and leases space to DeVry University under one-year operating leases, renewable annually at DeVry University’s option with the exception of one lease which expires in December 2023. Adtalem records the proceeds from these leases and subleases as an offset to operating costs. Adtalem also assigned certain leases to DeVry University but remains contingently liable under these leases.

The following is a summary of income statement information of operations reported as discontinued operations, which includes costs we continue to incur associated with ongoing litigation and settlements related to the DeVry University divestiture, which was completed during fiscal year 2019 (in thousands):

	Three Months Ended
	September 30,
	2021		2020
Revenue	$	—	$	—
Operating cost and expense:
Student services and administrative expense		23,382		10,084
Operating loss		(23,382)		(10,084)
Benefit from income taxes		6,012		2,477
Net loss from discontinued operations attributable to Adtalem	$	(17,370)	$	(7,607)