ADTALEM GLOBAL EDUCATION INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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

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

Throughout this MD&A, we sometimes use information derived from the Consolidated
Financial Statements and the notes thereto but not presented in accordance with
U.S. generally accepted accounting principles ("GAAP"). Certain of these items
are considered "non-GAAP financial measures" under the Securities and Exchange
Commission ("SEC") rules. See the "Non-GAAP Financial Measures and
Reconciliations" section for the reasons we use these non-GAAP financial
measures and the reconciliations to their most directly comparable GAAP
financial measures.

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

Available Information

We use our website (www.adtalem.com) as a routine channel of distribution of
company information, including press releases, presentations, and supplemental
information, as a means of disclosing material non-public information and for
complying with our disclosure obligations under Regulation FD. Accordingly,
investors should monitor our website in addition to following press releases,
SEC filings, and public conference calls and webcasts. Investors and others can
receive notifications of new information posted on our investor relations
website in real time by signing up for email alerts. You may also access our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and amendments to those reports, as well as other reports relating to
us that are filed with or furnished to the SEC, free of charge in the investor
relations section of our website as soon as reasonably practicable after such
material is electronically filed with or furnished to the SEC. The SEC also
maintains a website that contains reports, proxy and information

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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

During the first quarter of fiscal year 2022, Adtalem made a change to its reportable segments to align with current strategic priorities and resource allocation.

As of December 31, 2021, Adtalem eliminated its Financial Services segment when
the Association of Certified Anti-Money Laundering Specialists ("ACAMS"), Becker
Professional Education ("Becker"), OnCourse Learning ("OCL"), and EduPristine
were classified as discontinued operations and assets held for sale. In
accordance with GAAP, we have classified ACAMS, Becker, OCL, and EduPristine
entities as "Held for Sale" and "Discontinued Operations" in all periods
presented as applicable. As a result, all financial results, disclosures, and
discussions of continuing operations in this Quarterly Report on Form 10-Q
exclude ACAMS, Becker, OCL, and EduPristine operations, unless otherwise noted.
In addition, we continue to incur costs associated with ongoing litigation and
settlements related to the DeVry University divestiture, which was completed
during fiscal year 2019, and are classified as expense within discontinued
operations. See Note 4 "Discontinued Operations and Assets Held for Sale" to the
Consolidated Financial Statements for additional discontinued operations
information.

We present three reportable segments as follows:

Chamberlain - Offers degree and non-degree programs in the nursing postsecondary education industry. This segment includes the operations of Chamberlain University ("Chamberlain").

Walden - Offers more than 100 online certificate, bachelor's, master's, and
doctoral degrees, including those in nursing, education, counseling, business,
psychology, public health, social work and human services, public administration
and public policy, and criminal justice. This segment includes the operations of
Walden University ("Walden"), which was acquired by Adtalem on August 12, 2021.
See Note 3 "Acquisitions" to the Consolidated Financial Statements for
additional information on the acquisition.

Medical and Veterinary - Offers degree and non-degree programs in the medical
and veterinary postsecondary education industry. This segment includes the
operations of the American University of the Caribbean School of Medicine
("AUC"), Ross University School of Medicine ("RUSM"), and Ross University School
of Veterinary Medicine ("RUSVM"), which are collectively referred to as the
"medical and veterinary schools."

"Home Office and Other" includes activities not allocated to a reportable segment. Financial and descriptive information about Adtalem's reportable segments is presented in Note 20 "Segment Information" to the Consolidated Financial Statements.

Certain expenses previously allocated to ACAMS, Becker, OCL, and EduPristine
within our former Financial Services segment during fiscal year 2021 and the
first quarter of fiscal year 2022 have been reclassified to the Home Office and
Other segment based on discontinued operations reporting guidance regarding
allocation of corporate overhead. Beginning in the second quarter of fiscal year
2022, these costs are being allocated to the Chamberlain, Walden, and Medical
and Veterinary segments.

Walden University Acquisition

On August 12, 2021, Adtalem completed the acquisition of all the issued and
outstanding equity interest in Walden e-Learning, LLC, a Delaware limited
liability company ("e-Learning"), and its subsidiary, Walden University, LLC, a
Florida limited liability company, from Laureate Education, Inc. ("Laureate" or
"Seller") in exchange for a purchase price of $1.5 billion in cash, as set forth
in the Membership Interest Purchase Agreement (the "Agreement) (the
"Acquisition"). See the "Liquidity and Capital Resources" section of this MD&A
for a discussion on the financing used to fund the Acquisition. The risks and
uncertainties related to the Acquisition are described in Item 1A. "Risk
Factors" of our Annual Report on Form 10-K for the fiscal year ended June 30,
2021 ("2021 Form 10-K").

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Second Quarter Highlights

Financial and operational highlights for the second quarter of fiscal year 2022 include:

Adtalem revenue grew $136.8 million, or 58.4%, in the second quarter of fiscal

year 2022 compared to the year-ago quarter. Excluding the effect of the Walden

? acquisition, Adtalem revenue declined $3.8 million, or 1.6%, in the second

quarter of fiscal year 2022 compared to the year-ago quarter. The Chamberlain

and Medical and Veterinary segments saw declines in revenue.

Net income attributable to Adtalem of $17.9 million ($0.36 diluted earnings per

share) decreased $5.5 million ($0.08 per share) in the second quarter of fiscal

year 2022 compared to net income attributable to Adtalem of $23.3 million in

the year-ago quarter. This decrease was primarily driven by increased interest

? expense, partially offset by a decrease in income tax expense. Net income from

continuing operations excluding special items of $37.8 million ($0.75 diluted

earnings per share) increased $5.6 million ($0.14 per share), or 17.3%, in the

second quarter of fiscal year 2022 compared to the year-ago quarter. This

increase was driven principally by the addition of Walden operations, partially

offset by lower operating income at Chamberlain and increased interest expense.

For the November 2021 session, new and total student enrollment at Chamberlain

decreased 0.5% and 2.1%, respectively, compared to the same session last year.

? Chamberlain experienced declining enrollment in several programs, with the most

pronounced being in the Registered Nurse to Bachelor of Science in Nursing

   ("RN-to-BSN") online degree program.


   On August 12, 2021, Adtalem completed its acquisition of Walden. For the

December 2021 term, new and total student enrollment at Walden was 4,999 and

? 41,158 students, respectively. New and total enrollment decreased 18.3% and

9.1%, respectively, from amounts as calculated in the prior year by Walden

while controlled by Laureate Education, Inc., and are included here for

comparative purposes only.

Overview of the Impact of COVID-19

On March 11, 2020, the novel coronavirus ("COVID-19") outbreak was declared a
pandemic by the World Health Organization. COVID-19 has had tragic consequences
across the globe and altered business and consumer activity across many
industries. Management initiated several changes to the operations of our
institutions and administrative functions in order to protect the health of our
students and employees and to mitigate the financial effects of COVID-19 and its
resultant economic slowdown. We will continue to evaluate, and if appropriate,
adopt other measures in the future required for the ongoing safety of our
students and employees.

Results of Operations

Management believes the decreased enrollments at Chamberlain and Walden, and to
a lesser extent at Medical and Veterinary, are partially driven by disruptions
in the nursing and healthcare markets caused by COVID-19. The amount of revenue,
operating income, and earnings per share losses in the second quarter and first
six months of fiscal year 2022 driven by this disruption are not quantifiable.
Management anticipates COVID-19 will continue to negatively affect consolidated
revenue, operating income, net income, and earnings per share during the
remainder of fiscal year 2022 and beyond or for as long as the pandemic and the
various surges continue. In the second quarter and first six months of fiscal
year 2022, we experienced higher variable expenses associated with bringing
students back to campus and providing a safe environment in the context of
COVID-19 as we continue to move back to in-person instruction at Chamberlain and
the medical and veterinary schools. These higher variable expenses are expected
to continue during the remainder of fiscal year 2022; however, these are
expenses incurred in the normal course of on campus operations and will not be
categorized as COVID-19 expenses. COVID-19 effects on the second quarter and
first six months of fiscal year 2022 and 2021 results of operations of the
Adtalem institutions are described below.

