Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2025
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 001-13988
Adtalem Global Education Inc.
(Exact name of registrant as specified in its charter)
Delaware
36-3150143
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
233 South Wacker Drive
Chicago, Illinois
60606
(Address of principal executive offices)
(Zip Code)
(312) 651-1400
(Registrant’s telephone number; including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, $0.01 par value per share
ATGE
New York Stock Exchange
NYSE Texas
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
þ
Accelerated filer
Non-accelerated filer
◻
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
As of January 23, 2026, there were 34,508,523 shares of the registrant’s common stock, $0.01 par value per share outstanding.
Form 10-Q
Page
Part I. Financial Information
Item 1.
Financial Statements
1
Consolidated Balance Sheets
Consolidated Statements of Income
2
Consolidated Statements of Cash Flows
3
Consolidated Statements of Shareholders’ Equity
4
Notes to Consolidated Financial Statements
5
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
26
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
42
Item 4.
Controls and Procedures
Part II. Other Information
Legal Proceedings
43
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Item 5.
Other Information
Item 6.
Exhibits
45
Signature
46
Item 1. Financial Statements
(unaudited)
(in thousands, except par value)
December 31,
June 30,
2025
Assets:
Current assets:
Cash and cash equivalents
$
56,281
199,601
Restricted cash
2,359
1,563
Accounts and financing receivables, net
162,848
146,189
Prepaid expenses and other current assets
81,494
68,837
Total current assets
302,982
416,190
Noncurrent assets:
Property and equipment, net
266,036
256,131
Operating lease assets
189,483
191,194
Deferred income taxes
—
32,956
Intangible assets, net
759,864
765,474
Goodwill
961,262
Other assets, net
135,086
129,145
Total noncurrent assets
2,311,731
2,336,162
Total assets
2,614,713
2,752,352
Liabilities and shareholders' equity:
Current liabilities:
Accounts payable
103,103
105,017
Accrued payroll and benefits
53,153
76,374
Accrued liabilities
72,283
77,286
Deferred revenue
180,429
214,091
Current operating lease liabilities
33,917
35,159
Total current liabilities
442,885
507,927
Noncurrent liabilities:
Long-term debt
504,282
552,669
Long-term operating lease liabilities
191,353
186,172
56,815
31,856
Other liabilities
40,582
40,103
Total noncurrent liabilities
793,032
810,800
Total liabilities
1,235,917
1,318,727
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value per share, 200,000 shares authorized; 34,654 and 35,952 shares outstanding as of December 31, 2025 and June 30, 2025, respectively
847
839
Additional paid-in capital
686,587
664,300
Retained earnings
2,915,782
2,777,574
Accumulated other comprehensive loss
(2,227)
Treasury stock, at cost, 50,086 and 47,990 shares as of December 31, 2025 and June 30, 2025, respectively
(2,222,193)
(2,006,861)
Total shareholders' equity
1,378,796
1,433,625
Total liabilities and shareholders' equity
See accompanying Notes to Consolidated Financial Statements.
(in thousands, except per share data)
Three Months Ended
Six Months Ended
2024
Revenue
503,385
447,729
965,673
865,129
Operating cost and expense:
Cost of educational services
205,425
186,636
406,192
372,631
Student services and administrative expense
182,791
156,901
358,525
315,974
Restructuring expense
4,055
322
4,365
2,416
Total operating cost and expense
392,271
343,859
769,082
691,021
Operating income
111,114
103,870
196,591
174,108
Interest expense
(10,917)
(13,909)
(22,007)
(28,391)
Other income, net
1,704
2,235
4,190
4,881
Income from continuing operations before income taxes
101,901
92,196
178,774
150,598
Provision for income taxes
(25,730)
(21,020)
(41,541)
(33,177)
Income from continuing operations
76,171
71,176
137,233
117,421
Discontinued operations:
Income from discontinued operations before income taxes
303
6,271
1,050
6,164
(98)
(1,591)
(75)
(1,564)
Income from discontinued operations
205
4,680
975
4,600
Net income and comprehensive income
76,376
75,856
138,208
122,021
Earnings per share:
Basic:
Continuing operations
2.13
1.90
3.82
3.12
Discontinued operations
0.01
0.13
0.03
0.12
Total basic earnings per share
2.14
2.03
3.85
3.25
Diluted:
2.10
1.85
3.75
3.03
Total diluted earnings per share
2.11
1.98
3.77
3.15
Weighted-average shares outstanding:
Basic shares
35,725
37,435
35,918
37,578
Diluted shares
36,230
38,401
36,644
38,755
(in thousands)
Operating activities:
Net income
(975)
(4,600)
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation
21,532
20,918
Amortization of operating lease assets
14,411
14,092
Depreciation
21,250
19,993
Amortization of acquired intangible assets
5,610
Amortization and write-off of debt discount and issuance costs
2,554
2,226
Provision for bad debts
31,431
28,719
57,915
23,516
Loss on disposals and impairments of property and equipment
114
Gain on investments
(810)
(442)
Changes in assets and liabilities:
Accounts and financing receivables
(46,725)
(46,493)
(3,429)
6,829
Cloud computing implementation assets
(7,131)
(14,071)
(1,478)
(34,588)
(23,130)
(20,311)
(7,321)
(29,066)
(30,918)
(12,028)
Operating lease liabilities
(8,761)
(10,594)
Other assets and liabilities
(2,124)
(5,888)
Net cash provided by operating activities-continuing operations
160,113
65,957
Net cash provided by operating activities-discontinued operations
180
4,340
Net cash provided by operating activities
160,293
70,297
Investing activities:
Capital expenditures
(30,647)
(21,094)
Proceeds from sales of marketable securities
2,105
2,426
Purchases of marketable securities
(2,104)
(1,548)
Payment for investment in business
(5,000)
Net cash used in investing activities
(35,646)
(20,216)
Financing activities:
Proceeds from exercise of stock options
131
9,833
Employee taxes paid on withholding shares
(41,985)
(12,198)
Proceeds from stock issued under Colleague Stock Purchase Plan
815
567
Repurchases of common stock for treasury
(172,362)
(74,066)
Borrowings under long-term debt obligations
227,000
9,873
Repayments under long-term debt obligations
(277,000)
(9,873)
Payment of debt issuance costs
(3,770)
Net cash used in financing activities
(267,171)
(75,864)
Net decrease in cash, cash equivalents and restricted cash
(142,524)
(25,783)
Cash, cash equivalents and restricted cash at beginning of period
201,164
221,202
Cash, cash equivalents and restricted cash at end of period
58,640
195,419
Non-cash investing and financing activities:
Accrued capital expenditures
9,738
5,085
Accrued liability for repurchases of common stock
1,800
400
Accrued excise tax on share repurchases
1,089
301
Accumulated
Additional
Other
Common Stock
Paid-In
Retained
Comprehensive
Treasury Stock
Shares
Amount
Capital
Earnings
Loss
Total
September 30, 2024
83,829
838
631,033
2,586,674
46,113
(1,826,366)
1,389,952
11,467
Net activity from stock-based compensation awards
57
334
17
(1,481)
(1,146)
141
(4)
157
298
471
(37,517)
December 31, 2024
83,886
642,975
2,662,530
46,597
(1,865,207)
1,438,910
September 30, 2025
84,657
673,022
2,839,406
48,333
(2,053,424)
1,457,624
13,239
83
29
(2,866)
326
(3)
123
449
1,727
(166,026)
December 31, 2025
84,740
50,086
June 30, 2024
83,194
832
611,949
2,540,509
45,513
(1,781,928)
1,369,135
692
7
9,826
160
(2,365)
282
(9)
348
630
933
(71,429)
June 30, 2025
83,942
47,990
798
8
319
(41,854)
632
(7)
274
906
1,784
(173,621)
Note
Nature of Operations
6
Summary of Significant Accounting Policies
Discontinued Operations
Restructuring Expense
9
Other Income, Net
10
Income Taxes
Earnings per Share
11
Accounts and Financing Receivables
Property and Equipment, Net
14
Leases
12
Goodwill and Intangible Assets
15
13
Debt
Share Repurchases
20
Stock-Based Compensation
16
Fair Value Measurements
22
Commitments and Contingencies
23
18
Segment Information
24
1. Nature of Operations
In this Quarterly Report on Form 10-Q, Adtalem Global Education Inc., together with its subsidiaries, is collectively referred to as “Adtalem,” “we,” “our,” “us,” or similar references. Adtalem reports on a fiscal year period ending on June 30. Therefore, this Quarterly Report for the quarterly period ended December 31, 2025 is for our second quarter of fiscal year 2026.
Adtalem is the leading healthcare educator in the U.S. Our schools consist of Chamberlain University (“Chamberlain”), Walden University (“Walden”), American University of the Caribbean School of Medicine (“AUC”), Ross University School of Medicine (“RUSM”), and Ross University School of Veterinary Medicine (“RUSVM”). AUC, RUSM, and RUSVM are collectively referred to as the “medical and veterinary schools.” “Home Office” includes activities not allocated to a reportable segment. See Note 18 “Segment Information” for information on our reportable segments.
2. Summary of Significant Accounting Policies
Basis of Presentation
Our significant accounting policies are described in Note 2 “Summary of Significant Accounting Policies” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 (the “2025 Form 10-K”). We have prepared the accompanying unaudited consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (which are normal and recurring in nature) considered necessary for a fair presentation have been included. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. We use the same accounting policies in preparing quarterly and annual financial statements. Unless otherwise noted, amounts presented within the Notes to Consolidated Financial Statements refer to our continuing operations. Unless indicated, or the context requires otherwise, references to years refer to Adtalem’s fiscal years. Certain items presented in tables may not sum due to rounding. These consolidated financial statements and accompanying notes should be read in conjunction with our annual consolidated financial statements and the notes thereto included in our 2025 Form 10-K.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Standards
In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-11: “Interim Reporting (Topic 270): Narrow-Scope Improvements.” The guidance was issued to improve the guidance in Topic 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The guidance also provides additional guidance on what disclosures should be provided in interim reporting periods. The guidance is effective on a prospective or retrospective basis for financial statements issued for fiscal years beginning after December 15, 2027, and interim reporting periods within fiscal years beginning after December 15, 2028. Early adoption of the guidance is permitted. We do not expect the guidance will have a material impact on Adtalem’s Consolidated Financial Statements or disclosures.
In September 2025, the FASB issued ASU No. 2025-06: “Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” The guidance was issued to modernize the accounting for software costs. The guidance is effective on a prospective, modified, or a retrospective transition approach for financial statements issued for fiscal years beginning after December 15, 2027, and interim reporting periods within those fiscal years. Early adoption of the guidance is permitted. We are currently evaluating the impact the guidance will have on Adtalem’s Consolidated Financial Statements.
In July 2025, the FASB issued ASU No. 2025-05: “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” The guidance was issued to provide a practical expedient to measure credit losses on current accounts receivable and current contract assets. The guidance is effective prospectively for financial statements issued for fiscal years beginning after December 15, 2025, and interim reporting periods within those fiscal years. Early adoption of the guidance is permitted. We do not expect the guidance will have a material impact on Adtalem’s Consolidated Financial Statements.
In November 2024, the FASB issued ASU No. 2024-03: “Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The guidance was issued to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions as well as disclosures about selling expenses. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2026 and interim reporting periods within fiscal years beginning after December 15, 2027. The amendments should be applied prospectively, however retrospective application is permitted. Early adoption of the amendments is permitted, including adoption in an interim reporting period. The amendments will expand our footnote disclosures to include a disaggregation of expenses in accordance with the amendments but will not otherwise impact Adtalem’s Consolidated Financial Statements.
