Discontinued Operations and Assets Held for Sale

9 Months Ended

Mar. 31, 2022

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 $20.0 million over a ten-year period payable based on DeVry University’s free cash flow. Adtalem received $2.9 million during the second quarter of fiscal year 2022 related to the earn-out, which was recorded within discontinued operations in the Consolidated Statements of Income for the nine months ended March 31, 2022. 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 bore interest at a rate of 4% per annum, payable annually in arrears, and had a maturity date of January 1, 2022. We received the loan repayment of $10.0 million during the third quarter of fiscal year 2022. The DeVry Note is included on the Consolidated Balance Sheets in prepaid expenses and other current assets as of each of June 30, 2021 and March 31, 2021. 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.

On March 10, 2022, Adtalem completed the sale of ACAMS, Becker, and OCL to Wendel Group and Colibri Group (“Purchaser”), pursuant to the Equity Purchase Agreement (“Purchase Agreement”) dated January 24, 2022. Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, Adtalem sold the issued and outstanding shares of ACAMS, Becker, and OCL to the Purchaser for $962.7 million, net of cash of $21.5 million, subject to certain post-closing adjustments. This sale is the culmination of a long-term strategy to sharpen the focus of our portfolio and enhance our ability to address the rapidly growing and unmet demand for healthcare professionals in the U.S. In addition, we are in the process of selling EduPristine and expect to close during the fourth quarter of fiscal year 2022. As these sales

represented a strategic shift that had a major effect on Adtalem’s operations and financial results, these businesses previously included in our former Financial Services segment are presented in Adtalem’s financial reporting as discontinued operations. In accordance with GAAP, we have classified ACAMS, Becker, OCL, and EduPristine entities as “Held for Sale” and “Discontinued Operations” in all periods presented as applicable.

The following is a summary of balance sheet information of assets and liabilities reported as held for sale, which includes ACAMS, Becker, OCL, and EduPristine (in thousands):

	March 31,		June 30,		March 31,
	2022		2021		2021
Assets:
Current assets:
Cash and cash equivalents	$	1,273	$	18,236	$	36,141
Accounts receivable, net		140		24,955		19,451
Prepaid expenses and other current assets		19		5,124		4,535
Total current assets held for sale		1,432		48,315		60,127
Noncurrent assets:
Property and equipment, net		—		13,545		12,158
Operating lease assets		—		1,578		1,778
Intangible assets, net		—		138,749		142,497
Goodwill		—		376,164		376,325
Other assets, net		93		1,561		101
Total noncurrent assets held for sale		93		531,597		532,859
Total assets held for sale	$	1,525	$	579,912	$	592,986
Liabilities:
Current liabilities:
Accounts payable	$	884	$	13,650	$	11,512
Accrued payroll and benefits		—		10,121		9,572
Accrued liabilities		—		2,914		3,158
Deferred revenue		533		31,890		29,362
Current operating lease liabilities		—		1,338		1,313
Total current liabilities held for sale		1,417		59,913		54,917
Noncurrent liabilities:
Long-term operating lease liabilities		—		789		1,135
Deferred income taxes		—		31,821		31,594
Other liabilities		41		907		898
Total noncurrent liabilities held for sale		41		33,517		33,627
Total liabilities held for sale	$	1,458	$	93,430	$	88,544

The following is a summary of income statement information of operations reported as discontinued operations, which includes ACAMS, Becker, OCL, and EduPristine operations through the date of each respective sale, and activity related to the DeVry University divestiture, which includes litigation and settlement costs we continue to incur and the earn-out we received (in thousands):

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2022		2021		2022		2021
Revenue	$	41,105	$	50,441	$	153,444	$	148,571
Operating cost and expense:
Cost of educational services		6,872		8,099		26,846		22,100
Student services and administrative expense		29,611		40,926		122,918		123,005
Restructuring expense		551		—		1,500		1,307
Total operating cost and expense		37,034		49,025		151,264		146,412
Income from discontinued operations before income taxes		4,071		1,416		2,180		2,159
Gain on disposal of discontinued operations before income taxes		474,003		—		474,003		—
Provision for income taxes		(134,089)		(1,104)		(134,201)		(2,386)
Income (loss) from discontinued operations		343,985		312		341,982		(227)
Net loss attributable to redeemable noncontrolling interest from discontinued operations		—		102		—		359
Net income from discontinued operations attributable to Adtalem	$	343,985	$	414	$	341,982	$	132