?Chamberlain: Approximately 30% of Chamberlain's students are based at campus
locations and pursuing their Bachelor of Science in Nursing ("BSN") degree; at
the onset of the COVID-19 outbreak, all campus-based students transitioned to
online learning for didactic and select clinical experiences. The remaining 70%
of Chamberlain's students are enrolled in online programs that may or may not
have clinical components and those programs continued to

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successfully operate. Students and employees have returned to all Chamberlain
campuses for onsite instruction. Management believes that COVID-19 disruptions
in the healthcare industry may have driven the enrollment decisions of potential
students in the September 2021 and November 2021 sessions; however, the
resulting revenue losses specific to COVID-19 are not quantifiable. COVID-19 did
not result in significantly increased costs at Chamberlain in the second quarter
and first six months of fiscal year 2022 or 2021. The extent of the impact
during the remainder of fiscal year 2022 and beyond will be determined based on
the length and severity of the effects of COVID-19, the efficacy and
distribution of the vaccines, and whether any pandemic surge affects healthcare
facilities' ability to continue to provide clinical experiences. Chamberlain has
clinical partnerships with healthcare facilities across the U.S., minimizing the
risk of suspension of all onsite clinical education experiences.
?Walden: All of Walden's students are enrolled in online programs and these
programs have continued to successfully operate throughout the COVID-19
pandemic. Management believes that COVID-19 disruptions in the healthcare
industry may have driven the enrollment decisions of potential students in the
September 2021 and December 2021 terms; however, the resulting revenue losses
specific to COVID-19 are not quantifiable. COVID-19 did not result in increased
costs at Walden in the second quarter and first six months of fiscal year 2022.
The extent of the impact during the remainder of fiscal year 2022 and beyond
will be determined based on the length and severity of the effects of COVID-19
and the efficacy and distribution of the vaccines.
?AUC and RUSM: Medical students enrolled in the basic science portion of their
program transitioned to online learning at the onset of the COVID-19 outbreak.
Many students left St. Maarten and Barbados to continue their studies remotely
from other locations. AUC and RUSM were able to provide remote learning and have
students remain eligible for U.S. federal financial aid assistance under a
waiver provided by the U.S. Secretary of Education that was included in the
Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") signed into
law in March 2020. The waiver was dependent upon the host country's coronavirus
state of emergency declaration. The nation of St. Maarten lifted their
declaration in June 2020, and as a result, AUC's ability to offer distance
education ended after the September 2020 semester, requiring all AUC students to
return to St. Maarten for basic science instruction effective January 2021. A
limited number of RUSM students began returning to Barbados in January and May
2021 with a full return occurring for the September 2021 semester. The
Consolidated Appropriates Act, 2021 (the "Appropriations Act") was signed into
law in December 2020, and corrected technical errors in the CARES Act, which
clarified the authority to operate via distance learning due to a declaration of
an emergency in an applicable country or a qualifying emergency in the U.S. This
section also extends these flexibilities through the end of the qualifying
emergency or June 30, 2022, whichever is later. The Appropriations Act provides
Adtalem's foreign institutions the ability to continue distance education
without disruption to their students' Title IV federal financial aid. Management
believes uncertainties caused by COVID-19 may have driven the enrollment
decisions of potential and current students; however, COVID-19 did not result in
significant or quantifiable revenue losses or increased costs within the basic
science programs at the medical schools in the second quarter and first six
months of fiscal year 2022 or 2021, except with respect to housing operations in
fiscal year 2021, as discussed below. COVID-19 will likely continue to have a
minimal impact on basic science program revenue in fiscal year 2022, unless
significant numbers of students choose to not continue or start their studies
during this time of uncertainty. The extent of the impact during the remainder
of fiscal year 2022 and beyond will be determined based on the length and
severity of the effects of COVID-19 and the efficacy and distribution of the
vaccines. Students who have completed their basic science education progress to
clinical rotations in the U.S. and the U.K. Clinical rotations for all students
were temporarily suspended in March 2020; however, some students were able to
participate in online clinical elective courses during this transition period
and beyond. The COVID-19 surge experienced during the winter in fiscal year 2021
across the U.S. caused many partner hospitals to again reduce the hours
available for clinical experiences. As a result, although many students were
able to resume their clinical education during the second quarter of fiscal year
2021, management estimates that not being able to offer a full clinical program
reduced combined revenue of AUC and RUSM by approximately $3 million and $7
million and operating income losses by approximately $2 million and $4 million
in the second quarter and first six months of fiscal year 2021, respectively. As
of June 2021, all clinical partners of AUC and RUSM have resumed their clinical
programs. As a result, COVID-19 did not result in any lost clinical revenue in
the second quarter and first six months of fiscal year 2022. Should future
surges in COVID-19 again restrict the number of clinical hours available to our
students, we could experience negative effects on revenue and operating income
in future periods. Adtalem has clinical partnerships with hospitals across the
U.S. and the U.K., minimizing the risk of suspension of all onsite clinical
education experiences. In addition to the loss of clinical revenue and operating
income at AUC and RUSM, management estimates losses of housing and student
transportation revenue of approximately $3 million and $8 million and operating
income

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losses of approximately $3 million and $6 million in the second quarter and
first six months of fiscal year 2021, respectively, due to students not
returning to the St. Maarten and Barbados campuses. All students were back on
the two campuses in the first quarter of fiscal year 2022, and therefore,
COVID-19 did not result in lost housing and student transportation revenue in
the second quarter and first six months of fiscal year 2022.
?RUSVM: All basic science veterinary students transitioned to online learning
beginning in March 2020. Many students left St. Kitts in March 2020 to continue
their studies remotely from other locations. As of May 2021, all basic science
students have returned to St. Kitts where lectures continue to be delivered in
-person and remotely and labs are in-person. COVID-19 did not result in
significant revenue losses or increased costs within the basic science program
in the second quarter and first six months of fiscal year 2022 or 2021. We do
not expect a significant impact from COVID-19 on the basic science program for
the remainder of fiscal year 2022, unless students choose to not continue or
start their studies during this time of uncertainty. RUSVM continued to provide
remote learning during the pandemic and students remained eligible for U.S.
federal financial aid assistance under a waiver provided by the CARES Act and
the Appropriations Act. The Appropriations Act extends through the end of the
qualifying emergency or June 30, 2022, whichever is later, as described above.
Students who have completed their basic science education progress to clinical
rotations at select universities in the U.S., Canada, Australia, Ireland, New
Zealand, and the U.K. A few universities initially suspended onsite clinical
experiences and transitioned students to online education. All universities have
since resumed onsite clinical courses. The initial suspensions did not
significantly reduce revenue or operating income in the second quarter and first
six months of fiscal year 2022 or 2021. While we do not expect a significant
impact from COVID-19 at RUSVM, the extent of the impact on clinical experiences
during the remainder of fiscal year 2022 and beyond will be determined based on
the length and severity of the effects of COVID-19 and the efficacy and
distribution of the vaccines.
?Administrative Operations: Most institution and home office administrative
operations continue to principally be performed remotely. This includes
operations in both the U.S. and all foreign locations. These remote work
arrangements have not adversely affected Adtalem's ability to maintain
operations, financial reporting systems, internal control over financial
reporting, or disclosure controls and procedures. The effectiveness of our
remote technology enables our ability to maintain these systems and controls.
Management does not anticipate Adtalem will be materially impacted by any
constraints or other impacts on our human capital resources and productivity.
Travel restrictions and border closures are not expected to have a material
impact on our ability to operate and achieve operational goals. While recent
travel expenditures have been lower than historical levels, we would expect
these costs to increase as the effects of COVID-19 dissipate. No significant
home office costs were incurred related to COVID-19 in the second quarter and
first six months of fiscal year 2022 or 2021 and no such costs are anticipated
during the remainder of fiscal year 2022 and beyond.

Although COVID-19 has had a negative effect on the operating results of all four
reporting units that contain goodwill and indefinite-lived intangible assets as
of December 31, 2021, at this time none of the effects are considered
significant enough to create an impairment triggering event since our annual
goodwill impairment assessment on May 31, 2021. While management has considered
the effects of the COVID-19 pandemic in evaluating the existence of an
impairment triggering event, it is possible that effects to revenue and cash
flows will be more significant than currently expected if the effects of the
COVID-19 pandemic and measures established to combat the virus continue for an
extended period of time. Should economic conditions deteriorate beyond
expectations during the remainder of fiscal year 2022, an impairment triggering
event could arise and require reassessment of the fair values of goodwill and
intangible assets.

Liquidity

Adtalem's cash and cash equivalents balance as of December 31, 2021 was $275.4
million. Adtalem used $19.0 million in operating cash flow from continuing
operations in the first six months of fiscal year 2022. In the event of
unexpected market conditions or negative economic changes, including those
caused by COVID-19, that could negatively affect Adtalem's earnings and/or
operating cash flow, Adtalem maintains a $400 million revolving credit facility
with availability of $316.0 million as of December 31, 2021. Management
currently projects that COVID-19 will continue to have an effect on operations;
however, we believe the current balances of cash, cash generated from
operations, and our credit facility will be sufficient to fund both Adtalem's
current domestic and international operations and growth plans in the
foreseeable future. See further discussion on the new financing executed to
close the Acquisition in the section of this MD&A titled "Liquidity and Capital
Resources."