In December 2023, the FASB issued ASU No. 2023-09: “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The guidance was issued to enhance the transparency and decision usefulness of income tax disclosures by requiring entities to provide additional information in the rate reconciliation and additional disclosures about income taxes paid. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2024. The amendments should be applied prospectively, however retrospective application is permitted. Early adoption of the amendments is permitted. The amendments will impact our income tax disclosures but will not otherwise impact Adtalem’s Consolidated Financial Statements.
We reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our Consolidated Financial Statements or disclosures.
3. Discontinued Operations
On December 11, 2018, Adtalem sold DeVry University to Cogswell Education, LLC (“Cogswell”) for de minimis consideration. 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 financial results. Adtalem received $0.5 million and $7.0 million during the second quarter of fiscal year 2026 and 2025, respectively, related to the earn-out. As of the second quarter of fiscal year 2026, we have received the full earn-out of $20.0 million.
We had income from discontinued operations of $0.2 million and $1.0 million in the three and six months ended December 31, 2025, respectively, and income from discontinued operations of $4.7 million and $4.6 million in the three and six months ended December 31, 2024, respectively. We continue to incur costs associated with ongoing litigation and settlements related to divestitures, which are classified as expenses within discontinued operations.
4. Revenue
Revenue is recognized when control of the promised goods or services is transferred to our customers (students), in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
The following tables disaggregate revenue by source (in thousands):
Three Months Ended December 31, 2025
Chamberlain
Walden
Medical andVeterinary
Consolidated
Tuition and fees
183,832
217,562
100,360
501,754
1,631
101,991
Six Months Ended December 31, 2025
363,033
407,522
191,297
961,852
3,821
195,118
Three Months Ended December 31, 2024
180,986
171,306
93,021
445,313
95,437
Six Months Ended December 31, 2024
348,916
332,819
178,008
859,743
5,386
183,394
In addition, see Note 18 “Segment Information” for a disaggregation of revenue by geographical region.
Performance Obligations and Revenue Recognition
Tuition and fees: The majority of revenue is derived from tuition and fees, which is recognized on a straight-line basis over the academic term as instruction is delivered.
Other: Other revenue consists of housing and other miscellaneous services. Other revenue is recognized over the period in which the applicable performance obligation is satisfied.
Arrangements for payment are agreed to prior to registration of the student’s first academic term. The majority of U.S. students obtain Title IV or other financial aid resulting in institutions receiving a significant amount of the transaction price at the beginning of the academic term. Students not utilizing Title IV or other financial aid funding may pay after the academic term is complete.
Transaction Price
Revenue, or transaction price, is measured as the amount of consideration expected to be received in exchange for transferring goods or services.
Students may receive scholarships, discounts, or refunds, which gives rise to variable consideration. The amounts of scholarships or discounts are generally applied to individual student accounts when such amounts are awarded. Therefore, the transaction price is immediately reduced directly by these scholarships or discounts from the amount of the standard tuition rate charged. Scholarships and discounts that are only applied to future tuition charged are considered a separate performance obligation if they represent a material right in accordance with ASC 606. In those instances, we defer the
value of the related performance obligation associated with the future scholarship or discount based on estimates of future redemption based on our historical experience of student persistence toward completion of study.
Upon withdrawal, a student may be eligible to receive a refund, or partial refund, the amount of which is dependent on the timing of the withdrawal during the academic term. If a student withdraws prior to completing an academic term, federal and state regulations and accreditation criteria permit Adtalem to retain a set percentage of the total tuition received from such student, which varies with, but generally equals or exceeds, the percentage of the academic term completed by such student. Payment amounts received by Adtalem in excess of such set percentages of tuition are refunded to the student or the appropriate funding source. For contracts with similar characteristics and historical data on refunds, the expected value method is applied in determining the variable consideration related to refunds. Estimates of Adtalem’s expected refunds are determined at the outset of each academic term, based upon actual refunds in previous academic terms. Reserves related to refunds are presented as refund liabilities within accrued liabilities on the Consolidated Balance Sheets. All refunds are netted against revenue during the applicable academic term.
Management reassesses collectability on a student-by-student basis throughout the period revenue is recognized. This reassessment is based upon new information and changes in facts and circumstances relevant to a student’s ability to pay. Management also reassesses collectability when a student withdraws from the institution and has unpaid tuition charges. Such unpaid charges do not meet the threshold of reasonably collectible and are recognized as revenue on a cash basis.
Contract Balances
Students are billed at the beginning of each academic term and payment is due at that time. Adtalem’s performance obligation is to provide educational services in the form of instruction during the academic term and to provide for any scholarships or discounts that are deemed a material right under ASC 606. As instruction is provided or the deferred value of material rights are recognized, deferred revenue is reduced. A significant portion of student payments are from Title IV financial aid and other programs and are generally received during the first month of the respective academic term. For students utilizing Adtalem’s credit extension programs (see Note 9 “Accounts and Financing Receivables”), payments are generally received after the academic term, and the corresponding performance obligation, is complete. When payments are received, accounts and financing receivables are reduced.
Deferred revenue within current liabilities is $180.4 million and $214.1 million as of December 31, 2025 and June 30, 2025, respectively, which includes $43.7 million and $38.1 million, respectively, related to contract liabilities associated with material rights. Deferred revenue within other noncurrent liabilities is $27.8 million and $25.0 million as of December 31, 2025 and June 30, 2025, respectively, and relates entirely to contract liabilities associated with material rights, which are expected to be earned over approximately the next four fiscal years. Revenue of $10.4 million and $191.5 million was recognized during the three and six months ended December 31, 2025, respectively, that was included in the deferred revenue balance at the beginning of fiscal year 2026. Revenue of $6.8 million and $173.2 million was recognized during the three and six months ended December 31, 2024, respectively, that was included in the deferred revenue balance at the beginning of fiscal year 2025.
The difference between the opening and closing balances of deferred revenue includes decreases from revenue recognized during the period, increases from charges related to the start of academic terms beginning during the period, increases from payments received related to academic terms commencing after the end of the period, and increases from recognizing additional performance obligations for material rights during the period.
5. Restructuring Expense
During the six months ended December 31, 2025, Adtalem recorded restructuring expense primarily driven by workforce reductions and prior real estate consolidations at Adtalem’s home office. We continue to incur restructuring charges or reversals related to exited leased space from previous restructuring actions. During the six months ended December 31, 2024, Adtalem recorded restructuring expense primarily driven by workforce reductions, costs to exit certain course offerings, and prior real estate consolidations at Adtalem’s home office. When estimating costs of exiting lease space, estimates are made which could differ materially from actual results and may result in additional restructuring
charges or reversals in future periods. Termination benefit charges represent severance pay and benefits for employees impacted by workforce reductions. Restructuring expense by segment was as follows (in thousands):
Real Estateand Other
TerminationBenefits
98
1,825
429
Medical and Veterinary
39
397
436
480
Home Office
164
1,201
1,365
309
1,322
3,754
490
3,875
77
974
961
1,935
56
115
189
366
1,455
The following table summarizes the separation and restructuring plan activity for fiscal years 2025 and 2026, for which cash payments are required (in thousands):
Liability balance as of June 30, 2024
Increase in liability (termination and other charges)
1,418
Reduction in liability (payments and adjustments)
(1,418)
Liability balance as of June 30, 2025
(960)
Liability balance as of December 31, 2025
2,915
These liability balances are recorded as accrued liabilities on the Consolidated Balance Sheets.
6. Other Income, Net
Other income, net consisted of the following (in thousands):
Interest and dividend income
1,574
2,406
3,380
4,439
Investment gain (loss)
130
(171)
810
442
Investment gain (loss) includes trading gains and losses related to the rabbi trust used to fund nonqualified deferred compensation plan obligations.
7. Income Taxes
Our effective tax rate from continuing operations was 25.2% and 23.2% in the three and six months ended December 31, 2025, respectively, and 22.8% and 22.0% in the three and six months ended December 31, 2024, respectively. The effective tax rate for the three months ended December 31, 2025 increased compared to the prior year period primarily due to an increase in the limitation of tax benefits on certain executive compensation, partially offset by a decrease in the percentage of earnings from operations in higher taxed jurisdictions. The effective tax rate for the six months ended December 31, 2025 increased compared to the prior year period primarily due to an increase in the limitation of tax benefits
on certain executive compensation, partially offset by a decrease in the percentage of earnings from operations in higher taxed jurisdictions and an increase in tax benefits on stock-based compensation. The income tax provisions reflect the U.S. federal tax rate of 21% adjusted for taxes related to 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, changes in uncertain tax positions, and tax benefits on stock-based compensation.
RUSM and RUSVM each have agreements with their respective domestic governments that exempt them from local income taxation. RUSM has an exemption in Barbados until 2039 and RUSVM has an exemption in St. Kitts until 2038.
In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which introduced substantial changes to U.S. tax provisions. The most relevant provisions to Adtalem for fiscal year 2026 include allowing accelerated tax deductions for qualified property and research and development expenditures. The impacts of OBBBA were not material to the income tax provision for the three and six months ended December 31, 2025.
8. Earnings per Share
The following table sets forth the computations of basic and diluted earnings per share and antidilutive shares (in thousands, except per share data):
Numerator:
Net income:
Denominator:
Weighted-average basic shares outstanding
Effect of dilutive stock awards
505
966
726
1,177
Weighted-average diluted shares outstanding
Weighted-average antidilutive shares
89
9. Accounts and Financing Receivables
Our accounts receivables relate to student balances occurring in the normal course of business. Accounts receivables have a term of less than one year and are included in accounts and financing receivables, net on our Consolidated Balance Sheets. Our financing receivables relate to credit extension programs, which provide students with payment terms in excess of one year and are included in accounts and financing receivables, net and other assets, net on our Consolidated Balance Sheets.
The classification of our accounts and financing receivable balances was as follows (in thousands):
Gross
Allowance
Net
Accounts receivables, current
212,667
(52,515)
160,152
Financing receivables, current
5,201
(2,505)
2,696
Accounts and financing receivables, current
217,868
(55,020)
Financing receivables, noncurrent
30,411
(7,417)
22,994
Total financing receivables
35,612
(9,922)
25,690
189,874
(46,441)
143,433
5,393
(2,637)
2,756
195,267
(49,078)
33,116
(8,757)
24,359
38,509
(11,394)
27,115
Our financing receivables relate to credit extension programs available to students at Chamberlain, AUC, RUSM, and RUSVM. These credit extension programs are designed to assist students who are unable to completely cover educational costs consisting of tuition, fees, and books, and are available only after all other student financial assistance has been applied toward those purposes. In addition, AUC, RUSM, and RUSVM allow students to finance their living expenses. Repayment plans for financing agreements are developed to address the financial circumstances of the particular student. Interest charges at rates from 3.0% to 12.0% per annum accrue each month on the unpaid balance once a student withdraws or graduates from a program. Most students are required to begin repaying their obligations while they are still in school with a minimum payment level. Payments may increase upon completing or departing school.
Credit Quality
The primary credit quality indicator for our financing receivables is delinquency. Balances are considered delinquent when contractual payments on the loan become past due. We generally write-off financing receivable balances when they are at least 181 days past due. Payments are applied first to outstanding interest and then to the unpaid principal balance.
The credit quality analysis of financing receivables as of December 31, 2025 was as follows (in thousands):
Amortized Cost Basis by Origination Year
Prior
2022
2023
2026
1-30 days past due
529
207
530
546
401
2,535
31-60 days past due
30
28
68
171
48
627
61-90 days past due
267
82
394
772
91-120 days past due
250
59
133
21
474
121-150 days past due
49
453
125
718
Greater than 150 days past due
3,336
959
1,304
1,042
7,333
Total past due
4,431
979
1,892
2,586
2,063
508
12,459
Current
7,073
1,462
2,717
3,463
4,809
3,629
23,153
Financing receivables, gross
11,504
2,441
4,609
6,049
6,872
4,137
Gross write-offs
464
261
1,138
771
73
2,707
The credit quality analysis of financing receivables as of June 30, 2025 was as follows (in thousands):
2021
116
37
1,099
1,623
3,497
67
122
377
378
1,054
255
27
72
403
100
44
52
103
254
2,261
1,291
1,171
2,058
293
9,009
2,742
1,754
1,329
2,474
3,532
2,486
14,317
5,858
2,609
1,819
3,323
4,440
6,143
24,192
8,600
4,363
3,148
5,797
7,972
8,629
1,158
642
478
1,014
876
4,181
Allowance for Credit Losses
The allowance for credit losses represents an estimate of the lifetime expected credit losses inherent in our accounts and financing receivable balances as of each balance sheet date. In evaluating the collectability of our accounts and financing receivable balances, we utilize historical events, current conditions, and reasonable and supportable forecasts about the future.
For our accounts receivables, we use historical loss rates based on an aging schedule and a student’s status to determine the allowance for credit losses. As these accounts receivables are short-term in nature, management believes a student’s status provides the best credit loss estimate, while also factoring in delinquency. Students still attending classes, recently graduated, or current on payments are more likely to pay than those who are inactive due to being on a leave of absence, withdrawing from school, or not current on payments.
For our financing receivables, we use historical loss rates based on an aging schedule. As these financing receivables are based on long-term financing agreements offered by Adtalem, management believes that delinquency provides the best credit loss estimate. As the financing receivable balances become further past due, it is less likely we will receive payment, causing our estimate of credit losses to increase.
The following tables provide a roll-forward of the allowance for credit losses (in thousands):
Accounts
Financing
Beginning balance
52,019
11,117
63,136
46,441
11,394
57,835
Write-offs
(18,548)
(1,739)
(20,287)
(30,667)
(2,707)
(33,374)
Recoveries
2,709
331
3,040
5,929
616
6,545
Provision for credit losses
16,335
213
16,548
30,812
619
Ending balance
52,515
9,922
62,437
36,691
13,467
50,158
35,336
12,558
47,894
(16,759)
(1,275)
(18,034)
(29,870)
(2,373)
(32,243)
2,207
481
2,688
4,784
657
5,441
14,613
386
14,999
26,502
2,217
36,752
13,059
49,811
10. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
Useful Life
Land
-
31,776
Buildings and improvements
10 - 31 years
203,755
202,240
Leasehold improvements
Shorter of asset useful life or lease term
128,922
120,603
Furniture and equipment
3 - 8 years
111,583
104,708
Software
3 - 5 years
118,043
113,565
Construction in progress
33,200
24,983
Property and equipment, gross
627,279
597,875
Accumulated depreciation
(361,243)
(341,744)
11. Leases
We determine if a contract contains a lease at inception. We have entered into operating leases for academic sites, housing facilities, and office space which expire at various dates through December 2042, most of which include options to terminate for a fee or extend the leases for an additional five-year period. The lease term includes the noncancelable period of the lease, as well as any periods for which we are reasonably certain to exercise extension options. We account for lease and non-lease components (e.g., common-area maintenance costs) as a single lease component for all operating leases. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. We have not entered into any finance leases.
Operating lease assets represent our right to use an underlying asset during the lease term. Operating lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. Operating lease assets are adjusted for any prepaid or accrued lease payments, lease incentives, initial direct costs, and impairments. Our incremental borrowing rate is utilized in determining the present value of the lease payments based upon the information available at the commencement date. Our incremental borrowing rate is determined using a secured borrowing rate for the same currency and term as the associated lease. Operating lease expense is recognized on a straight-line basis over the lease term.
As of December 31, 2025, we entered into four additional operating leases that have not yet commenced. The first lease is expected to commence during the third quarter of fiscal year 2026, has a 13-year lease term, and will result in an additional operating lease asset and operating lease liability of approximately $4.5 million. The second lease is expected to commence during the third quarter of fiscal year 2026, has a 13-year lease term, and will result in an additional operating lease asset and operating lease liability of approximately $2.0 million. The third lease is expected to commence during the third quarter of fiscal year 2026, has a 13-year lease term, and will result in an additional operating lease asset and operating lease liability of approximately $1.7 million. The fourth lease is expected to commence during the fourth quarter of fiscal year 2026, has a 17-year lease term, and will result in an additional operating lease asset and operating lease liability of approximately $4.1 million.
The components of lease cost were as follows (in thousands):
Operating lease cost
12,230
11,379
24,577
22,110
Sublease income
(930)
(1,298)
(2,002)
(2,794)
Total lease cost
11,300
10,081
22,575
19,316
Maturities of lease liabilities as of December 31, 2025 were as follows (in thousands):
Operating
Fiscal Year
2026 (remaining)
23,967
2027
49,556
2028
46,075
2029
39,047
2030
36,565
Thereafter
176,910
Total lease payments
372,120
Less: lease incentives not yet received
(30,767)
Less: imputed interest
(116,083)
Present value of lease liabilities
225,270
Lease term and discount rate were as follows:
Weighted-average remaining operating lease term (years)
8.4
Weighted-average operating lease discount rate
7.8%
Supplemental disclosures of cash flow information related to leases were as follows (in thousands):
Cash paid for amounts in the measurement of operating lease liabilities (net of sublease and lease incentive receipts)
8,308
6,904
16,151
16,285
Operating lease assets obtained in exchange for operating lease liabilities
6,916
24,023
12,700
26,137
12. Goodwill and Intangible Assets
Goodwill balances by reportable segment were as follows (in thousands):
4,716
651,052
305,494
Indefinite-lived intangible assets consisted of the following (in thousands):
Title IV eligibility and accreditations
611,100
Trade name
141,760
752,860
Amortizable intangible assets consisted of the following (in thousands):
Gross Carrying
Weighted-Average
Amortization
Amortization Period
Curriculum
56,091
(49,087)
(43,477)
5 Years
Amortization expense on finite-lived intangible assets was $2.8 million and $5.6 million in the three and six months ended December 31, 2025, respectively, and $2.8 million and $5.6 million in the three and six months ended December 31, 2024, respectively. Future amortization expense on finite-lived intangible assets, by reporting unit, is expected to be as follows (in thousands):
1,394
7,004
Curriculum is amortized on a straight-line basis.
Indefinite-lived intangible assets related to trade names and Title IV eligibility and accreditations are not amortized, as there are no legal, regulatory, contractual, economic, or other factors that limit the useful life of these intangible assets to the reporting entity.
Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed for impairment annually and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist. Our annual testing date is May 31.
Adtalem has five reporting units, which are Chamberlain, Walden, AUC, RUSM, and RUSVM. These reporting units constitute components for which discrete financial information is available and regularly reviewed by segment management. We have the option to assess goodwill for impairment by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is determined that the reporting unit fair value is more likely than not less than its carrying value, or if we do not elect the option to perform an initial qualitative assessment, we perform a quantitative assessment of the reporting unit’s fair value. If the carrying value of a reporting unit containing the goodwill exceeds the fair value of that reporting unit, an impairment loss is recognized equal to the difference between the carrying value of the reporting unit and its fair value, not to exceed the carrying value of goodwill. We also have the option to perform a qualitative assessment to test indefinite-lived intangible assets for impairment by determining whether it is more likely than not that the indefinite-lived intangible assets are impaired. If it is determined that the indefinite-lived intangible asset is more likely than not impaired, or if we do not elect the option to perform an initial qualitative assessment, we perform a quantitative assessment of the indefinite-lived intangible assets. If the carrying value of the indefinite-lived intangible assets exceeds their fair value, an impairment loss is recognized to the extent the carrying value exceeds fair value.
During the second quarter of fiscal year 2026, Adtalem performed an assessment to determine whether there were indicators of a triggering event which could indicate the carrying value of the reporting units may not be supported by the fair value. No indicators of a triggering event for potential impairment were noted in the second quarter of fiscal year 2026.
If economic conditions deteriorate or operating performance of our reporting units does not meet expectations such that we revise our long-term forecasts, we may recognize impairments of goodwill and other intangible assets in future periods.
13. Debt
Long-term debt consisted of the following senior secured credit facilities (in thousands):
Senior Secured Notes due 2028
404,950
Term Loan B
103,333
153,333
Total principal
508,283
558,283
Unamortized debt discount and issuance costs
(4,001)
(5,614)
Scheduled future maturities of long-term debt were as follows (in thousands):
Maturity
Payments
On March 1, 2021, Adtalem issued $800.0 million aggregate principal amount of 5.50% Senior Secured Notes due 2028 (the “Notes”), which mature on March 1, 2028, pursuant to an indenture, dated as of March 1, 2021 (the “Indenture”), by and between Adtalem and U.S. Bank National Association, as trustee and notes collateral agent. The Notes were sold within the U.S. only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the U.S. to non-U.S. persons in reliance on Regulation S under the Securities Act.
The Notes were issued at 100.0% of their par value. The Notes bear interest at a rate of 5.50% per year, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2021, to holders of record on the preceding February 15 and August 15, as the case may be. The Notes are guaranteed by certain of Adtalem’s subsidiaries that are borrowers or guarantors under its senior secured credit facilities and certain of its other senior indebtedness, subject to certain exceptions. The Notes are secured, subject to permitted liens and certain other exceptions, by first priority liens on the same collateral that secures the obligations under Adtalem’s senior secured credit facilities.
We may redeem the Notes, in whole or in part, at any time on or after March 1, 2024 at redemption prices equal to 102.75%, 101.375%, and 100% of the principal amount of the Notes redeemed if the redemption occurs during the twelve-month periods beginning on March 1 of the years 2024, 2025, and 2026 and thereafter, respectively, in each case plus accrued and unpaid interest, if any, thereon to, but not including, the applicable redemption date.
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. This debt was subsequently retired. During the first quarter of fiscal year 2023, we repurchased on the open market an additional $0.9 million of Notes at a price equal to approximately 92% of the principal amount of the Notes. This debt was subsequently retired. The principal balance of the Notes was $405.0 million as of December 31, 2025.
Accrued interest on the Notes of $7.4 million and $7.4 million is recorded within accrued liabilities on the Consolidated Balance Sheets as of December 31, 2025 and June 30, 2025, respectively.
Credit Agreement
On August 12, 2021, in connection with the Walden acquisition, Adtalem entered into a 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 has availability for letters of credit and currencies other than U.S. dollars of up to $400.0 million.
On June 27, 2023, Adtalem entered into Amendment No. 1 to Credit Agreement, identifying the Secured Overnight Financing Rate (“SOFR”) as the benchmark rate to replace LIBOR for eurocurrency rate loans within the Credit Agreement effective the first quarter of fiscal year 2024.
Prior to January 26, 2024, borrowings under the Term Loan B bore interest at a rate per annum equal to, at our option, SOFR plus an applicable margin ranging from 4.00% to 4.50%, subject to a SOFR floor of 0.75%, or an alternate base rate (“ABR”) plus an applicable margin ranging from 3.00% to 3.50% depending on Adtalem’s net first lien leverage ratio for such period.