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Results of Operations

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

                                            Three Months Ended        Six Months Ended
                                              December 31,              December 31,
                                            2021         2020          2021       2020
Revenue                                       100.0 %      100.0 %      100.0 %    100.0 %
Cost of educational services                   48.6 %       51.5 %       50.4 %     50.0 %
Student services and administrative
expense                                        41.4 %       30.8 %       42.9 %     31.6 %
Restructuring expense                           0.9 %        0.5 %        1.0 %      0.9 %
Business acquisition and integration
expense                                         2.4 %        4.7 %        5.4 %      5.4 %
Total operating cost and expense               93.3 %       87.6 %       99.6 %     87.9 %
Operating income                                6.7 %       12.4 %        0.4 %     12.1 %
Net other expense                             (6.8) %      (0.6) %     (10.8) %    (0.8) %
(Loss) income from continuing
operations before income taxes                (0.1) %       11.8 %     (10.4) %     11.3 %
Benefit from (provision for) income
taxes                                          10.6 %      (1.5) %        4.7 %    (1.7) %
Income (loss) from continuing
operations                                     10.5 %       10.2 %      (5.8) %      9.6 %
Loss from discontinued operations, net
of tax                                        (5.7) %      (0.3) %      (0.3) %    (0.1) %
Net income (loss)                               4.8 %        9.9 %      (6.1) %      9.5 %
Net loss attributable to redeemable
noncontrolling interest from
discontinued operations                         0.0 %        0.1 %        0.0 %      0.1 %
Net income (loss) attributable to
Adtalem                                         4.8 %        9.9 %      (6.1) %      9.5 %




Revenue

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

                                                    Three Months Ended December 31, 2021
                                                                      Medical and
                                         Chamberlain      Walden      Veterinary      Consolidated
Fiscal year 2021 as reported             $    141,977   $        -   $      92,419   $      234,396
Organic decline                               (2,856)            -           (969)          (3,825)
Effect of acquisitions                              -      140,627               -          140,627
Fiscal year 2022 as reported             $    139,121   $  140,627   $      91,450   $      371,198

Fiscal year 2022 % change:
Organic decline                                 (2.0) %         NM           (1.0) %          (1.6) %
Effect of acquisitions                              -           NM               -             60.0 %

Fiscal year 2022 % change as reported           (2.0) %         NM         

 (1.0) %           58.4 %





                                                     Six Months Ended December 31, 2021
                                                                       Medical and
                                          Chamberlain      Walden      Veterinary      Consolidated
Fiscal year 2021 as reported             $     275,741   $        -   $     177,481   $      453,222
Organic decline                                  (981)            -         (1,217)          (2,198)
Effect of acquisitions                               -      209,244               -          209,244
Fiscal year 2022 as reported             $     274,760   $  209,244   $     176,264   $      660,268

Fiscal year 2022 % change:
Organic decline                                  (0.4) %         NM           (0.7) %          (0.5) %
Effect of acquisitions                               -           NM               -             46.2 %

Fiscal year 2022 % change as reported            (0.4) %         NM        

  (0.7) %           45.7 %




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Chamberlain

Chamberlain Student Enrollment:

                                            Fiscal Year 2022
Session                            July 2021   Sept. 2021   Nov. 2021
New students                           2,810        5,487       2,916
% change from prior year                 1.5 %     (13.4) %     (0.5) %
Total students                        32,729       34,539      33,648
% change from prior year                 1.6 %      (2.8) %     (2.1) %

                                                             Fiscal Year 2021
Session                            July 2020   Sept. 2020   Nov. 2020   Jan. 2021   Mar. 2021   May 2021
New students                           2,768        6,333       2,931       5,202       3,283      4,363
% change from prior year                15.5 %       13.2 %       8.1 %     (1.7) %       6.8 %      3.6 %
Total students                        32,198       35,525      34,387      35,750      35,702     34,930
% change from prior year                12.2 %       11.9 %      10.2 %    

  5.6 %       5.8 %      4.6 %




Chamberlain revenue decreased 2.0%, or $2.9 million, to $139.1 million in the
second quarter and decreased 0.4%, or $1.0 million, to $274.8 million in the
first six months of fiscal year 2022 compared to the year-ago periods. These
decreases were driven by declining total enrollments in the September 2021 and
November 2021 sessions compared to the same sessions from the prior year.
Chamberlain admitted its largest class of campus students in September 2020,
which partially explains the decline in the September 2021 comparable session,
as enrollment changes return to historical levels. Management believes that a
decrease in new and total student enrollment in several programs, with the most
pronounced being in the RN-to-BSN online degree program, may partially be driven
by prolonged COVID-19 pandemic disruptions in the healthcare industry. It is
expected disruptions caused by COVID-19 may continue to effect enrollment for as
long as the pandemic continues to stress the healthcare market.

Chamberlain currently operates 23 campuses in 15 states, including Chamberlain's newest campus in Irwindale, California, which began instruction in May 2021.

Tuition Rates:

Tuition for the BSN onsite degree program ranges from $675 to $730 per credit
hour. Tuition for the Registered Nurse to BSN ("RN-to-BSN") online degree
program is $590 per credit hour. Tuition for the online Master of Science in
Nursing ("MSN") degree program is $650 per credit hour. Tuition for the online
Family Nurse Practitioner ("FNP") degree program is $665 per credit hour.
Tuition for the online Doctor of Nursing Practice ("DNP") degree program is $775
per credit hour. Tuition for the online Master of Public Health ("MPH") degree
program is $550 per credit hour. Tuition for the online Master of Social Work
("MSW") degree program is $695 per credit hour. These tuition rates do not
include the cost of course fees, books, supplies, transportation, clinical fees,
living expenses, or other fees as listed in the Chamberlain University academic
catalog.

Walden

Walden Student Enrollment:




                    Fiscal Year 2022
Term             Sept. 2021   Dec. 2021
New students          8,413       4,999
Total students       44,886      41,158

Walden new and total student enrollment represents those students attending
instructional sessions as of September 30, 2021 and December 31, 2021. Walden
revenue was $140.6 million in the second quarter and $209.2 million in the first
six months of fiscal year 2022, which includes the deferred revenue purchase
accounting adjustment of $2.4 million and $8.6 million in the second quarter and
first six months of fiscal year 2022, respectively. There was no comparable

revenue in

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the year-ago periods as Adtalem acquired Walden on August 12, 2021. Management
believes new and total enrollment was possibly negatively affected by COVID-19
disruptions in the healthcare industry and the negative publicity surrounding
the now concluded U.S. Department of Justice inquiry into potential false
representations and false advertising to students. This inquiry ultimately
concluded favorably, with no findings of misconduct by Walden. In addition, the
uncertainty from potential students around the change in control and the Walden
acquisition may have negatively affected enrollment. It is expected disruptions
caused by COVID-19 may continue to effect enrollment for as long as the pandemic
continues to stress the healthcare market.

Tuition Rates:

On a per credit hour basis, tuition for Walden programs range from $120 per
credit hour to $995 per credit hour, with the wide range due to the nature of
the programs. General education courses are charged at $325 per credit hour.
Other subscription based learning modalities are billed on a subscription or
term basis and range from $1,500 to $6,800 per term. Students are charged a
technology fee that ranges from $75 to $210 per term as well as a clinical fee
of $150 per course for specific programs. Some programs require students to
attend residencies, skills labs, and pre-practicum labs, which are charged at a
range of $975 to $2,475 per event. These tuition rates, event charges, and fees
do not include the cost of books or personal technology, supplies,
transportation, or living expenses.

Medical and Veterinary

Medical and Veterinary Student Enrollment:

                           Fiscal Year 2022
Semester                      Sept. 2021
New students                            878
% change from prior year              (4.6) %
Total students                        5,449
% change from prior year              (6.9) %

                                      Fiscal Year 2021
Semester                      Sept. 2020      Jan. 2021   May 2021
New students                            920         589        611
% change from prior year                5.5 %      21.2 %     12.3 %
Total students                        5,850       5,292      5,126
% change from prior year                4.3 %     (6.2) %    (1.2) %




Medical and Veterinary revenue decreased 1.0%, or $1.0 million, to $91.5 million
in the second quarter and decreased 0.7%, or $1.2 million, to $176.3 million in
the first six months of fiscal year 2022 compared to the year-ago periods,
driven by lower enrollment, partially offset by an increase in clinical revenue
at AUC for the first six months of fiscal year 2022 and increased clinical
revenue and housing revenue at RUSM for the second quarter and first six months
of fiscal year 2022.