On January 26, 2024, we entered into Amendment No. 2 to Credit Agreement, which resulted in a 0.50% reduction in our Term Loan B interest rate margin. From January 26, 2024 through August 21, 2024, borrowings under the Term Loan B bore interest at a rate per annum equal to, at our option, SOFR plus an applicable margin ranging from 3.50% to 4.00%, subject to a SOFR floor of 0.75%, or an ABR plus an applicable margin ranging from 2.50% to 3.00% depending on Adtalem’s net first lien leverage ratio for such period.
On August 21, 2024, we entered into Amendment No. 3 to Credit Agreement, which resulted in a further 0.75% reduction in our Term Loan B interest rate margin and removed the leverage-based pricing grid. After August 21, 2024, borrowings under the Term Loan B bear interest at a rate per annum equal to, at our option, SOFR plus 2.75%, subject to a SOFR floor of 0.75%, or an ABR plus 1.75%.
As of December 31, 2025, the interest rate for borrowings under the Term Loan B facility was 6.47%, which approximated the effective interest rate. The Term Loan B originally required quarterly installment payments of $2.125 million beginning on March 31, 2022. On March 11, 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. We made additional Term Loan B prepayments of $100.0 million, $50.0 million, $50.0 million, $100.0 million, and $50.0 million on September 22, 2022, November 22, 2022, January 26, 2024, January 17, 2025, and October 29, 2025, respectively. The principal balance of the Term Loan B was $103.3 million as of December 31, 2025.
Revolver
Borrowings under the Revolver bear interest at a rate per annum equal to SOFR, subject to a SOFR floor of 0.75%, plus an applicable margin ranging from 3.75% to 4.25% or an ABR plus an applicable margin ranging from 2.75% to 3.25% depending on Adtalem’s net first lien leverage ratio for such period.
On August 6, 2025, we entered into Amendment No. 4 to Credit Agreement and Incremental Assumption Agreement (the “Amendment”), to (i) increase available commitments under our revolving facility by $100.0 million (resulting in aggregate outstanding commitments of $500.0 million under the revolving facility after giving effect to the Amendment), (ii) extend the maturity and commitment termination date of our revolving facility to August 6, 2030, and (iii) reduce the pricing on any drawn revolving loans to SOFR plus an applicable margin ranging from 2.25% to 3.00% or an ABR plus an applicable margin ranging from 1.25% to 2.00% depending on Adtalem’s net first lien leverage ratio for such period.
The Credit Agreement requires payment of a commitment fee equal to 0.25% of the unused portion of the Revolver. The commitment fee expense is recorded within interest expense in the Consolidated Statements of Income. During the six months ended December 31, 2025, we borrowed and repaid $227.0 million under the revolver, resulting in no outstanding borrowings as of December 31, 2025. There were no borrowings under the Revolver during the six months ended December 31, 2024. The amount unused under the Revolver was $500.0 million as of December 31, 2025.
Debt Discount and Issuance Costs
The Term Loan B was issued at a price of 99% of its principal amount, resulting in an original issue discount of 1%. The debt discount and issuance costs related to the Notes and Term Loan B are presented as a direct deduction from the face amount of the debt, while the debt issuance costs related to the Revolver are classified as other assets, net on the Consolidated Balance Sheets. The debt discount and issuance costs are amortized as interest expense over seven years for the Notes and Term Loan B and over five years for the Revolver. In connection with the Amendment to the Revolver discussed above, we wrote-off $0.3 million of previously capitalized debt issuance costs within interest expense in the Consolidated Statements of Income during the six months ended December 31, 2025, and capitalized $3.8 million of new debt issuance costs. All newly capitalized debt issuance costs and unamortized debt issuance costs prior to the Amendment will be amortized over a five-year period from the date of the Amendment. Based on the $50.0 million Term Loan B prepayment on October 29, 2025, we expensed $0.7 million in interest expense in the Consolidated Statements of Income in the three and six months ended December 31, 2025, which was the proportionate amount of the remaining unamortized debt discount and issuance costs related to the Term Loan B as of the prepayment date. The following table summarizes the unamortized debt discount and issuance costs activity for the six months ended December 31, 2025 (in thousands):
Notes
Unamortized debt discount and issuance costs as of June 30, 2025
3,258
2,356
2,299
7,913
Capitalized debt issuance costs
3,770
Amortization of debt discount and issuance costs
(594)
(332)
(646)
(1,572)
Debt discount and issuance costs write-off
(687)
(295)
(982)
Unamortized debt discount and issuance costs as of December 31, 2025
2,664
1,337
5,128
9,129
Off-Balance Sheet Arrangements
As of December 31, 2025, Adtalem had $202.6 million in surety-backed letters of credit outstanding in favor of the U.S. Department of Education (“ED”). The letters of credit represent 10% of the consolidated Title IV funds Adtalem’s institutions received during fiscal year 2025 with an expiration date of January 31, 2027.
As of December 31, 2025, Adtalem had posted $74.9 million of surety bonds to satisfy certain state regulatory requirements for licensure.
Interest Expense
Interest expense consisted of the following (in thousands):
Notes interest expense
5,568
11,136
Term Loan B interest expense
2,053
4,819
4,828
10,302
Revolver interest expense
246
Term Loan B debt discount and issuance costs write-off
687
Revolver debt issuance costs write-off
295
722
1,113
1,572
Letters of credit fees
1,300
2,215
2,576
4,347
341
194
667
380
10,917
13,909
22,007
28,391
Covenants and Guarantees
The Credit Agreement and Notes contain customary covenants, including restrictions on our restricted subsidiaries’ ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interest on assets, make
19
acquisitions, loans, advances or investments, or sell or otherwise transfer assets. Obligations under the Credit Agreement are secured by a first-priority lien on substantially all of the assets of Adtalem and certain of its domestic wholly-owned subsidiaries. The Credit Agreement contains customary events of default for facilities of this type. If an event of default under the Credit Agreement occurs and is continuing, the commitments thereunder may be terminated and the principal amount outstanding thereunder, together with all accrued and unpaid interest and other amounts owed thereunder, may be declared immediately due and payable.
Under the terms of the Credit Agreement, Adtalem is required to maintain a Total Net Leverage Ratio (as defined in the Credit Agreement) of equal to or less than 3.25 to 1.00. Adtalem was in compliance with the Credit Agreement debt covenants and the Notes covenants as of December 31, 2025.
14. Share Repurchases
On January 19, 2024, we announced that the Board of Directors (the “Board”) authorized Adtalem’s fourteenth share repurchase program, which allowed Adtalem to repurchase up to $300.0 million of its common stock through January 16, 2027. On May 5, 2025, Adtalem completed its fourteenth share repurchase program. On May 6, 2025, we announced that the Board authorized Adtalem’s fifteenth share repurchase program, which allows Adtalem to repurchase up to $150.0 million of its common stock through May 6, 2028. On December 10, 2025, Adtalem completed its fifteenth share repurchase program. On December 15, 2025, we announced that the Board authorized Adtalem’s sixteenth share repurchase program, which allows Adtalem to repurchase up to $750.0 million of its common stock through December 15, 2028. Adtalem made share repurchases under its share repurchase programs as follows (in thousands, except shares and per share data):
Total number of share repurchases
1,727,565
471,327
1,784,382
933,390
Total cost of share repurchases
164,903
37,517
172,497
71,429
Average price paid per share
95.45
79.60
96.67
76.53
As of December 31, 2025, $727.5 million of authorized share repurchases remained under the sixteenth share repurchase program. The timing and amount of any future repurchases will be determined based on an evaluation of market conditions and other factors. These repurchases may be made through open market purchases, accelerated share repurchases, privately negotiated transactions, or otherwise. Repurchases will be funded through available cash balances and ongoing business operating cash generation and may be suspended or discontinued at any time. Shares of stock repurchased under the programs are held as treasury shares. Repurchases under our share repurchase programs reduce the weighted-average number of shares of common stock outstanding for basic and diluted earnings per share calculations.
15. Stock-Based Compensation
Adtalem’s current stock-based incentive plan is its Fourth Amended and Restated Incentive Plan of 2013, which is administered by the Compensation Committee of the Board. Under the plan, employees and Board members are eligible to receive stock options, restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), and other forms of stock awards. As of December 31, 2025, 1,090,812 shares of common stock were available for future issuance under this plan.
Stock-based compensation expense is recognized on a straight-line basis over the requisite service period. We account for forfeitures of unvested awards in the period they occur. Adtalem issues new shares of common stock to satisfy stock option exercises, RSU vests, and PSU vests. Stock-based compensation expense is included in student services and administrative expense in the Consolidated Statements of Income. There was no capitalized stock-based compensation cost as of December 31, 2025 and June 30, 2025.
Stock Options
Beginning in fiscal year 2023, the Compensation Committee of the Board determined to no longer grant stock options. Prior to fiscal year 2023, we granted stock options generally with a four-year graded vesting from the grant date and expire
ten years from the grant date. The following table summarizes stock option activity for the six months ended December 31, 2025:
Number of
Remaining
Aggregate
Stock
Contractual Life
Intrinsic Value
Options
Exercise Price
(in years)
Outstanding as of June 30, 2025
275,238
38.05
Exercised
(3,624)
35.83
Outstanding as of December 31, 2025
271,614
38.08
4.9
17,760
Exercisable as of December 31, 2025
The fair value of stock options that vested during the six months ended December 31, 2025 and 2024 was $0.6 million and $1.3 million, respectively. As of December 31, 2025, all stock options have been vested and therefore there is no remaining unrecognized stock-based compensation expense related to unvested stock options. The total intrinsic value of stock options exercised for the six months ended December 31, 2025 and 2024 was $0.4 million and $10.2 million, respectively.
RSUs
We grant RSUs generally with a three-year graded vesting from the grant date. We also grant RSUs to our Board members with a one-year cliff vest from the grant date. The fair value per share of RSUs is the closing market price of our common stock on the grant date. The following table summarizes RSU activity for the six months ended December 31, 2025:
Grant Date
Fair Value
Unvested as of June 30, 2025
529,969
59.41
Granted
156,158
97.18
Vested
(307,295)
51.68
Forfeited
(15,314)
78.07
Unvested as of December 31, 2025
363,518
81.39
The weighted-average grant date fair value per share of RSUs granted in the six months ended December 31, 2025 and 2024 was $97.18 and $88.98, respectively. The grant date fair value of RSUs that vested during the six months ended December 31, 2025 and 2024 was $15.9 million and $13.6 million, respectively. As of December 31, 2025, $20.2 million of unrecognized stock-based compensation expense related to unvested RSUs is expected to be recognized over a remaining weighted-average period of 2.0 years.
PSUs
We grant PSUs with an approximate three-year cliff vest from the grant date. The fair value per share of PSUs is the closing market price of our common stock on the grant date. We estimate the number of shares that will vest under our PSU awards when recognizing stock-based compensation expense for each reporting period. The final number of shares
that vest under our PSUs is based on metrics approved by the Compensation Committee of the Board. The following table summarizes PSU activity for the six months ended December 31, 2025:
614,000
57.20
Incremental PSUs granted based on achievement of metrics
196,416
42.03
255,252
96.86
(487,721)
41.83
(18,129)
52.97
559,818
83.49
The weighted-average grant date fair value per share of PSUs granted in the six months ended December 31, 2025 and 2024 was $96.86 and $89.74, respectively. The grant date fair value of PSUs that vested during the six months ended December 31, 2025 and 2024 was $20.4 million and $2.8 million, respectively. As of December 31, 2025, $36.3 million of unrecognized stock-based compensation expense related to unvested PSUs is expected to be recognized over a remaining weighted-average period of 1.4 years.