In the September 2021 semester, total student enrollment increased at AUC but
declined at RUSM and RUSVM while new student enrollment increased at RUSVM but
declined at AUC and RUSM. The decline in total student enrollment at RUSM was
driven by the inability to offer clinical experiences to all eligible students
caused by an increase in students waiting to pass their USMLE Step 1 exam. If a
student has not yet started in a clinical program, is not eligible to be
enrolled in a clinical program, or not participating in other educational
experiences, they are not included in the enrollment count for that semester.
This clinical backlog is decreasing and is expected to be less of a factor in
enrollments in the near term. Management believes increased competition for
students and hesitancy on participating in on campus instruction were drivers of
lower new student enrollment. Total enrollment at RUSM and RUSVM also declined
due to higher student withdrawals and leaves of absence. Management is executing
its plan to differentiate the medical and veterinary schools from the
competition, with a core goal of increasing international students, increasing
affiliations with historically black colleges and universities ("HBCU") and
Hispanic-serving institutions ("HSI"), expanding AUC's medical education program
based in the U.K. in partnership with the University of Central Lancashire
("UCLAN"), and improving the effectiveness of marketing and enrollment
investments.

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Tuition Rates:

Effective for semesters beginning in September 2021, tuition rates for the

? beginning basic sciences and final clinical rotation portions of AUC's medical

program are $23,800 and $26,625, respectively, per semester. These tuition

rates represent a 2.4% increase from the prior academic year.

Effective for semesters beginning in September 2021, tuition rates for the

? beginning basic sciences and final clinical rotation portions of RUSM's medical

program are $24,750 and $27,310, respectively, per semester. These tuition

rates represent a 2.4% increase from the prior academic year.

For students who entered the RUSVM program in September 2018 or later, the

tuition rate for the pre-clinical (Semesters 1-7) and clinical curriculum

(Semesters 8-10) is $21,603 per semester effective September 2021. For students

? who entered RUSVM before September 2018, tuition rates for the pre-clinical and

clinical curriculum are $20,066 and $25,190, respectively, per semester

effective September 2021. All of these tuition rates represent a 3.5% increase

from the prior academic year.

The respective tuition rates for AUC, RUSM, and RUSVM do not include the cost of transportation, living expenses, or health insurance.

Cost of Educational Services

The largest component of cost of educational services is the cost of faculty and
staff who support educational operations. This expense category also includes
the costs of facilities, adjunct faculty, supplies, housing, bookstore, other
educational materials, student education-related support activities, and the
provision for bad debts. We have not yet experienced significant inflationary
pressures on wages or other costs of delivering our educational services;
however, should inflation persist in the overall economy, cost increase could
affect our results of operations in the future. The following tables present
cost of educational services by segment detailing the changes from the year-ago
periods (in thousands):




                                                  Three Months Ended December 31, 2021
                                                            Medical and     Home Office
                                Chamberlain     Walden      Veterinary       and Other      Consolidated
Fiscal year 2021 as reported   $      63,989   $       -   $      56,283   $         555   $      120,827
Cost increase (decrease)               2,608           -         (2,138)           (555)             (85)
Effect of acquisitions                     -      59,678               -               -           59,678

Fiscal year 2022 as reported $ 66,597 $ 59,678 $ 54,145 $

           -   $      180,420

Fiscal year 2022 % change:
Cost increase (decrease)                 4.1 %        NM           (3.8) %            NM            (0.1) %
Effect of acquisitions                     -          NM               -              NM             49.4 %
Fiscal year 2022 % change as
reported                                 4.1 %        NM           (3.8) %            NM             49.3 %





                                                   Six Months Ended December 31, 2021
                                                            Medical and     Home Office
                                Chamberlain     Walden      Veterinary       and Other      Consolidated
Fiscal year 2021 as reported   $     123,721   $       -   $     101,662   $       1,137   $      226,520
Cost increase (decrease)               8,564           -           4,793         (1,137)           12,220
Effect of acquisitions                     -      93,730               -               -           93,730

Fiscal year 2022 as reported $ 132,285 $ 93,730 $ 106,455 $

           -   $      332,470

Fiscal year 2022 % change:
Cost increase                            6.9 %        NM             4.7 %            NM              5.4 %
Effect of acquisitions                     -          NM               -              NM             41.4 %
Fiscal year 2022 % change as
reported                                 6.9 %        NM             4.7 %            NM             46.8 %


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Cost of educational services increased 49.3%, or $59.6 million, to $180.4
million in the second quarter and increased 46.8%, or $106.0 million, to $332.5
million in the first six months of fiscal year 2022 compared to the year-ago
periods. Excluding the effect of the Walden acquisition, cost of education
services decreased 0.1%, or $0.1 million, in the second quarter and increased
5.4%, or $12.2 million, in the first six months of fiscal year 2022 compared to
the year-ago periods. Costs increased in the first six months of fiscal year
2022 primarily driven by return to campus cost increases at Chamberlain, AUC,
RUSM, and RUSVM, increased clinical expense to support increased clinical hours,
and costs to support Chamberlain campus growth.

As a percentage of revenue, cost of educational services was 48.6% and 50.4% in
the second quarter and first six months of fiscal year 2022, respectively,
compared to 51.5% and 50.0% in the year-ago periods. The decrease in the
percentage in the second quarter was primarily the result of the influence of
Walden's higher gross margins for the entire quarter. Walden's fully online
operating model results in lower cost of educational services. The increase in
the percentage in the first six months of fiscal year 2022 was primarily the
result of return to campus, partially offset by Walden's lower relative cost of
instruction for a portion of the six-month period.

Student Services and Administrative Expense

The student services and administrative expense category includes expenses
related to student admissions, marketing and advertising, general and
administrative, and amortization expense of finite-lived intangible assets
related to business acquisitions. The following tables present student services
and administrative expense by segment detailing the changes from the year-ago
periods (in thousands):




                                                  Three Months Ended December 31, 2021
                                                            Medical and     Home Office
                                Chamberlain     Walden      Veterinary       and Other      Consolidated
Fiscal year 2021 as reported   $      45,506   $       -   $      17,328   $       9,426   $       72,260
Cost increase (decrease)               1,227           -             272         (1,763)            (264)
Effect of acquisitions
excluding special items                    -      50,902               -               -           50,902
Walden intangible
amortization expense                       -      30,699               -               -           30,699

Fiscal year 2022 as reported $ 46,733 $ 81,601 $ 17,600 $ 7,663 $ 153,597

Fiscal year 2022 % change:
Cost increase (decrease)                 2.7 %        NM             1.6 %            NM            (0.4) %
Effect of acquisitions
excluding special items                    -          NM               -              NM             70.4 %
Effect of Walden intangible
amortization expense                       -          NM               -              NM             42.5 %
Fiscal year 2022 % change as
reported                                 2.7 %        NM             1.6 %            NM            112.6 %


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                                                   Six Months Ended December 31, 2021
                                                            Medical and     Home Office
                                Chamberlain     Walden      Veterinary       and Other      Consolidated
Fiscal year 2021 as reported   $      89,370   $       -   $      34,169   $      19,551   $      143,090
Cost increase (decrease)               6,459           -             270           (792)            5,937
Effect of acquisitions
excluding special items                    -      80,661               -   

           -           80,661
Walden intangible
amortization expense                       -      47,150               -               -           47,150
CEO transition costs                       -           -               -           6,195            6,195

Fiscal year 2022 as reported $ 95,829 $ 127,811 $ 34,439 $ 24,954 $ 283,033

Fiscal year 2022 % change:
Cost increase                            7.2 %        NM             0.8 %            NM              4.1 %
Effect of acquisitions
excluding special items                    -          NM               -              NM             56.4 %
Effect of Walden intangible
amortization expense                       -          NM               -              NM             33.0 %
Effect of CEO transition
costs                                      -          NM               -              NM              4.3 %
Fiscal year 2022 % change as
reported                                 7.2 %        NM             0.8 %            NM             97.8 %


Student services and administrative expense increased 112.6%, or $81.3 million,
to $153.6 million in the second quarter and increased 97.8%, or $139.9 million,
to $283.0 million in the first six months of fiscal year 2022 compared to the
year-ago periods. Excluding the effect of the Walden acquisition and CEO
transition costs, student services and administrative expense decreased 0.4%, or
$0.3 million, in the second quarter and increased 4.1%, or $5.9 million, in the
first six months of fiscal year 2022 compared to the year-ago periods. Increased
costs at Chamberlain in the first six months of fiscal year 2022 were primarily
driven by higher marketing expense.