16. Fair Value Measurements
Fair value is defined under GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. The following fair value hierarchy prioritizes the inputs in valuation methodologies used to measure fair value:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 – Unobservable inputs for the asset or liability. These fair value measurements require significant judgment.
The valuation methodologies used for our assets and liabilities measured at fair value and their classification in the valuation hierarchy are described below.
The carrying value of our cash, cash equivalents, and restricted cash approximates fair value because of their short-term nature and is classified as Level 1.
Adtalem maintains a rabbi trust with investments in stock and bond mutual funds to fund obligations under our nonqualified deferred compensation plan. The fair value of the investments in the rabbi trust included in prepaid expenses and other current assets on the Consolidated Balance Sheets as of December 31, 2025 and June 30, 2025 was $13.8 million and $12.8 million, respectively. These investments are recorded at fair value based upon quoted market prices using Level 1 inputs.
The carrying value of the credit extension programs, which approximates their fair value, is included in accounts and financing receivables, net and other assets, net on the Consolidated Balance Sheets as of December 31, 2025 and June 30, 2025 of $25.7 million and $27.1 million, respectively, and is classified as Level 2. See Note 9 “Accounts and Financing Receivables” for additional information on these credit extension programs.
Adtalem has a nonqualified deferred compensation plan for highly compensated employees and its Board members. The participant’s “investments” are in a hypothetical portfolio of investments which are tracked by an administrator. Changes in the fair value of the nonqualified deferred compensation obligation are derived using quoted prices in active markets based on the market price per unit multiplied by the number of units. Total liabilities under the plan included in accrued liabilities on the Consolidated Balance Sheets as of December 31, 2025 and June 30, 2025 were $14.9 million and $13.5 million, respectively. The fair value of the nonqualified deferred compensation obligation is classified as Level 2
because its inputs are derived principally from observable market data by correlation to the hypothetical portfolio of investments.
As of both December 31, 2025 and June 30, 2025, the principal balance of our Notes was $405.0 million, with a fair value as of those dates of $405.8 million and $402.8 million, respectively. The valuation of the Notes was based upon quoted market prices and is classified as Level 1. As of December 31, 2025 and June 30, 2025, the principal balance of our Term Loan B was $103.3 million and $153.3 million, respectively, with a fair value as of those dates of $104.0 million and $153.8 million, respectively. The valuation of the Term Loan B was based upon quoted market prices in a non-active market and is classified as Level 2. See Note 13 “Debt” for additional information on our Notes and Term Loan B.
During the second quarter of fiscal year 2026, we made a $5.0 million investment in a business. We do not have the ability to exercise significant influence over the investee and therefore have recorded the investment as an equity investment without readily determinable fair value within other assets, net on the Consolidated Balance Sheets. We will adjust the carrying value of this equity investment for observable price changes and impairments with changes in the measurement recognized through net income.
Adtalem has elected not to measure any assets or liabilities at fair value other than those required to be measured at fair value on a recurring basis. Assets measured at fair value on a nonrecurring basis include goodwill, intangible assets, and assets of businesses where the long-term value of the operations are deemed to be impaired. Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed for impairment annually or more frequently if circumstances arise indicating potential impairment. This impairment review was most recently completed as of May 31, 2025. See Note 12 “Goodwill and Intangible Assets” for additional information on the impairment review, including valuation techniques and assumptions.
17. Commitments and Contingencies
Adtalem is subject to lawsuits, administrative proceedings, regulatory reviews, and investigations associated with financial assistance programs and other matters arising in the conduct of its business and certain of these matters are discussed below. Descriptions of certain matters from prior SEC filings may not be carried forward in this report to the extent we believe such matters no longer are required to be disclosed or there has not been, to our knowledge, significant activity relating to them. As of December 31, 2025, we adequately reserved for matters that management has determined a loss is probable and that loss can be reasonably estimated. For those matters for which we have not recorded an accrual, their possible impact on Adtalem’s business, financial condition, or results of operations, cannot be predicted at this time. The continued defense, resolution, or settlement of any of the following matters could require us to expend significant resources and could have a material adverse effect on our business, financial condition, results of operations, and cash flows, and result in the imposition of significant restrictions on us and our ability to operate.
As previously disclosed, pursuant to the terms of the Stock Purchase Agreement (“SPA”) by and between Adtalem and Cogswell, dated as of December 4, 2017, as amended, Adtalem sold DeVry University to Cogswell and Adtalem agreed to indemnify DeVry University for certain losses up to $340.0 million (the “Liability Cap”). Adtalem has previously disclosed DeVry University related matters that have consumed a portion of the Liability Cap.
In late January 2024 and early February 2024, ED sent notices to Chamberlain, RUSM, RUSVM, and Walden that it had received Borrower Defense to Repayment (“BDR”) applications filed by students between June 23, 2022 and November 15, 2022, which ED subsequently sent to each institution for awareness and optional response. Without a similar notice, in June 2025, AUC also received BDR claims that had been filed during the same 2022 timeframe. Each application seeks forgiveness of federal student loans made to these students. In the notices received, ED indicated that: (1) the notification was occurring prior to any substantive review of the application as well as its adjudication; (2) it would send the applications to each institution in batches of 500 per week; (3) it is optional for institutions to respond to the applications; and (4) not responding will result in no negative inference by ED. ED has also explained that it will separately decide whether to seek recoupment on any approved claim and that any recoupment actions ED chooses to initiate will have their own notification and response processes, which include an opportunity to provide additional evidence by the applicable institution. ED has indicated that an institution will learn of ED’s determination to forgive student loans only if it approves a BDR application and ED seeks recoupment. As of December 31, 2025, AUC, Chamberlain, RUSM, RUSVM, and Walden respectively have received 336, 3,144, 1,745, 1,905, and 7,804 BDR claims. Each institution has responded
to all applications received; they believe that none properly stated an eligible claim for loan forgiveness. To date, none of Adtalem’s institutions have received an ED notice of BDR application approvals or recoupment intent.
18. Segment Information
We present three reportable segments as follows:
Chamberlain – This segment includes the operations of Chamberlain, which offers degree and certificate programs in the nursing and health professions postsecondary education industry.
Walden – This segment includes the operations of Walden, which offers degree and certificate programs, including those in nursing, education, counseling, business, information technology, psychology, public health, social work and human services, public administration and public policy, and criminal justice.
Medical and Veterinary – This segment includes the operations of AUC, RUSM, and RUSVM, collectively referred to as the “medical and veterinary schools,” which offers degree and certificate programs in the medical and veterinary postsecondary education industry.
These segments are consistent with the method by which Adtalem’s Chief Operating Decision Maker (“CODM”) evaluates performance and allocates resources. Adtalem’s CODM is our Chief Executive Officer. Our measure of segment profitability utilized by our CODM is adjusted operating income. Our CODM uses this measure to assess the operating results and performance of our segments, perform analytical comparisons to budget, and allocate resources to each segment during monthly operating reviews and annual budget process. Adjusted operating income excludes Home Office expense, restructuring expense, amortization of acquired intangible assets, litigation reserve, strategic advisory costs, and debt modification costs because these are not associated with the ongoing operations of the segments. “Home Office” includes activities not allocated to a reportable segment and is included to reconcile segment results to the Consolidated Financial Statements. Total assets by segment are not presented as our CODM does not review or allocate resources based on segment assets. The accounting policies of the segments are the same as those described in Note 2 “Summary of Significant Accounting Policies.”
Summary financial information by reportable segment is as follows (in thousands):
Revenue:
Total consolidated revenue
Cost of educational services:
86,068
77,317
169,266
153,723
66,733
57,713
131,485
115,694
52,624
51,606
105,441
103,214
Other segment expenses(1):
63,941
61,366
134,336
125,058
72,369
67,440
141,503
128,330
24,332
22,312
47,870
43,931
Adjusted operating income:
33,823
42,303
59,431
70,135
78,460
46,153
134,534
88,795
25,035
21,519
41,807
36,249
Total segment adjusted operating income
137,318
109,975
235,772
195,179
Reconciliation to Consolidated Financial Statements:
Home Office expense
(11,234)
(8,528)
(19,412)
(17,883)
(4,055)
(322)
(4,365)
(2,416)
(2,805)
(5,610)
Litigation reserve
5,550
Strategic advisory costs
(8,110)
(9,794)
Debt modification costs
(712)
Total consolidated operating income
Total consolidated income from continuing operations before income taxes
Depreciation:
5,706
5,466
11,081
10,834
2,074
1,795
4,014
3,477
3,007
2,744
5,827
5,313
167
185
328
369
Total consolidated depreciation
10,954
10,190
Amortization of acquired intangible assets:
2,805
Total consolidated amortization of acquired intangible assets
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Adtalem conducts its educational operations in the U.S., Barbados, St. Kitts, and St. Maarten. Revenue and long-lived assets by geographic area are as follows (in thousands):
Revenue by geographic area:
Domestic operations
401,394
352,292
770,555
681,735
Barbados, St. Kitts, and St. Maarten
Long-lived assets by geographic area:
322,628
308,190
132,891
139,135
Total consolidated long-lived assets
455,519
447,325
No one customer accounted for more than 10% of Adtalem’s consolidated revenue for all periods presented.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read with and is qualified in its entirety by the Consolidated Financial Statements and the notes thereto included in this report. It should also be read in conjunction with the Cautionary Disclosure Regarding Forward-Looking Statements, the Risk Factors included in or incorporated by reference in this report (see Item 1A. “Risk Factors”), and the Financial Aid and Legislative and Regulatory Requirements disclosures set forth in this report. Adtalem reports on a fiscal year period ending on June 30. Therefore, this Quarterly Report for the quarterly period ended December 31, 2025 is for our second quarter of fiscal year 2026.
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 one 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
“Home Office” 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.
Second Quarter Highlights
Financial and operational highlights for the second quarter of fiscal year 2026 include:
One Big Beautiful Bill Act
In July 2025, the U.S. Congress passed the One Big Beautiful Bill Act (“OBBBA”). The U.S. Department of Education (“ED”) has commenced negotiated rulemaking regarding the education-related provisions of OBBBA but has yet to issue necessary enabling regulations and guidance with respect to these provisions. Due to the complexity of OBBBA, including
yet to be promulgated implementing regulations (including how to implement the “Do No Harm” provision discussed below) and lack of interpretive guidance, the impact of OBBBA on our institutions and our business is not yet fully known.
OBBBA makes several substantial changes to the availability of federal student aid, which many of our students rely on to fund their education, including:
We continue to analyze the changes made by OBBBA, including the regulations being promulgated to implement it, and what effect they may have on Adtalem and our programs. These changes could have a material adverse effect on our business, financial condition, cash flows, or results of operations.
Certain aspects of OBBBA may have a positive effect on our business. By applying the same rules to all Title IV participating institutions, OBBBA puts proprietary higher education on a level playing field with other segments of the higher education market regarding such rules.
The federal student aid limits described above apply to all institutions, encouraging other financing sources to enter the student market. We are in discussions with other financing sources who can provide loans to our students. We anticipate that potential relationships with one or more of these financing sources will result in loan programs for our students which will replace some or all the funding which will be limited by OBBBA.
Results of Operations
The following tables present revenue by segment detailing the changes from the prior year periods (in thousands):
Fiscal year 2025
Growth
2,846
46,256
6,554
55,656
Fiscal year 2026
% change from prior year
1.6
%
27.0
6.9
12.4
14,117
74,703
11,724
100,544
4.0
22.4
6.4
11.6
Chamberlain Student Enrollment:
Fiscal Year 2026
Session
July 2025
Sept. 2025
Nov. 2025
Total students
37,697
39,846
39,278
4.5
2.2
(1.0)
Fiscal Year 2025
July 2024
Sept. 2024
Nov. 2024
Jan. 2025
Mar. 2025
May 2025
36,061
38,987
39,691
40,445
40,564
38,891
12.1
11.7
11.5
8.7
6.8
5.8
Chamberlain revenue increased 1.6%, or $2.8 million, to $183.8 million in the second quarter and increased 4.0%, or $14.1 million, to $363.0 million in the first six months of fiscal year 2026 compared to the prior year periods, driven by an increase in enrollment in the September session and higher tuition rates. Enrollment increased in pre-licensure nursing programs; however, this growth was offset by a decline in post-licensure nursing program enrollment. Chamberlain is achieving pre-licensure growth by optimizing investments in student enrollment and experience while leveraging scale through a national footprint and providing a full breadth of nursing programs and modalities. Management is focused on optimizing marketing and enrollment operations to address post-licensure enrollment.
Tuition Rates:
Tuition rates in the current fiscal year increased compared to the prior fiscal year for the Bachelor of Science in Nursing (“BSN”) onsite and online degree, Master of Science in Nursing (“MSN”) online degree, and Doctor of Nursing Practice (“DNP”) degree programs. The average increase across all of these programs was approximately 4.6% from the prior year.
Walden Student Enrollment:
Sept. 30,
Dec. 31,
Period
52,216
52,435
13.6
13.0
Mar. 31,
45,979
46,399
48,526
48,116
12.2
13.2
13.5
15.0
Walden total student enrollment represents those students attending instructional sessions as of the dates identified above. Walden revenue increased 27.0%, or $46.3 million, to $217.6 million in the second quarter and increased 22.4%, or $74.7 million, to $407.5 million in the first six months of fiscal year 2026 compared to the prior year periods, driven by an increase in enrollment, higher tuition rates, and an increase in average credit hours per student. In addition, Walden recognized one additional week of revenue during the second quarter of fiscal year 2026 compared to the prior year period due to the timing of its academic calendar. Walden’s improved enrollment 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 for Walden programs, including general education are charged on a per credit hour basis that varies based on the nature of the program. For other programs such as those with a subscription-based learning modality, tuition is charged on a per term basis. Students are also charged program and clinical fees depending on the specific programs. Some programs require students to attend residencies, skills labs, and pre-practicum labs, for which tuition is charged per event. In most programs, these tuition rates, event charges, and fees increased by approximately 2.0% from the prior year.
Medical and Veterinary Student Enrollment:
Semester
5,297
2.4
5,174
5,133
4,773
(0.7)
1.2
1.0
Medical and Veterinary revenue increased 6.9%, or $6.6 million, to $102.0 million in the second quarter and increased 6.4%, or $11.7 million, to $195.1 million in the first six months of fiscal year 2026 compared to the prior year periods, driven by an increase in enrollment and higher tuition rates. Management continues to focus on increasing enrollment and renewing operational effectiveness, specifically around academic support and the enrollment experience.
Cost of Educational Services
The cost of educational services expense category includes expenses related to the cost of faculty and staff who support educational operations, facilities, adjunct faculty, supplies, housing, bookstore, other educational materials, student education-related support activities, and the provision for bad debts. The following tables present cost of educational services by segment detailing the changes from the prior year periods (in thousands):
Cost increase
8,751
9,020
1,018
18,789
11.3
15.6
2.0
10.1
15,543
15,791
2,227
33,561
9.0
Cost of educational services increased 10.1%, or $18.8 million, to $205.4 million in the second quarter and increased 9.0%, or $33.6 million, to $406.2 million in the first six months of fiscal year 2026 compared to the prior year periods. These cost increases were primarily driven by an increase in labor and other costs to support increased enrollment.
As a percentage of revenue, cost of educational services was 40.8% and 42.1% in the second quarter and first six months of fiscal year 2026, respectively, compared to 41.7% and 43.1% in the prior year periods. The decreases in the percentages were primarily the result of revenue growth accompanied by cost efficiencies.
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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 of acquired intangible assets. The following tables present student services and administrative expense by segment detailing the changes from the prior year periods (in thousands):
64,695
8,528
2,575
4,929
2,020
2,706
Litigation reserve impact
Strategic advisory costs increase
8,110
75,174
19,344
Fiscal year 2026 % change:
4.2
7.6
9.1
NM
7.8
8.6
3.5
5.2
Fiscal year 2026 % change
16.2
16.5
128,390
18,595
9,278
13,173
3,939
1,529
27,919
9,794
Debt modification costs decrease
147,113
29,206
7.4
10.3
8.8
4.3
1.8
3.1
(0.2)
14.6
Student services and administrative expense increased 16.5%, or $25.9 million, to $182.8 million in the second quarter and increased 13.5%, or $42.6 million, to $358.5 million in the first six months of fiscal year 2026 compared to the prior year periods. After excluding litigation reserve and strategic advisory costs, student services and administrative expense increased 7.8%, or $12.2 million, in the second quarter of fiscal year 2026 compared to the prior year period. After excluding litigation reserve, strategic advisory costs, and debt modification costs, student services and administrative expense increased 8.8%, or $27.9 million, in the first six months of fiscal year 2026 compared to the prior year period. These increases were primarily driven by an increase in marketing expense and investments to support growth initiatives.
As a percentage of revenue, student services and administrative expense was 36.3% and 37.1% in the second quarter and first six months of fiscal year 2026, respectively, compared to 35.0% and 36.5% in the prior year periods. The increases in the percentages were primarily the result of an increase in strategic advisory costs in the current year period and a reduction in litigation reserves in the prior year period, partially offset by revenue growth in the current year period. The reduction in litigation reserves in fiscal year 2025 represented a $5.6 million receipt in the second quarter of fiscal year 2025 from a claim made for indemnification under the Membership Interest Purchase Agreement with Laureate Education, Inc.
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Restructuring expense was $4.1 million and $4.4 million in the second quarter and first six months of fiscal year 2026, respectively, compared to $0.3 million and $2.4 million in the prior year periods. The increases in fiscal year 2026 were primarily driven by workforce reductions. In addition, we continue to incur restructuring charges or reversals related to exited leased space from previous restructuring activities.
Operating Income
The following table presents a reconciliation of operating income to adjusted operating income by segment (in thousands):
Increase/(Decrease)
Chamberlain:
31,998
42,226
(10,228)
(24.2)
57,606
68,200
(15.5)
1,748
(110)
Adjusted operating income
(8,480)
(20.0)
(10,704)
(15.3)
Operating margin
17.4
23.3
15.9
19.5
Adjusted operating margin
18.4
23.4
16.4
20.1
Walden:
75,226
48,898
26,328
53.8
128,495
88,735
39,760
44.8
(5,550)
32,307
70.0
45,739
51.5
34.6
28.5
31.5
26.7
36.1
26.9
33.0
Medical and Veterinary:
24,599
21,463
3,136
41,327
36,134
5,193
14.4
365
3,516
16.3
5,558
15.3
24.1
22.5
21.2
19.7
24.5
21.4
19.8
Home Office:
Operating loss
(20,709)
(8,717)
(11,992)
(137.6)
(30,837)
(18,961)
(11,876)
(62.6)
1,176
1,265
712
Adjusted operating loss
(2,706)
(31.7)
(1,529)
(8.6)
Adtalem Global Education:
Operating income (GAAP)
7,244
7.0
22,483
12.9
3,733
1,949
Adjusted operating income (non-GAAP)
126,084
101,447
24,637
24.3
216,360
177,296
39,064
22.0
Operating margin (GAAP)
22.1
23.2
20.4
Adjusted operating margin (non-GAAP)
25.0
22.7
20.5
Consolidated operating income increased 7.0%, or $7.2 million, to $111.1 million in the second quarter and increased 12.9%, or $22.5 million, to $196.6 million in the first six months of fiscal year 2026 compared to the prior year periods.
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The operating income increases in the second quarter and first six months of fiscal year 2026 were primarily driven by an increase in revenue, partially offset by a reduction in litigation reserves in the prior year period, and increases in strategic advisory costs, labor and other costs to support increased enrollment, marketing expense, and investments to support growth initiatives.
Consolidated adjusted operating income increased 24.3%, or $24.6 million, to $126.1 million in the second quarter and increased 22.0%, or $39.1 million, to $216.4 million in the first six months of fiscal year 2026 compared to the prior year periods. The adjusted operating income increases in the second quarter and first six months of fiscal year 2026 were primarily driven by an increase in revenue, partially offset by increases in labor and other costs to support increased enrollment, marketing expense, and investments to support growth initiatives.
Segment adjusted operating income decreased 20.0%, or $8.5 million, to $33.8 million in the second quarter and decreased 15.3%, or $10.7 million, to $59.4 million in the first six months of fiscal year 2026 compared to the prior year periods. The adjusted operating income decreases in the second quarter and first six months of fiscal year 2026 were primarily driven by increases in labor and other costs of educational services, marketing expense, and investments to support growth initiatives, partially offset by an increase in revenue.
Segment adjusted operating income increased 70.0%, or $32.3 million, to $78.5 million in the second quarter and increased 51.5%, or $45.7 million, to $134.5 million in the first six months of fiscal year 2026 compared to the prior year periods. The adjusted operating income increases in the second quarter and first six months of fiscal year 2026 were primarily driven by an increase in revenue, partially offset by increases in labor and other costs to support increased enrollment, marketing expense, and investments to support growth initiatives.
Segment adjusted operating income increased 16.3%, or $3.5 million, to $25.0 million in the second quarter and increased 15.3%, or $5.6 million, to $41.8 million in the first six months of fiscal year 2026 compared to the prior year periods. The adjusted operating income increases in the second quarter and first six months of fiscal year 2026 were primarily driven by an increase in revenue, partially offset by increases in investments to support initiatives to drive growth and investments in academic support.
Interest expense was $10.9 million and $22.0 million in the second quarter and first six months of fiscal year 2026, respectively, compared to $13.9 million and $28.4 million in the prior year periods. The interest expense decreases in the second quarter and first six months of fiscal year 2026 were primarily driven by lower interest expense on our Term Loan B due to decreased borrowings and a lower interest rate, and lower outstanding letters of credit balances during the period (as discussed in Note 13 “Debt” to the Consolidated Financial Statements).
Other income, net was $1.7 million and $4.2 million in the second quarter and first six months of fiscal year 2026, respectively, compared to $2.2 million and $4.9 million in the prior year periods. These decreases were primarily driven by decreases in interest and dividend income, partially offset by higher investment gains.
Provision for Income Taxes
Our effective income tax rate 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, changes in uncertain tax positions, and tax benefits on stock-based compensation.
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Our effective tax rate from continuing operations was 25.2% and 23.2% in the second quarter and first six months of fiscal year 2026, respectively, and 22.8% and 22.0% in the second quarter and first six months of fiscal year 2025, respectively. The effective tax rate for the second quarter of fiscal year 2026 increased compared to the prior year period primarily due to an increase in the limitation of tax benefits on certain executive compensation, partially offset by a decrease in the percentage of earnings from operations in higher taxed jurisdictions. The effective tax rate for the first six months of fiscal year 2026 increased compared to the prior year period primarily due to an increase in the limitation of tax benefits on certain executive compensation, partially offset by a decrease in the percentage of earnings from operations in higher taxed jurisdictions and an increase in tax benefits on stock-based compensation.