As a percentage of revenue, student services and administrative expense was
41.4% and 42.9% in the second quarter and first six months of fiscal year 2022,
respectively, compared to 30.8% and 31.6% in the year-ago periods. The increases
in the percentages were primarily the result of an increase in Chamberlain
marketing expense, Walden intangible amortization expense and CEO transition
costs.

Restructuring Expense

Restructuring expense in the second quarter and first six months of fiscal year
2022 was $3.4 million and $6.5 million, respectively, compared to $1.2 million
and $4.1 million in the year-ago periods. The primary driver of the increased
restructure expense in the second quarter and first six months of fiscal year
2022 was the higher severance charges related to workforce reductions related to
synergy actions with regard to the Walden acquisition. See Note 6 "Restructuring
Charges" to the Consolidated Financial Statements for additional information on
restructuring charges.

In addition to continuing to incur restructuring charges or reversals related to exiting leased space from previous restructuring activities, we have begun additional restructuring plans to achieve synergies with the Walden acquisition.

Business Acquisition and Integration Expense

Business acquisition and integration expense in the second quarter and first six
months of fiscal year 2022 was $9.1 million and $35.6 million, respectively,
compared to $11.1 million and $24.5 million in the year-ago periods. These are
transaction costs associated with acquiring Walden and costs associated with
integrating Walden into Adtalem. We expect to incur additional integration costs
through the remainder of fiscal year 2022.

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Operating Income

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

                                                   Three Months Ended December 31, 2021
                                                              Medical and     Home Office
                                 Chamberlain      Walden      Veterinary       and Other      Consolidated
Fiscal year 2021 as reported    $      32,482   $        -   $      18,808   $    (22,226)   $       29,064
Organic change                        (6,691)            -             898           2,317          (3,476)
Effect of acquisitions
excluding special items                     -       32,401               -               -           32,401
Deferred revenue adjustment
change                                      -      (2,354)               -               -          (2,354)
Restructuring expense change            (335)      (1,791)           (188)              93          (2,221)
Business acquisition and
integration expense change                  -            -               -           2,019            2,019
Walden intangible
amortization expense change                 -     (30,699)               -               -         (30,699)

Fiscal year 2022 as reported $ 25,456 $ (2,443) $ 19,518

 $    (17,797)   $       24,734





                                                    Six Months Ended December 31, 2021
                                                              Medical and     Home Office
                                 Chamberlain      Walden      Veterinary       and Other      Consolidated
Fiscal year 2021 as reported    $      62,651   $        -   $      41,649   $    (49,285)   $       55,015
Organic change                       (16,005)            -         (6,278)           1,929         (20,354)
Effect of acquisitions
excluding special items                     -       43,413               -               -           43,413
Deferred revenue adjustment
change                                      -      (8,561)               -               -          (8,561)
CEO transition costs change                 -            -               -         (6,195)          (6,195)
Restructuring expense change            (335)      (1,791)           (188)            (85)          (2,399)
Business acquisition and
integration expense change                  -            -               -        (11,098)         (11,098)
Walden intangible
amortization expense change                 -     (47,150)               -               -         (47,150)

Fiscal year 2022 as reported $ 46,311 $ (14,089) $ 35,183

 $    (64,734)   $        2,671


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


                                            Three Months Ended                        Six Months Ended
                                              December 31,                             December 31,
                                                             Increase                                 Increase
                                     2021         2020      (Decrease)        2021         2020      (Decrease)
Chamberlain:
Operating income (GAAP)           $   25,456   $   32,482       (21.6) %   $   46,311   $   62,651       (26.1) %
Restructuring expense                    335            -                         335            -
Operating income excluding
special items (non-GAAP)          $   25,791   $   32,482       (20.6) %   $   46,646   $   62,651       (25.5) %

Walden:
Operating loss (GAAP)             $  (2,443)   $        -           NM     $ (14,089)   $        -           NM
Deferred revenue adjustment            2,354            -                       8,561            -
Restructuring expense                  1,791            -                       1,791            -
Walden intangible amortization
expense                               30,699            -                      47,150            -
Operating income excluding
special items (non-GAAP)          $   32,401   $        -           NM     $   43,413   $        -           NM

Medical and Veterinary:
Operating income (GAAP)           $   19,518   $   18,808          3.8 %   $   35,183   $   41,649       (15.5) %
Restructuring expense                    188            -                         188            -
Operating income excluding
special items (non-GAAP)          $   19,706   $   18,808          4.8 %   $   35,371   $   41,649       (15.1) %

Home Office and Other:
Operating loss (GAAP)             $ (17,797)   $ (22,226)         19.9 %   $ (64,734)   $ (49,285)       (31.3) %
CEO transition costs                       -            -                       6,195            -
Restructuring expense                  1,073        1,166                       4,167        4,082
Business acquisition and
integration expense                    9,060       11,079                      35,613       24,515
Operating loss excluding
special items (non-GAAP)          $  (7,664)   $  (9,981)         23.2 %   $ (18,759)   $ (20,688)          9.3 %

Adtalem Global Education:
Operating income (GAAP)           $   24,734   $   29,064       (14.9) %   $    2,671   $   55,015       (95.1) %
Deferred revenue adjustment            2,354            -                       8,561            -
CEO transition costs                       -            -                       6,195            -
Restructuring expense                  3,387        1,166                       6,481        4,082
Business acquisition and
integration expense                    9,060       11,079                      35,613       24,515
Walden intangible amortization
expense                               30,699            -                      47,150            -
Operating income excluding
special items (non-GAAP)          $   70,234   $   41,309         70.0 %   $  106,671   $   83,612         27.6 %


Total consolidated operating income decreased 14.9%, or $4.3 million, to $24.7
million in the second quarter and decreased 95.1%, or $52.3 million, to $2.7
million in the first six months of fiscal year 2022 compared to the year-ago
periods. Excluding the effect of the Walden acquisition, total consolidated
operating income decreased $1.9 million and decreased $38.3 million in the
second quarter and first six months of fiscal year 2022, respectively, compared
to the year-ago periods. The primary drivers of the operating income decreases
in the second quarter and the first six months of fiscal year 2022 were
decreased revenue at Chamberlain and Medical and Veterinary, increased costs at
Chamberlain and Medical and Veterinary for return to campus, increased marketing
expense at Chamberlain, and CEO transition costs. An additional driver of the
operating income decrease in the first six months of fiscal year 2022 was
increased business acquisition and integration costs.

Consolidated operating income excluding special items increased 70.0%, or $28.9
million, in the second quarter and increased 27.6%, or $23.1 million, in the
first six months of fiscal year 2022 compared to the year-ago periods. The
addition of operating income excluding special items from Walden was partially
offset by the drivers explained above for the other segments.

Chamberlain

Chamberlain operating income decreased 21.6%, or $7.0 million, to $25.5 million
in the second quarter and decreased 26.1%, or $16.3 million, to $46.3 million in
the first six months of fiscal year 2022 compared to the year-ago periods. The
primary drivers of the decreases in operating income was decreased revenue,
increased costs for return to campus and increased marketing expense.

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Walden

Walden operating loss was $2.4 million in the second quarter and an operating
loss of $14.1 million in the first six months of fiscal year 2022, which were
impacted by intangible amortization expense and the deferred revenue purchase
accounting adjustments. Segment operating income excluding special items was
$32.4 million and $43.4 million in the second quarter and first six months of
fiscal year 2022, respectively. There was no comparable operating income in the
year-ago periods as Adtalem acquired Walden on August 12, 2021.

Medical and Veterinary

Medical and Veterinary operating income increased 3.8%, or $0.7 million, to
$19.5 million in the second quarter and decreased 15.5%, or $6.5 million, to
$35.2 million in the first six months of fiscal year 2022 compared to the
year-ago periods. The primary driver of the increase in operating income in the
second quarter of fiscal year 2022 was lower bad debt expense. The primary
driver of the decrease in operating income in the first six months of fiscal
year 2022 was an increase in costs for return to campus.

Net Other Expense

Net other expense in the second quarter and first six months of fiscal year 2022
was $25.1 million and $71.6 million, respectively, compared to $1.5 million and
$3.7 million in the year-ago periods. The increase in net other expense was
primarily the result of increased borrowings (as discussed in Note 13 "Debt" to
the Consolidated Financial Statements) to finance the Walden acquisition.