In July 2025, OBBBA was signed into law, which introduced substantial changes to U.S. tax provisions. The most relevant provisions to Adtalem for fiscal year 2026 include allowing accelerated tax deductions for qualified property and research and development expenditures. The impacts of OBBBA were not material to the income tax provision for the second quarter and six months ended December 31, 2025.
We had income from discontinued operations of $0.2 million and $1.0 million in the second quarter and first six months of fiscal year 2026, respectively, compared to $4.7 million and $4.6 million in the prior year periods. We recorded income within discontinued operations related to the DeVry University earn-out of $0.5 million and $7.0 million in the second quarter and first six months of fiscal year 2026 and 2025, respectively. In addition, we continue to incur costs associated with ongoing litigation and settlements related to divestitures, which are classified as expenses within discontinued operations.
Financial Aid
Like other higher education institutions, Adtalem’s institutions are dependent upon the timely receipt of federal financial aid funds. All public financial aid programs are subject to political and governmental budgetary considerations. Adtalem’s institutions and their students participate in a wide range of financial aid programs, including U.S. federal financial aid, state financial aid, Canadian financial aid, private loan programs, tax-favored programs, Adtalem-provided financial assistance, and employer-provided financial assistance. In the U.S., the Higher Education Act (as reauthorized, the “HEA”) guides the federal government’s support of postsecondary education. Changes to financial aid programs that restrict student eligibility or reduce funding levels could have a material adverse effect on Adtalem’s business, financial condition, results of operations, and cash flows. See Item 1A. “Risk Factors” in our 2025 Form 10-K for a discussion of student financial aid related risks.
Legislative and Regulatory Requirements
Government-funded financial assistance programs are governed by extensive and complex regulations in the U.S. Like any other educational institution, Adtalem’s institutions’ administration of these programs is periodically reviewed by regulatory agencies and is subject to audit or investigation by other authorities. Any violation could be the basis for penalties or other disciplinary action, including initiation of a suspension, limitation, or termination proceeding.
Financial Responsibility
Institutions must pass an ED financial responsibility test, also known as a “composite score,” to maintain eligibility to participate in Title IV aid programs. For Adtalem’s institutions, this test is calculated at the consolidated Adtalem level. Applying various financial elements from annual audited financial statements, the score is a composite 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 score greater than or equal to 1.5 indicates the institution is considered financially responsible. A score less than 1.5 but greater than or equal to 1.0 is considered financially responsible but requires additional oversight. For example, an institution with a score in this range is subject to heightened cash monitoring and other participation requirements. An institution with a score of less than 1.0 is not considered financially responsible but may continue to participate in the Title IV programs under provisional certification. In addition, this lower score typically requires that the institution be subject
35
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).
Prior to fiscal year 2022, Adtalem’s composite score was greater than 1.5. However, on September 25, 2023, ED notified Adtalem that its fiscal year 2022 composite score had declined to 0.2. As previously disclosed, this was expected due to the acquisition of Walden and other transactions. 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. Management does not believe these conditions will have a material adverse effect on Adtalem’s operations. At ED’s request, Adtalem maintains three surety-backed letters of credit in favor of ED totaling $202.6 million representing 10% of the consolidated Title IV funds Adtalem’s institutions received during fiscal year 2025. See “Off-Balance Sheet Arrangements” in Note 13 “Debt” to the Consolidated Financial Statements for additional information.
The financial responsibility rules include other mandatory or discretionary triggers that could require an institution to post a letter of credit. ED recently amended the financial responsibility regulation and the changes took effect July 1, 2024. The changes include additional triggers which could require additional letters of credit.
Program Participation Agreement (“PPA”)
The HEA specifies the manner in which ED reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution participating in Title IV programs must be certified to participate through a PPA and certification must be periodically renewed. Such recertification generally is required every six years, but may be required earlier, including when an institution undergoes a change in control. Institutions that violate certain ED Title IV regulations may lose eligibility to participate in Title IV programs or may only continue participation under provisional certification. 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. Provisional certification status also carries fewer due process protections than full certification. 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.
Chamberlain was most recently recertified and issued an unrestricted PPA in September 2020, with a reapplication date of June 30, 2024. 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 Chamberlain’s PPA recertification was timely submitted to ED.
ED provisionally recertified Walden’s Title IV PPA through December 31, 2028.
ED provisionally recertified AUC and RUSM’s Title IV PPAs through March 31, 2025. Materially complete applications for AUC and RUSM’s PPA recertification were timely submitted to ED. ED has provisionally recertified RUSVM’s Title IV PPA through March 31, 2027.
The provisional nature of the PPAs stemmed from Adtalem’s composite score declining and failing to meet ED’s standards of financial responsibility as described above.
Walden, AUC, RUSM, and RUSVM’s provisional PPAs included financial requirements, such as letter of credit and heightened cash monitoring, and AUC, RUSM, and RUSVM’s provisional PPAs require additional reporting. We do not believe these requirements will have a material effect on Adtalem’s financial condition or results of operations. With the approval of its change in ownership, Walden has the ability to request ED approval for new programs.
36
Gainful Employment
The HEA requires certificate programs at all Title IV institutions and degree programs at proprietary Title IV institutions to prepare students for gainful employment in a recognized occupation. In October 2023, ED released new Financial Value Transparency (“FVT”) and Gainful Employment (“GE”) rules effective July 1, 2024. GE 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. GE programs must also meet 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 for all Title IV programs are disclosed on a website hosted by ED. Because there are many factors and unknowns, including the earnings of program graduates, Adtalem is reviewing the regulation to determine what impact, if any, the regulation will have on its programs. In addition, multiple parties sought to block enforcement of the FVT/GE rule under the Administrative Procedure Act and other legal theories. On October 2, 2025, a federal district judge ruled in ED’s favor, upholding the FVT/GE rules. The decision is subject to appeal. On February 14, 2025, ED extended the institutional reporting deadline for 2023-2024 and earlier award years until September 30, 2025. The reporting deadline for the 2024-2025 award year was October 1, 2025. On July 25, 2025, ED announced its intent to establish negotiated rulemaking committees in advance of issuing draft regulations on various topics, including FVT/GE. The negotiating committee addressing FVT/GE met in December 2025 and January 2026. ED’s initial proposal includes amendments to the FVT/GE rules including elimination of debt to earnings.
Do No Harm
The recently enacted Do No Harm provisions of OBBBA provide that an undergraduate program may lose Title IV eligibility if the earnings of a programmatic cohort of its completers as defined in OBBBA are no greater than earnings of a population with a high school diploma, and a graduate or professional program may lose Title IV eligibility if the earnings of a programmatic cohort of its completers as defined in OBBBA and its implementing regulations are no greater than the earnings of a population with a bachelor’s degree, in each case for two years in a three-year period. These provisions are applicable to all Title IV participating institutions. Regulations to define how Do No Harm will be implemented, including the definition of completer, the populations to be used to measure the difference between earnings of completers and earnings of others, have yet to be promulgated. On July 25, 2025, ED announced its intent to establish negotiated rulemaking committees to implement Do No Harm and other provisions of OBBBA. The negotiating committee met in December 2025 and January 2026.
The 90/10 Rule
An ED regulation known as the 90/10 Rule affects only proprietary institutions participating in Title IV programs, including each of Adtalem’s institutions. 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 Title IV programs. The following table shows the 90/10 rates for each Adtalem institution for fiscal year 2025 and fiscal year 2024. We are also providing a consolidated rate for Adtalem even though it is not subject to 90/10 requirements.
Chamberlain University
70
Walden University
American University of the Caribbean School of Medicine
86
87
Ross University School of Medicine
Ross University School of Veterinary Medicine
78
Borrower Defense to Repayment
Under the HEA, ED is authorized to specify acts or omissions of an institution that a borrower may assert as a Borrower Defense to Repayment (“BDR”) of their Title IV loans made under the Federal Direct Loan Program. The 2022 BDR regulations were scheduled to go into effect on July 1, 2023 that included a lower threshold for establishing misrepresentation, no statute of limitation for claims submission, expanded reasons to file a claim including aggressive or deceptive recruitment tactics and omission of fact, weakened due processes afforded to institutions, and reinstated provisions for group discharges. ED also included a six-year statute of limitations for recovery of funds from institutions. These changes would increase financial liability risk and reputational risk for Adtalem. However, the updated rules were delayed by litigation from another party and the July 2025 enactment of OBBBA restored the 2019 BDR regulations and delayed the 2022 regulations until July 1, 2035. Consequently, on August 8, 2025, the parties in the litigation dismissed the appeal of the preliminary injunction order, returning the merits of the case to the district court.
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 $56.3 million and $199.6 million as of December 31, 2025 and June 30, 2025, respectively, included cash and cash equivalents held at Adtalem’s international operations of $5.7 million and $22.9 million as of December 31, 2025 and June 30, 2025, respectively, which is available to Adtalem for general corporate purposes.
Cash Flow Summary
Operating Activities
Net cash provided by operating activities from continuing operations in the six months ended December 31, 2025 increased $94.2 million to $160.1 million, compared to $66.0 million in the prior year period. This increase was primarily driven by a $81.0 million increase in cash collected from students, a $22.9 million decrease in net legal settlement payments, and a $9.2 million decrease in interest payments, partially offset by a $11.7 million increase in payments to employees and vendors and a $6.2 million increase in income tax payments.
Investing Activities
Net cash used in investing activities in the six months ended December 31, 2025 and 2024 was $35.6 million and $20.2 million, respectively, and was primarily driven by capital expenditures of $30.6 million and $21.1 million, respectively. In addition, during the six months ended December 31, 2025 we made a $5.0 million minority investment in a business. Capital expenditures for fiscal year 2026 are expected to include information technology investments and new campus development at Chamberlain.
Financing Activities
Net cash used in financing activities in the six months ended December 31, 2025 was $267.2 million, primarily driven by share repurchases of $172.4 million, net repayments under long-term debt obligations of $50.0 million, and employee taxes paid on withholding shares of $42.0 million. Net cash used in financing activities in the six months ended December 31, 2024 was $75.9 million, primarily driven by share repurchases of $74.1 million.
On December 15, 2025, we announced that the Board authorized Adtalem’s sixteenth share repurchase program, which allows Adtalem to repurchase up to $750.0 million of its common stock through December 15, 2028. As of December 31,
38
2025, $727.5 million of authorized share repurchases remained under the sixteenth 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.
Material Cash Requirements
Long-Term Debt – As of December 31, 2025, we have principal balances of $405.0 million of 5.50% Senior Secured Notes due 2028 (the “Notes”), which mature on March 1, 2028 and $103.3 million of Term Loan B under our Credit Facility, which matures on August 12, 2028 and requires interest payments. As a result of previous Term Loan B prepayments, we are no longer required to make quarterly principal installment payments on the Term Loan B. See Note 13 “Debt” to the Consolidated Financial Statements for additional information on the Notes and our Credit Facility.
As of December 31, 2025, Adtalem had $202.6 million of letters of credit outstanding in favor of ED. See “Off-Balance Sheet Arrangements” in Note 13 “Debt” to the Consolidated Financial Statements for additional information.
In the event of unexpected market conditions or negative economic changes that could negatively affect Adtalem’s earnings and/or operating cash flow, Adtalem maintained a $500.0 million revolving credit facility with availability of $500.0 million as of December 31, 2025.
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 obligations.
We believe our cash flows from operations, and our existing cash balances, combined with availability under our credit facility and access to the debt markets, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, capital spending, and anticipated stock repurchases for a period that includes the next twelve months as well as the next several years. However, our ability to maintain sufficient liquidity may be affected by numerous factors, many of which are outside our control.
We have engaged in and continue to engage in the review and planning of strategic alternatives to refinance or otherwise optimize our capital structure, which alternatives may include issuing debt, equity or other securities, or entering into new credit facilities. This review and planning could result in our pursuing one or more significant corporate transactions. There can be no assurance as to when or whether we will determine to pursue any such transaction, whether any such transaction will be successful, or the effects the failure to undertake any such transaction may have on our business, including our ability to achieve our operational, strategic, and financial goals.
Critical Accounting Estimates
There have been no material changes in our critical accounting estimates as disclosed in our 2025 Form 10-K.
Recent Accounting Pronouncements
For information regarding recent accounting pronouncements, see Note 2 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements.
Cautionary Disclosure Regarding 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 generally can be identified by
the use of forward-looking terminology such as “future,” “believe,” “project,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “may,” “will,” “would,” “could,” “can,” “continue,” “preliminary,” “potential,” “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 2025 Form 10-K and that might be contained in this Quarterly Report on Form 10-Q, which should be read in conjunction with the forward-looking statements in this Quarterly Report on Form 10-Q. You should evaluate forward-looking statements in the context of these risks and uncertainties and are cautioned to not place undue reliance on such forward-looking statements. We caution you that these factors may not contain all of the factors that are important to you. We cannot assure you that we will realize the results, performance or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. All 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, amortization of acquired intangible assets, strategic advisory costs, write-off of debt discount and issuance costs, litigation reserve, debt modification costs, and 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, amortization of acquired intangible assets, strategic advisory costs, write-off of debt discount and issuance costs, litigation reserve, debt modification costs, and income from discontinued operations.
Adjusted operating income (most comparable GAAP measure: operating income) – Measure of Adtalem’s operating income adjusted for restructuring expense, amortization of acquired intangible assets, litigation reserve, strategic advisory costs, and debt modification costs.
Adjusted EBITDA (most comparable GAAP measure: net income) – Measure of Adtalem’s net income adjusted for income from discontinued operations, interest expense, other income, net, provision for income taxes, depreciation, amortization of acquired intangible assets, amortization of cloud computing implementation assets, stock-based compensation, restructuring expense, litigation reserve, strategic advisory costs, and debt modification costs. 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 adjusted operating income.
A description of special items in our non-GAAP financial measures described above are as follows:
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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):
Net income (GAAP)
Write-off of debt discount and issuance costs, litigation reserve, and debt modification costs
982
(4,838)
Income tax impact on non-GAAP adjustments (1)
(3,922)
645
(5,146)
(205)
(4,680)
Adjusted net income (non-GAAP)
87,906
69,398
152,838
119,922
Diluted earnings per share reconciliation to adjusted earnings per share (shares in thousands):
Diluted earnings per share (GAAP)
Effect on diluted earnings per share:
0.11
0.06
0.08
0.07
0.15
0.14
0.22
0.27
0.02
(0.14)
(0.12)
(0.11)
(0.02)
(0.01)
(0.03)
Adjusted earnings per share (non-GAAP)
2.43
1.81
4.17
3.09
41
Reconciliation to adjusted EBITDA (in thousands):
Adjusted operating income (GAAP)
240
247
Amortization of cloud computing implementation assets
1,205
3,547
1,467
2,080
3,674
3,993
(319)
6,244
7,112
(868)
Adjusted EBITDA (non-GAAP)
45,223
52,577
(7,354)
(14.0)
80,303
89,548
(9,245)
(10.3)
Adjusted EBITDA margin (non-GAAP)
24.6
29.1
25.7
279
537
1,901
778
1,123
3,105
1,479
1,626
4,237
3,326
911
6,890
6,066
824
86,672
52,052
34,620
66.5
148,543
99,817
48,726
48.8
39.8
30.4
36.5
30.0
263
514
705
315
390
1,116
598
518
2,682
2,158
524
4,092
3,765
327
31,429
26,736
4,693
17.6
52,842
45,925
6,917
15.1
30.8
28.0
27.1
(18)
(41)
2,646
1,990
656
4,306
3,975
Adjusted EBITDA
(8,421)
(6,353)
(2,068)
(32.6)
(14,778)
(13,539)
(1,239)
(9.2)
520
0.7
16,187
13.3
4,475
3,625
(2,992)
(6,384)
(1,704)
(2,235)
531
(4,190)
(4,881)
691
25,730
21,020
4,710
41,541
33,177
8,364
Depreciation and amortization
18,385
14,903
3,482
34,628
29,147
5,481
1,772
614
154,903
125,012
29,891
23.9
266,910
221,751
45,159
27.9
27.6
25.6
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in Adtalem’s market risk exposure during the first six months of fiscal year 2026 from those set forth in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” contained in our 2025 Form 10-K.
Item 4. Controls and Procedures
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 December 31, 2025.
Changes in Internal Control over Financial Reporting
There were no changes during the second quarter of fiscal year 2026 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.
Item 1. Legal Proceedings
For information regarding legal proceedings, see Note 17 “Commitments and Contingencies” to the Consolidated Financial Statements included in Item 1. “Financial Statements.”
Item 1A. Risk Factors
There have been no material changes to Adtalem’s risk factors from those set forth since Item 1A. “Risk Factors” contained in our 2025 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The table below reflects shares of common stock we repurchased during the second quarter of the fiscal year ended June 30, 2026.
Total Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
October 1, 2025 - October 31, 2025
13,959
100.27
141,006,386
November 1, 2025 - November 30, 2025
905,602
94.31
55,602,868
December 1, 2025 - December 31, 2025
808,004
96.66
727,502,227
(1)
See Note 14 “Share Repurchases” to the Consolidated Financial Statements for additional information on our share repurchase programs.
Other Purchases of Equity Securities
Total Number of Shares Purchased (1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
1,469
148.62
NA
27,551
96.10
29,020
98.76
Represents shares purchased by Adtalem for payment of employee withholding taxes on stock awards vesting pursuant to the terms of Adtalem’s stock incentive plans.
Item 5. Other Information
On December 10, 2025, Mr. Stephen W. Beard, Adtalem’s Chairman and Chief Executive Officer, adopted a 10b5-1 Preset Diversification Program (the “10b5-1 Plan”). Mr. Beard’s 10b5-1 Plan is intended to satisfy the affirmative defense
of Rule 10b5-1(c). Trades under Mr. Beard’s 10b5-1 Plan are subject to the required “cooling-off period” with the estimated first sale date under Mr. Beard’s 10b5-1 Plan to occur not before March 16, 2026. Mr. Beard’s 10b5-1 Plan expires on November 30, 2026. The 10b5-1 Plan governs Mr. Beard’s sale of 142,860 shares of Adtalem common stock. After such sales, Mr. Beard will continue to satisfy the stock ownership requirements for our executive officers. Transactions under the 10b5-1 Plan will be disclosed publicly through Form 144 and Form 4 filings with the SEC to the extent required by law.
On December 11, 2025, Mr. Douglas Beck, Adtalem’s Senior Vice President, General Counsel, Corporate Secretary and Institutional Support Services, adopted a 10b5-1 Plan. Mr. Beck’s 10b5-1 Plan is intended to satisfy the affirmative defense of Rule 10b5-1(c). Trades under Mr. Beck’s 10b5-1 Plan are subject to the required “cooling-off period” with the estimated first sale date under Mr. Beck’s 10b5-1 Plan to occur not before March 12, 2026. Mr. Beck’s 10b5-1 Plan expires on November 30, 2026. The 10b5-1 Plan governs Mr. Beck’s sale of 19,230 shares of Adtalem common stock. After such sales, Mr. Beck will continue to satisfy the stock ownership requirements for our executive officers. Transactions under the 10b5-1 Plan will be disclosed publicly through Form 144 and Form 4 filings with the SEC to the extent required by law.
On December 12, 2025, Mr. Robert Phelan, Adtalem’s Senior Vice President and Chief Financial Officer, adopted a 10b5-1 Plan. Mr. Phelan’s 10b5-1 Plan is intended to satisfy the affirmative defense of Rule 10b5-1(c). Trades under Mr. Phelan’s 10b5-1 Plan are subject to the required “cooling-off period” with the estimated first sale date under Mr. Phelan’s 10b5-1 Plan to occur not before March 13, 2026. Mr. Phelan’s 10b5-1 Plan expires on December 1, 2026. The 10b5-1 Plan governs Mr. Phelan’s sale of 17,500 shares of Adtalem common stock. After such sales, Mr. Phelan will continue to satisfy the stock ownership requirements for our executive officers. Transactions under the 10b5-1 Plan will be disclosed publicly through Form 144 and Form 4 filings with the SEC to the extent required by law.
On December 15, 2025, Dr. Karen Cox, President, Chamberlain University, adopted a 10b5-1 Plan. Dr. Cox’s 10b5-1 Plan is intended to satisfy the affirmative defense of Rule 10b5-1(c). Trades under Dr. Cox’s 10b5-1 Plan are subject to the required “cooling-off period” with the estimated first sale date under Dr. Cox’s 10b5-1 Plan to occur not before March 16, 2026. Dr. Cox’s 10b5-1 Plan expires on December 1, 2026. The 10b5-1 Plan governs Dr. Cox’s sale of 2,000 shares of Adtalem common stock. After such sales, Dr. Cox will continue to satisfy the stock ownership requirements for our executive officers. Transactions under the 10b5-1 Plan will be disclosed publicly through Form 144 and Form 4 filings with the SEC to the extent required by law.
On December 15, 2025, Mr. Manjunath Gangadharan, Adtalem’s Vice President and Chief Accounting Officer, adopted a 10b5-1 Plan. Mr. Gangadharan’s 10b5-1 Plan is intended to satisfy the affirmative defense of Rule 10b5-1(c). Trades under Gangadharan’s 10b5-1 Plan are subject to the required “cooling-off period” with the estimated first sale date under Mr. Gangadharan’s 10b5-1 Plan to occur not before August 23, 2026. Mr. Gangadharan’s 10b5-1 Plan expires on December 1, 2026. The 10b5-1 Plan governs Mr. Gangadharan’s sale of any performance share units (“PSUs”) that may vest on August 23, 2026. If Mr. Gangadharan’s PSUs vest at 100%, 1,500 shares will be pursuant to his 10b5-1 Plan. After such sales, Mr. Gangadharan will continue to satisfy the stock ownership requirements for our executive officers. Transactions under the 10b5-1 Plan will be disclosed publicly through Form 144 and Form 4 filings with the SEC to the extent required by law.
Item 6. Exhibits
10.1*, **
Form of Restricted Stock Unit Award Agreement for Executive Officers (for awards granted in fiscal year 2026)
10.2*, **
Form of Restricted Stock Unit Award Agreement for Employees (for awards granted in fiscal year 2026)
10.3*, **
Form of Performance-Based Restricted Stock Unit Award Agreement for Executive Officers (for awards granted in fiscal year 2026)
10.4*, **
Form of Performance-Based Restricted Stock Unit Award Agreement for Employees (for awards granted in fiscal year 2026)
19.2**
Insider Sales and Ownership Policy Addendum
31.1**
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
31.2**
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1**
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Designates management contracts and compensatory plans or arrangements.
** Filed or furnished herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: January 28, 2026
By:
/s/ Robert J. Phelan
Robert J. Phelan
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)