Benefit from (Provision for) Income Taxes

Our effective income tax rate ("ETR") from continuing operations can differ from
the 21% U.S. federal statutory rate due to several factors, including the rate
of tax applied by state and local jurisdictions, the rate of tax applied to
earnings outside the U.S., tax incentives, changes in valuation allowances,
liabilities for uncertain tax positions, and tax benefits on stock-based
compensation awards. Additionally, our ETR is impacted by the provisions from
the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), which primarily includes a
tax on global intangible low-taxed income ("GILTI"), a deduction for foreign
derived intangible income ("FDII"), and a limitation of tax benefits on certain
executive compensation. The impact of the Tax Act may be revised in future
periods as we obtain additional data and consider any new regulations or
guidance that may be released.

Our income tax benefits from continuing operations were $39.4 million and $30.8
million in the three and six months ended December 31, 2021, respectively, and
our income tax expenses from continuing operations were $3.6 million and $7.8
million in the three and six months ended December 31, 2020, respectively. The
increase in the fiscal year 2022 income tax benefit is the result of the losses
incurred for the three and six months ended December 31, 2021, and a catch-up
tax benefit recorded in the second quarter of fiscal year 2022 due to the change
in the full year ETR after reflecting discontinued operations treatment for the
Financial Services segment.

On December 27, 2020, the Appropriations Act was enacted in response to the
COVID-19 pandemic. The Appropriations Act, among other things, temporarily
extends through December 31, 2025, certain expiring tax provisions, including
look-through treatment of payments of dividends, interest, rents, and royalties
received or accrued from related controlled foreign corporations. Additionally,
the Appropriations Act enacted new provisions and extended certain provisions
originated within the CARES Act, enacted on March 27, 2020, including an
extension of time for repayment of the deferred portion of employees' payroll
tax through December 31, 2021, and a temporary allowance for full deduction of
certain business meals. Adtalem elected not to defer the employees' portion of
payroll tax. Management does not expect that the other provisions of the
Appropriations Act would result in a material tax or cash benefit.

On March 11, 2021, the American Rescue Plan Act of 2021 (the "Rescue Act") was
enacted in response to the COVID-19 pandemic. The Rescue Act, among other
things, expands the number of employees subject to the tax deductibility
limitation of employee compensation in excess of $1 million for tax years
beginning after December 31, 2026 and repeals the election for U.S. affiliated
groups to allocate interest expense on a worldwide basis. Management does not
expect that the other provisions of the Rescue Act would result in a material
tax or cash detriment.

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Discontinued Operations

Beginning in the second quarter of fiscal year 2022, ACAMS, Becker, OCL, and
EduPristine operations were classified as discontinued operations. In addition,
we continue to incur costs associated with ongoing litigation and settlements
related to the DeVry University divestiture, which was completed during fiscal
year 2019, and are classified as expense within discontinued operations.

Total loss from discontinued operations attributable to Adtalem was $21.2 million and $2.0 million in the second quarter and first six months of fiscal year 2022, respectively, compared to $0.6 million and $0.3 million in the year-ago periods.

Regulatory Environment

Student Payments

Adtalem's primary source of liquidity is the cash received from payments for
student tuition, books, other educational materials, and fees. These payments
include funds originating as financial aid from various federal and state loan
and grant programs, student and family educational loans ("private 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 following table, which excludes ACAMS, Adtalem Brazil (divestiture completed
during fiscal year 2020, Becker, EduPristine, and OCL revenue, summarizes
Adtalem's revenue by fund source as a percentage of total revenue for fiscal
years 2021 and 2020.


                                                                 Fiscal Year
                                                                2021      2020
Federal assistance (Title IV) program funding (grants and
loans)                                                             72 %      71 %
State grants                                                        1 %       1 %
Private loans                                                       2 %    

2 % Student accounts, cash payments, private scholarships, employer and military provided tuition assistance, and other 25 %

 26 %
Total                                                             100 %     100 %


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.

Financial Aid

Like other higher education companies, Adtalem is highly dependent upon the
timely receipt of federal financial aid funds. All financial aid and assistance
programs are subject to political and governmental budgetary considerations. In
the U.S., the Higher Education Act ("HEA") guides the federal government's
support of postsecondary education. If there are changes to financial aid
programs that restrict student eligibility or reduce funding levels, Adtalem's
financial condition and cash flows could be materially and adversely affected.
See Item 1A. "Risk Factors" in our 2021 Form 10-K for a discussion of student
financial aid related risks.

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

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

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During the fourth quarter of fiscal year 2020 and the first quarter of fiscal
year 2021, ED provisionally recertified AUC, RUSM, and RUSVM's Title IV PPAs
with expiration dates of December 31, 2022, March 31, 2023, and June 30, 2023,
respectively. The provisional nature of the agreements stemmed from increased
and/or repeated Title IV compliance audit findings. No financial ramifications,
such as a letter of credit, heightened cash monitoring, or student enrollment
limitations, were imposed on any of these institutions. While corrective actions
have been taken to resolve past compliance matters and eliminate the incidence
of repetition, if AUC, RUSM, or RUSVM fail to maintain administrative capability
as defined by ED while under provisional status or otherwise fail to comply with
ED requirements, the institution(s) could lose eligibility to participate in
Title IV programs or have that eligibility adversely conditioned, which could
have a material adverse effect on the businesses, financial condition, results
of operations, and cash flows.

On October 13, 2016, DeVry University and ED reached a negotiated agreement (the
"ED Settlement") to settle the claims asserted in a Notice of Intent to Limit
from the Multi-Regional and Foreign School Participation Division of the Federal
Student Aid office of the Department of Education ("ED FSA"). Under the terms of
the ED Settlement, among other things, without admitting wrongdoing, DeVry
University agreed to certain compliance requirements regarding its past and
future advertising, that DeVry University's participation in Title IV programs
was subject to provisional certification for five years and that DeVry
University was required to post a letter of credit equal to the greater of 10%
of DeVry University's annual Title IV disbursements or $68.4 million for a
five-year period. The posted letter of credit continued to be posted by Adtalem
following the closing of the sale of DeVry University. This letter of credit
expired during the second quarter of fiscal year 2022 and is no longer
outstanding as of December 31, 2021.

Walden must apply periodically to ED for continued certification to participate
in Title IV programs. Such recertification generally is required every six
years, but may be required earlier, including when an institution undergoes a
change in control. ED may place an institution on provisional certification
status if it finds that the institution does not fully satisfy all of the
eligibility and certification standards and in certain other circumstances, such
as when an institution is certified for the first time or undergoes a change in
control. During the period of provisional certification, the institution must
comply with any additional conditions included in the institution's program
participation agreement. In addition, ED may more closely review an institution
that is provisionally certified if it applies for recertification or approval to
open a new location, add an educational program, acquire another institution or
make any other significant change. Students attending provisionally certified
institutions remain eligible to receive Title IV program funds. If ED determines
that a provisionally certified institution is unable to meet its
responsibilities under its program participation agreement, it may seek to
revoke the institution's certification to participate in Title IV programs
without advance notice or opportunity for the institution to challenge the
action. Walden University is currently on a temporary provisional program
participation agreement which is required for participation in Title IV programs
on a month-to-month basis. Walden's provisional certification prior to
acquisition was due to Walden's prior parent company (Laureate Education Inc.)
failing composite score under ED's financial responsibility standards and ED's
approval of Laureate's initial public offering in February 2017, which it viewed
as a change in control. As a result of Adtalem's acquisition of Walden, the
provisional nature of Walden's program participation agreement remains in effect
on a month-to-month basis while ED reviews the change in ownership application
relating to the acquisition of Walden by Adtalem. Walden also is subject to a
letter of credit and is subject to additional cash management requirements with
respect to its disbursements of Title IV funds, as well as a restriction on
changes to its educational programs, including a prohibition on the addition of
new programs or locations that had not been approved by ED prior to the change
in ownership during the period in which Walden participates under provisional
certification (either as a result of the change in ownership or because of the
continuation of the financial responsibility letter of credit). As of December
31, 2021, Adtalem maintains a letter of credit for $84.0 million in favor of ED,
which allows Walden to participate in Title IV programs. This letter of credit,
which was assumed in the Acquisition, reduces Adtalem's borrowing capacity
dollar-for-dollar under its Credit Facility (as defined in Note 13 "Debt" to the
Consolidated Financial Statements).

An ED regulation known as the "90/10 Rule" affects only proprietary
postsecondary institutions, such as Chamberlain, Walden, AUC, RUSM, and RUSVM.
Under this regulation, an institution that derives more than 90% of its revenue
on a cash basis from Title IV student financial assistance programs in two
consecutive fiscal years loses eligibility to participate in these programs for
at least two fiscal years. The Rescue Act enacted on March 11, 2021 amended the
90/10 rule to require that a proprietary institution derive no more than 90% of
its revenue from federal education assistance funds, including but not limited
to previously excluded U.S. Department of Veterans Affairs and military tuition
assistance benefits. This change is subject to negotiated rulemaking, which
began in January 2022. The amended rule will first apply to institutional fiscal
years beginning on or after January 1, 2023. The following table details the
percentage of revenue on

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a cash basis from federal financial assistance programs (excluding the U.S. Department of Veterans Affairs and military tuition assistance benefits) for each of Adtalem's Title IV-eligible institutions for fiscal years 2021 and 2020.

                                                           Fiscal Year
                                                          2021     2020
Chamberlain University                                       66 %    62 %

American University of the Caribbean School of Medicine 80 % 81 % Ross University School of Medicine

                           85 %    85 %
Ross University School of Veterinary Medicine                82 %    84 %


Fiscal year data for Walden is not available as they previously reported on a
calendar year basis. As reported by Laureate Education, Inc. in their February
2021 Annual Report on Form 10-K, Walden derived approximately 76% of its
revenues (calculated on a cash basis) from Title IV program funds for the year
ended December 31, 2020.

In September 2016, Adtalem committed to voluntarily limit to 85% the amount of
revenue that each of its Title IV-eligible institutions derive from federal
funding, including the U.S. Department of Veterans Affairs and military tuition
assistance benefits. As disclosed in the third party review reports that have
been made publicly available, Adtalem's institutions that were owned at each
reporting date have met this lower threshold for each fiscal year since the
commitment was made. Adtalem is committed to implementing measures to promote
responsible recruitment and enrollment, successful student outcomes, and
informed student choice. Management believes students deserve greater
transparency to make informed choices about their education. This commitment
builds upon a solid foundation and brings Adtalem to a new self-imposed level of
public accountability and transparency.

A financial responsibility test is required for continued participation by an
institution's students in U.S. federal financial assistance programs. For
Adtalem's participating institutions, this test is calculated at the
consolidated Adtalem level. The test is based upon a composite score of three
ratios: an equity ratio that measures the institution's capital resources; a
primary reserve ratio that measures an institution's ability to fund its
operations from current resources; and a net income ratio that measures an
institution's ability to operate profitably. A minimum score of 1.5 is necessary
to meet ED's financial standards. Institutions with scores of less than 1.5 but
greater than or equal to 1.0 are considered financially responsible, but require
additional oversight. These institutions are subject to heightened cash
monitoring and other participation requirements. An institution with a score of
less than 1.0 is considered not financially responsible. However, an institution
with a score of less than 1.0 may continue to participate in the Title IV
programs under provisional certification. In addition, this lower score
typically requires that the institution be subject to heightened cash monitoring
requirements and post a letter of credit (equal to a minimum of 10% of the Title
IV aid it received in the institution's most recent fiscal year).

For the past several years, Adtalem's composite score has exceeded the required
minimum of 1.5. Changes to the manner in which the composite score is calculated
that were effective on July 1, 2020 has negatively affected Adtalem's composite
score for fiscal year 2021 and will continue to negatively affect future Adtalem
scores. At this time, management does not believe these changes by themselves
will result in the score falling below 1.5. However, as a result of the
acquisition of Walden and the related transactions, Adtalem expects its
consolidated composite score to fall below 1.5 for its fiscal year 2022
financial responsibility test. If Adtalem becomes unable to meet requisite
financial responsibility standards within the regulations, management believes
it will be able to otherwise demonstrate its ability to continue to provide
educational services; however, our institutions will be subject to additional
state regulatory approvals, heightened cash monitoring, or be required to post a
letter of credit to continue to participate in federal and state financial
assistance programs.

Liquidity and Capital Resources

Adtalem's consolidated cash and cash equivalents balance of $275.4 million,
$476.4 million, and $415.9 million as of December 31, 2021, June 30, 2021, and
December 31, 2020, respectively, included cash and cash equivalents held at
Adtalem's international operations of $51.7 million, $111.7 million, and $44.5
million as of December 31, 2021, June 30, 2021, and December 31, 2020,
respectively, which is available to Adtalem for general corporate purposes.

Under the terms of Adtalem institutions' participation in financial aid programs, certain cash received from state governments and ED is maintained in restricted bank accounts. Adtalem receives these funds either after the financial aid authorization and disbursement process for the benefit of the student is completed, or just prior to that authorization. Once

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the authorization and disbursement process for a particular student is
completed, the funds may be transferred to unrestricted accounts and become
available for Adtalem to use in operations. This process generally occurs during
the academic term for which such funds have been authorized. Cash in the amount
of $1.2 million, $0.4 million, and $39.4 million was held in these restricted
bank accounts as of December 31, 2021, June 30, 2021, and December 31, 2020,
respectively. The higher balance in these accounts at December 31, 2020 was
driven by the federal financial aid funds received during December 2020 for the
January 2021 semester at the medical and veterinary schools, which were not yet
transferred to unrestricted accounts as of December 31, 2020. The federal
financial aid funds we received in December 2021 for the January 2022 semester
at the medical and veterinary schools were transferred to unrestricted accounts
prior to December 31, 2021. In addition, $818.6 million was recorded within
restricted cash on the Consolidated Balance Sheet as of June 30, 2021, which
represents cash held in an escrow account designated to fund the Acquisition and
was not available to Adtalem for general corporate purposes (see Note 13 "Debt"
to the Consolidated Financial Statements for additional information).

Cash Flow Summary

Operating Activities

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


                                                               Six Months Ended
                                                                 December 31,
                                                              2021           2020

(Loss) income from continuing operations                   $  (38,148)    $

43,527

Non-cash items                                                 131,129     

55,037

Changes in assets and liabilities                            (111,949)     

(40,607)

Net cash (used in) provided by operating
activities-continuing operations                           $  (18,968)    $

57,957

Net cash used in operating activities from continuing operations in the six
months ended December 31, 2021 was $19.0 million compared to net cash generation
of $58.0 million in the year-ago period. The decrease was driven by increased
interest payments and payments for business acquisition and integration expenses
related to the Walden acquisition. The increase of $76.1 million in non-cash
items between the six months ended December 31, 2021 and the six months ended
December 31, 2020 was principally driven by increases in Walden intangible
amortization, Walden depreciation, Walden bad debt expense, amortization of
deferred financing fees, and stock-based compensation expense related to the CEO
transition. The decrease of $71.3 million in cash generated from changes in
assets and liabilities was primarily due to changes in accounts receivable,
prepaid assets, prepaid income taxes, accounts payable, accrued payroll and
related taxes, accrued liabilities, accrued interest, and deferred revenue.

Investing Activities

Capital expenditures in the first six months of fiscal year 2022 and 2021 were
$14.8 million and $19.7 million, respectively. The capital expenditures in
fiscal year 2022 primarily consisted of spending for Chamberlain new campus
development and improvements. Capital spending for the remainder of fiscal year
2022 will support continued investment for new campus development at
Chamberlain, maintenance at the medical and veterinary schools, and Adtalem's
home office. Management anticipates full fiscal year 2022 capital spending to be
in the $55 to $65 million range, including $14.8 million spent during the first
six months of fiscal year 2022. The source of funds for this capital spending
will be from operations or the Credit Facility (as defined and discussed in Note
13 "Debt" to the Consolidated Financial Statements).

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Financing Activities

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


                                                         Six Months Ended
                                                           December 31,
                                                         2021         2020

Net proceeds from (repayments of) long-term debt $ 559,000 $ (1,500) Payment of debt discount and issuance costs

             (49,553)      

(1,722)

Repurchases of common stock for treasury                       -     

(44,963)

Other                                                      5,926      

(3,934)

Net cash provided by (used in) financing activities $ 515,373 $ (52,119)

On November 8, 2018, we announced that the Board authorized Adtalem's eleventh
share repurchase program, which allowed Adtalem to repurchase up to $300 million
of its common stock through December 31, 2021. The eleventh share repurchase
program commenced in January 2019 and was completed in January 2021. On February
4, 2020, we announced that the Board authorized Adtalem's twelfth share
repurchase program, which allowed Adtalem to repurchase up to $300 million of
its common stock through December 31, 2021. The twelfth share repurchase program
commenced in January 2021 and expired on December 31, 2021. Repurchases were
suspended in May 2021 after achieving management's target of $100 million in
repurchases for fiscal year 2021. We did not make any share repurchases during
the six months ended December 31, 2021. See Note 15 "Share Repurchases" to the
Consolidated Financial Statements for additional information on our share
repurchase programs.

On March 24, 2020, we executed a pay-fixed, receive-variable interest rate swap
agreement (the "Swap") with a multinational financial institution to mitigate
risks associated with the variable interest rate on our Prior Term Loan B (as
defined in Note 13 "Debt" to the Consolidated Financial Statements) debt. We
paid interest at a fixed rate of 0.946% and received variable interest of
one-month LIBOR (subject to a minimum of 0.00%), on a notional amount equal to
the amount outstanding under the Prior Term Loan B. The effective date of the
Swap was March 31, 2020 and settlements with the counterparty occurred on a
monthly basis. The Swap was set to terminate on February 28, 2025. On July 29,
2021, prior to refinancing our Prior Credit Agreement (as discussed below), we
settled and terminated the Swap for $4.5 million, which resulted in a charge to
interest expense for this amount in the first six months of fiscal year 2022.
During the operating term of the Swap, the annual interest rate on the amount of
the Prior Term Loan B was fixed at 3.946% (including the impact of our current
3% interest rate margin on LIBOR loans) for the applicable interest rate period.
The Swap was designated as a cash flow hedge and as such, changes in its fair
value were recognized in accumulated other comprehensive loss on the
Consolidated Balance Sheet and were reclassified into the Consolidated
Statements of Income (Loss) within interest expense in the periods in which the
hedged transactions affected earnings.

As discussed in the previous section of this MD&A titled "Walden University
Acquisition," on August 12, 2021, Adtalem acquired all of the issued and
outstanding equity interest in Walden, in exchange for a purchase price of $1.5
billion in cash. On March 1, 2021, we issued $800 million aggregate principal
amount of 5.50% Senior Secured Notes due 2028 (the "Notes"), which mature on
March 1, 2028. On August 12, 2021, Adtalem replaced the Prior Credit Facility
and Prior Credit Agreement (as defined in Note 13 "Debt" to the Consolidated
Financial Statements) by entering into its new credit agreement (the "Credit
Agreement") that provides for (1) a $850 million senior secured term loan ("Term
Loan B") with a maturity date of August 12, 2028 and (2) a $400 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 proceeds of the Notes and the Term Loan B were used, among other
things, to finance the Acquisition, refinance Adtalem's Prior Credit Agreement,
and pay fees and expenses related to the Acquisition. The Revolver will be used
to finance ongoing working capital and for general corporate purposes. As of
December 31, 2021, the amount of debt outstanding under the Notes and Credit
Facility was $1,650.0 million. See Note 13 "Debt" to the Consolidated Financial
Statements for additional information on the Notes and our Credit Agreement.

Management currently projects that COVID-19 will continue to have an effect on
operations and, as a result, liquidity, as discussed in the previous section of
this MD&A titled "Overview of the Impact of COVID-19"; however, we believe the
current balances of cash, cash generated from operations, and our Credit
Facility will be sufficient to fund both Adtalem's current domestic and
international operations and growth plans for the foreseeable future.

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Material Cash Requirements

Long-Term Debt - We have issued $800 million of Notes and maintain a $1,250
million credit facility, which requires principal and interest payments. As of
December 31, 2021, the amount of debt outstanding under the Notes and our Credit
Facility was $1,650.0 million. See Note 13 "Debt" to the Consolidated Financial
Statements for additional information on our Credit Agreement.

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

Seasonality

The seasonal pattern of Adtalem's enrollments and its educational programs'
starting dates affect the results of operations and the timing of cash flows.
Therefore, management believes that comparisons of its results of operations
should primarily be made to the corresponding period in the preceding year.
Comparisons of financial position should be made to both the end of the previous
fiscal year and to the end of the corresponding quarterly period in the
preceding year.

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates as disclosed in our 2021 Form 10-K.

Recent Accounting Pronouncements

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

Forward-Looking Statements

Certain statements 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 the
future impact of the COVID-19 pandemic, and the efficacy and distribution of the
vaccines, the expected synergies from the recent Walden acquisition, and the
pending sale of the financial services segment including our anticipated net
proceeds and whether the pending sale will be completed in the anticipated
timeframe, if at all. Forward-looking statements can also be identified by words
such as "future," "believe," "expect," "anticipate," "estimate," "plan,"
"intend," "may," "will," "would," "could," "can," "continue," "preliminary,"
"range," and similar terms. These forward-looking statements are subject to
risks 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 2021 Form 10-K and
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. These
forward-looking statements are based on information available to us as of the
date any such statements are made, and we do not undertake any obligation to
update any forward-looking statement, 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 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:

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Net income from continuing operations excluding special items (most comparable
GAAP measure: net income (loss) attributable to Adtalem) - Measure of Adtalem's
net income (loss) attributable to Adtalem adjusted for deferred revenue
adjustment, CEO transition costs, restructuring expense, business acquisition
and integration expense, Walden intangible amortization expense, pre-acquisition
interest expense, and loss from discontinued operations attributable to Adtalem.

Earnings per share from continuing operations excluding special items (most
comparable GAAP measure: earnings (loss) per share) - Measure of Adtalem's
diluted earnings (loss) per share adjusted for deferred revenue adjustment, CEO
transition costs, restructuring expense, business acquisition and integration
expense, Walden intangible amortization expense, pre-acquisition interest
expense, and loss from discontinued operations attributable to Adtalem.

Operating income excluding special items (most comparable GAAP measure:
operating income) - Measure of Adtalem's operating income adjusted for deferred
revenue adjustment, CEO transition costs, restructuring expense, business
acquisition and integration expense, and Walden intangible amortization expense.
This measure is applied on a consolidated and segment basis, depending on the
context of the discussion.

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

? Deferred revenue adjustment related to a revenue purchase accounting adjustment

to record Walden's deferred revenue at fair value.

? CEO transition costs related to acceleration of stock-based compensation

expense.

? Restructuring expense primarily related to plans to achieve synergies with the

Walden acquisition and real estate consolidations at Adtalem's home office.

? Business acquisition and integration expense include expenses related to the

Walden acquisition.

? Walden amortization expense on acquired intangible assets.

? Pre-acquisition interest expense related to financing arrangements in

connection with the Walden acquisition.

Loss from discontinued operations attributable to Adtalem includes the

? operations of ACAMS, Becker, OCL, and EduPristine, in addition to costs related

to DeVry University.

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 (loss) attributable to Adtalem reconciliation to net income from continuing operations excluding special items (in thousands):

                                             Three Months Ended        Six Months Ended
                                               December 31,             December 31,
                                              2021        2020         2021        2020
Net income (loss) attributable to
Adtalem (GAAP)                             $   17,853   $  23,315   $ (40,151)   $  43,245
Deferred revenue adjustment                     2,354           -        8,561           -
CEO transition costs                                -           -        6,195           -
Restructuring expense                           3,387       1,166        6,481       4,082
Business acquisition and integration
expense                                         9,060      11,079       35,613      24,515
Walden intangible amortization expense         30,699           -       47,150           -
Pre-acquisition interest expense                    -          45       31,634          45
Income tax impact on non-GAAP
adjustments (1)                              (46,742)     (4,006)     (42,102)     (7,607)
Loss from discontinued operations
attributable to Adtalem                        21,181         626        2,003         282
Net income from continuing operations
excluding special items (non-GAAP)         $   37,792   $  32,225   $   55,384   $  64,562

(1) Represents the income tax impact of non-GAAP continuing operations

    adjustments that is recognized in our GAAP financial statements.


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Earnings (loss) per share reconciliation to earnings per share from continuing operations excluding special items (shares in thousands):

                                             Three Months Ended       Six Months Ended
                                               December 31,            December 31,
                                              2021         2020       2021        2020
Earnings (loss) per share, diluted
(GAAP)                                     $      0.36   $   0.44   $  (0.81)   $   0.82
Effect on diluted earnings per share:
Deferred revenue adjustment                       0.05          -        0.17          -
CEO transition costs                                 -          -        0.12          -
Restructuring expense                             0.07       0.02        0.13       0.08
Business acquisition and integration
expense                                           0.18       0.21        0.71       0.47
Walden intangible amortization expense            0.61          -        0.94          -
Pre-acquisition interest expense                     -       0.00        0.63       0.00
Income tax impact on non-GAAP
adjustments (1)                                 (0.93)     (0.08)      (0.84)     (0.14)
Loss from discontinued operations
attributable to Adtalem                           0.42       0.01        0.04       0.01
Earnings per share from continuing
operations excluding special items,
diluted (non-GAAP)                         $      0.75   $   0.61   $    1.10   $   1.23
Diluted shares used in non-GAAP EPS
calculation                                     50,237     52,441      

50,166 52,622

(1) Represents the income tax impact of non-GAAP continuing operations

adjustments that is recognized in our GAAP financial statements.

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